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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 7389 36-3552153
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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2001 SPRING ROAD, SUITE 500
OAK BROOK, ILLINOIS 60523-1887
TELEPHONE (630) 571-1280
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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KEVIN M. SWAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
2001 SPRING ROAD, SUITE 500
OAK BROOK, ILLINOIS 60523-1887
TELEPHONE: (630) 571-1280
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)
Copies to:
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JOHN C. BLEW, ESQ. LOUIS E. ROSEN, ESQ.
BELL, BOYD & LLOYD LORD, BISSELL & BROOK
THREE FIRST NATIONAL PLAZA 115 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60602 CHICAGO, ILLINOIS 60603
TELEPHONE: (312) 372-1121 TELEPHONE: (312) 443-0700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
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Class A Common Stock, par value
$.01 per share................. 2,875,000 shares $15.00 $43,125,000 $12,722
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(1) Includes 375,000 shares of Class A Common Stock which may be purchased
pursuant to an over-allotment option granted by the Company to the
Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 30, 1998
PROSPECTUS
2,500,000 SHARES
[GRIFFITH MICRO SCIENCE LOGO]
CLASS A COMMON STOCK
All of the shares of Class A Common Stock offered hereby (the "Offering")
are being issued and sold by Griffith Micro Science International, Inc. (with
its subsidiaries and predecessors, the "Company" or "Griffith Micro Science"
unless the context otherwise requires).
The Company has two classes of Common Stock, Class A Common Stock and Class
B Common Stock (collectively, the "Common Stock"). Except with respect to voting
and conversion, the rights of the holders of Class A Common Stock and Class B
Common Stock are substantially identical. Each share of Class A Common Stock is
entitled to one vote and each share of Class B Common Stock is entitled to ten
votes. See "Description of Capital Stock -- Recapitalization" and "-- Class A
Common Stock and Class B Common Stock."
All of the outstanding capital stock of the Company is currently owned by
Griffith Laboratories International, Inc., a subsidiary of Griffith
Laboratories, Inc. (collectively, the "Parent Company" unless the context
otherwise requires). Upon completion of the Offering, the Parent Company will
continue to own all of the outstanding shares of Class B Common Stock and will
hold 67.6% of the total number and have 95.4% of the combined voting power of
the outstanding shares of both classes of Common Stock.
Prior to the Offering, there has been no public market for the Class A
Common Stock. It is currently estimated that the initial public offering price
per share will be between $13.00 and $15.00. For factors which are expected to
be considered in determining the initial public offering price, see
"Underwriting." Application has been made for the listing of the Class A Common
Stock on the Nasdaq National Market under the symbol "GMSI."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF CLASS A COMMON
STOCK OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share $ $ $
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Total(3) $ $ $
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(1) The Company and Griffith Laboratories International, Inc. have agreed to
indemnify the Underwriters against certain liabilities, including
liabilities arising under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting estimated expenses of $900,000 which are payable by the
Company.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 375,000 shares of Class A Common Stock, at the Price to
Public, less the underwriting discount, solely to cover over-allotments, if
any. If such option is exercised in full, the total Price to Public,
Underwriting Discount, and Proceeds to Company will be $ , $ ,
and $ , respectively. See "Underwriting."
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The shares of Class A Common Stock offered hereby are offered severally by
the Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the shares of Class A Common Stock will be made
against payment therefor in Chicago, Illinois on or about , 1998.
ABN AMRO INCORPORATED ROBERT W. BAIRD & CO.
INCORPORATED
, 1998
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GRIFFITH MICRO SCIENCE NETWORK
[MAP OF NORTH AMERICA AND EUROPE]
- - Sterilization Facility * Headquarters O Sterilization and Laboratory
Facility
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CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information contained in this Prospectus assumes that the Underwriters'
over-allotment option will not be exercised and, except in the Consolidated
Financial Statements and notes thereto, gives effect to the recapitalization of
the Company described under "Description of Capital Stock -- Recapitalization."
As used in this Prospectus in conjunction with any given year, the term "Fiscal"
refers to the fiscal year of the Company which ended on September 30. For
example, Fiscal 1997 ended on September 30, 1997.
THE COMPANY
Griffith Micro Science is the largest multinational provider of
sterilization management services and the only one with extensive operations in
both North America and Europe. The Company offers comprehensive sterilization
processing and related laboratory testing, consulting and logistics management
services to manufacturers of single use medical devices and, to a much lesser
extent, pharmaceuticals, cosmetics and food products. The Company pioneered the
development and use of ethylene oxide as a sterilant beginning in the 1930s.
Griffith Micro Science regards itself as the premier full service provider of
ethylene oxide sterilization management services and has recently begun to offer
gamma sterilization services. The Company currently operates a network of eleven
ethylene oxide sterilization facilities in North America (eight in the United
States, two in Canada and one in Mexico) and a network of seven ethylene oxide
sterilization facilities and one gamma sterilization facility in Europe. The
Company has also formed a joint venture to design, construct and operate a gamma
sterilization facility in Mexico. Over the past five years, the Company has
opened three new sterilization facilities, acquired five others, replaced one
and closed one.
Of the Company's Fiscal 1997 net revenues of $60.2 million, approximately
61% was derived from its operations in North America and 39% from its operations
in Europe. In Fiscal 1997, the Company provided sterilization management
services to approximately 530 customers in North America and approximately 980
customers in Europe. The Company's customers include many of the world's largest
medical products manufacturers, such as: Abbott Laboratories; Allegiance
Healthcare Corporation; Baxter International, Inc.; Becton, Dickinson and Co.;
The Kendall Company (a subsidiary of Tyco International, Ltd.); Mallinckrodt
Inc.; Medtronic, Inc.; Merck & Co., Inc.; Pfizer, Inc.; and Schering-Plough
Corporation.
A substantial portion of single use prepackaged medical devices and kits
are required by government regulation in the United States and many other
countries to be "sterile" or to have minimal levels of microbial contamination
when sold. In addition, other products, such as pharmaceuticals, cosmetics,
spices and herbs, frozen and dried foods, and animal feed, undergo sterilization
processing to improve their safety, reduce microbial contamination and extend
shelf-life. Manufacturers sterilize their products after assembly and packaging
using either or both of their own in-house sterilization facilities ("captive
processors") or the services of commercial sterilization processing companies
such as Griffith Micro Science ("contract processors"). The two most widely used
methods of commercial sterilization utilize either ethylene oxide in gaseous
form ("ethylene oxide sterilization") or gamma radiation from a radioactive
Cobalt 60 isotope ("gamma sterilization"). Other methods include E-beam
sterilization ("E-beam"), accomplished using a high-energy electron beam, and
steam sterilization, which to date have only been employed to a limited extent
for contract sterilization.
Although the Company is not aware of any published industry statistics and
precise numbers are difficult to determine, the Company estimates that in 1997
the market for sterilization services in North America and those European
countries in which the Company has sterilization facilities was approximately
$500 million, consisting of approximately $300 million in aggregate net revenues
generated by contract processors (approximately $200 million in North America
and $100 million in Europe) and $200 million in equivalent net revenue value for
products sterilized by captive processors (approximately $140 million in North
America and $60 million in Europe). Of this total market, the Company estimates
that slightly more than 50% was attributable to ethylene oxide sterilization,
approximately 40% to 45% to gamma sterilization and the balance to E-beam and
other forms of sterilization.
3
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Beginning in Fiscal 1995 under new senior management, the Company initiated
a comprehensive program to: (i) increase its sterilization processing capacity;
(ii) strengthen the quality and training of its personnel; (iii) improve the
process capability as well as the efficiency of its operations on a system-wide
basis; (iv) expand its customer base; (v) provide greater focus to and expand
the laboratory services it offers; and (vi) broaden its service offering to
include gamma sterilization, sterilization consulting and logistics management.
These efforts, together with a continuing trend by manufacturers of single use
medical devices to outsource their sterilization requirements, have resulted in
compound annual growth rates of 14.1% and 54.4% in net revenues and operating
profit before royalty expense to the Parent Company, respectively, during the
three-year period ended September 30, 1997.
The Company's primary strategic objective is to expand and strengthen its
position as the largest multi-national provider of a full range of sterilization
management services. The Company believes the extensive experience, know-how,
expertise and data it has gathered over the more than 60 years since it
pioneered the use of ethylene oxide as a sterilant has created a significant and
unique core competency, which it refers to as its "scientific platform." The
Company's business strategy is to continue to leverage its scientific platform,
enhancing its position as a full service provider of comprehensive sterilization
management services and allowing it to further pursue "Value Managed
Relationships" with its customers. The key components of this strategy include:
(i) expanding its core medical device sterilization business; (ii) optimizing
the sterilization process through continuous improvement programs with
customers; (iii) broadening its laboratory and related service offerings; and
(iv) expanding its processing of non-medical products.
All of the outstanding capital stock of the Company is currently owned by
Griffith Laboratories International, Inc. which in turn is wholly owned by
Griffith Laboratories, Inc. Upon completion of the Offering, the Parent Company
will continue to own all of the outstanding shares of Class B Common Stock and
will hold 67.6% of the total number and have 95.4% of the combined voting power
of all outstanding shares of Common Stock. As a result, the Parent Company will
be able to control the election of directors and the vote on other matters
submitted to the Company's stockholders, including the approval of extraordinary
corporate transactions. In addition, two of the Company's directors, including
Dean L. Griffith, its Chairman of the Board, are directors and senior officers
of the Parent Company, which was organized in 1919. Mr. Griffith, members of his
family and trusts established for their benefit collectively beneficially own a
substantial majority of the voting stock of the Parent Company. There is no
public market for the stock of the Parent Company.
The Company was organized in 1987 under the laws of Delaware. Its corporate
headquarters is located at 2001 Spring Road, Suite 500, Oak Brook, Illinois
60523-1887 and its telephone number is (630) 571-1280.
RISK FACTORS
An investment in the shares of Class A Common Stock being offered hereby
involves a high degree of risk. Accordingly, prospective purchasers should
carefully consider each of the risk factors set forth beginning on page 7, as
well as the other information set forth in this Prospectus.
4
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THE OFFERING
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Class A Common Stock offered by the Company................. 2,500,000 shares
Common Stock to be outstanding after the Offering(1):
Class A Common Stock...................................... 2,500,000 shares(2)
Class B Common Stock...................................... 5,225,000 shares(3)
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Total............................................. 7,725,000 shares
==================================
Use of Proceeds............................................. To repay approximately $12.2
million of short-term debt payable
to the Parent Company (incurred in
payment of a dividend), to repay
short-term bank debt and for
general corporate purposes,
including capital expenditures.
See "Use of Proceeds."
Proposed Nasdaq National Market Symbol for
Class A Common Stock...................................... GMSI
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(1) Two classes of Common Stock will be outstanding after the Offering: Class A
Common Stock, entitled to one vote per share, which will be owned by the
public stockholders; and Class B Common Stock, entitled to ten votes per
share, which will be owned by the Parent Company. The two classes of Common
Stock generally will vote as a single class with respect to all matters
submitted to a vote of stockholders. Class B Common Stock will be
convertible into Class A Common Stock on a share-for-share basis at the
option of the holder at any time or upon transfer to a person or entity
which is not a Permitted Transferee (as defined). See "Description of
Capital Stock."
(2) Excludes 185,000 shares of Class A Common Stock issuable upon exercise of
options to be granted under the Company's 1998 Employee Stock Option Plan
and its 1998 Director Stock Option Plan effective on the date of the
Offering at an exercise price per share equal to the initial public offering
price. See "Management -- 1998 Director Stock Option Plan" and "-- Employee
Stock Option Plans -- 1998 Plan."
(3) Excludes 505,686 shares of Class B Common Stock subject to options
outstanding at June 30, 1998 at a weighted average exercise price per share
of $7.44 which were granted by the Company under its 1996 Key Employee Stock
Option Plan. See "Management -- Employee Stock Option Plans -- 1996 Plan."
5
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SUMMARY FINANCIAL DATA
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SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
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(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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STATEMENT OF EARNINGS DATA:
Net revenues...................... $ 37,184 $ 40,587 $ 50,117 $ 54,771 $ 60,247 $ 28,345 $ 34,917
Gross profit...................... 13,270 12,344 15,275 16,452 19,602 8,966 11,072
Operating profit before royalty... 6,242 2,063(1) 5,187 6,281 7,599 3,386 4,674
Operating profit(2)............... 4,589 152(1) 2,912 3,800 4,852 2,071 3,131
Interest expense, net............. 335 822 1,705 1,355 875 464 451
Earnings (loss) before income
taxes........................... 4,231 (1,277) 1,056 2,761 3,699 1,486 2,568
Net earnings (loss)............... $ 2,633 $ (816) $ 1,017 $ 1,784 $ 2,726 $ 736 $ 1,643
Diluted net earnings (loss) per
common share.................... $ 0.50 $ (0.16) $ 0.19 $ 0.34 $ 0.52 $ 0.14 $ 0.31
Weighted average number of common
shares and dilutive potential
common shares outstanding....... 5,225,000 5,225,000 5,225,000 5,225,000 5,242,782 5,242,782 5,291,286
PRO FORMA DATA (UNAUDITED):
Net earnings(3)................... $ 4,431 $ 2,495
Diluted net earnings per common
share(3)........................ $ 0.85 $ 0.47
CASH FLOW DATA:
Depreciation and amortization..... $ 3,664 $ 4,380 $ 5,380 $ 5,884 $ 6,108 $ 3,074 $ 3,620
Capital expenditures.............. 6,864 23,189(4) 8,533 3,943 8,885(4) 2,195 6,500
</TABLE>
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AS OF JUNE 30, 1998
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ACTUAL ADJUSTED(5)
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BALANCE SHEET DATA:
Working capital (deficit)................................... $(24,822)(6) $ 6,827
Total assets................................................ 81,685 86,456
Long-term debt, less current portion........................ 17,991 17,991
Stockholders' equity........................................ 17,851 49,501
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(1) Operating profit for 1994 is net of costs associated with the closing of a
sterilization facility in Bound Brook, New Jersey. These costs include
approximately $1,264 for equipment value write downs and dismantling charges
and $147 for severance payments.
(2) For all periods presented the Company has paid to the Parent Company a
royalty equal to 5% of net revenues from sterilization management services
for the license of certain intellectual property owned by the Parent
Company. Prior to completion of the Offering the Parent Company will have
assigned this intellectual property to the Company and the royalty payment
to the Parent Company will cease.
(3) Pro forma net earnings and diluted net earnings per common share for 1997
and the six months ended March 31, 1998 include the following adjustments:
(i) the elimination of the 5% royalty payable to the Parent Company; (ii)
the inclusion of an incremental amount payable to the Parent Company under
the Administrative Services Agreement estimated to be $500 per year (see
"Relationship with Parent Company -- Administrative Services Agreement");
(iii) assumed interest savings from the net cash flows resulting from the
adjustments in (i) and (ii) above; and (iv) the related estimated income tax
effects.
(4) Capital expenditures for 1994 and 1997 include $8,138 and $2,585,
respectively, for acquisitions.
(5) The adjusted balance sheet data as of June 30, 1998 gives effect to the sale
by the Company of the shares of Class A Common Stock offered hereby at an
assumed initial public offering price of $14.00 per share and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."
(6) The working capital (deficit) at June 30, 1998 results primarily from a
$12,000 note payable to the Parent Company, $9,600 of short-term debt
incurred for the acquisition of Sorex Medical, Inc. and $5,218 of other
short-term borrowings primarily incurred for capital expenditures.
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RISK FACTORS
AN INVESTMENT IN THE CLASS A COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
ACCORDINGLY, PROSPECTIVE PURCHASERS SHOULD CONSIDER CAREFULLY EACH OF THE RISK
FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS, PRIOR TO INVESTING IN THE SHARES OF CLASS A COMMON STOCK OFFERED
HEREBY.
SUBSTANTIAL DEPENDENCE ON THE STERILIZATION OF SINGLE USE MEDICAL DEVICES
In Fiscal 1997, the Company derived a substantial majority of its net
revenues from the provision of sterilization management services to
manufacturers of single use medical devices. The Company anticipates that its
sterilization management services for such products will continue to provide
most of the Company's net revenues for the foreseeable future. Accordingly, the
future growth of the Company is dependent in large part upon continued growth in
the market for single use medical devices in North America, Europe and any other
regions or countries in which the Company subsequently establishes sterilization
facilities.
There are several developments which could adversely affect the market for
single use medical devices. In North America and Europe environmental and health
and safety concerns have been raised concerning the proper disposal of such
devices following their use. If any significant disposal restrictions or
requirements are imposed which materially increase the cost or administrative
burden of the disposal process, hospitals and other end users of such devices
might increase their use of reusable medical products. Also, in various
countries in which the Company operates, including the United States, there are
government and private insurance company efforts to change or reform the way in
which healthcare is delivered and paid for. The Company believes that these
efforts to contain or reduce healthcare costs are likely to continue. This could
result in fewer and shorter hospital stays and a reduction in the number and
nature of medical procedures which are performed. Were either or both of these
developments to lead to a material increase in reusable medical products or a
decrease in the use of hospitals or reduction in medical procedures, demand for
the Company's services could be adversely affected. See "Business -- The
Sterilization Processing Industry" and " -- Customers."
CUSTOMER CONCENTRATION
The Company's five largest customers accounted for approximately 38% of its
net revenues in Fiscal 1997, including one customer, Allegiance Healthcare
Corporation, which accounted for approximately 20% of net revenues. The loss by
the Company of any of these major customers, or any substantial reduction in the
volume of their business with the Company, could have a material adverse effect
on the Company's business, financial condition and results of operations. In
addition, at several of the Company's sterilization facilities, the business
from an individual customer accounts for a substantial majority of the total
volume of products sterilized at that facility. Any substantial reduction in the
volume of business at any individual sterilization facility of the Company could
also have a material adverse effect on the Company's business, financial
condition and results of operations due to the significant level of fixed
operating costs at each of the Company's sterilization facilities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Customers."
UNPREDICTABILITY OF FUTURE OPERATING RESULTS; LIKELY FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS
There can be no assurance that the Company's net revenues will grow or be
sustained in future periods or that the Company will maintain its current
profitability in the future. In addition, the Company has experienced, and
expects to continue to experience, significant fluctuations in net revenues and
operating results from quarter to quarter. As a result, the Company believes
that period-to-period comparisons of its operating results are not necessarily
meaningful, and that such comparisons cannot be relied upon as indicators of
future performance. An important cause of such quarterly fluctuations has been
material increases or decreases in demand by the Company's customers for its
ethylene oxide sterilization services, resulting from such factors as changes in
the customers' product mix or sterilization technology preferences or in the
demand for their products. Another important factor has been the timing of the
opening of new operating facilities or of significant capacity expansions at
existing facilities. In addition to the substantial capital requirements which
7
<PAGE> 9
capacity expansion entails, the start-up of a new facility typically involves
substantial added costs and any new facility typically requires several years
before achieving profitability.
A further factor contributing to quarterly fluctuations is changes in the
exchange rate from quarter-to-quarter between the United States dollar, in which
the Company's results are reported, and the local currency in each of the seven
foreign countries in which the Company currently operates. Since the Company
reports its interim and annual results in United States dollars, it is subject
to the risk of translation losses for reporting purposes. Whenever the United
States dollar gains against the local currency in any reporting period, the
actual earnings generated by the Company's operations in that country are
diminished in translation.
As a result of these and other factors, it is likely that in one or more
future quarters or other interim reporting periods the Company's operating
results will be less than the estimates made by or the expectations of market
analysts or investors and may be materially lower than the prior period in the
same fiscal year or the comparable period of the prior fiscal year. In either
event, the prevailing market price of the Class A Common Stock could be
materially adversely affected. See "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Quarterly Results."
AVAILABILITY OF ALTERNATIVE TECHNOLOGIES
All but one of the Company's 19 sterilization facilities currently employ
ethylene oxide technology exclusively. Certain of the Company's competitors
utilize alternative sterilization technologies, principally gamma radiation, in
some or all of their processing facilities. Gamma radiation has certain
advantages over ethylene oxide as a sterilant. As a result of these advantages,
while the business of both ethylene oxide and gamma contract processors has
grown rapidly during the past ten years, the use of gamma sterilization
increased at a faster rate as many medical device manufacturers which could
easily do so converted certain of their products from ethylene oxide to gamma
sterilization and designed certain new products and packaging to be gamma
compatible. Any significant further shift by manufacturers of single use medical
devices in their sterilization technology requirements from ethylene oxide to
gamma or other technologies would likely have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
any effort by the Company to effect a material and rapid conversion of its
facilities to gamma or some other sterilization technology or to rapidly
establish a number of new facilities employing such an alternative technology,
whether as a result of regulatory changes, customer preferences or some other
reason, would not be financially or operationally feasible. See "Business -- The
Sterilization Processing Industry," "-- Competition" and "-- Regulatory,
Environmental and Health and Safety Matters."
HEALTH AND SAFETY RISKS OF ETHYLENE OXIDE AND GAMMA
Ethylene oxide is a toxic and hazardous chemical which is flammable and
explosive. It has also been identified as a cancer and reproductive hazard. The
Cobalt 60 isotope used in gamma sterilization is highly radioactive and
corrosive. As a result, the operation of the Company's ethylene oxide and gamma
facilities involves special safety risks and potential liabilities resulting
from exposure to ethylene oxide or radioactive material or from an explosion or
fire involving the use of ethylene oxide and the possible business interruption
associated with any such explosion or fire. The Company is also subject to a
variety of specific regulatory, health and safety and environmental requirements
stemming from the use of these hazardous materials.
Any incident occurring at any of the Company's facilities which causes harm
to workers or others or the interruption of normal operations at the facility
could result in substantial liability to the Company. Such an incident might
also result in adverse community or regulatory reaction, which could affect the
Company's ability to continue to operate the facility involved in the incident.
To the extent any such liability is not covered by insurance or able to be
recovered from others, the Company's business, financial condition and results
of operations could be materially adversely affected. A similar result could
occur if any incident and the related interruption of normal operations of the
facility caused any significant customer served by that facility to switch to an
alternative sterilization service provider. In addition, the Company may
encounter resistance, protests or other actions from those communities in which
its existing facilities are located or where it seeks to
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establish or expand facilities based on the perceived risk of exposure to
ethylene oxide or radiation on the part of the residents of these communities.
See "Business -- Regulatory, Environmental and Health and Safety Matters."
RISKS RELATED TO GOVERNMENT REGULATIONS AND STANDARDS COMPLIANCE
The design, construction and operation of the Company's sterilization
facilities are subject to a variety of federal, state and local regulations in
each of the countries where they are located. Although the Company believes it
has received all material licenses and permits necessary to conduct its current
business, there can be no assurance that the Company will not be found in
violation of applicable requirements or that governmental entities will not seek
to impose more stringent regulatory requirements on the Company and its
business. In addition, the long-term course of regulatory policy cannot be
predicted, and there can be no assurance that laws and regulations will not be
applied in a manner that adversely affects the Company. The imposition of such
regulatory requirements could force the Company to alter or cease the operation
of one or more of its facilities and could otherwise have a material adverse
effect on the Company's business, financial condition and results of operations.
The health and safety risks of exposure to ethylene oxide have resulted in
extensive government regulations and industry standards which limit permissible
emissions levels, worker exposure and residues on sterilized products. The
Company is also subject to various local zoning and permit rules in connection
with the construction of its sterilization facilities. These regulations have
materially increased the cost of ethylene oxide sterilization.
The Company anticipates that ethylene oxide will be subjected to further
risk assessment by international standards organizations and by various
governmental entities and institutions in one or more of the countries in which
the Company operates. Furthermore, it is likely that more restrictive ethylene
oxide regulations or industry standards will be adopted as a result of such
studies. The expenditures required by the Company or its customers to comply
with any additional restrictions could be material. The further operating
restraints or burdens which any additional restrictions might entail, as well as
any increased concern over the health and safety risks of ethylene oxide, could
also result in additional customer shifts away from ethylene oxide
sterilization. In either event, any additional regulations could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Regulations to control low concentration ethylene oxide emissions were
adopted by the United States Environmental Protection Agency ("EPA") in 1994 and
are currently scheduled to become effective in December 1998. However, certain
types of low concentration emissions control equipment used by ethylene oxide
sterilizers, including the Company, have a risk of explosion. The regulations
are under review by the EPA, and the Company expects that their effective date
will be postponed to December 1999. If the regulations take effect in their
present form, the Company will be required to incur substantial cost to acquire
the control equipment necessary to bring certain of its facilities in the United
States into compliance. If the regulations become effective in December 1998,
the Company may require variances at two of its facilities to remain in
compliance pending installation of new systems. There can be no assurance that
the Company will be able to obtain such variances.
In addition to extensive regulation by various governmental agencies, the
Company and its medical device manufacturing customers are subject to standards,
guidelines and requirements established by industry organizations and other
non-governmental entities, such as the International Organization for
Standardization ("ISO") and the Committee for European Normalization ("EN"). The
ISO 9001 and 9002 standards are international quality standards that require the
Company to implement and document an effective quality assurance program which
is subject to periodic quality systems surveillance audits. The ISO 10993-7
standard, adopted in 1995, limits the permissible levels of residual ethylene
oxide on sterilized medical devices in order to protect patients who come into
contact with such devices. These residue limits are readily achievable by the
existing process technology and procedures employed by the Company for most of
the medical devices manufactured by its customers. The ISO is currently engaged
in a process to review and revise its existing ethylene oxide residue standard.
The Company is unable to predict the final outcome of this review process,
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although it believes that it will likely result in some reduction in the
permissible ethylene oxide residue limits set forth in the ISO standard.
Depending upon the extent of any such reduction, aeration times might need to be
increased for some products or, in an extreme case, certain products might
require redesign, significant changes in ethylene oxide sterilization technology
and equipment might be required to assure compliance and manufacturers might
increasingly shift their sterilization requirements to gamma or other existing
or new sterilization technologies.
Demonstrated compliance by a contract processor with the ISO and EN
certifications is becoming a requirement for doing business in or exporting
sterilized products to Canada and Europe and is expected by most medical device
manufacturers in the United States. Medical devices to be sold in countries
which are members of the European Community must carry the "CE" symbol on their
labels. In order to affix the CE symbol to any sterile medical device it must,
among other requirements, have been sterilized in a facility which is certified
as ISO 9000 series and EN 46000 series compliant and it must satisfy the ISO
10993-7 ethylene oxide residue standard.
Sterilization of medical devices is subject to regulation by the United
States Food and Drug Administration (the "FDA") pursuant to the Federal Food,
Drug and Cosmetic Act. The FDA has promulgated a Quality System Regulation
("QSR") which sets forth detailed Good Manufacturing Practices ("GMP") that
manufacturers of medical devices, including providers of contract sterilization
of medical devices, are required to follow. Consequently, the Company is
required to comply with the GMP requirements set forth in the QSR with respect
to its operating facilities in the United States and those outside the United
States which sterilize devices for export to the United States. These facilities
are subject to periodic inspections by the FDA to determine whether they are in
compliance with such requirements.
The parametric release system now being implemented by the Company to
increase sterilization processing efficiency (see "Business -- Sterilization
Management Services -- Continuous improvement initiatives") is subject to
compliance with FDA GMPs. The Company has only recently begun to commercially
process certain products for one of its customers using the parametric release
system. The Company's parametric release system adheres to the standards for
parametric release included in the ISO 11135 standard for ethylene oxide
sterilization. However, the Company has not been inspected by the FDA since
implementing the system and no assurance can be given that the FDA will accept
the Company's use of its parametric release system. Further, there can be no
assurance that the Company's customers will accept the use of parametric release
for contract sterilization.
Failure by the Company at any time to comply with applicable FDA
requirements could lead the FDA to institute enforcement actions against the
Company or its customers, including, among other things, warning letters, recall
or seizure of products, fines, injunctions, civil penalties, total or partial
suspension of sterilization operations and criminal prosecution. Such
enforcement actions would also harm the Company's business reputation and could
cause the Company to lose customers to competitors. During the last five years,
the Company has not received any warning letters from or been subjected to any
more stringent compliance action by the FDA. See "Business -- Regulatory,
Environmental and Health and Safety Matters -- Health regulations."
The design, construction and operation of commercial gamma sterilization
facilities, and byproduct materials used in such facilities, are extensively
regulated by government entities in Belgium (where the Company operates such a
facility) and Mexico (where a joint venture in which the Company is a
participant is establishing such a facility). Gamma facilities are also subject
to extensive regulation in the United States and in the other countries where
any additional gamma facilities built or acquired by the Company are likely to
be located.
Changes in, or reinterpretations of, existing requirements and standards or
adoption of new requirements or the failure at any time to comply with any
applicable material regulations and standards could have a material adverse
effect on the Company's business, financial condition and results of operations.
There can be no assurance that the Company will not incur significant costs to
comply with laws, regulations and other requirements in the future or that such
laws, regulations and other requirements will not have a material adverse effect
upon the Company's business, financial condition and results of operations.
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Violations of or noncompliance with applicable governmental requirements
could result in an enforcement action including, among other things, a warning
letter, imposition of civil penalties, suspension of operations, modification or
revocation of any applicable license or criminal prosecution. Any such action
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Quality Assurance" and
"-- Regulatory, Environmental and Health and Safety Matters."
POTENTIAL FOR SHORT-TERM CAPACITY CONSTRAINTS
The demand for the Company's sterilization services has been growing
rapidly, in some cases temporarily exceeding the capacity of certain of its
processing facilities. Certain of the Company's existing facilities are now at
or are expected over the next two years to reach their maximum capacity, which
could necessitate increases in capacity at existing facilities or opening new
facilities. Any substantial and prolonged inability on the part of the Company
to maintain sufficient sterilization capacity to fully serve the needs of its
customers could have a material adverse effect on its relationships with
affected customers and put at risk key elements of its business strategy. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Facilities."
SUPPLY RISKS
While ethylene oxide is a relatively common chemical with many different
uses, its use as a sterilant in the United States is subject to stringent
regulation under the Federal Insecticide, Fungicide and Rodenticide Act
("FIFRA"). The Company is aware of only two sources in the United States which
possess the FIFRA registration necessary to produce ethylene oxide for use as a
sterilant, only one of which actually engages in such production. In September
1997, the Company entered into a seven-year agreement with that producer to
supply ethylene oxide to all of its sterilization facilities in the United
States and Canada. Any interruption in the supply of ethylene oxide to the
Company's sterilization facilities, or substantial increase in the cost of such
supply, would have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company is aware of only two principal sources in the world for Cobalt
60, the radioactive isotope which emits gamma radiation. One of these sources is
MDS Nordion Inc., a Canadian company, and the other is the Puridec Irradiation
Technologies Division of Amersham International plc, a United Kingdom company.
The Company's gamma facility in Belgium purchases its Cobalt 60 requirements
under contract from Puridec. MDS Nordion is the Company's partner in a joint
venture to design, build and operate a gamma facility in Mexico. The joint
venture is contractually committed to acquire its Cobalt 60 requirements from
MDS Nordion. While the Company has not experienced any shortages of Cobalt 60
since the acquisition of its Belgian gamma facility in August 1997, there can be
no assurance that it will be able to obtain sufficient supplies of Cobalt 60 in
the future. In addition, the availability and price of Cobalt 60 to the Company
and its suppliers is dependent in part on the political situation in countries
with large deposits of Cobalt 59 (the material that is processed into Cobalt
60), such as the Democratic Republic of Congo and the republics of the former
Soviet Union. Such countries have recently experienced political unrest. In
addition, since mined Cobalt 59 must be converted into Cobalt 60 in nuclear
reactors, the supply of Cobalt 60 to the Company's suppliers is dependent upon
the availability of nuclear reactors. If interruptions in the supply or
increases in the price of Cobalt 60 were to occur for any reason, including a
decision by any of the Company's suppliers to decrease or discontinue supplies
of Cobalt 60 to the Company, trade restrictions with Canada or the United
Kingdom, political unrest, labor disputes or other factors, the Company's
business, financial condition and results of operations might be materially
adversely affected. See "Business -- Sterilization Management
Services -- Availability of raw materials."
COMPETITION
The Company is subject to intense competition in the provision of
sterilization services in each of the countries where it has operations. The
market for such services is fragmented as a result of traditional geographical
limitations on the area which can be served by each sterilization facility,
multiple sterilization technologies and the mix of captive and contract
facilities. Certain of the Company's competitors in North
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America have substantially greater financial, marketing, technical and other
resources or offer a broader range of sterilization technologies than the
Company, which may give them a competitive advantage over the Company. Two of
its major competitors in the United States, Isomedix, Inc. (a subsidiary of
Steris Corporation) and SteriGenics International, Inc., have extensive gamma
sterilization networks. In Europe, many of the Company's local competitors
benefit from long-term relationships with individual customers. Also, to the
extent that the Company expands into additional foreign countries it could be
faced with competition from existing providers of contract sterilization
services in those countries. See "Business -- Competition."
ACQUISITIONS
The Company has recently completed several acquisitions and expects to
continue to pursue acquisitions in the future. Some of the Company's major
competitors have similar acquisition strategies. As a result, competition for
suitable acquisition candidates is increasing, and the number of potential
acquisition candidates, particularly in the United States, is limited. There can
be no assurance that the Company will be able to acquire companies on favorable
terms, if at all. If the Company continues to complete acquisitions, it will
encounter various associated risks, including possible difficulty in integrating
an acquired business into the Company's sterilization or laboratory networks,
diversion of management's attention and unanticipated problems or liabilities,
some or all of which could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company does not
currently have any understandings, commitments or agreements with respect to any
potential acquisition. See "Business -- Business Strategy" and "-- Strategic
Acquisitions and Alliances."
ADDITIONAL INTERNATIONAL EXPANSION
Part of the Company's business strategy is to enter additional foreign
countries. Further expansion into additional countries will require substantial
capital and be subject to a number of risks, including any or all of the
following: (i) differing and evolving regulatory requirements for ethylene oxide
or gamma sterilization; (ii) political, economic, cultural and language
differences; (iii) fluctuating currency exchange rates; (iv) difficulties in
staffing and managing such operations and of integrating them into the Company's
business; (v) the inability to establish a stable and profitable customer base
for such operations; (vi) higher operating and administrative costs; and (vii)
potentially adverse tax consequences. Such factors, either individually or in
combination, could result in operating losses for any such facility or
facilities for several years or more and have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Business Strategy" and "-- Sterilization Management Services."
CAPITAL REQUIREMENTS
In order to expand its sterilization capacity sufficiently to meet
anticipated increases in the demand for its services, as well as to carry out
other components of its business strategy, the Company expects to require
substantially greater capital than it has previously required. Prior to the
Offering, a material portion of the Company's capital requirements was funded by
or through the Parent Company. Following completion of the Offering, no further
financing can be expected to be available from or through the Parent Company. No
assurance can be given that the Company's existing financial resources,
including cash flow from operations and amounts available under the proposed
Revolving Credit Agreement, will be sufficient to fund its future growth. The
Company may be required to seek other external funding sources in order to
finance its business strategy, which sources may not be available on terms
favorable to the Company or at all. These sources could include, subject to
market conditions, additional offerings by the Company of its equity or debt
securities. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Shares Eligible
For Future Sale."
FINANCIAL EXPOSURE TO PRODUCT AND OTHER LIABILITY CLAIMS
The Company faces the risk of financial exposure to product and other
liability claims alleging that the Company's failure to adequately perform its
services resulted in adverse effects. While the Company's
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customers are generally responsible for determining the cycle parameters or
dosage specifications for their products, the Company is required to certify
that such cycle or dosage parameters were achieved. In the event of the failure
of the Company to process the customer's product in accordance with the cycle
parameters or dosage specifications prescribed by the customer, the Company is
contractually required to inform its customer of the nonconformance, to
reprocess the product if that is a feasible alternative and to reimburse the
customer for the cost of any such product which is damaged as a result of the
nonconformance. In Belgium and France, contract processors, including the
Company, are required by law to certify that products they have processed are
"sterile." There can be no assurance that the Company will not be held liable
for damages that are alleged to result from improper or incorrect processing,
cycle parameters or dosage specifications, product damage or the failure to
achieve "sterility." In such event, the Company also could receive adverse
publicity. Both the Company and the Parent Company's Food Group are covered by
the same liability insurance coverage. There can be no assurance that such
liability insurance coverage will be adequate or remain available to the Company
at acceptable costs. A successful claim brought against the Company in excess of
the insurance coverage then available to it could have a material adverse effect
on the Company's business, financial condition and results of operations.
Additionally, adverse product or other liability actions could have a negative
impact on market acceptance of the Company's services and the Company's ability
to obtain and maintain regulatory approval for the products it processes. See
"Business -- Sterilization Management Services -- Achieving 'sterility,' "
"-- Quality Assurance" and "-- Regulatory, Environmental and Health and Safety
Matters."
CONTROL BY AND POSSIBLE CONFLICTS OF INTEREST WITH THE PARENT COMPANY
The Parent Company is currently the sole stockholder of the Company. Upon
completion of the Offering, the Parent Company will continue to own all of the
outstanding shares of Class B Common Stock (each of which entitles the holder to
ten votes) and will hold 67.6% of the total number and have 95.4% of the
combined voting power of the Common Stock. As a result, the Parent Company will
be able to control the election of directors and the vote on other matters
submitted to the Company's stockholders, including the approval of extraordinary
corporate transactions (such as a sale of assets, merger or other transaction
involving a change of control). In addition, two of the Company's directors,
including its Chairman of the Board, are also directors and senior officers of
the Parent Company.
There is almost no operational overlap between the business of the Parent
Company and the business of the Company. The Parent Company does, however,
render a variety of administrative and financial support services to the
Company, and it is expected to continue to do so after completion of the
Offering. In order to document and establish the terms of these arrangements and
other aspects of their continuing relationship, the Company and the Parent
Company will, prior to the completion of the Offering, enter into a series of
agreements (the "Intercompany Agreements"). The Intercompany Agreements will
include a Shareholder Agreement, an Administrative Services Agreement and a Tax
Matters Agreement.
The Intercompany Agreements will not be the result of arm's length
negotiations between independent parties, and there can be no assurance that
their terms and conditions will be the same as if so negotiated. The Committee
of Independent Directors of the Company's Board of Directors, whose members will
not be otherwise affiliated with either the Company or the Parent Company, will
be required to review and approve the terms of all material agreements and
transactions, and any material amendments to such agreements (including
amendments to the Intercompany Agreements) between the Company and the Parent
Company which are entered into or occur subsequent to the Offering.
Conflicts of interest may arise in the future between the Company and the
Parent Company. The Company has not adopted any formal plan or arrangement to
address such potential conflicts of interest. It is anticipated that the
directors of the Company would take such steps as they deem reasonable under all
of the circumstances to resolve any specific conflict of interest that may
occur. There can be no assurance, however, that any such conflicts will be
resolved in a manner favorable to the Company. See "Relationship With Parent
Company."
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POTENTIAL TRANSFER OF CONTROL BY THE PARENT COMPANY
The Company's Restated Certificate of Incorporation permits the Parent
Company to transfer shares of Class B Common Stock which it holds to any person
who is a Permitted Transferee. "Permitted Transferees" for such purpose include:
(i) the shareholders of the Parent Company, but only pursuant to a single
transaction in which all outstanding shares of Class B Common Stock held by the
Parent Company are distributed to the shareholders of the Parent Company as part
of a tax free spin off; and (ii) an unaffiliated corporation or business entity,
but only pursuant to a single transaction approved by the board of directors of
the Parent Company in which all outstanding shares of Class B Common Stock held
by the Parent Company are sold to, exchanged with or otherwise transferred to
such other corporation or business entity. Accordingly, it will be possible for
the Parent Company, as part of a spin off or sale, to convey to its shareholders
or to an unrelated purchaser all of the Class B Common Stock then held by it and
the voting power (which would be likely to include at least a majority of the
combined voting power of all shares of Common Stock then outstanding)
represented by such shares. See "Relationship with Parent Company" and
"Description of Capital Stock."
POTENTIAL SALES OF CLASS A COMMON STOCK BY THE PARENT COMPANY OR THE COMPANY
Sales by the Parent Company or by the Company of substantial amounts of
Class A Common Stock could adversely affect prevailing market prices of the
Class A Common Stock. Upon the consummation of the Offering, the Parent Company
will own all of the outstanding shares of Class B Common Stock (which will
represent 67.6% of the total number of shares of Common Stock outstanding or
64.5% if the Underwriters' over-allotment option is exercised in full). Pursuant
to the Company's Restated Certificate of Incorporation, the Parent Company will
be able at any time or from time to time to convert any or all of its Class B
Common Stock to Class A Common Stock on a share-for-share basis. Pursuant to the
Shareholder Agreement, the Parent Company will also be able to cause the Company
to register under the Securities Act of 1933 (the "Securities Act"), in
connection with their public sale, any or all of the shares of Class A Common
Stock resulting from such conversion. In addition, the Parent Company will be
permitted to sell in the public market specified amounts of such Class A Common
Stock without registration pursuant to Rule 144 under the Securities Act. The
Company may also issue and sell shares of Class A Common Stock in the future to
fund acquisitions, raise additional capital or for other purposes.
The Parent Company has informed the Company that it has no current
intention to sell any of its shares of Common Stock. In addition, each of the
Parent Company, the Company and each of the directors and officers of the
Company has agreed with the Underwriters that it or he will not sell or
otherwise dispose of any Common Stock or securities convertible into Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent of ABN AMRO Incorporated. The Company's agreement in this
regard excludes from such restriction Common Stock issued in connection with
acquisitions (provided that any recipient in an acquisition of Common Stock
during such 180-day period agrees to be bound by such prohibition during the
remainder of the 180-day period) and pursuant to stock option plans for
directors and employees of the Company. See "Shares Eligible for Future Sale."
ABSENCE OF PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common
Stock. There can be no assurance that an active trading market will develop for
the Class A Common Stock after the Offering or, if one does develop, that it
will be maintained. The initial public offering price of the Class A Common
Stock offered hereby will be determined through negotiations among the Company
and the representatives of the Underwriters, and may not be indicative of future
market prices. See "Underwriting" for the factors which are expected to be
considered in determining the initial public offering price of the Class A
Common Stock offered hereby. There can be no assurance that the market price of
the Class A Common Stock will not be highly volatile or that it will not decline
below the initial public offering price.
Factors such as variations in the Company's quarterly or annual financial
results, comments by securities analysts and others, changes in earnings
estimates by securities analysts, fluctuations in the stock prices of the
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Company's competitors, any loss by the Company of a key member of senior
management, adverse regulatory actions or decisions, adverse evidence regarding
the health or safety effects of ethylene oxide, announcements of extraordinary
events such as litigation or acquisitions, announcements of technical
innovations or changes in pricing policies by the Company or its competitors,
the development or retention of in-house sterilization capabilities by
manufacturers of single use medical devices, changing government regulations or
industry standards, and changes in the market for single use medical devices or
in general economic, political and market conditions in the United States or
elsewhere, may have a significant effect on the market price of the Class A
Common Stock. In addition, stock markets have experienced extreme price and
volume trading volatility in recent years. This volatility has had a substantial
effect on the market prices of securities of many companies for reasons
frequently unrelated or disproportionate to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of the Class A Common Stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."
DEPENDENCE ON KEY PERSONNEL
The Company's progress to date has been dependent to a significant extent
upon the skills of its key senior management personnel and facilities managers,
many of whom would be difficult to replace. There can be no assurance that the
Company can retain such personnel or that it can attract and retain other highly
qualified personnel in the future. The loss of any of the Company's senior
management, facilities managers or other key marketing, technical or
administrative personnel, particularly if lost to competitors, or the failure of
any such key personnel to perform well in his or her current positions, could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Management."
YEAR 2000 ISSUES
Many currently installed computer systems and software products throughout
the world, including certain of those used by the Company, are coded to accept
only two digit entries in the date code field. Any computer programs that have
date-sensitive software will require, prior to January 1, 2000, date code fields
which accept four digit entries to enable them to distinguish 21st century dates
from 20th century dates. As a result, prior to the end of 1999, certain of the
computer systems and/or software used by the Company will need to be upgraded or
replaced to become "Year 2000 compliant."
The Company's principal computer applications cover three broad areas of
its operation: (i) those associated with the process controls at its
sterilization facilities; (ii) those which relate to its general operations
(including invoicing, purchasing, receiving and payroll); and (iii) those which
pertain to its financial and accounting systems (including its general ledger,
receivables, payables and fixed assets). The Company currently utilizes the
Parent Company as a service provider with respect to its financial and
accounting systems throughout North America and also with respect to its general
operations systems in Mexico.
Commencing late in 1997, the Company began an evaluation and conversion
project covering all of its systems to identify and address all necessary code
changes, testing and implementation related to Year 2000 compliance issues. At
the same time, the Company also began an evaluation of Year 2000 compliance
issues for its critical customers and suppliers. The Company expects to conclude
its evaluation by the end of 1998 and to complete necessary systems
modifications or conversions and testing by mid-1999. The Parent Company has
informed the Company that (i) it has undertaken a similar evaluation and
conversion project with respect to its computer systems including those which
are used by the Company and (ii) it expects to bring such systems into Year 2000
compliance by mid-1999. Based upon its evaluation to date, the Company estimates
its aggregate cost to bring into Year 2000 compliance all of the computer
systems utilized by the Company, including those of the Parent Company, will not
be material.
There can be no assurance that the foregoing compliance schedule will be
met by the Company or the Parent Company or that any software or systems of the
Company's customers and suppliers, on which the Company's business is dependent,
will be corrected in a timely manner. Any failure by the Company, the
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Parent Company or such third parties to become Year 2000 compliant on a timely
basis could result in disruption of the Company's normal operations and in the
ability or willingness of its customers to utilize the Company's services. Any
such failure or disruption could have a material adverse effect on the Company's
business, financial condition and results of operations and could result in
litigation against the Company based upon any such disruption or failure. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000 Issues."
ABSENCE OF DIVIDENDS
The Company intends to retain its earnings to finance its growth and for
general corporate purposes and therefore does not anticipate paying any cash
dividends in the foreseeable future on the Common Stock. In addition, the
Company expects to enter into a Revolving Credit Agreement prior to completion
of the Offering which will contain a covenant restricting the amount of
dividends which the Company will be permitted to pay. See "Dividend Policy."
DILUTION
Investors purchasing shares of Class A Common Stock in the Offering will
experience immediate and substantial dilution of $8.47 per share in the net
tangible book value of their shares. See "Dilution."
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USE OF PROCEEDS
The net proceeds to the Company from the Offering are estimated to be
approximately $31.7 million ($36.5 million if the Underwriters' over-allotment
option is exercised in full) assuming an initial public offering price of $14.00
per share and after deduction of the estimated underwriting discount and
offering expenses.
Approximately $12.2 million of the proceeds will be paid to the Parent
Company to discharge in full the principal of and accrued interest on a
promissory note issued by the Company on June 1, 1998 in payment of a dividend
declared by the Company on May 21, 1998. The promissory note is payable on
demand and bears interest at the annual rate of 6%, payable at maturity.
The Company will use a substantial part of the remaining approximately
$19.4 million of the net proceeds ($24.3 million if the Underwriters'
over-allotment option is exercised in full) to repay short-term bank debt. At
June 30, 1998, the Company's aggregate short-term bank debt was approximately
$14.8 million, bore interest at a weighted average rate of 5.9% per annum and
had an average maturity of seven days. Approximately $9.6 million of the
Company's short-term bank debt outstanding at June 30, 1998 was used to finance
the purchase of Sorex Medical, Inc. and the balance was used primarily to fund
other parts of the Company's capital expenditure program. Any remaining proceeds
not used to retire short-term debt will be available for general corporate
purposes, including to fund capital expenditures. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Business -- Business Strategy" and "-- Strategic
Acquisitions and Alliances."
DIVIDEND POLICY
The Company has not declared or paid any dividends on its capital stock
since the beginning of Fiscal 1996 except for a dividend of $12.0 million paid
on June 1, 1998 to the Parent Company. It is the Company's current intention to
retain its earnings to finance its growth and for general corporate purposes.
Therefore the Company does not anticipate paying any cash dividends in the
foreseeable future. The declaration and payment of any future dividends will be
subject to the discretion of the Board of Directors of the Company. In addition,
the Revolving Credit Agreement which the Company expects to enter into prior to
the completion of the Offering will contain a covenant restricting the amount of
dividends which the Company will be permitted to pay. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company at June
30, 1998 on an actual basis and as adjusted to give effect to the sale by the
Company of the shares of Class A Common Stock offered hereby at an assumed
initial public offering price of $14.00 per share and the application of the
estimated net proceeds therefrom. See "Use of Proceeds." This table should be
read in conjunction with the Selected Financial Data, the Consolidated Financial
Statements, and the related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 3,069 $ 7,840
======= =======
Short-term debt:
Bank overdrafts........................................... $ 183 $ --
Short-term credit facilities.............................. 14,635 --
Note due to Parent Company................................ 12,060 --
------- -------
Total short-term debt............................. 26,878 --
------- -------
Long-term debt, including current portion:
Borrowings under notes payable and Industrial Revenue
Bonds.................................................. 19,385 19,385
------- -------
Stockholders' equity:
Preferred Stock, par value, $.01 per share, 10,000,000
shares authorized and no shares issued or
outstanding............................................ -- --
Class A Common Stock, par value $.01 per share, 50,000,000
shares authorized, 2,500,000 issued and outstanding, as
adjusted(1)............................................ -- 25
Class B Common Stock, par value $.01 per share, 40,000,000
shares authorized, 5,225,000 issued and
outstanding(2)......................................... 53 53
Additional paid-in capital................................ 12,004 43,629
Retained earnings......................................... 7,751 7,751
Equity adjustment from foreign currency translation....... (1,957) (1,957)
------- -------
Total stockholders' equity........................ 17,851 49,501
------- -------
Total capitalization.............................. $64,114 $68,886
======= =======
</TABLE>
- ---------------
(1) Excludes 185,000 shares of Class A Common Stock issuable upon exercise of
options to be granted under the Company's 1998 Employee Stock Option Plan
and its 1998 Director Stock Option Plan effective on the date of the
Offering at an exercise price per share equal to the initial public offering
price. See "Management -- 1998 Director Stock Option Plan" and "-- Employee
Stock Option Plans -- 1998 Plan."
(2) Excludes 505,686 shares of Class B Common Stock issuable upon exercise of
outstanding options granted under the Company's 1996 Key Executive Stock
Option Plan. See "Management -- Employee Stock Option Plans -- 1996 Plan."
No further options will be granted under the 1996 Plan.
18
<PAGE> 20
DILUTION
The net tangible book value of the Company at June 30, 1998 was
approximately $11.1 million, or $2.13 per share. "Net tangible book value" per
share represents the amount of total tangible assets of the Company less its
total liabilities, divided by the number of shares of Common Stock outstanding.
After giving effect to the sale by the Company of the 2,500,000 shares of Class
A Common Stock in the Offering at an assumed initial public offering price of
$14.00 per share and the deduction of the estimated underwriting discount and
expenses of the offering the adjusted net tangible book value of the Company at
June 30, 1998 would have been approximately $42.8 million, or $5.53 per share.
This represents an immediate increase in such net tangible book value of $3.40
per share to the Parent Company and an immediate dilution of $8.47 per share to
new investors purchasing shares of Class A Common Stock at the initial public
offering price. Net tangible book value dilution per share represents the
difference between the amount paid by purchasers of the shares of Class A Common
Stock in the Offering and the adjusted net tangible book value per share of
Common Stock immediately after completion of the Offering. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $14.00
Net tangible book value per share at June 30, 1998........ $2.13
Increase in net tangible book value per share attributable
to new investors....................................... 3.40
-----
Adjusted net tangible book value per share after the
Offering.................................................. 5.53
------
Dilution in net tangible book value per share to new
investors(1).............................................. $ 8.47
======
</TABLE>
- ---------------
(1) As of June 30, 1998, there were outstanding options to purchase a total of
505,686 shares of Class B Common Stock at a weighted average price per share
of $7.44 under the Company's 1996 Key Employee Stock Option Plan. The
foregoing table does not give effect to the exercise of any such options
subsequent to June 30, 1998. To the extent any such outstanding options are
exercised, there will be further dilution to new investors. See
"Management -- Employee Stock Option Plans -- 1996 Plan" and Note 17 of the
Notes to Consolidated Financial Statements.
19
<PAGE> 21
SELECTED FINANCIAL DATA
The following table presents selected consolidated or combined financial
information for the Company. The financial information as of September 30, 1997,
1996 and 1995 and for each of the years then ended was derived from the
Company's audited consolidated financial statements. This information should be
read in conjunction with the audited consolidated financial statements,
including the notes thereto, for each of the years in the three year period
ended September 30, 1997 included elsewhere in this Prospectus. Prior to Fiscal
1995, some of the Company's operations were held by other affiliates of the
Parent Company. See "Relationship with Parent Company -- Background." As such,
the financial information as of September 30, 1994 and 1993 and for the two
years then ended was derived from the audited financial statements of the Parent
Company and in the opinion of management of the Company has been prepared on a
basis consistent with the audited financial statements of the Company and
includes all normal and recurring adjustments and eliminations for a fair
presentation of such information. The selected financial information as of March
31, 1998 and 1997 and the six month periods then ended was obtained from the
Company's unaudited financial statements. In the opinion of the Company's
management all normal and recurring adjustments and eliminations necessary for a
fair presentation of the interim results have been included. The results of
operations for the six months ended March 31, 1998 are not necessarily
indicative of the results for any future periods. This selected financial
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
---------------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net revenues................... $ 37,184 $ 40,587 $ 50,117 $ 54,771 $ 60,247 $ 28,345 $ 34,917
Cost of revenues............. 23,914 28,243 34,842 38,319 40,645 19,379 23,845
--------- --------- --------- --------- --------- --------- ---------
Gross profit................... 13,270 12,344 15,275 16,452 19,602 8,966 11,072
Selling and administrative
expenses................... 7,028 9,017 10,088 10,171 12,003 5,580 6,398
--------- --------- --------- --------- --------- --------- ---------
Operating profit before
royalty...................... 6,242 2,063(1) 5,187 6,281 7,599 3,386 4,674
Operating profit(2)............ 4,589 152(1) 2,912 3,800 4,852 2,071 3,131
Interest expense, net.......... 335 822 1,705 1,355 875 464 451
Earnings (loss) before income
taxes........................ 4,231 (1,277) 1,056 2,761 3,699 1,486 2,568
Net earnings (loss)............ $ 2,633 $ (816) $ 1,017 $ 1,784 $ 2,726 $ 736 $ 1,643
Net earnings (loss) per common
share, basic and diluted..... $ 0.50 $ (0.16) $ 0.19 $ 0.34 $ 0.52 $ 0.14 $ 0.31
Weighted average number of
common shares outstanding.... 5,225,000 5,225,000 5,225,000 5,225,000 5,225,000 5,225,000 5,225,000
Weighted average number of
common shares and dilutive
potential common shares
outstanding.................. 5,225,000 5,225,000 5,225,000 5,225,000 5,242,782 5,242,782 5,291,286
Cash dividends paid............ -- -- -- -- -- -- --
PRO FORMA DATA (UNAUDITED):
Net earnings(3)................ $ 4,431 $ 2,495
Diluted net earnings per common
share(3)..................... $ 0.85 $ 0.47
CASH FLOW DATA:
Depreciation and
amortization................. $ 3,664 $ 4,380 $ 5,380 $ 5,884 $ 6,108 $ 3,074 $ 3,620
Capital expenditures........... 6,864 23,189(4) 8,533 3,943 8,885(4) 2,195 6,500
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
---------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)......... $ (1,244) $(15,656) $(10,478) $ (3,500) $ (583) $ (156) $ (1,929)
Total assets...................... 35,210 56,074 62,631 58,294 66,719 58,335 69,141
Long-term debt, less current
portion......................... 1,510 6,987 11,777 15,391 19,208 16,321 18,891
Stockholder's equity.............. 22,784 21,952 25,262 26,385 28,006 26,431 29,115
</TABLE>
- ---------------
(1) Operating profit for 1994 is net of costs associated with the closing of the
Company's sterilization facility in Bound Brook, New Jersey. These costs
include approximately $1,264 for equipment value write downs and dismantling
charges and $147 for severance payments.
(2) For all periods presented the Company has paid to the Parent Company a
royalty equal to 5% of net revenues from sterilization management services
for the license of certain intellectual property owned by the Parent
Company. Prior to completion of the Offering, the Parent Company will assign
this intellectual property to the Company and the royalty payment to the
Parent Company will cease.
(3) Pro forma net earnings and diluted net earnings per common share for 1997
and the six months ended March 31, 1998 include the following adjustments:
(i) the elimination of the 5% royalty payable to the Parent Company; (ii)
the inclusion of an incremental amount payable to the Parent Company under
the Administrative Services Agreement estimated to be $500 per year (see
"Relationship with Parent Company -- Administrative Services Agreement");
(iii) assumed interest savings from the net cash flows resulting from the
adjustments in (i) and (ii) above; and (iv) the related estimated income tax
effects.
(4) Capital expenditures for 1994 and 1997 include $8,138 and $2,585,
respectively, for acquisitions.
21
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results
of operations should be read in conjunction with "Selected Financial Data" and
the Consolidated Financial Statements and notes thereto of the Company included
elsewhere in this Prospectus. Figures may vary due to rounding.
OVERVIEW
Griffith Micro Science's principal line of business, representing
approximately 92% of net revenues in Fiscal 1997, is providing sterilization
management services to manufacturers of single use medical devices and, to a
much lesser extent, pharmaceuticals, cosmetics and food products. Its
sterilization management services include comprehensive sterilization processing
and related laboratory testing, consulting and logistics management services.
Substantially all of the remainder of the Company's net revenues are derived
from the distribution of a variety of sterilization packaging materials,
disinfection products and related items in Europe. Revenues for the Company's
sterilization processing services and laboratory testing, consulting and
logistics management services are recognized upon completion of the respective
service.
In the early 1990's, senior management at the Parent Company decided to
significantly strengthen the operations at Griffith Micro Science and
implemented several initiatives which included: (i) strengthening senior
management at the Company; (ii) increasing sterilization processing capacity;
(iii) completing acquisitions to increase capacity and expand geographically;
and (iv) improving overall profitability. During this period, the Company opened
three new ethylene oxide facilities, acquired five operations and added capacity
to existing facilities. The three new facilities are: Ontario, California
(August 1994); Glens Falls, New York (October 1994); and Charlotte, North
Carolina (October 1995). The five acquisitions include: ethylene oxide
facilities in eastern Belgium (July 1998), Salt Lake City, Utah (April 1998),
and France (two plants -- July 1994), and one gamma facility in Belgium (August
1997 -- 82.8% ownership). The implementation of these initiatives, as well as
the continuing trend of medical device manufacturers to outsource sterilization
processing, have resulted in compound annual growth rates of 14.1% and 54.4% in
net revenues and operating profit before royalty expense to the Parent Company,
respectively, during the three-year period ended September 30, 1997. Moreover,
operating margins before royalty improved from 5.1% in Fiscal 1994 to 12.6% in
Fiscal 1997.
Although the Company acquired a gamma facility in August 1997, most of the
Company's sterilization business continues to utilize the ethylene oxide
process. Both ethylene oxide and gamma sterilization operations are capital
intensive, resulting in significant depreciation expense. Efficiency and
capacity utilization are therefore key determinants of the margins for both
ethylene oxide and gamma operations. The Company believes that operating margins
for most gamma facilities are higher than the margins for comparable ethylene
oxide facilities due to a number of factors. The Company estimates that the
capital cost to build and equip an ethylene oxide facility is higher than the
cost (excluding the cost of Cobalt 60) to build a comparable gamma facility
primarily due to the need for emission control equipment in the ethylene oxide
facility. Further, in a gamma facility the cost of the source for sterilization,
Cobalt 60, is capitalized and then amortized over time at a rate corresponding
to its natural decay rate of 12.3% per year. Ethylene oxide is purchased as it
is used, and recorded as an operating cost. The Company believes that the costs
to operate an ethylene oxide sterilization facility tend to be substantially
higher than the operating costs for a comparable gamma facility, principally
because of the more complex nature of the ethylene oxide sterilization process.
This greater complexity tends to result in higher costs in such areas as
utilities, labor, repairs and maintenance.
The Company's average amount of annual capital expenditures (including
amounts for acquisitions) during the last five fiscal years was approximately
$10.3 million. The Company estimates that its total capital expenditures
(including approximately $9.8 million for the acquisition of Sorex Medical,
Inc.) for Fiscal 1998 will be approximately $30.0 million. In order to meet
anticipated increases in demand for its services, as well as to implement key
components of its growth strategy, the Company expects that its annual capital
expenditures in the next three fiscal years will be substantial and are likely
to exceed historical levels, more closely resembling the estimated Fiscal 1998
level. While the Company believes that net revenues and profits
22
<PAGE> 24
will ultimately be generated from capital expenditures for additional capacity,
there could be significant lead times before this occurs.
The following tables set forth for the periods indicated a breakdown of the
Company's net revenues and operating profits between North America and Europe:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS
SEPTEMBER 30, ENDED MARCH 31,
----------------------- ----------------
1995 1996 1997 1997 1998
----- ----- ----- ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net revenues:
North America............................ $28.4 $31.0 $36.9 $16.7 $21.9
Europe................................... 21.7 23.7 23.3 11.6 13.0
----- ----- ----- ----- -----
Total............................ $50.1 $54.7 $60.2 $28.3 $34.9
===== ===== ===== ===== =====
Operating profit before royalty to Parent Company:
North America............................ $ 2.3 $ 3.1 $ 4.6 $ 1.7 $ 2.9
Europe................................... 3.7 4.0 4.1 2.2 2.4
Corporate overhead....................... (0.8) (0.8) (1.1) (0.5) (0.6)
----- ----- ----- ----- -----
Total............................ $ 5.2 $ 6.3 $ 7.6 $ 3.4 $ 4.7
===== ===== ===== ===== =====
</TABLE>
In Fiscal 1997 and for the six months ended March 31, 1998, the Company's
net revenues generated outside North America were 38.7% and 37.3%, respectively.
The Company's European operating margins are typically higher than those of
North America due to: (i) higher use of plant capacity; (ii) lower depreciation
and rent expense associated with older facilities; and (iii) shorter term
contracts, which generally do not provide for any pricing incentives. See Note 3
of the Notes to Consolidated Financial Statements for further operating segment
data.
Since the vast majority of the Company's foreign operations' revenue and
expense transactions are denominated in local currency and it has typically been
the Company's policy to reinvest its foreign earnings overseas, the Company's
foreign exchange rate exposure has primarily been one of financial statement
translation exposure rather than transaction exposure. The Company utilizes
interest rate cap, collar and swap agreements to reduce the impact of increases
in interest rates on certain of its floating rate debt. Historically, gains and
losses on these contracts have not been material.
Over the past five years, the Company has closed one older ethylene oxide
facility in conjunction with the opening of the Glens Falls, New York facility
and replaced one of the acquired facilities in France. The Company plans to
close an additional small facility in Montreal, Canada and consolidate its
activities with the Company's Toronto, Canada facility during the third quarter
of Fiscal 1999. In June 1998, the Company recorded an operating expense reserve
of approximately $320,000 for estimated costs associated with the closing of the
Montreal facility.
The United States operating results of the Company and the Parent Company
are included in the consolidated federal income tax returns of Griffith
Laboratories, Inc. Income taxes have been allocated to the Company based upon
the estimated taxes which the Company would have paid on a separate company
basis. Subsequent to the Offering, the Company's operating results will no
longer be consolidated with those of the Parent Company for United States
federal income tax purposes.
23
<PAGE> 25
RESULTS OF OPERATIONS
The following tables set forth for the periods indicated the percentage of
net revenues and the percentage change from the prior period of certain items
reflected in the Company's consolidated statements of income:
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
---------------------------------------
FISCAL YEAR ENDED SIX MONTHS
SEPTEMBER 30, ENDED MARCH 31,
--------------------- ---------------
1995 1996 1997 1997 1998
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net revenues................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues............................... 69.5 70.0 67.5 68.4 68.3
----- ----- ----- ----- -----
Gross profit................................... 30.5 30.0 32.5 31.6 31.7
Selling and administrative expenses............ 20.1 18.6 19.9 19.7 18.3
----- ----- ----- ----- -----
Operating profit before royalty................ 10.4 11.4 12.6 11.9 13.4
Royalty expense to Parent Company.............. 4.6 4.5 4.6 4.6 4.4
----- ----- ----- ----- -----
Operating profit............................... 5.8 6.9 8.0 7.3 9.0
Other (income) expense:
Interest expense, net........................ 3.4 2.5 1.5 1.6 1.3
Other (income) expense....................... 0.3 (0.6) 0.4 0.4 0.3
----- ----- ----- ----- -----
Earnings before income taxes................... 2.1 5.0 6.1 5.3 7.4
Income tax expense............................. 0.1 1.7 1.6 2.7 2.7
----- ----- ----- ----- -----
Net earnings................................... 2.0% 3.3% 4.5% 2.6% 4.7%
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES
---------------------------------------
SIX MONTHS
FISCAL YEAR ENDED ENDED
SEPTEMBER 30, MARCH 31,
------------------------- -----------
1996 1997 1998
COMPARED TO COMPARED TO COMPARED TO
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net revenues..................................... 9.3% 10.0% 23.2%
Cost of revenues................................. 10.0 6.1 23.0
Gross profit..................................... 7.7 19.2 23.5
Selling and administrative expenses.............. 0.8 18.0 14.7
Operating profit before royalty.................. 21.1 21.0 38.0
Operating profit................................. 30.5 27.7 51.2
Earnings before income taxes..................... 161.5 34.0 72.8
</TABLE>
SIX MONTHS ENDED MARCH 31, 1998 COMPARED TO SIX MONTHS ENDED MARCH 31, 1997
Net revenues. Net revenues increased $6.6 million, or 23.2%, to $34.9
million in the six months of Fiscal 1998 from $28.3 million in the six months of
Fiscal 1997. This increase was primarily due to additional volume in North
America, reflecting the continued strength of the single use medical device
industry and industry trends towards consolidation and outsourcing. Also,
European net revenues increased due to new revenues generated by Griffith
Mediris, the Belgian gamma company acquired in August 1997.
Cost of revenues. Cost of revenues increased $4.4 million, or 23.0%, to
$23.8 million in the six months of Fiscal 1998 from $19.4 million in the six
months of Fiscal 1997. Gross margin increased to 31.7% for the six months of
Fiscal 1998 from 31.6% for the six months of Fiscal 1997.
Selling and administrative expenses. Selling and administrative expenses
increased $818,000, or 14.7%, to $6.4 million for the six months of Fiscal 1998
from $5.6 million for the six months of Fiscal 1997. This increase is a result
of additional costs related to increasing sales and marketing initiatives in
North America, incremental fees for outside consultants and the addition of the
Griffith Mediris operation. However, such expenses as a percent of net revenues
declined to 18.3% in the six months of Fiscal 1998 from 19.7% in the six months
of Fiscal 1997, due to economies of scale.
24
<PAGE> 26
Operating profit. As a result of the preceding factors, operating profit
increased $1.1 million, or 51.2%, to $3.1 million for the six months of Fiscal
1998 from $2.1 million for the six months of Fiscal 1997. Moreover, operating
profit before royalty increased $1.3 million, or 38.0%, to $4.7 million for the
six months of Fiscal 1998 from $3.4 million for six months of Fiscal 1997.
Fluctuations in foreign exchange rates between fiscal years had an unfavorable
translation impact of approximately $125,000 on the reported amount of operating
profit for the six months of Fiscal 1998 as compared to the six months of Fiscal
1997.
Other (income) expense. Net other expenses decreased to $563,000 for the
six months of Fiscal 1998 from $585,000 for the six months of Fiscal 1997.
Income tax expense. The Company's income tax expense represented a 36.0%
effective tax rate for the six months of Fiscal 1998 as compared to a 50.5%
effective tax rate for the six months of Fiscal 1997. The primary reason for the
reduction in the effective tax rate in Fiscal 1998 was the increase in the
relative weight of earnings before income taxes generated in North America which
generally has lower statutory tax rates than those in effect in Europe, and the
effect of a taxable dividend payable to the Company by a foreign subsidiary.
FISCAL YEARS ENDED SEPTEMBER 30, 1997 AND 1996
Net revenues. Net revenues increased $5.4 million, or 10.0%, to $60.2
million in Fiscal 1997 from $54.8 million in Fiscal 1996. This increase was due
to volume increases in North America with a number of existing customers. The
addition of capacity in the Glens Falls, New York facility during Fiscal 1997
also contributed to the net revenue increase. Net revenues from European
operations increased approximately 5.0% in local currency primarily due to
increased volume; however, unfavorable exchange rate variances resulted in a
slight decrease when translated into United States dollars.
Cost of revenues. Cost of revenues increased $2.3 million, or 6.1%, to
$40.6 million in Fiscal 1997 from $38.3 million in Fiscal 1996. Gross margin
increased to 32.5% in Fiscal 1997 from 30.0% in Fiscal 1996 due to the favorable
impact of higher volume against the Company's fixed cost structure.
Selling and administrative expenses. Selling and administrative expenses
increased $1.8 million, or 18.0%, to $12.0 million in Fiscal 1997 from $10.2
million in Fiscal 1996. This increase primarily resulted from additional North
American sales and marketing initiatives and increased professional fees.
Selling and administrative expenses as a percent of net revenues increased to
19.9% in Fiscal 1997 from 18.6% in Fiscal 1996 as a result.
Operating profit. As a result of the preceding factors, operating profit
increased $1.1 million, or 27.7%, to $4.9 million for Fiscal 1997 from $3.8
million for Fiscal 1996. Moreover, operating profit before royalty increased
$1.3 million, or 21.0%, to $7.6 million in Fiscal 1997 from $6.3 million in
Fiscal 1996. Fluctuations in foreign exchange rates between fiscal years had an
unfavorable translation impact of approximately $300,000 on operating income in
Fiscal 1997 as compared to Fiscal 1996.
Other (income) expense. Net other expenses increased to $1.2 million in
Fiscal 1997 from $1.0 million in Fiscal 1996. Interest expense decreased
approximately $500,000 in Fiscal 1997. However, in Fiscal 1996 other income
included $653,000 of insurance recoveries related to equipment damage claims at
the Company's Charlotte, North Carolina and Herentals, Belgium facilities.
Income tax expense. While the United States federal income tax rate was
34.0% in both fiscal years, the Company's effective tax rate in Fiscal 1997 and
Fiscal 1996 was 26.3% and 35.4%, respectively. The difference between the
Company's effective tax rate and the statutory rate, as well as the difference
between the Company's effective tax rates between years, was primarily due to
variations in foreign tax rate differentials and amounts of state income taxes
net of federal tax benefits.
FISCAL YEARS ENDED SEPTEMBER 30, 1996 AND 1995
Net revenues. Net revenues increased $4.7 million, or 9.3%, to $54.8
million in Fiscal 1996 from $50.1 million in Fiscal 1995. Net revenues in North
America increased $2.6 million largely due to volume increases made possible by
the opening of the Charlotte, North Carolina facility in early Fiscal 1996, and
by
25
<PAGE> 27
additional capacity added to the Glens Falls, New York facility. Net revenues in
Europe increased $2.1 million as a result of strong revenue growth in the United
Kingdom, growth in the Belgian and Dutch core sterilization operations and in
the European distribution business.
Cost of revenues. Cost of revenues increased $3.5 million, or 10.0%, to
$38.3 million in Fiscal 1996 from $34.8 million in Fiscal 1995. Gross margin
decreased to 30.0% in Fiscal 1996 from 30.5% in Fiscal 1995.
Selling and administrative expenses. Selling and administrative expenses
remained essentially level between Fiscal 1996 at $10.2 million and Fiscal 1995
at $10.1 million. Selling and administrative expenses as a percent of net
revenues decreased to 18.6% in Fiscal 1996 from 20.1% in Fiscal 1995, due to
economies of scale.
Operating profit. As a result of the preceding factors, operating profit
increased $888,000, or 30.5%, to $3.8 million for Fiscal 1996 from $2.9 million
for Fiscal 1995. Moreover, operating profits before royalty increased $1.1
million, or 21.1%, to $6.3 million for Fiscal 1996 from $5.2 million for Fiscal
1995. Fluctuations in foreign exchange rates between years had an unfavorable
impact of approximately $400,000 in Fiscal 1996 as compared to Fiscal 1995.
Other (income) expense. Net other expenses decreased to $1.0 million for
Fiscal 1996 from $1.9 million for Fiscal 1995. As previously indicated, in
Fiscal 1996 other income included $653,000 of insurance recoveries related to
equipment damage claims at the Company's Charlotte, North Carolina and
Herentals, Belgium facilities.
Income tax expense. While the United States federal income tax rate was
34.0% in both fiscal years, the Company's effective tax rate in Fiscal 1996 and
Fiscal 1995 was 35.4% and 3.7%, respectively. The difference between the
Company's effective tax rate and the statutory rate, as well as the difference
between the Company's effective tax rates between years, was primarily due to
variations in foreign tax rate differentials and amounts of state income taxes
net of federal tax benefits.
26
<PAGE> 28
QUARTERLY RESULTS
The following table sets forth consolidated statement of operations data
for the ten quarters in the period ended March 31, 1998. This information has
been derived from unaudited consolidated financial statements that, in the
Company's opinion, reflect all normal recurring adjustments and eliminations
that the Company considers necessary for a fair presentation of the results of
operations in the quarterly periods. The data set forth should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The operating results for any quarter
are not necessarily indicative of results for future quarters.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
FISCAL YEAR 1996 FISCAL YEAR 1997
------------------------------------------- -------------------------------------------
DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1995 1996 1996 1996 1996 1997 1997 1997
-------- --------- -------- --------- -------- --------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues................... $12,963 $13,530 $14,244 $14,034 $13,779 $14,566 $15,766 $16,136
Gross profit................... $ 3,635 $ 3,744 $ 4,655 $ 4,418 $ 4,258 $ 4,708 $ 5,232 $ 5,404
% of net revenues............ 28.0% 27.7% 32.7% 31.5% 30.9% 32.3% 33.2% 33.5%
Operating profit before
royalty...................... $ 890 $ 1,278 $ 2,194 $ 1,919 $ 1,469 $ 1,917 $ 2,307 $ 1,906
% of net revenues............ 6.9% 9.4% 15.4% 13.7% 10.7% 13.2% 14.6% 11.8%
Operating profit............... $ 304 $ 677 $ 1,543 $ 1,276 $ 832 $ 1,238 1,596 $ 1,186
% of net revenues............ 2.4% 5.0% 10.8% 9.1% 6.0% 8.5% 10.1% 7.4%
Net earnings (loss)............ $ (127) $ 285 $ 1,055 $ 571 $ 363 $ 534 $ 862 $ 967
% of net revenues............ (1.0%) 2.1% 7.4% 4.1% 2.6% 3.8% 5.2% 6.0%
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------
FISCAL YEAR 1998
--------------------
DEC. 31, MARCH 31,
1997 1998
-------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues................... $17,607 $17,310
Gross profit................... $ 5,917 $ 5,155
% of net revenues............ 33.6% 29.8%
Operating profit before
royalty...................... $ 2,637 $ 2,037
% of net revenues............ 15.0% 11.8%
Operating profit............... $ 1,862 $ 1,269
% of net revenues............ 10.6% 7.3%
Net earnings................... $ 953 $ 690
% of net revenues............ 5.4% 4.0%
</TABLE>
Quarterly fluctuations. The Company has experienced, and expects to
continue to experience, significant fluctuations in net revenues and operating
results from quarter to quarter. In general, fluctuations in the Company's
quarterly net revenues and operating results can be caused by a variety of items
including, among other things, fluctuations in the timing and size of customer
orders, volatility in the market for single use medical devices, and the timing
of construction and commencement of new capacity. Historically, due to the
seasonality of the manufacturing cycles for the single use medical device
industry, the Company's first and second fiscal quarters' net revenues and
operating results tend to be lower than such amounts in the third and fourth
quarters. The Company's third quarter net revenues and operating results have
typically benefited from increased sterilization processing resulting from
European manufacturers' desire to sterilize products prior to the traditional
European holiday month of August.
Gross and operating profits for the quarters ended December 31, 1995 and
March 31, 1996 were negatively impacted by start-up costs associated with the
opening of the Charlotte, North Carolina ethylene oxide sterilization facility.
Operating profit decreased between the quarters ended June 30, 1997 and
September 30, 1997 primarily due to the establishment of a reserve related to
the Griffith Mediris operation during the quarter ended September 30, 1997 which
was subsequently reversed in the quarter ended March 31, 1998. The decrease in
gross margins between the quarters ended December 31, 1997 and March 31, 1998
27
<PAGE> 29
primarily resulted from increased costs incurred in the quarter ended March 31,
1998 related to adding new capacity that became operational primarily in the
following quarter.
Because it has experienced significant fluctuations in net revenues and
operating results, the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful, and that such comparisons
cannot be relied upon as indicators of future performance. See "Risk Factors --
Unpredictability of Future Operating Results; Likely Fluctuations in Quarterly
Operating Results."
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date with cash flow from
operations, Industrial Revenue Bonds ("IRB's"), Parent Company financing and
bank financing. In addition to providing direct financing to the Company in the
form of capital contributions and loans, historically the Parent Company has
also guaranteed the Company's obligations for some of its bank debt and for
letters of credit required pursuant to the IRB's. Bank financing utilized by the
Company has historically been in the form of bank short-term credit facilities
and term loans generally bearing interest at floating market interest rates.
Following completion of the Offering, no further financing can be expected
to be available to the Company directly or indirectly from the Parent Company.
Therefore, in the future the Company expects to finance operations with cash
flows from operations, existing financial resources including existing
short-term credit facilities with various banks in the United States and Europe
as well as a new $50.0 million unsecured Revolving Credit Agreement which the
Company expects to finalize with a syndicate of banks by early September 1998
and, if necessary and to the extent allowed under the provisions of the
Revolving Credit Agreement, obtaining additional debt financing. The Company may
also raise cash to finance operations by the issuance of additional equity
securities in the future subsequent to the Offering.
In early July, 1998, the Company and The First National Bank of Chicago
(which will form a syndicate with other banks) signed a commitment letter for
the $50.0 million unsecured Revolving Credit Agreement referred to above. Per
the commitment letter, the Revolving Credit Agreement is expected to bear
interest at a floating rate based upon a leverage formula, expire in three years
and contain a number of restrictive covenants including, among other
restrictions, required minimum net worth and interest coverage ratios, maximum
levels of debt and annual capital expenditures, and limitations regarding
acquisitions and the payment of dividends. Concurrent with the finalization of
the letter of credit provisions (which reduce amounts available under the
Revolving Credit Agreement by the amount of letters of credit issued) of the new
Revolving Credit Agreement, it is anticipated that the original provisions of
the IRB agreements requiring Parent Company guaranty of IRB-related letters of
credit will be canceled. Similarly, it is expected that a Parent Company
guaranty of the Company's debt payable to a German bank will be removed.
As of March 31, 1998, the Company had approximately $3.0 million in cash
and cash equivalents and a $1.9 million working capital deficit. The working
capital deficit is primarily a result of amounts borrowed from banks and the
Parent Company under short-term credit facilities to finance various facility
expansion projects that are currently in progress. Historically, the Company's
cash in the United States has been pooled with the Parent Company's cash
resources, with separate records maintained. The Company has typically had an
overdraft due to the Parent Company.
At March 31, 1998, the Company's short-term debt consisted of approximately
$2.3 million of bank short-term credit facilities with a variable interest rate
(weighted average interest rate of 5.8% at March 31, 1998) and $1.3 million
payable to the Parent Company. At March 31, 1998, the Company had approximately
$17.1 million of unused lines of credit available. The Company's existing
short-term credit facilities have various maturities extending to April 2003,
and contain various restrictive covenants. The Company plans to use a portion of
the proceeds of the Offering to repay short-term debt. See "Use of Proceeds."
Long-term debt at March 31, 1998 consisted of $9.5 million of IRB's in the
United States and approximately $10.5 million (of which $1.1 million represents
the current portion) of notes payable to various European banks. This debt
contains certain restrictive covenants, including restrictions as to payment of
dividends and requirements that specified minimum levels of working capital and
tangible net worth be
28
<PAGE> 30
maintained. The IRB's are supported by bank letters of credit. Further, the
Company has pledged its shares in Griffith Mediris, its 82.8% owned Belgian
gamma entity, against the approximate $2.6 million acquisition loan facility
with a European bank expiring February 2003. The IRB's and the majority of the
European bank notes had floating market interest rates approximating 4.6% and
4.2%, respectively, at March 31, 1998. The weighted average interest rate on the
Company's total debt was approximately 4.7% on March 31, 1998.
Net cash provided by operating activities was $6.7 million, $8.3 million,
$10.7 million and $4.3 million in Fiscal 1995, 1996 and 1997, and the six months
ended March 31, 1998, respectively. The increases between fiscal years are
primarily the result of increased operating profits and increased depreciation
and amortization reflecting increased capacity. Deferred income tax expense also
significantly contributed to net cash provided by operating activities in Fiscal
1995, while working capital changes significantly impacted net cash provided by
operating activities in Fiscal 1997 and the six months ended March 31, 1998.
Net cash used in investing activities was $9.8 million, $3.8 million, $9.2
million and $5.6 million in Fiscal 1995, 1996 and 1997, and the six months ended
March 31, 1998, respectively. The investing activities were primarily
attributable to the purchase of property, plant and equipment. Fiscal 1997 net
cash used in investing activities also reflected the Company's acquisition of
its majority interest in the Belgian gamma operation, and a $923,000 advance
made by the Company to the Parent Company which was repaid during the six months
of Fiscal 1998. Net cash used in investing activities in Fiscal 1995 also
included a $910,000 increase in restricted cash and investments representing
unused proceeds of IRB's held in trust until expended. In Fiscal 1996 and 1997,
net cash of $457,000 and $413,000, respectively, was provided by reductions in
such restricted cash and investments.
The Company made capital expenditures of $8.5 million, $3.9 million, $8.9
million and $6.5 million in Fiscal 1995, 1996, 1997 and the six months ended
March 31, 1998, respectively. The Company currently expects to make additional
capital expenditures of approximately $13.2 million (excluding approximately
$9.8 million paid to acquire Sorex Medical, Inc. in April 1998) during the last
six months of Fiscal 1998. However, in order to expand its sterilization
capacity sufficiently to meet anticipated increases in the demand for its
services, as well as to carry out other components of its business strategy, the
Company expects that its annual capital expenditures in the next three fiscal
years will be substantial and are likely to exceed historical levels, more
closely resembling the level of capital expenditures in Fiscal 1998. The
Company, through its joint venture with MDS Nordion Inc., has a commitment of
approximately $3.6 million over the next 18 months for work related to its
planned Mexican gamma facility. While management believes that revenues will
ultimately be generated from additional capacity created by such capital
expenditures, the timing of the realization of such additional revenues cannot
be known with certainty. Typically, there is a lag between the start-up of a new
facility or expansion of an existing facility and the point when such facility
generates adequate amounts of annual revenues to achieve profitability.
Net cash provided by (used in) financing activities was $4.1 million,
($4.9) million, $424,000 and $1.8 million in Fiscal 1995, 1996 and 1997 and the
six months ended March 31, 1998, respectively. Net cash provided by financing
activities in Fiscal 1995 was primarily the net result of $5.3 million of IRB
proceeds relating to the Glens Falls, New York facility, $1.0 million of
proceeds from other long-term debt, $1.2 million from short-term credit
facilities and a $1.1 million capital contribution from the Parent Company
offset partially by $3.0 million of net repayments of debt payable to the Parent
Company and $1.2 million of other debt payments. In Fiscal 1996, net cash used
in financing activities was primarily attributable to repayments of $7.1 million
of short-term credit facilities, repayment of $2.7 million of amounts owed to
the Parent Company, and $1.4 million of principal payments on some of the
Company's long-term debt and notes payable, partially offset by approximately
$6.4 million of proceeds from additional long-term debt and notes payable,
including $4.2 million of proceeds from IRB's relating to the Company's
Charlotte, North Carolina facility. Net cash provided by financing activities in
Fiscal 1997 was primarily attributable to $6.7 million of long-term debt
proceeds in several European countries pursuant to bank agreements finalized
with a European bank in January 1997 and pursuant to an approximate $800,000
floating rate note related to the Company's acquisition of its majority interest
in the Belgian gamma operation, largely offset by repayments of bank short-term
credit facilities and notes payable to the Parent Company and banks of $2.4
million and $4.0 million, respectively. Net cash provided by financing
activities during the six months ended March 31, 1998 consisted primarily of
29
<PAGE> 31
$2.6 million of short-term credit provided to the Company by the Parent Company
and banks, offset by net repayment of $826,000 of long-term bank debt.
In April 1998, the Company obtained approximately $9.6 million to finance
substantially all of the cost of acquiring Sorex Medical, Inc. under a
short-term variable rate (approximately 6.3% per annum rate to date) bank credit
line guaranteed by the Parent Company. In July 1998, the Company obtained
approximately $1.6 million under its unsecured long-term facility with a
European bank to purchase ethylene oxide sterilization assets in eastern
Belgium. Since October 1997, the Company had been operating the eastern Belgian
sterilization facility pursuant to arrangements with the seller. Net revenues
and operating income of approximately $100,000 and $25,000 respectively, for
such Belgian operation were included in the Company's consolidated results for
the six months ended March 31, 1998.
On June 1, 1998 the Company issued a promissory note payable on demand to
the Parent Company for $12.0 million in payment of a dividend declared by the
Company on May 21, 1998. Such promissory note bears interest at an annual rate
of 6.0%, payable at maturity. The Company will use approximately $12.2 million
of its net proceeds from the Offering to discharge the principal of this
promissory note and related accrued interest and will use most of the remaining
net proceeds for repayment of short-term debt payable to banks incurred for
capital expenditures and general corporate purposes. See "Use of Proceeds."
The Company believes that the net proceeds of the Offering, together with
existing cash, cash expected to be generated from operations, its existing
credit facilities and the $50.0 million unsecured Revolving Credit Agreement
expected to be finalized by early September, 1998 will be sufficient to fund the
Company's anticipated capital expenditures and operations through at least the
end of Fiscal 2001. The Company also believes that it may be able to finance
certain of its expansion projects via the issuance of additional IRB's (until
the maximum tax-free IRB limit of $40.0 million is reached) although eligibility
to receive IRB proceeds is subject to specific rules and regulations, and the
availability of IRB funds from governmental Industrial Development Agencies in
the specific geographic regions of the Company's expansion therefore cannot be
assured. Overall, there can be no assurance that adequate sources of capital
will be available to the Company in the future or, if available, will be on
terms acceptable to the Company. See "Risk Factors -- Capital Requirements."
IMPACT OF INFLATION
The Company believes that inflation has not had a material effect on its
overall financial condition or results of operations during the six months ended
March 31, 1998 and the fiscal years ended September 30, 1997, 1996 and 1995.
YEAR 2000 ISSUES
The Company's principal computer applications cover three broad areas of
its operation: (i) those associated with the process controls at its
sterilization facilities; (ii) those which relate to its general operations
(including invoicing, purchasing, receiving and payroll); and (iii) those which
pertain to its financial and accounting systems (including its general ledger,
receivables, payables and fixed assets). The Company currently utilizes the
Parent Company as a service provider with respect to its financial and
accounting systems throughout North America and also with respect to its general
operations systems in Mexico.
Commencing late in 1997, the Company began an evaluation and conversion
project covering all of its systems to identify and address all necessary code
changes, testing and implementation related to Year 2000 compliance issues. At
the same time, the Company also began an evaluation of Year 2000 compliance
issues for its critical customers and suppliers. The Company expects to conclude
its evaluation by the end of 1998 and to complete necessary systems
modifications or conversions and testing by mid-1999. The Parent Company has
informed the Company that (i) it has undertaken a similar evaluation and
conversion project with respect to its computer systems including those which
are used by the Company and (ii) it expects to bring such systems into Year 2000
compliance by mid-1999. Based upon its evaluation to date, the Company estimates
its aggregate cost to bring into Year 2000 compliance all of the computer
systems utilized by the
30
<PAGE> 32
Company, including those of the Parent Company, will not be material. See "Risk
Factors -- Year 2000 Issues."
RECENTLY ISSUED ACCOUNTING STANDARDS
SFAS No. 130, Reporting Comprehensive Income, establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances in a financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income is defined to include all
changes in equity except those resulting from investments by owners and
distributions to owners. For the Company, comprehensive income will basically
consist of reported income plus the change in the balance of the cumulative
translation account. SFAS No. 130 is effective for the Company for Fiscal 1999
and requires comparative information for earlier years to be restated.
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise, establishes standards for the way that public enterprises
report information about operating segments in annual and interim financial
statements. It also establishes new standards for disclosures regarding products
and services, geographic areas and major customers. This statement is effective
for the Company for Fiscal 1999. However, the segment disclosures in the
footnotes to the Company's financial statements included in this registration
statement have already presented information regarding the Company's North
American and European operations in accordance with the provisions of SFAS No.
131.
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities
establishes the accounting and reporting standards for derivative instruments
and for hedging activities. This statement will be effective for the Company's
Fiscal Year 2000. Given the Company's current and anticipated use for derivative
instruments, SFAS No. 133 is not expected to have a material effect on the
Company's results of operations or financial position.
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<PAGE> 33
BUSINESS
INTRODUCTION
Griffith Micro Science is the largest multinational provider of
sterilization management services and the only one with extensive operations in
both North America and Europe. The Company offers comprehensive sterilization
processing and related laboratory testing, consulting and logistics management
services to manufacturers of single use medical devices and, to a much lesser
extent, pharmaceuticals, cosmetics and food products. The Company pioneered the
development and use of ethylene oxide as a sterilant beginning in the 1930s.
Griffith Micro Science regards itself as the premier full service provider of
ethylene oxide sterilization management services and has recently begun to offer
gamma sterilization services. The Company currently operates a network of eleven
ethylene oxide sterilization facilities in North America (eight in the United
States, two in Canada and one in Mexico) and a network of seven ethylene oxide
sterilization facilities and one gamma sterilization facility in Europe. The
Company has also formed a joint venture to design, construct and operate a gamma
sterilization facility in Mexico. Over the past five years, the Company has
opened three new sterilization facilities, acquired five others, replaced one
and closed one.
THE STERILIZATION PROCESSING INDUSTRY
Overview
A substantial portion of single use prepackaged medical devices and kits
are required by government regulation in the United States and many other
countries to be "sterile" or to have minimal levels of microbial contamination
when sold. Similar regulations apply to certain pharmaceutical products and
packaging materials. In addition, other products, such as cosmetics, spices and
herbs, frozen and dried foods, and animal feed are sterilized to improve their
safety, reduce microbial contamination and extend shelf-life. Manufacturers
sterilize their products after assembly and packaging using either or both of
their own in-house sterilization facilities ("captive processors") or the
services of contract sterilization processing companies such as Griffith Micro
Science ("contract processors"). The two most widely used methods of
sterilization utilize either ethylene oxide in gaseous form ("ethylene oxide
sterilization") or gamma radiation from a radioactive Cobalt 60 isotope ("gamma
sterilization"). Other methods include E-beam sterilization ("E-beam"),
accomplished using a high-energy electron beam, and steam sterilization, which
to date have only been employed to a limited extent for contract sterilization.
Until the 1980s, most major manufacturers of single use medical devices
performed the bulk of their sterilization in-house. As a result of a number of
factors, in the mid-1980s manufacturers began to outsource an increasing amount
of their sterilization requirements. The increased volume of outsourced
sterilization to contract processors reflects a trend among manufacturers to
focus on their core competencies. Specific factors contributing to this trend
include the logistical flexibility afforded by contract processors, the
significant capital required to construct and maintain an in-house sterilization
facility and the need to comply with dynamic environmental and health and safety
regulations. Today, the sterilization of single use medical devices represents
by far the largest component of the overall contract sterilization business. The
Company estimates that in 1997 a substantial majority of the aggregate revenues
of all contract processors was derived from the sterilization of single use
medical devices and related services.
Although the Company is not aware of any published industry statistics and
precise numbers are difficult to determine, the Company estimates that in 1997
the market for sterilization services in North America and those European
countries in which the Company has sterilization facilities was approximately
$500 million and that it consisted of the following components:
- contract processors generated aggregate net revenues of approximately
$300 million, including approximately $200 million in North America and
approximately $100 million in Europe; of this total, approximately 50% to
55% was attributable to ethylene oxide sterilization, 40% to 45% to gamma
sterilization and 5% to 7% to E-beam and other forms of sterilization;
and
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<PAGE> 34
- captive processors sterilized a volume of products which, had they been
sterilized by contract processors, would have generated aggregate net
revenues of approximately $200 million, including approximately $140
million in North America and approximately $60 million in Europe; the
Company estimates the breakdown of this total volume among sterilization
technologies is similar to that for contract processors.
In determining whether to use a contract processor for its sterilization
needs, a manufacturer considers a number of factors, including the cost of
transporting its products to the contract processor's sterilization facility,
the turn-around time required for processing, the price charged by the contract
processor and the expense associated with in-house processing. Sterilization
facilities operated by contract processors have traditionally tended to be
located within a 300-mile radius of most of the manufacturing plants served by
such facilities. In many cases, contract processors have chosen to strategically
locate a particular sterilization facility in close proximity to a large
customer's manufacturing facility. In those cases, the financial viability of
the sterilization facility is often tied to the volume of sterilization business
received from that customer.
Beginning in the 1960's, the medical products industry in the United States
began to develop and market an array of single use medical devices for a variety
of often highly specialized surgical and other applications. Some of these
single use devices replaced reusable medical devices, while many others were
employed in new procedures or applications for which reusables would have been
impractical or impossible. Today, throughout North America and Europe, a broad
range of single use medical devices are used by hospitals, clinics and other
healthcare organizations in performing surgical and other medical procedures and
in the treatment and care of patients. Such devices include catheters,
intravenous feeding sets, dental and orthopedic implants, surgical instruments,
blood collection devices, gowns and caps, specimen bottles and syringes. A
recent and rapidly-developing trend is the assembly and sale by medical device
manufacturers of specialized "kits" containing all of the individual single use
medical devices necessary to perform a particular surgical or other medical
procedure or sub-procedure. Some of these kits are customized for individual
hospitals and even individual physicians.
A variety of non-medical products are also commercially processed,
primarily due to concerns over health risks and potential product liability as
well as economic considerations such as losses due to infestation and spoilage.
The principal types of non-medical products being commercially processed include
certain food ingredients and products, food packaging materials, cosmetics and
pharmaceuticals. The FDA has approved the use of gamma processing for spices,
fruits, vegetables, chicken and most recently red meat to kill bacteria and
other disease-causing microorganisms. However, the Company believes commercial
development of gamma radiation for food products such as poultry and red meat is
subject to several significant uncertainties, including the need for consumer
education and acceptance of foods processed using gamma and the willingness of
consumers to pay the higher prices likely to be charged for such products. In
addition, most existing gamma facilities will require significant modifications
or new gamma facilities will have to be built in order to meet the particular
design requirements for the processing of such food products, including the
installation of refrigeration facilities. The Company believes the use of
ethylene oxide processing for such food products as red meat, poultry and fish
is unlikely to develop.
The principal sterilization processes
Validation. Prior to the commencement of sterilization of any medical
product, whether accomplished by ethylene oxide, gamma or any other
sterilization technology, the process parameters for each step in the
sterilization cycle require "validation" in each chamber or cell in which the
product will be sterilized. The manufacturer establishes the cycle parameters or
dosage specifications for its products, often in consultation with the contract
processor. The cycle parameters or dosage specifications for any given product
vary, often significantly, among different products. The validation process is
intended to assure that the proposed sterilization cycle will consistently
achieve the desired sterility assurance level and that the product and its
packaging will be able to withstand the sterilization process. Validation
involves test runs of the proposed cycle or dosage in the contract processor's
chamber or cell, the results of which are documented in detail.
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<PAGE> 35
Ethylene oxide sterilization. Ethylene oxide sterilization is accomplished
by exposing products to ethylene oxide in gaseous form, which destroys
microorganisms by disrupting their cells' metabolism and ability to reproduce.
Ethylene oxide sterilization in a contract processor's facility typically
involves five principal steps: (i) product pre-processing; (ii) preconditioning;
(iii) exposure to ethylene oxide; (iv) aeration; and (v) storage and shipment.
Product pre-processing involves completing the appropriate documentation and
preparing the product for sterilization, which includes placement of biological
indicators ("BIs") throughout the palletized product load. BIs are test strips,
test packs or product samples rich in microorganisms which, upon exposure to a
critical amount of ethylene oxide, will be destroyed, confirming sterility of
the processed batch. The preconditioning step involves exposure of the product
to elevated temperature and humidity to ensure that any microorganisms on the
product are active and therefore susceptible to the ethylene oxide. Exposure to
ethylene oxide occurs in an airtight chamber under specific parameters of time,
temperature, humidity and pressure. Once exposure to ethylene oxide is complete,
the product is removed from the chamber, the BIs are sent to a laboratory for
analysis and the product is transferred to an aeration area where residual
ethylene oxide is removed. Once aeration is complete and the test results of the
BIs are received confirming sterility, the product is released for use.
Gamma sterilization. Gamma sterilization is accomplished by exposing
products to Cobalt 60, an isotope that emits gamma radiation and disrupts the
DNA structure of microorganisms, thereby eliminating their ability to reproduce.
Similar to ethylene oxide sterilization, gamma sterilization is a multi-step
process that involves: (i) product staging and pre-processing; (ii) exposure to
Cobalt 60; and (iii) storage and shipment. Product staging involves completing
the appropriate documentation and preparing the product for sterilization.
Typically this includes removing the product from its pallets, placing it in
tote boxes, inserting a dose monitor in the tote to verify appropriate radiation
exposure and staging the product with other products requiring similar exposure
parameters. Once a staged batch of products has been prepared, the totes are
loaded on a conveyor and passed through a radiation cell. After exposure to the
radiation, the dose monitors are verified to confirm achievement of the desired
sterility assurance level and the product is re-palletized and then released for
use.
Comparison of ethylene oxide sterilization and gamma sterilization
Versatility. Ethylene oxide sterilization is highly versatile. Ethylene
oxide is compatible with, and will not change the molecular structure of,
virtually all types of materials which are used in manufactured products and
permeable packaging. Gamma sterilization, on the other hand, causes certain
plastics, rubber and other materials to discolor, become brittle, deform or
otherwise degrade. As a result, gamma sterilization may not be used to sterilize
such gamma sensitive materials, which are contained in many single use medical
devices or their packaging. In addition, gamma cannot be used to sterilize
multiple product surgical kits if they contain any item that is not gamma
compatible or any medications that have not been approved by the FDA for gamma
sterilization.
Turn-around time. Turn-around time (measured from intake of the product to
its release following confirmation of sterility) for ethylene oxide
sterilization in the Company's facilities is typically five to ten days, with
the average being approximately seven to eight days, while the industry standard
for turn-around time for gamma sterilization is approximately five days. The
Company believes this difference in average turn-around time between the two
technologies exists principally because: (i) the gamma process involves fewer
steps than the ethylene oxide process; (ii) the gamma process does not require
the use and testing of BIs to confirm sterility; and (iii) surgical and medical
kits, most of which can only be sterilized using ethylene oxide, tend to have
longer turn-around times. The Company believes there are additional
opportunities to optimize the ethylene oxide sterilization process and thereby
further reduce the average turn-around time through its facilities. See
"Business -- Sterilization Management Services -- Continuous improvement
initiatives."
Service pricing. The Company believes there is little difference in
customer pricing of ethylene oxide and gamma sterilization. In the case of both
technologies, the Company believes that contract processors typically charge
prices which range from 1% to 5% of the unit manufacturing cost of the products
being processed.
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<PAGE> 36
Current trends in use of the two technologies. Ethylene oxide sterilization
was the dominant technology for sterilization until the 1980s. Although
commercial gamma sterilization began in the early 1960s, its widespread use did
not occur until the 1980s when radiation compatible plastics became readily
available for use in products and packaging materials. This was also the period
when manufacturers of single use medical devices began to significantly increase
the outsourcing of their sterilization requirements to contract processors. As a
result, while the business of both ethylene oxide and gamma contract processors
has grown rapidly during the past ten years, the use of gamma sterilization
increased at a faster rate as many medical device manufacturers which could
easily do so converted the sterilization method used for certain of their
products from ethylene oxide to gamma and increasingly designed new products and
packaging to be gamma compatible.
The Company believes that most of the sterilization processing business
which can be feasibly converted from ethylene oxide to gamma (taking into
account technical, operational, financial and FDA regulatory considerations) has
already been converted by medical device manufacturers. The Company also
believes that innovations in gamma compatible resins have slowed. Based upon
these considerations, the Company believes that over the next several years any
further shift by manufacturers of medical devices from ethylene oxide to gamma
sterilization will occur at a very moderate rate. The Company is also aware of
recent instances in which manufacturers of certain medical devices have shifted
their sterilization from gamma to ethylene oxide due to concerns about possible
degradation caused by exposure to gamma.
The Company believes the overall trend among single use medical device
manufacturers is distinctly toward a technology neutral position with respect to
those products for which manufacturers have a choice of sterilization
technologies, with much greater emphasis being placed by customers on the
quality and extent of the service being offered by contract processors.
BUSINESS STRATEGY
The Company's primary strategic objective is to expand and strengthen its
position as the largest multinational provider of a full range of sterilization
management services. The Company believes the extensive experience, know-how,
expertise and data it has gathered over the more than 60 years since it
pioneered the use of ethylene oxide sterilization has created a significant and
unique core competency, which it refers to as its "scientific platform." The
Company's business strategy is to continue to leverage its scientific platform,
enhancing its position as a full service provider of comprehensive sterilization
management services and allowing it to further pursue "Value Managed
Relationships" with its customers. The key components of this strategy include
the following:
Expand its core medical device sterilization business. The Company will
seek to increase revenues in its core medical device sterilization business
through a combination of methods, including the following:
- increase its ethylene oxide sterilization capacity in North America and
Europe through the further expansion of existing facilities, the start-up
of new facilities and the completion of strategic acquisitions;
- continue to promote outsourcing by manufacturers which currently
sterilize their products in-house;
- continue to pursue business from manufacturers currently served by other
contract processors;
- pursue expansion into additional foreign countries consistent with the
needs of its multinational customer base;
- increase its gamma sterilization capacity on a selective basis; and
- continue to build long-term "Value Managed Relationships" with new and
existing customers by offering coordinated "one-stop shopping" for all of
their sterilization management requirements.
Optimize the sterilization process through continuous improvement programs
with customers. The Company believes it is uniquely positioned to assist its
customers in increasing the efficiency of the ethylene oxide sterilization
process for their products, thereby reducing turn-around time and cost. By
optimizing the
35
<PAGE> 37
ethylene oxide sterilization process, the Company seeks to establish a
technology neutral position with respect to those products for which
manufacturers have a choice of sterilization technologies. The Company is taking
the following actions, among others:
- develop alternative sterility assurance measurement practices, such as
the use of innovative technologies to measure achievement of key cycle
parameters;
- continue to collaborate with its customers in designing the optimum
ethylene oxide cycles for the sterilization of their products; and
- improve validation efficiency and flexibility through the use of
statistical methods to achieve cycle revalidation and multiple chamber
validation.
Broaden its laboratory and related services offering. The Company believes
the market for sterilization related and other laboratory services offers an
opportunity to broaden its testing and consulting services through a combination
of methods, including the following:
- capitalize upon the trend among the Company's current sterilization
processing customers toward outsourcing their laboratory testing
requirements;
- establish additional satellite laboratories; and
- expand its laboratory service offering through the employment of
additional technical personnel or through selective acquisitions.
Expand processing of non-medical products. The Company currently processes
a wide range of non-medical products at its ethylene oxide facilities and at its
gamma facility in Belgium where approximately 60% of the total volume consists
of food products. The gamma facility in Mexico, which is being built by the
Company's joint venture with MDS Nordion, has been designed to process both food
and non-food products. The Company intends to continue its current overall
sterilization focus on single use medical devices, while maintaining the
operational and financial flexibility necessary to expand its non-medical
products business if and to the extent warranted by changing market conditions
or opportunities.
STERILIZATION MANAGEMENT SERVICES
Ethylene oxide sterilization services. The Company's greatest expertise and
experience is in ethylene oxide sterilization processing and related
sterilization management services. This expertise represents the culmination of
over 40 years of commercial ethylene oxide processing experience and is based
upon and derived from the basic ethylene oxide sterilization research conducted
in the 1930s and 1940s by the Parent Company.
The Company currently operates a network of eleven ethylene oxide
processing facilities in North America (eight in the United States, two in
Canada and one in Mexico) and a network of seven ethylene oxide processing
facilities in Europe (two each in Belgium and France and one each in Germany,
the Netherlands and the United Kingdom). Since the beginning of 1994, in
addition to expanding sterilization processing capacity at a number of its
existing facilities, the Company opened newly constructed ethylene oxide
sterilization facilities in Ontario, California in August 1994, Glens Falls, New
York in October 1994 and Charlotte, North Carolina in October 1995. During the
same period, the Company acquired ethylene oxide sterilization facilities near
Paris and Lyon, France in July 1994, in Salt Lake City, Utah in April 1998 and
near Verviers, Belgium in July 1998. See "Business -- Strategic Acquisitions and
Alliances" and "-- Facilities."
Each of the Company's 18 ethylene oxide processing facilities is equipped
with multiple sterilization chambers which typically vary in size. This provides
flexibility and operational efficiency, so that the Company can more effectively
and quickly serve the sterilization needs of its small and medium-sized
customers, as well as those of its larger customers. The ethylene oxide
sterilization process, as practiced in substantially all of the chambers at the
Company's facilities, is precisely managed by computer systems which constantly
monitor and control the process and record and store detailed data covering key
parameters of the sterilization cycle.
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<PAGE> 38
Each product to be sterilized has specific cycle instructions which incorporate
the manufacturer's sterilization cycle parameters for that product. All of the
Company's sterilization facilities are designed to be operated 24 hours per day,
7 days a week. The Company typically operates each facility on three eight-hour
shifts, requiring two to seven employees for each shift.
The Company promotes sterilization processing at convenient points along
the distribution routes for its customers' products, rather than solely at the
facilities closest to their manufacturing plants. The effect of this has been to
increase the geographic area served by those sterilization facilities which are
positioned to take advantage of this trend. The Company's extensive geographic
networks of facilities in North America and Europe contribute to its ability to
capitalize on this trend.
Gamma sterilization services. The Company expanded its service offering to
include gamma sterilization processing with its purchase in August 1997 of Caric
Mediris, S.A., a Belgian company now named Griffith Mediris (in which the
Company holds an 82.8% equity interest). Griffith Mediris operates an
established gamma facility in southern Belgium which contains two completely
automated and segregated gamma systems and storage areas, one for food products
(with temperature controlled storage areas, both refrigerated and deep-freeze)
and the other for medical devices and pharmaceuticals. It also possesses a
laboratory gamma irradiator for testing purposes as well as a dosimetry
laboratory. The Griffith Mediris irradiators are designed to optimize dose
uniformity. Their processing parameters are controlled and monitored by computer
systems which also provide associated process documentation. Each product to be
sterilized has specific cycle instructions which incorporate the manufacturer's
sterilization cycle parameters for that product. Currently approximately 60% of
the volume of products processed at the Griffith Mediris facility consists of
various food products (including fresh or frozen shrimp, clams, frog legs,
cheese, pasta and spices) and 40% consists of medical products and
pharmaceuticals.
The Company is further expanding its gamma processing facilities with its
joint venture entered into in June 1997 with MDS Nordion Inc. The purpose of the
joint venture is to design, construct and operate a state-of-the-art gamma
sterilization facility near Mexico City, Mexico (where the Company already
operates an ethylene oxide sterilization facility). The joint venture's gamma
facility has been designed to process both medical and food products. The
Company currently anticipates that the facility will become operational early in
Fiscal 2000, although no assurance can be given that the current target for
start-up will be met. See "Business -- Strategic Acquisitions and Alliances."
Continuous improvement initiatives. The Company has undertaken a number of
initiatives, some of which are ongoing, primarily designed to increase the
efficiency of the sterilization process at its ethylene oxide facilities. During
the last three years, largely as a result of these initiatives, the Company has
significantly reduced the average turn-around time through its ethylene oxide
facilities. The Company is aggressively continuing to develop, promote and
implement several initiatives which it believes will further reduce its average
turn-around time or otherwise increase the operating efficiency and thereby the
capacity of its facilities and reduce overall processing costs. These
initiatives include:
- Parametric release. "Parametric release" is a system which permits
release of a processed product for use based on the measured and
confirmed achievement of key processing cycle parameters, including heat,
humidity, ethylene oxide concentration and time. This avoids the
time-consuming laboratory testing of BIs, a step which often delays the
release of sterilized products. The system being implemented by the
Company uses patented technology for measuring ethylene oxide
concentration which was developed by the University of Wales College of
Medicine ("UWCM"). The Company has licensed the acquisition and use of 15
of these measuring units from UWCM and has exclusive rights until January
1, 2000. The Company has installed measuring units on three of its
sterilization chambers and is processing certain products of one of its
customers through one such chamber using parametric release. It intends
to install units on additional chambers when and as warranted by customer
demand. At the present time, the Company has not identified the need for
additional measuring units beyond the licensed number. However, if
customer demand warrants acquisition of additional measuring units and
the Company is unable to license these units from the UWCM, alternative
technologies for
37
<PAGE> 39
measuring ethylene oxide concentration are available. See "Risk Factors -- Risks
Related to Government Regulations and Standards Compliance."
- Optimization of cycle efficiency. For many years it was the industry
practice to use substantial amounts of ethylene oxide for virtually all
product sterilization cycles, regardless of the particular features of
the product or its packaging. In recent years, the Company has been an
industry leader in dramatically changing this "overkill" approach to
ethylene oxide sterilization. Using its scientific platform, the Company
assists its customers to determine the amount of ethylene oxide
sufficient, in combination with the other ethylene oxide cycle
parameters, to achieve the desired sterility assurance level. The primary
objectives of this have been to reduce ethylene oxide residuals in
sterilized products and turn-around times through the Company's
facilities.
- Statistical cycle revalidation and multiple chamber validation. Utilizing
its scientific platform, the Company is able to revalidate the cycle
parameters for a customer's product based upon the demonstrated
statistical results of their use on the same or similar products. This
avoids the delay, cost and normal processing downtime associated with
traditional physical validation of cycle parameters. The Company also
uses a similar process, based upon its ability to statistically
demonstrate chamber equivalency, to validate a customer's product for
sterilization in multiple chambers operated by the Company, including
chambers at more than one facility, without the need to physically
validate the product at each additional chamber. The Company promotes
this "retrospective validation" process among its customers.
- Fully integrated plant information system. The Company is currently
designing a new and more sophisticated plant information system for use
in all of its facilities. When fully operational, the new system will
strengthen the Company's scientific platform and make it more accessible
to customers. The Company plans to install and test the new system in two
of its North American facilities later this year and in one of its
European facilities in 1999. The initial functions of the new system will
include product tracking, processing data and electronic data interchange
with customers. When fully installed and operational, which as currently
planned will require approximately five years, the new system will
integrate all of the Company's operating facilities and create a
worldwide data bank accessible to the Company's customers.
Laboratory and consulting services. The Company offers a variety of
microbiological and analytical laboratory testing and consulting services
related to and built upon the Company's expertise in sterilization. The
manufacture and sale of a medical device involves several stages, starting with
product development, design and testing, followed by the establishment and
validation of sterilization cycle parameters (where applicable), commercial
production and thereafter, as the final step for some but not all such products,
sterilization. Laboratory services are required at most of these stages. They
include testing pertaining to product validation, biocompatibility, package
integrity, bioburden, sterility assurance and endotoxins, as well as
environmental and air monitoring. The Company's current focus is on providing
services with respect to the sterility assurance stage. Future plans include
providing services during the product development and production stages. The
Company also assembles sterilization test packs, including biological
indicators, which are marketed primarily to the Company's sterilization
processing customers.
As in the case of sterilization services, laboratory services are performed
both in-house by product manufacturers and outsourced to commercial
laboratories. The Company believes that its existing sterilization processing
relationships with a large number of medical device manufacturers and its
reputation as a leading sterilization management company provide it with a
significant advantage in marketing its laboratory services and test pack
offerings.
In 1989 the Company established a central laboratory in the United States,
now located in Burr Ridge, Illinois, a suburb of Chicago. It opened satellite
laboratories at its Santa Teresa, New Mexico sterilization facility in 1990 and
at its Ontario, California sterilization facility in 1997. In 1995, the Company
provided greater focus to its laboratory services offering in the United States
by organizing it into a distinct operating division named Griffith Analytical.
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<PAGE> 40
In every country in Europe in which the Company operates sterilization
facilities, it maintains a microbiological and analytical laboratory capable of
offering a range of testing and other services to its sterilization processing
customers. The Company's European laboratory facilities grew out of applicable
regulatory requirements and have typically been operating for as long as the
sterilization facilities with which they are associated.
Logistics management services. The Company has recently begun to offer a
variety of logistics management services to certain of its sterilization
processing customers. They include product deployment, coordination of product
transportation and shipping, order fulfillment and warehousing services, cross
docking operations and related types of services. Since sterilization is the
final step in the manufacturing process, the Company's sterilization facilities
in some cases perform the function of a regional distribution center for its
customers. The Company's logistics management services facilitate the movement
of a customer's products, following sterilization, along the customer's
distribution system and in some cases direct to the end user, such as a hospital
or other healthcare facility.
Other activities. The Company engages in the distribution throughout Europe
of a wide range of sterilization packaging materials, plastic disposables and
indicator systems and disinfection products direct to manufacturers of medical
devices, industrial users and hospitals. The Company estimates that
approximately 8% of its Fiscal 1997 net revenues was derived from this
distribution business.
Achieving "sterility." The Company, in common with industry practice, does
not guarantee or warrant sterility in the United States or in most of the other
countries in which it operates. Its only responsibility to its customer is to
process the customer's products in accordance with the ethylene oxide cycle
parameters (heat, humidity, gas concentration and time) specified by the
customer (or, in the case of the Company's gamma facility, in accordance with
the dosage level specified by the customer). The customer is responsible for
validation of the sterilization cycle parameters for its products, for
determining achievement of product sterility assurance, for the integrity of
product packaging to withstand the vacuum, heat and humidity levels of the
sterilization process and for the adequacy and regulatory compliance of the
labeling of its products.
In the event of the failure of the Company to process the customer's
product in accordance with the cycle parameters or dosage specifications
prescribed by the customer (commonly referred to as a "nonconformance"), the
Company is typically required by contract to inform its customer of the
nonconformance, to reprocess the product if feasible and to reimburse the
customer, subject to a maximum, for the cost of any such product which is
damaged as a result of such nonconformance. In Belgium and France, ethylene
oxide contract processors, including the Company, are required by law to certify
that a product which has been processed at one of its facilities in those
countries is sterile and in both countries, gamma processors must certify that
the correct dosage has been given.
Availability of raw materials. The only significant raw materials required
by the Company's processing operations are ethylene oxide and nitrogen for its
ethylene oxide facilities and Cobalt 60 for its gamma facility. While ethylene
oxide is a relatively common chemical with many different uses, its production
in the United States for use as a sterilant is subject to stringent regulation
under the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"). The
Company is aware of only two sources in the United States which possess the
necessary FIFRA registration to package ethylene oxide for use as a sterilant,
only one of which, the ARC Chemical Division of Balchem Corporation ("ARC"),
currently engages in such production. ARC has been the Company's principal
supplier of ethylene oxide in North America for many years. In September 1997,
the Company and ARC entered into a new multi-year supply and service agreement,
pursuant to which ARC agrees to supply all of the Company's requirements for
ethylene oxide for its facilities in the United States and Canada for a
seven-year period. While there is only one source within Mexico of which the
Company is aware for the ethylene oxide required by the Company's facility in
Mexico City, if necessary ARC is also able to supply that facility's ethylene
oxide requirements from its plants in the United States.
Subject to obtaining necessary regulatory approvals, which it believes
might take at least a year, the Company could package ethylene oxide for use as
a sterilant in its North American facilities. Any interruption in the supply of
ethylene oxide to the Company's sterilization facilities in North America, or
any substantial increase in the cost of such supply, would have a material
adverse affect on the Company's results of
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<PAGE> 41
operations. In Europe, ethylene oxide for use as a sterilant is readily
available from a number of different sources on competitive terms. Liquid
nitrogen, which is used in certain of the Company's ethylene oxide cycles, is
readily available from a number of different sources in both North America and
Europe.
The Cobalt 60 radioactive isotope for use as a sterilant in the Company's
gamma facility in Belgium is available from two primary sources, one in Canada
(MDS Nordion, the world's largest supplier and the Company's joint venture
partner in Mexico), and one in the United Kingdom (Puridec Irradiation
Technologies, a division of Amersham International, plc). The Company purchases
"pencils" of Cobalt 60 each year sufficient to compensate for the normal decay
of the existing Cobalt 60 source. The Company currently purchases its Cobalt 60
requirements from Puridec on competitive terms. The gamma facility which the
Company's joint venture plans to establish near Mexico City is committed to
acquire its Cobalt 60 from MDS Nordion.
CUSTOMERS
Medical device manufacturers. The Company's principal customers in both
North America and Europe are manufacturers of single use medical devices,
including most of the major companies engaged in that business. In many cases,
the Company renders services to these customers at more than one of its
sterilization facilities, including in some cases facilities located in both
North America and Europe. In Fiscal 1997, the Company performed sterilization
processing and related services for approximately 300 manufacturers of single
use medical devices in North America and approximately 650 in Europe. A
representative sample of the Company's larger medical device customers is set
forth below:
<TABLE>
<S> <C>
Abbott Laboratories The Kendall Company
Alcon Laboratories, Inc. (subsidiary of Tyco International,
Allegiance Healthcare Corporation Ltd.)
C. R. Bard, Inc. Mallinckrodt Inc.
Baxter International, Inc. Medtronic, Inc.
Becton, Dickinson and Co. Merck & Co., Inc.
Boston Scientific Corporation Pfizer, Inc.
The Clinipad Corporation Rusch, Inc.
Gambro AB Schering-Plough Corporation
Fresenius USA, Inc. Smith & Nephew plc
Hartmann AG Terumo Medical Corporation
</TABLE>
Most major manufacturers of single use medical devices in North America and
Europe have multiple plants at disparate locations in a given country or, in
many cases, in more than one country. The Company believes that its geographic
network of strategically located sterilization processing facilities in North
America and Europe and its ability to effectively serve all of the contract
ethylene oxide sterilization needs of many of its largest customers give it a
unique marketing tool and have been factors in its success to date.
The Company's five largest customers accounted for approximately 38% of its
net revenues in Fiscal 1997, including Allegiance Healthcare Corporation, which
accounted for approximately 20% of such revenues. While the loss of Allegiance's
business would likely have a material adverse effect on the Company, the Company
has been the principal supplier of contract ethylene oxide sterilization
services to Allegiance and its predecessors for many years. The Company and
Allegiance are parties to a multi-year sterilization contract. An important
class of the Company's customers are medium and small-sized manufacturers of
single use medical devices which cannot justify the establishment of their own
processing facilities and which utilize the Company for virtually all of their
sterilization processing and related validation, laboratory and logistics
management services.
There has been a consolidation trend in recent years in the medical device
manufacturing industry, with a smaller number of larger companies having
multiple plants and more extensive distribution networks. The Company expects
this trend to continue. The Company believes that consolidation among its core
business customer base has worked to its competitive advantage. Because the
Company has the most extensive
40
<PAGE> 42
ethylene oxide sterilization network in both North America and Europe, it
believes it is in a superior position to take advantage of the consolidation
trend among medical device manufacturers by serving the increasing number of
manufacturing plants operated by fewer customers. While some large medical
device manufacturers divide their business between their own captive
sterilization facilities and those of one or more contract processors such as
the Company, the Company's extensive geographic facilities network enables it to
more aggressively seek to encourage such customers to outsource more of their
captive processing volume to one or more of the Company's facilities.
Other customers. The Company also furnishes sterilization processing
services to producers of a variety of non-medical device products and to
hospitals. In Fiscal 1997, the Company performed sterilization processing
services for approximately 230 such customers in North America and approximately
330 in Europe. These customers include producers or processors of a wide range
of dry or frozen food products, cosmetics, pharmaceuticals and packaging
products, as well as hospitals.
Contracts with customers. The Company's commercial agreements with its
customers vary from purchase order arrangements to multiple year contracts. Its
standard contract, which it uses for most of its medium-sized and small
customers and some of its large customers, typically has a term of one year. The
Company enters into separately negotiated, customized and in most cases
multi-year contracts with many of its larger North American sterilization
processing customers. These contracts with its larger customers typically
require the customer to purchase from the Company all of its ethylene oxide
sterilization processing requirements which it does not perform in-house or
provide for a minimum specified annual volume of sterilization processing
business to the Company. They also typically provide for price adjustments based
upon changes in ethylene oxide prices and other factors.
In its European operations, the Company enters into a standard commercial
contract with some customers, separately negotiated, customized contracts with a
few of its larger customers and relies on traditional purchase order
arrangements with the rest of its customers.
In combination with its commercial contracts, the Company enters into
technical agreements, specifying cycle parameters and related technical terms,
with its customers covering virtually all of the products it processes.
SALES AND MARKETING
The Company's sterilization management services are sold principally by its
direct sales force based throughout North America and Europe, the efforts of
which are coordinated with respect to many of its global customers. In most
cases, a single senior sales representative is assigned to each of the Company's
largest customers, with overall responsibility for the Company's relationship
with that customer on a worldwide basis.
The Company's sales force is trained to assist customers in maximizing
their sterilization efficiency and cost effectiveness. This marketing focus
seeks to ensure that each of the sterilization cycle parameters for the
customer's products has been optimized so as to shorten and improve the cycle
and otherwise assure that the required sterility assurance level is achieved as
quickly and cost-effectively as possible. The Company's sales staff and senior
management draw upon their experience in sterilization, engineering,
microbiology, component materials and packaging, medical devices and regulatory
compliance, as well as the Company's scientific platform, to assist customers in
devising the optimal cycle for its product and sterility assurance level.
The Company promotes its sterilization management services by participating
in industry trade shows, advertising in trade journals, sponsoring educational
seminars and promotional events, direct mail campaigns and addressing industry
organizations. The Company also encourages participation by members of its
corporate staff in the United States and Europe on technical committees and
advisory boards responsible for implementing industry standards or advising
government bodies with respect to the establishment of regulations applicable to
the provision of sterilization services.
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RESEARCH, DEVELOPMENT AND ENGINEERING
The Company engages in research, development and engineering projects aimed
at, among other goals, improving the efficiency and reducing the cost of
operating its sterilization facilities, reducing and more effectively
controlling emissions arising from its ethylene oxide sterilization operations
and reducing the turn-around times for processing its customers' products at
those facilities. The Company's engineering group is also responsible for
designing the Company's operating facilities and process equipment and for
overseeing the fabrication and installation of such equipment.
QUALITY ASSURANCE
The Company's quality control systems and procedures are intended to ensure
that each of the Company's sterilization facilities complies with the processing
and operating standards and specifications required by various governmental and
industry standards organizations and customers, such as the FDA's Quality System
Regulation which sets forth the good manufacturing practices that contract
sterilizers of medical devices are required to follow. The Company maintains a
quality assurance support staff at the corporate level and a quality assurance
manager at each of its sterilization facilities. The principal responsibilities
of the support staff are to design, review and refine the Company's quality
control system and the operating procedures necessary to implement that system.
The support staff also monitors regulatory developments at all levels of
government and within international standards organizations which pertain to
sterilization. The primary responsibilities of the quality assurance managers
are to ensure that the Company's Total Quality Management (TQM) system is
observed and all customer processing specifications are complied with at each of
the Company's sterilization facilities. The quality assurance manager at each
facility also represents the Company in the many audits of that facility's
procedures and processes which are conducted by or on behalf of governmental
agencies, standards organizations and customers.
All but two of the Company's 18 ethylene oxide sterilization facilities in
North America and Europe are certified as compliant with: (i) International
Organization for Standardization ("ISO") 9001, Quality Systems -- Model for
Quality Assurance in Design, Development, Production, Installation, and
Servicing; (ii) the Committee for European Normalization ("EN") 46001, Quality
Systems -- Medical Devices -- Particular Requirements for the Application of ISO
9001; and (iii) EN 550, Sterilization of Medical Devices -- Validation and
Routine Control of Ethylene Oxide Sterilization (the only exceptions are the
recently acquired facility at Verviers, Belgium, which was so certified under
its prior owner, and the facility at Montreal, Canada, which is currently
scheduled to be closed during the third quarter of Fiscal 1999). The Company's
gamma sterilization facility in Belgium is certified as compliant with ISO 9002,
Quality System -- Model for Quality Assurance in Production, Installation and
Servicing and with EN 46002 -- Quality Systems -- Medical Devices -- Particular
Requirements for the Application of ISO 9002.
The Company's headquarters and North American facilities were audited by
and received their certifications from TUV Product Service GmbH; its European
facilities were audited by and received their certifications from BSI Quality
Assurance. Both TUV and BSI are approved Quality Registrars for ISO and EN,
respectively. The Company's headquarters and each of its operating facilities
are subject to periodic quality system surveillance audits by such Quality
Registrars to ensure continued compliance with such standards.
Certification to the ISO 9000 standards demonstrates that the facility has
implemented the essential elements necessary for an effective quality control
system. Of the ISO 9000 standards, the ISO 9001 is the most comprehensive in
scope and the most difficult to achieve. Demonstrated compliance by a contract
sterilizer with the requirements for such ISO and EN certifications is becoming
a requirement for doing business in or exporting sterilized products to Canada
and Europe and is expected by most medical device manufacturers in the United
States. Medical devices to be sold in countries which are members of the
European Community must carry the "CE" symbol on their labels; in order to affix
the CE symbol to any medical device it must have been sterilized in a facility
which is certified as ISO 9000 series and EN 46000 series compliant. The Company
believes that its ability to obtain and maintain these certifications for its
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<PAGE> 44
facilities is an important factor in its success. See "Risk Factors -- Risks
Related to Government Regulations and Standards Compliance."
STRATEGIC ACQUISITIONS AND ALLIANCES
The Company has effected a number of strategic acquisitions and established
several strategic alliances during the past five years, principally those
identified below.
On July 2, 1998, the Company completed the purchase from a subsidiary of
Boston Scientific Corporation of an ethylene oxide sterilization facility
located at Verviers, Belgium, near the border with Germany. The seller had
operated the facility as an in-house sterilizer for its medical device
manufacturing operations in the same plant. Boston Scientific, having moved the
device manufacturing operations to another European country, subdivided the
building and sold the sterilization facility to the Company. The Company had
operated the facility since October 1997 under arrangements with Boston
Scientific.
On April 28, 1998, the Company completed the purchase of Sorex Medical,
Inc., which owns and operates a full service ethylene oxide sterilization
facility located in Salt Lake City, Utah, a major medical products manufacturing
and distribution center. This strategic acquisition increased the Company's
sterilization processing presence in the western United States.
In August 1997, the Company acquired Caric Mediris, S.A., a Belgian company
now named Griffith Mediris (in which the Company holds an 82.8% equity interest)
which operates a full service gamma sterilization facility in southern Belgium.
The remaining interest is held by an agency of the Belgian government (the
National Institute of Radioelements), which owned and operated the facility
until 1990, when it was largely privatized. The facility contains two
independent gamma irradiation cells.
In June 1997, the Company entered into a joint venture with MDS Nordion
Inc. to design, construct and operate a state-of-the-art gamma sterilization
facility near Mexico City, Mexico. The Company has a 60% interest in the joint
venture, subject to an agreement to divide equally the aggregate net profit, if
any, generated by the joint venture during the first five years of the
facility's operation. MDS Nordion, a Canadian company, is the leading designer
and supplier of gamma processing facilities and the world's largest supplier of
Cobalt 60. The gamma facility has been designed to process both medical and food
products. The Company currently anticipates that the facility will become
operational during the second half of 1999. However, there is no assurance that
the current target for start-up will be met.
In July 1994, the Company acquired all of the outstanding capital stock of
and the Rantigny real estate used by Laboratoires Perouse, S.A., a French
company which owns and operates two ethylene oxide sterilization processing
facilities in France (one of which the Company has since replaced).
FACILITIES
The following table provides information, as of June 30, 1998, with respect
to each of the Company's sterilization processing facilities and the laboratory
facilities of Griffith Analytical, including its location, approximate building
size, occupancy status (whether the building is owned or leased by the Company)
and, if leased, the expiration date of the lease. Each such sterilization
facility includes multiple sterilization chambers, preconditioning and aeration
rooms and/or cells, staging, quarantine and warehouse space, control rooms, an
office area, receiving and shipping docks and, where specifically indicated, a
testing laboratory.
<TABLE>
<CAPTION>
LEASE EXPIRATION
APPROXIMATE DATE (INCLUDING
BUILDING SIZE COMPANY
LOCATION (SQUARE FEET) OCCUPANCY STATUS RENEWAL OPTIONS)
-------- ------------- ---------------- ----------------
<S> <C> <C> <C>
North American Facilities:
Ontario, CA............................. 69,000(1) Leased March 2011
Los Angeles, CA......................... 90,000(2) Part owned; March 2002
part leased(2)
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
LEASE EXPIRATION
APPROXIMATE DATE (INCLUDING
BUILDING SIZE COMPANY
LOCATION (SQUARE FEET) OCCUPANCY STATUS RENEWAL OPTIONS)
-------- ------------- ---------------- ----------------
<S> <C> <C> <C>
Santa Teresa, NM........................ 72,000(1) Leased March 2029
(near El Paso, TX)
Salt Lake City, UT...................... 59,000 Owned --
Burr Ridge, IL(3)....................... 11,200 Leased February 2006
(near Chicago)
Willowbrook, IL......................... 67,000 Leased September 2004
(near Chicago)
Smyrna, GA.............................. 45,000 Leased June 2004
(near Atlanta)
Charlotte, NC........................... 40,000 Leased(4) January 2017
Glens Falls, NY......................... 33,000 Leased(5) December 2014
(upstate New York)
Toronto, Canada(7)...................... 23,000 Leased(6) September 2008
Montreal, Canada(7)..................... 10,000 Leased May 1999
Mexico City, Mexico..................... 43,000 Leased September 2000
European Facilities:
Somercotes, England..................... 55,500(8) Owned --
(near Birmingham)
Zoetermeer, the Netherlands............. 28,000(8) Leased July 2001
(between Amsterdam and Rotterdam)
Herentals, Belgium...................... 66,700(8)(9) Leased July 2000
(near Antwerp)
Verviers, Belgium....................... 21,500 Owned(10) --
(near the border with Germany)
Fleurus, Belgium........................ 46,000(11) Owned --
(near the border with France)
Rantigny, France........................ 35,500(8) Owned --
(40 miles north of Paris)
Anse, France............................ 22,000(8) Leased August 2005
(15 miles north of Lyon)
Moerfelden, Germany..................... 35,400(8) Leased September 1999
(near Frankfurt)
</TABLE>
- ---------------
(1) Includes a full service Griffith Analytical satellite laboratory (occupying
1,650 square feet at the Ontario, CA facility and 610 square feet at the
Santa Teresa, NM facility).
(2) Consists of two separate, but adjacent buildings, one of which is owned
(19,000 square feet) and one of which is leased (71,000 square feet).
(3) The central full service laboratory and headquarters of the Griffith
Analytical Division.
(4) Certain equipment and leasehold improvements are subject to a financing
lease expiring in 2007 used to fund repayment of industrial development
revenue bonds.
(5) Occupied under a financing lease to fund repayment of industrial
development revenue bonds; Company will acquire ownership of the facility
when bonds are paid at maturity in 2014.
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<PAGE> 46
(6) Located within a physically segregated portion of a food plant owned by,
and leased from, the Canadian subsidiary of the Parent Company.
(7) The Company intends to close the facility at Montreal when its lease
expires in May 1999 and to consolidate its operations with the existing
Toronto facility.
(8) Includes a testing laboratory.
(9) Includes approximately 10,000 square feet of space used by the Company's
distribution business and approximately 3,500 square feet of office space
which houses the Company's European headquarters staff.
(10) Occupies physically segregated premises comprising approximately 30% of a
larger building.
(11) Includes a dosimetry laboratory with a gamma irradiator used for testing
purposes.
The Company's corporate headquarters is located in approximately 13,000
square feet of leased space in an office building located in Oak Brook,
Illinois, a suburb of Chicago. The lease expires in March 2000.
The Company's operating facilities are well maintained and generally
adequate to meet the current demand for its sterilization services. The Company
has installed and is testing a new maintenance software system at one of its
U.S. facilities which enables it to monitor and statistically determine when
virtually every important piece of equipment at the facility requires
maintenance or replacement. The system is designed to increase the operational
efficiency of the facility and minimize unscheduled maintenance downtime or
equipment malfunctions. If the test system is successful, as to which no
assurance can be given, the Company currently plans to install the system in all
of its facilities by the end of the year 2000.
Due to increasing demand for its sterilization services, the Company
currently has underway or in the advanced planning stage several projects to add
additional sterilization processing capacity to five of its existing facilities.
When its lease expires in May 1999, the Company intends to close its small
sterilization facility in Montreal, Canada and consolidate its operations with
its larger facility near Toronto. The Company does not expect such consolidation
to result in any significant loss of business currently being processed at the
Montreal facility.
COMPETITION
The Company is subject to intense competition in the provision of
sterilization services. The sterilization industry is fragmented as a result of
geographical limitations on the area which can be served by each sterilization
processing facility, multiple sterilization technologies and the mix of captive
and contract facilities. The Company believes that quality of service, price,
location and capacity, customer relationships, turn-around time and availability
of support services are the key factors on which competition is based in the
sterilization processing industry.
The market for contract sterilization services is characterized by
significant price competition, particularly in gaining new business. However,
since achieving the specified sterility assurance level is so important to
customers and the cost of sterilization is a relatively small part of the total
cost of the product, the Company believes the quality of service rendered by the
contract processor becomes as important as price once a customer relationship is
established. Due to validation requirements, design and materials compatibility
limitations and regulatory constraints, switching from one contract processor to
another or from one sterilization technology to another can be costly and
administratively burdensome to customers. The Company believes that its long
experience with and widely recognized expertise in sterilization helps it
attract and retain business.
Facility location and capacity are also important marketing factors,
particularly for large medical device manufacturers. The Company's extensive
ethylene oxide sterilization facility network in North America and Europe, and
its ability to add sterilization capacity to most of its facilities, also give
it a valuable marketing tool.
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<PAGE> 47
In North America, the principal contract processors other than the Company
are: Isomedix, Inc. (a subsidiary of Steris Corporation), which operates
multiple gamma and ethylene oxide processing facilities in the United States and
Canada and one E-beam facility in the United States; SteriGenics International,
Inc., which operates multiple gamma facilities and one E-beam facility in the
United States; and Cosmed Group, Inc. and the Sterilization Services
subsidiaries of Vacudyne Incorporated, both of which operate multiple ethylene
oxide facilities in the United States. In addition, the Company competes in
North America against many local contract processors, each of which typically
operates only a single ethylene oxide sterilization facility.
In Europe, the Company believes that only two other contract processors
operate sterilization facilities in more than one country, and the competition
within each country is more fragmented than in the United States. The largest
contract processors, each of which is believed to be smaller than the Company,
are: Isotron plc, which operates gamma, ethylene oxide and E-beam facilities in
the United Kingdom and an ethylene oxide facility in Ireland; and Gammaster
B.V., which operates gamma facilities in France, Germany, the Netherlands and
Ireland.
In addition to other contract processors, the Company competes in both
North America and Europe with manufacturers which have existing, or may in the
future establish, captive sterilization processing operations.
Certain of the Company's competitors have greater financial, marketing,
technical and other resources than the Company or offer a broader range of
sterilization technologies, which may give them a competitive advantage over the
Company. Steris Corporation (the parent of Isomedix), SteriGenics International,
Inc. and Isotron plc are publicly traded companies with access to public debt
and equity capital markets. Isomedix and SteriGenics have extensive gamma
sterilization networks in the United States, giving them a competitive advantage
over the Company with those customers which prefer to sterilize their products
using gamma. In Europe, some of the Company's smaller local competitors have
close relationships with important individual customers, established over long
periods of time. To the extent that the Company expands into additional foreign
countries it could be faced with competition from existing providers of contract
sterilization services in those countries. See "Risk Factors -- Competition" and
"-- Availability of Alternative Technologies" and "Business -- The Sterilization
Processing Industry -- Comparison of ethylene oxide sterilization and gamma
sterilization."
REGULATORY, ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS
Ethylene oxide is a toxic and hazardous chemical which is flammable and
explosive. It has also been identified as a cancer and reproductive hazard. As a
result, to varying degrees in each of the countries in which the Company
operates, the use of ethylene oxide is subject to a variety of existing and
proposed national, state and local regulations which limit permissible emission
levels, worker exposure and residues on sterilized products and provide for
labeling requirements. In addition, the operation of the Company's gamma
facility in Belgium, including the use of radioactive Cobalt 60 therein, is
subject to extensive regulation by the Belgian government, and the design,
construction, use and operation of the gamma facility proposed to be built near
Mexico City by the Nordion Joint Venture is and will be similarly regulated by
the Mexican government.
The Company has been and continues to be an industry leader in seeking to
ensure that its facilities meet or exceed all applicable environmental and
health and safety regulations. The Company believes that it possesses all
licenses and permits necessary to conduct its business and that it is in
material compliance with all environmental and health and safety regulations
which govern its operations. Nevertheless, changes in, or reinterpretations of,
existing requirements or adoption of new requirements beyond those described
below, the failure of the Company at any time to comply with any applicable
material regulations and standards or the loss by the Company of any of its
material licenses and permits could have a material adverse effect on the
Company's business, financial condition and results of operations.
There can be no assurance that the Company will not incur significant costs
to comply with laws, regulations and other requirements in the future or that
such laws, regulations and other requirements will not have a material adverse
effect upon the Company's business, financial condition and results of
operations. The Company estimates that its total capital expenditures for
environmental control systems for the remainder of
46
<PAGE> 48
Fiscal 1998 and for Fiscal 1999 and Fiscal 2000 will be approximately $275,000,
$3,525,000 and $2,950,000, respectively; such estimates are based upon current
and proposed regulations and include the projects discussed below.
Emission control regulations. Ethylene oxide is evacuated in a high
concentration when the sealed sterilization chamber is purged at the end of each
cycle. Thereafter, residual ethylene oxide is evacuated in a low concentration
after the chamber is opened and during aeration following removal of the
sterilized products from the chamber. The release of high concentration
emissions into the atmosphere is prohibited or strictly limited in most of the
countries in which the Company has facilities. Each of the Company's
sterilization facilities throughout North America utilize either a wet scrubber
system or catalytic oxidizer to treat its high concentration emissions. The wet
scrubber system converts the ethylene oxide into ethylene glycol, a byproduct
which in most cases the Company sells for various commercial applications. The
catalytic oxidizer converts the ethylene oxide into carbon dioxide and water in
a catalyst bed. In its European ethylene oxide facilities, the Company uses
several different technologies (including wet scrubbers, incinerators and
catalytic converters) to control their high concentration emissions.
Low concentration ethylene oxide emissions are currently regulated by state
and local governmental entities in certain of the U.S. states in which the
Company's facilities are located. In addition, regulations to control low
concentration emissions were adopted by the EPA in 1994 and are currently
scheduled to become effective in December 1998. However, certain types of low
concentration emissions control equipment used by ethylene oxide sterilizers,
including the Company, have a risk of explosion. The regulations are under
review by the EPA, and the Company expects that their effective date will be
postponed to December 1999. All but three of the Company's facilities in the
United States are already operating with control systems which the Company
believes are capable of satisfying the new regulations if they take effect in
their present form. However, in that event, the Company would be required to
incur substantial cost to acquire control systems at those three facilities. If
the regulations become effective in December 1998, the Company may require
variances at two of the facilities to remain in compliance pending installation
of the new systems.
Regulations restricting low concentration emissions in the European
countries in which the Company has facilities vary from country to country. The
Company believes that all of its European facilities are in material compliance
with applicable low concentration emissions regulations. However, due to the
greater volume of absorbent products now being sterilized at its facility at
Herentals, Belgium, the Company believes that a new control system will be
required in order for that facility to remain in compliance with those
regulations. Accordingly, the Company has proposed to local governmental
authorities the installation of a new state-of-the-art system which would
control both the high concentration and low concentration emissions at the
Herentals facility. The Company believes that the installation of the new
equipment (currently planned for Fiscal 1999 and Fiscal 2000) will be approved
by such authorities and that any necessary waivers pending its installation will
be obtained.
The use of environmental control equipment at an ethylene oxide
sterilization facility requires care in order to avoid circumstances which could
result in an explosion or fire and the interruption of normal operations at or
the temporary shut-down of the facility while repairs are made. During the last
five years, there have been three such incidents at the Company's facilities in
North America (one in 1994 at its Montreal facility which did not interrupt
normal operation, one in 1995 at its Charlotte facility which interrupted normal
operation for approximately 30 days, and one in 1997 at its Los Angeles facility
which resulted in a shut-down of the facility for four days) and two at its
facilities in Europe (one in 1994 at its Herentals, Belgium facility which
prevented the start-up of a new sterilization chamber for approximately five
months and one in 1995 at its facility in the Netherlands which interrupted
production for about 10 days). In order to reduce the commercial risks
associated with any such mishap, the Company encourages its customers to cross
validate, at two or more of its facilities, those products which the Company
processes in large volume.
Worker and patient safety regulations and standards. Because of its status
as a cancer and reproductive hazard, government regulations in the countries in
which the Company operates strictly limit the exposure of workers to ethylene
oxide. The United States Occupational Safety and Health Administration ("OSHA")
limits worker exposure to one part per million as an 8-hour time weighted
average and five parts per million in
47
<PAGE> 49
any 15-minute short-term exposure. The regulations in most other countries where
the Company has facilities are similar. These regulations also have the indirect
effect of limiting the permissible amount of residual ethylene oxide left on a
product following completion of the sterilization process, since such residuals
are one source of exposure to ethylene oxide. OSHA regulations also require that
equipment used in connection with ethylene oxide at the Company's facilities be
designed and operated in a manner which is safe and that the Company use proper
safety precautions and practices when handling, monitoring and storing ethylene
oxide.
In order to provide a safe working environment for its employees and to
comply with such regulations, the Company utilizes a combination of methods,
including engineering controls, respiratory and other personal protection
apparatus and clothing, designation of restricted areas, continuous monitoring
equipment, detailed and strictly enforced employee safety procedures and
periodic physical examinations. The Company believes that all of its facilities
are in material compliance with all applicable regulations.
In addition to extensive regulation by various governmental bodies and
agencies, the Company is subject to standards, guidelines and requirements
established by industry organizations and other non-governmental bodies, such as
the ISO. The ISO 10993-7 standard, adopted in 1995, limits the permissible
levels of residual ethylene oxide on sterilized medical devices in order to
protect patients who come into contact with such devices. See "Risk
Factors -- Risks Related to Government Regulations and Standards Compliance."
Health regulations. Sterilization of medical devices is subject to
pervasive regulation by the FDA pursuant to the Federal Food, Drug and Cosmetic
Act. The FDA has promulgated a Quality System Regulation ("QSR") which sets
forth detailed Good Manufacturing Practices that manufacturers of medical
devices are required to follow. Under the QSR, a medical device manufacturer
includes those who perform the function of contract sterilization of medical
devices. Consequently, the Company is required, with respect to its operating
facilities in the United States and those outside the United States which
sterilize devices for export to the United States, to comply with the
requirements set forth in the QSR. All such facilities are subject to periodic
audits by the FDA to determine whether they are in compliance with such
requirements.
Failure by the Company at any time to comply with applicable FDA
requirements could lead the FDA to institute enforcement actions against the
Company or its customers, including, among other things, warning letters, recall
or seizure of products, fines, injunctions, civil penalties, total or partial
suspension of sterilization operations and criminal prosecution. Such
enforcement actions would also harm the Company's business reputation and could
cause the Company to lose customers to competitors. During the last five years,
the Company has not received any warning letters from or been subjected to any
more stringent compliance action by the FDA.
Regulation of gamma sterilization facilities. Regulations of the Belgian
government apply to various aspects of the operation of the Company's gamma
sterilization facility in that country, including regulations designed to
protect workers and others from exposure to gamma radiation. Government
inspectors visit the facility on a bi-monthly basis to audit the Company's
compliance with such regulations. Failure by the Company at any time to comply
with these regulations could subject it to a variety of sanctions, including
citations, fines or total or partial suspension of sterilization operations.
Any gamma sterilization facility located in Mexico, including the one to be
built near Mexico City by the Company's joint venture, is subject to extensive
regulation by the national and local governments of Mexico with respect to its
design, construction and operation. The Company's joint venture is currently
seeking to obtain the necessary government permits and licenses needed to
construct and operate the facility. Although not contemplated, any material
delay in or inability to obtain such approvals on satisfactory terms could
compromise the success of the project. The gamma sterilization of medical
devices, foods, cosmetics and other products is regulated by the Mexican
National Commission on Nuclear Safety and Safeguards. Failure to comply with the
Commission's regulations could result in significant fines, penalties or the
shut-down of the facility.
The design, construction, use and operation in the United States of
commercial gamma sterilization facilities, and the radioactive materials used in
such facilities, are extensively regulated by the United States Nuclear
Regulatory Commission, or in some cases by various state regulatory agencies and
authorities that
48
<PAGE> 50
undertake a comparable regulatory function from the Nuclear Regulatory
Commission. Such facilities are also subject to regulation by other regulatory
bodies at the federal, state and local levels, depending upon the type of
product that is being irradiated. Requirements of the FDA similar to those
described above for ethylene oxide facilities in the United States apply to the
use of gamma to sterilize medical devices, foods, cosmetics and pharmaceuticals.
When and if the Company constructs or acquires one or more gamma sterilization
facilities in the United States, it would be required to comply with all such
regulations.
EMPLOYEES
At June 30, 1998, the Company had a total of 483 employees, 303 of whom
were employed in North America and 180 in Europe. The only Company employees
subject to collective bargaining agreements are those in Belgium, France and
Mexico. The Company has never experienced a labor related work stoppage. It
considers its relations with its employees to be good.
LEGAL PROCEEDINGS
The Company is from time to time involved in routine litigation incidental
to the conduct of its business. The Company believes that no pending or
threatened litigation to which it is or may be a party will have a material
adverse effect on its business, financial condition or results of operations.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors, nominees for director and executive officers of the Company
and their respective ages and positions with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dean L. Griffith(1)................... 71 Chairman of the Board and a Director
Kevin M. Swan......................... 41 President, Chief Executive Officer and
a Director
John P. Sabalaskey.................... 39 Senior Vice President and Chief
Financial Officer
Peter D. Gortz........................ 39 Senior Vice President and Chief
Operating Officer -- North America
Dirk Barrie........................... 46 Senior Vice President and President --
European Group
Brian J. Tuttle....................... 48 Treasurer
James S. Legg......................... 41 Secretary and General Counsel
Joseph R. Maslick(1)(2)............... 50 Director
(1)(2)(3).............. Nominee for Director
(2)(3)................. Nominee for Director
</TABLE>
- ---------------
(1) Member or nominee to be a member of the Compensation Committee of the Board
of Directors
(2) Member or nominee to be a member of the Audit Committee of the Board of
Directors
(3) Nominee to be a member of the Committee of Independent Directors of the
Board of Directors
Dean L. Griffith has served as Chairman of the Board of the Company since
its incorporation in 1987. Mr. Griffith has been President and Chief Executive
Officer since 1975 and Chairman of the Board since 1989 of the Parent Company.
Mr. Griffith joined the Parent Company in 1950 and thereafter worked in a
succession of administrative and executive positions of increasing
responsibility.
Kevin M. Swan has served as President, Chief Executive Officer and a
Director of the Company since September 1994. Prior thereto, Mr. Swan served in
various capacities at Baxter International, Inc. including as
49
<PAGE> 51
President of Multi Hospital Systems during 1994, as Vice President and General
Manager of the Ambulatory Infusion Division from 1992 to 1993 and as Vice
President of the Interlink(TM) Business Unit from 1991 to 1992.
John P. Sabalaskey has served as Senior Vice President and Chief Financial
Officer of the Company since March 1998. Prior thereto, Mr. Sabalaskey served in
various capacities at Information Resources, Inc., including as an Executive
Vice President from 1994 until 1998, head of International Finance from 1992
through 1998 and Director of Internal Audit from 1991 to 1992. Previously, Mr.
Sabalaskey was a Senior Manager in the Audit and Financial Consulting Division
of Arthur Andersen & Co. Mr. Sabalaskey is both a Certified Public Accountant
and a Certified Management Accountant.
Peter D. Gortz has served as Senior Vice President and Chief Operating
Officer -- North America of the Company since February 1998. Mr. Gortz joined
the Company's operating subsidiary in the United States as Vice President of
Sales and Marketing in November 1994 and continued to serve in that capacity
until February 1998. Prior to joining the Company, Mr. Gortz was employed by
Baxter International, Inc. since 1988 in various positions, including as
Director of Business Development of its Ambulatory Infusion Division from
November 1993 to November 1994. Prior to joining Baxter, Mr. Gortz was a
co-founder of Infusion Systems Corporation, which was acquired by Baxter in
1988.
Dirk Barrie has served as Senior Vice President of the Company and
President of its European Group since February 1998. Prior thereto, Mr. Barrie,
who joined the Parent Company in 1979, served in various senior management
capacities for the European subsidiaries of the Company, most recently as
Managing Director.
Brian J. Tuttle has served as Treasurer of the Company since February 1992.
He is principally employed as Vice President, a position he has held since 1997,
and Treasurer of the Parent Company, a position he has held since 1992. Prior
thereto, Mr. Tuttle served as Treasurer of Applied Power, Inc. from 1986 to
1992.
James S. Legg has served as Secretary of the Company since February 1991
and General Counsel since February 1995. Mr. Legg is principally employed as
Vice President and General Counsel of the Parent Company, positions he has held
since 1997. Prior thereto, Mr. Legg served as Assistant General Counsel from
1984 to 1989 and Corporate Counsel from 1989 to 1997 of the Parent Company.
Joseph R. Maslick has served as a Director of the Company since 1989. Mr.
Maslick is principally employed as Executive Vice President and Chief Financial
Officer of the Parent Company, positions he has held since 1993 and 1988,
respectively. After holding several positions in accounting and finance at the
Parent Company, he was elected Vice President and Treasurer in 1983 and Senior
Vice President and Chief Financial Officer in 1988. Mr. Maslick joined the
Parent Company in 1970.
The Company's Board of Directors has nominated, and shortly after
completion of the Offering intends to elect, two independent directors of the
Company. The additional directors, and , are not
affiliated with the Company or with the Parent Company.
has been the of since
. Prior thereto,
was . also serves as a director of and
.
has been the of since
. Prior thereto,
was . also serves as a director of and
.
COMMITTEES OF THE BOARD
Prior to the completion of the Offering, the Board of Directors will have
designated a Compensation Committee, an Audit Committee and a Committee of
Independent Directors, the members of each of which will include one or both of
the independent directors to be elected shortly after completion of the
Offering.
The Compensation Committee will be composed of three members, none of whom
may be an employee of the Company. The Compensation Committee will be
responsible for establishing all executive officer
50
<PAGE> 52
compensation and adopting and administering stock option and variable
compensation programs applicable to employees and officers.
The Audit Committee will be composed of three members, a majority of whom
must be independent directors. The committee will meet periodically with
management and representatives of the Company's independent auditors to assure
that appropriate audits of the Company's affairs are being conducted. In
carrying out these responsibilities, the committee will review the scope of
audit activities and the results of the annual audit. The committee is also
responsible for recommending to the Board of Directors a public accounting firm
to serve as independent auditors each year. The independent auditors have direct
access to the Audit Committee to discuss the results of their examinations, the
adequacy of internal accounting controls, and the integrity of financial
reporting.
The Committee of Independent Directors will be composed of two members,
both of whom must be independent directors having no other affiliation with
either the Company or the Parent Company. It will be the principal
responsibility of this Committee to review and approve the terms of all material
agreements and transactions, and any material amendments to such agreements,
between the Company and the Parent Company which are entered into or occur
subsequent to the Offering.
COMPENSATION OF NON-AFFILIATED DIRECTORS
Each director of the Company, except any who is also an employee of the
Company or the Parent Company, will receive from the Company for his or her
services: (i) an annual retainer of $10,000; (ii) an annual fee of $2,000 for
each committee of the Board of Directors of which he or she is the chairman; and
(iii) a fee of $500 for each meeting of the Board of Directors or any committee
of the Board of Directors which he or she attends. Each such non-employee
director will also be eligible to participate in the 1998 Director Stock Option
Plan described below. In addition, all directors will be reimbursed for travel
and other out-of-pocket expenses related to attending meetings of the Board of
Directors and its committees.
1998 DIRECTOR STOCK OPTION PLAN
Prior to the commencement of the Offering, the Board of Directors of the
Company will have adopted, and the Parent Company as sole stockholder of the
Company will have approved, the 1998 Director Stock Option Plan (the "DSOP"),
which will be administered by the Board of Directors.
The DSOP will provide for the automatic granting of options to purchase
shares of Class A Common Stock to certain directors of the Company ("Eligible
Directors"). An Eligible Director consists of (i) every incumbent director who
at the time of grant is not an employee of the Company or any of its
subsidiaries and (ii) every newly elected or appointed director who at the time
of his or her election or appointment is neither an employee of the Company or
any of its subsidiaries nor a director, officer or employee of any other company
which directly or indirectly controls the Company (a "Newly Elected Director").
The exercise price of each option granted pursuant to the DSOP will be the fair
market value of the shares of Class A Common Stock at the date of grant.
At the time the Offering commences, Mr. Maslick, as well as and
(each of whom is deemed by the DSOP to be a Newly Elected Director as
of such time) will each be automatically granted an option under the DSOP to
purchase 5,000 shares of Class A Common Stock at the initial public offering
price. Thereafter, (i) each incumbent Eligible Director, on the date he or she
is annually reelected a director of the Company, will be automatically granted
an option under the Plan to purchase 1,000 shares of Class A Common Stock at
their fair market value on the date of grant and (ii) each Newly Elected
Director, on the date he or she first becomes a director of the Company, will be
automatically granted an option under the Plan to purchase 5,000 shares of Class
A Common Stock at their fair market value on the date of the grant.
A maximum of 50,000 shares of Class A Common Stock will be available in the
aggregate for grant under the DSOP. If an option expires or is terminated or
canceled unexercised as to any shares, such released shares may again be
optioned (including a grant in substitution for a canceled option). No options
may be granted under the DSOP after August 31, 2008.
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<PAGE> 53
Options granted under the DSOP will be for a term of not more than ten
years and may be subject to such conditions as Board may in its discretion
determine at the date of grant. Each such option will vest in full on the first
anniversary of its date of grant. The Board may permit the exercise price of any
option to be paid, all or in part, by delivery to the Company of (i) other
shares of Class A Common Stock of the Company, (ii) a one year promissory note
(with shares purchased thereby having a value equal to at least 150 percent of
the principal amount of the note pledged thereunder), or (iii) with a broker
guarantee to deliver cash. No option is transferable by the optionee other than
by the laws of descent and distribution or upon the consent of the Board.
In the event a director is removed for cause or voluntarily resigns, his or
her options will expire immediately. In the event a director ceases to serve as
such because of any other reason, including not being reelected, such director
may exercise his or her options at any time prior to the earlier of (i) the
close of business on the normal expiration date of such options or (ii) 90 days
from the date of such cessation to the extent his or her options were
exercisable as of the date of such cessation.
The Board may amend or discontinue the DSOP at any time. However, no such
amendment or discontinuation may (a) change or impair any option previously
granted without the consent of the optionee, or (b) without the approval of
stockholders, (i) increase the maximum number of shares which may be purchased
pursuant to options granted under the DSOP, (ii) change the minimum purchase
price of any option (except for certain adjustments), or (iii) change the
limitations on the option period or extend the time during which options may be
granted under the plan. Any other amendment that must be approved by the
stockholders of the Company in order to comply with applicable law or the rules
national securities exchange upon which the Class A Common Stock is traded or
quoted will not be effective unless and until such approval has been obtained in
compliance with such applicable law or rules.
The Company understands that no gain or loss will be recognized to an
optionee upon the grant of an option under the DSOP, but that upon exercise of
the option ordinary income will be recognized by the optionee measured by the
excess of the fair market value of the shares of Class A Common Stock acquired
over the option price. The Company will be entitled to a deduction equal to the
amount of ordinary income recognized to the optionee. An optionee's basis in
shares acquired upon the exercise of an option will be equal to the option price
plus the amount of ordinary income recognized to the optionee. An optionee's
holding period begins on the date on which the option is exercised.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation paid
to the Company's Chief Executive Officer and to each of its other executive
officers whose total annual salary and bonus exceeded $100,000 (collectively,
the "Named Executive Officers") for all services rendered to the Company during
Fiscal 1997.
52
<PAGE> 54
SUMMARY COMPENSATION TABLE FOR FISCAL 1997
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- -------------
OTHER SECURITIES
FISCAL ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(#)(3) COMPENSATION(4)
- --------------------------- ------ -------- -------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Kevin M. Swan(5).......... 1997 $257,718 $225,250 $4,940 27,500 $14,791
President and Chief
Executive Officer
Peter D. Gortz............ 1997 133,521 58,185 -- 20,268 12,095
Senior Vice President and
Chief Operating
Officer -- North America
Dirk Barrie(6)............ 1997 141,303 50,431 -- 20,268 3,900
Senior Vice President and
President -- European
Group
</TABLE>
- ---------------
(1) The bonus amounts reported for Mr. Swan and Mr. Gortz include a formula
based nondiscretionary payment and a discretionary payment pursuant to a
bonus plan for domestic employees of the Company. The bonus amount reported
for Mr. Barrie includes a formula based nondiscretionary payment and a
discretionary payment pursuant to a bonus plan for European employees of the
Company.
(2) The amount reported in this column reflects the payment by the Company of
federal income tax incurred by the Named Executive Officer relating to
certain executive officer benefits. This column excludes perquisites and
other personal benefits because for each Named Executive Officer those items
did not exceed the lesser of $50,000 or 10% of his total annual salary.
(3) The underlying securities shown consist of shares of Class B Common Stock
subject to options granted under the Company's 1996 Key Employee Stock
Option Plan.
(4) The amount reported in this column for Mr. Barrie is a pension allowance.
Amounts reported in this column for Messrs. Swan and Gortz include the
following:
<TABLE>
<CAPTION>
PAID PORTION OF
PARENT COMPANY PARENT COMPANY EXECUTIVE
CONTRIBUTIONS TO ITS ALLOCATIONS TO ITS OFFICER
SUPPLEMENTAL RETIREMENT EMPLOYEE STOCK LIFE INSURANCE
NAME YEAR AND SAVINGS PLAN OWNERSHIP PLAN* PROGRAMS
---- ---- ----------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Kevin M. Swan............ 1997 $9,396 $4,975 $420
Peter D. Gortz........... 1997 7,146 4,763 186
</TABLE>
- ---------------
* The Parent Company allocated 32.7 shares of its capital stock to the
account of Mr. Swan and 31.3 shares of its capital stock to the
account of Mr. Gortz under its Employee Stock Ownership Plan. The fair
market value of those shares was determined by independent appraisal
in connection with the annual valuation of the Parent Company's
capital stock for the Trustees of the Employee Stock Ownership Trust.
(5) Mr. Swan also participated in the Parent Company's long-term incentive plan
for senior management personnel (the "Parent Incentive Plan"). The Parent
Incentive Plan, which is based upon economic value added (EVA(R))
principles, is administered in accordance with separate three-year periods.
Prior to the commencement of each three-year period, every participant is
assigned a target award for each of the three years; the target award for
any given year may or may not be met or exceeded based upon the performance
of the Parent Company or the Company, as the case may be, and the
participant for that year. The amount actually earned for each such year
(there is no maximum limit on any such earned amount) is not paid out until
after completion of the third and final year of each three-year period;
instead, the earned amount is credited to the participant's account under
the Parent Incentive Plan. The
53
<PAGE> 55
current three-year period under the Parent Incentive Plan consists of Fiscal
1996, 1997 and 1998. The amounts earned by Mr. Swan for Fiscal 1996 and 1997
were $143,325 and $178,875, respectively, and his target award for Fiscal 1998
is $135,000. It is anticipated that Mr. Swan will receive payment of the
aggregate earned amount for the current three-year period in January 1999.
Upon the completion of Fiscal 1998, Mr. Swan will no longer participate in
the Parent Incentive Plan.
(6) Mr. Barrie's compensation is paid in Belgium francs. Accordingly, the
amounts reported in the table have been translated into U.S. dollars based
upon the average exchange rate during Fiscal 1997 of .027125 U.S. dollar per
Belgium franc.
Stock Option Grants in Fiscal 1997
The following table provides information concerning grants of options to
purchase shares of Class B Common Stock made during Fiscal 1997 to the Named
Executive Officers under the Company's 1996 Key Employee Stock Option Plan.
OPTION GRANTS IN FISCAL 1997(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR SHARE(2) DATE 5% 10%
---- ---------- ------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kevin M. Swan......... 27,500 31.4% $4.51 6-1-07 $77,983 $197,624
Peter D. Gortz........ 20,268 23.1 4.51 6-1-07 57,473 145,649
Dirk Barrie........... 20,268 23.1 4.51 6-1-07 57,473 145,649
</TABLE>
- ---------------
(1) During Fiscal 1998, the Company granted options under the 1996 Key Employee
Stock Option Plan with an exercise price of $10.09 per share to the Named
Executive Officers for the following numbers of shares of Class B Common
Stock: Mr. Swan -- 66,000; Mr. Gortz -- 16,500; and Mr. Barrie -- 16,500.
The Company intends to grant additional options effective at the
commencement of the Offering under the Company's 1998 Employee Stock Option
Plan with an exercise price per share equal to the initial public offering
price to the Named Executive Officers for the following numbers of shares of
Class A Common Stock: Mr. Swan -- 100,000; Mr. Gortz -- 25,000; and Mr.
Barrie -- 20,000.
(2) The exercise price of options granted under the 1996 Key Employee Stock
Option Plan is equal to the fair market value of the Company's Class B
Common Stock on the date of grant. The fair market value was determined in
reliance upon an independent appraisal prepared at the direction of the
Board of Directors.
(3) The assumed 5% and 10% rates of stock appreciation are provided in
accordance with rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the possible future
appreciation of the Company's Common Stock. The dollar amounts in these
columns are not discounted to present value and are prior to the payment of
applicable taxes. This table does not account for any appreciation in the
actual price of the Common Stock from the date of grant to the current date.
Option Exercises in Fiscal 1997 and Fiscal 1997 Year-End Values
None of the Named Executive Officers exercised any options to purchase
Common Stock during Fiscal 1997. The following table provides certain
information concerning the value of unexercised options held by the Named
Executive Officers at September 30, 1997.
54
<PAGE> 56
AGGREGATE OPTION VALUES AT FISCAL 1997 YEAR-END
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT SEPTEMBER 30, 1997 AT SEPTEMBER 30, 1997(1)
------------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
Kevin M. Swan...................... 25,751 78,996 $158,720 $470,902
Peter D. Gortz..................... 6,006 20,267 37,019 113,127
Dirk Barrie........................ 6,006 20,267 37,019 113,127
</TABLE>
- ---------------
(1) The amounts reported were calculated by subtracting the exercise price from
$10.09, the fair market value at September 30, 1997 of the Company's Class B
Common Stock as determined in reliance upon an independent appraisal
prepared at the direction of the Board of Directors.
EMPLOYEE STOCK OPTION PLANS
1998 Plan
Immediately prior to the Offering, the Board of Directors of the Company
will adopt, and the Parent Company as sole stockholder of the Company will
approve, the 1998 Employee Stock Option Plan (the "1998 Plan"). The 1998 Plan
will be administered by a Committee of the Board of Directors, consisting of two
or more directors who are not eligible to receive options under the 1998 Plan.
The Committee has authority to determine the persons to be granted options under
the 1998 Plan, the number of shares subject to each option, the time or times at
which options will be granted, the option price of the shares subject to each
option (which price shall not be less than the fair market value of the shares
at the date of grant), and the time or times when each option becomes
exercisable and the duration of the exercise period. Unless otherwise determined
by the Committee, options become exercisable as to one-fourth of the shares
subject thereto on each of the first, second, third, and fourth anniversaries of
the date of grant.
Options may be granted under the 1998 Plan to employees of the Company.
Initially, options may be granted under the 1998 Plan with respect to a total of
not more than 300,000 shares of Class A Common Stock, subject to antidilution
and other adjustment provisions. An additional 150,000 shares of Class A Common
Stock will be reserved for options to be granted under the 1998 Plan on October
1 of each of the years 1999 through 2001. No options may be granted under the
1998 Plan after August 31, 2008. If an option expires or is terminated or
canceled unexercised as to any shares, such released shares may again be
optioned (including a grant in substitution for a canceled option).
Options granted under the 1998 Plan will be for such term of not more than
ten years as shall be determined by the Committee at the date of the grant and
may be subject to such conditions as the Committee may in its discretion
determine at the date of grant. The Committee may accelerate the exercisability
of any option or, at any time before the expiration or termination of an option
previously granted, extend the terms of such option for such additional period
as the Committee, in its discretion, shall determine, except that the aggregate
option period with respect to any option, including the original term of the
option and any extensions thereof, shall never exceed ten years. In addition, in
the event of a Change in Control (as defined) of the Company, all options then
outstanding under the 1998 Plan will become immediately exercisable. All
employees of the Company and its subsidiaries are eligible to participate in the
1998 Plan.
The Committee may permit the exercise price to be paid, all or in part, by
delivery to the Company of (i) other shares of Common Stock of the Company, (ii)
a one year promissory note (with shares pledged thereunder) or (iii) with a
broker guarantee to deliver cash. No option is transferable by the optionee
other than by the laws of descent and distribution or upon the consent of the
Committee.
In the event an optionee's employment with the Company is terminated for
cause or an optionee voluntarily resigns, such optionee's options will expire
immediately. In the event of an optionee's death, permanent disability, or
retirement after the age of 65, any option granted to such optionee may continue
to be exercised by such optionee (or, in the case of death or permanent
disability, his or her heirs or legal representative) to the extent such option
was exercisable on the date his or her employment was so
55
<PAGE> 57
terminated, until the earlier of (i) the close of business on the first
anniversary of the date his or her employment was so terminated or (ii) the
close of business on the normal expiration date of such option. In the event an
optionee's employment with the Company is terminated for any other reason, any
option granted to such optionee may continue to be exercised by such optionee,
to the extent such option was exercisable on the date his or her employment was
so terminated, until the earlier of (i) the close of business on the 90th day
after the date his or her employment was so terminated or (ii) the close of
business on the normal expiration date of such option.
The Committee may amend or discontinue the 1998 Plan at any time. However,
no such amendment or discontinuation shall (a) change or impair any option
previously granted without the consent of the optionee, or (b) without the
approval of the holders of a majority of the shares of the Common Stock which
vote in person or by proxy at a duly held stockholders' meeting, (i) increase
the maximum number of shares which may be purchased by all employees pursuant to
the 1998 Plan, (ii) change the minimum purchase price of any option, or (iii)
change the limitations on the option period or increase the time limitations on
the grant of options. Also, any amendment that must be approved by the
shareholders of the Company in order to comply with applicable law or the rules
of the principal national securities exchange upon which Common Stock are traded
or quoted will not be effective unless and until such approval has been obtained
in compliance with such applicable law or rules.
The Company understands that no gain or loss will be recognized to an
optionee upon the grant of an option under the 1998 Plan, but that upon exercise
of the option ordinary income will be recognized to the optionee measured by the
excess of the fair market value of the shares of Common Stock acquired over the
option price. The Company will be entitled to a deduction equal to the amount of
ordinary income recognized to the optionee. An optionee's basis in shares
acquired upon the exercise of an option will be equal to the option price plus
the amount of ordinary income recognized to the optionee. An optionee's holding
period begins on the date on which the option is exercised.
1996 Plan
Under the Company's 1996 Key Employee Stock Option Plan, as amended and
restated ("1996 Plan"), a committee of the Company's Board of Directors (the
"Committee") granted options to purchase shares of the Company's common stock to
certain employees, including executive officers of the Company. Options granted
under the 1996 Plan are intended not to be treated as "incentive stock options"
as that term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended. When the Recapitalization becomes effective, the options granted under
the 1996 Plan will be reclassified as options to purchase shares of Class B
Common Stock of the Company. See "Description of Capital
Stock -- Recapitalization." No additional options will be granted pursuant to
the 1996 Plan.
The Committee determined the number of shares subject to each option, the
time or times at which options were granted, the exercise price of the shares
subject to each option (which price was determined to be not less than the fair
market value of the shares at the most recent fiscal year end), and the time or
times when each option is exercisable and the duration of the exercise period.
As determined by the Committee, options granted under the 1996 Plan become
exercisable (i) with respect to the total number of shares covered by such
option on the first anniversary of the date of grant or (ii) with respect to
one-third of the shares covered by such option on each of the first, second and
third anniversaries of the date of grant. All options granted under the 1996
Plan will expire not later than April 9, 2006.
The Committee may accelerate the exercisability of any option or, at any
time before the expiration or termination of an option previously granted,
extend the terms of such option for such additional period as the Committee, in
its discretion, shall determine, except that the aggregate option period with
respect to any option, including the original term of the option and any
extensions thereof, shall never exceed ten years. If an option expires or is
terminated or canceled unexercised as to any shares, such released shares may
again be optioned.
The Committee may permit the exercise price to be paid, all or in part, by
delivery to the Company of (i) a cashier's or certified check, or (ii)
irrevocable instructions directing the Company to deliver that portion
56
<PAGE> 58
of shares being purchased pursuant to such exercise to a broker for sale in the
public market subject to such broker's guarantee to deliver cash sufficient to
cover the exercise price in full.
In the event of an optionee's death or permanent disability any option
granted to such optionee may continue to be exercised by such optionee (or, in
the case of death or permanent disability, his or her heirs or legal
representative) to the extent such option was exercisable on the date his or her
employment was so terminated, until the earlier of (i) the close of business on
the 90th day after the date his or her employment was so terminated or (ii) the
close of business on the normal expiration date of such option. In the event an
optionee's employment with the Company is terminated without cause, any option
granted to such optionee may continue to be exercised by such optionee, to the
extent such option was exercisable on the date his or her employment was so
terminated, until the earlier of (i) the close of business on the 60th day after
the date his or her employment was so terminated or (ii) the close of business
on the normal expiration date of such option. In the event an optionee's
employment with the Company is terminated for any other reason, such optionee's
options and all rights pursuant thereto will expire immediately.
No option is transferable by the optionee other than by the laws of descent
and distribution or upon the consent of the Committee.
The Committee may amend or discontinue the 1996 Plan at any time. However,
no such amendment or discontinuation shall change or impair any option
previously granted without the consent of the optionee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to this Offering, the compensation of the Company's executive
officers was determined and fixed by the Company's Board of Directors,
consisting of Dean L. Griffith, Joseph R. Maslick and Kevin M. Swan, the
Company's President and Chief Executive Officer. Subsequent to this Offering,
the terms of compensation of the Company's executive officers will be determined
by the Compensation Committee of the Company's Board of Directors, none of whose
members will be employees of the Company. No executive officer of the Company
serves as a member of the board of directors or compensation committee of any
entity which has one or more executive officers serving as members of the
Company's Board of Directors or Compensation Committee.
CERTAIN TRANSACTIONS
In accordance with a standing policy of the Parent Company applicable to
certain senior officers of the Parent Company and its subsidiaries, including
the Company, in May 1995 the Company made a loan to Mr. Swan in the principal
amount of $50,000. Interest on the principal amount of the Company's loan to Mr.
Swan accrues at a rate of 7%, compounded annually. Mr. Swan is obligated to pay
the Company the outstanding amount of the loan, including accrued interest, in
the event his employment with the Company terminates for any reason prior to May
4, 2000. If he remains in the employ of the Company through that date, the loan
and related accrued interest will be forgiven by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the date of this Prospectus, no shares of Class A Common Stock are
outstanding. Upon completion of the Offering, the only shares of Class A Common
Stock that will be outstanding are those that will be issued in the Offering.
The following table sets forth as of June 30, 1998, and as adjusted to reflect
the sale of the shares of Class A Common Stock offered hereby, certain
information regarding the beneficial ownership of the Class B Common Stock by
(i) each person known by the Company to be the beneficial owner of 5% or more of
any class of the Company's voting securities, (ii) each of the Company's
directors and nominees for director, (iii) each of the Named Executive Officers,
and (iv) all directors, nominees for director and executive officers of the
Company as a group. Certain employees of the Company, including the Named
57
<PAGE> 59
Executive Officers, will be given the opportunity to purchase shares of Class A
Common Stock in the Offering at the public offering price set forth on the cover
page of this Prospectus.
<TABLE>
<CAPTION>
SHARES OF CLASS B
COMMON STOCK BENEFICIALLY SHARES OF CLASS B
OWNED BEFORE OFFERING(1) COMMON STOCK BENEFICIALLY
---------------------------- OWNED AFTER OFFERING(1)
% OF TOTAL -------------------------------------
EQUITY AND TOTAL % OF TOTAL % OF TOTAL
NAME(2) NUMBER VOTING POWER NUMBER EQUITY VOTING POWER
------- --------- ---------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Griffith Laboratories International,
Inc.(3)............................ 5,225,000 97.6 5,225,000 66.6 93.3
Dean L. Griffith..................... -- -- -- -- --
Joseph R. Maslick.................... -- -- -- -- --
Kevin M. Swan(4)..................... 51,502 * 51,502 * *
Peter D. Gortz(4).................... 12,017 * 12,017 * *
Dirk Barrie(4)....................... 12,017 * 12,017 * *
...................... -- -- -- -- --
...................... -- -- -- -- --
All directors, nominees for director
and executive officers as a group
(10 persons)(4).................... 75,536 1.4 75,536 * 1.4
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Class B Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Under those rules, a person is generally
regarded as the beneficial owner of: (i) shares as to which he, she or it
possesses sole or shared voting or investment power; and (ii) shares which,
although not issued, are subject to a stock option which is exercisable
within 60 days of the date of this Prospectus.
(2) Unless otherwise indicated, the address of such person is c/o Griffith Micro
Science International, Inc., 2001 Spring Road, Suite 500, Oak Brook,
Illinois 60523-1887.
(3) Griffith Laboratories International, Inc. ("GLII") is a wholly-owned
subsidiary of Griffith Laboratories, Inc. ("GLI"). Dean L. Griffith, members
of his family and trusts established for their benefit collectively
beneficially own a substantial majority of the issued and outstanding voting
stock of GLI. The address of GLII and GLI is One Griffith Center, Alsip,
Illinois 60803-3495.
(4) Consists entirely of shares of Class B Common Stock subject to outstanding
stock options held by such person which are exercisable within 60 days of
the date of this Prospectus.
RELATIONSHIP WITH PARENT COMPANY
BACKGROUND
The Parent Company, which was organized in 1919 and is headquartered in
Alsip, Illinois, a suburb of Chicago, is engaged through subsidiaries which
comprise its Food Group in the creation and manufacture of custom blended
coatings, flavorings and flour-based blends used by food processing and food
service companies worldwide to impart or improve the taste, texture and
appearance of a variety of food products and in the production of soup bases.
During the 1930s, the Parent Company patented the use of ethylene oxide to
sterilize dry food ingredients. During the 1940s, the Parent Company received
patents for ethylene oxide sterilization of hospital and medical devices.
Initially, the Parent Company used the process to sterilize herbs and spices
which it imported for use by its Food Group. Beginning in the 1950s, while
continuing to do its own sterilization, the Parent Company began offering
contract ethylene oxide sterilization services to others. In 1970, the Parent
Company organized a separate division to operate its contract ethylene oxide
sterilization business. Thereafter, the business was transferred to the Company,
except that its attendant intellectual property was retained by the Parent
Company and its use licensed to the Company.
58
<PAGE> 60
Today, there is relatively little operational overlap between the business
of the Parent Company and the business of the Company. The Parent Company does
render a variety of administrative and financial support services to the
Company, and it is expected to continue to do so after completion of the
Offering. The Parent Company is also the owner of certain intellectual property
which it licenses to the Company for use in the Company's business. Prior to
completion of the Offering, the Parent Company will have assigned this
intellectual property to the Company as a contribution to capital. In order to
document and establish the terms of these arrangements and other aspects of
their continuing relationship, the Company and the Parent Company will, prior to
the completion of the Offering, have entered into the Intercompany Agreements,
which are described below.
The Intercompany Agreements are not the result of arm's length negotiations
between independent parties. There can be no assurance that their terms and
conditions are or will remain the same as those for agreements negotiated at
arm's length. It is the intention of the Company and the Parent Company,
however, that the Intercompany Agreements, taken as a whole, should accommodate
the parties' respective interests in a manner that is fair to each of them,
while continuing certain mutually beneficial arrangements. In addition, the
Committee of Independent Directors of the Company's Board of Directors, whose
members will not be otherwise affiliated with either the Company or the Parent
Company, will be required to review and approve the terms of all material
agreements and transactions, and any material amendments to such agreements
(including amendments to the Intercompany Agreements) between the Company and
the Parent Company which are entered into or occur subsequent to the Offering.
The following summary of the material terms of the Intercompany Agreements
is qualified in its entirety by reference to the provisions of such agreements,
which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
SHAREHOLDER AGREEMENT
Prior to the completion of the Offering, the Company and the Parent Company
will have entered into a Shareholder Agreement (the "Shareholder Agreement"),
pursuant to which the Company has granted certain rights (the "Registration
Rights") to the Parent Company with respect to the registration under the
Securities Act of 1933 (the "Securities Act") of: (i) the shares of Class B
Common Stock owned by the Parent Company at the closing of the Offering; and
(ii) the shares of Class A Common Stock into which such shares of Class B Common
Stock are convertible (together, the "Registrable Securities"). Pursuant to the
Shareholder Agreement, the Parent Company will be able to require the Company,
not more than once in any 365-day period commencing on the first anniversary of
the closing of the Offering to file a registration statement under the
Securities Act covering the registration of the Registrable Securities,
including in connection with an offering by the Parent Company of its securities
that are exchangeable for the Registrable Securities (the "Demand Registration
Rights"). The Parent Company's Demand Registration Rights are subject to certain
limitations, including that any such registration cover a number of Registrable
Securities having a fair market value of at least $2.5 million at the time of
the request for registration and that the Company may be able to temporarily
defer a Demand Registration to the extent it conflicts with another public
offering of securities by the Company or would require the Company to disclose
certain material non-public information. In addition, after the Parent Company
no longer owns a majority of the voting power of the outstanding capital stock
of the Company, it may exercise its Demand Registration Rights on not more than
three occasions. The Parent Company will also be able to require the Company to
include Registrable Securities owned by the Parent Company in a registration by
the Company of its securities (the "Piggyback Registration Rights"), subject to
certain conditions, including the ability of the underwriters to limit or
exclude Registrable Securities from such an offering.
The Company and the Parent Company will share equally the out-of-pocket
fees and expenses of the Company associated with a demand registration and the
Parent Company will pay its pro rata share of underwriting discounts,
commissions, and related expenses (the "Selling Expenses"). The Company will pay
all expenses associated with a piggyback registration except that the Parent
Company will pay its pro rata share of the Selling Expenses. The Shareholder
Agreement contains certain indemnification and contribution provisions (i) by
the Parent Company for the benefit of the Company and related persons, as well
as any
59
<PAGE> 61
potential underwriter, and (ii) by the Company for the benefit of the Parent
Company and related persons, as well as any potential underwriter. The Parent
Company's Demand Registration Rights will terminate on the date that the Parent
Company owns, on a fully converted or exercised basis with respect to such
securities held by the Parent Company, Registrable Securities representing less
than 10% of the then issued and outstanding voting stock of the Company. The
Parent Company's Piggyback Registration Rights will terminate at such time as it
is able to sell all of its Registrable Securities pursuant to Rule 144 under the
Securities Act within a three-month period. The Parent Company also may transfer
its Registration Rights to any Permitted Transferee of Class B Common Stock, as
defined in the Company's Restated Certificate of Incorporation, or to any
transferee from it of Registrable Securities that represent, on a fully
converted or exercised basis with respect to the Registrable Securities
transferred, at least 20% of the then issued and outstanding voting stock of the
Company at the time of transfer; provided, however, that any such transferee
will be limited to (i) two demand registrations if the transfer conveys less
than a majority but more than 30% and (ii) one demand registration if the
transfer conveys 30% or less of the then issued and outstanding voting stock of
the Company.
The Shareholder Agreement also provides that the Parent Company, at any
time when it holds less than 50% of the combined voting power of all outstanding
shares of capital stock of the Company, may demand that within 12 months the
Company change its name to a name that does not include the word "Griffith,"
cease using any trademark or trade name that contains the word "Griffith," and
cease using the word "Griffith" in any manner in connection with the Company's
business.
ADMINISTRATIVE SERVICES AGREEMENT
Prior to the completion of the Offering, the Company and the Parent Company
will have entered into an agreement (the "Administrative Services Agreement")
pursuant to which the Parent Company will continue to provide various services
to the Company as requested or as otherwise required by the Administrative
Services Agreement. These services include information systems, finance and
accounting, treasury, legal, insurance and risk management, taxation, human
resources and employee benefits, strategic planning, management services and
systems and procedures. The Administrative Services Agreement will have an
initial term of ten years and thereafter will renew automatically for successive
one year terms unless either party gives the other not less than six months'
prior written notice of termination.
The Company will pay a quarterly fee for these services intended to reflect
a reasonable approximation of the cost to the Parent Company of providing such
services to the Company. A portion of the services have been and will continue
to be provided by the Parent Company's Food Group. In prior periods, the Company
has paid the Parent Company for the cost of the Food Group services, which
amounted to approximately $313,000 in Fiscal 1997. The balance of the services
have been and are expected to continue to be provided principally by the Parent
Company's Corporate Group. No charge was previously made to the Company for the
Corporate Group services. The Company believes that in Fiscal 1999 its aggregate
cost for the Corporate Group services is not likely to exceed $500,000. At the
request of the Company, the Parent Company may also elect, at its sole option
and discretion, to provide guaranties of specified financial obligations of the
Company, in which case the Parent Company would receive additional fees.
TAX MATTERS AGREEMENT
Prior to the completion of the Offering, the Company and the Parent Company
will have entered into an agreement (the "Tax Matters Agreement") which governs
the allocation between the parties of state and federal tax liabilities and
obligations. Pursuant to the Tax Matters Agreement, for periods prior to the
date of completion of the Offering (the "Deconsolidation Date"), the Company is
responsible for its tax liabilities computed as though it filed separate tax
returns for such periods. From and after the Deconsolidation Date, the Company
is responsible for all tax liabilities incurred by it but the Parent Company
will have the right and obligation, subject to certain constraints, to: (i)
prepare and file the Company's tax returns; (ii) conduct all audits of and
litigation regarding the Company's tax returns; and (iii) determine the final
disposition of all tax matters. The Company will reimburse the Parent Company
through the Administrative Services Agreement for all internal tax
administration costs relating to the Company incurred by the Parent Company. The
Tax Matters Agreement will have an initial term of ten years and thereafter will
renew automatically for additional
60
<PAGE> 62
terms of one year unless either party gives the other not less than six months
prior written notice of termination.
INTELLECTUAL PROPERTY ASSIGNMENT
Prior to the completion of the Offering, the Parent Company will have
assigned to the Company all of the trademarks, technical know-how, and other
intellectual property owned by the Parent Company and used in or associated with
the business of the Company (which intellectual property is currently licensed
by the Parent Company to the Company).
CERTAIN OTHER ARRANGEMENTS
The Company's sterilization facility near Toronto, Canada is located in
space leased from the Parent Company. The leased premises occupy a portion of a
building which also houses production facilities of the Parent Company's Food
Group. The space leased by the Company is physically separated from the rest of
the building. The lease will expire in September 2008. In Fiscal 1997, the
Company paid the Parent Company approximately $219,000 in rent and related
charges for this space. See "Business -- Facilities" and Note 12 of the Notes to
Consolidated Financial Statements.
The Company also renders services in the ordinary course of its business
and on customary and competitive terms for the Parent Company's Food Group, the
aggregate amount of which in Fiscal 1997 was approximately $371,000 and which
consist principally of laboratory testing services performed by the Company for
the Food Group in the United Kingdom and sterilization processing performed for
the Food Group in North America. The Company also purchases certain
administrative services in the ordinary course of its business from various
operating units of the Parent Company's Food Group in North America. Subsequent
to the Offering, these services, the aggregate cost of which was approximately
$313,000 in Fiscal 1997, will be performed pursuant to the Administrative
Services Agreement. See Note 12 of the Notes to Consolidated Financial
Statements. In addition, the Parent Company has issued non-binding "comfort
letters" to various European financial institutions in support of borrowings
made by the Company from those institutions.
The Company participates in the qualified profit sharing plan maintained by
the Parent Company, under which substantially all of the Company's employees in
the United States are eligible to participate after six months of employment.
Contributions charged to earnings consist of matching contributions based on the
amount contributed by employees and discretionary amounts set by the Board of
Directors of the Parent Company, a portion of which is allocated to the Company.
The Company will continue to participate in this plan after completion of the
Offering.
DESCRIPTION OF CAPITAL STOCK
RECAPITALIZATION
Prior to the completion of the Offering, a recapitalization of the Company
will have been effected pursuant to which the following will occur
(collectively, the "Recapitalization"):
(i) the total number of authorized shares of capital stock of the
Company will be increased to 100,000,000, consisting of 50,000,000 shares
of Class A Common Stock, 40,000,000 shares of Class B Common Stock and
10,000,000 shares of Preferred Stock; and
(ii) each of the currently outstanding 950,000 shares of common stock
of the Company, all of which are owned by the Parent Company, will be
reclassified into 5.5 shares of Class B Common Stock.
Upon the effectiveness of and to give effect to the Recapitalization, each
of the outstanding options to purchase shares of existing common stock of the
Company which were previously granted pursuant to the 1996 Plan will be
converted, pursuant to the provisions of the 1996 Plan, into an option to
purchase that
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<PAGE> 63
number of shares of Class B Common Stock determined by multiplying the number of
shares of existing common stock subject to the option by 5.5 at an exercise
price per share equal to the current exercise price divided by 5.5.
Each share of Class A Common Stock to be sold by the Company in the
Offering will be issued by the Company from its newly authorized but unissued
shares of Class A Common Stock.
After giving effect to the Recapitalization, the authorized capital stock
of the Company will consist of: (i) 50,000,000 shares of Class A Common Stock,
$.01 par value per share; (ii) 40,000,000 shares of Class B Common Stock, $.01
par value per share; and (iii) 10,000,000 shares of Preferred Stock, $.01 par
value per share. Upon completion of the Offering, there will be outstanding:
2,500,000 shares of Class A Common Stock (2,875,000 if the Underwriters'
over-allotment option is exercised in full); 5,225,000 shares of Class B Common
Stock; and no shares of Preferred Stock. The following summary of the material
terms of the capital stock of the Company is qualified in its entirety by
reference to the provisions of the Restated Certificate of Incorporation of the
Company, which has been included as an exhibit to the Registration Statement of
which this Prospectus is a part.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Except as described below under "Voting," "Dividends and Distributions,"
and "Conversion and Other," the Class A Common Stock and the Class B Common
Stock are identical to each other.
Voting. Each share of Class B Common Stock entitles the holder thereof to
ten votes per share on all matters on which stockholders are entitled to vote
(including election of directors). Each share of Class A Common Stock entitles
the holder thereof to one vote per share on all such matters. All actions
submitted to a vote of stockholders will be voted on by holders of Class A and
Class B Common Stock voting together as a single class, except on matters where
a separate class vote is required by Delaware law. Such matters include
amendments of the Certificate of Incorporation to change the number of
authorized shares of such class, to change the par value of the shares of such
class, or to alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely.
There is no provision in the Certificate of Incorporation permitting
cumulative voting.
All of the currently outstanding shares of Class B Common Stock are owned
by GLII. As a result, GLII will be able to control the election of directors and
the vote on other matters submitted to stockholders, including the approval of
extraordinary corporate transactions. See "Risk Factors -- Control By and
Possible Conflicts of Interest with the Parent Company" and "Relationship with
Parent Company."
Dividends and Distributions. Subject to the paragraph below, the Class A
Common Stock and Class B Common Stock have identical dividend rights, with any
payment of dividends to one class of Common Stock requiring payment of an
identical dividend to the other class.
Dividends consisting of one class of Common Stock may be paid on that class
of Common Stock if dividends consisting of the other class of Common Stock are
paid on the other class of Common Stock on an equal per share basis. The shares
of one class may not be reclassified, subdivided or combined unless there is a
simultaneous equivalent reclassification, combination or subdivision of the
shares of the other class.
The Revolving Credit Agreement which the Company expects to enter into
prior to the Offering will contain a covenant restricting the amount of
dividends which the Company will be permitted to pay. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Conversion and Other. The Class B Common Stock is convertible, at the
option of the holder, into Class A Common Stock on a share-for-share basis. Any
shares of Class B Common Stock which are transferred (other than to certain
Permitted Transferees) shall automatically be converted into Class A Common
Stock on a share-for-share basis. For such purpose, a "Permitted Transferee"
shall mean: (i) any Person which directly or indirectly controls, is controlled
by or is under common control with, the Company (an "affiliate of the Company");
(ii) the shareholders of GLI, but only pursuant to a single transaction in
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<PAGE> 64
which all outstanding shares of Class B Common Stock then held by GLI are
distributed to the shareholders of GLI as part of a tax free spin off; and (iii)
any other corporation or business entity which is not an affiliate of the
Company, but only pursuant to a single transaction approved by the Board of
Directors of the Parent Company in which all outstanding shares of Class B
Common Stock held by the Parent Company are sold to, exchanged with or otherwise
transferred to such other corporation or business entity; and "Person" means any
individual, corporation, association, partnership, limited liability company,
joint venture, trust, organization, business, government or any government
agency or political subdivision thereof or any other entity. In addition, at the
close of business on the first date that the number of outstanding shares of
Class B Common Stock represents less than 10% of the aggregate number of then
outstanding shares of Common Stock, all of the Class B Common Stock shall be
automatically converted into Class A Common Stock on a share-for-share basis.
See "Risk Factors -- Potential Transfer of Control by the Parent Company."
Shares of Class B Common Stock which are converted become authorized and
unissued shares which may be issued by the Board of Directors without further
action by stockholders, except as required by law, and subject to the
limitations on future issuances of Class B Common Stock described below.
Neither the Class A Common Stock nor the Class B Common Stock has any
preemptive rights enabling a holder to subscribe for or receive shares of stock
of the Company of any class.
Shares of Class B Common Stock currently outstanding are, and shares of
Class A Common Stock offered by the Company hereby will be, fully paid and
non-assessable.
Under provisions of the Restated Certificate of Incorporation, every
reference in the Company's Restated Certificate of Incorporation or Bylaws to a
majority or other proportion of stock shall refer to such majority or other
proportion of the votes of such stock (except with respect to the provision
providing for conversion of the Class B Common Stock into Class A Common Stock
upon the Class B Common Stock representing less than 10% of the Common Stock).
Limitation on Future Class B Issuances. The Restated Certificate of
Incorporation prohibits issuances of additional Class B Common Stock other than
upon exercise of existing options or pursuant to any permitted stock dividend or
distribution, as described above.
Liquidation and Mergers. The holders of the Class A Common Stock and Class
B Common Stock will have equal rights, on a share-for-share basis, in the event
of liquidation of the Company (subject to any preferential rights of any
outstanding series of Preferred Stock) or mergers or consolidations of the
Company in which shares of Common Stock are converted into cash, securities or
other property, provided that if the consideration in a merger or consolidation
consists of voting securities, the merger or consolidation agreement may provide
for the holders of Class B Common Stock to receive, on a per share basis, voting
securities with ten times the number of votes per share as those voting
securities to be received by the holders of shares of Class A Common Stock.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 10,000,000 shares of Preferred Stock in one or more
series and to fix the voting powers, designations, preferences, and relative,
participating, optional, or other special rights, and qualifications,
limitations, and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, and the
number of shares constituting any series. Because the Board of Directors has the
power to establish the preferences and rights of the shares of any such series
of preferred stock, it may afford holders of any preferred stock preferences,
powers and rights (including voting rights), senior to the rights of holders of
Common Stock, which could adversely affect the rights of holders of Common
Stock. The Company has no present plan to issue any shares of Preferred Stock.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Harris Trust
Company of New York.
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<PAGE> 65
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no market for the Common Stock. The
Company cannot predict the effect, if any, that future sales of shares, or the
availability of shares for future sale, will have on the market price prevailing
from time to time. Sales of substantial amounts of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
prevailing market prices of the Common Stock.
Upon completion of the Offering, the Company will have 2,500,000 shares of
Class A Common Stock outstanding (2,875,000 if the Underwriters' over-allotment
option is exercised in full). All such shares of Class A Common Stock will be
freely tradable (other than by an "affiliate" of the Company as such term is
defined in the Securities Act) without restriction or registration under the
Securities Act.
Upon completion of the Offering, the Parent Company will own 5,225,000
shares of Class B Common Stock. All such shares were issued and sold by the
Company in a private transaction and are "restricted securities" as such term is
defined in the Securities Act ("Restricted Shares"). Accordingly, neither they
nor the shares of Class A Common Stock into which they are convertible may be
resold by the Parent Company unless registered under the Securities Act or sold
in accordance with an exception therefrom, such as Rule 144 or Rule 144A
thereunder. Due to the restrictions on transferability of the Class B Common
Stock contained in the Company's Restated Certificate of Incorporation, no
public market is expected to develop in the shares of Class B Common Stock. Each
share of Class B Common Stock is however, convertible at any time by the holder
thereof (including the Parent Company) into a share of Class A Common Stock. The
Parent Company has informed the Company that it has no present intention to
convert and sell any shares of Common Stock owned by it and has also agreed not
to convert and sell any Common Stock owned by it prior to the expiration of 180
days from the date of this Prospectus without the prior written consent of ABN
AMRO Incorporated.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, an affiliate of the Company, or a holder of
Restricted Shares who beneficially owns shares that were not acquired from the
Company or an affiliate of the Company within the previous year (all of the
Restricted Shares held by the Parent Company were acquired more than one year
ago for purposes of this condition), would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of Class A Common Stock (approximately 25,000 shares
of Class A Common Stock immediately after the Offering, assuming no exercise of
the Underwriters' over-allotment option) or the average weekly trading volume of
Class A Common Stock during the four calendar weeks preceding the date on which
notice of the sale is filed with the Securities and Exchange Commission. Sales
under Rule 144 are subject to certain requirements relating to manner of sale,
notice and availability of current public information about the Company.
However, a person (or persons whose shares are aggregated) who is not deemed to
have been an affiliate of the Company at any time during the 90 days immediately
preceding the sale and who owns beneficially Restricted Shares is entitled to
sell such shares under Rule 144(k) without regard to the limitations described
above, provided that at least two years have elapsed since the later of the date
the shares were acquired from the Company or from an affiliate of the Company.
The foregoing is a summary of Rule 144 and is not intended to be a complete
description of it.
In addition, as of June 30, 1998 there were outstanding options, granted
under the Company's 1996 Plan, to purchase a total of 505,686 shares of Class B
Common Stock; as of such date, these options had vested and were exercisable as
to 126,176 such shares. Upon the exercise of any such options and the conversion
of the shares of Class B Common Stock issued upon such exercise, the resulting
shares of Class A Common Stock may be publicly sold by the holders thereof,
subject to compliance with the Securities Act. The directors and officers of the
Company have agreed not to convert and sell any Common Stock owned by them prior
to the expiration of 180 days from the date of this Prospectus without the prior
written consent of ABN AMRO Incorporated. The Company also expects to grant
options to purchase an aggregate of 185,000 shares of Class A Common Stock
effective on the date of the Offering pursuant to its 1998 Plan and its DSOP.
None of these options would begin to vest until the first anniversary of their
date of grant. Upon the exercise of any such options, the shares of Class A
Common Stock purchased thereby may also be publicly sold by the holders thereof
subject to compliance with the Securities Act.
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<PAGE> 66
The Company intends to file a registration statement on Form S-8 under the
Securities Act covering approximately 856,000 shares of Class A Common Stock
reserved for issuance under the 1996 Plan and the 1998 Plan and DSOP. Such
registration statement is expected to be filed soon after the Offering and will
automatically become effective upon filing. Accordingly, shares registered under
such registration statement will be available for sale in the open market when
and as such options are exercised.
UNDERWRITING
The underwriters named below (the "Underwriters"), for whom ABN AMRO
Incorporated and Robert W. Baird & Co. Incorporated are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions specified in the underwriting agreement between the Company
and the Representatives (the "Underwriting Agreement"), to purchase from the
Company the respective numbers of shares of Class A Common Stock set forth
opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
UNDERWRITER CLASS A COMMON STOCK
----------- ---------------------
<S> <C>
ABN AMRO Incorporated.......................................
Robert W. Baird & Co. Incorporated..........................
---------
Total............................................. 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions and that the Underwriters will be
obligated to purchase all of the shares of Class A Common Stock offered hereby
(other than those shares covered by the over-allotment option described below)
if any are purchased. The Underwriting Agreement provides that, in the event of
a default by an Underwriter, in certain circumstances the purchase commitments
of non-defaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Class A Common Stock to the public initially at
the public offering price set forth on the cover page of this Prospectus and to
certain selected dealers at such public offering price less a concession not in
excess of $
per share, and that the Underwriters and such dealers may reallow to certain
other dealers, including any Underwriters, a discount not in excess of $ per
share. After the initial offering to the public, the public offering price and
other selling terms may be changed by the Representatives.
The Company has granted to the Underwriters an option, exercisable by ABN
AMRO Incorporated, expiring at the close of business on the 30th day after the
date of this Prospectus, to purchase up to an aggregate of 375,000 additional
shares of Class A Common Stock from it at the public offering price less the
underwriting discount, all as set forth on the cover page of this Prospectus.
Such option may be exercised only to cover over-allotments in the sale of the
shares of Class A Common Stock offered hereby. To the extent such option is
exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares of Class A Common Stock as it was obligated to purchase pursuant to the
Underwriting Agreement.
The Company, all of the Company's directors and officers and the Parent
Company have agreed for a period of 180 days after the date of this Prospectus
not to register for sale, sell, offer, contract to sell, grant an option for
sale or otherwise dispose of or transfer any capital stock of the Company or any
securities convertible into or exchangeable or exercisable for capital stock of
the Company, without the prior written consent of ABN AMRO Incorporated, except,
in the case of the Company, registration and issuances of capital stock pursuant
to the exercise of director and employee stock options granted under the
Company's
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<PAGE> 67
existing incentive plans and in connection with acquisitions (provided that any
recipient in an acquisition of Class A Common Stock during such 180 day period
agrees to be bound by such prohibition during the remainder of the 180 day
period) and, in the case of the officers and directors, pledges of shares and
gifts of shares where the pledgees agree in writing to be bound by the terms of
such agreement.
Prior to the Offering, there has been no public market for the Class A
Common Stock. The initial public offering price will be determined by
negotiations between the Company and the Representatives. Among the factors to
be considered in determining the initial public offering price will be the
future prospects of the Company and its industry in general, revenues, earnings
and certain other financial operating information of the Company in recent
periods, the experience of the Company's management, the general condition of
the equity securities markets, and the price-earnings ratios, price-sales
ratios, market prices of securities and certain financial and operating
information of companies engaged in activities similar to those of the Company.
The estimated initial public offering price range set forth on the cover page of
this Preliminary Prospectus is subject to change as a result of market
conditions and other factors.
The Company and GLII have agreed to indemnify the Underwriters and their
controlling persons against certain liabilities, including civil liabilities
under the Securities Act, or contribute to payments that the Underwriters may be
required to make in respect thereof.
The Company has submitted an application to list the shares of Class A
Common Stock offered hereby on the Nasdaq National Market under the symbol GMSI.
The Representatives, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M of the Exchange Act. Over-allotment
involves syndicate sales in excess of the size of the Offering, which creates a
syndicate short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the Class A Common
Stock in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the Representatives to
reclaim a selling concession from a syndicate member when the Class A Common
Stock originally sold by such syndicate member is purchased in a syndicate
covering transaction to cover syndicate short positions. Such stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the Class A Common Stock to be higher than it would otherwise be in the
absence of such transactions. These transactions may be effected on the Nasdaq
National Market or otherwise and, if commenced, may be discontinued at any time.
The Representatives have informed the Company that they do not intend sales
to discretionary accounts to exceed five percent of the total number of shares
of Class A Common Stock offered by them.
LEGAL MATTERS
The validity of the Class A Common Stock will be passed upon for the
Company by Bell, Boyd & Lloyd, Chicago, Illinois. Certain legal matters will be
passed upon for the Underwriters by Lord, Bissell & Brook, Chicago, Illinois.
EXPERTS
The consolidated financial statements as of September 30, 1996, and 1997
and for each of the periods ended September 30, 1995, 1996 and 1997 included in
this Prospectus and elsewhere in the Registration Statement have been audited by
KPMG Peat Marwick LLP, independent certified public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
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<PAGE> 68
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with respect to the Class A
Common Stock offered hereby. As used herein, the term "Registration Statement"
means the initial Registration Statement and any and all amendments thereto.
This Prospectus omits certain information contained in said Registration
Statement as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the Class A Common Stock
offered hereby, reference is made to the Registration Statement, including the
exhibits thereto. Statements herein concerning the contents of any contract or
other document are not necessarily complete and in each instance reference is
made to such contract or other document filed with the Commission as an exhibit
to the Registration Statement, or otherwise, each such statement being qualified
by and subject to such reference in all respects.
As a result of this offering, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith will file reports and other information with the
Commission. Reports, registration statements, proxy statements, and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10048. Copies of
such materials can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. In addition, the Commission has a web site on the World Wide Web at
http://www.sec.gov, containing registration statements, reports, proxy and
information statements and other information that registrants, such as the
Company, file electronically with the Commission. The Class A Common Stock will
be listed on the Nasdaq National Market, and such reports, registration
statements, proxy statements and other information concerning the Company will
be available at the offices of the Nasdaq National Market, located at 1735 K
Street, N.W., Washington, D.C. 20006.
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<PAGE> 69
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Earnings......................... F-4
Consolidated Statements of Changes in Stockholder's
Equity.................................................... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 70
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Griffith Micro Science International, Inc.
We have audited the accompanying consolidated balance sheets of Griffith
Micro Science International, Inc. (a wholly owned subsidiary of Griffith
Laboratories International, Inc.), and its subsidiaries as of September 30, 1996
and 1997, and the related consolidated statements of earnings, changes in
stockholder's equity, and cash flows for each of the years in the three-year
period ended September 30, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements 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
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 Griffith
Micro Science International, Inc. and its subsidiaries as of September 30, 1996
and 1997 and the results of their operations and their cash flows for each of
the years in the three-year period ended September 30, 1997, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
December 3, 1997
except Note 20 which is as of June 1, 1998
Chicago, Illinois
F-2
<PAGE> 71
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,077 $ 2,722 $ 2,987
Due from Parent -- advance................................ -- 923 --
Receivables:
Trade, less allowance for doubtful accounts of $78 in
1996, $201 in 1997 and $207 in 1998................... 6,799 9,233 9,646
Affiliates.............................................. 11 18 12
Other................................................... 379 456 786
------- ------- -------
Receivables, net.......................................... 7,189 9,707 10,444
------- ------- -------
Inventories............................................... 817 737 631
Prepaid expenses and other current assets................. 580 657 824
Income taxes recoverable.................................. 165 -- --
Current deferred income taxes............................. 145 652 566
------- ------- -------
Total current assets................................ 9,973 15,398 15,452
------- ------- -------
Other assets:
Intangible and other assets............................... 7,205 7,549 7,174
Restricted cash and investments........................... 453 40 --
Long-term receivable -- affiliate......................... 374 -- --
Deferred income taxes..................................... 132 536 704
------- ------- -------
Total other assets.................................. 8,164 8,125 7,878
------- ------- -------
Property, plant and equipment:
Land...................................................... 443 480 474
Buildings and improvements................................ 15,385 16,201 16,442
Equipment................................................. 53,778 59,868 59,536
Cobalt source............................................. -- 3,821 3,654
Construction in progress.................................. 3,364 2,591 8,401
------- ------- -------
Total property, plant and equipment....................... 72,970 82,961 88,507
Less accumulated depreciation and amortization............ 32,813 39,765 42,696
------- ------- -------
Property, plant and equipment, net.................. 40,157 43,196 45,811
------- ------- -------
$58,294 $66,719 $69,141
======= ======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Bank overdrafts........................................... $ 393 $ -- $ 178
Short-term credit facilities.............................. 318 951 2,092
Current maturities of long-term notes payable............. 2,224 2,020 1,108
Due to Parent -- overdraft................................ 1,962 -- 1,284
Accounts payable:
Trade and other......................................... 4,308 4,919 4,292
Affiliates.............................................. 407 262 77
Accrued liabilities....................................... 3,861 6,768 7,046
Income taxes.............................................. -- 1,058 1,278
Current deferred income taxes............................. -- 3 26
------- ------- -------
Total current liabilities........................... 13,473 15,981 17,381
------- ------- -------
Long-term liabilities and deferred credits:
Notes payable, less current maturities.................... 15,391 19,208 18,891
Notes payable -- Parent................................... 392 -- --
Deferred income taxes..................................... 2,650 2,956 3,118
Minority interest in consolidated subsidiary.............. -- 360 427
Other..................................................... 3 208 209
------- ------- -------
Total long-term liabilities and deferred credits.... 18,436 22,732 22,645
------- ------- -------
Stockholder's equity:
Common stock, par value $.01 per share. Authorized
1,000,000 shares in 1996 and 1997 and 1,050,000 in 1998;
issued and outstanding 950,000 shares in 1996, 1997 and
1998.................................................... 10 10 10
Additional paid-in capital................................ 12,004 12,004 12,004
Retained earnings......................................... 14,774 17,500 19,143
Equity adjustment from foreign currency translation....... (403) (1,508) (2,042)
------- ------- -------
Total stockholder's equity.......................... 26,385 28,006 29,115
------- ------- -------
$58,294 $66,719 $69,141
======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 72
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
--------------------------- -----------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE
INFORMATION)
<S> <C> <C> <C> <C> <C>
Net revenues................................. $50,117 $54,771 $60,247 $28,345 $34,917
Cost of revenues............................. 34,842 38,319 40,645 19,379 23,845
------- ------- ------- ------- -------
Gross profit................................. 15,275 16,452 19,602 8,966 11,072
Selling and administrative expenses.......... 10,088 10,171 12,003 5,580 6,398
------- ------- ------- ------- -------
Operating profit before royalty.............. 5,187 6,281 7,599 3,386 4,674
Royalty expense to Parent.................... 2,275 2,481 2,747 1,315 1,543
------- ------- ------- ------- -------
Operating profit............................. 2,912 3,800 4,852 2,071 3,131
------- ------- ------- ------- -------
Other (income) and expense:
Interest expense........................... 1,774 1,519 1,020 525 538
Interest income............................ (69) (164) (145) (61) (87)
Insurance recoveries....................... -- (653) -- -- --
Other, net................................. 151 337 278 121 112
------- ------- ------- ------- -------
Other expense, net........................... 1,856 1,039 1,153 585 563
------- ------- ------- ------- -------
Earnings before income taxes................. 1,056 2,761 3,699 1,486 2,568
------- ------- ------- ------- -------
Income tax expense........................... 39 977 973 750 925
------- ------- ------- ------- -------
Net earnings................................. $ 1,017 $ 1,784 $ 2,726 $ 736 $ 1,643
======= ======= ======= ======= =======
Net earnings per common share:
Basic...................................... $ 1.07 $ 1.88 $ 2.87 $ 0.77 $ 1.73
======= ======= ======= ======= =======
Diluted.................................... $ 1.07 $ 1.88 $ 2.86 $ 0.77 $ 1.71
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 73
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
ADDITIONAL FROM FOREIGN TOTAL
COMMON PAID-IN RETAINED CURRENCY STOCKHOLDER'S
STOCK CAPITAL EARNINGS TRANSLATION EQUITY
------ ---------- -------- ------------ -------------
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1994........... $ 1 $ 9,728 $11,983 $ 240 $21,952
Net earnings............................ -- -- 1,017 -- 1,017
Capital contribution from Griffith
Laboratories International, Inc....... -- 2,275 -- -- 2,275
Current year foreign currency
translation effect.................... -- -- -- 18 18
--- ------- ------- ------- -------
Balance at September 30, 1995........... 1 12,003 13,000 258 25,262
Net earnings............................ -- -- 1,784 -- 1,784
Reduction of par value from $1.00 per
share to $.01 per share............... (1) 1 -- -- --
Issuance of 949,000 shares of common
stock to effect a 950-for-1 stock
split................................. 10 -- (10) -- --
Current year foreign currency
translation effect.................... -- -- -- (661) (661)
--- ------- ------- ------- -------
Balance at September 30, 1996........... 10 12,004 14,774 (403) 26,385
Net earnings............................ -- -- 2,726 -- 2,726
Current year foreign currency
translation effect.................... -- -- -- (1,105) (1,105)
--- ------- ------- ------- -------
Balance at September 30, 1997........... 10 12,004 17,500 (1,508) 28,006
Net earnings (unaudited)................ -- -- 1,643 -- 1,643
Current period foreign currency
translation effect (unaudited)........ -- -- -- (534) (534)
--- ------- ------- ------- -------
Balance at March 31, 1998 (unaudited)... $10 $12,004 $19,143 $(2,042) $29,115
=== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 74
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, MARCH 31,
--------------------------- -----------------
1995 1996 1997 1997 1998
------- ------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings.............................................. $ 1,017 $ 1,784 $ 2,726 $ 736 $ 1,643
Adjustments to reconcile net earnings to net cash provided
by operating activities net of acquisition in 1997:
Depreciation and amortization........................... 5,380 5,884 6,108 3,074 3,620
Deferred income tax (benefit) expense................... 1,049 370 (795) 59 83
Cash provided by (used in) changes:
Receivables, net...................................... (251) (95) (1,699) (1,746) (670)
Inventories........................................... (120) (159) 109 107 45
Prepaid expenses and other current assets............. (21) (173) (13) (109) (175)
Accounts payable and accrued liabilities.............. 1,237 (700) 2,992 (336) (534)
Income taxes.......................................... (1,513) 1,296 1,163 395 220
Other, net.............................................. (44) 124 59 2 65
------- ------- ------- ------- -------
Net cash provided by operating activities................... 6,734 8,331 10,650 2,182 4,297
------- ------- ------- ------- -------
Cash flows from financing activities:
Increase (decrease) in bank overdrafts and short-term
credit facilities....................................... 1,209 (7,066) (1,019) 2,766 1,320
(Decrease) increase in due to Parent -- overdraft......... (3,858) (1,636) (1,962) (1,962) 1,284
Proceeds from additional long-term debt and notes
payable................................................. 6,343 6,440 6,735 2,020 171
Principal payments of long-term debt and notes payable.... (1,240) (1,441) (2,965) (1,958) (997)
Increase (decrease) in notes payable -- Parent............ 864 (1,016) (392) (392) --
Increase in debt issuance costs........................... (199) (134) -- -- --
(Decrease) increase in other long-term liabilities and
deferred credits........................................ (83) (21) 27 -- 1
Capital contribution from Griffith Laboratories
International, Inc. .................................... 1,090 -- -- -- --
------- ------- ------- ------- -------
Net cash provided by (used in) financing activities......... 4,126 (4,874) 424 474 1,779
------- ------- ------- ------- -------
Cash flows from investing activities:
(Increase) decrease in due from Parent -- advance......... -- -- (923) (586) 923
Proceeds from disposition of property, plant and
equipment............................................... 3 18 5 -- 2
Additions to property, plant and equipment................ (8,533) (3,943) (6,300) (2,195) (6,500)
Acquisition, net of cash and cash equivalents............. -- -- (2,585) -- --
(Increase) decrease in restricted cash and investments.... (910) 457 413 162 40
(Increase) decrease in long-term receivables and other
assets.................................................. (403) (378) 173 319 (37)
------- ------- ------- ------- -------
Net cash used in investing activities....................... (9,843) (3,846) (9,217) (2,300) (5,572)
------- ------- ------- ------- -------
Effect of foreign currency rate fluctuations................ (275) 97 (212) (94) (239)
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash equivalents........ 742 (292) 1,645 262 265
Cash and cash equivalents at beginning of the period........ 627 1,369 1,077 1,077 2,722
------- ------- ------- ------- -------
Cash and cash equivalents at end of the period.............. $ 1,369 $ 1,077 $ 2,722 $ 1,339 $ 2,987
======= ======= ======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest................................................ $ 1,273 $ 1,165 $ 996 $ 434 $ 487
Income taxes............................................ 494 731 992 617 468
======= ======= ======= ======= =======
Noncash financing and investing activities:
Stock split............................................. $ -- $ 10 $ -- $ -- $ --
Reduction in par value of common stock.................. -- 1 -- -- --
Contribution to capital by Griffith Laboratories
International, Inc. of its receivable from Griffith
Micro Science, Limited (U.K.)......................... $ 1,185 $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 75
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1998 AND FOR THE SIX MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Griffith Micro Science International, Inc. (the Company) is a multinational
provider of contract sterilization services utilizing ethylene oxide and gamma
radiation technologies. The Company's principal line of business is providing
sterilization management services to manufacturers of single-use medical
devices, and to a much lesser extent pharmaceuticals, cosmetics and food
products and to hospitals. In addition, the Company also provides related
laboratory testing, consulting and logistics management services to its
customers. Sterilization services are sold to customers primarily in the United
States, Europe, Canada and Mexico.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, after elimination of significant intercompany balances and
transactions. The Company is a wholly owned subsidiary of Griffith Laboratories
International, Inc. (Parent). The ultimate parent of the Company is Griffith
Laboratories, Inc. (the Holding Company).
Fiscal Year
The fiscal year-end of the Company and its subsidiaries is September 30.
Prior to 1996, the fiscal year of certain subsidiaries of the Company ended on
the last Saturday in September. The fiscal years ended September 30, 1997 and
1996 contained 52 weeks, and the year ended September 30, 1995 contained 53
weeks.
Revenue Recognition
Revenue from the Company's contract services is recognized upon completion
of the sterilization process and upon completion of the laboratory testing,
consulting or logistics management service.
Translation of Currencies
Assets and liabilities of the Company's non-U.S. subsidiaries are
translated into U.S. Dollars at the current rate of exchange in effect on the
balance sheet date. The resulting translation adjustments are recorded as a
currency component in stockholder's equity. Income and expenses are translated
at the average rates of exchange prevailing during the year.
Inventories
Inventories are stated at the lower of cost or realizable value. The cost
of inventory is determined by the first-in, first-out (FIFO) method.
F-7
<PAGE> 76
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are computed
principally on a straight-line basis over the estimated useful lives of the
related assets. The following ranges of lives are used for depreciation and
amortization purposes:
<TABLE>
<CAPTION>
TYPE YEARS
---- -----
<S> <C>
Buildings................................................... 20-40
Leasehold improvements...................................... 5-10
Machinery and equipment..................................... 3-10
Furniture and fixtures...................................... 5-10
</TABLE>
Cobalt Source
Cobalt 60 isotope is used by the Company in providing gamma sterilization
services. The isotope is stated at acquired cost and is amortized using the
declining balance method, which is similar to the natural decay factor of the
material. The annual amortization charge is approximately 12.3% of the net book
value per year, plus the residual value amortized on a straight-line basis over
a useful life of 20 years.
Intangible and Other Assets
Intangible and other assets include primarily goodwill and debt issuance
costs. Goodwill represents the cost in excess of the fair value of the net
assets of acquired companies, and is amortized on a straight-line basis over a
20-year period. Debt issuance costs are amortized on the straight-line method
over the term of the related debt.
Management periodically reviews whether there has been a permanent
impairment to the value of goodwill and other assets by evaluating various
factors including current operating results, market and economic conditions, and
anticipated future results and cash flows.
Income Taxes
The operating results of the Company and the Parent are included in the
consolidated federal income tax returns of the Holding Company. U.S. income
taxes have been allocated to the Company based upon income taxes which the
Company would have provided on a separate company basis.
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.
The Company provides U.S. income taxes on its equity in the undistributed
earnings of those subsidiaries when management intends that such earnings will
be remitted in the future. For all other subsidiaries (principally non-U.S.
subsidiaries), management intends to reinvest its equity in undistributed
earnings (approximately $6,832 at September 30, 1997) indefinitely, and
accordingly, no U.S. income taxes have been provided thereon.
F-8
<PAGE> 77
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash Equivalents
Cash and cash equivalents include cash on hand, amounts due from banks,
treasury bills, commercial paper and money market funds.
Restricted Cash and Investments
Restricted cash and investments consist of unused proceeds of industrial
revenue bonds issued for purposes of plant construction. The restricted cash and
investments are held in trust until expended, and are presented as a long-term
asset on the consolidated balance sheets.
Financial Instruments and Risk Management
The Company utilizes interest rate cap, collar and swap agreements to
reduce the impact of increases in interest rates on certain of its floating rate
debt. Premiums paid for interest rate agreements are recorded on the balance
sheet and amortized to interest expense over the life of the agreement. Gains
and losses on these contracts are recorded as a component of interest expense.
Stock-based Compensation
In fiscal 1997, the Company adopted the disclosure requirements of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," ("Statement 123"). As allowed under Statement 123, the Company
continues to account for its employee stock option plans in accordance with the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"). Under APB 25, no compensation expense is
recognized when the exercise price of the Company's stock options equals the
fair market value of the underlying stock on the date of grant. Pro forma
disclosure of net earnings is provided in Note 17 as if the fair value basis
method prescribed by Statement 123 had been applied in measuring employee
compensation expense.
Net Earnings Per Share
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share," ("Statement 128") which replaces the
provisions of Accounting Principles Board Opinion No. 15, "Earnings per Share".
Statement 128, which establishes the standards for computing and reporting
earnings per share, requires the presentation of basic and diluted earnings per
share. Basic earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Minority Interest in Consolidated Subsidiary
The minority interest in consolidated subsidiary represents the minority
stockholder's proportionate share of the equity of Griffith Mediris S.A. At
March 31, 1998 and September 30, 1997, the Company's ownership interest in
Griffith Mediris S.A. was 82.8%.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the balance
F-9
<PAGE> 78
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
sheet date of the Company, and the reported amounts of net revenues and expenses
during its fiscal year. Actual results may differ from those estimates.
Unaudited Interim Financial Statements
In the opinion of the Company's management the interim financial statements
as of March 31, 1998 and for the six month periods ended March 31, 1997 and 1998
include all normal and recurring adjustments and eliminations that are necessary
for the fair presentation of the Company's financial position at March 31, 1998
and its results of operations, changes in stockholder's equity and cash flows
for the for the six month periods ended March 31, 1997 and 1998. The results for
the six months ended March 31, 1998 are not necessarily indicative of the
results expected for the entire year.
(2) SUMMARY OF SIGNIFICANT ALLOCATION POLICIES
Operating Costs and Selling and Administrative Expenses
During the fiscal years presented, the Company's Canadian subsidiary shared
an operating facility with a related company. Operating expenses for this shared
facility are allocated based upon the amount of space occupied by the Company.
All of the selling expenses and a significant amount of the administrative
expenses are incurred directly by the Company and its subsidiaries. Those
elements of operating costs and administration which are supplied by the Parent
and related companies are generally allocated based upon the estimated
percentage of personnel time devoted to Company matters. Management of the
Company and the Parent believe the operating cost and administrative expense
allocations are both reasonable and equitable.
Cash and Interest Allocation
The Company's domestic cash is pooled with the Parent's cash resources,
with separate records being maintained. Any negative cash balance would
represent an overdraft due to the Parent. Interest expense is allocated to the
Company based upon these overdraft balances and the applicable rates on the
Parent's short-term borrowings. Management of the Company and the Parent believe
the cash and interest allocations are both reasonable and equitable.
(3) OPERATING SEGMENT AND GEOGRAPHIC INFORMATION
For purposes of management decision making and performance evaluation the
Company's operations are organized into two distinct geographic groups, North
America and Europe. Within each of these groups, the Company's principle source
of revenue is derived from the provision of sterilization management services to
manufacturers of single-use medical devices, and to a much lesser extent
pharmaceuticals, cosmetics and food products and to hospitals. In addition, the
Company also provides related laboratory testing, consulting and logistics
management services to its customers. Of its fiscal 1997 revenue total,
approximately 92% was derived from providing sterilization management services.
The Company's operating groups in North America and Europe are considered
operating segments for purposes of satisfying the disclosure requirements of
Statement of Financial Accounting Standards No. 131,
F-10
<PAGE> 79
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
"Disclosures about Segments of an Enterprise and Related Information." Presented
below are disclosures for the Company's operating segments for 1995, 1996 and
1997:
<TABLE>
<CAPTION>
NORTH CORPORATE/
AMERICA EUROPE ELIMINATIONS CONSOLIDATED
------- ------- ------------ ------------
<S> <C> <C> <C> <C>
1995:
Net revenues............................ $28,412 $21,705 $ -- $50,117
Operating profit (loss)................. 918 2,799 (805) 2,912
Interest expense, net................... 788 917 -- 1,705
Depreciation and amortization expense... 3,396 1,984 -- 5,380
Income tax expense (benefit)............ (595) 634 -- 39
Total assets............................ 34,430 28,166 35 62,631
Capital expenditures.................... 4,889 3,644 -- 8,533
1996:
Net revenues............................ $31,036 $23,735 $ -- $54,771
Operating profit (loss)................. 1,553 3,016 (769) 3,800
Interest expense, net................... 630 699 26 1,355
Depreciation and amortization expense... 3,674 2,210 -- 5,884
Income tax expense (benefit)............ (177) 1,127 27 977
Total assets............................ 31,647 26,542 105 58,294
Capital expenditures.................... 2,278 1,665 -- 3,943
1997:
Net revenues............................ $36,925 $23,322 $ -- $60,247
Operating profit (loss)................. 2,828 3,124 (1,100) 4,852
Interest expense, net................... 453 422 -- 875
Depreciation and amortization expense... 3,985 2,123 -- 6,108
Income tax expense (benefit)............ 582 497 (106) 973
Total assets............................ 34,299 32,558 (138) 66,719
Capital expenditures.................... 3,720 2,580 -- 6,300
</TABLE>
The Company maintains general purpose financial statements for each of the
countries in which it operates. Revenues and assets are recorded in the separate
company financial statements of the unit which provides the related
sterilization management services and owns the underlying assets. There were no
intersegment revenues during 1995, 1996 or 1997.
The Company's North American operations are located in the United States,
Canada and Mexico. For fiscal 1997 the net revenues and total assets of the
operations located in Canada and Mexico, combined, accounted for approximately
13%, and 9%, respectively, of the totals for the North American group.
The Company's European group operations are located in Belgium, France,
Germany, the Netherlands and the United Kingdom.
F-11
<PAGE> 80
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) INVENTORIES
Inventories at September 30, 1996 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Raw materials............................................... $125 $143
Finished goods.............................................. 692 594
---- ----
$817 $737
==== ====
</TABLE>
The Company's operations primarily consist of providing sterilization
management services. Raw materials consist of ethylene oxide, nitrogen and
supplies used in the sterilization process. Finished goods are comprised
primarily of sterilization packaging materials, disinfection products and
related items purchased mainly for resale to manufacturers of medical devices
and hospitals.
(5) INTANGIBLE AND OTHER ASSETS
The components of intangible and other assets at September 30, 1996 and
1997 are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Goodwill, net of accumulated amortization of $368 in 1996
and
$475 in 1997.............................................. $6,617 $6,776
Debt issuance costs, net of accumulated amortization of $18
in
1996 and $28 in 1997...................................... 317 307
Long-term receivables....................................... 55 58
Long-term deposits.......................................... 146 130
Advanced Corporation Tax -- United Kingdom.................. -- 202
Other, net.................................................. 70 76
------ ------
$7,205 $7,549
====== ======
</TABLE>
(6) SHORT-TERM CREDIT FACILITIES
At September 30, 1997 the Company had $8,522 of unused lines of credit
available for short-term financing. The weighted average interest rate on the
Company's outstanding short-term borrowings was 4.83% and 4.94% at September 30,
1996 and 1997, respectively. At September 30, 1997 the Company had outstanding
letters of credit in the amount of $5,000 and $4,500 which carry an annual fee
of 0.875% and 0.75%, respectively. These letters of credit support the Company's
borrowings under Industrial Revenue Bonds in the United States. At March 31,
1998 the Company had $17,050 (unaudited) of unused lines of credit available and
a weighted average interest rate of 5.82% (unaudited) on outstanding short-term
borrowings at March 31, 1998.
F-12
<PAGE> 81
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) LONG-TERM LIABILITIES
Long-term notes payable at September 30, 1996 and 1997, net of current
maturities, are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Notes payable in the United States:
Griffith Micro Science, Inc. Industrial Revenue Bonds,
floating rates (4.15% and 4.1% at September 30, 1997),
due on November 1, 2007 and December 1, 2014........... $ 9,500 $ 9,500
------- -------
Notes payable outside the United States:
GMS S.A.S. (France):
Note at floating rate (3.7% at September 30, 1997),
semi-annual payments due 1998-2002.................... -- 2,124
Term loan at floating rate............................. 2,421 --
Griffith Micro Science S.A. (France):
Note at floating rate (3.7% at September 30, 1997),
semi-annual payments due 1998-2002.................... -- 1,989
Notes payable at floating rates........................ 1,220 --
N.V. Griffith Micro Science S.A. (Belgium):
Notes at floating rates (3.7% at September 30, 1997),
semi-annual payments due 1998-2003.................... -- 3,248
Term loan at 6.54%..................................... 620 --
Griffith Micro Science G.m.b.H. (Germany) term loans at
5.75% and 6%, due 1998-2005............................ 778 589
Griffith Micro Science, Limited (U.K.):
Note at 11%, semi-annual payments due 1998-1999........ 391 202
Note at floating rate (7.6% at September 30, 1997),
semi-annual payments due 1998-2002.................... -- 712
Note at 8.5%........................................... 391 --
Griffith Mediris S.A. (Belgium) note at floating rate
(3.7% at September 30, 1997) due 1999-2003............. -- 823
Other..................................................... 70 21
------- -------
5,891 9,708
------- -------
$15,391 $19,208
======= =======
</TABLE>
At September 30, 1997 the Company's outstanding Industrial Revenue Bonds in
the United States and notes in the United Kingdom are guaranteed by the Parent
and Holding Company, respectively.
The aggregate maturities for long-term debt at September 30, 1997 are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
----------- -------
<S> <C>
1998....................................................... $ 2,020
1999....................................................... 2,417
2000....................................................... 2,205
2001....................................................... 2,203
2002....................................................... 2,202
Later years................................................ 10,181
-------
$21,228
=======
</TABLE>
F-13
<PAGE> 82
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The notes described above contain certain restrictive covenants, including
restrictions as to payment of dividends and requirements that specified minimum
levels of working capital and tangible net worth be maintained. In 1995, 1996
and 1997 the Company was in compliance with these covenants.
(8) BENEFIT PLANS
The Company participates in the qualified profit sharing and employee stock
ownership plans maintained by the Parent, in which substantially all full-time
U.S. employees are eligible to participate after one year of employment.
Contributions are discretionary amounts set by the Board of Directors of the
Parent. The Company's proportionate share of contributions charged to earnings
amounted to approximately $269 in 1995, $362 in 1996 and $455 in 1997.
Retirement plan assets, obligations and expenses of the Company's non-U.S.
subsidiaries are not material.
(9) ACCRUED LIABILITIES
Accrued liabilities at September 30, 1996 and 1997 and March 31, 1998 are
summarized as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Payroll............................................... $ 856 $ 877 $ 691
Employee incentives................................... 995 1,387 1,080
Customer incentives................................... -- 1,324 1,670
Retirement plan contributions......................... 403 596 618
Professional fees and insurance....................... 355 573 648
Warranty costs........................................ 71 282 249
All others............................................ 1,181 1,729 2,090
------ ------ ------
$3,861 $6,768 $7,046
====== ====== ======
</TABLE>
(10) INCOME TAXES
Income tax expense (benefit) is summarized as follows:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- ------
<S> <C> <C> <C>
1995:
Federal................................................. $(1,120) $ 677 $ (443)
State................................................... (282) 128 (154)
Foreign................................................. 392 244 636
------- ------ ------
$(1,010) $1,049 $ 39
======= ====== ======
1996:
Federal................................................. $ (287) $ 39 $ (248)
State................................................... (187) 6 (181)
Foreign................................................. 1,081 325 1,406
------- ------ ------
$ 607 $ 370 $ 977
======= ====== ======
1997:
Federal................................................. $ 624 $ (461) $ 163
State................................................... 122 (93) 29
Foreign................................................. 1,022 (241) 781
------- ------ ------
$ 1,768 $ (795) $ 973
======= ====== ======
</TABLE>
F-14
<PAGE> 83
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provisions for income taxes for the six month periods ended March 31,
1997 and 1998 are based upon the Company's estimate of annual effective tax
rates for full fiscal years.
Deferred income taxes are recognized for the future tax consequences of
temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities. The types of temporary differences that
give rise to significant portions of the deferred tax assets and liabilities and
the effect on deferred tax expense of changes in those temporary differences are
presented below:
<TABLE>
<CAPTION>
1995 1996 1997
------ ---- -----
<S> <C> <C> <C>
Excess of tax over book depreciation........................ $ 287 $123 $ 344
Inflation indexing.......................................... 559 -- (105)
Deferred compensation and accrued severance................. 102 -- (527)
Goodwill amortization....................................... 112 114 (160)
Loss carryforwards.......................................... -- 140 (238)
Other, net.................................................. (11) (7) (109)
------ ---- -----
$1,049 $370 $(795)
====== ==== =====
</TABLE>
The tax effect of temporary differences and carryforwards that give rise to
significant portions of deferred tax assets and liabilities consists of the
following at September 30, 1996 and 1997:
<TABLE>
<CAPTION>
ASSETS LIABILITIES
1996: ------ -----------
<S> <C> <C>
Depreciation.............................................. $ -- $2,495
Goodwill.................................................. -- 221
Inflation indexing........................................ 132 --
Deferred state income tax expense......................... 99 --
Deferred compensation and accrued severance............... 52 --
Other..................................................... 60 --
------ ------
$ 343 $2,716
====== ======
1997:
Depreciation.............................................. $ -- $2,980
Goodwill.................................................. -- 85
Net operating loss carryforwards.......................... 227 --
Inflation indexing........................................ 235 --
Deferred state income tax expense......................... 62 --
Deferred compensation and accrued severance............... 568 --
Other..................................................... 202 --
------ ------
$1,294 $3,065
====== ======
</TABLE>
No valuation allowance has been recorded against the deferred tax assets as
of September 30, 1996 or 1997, as management believes it is more likely than not
that the results of future operations will generate sufficient taxable income to
realize the deferred tax assets.
F-15
<PAGE> 84
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The effective tax rate is summarized as follows:
<TABLE>
<CAPTION>
1995 1996 1997
----- ---- ----
<S> <C> <C> <C>
United States federal tax rate.............................. 34.0% 34.0% 34.0%
Increase (decrease) resulting from:
Foreign tax rate differential............................. (12.8) 5.3 (8.8)
State income taxes, net of federal income tax benefit..... (9.6) (4.3) (1.2)
Other, net................................................ (7.9) 0.4 2.3
----- ---- ----
Effective tax rate.......................................... 3.7% 35.4% 26.3%
===== ==== ====
</TABLE>
The consolidated federal income tax returns of the Holding Company, which
include the results of operations of the Company, have been accepted by the
Internal Revenue Service through September 30, 1995.
(11) LEASE COMMITMENTS
The Company is liable under noncancelable long-term leases (operating
leases that are principally for real property and equipment) providing for the
following approximate aggregate minimum rentals:
<TABLE>
<CAPTION>
AGGREGATE
MINIMUM
FISCAL YEAR RENTALS
- ----------- ---------
<S> <C>
1998....................................................... $2,433
1999....................................................... 2,187
2000....................................................... 1,534
2001....................................................... 1,034
2002....................................................... 713
Later years................................................ 1,968
------
Total minimum lease payments..................... $9,869
======
</TABLE>
Most of the Company's real property leases provide that the Company pay
taxes, maintenance, and certain other operating expenses applicable to the
leased premises. The Company expects that leases that expire and are renewable
will be renewed or replaced by other leases in the normal course of business.
Total rental expense (including other than noncancelable leases) aggregated
approximately $2,817 in 1995, $3,088 in 1996 and $3,174 in 1997.
(12) TRANSACTIONS WITH THE PARENT AND RELATED COMPANIES
The following summarizes the income and expenses reflected in the
accompanying consolidated statements of earnings that were paid to the Parent or
related companies:
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Cost of revenues -- rent and related expenses.............. $ 211 $ 212 $ 219
Administrative expenses.................................... 445 327 313
Royalty paid to Parent..................................... 2,275 2,481 2,747
Other (income) expenses:
Interest expense......................................... 362 340 36
Interest income.......................................... -- (14) (9)
------ ------ ------
Total expenses, net.............................. $3,293 $3,346 $3,306
====== ====== ======
</TABLE>
F-16
<PAGE> 85
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net revenues from related companies amounted to $208, $281 and $371 in
fiscal 1995, 1996 and 1997, respectively.
(13) NET REVENUES FROM SIGNIFICANT CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK
Net revenues from the Company's five largest customers accounted for
approximately 32%, 33% and 38% of the consolidated fiscal 1995, 1996 and 1997
totals, respectively. The Company's largest individual customer accounted for
approximately 20%, 18% and 20% of consolidated fiscal 1995, 1996 and 1997 net
revenues, respectively. For the (unaudited) six months ended March 31, 1997 and
1998 this customer accounted for approximately 18% and 20%, respectively, of
consolidated net revenues. No other individual customer accounted for more than
10% of consolidated net revenues during 1995, 1996 and 1997 or the (unaudited)
six month periods ended March 31, 1997 and 1998.
The Company's trade receivables consist primarily of balances due from its
customers for the performance of sterilization management services. Amounts due
from the Company's largest individual customer accounted for 12% and 13%
(unaudited) of total trade receivables at September 30, 1997 and March 31, 1998,
respectively. Concentrations of credit risk with respect to trade receivables
are limited due to the large number of entities which comprise the Company's
customer base and their geographic dispersion. The Company performs ongoing
credit evaluations of its customers and generally does not require collateral.
Management also believes that any concentration of credit risk is substantially
reduced by its collection practices. The Company establishes an allowance for
doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information. Actual bad debt experience
has been insignificant.
(14) CONTINGENCIES
The Company is party to various suits and claims which arise in the normal
course of business. Although the ultimate disposition of these suits and claims
is not presently determinable, management does not believe that the outcome of
these matters will have a material adverse effect on the business, financial
position or results of operations of the Company.
(15) ACQUISITION
On August 29, 1997, the Company's wholly owned subsidiary, N.V. Griffith
Micro Science S.A. acquired an 80.1% interest in Caric Mediris S.A. ("Mediris").
Mediris is located in Belgium and is engaged in providing gamma irradiation
processing and sterilization services for a variety of products including food,
single-use medical devices and others. The cost of the acquisition was $2,869
and has been accounted for as a purchase. Accordingly, the net assets and
results of operations of Mediris are included in the consolidated financial
statements from the date of acquisition. The purchase price resulted in an
excess of consideration paid over the fair value of net assets acquired of
$1,120. This excess is recorded as goodwill and is being amortized on a
straight-line basis over 20 years. Concurrent with the acquisition, the Company
made an additional $439 capital investment in Mediris stock which raised the
Company's ownership interest to 82.8% and changed the name of Mediris to
Griffith Mediris S.A.
The following unaudited pro forma information presents a summary of the
consolidated results of operations of the Company and Mediris as if the
acquisition had occurred at the beginning of fiscal 1996, with
F-17
<PAGE> 86
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
pro forma adjustments to give effect to amortization of goodwill, interest
expense on acquisition debt and certain other adjustments, together with the
related income tax effects.
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Net revenues................................................ $58,731 $63,473
Net earnings................................................ 1,741 2,876
Net earnings per share:
Basic..................................................... $ 1.83 $ 3.03
Diluted................................................... $ 1.83 $ 3.02
</TABLE>
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had Mediris been acquired as of
October 1, 1995, or of the future results of the consolidated companies.
(16) STOCKHOLDER'S EQUITY
On June 6, 1996 the Company's Certificate of Incorporation was amended to
increase the number of authorized shares of common stock from 1,000 to 1,000,000
and reduce the par value of the Company's common stock from $1.00 per share to
$.01 per share. As a result of the reduction in par value, the common stock
account was reduced by $1 and the additional paid-in capital account increased
by the same amount.
On June 7, 1996 the Company split its common stock 950-for-1 in the form of
a stock dividend to the Parent. As a result of the split, 949,000 additional
shares of the Company's $.01 par value common stock were issued to the Parent on
June 10, 1996 and retained earnings were reduced by $10.
At September 30, 1995 there were 1,000 shares of the Company's $1.00 par
value common stock authorized, issued, and outstanding. All of these shares were
held by the Parent.
(17) STOCK OPTIONS
On June 14, 1996 the Company adopted the 1996 Key Executive Stock Option
Plan ("1996 KESOP"). Under the terms of the 1996 KESOP, 50,000 shares of the
Company's authorized but unissued $.01 par value common stock are reserved for
grant under the plan.
Activity in the Company's 1996 KESOP is summarized in the table below:
<TABLE>
<CAPTION>
SHARES EXERCISE PRICE
------ --------------
<S> <C> <C>
Outstanding at September 30, 1995........................... -- $ --
Options granted............................................. 25,173 21.60
------ ------------
Outstanding at September 30, 1996........................... 25,173 21.60
Options granted............................................. 15,945 24.80
Forfeited................................................... (126) 21.60
------ ------------
Outstanding at September 30, 1997........................... 40,992 $21.60-24.80
====== ============
</TABLE>
The exercise price of the options granted in both 1996 and 1997 was equal
to the fair market value of the Company's stock at the date of the grant.
F-18
<PAGE> 87
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about the Company's outstanding
stock options at September 30, 1997:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL LIFE EXERCISE NUMBER EXERCISE
DATE OF GRANT OUTSTANDING OF OPTION IN YEARS PRICE EXERCISABLE PRICE
------------- ----------- ------------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
June 14, 1996................ 25,047 8.7 $21.60 11,314 $21.60
June 23, 1997................ 15,945 9.8 24.80 -- --
------ --- ------ ------ ------
40,992 9.1 $22.84 11,314 $21.60
====== === ====== ====== ======
</TABLE>
Unexercised stock options at September 30, 1997 vest and become exercisable
as follows:
<TABLE>
<CAPTION>
YEAR VESTING SHARES VESTING
------------ --------------
<S> <C>
1998.................................................... 11,627
1999.................................................... 9,551
2000.................................................... 8,500
------
29,678
======
</TABLE>
The Company has elected to follow APB 25 and its related interpretations in
accounting for its employee stock option plan. Under APB 25, no compensation
expense is recognized in the financial statements when the exercise price of the
option is equal to the fair value of the underlying stock at the date of the
grant. Accordingly, no compensation expense has been recognized for the
Company's stock option plan in fiscal 1996 or 1997. Had compensation cost for
the Company's stock option plan been determined consistent with the fair value
method provided by Statement 123, consolidated net earnings would have decreased
to $1,775 in 1996 and $2,691 in 1997.
The fair value of each option is estimated on the date of the grant using
the Black-Scholes option pricing model. The following assumptions were used in
estimating the fair values for the options: a risk free interest rate of 6.49%
in 1996 and 6.04% in 1997; an expected option life of 2.7 years in 1996 and 2.4
years in 1997; and no dividend yield for both 1996 and 1997. Since the Company
is a nonpublic entity, with no trading history for its common stock, no
volatility was assumed for 1996 or 1997. The weighted average fair value of the
options granted in fiscal 1996 and 1997 was $3.42 and $3.30, respectively.
Option valuation models require the use of subjective assumptions,
including the expected option life. Changes in the input assumptions used in the
option pricing model can have a significant impact on the estimated fair value
of the Company's stock options.
(18) FINANCIAL INSTRUMENTS
At September 30, 1997, the Company had interest rate collars and swap
contracts in place to manage interest costs and risk associated with movements
in interest rates on its floating rate debt. Debt denominated in Belgian Francs
and French Francs with an aggregate notional principal amount of $8,917 was
covered by interest rate collars. The interest rate collars in place provide a
lender floor at rates of 3.15% through 4% and the Company a cap at rates of 3.9%
through 5.8%. At September 30, 1997, interest rates on all of the covered
floating rate debt were within the lender and borrower contract rates. The
interest collars expire beginning January 31, 1998 through June 30, 2002.
Interest rate swaps with a notional principal value of $809 covering floating
rate debt in British Pounds Sterling were outstanding at September 30, 1997.
These swaps effectively fix the rate on this debt at 7.45% to 7.57% through
December 31, 1998.
F-19
<PAGE> 88
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In entering into these contracts, the Company has assumed the risk which
might arise from the possible inability of the counterparties to meet the terms
of their contracts. Counterparties to the interest rate contracts are major
financial institutions. Management does not anticipate any losses as a result of
counterparty defaults.
(19) EARNINGS PER SHARE
The Company follows Statement 128 in computing earnings per common share.
For purposes of determining diluted earnings per share the only potential common
shares are in the form of outstanding stock options. The Company does not have
outstanding any convertible securities or other contracts to issue common stock
nor has there been any payment of dividends on preferred stock for any period
presented.
For fiscal 1995 and 1996 there were no dilutive potential common shares nor
adjustments to net earnings available for common stockholders. Accordingly,
basic and diluted earnings per share for fiscal 1996 and 1997 are the same.
During fiscal 1995, 1996 and 1997 the total weighted average common shares
outstanding were 950,000. Below is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations for fiscal
1997:
<TABLE>
<CAPTION>
NUMERATOR DENOMINATOR PER SHARE
(EARNINGS) (SHARES) AMOUNT
---------- ----------- ---------
<S> <C> <C> <C>
Net earnings........................................ $2,726
Basic earnings per share............................ -- 950,000 $2.87
=====
Effect of dilutive stock options.................... -- 3,233
------ -------
Diluted earnings per share.......................... $2,726 953,233 $2.86
====== ======= =====
</TABLE>
Options to purchase an additional 15,945 shares of common stock at $24.80
were outstanding during fiscal 1997 but were not included in the computation of
diluted earnings per share because the exercise price of the options were equal
to the fair market price of the Company's stock.
(20) SUBSEQUENT EVENTS
On January 29, 1998 the Company's Certificate of Incorporation was amended
to increase the number of authorized shares of common stock from 1,000,000 to
1,050,000.
On February 28, 1998 the Board of Directors of the Company approved an
amendment to the 1996 KESOP which increased from 50,000 to 100,000 the number of
shares of the Company's authorized but unissued $.01 par value common stock
which are reserved for grant under the terms of the plan. On April 9, 1998
options covering 50,951 shares of common stock were granted to certain key
employees. The exercise price for these options was $55.50 per share and was
equal to the fair market value of the Company's stock at the date of the grant.
These options vest and become exercisable as follows: 32,986 shares in 1999,
8,986 shares in 2000 and 8,979 shares in 2001.
On April 28, 1998 the Company acquired all of the outstanding capital stock
of Sorex Medical, Inc. ("Sorex") for $9,750. The acquisition will be accounted
for as a purchase and accordingly the net assets and results of operations of
Sorex will be included in the consolidated financial statements from the date of
acquisition. Sorex is an ethylene oxide sterilization facility in Salt Lake
City, Utah which provides sterilization services to single-use medical device
and disposable products manufacturers. The cost of the acquisition was funded
through borrowings under the Company's existing lines of credit in the United
States.
On June 1, 1998 the Company paid a $12,000 dividend to the Parent in the
form of a promissory note. The promissory note is due on demand and bears
interest at a rate of 6% per annum which is payable at maturity.
F-20
<PAGE> 89
[INSIDE BACK COVER OF PROSPECTUS]
[GRAPHIC TO COME]
[GRIFFITH LOGO]
<PAGE> 90
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. UNDER NO
CIRCUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT TO
THIS PROSPECTUS CREATE ANY IMPLICATION THAT INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 17
Dividend Policy....................... 17
Capitalization........................ 18
Dilution.............................. 19
Selected Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 22
Business.............................. 32
Management............................ 49
Security Ownership of Certain
Beneficial Owners and Management.... 57
Relationship with Parent Company...... 58
Description of Capital Stock.......... 61
Shares Eligible for Future Sale....... 64
Underwriting.......................... 65
Legal Matters......................... 66
Experts............................... 66
Additional Information................ 67
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
THROUGH , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
2,500,000 SHARES
[GRIFFITH MICRO SCIENCE LOGO]
CLASS A COMMON STOCK
PROSPECTUS
ABN AMRO INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 91
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be borne by the
Company in connection with the registration, issuance, and distribution of the
securities being registered hereby, other than underwriting discounts and
commissions. All amounts are estimates except the SEC registration fee, the NASD
filing fee, and the Nasdaq listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 12,722
NASD filing fee............................................. 4,813
Nasdaq listing fee.......................................... 48,750
Transfer agent and registrar's fee and expenses............. 12,500
Blue Sky fees and expenses.................................. 2,500
Printing and engraving expenses............................. 107,000
Legal fees and expenses..................................... 525,000
Accounting fees and expenses................................ 175,000
Miscellaneous............................................... 11,715
--------
Total............................................. $900,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware authorizes the
Company to indemnify its directors and officers under specified circumstances.
The Restated Certificate of Incorporation and Bylaws of the Company provide that
the Company shall indemnify, to the extent permitted by Delaware law, its
directors and officers (and may indemnify its employees and agents) against
liabilities (including expenses, judgments, and settlements) incurred by them in
connection with any actual or threatened action, suit, or proceeding to which
they are or may become parties and which arises out of their status as
directors, officers, or employees.
The Company's Restated Certificate of Incorporation eliminates, to the
fullest extent permitted by Delaware law, liability of a director to the Company
or its stockholders for monetary damages for a breach of such director's
fiduciary duty, except for liability where a director (a) breaches his or her
duty of loyalty to the Company or its stockholders, (b) fails to act in good
faith or engages in intentional misconduct or knowing violation of law, (c)
authorizes payment of an illegal dividend or stock repurchase, or (d) obtains an
improper personal benefit. While liability for monetary damages has been
eliminated, equitable remedies such as injunctive relief or rescission remain
available. In addition, a director is not relieved of his responsibilities under
any other law, including the federal securities laws.
The directors and officers of the Company are insured within the limits and
subject to the limitations of the policies, against certain expenses in
connection with the defense of actions, suits, or proceedings and certain
liabilities which might be imposed as a result of such actions, suits, or
proceedings, to which they are parties by reason of being or having been such
directors or officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None.
II-1
<PAGE> 92
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The exhibits to this registration statement are listed in the exhibit index
which follows the signature page and which is hereby incorporated by reference.
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be set
forth therein is not applicable or has been provided in the consolidated
financial statements or the notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the
Underwriters, at the closing specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Company pursuant to the provisions described under Item 14 above or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer, or controlling person of the Company in
the successful defense of any action, suit, or proceeding) is asserted against
the Company by such director, officer, or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 93
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on July 29, 1998.
GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC.
By: /s/ KEVIN M. SWAN
----------------------------------
Kevin M. Swan
Chief Executive Officer
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY APPOINTS KEVIN M. SWAN AND
JOHN P. SABALASKEY, AND EACH OF THEM SEVERALLY, ACTING ALONE AND WITHOUT THE
OTHER, HIS OR HER TRUE AND LAWFUL ATTORNEY-IN-FACT WITH AUTHORITY TO EXECUTE IN
THE NAME OF EACH SUCH PERSON AND TO FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION, TOGETHER WITH ANY EXHIBITS THERETO AND OTHER DOCUMENTS THEREWITH,
ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS
REGISTRATION STATEMENT NECESSARY OR ADVISABLE TO ENABLE THE REGISTRANT TO COMPLY
WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY RULES, REGULATIONS, AND
REQUIREMENTS OF THE SECURITIES EXCHANGE COMMISSION IN RESPECT THEREOF, WHICH
AMENDMENTS MAY MAKE SUCH OTHER CHANGES IN THE REGISTRATION STATEMENT AS THE
AFORESAID ATTORNEY-IN-FACT EXECUTING THE SAME DEEMS APPROPRIATE, AND ANY FILINGS
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on July 29, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ KEVIN M. SWAN President and Chief Executive Officer
- -----------------------------------------------------
Kevin M. Swan
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ JOHN P. SABALASKEY Senior Vice President and Chief Financial
- ----------------------------------------------------- Officer
John P. Sabalaskey
A MAJORITY OF THE DIRECTORS:
/s/ DEAN L. GRIFFITH Chairman of the Board and a Director
- -----------------------------------------------------
Dean L. Griffith
/s/ JOSEPH R. MASLICK Director
- -----------------------------------------------------
Joseph R. Maslick
/s/ KEVIN M. SWAN Director
- -----------------------------------------------------
Kevin M. Swan
</TABLE>
II-3
<PAGE> 94
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated December 3, 1997 except Note 20 which is as of June 1, 1998, on
our audit of the consolidated financial statements of Griffith Micro Science
International, Inc. We also consent to the references to our firm under the
captions "Experts" and "Selected Financial Data."
KPMG PEAT MARWICK LLP
Chicago, Illinois
July 29, 1998
II-4
<PAGE> 95
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1* -- Proposed form of Underwriting Agreement
2.1 -- Stock Purchase Agreement dated April 28, 1998 between the
Company and the owners of all the outstanding shares of
capital stock of Sorex Medical, Inc. (the "Sorex Purchase
Agreement"). Pursuant to Item 601(b)(2) of Regulation
S-K, the Company agrees to furnish supplementally a copy
of any omitted schedule to the Sorex Purchase Agreement
to the Commission upon request.
2.2 -- Share Purchase Agreement dated June 27, 1997 between the
Company and Laboratories Perouse S.A. (the "Caric Mediris
Purchase Agreement") and related instruments. Pursuant to
Item 601(b)(2) of Regulation S-K, the Company agrees to
furnish supplementally a copy of any omitted schedule to
the Caric Mediris Purchase Agreement to the Commission
upon request.
2.3 -- Share Purchase Agreement dated July 22, 1994 between the
Company on the one hand and Laboratories Perouse S.A. and
Eric Perouse on the other hand (the "Perouse Purchase
Agreement"), and related instruments. Pursuant to Item
601(b)(2) of Regulation S-K, the Company agrees to
furnish supplementally a copy of any omitted schedule to
the Perouse Purchase Agreement to the Commission upon
request.
3.1(a) -- Certificate of Incorporation of the Company and all
amendments thereto
3.1(b) -- Proposed form of Restated Certificate of Incorporation of
the Company
3.2(a) -- Bylaws of the Company
3.2(b) -- Proposed form of Amended and Restated Bylaws of the
Company
4.1+ -- Included in Exhibits 3.1(a), 3.1(b), 3.2(a) and 3.2(b)
4.2 -- Proposed form of certificate representing shares of Class
A Common Stock
4.3* -- Revolving Credit Agreement with a syndicate of banks led
by The First National Bank of Chicago
4.4 -- Proposed form of Shareholder Agreement with the Parent
Company
4.5 -- Proposed form of Lock Up Agreement
5.1* -- Opinion of Bell, Boyd & Lloyd as to the legality of the
Class A Common Stock
10.1 -- 1996 Key Employee Stock Option Plan of the Company (as
amended and restated)
10.2* -- Proposed form of 1998 Employee Stock Option Plan of the
Company
10.3* -- Proposed form of 1998 Director Stock Option Plan of the
Company
10.4 -- EVA Incentive Compensation Program of the Parent Company
10.5 -- Promissory Note dated June 1, 1998 issued by the Company
to the Parent Company
10.6* -- Proposed form of Administrative Services Agreement with
the Parent Company
10.7* -- Proposed form of Tax Matters Agreement with the Parent
Company
10.8(a) -- Counties of Warren and Washington Industrial Development
Agency Industrial Development Revenue Bonds, Series 1994
($5,300,000) -- Lease Agreement
10.8(b) -- Counties of Warren and Washington Industrial Development
Agency Industrial Development Revenue Bonds, Series 1994
($5,300,000) -- Indenture of Trust
10.8(c) -- Counties of Warren and Washington Industrial Development
Agency Industrial Development Revenue Bonds, Series 1994
($5,300,000) -- Guaranty Agreement
10.8(d) -- Counties of Warren and Washington Industrial Development
Agency Industrial Development Revenue Bonds, Series 1994
($5,300,000) -- Reimbursement Agreement
</TABLE>
<PAGE> 96
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.8(e) -- Counties of Warren and Washington Industrial Development
Agency Industrial Development Revenue Bonds, Series 1994
($5,300,000) -- Letter of Credit
10.9(a) -- Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority Industrial Development
Revenue Bonds, Series 1995 ($4,500,000) -- Indenture of
Trust
10.9(b) -- Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority Industrial Development
Revenue Bonds, Series 1995 ($4,500,000) -- Loan Agreement
10.9(c) -- Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority Industrial Development
Revenue Bonds, Series 1995 ($4,500,000) -- Reimbursement
Agreement
10.9(d) -- Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority Industrial Development
Revenue Bonds, Series 1995 ($4,500,000) -- Letter of
Credit
10.10++ -- Sterilization Contract with Allegiance Healthcare
Corporation
10.11++ -- Ethylene Oxide Supply Agreement with the ARC Chemical
Division of Balchem Corporation
10.12 -- Joint Venture Agreement dated June 1997 between the
Company and MDS Nordion Inc. and related instruments
10.13 -- Facility Lease dated October 12, 1992 between General
American Life Insurance Company and the Company
10.14 -- Facility Lease dated March 1, 1997 between Catellus
Development Corporation and the Company
10.15 -- Facility Lease dated August 25, 1988 between The Guevara
Corporation and the Company
10.16 -- Facility Lease dated January 1996 between Boulevard Bank,
N.A. and the Company
10.17 -- Facility Lease dated April 12, 1984 between Geo. A.
Rediehs Co., Inc. and the Company
10.18 -- Facility Lease dated February 19, 1974 between Cynwyd
Investments and the Company
10.19 -- Facility Lease dated June 9, 1994 between TKC VI and the
Company
10.20* -- Facility Lease dated as of October 1, 1998 between
Griffith Laboratories Limited and the Company
10.21 -- Facility Lease dated August 1, 1992 between Cytren
Industrial Corporation and the Company
10.22 -- Facility Lease dated March 1, 1998 between Inmobiliaria
Azabi, S.A. de C.V. and Griffith Micro Science, S.A. de
C.V.
10.23 -- Facility Lease dated July 1, 1991 between Stichting
Pensioenfonds De Eendragt and the Company
10.24 -- Facility Lease dated July 1, 1987 between NIMCO and the
Company
10.25 -- Facility Lease dated September 1, 1996 between SCI ELDE
and the Company
10.26 -- Facility Lease dated October 1, 1995 between Helmut von
Heesen GmbH & Co. KG and the Company
10.27 -- Proposed form of Assignment of Intellectual Property
21.1 -- Subsidiaries of the Company
23.1 -- Consent of KPMG Peat Marwick LLP (included in Part II of
this registration statement)
23.2* -- Consent of Bell, Boyd & Lloyd (to be contained in Exhibit
5.1)
24.1 -- Powers of Attorney (included on the signature page of
this registration statement)
27.1 -- Financial Data Schedule for Fiscal 1997
27.2 -- Financial Data Schedule for the six months ended March
31, 1998
</TABLE>
<PAGE> 97
- ---------------
* To be filed by amendment.
+ The Company agrees to furnish supplementally to the Commission upon request a
copy of any instrument with respect to long-term debt not being filed as an
exhibit in reliance on Item 601(b)(4)(iii)(A) of Regulation S-K.
++ The Company has requested confidential treatment with respect to a portion of
this exhibit.
<PAGE> 1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
DATED APRIL 28, 1998
BETWEEN
GRIFFITH MICRO SCIENCE, INC.
AND
THE OWNERS OF ALL OF THE
OUTSTANDING SHARES OF CAPITAL STOCK OF
SOREX MEDICAL, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1.0 PURCHASE AND SALE OF THE SHARES................................................ 1
1.1 Purchase and Sale......................................................... 1
1.2 Amount of the Purchase Price.............................................. 1
1.3 Time and Place of the Closing............................................. 2
1.4 Procedure at the Closing.................................................. 2
1.5 Post Closing Adjustment to the Purchase Price............................. 2
2.0 REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE TRANSACTION....... 3
2.1 Binding Obligation........................................................ 3
2.2 Status and Effect of Delivery of the Shares............................... 4
2.3 The Corporate Seller...................................................... 4
2.4 The Engineering Lease Agreement........................................... 4
3.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER CONCERNING THE TRANSACTION..... 5
3.1 Organization, Power and Authority of the Purchaser; Due Authorization..... 5
3.2 Binding Obligation; Noncontravention...................................... 5
4.0 REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE COMPANY
4.1 Organization, Power and Authority of the Company.......................... 5
4.2 Capital Stock of the Company.............................................. 6
4.3 Subsidiaries and Investments of the Company............................... 6
4.4 Financial Statements of the Company....................................... 6
4.5 Liabilities of the Company................................................ 6
4.6 Tax Matters............................................................... 7
4.7 Real Estate of the Company................................................ 8
4.8 Good Title to and Condition of the Company's Other Assets................. 9
4.9 Receivables of the Company................................................ 10
4.10 Licenses and Permits of the Company....................................... 10
4.11 Proprietary Rights of the Company......................................... 10
4.12 Adequacy of the Company's Assets; the Company's
Relationships with its Customers and Suppliers.......................... 11
4.13 Documents of and Information with Respect to the Company.................. 12
4.14 Insurance of the Company.................................................. 12
4.15 Litigation Involving the Company.......................................... 12
4.16 The Records of the Company................................................ 13
4.17 No Material Adverse Change................................................ 13
4.18 Absence of Certain Acts or Events......................................... 13
4.19 Compliance with Laws by the Company....................................... 13
4.20 Environmental Matters..................................................... 14
4.21 Labor and Employment Matters.............................................. 14
4.22 Employee Benefits......................................................... 16
4.23 Product Liability Claims; Product Warranties.............................. 17
4.24 No Bylaw Indemnification Claims........................................... 17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
5.0 CONDITIONS TO THE OBLIGATION OF THE PURCHASER 18
5.1 Opinion of Counsel......................................................... 18
5.2 Receipt of Necessary Consents.............................................. 18
5.3 No Adverse Litigation...................................................... 18
5.4 Resignations and Releases.................................................. 18
5.5 Survey and Title Commitment................................................ 18
5.6 Engineering Lease; Transfer of the Excluded Assets and Related Matters..... 18
5.7 Certified Resolutions of the Company....................................... 19
5.8 Certified Resolutions of the Corporate Seller.............................. 19
5.9 Escrow Agreement........................................................... 19
6.0 CONDITIONS TO THE OBLIGATIONS OF THE SELLERS.................................... 19
6.1 Engineering Lease; Transfer of the Excluded Assets and Related Matters..... 19
6.2 Opinion of Counsel......................................................... 19
6.3 Certified Resolutions...................................................... 19
6.4 Receipt of Necessary Consents.............................................. 19
6.5 No Adverse Litigation...................................................... 19
6.6 Sterilization Contract with SDI............................................ 19
6.7 Escrow Agreement........................................................... 20
7.0 POST-CLOSING COVENANTS AND OBLIGATIONS OF THE SELLERS........................... 20
7.1 Cooperation with Respect to Returns and Taxes
and with Respect to a Possible Claim Against Thermatrix................... 20
7.2 Return of Credit Cards etc.; No Further Action on Behalf of the Company.... 20
7.3 Execution of Further Documents; Assistance in Transition to New Ownership.. 20
7.4 Restrictive Covenant....................................................... 21
7.5 Employee Benefit Matters................................................... 21
7.6 Actions, Responsibility with Respect to Certain Employees.................. 21
8.0 POST-CLOSING COVENANTS AND OBLIGATIONS OF THE PURCHASER......................... 21
8.1 Change of Company's Name................................................... 21
8.2 Employee Benefit Matters................................................... 21
9.0 INDEMNIFICATION................................................................. 23
9.1 Definition of Indemnifiable Damages........................................ 23
9.2 Indemnification by the Corporate Seller.................................... 23
9.3 Indemnification by the Individual Sellers.................................. 23
9.4 Duration of Representations and Warranties and Covenants and Agreements.... 23
9.5 Deductible for Certain Indemnifiable Damages............................... 24
9.6 Exclusive Remedy........................................................... 24
9.7 Appointment and Duties of Sellers' Representative.......................... 24
9.8 Determination of Indemnifiable Damages..................................... 25
9.9 Procedure for Third Party Claims........................................... 26
9.10 Limitation on Liability.................................................... 26
9.11 Limitation on JTS Liability................................................ 27
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
10.0 MISCELLANEOUS .................................................................. 27
10.1 Amendments and Waivers.................................................... 27
10.2 Payment of Expenses....................................................... 27
10.3 Assignability; Binding Effect............................................. 27
10.4 Entire Agreement.......................................................... 27
10.5 Headings.................................................................. 27
10.6 Execution in Counterpart.................................................. 27
10.7 Notices................................................................... 27
10.8 Brokers' Commission....................................................... 28
10.9 Governing Law............................................................. 28
10.10 Venue and Submission to Personal Jurisdiction
with Respect to Actions Brought by the Purchaser......................... 29
10.11 Venue and Submission to Personal Jurisdiction
with Respect to Actions Brought by the Sellers........................... 29
10.12 Publicity................................................................. 30
10.13 Severability.............................................................. 30
10.14 Engineering Employees; Confidentiality.................................... 30
Exhibit A -- Form of Escrow Agreement.................................................A-1
Exhibit B -- Restrictive Covenant Pursuant to Section 7.4 ............................B-1
Schedules -- Listed in Index accompanying Schedules delivered herewith
</TABLE>
iii
<PAGE> 5
STOCK PURCHASE AGREEMENT
This stock purchase agreement (the "Agreement") is made and entered into
this 28th day of April, 1998 by and among the following parties: Griffith
Micro Science, Inc., a Delaware corporation (the "Purchaser") and each of the
following shareholders of Sorex Medical, Inc., a Utah corporation (the
"Company"): James LeVoy Sorenson and his son, Joseph T. Sorenson, each of whom
resides in Salt Lake County, Utah (the "Individual Sellers"), and Sorenson
Development, Incorporated, a Utah corporation (the "Corporate Seller"). The
Individual Sellers and the Corporate Seller are hereinafter sometimes referred
to individually as a "Seller" and collectively as the "Sellers." James LeVoy
Sorenson is hereinafter sometimes referred to as "JLS" and Joseph T. Sorenson
is hereinafter sometimes referred to as "JTS."
RECITALS
The Sellers own all of the issued and outstanding shares of capital stock
of all classes of the Company. The Sellers desire to sell such shares to the
Purchaser and the Purchaser desires to purchase such shares from the Sellers,
all as herein provided and on the terms and conditions hereinafter set forth.
COVENANTS
In consideration of the mutual representations, warranties and covenants
and subject to the conditions herein contained the parties hereto agree as
follows:
1.0 PURCHASE AND SALE OF THE SHARES
1.1 PURCHASE AND SALE. The Sellers jointly and severally agree to and are
hereby selling, transferring, assigning and delivering to the Purchaser at the
Closing (as defined in Section 1.3), free and clear of all liens, pledges,
encumbrances, claims and equities of every kind, and the Purchaser agrees to
and is hereby purchasing and accepting from the Sellers at the Closing, in each
case on the terms and subject to the conditions set forth in this Agreement,
the numbers of shares of Preferred Stock, $1.00 par value and shares of Common
Stock, $1.00 par value, which are set forth opposite the Sellers' respective
names on Schedule 1.1 and which collectively constitute all of the issued and
outstanding shares of capital stock of the Company (the "Shares"). Those
Shares which are set forth opposite each Seller's name on Schedule 1.1 are
hereinafter referred to, in reference to such Seller, as the "Shares of such
Seller."
1.2 AMOUNT OF THE PURCHASE PRICE. As consideration for the Shares (the
"Purchase Price"), the Purchaser, subject to the terms, conditions and
limitations set forth in this Agreement, agrees to and is hereby paying to or
for the account of the Sellers, in the manner specified in Section 1.4 hereof,
an amount in cash equal in the aggregate to $9,600,000 plus the agreed upon
value of the Excluded Assets being transferred to the Sellers pursuant to
Sections 5.6 and 6.1, minus $149,482 representing certain bonuses to be paid by
the Company on the Closing Date and $10,000 for a computer network, allocated
among the respective Sellers as set forth opposite their respective names under
the caption "Purchase Price for Shares" on Schedule 1.4. The amount of the
Purchase Price shall be subject to adjustment after the Closing Date in the
manner and to the extent specified in Section 1.5.
<PAGE> 6
1.3 TIME AND PLACE OF THE CLOSING. The closing of the purchase and sale
of the Shares is taking place at and as of the date and time of execution and
delivery of this Agreement (being 9:00 A.M., Salt Lake City Time, on April 28,
1998) at the offices of Ray, Quinney & Nebeker, P.C., 79 South Main Street,
Salt Lake City, Utah. Throughout this Agreement, such event is referred to as
the "Closing" and such date and the time on such date at which the purchase and
sale of the Shares occur are collectively referred to as the "Closing Date."
1.4 PROCEDURE AT THE CLOSING. At the Closing, the parties agree to and
are hereby taking the following steps in the order listed below (provided,
however, that until the completion of all such steps none of them shall be
deemed to have been completed and upon the completion of all such steps they
shall be deemed to have occurred simultaneously):
1.4.1 The Sellers are delivering to the Purchaser evidence, in such
form as in each case is satisfactory to the Purchaser, that each of the
conditions to the obligation of the Purchaser to purchase the Shares from
the Sellers which is set forth in Article 5.0 of this Agreement has been
satisfied.
1.4.2 The Purchaser is delivering to the Sellers evidence, in such
form as in each case is satisfactory to the Sellers, that each of the
conditions to the obligations of the Sellers to sell the Shares to the
Purchaser which is set forth in Article 6.0 of this Agreement has been
satisfied.
1.4.3 The Sellers are delivering to the Purchaser duly executed
certificates in valid form evidencing the Shares, duly endorsed in blank
or accompanied by duly executed stock powers, in either case with the
Sellers' signatures thereon guaranteed by a bank or by a member firm of
the New York Stock Exchange.
1.4.4 The Purchaser is paying that portion of the Purchase Price
allocable to each of the Sellers in the following manner: (i) the
Purchaser is delivering to each of the Individual Sellers, by means of a
check (which is not certified) payable to such Individual Seller, the
amount set forth opposite such Individual Seller's name under the caption
"Portion of Purchase Price Payable to Seller at Closing" on Schedule 1.4;
(ii) the Purchaser is delivering to the Corporate Seller, by wire
transfer to the bank account of the Corporate Seller which was designated
in writing by the Corporate Seller to the Purchaser at least two full
business days prior to the Closing Date, the amount set forth opposite
the Corporate Seller's name under the caption "Portion of Purchase Price
Payable to Seller at Closing" on Schedule 1.4; and (iii) the Purchaser is
delivering to the Escrow Agent (as hereinafter defined), by wire transfer
to such account as was designated in writing by the Escrow Agent at least
two full business days prior to the Closing Date, the sum set forth
opposite each Seller's name under the caption "Portion of Purchase Price
Payable to Escrow Agent at Closing" on Schedule 1.4, to be held and
administered by the Escrow Agent in accordance with an escrow agreement
(the "Escrow Agreement") substantially in the form set forth as Exhibit
A.
1.4.5 The Purchaser and the Sellers are executing and delivering a
cross receipt acknowledging receipt from the other, respectively, of the
Shares and the Purchase Price.
1.5 POST CLOSING ADJUSTMENT TO THE PURCHASE PRICE.
1.5.1 As soon as reasonably practicable after the Closing Date, the
Purchaser will prepare a balance sheet (the "Closing Balance Sheet")
reflecting the assets, liabilities and net
2
<PAGE> 7
worth of the Company as of the Closing Date. The Closing Balance Sheet
shall be prepared in accordance with generally accepted accounting
principles and otherwise in a manner consistent with that used by the
Company in the preparation of the January 31 Balance Sheet (as
hereinafter defined). The Closing Balance Sheet will be submitted by the
Purchaser to the Sellers who will, within 15 business days after receipt
of the Closing Balance Sheet, notify the Purchaser in writing (the
"Exception Notice") of any exceptions which they take thereto (with such
exceptions specified in writing in reasonable detail, including a
quantification of the consequences of each such exception). If no
Exception Notice has been received by the Purchaser within such 15 day
period, the Closing Balance Sheet shall be final and binding on all
parties to this Agreement. If an Exception Notice has been timely given
to the Purchaser by the Sellers, the Purchaser and the Sellers shall
attempt for a period of not exceeding 30 days after receipt of the
Exception Notice to reconcile their differences. Absent such
reconciliation, each unresolved exception to the Closing Balance Sheet
shall be submitted in writing for final resolution to a nationally
recognized independent public accounting firm (the "Arbiter") jointly
selected by the Purchaser and the Sellers. If the Purchaser and the
Sellers are unable to agree by not later than the end of the foregoing
30-day period on the identity of an Arbiter, then it shall be Arthur
Andersen & Co., or, if that firm refuses or is unable to serve, Ernst &
Young. Each of the parties shall be entitled to make a written
submission concerning each unresolved exception to the Arbiter within 15
business days of the Arbiter's acceptance of the engagement. The Arbiter
shall review such written submissions and the parties shall submit such
further information as the Arbiter may request, including written and
oral testimony. The decision of the Arbiter as to whether any changes
should be made in the Closing Balance Sheet shall be rendered in writing
within 30 days after the end of such 15 day period for written
submissions to it, and such decision shall be final and binding on all
parties to this Agreement, and may be enforced by court proceedings. The
Purchaser and the Sellers shall each pay one-half of the fee and expenses
of the Arbiter.
1.5.2 If the Closing Balance Sheet, as it may be changed by
agreement of the parties or determination of the Arbiter, shows that the
Company had a net book value (assets less liabilities) at the Closing
Date of less than $9,600,000, the Purchase Price shall be reduced, dollar
for dollar, by the amount of the deficiency, which amount the Sellers
agree to promptly remit pro rata to the Purchaser.
2.0 REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE TRANSACTION
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, each of the Sellers
severally makes the following representations and warranties:
2.1 BINDING OBLIGATION. This Agreement has been duly executed and
delivered by such Seller and is a valid and binding obligation of him or it,
enforceable in accordance with its terms. Neither the execution and delivery
of this Agreement by such Seller nor the consummation by him or it of the
transactions and performance by him or it of the agreements contemplated hereby
will: (i) conflict with or violate any provision of the articles of
incorporation or bylaws of the Company or of the Corporate Seller, or of any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to,
binding upon or enforceable against such Seller or the Company; or (ii) result
in any breach of or default under or create in any party the right to
accelerate, terminate, modify or cancel, any mortgage, contract, indenture,
will, trust or other instrument which is either binding upon or enforceable
against such Seller, the Company or the assets
3
<PAGE> 8
and properties of the Company or of the Corporate Seller. No permit, consent,
approval or authorization of, or declaration to or filing by such Seller or the
Company with any regulatory or other government authority is required,
including without limitation under or pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), in connection with the
execution and delivery of this Agreement by such Seller and the consummation by
him or it of the transactions and performance by him or it of the agreements
contemplated hereby.
2.2 STATUS AND EFFECT OF DELIVERY OF THE SHARES. Such Seller is the
lawful owner of the Shares of such Seller and has valid marketable title
thereto, free and clear of all liens, pledges, encumbrances, restrictions on
transfer, claims and equities of every kind. Except for this Agreement, there
are no outstanding warrants, options or rights of any kind to acquire from such
Seller any of the Shares of such Seller. Delivery of the Shares of such Seller
by such Seller to the Purchaser in accordance with this Agreement will vest
title to all of the Shares of such Seller in the Purchaser, free and clear of
all liens, pledges, encumbrances, claims and equities of every kind.
2.3 THE CORPORATE SELLER. The Corporate Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Utah, and has full corporate power and authority to enter into this Agreement
and to carry out the transactions and perform its covenants provided for herein
and therein. The authorized capital stock of the Corporate Seller consists
solely of the following: (i) a class consisting of 100,000 shares of Voting
Common Stock, $1.00 par value per share, eight of which are issued and
outstanding; and (ii) a class consisting of 100,000 shares of Nonvoting Common
Stock, $1.00 par value per share, 28,433 of which are issued and outstanding.
Except as otherwise provided by law, all voting rights in the Corporate Seller
are vested exclusively in the holders of the issued and outstanding shares of
Voting Common Stock, each of whom is entitled to one vote for each such share
held on each matter submitted to stockholders for a vote. There are no voting
trusts, proxies or other agreements or understandings which are in effect with
respect to the voting of the capital stock of the Corporate Seller. All of the
issued and outstanding shares of capital stock of the Corporate Seller are
validly authorized and issued, fully paid and nonassessable. Schedule 2.3 sets
forth the name and address of, and the number of shares of capital stock of
each class of the Corporate Seller owned by, each stockholder of record and, if
different, each beneficial owner) as of the Closing Date; all such shares
having voting rights are so owned by the persons specified in Schedule 2.3,
free and clear of all liens, pledges, encumbrances, claims and equities of
every kind. There are no outstanding warrants, options or rights of any kind
to acquire from the Corporate Seller any shares of any class of its capital
stock or securities of any kind. The board of directors of the Corporate
Seller consists of a single member, the name and address of whom are set forth
on Schedule 2.3. The execution, delivery and performance of this Agreement by
the Corporate Seller and the consummation of the transactions and performance
of the covenants provided for herein by the Corporate Seller have been duly
authorized by all necessary corporate action of the Corporate Seller, including
without limitation approval thereof by its board of directors and stockholders.
The net worth of the Corporate Seller exceeds $50,000,000.
2.4 THE ENGINEERING LEASE AGREEMENT. Sorex Engineering, Inc. ("Sorex
Engineering") is a corporation duly organized, validly existing and in good
standing under the laws of the State of Utah, and has full corporate power and
authority and all licenses and permits to own or lease its properties and
assets and to enter into the Engineering Lease and to carry out the
transactions and perform its covenants provided for therein. The Engineering
Lease (as defined in Section 5.6) has been duly executed and delivered by Sorex
Engineering and is a valid and binding obligation of Sorex Engineering,
enforceable in accordance with its terms. Neither the execution and delivery
of the Engineering Lease by Sorex Engineering nor the performance by Sorex
Engineering of its covenants made therein will: (i) conflict with or violate
any provision of the articles of incorporation or bylaws of Sorex Engineering
or of any
4
<PAGE> 9
decree or order of any court or administrative or other governmental body which
is either applicable to, binding upon or enforceable against Sorex Engineering;
or (ii) result in any breach of or default under any mortgage, contract,
agreement, indenture, will, trust or other instrument which is either binding
upon or enforceable against Sorex Engineering. No permit, consent, approval or
authorization of, or declaration to or filing with, any regulatory or other
government authority is required in connection with the execution and delivery
of the Engineering Lease and the performance of the covenants made therein by
Sorex Engineering.
3.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER CONCERNING THE
TRANSACTION
In order to induce the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Purchaser makes the
following representations and warranties:
3.1 ORGANIZATION, POWER AND AUTHORITY OF THE PURCHASER; DUE AUTHORIZATION.
The Purchaser is a corporation duly organized and validly existing under the
laws of the State of Delaware, with full corporate power and authority to enter
into this Agreement and to carry out the transactions and agreements
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions and performance of the agreements
contemplated hereby have been duly authorized by all necessary corporate action
of the Purchaser.
3.2 BINDING OBLIGATION; NONCONTRAVENTION. This Agreement has been duly
executed and delivered by the Purchaser and is a valid and binding obligation
of the Purchaser, enforceable in accordance with its terms. Neither the
execution and delivery of this Agreement by the Purchaser nor the consummation
of the transactions and performance of the agreements contemplated hereby will:
(i) conflict with or violate any provision of the certificate of incorporation
or bylaws of the Purchaser or of any decree or order of any court or
administrative or other governmental body which is either applicable to,
binding upon or enforceable against the Purchaser; or (ii) result in any breach
of or default under or create in any party the right to accelerate, terminate,
modify or cancel, any mortgage, contract, agreement, indenture, will, trust or
other instrument which is either binding upon or enforceable against the
Purchaser. No permit, consent, approval or authorization of, or declaration to
or filing with, any regulatory or other government authority is required,
including without limitation under or pursuant to the HSR Act, in connection
with the execution and delivery of this Agreement by the Purchaser and the
consummation of the transactions and performance of the agreements contemplated
hereby and thereby; provided, however, that the foregoing representation and
warranty with respect to the HSR Act is based upon and subject to the accuracy
of the representation and warranty of the Sellers set forth in Section 4.4
hereof.
4.0 REPRESENTATIONS AND WARRANTIES OF THE SELLERS CONCERNING THE COMPANY
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Sellers jointly and
severally make the following representations and warranties:
4.1 ORGANIZATION, POWER AND AUTHORITY OF THE COMPANY. The Company is a
corporation duly organized and legally existing in good standing under the laws
of the State of Utah, and has full corporate power and authority and all
licenses and permits necessary to own or lease and to operate and use its
properties and assets and to carry on its business as it is now being
conducted, and to enter into each of the agreements contemplated by this
Agreement to which the Company is a party and to carry out the transactions and
perform the covenants provided for therein. The Company is legally qualified
to
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transact business as a foreign corporation and is in good standing in the
jurisdictions identified in Schedule 4.1, those being the only jurisdictions in
which its business or property is such as to require that it be thus qualified,
except where the failure to so qualify does not have a material adverse effect
on either the Company's financial condition or its ability to conduct its
business as it is currently being conducted.
4.2 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of the following: (i) a class consisting of 20,000,000
shares of Preferred Stock, $1.00 par value per share, 15,707,642.01 shares of
which are issued and outstanding; and (ii) a class consisting of 50,000 shares
of Common Stock, $1.00 par value per share, 1,000 shares of which are issued
and outstanding. Except as otherwise provided by law, all voting rights in the
Company are vested exclusively in the holders of the issued and outstanding
shares of Common Stock, each of whom is entitled to one vote for each such
share held on each matter submitted to stockholders for a vote. There are no
voting trusts, proxies or other agreements or understandings which are in
effect with respect to the voting of the capital stock of the Company. All of
the issued and outstanding shares of capital stock of the Company are validly
authorized and issued, fully paid and non-assessable. Schedule 4.2 sets forth
the name and address of, and the number of shares of capital stock of each
class of the Company owned by, each shareholder of record (and, if different,
by each beneficial owner) as of the date hereof. There are no outstanding
warrants, options or rights of any kind to acquire from the Company any shares
of any class of its capital stock or securities of any kind. There are no
preemptive rights with respect to the issuance or sale of shares of capital
stock of the Company. The Company has no obligation to acquire any of the
issued and outstanding shares of any class of its capital stock or any other
security issued by it from any holder thereof.
4.3 SUBSIDIARIES AND INVESTMENTS OF THE COMPANY. The Company has no
subsidiaries and, except as set forth on Schedule 4.3, no other equity interest
or the right or obligation to acquire an equity interest, in any other person
or entity.
4.4 FINANCIAL STATEMENTS OF THE COMPANY. Set forth in Schedule 4.4 are
unaudited balance sheets, income statements and cash flow statements of the
Company for the following periods:
4.4.1 the years ended December 31, 1997 and 1996;
4.4.2 the month ended January 31, 1998;
4.4.3 the month ended February 28, 1998, and year-to-date; and
4.4.4 the month ended March 31, 1998, and year-to-date.
Such financial statements present fairly in all material respects the financial
position of the Company at each of the said balance sheet dates and the results
of its operations and its cash flow for each of the said periods covered, and
such financial statements have been prepared on a consistent basis. The
unaudited balance sheet of the Company at December 31, 1997 is referred to
herein as the "December 31 Balance Sheet" and the unaudited balance sheet of
the Company at January 31, 1998 is referred to herein as the "January 31
Balance Sheet."
4.5 LIABILITIES OF THE COMPANY. The Company has no liabilities or
obligations, either accrued, absolute, contingent or otherwise, except: (i)
those reflected, reserved against or otherwise disclosed or taken into account
in the January 31 Balance Sheet and not heretofore paid or discharged;
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(ii) to the extent clearly disclosed and specifically set forth in Schedule 4.5
or any of the other schedules attached hereto; and (iii) normal liabilities
incurred in the ordinary course of business, consistent with prior practice,
since the date of the January 31 Balance Sheet.
4.6 TAX MATTERS.
4.6.1 The Company has timely filed all federal, state, local and any
other returns, declarations, reports, information returns and statements
required to be filed by it in respect to any Taxes (as hereinafter
defined) (collectively, the "Returns") and has validly made any elections
reflected on such Returns. The foregoing Returns correctly reflect in all
material respects the facts regarding the income, business, assets,
operations, activities and status of the Company or any other information
required to be shown thereon. Except as set forth on Schedule 4.6, the
Company has not requested an extension of time within which to file any
Return which Return has not since been filed nor is there in effect any
such extension. Without limiting the generality of the foregoing, and
except as set forth in Schedule 4.6, the Company has filed all Returns
required to be filed by it with respect to or covering its fiscal year
ended December 31, 1997 and, as hereinafter used, the term "Returns"
includes all such Returns.
4.6.2 Except as set forth on Schedule 4.6, the Company has timely
paid or reserved on the January 31 Balance Sheet all Taxes that are
required to be shown as due and payable on its Returns and is not
delinquent in the payment of any Taxes and the Company is not liable for
(or has provided an adequate reserve on the January 31 Balance Sheet with
respect to) any Taxes of or relating to any acquired business or assets.
The Company has established on its books and records reserves that are
adequate for the payment of any Taxes not yet due and payable. The
Company has made all payments of estimated taxes when due in amounts
sufficient to avoid the imposition of any interest or penalty.
4.6.3 The Company has not been and is not now a party to any tax
indemnity or tax sharing agreement. The Company is not liable for Taxes
of any other person as a result of their filing of any consolidated tax
return. The Company has not been a member of an "affiliated group"
within the meaning of Section 1502 of the Internal Revenue Code of 1986,
as amended (the "Code").
4.6.4 There are no liens for Taxes upon assets of the Company except
liens for Taxes not yet due and payable and liens for Taxes, if any,
which are being contested in good faith by appropriate actions as set
forth in Schedule 4.6.
4.6.5 The Company is not a party to any agreement, contract,
arrangement or plan that could result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
4.6.6 If the tax treatment of any item reflected in a Return filed
by or on behalf of the Company is not supported by substantial authority
(within the meaning of Section 6662(d)(2)(B)(i) of the Code), such Return
adequately disclosed the relevant facts affecting the item's tax
treatment.
4.6.7 The Company has not filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of any asset owned by the Company.
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4.6.8 Except to the extent set forth in Schedule 4.6, the Returns of
the Company have been closed by applicable statute or examined by all
appropriate tax authorities. There are no outstanding agreements or
waivers extending the statute of limitations applicable to any Returns
for any period. With respect to any taxable year for which the statute
of limitations has not expired, no issues have been raised by any taxing
authority, either in writing or by oral statement of such taxing
authority to any director or officer of the Company or to any other
employee of the Company whose duties or activities include the
preparation or processing of any Returns or to any other representative
of the Company who had such duties or engaged in such activities, to the
effect that such taxing authority may take a position contrary to the
Company's position with respect to any particular tax issue which could
result in additional Taxes, or that could give rise to a change in the
taxable income of the Company for any taxable year. No deficiency for
any Taxes has been proposed, asserted or assessed against the Company
which has not been resolved and paid in full.
4.6.9 The Company is not required for the tax year ended December
31, 1997 or any tax year ended thereafter to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a change
in accounting method initiated by the Company prior to the Closing Date,
and neither the Company nor the Sellers have knowledge that the Internal
Revenue Service has proposed any such adjustment or change in accounting
method which would affect any tax year nor does Company or the Sellers
have knowledge of conditions that would give rise to any such adjustment
or change.
4.6.10 The Company is not, and has not been since July 1, 1986, a
United States real property holding corporation within the meaning of
Section 897 (c) (2) of the Code.
4.6.11 Except as set forth on Schedule 5.6, the fair market value of
each of the Excluded Assets (as defined in Section 5.6) does not exceed
its adjusted basis for federal income tax purposes.
4.6.12 As used herein, the term "Taxes" means (i) all net income,
gross income, gross receipts, value added, alternative minimum,
recapture, environmental, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, unemployment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, customs duties and other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign) upon the Company with respect to
all periods or portions thereof ending on or before the Closing Date
and/or (ii) any liability of the Company for the payment of any amounts
of the type described in the immediately preceding clause (i) as a result
of being a member of an affiliated, consolidated, combined or unitary
group.
4.7 REAL ESTATE OF THE COMPANY.
4.7.1 Schedule 4.7 accurately and completely sets forth, with
respect to every parcel of real estate owned by the Company (the "Real
Estate"): (i) the titleholder; (ii) the location, including address,
thereof; (iii) the legal description and approximate size thereof; (iv) a
brief description (including size, approximate year of completion, and
function) of the principal improvements and buildings thereon, all of
which are within the property, set-back and building lines of the Real
Estate; (v) the approximate year acquired; and (vi) the nature and amount
of any
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mortgages, tax liens or other liens and encumbrances thereon (including
without limitation any environmental liens). The Sellers have previously
delivered to the Purchaser complete and accurate copies of each and every
appraisal and survey of any parcel of the Real Estate which was prepared
for the Company at any time during the four year period prior to the date
hereof. The Company does not lease any parcel of real estate to or from
any other person.
4.7.2 The Company has good and marketable title to each parcel of
the Real Estate, free and clear of all liens, mortgages, pledges,
charges, encumbrances, assessments, restrictions, covenants and easements
or title defects of any nature whatsoever, except for liens set forth on
Schedule 4.7, liens for real estate taxes not yet due and payable, and
such imperfections of title and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract
from the value, or interfere with the present use, of such properties or
otherwise impair business operations in any material respect.
4.7.3 The buildings located on the Real Estate are each in good
operating condition, normal wear and tear excepted, and are in the
aggregate sufficient to satisfy the Company's current normal
sterilization service levels and other business activities conducted at
such buildings. The Company is not in violation of any zoning or
building laws, regulations or codes or other laws, statutes, ordinances,
regulations or codes applicable to any portion of the Real Estate or the
use thereof by the Company, and no written or oral notice of any
violation thereof relating to any of the Real Estate has been received by
the Company which has not been corrected and as to which the Company has
no further liability.
4.7.4 Each parcel of the Real Estate: (i) has direct access to
public roads or access to public roads by means of a perpetual access
easement, such access being sufficient to satisfy the current and
reasonably anticipated normal transportation requirements of the
Company's business as presently conducted at such parcel; and (ii) is
served by all utilities, including but not limited to water, electricity,
natural gas, sewer and telephone, in such quantity and quality as are
sufficient to satisfy the Company's current normal sterilization service
levels and other business activities conducted at such parcel.
4.7.5 None of the Sellers or the Company has received notice of: (i)
any condemnation proceeding with respect to any portion of the Real
Estate, and to the best of the Sellers' and the Company's knowledge no
proceeding is contemplated by any governmental authority; or (ii) any
special assessment which may affect the Real Estate, and to the best of
the Sellers' and the Company's knowledge no such special assessment is
contemplated by any governmental authority nor are there grounds for such
a special assessment.
4.8 GOOD TITLE TO AND CONDITION OF THE COMPANY'S OTHER ASSETS.
4.8.1 Except as set forth on Schedule 4.7, the Company has good and
marketable title to all of the assets and properties owned by it and
reflected on the January 31 Balance Sheet or acquired by the Company
subsequent to January 31, 1998 other than (i) those assets sold or used
up by the Company in the ordinary course of business since January 31,
1998 and (ii) the Excluded Assets (as defined in Section 5.6), free and
clear of all liens, mortgages, pledges, encumbrances or charges of every
kind, nature, and description whatsoever.
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4.8.2 Except as set forth on Schedule 4.8, each item of the
Company's fixed assets is in good working order, repair and operating
condition and fit for its intended purpose, normal wear and tear
excepted.
4.8.3 The inventory and supplies of the Company consist of items of
a quality and quantity usable and saleable in the normal course of the
Company's business at values in the aggregate at least equal to the
values at which such items are carried on its books. The values of
obsolete inventory and supplies and inventory and supplies of below
standard quality, if any, have been written off. The value at which such
inventory and supplies are carried on the December 31 Balance Sheet and
the January 31 Balance Sheet reflects in each case the normal inventory
valuation policies of the Company, stating inventory and supplies at cost
on a first in, first out basis.
4.9 RECEIVABLES OF THE COMPANY. The Sellers have previously delivered to
the Purchaser a complete list of all receivables of the Company as of January
31, 1998 including accounts receivable, notes receivable and insurance proceeds
receivable. All of the receivables listed thereon or set forth or reflected in
the December 31 Balance Sheet and the January 31 Balance Sheet, were, as of the
dates as of which the information is given therein, and as of the Closing Date
all of the Company's receivables are, valid accounts receivable which are or
will be current and collectible and which have been or will be, within 90 days
after the Closing Date, collected in full except to the extent of an allowance
for uncollectible receivables in the amount of $7,750. For purposes of
determining whether a receivable of a particular customer has been collected,
payments received from that customer shall be applied on a first-in, first-out
basis, except for cash on delivery payments and except as otherwise directed by
the customer in the case of disputed accounts.
4.10 LICENSES AND PERMITS OF THE COMPANY. The Company possesses all
licenses and other required governmental or official approvals, permits or
authorizations, the failure to possess which would have a material adverse
effect on the business, financial condition or results of operations of the
Company, including without limitation those issued or administered by the U.S.
Food and Drug Administration, the U.S. Occupational Safety and Health
Administration, the U.S. Environmental Protection Agency and any other federal,
state or local agencies. All such licenses, approvals, permits and
authorizations are in full force and effect, the Company is in compliance with
their requirements, and no proceeding is pending or threatened to revoke or
amend any of them. Schedule 4.10 contains a complete list of all such
licenses, approvals, permits and authorizations. The Sellers have previously
delivered to the Purchaser complete and accurate copies of each of the
licenses, approvals, permits and authorizations listed on Schedule 4.10. None
of such licenses, approvals, permits and authorizations, either by its terms or
by the provisions of the act, statute, regulation, ordinance or order pursuant
to which it was issued, are or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. Except as set forth on Schedule 4.10, the
Company is ISO 9001 certified and EN550 compliant.
4.11 PROPRIETARY RIGHTS OF THE COMPANY
4.11.1 The Company possesses all proprietary rights, including
without limitation patents, trade secrets, technology, know-how,
copyrights, trademarks, trade names, and rights to any of the foregoing,
which are necessary for it to carry on its business as now being
conducted (collectively, the "Proprietary Rights") without conflict with
valid proprietary rights of others. Schedule 4.11 contains a complete
list of those Proprietary Rights which consist of patents, copyrights,
trade marks, trade names and any rights to use any of them and any
pending
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applications to register any of them. Those patents and 510K submissions
identified on Schedule 4.11 are not required by the Company to carry on
its business as it is now being conducted and are not believed by the
Sellers to have any material commercial value.
4.11.2 (i) The Company owns all right, title and interest in and to
or licenses from others under valid fully paid up license agreements all
of the Proprietary Rights, (ii) there have been no claims made against
the Company for the assertion of the invalidity, abuse, misuse, or
unenforceability of any of such rights, and to the knowledge of the
Sellers or the Company there are no grounds for the same, (iii) none of
the Sellers or the Company has received a notice of conflict of any of
the Proprietary Rights with the asserted rights of others within the last
five years, and (iv) the conduct of the Company's business has not
infringed on such rights of others.
4.12 ADEQUACY OF THE COMPANY'S ASSETS; THE COMPANY'S RELATIONSHIPS WITH
ITS CUSTOMERS AND SUPPLIERS. (a) Those assets and properties of the Company
other than the Excluded Assets constitute, in the aggregate, all of the
property necessary for the conduct of the Company's business in the manner in
which and to the extent to which it is currently being conducted. None of the
Sellers or the Company knows of any written or oral communication, fact, event
or action which exists or has occurred since January 1, 1998 which would tend
to indicate that
(i) any current customer of the Company which accounted for over 1%
of the total net revenue of the Company for the year ended December 31,
1997, or
(ii) any current supplier to the Company of items essential to the
conduct of its business, which items cannot be replaced by the Company at
comparable cost to the Company and the loss of which would have a
material adverse effect on the business or operations of the Company,
will terminate its business relationship with the Company provided, however,
that the Sellers make no such representation and warranty with respect to (A)
any current customer which may terminate its business relationship with the
Company in favor of establishing such a relationship with the Purchaser or any
of its Affiliates or (B) Fresenius Medical Care, whose contract with the
Company has expired and as to which the Purchaser has requested the Company to
defer entering into a new contract until after the Closing.
(b) Set forth in Schedule 4.12, for each of the two fiscal years of the
Company ended December 31, 1997 and December 31, 1996, is a complete list of
all of the customers to which the Company sold sterilization services during
such year and the dollar amount of the Company's sales to each such customer
during such year. None of the customer accounts of the Company have been
designated by the appropriate governmental authorities as "small business
set-aside" contracts. Except as set forth on Schedule 4.12, neither the
Sellers nor any Affiliate (as hereinafter defined) of any of the Sellers other
than the Company, nor any officer, director or employee of the Company, has any
direct or indirect interest in any customer, supplier or competitor of the
Company or in any person from whom or to whom the Company leases real or
personal property, or in any other person with whom the Company is doing
business. The Company is not restricted by agreement from carrying on its
business anywhere in the world. As used in this Agreement, the term
"Affiliate" means, with respect to a specified person, any other person which
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person specified.
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4.13 DOCUMENTS OF AND INFORMATION WITH RESPECT TO THE COMPANY. Schedule
4.13 accurately and completely identifies each of the following: (i) each
loan, credit agreement, guarantee, security agreement or similar document or
instrument to which the Company is a party or by which it is bound; (ii) each
lease of personal property and license of software to which the Company is a
party or by which it is bound; (iii) any other agreement, contract or
commitment to which the Company is a party or by which it is bound which
involves a future commitment by the Company in excess of $25,000 and which
cannot be terminated without liability on 90 days or less notice; (iv) the name
and current annual salary of each salaried employee of the Company whose
current annual base compensation is in excess of $25,000 and the profit
sharing, bonus or any other form of incentive compensation (other than salary)
paid or payable by the Company to or for the benefit of each such person for
each of the years ended December 31, 1997 and 1998; (v) each employment or
other agreement of the Company with any of its officers or employees; (vi) the
name of each of the Company's officers and directors; and (vii) the name of
each bank in which the Company has an account or safe-deposit box, the name in
which the account or box is held, the number of the account or box and the
names of all persons authorized to draw thereon or to have access thereto. The
Sellers have previously furnished the Purchaser with a true and complete copy
of each such agreement, contract or commitment listed in Schedule 4.13. There
has not been any default in any obligation to be performed by the Company under
any such instrument.
4.14 INSURANCE OF THE COMPANY. Schedule 4.14 identifies (including name
of insurer, policy number and a brief description thereof) each policy of
insurance, including without limitation general liability, automobile
liability, excess liability, property and casualty, workers compensation,
directors and officers and fiduciary liability insurance and any insurance on
the life of any key employee of the Company, carried by or for the benefit of
the Company and each performance or other surety bond currently provided by the
Company in the conduct of its business. The Sellers have previously furnished
the Purchaser with a true and complete copy of each policy of insurance and
each bond identified on Schedule 4.14. All premiums and other payments which
have become due under the policies of insurance and bonds identified on
Schedule 4.14 have been paid in full, all of such policies and bonds are now in
full force and effect, the Company has received no written notice from any
insurer, agent or broker of the cancellation of, or any increase in premium
with respect to, any of such policies or bonds and the Company has not made or
agreed to make any assignment of any such policy or any of the Company's rights
thereunder. Any premium refunds which become payable as a result of the
removal of the Company as a covered insured under any such policy shall be paid
to the Company or forwarded to the Company by the recipient thereof. Except as
set forth in Schedule 4.14, within the 12 months preceding the date hereof the
Company has received no written notification from any insurer, agent or broker
denying or disputing any insurance claim made by the Company or denying or
disputing any coverage for any such claim or the amount of any claim. Except
as set forth in Schedule 4.14, the Company has no claim against any of its
insurers under any of such policies pending or anticipated and, to the
knowledge of the Sellers, there has been no occurrence of any kind which may
give rise to any such claim.
4.15 LITIGATION INVOLVING THE COMPANY. Except as set forth in Schedule
4.15: (i) there are no actions, suits, claims or arbitration proceedings
pending or, to the knowledge of the Sellers or the Company, threatened against
or reasonably expected to adversely affect the Company or any of its assets or
properties; (ii) there are no governmental investigations of which the Company
has received notice or which, to the knowledge of the Sellers or the Company,
are pending or threatened against or reasonably expected to adversely affect
the Company or any of its assets or properties; (iii) to the best of the
knowledge of the Sellers or the Company, there is no set of circumstances
directly and particularly involving the Company which provides a reasonable
basis for any action, suit or claim against the Company or any of its assets
and properties; and (iv) there are no outstanding orders, decrees or
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stipulations issued by any federal, state, local or foreign judicial or
administrative authority in any proceeding to which the Company is or was a
party.
4.16 THE RECORDS OF THE COMPANY. The Sellers have previously furnished
the Purchaser with copies of the Company's articles of incorporation and all
amendments thereto to date (certified by the Secretary of State of Utah) and of
the Company's bylaws (certified by the Company's secretary), and such copies
are correct and complete in all respects. All of the Company's operating data
and records, including without limitation customer lists and financial,
accounting and credit records (the "Company Records"), are accurate and
complete in all material respects and there are no material matters as to which
appropriate entries have not been made in the Company Records. A record of all
action taken by the stockholders and the board of directors of the Company and
all minutes of their meetings are contained in the minute books of the Company
and are accurate and complete. The record books and stock ledgers of the
Company contain an accurate and complete record of all issuances, transfers and
cancellations of shares of capital stock of all classes of the Company.
4.17 NO MATERIAL ADVERSE CHANGE. Except as set forth in Schedule 4.17,
since December 31, 1997, there has not been: (i) any change in the business or
properties of the Company, or in its financial condition, other than changes
which in the aggregate have not had a material adverse effect on the assets,
business, properties, financial condition, business prospects or results of
operations of the Company; or (ii) to the knowledge of the Sellers and the
Company, any threatened event or condition of any character whatsoever which
could reasonably be expected to materially and adversely affect the assets,
business, properties, financial condition, business prospects or results of
operations of the Company, other than any such event or condition which would
have such an effect on the entire contract sterilization industry or the U.S.
economy as a whole.
4.18 ABSENCE OF CERTAIN ACTS OR EVENTS. Except as set forth on Schedule
4.18, since January 31, 1998 the Company has not: (i) authorized or issued any
shares of its capital stock of any class (including any held in its treasury)
or any other securities; (ii) declared or paid any dividend or made any other
distribution of or with respect to its shares of capital stock or other
securities or purchased or redeemed any shares of its capital stock or other
securities; (iii) paid any bonus or increased the rate of compensation of any
of its employees; (iv) except for the transfer of the Excluded Assets pursuant
to Section 5.6, sold, leased, transferred or assigned any of its assets (A) to
any of its directors, officers or other employees (except normal compensation
for services actually rendered), (B) to any of the Sellers or (C) other than in
the ordinary course of business; (v) made or obligated itself to make capital
expenditures aggregating more than $50,000, (vi) paid any of the fees or
expenses of any attorneys, auditors, investment bankers, consultants or any
other agent or advisor for services rendered in connection with the
transactions or agreements contemplated hereby; (vii) incurred any material
obligations or liabilities (including any indebtedness) or entered into any
material transaction, except for this Agreement and the transactions
contemplated hereby ("material" being defined for purposes of this clause
(viii) as any obligation, liability or transaction in excess of $50,000); or
(ix) suffered any theft, damage, destruction or casualty loss in excess of
$50,000.
4.19 COMPLIANCE WITH LAWS BY THE COMPANY.
4.19.1 The Company is and has been in compliance with all laws,
regulations, ordinances and orders applicable to the Company, its assets,
properties and business. Except as set forth in Schedule 4.19, neither
the Sellers nor the Company has received notification of any asserted
past or present failure of the Company to comply with any laws,
regulations, ordinances
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and orders, and to the best of their knowledge, no proceeding with
respect to any such violation is contemplated nor is there any basis for
such a proceeding.
4.19.2 Neither the Company nor, to the best of the knowledge of the
Sellers and the Company, any employee of the Company, has made any
payment of funds in connection with the business of the Company
prohibited by law, and no funds have been set aside to be used in
connection with the business of the Company for any payment prohibited by
law.
4.20 ENVIRONMENTAL MATTERS.
4.20.1 Except as set forth on Schedule 4.20, the Company has not
transported, stored, treated or disposed, nor has it allowed or arranged
for any third parties to transport, store, treat or dispose of Hazardous
Substances (as hereinafter defined) or other waste to or at any location
other than a site lawfully permitted to receive such Hazardous Substances
or other waste for such purposes, nor has it performed, arranged for or
allowed by any method or procedure such transportation, storage,
treatment or disposal in contravention of any laws or regulations. For
purposes of this Section 4.20, the term "Hazardous Substances" shall have
the meaning given it in the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. sections 9601, et seq.), as
amended, and the regulations promulgated pursuant thereto ("CERCLA"), or
any similar state law. For purposes of this Agreement, the term
"Hazardous Substances" shall also include petroleum, crude oil and any
fractions thereof, but shall not include common household or office
products in de minimus quantities.
4.20.2 Except as set forth in Schedule 4.20, there has not occurred,
nor is there presently occurring, a Release (as hereinafter defined) of
any Hazardous Substance on, into or beneath the surface of any parcel of
the Real Estate. For purposes of this Section 4.20, the term "Release"
shall mean releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or
dumping.
4.20.3 Except as set forth in Schedule 4.20, the Company has not
transported or disposed, nor has it allowed or arranged for any third
parties to transport or dispose, of any Hazardous Substance or other
waste to or at a site which, pursuant to CERCLA or any similar state law,
(i) has been placed on the National Priorities List provided for under
CERCLA or its state equivalent, or (ii) the U.S. Environmental Protection
Agency or the relevant state agency has proposed or is proposing to place
on such National Priorities List or its state equivalent. The Company
has received no notice, and it has no knowledge of any facts which could
give rise to any notice, that the Company is a potentially responsible
party for a federal or state environmental cleanup site or for corrective
action under CERCLA or any other applicable federal, state or local law
or regulation. The Company has not submitted nor was it required to
submit any notice pursuant to Section 103(c) of CERCLA with respect to
the Real Estate. The Company has received no written or oral request for
information in connection with any federal or state environmental cleanup
site. The Company has not undertaken (or been requested to undertake)
any response or remedial actions or cleanup actions of any kind at the
request of any federal, state or local governmental entity, or at the
request of any other person or entity.
4.20.4 The Company does not use, and has not used, any Underground
Storage Tanks (as hereinafter defined), and there are not now nor have
there ever been Underground Storage Tanks on the Real Estate. For
purposes of this Section 4.20, the term "Underground Storage
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Tanks" shall have the meaning given it in the Resource Conservation and
Recovery Act (42-U.S.C. Sections 6901 et seq.).
4.20.5 There is no asbestos nor friable asbestos containing
materials in or on any of the Real Estate.
4.20.6 Except as set forth in Schedule 4.20, there are no laws,
regulations, ordinances, licenses, permits or orders relating to
environmental or worker safety matters requiring any work, repairs,
construction or capital expenditures with respect to the assets or
properties of the Company which have not been completed and approved as
required.
4.20.7 Schedule 4.20 identifies: (i) all environmental audits,
assessments or occupational health studies delivered to or commissioned
by the Company or its agents or any of the Sellers since April 1, 1994
or, to the best of the knowledge of the Company, during the period from
January 1, 1990 through March 31, 1994, which relate to the assets,
properties or business of the Company; (ii) the results of any ground,
water, soil, air or asbestos monitoring undertaken with respect to the
Real Estate; (iii) all written communications between the Company and any
environmental or occupational safety agencies within the past three
years; and (iv) all citations issued to the Company within the past three
years under the Occupational Safety and Health Act (29 U.S.C. Sections
651 et seq.). The Company has previously made copies of all such
documents identified on Schedule 4.20 available to the Purchaser for its
review.
4.21 LABOR AND EMPLOYMENT MATTERS. (i) Except as set forth in Schedule
4.21, the Company is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including without limitation the federal Immigration Reform
and Control Act, the National Labor Relations Act, the Fair Labor Standards
Act, the Equal Pay Act, the Occupational Safety and Health Act, Title VII of
the Civil Rights Act, the Age Discrimination in Employment Act, the Americans
with Disabilities Act and the Utah Anti-Discrimination Act; (ii) there is no
unfair labor practice, complaint or proceeding against the Company pending
before the National Labor Relations Board or, to the best knowledge of the
Sellers and the Company, threatened against or affecting the Company nor, to
the best knowledge of the Sellers is there a basis for such a complaint or
proceeding; (iii) there are no complaints or charges of employment
discrimination against the Company pending before any federal, state or local
agency or authority or, to the best knowledge of the Sellers and the Company,
threatened against or affecting the Company; (iv) there is no labor strike,
labor dispute, work slowdown or work stoppage actually pending or, to the best
knowledge of the Sellers and the Company, threatened against or affecting the
Company; (v) no representation question involving an attempt to organize a
bargaining unit including any employees of the Company is pending or, to the
best knowledge of the Sellers and the Company, threatened against or affecting
the Company; (vi) no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement between the Company and any labor
union or labor organization is pending or, to the best knowledge of the Sellers
and the Company, threatened against or affecting the Company; (vii) the Company
is not a party to or bound by any collective bargaining agreement, union
contract or understanding with any labor union or labor organization; (viii) no
collective bargaining agreement is currently being negotiated by the Company;
and (ix) there are no actions, suits, claims, governmental investigations or
arbitration proceedings pending or to the knowledge of the Sellers or the
Company threatened against or affecting the Company or any of its assets or
properties brought by any applicant for employment, any employee or any former
employee. Except as set forth in Schedule 4.21, none of the Sellers nor the
Company is aware that any executive or key employee or group of employees has
any plans to terminate his, her or their employment with the Company.
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<PAGE> 20
4.22 EMPLOYEE BENEFITS.
4.22.1 Except in each case as identified and described in Schedule
4.22, neither the Company, nor any corporation or business which is now
or at the relevant time was a member of a controlled group of
corporations or trades or businesses including the Company, within the
meaning of Section 414 of the Code, maintains or contributes to, or at
any time since January 1, 1993 maintained or contributed to: (i) any
non-qualified deferred compensation or retirement plans or arrangements;
(ii) any tax qualified defined contribution retirement plans or
arrangements; (iii) any tax qualified defined benefit pension plan; (iv)
any other plan, program, agreement or arrangement under which former
employees of the Company or their beneficiaries are entitled, or current
employees of the Company will be entitled following termination of
employment, to medical, health, life insurance or other benefits other
than pursuant to benefit continuation rights granted by state or federal
law; or (v) any other employee benefit, health, welfare, medical,
disability, life insurance, stock, stock purchase or stock option plan,
program, agreement, arrangement or policy. The plans identified and
described in Schedule 4.22 are referred to herein as the "Plans."
4.22.2 The administration of the Plans complies in all respects
with the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA") or other applicable laws, and the Plans meet any
applicable requirements for favorable tax treatment under the Code in
both form and operation. All of the Plans which constitute employee
pension benefit plans or employee welfare plans subject to ERISA and the
trusts or other funding vehicles related to the Plans have been
maintained in compliance in both form and operation with requirements of
ERISA including, but not limited, to, the preparation and filing of all
required reports with respect to the Plans, the submission of such
reports to the appropriate governmental authorities, the timely
preparation and distribution of all required employee communications
(including without limitation any notice of plan amendment which is
required prior to the effectiveness of such amendments), the proper and
timely purchase and maintenance of required surety bonds and the proper
and timely disposition of all benefit claims. The costs of administering
the Plans, including fees for the trustee and other service providers
which are customarily paid by the Company, have been paid or will be paid
prior to the Closing or are reflected in the December 31 Balance Sheet.
There have been no prohibited transactions as defined in Section 406 of
ERISA or Section 4975 of the Code with respect to any of the Plans or any
parties in interest or disqualified persons with respect to the Plans or
any reduction or curtailment of accrued benefits with respect to any of
the Plans. There are no pending or, to the knowledge of Sellers,
threatened claims, lawsuits or arbitrations which have been asserted or
instituted against the Plans, any fiduciaries thereof with respect to
their duties to the Plans or the assets of any of the trusts under any of
the Plans.
4.22.3 Except as set forth in Schedule 4.22: (i) all required
contributions by the Company for all Plan years ending prior to the
Closing Date and for all current Plan years have been made; (ii) all
employee contributions, including amounts withheld from employee
compensation, have been deposited in trusts established under the Plans
within the period required by Department of Labor Regulations Section
2510.3-102; (iii) none of the Plans is subject to Section 302 or Title IV
of ERISA, or is a multiemployer plan as defined in Section 4001 (3) of
ERISA; and (iv) the Company has no plans, programs, agreements or
arrangements and has made no other commitments to its employees, former
employees or their beneficiaries under
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which it has any obligation to provide any retiree or other employee
benefit payments which are not adequately funded through a trust or other
funding arrangement (the "Unfunded Plans").
4.22.4 The Sellers shall furnish to the Purchaser upon request true
and complete copies of: (i) each of the Plans and any related trusts or
funding vehicles, policies or contracts and, with respect to those of the
Plans subject to Title I of ERISA, the related summary plan descriptions
with respect to each such Plan; (ii) with respect to those of the Plans
intended to be qualified under Section 401(a) of the Code, the most
recent determination letters received from the Internal Revenue Service
regarding such Plans and copies of any pending applications, filings or
notices with respect to any of the Plans with the Internal Revenue
Service; (iii) with respect to those of the Plans subject to Title IV of
ERISA, all written communications to or from the Pension Benefit Guaranty
Corporation; (iv) with respect to those of the Plans subject to ERISA,
all written communications to or from the Department of Labor, the
Pension Benefit Guaranty Corporation or any other governmental body; (v)
the latest financial statements (audited where required by applicable law
or regulation) and annual reports for each of the Plans and all related
trusts or funding vehicles, policies or contracts as of the end of the
most recent plan year with respect to which the filing date for such
information has passed; (vi) the reports of the most recent actuarial
valuations of the Plans; (vii) all corporate resolutions or other
documents pertaining to the adoption of the Plans or any amendments
thereto or to the appointment of any fiduciaries thereunder and copies of
any investment management agreement thereunder and of any fiduciary
insurance policies, surety bonds, rules, regulations or policies of the
trustees or of any committee thereunder; (viii) any communications or
notices provided to employees or plan participants with respect to the
Plans along with information concerning the date and extent of
distribution of such communications, including without limitation notices
intending to comply with Section 606 of ERISA and Section 4980B of the
Code; and (ix) each of the Unfunded Plans or a written description of any
Unfunded Plan which has not been reduced to writing.
4.22.5 Schedule 4.22 sets forth: (i) the name and address of each
of the Company's employees; (ii) the name of each employee, former
employee and any other person currently receiving benefits under any one
or more of the Company's hospitalization pay, extended illness pay or
sick leave pay plans, together with a summary of the benefits being
provided; (iii) the name of each former employee of the Company and every
other person currently being covered under the Company's health care plan
pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA"),
together with the expiration date of all COBRA rights for each such
covered person.
4.23 PRODUCT LIABILITY CLAIMS; PRODUCT WARRANTIES. No product liability
claims for injury or damage to persons or property are pending or, to the best
of the knowledge of the Sellers and the Company, threatened against the Company
with respect to the services provided by the Company. Schedule 4.23 sets
forth, for each of the last three fiscal years of the Company, and for the
interim period ended on the date hereof, the amount of each product liability
claim exceeding $5,000 paid by or on behalf of the Company. Except as
specifically described in Schedule 4.23, the Company has not extended to its
customers any product warranties, indemnifications or guarantees except those
imposed by law. Neither the Company nor any of the Sellers is aware of any
circumstances which might reasonably be expected to result in product liability
claims against the Company.
4.24 NO BYLAW INDEMNIFICATION CLAIMS. No claim for indemnification or
advancement of expenses has been or will at any time after the Closing Date be
made against the Company pursuant to Article XI of its Bylaws (a "Bylaw
Indemnification Claim") by any person who was at any time prior to
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the Closing Date a director, officer, employee, fiduciary or agent of the
Company based upon or arising out of any actual or alleged facts which existed
or occurred or were alleged to have existed or occurred in whole or in part
prior to or at the Closing Date.
5.0 CONDITIONS TO THE OBLIGATION OF THE PURCHASER
The obligation of the Purchaser to purchase the Shares shall be subject to
the fulfillment at or prior to the Closing Date of each of the following
conditions:
5.1 OPINION OF COUNSEL. The Purchaser shall have received an opinion
dated the Closing Date from Ray, Quinney & Nebeker, counsel for the Sellers and
the Company, in form and substance satisfactory to the Purchaser.
5.2 RECEIPT OF NECESSARY CONSENTS. All necessary consents or approvals of
third parties to any of the transactions contemplated hereby, the absence of
which would materially affect Purchaser's rights hereunder, shall have been
obtained and shown by written evidence satisfactory to the Purchaser.
5.3 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Shares to the
Purchaser or any other transaction contemplated hereby, or which might affect
the right of the Purchaser to own the Shares or to control the Company and
which, in the judgment of the Purchaser, makes it advisable not to proceed with
the purchase of the Shares.
5.4 RESIGNATIONS AND RELEASES. The Sellers shall have delivered to the
Purchaser the written resignations of the directors and officers of the
Company. Each of the Sellers and the directors and officers of the Company
shall have delivered to the Company and the Purchaser a release and waiver of
any claim that he, she or it may have against the Company.
5.5 SURVEY AND TITLE COMMITMENT. The Purchaser shall have received from
the Sellers (i) a current survey of each parcel of the Real Estate identified
on Schedule 4.7 performed by a licensed and reputable surveyor and (ii) a
commitment with an effective date within five business days of the Closing
Date, in form and substance acceptable to Purchaser and issued by Metro
National Title Insurance Company, to issue an Owner's Policy of Title Insurance
insuring the Company's title to the Real Estate identified on Schedule 4.7 in a
reasonable amount (but in no event less than $6,000,000) and subject only to
the liens and encumbrances permitted by Section 4.7.2, and the Sellers shall
have borne the cost of such survey and Title Insurance Policy.
5.6 ENGINEERING LEASE; TRANSFER OF THE EXCLUDED ASSETS AND RELATED
MATTERS. (a) Sorex Engineering on the one hand, and the Company, on the
other hand, shall have executed and delivered to the other parties thereto an
agreement in form and substance satisfactory to the Purchaser (the "Engineering
Lease").
(b) The assets of the Company which are specifically identified on
Schedule 5.6 (collectively, the "Excluded Assets") shall have been sold by the
Company to Sorex Engineering. The Company shall have provided evidence to the
Purchaser that each of those employees specifically identified on Schedule 4.21
who were members of the Company's engineering staff and who have been engaged
in activities related to certain of the Excluded Assets (collectively, the
"Engineering Employees") has received from the Company a release and waiver and
related payment in form and substance satisfactory to the Purchaser.
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5.7 CERTIFIED RESOLUTIONS OF THE COMPANY. The Company shall have
delivered to the Purchaser copies of resolutions, in form and substance
satisfactory to the Purchaser, certified as of the Closing Date by the
Company's secretary, duly adopted by the board of directors and the
stockholders, respectively, of the Company, approving the form of and
authorizing the Company to execute, deliver and perform each of the agreements
contemplated by this Agreement to which the Company is a party.
5.8 CERTIFIED RESOLUTIONS OF THE CORPORATE SELLER. The Corporate Seller
shall have delivered to the Purchaser copies of resolutions, in form and
substance satisfactory to the Purchaser, certified as of the Closing Date by
the Corporate Seller's secretary, duly adopted by the board of directors and
the stockholders, respectively, of the Corporate Seller, authorizing the
Corporate Seller to execute, deliver and perform all of its obligations under
this Agreement.
5.9 ESCROW AGREEMENT. The Sellers and an escrow agent (the "Escrow
Agent"), shall have executed and delivered to the Purchaser the Escrow
Agreement.
6.0 CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to sell the Shares shall be subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
6.1 ENGINEERING LEASE; TRANSFER OF THE EXCLUDED ASSETS AND RELATED
MATTERS. The Excluded Assets shall have been sold by the Company to Sorex
Engineering, and the written resignations of the Engineering Employees shall
have been delivered to the Purchaser. The Company shall have entered into the
Engineering Lease with Sorex Engineering in form and substance satisfactory to
the Sellers.
6.2 OPINION OF COUNSEL. The Sellers shall have received an opinion, dated
the Closing Date, from Bell, Boyd & Lloyd, counsel for the Purchaser, in form
and substance satisfactory to the Sellers.
6.3 CERTIFIED RESOLUTIONS. The Purchaser shall have delivered to the
Sellers a copy of a resolution duly adopted by the board of directors of the
Purchaser authorizing the transactions contemplated by this Agreement,
certified as of the Closing Date by its secretary or assistant secretary.
6.4 RECEIPT OF NECESSARY CONSENTS. All necessary consents or approvals
of third parties to any of the transactions contemplated hereby, the absence of
which would materially affect Sellers' rights hereunder, shall have been
obtained and shown by written evidence satisfactory to the Sellers.
6.5 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Shares to the
Purchaser or any other transaction contemplated hereby, or which might affect
the right of the Purchaser to own the Shares or to control the Company and
which, in the judgment of the Sellers, makes it advisable not to proceed with
the purchase of the Shares.
6.6 STERILIZATION CONTRACT WITH SDI. The Company shall have entered into
a sterilization contract with SDI and/or one or more of its Affiliates in form
and substance satisfactory to the Sellers.
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6.7 ESCROW AGREEMENT. The Purchaser and the Escrow Agent shall have
executed and delivered to the Sellers the Escrow Agreement.
7.0 POST-CLOSING COVENANTS AND OBLIGATIONS OF THE SELLERS
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Sellers, jointly and
severally unless otherwise expressly provided, agree with the Purchaser as
follows:
7.1 COOPERATION WITH RESPECT TO RETURNS AND TAXES AND WITH RESPECT TO A
POSSIBLE CLAIM AGAINST THERMATRIX. (a) The Corporate Seller and JLS will
cooperate with the Purchaser, when and as requested by the Purchaser, in
connection with the preparation and filing of all Returns and in any audit,
litigation or other proceeding with respect to any Taxes.
(b) The Corporate Seller and JLS will cooperate with and provide
reasonable assistance and support to the Purchaser and the Company in the event
that the Company determines to assert and pursue a claim against Thermatrix
Inc. related to the failure of the Thermatrix waste control system installed in
the Company's sterilization facility to perform properly. Without limiting the
generality of the foregoing, the Corporate Seller and JLS will use their best
efforts to assure that Duane M. Toney will be made reasonably available to the
Purchaser for the purpose of providing the assistance and support referred to
in the preceding sentence. The Purchaser will reimburse the Corporate Seller
and JLS their reasonable out-of-pocket costs incurred in connection with
providing such assistance and support.
7.2 RETURN OF CREDIT CARDS ETC.; NO FURTHER ACTION ON BEHALF OF THE
COMPANY. Immediately after completion of the Closing, the Corporate Seller
and JLS shall cause each of the directors and officers of the Company and each
of the Engineering Employees to, and each of the Sellers shall (i) cease to use
and shall surrender to the Company any credit cards, telephone cards and any
other charge cards entitling such person to make any charge to or for the
account of the Company which were issued to or are in the possession of such
person and any keys to any premises of the Company or any safe deposit box or
other assets of the Company, (ii) cease to sign checks on any Company or Plan
bank or investment account and (iii) cease to act in any fashion for or on
behalf of or in the name of the Company, whether pursuant to any power of
attorney or otherwise. From and after the Closing Date, the Company shall
cease to pay any club dues or make any other payments to or on behalf of any
person who was immediately prior to the Closing a director or officer of the
Company, any of the Engineering Employees or any of the Sellers, except as
otherwise expressly provided for herein or in any of the other agreements
contemplated hereby.
7.3 EXECUTION OF FURTHER DOCUMENTS; ASSISTANCE IN TRANSITION TO NEW
OWNERSHIP. (a) From and after the Closing, upon the reasonable request of
the Purchaser, the Sellers shall execute, acknowledge and deliver all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney
and assurances as may be reasonably required to convey and transfer to and vest
in the Purchaser and protect its right, title and interest in the Shares and as
may be appropriate otherwise to carry out the transactions contemplated by this
Agreement.
(b) The Corporate Seller and JLS agree, for a period not to exceed six
months following the Closing Date, that they will, upon request from the
Purchaser or the Company, furnish reasonable assistance to the Purchaser and
the Company, in effecting a smooth transition to new ownership and operation of
the Company. Without limiting the generality of the foregoing, the Corporate
Seller and
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<PAGE> 25
JLS will use their best efforts to assure that Duane M. Toney will be made
reasonably available to the Purchaser during such period to render such support
and assistance.
7.4 RESTRICTIVE COVENANT. The Sellers agree: (i) that they will fully
and strictly comply with all of the terms of the Restrictive Covenant attached
hereto as Exhibit B (the "Restrictive Covenant"); and (ii) that they will use
their best efforts to cause Duane M. Toney to fully and strictly comply with
all of the terms of the Restrictive Covenant to the same extent that he would
be obligated to comply with the Restricted Covenant if he were included in the
term "Seller" as used therein.
7.5 EMPLOYEE BENEFIT MATTERS. The Corporate Seller and JLS agree to cause
the Corporate Seller and/or its Affiliates to take all actions necessary to
enable the Company and the Purchaser to discharge their obligations set forth
in Section 8.2.
7.6 ACTIONS, RESPONSIBILITY WITH RESPECT TO CERTAIN EMPLOYEES. The
Sellers agree to cause the Company, prior to the Closing, to terminate the
employees identified on Schedule 4.21. The Sellers hereby assume and shall be
responsible for all severance or other obligations arising out of the
employment or termination of such individuals.
8.0 POST-CLOSING COVENANTS AND OBLIGATIONS OF THE PURCHASER
8.1 CHANGE OF COMPANY'S NAME. As soon as is reasonably practicable but
in any event within 90 days after the Closing Date, the Purchaser will change
the corporate name of the Company to a name which does not include the word
"Sorex" or any word deceptively similar thereto. The Sellers acknowledge and
agree that the name "Griffith Micro Science" is not deceptively similar to the
name "Sorex."
8.2 EMPLOYEE BENEFIT MATTERS. The provisions of this Section 8.2 set
forth the exclusive obligation of the Company and the Purchaser with respect to
the terms and conditions of employment of persons who are active employees of
the Company at the time of the Closing, including those who are on vacation or
approved leave of absence but excluding retired employees, employees on
disability, and the Engineering Employees as defined in Section 5.6 (the
"Company Employees"). The provisions of this Section 8.2 are for the exclusive
benefit of the parties, and neither the Company Employees nor any other person
shall be considered a third party beneficiary thereof. Nothing contained
herein shall be construed in any way to limit the authority of the Company, the
Purchaser, or any of its affiliates to amend or terminate any employee benefit
plan, or to revise any employment policy or practice, to the maximum extent
permitted by law.
8.2.1 Except for Company Employees who are parties to a valid
employment agreement listed on Schedule 4.13, each Company Employee shall
be an employee at will, subject to discharge or change in terms and
conditions of employment to the fullest extent permitted by law.
8.2.2 Each Company Employee who meets the eligibility requirements
thereof shall become a participant in the Griffith Supplemental
Retirement and Savings Plan (the "Griffith Plan") on the Closing Date,
which shall be a special entry date for the Company Employees only. Such
Company Employees shall be eligible to receive contributions for the Plan
Year that includes the Closing on the same basis as employees who became
participants on April 1, 1998, but based solely on their compensation
paid after April 24, 1998. All Company Employees (whether or not
eligible to become participants at the Closing) shall receive credit for
eligibility
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and vesting purposes under the Griffith Plan for their period of service
with the Company prior to the Closing. Company Employees shall not
become participants in the Griffith Equity Investment Plan (the "ESOP"),
which is in the process of being merged with the Griffith Plan, but upon
completion of the merger, shall be treated in the same manner as other
employees who become participants in the Griffith Plan without previously
having been a participant in the ESOP.
8.2.3 The Company shall withdraw as a participating employer in the
Sorenson Development/ Deseret Research Affiliated Employee's Retirement
Plan (the "Sorenson Plan") as of the Closing, and shall have no further
responsibilities or obligations with respect thereto except as provided
herein. The Sorenson Plan shall be responsible for all benefits owed to
any former employee of the Company who terminated employment prior to the
Closing. The Corporate Seller shall make, or cause to be made, any
contribution to the accounts of Company Employees in the Sorenson Plan to
which they may be entitled based upon their service and compensation
prior to April 25, 1998, and neither the Company nor the Purchaser shall
have any responsibility with respect thereto. After such contribution,
if any, has been made, the accounts of the Company Employees in the
Sorenson Plan shall be transferred to the Griffith Plan in accordance
with the provisions of Section 414(l) of the Code. The Corporate Seller
shall take, or cause its appropriate subsidiary to take, any action
necessary to accomplish such transfer and to provide Purchaser with any
reasonable assurance that such transfer will not adversely affect the
qualified status of the Griffith Plan.
8.2.4 The Purchaser shall cause all Company Employees to be eligible
to participate in all health, medical, dental, life insurance,
disability, workers compensation and similar welfare benefit plans (the
"Griffith Welfare Plans") for which similarly situated employees of the
Purchaser are eligible as of the Closing, without requiring proof of
insurability or being subject to limitations on the coverage of
pre-existing conditions (except to the extent that a Company Employee was
subject to such a limitation under the comparable welfare benefit plan of
the Corporate Seller and its affiliates (the "Sorenson Welfare Plans")).
The Company shall withdraw as a participating employer in each of the
Sorenson Welfare Plans as of the Closing and shall have no further
responsibilities or obligations with respect thereto. The Corporate
Seller and its affiliates shall be responsible for the payment, through
the Sorenson Welfare Plans, of (i) all claims for benefits by former
employees of the Company who do not remain Company Employees and their
dependents and beneficiaries whenever they arise (including continuation
coverage under Section 4980B of the Code), and for (ii) all claims for
benefits by Company Employees and their dependents and beneficiaries that
have accrued prior to the Closing, and shall provide a reasonable tail
period for Company Employees and their dependents and beneficiaries to
submit claims therefor. For purposes of the preceding sentence, a claim
for a medical benefit is accrued on the date on which the services are
rendered, a claim for a death benefit is accrued on the date of death,
and a claim for a disability benefit is accrued on the date on which the
disability arose.
8.2.5 If any Company Employee is a participant at the Closing in any
cafeteria plan, as defined in Section 125 of the Code, maintained by the
Corporate Seller or its affiliates, the amount of benefits owed to such
Company Employee (including the full amount owed for the plan year that
includes the Closing to the extent such benefits are required to be
immediately available to the Company Employee under Section 125) shall be
a liability on the books of the Company for purposes of Section 1.5, and
the Company shall retain the liability to provide such
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<PAGE> 27
benefits; provided that such liability may be transferred to any
cafeteria plan maintained by the Purchaser or its affiliates.
8.2.6 Any person who is carried on the payroll of the Company as of
the Closing but who is absent on disability shall not remain a Company
Employee unless and until he returns to active employment, and until such
time shall be treated for all purposes of this Section 8.2 as a former
employee of the Company. If such person returns to active employment he
shall be reinstated as a Company Employee, but the provisions of this
Section 8.2 shall be interpreted by substituting the date of his return
to active employment for the date of the Closing with respect to him
(except that such date shall not be considered a special entry date under
the Griffith Plan, and he shall not become a participant until the next
date on which employees are generally eligible to enter the Griffith
Plan.)
9.0 INDEMNIFICATION
9.1 DEFINITION OF INDEMNIFIABLE DAMAGES. For purposes of this Agreement,
"Indemnifiable Damages" means all expenses, losses, costs, deficiencies,
liabilities and damages (including counsel fees and expenses) incurred or
suffered by the Purchaser or the Company (or any successor to all or any part
of the assets or business of the Company): (i) resulting from any inaccurate
representation or warranty made by any of the Sellers in or pursuant to this
Agreement; (ii) resulting from any default in the performance of any of the
covenants or agreements made by any of the Sellers in or pursuant to this
Agreement; (iii) resulting from any Bylaw Indemnification Claim (as defined in
Section 4.24 hereof); (iv) resulting from any of the environmental matters
identified on Schedule 9.1; or (v) resulting from any failure of Sorex
Engineering to fulfill any of its obligations under the Engineering Lease.
Without limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, the Purchaser shall have the right to be
put in the same financial position as it would have been in had each of the
representations and warranties of the Sellers been true and correct and had
each of the covenants of the Sellers been performed in full and had no Bylaw
Indemnification Claim been made against the Company.
9.2 INDEMNIFICATION BY THE CORPORATE SELLER. Subject to the applicable
principles, procedures, qualifications and limitations hereinafter set forth in
this Article 9, the Corporate Seller agrees to indemnify and hold the Purchaser
harmless in respect of the aggregate of all Indemnifiable Damages.
9.3 INDEMNIFICATION BY THE INDIVIDUAL SELLERS. Subject to the applicable
principles, procedures, qualifications and limitations hereinafter set forth in
this Article 9, each of the Individual Sellers severally agrees to indemnify
and hold the Purchaser harmless in respect of the aggregate of all
Indemnifiable Damages (i) resulting from any inaccurate representation or
warranty made by him in Sections 2.1 and 2.2 hereof and, (ii) resulting from
any default in the performance of any of the covenants or agreements made by
him in or pursuant to this Agreement.
9.4 DURATION OF REPRESENTATIONS AND WARRANTIES AND COVENANTS AND
AGREEMENTS. Each of the representations and warranties made by the Sellers in
this Agreement or pursuant hereto, shall survive for a period of two years
after the Closing Date, notwithstanding any investigation at any time made by
or on behalf of the Purchaser, and thereafter all such representations and
warranties shall be extinguished; provided, however, that notwithstanding the
foregoing, the representations and warranties made by the Sellers in Sections
2.1, 2.2, 2.3, 4.1, 4.2 and 4.24 hereof shall survive forever, those made in
Section 4.20 hereof shall in each case survive until the first anniversary of
the date on
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<PAGE> 28
which the applicable statute of limitations has expired and those made in
Section 4.6 hereof shall in each case survive until the first anniversary of
the later of (i) the date on which the applicable period of limitation on
assessment or refund of tax has expired, or (ii) the date on which the
applicable taxable year (or portion thereof) has been closed. No claim for the
recovery of Indemnifiable Damages based upon the inaccuracy of such
representations and warranties may be asserted by the Purchaser after such
representations and warranties shall be thus extinguished; provided, however,
that claims first asserted by the Purchaser in writing within the applicable
period (whether or not the amount of any such claim has become ascertainable
within such period) shall not thereafter be barred. All of the covenants and
agreements made by any of the Sellers in this Agreement or pursuant hereto
shall, unless any of them specifically provide to the contrary, survive
forever.
9.5 DEDUCTIBLE FOR CERTAIN INDEMNIFIABLE DAMAGES. Except as otherwise
expressly provided to the contrary in this Section 9.6, in the event of the
breach by the Sellers of any of their representations or warranties made in or
pursuant to this Agreement, the Sellers shall not be liable for any
Indemnifiable Damages suffered as a result of such breach until the aggregate
amount of all Indemnifiable Damages resulting from all such breaches exceeds
$250,000, and then the Sellers will only be liable for Indemnifiable Damages in
excess of $250,000; provided, however, that the limitations on the Sellers'
liability for Indemnifiable Damages set forth in this Section 9.6 shall not
apply to and there shall be no such deductible for Indemnifiable Damages
resulting from (i) any breach by the Sellers of any of their representations
and warranties made in or pursuant to Sections 2.1, 2.2, 2.3, 4.1, 4.2, 4.18
and 4.24 hereof, (ii) the environmental matters identified in Schedule 9.1,
(iii) any failure or Sorex Engineering to fulfill any of its obligations under
the Engineering Lease, or (iv) any default in the performance of any of the
covenants or agreements made by the Sellers in or pursuant to this Agreement.
9.6 EXCLUSIVE REMEDY. The Purchaser agrees that its exclusive remedy for
Indemnifiable Damages, if and until the same shall be exhausted, shall be the
recovery of the funds available under the Escrow Agreement (the "Escrow
Funds"), provided, however, that: (i) upon either the exhaustion of the Escrow
Funds or the termination of the Escrow in accordance with the Escrow Agreement,
the Purchaser may thereupon seek to recover Indemnifiable Damages directly from
the Sellers as set forth herein by any legal means; and (ii) nothing in this
Section 9.6 shall prevent the Purchaser from obtaining equitable relief in any
appropriate case.
9.7 APPOINTMENT AND DUTIES OF SELLERS' REPRESENTATIVE. (a) By his or
its execution of this Agreement, each of the Sellers hereby appoints the
Corporate Seller as his or its representative for all purposes under this
Article 9 (the "Sellers' Representative"), and each of the Sellers hereby
confers on the Sellers' Representative full and exclusive authority to act for
and on behalf of such Seller to the extent provided for in this Article 9. By
its execution of this Agreement, the Corporate Seller hereby accepts
appointment as the Sellers' Representative and agrees to discharge the duties
conferred on the Sellers' Representative.
(b) Until the last to occur of (i) the fifth anniversary of the Closing
Date or (ii) three months after the date on which all claims by the Purchaser
for Indemnifiable Damages which are outstanding on the said fifth anniversary
are finally resolved, this appointment of the Sellers' Representative shall be,
to the extent and for the purposes provided herein, irrevocable and shall not
be terminated (i) by any act of any Seller, (ii) by operation of law, (iii) by
the death or incapacity of any Seller or (iv) by the occurrence of any other
event, except as otherwise specifically provided for in this Agreement.
(c) From and after the Closing Date, the Sellers' Representative shall,
acting for, in the name of and on behalf of all of the Sellers, make all
determinations, take all actions and execute and
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<PAGE> 29
deliver all of the documents which the Sellers are required by Article 9 of this
Agreement to make, take or execute. Without limiting the generality of the
foregoing, the Sellers' Representative is hereby authorized and directed by each
of the Sellers to make all determinations, to give and receive all notices, to
take all actions and to execute and deliver all documents which are necessary or
advisable to enable each of the Sellers to fully discharge his or its
obligations and agreements specified in or pursuant to Article 9 of this
Agreement. Each of the Sellers shall be bound by all such determinations made,
notices given or received, actions taken and documents executed and delivered by
the Sellers' Representative in accordance with this Section 9.7. The Purchaser
shall be entitled to rely upon all such determinations made, notices given or
received, actions taken and documents executed and delivered by the Sellers'
Representative in accordance with this Section 9.7 to the same extent as though
taken, given or received, made or executed and delivered by the Sellers
themselves.
9.8 DETERMINATION OF INDEMNIFIABLE DAMAGES. (a) The determination of
Indemnifiable Damages with respect to claims asserted by the Purchaser on or
prior to the second anniversary of the Closing Date shall be governed by the
Escrow Agreement. Claims asserted after such second anniversary will be
determined pursuant to paragraphs (b) through (g) of this Section 9.8.
(b) Subject to paragraph (c) of this Section 9.8, if the Purchaser
believes that it has suffered or incurred any Indemnifiable Damages, the
Purchaser agrees to give written notice thereof to the Sellers' Representative
within 30 days of becoming aware of such claim, describing such Indemnifiable
Damages, the amount thereof, if known, and the method of computation of such
Indemnifiable Damages, all with reasonable particularity and containing a
reference to the provisions of this Agreement in respect of which such
Indemnifiable Damages are believed to have occurred. If any action at law or
suit in equity is instituted by a third party with respect to which the
Purchaser intends to claim any Indemnifiable Damages, the Purchaser agrees to
use its reasonable best efforts to give prompt written notice to the Sellers'
Representative of such action or suit. Any notice given by the Purchaser
pursuant to this paragraph (a) or pursuant to paragraph (d) of this Section 9.8
is referred to in this Article 9 as a "Claim Notice."
(c) Anything to the contrary in this Section 9.8 notwithstanding, and
except as otherwise provided in Section 9.4: (i) only a single omnibus Claim
Notice need be given by the Purchaser with respect to any Indemnifiable Damages
to which the deductible provided for in Section 9.5 is applicable, (provided,
however, that such omnibus Claim Notice will contain the same particularity
with respect to each separate claim making up the deductible amount as is
required by paragraph (b) of this Section 9.8), and such Claim Notice need be
given only upon the exhaustion of such deductible amount; and (ii) no delay by
the Purchaser in the giving of any Claim Notice shall affect the rights of the
Purchaser to recover Indemnifiable Damages hereunder and under the Escrow
Agreement unless (and then only to the extent) that such delay damages the
Sellers.
(d) If within 30 days after the date on which any Claim Notice has been
received by the Sellers' Representative, the Purchaser has not been notified in
writing by the Sellers' Representative that the claim stated therein for
Indemnifiable Damages is disputed, the claim for the amount of Indemnifiable
Damages specified in such Claim Notice shall be deemed to be accepted by the
Sellers and the Purchaser shall be entitled to prompt payment thereof by the
Seller or Sellers responsible to pay such Indemnifiable Damages pursuant to
Sections 9.2 and 9.3 hereof. If at any time or from time to time after giving
the initial Claim Notice with respect to any particular claim, additional
Indemnifiable Damages to the Purchaser from the same claim become
ascertainable, the Purchaser shall give an additional Claim Notice to the
Sellers' Representative, specifying the nature and amount of such additional
Indemnifiable Damages. If within 30 days after the date on which any such
additional Claim Notice has been received
25
<PAGE> 30
by the Sellers' Representative, the Purchaser has not been notified in writing
by the Sellers' Representative that the claim stated therein for Indemnifiable
Damages is disputed, the claim for the amount of Indemnifiable Damages
specified in such additional Claim Notice shall be deemed to be accepted by the
Sellers and the Purchaser shall be entitled to prompt payment thereof by the
Seller or Sellers responsible to pay such Indemnifiable Damages pursuant to
Sections 9.2 and 9.3 hereof. The Purchaser may give any number of Claim
Notices with respect to the same claim.
(e) If within 30 days after the date on which a Claim Notice has been
received by the Sellers' Representative, the Purchaser is notified in writing
by the Sellers' Representative that the claim for or amount of Indemnifiable
Damages set forth therein is disputed (a "Dispute Notice"), the Purchaser shall
not be entitled to collect such amount from any of the Sellers except (i) as
the Sellers' Representative otherwise consents to in writing at any time or
(ii) in accordance with a final judgment or decree of any court of competent
jurisdiction. Any Dispute Notice given by the Sellers' Representative shall be
accompanied by a written statement of the Sellers' Representative setting forth
in reasonable detail the factual and contractual bases for disputing the claim
to which it relates and/or the amount of such claim. The judgment or decree of
a court shall be deemed final when the time for appeal, if any, shall have
expired and no appeal shall have been taken or when all appeals taken have been
finally determined. The Purchaser shall have the burden of proof in
establishing the amount of the Indemnifiable Damages suffered by it. If the
Purchaser obtains a final judgment or decree of a court in its favor with
respect to establishing its right to Indemnifiable Damages, or if the Purchaser
is required to incur any costs to collect such Indemnifiable Damages from any
Seller, the costs incurred by the Purchaser in such action or collection
efforts (including reasonable attorneys' fees and expenses) shall be deemed to
be additional Indemnifiable Damages due and payable at the same time and from
the same Seller or Sellers as the Indemnifiable Damages which were the subject
of such action or collection efforts.
(f) If a Claim Notice has not been timely disputed by the Sellers'
Representative, or if a court has resolved a disputed Claim Notice against the
Sellers, the Sellers' Representative may not dispute the Sellers' liability for
Indemnifiable Damages upon receipt of an additional Claim Notice relating to
the same claim, but the Sellers' Representative may dispute the amount of
additional Indemnifiable Damages claimed by the Purchaser in such additional
Claim Notice.
(g) In the event that a Claim Notice has been disputed by the Sellers'
Representative, the Purchaser shall keep the Sellers' Representative informed
of all material developments in respect of the status of the claim. The
Purchaser on the one hand, and the Sellers' Representative on the other, shall,
at the request of the other, from time to time in good faith consult with
respect to and seek to resolve each Claim Notice which has been disputed.
9.9 PROCEDURE FOR THIRD PARTY CLAIMS. In the event that any Claim Notice
given by the Purchaser for Indemnifiable Damages pursuant to the Escrow
Agreement or Section 9.8 relates to a claim by a third party (a "TPC"), the
Purchaser will assume complete control (including with respect to any
settlement) over the defense of such TPC. The Purchaser will permit counsel
selected by the Sellers' Representative (not more than one firm for all
Sellers) to participate, at the expense of the Sellers and subject to the
Purchaser's control, in the defense of such TPC and in the settlement or any
other disposition of such TPC.
9.10 LIMITATION ON LIABILITY. Anything to the contrary set forth in this
Article 9 notwithstanding, the maximum aggregate liability of the Sellers for
all breaches of the representations and warranties made in this Agreement shall
be the amount of the Purchase Price.
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<PAGE> 31
9.11 LIMITATION ON JTS LIABILITY. Anything to the contrary set forth in
this Article 9 notwithstanding, JTS shall have no liability for Indemnifiable
Damages except for those provided for by Section 9.3.
10.0 MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. This Agreement may not be amended or
modified except by a written instrument signed by the party against whom
enforcement thereof is sought. Either the Purchaser or the Sellers (acting
collectively) may extend the time for or waive the performance of any of the
obligations of the other party hereto or waive compliance by the other party
hereto with any of the covenants or conditions contained in this Agreement.
Any such extension or waiver shall be in writing and signed by the party
granting such extension or making such waiver. No course of dealing between or
among any persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any persons under or by reason of this Agreement.
10.2 PAYMENT OF EXPENSES. Except as otherwise expressly provided herein
to the contrary, each party to this Agreement shall pay all of the expenses
incurred by it in connection with this Agreement, including without limitation
its legal and accounting fees and expenses, and the commissions, fees and
expenses of any person employed or retained by it to bring about, or to
represent it in, the transactions contemplated hereby.
10.3 ASSIGNABILITY; BINDING EFFECT. In the event of the death or legal
incapacity of any of the Sellers, this Agreement shall inure to the benefit of
and be binding upon such Seller's heirs, executors and administrators but this
Agreement shall not otherwise be assignable by any of the Sellers. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Purchaser.
10.4 ENTIRE AGREEMENT. This instrument, the schedules and exhibit
attached hereto and the other agreements and instruments contemplated hereby
and identified herein collectively contain the entire agreement of the parties
hereto with respect to the purchase and sale of the Shares and the other
transactions contemplated herein, and they supersede all prior understandings
and agreements of the parties with respect to the subject matter hereof,
including without limitation that certain confidentiality agreement dated
January 20, 1998 and those certain letter agreements dated March 5 and 10, 1998
and March 6, 1998 by and among the parent company of the Purchaser, the Company
and the Sellers. Any reference herein to this Agreement shall be deemed to
include the schedules and exhibit[s] attached hereto.
10.5 HEADINGS. The descriptive headings in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
10.6 EXECUTION IN COUNTERPART. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
10.7 NOTICES. Any notice, request, information or other document to be
given hereunder shall be in writing. Any notice, request, information or other
document shall be deemed duly given four business days after it is sent by
registered or certified mail, postage prepaid, to the intended recipient,
addressed as follows:
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<PAGE> 32
If to the Sellers, addressed to:
Sorenson Development, Incorporated
2511 South West Temple
Salt Lake City, UT 84115
Attention: Corporate Legal
with a copy to:
Ray, Quinney & Nebeker
79 South Main Street
500 Deseret Building
Salt Lake City, UT 84111
Attention: Gerald T. Snow, Esq.
If to the Purchaser, addressed to:
Griffith Micro Science, Inc.
2001 Spring Road
Oak Brook, Illinois 60521
Attention: President
with a copy to:
Griffith Laboratories International, Inc.
1 Griffith Center
Alsip, Illinois 60803-3495
Attention: James S. Legg, Esq.
Vice President and General Counsel
Any party may send any notice, request, information or other document to be
given hereunder using any other means (including personal delivery, courier,
messenger service, facsimile transmission, telex or ordinary mail), but no such
notice, request, information or other document shall be deemed duly given
unless and until it is actually received by the party for whom it is intended.
Any party may change the address to which notices hereunder are to be sent to
it by giving written notice of such change of address in the manner herein
provided for giving notice.
10.8 BROKERS' COMMISSION. Purchaser will indemnify and hold harmless
Sellers from any commission, fee or claim of any person, firm or corporation
employed or retained or claiming to be employed or retained by Purchaser to
bring about, or to represent it in, the transactions contemplated hereby.
Sellers will jointly and severally indemnify and hold harmless Purchaser from
any commission, fee or claim of any person, firm or corporation employed or
retained or claiming to be employed or retained by any of the Sellers to bring
about, or to represent it in, the transactions contemplated hereby.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to contracts
made and to be performed therein.
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<PAGE> 33
10.10 VENUE AND SUBMISSION TO PERSONAL JURISDICTION WITH RESPECT TO
ACTIONS BROUGHT BY THE PURCHASER.
10.10.1 To the maximum extent possible under applicable law and
rules of civil procedure, each of the Sellers and the Purchaser agree
that any action brought by the Purchaser to enforce its rights under this
Agreement, the Escrow Agreement, the Engineering Lease or any of the
other agreements contemplated hereby may be brought in the United States
District Court for the Northern District of Illinois (Eastern Division)
or in the Circuit Court of Cook County, Illinois.
10.10.2 In order to facilitate the ability of the Purchaser to
enforce its rights under this Agreement, the Escrow Agreement, the
Engineering Lease and the other agreements contemplated hereby against
the Sellers in accordance with subsection 10.10.1, each of the Sellers
hereby (i) expressly submits himself or itself, as the case may be, for
such purpose only, to the personal jurisdiction of the United States
District Court for the Northern District of Illinois and the Circuit
Court of Cook County, Illinois and (ii) expressly agrees that service of
process may be had upon such Seller pursuant to the rules pertaining to
service of process contained in the Illinois Long-Arm Statute, Chap. 735
Paragraph 5/2-209 Ill. Comp. Stat. (1997) and the Rules of the Court
pertaining thereto.
10.10.3 Each of the Sellers acknowledges and agrees with the
Purchaser that: (i) the provisions of this Section 10.10 have been
bargained for by the Purchaser and constitute a concession by the Sellers
to the Purchaser and (ii) he or it will not file any motion with either
of the Courts specified in subsection 10.10.1 seeking a change of venue
for the hearing of any action filed against him or it therein by the
Purchaser to enforce any rights under this Agreement.
10.11 VENUE AND SUBMISSION TO PERSONAL JURISDICTION WITH RESPECT TO
ACTIONS BROUGHT BY THE SELLERS.
10.11.1 To the maximum extent possible under applicable law and
rules of civil procedure, each of the Sellers and the Purchaser agree
that any action brought by any of the Sellers to enforce his or its
rights under this Agreement, the Escrow Agreement, the Engineering Lease
or any of the other agreements contemplated hereby may be brought in the
United States District Court for the District of Utah or in the Third
Judicial Court of the State of Utah.
10.11.2 In order to facilitate the ability of the Sellers to
enforce their rights under this Agreement, the Escrow Agreement, the
Engineering Lease and the other agreements contemplated hereby against
the Purchaser in accordance with subsection 10.11.1, the Purchaser hereby
(i) expressly submits itself, for such purpose only, to the personal
jurisdiction of the United States District Court for the District of Utah
and the Third Judicial Court of the State of Utah and (ii) expressly
agrees that service of process may be had upon the Purchaser pursuant to
the rules pertaining to service of process contained in the Utah Long-Arm
Statute and the Rules of the Court pertaining thereto.
10.11.3 The Purchaser acknowledges and agrees with the Sellers
that: (i) the provisions of this Section 10.11 have been bargained for
by the Sellers and constitute a concession by the Purchaser to the
Sellers and (ii) it will not file any motion with either of the Courts
specified in subsection 10.11.1 seeking a change of venue for the hearing
of any action filed against it therein by any of the Sellers to enforce
any rights under this Agreement.
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<PAGE> 34
10.12 PUBLICITY. No press release or other public announcement related to
this Agreement or the transactions contemplated hereby will be issued by any
party hereto without the prior approval of the other party, except that any
party may make such public disclosure which it believes in good faith to be
required by law (in which case such party will consult with the other parties
prior to making such disclosure). Notwithstanding the foregoing, the Purchaser
or any of its Affiliates (as defined in Section 4.12 hereof) shall be free (i)
to make whatever disclosure it deems appropriate in its sole discretion with
respect to this Agreement, the transactions contemplated hereby and the Company
in or pursuant to any registration statement filed by the Purchaser or any such
Affiliate with the Securities and Exchange Commission under the Securities Act
of 1933 and to (ii) file as an exhibit to such registration statement a copy of
this Agreement.
10.13 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
10.14 ENGINEERING EMPLOYEES; CONFIDENTIALITY. The Corporate Seller agrees
that, with respect to the confidentiality agreements executed by each of the
Engineering Employees with "The Sorenson Companies," copies of which have
previously been provided to Purchaser (the "Confidentiality Agreements"), the
Company is one of the "Companies," as defined in the Confidentiality
Agreements, and shall be entitled to all of the rights and benefits of a
"Company" under such Confidentiality Agreements.
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<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLERS: PURCHASER:
/s/ James LeVoy Sorenson GRIFFITH MICRO SCIENCE, INC.
-----------------------------------
James LeVoy Sorenson
/s/ Joseph T. Sorenson By: /s/ Kevin Swan
----------------------------------- ------------------------------
Joseph T. Sorenson Kevin Swan
President
SORENSON DEVELOPMENT, INCORPORATED
By: /s/ James LeVoy Sorenson
--------------------------------
James LeVoy Sorenson
President
31
<PAGE> 1
EXHIBIT 2.2
SHARE PURCHASE AGREEMENT
BETWEEN:
1. the company "LABORATOIRES PEROUSE S.A.", a limited liability company
having a capital of 8,028,000 French francs, and having its registered office
situated at BORNEL (Oise), Z.A. d'Outreville; registered in the Registry of
Commerce and of Corporations at Beauvais under number B 317.883.999,
Represented by Mister Jean-Pierre Deloux, acting as Administrative and
Financial Director of said company, authorized by a Board's decision dated June
20, 1997.
Hereafter referred to as "LABORATOIRES PEROUSE" or the "Grantor"
AND:
2. the company "GRIFFITH MICRO SCIENCE N.V.", a limited liability company
having its registered office at Atealaan 4, 2200 Herentals, registered in the
Registry of Commerce at Turnhout under number 55083,
Represented by Dirk Barrie acting as managing director of said company,
Hereafter referred to as the "the Buyer"
THE FOLLOWING HAS BEEN SAID PRELIMINARILY:
The Grantor declares that it owns TEN THOUSAND (10,000) shares of Category A of
the THIRTY FIVE THOUSAND SIX HUNDRED TWENTY FIVE (35,625) shares making out the
capital of the company established under Belgian Law CARIC MEDIRIS (hereafter
referred to as "the Company" or as "CARIC MEDIRIS") with the following
characteristics:
a) CAPITAL OF THE COMPANY
Following the provisions of Article 5 of the articles of association of
the Company (Annex 1), the shares are divided into two categories : 25.625
shares of category A, the so-called ordinary shares and 10.000 shares of
category B, the so-called privileged shares.
The company is a limited liability company under Belgian Law with a
capital of 35,625,000 Belgian francs, divided in 35,625 denominated shares
without designation of a nominal value.
<PAGE> 2
2
b) REGISTERED OFFICE
The registered office of the Company is at Avenue de l'Esperance, "Zoning
Industriel", FLEURUS.
The Company has been constituted by deed received by Philippe Ganty, notary at
MONT SUR MARCHIENNE (CHARLEROI) on November 26, 1990.
c) REGISTRY OF COMMERCE
The company is registered in the Registry of Commerce of CHARLEROI under number
168 224.
d) GOAL
The company has as a goal, both in Belgium and abroad:
- - All technical, industrial or commercial activities concerning ionization.
Particularly,
- - All service operations in the field of ionization in all applications.
- - All development studies and all experimentations on all new applications of
ionization.
- - All promotional activities, studies, engineering and assistance concerning
the realization and the management of ionization centers for third parties.
e) SHAREHOLDING
The shares are distributed as follows:
<TABLE>
<S> <C>
- - The Grantor . . . . . . . . . . . . . . . . . . . . . . . . .10,000 shares of Category A
- - Institut National de Radioelements ("IRE"). . . . . . . . . 8,950 shares of Category A
- - The Bank Scalbert Dupont ("B.S.D.") . . . . . . . . . . . . . . . . . . . .16,675 shares
whereof 6,675 are shares of Category A
and 10,000 are shares of Category
(collectively, the "B.S.D. shares")
--------------------------------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . 35,625 shares
</TABLE>
<PAGE> 3
3
The 26,675 shares collectively owned by the Grantor and the B.S.D. shares are
hereafter referred to as "the Shares").
f) BOARD OF DIRECTORS
The Board of Directors of the Company is composed as follows:
- Mr. Rene Constant, Director and President of the Board of Directors
- LABORATOIRES PEROUSE, Director and Managing Director
- Mr. Eric Perouse, Director
- The IRE, Director
- Mrs. Danielle Perouse, Director
The company has as manager, Mr. Pierre Dardenne, who is not a director.
g) THE SHARES
The Shares are denominated and registered in conformity with the law.
The Shares all have been fully paid up and are entirely liberated.
They are freely negotiable subject to the following reservations and
observations:
Following Article 8bis of the articles of association, it is expressly
indicated that, "in case of a transfer of shares, the shareholders must refer
to the exact agreements between them and refrain from transferring their shares
without respect for the clauses and conditions established between them. They
refer explicitly to the clauses and conditions laid down in the agreements
between them". All of the "exact agreements" referred to above are listed
below.
By way of agreement drafted at Fleurus on March 31, 1994 and attached as Annex
2, the Grantor has engaged itself not to sell or transfer to a third party
shares of CARIC MEDIRIS which it owns without receiving the assent of the other
shareholders, who can acquire the shares preferably at the same price and time
limit conditions of which a written proof shall be given.
By way of agreements drafted at Paris on November 6, 1996 and on March 19,
1997, the Grantor has granted to IONISOS an option right to acquire the CARIC
MEDIRIS shares, which are the subject of the present agreement.
By a Protocol signed in Paris on April 15, 1997, the Grantor has declared to
accept to extend to April 21, 1997, the date on which the company IONISOS shall
have to notify its intention to acquire or to have acquired by a third party
the CARIC MEDIRIS shares.
The Shares are free of all charges, privileges, pledges and guaranties.
<PAGE> 4
4
Negotiations have taken place between the Grantor and the Buyer concerning the
acquisition by the Buyer of the Shares.
The Buyer has declared that as a condition precedent to the acquisition of any
of the shares held by the Grantor, the Grantor must have acquired all of the
B.S.D. Shares which must be acquired by the Grantor prior to the Closing Date,
as defined hereafter in Article 8.
THEREFORE, IT IS AGREED AS FOLLOWS:
ARTICLE 1 ACQUISITION AND SALE
On the Closing Date, and under the conditions stipulated in the present
agreement, the Grantor shall transfer to the Buyer, who obliges itself to
acquire, the Shares. Prior to the Closing Date, the Grantor shall obtain the
B.S.D. Shares and shall transfer all the Shares to Buyer, who obliges itself to
acquire such Shares.
ARTICLE 2 PRICE
2.1. Acquisition price
In return for the acquisition of the 26,675 CARIC MEDIRIS shares and under
reserve of the conditions stipulated in the present agreement, the Buyer shall
pay to the Grantor on the Closing Date the total price of FOURTEEN MILLION NINE
HUNDRED AND SEVENTY-FIVE THOUSAND FOUR HUNDRED French francs (14,975,400 FF).
ARTICLE 3 SUSPENSIVE CONDITIONS - CLOSING DATE
The transfer of shares can only intervene under reserve of the realization of
the suspensive conditions mentioned hereunder:
(a) Approval of the project of transfer and non use by IRE of their
preemption rights on the CARIC MEDIRIS shares.
(b) Explicit approval of the acquisition of the shares, without conditions or
restrictions by any applicable official authorities, including, but not
limited to the Belgian Trade authorities.
(c) Delivery of the Shares including the B.S.D. Shares which must be held by
the Grantor on the Closing Date.
(d) Acceptance by the Buyer before July 9, 1997 of a Guaranty Agreement with
representations, warranties and Annexes from the Grantor which are
acceptable to the
<PAGE> 5
5
Buyer in its sole discretion. Execution by the parties before July 9,
1997 of the Guaranty Agreement, and delivery by the Grantor of the first
demand bank guarantee in the amount of FRF 1 million provided therein as
hereinafter described.
(e) Fulfillment by the Grantor of its commitments with respect to holding an
Ordinary General Meeting of shareholders under Article 5.1 of this
Agreement.
(f) Delivery by the Grantor to the Buyer, on July 9, 1997 at the latest, of
the totality of the Annexes to the Guarantee Agreement, annexed to the
present agreement. These Annexes will be remitted to the Buyer for
review. If the review of these Annexes were to reveal to the Buyer an
issue challenging its intention to acquire the company, it shall notify to
the Grantor within 15 days from the remittance of the Annexes. In this
situation, the Grantor and the Buyer shall do their best efforts to
renegotiate the conditions of their agreement before the delay of ONE
HUNDRED AND TWENTY (120) days mentioned hereinafter. If no agreement
satisfactory to the Buyer and to the Grantor were to be reached, all the
provisions of the present agreement would be void. No indemnity would be
due by either party.
If these suspensive conditions are not met within ONE HUNDRED TWENTY (120) days
following execution of this Agreement at the latest, all dispositions in the
present agreement shall be considered null and void, without there being
whichever indemnity due by either party.
Conversely, the Closing Date shall be determined by the most diligent party
within TEN (10) days following the fulfillment of the suspensive conditions
mentioned above.
ARTICLE 4 DECLARATIONS AND COMMITMENTS BY THE GRANTOR
AS TO THE SHARES
Under reservation of the provisions mentioned above, the Grantor declares that
none of the Shares are pledged, that their ownership is not dismembered and
that they do not form the object of any transfer promise or security.
As a consequence of the present contract, the Grantor shall not, until the
expiration of the time span provided for the fulfillment of the suspensive
conditions above, transfer to any party, under any form or condition, directly
or indirectly, all or part of the Shares; nor constitute on these Shares any
security or pledge.
<PAGE> 6
6
ARTICLE 5 PARTICULAR COMMITMENTS ENTERED INTO BY THE PARTIES
5.1. Commitments entered into by the Grantor
The Grantor commits itself to convene an Ordinary General Meeting of
shareholders of the Company at least SEVEN (7) days prior to the Closing Date;
said meeting shall have to decide on the written resignation and release from:
- LABORATOIRES PEROUSE
- Mr. Eric PEROUSE
- Mrs. Danielle PEROUSE
from their function as members of the Board of Directors, as well as the
designation of their replacements.
To this effect, the Buyer commits itself to transmit to the actual Board of
Directors, at the latest FIFTEEN (15) days prior to the Closing Date, the
candidatures of at least TWO (2) new directors, accompanied by all legal
documents requested by the legislation on commercial companies.
5.2. Commitments entered into by the Buyer
5.2.1. Redemption of CARIC MEDIRIS' current account.
At the latest on the Closing Date, the Buyer commits itself to buy back the
current account that LABORATOIRES PEROUSE shall have, as stated in the accounts
of CARIC MEDIRIS, by way of payment of a price equal to the amount of said
current account, which cannot exceed the sum of SIX HUNDRED FIFTY THOUSAND
FRENCH FRANCS (650,000 FF.). On the Closing Date, the auditor of the company
CARIC MEDIRIS shall testify as to the amount of said current account.
5.2.2. Guaranty commitments.
As of the Closing Date, the Buyer commits to cause the Company to terminate, by
reimbursing the credit lines to which they relate, the guarantees granted by
LABORATOIRES PEROUSE to BBL and Paribas, which are contained in Annex 4 of the
present agreement and which are the only financing guarantees given by
LABORATOIRES PEROUSE with respect to CARIC MEDIRIS.
If not, the Buyer engages itself to give to the Grantor, on the Closing Date, a
bank guaranty covering the totality of the commitments entered into above.
<PAGE> 7
7
ARTICLE 6 CONDUCT OF BUSINESS
As of the date of signature of the present agreement and until the Closing
Date, the Grantor shall make sure that the Company is well managed, is in
compliance with all applicable laws, rules and regulation. However, it is
specified that the Company is doing the ionisation of certain food products
and, although the Company does not have a specific authorization, it
notifies regularly the Ministry of Public Health. In addition, the Company
will continue to run its affairs in the same fashion as in the past,
continue to benefit from the services of its administrators, social
mandatories and other managers, counsels and consultants and employees and
maintain good relationships with its clients, distributors, tradesmen and
other entities or persons with which it maintains business relationships as
well as with every authority or administration on which it depends.
Moreover, from the date of signature of the present agreement until the Closing
Date, the Grantor, unless the Buyer agrees differently by prior agreement and
writing, and under reserve of the conditions of the present agreement, shall
make sure that the Company:
(i) does not decide and does not enter into any distribution of dividends or
other remunerations of the capital;
(ii) does not proceed with any modification of its articles of association or
social organs, nor decides to the creation, at random moment or on a
fixed date, of new shares or other titles representing a part of the
capital and/or giving right to a part of the benefits of the company;
(iii) does not sell, transfer, mortgage, pledge or submit to any other
restriction on the rights of ownership, possession or enjoyment of any of
its material or immaterial assets, if such is not in the normal course of
business or on conditions which conform to the market conditions and
customs of the profession and does not imply a payment by or to the
company exceeding THREE HUNDRED THOUSAND BELGIAN FRANCS (300,000 BF) per
sale, transfer, mortgage, pledge or submission;
(iv) does not enter into any agreement, commitment or covenant other than
those needed in the normal course of business affairs and on the
condition that they are entered into on conditions that conform to the
market conditions and to the customs of the profession and respecting the
legislation and regulations in force and does not imply a payment by or
to the Company exceeding THREE HUNDRED THOUSAND BELGIAN FRANCS (300,000
BF) per agreement, commitment or convention;
(v) does not terminate by anticipation any agreement, commitment or covenant
to which the company is a party, except in the normal conduct of
business;
(vi) does not decide, nor engages it to grant in the future any increase in
salary or other remunerations or social advantages given to its
employees, administrators, social mandatories and other managers,
counsels and consultants, except an increase in the normal conduct of
business;
<PAGE> 8
8
(vii) does not proceed with any recruiting or commitments to recruit;
(viii) does not dismiss any executive employee;
(ix) maintains its material assets in good working order;
(x) does not borrow any funds from any source;
(xi) conducts its business such that all Annexes to this Agreement shall
remain true, accurate and complete, except as the Buyer is notified by
the Grantor in writing not less than seven (7) days prior to the
Closing Date.
ARTICLE 7 COMMUNICATION OF THE DOCUMENTS AND ORGANIZATION OF THE VISITS
The Grantor shall provide to the Buyer, on July 9, 1997 at the latest, the
totality of the loan agreements in course entered into by CARIC MEDIRIS.
Within the same period, the Grantor shall provide to the Buyer the audited
annual accounts of CARIC MEDIRIS for the fiscal year ending December 31, 1996,
including, the auditor's certified opinion thereon.
Finally, the Grantor engages itself to facilitate all visits of the Fleurus
installations by Messrs. Dean GRIFFITH, Kevin SWAN and Dirk BARRIE, provided
they request to visit the site 72 hours before the date of the visit.
In case of default of this obligation in the delay mentioned, all the
provisions of the present agreement shall be void. No indemnity shall be due
by either party.
ARTICLE 8 CLOSING
8.1 Closing
The closing (the "Closing") shall be held on a date determined as foreseen in
Article 3 at the offices of Coudert, avenue Louise 149, 1050 Brussels, Belgium
or such other place and time as the parties hereto shall designate.
8.2 Transaction
Subject to the prior satisfaction of all the suspensive conditions specified in
Article 3 of the present agreement, the Grantor and the Buyer hereby agree
that, at the Closing, the following actions shall occur simultaneously :
<PAGE> 9
9
a) Sales and purchase of the Shares
The Grantor shall sell and transfer the Shares to the Buyer and the Buyer shall
purchase and accept the transfer of the Shares.
b) Delivery of the shares
The Grantor shall (i) remit the shareholders registry of CARIC MEDIRIS to the
Buyer; (ii) execute the transfer of the Shares in the Shareholders' Registry of
CARIC MEDIRIS; and (iii) provide all documents and take all actions which are
necessary to transfer good and valid titles to the Shares to the Buyer and to
accurately reflect ownership of the Shares in the Shareholders' Registry of
CARIC MEDIRIS
c) Payments
The Buyer shall deliver to the Grantor a certified bank check in the amount of
14,975,400 French francs, presenting the Buyer's payment of the purchase price
at Closing.
d) Bank guarantee
The Grantor shall remit to the Buyer on the Closing Date the first demand bank
guarantee for an amount of FRF 1 million as provided in the Guarantee
Agreement.
e) Director's Resignation
At the Closing, the Directors listed in Article 5.1 shall deliver to the Buyer
their resignation letter effective as of the Closing Date, of their functions
as directors of CARIC MEDIRIS as well as the documents allowing CARIC MEDIRIS
to hold immediately a General Shareholders Meeting as set forth in Article 5.1.
ARTICLE 9 CONFIDENTIALITY
The present agreement as well as all engagements that result from it, have a
confidential character between the parties, who engages themselves not to
disclose them, except in case of litigation or as otherwise required by law,
rule, regulation or statute.
ARTICLE 10 DISPUTES - LAWSUITS
The present agreement is ruled by French law.
<PAGE> 10
10
The parties agree to submit to arbitration all disputes arising between them,
regarding interpretation, execution or validity of the contract.
This arbitration shall take place in Brussels under the CEPANI patronage.
Unless the parties agree upon designation of one sole arbitrator, there shall
be three arbitrators appointed. The first arbitrator shall be chosen by the
plaintiff. A registered letter with acknowledgement of receipt shall be sent
to the other party indicating the appointment. The second arbitrator shall be
appointed by the defendant. The defendant shall have one month as from the day
of notification to designate and notify the plaintiff in the same way and
conditions. The third arbitrator shall be appointed by the two other
arbitrators, no later than one month after the appointment of the second
arbitrator.
If no second or third arbitrator are appointed timely, they shall be appointed
by decision of the Chairman of the Court of the district of Luxembourg, upon
request of the most diligent party.
Upon impediment, death or departure of one arbitrator, he shall be replaced
within one month, by the party he was designated by or, if the third arbitrator
is concerned, by the first two arbitrators. If this is not the case, the
District Court of Luxembourg shall decide, upon request of the most diligent
party.
In the latter case, the Court shall have three additional months to take a
decision.
The arbitrator's decisions shall be sovereign, the undersigning parties submit
to their decisions and renounce to their right of appeal.
ARTICLE 11 OPPOSABILITY OF THE PRESENT AGREEMENT
The present agreement and the commitments that result from it (namely the
Guaranty Agreement) shall benefit and burden the inheritants which will be held
jointly and indivisibly.
ARTICLE 12 ELECTION OF DOMICILE - NOTIFICATION
12.1 Election of domicile.
Each party declares to elect domicile at the address figuring in the heading of
the present agreement.
- - the Grantor, at the registered office of the company "LABORATOIRES
PEROUSE S.A."
- - the Buyer, at the registered office of the company "GRIFFITH MICRO
SCIENCE N.V."
<PAGE> 11
11
12.2 NOTIFICATION
All notifications between parties are made by registered or couriered letter
with acknowledgement of receipt at the domicile elected by the parties.
All notifications are considered as received as of the date of reception or
first presentation of the registered or couriered letter.
ARTICLE 13 MISCELLANEOUS
13.1 It is expressly agreed between parties that the Buyer can transfer to any
legal entity it controls, is controlled by or under common control with, the
rights and obligations it benefits from or that are incumbent upon him by way
of the provisions of the present agreement, taking into account that it will be
solely responsible for the execution of said agreements by the transferee.
13.2 The Grantor cannot surrender, delegate or transfer all or part of the
rights and obligations under the present agreement without the preliminary
written permission of the Buyer.
13.3 The present agreement and the Guaranty Agreement constitute the totality
of the agreements between the Grantor and the Buyer with regard to the subjects
that are treated therein. No endorsement or renunciation to whichever
stipulation of these agreements shall produce any effect unless it has been
signed by the party bound by it.
13.4 The Annexes to the present agreement are part of it in their totality.
13.5 The non-validity of all or part of whichever Article of the present
agreement shall not entail the non-validity of the rest of this Article or
this agreement and the present agreement shall have to be executed by
respecting as much as possible the initial terms and intentions of said
agreement.
13.6 The fact that whichever stipulation of the present agreement has not been
executed or has not been requested to be executed shall not be considered as to
amount to a renunciation to such a stipulation and shall not affect in
whichever way the validity of the present agreement or part of the present
agreement, nor shall it affect the right of every party to have executed
subsequently whichever stipulation in conformity with its terms.
13.7 Except for that certain amount to be paid by Buyer to Ionisos, neither
party is obligated or is in fact paying a broker's commission or fee relating
to this transaction.
Done in Brussels
In two original copies
On June 27, 1997
<PAGE> 12
12
/s/ Jean-Pierre Deloux /s/ Dirk Barrie
- --------------------------------- -----------------------------------
Mr. Jean-Pierre DELOUX Mr. Dirk BARRIE
Acting in the name and for the Acting in the name and for the
account of account of
"LABORATOIRES PEROUSE S.A." "GRIFFITH MICRO SCIENCE N.V."
<PAGE> 13
13
TABLE OF CONTENT
<TABLE>
<S> <C>
Annex 1 Articles of Association of Caric Mediris N.V. dated 26 Novembre 1990
Annex 2 Agreement by Group Perouse dated 31 March 1994 engaging itself not to
sell nor transfer to a third party shares without receiving the assent
of the other shareholders
Annex 3 Status of the Guarantees given by the Grantor
</TABLE>
<PAGE> 14
SECOND AMENDMENT TO THE SHARE PURCHASE AGREEMENT
OF 27 JUNE 1997
BETWEEN THE UNDERSIGNED:
1. THE COMPANY LABORATOIRES PEROUSE S.A.,
Societe Anonyme with a capital of FRF 8,028,000, whose registered
office is at Zone d'Activites d'OUTREVILLE - BORNEL (Oise),
registered in the registry of commerce of BEAUVAIS under number B
317.883.999,
Represented by Mr Jean-Paul DELOUX, acting as the Administration
and Finance Director of the said company and having the power to
sign the amendment following a meeting of the Board of Directors
of 20 June 1997.
HEREAFTER, "LABORATOIRES PEROUSE" OR "THE TRANSFEROR"
AND
2. THE COMPANY GRIFFITH MICRO SCIENCE N.V.,
Societe Anonyme whose registered office is at Atealaan 4 - 2200
HERENTALS, registered in the registry of commerce of TURNHOUT
under number 55083,
Represented by Mr Dirk BARRIE, acting as the managing director of
said company.
HEREAFTER, "THE BUYER"
Whereas Article 5.2.1 of the Share Purchase Agreement of 27 June 1997 provides
for the purchase by the Buyer of the current account that Laboratoires Perouse
has at the Closing Date;
Whereas, according to Article 1, paragraph 0-XI of the Guarantee Agreement to
be signed between the Buyer and the Transferor on 29 August 1997, the
Transferor has informed the Buyer of the existence of a bad claim of NLG
213,972 against the company Goudschelp B.V.;
Whereas the Transferor has agreed to provide for a special guarantee for the
recovery of this bad claim;
IT IS AGREED AS FOLLOWS:
1. The amount of the current account of the Transferor in the books of Caric
Mediris shall be used as a guarantee for the bad claim of Caric Mediris
against Goudschelp B.V.
<PAGE> 15
15
2. The current account of the Transferor in the books of Caric Mediris shall
not be bought back on the Closing Date, contrary to what has been provided
for in Article 5.2.1 of the Share Purchase Agreement.
3. The Buyer shall reimburse or have the current account of the Transferor
in the books of Caric Mediris reimbursed progressively as Goudschelp B.V.
reimburses Caric Mediris' claim of a total amount of NLG 213,272.
The current account held by the Transferor in the books of Caric Mediris
amounts to BEF 4,000,000 on 29 August 1997. If, on 29 August 1997, the
amount of the current account held by the Transferor in the books of
Caric Mediris would be less than BEF 4,000,000, the reimbursement by the
Buyer of this current account to the extent that Goudschelp B.V.
reimburses Caric Mediris, shall only start when the amount of the debt
owed by Goudschelp B.V. shall be at least equal to that of the current
account.
4. The current account of the Transferor in the books of Caric Mediris shall
not bear any interest during the reimbursement period.
5. The present second amendment to the Share Purchase Agreement is in
addition to the Guarantee Agreement of 29 August 1997.
6. All other provisions of the Share Purchase Agreement of 26 June 1997
remain unchanged.
Done in two originals
on 29 August 1997
/s/ Jean-Pierre DELOUX /s/ Dirk Barrie
- ------------------------------ --------------------------------
Mr Jean-Pierre DELOUX Mr. Dirk BARRIE
Acting in the name and Acting in the name and
for the account of for the account of
"LABORATOIRES PEROUSE" "GRIFFITH MICRO SCIENCE N.V."
<PAGE> 16
SHAREHOLDERS' AGREEMENT
BETWEEN:
Griffith Micro Science N.V., having its registered
office at Atealaan 4, 2200 Herentals, represented by
Mr. Dirk Barrie, Managing Director,
AND:
Institut National des Radioelements, having its
registered office at 6220 Fleurus, represented by Mr.
H. Bonet, General Manager and CEO,
WITNESSETH
WHEREAS, Griffith Micro Science N.V. ("GMS") has been negotiating the
acquisition of the 74.9% of the shares of Caric Mediris ("Caric Mediris") not
held by Institut National des Radioelements ("IRE"). This proposed transaction
is subject to :
a) Acquisition by GMS of 74.9% of the outstanding shares of Caric Mediris
not owned by IRE;
b) Notification and approval of all relevant governmental authorities; and
c) Approval of all parties and their respective boards of directors prior to
closing.
WHEREAS, in addition, GMS wishes a definitive agreement to be negotiated and
signed between GMS (or one of its parents or affiliates) and IRE with respect
to their relationship as shareholders of Caric Mediris prior to the acquisition
of the shares of Caric Mediris.
WHEREAS, GMS has proposed to purchase the shares of Caric Mediris held by IRE,
for itself or one of its parents or affiliates.
WHEREAS, IRE has indicated that it would prefer to sell 5.2% of the shares of
Caric Mediris and to have GMS make any additional investment in Caric Mediris
in the form of contribution to
<PAGE> 17
2
the capital of Caric Mediris, which may permit a dilution of IRE shareholding
to not less than 10% of the stock of Caric Mediris.
WHEREAS, to permit the purchase by GMS of 74.9% of the shares of Caric Mediris,
IRE and GMS have decided to negotiate and enter into the present Shareholders'
Agreement ("the Shareholders' Agreement")
Now, therefore, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, GMS and IRE agree as follows:
1. SALE OF 5.2% OF THE SHARES OF CARIC MEDIRIS
On the same date as the date of the acquisition by GMS of 74.9% of
the shares of Caric Mediris from Laboratoires Perouse, IRE shall
transfer to GMS 1.853 shares of Caric Mediris, free and clear of
all liens, representing 5.2% of the capital stock of Caric
Mediris, in consideration of an amount of 5.200.00 Belgian francs
paid by bank check to be remitted by Griffith simultaneously with
the transfer of the shares and filing of the transfer of such
shares in the shareholders' registry of Caric Mediris.
2. CAPITAL INCREASES
IRE shall not oppose capital increases of Caric Mediris subscribed to by
GMS and shall renounce its preferential right to participate in those
capital increases at a pro rata portion of its shareholding, as provided in
Section 6 of the Articles of Incorporation of Caric Mediris, provided the
following conditions are met:
a) Capital increases shall be used for (i) investments in tangible or
intangible assets, including shares or participations in other
companies, which are useful or necessary either to maintain or to
develop the activity of Caric Mediris at the Fleurus site or (ii) the
repayment of debt.
b) If the proposed capital increase will reduce IRE's share position to
less than 10%, IRE shall regain its right to participate in such
capital increase, but only to the extent necessary for IRE to maintain
a 10% holding in Caric Mediris.
Within a period of three (3) years following the acquisition date of the
74.9% of Caric Mediris by GMS, i.e. the date on which such shares will be
actually and definitely transferred to GMS, the value of any newly issued
shares will be based on a value of BEF 100 million for 100% of Caric
Mediris shares.
GMS agrees to increase the capital of Caric Mediris in the amount of BEF
16,000,000 within the first year following the acquisition of the shares of
Caric Mediris from IRE and IRE accepts to be diluted in accordance with the
first paragraph of this section. In consideration of such capital
contribution, Caric
<PAGE> 18
3
Mediris shall issue 5,637 shares to GMS, which will have as an effect to
increase with 2.7% the participation of GMS in the capital of Caric
Mediris.
3. PREEMPTION RIGHTS AND CONTINUED ACTIVITIES
The parties agree as follows:
a) The Belgian Fleurus facility shall remain operational for so long as
IRE remains a shareholder, unless the facility's continued operation
becomes no longer feasible as a result of, without limitation, events
of force majeure or economic, political or regulatory affairs not
attributed to an arbitrary or capricious decision of GMS. IRE shall
cooperate in good faith with GMS to help resolve any such events or
factors. If such events or factors nevertheless leads to closing or
voluntary liquidation of the facility, GMS shall offer IRE a right of
first refusal to acquire either the shares of Caric Mediris or the
assets themselves at the same terms and conditions as are offered
by any third party.
b) For so long as IRE remains a shareholder of Caric Mediris, IRE shall
receive a right of preemption in the event GMS desires to sell part
or all of its shares in Caric Mediris to an unrelated third party.
IRE shall have 60 days following notice given by GMS pursuant to
Section 4 e) hereof to exercise its preemption right and enter into a
definitive agreement to purchase at the sales conditions offered by
such third party all but not less than all of the shares of Caric
Mediris which Griffith Micro Science is offering for sale and that
such third party is prepared to buy. If the parties are unable to
enter into a definitive agreement within such 60 days period, Griffith
Micro Science shall be free to transfer its shares to such third party
on the same terms and conditions offered to IRE. If such terms and
conditions are changed, GMS shall again offer to sell its shares to
IRE on the new terms and conditions according to the terms stated in
this paragraph above.
c) For so long as GMS remains a shareholder of Caric Mediris, GMS shall
receive a right of preemption in the event IRE desires to sell part
or all of its shares in Caric Mediris to an unrelated third party.
GMS shall have 60 days following notice given by IRE pursuant to
Section 4 e) hereof to exercise its preemption right and enter into a
definitive agreement to purchase at the sales conditions offered to
such third party all but not less than all of the shares of the Caric
Mediris which IRE is offering for sale and that such third party is
prepared to buy. If the parties are unable to enter into a definitive
agreement within such 60 days, IRE shall be free to transfer its
shares to such third party on the same terms and conditions offered to
GMS. If such terms and conditions are changed, IRE shall again offer
to sell its shares to GMS on the new terms and conditions according to
the terms stated in this paragraph above. Notwithstanding the
foregoing, during the first three (3) years of the Shareholders
Agreement, the purchase price for such shares shall be based on a
value of 100 million BEF for 100% of Caric Mediris shares.
<PAGE> 19
4
d) Provided that both parties remain shareholders, each party agrees
not to construct without the agreement of the other party (for itself
or with any third party) a gamma irradiation sterilization facility
in Belgium for five (5) years from the date of the Shareholders'
Agreement.
e) With respect to the management and operation of the company and for
so long as IRE remains the shareholder of Caric Mediris, GMS will not
do either of the following without the consent of IRE, which consent
shall not be unreasonably withheld :
- Modify the corporate purpose of the company.
- Modify the rights attributed to the different categories of
shareholders.
f) For so long as IRE remains a shareholder in Caric Mediris, IRE shall
have the right to appoint one director to the board of Caric Mediris.
4. Miscellaneous
a) Reimbursement of IRE credit lines to Caric Mediris
Immediately following the acquisition of the shares from IRE, GMS
agrees to cause Caric Mediris to reimburse the advance that IRE has
granted to Caric Mediris in the amount of BEF 3,000,000 as well as
the unpaid due interests, due as from January 1, 1997 until the
date of reimbursement of the advance. The amount of these
interests is of 51.150 Belgian francs on June 30, 1997. A yearly
interest rate of 3.41% shall be applied to this amount as from July
1, 1997 until the reimbursement date.
b) Term of the agreement
The provision of Article 2 of the Shareholders' Agreement that has
as an effect to bind the parties thereto to vote in a certain way
at the shareholders' meeting or the board of directors shall remain
valid for a term of 5 years. The other provisions have an
indefinite duration.
c) Governing Law
The construction, validity and performance of the Shareholders'
Agreement shall be governed by Belgian law.
The disputes relating to the interpretation or the execution of the
Shareholders' Agreement shall be of the exclusive competence of the
court of Brussels, in case no amicable agreement is reached. The
language of the proceedings shall be French.
<PAGE> 20
5
d) Terms of this agreement to prevail
In the event that any ambiguity or conflict arising between the
terms of the Shareholders' Agreement and those of the Caric
Mediris' corporate charter the terms of the Shareholders' Agreement
shall prevail as between the Shareholders.
e) Notices
All notices, requests and consents under the Shareholders'
Agreement directed to the IRE or the GMS shall be sent by return
receipt or overnight mail and should be deemed delivered when
signed for receipt as follows:
If to GMS:
Mr. Dirk Barrie
Managing Director
Griffith Micro Science N.V.
Atealaan 4
2200 Herentals
with a copy to James Legg, Esq.
General Counsel
Griffith Micro Science International Inc.
2001 Spring Road, Suite 500
Oak Brook, Illinois 60521-1887
U.S.A.
Fax : 00 1 (630) 472-4543
If to IRE:
Mr H. Bonet
Managing Director
Institut National des Radioelements
6220 Fleurus
f) Corporate changes
In as much as possible under corporate law, the parties shall take
or cause Caric Mediris to take, the necessary corporate actions and
amend the Articles of Incorporation of Caric Mediris to reflect the
provisions of the Shareholders' Agreement.
g) Each party may transfer all of its ownership interests in Caric
Mediris to any affiliated company which controls, is controlled by or
is under common control with such party. Prior to any such transfer,
the transferee shall have agreed in writing to be bound by the terms
of the Shareholders' Agreement.
<PAGE> 21
6
h) The Shareholders' Agreement has been be drafted in the French and
English language. In case of different interpretation between the
English version and the French version, the French version will
prevail.
i) The Shareholders' Agreement is conditional upon the acquisition by
GMS of all 74.9% of the capital stock of Caric Mediris not owned by
IRE before October 15, 1997.
DONE ON June 1997, in two original copies of which each party acknowledges the
receipt of one original.
Institut National des Radioelements Griffith Micro Science N.V
By: /s/ H. Bonet By: /s/ Dirk Barrie
------------------------------------ ------------------------------
Name: H. Bonet Name: Dirk Barrie
Title: General Manager and CEO Title: Managing Director
<PAGE> 1
EXHIBIT 2.3
SHARE PURCHASE AGREEMENT
BETWEEN THE UNDERSIGNED:
- - LABORATOIRES PEROUSE S.A., a corporation (societe anonyme) organized and
existing under French law whose registered office is located at ZA
d'Outreville, Bornel, 60540 Bornel, France, registered with the Commercial
and Companies Registry of Beauvais under number B 317 883 999, duly
represented herein by Mr. Eric Perouse in his capacity as Chairman
(hereinafter referred to as the "Seller");
- - Mr. Eric Perouse, of French nationality, residing in L'ISLE ADAM
(Val d'Oise), 53, rue Saint Lazare, principal shareholder of the Seller
(hereinafter referred to as "Mr. Perouse");
on the one hand,
---------------
AND
Griffith Micro Science S.A.S., a corporation (societe anonyme simplifiee)
organized and existing under French law, whose registered office is
located at 10 Boulevard du Parc, 92521 Neuilly-sur-Seine, France, duly
represented by Mr. Dirk Barrie in his capacity as President of Griffith
Micro Science S.A.S. (hereinafter referred to as the "Purchaser");
on the other hand,
-----------------
The Seller, Mr. Perouse and the Purchaser are hereinafter collectively
referred to as the "Parties" and, individually, as a "Party".
FIRST OF ALL THE FOLLOWING WAS SET FORTH:
The Seller declares that it owns one hundred two thousand five hundred
(102,500) shares (hereinafter referred to as the "Shares") representing 100% of
the share capital, the voting rights and the rights to the profits of the
company Laboratoires Perouse Sterilisation S.A., a corporation organized and
existing under French law with a capital of ten million two hundred fifty
thousand (10,250,000) Francs divided into one hundred two thousand five hundred
(102,500) shares of one hundred Francs (FF 100) each, whose registered office
is located at 8 rue Parmentier, 60290 Rantigny, France, registered with the
Commercial and Companies Registry of Beauvais under number B 344 047 097
(hereinafter referred to as the "Company").
The Company's activity is the sterilization of medical devices, healthcare
products, cosmetics, laboratory supplies, pharmaceuticals and packaging by
means of chemical processes (including ethylene oxide gas) or steam and the
development, production and quality control of sterilization equipment using
the same processes (the "Sterilization Activity"). Sterilization Activity does
not include sterilization by means of electron beams or gamma irradiation.
<PAGE> 2
2.
Negotiations have taken place between the Seller and the Purchaser with respect
to the acquisition by the Purchaser of the Company. The Seller has expressed
the wish that this acquisition take place by means of the acquisition of 100%
of the capital, the voting rights and the rights to the profits of the Company.
The Seller is disposed to sell and the Purchaser is disposed to acquire the
Shares under the terms and conditions hereinafter set forth.
THE FOLLOWING WAS THEN AGREED:
1 - PURCHASE AND SALE
The Seller hereby sells on the date hereof (the "Closing Date") all of the
Shares to the Purchaser, in such a manner that the Purchaser holds 100% of the
capital, the voting rights and the rights to the profits of the Company.
2 - PURCHASE PRICE
2.1 Purchase Price.
In consideration for the purchase of the Shares and subject to the
conditions and adjustments provided for herein, the Purchaser hereby pays to
the Seller, a total price of twenty seven million Francs (FF 27,000,000) (the
"Purchase Price").
2.2 Price Adjustment
2.2.1 Shareholders Equity.
The Seller and Mr. Perouse hereby represent and warrant that the
shareholders equity of the Company (the "Shareholders Equity") as of the
Closing Date (the "Closing Shareholders Equity") shall not be less than the
amount of the Shareholders Equity set forth on the balance sheet of the Company
as of 30 June, 1994 attached hereto as Annex A (the "30 June Balance Sheet").
2.2.2 Closing Balance Sheet.
The Seller and Mr. Perouse shall cause the Company's accountants SECA, 10
bis, rue du General Leclerc, Beauvais, France ("SECA") to prepare the balance
sheet of the Company as of the Closing Date (the "Closing Balance Sheet") and
deliver the same to the Purchaser and the Purchaser's advisor, KPMG Corporate
Finance, 18 bis, rue de Villiers, Neuilly-sur-Seine, France ("KPMG") no later
than twenty (20) days after the Closing Date. The Purchaser shall be
responsible for arranging for the Seller, Mr. Perouse and SECA access to the
documents necessary for preparation of the Closing Balance Sheet. The
Purchaser shall cause KPMG to examine the Closing Balance Sheet and, for that
purpose, will cause the Company to give access to such documents and
information as KPMG may require in order to effect such examination. The
Seller and Mr. Perouse shall cause SECA to provide such assistance as KPMG may
require. Within twenty (20) days after receipt of the Closing Balance Sheet,
the Purchaser shall deliver to
<PAGE> 3
3.
the Seller and Mr. Perouse a statement with respect to any proposed adjustments
to the Closing Balance Sheet as proposed by KPMG. If the Closing Balance Sheet
as examined by KPMG reveals any decrease in the Closing Shareholders Equity as
compared to the Shareholders Equity on the June 30 Balance Sheet (the
"Shareholders Equity Shortfall") then the Purchaser, Mr. Perouse and the Seller
shall negotiate in good faith to attempt to agree upon the actual amount of the
Closing Shareholders Equity no later than twenty (20) days after the Seller's
receipt of the KPMG audit statement. At the end of the last twenty (20) day
period, the more diligent Party will dispose of the delay of five (5) working
days to file a demand for arbitration to resolve any dispute in accordance with
Article 2.2.4 below.
2.2.3 Adjustment of Purchase Price.
2.2.3.1 Calculation. In the event of any Shareholders Equity Shortfall
and subject to the provisions of Article 2.2.3.2 below, the Purchase Price
shall be reduced in an amount equal to the Shareholders Equity Shortfall
provided that the following conditions are fulfilled:
(i) the Shareholders Equity Shortfall is a direct result of operations
in the ordinary course of business of the Company; and
(ii) there has been no breach of any of the representations or warranties
set forth in Article 6 below.
2.2.3.2 Deductible Amount. In the event of any Shareholders Equity
Shortfall for which the Purchaser makes a claim pursuant to Article 2.2.3.1
above, the Seller shall not be required to pay the first one hundred thousand
Francs (FF 100,000) of the amount so calculated, but shall only be liable for
the amount in excess of the amount of FF 100,000. Unless an arbitration
procedure is commenced in accordance with Article 2.2.4 below, the Seller shall
promptly pay to the Purchaser the amount of the claim less the deductible
amount. In the event of the Seller's failure to do so, the Amount shall be
paid from the Fund as hereinafter defined in Article 2.2.5.
2.2.3.3 Other Claims. In the event of any Shareholders Equity Shortfall
which occurs under circumstances in which the conditions of Article 2.2.3.1
above have not been fulfilled, the Seller shall pay to the Purchaser an amount
equal to three (3) times the amount of the Shareholders Equity Shortfall not
subject to any set off or deductible amount. The Seller shall promptly pay
such amount after the Purchaser's demand therefor unless arbitration is
instituted in accordance with the provisions of Article 2.2.4 below.
Otherwise, the amount of the claim shall be paid from the Fund as hereinafter
defined in Article 2.2.5.
2.2.4 Arbitration.
In the event of a dispute as to the amount of the Closing Shareholders
Equity, the Seller, Mr. Perouse and the Purchaser hereby agree to submit the
dispute to arbitration by Ernst & Young, Paris, France ("Ernst & Young"). In
the event that Ernst & Young shall be unable or unwilling to accept such a
mission, the more diligent Party may apply to the President of the Commercial
Court of Paris for the nomination of another auditing firm to take the place of
Ernst & Young. Ernst & Young or such other auditing firm shall deliver its
decision with respect to
<PAGE> 4
4.
the Closing Shareholders Equity no later than forty-five (45) days following
acceptance of the appointment. The Party against whom the dispute is resolved
shall pay the fees of Ernst & Young or such other auditing firm.
2.2.5 Escrow Fund.
On the Closing Date, the Purchaser shall pay to Barclays Bank (the "Escrow
Agent") as escrow agent pursuant to the Escrow Agreement attached hereto as
Annex B the sum of five million Francs (FF 5,000,000) (the "Fund") which shall
be the Purchaser's security for any Purchase Price adjustment based on any
Shareholders Equity Shortfall.
2.2.6 Investment of the Fund.
The Fund shall be invested in liquid investment grade securities of
recognized quality. All interest or other income on the Fund shall be paid to
the Party or the Parties pro-rata to the portion of principal of the Fund paid
to such Party or Parties.
2.2.7 Termination of the Fund.
No later than five (5) days after the amount of the Closing Shareholders
Equity shall have been definitively determined, the Purchaser and the Seller
shall give joint written instructions to the Escrow Agent as to the payment of
the Fund.
2.3 Payment of the Purchase Price
The Purchase Price, less the amount of the Fund, shall be paid at the Closing
by bank check.
2.4 Dividends
The Seller and Mr. Perouse hereby represent and warrant to the Purchaser
that no dividends have been paid by the Company since January 1, 1994, except
for the distribution of reserves as set forth in Annex C hereto.
3 - CLOSING OBLIGATIONS
3.1 Simultaneously with the execution hereof, the following operations are
taking place:
3.1.1 Termination by mutual consent of the leases currently in force
between SCI Eugenie and SCI Diane (collectively, the "Owners"), on
the one hand, and the Company, on the other hand, concerning the
land and buildings at Vaulx-en-Velin, without any obligation to the
parties to such leases to return the same to the original state or
to pay damages of any nature whatsoever and the execution, on
financial terms which are identical, by the Company, on the one
hand, and the SCI Diane and SCI Eugenie, on the other hand, of the
commercial leases attached in Annex F-1 relating to all of the
buildings and land at
<PAGE> 5
5.
Vaulx-en-Velin, specifically excluding the lease for
Vaulx-en-Velin executed by the Company and SCI Eugenie on January
25, 1994 as amended on February 21, 1994.
3.1.2 Termination by mutual consent of the current lease between the
Company and the Societe Civile Immobiliere Parmentier without any
obligation to the parties to such lease to return the premises to
their original state or to pay damages of any nature whatsoever,
and execution of a deed by SCI Parmentier and the Company as set
forth in Annex F-2 hereto, pursuant to which SCI Parmentier
transfers to the Company all of the buildings and land at Rantigny
(the "Rantigny Property") for a price of ten million Francs (FF
10,000,000), plus V.A.T. (the "Rantigny Purchase Price"), the
costs, fees and duties relating thereto to being paid by the
Purchaser. The Seller and Mr. Perouse hereby guarantee to the
Purchaser that the sale of the Rantigny Property is subject to
V.A.T. All registration duties which may become payable in respect
of the Rantigny Purchase Price or in respect of a part of such
price, to the extent and only to the extent that all or part of the
sale of the Rantigny Property is not subject to V.A.T., will be for
the account of the Seller, Mr. Perouse and SCI Parmentier jointly
and severally.
3.1.3 Delivery by the Seller to the Purchaser of the letters of
resignation of the Directors and General Managers (directeurs
generaux) of the Company, according to which such persons also waive
any claim for any reason whatsoever against the Company the text of
which resignation and release is set forth in Annex K hereto.
3.1.4 Delivery by the Seller to the Purchaser of the share transfer
registers, shareholders accounts, and registers of the Company's
minutes of General Meetings and Board of Directors Meetings.
3.1.5 Execution and delivery by Mr. Perouse and all the companies
directly or indirectly controlled by Mr. Perouse, on the one hand,
and the Purchaser, on the other hand of the agreement for the
exclusive provision of ethylene oxide sterilization services set
forth in Annex L hereto.
3.1.6 Termination on the Closing Date of the existing management
agreement between the Seller and the Company, without penalty to
either party to the said agreement.
3.2 With respect to the transactions described in Articles 3.1.1 and
3.1.2 above, Mr. Perouse represents and warrants that he controls the SCI's
Eugenie, Diane and Parmentier, and jointly and severally guarantees, subject to
the terms and conditions of this Agreement, that the aforementioned parties are
validly executing and delivering the aforementioned commercial leases to the
Purchaser, and that SCI Parmentier is fulfilling all its obligations under
Article 3.1.2 above.
<PAGE> 6
6.
4 - REPRESENTATIONS AND WARRANTIES
4.1 Warranty Agreement. As of the Closing Date the Seller has executed,
for the benefit of the Purchaser, and delivered to the Purchaser the Warranty
Agreement as set forth in Annex E-1 hereof (the "Warranty Agreement").
4.2 Covenants of the Seller and Mr. Perouse. The Seller and Mr. Perouse
hereby covenant and agree for the benefit of the Purchaser that until the
Warranty Agreement has been terminated and the Seller has fulfilled all of its
obligations and agreements thereunder:
(i) The consolidated net worth of the Seller and its Affiliates or the
net worth of the Seller in the case in which the Seller shall no
longer have any majority participation in its affiliates
(collectively the "Net Worth") shall not at any time be less than
ten million francs (10.000.000 FF) during the five (5) years
starting on the Closing Date. However, if the Net Worth
becomes, at any time during this period, less than the said amount
of ten million francs (10.000.000 FF), the Seller shall furnish to
the Purchaser within a period of thirty (30) days, a supplementary
bank guaranty (the "Shortfall Guaranty") in accordance with the
guaranty letter of the Societe Generale set forth in Annex E-3
hereto for the amount of the difference between the ten million
francs (10.000.000 FF) and the actual Net Worth, the Shortfall
Guaranty in no case to be higher than five million francs (5.000.000
FF) less the current amount of the Bank Guaranty as defined in
Article 4.5 below. The amount of the Shortfall Guaranty shall be
adjusted each year based on the annual accounts of the Seller,
deduction being made for the current amount of the Bank Guaranty.
For the purposes of this article, if the cumulative amount of the
Shortfall Guaranty and the Bank Guaranty is in excess of five
million francs (5.000.000 FF), the amount of the Shortfall Guaranty
shall be adjusted in such a manner that the amount of the two
abovementioned guaranties shall be equal to five million francs
(5.000.000 FF).
(ii) no later than ninety (90) days after the end of each fiscal year of
the Seller, the Seller shall deliver to the Purchaser a certified
copy of the Seller's financial statements for the most recently
ended fiscal year and a certificate signed by the President and the
Chief Financial Officer of the Seller certifying as to the Seller's
compliance with the covenants and agreements set forth in this
Article 4.2 of this Agreement, a form of which certification is set
forth in Annex J hereto.
4.3 [Not used].
4.4 [Not used].
4.5 Bank Guaranty. The Seller's obligations under this Agreement and the
Warranty Agreement are guaranteed by Bank Societe Generale pursuant to the duly
executed bank guaranty in an initial amount of three million Francs (FF
3,000,000) in force for a period of three (3) years from the Closing Date which
the Seller and Mr. Perouse have delivered herewith to the Purchaser in the form
of Annex E-2 attached hereto (the "Bank Guaranty").
<PAGE> 7
7.
4.6 Computer Equipment Sublease. The Sellers hereby represent to the
Purchaser that the list of computer equipment set forth in Annex DC-1 hereto
constitutes all of the computer equipment currently used in the Sterilization
Activity (the "Computer Equipment"). The Computer Equipment is leased by the
Seller from SOFINABAIL pursuant to two separate leases dated September 18, 1990
and March 13, 1991, copies of which are attached hereto as Annex DD-1 and Annex
DD-2 respectively. The Seller has delivered herewith to the Purchaser the duly
executed sublease agreement pursuant to which the Seller agrees to sublease the
Computer Equipment to the Company for the agglomerate amount of forty three
thousand nine hundred and fourteen Francs (FF 43,914), from the Closing Date
until the termination of the respective leases and on such other terms and
conditions as provided in the draft sublease set forth in Annexe DE-1 hereto
(the "Sublease").
4.7 Computer Equipment Option to Purchase. At the end of the current term
of each lease for the Computer Equipment, the Company shall have the right to
acquire full right, title and ownership to the Computer Equipment for a
percentage of the termination payment as provided for under the lease in
question equivalent to the percentage of the rent paid as further described in
the Subleases. A copy of the authorization of Datika, the owner of the
software used by the Sterilization Activity to the transfer of same to
Purchaser is attached as Annex DC-2 hereto.
4.8 Sterilization Activity Property. The Seller and Mr. Perouse hereby
represent and warrant to the Purchaser that all of the property currently used
in connection with the Sterilization Activity is in the possession of the
Company on the date hereof and the Company has the legal right to possess and
use the same.
4.9 Vehicles. The Seller hereby represents and warrants to the Purchaser
as follows. The vehicles identified in Annex I hereto are the only ones used
in the Sterilization Activity (the "Vehicles") and that the Company has full
right and title to all the Vehicles except for the automobiles under lease
(copies of which leases are set forth in Annex DD-3 hereto). All the Vehicles
are in good condition subject to normal wear and tear. The Vehicles are all in
the possession of the Company on the date hereof. With respect to the leased
automobiles, the Company has the right to continue to lease them and shall be
able to acquire them in accordance with the provisions of the corresponding
leases.
5. - JUNE 30, 1994 BALANCE SHEET
The Seller and Mr. Perouse have delivered to the Purchaser the Company's
balance sheet for the period ended June 30, 1994, prepared by the management of
the Company (the "June 30 Balance Sheet"). The June 30 Balance Sheet takes
into account (i) the forgiveness of debt in the amount of three million seven
hundred and eighty two thousand, five hundred and fifty six Francs and twenty
two centimes (FF 3,782,556.22) owed by the Seller to the Company, this
forgiveness not being tax-deductible by the Company and (ii) the distribution
of reserves the payment of which has been effected by reduction of the debt
owed to the Seller as set forth in Annex C hereto. The Seller and Mr. Perouse
hereby represent and warrant to the Purchaser that
<PAGE> 8
8.
the June 30 Balance Sheet has been prepared in accordance with accounting
principles and procedures applied on a basis consistent with those used to
prepare the Company's annual financial statements. The Seller hereby
represents and warrants to the Purchaser that the June 30 Balance Sheet
presents fairly the Company's shareholders equity at such date.
6. - CONDUCT OF BUSINESS
6.1 The Seller and Mr. Perouse hereby represent and warrant to the
Purchaser with respect to the period commenced February 1, 1994, and ended on
the date hereof and except as set forth in Annex H hereto, that the Company:
6.1.1 has not declared or paid any distribution of dividends or other
return on capital, subject to the distribution of reserves as set
forth in Annex C hereto;
6.1.2 has not modified any of its articles, by-laws or corporate bodies,
nor decided on the creation, at any time or on a set date, of new
shares or other securities representing a portion of the share
capital and/or giving right to a share of the profits of the
Company;
6.1.3 has not sold, transferred, mortgaged, pledged or submitted to any
restrictions on ownership, possession or enjoyment rights of, any
of its tangible or intangible assets, except in the ordinary course
of business and under such terms and conditions as are in
accordance with those of the market and professional practices, and
provided that they are not assets essential to the activities of the
Company or whose market value exceeds in aggregate 50,000 Francs;
6.1.4 has not entered into any contract, commitment or agreement
whatsoever other than those required in the ordinary course of
business and on the condition that they are entered into in
conditions in accordance with those of the market and professional
standards and respecting the legislation and regulations in force
and does not entail payments by or to the Company in excess of
50,000 Francs per contract, commitment or agreement;
6.1.5 has not terminated in advance any contract, commitment or
agreement whatsoever to which the Company is a party, subject to the
ordinary course of business;
6.1.6 has not decided on nor undertaken to grant in the future any
salary increase or increase in the remuneration or benefits nor to
provide any new benefits or advantages other than those existing on
January 31, 1994, for the benefit of any of its employees,
directors, corporate representatives or other managers, advisors or
consultants, subject to increases in the ordinary course of
business;
<PAGE> 9
9.
6.1.7 has not hired any employee or proceeded with any recruitment or
recruitment undertaking;
6.1.8 has not terminated any management level employee;
6.1.9 has maintained its tangible assets in a good state of repair and
maintenance;
6.1.10 has been managed with due and proper care and has continued to
operate its business in the same way as done in the past, has
continued to benefit from the services of its directors, corporate
representatives and other managers, advisors and consultants and
employees and has maintained good relations with its clients,
distributors, suppliers and other entities or persons with whom it
has a business relationship, as well as any administration or
authority on which it depends.
6.2 The Seller and Mr. Perouse further represent and warrant to the
Purchaser as follows:
6.2.1 The aggregate debt of the Company as set forth in the June 30
Balance Sheet, entrey "Bank Loan", does not exceed at the Closing
Date the amount of 6,525,000 Francs disclosed in the Financial
Statements of the Company as of December 31, 1993 prepared by the
Cabinet SECA, less any scheduled repayment of such debt amount
pursuant to the underlying loan agreements.
6.2.2 [Not used].
6.2.3 The Seller has complete ownership, free of any pledge, lien,
encumbrance, restriction or charge, of the Shares and free of any
claim by any former shareholder of the Company.
6.2.4 Subject to any applicable statute of limitation, the installations
and the activity of the Company is and has always been completely
in accordance with the laws, regulations and individual
administrative decisions applicable thereto.
6.2.5 The transfer of the Shares to the Purchaser and/or the change in
control of the Company which results from such transfer does not
adversely affect the financial, legal, operational or commercial
position of the Company.
6.2.6 There does not exist any other factor of such nature as to
cause a professional buyer reasonably to determine not to proceed
with the purchase of the Shares under the terms and conditions
hereof.
<PAGE> 10
10.
6.2.7 The lease dated January 25, 1994, as amended on February 21, 1994,
for the rental of certain property in Vaulx-en-Velin has been
terminated and the Company has been fully reimbursed for (a) all
rents paid thereunder and (b) the increased rents paid on the
existing facility in Vaulx-en-Velin charged to the Company
subsequent to December 31, 1993.
7. - FRENCH GOVERNMENT REQUIREMENTS
The Parties hereby acknowledge the fulfillment of all the conditions required
by law and in particular sending the notice of the proposed investment to the
Ministry of Economy as required by the French regulation of foreign investments
in France.
8. - POST-CLOSING UNDERTAKINGS OF CONFIDENTIALITY AND NON-COMPETITION
8.1 The Seller and Mr. Perouse hereby agree to keep secret and
confidential all commercial, financial, technical or other information which
they have in their possession regarding the business of the Company, and its
clients, not including the information which is known publicly or available to
the public and deliver the same to the Purchaser on the Closing Date. In
addition, they agree not to use for their benefit or reveal to third parties
any commercial secrets, know-how or confidential information about the Company,
except that they may use such know-how or confidential information for the
purpose of the activities described in Article 8.3 hereafter.
8.2 The Seller and Mr. Perouse undertake, in their own names as well as in
the name of each of the companies which either one of them controls directly or
indirectly, for a period of five (5) years as from the Closing Date, not to
exercise any activity whatsoever in the field of Sterilization Activity,
whether directly or indirectly (through the intermediary of an entity which
either of them controls or manages, through a third party or otherwise) whether
a board member, an employee, manager in law or de facto, authorized
representative, consultant or otherwise within the territory defined by a
circle having a radius of three hundred twenty (320) kilometers around each
facility of the Company (the "Territory"). The Seller and Mr. Perouse each
undertakes, for the same period, not to hold directly or indirectly more than
five per cent (5%) of the voting rights or rights to dividends in an enterprise
which directly or indirectly exercises an activity in the field of
Sterilization Activity in the Territory. It will be considered that an entity
exercises an activity in the field of Sterilization Activity in the Territory
if either (i) it owns controls or otherwise operates a facility engaging in
Sterilization Activity within the Territory or (ii) any products sterilized by
such entity are delivered within the Territory regardless of the location of
the sterilization facility.
For purposes of the present provision, it shall not be deemed a violation
of the noncompetition obligation for the Seller to have an interest, even
majority interest, in the Belgian law company Caric Mediris ("Caric Mediris").
However, if the Seller acquires the control of
<PAGE> 11
11.
Caric Mediris, it agrees and guarantees that Caric Mediris will respect the
noncompetition provision set forth in this Article 8.2.
8.3 The in-house steam sterilization and electron beam sterilization of
products manufactured by the Perouse group in facilities belonging to companies
owned and controlled by the Seller as they exist at the date hereof (as such
products and facilities are described in ANNEX G attached hereto) will not fall
within the scope of the non-competition undertaking stipulated in Article 8.2
above.
8.4 The Seller and Mr. Perouse agree that the Purchaser shall be entitled
to the declaration of an injunction in the event of any breach of their
obligations under this Article 8, and hereby submit to the jurisdiction of any
competent court for the granting of such injunctive relief. For the purpose of
enforcing its rights under this Article 8.4, the Purchaser need not institute
an arbitration proceeding pursuant to Article 10.13 hereof and may proceed
directly with court proceedings to obtain injunctive relief and enforce its
rights hereunder.
8.5 The Seller and Mr. Perouse hereby agree, subject to the provisions of
Article 8.3 above, on their behalf and on behalf of all of their controlled
affiliates, entities and persons as they exist today or in the future, to
procure all of their requirements for ethylene oxide sterilization services in
Continental Europe and Great Britain from the Company as such requirements
exist on the date hereto or in the future on the terms and conditions set forth
in Annex L hereto and such other agreements as may become necessary to effect
the foregoing.
9. - USE OF THE PEROUSE NAME AND ITS DERIVATIVES
9.1 The Purchaser and the Company may use the "PEROUSE" name and its
derivatives (such as Perouse Sterilisation") and the Perouse trademark and its
derivatives for a period of two (2) years as from the Closing Date. At the end
of the this period, the Company will have to, insofar as necessary, change its
corporate name in order that the "PEROUSE" name no longer appears and the
Purchaser will ensure that the companies of its group cease all usage of the
"PEROUSE" name.
9.2 Without prejudice to the non-competition undertaking provided in
Article 8 above, the Seller and Mr. Perouse undertake, in their own name as
well as in the name of the companies which they directly or indirectly control
or manage, not to use the name and the trademark "PEROUSE" and their
derivatives for any activity in the field of Sterilization Activity.
9.3 The Seller agrees to cause the companies Caric Aube Champagne S.A. and
Laboratories Caric S.A. to cease use of the name "PEROUSE" at the latest by
September 1, 1994.
9.4 The Seller hereby agrees to cause the Company to cease use of the name
"CARIC" at the latest by September 1, 1994.
<PAGE> 12
12.
10. - MISCELLANEOUS PROVISIONS
10.1 This Agreement will inure to the benefit of the Parties and shall be
binding upon them and their respective permitted successors and assigns.
10.2 It is expressly agreed between the Parties that the Purchaser may
assign to any company within its Affiliated group the rights and obligations
from which it benefits or for which it is responsible, pursuant to the
provisions of this Agreement, it being understood that it will remain jointly
and severally liable for the performance of said obligations by the assignee.
10.3 The Seller and Mr. Perouse may not assign, delegate or transfer all
or any part of their rights and obligations pursuant to this Agreement without
the prior written agreement of the Purchaser.
10.4 This Agreement constitutes the entire agreement between the Seller
and Mr. Perouse on the one hand and the Purchaser on the other hand, with
respect to the subject matter hereof. It invalidates and replaces any
discussion, agreement or letter of intent which may have taken place between
the Parties concerning the same purpose prior to its signature. No amendment
or waiver of any provision of this Agreement shall be binding unless executed
in writing by the Party to be bound thereby.
10.5 The Annexes to this Agreement form an integral part thereof.
10.6 [Not used].
10.7 The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
10.8 [Not used].
10.9 Neither the Seller, Mr. Perouse nor any of their Affiliates have
retained or employed any broker, finder, investment banker or person who could
have a valid claim against the Purchaser and/or the Company for a fee,
commission, brokerage or other compensation in connection with this Agreement
or the transactions contemplated hereby or taken any action or entered into any
agreement or understanding which would give any such person any such valid
claim against the Purchaser; and neither the Purchaser nor any of its
Affiliates has retained or employed any broker, finder, investment banker or
person who could have a valid claim against the Seller or Mr. Perouse for a
fee, commission, brokerage or other compensation in connection with this
Agreement or the transactions contemplated hereby or taken any action or
entered into any agreement or understanding which would give any such person
any such valid claim against the Seller or Mr. Perouse.
10.10 The invalidity of all or any part of any article of this Agreement
shall not render the remainder of that article or this Agreement invalid, and
the Agreement shall be carried out as nearly as possible according to its
original terms and intent.
<PAGE> 13
13.
10.11 The failure to enforce or to require the performance at any time of
any of the provisions of this Agreement shall in no way be construed to be a
waiver of such provisions, and shall not affect either the validity of this
Agreement or any part hereof or the right of any Party thereafter to enforce
each and every provision in accordance with its terms. Any right of rescission
conferred upon the Parties shall be in addition to and without prejudice to all
other rights and remedies available to the Parties and no exercise or failure
to exercise such a right of rescission shall constitute a waiver of any other
right or remedy. The Closing shall not constitute a waiver by any Party of any
breach of any provision of this Agreement whether or not known to such Party at
the Closing.
10.12 This Agreement is governed by French Law.
10.13 Any dispute arising out of or in connection herewith, shall be
conclusively settled by arbitration conducted in both the French and English
languages in Paris, France, in accordance with the then-existing Rules of
Conciliation and Arbitration of the International Chamber of Commerce (ICC).
The Seller and Mr. Perouse shall jointly appoint one (1) arbitrator and the
Purchaser shall appoint one (1) arbitrator and these two (2) arbitrators shall
mutually agree upon the third arbitrator to constitute the arbitration panel of
three (3) members. If either Party fails to appoint an arbitrator within
thirty (30) days after the appointment of an arbitrator by the other Party, or
if the two (2) arbitrators fail to agree upon a third within thirty (30) days
after the appointment of the second arbitrator the most diligent Party may
apply to the ICC for the appointment of the defaulting Party's arbitrator, or
of the third arbitrator, as the case may be. The arbitrators shall understand
both French and English perfectly and either language will be acceptable for
oral and written pleadings. The arbitrators will make a finding based on legal
principles.
Nevertheless, when the amount of the claim or dispute in question,
including the amount of any counterclaim, is less than one million Francs (FF
1,000,000), the Parties agree to submit their dispute to a single arbitrator
appointed by the President of the Paris Commercial Court at the request of the
most diligent Party. However, if one of the Parties so wishes, it may within
fifteen (15) days of the date of the President of the Commercial Court's order,
name a second arbitrator. In such a situation, the other Party shall name a
third arbitrator within the same time period. The single arbitrator, or the
three arbitrators must understand French and English perfectly and the written
and oral pleadings shall be capable of being submitted in either language.
They shall make a finding based on legal principles and give their decision
within three (3) months of (i) the date of the President of the Commercial
Court's nomination, in the case of a single arbitrator, or (ii) the nomination
of the second and third arbitrators in the case of a plurality of arbitrators.
Such time limit may be extended by decision of the arbitration panel.
The award of the arbitrator(s) shall be final, binding and
executory, and judgment thereon may be entered in any court having jurisdiction
thereof. The arbitrators shall award costs and expenses of the arbitration,
including but not limited to fees and expenses of the arbitrators,
administrative expenses of the ICC, fees of counsel and other related expenses
of the Parties (the "Costs"). In making their award with regard to the Costs,
the arbitrators shall have regard to the outcome of the arbitration and to the
success or failure of the claims made therein. In the event
<PAGE> 14
14.
that the Party which commenced the arbitration procedure does not provide proof
of at least a substantial part of all of its claims, such Party shall be obliged
to pay all the Costs.
10.14 Any notification or communication addressed by either one of the
Parties to the other under this Agreement must be made by registered letter
with notice of receipt and at the same time by telecopy sent to the persons and
addresses below:
To the Seller and/or Mr. Perouse
-------------------------------------------
Z.A. d'Outreville
60540 Bornel
France
For the attention of Mr. Eric Perouse
Telecopy No: (33) 44.08.49.62
With a copy to:
Dutoit, Fouques, Carluis et Associes
Technopolis
Zone d'Activite de Mercieres
60471 Compiegne Cedex
France
For the attention of Messrs Alain Carluis and Xavier Roguet
Telecopy No: (33) 44.23.29.21
and to:
SECA
10 bis rue du General Leclerc
6000 Beauvais
France
For the Attention of Mr. Alain Collet
Telecopy No: (33) 44.45.61.96
To the Purchaser:
- -----------------
Griffith Micro Science S.A.S.
10 Boulevard du Parc
92521 Neuilly-Sur-Seine
France
<PAGE> 15
15.
For the attention of Mr. Dirk Barrie
Telecopy No: (33) (1) 46 43 93 94
With a copy to:
Griffith Laboratories Worldwide Inc.
One Griffith Center
Alsip, Illinois 60658
U.S.A.
For the attention of: Mr. James S. Legg, Legal Department
Telecopy No: 1 (708) 371 4783
and to: Coudert Freres
52 avenue des Champs-Elysees
75008 Paris
France
For the attention of: Mr. George T. Yates, III
Telecopy No: (33)(1) 43.59.66.55
The reception or communication date will be deemed to be that of the
telecopy.
Each one of the Parties may notify the other of any change in address,
fax number or addressee by respecting the above indicated procedure.
10.15 For the purpose of this Agreement unless the context requires
otherwise, Affiliate (and forms thereof such as Affiliated) means any person
(including any individual, trust, estate, partnership, corporation, limited
liability company or other juridical entity, business enterprise or
association) which is directly or indirectly controlled by, under common
control with, or controls any Party to this Agreement or in which any such
party has an ownership interest.
10.16 Terms used in this Agreement not defined herein shall have the
meaning attributed to them in the Warranty Agreement.
Signed in Paris, on July 22, 1994
In five (5) originals, one for the Purchaser and one for each of the Seller and
Mr. Perouse.
/s/ Eric Perouse /s/ Dirk Barrie
- ----------------------------- --------------------------
Mr. Eric Perouse Griffith Micro Science S.A.S.
By: Mr. Dirk Barrie
Title: Chairman of Griffith Micro
Science B.V., its President
<PAGE> 16
16.
/s/ Eric Perouse
- ---------------------------------
LABORATOIRES PEROUSE S.A.
By: Mr. Eric Perouse
Title: Chairman
<PAGE> 17
17.
SHARE PURCHASE AGREEMENT
LIST OF ANNEXES
Annex A June 30 Balance Sheet
Annex B Escrow Agreement
Annex C Dividends
Annex D Finance Leases and Computer Equipment
Annex DC-1 Computer Equipment
Annex DC-2 Copy of a fax dated February 7, 1994 from Datika
concerning the sale of the computing software
Annex DD-1 Copy of the finance lease dated September 18, 1990
Annex DD-2 Copy of the finance lease dated March 13, 1991
Annex DD-3 Copy of Automobile Leases
Annex DE-1 Computer Equipment Sublease
Annex E Warranty Agreement
Annex E-1 Warranty Agreement
Annex E-2 First Demand Guaranty of Banque Scalbert Dupont
Annex E-3 Guaranty Letter of Banque Scalbert Dupont
Annex F Real Estate
Annex F-1 Commercial Leases relating to Vaulx-en-Velin
Annex F-2 Deed relating to Rantigny
Annex G Description of Existing Facilities for In-House Steam and Electron
Beam Sterilization
Annex H Conduct of Business Exceptions
Annex I List of Vehicles
Annex J Form of Compliance Certificate
Annex K Form of Resignation and Release
Annex L Sterilization Services Agreement
<PAGE> 18
18.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
page
<S> <C> <C>
1. - PURCHASE AND SALE.......................................... 2
2. - PURCHASE PRICE............................................. 2
2.1 Purchase Price....................................... 2
2.2 Price Adjustment..................................... 2
2.3 Payment of the Purchase Price........................ 4
2.4 Dividends............................................ 4
3. - CLOSING OBLIGATIONS........................................ 4
4. - REPRESENTATIONS AND WARRANTIES............................. 6
4.1 Warranty Agreement................................... 6
4.2 Covenants of the Seller and Mr. Perouse.............. 6
4.3 6
4.4 6
4.5 Bank Guaranty........................................ 6
4.6 Computer Equipment Sublease.......................... 7
4.7 Computer Equipment Option to Purchase................ 7
4.8 Sterilization Activity Property...................... 7
4.9 Vehicles............................................. 7
5. - JUNE 30, 1994 BALANCE SHEET................................ 7
6. - CONDUCT OF BUSINESS........................................ 8
7. - FRENCH GOVERNMENT REQUIREMENTS............................. 10
8. - POST-CLOSING UNDERTAKINGS OF CONFIDENTIALITY AND
NON-COMPETITION............................................ 10
9. - USE OF THE PEROUSE NAME AND ITS DERIVATIVES................ 11
10. - MISCELLANEOUS PROVISIONS................................... 12
</TABLE>
<PAGE> 1
EXHIBIT 3.1(a)
CERTIFICATE OF INCORPORATION
OF
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
FIRST. The name of the Corporation is Griffith Micro Science
International, Inc.
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street in the City of Wilmington, County of
New Castle. The name of the registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is one thousand (1,000) shares, all of which shall be
common stock, $1 par value.
FIFTH. The name and mail address of the sole incorporator is as follows:
Name Address
- --------------------------- --------------------------
Griffith Laboratories, Inc. 1 Griffith Center
Alsip, Illinois 60658-3495
SIXTH. The original bylaws of the Corporation shall be adopted by the
incorporator. Thereafter, in furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly authorized to make,
alter or repeal the bylaws of the corporation.
SEVENTH. Meetings of stockholders may be held within or without the State
of Delaware, as the bylaws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
EIGHTH. Any person (and the heirs, executors, administrators and estates
of any such person) who at any time shall serve, or shall have served, as a
director or officer of the Corporation or of any other enterprise at the
<PAGE> 2
corporation, shall be indemnified by the Corporation in accordance with and to
the fullest extent authorized by the General Corporation Law of Delaware as it
may exist from time to time. Any person (and their heirs, executors,
administrators and estates of any such person) who at any time shall serve, or
shall have served, as an employee or an agent of the Corporation, or of any
other enterprise at the request of the Corporation, may be similarly
indemnified at the discretion of the board of directors of the Corporation.
NINTH. No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper benefit.
TENTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this restated certificate of incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate, hereby declaring and certifying
that this is its act and deed and the facts herein stated are true and
accordingly has hereunto set its hand and seal this 20th day of October, 1997.
GRIFFITH LABORATORIES, INC.
By /s/ Gregory L. Schmidt
------------------------------
Gregory L. Schmidt
Vice President
ATTEST:
(Corporate Seal)
/s/ James S. Legg
- ------------------------
James S. Legg
Assistant Secretary
2
<PAGE> 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
Griffith Micro Science International, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That by the unanimous written consent of the Board of Directors of
the Corporation, resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of the Corporation (the
"Amendment"), declaring said Amendment to be advisable and calling a meeting of
the stockholders of the Corporation for consideration thereof. The resolution
setting forth the proposed Amendment is as follows:
RESOLVED, that the Certificate of Incorporation of
this corporation be amended by changing the Article
numbered "Fourth" so that, as amended, said Article shall
be read in its entirety as follows:
"FOURTH. The total number of shares of
stock which the Corporation shall have authority
to issue is one million (1,000,000) shares, all
of which shall be common stock, $.01 par value
per share."
FURTHER RESOLVED, that each share of common stock,
$1 par value per share, of this corporation which is
issued and outstanding or held in the treasury of the
corporation at the time the proposed Amendment becomes
effective shall, at and as of such time, be reclassified
into one fully paid and nonassessable share of common stock,
$.01 par value per share, of the corporation.
<PAGE> 4
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the sole stockholder of the Corporation, acting by written consent,
voted the necessary number of shares of the Corporation as required by statute
in favor of the said Amendment.
THIRD: That the said Amendment was thereby duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Joseph R. Maslick, its Executive Vice President and
James S. Legg, its Secretary, this 29th day of January, 1998.
GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC.
BY: /s/ Joseph Maslick
---------------------------------
Executive Vice President
ATTEST: /s/ James S. Legg
----------------------------
Secretary
2
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
Griffith Micro Science International, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation") DOES HEREBY CERTIFY:
FIRST: That by the unanimous written consent of the Board of Directors of
the Corporation, resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of the Corporation (the
"Amendment"), declaring said Amendment to be advisable and calling a meeting of
the stockholders of the Corporation for consideration thereof. The resolution
setting forth the proposed Amendment is as follows:
RESOLVED, that the Certificate of Incorporation of
this corporation be amended by changing the Article
numbered "Fourth" so that, as amended, said Article shall
be read in its entirety as follows:
"FOURTH. The total number of shares of
stock which the Corporation shall have authority
to issue is one million (1,000,000) shares, all
of which shall be common stock, $.01 par value
per share."
FURTHER RESOLVED, that each share of common stock,
$1 par value per share, of this corporation which is
issued and outstanding or held in the treasury of the
corporation at the time the proposed Amendment becomes
effective shall, at and as of such time, be reclassified
into one fully paid and nonassessable share of common stock,
$.01 par value per share, of the corporation.
<PAGE> 6
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the sole stockholder of the Corporation, acting by written consent,
voted the necessary number of shares of the Corporation as required by statute
in favor of the said Amendment.
THIRD: That the said Amendment was thereby duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Joseph R. Maslick, its Executive Vice President and
James S. Legg, its Secretary, this 29th day of January, 1998.
GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC.
BY: /s/ Joseph Maslick
--------------------------------
Executive Vice President
ATTEST: /s/ James S. Legg
-----------------------------
Secretary
2
<PAGE> 1
EXHIBIT 3.1(b)
RESTATED CERTIFICATE OF INCORPORATION
OF
GIRFFITH MICRO SCIENCE INTERNATIONAL, INC.
Griffith Micro Science International, Inc., a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The corporation's present name is that shown above. The corporation
was originally incorporated under the same name and the date of filing of the
corporation's original certificate of incorporation with the Delaware Secretary
of State was October 30, 1987.
2. This Restated Certificate of Incorporation of the corporation, which
both restates and further amends the provisions of the corporation's Certificate
of Incorporation, was duly adopted in accordance with the provisions of Sections
242 and 245 of the General Corporation Law of the State of Delaware and by the
unanimous written consent of its stockholders in accordance with Section 228 of
the General Corporation Law of the State of Delaware.
3. The text of the corporation's certificate of incorporation, as
heretofore amended or supplemented, is hereby restated and further amended to
read in its entirety as follows:
FIRST: The name of this corporation is GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC. (the "Corporation").
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name and address of its registered
agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is one hundred million (100,000,000),
of which (i) fifty million (50,000,000) shares of the par value of $.01 each are
to be of a class designated Class A Common Stock (the "Class A Common Stock"),
(ii) forty million (40,000,000) shares of the par
<PAGE> 2
value of $.01 each are to be of a class designated Class B Common Stock (the
"Class B Common Stock," and, together with the Class A Common Stock, the "Common
Stock") and, (iii) ten million (10,000,000) shares of the par value of $.01 each
are to be of a class designated Preferred Stock (the "Preferred Stock"). The
designations and the powers, preferences and rights and the qualifications,
limitations or restrictions thereof of the shares of each class of capital stock
of the Corporation are as follows:
4.1. COMMON STOCK
The powers, preferences and relative, participating, optional or other
special rights of the Common Stock and the qualifications, limitations or
restrictions thereof, are fixed as follows:
4.1.1 Dividends. Subject to Section 4.1.2, (i) whenever a dividend is
paid to the holders of Class A Common Stock, the Corporation also shall pay to
the holders of Class B Common Stock a dividend per share equal to the dividend
per share paid to the holders of Class A Common Stock, and (ii) whenever a
dividend is paid to holders of Class B Common Stock, the Corporation also shall
pay to the holders of Class A Common Stock a dividend per share equal to the
dividend per share paid to the holders of Class B Common Stock. Dividends shall
be payable only if, as and when declared by the Board of Directors.
4.1.2 Share Distributions. If at any time a distribution is to be
paid in Class A Common Stock or Class B Common Stock (hereinafter sometimes
called a "share distribution"), such share distribution may be declared and paid
only as follows:
(i) a share distribution consisting of Class A Common Stock may be
declared and paid to holders of Class A Common Stock only, but in any
such event there shall also be a simultaneous share distribution to
holders of Class B Common Stock consisting of shares of Class B
Common Stock on an equal per share basis; and
(ii) a share distribution consisting of Class B Common Stock may be
declared and paid to holders of Class B Common Stock only, but in any
such event there shall also be a simultaneous share distribution to
holders of Class A Common Stock consisting of shares of Class A Common
Stock on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine one class of its
Common Stock without reclassifying, subdividing or combining the other class of
Common Stock, on an equal per share basis. For purposes of this Section 4.1.2,
(i) the term "equal per share basis" means that after the completion of any
share distribution or any such reclassification, subdivision or combination, the
number, dividend rights, voting power, conversion and liquidation rights of the
shares of each class of Common Stock will be in the same aggregate proportion as
they were before such share distributions or other transaction, and (ii) the
term "distribution" shall be deemed to include, but not be limited to, a stock
dividend.
2
<PAGE> 3
4.1.3 Voting. The holders of Class A Common Stock shall be entitled
to one vote per share on each matter submitted to a vote of the stockholders of
the Corporation. The holders of Class B Common Stock shall be entitled to ten
votes per share on each matter submitted to a vote of stockholders. The holders
of the Class A Common Stock and the holders of the Class B Common Stock shall be
entitled to vote as separate classes on such matters as may be required by law
to be submitted to such holders voting as separate classes. On all other
matters, holders of Common Stock shall vote together as a single class. Except
as provided in Section 4.1.5.2, every reference in the Corporation's Restated
Certificate of Incorporation or Bylaws to a majority or other proportion of
stock shall refer to such majority or other proportion of the votes of such
stock.
4.1.4 Liquidation and Mergers. The holders of Class A Common Stock
and the holders of Class B Common Stock shall share equally, on a share for
share basis, in any distribution of the Corporation's assets upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and other
liabilities of the Corporation, and payment in full of the amounts required to
be paid to the holders of any outstanding series of Preferred Stock, and shall
be treated identically, on a share for share basis, in the event of any merger
or consolidation of the Corporation in which shares of Common Stock of the
Corporation are converted into cash, securities or other property, provided that
if the securities or other property into which shares of Common Stock are
converted in a merger or consolidation includes voting securities, then the
agreement of merger or consolidation may provide for the holders of Class B
Common Stock to receive, on a per share basis, voting securities with up to ten
times the number of votes per share as those voting securities to be received by
the holders of the Class A Common Stock.
4.1.5 Conversion.
4.1.5.1 The Class A Common Stock has no conversion rights.
Each holder of record of Class B Common Stock may at any time or from time
to time, in such holder's sole discretion and at such holder's option,
convert any or all of such holder's shares of Class B Common Stock into
fully paid and non-assessable shares of Class A Common Stock at the rate
of one share of Class A Common Stock for each share of Class B Common
Stock surrendered for conversion. Any such conversion may be effected by
any holder of Class B Common Stock delivering such holder's certificate or
certificates evidencing the shares of Class B Common Stock to be
converted, duly endorsed or accompanied by duly executed stock powers, to
the office of the Corporation or any transfer agent for the Class B
Common Stock, together with a written notice to the Corporation specifying
that such holder elects to convert all or a specified number of the shares
of Class B Common Stock evidenced by such certificate or certificates into
Class A Common Stock and stating the name or names in which such holder
desires the certificate or certificates evidencing such shares of Class A
Common Stock to be issued. If so required by the Corporation, any
certificate for shares of Class B Common Stock surrendered for conversion
shall be accompanied by instruments of transfer, in form satisfactory to
the Corporation, duly executed by the holder of such shares or the duly
authorized representative of such holder. Promptly thereafter, the
Corporation shall issue and deliver to such holder or such holder's
nominee or nominees or transferee or
3
<PAGE> 4
transferees, a certificate or certificates for the number of shares of
Class A Common Stock to which such holder shall be entitled as herein
provided. Such conversion shall be deemed to have been made at the close
of business on the date of receipt by the Corporation or any such
transfer agent of the certificate or certificates evidencing the shares
to be converted and the written notice of conversion in proper form, and
the person or persons entitled to receive the Class A Common Stock
issuable on such conversion shall be treated for all purposes as the
record holder or holders of such Class A Common Stock on that date.
4.1.5.2 At the close of business on the first date that the
number of outstanding shares of Class B Common Stock represents less than
10% of the aggregate number of then outstanding shares of Common Stock
(calculated without regard to the differing voting rights of the two
classes of Common Stock), all of the shares of Class B Common Stock then
issued shall automatically be converted into shares of Class A Common
Stock at the rate of one share of Class A Common Stock for each share of
Class B Common Stock converted. In the event of any automatic conversion
of the Class B Common Stock pursuant to this Section 4.1.5.2, certificates
formerly evidencing outstanding shares of Class B Common Stock will
thereafter be deemed for all purposes to evidence the same number of
shares of Class A Common Stock. Any holder of certificates which prior to
any such automatic conversion evidenced shares of Class B Common Stock may
at any time thereafter surrender such certificates pursuant to the same
procedures specified in Section 4.1.5.1 and receive from the Corporation
or the transfer agent for the Class B Common Stock certificates
representing the appropriate number of shares of Class A Common Stock.
4.1.5.3 Any purported transfer of shares of Class B Common Stock
by a holder thereof to any Person (as defined below) other than a
Permitted Transferee (as defined below) shall result in the automatic
conversion of such shares of the transferor's Class B Common Stock into
shares of Class A Common Stock at the rate of one share of Class A Common
Stock for each share of Class B Common Stock converted, effective at the
time of such purported transfer, and certificates formerly evidencing such
shares of Class B Common Stock will thereafter be deemed for all purposes
to evidence the same number of shares of Class A Common Stock. The
Corporation may, as a condition to the transfer or the registration of
transfer of any shares of Class B Common Stock to a purported Permitted
Transferee, require the furnishing of such affidavits or other proof as it
deems necessary to establish that such transferee is a Permitted
Transferee.
For purposes of this Section 4.1.5.3, a "Permitted Transferee"
shall mean only the following Persons:
(i) any Person which directly or indirectly controls, is
controlled by or is under common control with, the
Corporation (an "affiliate of the Corporation"); for
purposes of this clause (i), the term "control"
(including the terms "controlling," "controlled by,"
and "under common control with") means the possession,
direct or indirect, of the power to direct or
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cause the direction of the management and policies of a
Person, whether through the ownership of voting
securities, by contract or otherwise;
(ii) the shareholders of Griffith Laboratories, Inc., an
Illinois corporation ("GLI"), but only pursuant to a
single transaction in which all outstanding shares of
Class B Common Stock beneficially owned by GLI are
distributed by it to the shareholders of GLI as part of
a dividend intended not to be subject to tax pursuant
to Section [355] of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor or other
provision of the Code (and commonly referred to as a
"tax-free spin-off"); and
(iii) any other corporation or business entity which is not
an affiliate of the Corporation, but only pursuant to a
single transaction approved by the board of directors
of GLI in which all outstanding shares of Class B
Common Stock beneficially owned by GLI are sold to,
exchanged with or otherwise transferred to such other
corporation or business entity.
For purposes of this Section 4.1.5.3, "Person" shall
mean any individual, corporation, association, partnership, limited
liability company, joint venture, trust, organization, business,
government or any agency or political subdivision thereof or any other
entity.
For purposes of this Section 4.1.5.3, "GLI" shall
include any successor to GLI, whether by merger, consolidation, sale of
assets or other similar transaction, if over 50% of the total equity
interest of such successor immediately after such transaction is held
by the holders of the equity interest in GLI immediately prior to such
transaction.
For purposes of this Section 4.1.5.3, "transfer," when
used as a verb, means to sell, pledge, assign, encumber, dispose of or
otherwise transfer (including by merger, testamentary disposition,
interspousal disposition pursuant to a domestic relations proceeding or
otherwise or otherwise by operation of law), or, when used as a noun,
means a sale, pledge, assignment, encumbrance, disposition, or other
transfer (including a merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise or
other transfer by operation of law).
4.1.5.4 The issuance of certificates evidencing shares
of Class A Common Stock issuable upon the conversion of Class B Common
Stock shall be made without charge to the converting holder for any tax
imposed on the Corporation in respect of the issue thereof. The
Corporation shall not, however, be required to pay any tax which may be
payable with respect to any transfer involved in the issue and delivery
of any certificate in a name other than that of the holder of the
shares being converted, and the Corporation shall not be required to
issue or deliver any such certificate unless and until the person
requesting the issue thereof shall have paid to the Corporation the
amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid or is not applicable. Upon any
conversion of shares of Class B Common Stock into
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shares of Class A Common Stock pursuant hereto, no adjustment with
respect to dividends shall be made; provided, however, that if a share
of Class B Common Stock shall be converted into a share of Class A
Common Stock subsequent to the record date for the payment of a
dividend or other distribution on the share of Class B Common Stock so
converted but prior to such payment, the registered holder of such
share of Class B Common Stock at the close of business on such record
date shall be entitled to receive the dividend or other distribution
payable on such share of Class B Common Stock on such payment date
notwithstanding the conversion thereof into a share of Class A Common
Stock after such record date; and only those dividends shall be payable
on the share of Class A Common Stock issued upon such conversion as may
be declared and may be payable to holders of record of shares of Class
A Common Stock of that class on or after the conversion date.
4.1.5.5 All shares of Class B Common Stock which shall
have been surrendered for conversion as herein provided shall no longer
be deemed to be outstanding, and all rights with respect to such
shares, including the rights, if any, to receive notices and to vote,
shall thereupon cease and terminate, except only the right of the
holders thereof, subject to compliance with the provisions of Section
4.1.5.1, to receive certificates representing shares of Class A Common
Stock in exchange therefor. All shares of Class B Common Stock
surrendered for conversion shall resume the status of authorized but
unissued shares of Class B Stock.
4.1.5.6 Such number of shares of Class A Common Stock
as may from time to time be required for such purpose shall be reserved
by the Corporation for issuance upon conversion of outstanding shares
of Class B Common Stock.
4.1.5.7 In the event of a reclassification or other
similar transaction as a result of which the shares of Class A Common
Stock are converted into another security, then a holder of Class B
Common Stock shall be entitled to receive upon conversion the amount of
such security that such holder would have received if such conversion
had occurred immediately prior to the record date of such
reclassification or other similar transaction.
4.1.6 Pledge of Class B Common Stock. Notwithstanding anything
to the contrary set forth herein, any holder of Class B Common Stock may pledge
any or all of such holder's Class B Common Stock, pursuant to a bona fide pledge
of such shares as collateral security for indebtedness due to the pledgee,
provided that such shares shall not be transferred to, voted by or registered in
the name of the pledgee and shall remain subject to the provisions of Section
4.1.5. In the event of foreclosure or other similar action by the pledgee, such
pledged Class B Common Stock may only be transferred to a Permitted Transferee
(as defined in Section 4.1.5); otherwise, such shares shall automatically be
converted into Class A Common Stock on a share for share basis pursuant to and
in accordance with Section 4.1.5.3 hereof.
4.1.7 Restrictions on Issuances of Class B Common Stock.
Following the initial issuance by the Corporation of shares of Class A Common
Stock, the board of directors may issue Class B Common Stock only (i) upon the
exercise of options to purchase Class B Common
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Stock outstanding at the time of such initial issuance, or (ii) in the form of a
distribution or distributions pursuant to a stock dividend on or split-up of the
Class B Common Stock and only to the then holders of the outstanding Class B
Common Stock in conjunction with and in the same ratio as a stock dividend on or
split-up of the Class A Common Stock; and no further issuance of options,
warrants or other rights to acquire Class B Common Stock shall be permitted.
4.1.8 Conversion Determinations. The board of directors of the
Corporation (or any duly authorized committee thereof) shall have the sole power
(i) to determine whether an event of automatic conversion has occurred pursuant
to Section 4.1.5 or 4.1.6 with respect to any share of Class B Common Stock, and
(ii) to otherwise administer such conversion provisions.
4.1.9 Reclassification. Upon the filing and effectiveness of
this Restated Certificate of Incorporation, each share of Common Stock, $.01 par
value, of the Corporation (the "Existing Common Stock") issued and outstanding
or held in the treasury of the Corporation immediately prior to such
effectiveness shall be reclassified (without any further action of the
Corporation or its stockholders) into [_____] fully paid and nonassessable
shares of Class B Common Stock.
4.2. PREFERRED STOCK
4.2.1 The Preferred Stock may be issued from time to time in one
or more series. Subject to limitations prescribed by law and the provisions of
this Restated Certificate of Incorporation or any amendment hereto, authority is
expressly granted to the Board of Directors to authorize the issue of one or
more series of Preferred Stock without any vote or other action by the
stockholders of the Corporation, and to fix, by filing a Preferred Stock
Designation pursuant to the applicable provisions of the General Corporation Law
of the State of Delaware, the voting powers, designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof to the full extent now or
hereafter permitted by law, including but not limited to the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate (or method of determining such rate) on the
shares of that series, the conditions and dates upon which such
dividends shall be payable, whether such dividends shall be
cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of
that series to the dividends payable on any other series of
Preferred Stock or any other class of stock of the Corporation;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such
voting rights;
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(d) Whether or not the shares of that series shall be convertible
into or exchangeable for shares of any other series of Preferred
Stock or of any other class or classes of stock of the
Corporation, or convertible into or exchangeable for other
securities of the Corporation or securities of any other
corporation, partnership or other person or entity, and, if so,
the times, prices, rates, adjustments, and other terms and
conditions of such conversion or exchange;
(e) Whether or not the shares of that series shall be redeemable,
in whole or in part, at the option of the Corporation or at the
option of the holder thereof or upon the happening of a specified
event, and, if so, the times, prices and other terms and
conditions of such redemption;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the
terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of the
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, with
respect to payment of amounts payable in such event on shares of
that series to amounts payable in such event on shares of any
other series of Preferred Stock or of any other class of stock of
the Corporation; and
(h) Any other relative rights, preferences and limitations of that
series.
4.2.2 All shares of any one series of Preferred Stock shall be
identical except as to dates of issue and the dates from which
dividends on shares of the series issued on different dates shall
cumulate (if cumulative).
FIFTH: The Corporation is to have perpetual existence.
SIXTH: In furtherance, and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to adopt,
amend or repeal the bylaws of the Corporation, subject to such restrictions upon
the exercise of such power as may be imposed by this Restated Certificate of
Incorporation or any amendment hereto.
SEVENTH: Meetings of stockholders of the Corporation may be
held within or outside the state of Delaware, as the bylaws of the Corporation
may provide. The books of the Corporation may be kept (subject to any provisions
contained in the statutes) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
bylaws of the Corporation. Elections of directors need not be by written ballot
unless the bylaws of the Corporation so provide.
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EIGHTH:
8.1 No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable law
(i) for breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Section 8.1 shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions prior to such amendment or repeal.
8.2 Subject to Section 8.3, each person (hereinafter in this Article
Eighth, a "Covered Person") who was or is made a party to or is threatened to
be made a party to or is otherwise subpoenaed in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter in this Article Eighth,
a "proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee,
trustee or agent of any other corporation or of any partnership, joint venture,
limited liability company, trust or other enterprise including without
limitation service with respect to any employee benefit plan or trust or any
charitable foundation (hereinafter in this Article Eighth, "another entity"),
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, in each
case as the same exists or may hereafter be amended, against all expenses,
judgments, fines and amounts paid in settlement (including, without limitation,
attorneys' fees and disbursements, ERISA excise taxes, penalties or interest
related to any such obligations actually and reasonably incurred by the Covered
Person in connection therewith), and such indemnification shall continue as to
a Covered Person who has ceased to be a director or officer of the Company and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, subject to Section 5.2 of the Bylaws of the Corporation,
that the Corporation shall indemnify any such Covered Person seeking
indemnification in connection with a proceeding (or part thereof) brought by or
on behalf of such Covered Person only if such proceeding (or part thereof) was
authorized in advance of commencement by a majority of the entire board of
directors of the Corporation.
8.3 Any indemnification pursuant to this Article Eighth (unless ordered by
a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the Covered Person is proper
in the circumstances because he or she (or the person of whom he or she is the
legal representative) has met the applicable standards of conduct for
indemnification under subsection (a) or subsection (b) of Section 145 of the
General Corporation Law of the State of Delaware as the same exist or may
hereafter be amended. Such determination shall be made, with respect to a
person who is a director or officer of the Corporation at the time of such
determination, (1) by a majority vote of those directors of the Corporation who
are not parties to the proceeding, even though less than a quorum, or (2) by a
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committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, such
counsel to be selected by the board of directors and paid by the Corporation, or
(4) by the stockholders.
8.4 The expenses (including attorneys' fees and disbursements) incurred by
a Covered Person in defending or responding to any proceeding to which such
person is a party or is threatened to be made a party or is otherwise subpoenaed
in connection with, by reason of the fact that such Covered Person (or the
person of whom he or she is the legal representative) is or was an officer or a
director of the Corporation or, while a director or officer of the Corporation
is or was serving at the request of the Corporation as a director, officer,
employee, trustee or agent of another entity, shall be paid by the Corporation,
as those expenses become due, in advance of the final disposition of such
proceeding, upon receipt by the Corporation of an undertaking by such Covered
Person to repay such amounts so advanced if it shall ultimately be determined
that he or she is not entitled to be indemnified by the Corporation for such
expenses under this Article Eighth or otherwise; provided, however, that the
Corporation shall pay the expenses of any such Covered Person in advance, as
provided in this Section 8.4, which are incurred in connection with a proceeding
(or part thereof) brought by or on behalf of such person only if such proceeding
(or part thereof) was authorized in advance of its commencement by a majority of
the entire board of directors of the Company.
NINTH: The Corporation reserves the right to amend, alter, change, add to
or repeal any provisions contained in this Restated Certificate of Incorporation
in the manner now or hereafter prescribed by statute and any applicable
provision of this Restated Certificate of Incorporation or any amendment hereto
or any Preferred Stock Designation; and all rights, preferences and privileges
of whatsoever nature herein conferred are granted subject to this reservation.
TENTH: The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, GRIFFITH MICRO SCIENCE INTERNATIONAL, INC. has
caused this Restated Certificate of Incorporation to be signed by its President
this [___] day of [______], 1998.
GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC.
By:______________________________________
Name: ________________________________
Title: President
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EXHIBIT 3.2(a)
BYLAWS
OF
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
ARTICLE I
CORPORATE OFFICES
Section 1. Delaware Registered Office. The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington, County
of New Castle.
Section 2. Other offices. The corporation may also have offices at such
other places, both within and outside the state of Delaware, as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose may
be held at such time and place, within or outside the state of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders, commencing
with the year 1988, shall be held on the third Wednesday of February if not a
legal holiday, or if a legal holiday, then on the following business day, at
10:00 a.m. local time, or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting, at which the stockholders shall elect a board of directors and
transact such other business as may properly come before the meeting.
Section 3. Special Meetings. Special meetings of stockholders, for any
purpose or purposes, unless otherwise prescribed by law or by the certificate
of incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the whole
board of directors, or at the request in writing of stockholders owning a
majority of the capital stock of the corporation outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed
meeting. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 4. Notice. Written notice of a meeting, annual or special,
stating the place, date and hour of the meeting, and in the case of a special
meeting stating the purpose or purposes for which the meeting is called, shall
be given to each stockholder entitled to vote at such meeting, not less than
ten nor more than sixty days, or if a vote of stockholders on a merger or
consolidation is one of the stated purposes of the meeting, not less than
twenty nor more than sixty days before the date of the meeting.
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Section 5. Stockholder List. The officer who has charge of the stock
ledger of the corporation shall prepare or cause to be prepared and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, 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. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof and may
be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the stock outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of stockholders for the transaction of
business, except as otherwise required by law or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
a meeting of stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting of the
place, date and hour of the adjourned meeting, until a quorum shall be present
or represented by proxy. At such adjourned meeting at which a quorum shall be
present or represented by proxy, any business may be transacted which might
have been transacted at the meeting as originally notified. If the adjournment
is for more than thirty 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.
Section 7. Required Vote. Each election of directors or others shall be
determined by a plurality vote, and, except as otherwise required by law or by
the certificate of incorporation, each other matter shall be determined by the
affirmative vote of a majority of the shares present in person or represented
by proxy.
Section 8. Voting. Unless otherwise required by law or by the certificate
of incorporation, each stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be voted
on after three years from its date, unless the proxy provides for a longer
period.
Section 9. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action that may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing setting forth the
action so taken shall be signed by the holders of outstanding stock having not
less than the minimum number of votes 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. Prompt notice of
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the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
Section 1. Number and Term. The number of directors constituting the
whole board shall be three. Directors shall be elected at annual meetings of
stockholders, except as provided in section 2 of this article, and each
director shall hold office until a successor is elected and qualified or until
that director's earlier resignation or removal. Directors need not be
stockholders.
Section 2. Vacancies. Except as otherwise required by law or by the
certificate of incorporation, any vacancy on the board of directors, including
a newly created directorship, may be filled by a majority of the directors then
in office, although less than a quorum, or by a sole remaining director. If
there are no directors in office, then an election of directors may be held in
the manner provided by law.
Section 3. Powers. The business and affairs of the corporation shall be
managed by or under the direction of the board of directors, which 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 bylaws
directed or required to be exercised or done by the stockholders.
Section 4. Place of Meetings. The board of directors of the corporation
may hold meetings, both regular and special, either within or outside the state
of Delaware.
Section 5. Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than this bylaw immediately following and at
the same place as the annual meeting of stockholders. In the event such
meeting is not held at the time and place specified in the preceding sentence,
the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board or as
shall be specified in written waivers signed by all of the directors. Other
regular meetings of the board may be held without notice at such time and at
such place as shall from time to time be determined by the board.
Section 6. Special Meetings. Special meetings of the board of directors
may be called by the president and shall be called by the president or
secretary on the written request of two directors, on not less then two days'
notice to each director, either personally or by mail or by telegram.
Section 7. Quorum. At any meeting of the board of directors a majority of
the whole board of directors shall 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
otherwise required by law or by the certificate of incorporation. If
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there is not a quorum at a meeting of the board, a majority of the directors
present may adjourn the meeting from time to time without further notice.
Section 8. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation or these bylaws, any action required or permitted
to be taken at a meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as
the case may be, consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the board or committee.
Section 9. Participation with Communications Equipment. Unless otherwise
restricted by law or by the certificate of incorporation or these bylaws,
members of the board of directors, or of any committee designated by the board
of directors, may participate in a meeting of the board of directors, or of any
committee, by 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 by such means shall constitute presence at the
meeting.
Section 10. Committees of Directors. The board of directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. 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 board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all of the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require the seal; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Each committee shall keep regular minutes of its meetings and shall
furnish them to the board of directors when required.
Section 11. Compensation of Directors. Unless otherwise restricted by the
certificate of incorporation, the board of directors shall have the authority
to fix the compensation of directors. The receipt of such compensation shall
not preclude any director from serving the corporation in any other capacity
and receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings. The
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directors may be reimbursed for any expenses of attending meetings of the board
of directors and of committees of the board.
ARTICLE IV
NOTICES
Section 1. Method of Giving Notice. Whenever, under any provision of the
statutes or of the certificate of incorporation or of these bylaws, notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or stockholder, at that person's address as it
appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time the same is deposited in
the United States mail. Notice to directors may also be given by telegram.
Section 2. Waiver of Notice. Whenever notice is required to be given
under any provision of law or of the certificate of incorporation or of these
bylaws, a written waiver of such notice, signed by the person or persons
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to such notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
the 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.
ARTICLE V
OFFICERS
Section 1. Offices. The officers of the corporation, shall be elected by
the board of directors and shall be a president, a vice-president, a secretary
and a treasurer. In addition, the board of directors may elect additional
vice-presidents, and one or more assistant secretaries, assistant treasurers
and other subordinate officers. Any number of offices may be held by the same
person, unless the certificate of incorporation or these bylaws otherwise
provide.
Section 2. Annual Election. The board of directors at its first meeting
after each annual meeting of stockholders shall elect a president, one or more
vice-presidents, a secretary and a treasurer. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be.
Section 3. Additional Officers. The board of directors 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.
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Section 4. Compensation of Officers. The compensation of all officers and
agents of the corporation shall be fixed by or under the direction of the board
of directors.
Section 5. Term of Office and Vacancy. Each officer shall hold office
until a successor is chosen and qualifies or until the officer's 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. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors.
Section 6. President. The president (a) shall be the chief executive
officer of the corporation, (b) shall preside at all meetings of the
stockholders and the board of directors, (c) shall have general and active
management of the business and affairs of the corporation, (d) shall see that
all orders and resolutions of the board of directors are carried into effect
and (e) shall have the power to execute bonds, mortgages and other contracts,
agreements and instruments, except where required or permitted by law to be
otherwise signed and executed or where the signing and execution thereof shall
be expressly delegated by the board of directors to some other officer or agent
of the corporation.
Section 7. Vice-Presidents. In the absence of the president or in the
event of the disability of the president, the vice-president (or if there be
more than one, the vice-presidents in the order designated, or in the absence
of any designation, then in the order of their most recent election) shall
perform the duties of the president and when so acting shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors or the president may from time to time prescribe.
Section 8. Secretary. The secretary shall (a) attend all meetings of the
board of directors and all meetings of the stockholders and record all of the
proceedings of the meetings of the board of directors and of the stockholders
in a book to be kept for that purpose and perform like duties for the standing
committees when required, (b) give, or cause to be given, notice of all special
meetings of the board of directors and all meetings of the stockholders and (c)
perform such other duties as may be prescribed by the board of directors or the
president, under whose supervision the secretary shall be. The secretary shall
have custody of the corporate seal of the corporation and shall have authority
to affix it to any instrument requiring the seal, and when so affixed, the seal
may be attested by the signature of such officer. The board of directors may
give general authority to any other officer to affix the seal of the
corporation and to attest the affixing by signature.
Section 9. Assistant Secretaries. The assistant secretary (or if there be
more than one, the assistant secretaries in the order determined by the board
of directors, or if there be no such determination, then in the order of their
most recent election or appointment) shall, in the absence of the secretary or
in the event of the disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors or the president may from time
to time prescribe.
6
<PAGE> 7
Section 10. Treasurer. The treasurer shall (a) have custody of the
corporate funds and securities, (b) keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation, (c) deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositaries as may be designated by the board of directors, (d) disburse
the funds of the corporation as may be ordered by the board of directors,
taking proper vouchers for such disbursements, (e) render to the president and
the board of directors, at its regular meetings, or when the board of directors
so requests, an account of all the transactions of the treasurer and of the
financial condition of the corporation, and (f) perform such other duties and
have such other powers as the board of directors or the president may from time
to time prescribe.
Section 11. Assistant Treasurers. The assistant treasurer (or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, or if there be no such determination, then in the order of
their most recent election or appointment) shall, in the absence of the
treasurer or in the event of the disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors or the president
may from time to time prescribe.
ARTICLE VI
STOCK CERTIFICATES
Section 1. Right of Holder to Certificate. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of the corporation by, the president or a vice-president and the treasurer or
an assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by the holder in the
corporation.
Section 2. Facsimile Signatures. Any or all of the signatures on the
certificate may be facsimile. In the event any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, the certificate may be issued
by the corporation with the same effect as if he were such officer at the date
of issue.
Section 3. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issuance of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or the legal representative of the owner, to advertise the same
in such manner as it shall require or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the corporation in connection with the certificate alleged to have been lost,
stolen or destroyed, or both.
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<PAGE> 8
Section 4. Registration of Transfers. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, the corporation or its transfer agent shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its stock records.
Section 5. Record Date. In order that the corporation may determine 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 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 nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
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.
Section 6. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered in its stock records as
the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise required
by law.
ARTICLE VII
OTHER PROVISIONS
Section 1. Dividends. 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 the capital stock, subject to the provisions of the certificate of
incorporation and requirements of law.
Section 2. Signatures on Checks and Notes. All checks or demands for
money and notes of the corporation shall be signed by such officer or officers
or such other person or persons as the board of directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the corporation shall end on
September 30.
Section 4. Seal. The corporate seal shall be inscribed with the name of
the corporation and the words "Corporate Seal" and "Delaware." The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
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<PAGE> 9
Section 5. Indemnification of Directors, Officers and Others. Each person
who is or was a director or officer of the corporation or a subsidiary of the
corporation and each person who serves or served at the request of the
corporation as a director or officer (or equivalent) of another corporation,
partnership, joint venture, trust or other enterprise (and the heirs,
executors, administrators and estates of any such persons), shall be
indemnified by the corporation in accordance with, and to the fullest extent
authorized by, the provisions of the General Corporation Law of the State of
Delaware as it may from time to time be amended, except as to any action, suit
or proceeding brought by or on behalf of the director or officer of the
corporation without prior approval of the board of directors. Each person who
is or was an employee or agent of this corporation, and each person who serves
or has served as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, may be similarly indemnified at the
discretion of the board of directors. The indemnification provided by this
section 5 shall not be deemed exclusive of any other rights to which a person
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
ARTICLE VIII
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new bylaws was contained in
the notice of such special meeting.
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<PAGE> 1
EXHIBIT 3.2(b)
BYLAWS
OF
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AS AMENDED AND RESTATED AS OF
[ ___________ ], 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Article I -- STOCKHOLDERS........................................................... 1
Section 1.1 Annual Meeting.................................................. 1
Section 1.2 Special Meetings................................................ 1
Section 1.3 Notice of Meetings.............................................. 1
Section 1.4 Adjournment of Meetings......................................... 2
Section 1.5 Quorum at Meetings.............................................. 2
Section 1.6 Nominations and Business at Meetings............................ 2
Section 1.7 Organization and Conduct of Meetings............................ 4
Section 1.8 Required Vote................................................... 5
Section 1.9 Voting; Proxies................................................. 5
Section 1.10 Record Dates for Meetings and Other Purposes.................... 5
Section 1.11 List of Stockholders Entitled to Vote........................... 6
Section 1.12 Inspectors of Election.......................................... 6
Section 1.13 Stockholders of Record.......................................... 7
Article II -- BOARD OF DIRECTORS.................................................... 7
Section 2.1 Powers.......................................................... 7
Section 2.2 Number, Election, Term of Office and Qualifications............. 7
Section 2.3 Resignation, Removal and Vacancies.............................. 7
Section 2.4 Newly Created Directorships..................................... 8
Section 2.5 Annual Meeting.................................................. 8
Section 2.6 Regular Meetings................................................ 8
Section 2.7 Special Meetings................................................ 8
Section 2.8 Telephonic Meetings Permitted................................... 8
Section 2.9 Quorum; Vote Required for Action................................ 8
Section 2.10 Organization of Meetings........................................ 9
Section 2.11 Action by Written Consent....................................... 9
Section 2.12 Committees of the Board......................................... 9
Section 2.13 Notices to Directors............................................ 9
Section 2.14 Waiver of Notice................................................ 10
Section 2.15 Compensation of Directors....................................... 10
Article III -- OFFICERS............................................................. 10
Section 3.1 Officers........................................................ 10
Section 3.2 Term of Office; Resignation; Removal; Vacancies................. 11
Section 3.3 Compensation of Officers........................................ 11
Section 3.4 Powers and Duties of Officers................................... 11
Section 3.5 Chief Executive Officer......................................... 11
Section 3.6 Chief Operating Officer......................................... 12
Section 3.7 Chief Financial Officer......................................... 12
Section 3.8 Chairman of the Board........................................... 12
Section 3.9 President....................................................... 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.10 Vice Presidents...................................................... 13
Section 3.11 Treasurer............................................................ 14
Section 3.12 Secretary............................................................ 14
Section 3.13 General Counsel...................................................... 14
Section 3.14 Assistant Secretaries and Assistant Treasurers....................... 14
Article IV -- STOCK...................................................................... 15
Section 4.1 Certificates......................................................... 15
Section 4.2 Lost, Stolen or Destroyed Certificates; Issuance of New Certificates. 15
Section 4.3 Registration of Transfers............................................ 16
Section 4.4 The Stock Ledger..................................................... 16
Article V -- INDEMNIFICATION AND ADVANCEMENT OF EXPENSES................................. 16
Section 5.1 Right to Indemnification............................................. 16
Section 5.3 Claims............................................................... 16
Section 5.4 Nonexclusivity of Rights; Purchase of Insurance...................... 17
Section 5.5 Provisions Deemed a Contract......................................... 17
Section 5.6 Conclusive Presumption............................................... 17
Section 5.7 Other Indemnification................................................ 17
Article VI -- MISCELLANEOUS PROVISIONS................................................... 17
Section 6.1 Offices and Books and Records........................................ 18
Section 6.2 Fiscal Year.......................................................... 18
Section 6.3 Seal................................................................. 18
Section 6.4 Form of Records...................................................... 18
Section 6.5 Signing of Checks, Notes, etc........................................ 18
Section 6.6 Voting of Shares in Other Companies.................................. 18
Section 6.7 Amendment of Bylaws.................................................. 19
</TABLE>
ii
<PAGE> 4
BYLAWS
OF
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
AS AMENDED AND RESTATED AS OF
[ ________ ], 1998
_____________
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETING. An annual meeting of stockholders shall be
held at such place, date and hour as may be determined by resolution of the
board of directors from time to time. At the annual meeting, the stockholders
shall elect directors and transact such other business as may properly come
before the meeting in accordance with Section 1.6 of these Bylaws.
SECTION 1.2 SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the chairman of the board of
the Corporation and shall be called by the president or the secretary at the
request in writing of a majority of the members of the whole board of
directors. Such request shall state the purpose or purposes of the proposed
special meeting. Except as otherwise prescribed by the General Corporation Law
of the State of Delaware or the Restated Certificate of Incorporation, special
meetings of stockholders may not be called by any other person or persons. The
date, time and place of any properly called special meeting shall be determined
by the chairman of the board. The business transacted at any special meeting
of stockholders shall be limited to the purpose or purposes for which the
meeting is called which are stated in the Corporation's notice of the meeting
pursuant to Section 1.3 of these Bylaws.
SECTION 1.3 NOTICE OF MEETINGS. Whenever stockholders are required or
permitted to take any action at a meeting, annual or special, a written notice
of the meeting shall be given to each stockholder entitled to vote at such
meeting that shall state the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called. Unless otherwise provided
by the General Corporation Law of the State of Delaware, the Restated
Certificate of Incorporation or these Bylaws, the written notice of any meeting
shall be given not less than 10 nor more than 60 days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his, her or its address as it
appears on the records of the Corporation. Any meeting of stockholders as to
which notice has previously been
<PAGE> 5
given may at any time prior to its commencement be canceled by resolution of
the board of directors.
SECTION 1.4 ADJOURNMENT OF MEETINGS. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or some
other place, and, except as otherwise provided herein, notice need not be given
of any such adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
SECTION 1.5 QUORUM AT MEETINGS. Except as otherwise provided by the
General Corporation Law of the State of Delaware, the Restated Certificate of
Incorporation or these Bylaws, at each meeting of stockholders the presence in
person or by proxy of the holders of a majority in voting power of the
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. In the absence of a quorum, the
stockholders so present may, by majority vote, adjourn the meeting from time to
time in the manner provided in Section 1.4 of these Bylaws until a quorum shall
attend. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of
the Corporation or any subsidiary of the Corporation to vote stock, including
but not limited to its own stock, held by it in a fiduciary capacity.
SECTION 1.6 NOMINATIONS AND BUSINESS AT MEETINGS. (a) Nominations of
persons for election as directors of the Corporation at any meeting of
stockholders called for the election of directors may be made by or at the
direction of the board of directors or by a stockholder who is entitled to vote
at such meeting and who complies with the applicable provisions of this Section
1.6. For a nomination of any person for election as a director of the
Corporation to be properly made by a stockholder at any meeting, the
stockholder must have given timely advance notice thereof in writing to the
secretary of the Corporation and must be a stockholder of record at the time of
the delivery of such notice.
(b) At any annual meeting of stockholders, only business shall be
conducted which has been properly brought before the meeting. To be properly
brought before an annual meeting of stockholders, business must be specified in
the notice of meeting given by, or at the direction of, the board of directors
or otherwise properly brought before the meeting by or at the direction of the
board of directors or by a stockholder who is entitled to vote at such meeting.
For business to be properly brought before an annual meeting by a stockholder,
the business must be a proper subject for stockholder action, and the
stockholder must have given timely advance notice thereof in writing to the
secretary of the Corporation and must be a stockholder of record at the time of
the delivery of such notice.
(c) To be timely, a stockholder's notice of his intention to nominate a
person for election as a director at any meeting pursuant to paragraph (a) of
this Section 1.6 or to bring
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<PAGE> 6
other business before any annual meeting pursuant to paragraph (b) of this
Section 1.6 must in either case be delivered to or mailed, postage prepaid, and
received by the secretary at the Corporation's headquarters:
(i) for an annual meeting (other than the 1999 annual
meeting), not less than 60, nor more than 90, days before the date
on which the Corporation first mailed its proxy materials for the
prior year's annual meeting; provided, however, that if the date
of the current year's annual meeting has been advanced by more
than 30 days from the date of the prior year's annual meeting,
then such notice must be received by the secretary not later than
the close of business on the tenth day following the date on which
the Corporation first makes public disclosure of the date of the
meeting; and
(ii) for a special meeting, and for the 1999 annual meeting,
not more than 90 days before the date of such meeting and not
later than the later of 60 days before the date of the meeting and
the close of business on the tenth day following the date on which
the Corporation first makes public disclosure of the date of the
meeting.
For purposes of this Section 1.6, "public disclosure" shall mean disclosure by
the Corporation in a press release reported by the Dow Jones News Service or
comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission.
(d) Any notice given by a stockholder pursuant to paragraph (a) of this
Section 1.6 shall set forth: (i) the name and address of the stockholder who
intends to make the nomination, as they appear on the Corporation's stock
ledger, and of the beneficial owner, if any, on whose behalf the nomination is
made; (ii) the name, age, business address and, if known, residence address of
the nominee; (iii) the principal occupation or employment of the nominee; (iv)
the class and number of shares of stock of the Corporation which are
beneficially owned by the nominee and by the nominating stockholder and any
such beneficial owner on whose behalf the nomination is made; (v) any other
information concerning the nominee that must be disclosed with respect to
nominees in a proxy statement pursuant to Regulation 14A under the Securities
Exchange Act of 1934; (vi) the executed consent of the nominee to serve as a
director of the Corporation, if elected; and (vii) whether the proponent
intends or is part of a group which intends to solicit proxies from other
stockholders in support of such nominations. The Corporation may require any
such nominee to furnish such other information as may reasonably be required to
determine the eligibility of the nominee to be a director of the Corporation.
(e) Any notice given by a stockholder pursuant to paragraph (b) of this
Section 1.6 shall set forth (i) a brief description of the business which the
stockholder desires to bring before the annual meeting, (ii) the name and
address of the stockholder giving the notice, as they appear on the
Corporation's stock ledger, and of the beneficial owner, if any, on whose
behalf such notice is given, (iii) the class and number of shares of stock of
the Corporation which are beneficially owned by the stockholder giving the
notice and by any such beneficial owner; (iv) the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and any such beneficial owner; and (v) whether the proponent
3
<PAGE> 7
intends or is part of a group which intends to solicit proxies from other
stockholders in support of such proposal. The Corporation may require any such
stockholder to furnish such other information as may reasonably be required to
determine whether any such proposed item of business is a proper subject for
stockholder action.
(f) In addition to, and not in limitation of, the provisions of this
Section 1.6, a stockholder shall also comply with all applicable requirements
of the Securities Exchange Act of 1934 and the rules and regulations thereunder
with respect to any nomination of a person for election as a director of the
Corporation or with respect to the proposal of any other business, as the case
may be, which such stockholder wishes to make or present at any meeting of
stockholders of the Corporation.
(g) Only persons who are nominated in accordance with the procedures set
forth in this Bylaw shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Bylaw.
SECTION 1.7 ORGANIZATION AND CONDUCT OF MEETINGS. (a) The chairman of
the board of the Corporation shall be the chairman of, and shall preside at,
all annual and special meetings of stockholders. In the event of the absence
of the chairman of the board from any meeting of stockholders, the meeting will
be presided over by the president of the Corporation or, in his or her absence,
by a chairman designated by the board of directors, or in the absence of such
designation by a chairman chosen by the meeting. The secretary of the
Corporation shall act as secretary of the meeting, but in his or her absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
(b) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting by the chairman of the meeting. The board of directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of any or all meetings of stockholders as it shall deem appropriate. Except to
the extent inconsistent with such rules and regulations, if any, as adopted by
the board of directors, the chairman of any meeting of stockholders shall have
the right and authority to prescribe such rules, regulations and procedures and
to do all such acts as, in the judgment of such chairman, are appropriate for
the proper conduct of the meeting. Such rules, regulations or procedures,
whether adopted by the board of directors or prescribed by the chairman of the
meeting, may include, without limitation, the following: (i) the establishment
of an agenda or order of business for the meeting; (ii) rules and procedures
for maintaining order at the meeting and the safety of those present; (iii)
limitations on attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized and constituted proxies or
such other persons as the chairman of the meeting shall determine; (iv)
restrictions on entry to the meeting after the time fixed for the commencement
thereof; and (v) limitations on the time allotted to questions or comments by
participants. Except to the extent determined otherwise by the board of
directors or the chairman of the meeting, meetings of stockholders shall not be
required to be held in accordance with the rules of parliamentary procedure.
4
<PAGE> 8
(c) The chairman of the meeting shall have the power and duty to determine
whether a nomination of a person for election as a director of the Corporation
or any other business proposed to be brought before the meeting was made or
brought in accordance with the procedures set forth in Section 1.6 of these
Bylaws and, if any proposed nomination or other business is not in such
compliance, to declare that such defective nomination or proposal shall be
disregarded.
SECTION 1.8 REQUIRED VOTE. A plurality of the votes cast at any meeting
for the election of directors shall be sufficient to elect. Except as
otherwise provided by the rules and regulations of any stock exchange
applicable to the Corporation, any other rule or regulation application to the
Corporation or its securities, applicable law, the Restated Certificate of
Incorporation or these Bylaws, all matters other than the election of directors
submitted to the stockholders at any meeting shall be decided by the
affirmative vote of the holders of a majority in voting power of the shares of
stock which are present in person or by proxy and entitled to vote thereon.
SECTION 1.9 VOTING; PROXIES. (a) Except as otherwise provided by law or
by the Restated Certificate of Incorporation, each stockholder entitled to vote
at any meeting of stockholders shall be entitled to that number of votes
specified in the Restated Certificate for each share of stock of each class
held by him, her or it which has voting power upon the matter in question.
Each stockholder entitled to vote at a meeting of stockholders may authorize
another person or persons to act for him, her or it by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. To be valid, a proxy must be filed with the
secretary of the Corporation or his or her representative at or before the time
of the meeting at which it is intended that it be voted or acted upon. A proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A stockholder may revoke any proxy which is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or by delivering to the secretary of the Corporation
a proxy in accordance with applicable law bearing a later date. Except as
otherwise provided in the Restated Certificate of Incorporation or as
determined by the chairman of the meeting, voting at any meeting of
stockholders need not be by written ballot.
SECTION 1.10 RECORD DATES FOR MEETINGS AND OTHER PURPOSES. In order that
the Corporation may determine 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 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 a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which record date: (1) in the case of a determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than 60 nor less
than 10 days before the date of such meeting; (2) in the case of determination
of stockholders entitled to express consent to corporate action in writing
without a meeting, shall not be more than 10 days from the date upon which the
resolution fixing the record date is adopted by the board of directors; and (3)
in the case of any other action, shall not be more than 60 days prior to such
other action. If no
5
<PAGE> 9
record date is fixed: (1) 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; (2) the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action of the board of directors is required by law,
shall be the first date on which a signed written consent setting for the
action taken or proposed to be taken is delivered to the Corporation in
accordance with applicable law, or, if prior action by the board of directors
is required by law, shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action; and (3) the
record date for determining stockholders for any other purpose shall be 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 a 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.
SECTION 1.11 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The secretary of the
Corporation shall prepare and make, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, 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. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof and may be inspected by any
stockholder who is present. Upon the willful neglect or refusal of the
directors to produce such a list at any meeting for the election of directors,
they shall be ineligible for election to any office at such meeting.
SECTION 1.12 INSPECTORS OF ELECTION. By action of its board of directors
the Corporation shall, in advance of any meeting of stockholders, appoint one
or more inspectors of election, who may be employees of the Corporation, to act
at the meeting or any adjournment thereof and to make a written report thereof.
In the same manner, the Corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. In the event
that no inspector so appointed or designated is able to act at a meeting of
stockholders, the chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of
his or her duties, shall take and sign an oath to execute faithfully the duties
of inspector with strict impartiality and according to the best of his or her
ability. The inspector or inspectors so appointed or designated shall: (i)
ascertain the number of shares of capital stock of the Corporation outstanding
at the record date for the meeting and the voting power of each such share;
(ii) determine the shares of capital stock of the Corporation represented at
the meeting and the validity of proxies and ballots; (iii) count all votes and
ballots; (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors; and
(v) certify their determination of the number of shares of capital stock of the
Corporation represented at the meeting and such inspectors' count of all votes
and ballots. Such certification and report shall specify such other
information as may be required by law or specified by the chairman of the
meeting. In determining the validity and
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counting of proxies and ballots cast at any meeting of stockholders of the
Corporation, the inspectors may consider such information as is permitted by
applicable law. No person who is a candidate for an office at an election may
serve as an inspector at such election.
SECTION 1.13 STOCKHOLDERS OF RECORD. Except as otherwise provided by
law, the stock ledger of the Corporation provided for by Section 4.4 of these
Bylaws shall be the only evidence as to who are the stockholders of the
Corporation entitled, upon compliance with any applicable provisions of the
General Corporation Law of the State of Delaware: (i) to examine the stock
ledger, any list of stockholders (including the list of stockholders referred
to in Section 1.11 of these Bylaws) or the other books and records of the
Corporation; and (ii) to vote in person or by proxy at any meeting of
stockholders. The Corporation shall be entitled to treat the holder of record
of any shares of stock of the Corporation as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
law. All references in the Restated Certificate of Incorporation or these
Bylaws, unless the context or the law otherwise requires, to "stockholders,"
"stockholders of record," "registered owners" and similar terms shall refer in
each case, at a given date, only to the stockholders and the stock of the
Corporation held by them as such information is set forth on the stock ledger
of the Corporation as of such date.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 POWERS. The business and affairs of the Corporation shall be
managed by or under the direction of the board of directors of the Corporation,
except as may be otherwise provided by law or the Restated Certificate of
Incorporation.
SECTION 2.2 NUMBER, ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The
number of directors constituting the whole board shall be fixed from time to
time by resolution adopted by the affirmative vote of a majority of the entire
board of directors, except that the number of directors shall not be less than
three nor more than nine. Directors shall be elected at annual meetings of
stockholders, and each director shall hold office until a successor is elected
and qualified or until that director's earlier death, resignation,
disqualification or removal. Directors need not be stockholders.
SECTION 2.3 RESIGNATION, REMOVAL AND VACANCIES. Except as otherwise
required by law or by the Restated Certificate of Incorporation, any vacancies
on the board of directors resulting from death, resignation, disqualification,
removal or other cause shall be filled by the affirmative vote of a majority of
the directors then in office, even though less than a quorum, or by the sole
remaining director, as the case may be. If there are no directors in office,
then an election of directors may be held in the manner provided by law. A
director shall hold office until the next annual meeting of the stockholders
and until such director's successor shall have been elected and qualified, or
until such director's earlier death, resignation, disqualification or removal.
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SECTION 2.4 NEWLY CREATED DIRECTORSHIPS. A newly created directorship
resulting from an increase in the number of directors shall be construed not to
constitute a vacancy and shall be filled in the manner required by law.
SECTION 2.5 ANNUAL MEETING. The first meeting of the board of directors
following each annual meeting of stockholders shall be held immediately after,
and at the same place as, such annual meeting of stockholders, and no notice of
such meeting other than this Bylaw shall be necessary to any director,
including any director elected at such annual meeting of stockholders, in order
legally to constitute the meeting provided a quorum shall be present. In the
event of the failure to hold such meeting of the board of directors at the time
and place specified in the preceding sentence, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the board of directors, or as shall be specified in a
written waiver of notice signed by those directors who did not attend such
meeting.
SECTION 2.6 REGULAR MEETINGS. Regular meetings of the board of
directors, or of any committee thereof, may be held at such places within or
without the State of Delaware and at such times as the board of directors or
such committee may from time to time determine, and if so determined notices
thereof need not be given.
SECTION 2.7 SPECIAL MEETINGS. (a) Special meetings of the board of
directors may be held at any time or place within or without the State of
Delaware whenever called by the chairman of the board, the president or any two
members of the board of directors. Notice of a special meeting of the board of
directors shall be given by the person or persons calling the meeting, in the
manner specified in Section 2.13 of these Bylaws, at least 24 hours before the
special meeting.
(b) Special meetings of any committee of the board of directors may be
held at any time or place within or without the State of Delaware whenever
called by the chairman of the board, the president or the chairman of the
committee. Notice of a special meeting of any committee of the board of
directors shall be given by the person calling the meeting, in the manner
specified in Section 2.13 of these Bylaws, at least 24 hours before the special
meeting.
SECTION 2.8 TELEPHONIC MEETINGS PERMITTED. Members of the board of
directors, or of any committee thereof, may participate in a meeting thereof 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 Section 2.8 shall constitute
presence in person at such meeting.
SECTION 2.9 QUORUM; VOTE REQUIRED FOR ACTION. At all meetings of the
board of directors a majority of the whole board of directors shall constitute
a quorum for the transaction of business. Except in cases in which the
Restated Certificate of Incorporation, these Bylaws or applicable law otherwise
provides, the vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at a meeting until a quorum shall be present.
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SECTION 2.10 ORGANIZATION OF MEETINGS. Meetings of the board of
directors shall be presided over by the chairman of the board, or in his or her
absence by the vice chairman of the board, if any, or in his or her absence by
the president (if he or she is also a director) or in their absence by a
chairman chosen at the meeting. The secretary of the Corporation shall act as
secretary of the meeting, but in his or her absence the chairman of the meeting
may appoint any person to act as secretary of the meeting.
SECTION 2.11 ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the Restated Certificate of Incorporation or these Bylaws, 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 all members of the board
of directors or such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
board of directors or such committee.
SECTION 2.12 COMMITTEES OF THE BOARD. (a) The board of directors shall
have such committees, if any, as the board of directors may designate, each
such committee to consist of one or more of the directors of the Corporation as
determined by the board of directors. The board of directors shall appoint the
member or members of each such committee, who shall serve at the pleasure of
the board, and shall designate one member of the committee to be its chairman.
Each such committee, to the extent permitted by law and provided in the
resolution of the board of directors designating it, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the Corporation. Each such committee
may authorize the seal of the Corporation to be affixed to all papers which may
require it.
(b) The board of directors may designate one or more directors as
alternate members of any committee of the board of directors, who may replace
any absent or disqualified member at any meeting of the committee. In
addition, in the absence or disqualification of a member of any committee of
the board of directors, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in place of any such absent or disqualified
member.
(c) Unless the board of directors otherwise provides, the executive
committee and each other committee, if any, designated by the board of
directors may make, alter and repeal rules for the conduct of its business. In
the absence of such rules each committee shall conduct its business in the same
manner as the board of directors conducts its business pursuant to this Article
II. Each of the committees shall keep minutes of all of its meetings which
shall be open to the inspection of any director at any time.
SECTION 2.13 NOTICES TO DIRECTORS. (a) All notices to directors shall
be in writing and shall be delivered by hand or sent by facsimile transmission
("fax") or mail to the directors at their respective addresses or fax numbers
most recently furnished by each of them in writing to the secretary of the
Corporation. Any notice delivered by hand to such address of a director shall
be deemed to have been given on the day it is so delivered at such address,
provided that if such day is not a business day then the notice shall be deemed
to have been given on the business
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day next following such day. Any notice sent by fax to such fax number of a
director shall be deemed to have been given on the date and time the fax is
sent if transmitted during normal business hours on a business day or otherwise
shall be deemed to have been given at the normal opening of business on the
business day next following the date of its transmission. Any notice sent by
mail to such address of a director shall be deemed to have been given when the
notice is deposited in the United States mail, postage prepaid. For purposes
of this Bylaw, the term "business day" means any day other than a Saturday,
Sunday or official national holiday in the United States.
(b) Notice to any member or alternate member of any committee of the board
of directors, in his or her capacity as a committee member, may be given in the
same manner as that specified in paragraph (a) for notices to directors as
such; notice to any committee member may also be given orally, in person or by
telephone, and in any such case shall be deemed to be given when actually
received by the committee member.
SECTION 2.14 WAIVER OF NOTICE. Whenever any notice is required to be
given to a director under the provisions of any statute, the Restated
Certificate of Incorporation or these Bylaws, a waiver thereof in writing
signed by the director entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
director at a meeting of the board of directors or any committee thereof shall
constitute a waiver of notice of such meeting, except when the director 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.
SECTION 2.15 COMPENSATION OF DIRECTORS. Each director of the Corporation
shall be entitled to receive such compensation on such bases for his or her
services as a director and as a member of any standing or special committee of
the board of directors as the board of directors by resolution may from time to
time determine. In addition, each director, whether or not an employee of the
Corporation, shall be entitled to reimbursement for all expenses reasonably
incurred by him or her in connection with attending any meeting of the board of
directors or of any committee thereof.
ARTICLE III
OFFICERS
SECTION 3.1 OFFICERS. The officers of the Corporation shall be a
chairman of the board, a president, one or more vice presidents (the number and
designation thereof to be determined by the board of directors), a treasurer, a
secretary and a general counsel. The board of directors shall designate either
the chairman of the board or the president as the chief executive officer of
the Corporation, and it may designate the same or one or more other officers as
the chief operating officer and the chief financial officer of the Corporation.
The officers of the Corporation shall be elected by the board of directors;
provided, however, that in its discretion, the board of directors may leave any
such office unfilled. The board of directors may also from time-to-time elect
such other officers of the Corporation, including without limitation one or
more vice chairmen of the board, assistant treasurers, assistant controllers
and assistant secretaries, as it shall deem
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advisable. Any two or more offices may be held by the same person. No officer
other than the chairman of the board and any vice chairman of the board need be
a director of the Corporation.
SECTION 3.2 TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES. Each
officer of the Corporation shall hold office until the first meeting of the
board of directors after the annual meeting of stockholders of the Corporation
next succeeding his or her election, and until his or her successor is elected,
or until his or her earlier death, resignation or removal. Any officer may
resign at any time upon written notice to the Corporation, but such resignation
shall be without prejudice to the contractual rights of the Corporation, if
any, with such officer. The board of directors may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights of such officer, if any, with the Corporation. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the board of
directors at any regular or special meeting thereof.
SECTION 3.3 COMPENSATION OF OFFICERS. The salaries and other
compensation (including, without limitation, bonuses and similar supplemental
payments) of the officers of the Corporation shall be fixed or approved from
time to time by or under the direction of the board of directors.
SECTION 3.4 POWERS AND DUTIES OF OFFICERS. Each of the officers of the
Corporation shall have such powers and perform such duties in the management of
the Corporation as are prescribed or assigned in these Bylaws or as may be
prescribed or assigned from time to time by the board of directors or by the
officer of the Corporation to whom he or she reports and, to the extent not so
prescribed or assigned, as generally pertain to his or her office, subject to
the control of the board of directors. The board of directors may require any
officer, agent or employee to give security for the faithful performance of his
or her duties in such form and amount as the board of directors shall
determine. Nothing in any other provision of this Article III is intended to
limit the generality of this Section 3.4.
SECTION 3.5 CHIEF EXECUTIVE OFFICER. (a) The chief executive officer of
the Corporation, who shall be designated by the board of directors and who
shall be either the chairman of the board or the president of the Corporation,
shall have general and active authority, control and supervision over the
business, property and affairs of the Corporation, subject to the board of
directors. The chief executive officer shall report to the board of directors.
He or she shall keep the board of directors fully informed, and shall freely
consult it, concerning the business and affairs of the Corporation, and he or
she shall see that all orders and resolutions of the board of directors are
carried out.
(b) In the absence or disability of the chief executive officer, or in
case of an unfilled vacancy in that position, until such time as the board of
directors shall designate his or her successor, his or her duties shall be
performed and his or her powers shall be exercised by (i) whichever officer,
either the chairman of the board or the president, who is not then the
designated chief executive officer of the Corporation or (ii) in the absence or
disability of such officer or in the case of an unfilled vacancy in that
office, by other elected or appointed officers
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of the Corporation who are also directors of the Corporation, if any, in the
order of their election or appointment.
SECTION 3.6 CHIEF OPERATING OFFICER. The chief operating officer of the
Corporation, if one is designated by the board of directors, shall be in
general and active charge of the day-to-day operations and business of the
Corporation. Unless otherwise expressly provided by the board of directors, he
or she shall report to the chief executive officer. He or she shall keep the
chief executive officer and, when and as requested by it, the board of
directors fully informed concerning the day-to-day operations and business of
the Corporation.
SECTION 3.7 CHIEF FINANCIAL OFFICER. The chief financial officer of the
Corporation, if one is designated by the board of directors, shall be the
principal financial officer and the principal accounting officer of the
Corporation and have responsibility for all of its financial affairs. In that
capacity, he or she shall: (i) protect the cash, securities, receivables and
other financial resources of the Corporation, have responsibility for
investment, receipt, custody and disbursement of such resources, and establish
policies for granting credit to customers; (ii) maintain the creditworthiness
of the Corporation; (iii) procure capital as required by the Corporation from
such sources as he or she deems appropriate, including without limitation
long-term bank borrowings or the public or private sale of debt or equity
securities of the Corporation, and maintain adequate sources for the
Corporation's short-term financing requirements; (iv) maintain the
Corporation's banking relationships; (v) administer the accounting policies of
the Corporation and the internal controls with respect to its financial
affairs; and (vi) supervise the preparation and maintenance of the
Corporation's books of account, and have access to all records of the
Corporation. He or she shall supervise the preparation and maintenance, on a
current basis, of such accounting books, records and reports as may be
necessary for the directors, officers and employees of the Corporation to
discharge their respective duties or as may be required by applicable law or
regulation. He or she shall be responsible for implementing the internal
controls established by or under the direction of the board of directors with
respect to the financial affairs of the Corporation. Unless otherwise
expressly provided by the board of directors, he or she shall report to the
chief executive officer. He or she shall keep the chief executive officer and,
when and as requested by it, the board of directors fully informed concerning
the financial affairs of the Corporation.
SECTION 3.8 CHAIRMAN OF THE BOARD. The chairman of the board shall act
as chairman of, and preside at, all meetings of the stockholders and the board
of directors of the Corporation; provided, however, that he or she may delegate
to the president the authority and duty to act as chairman of, and preside at,
any particular meeting of stockholders. The chairman of the board shall
consult with the other directors and officers of the Corporation. If he or she
has been so designated by the board of directors, the chairman of the board
shall have those powers and duties conferred by these Bylaws upon the chief
executive officer of the Corporation. He or she may sign with the secretary or
any other officer of the Corporation thereunto authorized, certificates for
shares or other securities of the Corporation, the issuance of which shall have
been duly authorized by the board of directors. He or she shall have the
authority to execute, by and on behalf of the Corporation, deeds, mortgages,
bonds, contracts or other agreements and instruments, except in cases where the
signing and execution thereof shall be expressly delegated
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by the board of directors or by these Bylaws to some other officer or agent of
the Corporation or shall be required by law to be otherwise signed or executed.
SECTION 3.9 PRESIDENT. If he or she is a director, the president shall,
in the absence of the chairman of the board, preside at all meetings of the
board of directors. If the chairman of the board has been designated the chief
executive officer of the Corporation, then unless otherwise expressly provided
by the board of directors, the president shall report to him or her. If he or
she has been so designated by the board of directors, the president shall have
those powers and duties conferred by these Bylaws upon the chief executive
officer of the Corporation. If no chief operating officer has been designated
by the board of directors, the president shall have those powers and duties
conferred on the chief operating officer of the Corporation by these Bylaws.
In the absence of the chairman of the board, or in the event of his or her
inability or refusal to act, the president shall perform the duties of the
chairman of the board and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the chairman of the board. The president
may sign with the secretary or any other officer of the Corporation thereunto
authorized, certificates for shares or other securities of the Corporation, the
issuance of which shall have been duly authorized by the board of directors.
He or she shall have the power to execute, by and on behalf of the Corporation,
deeds, mortgages, bonds, contracts or other agreements and instruments, except
in cases where the signing and execution thereof shall be expressly delegated
by the board of directors or by these Bylaws to some other officer or agent of
the Corporation or shall be required by law to be otherwise signed or executed.
SECTION 3.10 VICE PRESIDENTS. In the absence of the president, or in the
event of his or her inability or refusal to act, the vice president (or if
there be more than one, first the executive vice presidents, then the senior
vice presidents and then the vice presidents in the order designated by the
board of directors, or in the absence of such designation, then in the order of
their election or in the order named for election) shall perform the duties of
the president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. Each vice president who is elected
as such with respect to a particular area of responsibility or function of the
Corporation shall, subject to the authority of the chief executive officer and
any chief operating officer, perform all duties and have all authority
pertaining to the general and active management of such area or function and
shall see that all orders and resolutions of the board of directors, the chief
executive officer or any chief operating officer pertaining to such area or
function are carried into effect. Unless otherwise expressly provided by these
Bylaws, by the board of directors or by the chief executive officer, each vice
president shall report to the president of the Corporation. Each vice
president may sign with the secretary or any other officer thereunto
authorized, certificates for shares or other securities of the Corporation, the
issuance of which shall have been duly authorized by the board of directors.
Each vice president shall have the power to execute, by and on behalf of the
Corporation, deeds, mortgages, bonds, contracts or other agreements and
instruments, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these Bylaws to some other
officer or agent of the Corporation or shall be required by law to be otherwise
signed or executed.
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SECTION 3.11 TREASURER. The treasurer shall have charge and custody of
and be responsible for all funds and securities of the Corporation, and the
deposit of all moneys and other valuable effects in the name and to the credit
of the Corporation in such banks, trust companies or other depositories as
shall be selected or approved by or in accordance with resolutions of the board
of directors. He or she shall be responsible for the disbursement of the funds
of the Corporation only upon vouchers duly processed and under such rules and
regulations as the board of directors may from time to time adopt. Unless
otherwise expressly provided by the board of directors or the chief executive
officer, the treasurer shall report to the chief financial officer of the
Corporation, if one has been designated by the board of directors. He or she
may sign, with the chairman of the board, the president or any vice president,
certificates for shares or other securities of the Corporation, the issuance of
which shall have been duly authorized by the board of directors.
SECTION 3.12 SECRETARY. The secretary shall: (i) attend and keep the
minutes of all meetings of the stockholders, the board of directors and such
committees of the board of directors as the board of directors may specify;
(ii) be custodian and have general charge of all corporate records (including,
without limitation, the stock ledger and all stock transfer books and other
stockholder records), contracts, papers, correspondence, instruments, documents
and books of the Corporation except those required by these Bylaws or the board
of directors to be kept and maintained by other officers of the Corporation;
(iii) see that all notices are duly given by the Corporation in accordance with
the provisions of these Bylaws or as required by law; (iv) be custodian of the
seal of the Corporation and see that the seal of the Corporation is affixed to
all securities and documents of the Corporation, the execution of which on
behalf of the Corporation under its seal is necessary or desirable; (v) have
authority to sign, with the chairman of the board, the president or any vice
president certificates for shares or other securities of the Corporation, the
issuance of which shall have been duly authorized by the board of directors;
(vi) attest to the genuineness of the signature on behalf of the Corporation of
any officer or agent of the Corporation on any deeds, mortgages, bonds,
contracts or other instruments; and (vii) certify the authenticity of any
instrument or record of the Corporation or of any resolution of the
stockholders, the board of directors or any committee of the board of directors
of the Corporation.
SECTION 3.13 GENERAL COUNSEL. The general counsel shall be the chief
legal officer of and advisor to the Corporation as to all matters affecting the
Corporation or its business. He or she shall have authority to issue any legal
opinion which he or she deems appropriate with respect to the Corporation or
any aspect of its business or affairs. He or she shall supervise the provision
of legal advice and counsel to the board of directors, the officers and the
employees and agents of the Corporation with respect to all matters pertaining
to the Corporation and its business, and he or she shall be responsible for
supervising the prosecution of all claims made by the Corporation and the
defense of all claims made upon or against the Corporation. Unless otherwise
expressly provided by the board of directors or the chief executive officer,
the general counsel shall report to the chief executive officer of the
Corporation.
SECTION 3.14 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretary and assistant treasurer (or if in either case there be more
than one, in each case in the order
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determined by the board of directors, or if there be no such determination,
then in each case in the order of their election or appointment) shall, in the
absence of the secretary or the treasurer, as the case may be, or the inability
or refusal of the secretary or the treasurer, as the case may be, to act,
perform the duties and exercise the powers of the secretary or the treasurer,
as the case may be. Each assistant secretary may sign with the chairman of the
board, the president, or a vice president certificates for shares or other
securities of the Corporation, the issuance of which shall have been duly
authorized by the board of directors, may attest to the genuineness of the
signature on behalf of the Corporation of any officer or agent of the
Corporation on any deeds, mortgages, bonds, contracts or other instruments and
may certify the authenticity of any instrument or record of the Corporation.
Each assistant treasurer may sign with the chairman of the board, the president
or a vice president, certificates for shares or other securities of the
Corporation, the issuance of which shall have been duly authorized by the board
of directors. Each assistant secretary shall report to the secretary and each
assistant treasurer shall report to the treasurer.
ARTICLE IV
STOCK
SECTION 4.1 CERTIFICATES. (a) Every holder of stock of the Corporation
shall be entitled to have a certificate signed by, or in the name of the
Corporation by, the chairman of the board, a vice chairman of the board or the
president or vice president and the secretary or an assistant secretary or
treasurer or an assistant treasurer of the Corporation, certifying the number
of shares owned by the holder in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, the certificate may nevertheless be issued
by the Corporation with the same effect as if he, she or it was such officer,
transfer agent or registrar at the date of issue.
(b) If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations, or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of the State
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate a statement that the Corporation will
furnish, without charge to each stockholder who so requests, the powers,
designations, preferences and relative, participating, optional, or other
special rights of each class of stock or series thereof and the qualifications,
limitations, or restrictions of such preferences and/or rights.
SECTION 4.2 LOST, STOLEN OR DESTROYED CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES. The Corporation, when authorized to do so by the board of
directors, which authorization may be general or confined to specific
instances, may issue a new certificate of stock in place of any
15
<PAGE> 19
certificate representing shares theretofore issued by the Corporation and
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate for such shares to be lost,
stolen or destroyed. When authorizing such issuance of a new certificate or
certificates, the Corporation may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or the legal representative of the
owner, to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation in connection with
the certificate alleged to have been lost, stolen, or destroyed.
SECTION 4.3 REGISTRATION OF TRANSFERS. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate representing shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, the Corporation or its transfer agent shall cancel the
old certificate, record the transaction upon the stock records of the
Corporation and issue a new certificate or certificates to the person or
persons entitled thereto.
SECTION 4.4 THE STOCK LEDGER . The name and address of each holder of
shares of stock of the Corporation and the number of shares of each class or
series so held by such holder shall be recorded on the Corporation's stock
ledger. Each such holder shall be the holder of record of such shares of the
Corporation for all purposes.
ARTICLE V
INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
SECTION 5.1 RIGHT TO INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
rights of certain persons to receive indemnification and advancement of
expenses from the Corporation shall be as set forth in Article Eighth of the
Corporation's Restated Certificate of Incorporation. Capitalized terms used
but not otherwise defined in this Article V shall have the meaning given to
them in Article Eighth of the Restated Certificate of Incorporation.
SECTION 5.2 CLAIMS. If a claim for indemnification or advancement of
expenses under Article Eighth of the Restated Certificate of Incorporation or
this Article V is not paid in full by or on behalf of the Corporation within 30
days after a written claim therefor by the Covered Person has been received by
the Corporation, the Covered Person may file suit to recover the unpaid amount
of such claim and, if successful in whole or in part, shall be entitled to be
paid by the Corporation an additional amount equal to the expense of
prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the Covered Person was not entitled to the requested
indemnification or payment of expenses under applicable law. Neither the
failure of the Corporation (including its board or independent legal counsel)
to have made a determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Corporation (including its
board, its independent legal counsel and its stockholders) that such Covered
Person is not entitled to such indemnification or reimbursement
16
<PAGE> 20
or advancement of expenses shall constitute a defense to the action or create a
presumption that such Covered Person is not so entitled.
SECTION 5.3 NONEXCLUSIVITY OF RIGHTS; PURCHASE OF INSURANCE. (a) The
rights conferred on any Covered Person by Article Eighth of the Restated
Certificate of Incorporation or this Article V shall not be exclusive of any
other rights which such person may have or hereafter acquire under any statute,
the Restated Certificate of Incorporation, these Bylaws, any agreement, any
vote of stockholders or disinterested directors or otherwise. Any amendment or
repeal of any provision of Article Eighth of the Restated Certificate of
Incorporation or this Article V shall not limit the right of any person to
indemnity or advancement of expenses with respect to actions taken or omitted
to be taken by such person prior to such amendment or repeal.
(b) The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another entity, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of Section 145 of the General Corporation Law of the State of
Delaware.
SECTION 5.4 PROVISIONS DEEMED A CONTRACT. The provisions of Article
Eighth of the Restated Certificate of Incorporation and this Article V shall
constitute a contract between the Corporation, on the one hand, and each
director and officer of the Corporation who serves in such capacity at any time
while either of Article Eighth of the Restated Certificate of Incorporation and
this Article V is in effect and any other person entitled to indemnification
hereunder, on the other hand, pursuant to which the Corporation and each such
Covered Person intend to be, and shall be, legally bound. No repeal or
modification of any provision of Article Eighth of the Restated Certificate of
Incorporation or this Article V shall affect any rights or obligations with
respect to any state of facts then or theretofore existing or any proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
SECTION 5.5 CONCLUSIVE PRESUMPTION. For purposes of Article Eighth of
the Restated Certificate of Incorporation and this Article V, any director or
officer of the Corporation serving in any capacity (a) another corporation of
which a majority of the shares entitled to vote in the election of its
directors is held, directly or indirectly, by the Corporation or (b) any
employee benefit plan or trust of the Corporation or any corporation referred
to in clause (a), shall in either case be conclusively presumed to be doing so
at the request of the Corporation.
SECTION 5.6 OTHER INDEMNIFICATION. The Corporation's obligation, if any,
to indemnify or to advance expenses to any Covered Person who was or is serving
at its request as a director, officer, employee, trustee or agent of another
entity shall be reduced by any amount such person may collect as
indemnification or advancement of expenses from such other entity.
17
<PAGE> 21
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 OFFICES AND BOOKS AND RECORDS. (a) The registered office of
the Corporation in the State of Delaware shall be in the City of Wilmington,
County of New Castle.
(b) The Corporation may have offices at such other places, both within and
outside the State of Delaware, as the board of directors may from time to time
designate or as the business of the Corporation may require.
(c) The books and records of the Corporation may be kept at the
Corporation's headquarters at Oak Brook, Illinois and at such other locations
outside the State of Delaware as may be from time to time designated by the
board of directors.
SECTION 6.2 FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of October in each year.
SECTION 6.3 SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
SECTION 6.4 FORM OF RECORDS. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, computer entry, photographs, microphotographs, or any other
information storage device, provided that the records so kept can be converted
into clearly legible form within a reasonable time.
SECTION 6.5 SIGNING OF CHECKS, NOTES, ETC. All checks, drafts, bills of
exchange, notes or other obligations or orders for the payment of money shall
be signed by such officer or officers or employee or employees of the
Corporation and in such manner as shall from time to time be determined by
resolution of the board of directors or by any officer of the Corporation
authorized by resolution of the board of directors to make such determinations.
SECTION 6.6 VOTING OF SHARES IN OTHER COMPANIES. Unless otherwise
expressly ordered by the board of directors, any one of the chairman of the
board, the president or any vice president of the Corporation shall have full
power and authority, on behalf of the Corporation, to consent to or approve of
any action by, and to attend, act and vote at any meeting of stockholders or
similar equity owners of, any Corporation in which the Corporation may hold
shares of stock or similar equity interests and in giving such consent or
approval or at any such meeting shall possess and may exercise any and all
rights and powers incident to the ownership of such shares or similar equity
interests and which, as the holder thereof, the Corporation might possess and
exercise if personally present, and may exercise such power and authority
through the execution of proxies or may delegate such power and authority to
any other officer, agent or employee of the Corporation. Provided that the
transfer thereof has been authorized by the board of directors or the chief
executive officer, certificates or similar instruments representing shares or
similar
18
<PAGE> 22
equity interests owned by the Corporation in other companies may be
endorsed for transfer on behalf of the Corporation by any one of the officers
of the Corporation referred to in the preceding sentence.
SECTION 6.7 AMENDMENT OF BYLAWS. These Bylaws may be altered, amended or
repealed, or new Bylaws may be adopted, by the board of directors. Any Bylaws
adopted by the board of directors may be altered, amended or repealed by the
stockholders, and the stockholders may make additional Bylaws, at any annual
meeting or at any special meeting, provided that notice of such proposed
alteration, amendment or repeal or new Bylaw shall have been given in the
notice of the meeting. No such altered or amended or new Bylaw shall be
inconsistent with any provision of the Restated Certificate of Incorporation.
19
<PAGE> 1
EXHIBIT 4.2
Class A Common Stock Class A Common Stock
Number _____________ Shares ______________
See Reverse Side For
Certain Definitions
[GMSI LOGO]
GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT
-------------------------------------------------------------
IS THE OWNER OF
-----------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON STOCK OF PAR VALUE OF
$.01 PER SHARE OF GRIFFITH MICRO SCIENCE INTERNATIONAL, INC. (the
"Corporation") transferable on the books of the Corporation by the owner hereof
in person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate and the shares represented hereby are
issued subject to the laws of the State of Delaware and all the provisions of
the Certificate of Incorporation and Bylaws of the Company, each as now in
effect or hereafter amended.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Company and the facsimile signatures of its
duly authorized officers.
Dated:
-------------------------
/s/ John P. Sabalasky /s/Kevin M. Swan
Senior Vice President and Chief President and Chief
Financial Officer Executive Officer
COUNTERSIGNED AND REGISTERED:
[TRANSFER AGENT]
[CITY, STATE]
TRANSFER AGENT AND REGISTRAR
BY
----------------------------
AUTHORIZED SIGNATURE
<PAGE> 2
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS AND SERIES OF STOCK.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS IN WRITING A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF
STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE ADDRESSED TO THE SECRETARY
OF THE CORPORATION OR THE TRANSFER AGENT AND REGISTRAR NAMED ON THE FACE OF
THIS CERTIFICATE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT ______________ Custodian _____________
(Cust) (Minor)
under Uniform Gift to Minors Act
------------------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ___________ hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------ Shares
of the Common Stock represented by the within certificate, and do(es) hereby
irrevocably constitute and appoint
- ---------------------------------------------------------------------- Attorney
to transfer the said shares on the books of the within named Corporation with
full power of substitution in the premises.
<PAGE> 3
Dated
--------------------------------
X
--------------------------------
X
--------------------------------
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OF
ENLARGEMENT OR ANY CHANGE
WHATEVER.
SIGNATURE(S) GUARANTEED
BY
-----------------------------------
THE SIGNATURE(S) SHOULD BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS THAT
ARE PARTICIPANTS IN A SECURITIES
TRANSFER ASSOCIATION RECOGNIZED
PROGRAM). PURSUANT TO S.E.C. RULE
17Ad-13.
<PAGE> 1
EXHIBIT 4.4
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of [_____ ___], 1998,
between GRIFFITH LABORATORIES INTERNATIONAL, INC., a Delaware corporation
("GLII"), and GRIFFITH MICRO SCIENCE INTERNATIONAL, INC., a Delaware
corporation (the "Company").
WHEREAS, GLII owns all of the currently outstanding Class B Common Stock,
$.01 par value per share ("Class B Common Stock") of the Company (which is the
only class of the Company's capital stock currently outstanding).
WHEREAS, the Company, with the consent of GLII, has determined to offer to
the public (the "Public Offering") up to [__________] shares of Class A Common
Stock, $.01 par value per share, of the Company ("Class A Common Stock" and,
together with the Class B Common Stock, the "Common Stock").
WHEREAS, in consideration for the consent of GLII to the Public Offering
by the Company, the Company has, among other things, agreed to grant to GLII
certain registration rights applicable to Registrable Securities (as defined
below) held by GLII, and agreed to certain limitations on the use of the
Griffith name.
WHEREAS, the parties hereto desire to enter into this Agreement to set
forth the terms of such registration rights and name use limitations.
NOW, THEREFORE, upon the premises and the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the following
initially capitalized terms shall have the following meanings:
(a) "Affiliate" means, with respect to any person, any other person who,
directly or indirectly, is in control of, is controlled by or is under common
control with the former person; and "control" (including the terms
"controlling," "controlled by," and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract or otherwise.
(b) "Company Securities" has the meaning set forth in Section 3 hereof.
(c) "Exchangeable Securities" has the meaning set forth in Section 6 of
this Agreement.
<PAGE> 2
(d) "Fair Market Value" means, with respect to any security, (i) if the
security is listed on a national securities exchange or authorized for
quotation on a national market quotation system, the closing price, regular
way, of the security on such exchange or quotation system, as the case may be,
or if no such reported sale of the security shall have occurred on such date,
on the next preceding date on which there was such a reported sale, or (ii) if
the security is not listed for trading on a national securities exchange or
authorized for quotation on a national market quotation system, the average of
the closing bid and asked prices as reported by the National Association of
Securities Dealers Automated Quotation System or such other reputable entity or
system engaged in the regular reporting of securities prices and on which such
prices for such security are reported or, if no such prices shall have been
reported for such date, on the next preceding date for which such prices were
so reported, or (iii) if the security is not publicly traded, the fair market
value of such security as determined by a nationally recognized investment
banking or appraisal firm mutually acceptable to the Company and the Holders,
the fair market value of whose Registrable Securities is to be determined;
provided that, for purposes of Section 2(a)(iii)(C), the Fair Market Value of
Class B Common Stock shall equal the Fair Market Value of the shares of Class A
Common Stock into which such shares of Class B Common Stock are convertible.
(e) "Holder" means GLII or any Qualifying Permitted Transferee.
(f) "Initiating Holders" has the meaning set forth in Section 3 of this
Agreement.
(g) "Other Holders" has the meaning set forth in Section 3 hereof.
(h) "Other Securities" has the meaning set forth in Section 3 hereof.
(i) "Other Voting Securities" means any options, rights, warrants or other
securities convertible into or exchangeable for Voting Stock of the Company.
(j) "Permitted Transferee" has the meaning set forth in Section 11 hereof.
(k) "Person" means any individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.
(l) "Registrable Securities" means (i) all shares of Class B Common Stock
owned on the date hereof by GLII and all shares of Class A Common Stock
issuable upon conversion of Class B Common Stock owned on the date hereof by
GLII, (ii) any stock or other securities into which or for which such Class A
Common Stock or Class B Common Stock may hereafter be changed, converted or
exchanged, and (iii) any other securities issued to holders of such Common
Stock (or such stock or other securities into which or for which such Common
Stock are so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, merger, consolidation or
similar transaction or event, provided that any such securities shall cease to
be Registrable Securities when such securities are transferred in any manner to
a person who is not a Permitted Transferee.
2
<PAGE> 3
(m) "Registration Expenses" means all out-of-pocket expenses incurred in
connection with any registration of Registrable Securities pursuant to this
Agreement including, without limitation, the following: (i) SEC filing fees;
(ii) the fees, disbursements and expenses of the Company's counsel(s) and
accountants in connection with the registration of the Registrable Securities
to be disposed of; (iii) all expenses in connection with the preparation,
printing and filing of the registration statement, any preliminary prospectus
or final prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to any Holders, underwriters and dealers and all
expenses incidental to delivery of the Registrable Securities; (iv) the cost of
printing or producing any underwriting agreement, agreement among underwriters,
agreement between syndicates, selling agreement, blue sky or legal investment
memorandum or other document in connection with the offering, sale or delivery
of the Registrable Securities to be disposed of; (v) all expenses in connection
with the qualification of the Registrable Securities to be disposed of for
offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters in connection with such
qualification and the preparation of any blue sky and legal investment surveys;
(vi) the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Registrable Securities to be disposed of; (vii) transfer agents', depositaries'
and registrars' fees and the fees of any other agent appointed in connection
with such offering; (viii) all security engraving and security printing
expenses, (ix) all fees and expenses payable in connection with the listing of
the Registrable Securities on any securities exchange or inter-dealer quotation
system; and (x) any one-time payment for directors and officers insurance
directly related to such offering, provided the insurer provides a separate
statement for such payment.
(n) "Rule 144" means Rule 144 promulgated under the Securities Act, or any
successor rule to similar effect.
(o) "SEC" means the United States Securities and Exchange Commission.
(p) "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.
(q) "Selling Expenses" means all underwriting discounts and commissions,
selling concessions and stock transfer taxes applicable to the sale by the
Holders of Registrable Securities pursuant to this Agreement and all fees and
disbursements of any legal counsel, investment banker, accountant or other
professional advisor retained by a Holder.
(r) "Selling Holder" has the meaning set forth in Section 5 hereof.
(s) "Transactional Deferral" has the meaning set forth in Section 2 of
this Agreement.
(t) "Voting Stock" means shares of the Company's capital stock having the
power under ordinary circumstances (and not merely upon the happening of a
contingency) to vote in the election of directors of the Company.
3
<PAGE> 4
2. Demand Registration.
(a) At any time prior to such time as the rights under this Section 2
terminate with respect to a Holder as provided in Section 2(e) hereof, upon
written notice from such Holder in the manner set forth in Section 12(h) hereof
requesting that the Company effect the registration under the Securities Act of
any or all of the Registrable Securities held by such Holder, which notice
shall specify the intended method or methods of disposition of such Registrable
Securities, the Company shall use its best efforts to effect, in the manner set
forth in Section 5, the registration under the Securities Act of such
Registrable Securities for disposition in accordance with the intended method
or methods of disposition stated in such request (including in an offering on a
delayed or continuous basis under Rule 415, or any successor rule to similar
effect, promulgated under the Securities Act, if (x) the Company is then
eligible to register such Registrable Securities on Form S-3 (or a successor
form) for such offering and (y) the Company consents to such an offering,
except that no consent of the Company will be required if the contemplated
offering on a delayed or continuous basis under Rule 415 is the offering of
Registrable Securities upon the exercise, exchange or conversion of
Exchangeable Securities as contemplated by Section 6 hereof), provided that:
(i) if, within 5 business days of receipt by the Company of a
registration request pursuant to this Section 2(a), the Holder or Holders
making such request are advised in writing that the Company has in good
faith commenced the preparation of a registration statement for an
underwritten public offering prior to receipt of the notice requesting
registration pursuant to this Section 2(a) and the managing underwriter
of the proposed offering has determined, and set forth in writing to said
Holder or Holders, that in such firm's good faith opinion, a registration
at the time and on the terms requested would materially and adversely
affect the offering that is contemplated by the Company, the Company
shall not be required to effect a registration pursuant to this Section
2(a) (a "Transactional Deferral") until the earliest of (A) the
abandonment of such offering by the Company, (B) 60 days after receipt by
the Holder or Holders requesting registration of the managing
underwriter's written opinion referred to above in this clause (i),
unless the registration statement for such offering has become effective
and such offering has commenced on or prior to such 60th day, and (C) if
the registration statement for such offering has become effective and
such offering has commenced on or prior to such 60th day, the day on
which the restrictions on the Holders contained in Section 10 hereof
lapse, provided, however, that the Company shall not be permitted to
delay a requested registration in reliance on this clause (i) more than
once in any 12-month period;
(ii) if, while a registration request is pending pursuant to this
Section 2(a), the Company is advised in writing by its legal counsel that
the filing of a registration statement would require the disclosure of
material information that the Company has a bona fide business purpose
for preserving as confidential and the disclosure of which the Company
determines reasonably and in good faith would have a material adverse
effect on the Company, the Company shall not be required to effect a
registration pursuant to this Section 2(a) until the earlier of (A) the
date upon which such material information is
4
<PAGE> 5
otherwise disclosed to the public or ceases to be material and (B) 90
days after the Company makes such determination;
(iii) the Company shall not be obligated to file a registration
statement relating to a registration request pursuant to this Section 2:
(A) prior to the first anniversary of the closing of the Public Offering,
(B) within a period of 365 calendar days after the effective date of any
other registration statement of the Company demanded pursuant to this
Section 2(a), (C) if such registration request is for a number of
Registrable Securities having a Fair Market Value on the business day
immediately preceding the date of such registration request of less than
$2,500,000, or (D) if such registration request is for Registrable
Securities which consist in whole or in part of shares of Class B Common
Stock, unless such request is accompanied by an opinion of counsel for
the Holder submitting the request, which opinion is satisfactory in form
and substance to the Board of Directors of the Company, to the effect
that: (x) the sale or other transaction in connection with which
registration of such shares is requested will not result in their
automatic conversion to Class A Common Stock pursuant to the Amended and
Restated Certificate of Incorporation of the Company and (y) registration
of such shares in connection with such sale or other transaction is
required by the Securities Act; and
(iv) the Company shall not be obligated to file a registration
statement relating to a registration request pursuant to this Section 2:
(A) in the case of a registration request by GLII or any Permitted
Transferee that has acquired, in the transaction in which it became a
Permitted Transferee, at least a majority of the then issued and
outstanding Voting Stock, on more than three occasions after such time as
GLII or such Permitted Transferee, as the case may be, owns less than a
majority of the voting power of the outstanding capital stock of the
Company (it being acknowledged that so long as GLII or such Permitted
Transferee owns a majority of the voting power of the outstanding capital
stock of the Company, there shall be no limit to the number of occasions
on which GLII or such Permitted Transferee may exercise such rights), or
(B) in the case of a Holder other than GLII or a Permitted Transferee
described in clause (A) above, on more than the number of occasions
permitted such Holder in accordance with Section 11 hereof.
(b) Notwithstanding any other provision of this Agreement to the contrary:
(i) a registration requested by a Holder pursuant to this Section 2
shall not be deemed to have been effected (and, therefore, not requested
for purposes of Section 2(a)), (A) unless the registration statement
filed in connection therewith has become effective, (B) if after such
registration statement has become effective, it becomes subject to any
stop order, or there is issued an injunction or other order or decree of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by such Holder, which injunction, order
or decree prohibits or otherwise materially and adversely affects the
offer and sale of the Registrable Securities so registered prior to the
completion of the distribution thereof in
5
<PAGE> 6
accordance with the plan of distribution set forth in the registration
statement or (C) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied by reason of some act, misrepresentation
or omission by the Company and are not waived by the purchasers or
underwriters; and
(ii) nothing herein shall modify a Holder's obligation to pay
Registration Expenses, in accordance with Section 4 hereof, that are
incurred in connection with any withdrawn registration requested by such
Holder.
(c) In the event that any registration pursuant to this Section 2 shall
involve, in whole or in part, an underwritten offering, Holders owning at least
50.1% of the Fair Market Value of the Registrable Securities to be registered
in connection with such offering shall have the right to designate an
underwriter reasonably satisfactory to the Company as the lead managing
underwriter of such underwritten offering.
(d) The Company shall have the right to cause the registration of
additional shares of Class A Common Stock for sale for the account of any
person (including the Company) in any registration of Registrable Securities
requested by any Holder pursuant to Section 2(a), but only to the extent the
managing underwriter or other independent marketing agent for such offering (if
any), in such case selected by the Holder which has tendered the registration
request, determines that, in its opinion, the additional shares of Class A
Common Stock proposed to be sold will not materially and adversely affect the
offering and sale of the Registrable Securities to be registered in accordance
with the intended method or methods of disposition then contemplated by such
Holder. The rights of a Holder to cause the registration of additional
Registrable Securities held by such Holder in any registration of Registrable
Securities requested by another Holder pursuant to Section 2(a) shall be
governed by the agreement of the Holders with respect thereto as provided in
Section 11(a).
(e) The Company shall not be obligated to file a registration statement
relating to a registration request by a Holder pursuant to this Section 2 from
and after such time as such Holder first owns Registrable Securities
representing (assuming for this purpose the conversion, exchange or exercise of
all Registrable Securities then owned by such Holder that are convertible into
or exercisable or exchangeable for Voting Stock of the Company) less than 10%
of the then issued and outstanding Voting Stock of the Company.
3. Piggyback Registration. If the Company at any time proposes to
register any of its Common Stock or any other of its securities (collectively,
"Other Securities") under the Securities Act, whether or not for sale for its
own account, in a manner which would permit registration of Registrable
Securities for sale for cash to the public under the Securities Act, it will
each such time give prompt written notice to each Holder of its intention to do
so at least 10 business days prior to the anticipated filing date of the
registration statement relating to such registration. Such notice shall offer
each such Holder the opportunity to include in such registration statement such
number of Registrable Securities as each such Holder may request. Upon the
written request of any such Holder made within 5 business days after the
receipt of the
6
<PAGE> 7
Company's notice (which request shall specify the number of Registrable
Securities intended to be disposed of and the intended method of disposition
thereof), the Company shall effect, in the manner set forth in Section 5, in
connection with the registration of the Other Securities, the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register, to the extent required to permit the disposition
(in accordance with such intended methods thereof) of the Registrable
Securities so requested to be registered, provided that:
(a) if at any time after giving written notice of its intention to
register any securities and prior to the effective date of such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to the Holders and, thereupon, (A) in the case of
a determination not to register, the Company shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration and (B) in the case of a determination to delay such registration,
the Company shall be permitted to delay registration of any Registrable
Securities requested to be included in such registration for the same period as
the delay in registering such other securities, but, in either such case,
without prejudice to the rights of the Holders under Section 2;
(b) (i) if the registration referred to in the first sentence of
this Section 3 is to be a registration in connection with an underwritten
offering on behalf of either the Company or holders of securities (other
than Registrable Securities) of the Company ("Other Holders"), and the
managing underwriter for such offering advises the Company in writing
that, in such firm's opinion, such offering would be materially and
adversely affected by the inclusion therein of Registrable Securities
requested to be included therein because such Registrable Securities are
not of the same type, class or series as the securities to be offered and
sold in such offering on behalf of the Company and/or the Other Holders,
the Company may exclude all such Registrable Securities from such
offering provided that the Holder is permitted to substitute for the
Registrable Securities so excluded an equal number of Registrable
Securities of the same type, class or series as those being registered by
the Company or the Other Holders, if and to the extent such Holder owns
Registrable Securities of such type, class or series or can acquire
Registrable Securities of such type, class or series upon exercise or
conversion of other Registrable Securities; and
(ii) if the registration referred to in the first sentence of
this Section 3 is to be a registration in connection with an underwritten
primary offering on behalf of the Company, and the managing underwriter
for such offering advises the Company in writing that, in such firm's
opinion, such offering would be materially and adversely affected by the
inclusion therein of the Registrable Securities requested to be included
therein because the number or principal amount of such Registrable
Securities, considered together with the number or principal amount of
securities proposed to be offered by the Company, exceeds the aggregate
number or principal amount of securities which, in such firm's opinion,
can be sold in such offering without materially and adversely affecting
the offering, the Company shall include in such registration: (1) first,
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<PAGE> 8
all securities the Company proposes to sell for its own account ("Company
Securities") and (2) second, the number or principal amount of
Registrable Securities and securities, if any, requested to be included
therein by the Holder and by Other Holders in excess of the number or
principal amount of Company Securities which, in the opinion of such
underwriter, can be so sold without materially and adversely affecting
such offering (allocated pro rata among the Holders and the Other Holders
on the basis of the number of securities (including Registrable
Securities) requested to be included therein by each Holder and each such
Other Holder); and
(iii) if the registration referred to in the first sentence of
this Section 3 is to be a registration in connection with an underwritten
secondary offering on behalf of Other Holders made pursuant to demand
registration rights granted by the Company to such Other Holders (the
"Initiating Holders"), and the managing underwriter for such offering
advises the Company in writing that in such firm's opinion, such offering
would be materially and adversely affected by the inclusion therein of
the Registrable Securities requested to be included therein because the
number or principal amount of such Registrable Securities, considered
together with the number or principal amount of securities proposed to be
offered by the Initiating Holders, exceeds the aggregate number or
principal amount of securities which, in such firm's opinion, can be sold
in such offering without materially and adversely affecting the offering,
the Company shall include in such registration; (1) first, to the extent
the registration rights granted to an Initiating Holder permit it to
exclude other securities from its registration on substantially the same
basis as that set forth in the first sentence of Section 2(d) hereof, all
securities any such Initiating Holder proposes to sell for its own
account, and (2) second, the number or principal amount of additional
securities (including Registrable Securities) that such managing
underwriter advises can be sold without materially and adversely
affecting such offering, allocated pro rata among any Other Holders to
which clause (1) does not apply and the Holders on the basis of the
number of securities (including Registrable Securities) requested to be
included therein by each Holder and each such Other Holder;
(c) the Company shall not be required to effect any registration of
Registrable Securities under this Section 3 incidental to the registration of
any of its securities in connection with (i) stock option or other executive or
employee benefit or compensation plans of the Company, or (ii) acquisitions of
assets or businesses by the Company;
(d) no registration of Registrable Securities effected under this Section
3 shall relieve the Company of its obligation to effect any registration of
Registrable Securities required of the Company pursuant to Section 2 hereof;
and
(e) the Company shall not be required to effect any registration of
Registrable Securities under this Section for any Holder from and after such
time as such Holder is able to dispose of all of its Registrable Securities
within a three-month period pursuant to Rule 144.
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<PAGE> 9
4. Expenses. The Holders, on the one hand, by accepting Registrable
Securities, and the Company, on the other hand, each agree to pay one-half of
all Registration Expenses with respect to a registration pursuant to Section 2
hereof, provided that to the extent a registration pursuant to Section 2
includes the registration of shares for the Company or another person in
connection therewith, the Company or such other person shall pay all
incremental expenses of including such additional shares in the registration.
The Holders' portion of any Registration Expenses shall be allocated among them
pro rata based on each Holder's number or principal amount of Registrable
Securities included in such offering. The Company agrees to pay all
Registration Expenses with respect to a registration pursuant to Section 3
hereof. All Registration Expenses to be paid by the Holder shall be paid
within 30 days of the delivery of a statement from the Company, such statements
to be delivered not more frequently than once every 60 days. All internal
expenses of the Company or a Holder in connection with any offering pursuant to
this Agreement, including, without limitation, the salaries and expenses of
officers and employees, including in-house attorneys, shall be borne by the
party incurring them. All Selling Expenses of the Holders participating in any
registration pursuant to this Agreement shall be borne by such Holders pro rata
based on each Holder's number of Registrable Securities included in such
registration.
5. Registration and Qualification. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 2 or 3 hereof, the
Company, subject to Section 4 hereof, shall:
(a) use its best efforts to prepare and file a registration statement
under the Securities Act relating to the Registrable Securities to be offered
as soon as practicable, but in no event later than 45 days (60 days if the
applicable registration form is other than Form S-3) after the date notice is
given, and use its best efforts to cause the same to become effective within 90
days after the date notice is given (120 days if the applicable registration
form is other than Form S-3);
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective with respect to the
disposition of all Registrable Securities until the earlier of (i) such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition set forth in such registration statement and
(ii) the expiration of nine months after such registration statement becomes
effective; provided, that such nine-month period shall be extended for such
number of days that equals the number of days elapsing from (A) the date the
written notice contemplated by paragraph (f) below is given by the Company to
(B) the date on which the Company delivers to the Holders of Registrable
Securities the supplement or amendment contemplated by paragraph (f) below; and
provided further, that in the case of a registration to permit the exercise or
exchange of Exchangeable Securities for, or the conversion of Exchangeable
Securities into, Registrable Securities, the time limitation contained in
clause (ii) above shall be disregarded to the extent that, in the written
opinion of counsel to the Holder of such Registrable Securities, delivered to
the Company, such Registrable Securities are required to be covered by an
effective registration statement under the Securities Act at the time such
Registrable Securities are issued
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<PAGE> 10
upon exercise, exchange or conversion of Registrable Securities in order for
such Registrable Securities to be freely tradeable by any person who is not an
Affiliate of the Company or GLII;
(c) furnish to the Holders and to any underwriter of such Registrable
Securities such number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act, and
such other documents, as the Holders or such underwriter may reasonably request
in order to facilitate the public sale of the Registrable Securities, and a
copy of any and all transmittal letters or other correspondence to, or received
from, the SEC or any other governmental agency or self-regulatory body or other
body having jurisdiction (including any domestic or foreign securities
exchange) relating to such offering;
(d) use its best efforts to register or qualify all Registrable Securities
covered by such registration statement under the securities or blue sky laws of
such jurisdictions (domestic or foreign) as the Holders or any underwriter of
such Registrable Securities shall request, and use its best efforts to obtain
all appropriate registrations, permits and consents required in connection
therewith, and do any and all other acts and things which may be necessary or
advisable to enable the Holders or any such underwriter to consummate the
disposition in such jurisdictions of its Registrable Securities covered by such
registration statement; provided that the Company shall not for any such
purpose be required to register or qualify generally to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified, or to
subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(e) (i) use its best efforts to furnish an opinion of counsel for the
Company addressed to the underwriters and each Holder of Registrable Securities
included in such registration (each a "Selling Holder") and dated the date of
the closing under the underwriting agreement (if any) (or if such offering is
not underwritten, dated the effective date of the registration statement), and
(ii) use its best efforts to furnish a "cold comfort" letter addressed to each
Selling Holder, if permissible under applicable accounting practices, and
signed by the independent public accountants who have audited the Company's
financial statements included in such registration statement, in each such case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Selling Holders may reasonably request and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements;
(f) immediately notify the Selling Holders in writing (i) at any time when
a prospectus relating to a registration pursuant to Section 2 or 3 hereof is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
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<PAGE> 11
the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) of any request by the SEC or any other
regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in either such case (i) or (ii) at the request of the Selling
Holders, subject to Section 4 hereof, prepare and furnish to the Selling
Holders a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading;
(g) use its best efforts to list all such Registrable Securities which
consist of Class A Common Stock covered by such registration on each securities
exchange and inter-dealer quotation system on which the Class A Common Stock is
then listed, with expenses in connection therewith (not including any future
periodic assessments or fees for such additional listing, which shall be paid
by the Company) to be paid in accordance with Section 4 hereof;
(h) to the extent reasonably requested by the lead or managing
underwriters in connection with any underwritten offering, send appropriate
officers of the Company to attend any "road shows" or other customary marketing
efforts scheduled in connection with any such registration; and
(i) furnish for delivery in connection with the closing of any offering of
Registrable Securities unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested
by the Selling Holders or the underwriters.
6. Exchangeable Securities. GLII shall be entitled, if it intends to
offer any options, rights, warrants or other securities issued or to be issued
by it or any other person that are exercisable or exchangeable for or
convertible into any Registrable Securities ("Exchangeable Securities"), to
register the Registrable Securities underlying such options, rights, warrants
or other securities pursuant to (and subject to the limitations contained in)
Section 2 of this Agreement.
7. Underwriting; Due Diligence.
(a) If requested by the underwriters for any underwritten offering of
Registrable Securities pursuant to a registration requested under this
Agreement, the Company shall enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution
substantially to the effect and to the extent provided in Section 8 hereof and
the provision of opinions of counsel and accountants' letters to the effect and
to the extent provided in Section 5(e) hereof. The Selling Holders on whose
behalf the Registrable Securities are to be distributed by such underwriters
shall be parties to any such underwriting agreement and the representations and
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<PAGE> 12
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, shall also be made to and for the benefit of
such Selling Holders. Such underwriting agreement shall also contain such
representations and warranties by the Selling Holders on whose behalf the
Registrable Securities are to be distributed as are customarily contained in
underwriting agreements with respect to secondary distributions. The Selling
Holders may require that any additional securities included in an offering
proposed by a Holder be included on the same terms and conditions as the
Registrable Securities that are included therein.
(b) In the event that any registration pursuant to Section 3 shall
involve, in whole or in part, an underwritten offering, the Company may require
the Registrable Securities requested to be registered pursuant to Section 3 to
be included in such underwritten offering on the same terms and conditions as
shall be applicable to the other securities being sold through underwriters
under such registration. If requested by the underwriters for such
underwritten offering, the Selling Holders on whose behalf the Registrable
Securities are to be distributed shall enter into an underwriting agreement
with such underwriters, such agreement to contain such representations and
warranties by the Selling Holders and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution
substantially to the effect and to the extent provided in Section 8 hereof.
Such underwriting agreement shall also contain such representations and
warranties by the Company and such other person or entity for whose account
securities are being sold in such offering as are customarily contained in
underwriting agreements with respect to secondary distributions.
(c) In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, the
Company shall give the Holders of such Registrable Securities and the
underwriters, if any, and their respective counsel and accountants, such
reasonable and customary access to its books and records and such opportunities
to discuss the business of the Company with its officers and the independent
public accountants who have certified the Company's financial statements as
shall be necessary, in the opinion of such Holders and such underwriters or
their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act, subject to the execution by such Holders and
such underwriters of appropriate confidentiality agreements.
8. Indemnification and Contribution.
(a) In the case of each offering of Registrable Securities made pursuant
to this Agreement, the Company agrees to indemnify and hold harmless each
Holder, its officers and directors, each underwriter of Registrable Securities
so offered and each person, if any, who controls any of the foregoing persons
within the meaning of the Securities Act, from and against any and all claims,
liabilities, losses, damages, expenses and judgments, joint or several, to
which they or any of them may become subject, under the Securities Act or
otherwise, including any amount paid in settlement of any litigation commenced
or threatened, and shall promptly reimburse them, as and when incurred, for any
reasonable legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as such
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<PAGE> 13
losses, claims, damages, liabilities or actions shall arise out of, or shall be
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or supplement thereto, or
in any document incorporated by reference therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the Company shall not be liable to a particular Holder or underwriter in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement, or any omission, if such statement or omission shall have been made
in reliance upon and in conformity with information (i) relating to such Holder
and furnished to the Company in writing by or on behalf of such Holder or (ii)
furnished to the Company in writing by or on behalf of an underwriter, in
either case specifically for use in the preparation of the registration
statement (or in any preliminary or final prospectus included therein) or any
amendment thereof or supplement thereto. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of a
Holder and shall survive the transfer of such securities. The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to each Holder, any of such Holder's directors or officers,
underwriters of the Registrable Securities or any controlling person of the
foregoing; provided, further, that this indemnity does not apply in favor of
any underwriter or person controlling an underwriter (or if a Selling Holder
offers Registrable Securities directly without an underwriter, the Selling
Holder) with respect to any loss, liability, claim, damage or expense arising
out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary prospectus if a copy of a final
prospectus was not sent or given by or on behalf of an underwriter (or the
Selling Holder, if the Selling Holder offered the Registrable Securities
directly without an underwriter) to the person asserting such loss, claim,
damage, liability or action at or prior to the written confirmation of the sale
of the Registrable Securities as required by the Securities Act and such untrue
statement or omission had been corrected in such final prospectus.
(b) In the case of each offering made pursuant to this Agreement, each
Holder of Registrable Securities included in such offering, by exercising its
registration rights hereunder, agrees to indemnify and hold harmless the
Company, its officers and directors and each person, if any, who controls any
of the foregoing within the meaning of the Securities Act (and if requested by
the underwriters, each underwriter who participates in the offering and each
person, if any, who controls any such underwriter within the meaning of the
Securities Act), from and against any and all claims, liabilities, losses,
damages, expenses and judgments, joint or several, to which they or any of them
may become subject, under the Securities Act or otherwise, including any amount
paid in settlement of any litigation commenced or threatened, and shall
promptly reimburse them, as and when incurred, for any legal or other expenses
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities or actions
shall arise out of, or shall be based upon, any untrue statement or alleged
untrue statement of a material fact contained in the registration statement (or
in any preliminary or final prospectus included therein) or any amendment
thereof or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
such untrue statement of a material fact is contained in, or such material fact
is
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<PAGE> 14
omitted from, information relating to such Holder furnished in writing to the
Company by or on behalf of such Holder specifically for use in the preparation
of such registration statement (or in any preliminary or final prospectus
included therein). The foregoing indemnity is in addition to any liability
which such Holder may otherwise have to the Company, any of its directors or
officers, underwriters of the Registrable Securities or any controlling person
of the foregoing; provided, however, that this indemnity does not apply in
favor of any underwriter or person controlling an underwriter (or if the
Company offers Registrable Securities directly without an underwriter, the
Company) with respect to any loss, liability, claim, damage or expense arising
out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary prospectus if a copy of a final
prospectus was not sent or given by or on behalf of an underwriter (or the
Company, if the Company offered the Registrable Securities directly without an
underwriter) to the person asserting such loss, claim, damage, liability or
action at or prior to the written confirmation of the sale of the Registrable
Securities as required by the Securities Act and such untrue statement or
omission had been corrected in such final prospectus.
(c) Each party indemnified under paragraph (a) or (b) of this Section 8
shall, promptly after receipt of notice of any claim or the commencement of any
action against such indemnified party in respect of which indemnity may be
sought, notify the indemnifying party in writing of the claim or the
commencement thereof; provided that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party on account of the indemnity agreement contained in paragraph
(a) or (b) of this Section 8, except to the extent the indemnifying party was
materially prejudiced by such failure, and in no event shall relieve the
indemnifying party from any other liability which it may have to such
indemnified party. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided that each indemnified party, its officers and
directors, if any, and each person, if any, who controls such indemnified party
within the meaning of the Securities Act, shall have the right to employ
separate counsel reasonably approved by the indemnifying party to represent
them if the named parties to any action (including any impleaded parties)
include both such indemnified party and an indemnifying party or an Affiliate
of an indemnifying party, and such indemnified party shall have been advised by
counsel either (i) that there may be one or more legal defenses available to
such indemnifying party that are different from or additional to those
available to such indemnified party or such Affiliate or (ii) a conflict may
exist between such indemnified party and such indemnifying party or such
Affiliate, and in that event the fees and expenses of one such separate counsel
for all such indemnified parties shall be paid by the indemnifying party. An
indemnified party will not enter into any settlement agreement which is not
approved by the indemnifying party, such approval not to be unreasonably
withheld. The indemnifying party may not agree to any settlement of any such
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<PAGE> 15
claim or action which provides for any remedy or relief other than monetary
damages for which the indemnifying party shall be responsible hereunder,
without the prior written consent of the indemnified party, which consent shall
not be unreasonably withheld. In any action hereunder as to which the
indemnifying party has assumed the defense thereof with counsel reasonably
satisfactory to the indemnified party, the indemnified party shall continue to
be entitled to participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the indemnifying party shall not be
obligated hereunder to reimburse the indemnified party for the costs thereof.
In all instances, the indemnified party shall cooperate fully with the
indemnifying party or its counsel in the defense of such claim or action.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
in respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to herein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, in such proportion as shall be appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party on the
one hand or the indemnified party on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission, but not by reference to any indemnified
party's stock ownership in the Company. In no event, however, shall a Holder
be required to contribute in excess of the amount of the net proceeds received
by such Holder in connection with the sale of Registrable Securities in the
offering which is the subject of such loss, claim, damage or liability. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
paragraph shall be deemed to include, for purposes of this paragraph, any legal
or other expenses reasonably incurred by such indemnifying party in connection
with investigating or defending any such action or claim. 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.
9. Rule 144. The Company shall take such measures and file such
information, documents and reports as shall be required by the SEC as a
condition to the availability of Rule 144 (or any successor provision). The
Company shall use its best efforts to cause all conditions to the availability
of Form S-3 (or any successor form thereto) under the Securities Act for the
filing of registration statements under this Agreement to be met as soon as
possible after the completion of the Public Offering.
10. Holdback.
(a) GLII and each other Holder agrees by the acquisition of Registrable
Securities, if so required by the managing underwriter of any offering of
equity securities by the
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<PAGE> 16
Company, not to sell, make any short sale of, loan, grant any option for the
purchase of, effect any public sale or distribution of or otherwise dispose of
any Registrable Securities owned by such Holder, during the 30 days prior to
and the 90 days after the registration statement relating to such offering has
become effective (or such shorter period as may be required by the
underwriter), except as part of such underwritten offering. Notwithstanding
the foregoing sentence, each Holder subject to the foregoing sentence shall be
entitled to sell during the foregoing period any securities of the Company
owned by it in a private sale. The Company may legend and may impose stop
transfer instructions on any certificate evidencing Registrable Securities
relating to the restrictions provided for in this Section 10.
(b) The Company agrees, if so required by the managing underwriter of any
offering of Registrable Securities, not to sell, make any short sale of, loan,
grant any option for the purchase of (other than pursuant to employee benefit
plans), effect any public sale or distribution of or otherwise dispose of any
of its equity securities during the 30 days prior to and the 90 days after any
underwritten registration pursuant to Section 2 or 3 hereof has become
effective, except as part of such underwritten registration and except pursuant
to registrations on Form S-4, S-8 or any successor or similar forms thereto.
11. Transfer of Registration Rights.
(a) A Holder may transfer all or any portion of its rights under this
Agreement to any "Permitted Transferee," as defined in Section 4[__] of the
Company's Amended and Restated Certificate of Incorporation, or to any
transferee of Registrable Securities that represent (assuming, for purposes of
making such 20% calculation, the conversion, exchange or exercise of all
Registrable Securities so transferred that are convertible into or exercisable
or exchangeable for the Company's Voting Stock) at least 20% of the then issued
and outstanding Voting Stock of the Company (each, a "Qualifying Permitted
Transferee"); provided, however, that (i) with respect to any transferee of
less than a majority but more than 30% of the then issued and outstanding
Voting Stock, the Company shall not be obligated to file a registration
statement pursuant to a registration request made by such transferee pursuant
to Section 2 hereof on more than two occasions, and (ii) with respect to any
transferee of 30% or less of the then issued and outstanding Voting Stock, the
Company shall not be obligated to file a registration statement pursuant to a
registration request made by such transferee pursuant to Section 2 hereof on
more than one occasion. The Company shall receive a written notice stating the
name and address of any Permitted Transferee and identifying the number and/or
aggregate principal amount of Registrable Securities with respect to which the
rights under this Agreement are being transferred and the scope of the rights
so transferred, provided that the failure of the Company to receive any such
notice shall not affect the validity of the transfer of rights under this
Agreement to any Permitted Transferee. In connection with any such transfer,
the term GLII as used in this Agreement (other than in Section 2(a)(iv)) shall,
where appropriate to assign the rights and obligations hereunder to such
Permitted Transferee, be deemed to refer to the Permitted Transferee of such
Registrable Securities. GLII and any Permitted Transferees may exercise the
registration rights hereunder in such priority, as among themselves, as they
shall agree among themselves, and the Company shall observe any such agreements
of which it shall have notice as provided above.
16
<PAGE> 17
(b) After any such transfer, the transferring Holder shall retain its
rights under this Agreement with respect to all other Registrable Securities
owned by such transferring Holder.
(c) Upon the request of the transferring Holder, the Company shall execute
an agreement with a Permitted Transferee substantially similar to this
Agreement.
12. Termination of Right to Use Griffith Name. The Company agrees that,
if at any time Griffith Laboratories, Inc., an Illinois corporation that owns
all of the capital stock of GLII ("GLI"), owns, directly or indirectly through
one or more sales, less than 50% of the voting power of all outstanding capital
stock of the Company, GLI may at any time thereafter demand by written notice
to the Company that within 12 months of the date such notice is received, the
Company (i) change its name to a name that does not include the word
"Griffith," (ii) cease using any trademark or trade name that contains the word
"Griffith," and (iii) cease using the word "Griffith" in any manner in
connection with the Company's business. The limitations set forth above on the
use of the word "Griffith" shall also apply to any similar word or any
abbreviation of such word. In the event that any such written notice as given
by GLI, the Company agrees, within such 12-month period, to comply fully with
any such demand contained therein.
13. Miscellaneous.
(a) Injunctions. Each party acknowledges and agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement
was not performed in accordance with its specific terms or was otherwise
breached. Therefore, each party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court having
jurisdiction, such remedy being in addition to any other remedy to which such
party may be entitled at law or in equity.
(b) Severability. If any term or provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
each of the parties shall use its best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
(c) Further Assurances. Subject to the specific terms of this Agreement,
each of the parties hereto shall make, execute, acknowledge and deliver such
other instruments and documents, and take all such other actions, as may be
reasonably required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby.
(d) Waivers, etc. Except as otherwise expressly set forth in this
Agreement, no failure or delay on the part of either party 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. Except
as otherwise
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<PAGE> 18
expressly set forth in this Agreement, no modification or waiver of any
provision of this Agreement nor consent to any departure therefrom shall in any
event be effective unless the same shall be in writing and signed by an
authorized officer of each of the parties, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
(e) Entire Agreement. This Agreement contains the final and complete
understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the
parties, whether written or oral, with respect to the subject matter hereof.
The paragraph headings contained in this Agreement are for reference purposes
only, and shall not affect in any manner the meaning or interpretation of this
Agreement.
(f) Counterparts. For the convenience of the parties, this Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original but all of which together shall be one and the same instrument.
(g) Amendment. This Agreement may be amended only by a written instrument
duly executed by an authorized officer of each of the parties.
(h) Notices. Unless expressly provided herein, all notices, claims,
certificates, requests, demands and other communications hereunder shall be in
writing and shall be deemed to be duly given (i) when personally delivered or
(ii) if mailed registered or certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or the letter refused by
the addressee or its agent or (iii) if sent by overnight courier which delivers
only upon the signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or its agent or (iv) if
sent by facsimile or other generally accepted means of electronic transmission,
on the date confirmation of transmission is received (provided that a copy of
any notice delivered pursuant to this clause (iv) shall also be sent pursuant
to clause (ii) or (iii)), addressed as follows or sent by facsimile to the
following number (or to such other address or facsimile number for a party as
it shall have specified by like notice):
(i) if to GLII, to:
Griffith Laboratories International, Inc.
1 Griffith Center
Alsip, Illinois 60803-3495
Attention: General Counsel
Facsimile: 708-371-4783
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<PAGE> 19
(ii) if to the Company, to
Griffith Micro Science International, Inc.
2001 Spring Road, Suite 500
Oak Brook, Illinois 60523-1887
Attention: President
Facsimile: 630-472-4543
(iii) if to a Holder of Registrable
Securities, to the name and address as the same appear
in the security transfer books of the Company,
or to such other address as either party (or other Holders of Registrable
Securities) may, from time to time, designate in a written notice in a like
manner.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
(j) Assignment. Except as specifically provided herein, the parties may
not assign their rights under this Agreement. The Company may not delegate its
obligations under this Agreement.
(k) Conflicting Agreements. The Company shall not hereafter grant any
rights to any person to register securities of the Company, the exercise of
which would conflict with the rights granted to the Holders of the Registrable
Securities under this Agreement. The Company shall not hereafter grant to any
person demand registration rights permitting it to exclude the Holders from
including Registrable Securities in a registration on behalf of such person on
a basis more favorable than that set forth in Section 2(d) hereof with respect
to the Holders.
19
<PAGE> 20
IN WITNESS WHEREOF, GLII and the Company have caused this Agreement to be
duly executed by their authorized representative as of the date first above
written.
GRIFFITH LABORATORIES
INTERNATIONAL, INC.
By:
------------------------------
Name:
Title:
GRIFFITH MICRO SCIENCE
INTERNATIONAL, INC.
By:
------------------------------
Name:
Title:
20
<PAGE> 1
EXHIBIT 4.5
_________________, 1998
ABN AMRO Incorporated
Robert W. Baird & Co. Incorporated
As Representatives of the
several Underwriters named
in Schedule I hereto
c/o ABN AMRO Incorporated
208 South LaSalle Street
Chicago, Illinois 60604
Re: Griffith Micro Science International, Inc.
2,500,000 Shares of Class A Common Stock
Registration Statement No. 333-
Ladies & Gentlemen:
The undersigned understands that ABN AMRO Incorporated and Robert W. Baird
& Co. Incorporated, as representatives (the "Representatives") of the several
underwriters (the "Underwriters"), propose to enter into an underwriting
agreement (the "Underwriting Agreement"), with Griffith Micro Science
International, Inc. (the "Company") providing for the initial public offering
(the "Public Offering") by the Underwriters of up to 2,875,000 shares of the
Company's Class A Common Stock, $0.01 par value per share (the "Class A Common
Stock").
In consideration of the Underwriters' agreement to purchase and undertake
the Public Offering and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the undersigned agrees that,
without the prior written consent of the Representatives, the undersigned will
not, directly or indirectly, sell, offer, contract to sell, grant an option for
sale, pledge or otherwise dispose of or transfer any shares of Class A Common
Stock or any securities convertible into or exchangeable or exercisable for
Class A Common Stock owned by him or with respect to which he has the power of
disposition, for a period of 180 days after the date of the Underwriting
Agreement.
Notwithstanding the foregoing, it is agreed that bona fide gifts of shares
of Class A Common Stock by the undersigned to a donee who agrees in writing
prior to receipt of any such gifts to be subject to and bound by the terms
hereof will not be subject to the restrictions set forth in this Agreement.
This Agreement shall be binding on the undersigned and the respective
successors, heirs, personal representatives and assigns of the undersigned.
The undersigned understands that the Company, the Underwriters and the
Representatives will proceed with the Public Offering in reliance on this
Agreement.
Very truly yours,
<PAGE> 1
EXHIBIT 10.1
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
1996 KEY EMPLOYEE STOCK OPTION PLAN
(AS AMENDED AND RESTATED IN MARCH 1998)
1. Statement of Purpose. The purpose of this 1996 Key Employee Stock
Option Plan (the "Plan") is to benefit Griffith Micro Science International,
Inc., a Delaware corporation (the "Company"), and its subsidiaries by offering
certain key employees of the Company, its subsidiaries and its other affiliates
whose services are deemed to be important to the future success of the Company a
favorable opportunity to acquire capital stock of the Company over time, thereby
giving them an equity stake in the growth and prosperity of the Company and
encouraging the continuance of their services with the Company, its subsidiaries
and its other affiliates.
2. Certain defined terms. The terms hereinafter set forth when used in the
Plan or any certificate evidencing an Option granted pursuant to the Plan shall
have the following meanings (and the following definitions shall be equally
applicable to both the singular and plural forms of any of the terms herein
defined):
(a) "Affiliate" means, when used with reference to the Company, any
corporation or other form of business entity which directly, or through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Company.
(b) "Annual Appraisal" means a written valuation of the Company and/or
its outstanding shares of Common Stock at and as of the last day of any fiscal
year of the Company prepared by an independent evaluator selected by the
Committee. Without limiting the generality of the foregoing, with respect to any
Option granted prior to October 1, 1996, the term "Annual Appraisal" means the
value of the Company at and as of September 30, 1995 as
<PAGE> 2
determined by The Chicago Corporation, an independent investment banking firm,
as set forth in the letter dated January 20, 1996 and accompanying valuation
material of The Chicago Corporation sent to the Company's affiliate, Griffith
Laboratories, Inc.
(c) "Board" means the board of directors of the Company as it is duly
constituted from time-to-time.
(d) "Call" and "Call Notice" and "Call Closing" are defined in Paragraph
10.
(e) "Cause" means: either (i) the willful failure by the Optionee to
substantially perform his or her employment duties with the Company or any of
its subsidiaries or other affiliates; or (ii) the willful engaging by the
Optionee in conduct which is demonstrably and materially injurious, monetarily
or otherwise, to the Company or any of its subsidiaries or other affiliates.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" is defined in Paragraph 3.
(h) "Common Stock" means the class of shares of common stock, $.01 par
value per share, of the Company, including without limitation such class as it
may in the future be redesignated or reclassified.
(i) "Company" is defined in Paragraph 1.
(j) "Custodian" is defined in Paragraph 13.
(k) "Fair Market Value" means, with respect to a share of Common Stock
on any specified date (the "Measuring Date"), as follows:
(i) if the Measuring Date occurs prior to the Initial Public
Trading Date, the Fair Market Value of a share of Common Stock on such
date,
2
<PAGE> 3
unless the Committee otherwise reasonably determines in any given
case, shall be deemed to be the value of a share of Common Stock at
and as of the last day of the fiscal year of the Company most
recently ended prior to the Measuring Date as specified in or
derived from the Annual Appraisal; and
(ii) if the Measuring Date occurs on or after the Initial
Public Trading Date, the Fair Market Value of a share of Common
Stock on such date shall be:
(A) in the event that on the Measuring Date the Common
Stock is listed or quoted on the NASDAQ National Market System
or any other national securities exchange, the average of the
highest and lowest sale prices of the Common Stock reported on
the NASDAQ National Market System or on the principal national
securities exchange on which the Common Stock is listed (as
reported in The Wall Street Journal, Midwest Edition) on such
date; or
(B) in the event that on the Measuring Date the Common
Stock is not listed or quoted on the NASDAQ National Market
System or any other national securities exchange but another
class of the Company's equity securities into which the Common
Stock is then convertible (the "Conversion Securities") is so
listed or quoted on such date, the product of (x) the average
of the highest and lowest sale prices of the Conversion
Securities reported on the NASDAQ National Market System or on
the principal national securities exchange on which the Common
Stock is listed (as reported in The Wall Street Journal,
Midwest Edition) on such date times (y) the conversion rate of
Common Stock into Conversion Securities on such date; or
3
<PAGE> 4
(C) if neither clause (A) nor clause (B) is applicable
under the specific circumstances, then the Fair Market Value
of a share of Common Stock on such Measuring Date shall be as
reasonably determined by the Committee.
(l) "Initial Public Trading Date" means the effective date of
a registration statement filed by the Company with the U.S. Securities and
Exchange Commission under the U.S. Securities Act of 1933, as amended, in
connection with an initial public offering of shares of Common Stock or of any
other class of the Company's equity securities into which the Common Stock is
convertible.
(m) "Option" means an option to purchase Shares granted
pursuant to the Plan.
(n) "Option Agreement" is defined in Paragraph 5(d).
(o) "Optionee" means each individual who is granted an Option
and each other person entitled at any time by the Plan to exercise an Option.
(p) "Option Shares Certificate" is defined in Paragraph 13.
(q) "Permanent Disability" has the same meaning herein as its
definition in Section 22(e)(3) of the Code as in effect on the date of adoption
of the Plan.
(r) "Plan" is defined in Paragraph 1.
(s) "Promissory Note" is defined in Paragraph 8(e).
(t) "Put" and "Put Notice" and "Put Closing" are defined in
Para-graph 9.
(u) "Right of First Refusal" and "RFR Notice" and "RFR
Closing" are defined in Paragraph 12.
4
<PAGE> 5
(v) "Shares" means the aggregate number of shares of Common
Stock as to which the Committee may grant Options. The term includes shares of
Common Stock which are at any given time either covered by outstanding Options
or which are issued and outstanding as a result of the exercise of any Option.
(w) "Stock Powers" is defined in Paragraph 13.
(x) "Substitute Option Shares Certificate" is defined in
Paragraph 13.
(y) "Unexercised Shares" means, at any specified point in
time, the Shares which then remain subject to an Option, whether or not vested,
and as to which the Option has not then been exercised.
3. Administration. (a) The Plan shall be administered by the Stock Option
Committee of the Board (the "Committee") as it is duly constituted from
time-to-time. The Committee shall be composed of each member of the Board who
is not also an employee of the Company or any subsidiary of the Company.
(b) The Committee shall have exclusive authority to interpret
the terms and provisions of the Plan and to prescribe, amend and rescind rules
and regulations relating to the Plan and its administration. All
interpretations by the Committee of the terms and provisions of the Plan and all
determinations by the Committee of matters pertaining to Options shall be final
and conclusive.
4. Eligibility. (a) Options may be granted to key employees of the
Company, its subsidiaries and its other Affiliates selected initially and from
time to time thereafter by the Committee on the basis of the special importance
of their services in the management, development or operation of the Company or
any of its subsidiaries or in the ability to achieve the goals of the Company or
any such subsidiary.
5
<PAGE> 6
(b) Any option granted by the Committee to a person who at the time of
grant is a member of the Committee shall be approved by the holder(s) of a
majority of the outstanding shares of Common Stock.
5. Granting of Options. (a) The Committee may grant Options to purchase
up to an aggregate of 100,000 Shares, subject to adjustment as provided in
Paragraph 15 hereof. Upon the normal or early expiration of any Option, the
Unexercised Shares then subject thereto shall thereupon be released and may
again be covered by an Option or Options thereafter granted (including, without
limitation, a grant in substitution for an Option which has been cancelled by
mutual agreement between the Company and the Optionee). Options are intended
not to be treated as "incentive stock options" as that term is defined in
Section 422 of the Code.
(b) No Options shall be granted subsequent to May 31, 2006; provided,
however, that the Board may at any time prior to that date terminate the right
to grant any further Options. Shares subject to Options may be furnished from
the Company's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock.
(c) Nothing contained in the Plan or in any Option shall confer upon
any Optionee any right to be continued in the employment of the Company or any
subsidiary or other affiliate of the Company, or interfere in any way with the
right of the Company or any of its subsidiaries or other affiliates to terminate
such Optionee's employment at any time.
(d) Every Option granted by the Committee shall be evidenced by a
stock option agreement substantially in the form set forth as Exhibit A hereto
(the "Option Agreement"). Upon the grant of an Option by the Committee, the
following procedure will be followed:
6
<PAGE> 7
(i) duplicate originals of a completed but unsigned Option
Agreement will be sent by the Company to the Optionee;
(ii) to accept the Option evidenced thereby, the Optionee will
sign both of the duplicate originals of the Option Agreement and
return them to the Company within 30 days of the date thereof; and
(iii) upon the timely receipt by the Company from the Optionee
of the executed duplicate originals of the Option Agreement and the
signed Stock Powers called for by Paragraph 13(a) hereof, a duly
authorized officer of the Company will execute both duplicate
originals of the Option Agreement and return one fully signed copy to
the Optionee.
Every Option Agreement shall be dated as of the date on which the Committee
granted the Option evidenced thereby. No Option shall be valid until duplicate
originals of the Option Agreement evidencing the Option have been executed and
delivered by the Optionee and the Company. Upon its execution and delivery by
the Optionee and the Company, the Option Agreement shall constitute an
enforceable agreement between the Company and the Optionee to be bound by all of
the terms and conditions of the Option Agreement and of the Plan which is
incorporated therein with respect to the Option evidenced by such Option
Agreement and with respect to any Shares acquired upon exercise of such Option.
7
<PAGE> 8
6. Duration and vesting of right to exercise Options; early expiration.
(a) Each Option shall be for a term of ten years from the date of
grant and shall then expire, unless it has been fully exercised or has expired
prior to the end of such term.
(b) Each Option shall either vest and become exercisable (i) with
respect to the total number of Shares covered by such Option on the first
anniversary of the date of grant thereof or (ii) with respect to one-third of
the total number of Shares covered by such Option on each of the first, second
and third anniversaries of the date of grant thereof, as determined by the
Committee at the time the Option is granted and as set forth in the Option
Agreement evidencing the Option. All or any part of the Shares with respect to
which an Option has vested and become exercisable may be purchased at any time
or times thereafter by exercise of the Option prior to its normal or any early
expiration.
(c) Notwithstanding the foregoing subparagraphs (a) and (b) of this
Paragraph 6, the Committee may in its discretion: (i) specifically provide as
of the date of the grant of any Option for a term thereof which is less than ten
years; (ii) specifically provide as of the date of the grant of any Option for
another time or times when it vests and becomes exercisable in whole or part;
(iii) at any time or times after any Option has been granted, accelerate the
exercisability thereof in whole or in part, subject to any terms and conditions
that the Committee deems necessary and appropriate to effectuate the purposes of
the Plan; and (iv) at any time prior to the normal or early expiration of any
Option, extend the term thereof for an additional period or periods (provided,
however, that in no event shall the aggregate term of any Option, including the
original term of such Option and any extensions thereof, exceed ten years).
8
<PAGE> 9
(d) In the event the employment of an Optionee with the Company or any
of its subsidiaries or other affiliates terminates for any reason other than the
death or Permanent Disability of the Optionee or his or her discharge by the
Company without Cause, any Option held by him or her, to the extent then
unexercised, shall thereupon expire and all rights to purchase any of the
Unexercised Shares pursuant thereto shall terminate immediately. Temporary
absence from employment because of illness, vacations, approved leaves of
absence, and transfers of employment among the Company, its subsidiaries and its
affiliates shall not be considered to terminate employment or to interrupt
continuous employment.
(e) In the event the employment of an Optionee with the Company or any
of its subsidiaries or other affiliates terminates because of his or her death
or Permanent Disability, any Option granted to the Optionee may continue to be
exercised by the Optionee or, if the Optionee is not living, by the heirs,
legatees or legal representative of the Optionee, as the case may be, until the
earlier of (i) the close of business on the normal expiration date of such
Option or (ii) the close of business on the 90th day after the date his or her
employment is so terminated, but only to the extent that such Option was
exercisable on the date his or her employment is so terminated. Thereafter, any
such Option shall expire and all rights to purchase any of the Unexercised
Shares pursuant thereto shall terminate immediately.
(f) In the event the employment of an Optionee with the Company or any
of its subsidiaries or other affiliates terminates because of his or her
discharge without Cause, any Option granted to the Optionee may continue to be
exercised by the Optionee until the earlier of (i) the close of business on the
normal expiration date of such Option or (ii) the close of business on the 60th
day after the date his or her employment is so terminated, but only to the
extent that such Option was exercisable on the date his or her employment is so
9
<PAGE> 10
terminated. Thereafter, any such Option shall expire and all rights to purchase
any of the Unexercised Shares pursuant thereto shall terminate immediately.
7. Exercise price of Options. (a) The price at which any Option may be
exercised by the Optionee shall be the Fair Market Value of the Shares subject
to the Option at and as of the date on which the Option is granted.
(b) With respect to any Option granted prior to the availability of
the Annual Appraisal on which the exercise price of such Option will be based,
the Committee may specify in its resolution granting such Option that its
exercise price will be the Fair Market Value of the Shares subject to the Option
as specified in or derived from such Annual Appraisal and the Option Agreement
evidencing such Option may be withheld by the Company until such Annual
Appraisal is available and such exercise price is determinable therefrom.
8. Exercise of Options. (a) An Optionee may exercise the vested portion
of any Option at any time or from time to time prior to its normal or any early
expiration by giving written notice to the Company, attention of the Secretary,
specifying the number of Shares to be purchased pursuant to such exercise and
accompanied by the purchase price for the Shares being purchased. Except as
otherwise provided in subparagraphs (e) and (f) of this Paragraph 8, the
purchase price shall be paid by the delivery to the Company of a certified or
cashier's check.
(b) At the time of exercise of any Option, the Company may, if it
shall determine it necessary or desirable for any reason, require the Optionee
as a condition upon exercise to deliver to the Company (i) a written
representation of present intention to purchase the Shares acquired pursuant to
such exercise for his or her own account and not with a view to their
distribution, and (ii) a written agreement containing such additional
restrictions on the transferability of such Shares as the Company reasonably
determines are necessary or desirable
10
<PAGE> 11
to secure exemption from the registration or qualification provisions of
applicable Federal, state or foreign securities laws or regulations in
connection with the issuance of the Shares.
(c) Each Option granted shall also be subject to the requirement that,
if at any time the Company determines, in its discretion, that the listing,
registration or qualification of the Shares then subject to the Option upon any
securities exchange or under any state, Federal or foreign law or regulation, or
the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issuance or purchase of
the Shares thereunder, the Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company;
in such event, the Company shall use reasonable efforts to effect or obtain such
listing, registration, qualification, consent or approval, as the case may be.
(d) Upon the exercise of any Option, the Optionee shall pay to the
Company, on or before the date on which payment thereof by the Company is due,
the amount of all Federal, state, local and foreign withholding taxes required
to be withheld by the Company upon such exercise. Except as otherwise provided
in subparagraphs (e) and (f) of this Paragraph 8, such amount shall be paid by
the delivery to the Company of a certified or cashier's check.
(e) In the event that both (i) the notice of exercise of any Option
which is given by the Optionee on or after January 1, 2001 and prior to the
Initial Public Trading Date provides that the Optionee desires to finance the
payment of all or any part of the purchase price for the Shares being purchased
pursuant to such exercise or the withholding taxes which the Optionee is
required to pay to the Company in connection with such exercise, or both, and
(ii) the Committee specifically approves such financing in each case, then the
Optionee shall be
11
<PAGE> 12
permitted to pay the amount so specified by the Optionee by the delivery to the
Company of the Optionee's promissory note substantially in the form set forth as
Exhibit B hereto (the "Promissory Note"). Any such Promissory Note shall be due
on the first anniversary of the exercise date, subject to mandatory prepayment
in the event of any repurchase of Shares by the Company pursuant to any exercise
by the Optionee of the Put or any exercise by the Company of the Call or the
Right of First Refusal, and it shall bear interest at a per annum rate not less
than the Federal short-term rate in effect on the date of the Promissory Note
under Section 1274(d) of the Code, compounded semi-annually. The Shares
acquired pursuant to such exercise shall be pledged to the Company to secure
repayment of the Promissory Note. Any such Promissory Note shall be repayable
by the Optionee either in cash or, at the Optionee's election at any time prior
to the Initial Public Trading Date, by instructing the Company to transfer to
its treasury or to cancel that whole number of Shares which had been previously
pledged by Optionee to the Company to secure repayment of the Promissory Note
having an aggregate Fair Market Value on the repayment date which is at least
equal to the amount required to discharge the Promissory Note (principal and
interest) in full.
(f) In the event that the notice of exercise of any Option which is
duly received by the Company on or after the Initial Public Trading Date
provides that the Optionee desires to make payment of all or any part of the
purchase price for the Shares being purchased pursuant to such exercise or the
withholding taxes which the Optionee is required to pay to the Company in
connection with such exercise, or both, in kind, then the Optionee shall be
permitted to pay the amount so specified by the Optionee by including in each
notice irrevocable instructions directing the Company to deliver that portion of
the Shares being purchased pursuant to such exercise (or securities of the
Company into which such Shares are convertible) as is
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<PAGE> 13
sufficient when sold to cover such amount in full to a broker for sale in the
public market subject to each of the following conditions: (i) receipt by the
Company of the broker's written guarantee to deliver cash to the Company in an
amount at least equal to the amount of purchase price and withholding taxes, or
both, so specified by the Optionee; and (ii) compliance with any contractual
restrictions applicable to the sale of the Shares and binding on the Company or
the Optionee.
9. Optionee's right to put Shares. (a) Each Optionee shall have a right
to sell to the Company, on the terms and subject to the conditions set forth in
this Paragraph 9 (as the same are modified by Paragraph 11 for a specified class
of Optionees), all or any part of the Shares acquired by him or her upon
exercise of any Option (the "Put").
(b) The Put shall only come into existence and be available to any
Optionee if the Initial Public Trading Date has not occurred prior to July 1,
2001.
(c) The right to exercise the Put with respect to any Shares to which
it applies shall commence on the last to occur of (i) the six-month anniversary
of the date on which the Optionee purchased such Shares pursuant to the exercise
of an Option or (ii) July 1, 2001.
(d) Except as otherwise provided in subparagraphs (e), (f) and (g) of
this Paragraph 9, the Put with respect to any Shares shall expire and cease to
be exercisable on the first to occur of (i) the Initial Public Trading Date or
(ii) December 31, 2001.
(e) In the event the employment of an Optionee with the Company or any
of its subsidiaries or other affiliates terminates for any reason other than the
death or Permanent Disability of the Optionee or his or her discharge by the
Company without Cause, any Put held by him or her, to the extent then
unexercised, shall thereupon expire and all rights to sell any of the Shares
pursuant thereto shall terminate immediately. Temporary absence from
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<PAGE> 14
employment because of illness, vacations, approved leaves of absence, and
transfers of employment among the Company, its subsidiaries and its affiliates
shall not be considered to terminate employment or to interrupt continuous
employment.
(f) In the event the employment of an Optionee with the Company or any
of its subsidiaries or other affiliates terminates because of his or her death
or Permanent Disability, any Put granted to the Optionee may continue to be
exercised by the Optionee or, if the Optionee is not living, by the heirs,
legatees or legal representative of the Optionee, as the case may be, until the
earliest of (i) the Initial Public Trading Date, (ii) the close of business on
December 31, 2001 or (iii) the close of business on the 90th day after the date
his or her employment is so terminated, but only to the extent that such Put was
exercisable on the date his or her employment is so terminated. Thereafter, any
such Put shall expire and all rights to sell any of the Shares pursuant thereto
shall terminate immediately.
(g) In the event the employment of an Optionee with the Company or any
of its subsidiaries or other affiliates terminates because of his or her
discharge without Cause, any Put granted to the Optionee may continue to be
exercised by the Optionee until the earliest of (i) the Initial Public Trading
Date, (ii) the close of business on December 31, 2001 or (iii) the close of
business on the 60th day after the date his or her employment is so terminated,
but only to the extent that such Put was exercisable on the date his or her
employment is so terminated. Thereafter, any such Put shall expire and all
rights to sell any of the Shares pursuant thereto shall terminate immediately.
(h) The price per share at which the Company shall purchase Shares
pursuant to any exercise of the Put shall be the Fair Market Value of such
Shares at and as of the date a duly given Put Notice with respect to such Shares
is received by the Company.
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<PAGE> 15
(i) Any exercise of the Put shall be effected by written notice
(the "Put Notice") given by the Optionee to the Company at any time when the Put
is exercisable. The closing of the Put (the "Put Closing") shall occur either:
(i) on a date, specified by the Optionee in the Put Notice, which shall be not
less than 30 nor more than 45 days after the date the Put Notice is given to the
Company; or (ii) if the Put Notice is given by the Optionee during the period
commencing immediately after the end of any fiscal year of the Company and prior
to the delivery to the Committee of the Annual Appraisal as of the last day of
such fiscal year of the Company, on the first to occur of (A) the 10th business
day following the date of delivery to the Committee of such Annual Appraisal or
(B) the 130th day following the last day of such prior fiscal year (or, if such
date is not a business day, on the next succeeding business day).
(j) At the Put Closing:
(i) the Optionee shall deliver to the Company a certificate,
signed by the Optionee, containing a representation and warranty that
such Shares are being sold free and clear of all liens, pledges,
encumbrances, claims and equities of every kind;
(ii) the Company, as custodian thereof pursuant to
Paragraph 13, shall deliver to the Company for cancellation the
certificate or certificates representing the Shares being sold
together with a duly executed stock power delivered to the Company
upon acceptance of the Option; and
(iii) the Company shall pay to the Optionee the purchase
price for the Shares being purchased in the following manner:
(A) the Company shall first cancel an aggregate amount of
the principal and interest owed by the Optionee to the Company
at the time of the Put Closing under any Promissory Note
delivered by the
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<PAGE> 16
Optionee pursuant to Paragraph 8(e) or 11(b) hereof equal
to the lesser of the purchase price for such Shares or the
entire amount of such principal and interest then owed; and
(B) the Company shall deliver a check to the Optionee in
the amount of the balance of the purchase price for such
Shares, if any.
10. Company's right to call Shares. (a) The Company shall have a right
to purchase from each Optionee, on the terms and subject to the conditions set
forth in this Paragraph 10, all or any part of the Shares acquired by such
Optionee upon exercise of any Option (the "Call").
(b) The right to exercise the Call with respect to any Shares to which
it applies shall commence on the first to occur of (i) the date on which the
Put with respect to such Shares first becomes exercisable pursuant to Paragraph
9 or 11 hereof or (ii) the date on which the Optionee's employment with the
Company or any of its subsidiaries or other affiliates terminates for any
reason; provided, however, that the foregoing to the contrary notwithstanding,
in no event shall the Call become exercisable with respect to any Shares to
which it applies until the six-month anniversary of the date on which the
Optionee purchased such Shares pursuant to the exercise of an Option.
(c) The Call with respect to any and all Shares shall expire and cease
to be exercisable on the Initial Public Trading Date.
(d) The price per share at which the Company shall purchase Shares
pursuant to any exercise by it of the Call shall be the Fair Market Value of
such Shares at and as of the date on which the Call Notice with respect to such
Shares is given by the Company.
(e) Any exercise of the Call shall be effected by written notice (the
"Call Notice") given by the Company to the Optionee at any time when the Call
is exercisable. The closing of the Call (the "Call Closing") shall occur
either: (i) on a date, specified by the
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<PAGE> 17
Company in the Call Notice, which shall be not less than 10 nor more than 30
business days after the date the Call Notice is given by the Company; or (ii) if
the Call Notice is given by the Company during the period commencing immediately
after the end of any fiscal year of the Company and prior to the delivery to the
Committee of the Annual Appraisal as of the last day of such fiscal year of the
Company, on the first to occur of (A) the 10th business day following the date
of delivery to the Committee of such Annual Appraisal or (B) the 130th day
following the last day of such prior fiscal year (or, if such date is not a
business day, on the next succeeding business day).
(f) At the Call Closing:
(i) the Optionee shall deliver to the Company a certificate,
signed by the Optionee, containing a representation and warranty that
such Shares are being sold free and clear of all liens, pledges,
encumbrances, claims and equities of every kind;
(ii) the Company, as custodian thereof pursuant to Paragraph
13, shall deliver to the Company for cancellation the certificate or
certificates representing the Shares being sold together with a duly
executed stock power delivered to the Company upon acceptance of the
Option; and
(iii) the Company shall pay to the Optionee the purchase
price for the Shares being purchased in the following manner:
(A) the Company shall first cancel an aggregate amount
of the principal and interest owed by the Optionee to the Company
at the time of the Call Closing under any Promissory Note
delivered by the Optionee pursuant to Paragraph 8(e) or 11(b)
hereof equal to the lesser of the purchase price for such Shares
or the entire amount of such principal and interest then owed;
and
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<PAGE> 18
(B) the Company shall deliver a check to the Optionee
in the amount of the balance of the purchase price for such
Shares, if any.
11. Special provisions applicable to Options exercised after the death or
Permanent Disability of an Optionee. (a) In the event the employment of an
Optionee with the Company or any of its subsidiaries or affiliates terminates
because of his or her death or Permanent Disability and thereafter any Option
granted to such Optionee is duly exercised prior to its expiration in the manner
contemplated by Paragraph 6(e), then anything to the contrary in this Plan
notwithstanding the following special provisions in this Paragraph 11 shall
apply to any such exercise and to the Shares acquired upon such exercise.
(b) If the notice of exercise of any such Option which is duly
given by the Optionee at any time prior to the Initial Public Trading Date
provides that the Optionee desires to finance the payment of all or any part of
the purchase price for the Shares being purchased pursuant to such exercise or
the withholding taxes which the Optionee is required to pay to the Company in
connection with such exercise, or both, and (ii) the Committee specifically
approves such financing in each case, then the Optionee shall be permitted to
pay the amount so specified by the Optionee by the delivery to the Company of
the Optionee's Promissory Note substantially in the form set forth as Exhibit B
hereto. Any such Promissory Note shall be due on the first anniversary of the
exercise date subject to mandatory prepayment in the event of any repurchase of
Shares by the Company pursuant to any exercise by the Optionee of the Put or any
exercise by the Company of the Call, and it shall bear interest at a per annum
rate not less than the Federal short-term rate in effect on the date of the
Promissory Note under Section 1274(d) of the Code, compounded semi-annually.
The Shares acquired pursuant to such exercise shall be pledged to the Company to
secure repayment of the Promissory Note.
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<PAGE> 19
Any such Promissory Note shall be repayable by the Optionee either in cash or,
at the Optionee's election, by instructing the Company to transfer to its
treasury or to cancel that whole number of Shares which had been previously
pledged by Optionee to the Company to secure repayment of the Promissory Note
having an aggregate Fair Market Value on the repayment date which is at least
equal to the amount required to discharge the Promissory Note (principal and
interest) in full.
(c) Each such Optionee shall have a Put with respect to any
Shares so acquired. Any such Put shall be governed by the provisions of
Paragraph 9, except that, notwithstanding Paragraph 9, the following shall
apply:
(i) Paragraph 9(b) shall be inapplicable;
(ii) the right to exercise the Put with respect to any such
Shares shall commence on the six-month anniversary of the date on
which the Optionee purchased such Shares pursuant to the exercise of
the Option; and
(iii) the Put with respect to any such Shares shall expire
and cease to be exercisable on the first to occur of (A) the first
anniversary of the date on which the Put became exercisable or (B)
the Initial Public Trading Date.
12. Restrictions on transfer; Company's right of first refusal. (a) At no
time prior to the Initial Public Trading Date shall any Optionee be permitted to
sell, assign, transfer, pledge, hypothecate or otherwise dispose of any of the
Shares purchased by such Optionee upon exercise of an Option at any time or for
any reason (including without limitation the Optionee's death) except pursuant
to the Put or the Call or upon compliance with the Right of First Refusal
provided for in Paragraph 12(b) hereof. Any purported transfer of Shares in
violation of this Paragraph 12 shall be ineffective. Each of the certificates
evidencing the Shares shall bear the
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<PAGE> 20
following legend during the period in which the transfer restrictions set forth
in this Paragraph 12 are in effect:
The shares of Griffith Micro Science
International, Inc. (the "Company")
represented by this certificate (the
"Shares") may not be sold, assigned,
transferred, pledged, hypothecated or
otherwise disposed of by the owner thereof
except in accordance with and subject to the
terms and conditions of the Company's 1996
Key Employee Stock Option Plan and the Stock
Option Agreement pursuant to which the
Shares were acquired. Copies of such Plan
and such Option Agreement are on file at the
principal office of the Company.
(b) In the event at any time prior to the Initial Public Trading
Date that any Optionee desires to sell all or any portion of the Shares which he
or she purchased from the Company pursuant to exercise of an Option and receives
a bona fide offer to purchase the same (the "Offered Shares"), he or she shall
first give written notice thereof to the Company (the "Offer Notice"). The
Offer Notice must be received by the Company not less than 45 days before the
proposed sale, and shall state the number of Offered Shares, the date of the
proposed sale, the name and address of the proposed purchaser, and the proposed
price, terms and conditions of sale. For a period of 45 days after the receipt
of the Offer Notice, the Company shall have a right of first refusal to purchase
all, but not less than all, of the Offered Shares at the price and on the terms
and conditions set forth in the Offer Notice (the "Right of First Refusal"). If
the Company shall decide to exercise its right to purchase the Offered Shares
pursuant to the Right of First Refusal it shall give written notice to the
Optionee (the "RFR Notice") within 45 days following receipt of the Offer
Notice. The closing of the purchase by the Company of the Offered Shares (the
"RFR Closing") shall occur no later than ten business days following the date
the RFR Notice is given by the Company. If the Company does not exercise the
Right of
20
<PAGE> 21
First Refusal with respect to the Offered Shares within the time period provided
above, the Optionee shall be free for a period of 30 days thereafter to sell the
Offered Shares to the same proposed purchaser identified in the Offer Notice, at
a price and on terms and conditions no less favorable to the Optionee than the
price and other terms and conditions set forth in the Offer Notice, provided
that the proposed purchaser has agreed in writing for the express benefit of the
Company to be bound by all of the terms of the Plan and the Certificate,
including without limitation those pertaining to the Put, the Call and the Right
of First Refusal. If the Optionee fails to sell the Offered Shares as provided
herein within such 30-day period, he or she shall again be subject to all of the
restrictions set forth in this Paragraph 12.
(c) In the event that the Company's right to Call the Shares is
exercisable pursuant to Paragraph 10 at the same time as its right to purchase
the Shares pursuant to the Right of First Refusal provided for in this Paragraph
12, the Company shall be entitled in its sole discretion to elect to purchase
the Shares in question either by exercising the Call or pursuant to the Right of
First Refusal. The factors on which the Company's election is based may
include, without limitation, that the price per share at which the Company may
purchase the Shares pursuant to one or the other of the Call or the Right of
First Refusal is less than the applicable purchase price pursuant to the other.
(d) At the RFR Closing:
(i) the Optionee shall deliver to the Company a certificate,
signed by the Optionee, containing a representation and warranty that
such Shares are being sold free and clear of all liens, pledges,
encumbrances, claims and equities of every kind;
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<PAGE> 22
(ii) the Company, as custodian thereof pursuant to Paragraph
13, shall deliver to the Company for cancellation the certificate or
certificates representing the Shares being sold together with a duly
executed stock power delivered to the Company upon acceptance of the
Option; and
(iii) the Company shall pay to the Optionee the purchase
price for the Shares being purchased in the following manner:
(A) the Company shall first cancel an aggregate amount
of the principal and interest owed by the Optionee to the Company
at the time of the RFR Closing under any Promissory Note
delivered by the Optionee pursuant to Paragraph 8(e) or 11(b)
hereof equal to the lesser of the purchase price for such Shares
or the entire amount of such principal and interest then owed;
and
(B) the Company shall deliver a check to the Optionee
in the amount of the balance of the purchase price for such
Shares, if any.
(e) All of the restrictions on transfer of the Shares set forth
in this Paragraph 12, including without limitation the Right of First Refusal,
shall terminate on the Initial Public Trading Date. On and after the Initial
Public Trading Date, each Optionee shall be entitled to receive from the
Company, in exchange for each of the certificates evidencing Shares which bear
the legend specified in Paragraph 12(a), a clean certificate for the same number
of Shares without any such legend.
13. Company to act as custodian; rights of the Optionee with respect
to the Option Shares. (a) For the purpose of facilitating any exercise by the
Optionee of the Put or any exercise by the Company of the Call or the Right of
First Refusal:
(i) each Optionee shall execute in blank two separate stock
powers (the "Stock Powers") and shall deliver them to the Company at
the same time he or she accepts an Option by delivering to the
Company the signed
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<PAGE> 23
duplicate originals of the Option Agreement evidencing such Option
pursuant to Paragraph 5(d) hereof; and
(ii) upon the exercise of any Option by an Optionee prior to
the Initial Public Market Date and the payment to the Company of the
purchase price for the shares covered by such exercise together with
the withholding taxes which the Optionee is required to pay to the
Company in connection with such exercise in the manner contemplated
by the Plan, the Company will issue a stock certificate (the "Option
Shares Certificate") in the name of the Optionee evidencing the
number of Shares to which such Optionee is entitled with respect to
such exercise after giving effect to the payment of such purchase
price.
The Option Shares Certificate and the Stock Powers shall be held by the Company
as custodian (the "Custodian") for the Optionee and dealt with in accordance
with this Paragraph 13.
(b) As Custodian of the Option Shares Certificate and the Stock
Powers of each Optionee, the Company will do the following:
(i) it will hold the Option Shares Certificate and the Stock
Powers of each Optionee in safekeeping;
(ii) upon any exercise by an Optionee of the Put or by the
Company of the Call or the Right of First Refusal with respect to any
Shares in accordance with the terms hereof, it will cause the Option
Shares Certificate evidencing such Shares and a Stock Power of the
Optionee who owns such Shares to be delivered to the Company to be
dealt with in accordance with the provisions of subparagraph (d) of
this Paragraph 13;
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<PAGE> 24
(iii) it will thereafter receive and hold any Substitute
Option Shares Certificate (as hereinafter defined) and the remaining
Stock Power of the Optionee in safekeeping and upon any further
exercise of the Put or the Call in accordance with the terms hereof
will repeat the actions specified in clause (ii) and this clause
(iii); and
(iv) upon expiration of the last to expire of the Put, the
Call and the Right of First Refusal, it will deliver to the Optionee
any Option Shares Certificate or Substitute Option Shares Certificate
of such Optionee then being held by the Custodian evidencing any
Shares as to which none of the Put, the Call or the Right of First
Refusal has then been exercised, together with any of the Stock
Powers which have not been used to effect transfers of Shares
pursuant hereto.
(c) Each Option Shares Certificate held by the Company as
Custodian is subject to the rights of the Company pursuant to the Plan. The
deposit arrangements provided for in this Paragraph 13 are to that extent
irrevocable, and the rights and obligations of the Company and the Optionee
under the Plan and the Option Agreement may not be terminated by operation of
law, whether by the death of any Optionee or the occurrence of any other event,
except as specifically provided to the contrary herein. Accordingly,
notwithstanding the death of any Optionee or the occurrence of any such other
event before the exercise of the Put, the Call or the Right of First Refusal as
to any of the Shares then owned by the Optionee, the Custodian is nevertheless
authorized and directed to deal with the Option Shares Certificate, any
Substitute Option Shares Certificate and the Stock Powers in accordance with the
terms and conditions
24
<PAGE> 25
hereof, as if such death or other event had not occurred, regardless of whether
or not the Company shall have received notice of such death or other event.
(d) Upon any exercise of the Put, the Call or the Right of First
Refusal with respect to any Shares in the manner specified in the Plan, the
Company shall at the Put Closing, the Call Closing or the Right of First Refusal
Closing, as the case may be, use a Stock Power of such Optionee and shall cause
(i) the Option Shares Certificate (or Substitute Option Shares Certificate, as
the case may be) of the Optionee being held by it as Custodian to be cancelled,
(ii) the number of Shares purchased by the Company pursuant to such exercise to
be transferred to the Company, (iii) a new share certificate for any remaining
Shares as to which the Put or the Call thereafter remains unexercised as to such
Shareholder (a "Substitute Option Shares Certificate") to be issued in the name
of such Shareholder, and (iv) the Substitute Option Shares Certificate and
remaining Stock Power to be held and dealt with by the Company as Custodian
pursuant to the terms hereof.
(e) At all times while the Option Shares Certificate or any
Substitute Option Shares Certificate evidencing the Shares of any Optionee are
held by the Company as Custodian pursuant to this Paragraph 13, the Optionee
shall remain the record and, subject to the rights of the Company under the
Plan, beneficial owner of such Shares and shall be entitled to receive all
dividends on such Shares when, as and if declared and paid by the Company, to
vote such Shares on any matter submitted to a vote of the shareholders of the
Company, and, subject to compliance with Paragraphs 10 and 12 of the Plan, to
sell, assign, transfer, pledge, hypothecate or otherwise dispose of such Shares.
14. Non-transferability of Options. Except by will or the laws of
descent and distribution, Options shall not be sold, assigned, transferred,
pledged, hypothecated or otherwise
25
<PAGE> 26
disposed of in any way, whether by operation of law or otherwise. During an
Optionee's lifetime any Option granted to him or her shall be exercisable only
by him or her.
15. Adjustments. If the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company through reorganization, recapitalization,
reclassification, redesignation, stock dividend, stock split, reverse stock
split or other similar transaction, appropriate and proportionate adjustments
shall be made to the number and kind of Shares then subject to the unexercised
portion of any Option and to the aggregate number of Shares as to which the
Committee may grant Options. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations, there
shall be substituted, on an equitable basis, for each Share then subject to the
unexercised portion of any Option, the number and kind of shares of stock or
other securities to which the holders of shares of Common Stock will be entitled
pursuant to the transaction. In the event of any other relevant change in the
capitalization of the Company, an equitable adjustment in the number of Shares
then subject to the unexercised portion of the Option shall be made without
change in the aggregate exercise price applicable to the unexercised portion of
the Option but with a corresponding adjustment in the price for each share or
other unit of any security subject to the unexercised portion of the Option.
Adjustments shall be made by the Committee, whose determination as to what
adjustments shall be made and the extent thereof shall be final, binding and
conclusive. No fractional shares shall be issued upon the exercise of any
Option as a result of any such adjustment.
16. Rights before issuance of Shares. An Optionee shall not be
entitled to any privileges of share ownership with respect to any Shares unless
and until such Shares have been issued as fully paid and non-assessable shares
of Common Stock upon exercise of an Option.
26
<PAGE> 27
17. Funding assistance. The Committee, with respect to any
Option granted to an Optionee who is an employee of or has otherwise rendered
services for the direct benefit of any subsidiary of the Company, and the board
of directors of Griffith Laboratories Worldwide, Inc., the Company's parent,
with respect to any Option granted to an Optionee who is an employee of or has
otherwise rendered services for the direct benefit of any other affiliate of the
Company, shall have discretion to require each such subsidiary or other
affiliate of the Company, respectively, to make a funding assistance payment to
the Company within 30 days after the Company incurs any out-of-pocket cost as a
result of such Optionee's exercise of such Option, his or her exercise of the
Put or the Company's exercise of the Call or Right of First Refusal, in each
case for the purpose of reimbursing the Company for such cost. The maximum
amount of each such funding assistance payment shall be equal to the difference
between the exercise price per Share and the Fair Market Value per Share on the
exercise date times the number of Shares pursuant to which the Option was
exercised.
18. Amendment of the Plan. The Board may amend or discontinue
the Plan at any time. However, no such amendment or discontinuance shall change
or impair any Option previously granted under the Plan in a manner detrimental
to the Optionee without the consent of the Optionee.
19. Binding effect. The provisions of the Plan (as now in effect
and as the same may be amended pursuant hereto) and of each Option Agreement
entered into pursuant to the Plan shall be binding upon and inure to the benefit
of the Company and the Optionee and their respective successors, assigns,
transferees, heirs, legatees, and legal representatives.
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<PAGE> 28
20. Headings. The descriptive headings in the Plan and each
Option Agreement entered into pursuant to the Plan are inserted for convenience
only and do not constitute a part of the Plan or of such Option Agreement.
21. Notices. Every notice to be given pursuant to the Plan or
any Option Agreement issued pursuant to the Plan by the Company or any Optionee
to the other shall be in writing and delivered personally or sent by registered
or certified mail, postage prepaid, as follows:
If to the Company addressed to:
Griffith Micro Science International, Inc.
2001 Spring Road, Suite 500
Oak Brook, IL 60521
with a copy to
Griffith Laboratories Worldwide, Inc.
One Griffith Center
Alsip, IL 60658-3495
Attn: James S. Legg, Corporate Counsel
If to the Optionee, addressed to him or her
at the address set forth under his or her
name on the signature page of the Option
Agreement evidencing his or her Option.
The Company or any Optionee may change the address to which notices hereunder
are to be sent to it or to him or her by giving written notice of such change of
address in the manner herein provided for giving notice. Any notice delivered
personally shall be deemed to have been given on the date it is so delivered,
and any notice delivered by registered or certified mail shall be deemed to have
been given on the date it is received.
28
<PAGE> 29
22. Governing law. The Plan and each Option Agreement and the
Option evidenced thereby shall be governed by and construed in accordance with
the laws of the State of Illinois applicable to contracts made and to be
performed therein.
29
<PAGE> 30
EXHIBIT A
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement") is entered into as of
the ___ day of _________, 19__ by and between Griffith Micro Science
International, Inc., a Delaware corporation (the "Company"), and
_________________________ (the "Optionee") for the purpose of evidencing a stock
option (the "Option") granted on the date hereof to the Optionee by the duly
authorized Stock Option Committee of the Board of Directors of the Company
pursuant to the 1996 Key Employee Stock Option Plan of the Company, a copy of
which is attached hereto as Appendix I (the "Plan"). All capitalized terms
hereinafter used in this Option Agreement have the definitions herein given to
them in the Plan.
1. The Option and this Option Agreement are subject to all of
the terms and conditions of the Plan, which is incorporated herein
by this reference thereto.
2. The Company hereby grants to the Optionee an Option to
purchase up to _________ Shares at an exercise price of $__________
per Share.
3. The Option shall be for a term of 10 years from the date
hereof and shall expire on the tenth anniversary of the date hereof,
unless it has been fully exercised or has expired prior to the end
of such term in accordance with the provisions of the Plan.
[4. The Option shall vest and become exercisable with respect
to the total number of Shares covered by the Option on first
anniversary of the date of this Option Agreement.]
or
[4. The Option shall vest and become exercisable with respect
to one-third of the total number of Shares covered by the Option on
each of the first, second and third anniversaries of the date of
this Option Agreement. The Option shall vest and become exercisable
only in whole share increments, with any odd Share vesting and
becoming exercisable on the third anniversary of the date of this
Option Agreement.]
[Committee must determine vesting
alternative at time of grant]
Dated as of the date first above written.
Accepted and agreed as of the GRIFFITH MICRO SCIENCE
date first above written: INTERNATIONAL, INC.
___________________________ By:_____________________________
[type in name and home Dean L. Griffith
address of the Optionee here] Chairman of the Board
<PAGE> 31
EXHIBIT B
PROMISSORY NOTE
$_____________________ _______________, 19__
Oak Brook, Illinois
FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC., a Delaware corporation (the
"Company"), the principal sum of $____________ on [here insert maturity date,
which shall be the first anniversary of the date of the note], with interest
(computed on the basis of the actual number of days elapsed over a 365-day
year) on the unpaid balance thereof at the rate of [here insert interest rate,
which shall be equal to the Federal short-term rate in effect on the date of
the note, as determined pursuant to Section 1274(d) of the Internal Revenue
Code of 1986, as amended, or any successor provision thereto] per annum,
compounded semi-annually, from the date hereof until the principal amount of
this Note is paid in full, payable on the maturity date of this Note.
The payment of principal and interest on this Note shall be made at the
offices of the Company, 2001 Spring Road, Suite 500, Oak Brook, Illinois 60621
or at such other place as the holder of this Note may from time to time
designate in writing.
This Note has been issued in connection with the purchase of __________
shares of Common Stock of the Company, $.01 par value (the "Shares'), pursuant
to the exercise of an Option granted to the undersigned under the 1996 Key
Employee Stock Option Plan of the Company (the "Plan"). The terms and
conditions of the Option are set forth in a Stock Option Agreement dated [here
insert date of Option Agreement] between the Company and the undersigned, and
they include all of the terms and conditions set forth in the Plan. All
capitalized terms used but not defined in this Note have the definitions herein
given to them in the Plan.
The Shares are represented by certificate no. __________ (the
"Certificate"). The undersigned hereby assigns, transfers and pledges the
Shares to the Company to secure the performance by the undersigned of his or
her obligations under this Note. To effect this pledge, the undersigned (or
the Custodian acting on his behalf), concurrent with the issuance of this Note,
has delivered to the Company the Certificate accompanied by a duly executed
Stock Power.
The principal of and interest on this Note shall be payable by the
undersigned either in cash or, at the undersigned's election at any time prior
to the Initial Public Trading Date, by instructing the Company to transfer to
its treasury or to cancel that whole number of Shares which have been pledged
to secure performance by the undersigned of his or her obligations under this
Note having an aggregate Fair Market Value on the repayment date which is at
least equal to the amount required to repay this Note in full.
The undersigned shall have the right to prepay this Note in whole or in
part, without premium or penalty, and he shall be obligated to prepay this
Note as and to the extent provided in Paragraphs 9, 10, 11 and 12 of the Plan.
The undersigned hereby waives presentment, notice of dishonor or protest
of dishonor of this Note.
This Note shall be governed by and construed in accordance with the laws
of the State of Illinois.
___________________________________
[here insert name and home
address of the optionee]
<PAGE> 1
EXHIBIT 10.4
GRIFFITH LABORATORIES
EVA INCENTIVE COMPENSATION PROGRAM
AUGUST 26, 1993
<PAGE> 2
EVA INCENTIVE COMPENSATION FRAMEWORK
<PAGE> 3
DESCRIPTION OF THE EVA - BASED INCENTIVE PLAN
- --------------------------------------------------------------------------------
The objectives underlying the EVA incentive compensation program are to more
closely link incentive awards to the economic performance of the firm, and to
promote a culture of ownership among the company's managers. This involves
sharing some of the company's business risk with stockholders, but also
provides access to the upside potential associated with outstanding financial
performance. Accordingly, the program rewards enduring improvements in the
ability of the company to generate cash over the long-term.
Incentives are focused on the generation of improved Economic Value Added
which, in turn, results from:
1. Enhanced business efficiencies;
2. Profitable Growth; and
3. Strategic Downsizing.
Each participant's bonus award will be based on a multiple of his/her target
bonus. For example, if the target bonus is 25% of salary, the bonus multiple
earned must be equal to 1.0 to generate a target bonus; a multiple of 1.0
occurs when the actual EVA is equal to the target EVA for that year.
Underperformance results in a multiple of less than 1.00; likewise,
particularly strong performance generates a multiple greater than 1.00.
A portion of bonus awards above a predetermined threshold flow through a "bonus
bank." If the bank balance at the beginning of the year is zero or positive
this threshold is 2.0 times the target award. Awards up to 2.0 times target
plus 1/3 of any excess will be immediately paid out. The remaining 2/3 of any
excess above 2.0 flows into the bank. One-third of the beginning bank balance
is also paid out. When the beginning bank balance is negative the threshold
equals target. Awards up to 1.0 times target plus 1/3 of any excess will be
paid out currently. The remaining 2/3 of any excess greater than 1.0 flows
into the bank. In this manner the bank is used to amortize the beginning
negative balance while also allowing a current award of target plus 1/3 of
excess over target to be paid even while the bank balance remains negative.
- --------------------------------------------------------------------------------
<PAGE> 4
EVA INCENTIVE COMPENSATION FRAMEWORK
DETERMINATION OF BONUS MULTIPLE
[CHART]
<PAGE> 5
EVA INCENTIVE COMPENSATION FRAMEWORK
KEY PARAMETERS
- --------------------------------------------------------------------------------
Target EVA: the level of EVA that must be achieved in order to generate a
Bonus Multiple of 1.0. This multiple will yield the target
bonus. For each business unit the Target EVA has been set equal
to the average of the prior year's target and actual EVA plus an
Expected Improvement. For 1994, the initial year of the plan,
prior year's target amount in the formula will be the 1993
budgeted EVA.
EVA Interval: the amount by which EVA must exceed (or fall short of) the
target EVA in order to increase (or decrease) the Bonus Multiple
by 1.0 (e.g. to go from 1.0 to 2.0).
- --------------------------------------------------------------------------------
<PAGE> 6
EVA INCENTIVE COMPENSATION FRAMEWORK
DETERMINATION OF BONUS MULTIPLE
[CHART]
<PAGE> 7
EVA INCENTIVE COMPENSATION FRAMEWORK
CALCULATION OF EVA BONUS MULTIPLE
- --------------------------------------------------------------------------------
1. The "steepness" (i.e., the slope of the line) of the award schedule is
described by the EVA Interval, which is the amount that EVA must change to
increase (or decrease) the Bonus Multiple by 1.0. The EVA Interval has
been set at 2% of 1992 ending Capital for all individual groups and for
the operating group total.
2. To determine the Bonus Multiple for any level of performance, the
difference between actual EVA and the EVA Target divided by the EVA
Interval results in a Performance Increment which is added to (or
subtracted from) the Target Multiple of 1.0.
3. A fixed EVA Interval based on 2% of 1992 ending Capital is "locked in"
for, at a minimum, the 1994 and 1995 fiscal years. The parameter will be
reviewed and possibly modified by the Company from time to time
thereafter.
- --------------------------------------------------------------------------------
<PAGE> 8
EVA INCENTIVE COMPENSATION FRAMEWORK
TARGET ADJUSTMENT YEAR 2
[CHART]
<PAGE> 9
EVA INCENTIVE COMPENSATION FRAMEWORK
ANNUAL TARGET REVISION
- --------------------------------------------------------------------------------
1. The approach for establishing each subsequent year's target EVA is to add
an expected improvement to the average of this year's actual and this
year's target EVA.
2. Adding an Expected Improvement to the average of the actual and target
EVA ensures that continuous EVA growth is required to generate outstanding
awards. The effect of averaging actual and target is to provide a
lingering award for performance which temporarily exceeds target, and a
magnified award when performance continually exceeds target.
3. The amount of the Expected Improvement has been set at 1.2% of 1992
ending Capital for all individual groups and the operating group total.
4. The parameters for the EVA Interval and the Expected Improvement -- 2%
and 1.2% of 1992 ending Capital, respectively -- are "locked in" for, at a
minimum, the 1994 and 1995 fiscal years. The parameters will be reviewed
and possibly modified by the Company from time to time thereafter.
5. Transactions which are considered non-operating and do not affect bonus
calculations will not be used to calculate future EVA targets.
- --------------------------------------------------------------------------------
<PAGE> 10
EVA INCENTIVE COMPENSATION FRAMEWORK
EVA BONUS BANK
AWARD PAYOUTS
<TABLE>
<CAPTION>
CURRENT BONUS MULTIPLE CURRENT BONUS MULTIPLE CURRENT BONUS MULTIPLE
LESS THAN 0.0X GREATER THAN 0.0X, LESS THAN 1.0X GREATER THAN 1.0X
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Payout Bank Balance up to 2.00 Payout Bank Balance up to 2.00 Payout Bank Balance up to 2.00
POSITIVE + + +
1/3 Excess, if any, over 2.00 1/3 Excess, if any, over 2.00 1/3 Excess, if any, over 2.00
BEGINNING
BANK --------------------------------------------------------------------------------------------------------------------
BALANCE
Payout 1.00
Payout Current Multiple +
(therefore no reduction 1/3 Current Multiple above 1.00
NEGATIVE Zero of negative bank) (2/3 into bank)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
EVA INCENTIVE COMPENSATION FRAMEWORK
EVA BONUS BANK
- --------------------------------------------------------------------------------
1. One objective of the EVA incentive program is to offer the potential of
unlimited bonuses, but to ensure that "windfalls" are not rewarded. That
is, only sustained EVA growth is fully compensated.
2. Consequently, 2/3 of any EVA awards which exceed a predetermined
threshold flow through a "bonus bank" assigned to each participant.
3. The threshold is set at 2.0 times target as long as the beginning bank
balance is zero or positive, and is equal to target if the beginning bank
balance is negative.
4. If the beginning bank balance is zero or positive, the Current Bonus
Multiple is added to the beginning bank balance. From this amount, a
maximum of 2.0 plus 1/3 of any excess over 2.0 is paid out. The remaining
2/3 of this excess is held in the bank. Setting the payout threshold at
2.0 allows for full payout of all but extraordinary awards, and, paying
out 1/3 of any excess above 2.00 allows for an unlimited upside potential.
5. When the beginning bank balance is negative, positive awards up to 1.0x
target will be paid in full before any amount is credited to the bank. In
addition, 1/3 of any excess above target will be paid with the remaining
2/3 added to the bank to reduce the negative balance. No additional
payout from the bank will be made even if the ending balance is positive.
Setting the threshold equal to target when the bank balance is negative
allows for participants to receive target payments even while the negative
bank balance is being recovered.
- --------------------------------------------------------------------------------
<PAGE> 12
EVA INCENTIVE COMPENSATION FRAMEWORK
BONUS BANK EXAMPLES
CHANGING THRESHOLD
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
PAYOUT OF CURRENT AWARD 1993 1994 1995 1996 1997 1998
- ------------------------- ---- ---- ---- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Payout Threshold [1] 2.00 2.00 2.00 2.00 1.00 1.00
Current Bonus Multiple 1.75 2.65 0.80 (1.00) 1.40 1.80
- - Payout up to Threshold 1.75 2.00 0.80 0.00 1.00 1.00
- - 1/3 of Amount over Threshold 0.00 0.22 0.00 0.00 0.13 0.27
---- ---- ---- ----- ---- ----
= Payout of Current Award 1.75 2.22 0.80 0.00 1.13 1.27
Banking of Current Award 0.00 0.43 0.00 (1.00) 0.27 0.53
PAYOUT FROM BANK
- -------------------------
Beginning Bank Balance 0.00 0.00 0.43 0.00 (1.00) (0.73)
- - Payout from Bank [2] 0.00 0.00 0.43 0.00 0.00 0.00
+ Banking of Current Award 0.00 0.43 0.00 (1.00) 0.27 0.53
---- ---- ---- ----- ----- -----
= Ending Bank Balance 0.00 0.43 0.00 (1.00) (0.73) (0.20)
TOTAL PAYOUT
- -------------------------
Payout of Current Award 1.75 2.22 0.80 0.00 1.13 1.27
+ Payout from Bank 0.00 0.00 0.43 0.00 0.00 0.00
---- ---- ---- ----- ---- -----
= Total Payout 1.75 2.22 1.23 0.00 1.13 1.27
- -------------------------------------------------------------------------
</TABLE>
[1] Payout threshold is 1.0 if beginning bank balance is negative, otherwise
it is 2.0.
[2] Payout from bank is 1/3 of beginning balance unless payout of current
award is less than threshold.
<PAGE> 13
EVA INCENTIVE COMPENSATION FRAMEWORK
SUMMARY OF PARAMETERS
<TABLE>
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
1. EVA Interval 2% of 1992 Ending Capital
2. Expected Improvement 1.2% of 1992 Ending Capital
prior yr. Actual EVA + prior yr. target EVA
-------------------------------------------
3. Next Year's Target = 2 +Expected Improvement
4. Bonus Bank:
-If beg. bank balance > 0.0x -- Threshold = 2.0x
-If beg. bank balance < 0.0x -- Threshold = 1.0x
-Bank Payout Ratio =33% (excess over threshold)
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 14
LONG-TERM INCENTIVE PLAN
<PAGE> 15
LONG-TERM INCENTIVE PLAN
GENERIC EXAMPLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Base Salary Year 1 Year 2 Year 3 Total
------ ------ ------ -----
<S> <C> <C> <C> <C>
x Target Bonus % $150,000 $160,000 $170,000 $480,000
- ----------------
= Long Term Target 45% 45% 45%
-------- --------- --------
$67,500 $72,000 $76,500 $216,000
x Total Company Multiple - S/T Plan 1.65 -0.25 3.35
- ------------------------------ -------- ------------ --------
= Long Term Award (Deficit) $111,375 ($18,000) $256,275 $349,650
Beginning Bank Balance $0 $111,375 $93,375
+ Long-Term Award (Deficit) $111,375 ($18,000) $256,275
- --------------------------- -------- --------- --------
Available Balance $111,375 $93,375 $349,650
Amount Deferred to Year 4 [1] $103,275
- ----------------------------- --------
= Available Balance $111,375 $93,375 $246,375
Year 3 Bank Payout $0 $0 $246,375
Ending Bank Balance $111,375 $93,375 $103,275
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
[1] If Year 3 Total Operating Group S/T Multiple is greater than 2.00, the
excess above 2.0 is deferred to Year 4 and paid out at the end of Year 4 if
Year 4 EVA exceeds Year 3 EVA; otherwise it is reduced on a pro-rata basis.
<PAGE> 16
DESCRIPTION OF THE LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------
AWARD CALCULATION
- -----------------
1. Long-term incentive awards will be based solely on Total Operating Group EVA
from 1994 to 1996.
2. The long-term target award will be equal to a percent of base salary.
3. Targets for 1994-1996 will be identical to those for the Annual EVA
Compensation Plan.
4. The award multiple for each year, the amount going into each participant's
bonus bank, will be identical to the Total Operating Group multiple
calculated for the Annual EVA Compensation Plan.
LONG-TERM AWARD PAYOUT
- ----------------------
1. The entire award for 1994-1996 will be credited to the participant's bonus
bank.
2. There will be no payment of awards in 1994-1995.
3. At the end of 1996, the entire amount accumulated in the bonus bank will be
paid in cash to the participants, except under conditions as described on
page 4.
- --------------------------------------------------------------------------------
<PAGE> 17
DESCRIPTION OF THE LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------
1996 DEFERRAL
- -------------
1. If in the terminal year of the long-term plan, 1996, the award multiple is
greater than two times the target bonus, the amount in excess of two for 1996
will be deferred for one year.
2. The balance deferred will be paid in full at the end of 1997 provided that
the Total Operating Group EVA in 1997 is equal to or greater than the Total
Operating Group EVA in 1996 (i.e., there is no EVA decline).
3. If EVA in 1997 declines by an amount equal to (or in excess of) the Total
Operating Group EVA Interval the entire deferred balance will be forfeited.
4. The deferred balance will be paid pro rata if 1997 EVA falls by less than
the Total Operating Group EVA Interval (see example).
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT-10.5
PROMISSORY NOTE
$12,000,000 Alsip, Illinois
June 1, 1998
FOR VALUE RECEIVED, GRIFFITH MICRO SCIENCE INTERNATIONAL, INC. (the
"Borrower"), a corporation duly organized and validly existing under the laws
of Delaware, hereby promises to pay to the order of GRIFFITH LABORATORIES
INTERNATIONAL, INC. (the "Creditor"), at its office located at 1 Griffith
Center, Alsip, Illinois 60803-3495 (or at such other place of payment
designated by the holder hereof to the Borrower), the principal sum of:
TWELVE MILLION DOLLARS
($12,000,00.00) in lawful money of the United States of America, which
principal sum shall be payable ON DEMAND.
The Borrower hereby further promises to pay to the order of the Creditor,
at the place of payment, interest on the unpaid principal amount hereof from
the date hereof until the maturity hereof (whether by acceleration or
otherwise), at a rate equal to six per cent (6.00%) per annum, such interest to
be payable at the maturity hereof (whether by acceleration or otherwise). The
Borrower hereby further promises to pay to the order of the Creditor, on
demand, at the place of payment, interest on the principal amount hereof unpaid
after maturity (whether by acceleration or otherwise) at a rate per annum equal
to nine (9.00%) per annum. All interest payable hereunder shall be calculated
on the basis of a year of 360 days and actual days elapsed. "Business Day"
shall mean any day other than a Saturday, a Sunday or a day on which banks in
Chicago and Alsip are required or permitted by law to close.
All payments due hereunder shall be made by the Borrower to the holder
hereof no later that 2:00 p.m. local time at the place of payment, in lawful
money of the United States of America and in funds immediately available and
freely transferable at the place of payment, free and clear of, and without
deduction for, any present or future taxes, levies, offsets, counterclaims or
deductions of any nature whatsoever ("Deductions"). Payments received after
such time shall be deemed received by the holder hereof on the next succeeding
Business Day at such place of payment. In the event that the Borrower is
compelled for any reason to make any Deductions, it shall pay to the holder
hereof such amounts (after giving effect to all Deductions on all additional
payments to be made hereunder) as will result in the receipt by the holder
hereof of the amount such holder would have received had no such Deductions
been required to be made. If any payment shall fall due hereunder on a day
that is not a Business Day for the holder hereof at the place of payment,
payment shall be made on the next succeeding Business Day at such place of
payment and interest thereon shall be payable for such extended time.
<PAGE> 2
This Promissory Note may be prepaid in whole or in part without the prior
written consent of the holder hereof.
In the event that the Borrower shall be in default in the payment when and
as due of any amounts due hereunder or under any other indebtedness or
liability of the Borrower to the holder hereof (whether by acceleration or
otherwise), such holder may, by notice to the Borrower, declare all amounts due
hereunder to be forthwith due and payable and thereupon this Promissory Note
and all such amounts shall be and become immediately due and payable all
without further demand, presentment, protest or notice of any kind, all of
which are hereby waived by the Borrower. The Borrower hereby agrees to
indemnify the holder hereof against any loss (including any loss on
redeployment of the funds repaid), cost or expense incurred by such holder as a
result of such default and/or acceleration of, this Promissory Note, including,
without limitation, all court costs, reasonable attorney's fees and other costs
of collection. No delay on the part of the holder hereof in exercising any of
its options, powers or rights, or partial or single exercise thereof shall
constitute a waiver thereof. The options, powers and rights of the holder
hereof specified herein are in addition to those otherwise created.
This Promissory Note shall be governed by and construed in accordance with
the laws of the State of Illinois, without giving effect to choice of law or
conflicts of laws principles.
Griffith Micro Science International,
Inc.
By: /s/ Kevin M. Swan
------------------------------------
Its: President and C.E.O.
---------------------------------
<PAGE> 1
EXHIBIT 10.8(a)
This instrument has been prepared by and when
recorded should be returned to:
Matthew R. Lewin
Chapman and Cutler
111 W. Monroe Street
Chicago, Illinois 60603
================================================================================
LEASE AGREEMENT
dated as of December 1, 1994
between
COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
and
GRIFFITH MICRO SCIENCE, INC.
-----------------------------------------
$5,300,000
Counties of Warren and Washington
Industrial Development Agency
Industrial Development Revenue Bonds, Series 1994
(Griffith Micro Science, Inc. Project)
-----------------------------------------
================================================================================
<PAGE> 2
LEASE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS.................................................................................... 1
ARTICLE II REPRESENTATIONS................................................................................ 3
Section 2.1. Representations of Issuer.............................................................. 3
Section 2.2. Representations of Company............................................................. 4
ARTICLE III ISSUANCE OF BONDS; THE PROJECT................................................................. 5
Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds.................................. 5
Section 3.2. Acquisition and Construction of Project................................................. 5
Section 3.3. Disbursements from the Construction Fund................................................ 6
Section 3.4. Establishment of Completion Date; Obligation
of Company to Complete.................................................................. 7
Section 3.5. Investment of Moneys.................................................................... 9
Section 3.6. Operation of the Project................................................................ 10
ARTICLE IV LEASE OF PROJECT............................................................................... 10
Section 4.1. Lease.................................................................................. 10
Section 4.2. Rental Payments........................................................................ 10
Section 4.3. Additional Rental Payments............................................................. 11
Section 4.4. Prepayments............................................................................ 11
Section 4.5. Obligations of Company Unconditional................................................... 12
Section 4.6. Letter of Credit....................................................................... 12
Section 4.7. Purchase of Bonds Prohibited........................................................... 13
Section 4.8. Mode Conversions....................................................................... 13
ARTICLE V OTHER COMPANY AGREEMENTS...................................................................... 13
Section 5.1. Maintenance of Existence............................................................... 13
Section 5.2. Qualification in State................................................................. 13
Section 5.3. Arbitrage.............................................................................. 13
Section 5.4. Company's Obligation with Respect to Exclusion
of Interest Paid on the Bonds.......................................................... 14
Section 5.5. Financing Statements................................................................... 14
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VI NO RECOURSE TO ISSUER; INDEMNIFICATION................................................................ 14
Section 6.1. No Recourse to Issuer........................................................................ 14
Section 6.2. Indemnification.............................................................................. 14
ARTICLE VII PROJECT COVENANTS..................................................................................... 15
Section 7.1. Insurance................................................................................... 15
Section 7.2. Prohibition of Liens........................................................................ 15
Section 7.3. Maintenance, Repairs, Replacements and Removals............................................. 15
Section 7.4. Inspection of the Project................................................................... 16
Section 7.5. Granting of Easements....................................................................... 16
Section 7.6. Compliance with Governmental Regulations.................................................... 16
Section 7.7. Trustee's Right to Perform.................................................................. 16
Section 7.8. Identification of Property.................................................................. 17
Section 7.9. Use of Premises............................................................................. 17
Section 7.10. Casualty; Condemnation...................................................................... 17
Section 7.11. Taxes and Assessments....................................................................... 17
ARTICLE VIII ASSIGNMENT OR SUBLEASE................................................................................ 17
Section 8.1. Assignment or Sublease by Company............................................................ 17
Section 8.2. Assignment by Issuer......................................................................... 18
ARTICLE IX DEFAULTS AND REMEDIES................................................................................. 18
Section 9.1. Events of Default; Remedies.................................................................. 18
Section 9.2. Delay Not Waiver; Remedies................................................................... 18
Section 9.3. Attorneys' Fees and Expenses................................................................. 18
ARTICLE X MISCELLANEOUS......................................................................................... 18
Section 10.1. Notices.................................................................................... 18
Section 10.2. Binding Effect............................................................................. 19
Section 10.3. Severability............................................................................... 19
Section 10.4. Amendments................................................................................. 19
Section 10.5. Right of Company to Perform Issuer's Agreements............................................ 19
Section 10.6. Expiration of Rights of Bank............................................................... 19
Section 10.7. Applicable Law............................................................................. 19
Section 10.8. Captions; References to Sections........................................................... 19
Section 10.9. Complete Agreement......................................................................... 19
Section 10.10. Termination................................................................................ 19
Section 10.11. Counterparts............................................................................... 20
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
EXHIBIT A -- LEGAL DESCRIPTION.................................................................................. A-1
EXHIBIT B -- PROJECT DESCRIPTION................................................................................ B-1
</TABLE>
-iii-
<PAGE> 5
LEASE AGREEMENT dated as of December 1, 1994, between COUNTIES
OF WARREN AND WASHINGTON INDUSTRIAL DEVELOPMENT AGENCY, a
corporate governmental agency constituting a body corporate
and politic and a public benefit corporation of the State of
New York (the "Issuer"), and GRIFFITH MICRO SCIENCE, INC., a
Delaware corporation (the "Company").
WHEREAS, the Issuer is authorized by the New York State Industrial
Development Agency Act, Title I of Article 18-A of the New York State General
Municipal Law, as amended, and Chapter 862 of the Laws of 1971 of the State of
New York (collectively, the "Act"), to provide financing for a "Project," as
defined in the Act, located within the jurisdiction of the Issuer; and
WHEREAS, the Issuer proposes to issue $5,300,000 Industrial Development
Revenue Bonds, Series 1994 (Griffith Micro Science, Inc. Project) pursuant to
the Indenture in order to provide funds to finance the acquisition,
construction, rehabilitation and equipping of certain industrial development
facilities more particularly described in Exhibit B hereto (the "Project"); and
WHEREAS, the Issuer proposes to lease the Project to the Company, and
the Company desires to lease the Project from the Issuer;
Accordingly, the Issuer and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, unless the context clearly requires
otherwise, all terms defined in Article I of the Indenture have the same
meanings in this Agreement.
"Authorized Company Representative" shall mean any person designated by
the Company to act on behalf of the Company pursuant to a written instrument
filed with the Trustee, the Issuer and the Bank containing the specimen
signature of such person. Such instrument may designate an alternate or
alternates.
"Completion Date" means the date the acquisition, construction,
rehabilitation and equipping of the Project is certified to be complete in
accordance with the provisions of Section 3.4 hereof.
"Construction Period" means the period between the beginning of
construction or the date on which Bonds are first delivered to the purchasers
thereof, whichever is earlier, and the Completion Date.
<PAGE> 6
"Cost of the Project" means the sum of the items authorized to be paid
from the Construction Fund pursuant to the provisions of Section 3.3 hereof.
"Indenture" means the Indenture of Trust relating to the Bonds, dated
as of the date of this Agreement, between the Issuer and Harris Bank and Trust
Company, as Trustee, as such Indenture of Trust may be amended or supplemented
from time to time in accordance with its terms.
"Industrial Building" means, the buildings, structures and related
facilities constructed on the Premises as part of the Project. It is recognized
that the term, within the meaning of the Act, also comprehends machinery and
equipment, which are referred to in this instrument as Leased Equipment.
"Leased Equipment" means those items of machinery, equipment and other
personal property acquired from the proceeds of the sale of the Bonds or the
proceeds of any payment, if any, by the Company pursuant to Section 7.3 hereof,
which property is generally described in Exhibit B attached hereto.
"Permitted Encumbrances" means, as of any particular time, (i) liens
for ad valorem taxes and impositions not then delinquent, (ii) this Lease
Agreement and the Indenture, (iii) those utility, access and other easements and
rights-of-way, restrictions, reservations, reversions and exceptions which, in
the opinion of the Company, will not materially reduce the value of the Project
or interfere with or impair the operations being conducted therein (or, if no
operations are being conducted therein, the operations for which the Project
were designed), (iv) such minor defects, irregularities, encumbrances,
easements, rights-of-way, and clouds on title as normally exist with respect to
properties similar in character to the Project and as do not in the aggregate,
in the opinion of the Company, materially reduce the value of the Project or
materially impair the property affected thereby for the purpose for which it was
acquired or is held, including those exceptions listed in the Endorsement to
ALTA owner's title policy No. 9303-04727, issued by Chicago Title Insurance
Company, dated March 28, 1994, and (v) all leases, subleases, liens and
encumbrances on the Premises in existence on the effective date of this
Agreement.
"Premises" means the real property described in Exhibit A.
"Project" means the Premises, the Industrial Building and the Leased
Equipment, if any, more specifically described in Exhibit B hereto.
"Qualified Costs of Construction" means that portion of the Cost of the
Project which is chargeable to the Project's capital account for Federal income
tax purposes or which would be so chargeable either with a proper election by
the Company under the Code or but for a proper election by the Company to deduct
such amount and which were incurred and paid, or are to be incurred and paid,
after November 22, 1993.
2
<PAGE> 7
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations of Issuer. The Issuer represents as follows:
(a) The Issuer (1) is a corporate governmental agency
constituting a body corporate and politic and a public benefit
corporation duly organized and existing under the laws of the State,
(2) has full power and authority to enter into the transactions
contemplated by this Agreement, the Tax Agreement, the Offering
Agreement and by the Indenture and to carry out its obligations under
this Agreement, the Tax Agreement, the Offering Agreement and the
Indenture, including the issuance of the Bonds, (3) is not in default
under any provisions of the laws of the State and (4) by proper
corporate action has duly authorized the execution and delivery of this
Agreement, the Bonds, the Tax Agreement, the Offering Agreement and the
Indenture.
(b) Under existing statutes and decisions, no taxes on income
or profits are imposed on the Issuer. The Issuer will not knowingly
take or omit to take any action reasonably within its control which
action or omission would impair the exclusion of interest paid on the
Bonds from the federal gross income of the owners of the Bonds.
(c) Neither the execution and delivery by the Issuer of this
Agreement, the Indenture, the Tax Agreement or the Offering Agreement
nor the consummation by the Issuer of the transactions contemplated
hereby or thereby conflicts with, will result in a breach of or default
under or will (except with respect to the lien of the Indenture) result
in the imposition of any lien on any property of the Issuer pursuant to
the terms, conditions or provisions of any statute, order, rule,
regulation, agreement or instrument to which the Issuer is a party or
by which it is bound.
(d) Each of this Agreement, the Tax Agreement, the Offering
Agreement and the Indenture has been duly authorized, executed and
delivered by the Issuer and each constitutes the legal, valid and
binding obligation of the Issuer enforceable against the Issuer in
accordance with its terms.
(e) There is no litigation or proceeding pending, or to the
knowledge of the Issuer threatened, against the Issuer, or to the
knowledge of the Issuer affecting it, which would adversely affect the
validity of this Agreement, the Indenture, the Tax Agreement, the
Offering Agreement or the Bonds or the ability of the Issuer to comply
with its obligations under this Agreement, the Indenture, the Tax
Agreement, the Offering Agreement or the Bonds.
(f) The Issuer is not in default under any of the provisions
of the laws of the State which would affect its existence or its powers
referred to in the preceding subsection (a).
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(g) The Issuer hereby finds and determines that, based on
representations of the Company, all requirements of the Act have been
complied with and that the financing of the Project through the
issuance of the Bonds will further the public purposes of the Act.
(h) No member, director, officer or official of the Issuer has
any interest (financial, employment or other) in the Company or the
transactions contemplated by this Agreement.
(i) The Issuer will apply the proceeds from the sale of the
Bonds as specified in the Indenture and this Agreement. So long as any
of the Bonds remain outstanding and except as may be authorized by the
Indenture, the Issuer will not issue or sell any bonds or obligations,
other than the Bonds, the principal of or premium, if any, or interest
on which will be payable from the property described in the granting
clause of the Indenture.
(j) The Project will be wholly located within the Town of
Kingsbury, Washington County, New York.
(k) The representations and warranties of the Issuer contained
in the Offering Agreement are incorporated by reference herein and are
true and correct in all material respects on the Closing Date.
Section 2.2. Representations of Company. The Company represents as
follows:
(a) The Company (1) is a corporation duly incorporated and in
good standing in the state of Delaware, (2) is duly qualified to
transact business and in good standing in the State, (3) is not in
violation of any provision of its certificate of incorporation or its
by-laws, (4) has full corporate power to own its properties and conduct
its business, (5) has full legal right, power and authority to enter
into this Agreement, the Reimbursement Agreement, the Remarketing
Agreement, the Guaranty, the Tax Agreement and the Offering Agreement
and consummate all transactions contemplated by this Agreement, the
Reimbursement Agreement, the Remarketing Agreement, the Guaranty, the
Tax Agreement and the Offering Agreement and (6) by proper corporate
action has duly authorized the execution and delivery of this
Agreement, the Reimbursement Agreement, the Remarketing Agreement, the
Guaranty, the Tax Agreement and the Offering Agreement.
(b) Neither the execution and delivery by the Company of this
Agreement, the Reimbursement Agreement, the Remarketing Agreement, the
Guaranty, the Tax Agreement or the Offering Agreement nor the
consummation by the Company of the transactions contemplated hereby or
thereby conflicts with, will result in a breach of or default under or
will result in the imposition of any lien on any property of the
Company pursuant to the certificate of incorporation or by-laws of the
Company or the terms, conditions or provisions of any statute, order,
rule, regulation, agreement or instrument to which the Company is a
party or by which it is bound.
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(c) This Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Guaranty, the Tax Agreement and the Offering
Agreement have been duly authorized, executed and delivered by the
Company and constitute the legal, valid and binding obligations of the
Company in accordance with its terms.
(d) There is no litigation or proceeding pending, or to the
knowledge of the Company threatened, against the Company which could
adversely affect the validity of this Agreement, the Reimbursement
Agreement, the Remarketing Agreement, the Guaranty, the Tax Agreement
or the Offering Agreement or the ability of the Company to comply with
its obligations under this Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Guaranty, the Tax Agreement or the Offering
Agreement.
(e) The information contained in the Tax Agreement, the
Project Certificate and all other written information relating to the
Project provided by the Company to the Issuer and bond counsel for the
Bonds is true and correct.
(f) The Project will be located wholly within the corporate
limits of the Town of Kingsbury, Washington County, New York.
(g) The representations and warranties of the Company
contained in the Offering Agreement are incorporated by reference
herein and are true and correct in all material respects on the Closing
Date.
ARTICLE III
ISSUANCE OF BONDS; THE PROJECT
Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds. In
order to provide funds to finance the Cost of the Project, the Issuer agrees
that it will issue under the Indenture, sell and cause to be delivered, the
Bonds, bearing interest and maturing as set forth in the Indenture. The Issuer
will thereupon cause the proceeds received from the sale of the Bonds to be
deposited into the Construction Fund in accordance with Section 5.01 of the
Indenture.
Section 3.2. Acquisition and Construction of Project. The Company has
conveyed the Premises to the Issuer and the Company, as agent of the Issuer,
hereby agrees to acquire, construct, rehabilitate and equip the Project in
accordance with this Article III, substantially in accordance with the plans and
specifications therefor prepared by it including any and all supplements,
amendments and additions (or deletions) thereto (or therefrom); provided,
however, that such other facilities and property contemplated by such
supplements, amendments, additions or deletions to the plans and specifications
shall not materially impair the effective use or character of the Project as
contemplated by this Agreement or disqualify the Project as a "Project" within
the meaning of the Act or result in the interest on any Bonds becoming
includable in the gross income of the owners of the Bonds for Federal income tax
purposes.
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In the event that Exhibit A or Exhibit B hereto is to be amended or
supplemented in accordance with the provisions of Section 9.01 of the Indenture,
the Issuer will enter into, and will instruct the Trustee to consent to, an
amendment of or supplement to Exhibit A or Exhibit B hereto upon receipt of:
(i) a copy of the proposed form of amendment or supplement to
Exhibit A or Exhibit B hereto; and
(ii) the written approving opinion of Bond Counsel to the
effect that such amendment or supplement will not have the effect of
disqualifying the Project as a "project" within the meaning of the Act
or result in the interest on any Bonds becoming includable in the gross
income of the owners of the Bonds for Federal income tax purposes.
Section 3.3. Disbursements from the Construction Fund. The Issuer
authorizes and directs the Trustee upon compliance with Section 5.10 of the
Indenture to disburse the moneys in the Construction Fund to or on behalf of the
Company for the following purposes:
(a) Payment to the Company of such amounts, if any, as shall
be necessary to reimburse the Company for advances and payments made by
it prior to or after the delivery of the Bonds for expenditures in
connection with the preparation of plans and specifications for the
Project (including any preliminary study or planning of the Project or
any aspect thereof) and the acquisition, construction, rehabilitation
or equipping of the Project.
(b) Payment of the initial or acceptance fee of the Trustee,
fees of the Trustee and any paying agent incurred during the
Construction Period, fees relating to the underwriting or placement of
the Bonds, legal, financial and accounting fees and expenses, printing
and engraving costs incurred in connection with the authorization, sale
and issuance of the Bonds, the execution and filing of the Indenture
and the preparation of all other documents in connection therewith, and
payment of all fees, costs and expenses for the preparation of this
Agreement, the Indenture, the Bonds and all related agreements and
instruments.
(c) Payment for labor, services, materials and supplies used
or furnished in the acquisition, construction, rehabilitation or
equipping of the Project, all as provided in the plans, specifications
and work orders therefor, payment for the cost of the construction,
acquisition and installation of utility services or other facilities,
and acquisition and installation of all real and personal property
deemed necessary in connection with the Project and payment for the
miscellaneous capitalized expenditures incidental to any of the
foregoing items.
(d) Payment of the fees, if any, for architectural,
engineering, legal, printing, underwriting and supervisory services
with respect to the Project.
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(e) To the extent not paid by a contractor for construction
with respect to any part of the Project, payment of the premiums on all
insurance required to be taken out and maintained during the
Construction Period.
(f) Payment of the taxes, assessments and other charges, if
any, that may become payable during the Construction Period with
respect to the Project, or reimbursement thereof if paid by the
Company.
(g) Payment of expenses incurred in seeking to enforce any
remedy against any contractor or subcontractor in respect of any
default under a contract relating to the Project.
(h) Interest on the Bonds during the Construction Period (or
reimbursement of the Bank for draws under the Letter of Credit to pay
such interest).
(i) Fees of the Bank during the Construction Period for the
issuance of the Letter of Credit.
(j) Payment of any other costs permitted by the Act which will
not affect the exemption from Federal income taxes of interest on the
Bonds.
All moneys remaining in the Construction Fund after the Completion Date
and after payment or provision for payment of all other items provided for in
the preceding subsections (a) to (j), inclusive, of this Section, shall at the
direction of the Company be used in accordance with Section 3.4 hereof.
Each of the payments referred to in this Section shall be made upon
receipt by the Trustee of a written order complying with the form set forth in
Section 5.10 of the Indenture signed by the Authorized Company Representative.
The Company covenants and agrees that it will cause at least 95% of the
moneys in the Construction Fund (including any earnings on investment of such
moneys) to be disbursed for Qualified Costs of Construction and all of such
proceeds to be disbursed for costs permitted by the Act. The Company further
covenants that no more than $106,000 of the moneys in the Construction Fund will
be disbursed for payment of issuance costs within the meaning of the Code.
Section 3.4. Establishment of Completion Date; Obligation of Company to
Complete. The Completion Date shall be evidenced to the Trustee and the Issuer
by a certificate signed by the Authorized Company Representative stating the
Completion Date and the Cost of the Project and stating that (i) construction of
the Project has been completed substantially in accordance with the plans,
specifications and work orders therefor and all labor, services, materials and
supplies used in such construction have been paid for (other than costs and
expenses for which payment has been withheld), (ii) all other facilities
necessary in connection with the Project have been constructed, acquired and
installed in accordance with the plans, specifications and work orders therefor
and all costs and expenses incurred in connection therewith (other than costs
and
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expenses for which payment has been withheld) have been paid and (iii) at least
95% of the costs previously disbursed and to be disbursed from the Construction
Fund (including moneys to be disbursed in accordance with the next succeeding
paragraph of this Section 3.4) are Qualified Costs of Construction, and all of
such costs are costs permitted by the Act. The Company may withhold payment and
direct the Trustee to retain in the Construction Fund an amount sufficient to
pay any Cost of the Project which has been incurred; such retained moneys shall
be disbursed after the Completion Date in the manner provided in Section 3.3
hereof. If the Company withholds the payment of any such cost or expense of the
Project the certificate shall state the amount of such withholding and the
reason therefor. Notwithstanding the foregoing, such certificate may state that
it is given without prejudice to any rights against third parties which exist at
the date of such certificate or which may subsequently come into being. It shall
be the duty of the Company to cause such certificate to be furnished to the
Trustee within 60 days after the Project shall have been completed.
Moneys (including investment proceeds) remaining in the Construction
Fund on the date of such certificate may be used, at the direction of the
Authorized Company Representative, to the extent indicated, for one or more of
the following purposes:
(1) for the payment, in accordance with the provisions of this
Agreement, of any Cost of the Project not theretofore paid, as
specified in the above-mentioned completion certificate; or
(2) for transfer to the Bond Fund, but only if, and to the
extent that, the Trustee has been furnished with an opinion of Bond
Counsel to the effect that such transfer is lawful under the Act and
does not adversely affect the exclusion from Federal gross income of
interest on any of the Bonds.
Any moneys (including investment proceeds) remaining in the
Construction Fund on the date of the aforesaid certificate and not set aside for
the payment of Costs of the Project as specified in (1) above or transferred to
the Bond Fund pursuant to (2) above shall on such date be deposited by the
Trustee in a separate escrow account and used to pay all or part of the
redemption price of Bonds at the earliest redemption date or dates on which
Bonds may be redeemed without the payment of a premium or, at the option of the
Company, at an earlier redemption date or dates; provided that, until so used
such moneys may also be used, at the direction of the Authorized Company
Representative, for one or more of the following purposes:
(a) to pay all or part of the price of purchasing Bonds on
tender, in the open market or at private sale, at a purchase price not
in excess of 100% of the principal amount of such Bonds plus accrued
interest to the date of such purchase for the purpose of cancellation;
(b) for the payment of qualifying costs of any additional
improvements to be installed or constructed on the Project site,
provided that such use of funds is permitted under the Act; or
(c) for any other purpose permitted by the Act;
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provided, that the earnings on the investment of the moneys on deposit in such
escrow account shall be transferred on each interest payment date on the Bonds
to the Bond Fund and shall be used to pay interest on the Bonds coming due on
each interest payment date on the Bonds (or to reimburse the Bank for draws
under the Letter of Credit to pay interest on the Bonds), but no moneys on
deposit in such escrow account may be used for any of the purposes specified in
this paragraph (including the redemption of Bonds) unless and until the Trustee
has been furnished with an opinion of Bond Counsel to the effect that such use
is lawful under the Act and does not adversely affect the exclusion from gross
income for Federal income tax purposes of the interest on any of the Bonds; and
provided further that, until used for one or more of the foregoing purposes,
moneys on deposit in such escrow account may be invested in investments
authorized by Section 3.5 of this Agreement, but may not be invested to produce
a yield on such moneys (computed from the Completion Date and taking into
account any investment of such moneys during the period from the Completion Date
until such moneys were deposited in such escrow account) greater than the yield
on the Bonds from which such proceeds were derived, all as such terms are used
in and determined in accordance with Section 103(c) of the Code and regulations
promulgated thereunder.
In the event the moneys in the Construction Fund available for payment
of the Costs of the Project should not be sufficient to pay the costs thereof in
full, the Company agrees to pay directly, or to deposit in the Construction Fund
moneys sufficient to pay, the costs of completing the Project as may be in
excess of the moneys available therefor in the Construction Fund. The Issuer
does not make any warranty, either express or implied, that the moneys which
will be paid into the Construction Fund and which, under the provisions of this
Agreement, will be available for payment of the Costs of the Project, will be
sufficient to pay all the costs which will be incurred in that connection. The
Company agrees that if after exhaustion of the moneys in the Construction Fund
the Company should pay, or deposit moneys in the Construction Fund for the
payment of, any portion of the said costs of the Project pursuant to the
provisions of this Section it shall not be entitled to any reimbursement
therefor from the Issuer or from the Trustee or from the owners of any of the
Bonds, nor shall it be entitled to any diminution of the amounts payable under
Article IV hereof.
Section 3.5. Investment of Moneys. Any moneys held as a part of the
Bond Fund or the Construction Fund shall be invested or reinvested by the
Trustee, at the direction of the Authorized Company Representative as provided
in Section 5.05 of the Indenture and in the Tax Agreement, to the extent
permitted by law in Qualified Investments. Any such investment may be purchased
at the offering or market price thereof at the time of such purchase. The
Trustee may make any and all such investments through its own bond department.
The investments so purchased shall be held by the Trustee and shall be
deemed at all times a part of the fund for which they were made and the interest
accruing thereon and any profit realized therefrom shall be credited to such
fund and any net losses resulting from such investment shall be charged to such
fund and paid by the Company.
Although the Company recognizes that it may obtain a broker
confirmation or written statement containing comparable information at no
additional cost, the Company hereby agrees
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that confirmations of investments made by the Trustee pursuant to Section 4.07
of the Indenture are not required to be issued by the Trustee for each month in
which a monthly statement is rendered. No such statement need be rendered
pursuant to the provisions hereof if no activity occurred in the fund or account
during such preceding month.
Section 3.6. Operation of the Project. The Company will not, nor will
it allow any lessee or other user of the Project to, make any material change in
its use of the Project unless the Trustee and the Issuer receive an opinion of
Bond Counsel to the effect that such change will not impair the exclusion of
interest on the Bonds from the gross income of holders of the Bonds for federal
income tax purposes.
The Company will agree to operate the Project, or cause any lessee or
other user of the Project to operate the Project, as a "project" as contemplated
by the Act and in such a manner that it will not impair the exclusion of
interest on the Bonds from gross income of the holders of the Bonds for federal
income tax purposes.
Upon a sale of all or any portion of the Company's interest in the
Project (to the extent permitted hereunder), the Company will obtain the
agreement of the purchaser of the Project or any interest therein to comply with
the provisions of this Agreement, regardless of whether such purchaser assumes
the obligations of the Company under this Agreement generally.
ARTICLE IV
LEASE OF PROJECT; RENTAL PAYMENTS
Section 4.1. Lease; Issuance of Bonds. From and after the effective
date of this Agreement and until the term of this Agreement has expired, the
Issuer hereby leases to the Company and the Company hereby leases from the
Issuer the Project, subject to Permitted Encumbrances, for the rental set forth
in Section 4.2. In order to finance the costs of the Project, the Issuer will
issue, sell and deliver the Bonds to the initial purchasers thereof and deposit
the proceeds of the Bonds with the Trustee as provided in Section 5.01 of the
Indenture. The Issuer authorizes the Trustee to disburse the proceeds of the
Bonds in accordance with Section 5.01 of the Indenture. The Company hereby
approves the Indenture and the issuance by the Issuer of the Bonds.
Section 4.2. Rental Payments. In consideration for the lease of the
Project from the Issuer to the Company, the Company agrees to make rental
payments as follows:
(a) Principal, Premium and Interest. On or before 11:00 a.m.
(local time at the principal corporate office of the Trustee) on each
day on which any payment of principal of, premium, if any or interest
on the Bonds shall become due (whether on an interest payment date, at
maturity, or upon redemption or acceleration or otherwise), the Company
will pay, in immediately available funds, an amount which, together
with other moneys held by the Trustee in the Bond Fund and available
therefor (including, without limitation, proceeds of draws under the
Letter of Credit), will enable the Trustee to make such payment in full
in a timely manner. If the Company defaults in any payment
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required by this Section, the Company will pay interest (to the extent
allowed by law) on such amount until paid at the rate provided for in
the Bonds.
(b) Purchase Price. The Company agrees to pay to the Tender
Agent (or if the Bonds are in the Book Entry System, the Trustee)
amounts sufficient to pay the purchase price of Bonds on each optional
or mandatory tender date pursuant to Section 2.03 or 2.04 of the
Indenture, provided the Company shall receive a credit for the amount
of remarketing or Letter of Credit proceeds available for such purpose
under the Indenture on each such date.
In furtherance of the foregoing, so long as any Bonds are outstanding
the Company will pay all amounts required to prevent any deficiency or default
in any payment of the principal or purchase price of, premium, if any, or
interest on the Bonds, including any deficiency caused by an act or failure to
act by the Trustee, the Company, the Issuer or any other person.
All amounts payable under this Section by the Company are assigned by
the Issuer to the Trustee pursuant to the Indenture for the benefit of the
Bondholders. The Company consents to such assignment. Accordingly, the Company
will pay directly to the Trustee (or in the case of the purchase price of Bonds
when the Bonds are not in a Book Entry System, to the Tender Agent) at its
principal corporate trust office all payments payable by the Company pursuant to
this Section.
The Company will pay all amounts owing to the Bank under the
Reimbursement Agreement directly to the Bank when due and no such payment shall
be made to the Trustee.
Section 4.3. Additional Rental Payments. As additional rental payments
for the Project, the Company will also pay the following within 45 days after
receipt of a bill therefor:
(a) The reasonable fees and expenses of the Issuer in
connection with this Agreement and the Bonds, such fees and expenses to
be paid directly to the Issuer; provided that the Company shall have
approved such expenses in writing prior to their incurrence.
(b) (i) The reasonable fees and expenses of the Trustee, the
Tender Agent and all other fiduciaries and agents serving under the
Indenture (including any expenses in connection with any redemption of
the Bonds), and (ii) all reasonable fees and expenses, including
attorneys' fees, of the Trustee for any extraordinary services rendered
by it under the Indenture. All such fees and expenses are to be paid
directly to the Trustee or other fiduciary or agent for its own account
as and when such fees and expenses become due and payable.
(c) The fees and expenses of the Remarketing Agent in
accordance with the terms of the Remarketing Agreement.
Section 4.4. Prepayments; Payment in Full of Bonds and Purchase of the
Project. The Company may prepay to the Trustee all or any part of the amounts
payable under Section 4.2(a)
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at any time, provided that the Bonds shall be subject to redemption solely as
provided in the Indenture and the Bonds. A prepayment shall not relieve the
Company of its obligations under this Agreement until all the Bonds have been
paid or provision for the payment of all the Bonds has been made in accordance
with the Indenture. In the event of a mandatory redemption of the Bonds, the
Company will prepay all amounts necessary for such redemption. In the event that
the Company pays all of the amounts payable pursuant to Section 4.2 hereof and
the Bonds are no longer Outstanding, such payment shall constitute the purchase
of the Project by the Company.
At such time as the Company purchases the Project as described above or
upon the expiration of the term of this Agreement when no Bonds are Outstanding,
the Issuer will deliver to the Company documents conveying to the Company legal
title to the Project, as it then exists, subject to the following: (i) those
liens and encumbrances (if any) to which title to said property was subject on
the date hereof; (ii) those liens and encumbrances created by the Company or to
the creation or suffering of which the Company consented; (iii) those liens and
encumbrances resulting from the failure of the Company to perform or observe any
of the agreements on its part contained in this Agreement; and (iv) Permitted
Encumbrances other than this Agreement.
The Company hereby agrees to purchase and the Issuer hereby agrees to
sell, the Project at such time as no Bonds are Outstanding within the meaning of
the Indenture. The payment in full of the Bonds shall constitute full
consideration for the purchase and sale of the Project and no further
consideration or obligations shall be due hereunder.
Section 4.5. Obligations of Company Unconditional. The obligations of
the Company to make the payments required by Sections 4.2 and 4.4 and to perform
its other obligations contained in this Agreement shall be absolute and
unconditional. Until the principal of and interest on the Bonds shall have been
fully paid or provision for the payment of the Bonds made in accordance with the
Indenture, the Company (a) will not suspend or discontinue any payments provided
for in Section 4.2 hereof, (b) will perform all its other obligations in this
Agreement and (c) will not terminate this Agreement for any cause including any
acts or circumstances that may constitute failure of consideration, defect in
Issuer's title to the Project, destruction of or damage to the Project, the
taking by eminent domain of title to or temporary use of any or all of the
Project, commercial frustration of purpose, any change in the laws of the United
States or of the State or any political subdivision of either or any failure of
the Issuer to perform any of its agreements, whether express or implied, or any
duty, liability or obligation arising from or connected with this Agreement.
Section 4.6. Letter of Credit. The Company shall provide for the
delivery of the Initial Letter of Credit to the Trustee simultaneously with the
original issuance and delivery of the Bonds. The Company may provide for the
delivery of an Alternate Credit Facility in substitution or replacement for the
then existing Letter of Credit or Alternate Credit Facility but only in
accordance with Section 5.03 of the Indenture.
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Section 4.7. Purchase of Bonds Prohibited. So long as a Letter of
Credit is in effect, the Company shall not, directly or indirectly, purchase any
Bonds with any funds that do not constitute Available Moneys, except as required
by Section 4.2(b) of this Agreement.
Section 4.8. Mode Conversions. The Company has the option to cause the
interest rate on the Bonds to be converted from one Mode to another or from an
Adjustable Rate Period of one duration to an Adjustable Rate Period of the same
or a different duration. Such option may be exercised by the Company as provided
in the Indenture.
ARTICLE V
OTHER COMPANY AGREEMENTS
Section 5.1. Maintenance of Existence. The Company agrees that during
the term of this Agreement and so long as any Bond is outstanding, it will
maintain its corporate existence, will continue to be a corporation in good
standing under the laws of the State of Delaware and the State, will not
dissolve or otherwise dispose of all or substantially all of its assets and will
not consolidate with or merge into another legal entity or permit one or more
other legal entities (other than one or more subsidiaries of the Company) to
consolidate with or merge into it, or sell or otherwise transfer to another
legal entity all or substantially all its assets as an entirety and dissolve,
unless (a) in the case of any merger or consolidation, the Company is the
surviving corporation, or (b)(i) the surviving, resulting or transferee legal
entity is organized and existing under the laws of the United States, a state
thereof or the District of Columbia, and (if not the Company) assumes in writing
all the obligations of the Company under this Agreement, the Remarketing
Agreement and the Tax Agreement and (ii) no event which constitutes, or which
with the giving of notice or the lapse of time or both would constitute an Event
of Default shall have occurred and be continuing immediately after such merger,
consolidation or transfer.
Section 5.2. Qualification in State. Subject to the provisions of
Section 5.1 hereof, the Company agrees that throughout the term of this
Agreement, it will remain qualified to do business in the State.
Section 5.3. Arbitrage. The Company covenants with the Issuer and for
and on behalf of the purchasers and owners of the Bonds from time to time
outstanding that so long as any of the Bonds remain outstanding, moneys on
deposit in any fund in connection with the Bonds, whether or not such moneys
were derived from the proceeds of the sale of the Bonds or from any other
sources, will not be used in a manner which will cause the Bonds to be
"arbitrage bonds" within the meaning of Section 148 of the Code, and any lawful
regulations promulgated thereunder, as the same exist on this date, or may from
time to time hereafter be amended, supplemented or revised. The Company also
covenants for the benefit of the Bondholders to comply with all of the
provisions of the Tax Agreement and the Project Certificate. The Company
reserves the right, however, to make any investment of such moneys permitted by
State law, if, when and to the extent that said Section 148 or regulations
promulgated thereunder shall be repealed or relaxed or shall be held void by
final judgment of a court of competent jurisdiction, but only if any investment
made by virtue of such repeal, relaxation or decision
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would not, in the written opinion of Bond Counsel, result in making the interest
on the Bonds includable in the federal gross income of the owners of the Bonds.
Section 5.4. Company's Obligation with Respect to Exclusion of Interest
Paid on the Bonds. Notwithstanding any other provision hereof, the Company
covenants and agrees that it will not take or authorize or permit, to the extent
such action is within the control of the Company, any action to be taken with
respect to the Project, or the proceeds of the Bonds (including investment
earnings thereon), or any other proceeds derived directly or indirectly in
connection with the Project, which will result in the loss of the exclusion of
interest on the Bonds from the federal gross income of the owners of the Bonds
under Section 103 of the Code (except for any Bond during any period while any
such Bond is held by a person referred to in Section 147(a) of the Code); and
the Company also will not omit to take any action in its power which, if
omitted, would cause the above result. Toward that end, the Company covenants
that it will comply with all provisions of the Tax Agreement and the Project
Certificate. This provision shall control in case of conflict or ambiguity with
any other provision of this Agreement.
Section 5.5. Financing Statements. The Company shall cause such
security agreements, financing statements and all supplements thereto and other
instruments as may be required from time to time to be kept, to be recorded and
filed in such manner and in such places as may be required by law in order to
fully preserve, protect and perfect the security of the Owners of the Bonds and
the rights of the Trustee, and to perfect the security interest created by the
Indenture.
ARTICLE VI
NO RECOURSE TO ISSUER; INDEMNIFICATION
Section 6.1. No Recourse to Issuer. The Issuer will not be obligated to
pay the Bonds except from revenues provided by the Company or from other sources
specified in the Indenture. The issuance of the Bonds will not directly or
indirectly or contingently obligate the Issuer or the State to levy or pledge
any form of taxation whatever or to make any appropriation for their payment.
Neither the Issuer nor any member or officer of the Issuer nor any person
executing the Bonds shall be liable personally for the Bonds or be subject to
any personal liability or accountability by reason of the issuance of the Bonds.
Section 6.2. Indemnification. The Company during the term of this
Agreement releases the Issuer, the Trustee and their members or officers from
and covenants and agrees that the Issuer, the Trustee and their members or
officers shall not be liable for, and agrees to indemnify, defend and hold the
Issuer and the Trustee harmless against, any loss or damage to property or any
injury to or death of any person occurring on or about or resulting from any
defect in the Project, provided that the indemnity provided in this sentence
shall be effective only to the extent of any loss that may be sustained by the
Issuer, the Trustee or their officers in excess of the net proceeds received by
the Issuer or the Trustee from any insurance carried with respect to the loss
sustained, and provided further, that the indemnity shall not be effective for
damages that result from the negligence or intentional acts on the part of the
Issuer, the Trustee or their officers. The Company will also indemnify and save
harmless the Trustee for, and hold it harmless against,
14
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any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust created under the Indenture, including the cost and expense of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under the Indenture.
ARTICLE VII
PROJECT COVENANTS
Section 7.1. Insurance. The Company agrees to maintain, or cause to be
maintained, all necessary insurance with respect to the Project in accordance
with its customary insurance practices. The Issuer shall have no obligation to
maintain insurance with respect to the Project.
Section 7.2. Prohibition of Liens. The Company shall not, except as
permitted by Section 7.3 hereof, create or suffer to be created any lien or
charge upon the Project or any part thereof or upon the rents, contributions or
charges or receipts or revenues therefrom other than in favor of the Issuer or
the Trustee. The Company further agrees to pay or cause to be discharged or make
adequate provisions to satisfy and discharge, within 60 days or as soon
thereafter as is reasonable after the same shall accrue, any such lien or charge
and also all lawful claims or demands for labor, materials, supplies or other
charges which, if unpaid, might be or become a lien upon the Project or any part
thereof or the rents, contributions or charges or receipts or revenues
therefrom; provided, however, that nothing in this Section shall require the
Company to pay or cause to be discharged or make provision for any such lien or
charge so long as the validity thereof shall be contested in good faith.
Section 7.3. Maintenance, Repairs, Replacements and Removals. The
Company shall at all times during the term of this Agreement maintain, preserve
and keep the Project in good repair, working order and condition, excepting
normal wear and tear, and it will from time to time make or cause to be made all
necessary and proper repairs and replacements in connection with the
maintenance, repairs and replacements referred to in this Section. The Company
may, subject only to other applicable provisions of this Agreement, modify the
Project or make modifications, substitutions, additions, removals, or
improvements thereto from time to time, as it may deem to be desirable for its
uses and purposes, the cost of which modifications, substitutions, additions,
removals, or improvements shall be paid by the Company, and the same (other than
removals) shall be included under the terms of this Agreement as part of the
Project except for property owned by third parties which property will not
become a part of the Project. The Company will not permit any mechanics',
materialmen's or other liens to be established and remain against the Project
for labor or material furnished in connection with any modification,
substitutions, additions, removals, improvements, repairs, renewals or
replacement so made by it; provided, however, that nothing in this Section shall
require the Company to pay or cause to be discharged or make provision for any
such lien or charge so long as the validity thereof shall be contested in good
faith. Upon written request of the Company, the Issuer shall give a bill of sale
in quitclaim form to the Company for an item of any Leased Equipment permanently
removed from the Premises by the Company. Nothing contained in this Agreement
shall limit the right of the Company to acquire, and to locate within the
Project, such machinery, equipment, tools,
15
<PAGE> 20
tooling, attachments and accessories thereto as the Company shall deem
appropriate, which machinery, equipment, tools, tooling, attachments and
accessories thereto; provided that such item, by its character, does not
constitute an addition, modification or improvement to an existing portion of
the Project, shall remain the property of the Company, the Company's bailor or
the lessor thereof to the Company, as the case may be.
Section 7.4. Inspection of the Project. The Issuer, the Trustee and
their or either of their duly authorized agents shall have the right at all
reasonable times to enter upon the Project and to examine and inspect the
Project upon not less than two Business Days' prior notice to the Company.
Section 7.5. Granting of Easements. If no Event of Default shall have
happened and be continuing, the Company may, notwithstanding anything contained
herein to the contrary, at any time or times:
(a) Grant easements, licenses, rights of way (including the
dedication of public highways) and other rights or privileges in the
nature of easements with respect to any property included in the
Project, free from the Indenture; or
(b) Release existing easements, licenses, rights of way
and other rights or privileges,
all with or without consideration and upon such terms and conditions as the
Company shall determine, and the Issuer agrees that it will execute and deliver
and will cause and direct the Trustee to execute and deliver any instrument
necessary or appropriate to confirm and grant or release any such easement,
license, right of way or privilege, or other right, upon receipt by the Issuer
and the Trustee of a copy of the instrument of grant or release and a written
notice signed by the Company requesting such instrument. If the instrument of
grant shall so provide, any such easement or right and rights of such parties
thereunder shall be superior to the rights of the Issuer and the Trustee under
this Agreement and the Indenture and shall not be affected by any termination of
this Agreement or default on the part of the Company hereunder. Any payments or
other consideration received by the Company for any such grant shall be and
remain the property of the Company.
Section 7.6. Compliance with Governmental Regulations. With respect to
the Project, the Company shall at all times comply with all applicable
requirements of the laws of the State and with all applicable requirements of
any agency, board or commission, created under such laws or of any other duly
constituted public authority, and to the extent possible, will use the Project
only for such purposes as are lawful under the Act, provided, however, that the
Company shall be deemed in compliance with this Section so long as it is
contesting in good faith any such requirement by appropriate legal proceedings.
Section 7.7. Trustee's Right to Perform. If at any time the Company
defaults in the performance of any of its covenants under this Agreement, the
Trustee may (but shall not be obligated to) perform the same after giving the
Company ten days' notice of its intention to do so.
16
<PAGE> 21
Section 7.8. Identification of Property. All property of a capital
nature belonging to the Company or others, as described in Section 7.3 hereof,
shall be suitably marked by the Company to identify the Company's ownership or
ownership by a third party.
Section 7.9. Use of Premises. The Issuer shall not, to the extent
permitted by law, attempt to impose upon the use or occupancy of the Project any
laws, ordinances, rules or regulations more burdensome or restrictive than those
in effect upon the date of this Agreement.
Section 7.10. Casualty; Condemnation. If the Project is damaged or
destroyed in whole or in part by casualty, whether or not covered by insurance,
or is taken, in whole or in part, by power of eminent domain, this Agreement
shall nevertheless continue in effect without abatement or suspension of rent
for so long as this Agreement shall remain in effect and any proceeds with
respect thereto received by the Company from insurance providers or government
agencies shall be the sole property of the Company.
Section 7.11. Taxes and Assessments. The Issuer covenants that during
the term of this Agreement, the Issuer will retain title to the Project, except
as herein otherwise expressly provided. The Company has entered into an
Agreement for Payments in Lieu of Taxes dated December 29, 1994 (the "PILOT
Agreement") with the Issuer, pursuant to which it has agreed to pay certain
amounts with respect to the Project.
ARTICLE VIII
ASSIGNMENT OR SUBLEASE
Section 8.1. Assignment or Sublease by Company. The rights and
obligations of the Company under this Agreement may be assigned by the Company
and/or the Project may be subleased as a whole or in part by the Company;
provided, however, that (a) no such assignment or sublease shall relieve the
Company from primary liability for any of its obligations hereunder, (b) each
assignee of the Company's interest in this Agreement shall assume the
obligations of the Company hereunder to the extent of the interest assigned, (c)
the Company shall not less than 30 days prior to the effective date of any such
assignment or sublease, furnish or cause to be furnished to the Issuer and the
Trustee a true and complete copy of each such assignment or sublease contract
and, as applicable, assumption of obligations and (d) prior to any assignment or
sublease, the Company shall have caused to be delivered to the Issuer and the
Trustee an opinion of Bond Counsel to the effect that such assignment or
sublease will not cause interest on the Bonds to be includable in the gross
income of the owners thereof for purposes of federal income taxation.
Notwithstanding the provisions of the preceding paragraph, this
Agreement may be assigned by the Company as provided in the preceding paragraph,
but without the Company remaining liable hereunder, if either (a) the Guaranty
will continue to remain in full force and effect and enforceable notwithstanding
such assignment, or (b) if the Guaranty is to be released in accordance with
Section 9.05 of the Indenture in connection with such assignment, the release of
the Guaranty is accomplished in accordance with the provisions of the Indenture.
17
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Section 8.2. Assignment by Issuer. The Issuer will assign its rights
under and interest in this Agreement (except for the Unassigned Rights) to the
Trustee pursuant to the Indenture as security for the payment of the Bonds.
Otherwise, the Issuer will not sell, assign or otherwise dispose of its rights
under or interest in this Agreement nor create or permit to exist any lien,
encumbrance or other security interest in or on such rights or interest.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default; Remedies. The occurrence of any Event
of Default under the Indenture shall constitute an Event of Default hereunder
for so long as such Event of Default under the Indenture is continuing. Whenever
any Event of Default has occurred and is continuing, the Trustee may take
whatever action may appear necessary or desirable to collect the payments then
due and to become due or to enforce performance of any agreement of the Company
in this Agreement. Upon any acceleration of the Bonds under the Indenture, all
amounts payable under Section 4.2(a) hereof shall be immediately due and payable
without the necessity of any action by any party.
In addition, if an Event of Default is continuing with respect to any
of the Unassigned Rights, the Issuer may take whatever action may appear
necessary or desirable to it to enforce performance by the Company of such
Unassigned Rights.
Any amounts collected pursuant to action taken under this Section
(except for amounts payable directly to the Issuer or the Trustee pursuant to
Section 4.3, 8.2 and 9.3) shall be applied in accordance with the Indenture.
Section 9.2. Delay Not Waiver; Remedies. A delay or omission by the
Issuer or the Trustee in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 9.3. Attorneys' Fees and Expenses. If the Company should
default under any provision of this Agreement and the Issuer should employ
attorneys or incur other expenses for the collection of the payments due under
this Agreement, the Company will on demand pay to the Issuer the reasonable fees
of such attorneys and such other reasonable expenses so incurred by the Issuer.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices or other communications hereunder
shall be sufficiently given and shall be deemed given when delivered or mailed
as provided in the Indenture.
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Section 10.2. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Company and their
respective successors and assigns, subject, however, to the limitations
contained in Section 6.1.
Section 10.3. Severability. If any provision of this Agreement shall
be determined to be unenforceable at any time, that shall not affect any other
provision of this Agreement or the enforceability of that provision at any other
time.
Section 10.4. Amendments. After the issuance of the Bonds, this
Agreement may be effectively modified, amended, supplemented or terminated only
with the written consent of the Trustee and the Bank and any such modification,
amendment or supplement must be in accordance with the provisions of the
Indenture.
Section 10.5. Right of Company to Perform Issuer's Agreements. The
Issuer irrevocably authorizes and empowers the Company to perform in the name
and on behalf of the Issuer any agreement made by the Issuer in this Agreement
or in the Indenture which the Issuer fails to perform in a timely fashion if the
continuance of such failure could result in an Event of Default. This Section
will not require the Company to perform any agreement of the Issuer.
Section 10.6. Expiration of Rights of Bank. It is expressly understood
that any and all provisions of this Agreement for notices or the furnishing of
documents, information or reports to the Bank and the necessity of obtaining the
consent of the Bank to any modifications, amendments or supplements to this
Agreement or waivers of any of the provisions hereof shall cease and determine
and be of no further force and effect when (a) the Letter of Credit is not in
effect and no amounts are due and payable by the Company to the Bank under the
Reimbursement Agreement, or (b) the Bank is in default on any of its obligations
to pay drawings under the Letter of Credit submitted in conformity with the
terms of the Letter of Credit.
Section 10.7. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 10.8. Captions; References to Sections. The captions in this
Agreement are for convenience only and do not define or limit the scope or
intent of any provisions or Sections of this Agreement. References to Articles
and Sections are to the Articles and Sections of this Agreement, unless the
context otherwise requires.
Section 10.9. Complete Agreement. This Agreement represents the entire
agreement between the Issuer and the Company with respect to its subject matter.
Section 10.10. Termination. When no Bonds are Outstanding under the
Indenture and the Indenture is deemed discharged pursuant to Article X thereof,
the Company and the Issuer shall not have any further obligations under this
Agreement; provided that the Company's covenants in Sections 5.4 and 7.11 and
the provisions of Section 4.4 with respect to mandatory redemption of the Bonds
shall survive so long as any Bond remains unpaid.
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Section 10.11. Counterparts. This Agreement may be signed in several
counterparts. Each will be an original, but all of them together constitute the
same instrument.
COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
By /s/ Louis Tessier
--------------------------------
Louis E. Tessier, Vice Chairman
[SEAL]
Attest:
By /s/ C. Powel South, Secy.
--------------------------------
GRIFFITH MICRO SCIENCE, INC.
By /s/ Brian J. Tuttle
--------------------------------
Treasurer
[SEAL]
Attest:
By /s/ James S. Legg
-----------------------------
20
<PAGE> 25
STATE OF NEW YORK )
) SS
COUNTY OF WARREN )
I, the undersigned Notary Public in and for the State and County
aforesaid, do hereby certify that on the 27th day of December, 1994, the
foregoing instrument was produced to me in said County by Louis E. Tessier and
C. Powel South, personally known by me to be the Vice Chairman and Secretary,
respectively, of the COUNTIES OF WARREN AND WASHINGTON INDUSTRIAL DEVELOPMENT
AGENCY, and acknowledged by them and each of them to be their free act and deed
as Vice Chairman and Secretary of such Agency and the act and deed of said
Agency as authorized by a resolution of such Agency; and they say that they have
read the aforesaid instrument and the statements contained therein are true.
WITNESS my hand and seal this 27th day of December, 1994.
/s/ Bruce G. Carr
-----------------------
Notary Public
(Seal)
<PAGE> 26
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, the undersigned Notary Public in and for the State and County
aforesaid, do hereby certify that on the (28th) day of (December), 1994, the
foregoing instrument was produced to me in said County by Brian J. Tuttle and
James C. Legg, personally known by me to be the Treasurer and Secretary,
respectively, of GRIFFITH MICRO SCIENCE, INC., a corporation incorporated under
the laws of the State of Delaware, who being by me duly sworn, did say that the
seal affixed to said instrument was signed and sealed in behalf of said
corporation by authority of its Board of Directors; and said respective persons
acknowledged said instrument to be the free act and deed of said corporation and
to be their free act and deed as such officers of such corporation.
WITNESS my hand and seal this (28th) day of December, 1994.
/s/ Linda Sanders
-----------------------
Notary Public
(SEAL)
<PAGE> 27
EXHIBIT A
LEGAL DESCRIPTION
All that certain lot, piece or parcel of land, situate lying and being
in the Town of Kingsbury, County of Washington and State of New York and more
particularly described as follows:
Lots Number 42 and 43, containing 5.409 acres, more or less,
as shown on a Map of a Survey entitled "The Industrial Park
owned by Counties of Warren and Washington Industrial
Development Agency" made by John B. Van Dusen, dated June 2,
1978, and filed in the Washington County Clerk's Office on
September 19, 1978.
Subject to all rights of the public and to Casey Road, County Line Road
and Park Road in the development of the said Industrial Park.
A-1
<PAGE> 28
EXHIBIT B
PROJECT DESCRIPTION
The Project consists of the acquisition of a 5.4 acre parcel of real
estate located in the Town of Kingsbury, Washington County, New York and the
construction of a 33,000 square foot building which houses facilities for the
sterilization of prepackaged medical, pharmaceutical and cosmetic products. In
addition, the Project includes the equipment necessary to operate an ethylene
oxide gas contract sterilization facility, including, but not limited to, five
remanufactured sterilizers, vacuum pump system, both low and high pressure gas
fuel boilers, ethylene oxide abatement systems and racking systems. The Project
is more particularly described in Exhibit A to the Project Certificate.
B-1
<PAGE> 1
EXHIBIT 10.8(b)
================================================================================
INDENTURE OF TRUST
by and between
COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
and
HARRIS TRUST AND SAVINGS BANK,
as Trustee
-----------------------------------
Dated as of December 1, 1994
-----------------------------------
$5,300,000
COUNTIES OF WARREN AND WASHINGTON INDUSTRIAL DEVELOPMENT AGENCY
INDUSTRIAL DEVELOPMENT REVENUE
BONDS, SERIES 1994
(GRIFFITH MICRO SCIENCE, INC. PROJECT)
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Article and Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.03. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II. AUTHORIZATION AND ISSUANCE OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.01. Authorization of Bonds; No Additional Bonds . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.02. Issuance of Bonds; Terms of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.03. Optional Tenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.04. Mandatory Tenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.05. Form of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.06. Execution and Authentication of Bonds; Limited Obligations . . . . . . . . . . . . . . . . 23
Section 2.07. Registration and Exchange of Bonds; Persons Treated as Owners . . . . . . . . . . . . . . . 24
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.09. Cancellation of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.10. Temporary Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.11. Conditions Precedent to Authentication and Delivery of Bonds . . . . . . . . . . . . . . . 25
Section 2.12. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III. REDEMPTION OF BONDS, PURCHASE AND REMARKETING OF BONDS . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.01. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.02. Extraordinary Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.03. Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.05. Effect of Deposit of Redemption Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.06. Partial Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.07. Purchase of Tendered Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.08. Remarketing of Tendered Bonds; Payment of Purchase Price . . . . . . . . . . . . . . . . . 32
Section 3.09. Funds for Purchase Price of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.10. Delivery of Purchased Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.11. Pledged Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.01. Payment of Principal, Premium, If Any, and Interest . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. Instruments of Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.03. Tax-Exempt Status of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.04. Books, Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.05. Notice to Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V. REVENUES AND FUNDS; LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.01. Application of Original Proceeds of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<TABLE>
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Section 5.02. Creation of Bond Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.03. Letter of Credit, Alternate Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.04. Letter of Credit Draws and Bond Fund Moneys to Pay Principal,
Premium or Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.05. Investment of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.06. Moneys to Be Held in Trust; Nonpresentment of Bonds . . . . . . . . . . . . . . . . . . . . 42
Section 5.07. Repayment from Indenture Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.08. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.09. Construction Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.10. Payments into Construction Fund; Disbursements . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.11. Completion of Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.12. Transfer of Construction Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.13. Custody of Funds and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.07. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII. TRUSTEE, REMARKETING AGENT AND TENDER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.06. Compensation and Indemnity of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.07. Eligibility of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.09. Duties of Remarketing Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.10. Eligibility of Remarketing Agent; Replacement . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.11. Tender Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.12. Successor Trustee, Remarketing Agent or Tender Agent by Merger . . . . . . . . . . . . . . 54
ARTICLE VIII. SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.01. Without Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.02. With Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.03. Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.04. Notation on or Exchange of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 8.05. Execution and Delivery by Trustee of Amendments and Supplements . . . . . . . . . . . . . . 56
Section 8.06. Company and Bank Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.07. Notice to Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IX. AMENDMENT OF AGREEMENT, GUARANTY OR LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.01. Without Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.02. With Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.03. Bank Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.04. Modifications of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.05. Release of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X. DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.01. Bonds Deemed Paid; Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.02. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.03. Repayment to Bank and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.01. Bondholders Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.02. Limitation of Rights; Rights of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.03. No Personal Liability of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.06. Payments or Performance Due on Other Than Business Day . . . . . . . . . . . . . . . . . . 62
Section 11.07. Execution of Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 11.08. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Exhibit A - Form of Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
iii
<PAGE> 5
INDENTURE OF TRUST
THIS INDENTURE OF TRUST is made and entered into as of December 1,
1994 by and between the COUNTIES OF WARREN AND WASHINGTON INDUSTRIAL
DEVELOPMENT AGENCY, a corporate governmental agency constituting a body
corporate and politic and a public benefit corporation of the State of New York
(the "Issuer" ), and HARRIS TRUST AND SAVINGS BANK, a banking corporation
organized under the laws of the State of Illinois (the "Trustee"), as trustee.
WITNESSETH:
WHEREAS, the Issuer is authorized under the New York State Industrial
Development Agency Act, Title I of Article 18-A of the New York State General
Municipal Law, as amended, and Chapter 862 of the Laws of 1971 of the State of
New York (collectively, the "Act"), to issue its revenue bonds for the purpose
of providing financing for a "project" located within the Issuer as therein
defined; and
WHEREAS, Griffith Micro Science, Inc., a Delaware corporation
authorized to do business in the State of New York (the "Company"), proposes to
finance the cost of the acquisition, construction, rehabilitation and equipping
of certain land, building and equipment constituting industrial development
facilities located in the Town of Kingsbury, Washington County, New York (the
"Project") and to finance a portion of the cost of the Project through the
issuance by the Issuer of its hereinafter defined Bonds; and
WHEREAS, the Issuer has duly entered into a Lease Agreement (the
"Agreement") with the Company specifying the terms and conditions of such
financing, the use of the proceeds of its Counties of Warren and Washington
Industrial Development Agency Industrial Development Revenue Bonds, Series 1994
(Griffith Micro Science, Inc. Project) (the "Bonds") for such purpose and the
payment by the Company of lease installments under the Agreement; and
WHEREAS, it has been determined that the amount necessary to finance
the Project will require the issuance, sale and delivery of the Issuer's Bonds
in the aggregate principal amount of $5,300,000 as hereinafter provided.
WHEREAS, all things necessary to make the Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, the valid, binding and
legal obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid assignment and pledge of the security pledged
hereunder, have been done and performed, and the creation, execution and
delivery of this Indenture of Trust, and the creation, execution and issuance
of the Bonds, subject to the terms hereof, have in all respects been duly
authorized;
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:
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<PAGE> 6
GRANTING CLAUSE
To secure the timely payment of the principal of, premium, if any, and
interest on the Bonds according to their tenor and effect and to secure the
performance and observance by the Issuer of all of the covenants set forth
herein and in the Bonds, the Issuer hereby assigns to the Trustee and grants to
the Trustee a security interest in all right, title and interest of the Issuer
in and to (a) the Agreement, including the current and continuing right to
claim, collect, receive and give receipts for all amounts payable by or
receivable from the Company under the Agreement, to bring actions and
proceedings under the Agreement or for the enforcement of the Agreement and to
do all things that the Issuer is entitled to under the Agreement, but excluding
the Unassigned Rights, and (b) all moneys and securities held from time to time
by the Trustee under this Indenture as provided in this Indenture (other than
moneys and securities held in the Purchase Fund or the Rebate Fund), all for
the equal and proportionate benefit of all holders of the Bonds without
priority or distinction as to lien or otherwise of any Bonds over any other
Bonds.
To secure the Obligations (as defined in the Reimbursement Agreement)
of the Company to the Bank under the Reimbursement Agreement, the Issuer
assigns and grants to the Trustee for the benefit of the Bank a security
interest in all right, title and interest of the Issuer in and to the moneys
held in the funds and accounts created hereunder until such monies are applied
for their intended purposes as provided herein, provided, however, the said
security interest shall be subordinate to the security interest in and to such
moneys granted to the Trustee in the preceding paragraph for the benefit of the
holders of the Bonds.
TO HAVE AND TO HOLD all and singular the Trust Estate (as defined
below) whether now owned or hereafter acquired, to the Trustee and its
respective successors in trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit, security and protection of all present and
future Owners of the Bonds issued under and secured by this Indenture without
privilege, priority or distinction as to the lien or otherwise of any of the
Bonds over any of the other Bonds;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns,
shall well and truly pay, or cause to be paid, the principal of, premium, if
any, and interest on the Bonds due or to become due thereon, at the times and
in the manner mentioned in the Bonds and as provided in Section 4.01 hereof
according to the true intent and meaning thereof, or shall provide, as
permitted hereby, for the payment thereof in accordance with Article X hereof,
and shall well and truly keep, perform and observe all the covenants and
conditions pursuant to the terms of this Indenture to be kept, performed and
observed by it, and shall pay or cause to be paid to the Trustee all sums of
money due or to become due in accordance with the terms and provisions hereof
and the Company shall have satisfied all Obligations to the Bank under the
Reimbursement Agreement, then upon such final payments or deposits as provided
in Article X hereof, this Indenture and the rights hereby granted shall cease,
terminate and be void and the Trustee shall thereupon cancel and discharge this
Indenture and execute and deliver to the Issuer
2
<PAGE> 7
and the Company such instruments in writing as shall be requisite to evidence
the discharge hereof.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly
declared, that all Bonds issued and secured hereunder are to be issued,
authenticated and delivered and all of the Trust Estate is to be dealt with and
disposed of, under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes hereinafter expressed and the
Issuer has agreed and covenanted, and does hereby agree and covenant, with the
Trustee and with the respective Owners, from time to time, of the Bonds or any
part thereof, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Each of the following terms shall have
the meaning assigned to it in this Section 1.01 whenever it is used in this
Indenture, unless the context in which it is used clearly requires otherwise
(certain terms used, and not defined, herein are defined in the Agreement):
"Adequate Interest Coverage" shall have the meaning set forth in
Section 2.02(f)(iii) hereof.
"Adjustable Rate" shall mean the interest rate per annum from time to
time borne by the Bonds when in the Adjustable Rate Mode, as established in
accordance with Section 2.02(e) hereof.
"Adjustable Rate Conversion Date" shall mean each Interest Payment
Date on which the Bonds, upon having been converted to the Adjustable Rate Mode
from another Mode, shall first begin to bear interest at an Adjustable Rate in
accordance with the terms hereof, and each subsequent Adjustable Rate Reset
Date.
"Adjustable Rate Interest Payment Date" means (i) with respect to an
Adjustable Rate Period which extends over a period covering all or part of at
least six calendar months, the first day of the sixth calendar month following
the Adjustable Rate Conversion Date and the first day of each successive sixth
calendar month, if any, of such Adjustable Rate Period; provided, however, the
final Adjustable Rate Interest Payment Date with respect to any such Adjustable
Rate Period (unless such date is the maturity date of the Bonds) shall be the
first Business Day of the calendar month immediately following the expiration
of such Adjustable Rate Period, or the maturity date of the Bonds (if such
Adjustable Rate Period extends to the final maturity of the Bonds), and (ii)
with respect to an Adjustable Rate Period which extends over a period covering
all or part of less than six calendar months, the first Business Day of the
calendar month immediately following the Adjustable Rate Period or the maturity
date of the Bonds (if such Adjustable Rate Period extends to the final maturity
of the Bonds).
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<PAGE> 8
"Adjustable Rate Mode" shall mean the Mode in which the Bonds bear
interest at an Adjustable Rate.
"Adjustable Rate Period" shall mean any period of not less than one
month in duration, commencing on an Adjustable Rate Conversion Date or an
Adjustable Rate Reset Date, as appropriate, and ending on the day preceding the
subsequent Conversion Date or Adjustable Rate Reset Date, as appropriate.
"Adjustable Rate Reset Date" shall mean an Adjustable Rate Interest
Payment Date on which the Bonds begin to bear interest at a new Adjustable Rate
in accordance with the terms hereof.
"Agreement" shall mean the Lease Agreement, dated as of December 1,
1994, between the Issuer and the Company, as amended and supplemented.
"Alternate Credit Facility" shall mean an irrevocable letter of credit
or other credit facility described in Section 5.03(b) hereof delivered pursuant
to such Section in substitution for a Letter of Credit.
"Authorized Company Representative" shall mean any person at the time
designated to act on behalf of the Company by a written certificate furnished
to the Issuer, the Remarketing Agent and Trustee.
"Authorized Denomination" shall mean $100,000 and any integral
multiple thereof or, upon conversion to any Adjustable Rate Period extending to
the final maturity of the Bonds, $5,000 or any integral multiple thereof.
"Available Moneys" shall mean
(1) During any period the Letter of Credit is in effect:
(a) proceeds from the remarketing of any Bonds, tendered
for purchase pursuant to this Indenture, to any person other than the
Issuer, the Company or any "insider" (as defined in the Bankruptcy
Code) of the Issuer or the Company;
(b) moneys derived from any draw on the Letter of Credit;
(c) any other moneys or securities, if there is delivered
to the Trustee an opinion of an attorney-at-law, duly admitted to
practice before the highest court of the jurisdiction in which such
attorney maintains an office, who is not a full-time employee of the
Company, the Bank, the Issuer or the Remarketing Agent, having
expertise in bankruptcy matters (who, for purposes of such opinion,
may assume that no Bondholder is an "insider," as defined in the
Bankruptcy Code) to the effect that the use of such moneys or
securities to pay the principal or purchase price of, premium, if any,
or interest on the Bonds would not be avoidable as preferential
payments under Section 547 of the Bankruptcy Code recoverable under
Section 550 of the Bankruptcy Code should the
4
<PAGE> 9
Company become a debtor in a proceeding commenced thereunder, which
opinion shall also be addressed to and acceptable to any Rating Agency
then rating the Bonds; and
(d) earnings derived from the investment of any of the
foregoing; and
(2) During any period the Letter of Credit is not in effect, any
moneys held by the Trustee in any Fund or Account under this Indenture and
available, pursuant to the provisions hereof, to be used to pay principal of,
premium, if any, or interest on, or the purchase price of, the Bonds.
"Bank" shall mean the entity issuing the Letter of Credit, if any then
in effect, and its successors in such capacity and their assigns; or if an
Alternate Credit Facility is issued, the issuer thereof, and its successors in
such capacity and their assigns. All references to "Bank" shall be of no
effect at any time that no Letter of Credit is issued and secures the Bonds,
except with respect to rights of any Bank established hereunder which do not,
by their terms, expire upon the expiration of the Letter of Credit issued by
such Bank.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act
of 1978, as amended from time to time, or any substitute or replacement
legislation.
"Beneficial Owner" means the person in whose name a Bond is recorded
as beneficial owner of such Bond by the Securities Depository or a Participant
or an Indirect Participant on the records of such Securities Depository,
Participant or Indirect Participant, as the case may be, or such Person's
subrogee.
"Bond Counsel" shall mean, with respect to the original issuance of
the Bonds, Chapman and Cutler, Chicago, Illinois, and thereafter, any firm of
attorneys of nationally recognized expertise with respect to the tax-exempt
obligations of political subdivisions, selected by the Company and acceptable
to the Remarketing Agent, the Trustee and the Issuer.
"Bond Fund" shall mean the Fund by that name established by Section
5.02 of this Indenture.
"Bond Owner," "Bondowner," "Owner," "owner," "Bond holder,"
"bondholder," "holder" or "owner of the Bonds," when used with respect to a
Bond, shall mean the person or entity in whose name such Bond shall be
registered.
"Bonds" shall mean the $5,300,000 Counties of Warren and Washington
Industrial Development Agency Industrial Development Revenue Bonds, Series 1994
(Griffith Micro Science, Inc. Project), issued pursuant to this Indenture.
"Book-Entry System" means a book-entry system established and operated
for the recordation of Beneficial Owners of the Bonds pursuant to Section 2.12
hereof.
"Business Day" or "business day" shall mean any day which is not (i) a
Saturday or a Sunday, (ii) a day on which banking institutions in the cities of
New York, New York or
5
<PAGE> 10
Chicago, Illinois (or, if different, in the cities in which the principal
corporate trust office of the Trustee and the office of the Bank at which
drawings under the Letter of Credit are to be honored are located) are
authorized or required by law or executive order to close, or (iii) a day on
which the New York Stock Exchange is closed.
"Closing Date" shall mean the date of initial issuance and delivery of
the Bonds to the purchasers thereof.
"Code" shall mean the Internal Revenue Code of l986, as amended.
Each citation to a section of the Code shall include the Regulations applicable
to such Section.
"Company" shall mean Griffith Micro Science, Inc., a Delaware
corporation, its successors and assigns.
"Company Bonds" shall mean Bonds purchased with moneys described in
Section 3.09(c) hereof.
"Construction Fund" shall mean the Fund by that name established by
Section 5.09 of this Indenture.
"Conversion Date" shall mean an Adjustable Rate Conversion Date, a
Weekly Rate Conversion Date, a Daily Rate Conversion Date or a CP Rate
Conversion Date, as appropriate.
"CP Rate" shall mean the interest rate per annum on each Bond
established in accordance with Section 2.02(d) hereof.
"CP Rate Conversion Date" shall mean each Interest Payment Date on
which the Bonds. having been converted to the CP Rate Mode from another Mode,
first begin to bear interest at a CP Rate in accordance with the terms hereof.
"CP Rate Interest Payment Date" shall mean with respect to each Bond,
the Business Day which immediately succeeds the last date of any CP Rate Period
applicable to such Bond.
"CP Rate Mode" shall mean the interest rate Mode in which Bonds bear
interest at the CP Rate.
"CP Rate Period" shall mean with respect to each Bond, while the Bonds
are in the CP Rate Mode, a period (a) which begins on a CP Rate Conversion Date
or a CP Rate Reset Date, as appropriate, and (b) has a duration which shall
have been set by the Remarketing Agent as provided in Section 2.02(d), from l
to 360 days' length, and (c) which ends on a day which immediately precedes a
Business Day and which falls on or prior to the maturity date of the Bonds.
"CP Rate Reset Date" shall mean with respect to each Bond, each CP
Rate Interest Payment Date on which commences a new CP Rate Period applicable
to such Bond, whereon a new CP Rate which shall have been set pursuant to
Section 2.02(d) shall first become effective.
6
<PAGE> 11
"Daily Interest Period" shall mean, while the Bonds are in the Daily
Rate Mode, the period from and including each day which is a Business Day to
but excluding the next succeeding day which is a Business Day.
"Daily Rate" shall mean the interest rate per annum on the Bonds
established in accordance with Section 2.02(c) hereof.
"Daily Rate Conversion Date" shall mean each date on which the Bonds,
having been converted to the Daily Rate Mode from another Mode, first begin to
bear interest at a Daily Rate in accordance with the terms hereof.
"Daily Rate Interest Payment Date" shall mean the first Business Day
of each month during which the Bonds shall be in the Daily Rate Mode,
commencing with the first Business Day of the month next succeeding each Daily
Rate Conversion Date or, if applicable, the Closing Date.
"Daily Rate Mode" shall mean the Mode in which the Bonds bear interest
at a Daily Rate.
"Daily Rate Period" shall mean the period from the Daily Rate
Conversion Date to the earlier to occur of the following Conversion Date or the
date on which principal of the Bonds is paid in full.
"Determination of Taxability" shall mean the receipt by the Trustee of
evidence of a judgment or order of a court of competent jurisdiction, or a
final ruling, technical advice or decision of the Internal Revenue Service to
the effect that the interest on the Bonds (other than interest on any Bond for
any period during which such Bond is held by a "substantial user" of the
Project or a "related person," as such terms are used in the Internal Revenue
Code of 1986, as amended) is includable for Federal income tax purposes in the
gross incomes of the owners or Beneficial Owners thereof; provided, however,
that in no event shall a Determination of Taxability be based upon the
inclusion of interest in any minimum tax or indirect tax. For purposes of
this definition, a ruling or decision of the Internal Revenue Service shall be
considered final if no appeal or action for a judicial review has been filed
and the time for filing of such appeal or action has expired.
"Event of Default," used with respect to this Indenture, shall mean
any event specified in Section 6.01 of this Indenture.
"Government Obligations" shall mean direct obligations of, or
obligations the timely payment of the principal of, and interest on, which are
fully and unconditionally guaranteed by the United States of America, which, at
the time of investment, are not subject to prepayment or redemption prior to
maturity and are legal investments under the laws of the State for the moneys
proposed to be invested therein.
"Guaranty" shall mean the Guaranty Agreement dated as of December 1,
1994 between the Company, as guarantor, and the Trustee, as supplemented and
amended.
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<PAGE> 12
"Indenture" shall mean this Indenture of Trust, as amended and
supplemented.
"Indirect Participant" means a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository through a Participant.
"Initial Letter of Credit" shall mean the irrevocable Letter of Credit
delivered on the Closing Date by the Bank for the purpose of securing the
Bonds, as extended or amended from time to time.
"Interest Payment Date" shall mean an Adjustable Rate Interest Payment
Date, a Weekly Rate Interest Payment Rate, a Daily Rate Interest Payment Date,
a CP Rate Interest Payment Date (with respect to any Bond), each date upon
which Bonds shall be subject to mandatory tender for purchase pursuant to
Section 2.04 hereof and any date upon which the outstanding principal amount of
the Bonds becomes due.
"Issuer" shall mean the Counties of Warren and Washington Industrial
Development Agency, and its successors and assigns.
"Letter of Credit" shall mean the Initial Letter of Credit and, if an
Alternate Credit Facility is issued, each Alternate Credit Facility, as
extended or amended from time to time. All references to the "Letter of
Credit" shall be of no effect at any time that no Letter of Credit secures the
Bonds, except with respect to rights of any Bank created hereunder which do
not, by their terms, expire upon the termination of the Letter of Credit issued
by such Bank.
"Maximum Rate" shall mean the rate per annum equal to the lesser of
(a) 15% per annum, or (b) if a Letter of Credit is then in effect, the maximum
interest rate stated in such Letter of Credit for purposes of calculating the
interest portion of the stated amount of such Letter of Credit.
"Mode" shall mean any of the interest rate modes which may exist from
time to time with respect to the Bonds, including the Adjustable Rate Mode, the
Weekly Rate Mode, the Daily Rate Mode or the CP Rate Mode, as appropriate.
"Offering Agent" shall mean The First National Bank of Chicago,
Chicago, Illinois.
"Offering Agreement" shall mean the Offering Agreement, dated December
28, 1994, among the Issuer, the Company and the Offering Agent, including all
amendments thereof and supplements thereto.
"Outstanding" or "Bonds outstanding" or "Bonds then outstanding," at
the time in question, shall mean all Bonds which have been executed and
delivered by the Issuer and authenticated by the Trustee or the Tender Agent
under this Indenture, except:
(i) Bonds theretofore canceled by the Trustee or
surrendered to the Trustee for cancellation;
(ii) Bonds paid or deemed to be paid pursuant to Article X
hereof;
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<PAGE> 13
(iii) Bonds in lieu of or in exchange for which other Bonds
shall have been executed and delivered by the Issuer and authenticated
by the Trustee or the Tender Agent pursuant to Sections 2.07, 2.08,
2.10 or 3.06 hereof; and
(iv) Undelivered Bonds.
"Participant" shall mean a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository.
"Pledged Bonds" shall mean Bonds purchased with moneys provided
pursuant to Section 3.09(b) hereof.
"Principal Office" shall have the respective meanings set forth herein
under "Remarketing Agent" and "Tender Agent."
"Project" or "Project Facility" shall mean the industrial development
facilities as described in Exhibit B to the Agreement.
"Project Certificate" shall mean the Certificate Re: Use of Bond
Proceeds and the Project of the Company dated the date of initial issuance of
the Bonds.
"Purchase Fund" shall mean the fund by that name established pursuant
to Section 3.07(b) of this Indenture.
"Qualified Investments" shall mean, subject to any restrictions
imposed by State law, (i) Government Obligations, (ii) obligations of the
Federal National Mortgage Association, the Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation, (iii) commercial
paper or finance company paper rated not less than "P-1" by Moody's Investors
Service or "A-1+" by S&P, (iv) certificates of deposit or other time or demand
deposits of banks (including, without limitation, the Trustee and the Bank)
that are fully insured by the Federal Deposit Insurance Corporation or fully
secured by obligations described in (i) or (ii) above, (v) repurchase
agreements secured by obligations described in (i) or (ii) above or bonds or
obligations which are authorized by law as security for public deposits,
provided that no proceeding under any applicable insolvency or reorganization
law has been commenced by or against the issuer of such bonds or obligations,
and provided, further, that such bonds or obligations and debt of the issuer of
the repurchase agreement bear one of the three highest full credit ratings
assigned by Moody's Investors Service and S&P, (vi) any investment fund or
other investment pooling arrangement which purchases and holds exclusively
Government Obligations or repurchase agreements meeting the requirements of (v)
above, (vii) Tax-Exempt Obligations (as defined in the Tax Agreement) rated in
one of the two highest full rating categories by either of the Rating Agencies,
and (viii) any other investment approved in writing by the Bank. The Trustee
may rely upon the certificate or direction of the Company as to the
qualification of any specific investment under this definition.
"Rating Agencies" shall mean S&P and/or Moody's Investors Service,
according to which of such rating agencies then rates the Bonds; and provided
that if neither of such rating
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agencies then rates the Bonds, the term "Rating Agencies" shall refer to any
national rating agency (if any) which provides such rating. If at any time
only one Rating Agency then rates the Bonds, "Rating Agencies" shall at that
time mean only such Rating Agency as is then rating the Bonds.
"Rebate Fund" shall mean the fund by that name created under the Tax
Agreement.
"Record Date" shall mean (a) with respect to any Weekly Rate Interest
Payment Date, Daily Rate Interest Payment Date, CP Rate Interest Payment Date
or Adjustable Rate Interest Payment Date for an Adjustable Rate Period of less
than six months in duration, the close of business on the Business Day next
preceding such Interest Payment Date, and (b) with respect to any Adjustable
Rate Interest Payment Date for an Adjustable Rate Period of six months or more
in duration, the close of business on the fifteenth day of the calendar month
next preceding such Interest Payment Date.
"Regulations" shall mean the temporary and permanent Income Tax
Regulations promulgated or proposed by the Department of the Treasury pursuant
to the Code, as applicable to the Bonds.
"Reimbursement Agreement" shall mean the Initial Reimbursement
Agreement and with respect to each subsequent Letter of Credit, the agreement
pursuant to which such Letter of Credit is issued. All references to
"Reimbursement Agreement" shall be of no effect at any time that no Letter of
Credit is issued and secures the Bonds, except with respect to rights of any
Bank which do not, by their terms, expire upon the expiration of the Letter of
Credit issued by such Bank.
"Remarketing Agent" shall mean the Remarketing Agent appointed in
accordance with Section 7.10 hereof, and shall mean initially The First
National Bank of Chicago, Chicago, Illinois. "Principal Office" of the
Remarketing Agent shall mean the office thereof designated in writing to the
Issuer, the Trustee, the Bank and the Company, and shall mean initially the
office of the Remarketing Agent located at One First National Plaza, Suite
0463, Chicago, Illinois 60670-0463, Attention: Municipal Bond Department/Short
Term Trading.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as
of December 1, 1994 between the Company and the Remarketing Agent.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., its successors and assigns.
"Securities Depository" means The Depository Trust Company and any
substitute for or successor to such securities depository that shall maintain a
Book-Entry System with respect to the Bonds.
"Securities Depository Nominee" means the Securities Depository or the
nominee of such Securities Depository in whose name there shall be registered
on the registration books of
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the Issuer the Bonds to be delivered to such Securities Depository during the
continuation with such Securities Depository of participation in its Book-Entry
System.
"State" shall mean the State of New York.
"Tax Agreement" shall mean the Tax Exemption Certificate and Agreement
dated the Closing Date among the Company, the Issuer and the Trustee, as
amended and supplemented.
"Tender Agent" shall mean the Tender Agent appointed in accordance
with Section 7.11 hereof if the Bonds are not then in a Book-Entry System.
"Principal Office" of the Tender Agent shall mean the office thereof designated
in writing to the Issuer, the Trustee, the Bank, the Remarketing Agent and the
Company.
"Trustee" shall mean Harris Trust and Savings Bank, Chicago, Illinois,
or any successor trustee or co-trustee serving as such under this Indenture.
"Trust Estate" shall mean the property conveyed to the Trustee
pursuant to the Granting Clause of this Indenture.
"Unassigned Rights" shall mean the rights of the Issuer under Sections
4.3, 6.2 and 9.3 of the Agreement, the Issuer's rights to consent to amendments
to the Agreement, its rights to receive notices thereunder and any other rights
relating to any agreement with the Company with respect to payments in lieu of
taxes.
"Undelivered Bonds" shall mean, during any period the Bonds are not in
the Book-Entry System, Bonds for which notice of optional tender shall have
been given pursuant to Section 2.03 and Bonds subject to mandatory tender
pursuant to Section 2.04, for which Available Moneys sufficient to pay the
purchase price have been deposited with the Tender Agent on or before the
purchase date of such Bonds, but which Bonds were not delivered to the Tender
Agent on or before such purchase date.
"Weekly Interest Period" shall mean, while the Bonds are in the Weekly
Rate Mode, each period from and including Wednesday of each week (and, if the
first day of any Weekly Rate Period is not a Wednesday, the Weekly Rate
Conversion Date on which such Weekly Rate Period commences) through and
including the following Tuesday, whether or not such days are Business Days.
In addition, and notwithstanding the foregoing, the initial Weekly Interest
Period shall commence on the Closing Date and shall end on the next following
Tuesday.
"Weekly Rate" shall mean the interest rate per annum on the Bonds
established in accordance with Section 2.02(b) hereof.
"Weekly Rate Conversion Date" shall mean each date on which the Bonds,
having been converted to the Weekly Rate Mode from another Mode, first begin to
bear interest at a Weekly Rate in accordance with the terms hereof.
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"Weekly Rate Interest Payment Date" shall mean the first Business Day
of each month during which the Bonds are in the Weekly Rate Mode, commencing
with the first Business Day of the month following the Weekly Rate Conversion
Date or, if applicable, the Closing Date.
"Weekly Rate Mode" shall mean the Mode in which the Bonds bear
interest at a Weekly Rate.
"Weekly Rate Period" shall mean the period from the Closing Date or
any Weekly Rate Conversion Date to the earlier of the next following Conversion
Date or the maturity date of the Bonds.
Section 1.02. Article and Section Headings. The headings or titles
of the several Articles and Sections of this Indenture, and the Table of
Contents appended hereto, are solely for convenience of reference and shall not
affect the meaning or construction of the provisions hereof.
Section 1.03. Interpretation. The singular form of any word used
herein shall include plural, and vice versa, if applicable. The use of a word of
any gender shall include all genders, if applicable. Any reference to a
particular Article or Section shall be to such Article or Section of this
Indenture unless the context shall otherwise require. Any reference to any time
of day on any date shall be to prevailing time in New York City, New York on
such date unless otherwise specified herein.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF THE BONDS
Section 2.01. Authorization of Bonds; No Additional Bonds. (a) The
Bonds are hereby authorized to be issued in a single series, which shall be
designated as Counties of Warren and Washington Industrial Development Agency
Industrial Development Revenue Bonds, Series 1994 (Griffith Micro Science, Inc.
Project) (the "Bonds"). The Bonds shall be issued in the aggregate principal
amount of $5,300,000.
(b) The Bonds shall be issued for the purpose of providing funds
to enable the Issuer to acquire, construct and equip the Project and lease it
to the Company, as provided in the Agreement. No Bonds may be issued pursuant to
this Indenture in addition to those authorized by this Section 2.01, except
Bonds issued upon transfer or exchange pursuant to Section 2.07 hereof,
temporary Bonds issued pursuant to Section 2.10 hereof, replacement Bonds issued
pursuant to Section 2.08 hereof, Bonds issued pursuant to Section 3.06 hereof,
and Bonds delivered pursuant to Section 3.10 hereof.
Section 2.02. Issuance of Bonds; Terms of Bonds. (a) General
Provisions. The Bonds shall:
(i) be dated as provided in Section 2.02(i) below,
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(ii) bear interest initially in the Weekly Mode and,
thereafter, as set forth in paragraphs (b) through (f) of this
Section, until paid, at the rates therein provided (computed, while
the Bonds are in the Weekly Rate Mode, the CP Rate Mode or the Daily
Rate Mode, on the basis of a 365- or 366-day year, for the actual
number of days elapsed and, while the Bonds are in the Adjustable Rate
Mode, on the basis of a 360-day year, composed of twelve 30-day
months), payable on each Interest Payment Date,
(iii) all be in the same Mode at the same time (except as
provided pursuant to subsection (d) herein), and
(iv) mature on December 1, 2014.
(b) Weekly Rate Provisions. The Bonds shall bear interest at a
Weekly Rate from the Closing Date (if applicable) and from each Weekly Rate
Conversion Date to the earlier of their redemption, the following Conversion
Date or their maturity date. The Weekly Rate for each Weekly Interest Period
shall be the lowest rate of interest which will, in the sole judgment of the
Remarketing Agent, having due regard for prevailing financial market
conditions, permit the Bonds to be remarketed at par on the first day of such
Weekly Interest Period. Notwithstanding the foregoing, the Weekly Rate so
established shall be not more than the Maximum Rate. Each determination of a
Weekly Rate by the Remarketing Agent shall be conclusive and binding upon the
Issuer, the Company, the Trustee, the Tender Agent, the Bank and the
Bondholders. Notwithstanding the foregoing, if at any time the Remarketing
Agent shall fail to determine a Weekly Rate as set forth above, then, until the
Remarketing Agent shall next determine the Weekly Rate in such fashion, the
Weekly Rate shall be the rate from time to time established as the J.J. Kenney
index rate for high grade tax-exempt obligations having maturities of 30 days.
If such index rate is not available, the Weekly Rate shall be the rate from
time to time established by the Public Securities Association Municipal Swap
Index, and if such index is not available, the Weekly Rate shall be the rate
from time to time established by such other comparable index as may be selected
by the Company upon notice to the Trustee. In no event however may the
interest rate on the Bonds exceed the Maximum Rate.
On Tuesday (unless Tuesday is not a Business Day, then on the next
preceding Monday; unless Monday and Tuesday are not Business Days, then on the
next subsequent Wednesday, whether or not a Business Day) of each calendar week
during a Weekly Rate Period, with respect to each Weekly Interest Period, the
Remarketing Agent shall determine and furnish to the Trustee the Weekly Rate
for the ensuing Weekly Interest Period. On the Business Day preceding each
Weekly Rate Interest Payment Date, the Trustee shall furnish to the Company,
the Bank and, if the Bonds are not in a Book-Entry System, to the Tender Agent,
the Weekly Rates applicable to the Bonds from the time of the prior notice of
such rates. Should any Bondholder or Beneficial Owner request such in writing,
the Remarketing Agent shall also furnish (by first class mail, postage prepaid)
the Weekly Rate to such requesting Bondholder or Beneficial Owner.
(c) Daily Rate Provisions. (i) The Bonds shall bear interest at
a Daily Rate from the Closing Date (if applicable) and from each Daily Rate
Conversion Date to the earlier of their
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redemption, the following Conversion Date with respect to such Bonds or their
maturity date. The Daily Rate for each Daily Interest Period shall be the
interest rate determined by the Remarketing Agent on the first day of such
Daily Interest Period (by not later than 11:00 a.m., New York time), which
shall be the lowest rate of interest which will, in the sole judgment of the
Remarketing Agent having due regard for prevailing financial market conditions,
permit the Bonds to be remarketed at par on the said first day of such Daily
Interest Period. Notwithstanding the foregoing, the Daily Rate so established
shall be not more than the Maximum Rate. In the event no Daily Rate is
determined by the Remarketing Agent for a Daily Interest Period, then the Bonds
shall thereupon bear interest at the last Daily Rate previously determined
pursuant to this Indenture. Upon such event the Trustee shall promptly notify
the Bondholders, the Company, the Remarketing Agent, the Tender Agent, if any,
and the Bank of such fact. Each determination of a Daily Rate by the
Remarketing Agent shall be conclusive and binding upon the Issuer, the Company,
the Trustee, the Tender Agent, the Bank and the Bondholders.
(ii) On the Business Day preceding each Interest Payment Date
during each Daily Rate Period, the Remarketing Agent will furnish to the
Trustee, and the Trustee will furnish to the Bank, the Company and the Tender
Agent, if any, the Daily Rates applicable to the Bonds during such Daily Rate
Period. Should any Bondholder or Beneficial Owner request in writing the Daily
Rate applicable to the Bonds for any particular day, the Remarketing Agent will
furnish such Daily Rate to such requesting Bondholder or Beneficial Owner.
(d) CP Rate Provisions. While the Bonds are in the CP Rate Mode,
each Bond shall bear interest at a CP Rate from each CP Rate Conversion Date or
CP Rate Reset Date, as appropriate, to the earlier of its redemption or
maturity, the following Conversion Date for all Bonds or the following CP Rate
Reset Date applicable to such Bond. Different CP Rate Periods may apply to
different Bonds at any time and from time to time while the Bonds are in a CP
Rate Mode. In the case of each CP Rate Period, on the first day thereof, the
Remarketing Agent shall determine (i) the duration of such CP Rate Period and
(ii) the CP Rate which shall apply during such CP Rate Period. The duration of
the CP Rate Period so determined shall be that which, together with all such
other CP Rate Periods for all Bonds then outstanding, in the sole judgment of
the Remarketing Agent will provide the lowest overall interest cost with
respect to the Bonds, with due regard to prevailing financial market
conditions, foreseeable changes in such conditions, the anticipated duration of
the period the Bonds may remain in the CP Rate Mode, and such other factors
which the Remarketing Agent, in its sole judgment, shall deem relevant and
economically advantageous to consider. Upon determination of the duration of a
CP Rate Period with respect to any Bonds, the Remarketing Agent shall determine
the CP Rate which shall be in effect with respect to such Bonds during such CP
Rate Period, which shall be the lowest rate of interest which, in the sole
judgment of the Remarketing Agent, having due regard to prevailing financial
market conditions, will permit such Bonds to be sold at par on the first day of
such CP Rate Period. Notwithstanding the foregoing, the CP Rate so determined
shall not be more than the Maximum Rate. Unless and until the Company elects
to effect a conversion of the Bonds from the CP Rate Mode to another Mode, the
Remarketing Agent shall continually redetermine the duration of, and the CP
Rate to be effective during, each new CP Rate Period with respect to each Bond,
which will commence, without further action on the part of the
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Company, on each CP Rate Reset Date with respect to such Bond. If on any CP
Rate Reset Date, the Remarketing Agent shall fail to determine either the
duration of, or the CP Rate to be effective during, the CP Rate Period which
commences on such date with respect to any Bonds, such Bonds without further
action on the part of any person, shall automatically convert to the Weekly
Rate Mode upon such date, and the Weekly Rate which will be effective on such
date will be determined as described in Section 2.02(b) hereof. Such Bonds may
not thereafter be converted from the Weekly Rate Mode until such time as all
Bonds then outstanding are in the Weekly Rate Mode. Upon such automatic
conversion of a portion of the Bonds to the Weekly Rate Mode, any Bonds then
remaining in the CP Rate Mode shall be automatically converted to the Weekly
Rate Mode upon the expiration of the CP Rate Period applicable to such Bond
without further action on the part of any person (and notwithstanding any
attempted act to the contrary on the part of any person). Upon such event the
Trustee shall promptly notify the affected Bondholders, the Company, the
Remarketing Agent, the Tender Agent, if any, and the Bank of such automatic
conversion. Each determination by the Remarketing Agent pursuant to this
paragraph shall be conclusive and binding upon the Issuer, the Company, the
Trustee, the Tender Agent, the Bank and the Bondholders.
On the first day of each CP Rate Period, the Remarketing Agent shall
furnish to the Trustee, the Bank, the Company and, if the Bonds are not in a
Book-Entry System, the Tender Agent, notice of the duration of such CP Rate
Period and the CP Rate to be effective during such CP Rate Period. Should any
Bondholder or Beneficial Owner request notice of such items in writing, the
Remarketing Agent shall provide such notice (by first class mail, postage
prepaid) to such requesting Bondholder or Beneficial Owner.
The Securities Depository has established separate procedures
applicable to Bonds held in the CP Mode. The Issuer and the Trustee agree to
comply with such procedures whenever Bonds in the CP Mode are held in a
Book-Entry System.
At any time that the Company has given notice of conversion of the
Bonds from the CP Rate Mode to another Mode as provided in Section 2.02(f)
herein, the Remarketing Agent shall thereafter determine CP Rate Periods of
such duration so that, as soon as possible, all CP Rate Periods shall end on
the same date, which date shall be the day preceding the Conversion Date.
(e) Adjustable Rate Provisions. The Bonds shall bear interest at
an Adjustable Rate from each Adjustable Rate Conversion Date or each Adjustable
Rate Reset Date, as appropriate, to the earlier of their redemption or
maturity, the following Conversion Date, the following Adjustable Rate Reset
Date or the following date on which the Bonds shall be subject to mandatory
tender for purchase pursuant to Section 2.04 hereof. Upon a conversion of the
Bonds to the Adjustable Rate Mode, the duration of the initial Adjustable Rate
Period shall be that period specified in the Company's conversion notice
delivered pursuant to Section 2.02(f)(i) for the purpose of effecting such
conversion. An Adjustable Rate Period shall be of at least one month in
duration and shall end on the day preceding the first Business Day of a
calendar month or, if such Adjustable Rate Period extends to the final maturity
date of the Bonds, such final maturity date. The Bonds thereupon shall remain
in the Adjustable Rate Mode for as long as the Company shall continue to
deliver timely notices pursuant to Section 2.02(f)(i) specifying the
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duration of the next subsequent Adjustable Rate Period which is to commence on
the expiration of any current Adjustable Rate Period. The Remarketing Agent,
on or prior to the commencement of each Adjustable Rate Period, shall determine
the Adjustable Rate to be borne by the Bonds during such Adjustable Rate
Period, which shall be the lowest rate which, in its sole judgment having due
regard for prevailing financial market conditions, will permit the Bonds to be
sold at par on the first day of such Adjustable Rate Period. Notwithstanding
the foregoing, the Adjustable Rate shall not be more than the Maximum Rate.
If, during any period the Bonds shall be in the Adjustable Rate Mode, either
(i) the Company shall not deliver a timely conversion notice specifying the
duration of the next subsequent Adjustable Rate Period, or (ii) on or prior to
any Adjustable Rate Reset Date the Remarketing Agent shall fail to determine
the Adjustable Rate to be borne by the Bonds during such Adjustable Rate
Period, then, subject to the provisions described in the following sentences,
the Bonds, without further action on the part of any other person, shall
automatically convert to the Weekly Rate Mode on the date which otherwise would
have been the Adjustable Rate Reset Date and, the Bonds shall thereupon bear
interest at the Weekly Rate determined pursuant to Section 2.02(b)(i). Upon
such event, the Trustee shall promptly notify the Bondholders, the Company, the
Remarketing Agent, the Tender Agent, if any, and the Bank of such automatic
conversion. If, however, prior to such date, the Bonds were in a Long-Term
Mode, the Bonds shall not be automatically converted to the Weekly Mode, as
described in the preceding sentence, unless there shall have been delivered to
the Trustee on or prior to such date an opinion of Bond Counsel to the effect
that such automatic conversion will not adversely affect the exclusion of
interest on the Bonds from the federal gross income of the owners thereof.
Absent delivery of such opinion, the Bonds will convert automatically on such
date to the shortest possible Adjustable Rate Period of a duration of at least
one year and one day. In such event, the Bonds shall bear interest during such
period at a rate to be determined by the Remarketing Agent as described herein,
or if no rate is so determined, at a rate equal to 75% of the average interest
rate for one year U.S. Treasury Notes, as published in the Federal Reserve
Bulletin (published by the Board of Governors of the Federal Reserve System)
most recently published prior to the Conversion Date, as determined by the
Trustee. Each determination of an Adjustable Rate by the Remarketing Agent
shall be conclusive and binding upon the Issuer, the Company, the Trustee, the
Tender Agent, the Bank and the Bondholders.
(f) Conversion Options. (i) In General. The interest rate Mode
of the Bonds shall be converted from one Mode to another, and an Adjustable
Rate Period of one duration shall be converted to an Adjustable Rate Period of
the same or another duration, if the Company shall notify the Trustee, the
Tender Agent, the Bank and the Remarketing Agent of its election to effect such
a conversion and each other condition to any such conversion set forth herein
shall have been satisfied. The Company's conversion notice shall specify the
date on which the Conversion Date will occur (which date shall be not sooner
than 25 days after the date such notice is given) and if the conversion is to
an Adjustable Rate Period shall specify the Interest Payment Date which shall
be the day following the last day of such Adjustable Rate Period.
Notwithstanding the foregoing, no conversion from a Short Term Mode to a Long
Term Mode or from a Long Term Mode to a Short Term Mode (as such terms are
defined in Section 5.03(d) below), and no conversion effected in connection
with either a change in the Bank issuing the Letter of Credit supporting
payment of the Bonds, a change in the security for the Bonds or an
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amendment to this Indenture or this Agreement, shall be effective unless the
Company has delivered with such notice an opinion of Bond Counsel (which
opinion must be confirmed on the Conversion Date) stating that such conversion
will not adversely affect the excludability from gross income of interest on
the Bonds for federal income tax purposes. The Conversion Date shall be the
date specified in the Company notice; provided that no conversion from the
Adjustable Rate Mode shall be effective prior to the Business Day following the
last day of the Adjustable Rate Period which is then in effect and no such
optional conversion from the CP Rate Mode shall be effective prior to the
Business Day following the day which is the last day of the CP Rate Periods for
all of the Bonds. In the event any condition precedent to conversion
(including, but not limited to, the establishment by the Remarketing Agent of
the initial interest rate to be in effect after the Conversion Date or, if
required, the delivery of the Bond Counsel opinion described above) is not
satisfied on or prior to the Conversion Date, the Bonds shall nonetheless be
subject to mandatory tender on the Conversion Date and, subject to the
provisions described in the following sentences, upon such date, the Bonds,
without any further action on the part of any person, shall automatically
convert to the Weekly Mode, and the Bonds shall thereupon bear interest at the
Weekly Rate determined pursuant to Section 2.02(b)(i). If, however, prior to
such date, the Bonds were in a Long-Term Mode, the Bonds shall not be
automatically converted to the Weekly Mode, as described in the preceding
sentence, unless there shall have been delivered to the Trustee on or prior to
such date an opinion of Bond Counsel to the effect that such automatic
conversion will not adversely affect the exclusion of interest on the Bonds
from the federal gross income of the owners thereof. Absent delivery of such
opinion, the Bonds will convert automatically on such date to the shortest
possible Adjustable Rate Period of a duration of at least one year and one day.
In such event, the Bonds shall bear interest during such period at a rate to be
determined by the Remarketing Agent as described herein, or if no rate is so
determined, at a rate equal to 75% of the average interest rate for one year
U.S. Treasury Notes, as published in the Federal Reserve Bulletin (published by
the Board of Governors of the Federal Reserve System) most recently published
prior to the Conversion Date, as determined by the Trustee.
(ii) Conversion Notice. At least 20 days prior to each Conversion
Date, the Trustee shall give to each Bondholder notice by first class mail,
postage prepaid, stating: (A) the Conversion Date, (B) that on the Conversion
Date, the Bonds are subject to mandatory tender and purchase; (C) that subject
to clause (E) below, all owners who fail to tender their Bonds for purchase on
the mandatory tender date will nonetheless be deemed to have tendered their
Bonds for purchase on such date; (D) that, subject to clause (E) below, any
Bonds not delivered to the Tender Agent on or prior to the mandatory tender
date, for which there has been irrevocably deposited in trust with the Trustee
or the Tender Agent on or prior to the mandatory tender date Available Moneys
sufficient to pay the purchase price of such Undelivered Bonds on the mandatory
tender date, shall be deemed to have been so purchased at the purchase price,
and such Bonds shall no longer be considered to be outstanding for purposes of
this Indenture and shall no longer be entitled to the benefits of this
Indenture, except for the payment of the purchase price thereof (and no
interest shall accrue thereon subsequent to the mandatory tender date) and (E)
that notwithstanding the foregoing, while the Bonds are held in the Book-Entry
System, Bonds need not be physically tendered on the mandatory tender date, and
transfers of
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beneficial ownership interests will be effected by the Securities Depository in
accordance with its rules and procedures.
(iii) Letter of Credit Interest Coverage. The interest component of
each Letter of Credit in effect during any Mode shall be sufficient to provide
Adequate Interest Coverage (as defined below). With respect to the Weekly Rate
Mode, the Daily Rate Mode or the CP Rate Mode, "Adequate Interest Coverage"
shall mean the aggregate amount of interest which would accrue on all
Outstanding Bonds (other than Pledged Bonds and Company Bonds) at a rate equal
to 10% per annum, computed on the basis of a 365-day year, (1) for a period of
forty-eight (48) days, in the case of Bonds in the Weekly Rate Mode or the
Daily Rate Mode, and (2) for a period of three hundred eighty (380) days, in
the case of Bonds in the CP Rate Mode, or in either case such shorter period
acceptable to each Rating Agency then rating the Bonds and which will not
result in a withdrawal or lowering of any rating on the Bonds from that which
would otherwise accrue from a longer interest coverage period.
Notwithstanding the foregoing, Adequate Interest Coverage during the Weekly
Rate Mode, the Daily Rate Mode or the CP Rate Mode may cover interest on Bonds
at a rate other than 10% per annum if (l) the Company provides the Trustee with
an opinion of Bond Counsel to the effect that such coverage and the effect of
such coverage upon clause (b) of the definition of "Maximum Rate" herein will
not adversely affect the exclusion from gross income of interest on the Bonds
for Federal income tax purposes and (2) if the applicable rate is to be less
than 10% per annum, such lower rate will not result in a withdrawal or lowering
of any rating on the Bonds from that which would otherwise accrue from a
maintenance of coverage at the 10% rate. With respect to the Adjustable Rate
Mode, "Adequate Interest Coverage" shall mean the aggregate amount of interest
which would accrue on all Outstanding Bonds (other than Pledged Bonds and
Company Bonds) at a rate equal to the Adjustable Rate to be borne by the Bonds
during such Mode, computed on the basis of a 360-day year composed of twelve
30-day months, for a period of two hundred (200) days or with respect to an
Adjustable Rate Period of less than six months' duration, for a period equal to
the number of days in such Adjustable Rate Period plus twenty, or in either
such case, such shorter period acceptable to the Rating Agencies and which will
not result in a withdrawal or lowering of any rating on the Bonds from that
which would otherwise accrue from a longer interest coverage period.
(g) Denominations; Numbering. The Bonds are issuable only as
registered Bonds without coupons in Authorized Denominations. The Bonds shall
be numbered from 1 upwards, provided that the number assigned to each
definitive Bond shall be prefixed by the letter "R." Temporary Bonds shall be
prefixed by the letters "TR."
(h) Payment Terms. Principal of, and premium, if any, on, the
Bonds shall be payable by the Trustee from moneys held by the Trustee in the
Bond Fund to the Bondholders upon presentation and surrender of the Bonds as
the same become due at the principal corporate trust office of the Trustee.
Interest on the Bonds shall be paid by the Trustee by check or draft drawn upon
the Trustee and mailed by first class mail on the respective Interest Payment
Dates to the Bondholders at their addresses shown on the registration books of
the Trustee, or such other addresses as are furnished to the Trustee (in form
satisfactory to the Trustee) by such Bondholders, as of the close of business
on the Record Date with respect to such Interest
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Payment Date; provided that payment of interest shall be made by the Trustee by
wire transfer to any Owner of $1,000,000 or more in aggregate principal amount
of Bonds upon such Owner providing the Trustee with written wire transfer
instructions acceptable to the Trustee before the applicable Record Date and
upon compliance with the reasonable requirements of the Trustee. If and to
the extent there shall be a default in the payment of the interest due on an
Interest Payment Date, such defaulted interest shall be paid to the Bondholders
in whose names any such Bonds (or any Bond or Bonds issued upon registration of
transfer or exchange thereof) are registered at the close of business on the
Business Day next preceding the date of payment of such defaulted interest.
Payment of the principal or purchase price of, and the premium, if any, and
interest on, the Bonds shall be made in such lawful money of the United States
of America as, at the respective times of payment, shall be legal tender for
the payment of public and private debts.
(i) Dating. The Bonds shall be dated and initially bear interest
from the Closing Date, and thereafter shall bear interest from the Interest
Payment Date next preceding the date of authentication, unless (i)
authenticated prior to the first Interest Payment Date, in which event such
Bonds shall bear interest from the Closing Date, (ii) authenticated on an
Interest Payment Date, in which event such Bonds shall bear interest from the
date of authentication, or (iii) authenticated after a Record Date and before
the following Interest Payment Date, in which event such Bonds shall bear
interest from the following Interest Payment Date. If, as shown by the records
of the Trustee, interest on the Bonds is in default, Bonds issued in exchange
for Bonds surrendered for registration of transfer or exchange shall bear
interest from the date to which interest has been paid in full on the Bonds,
or, if no interest has been paid on the Bonds, from the Closing Date.
Section 2.03. Optional Tenders. (a) While the Bonds are in the
Weekly Rate Mode, any Outstanding Bond or portion thereof in an Authorized
Denomination (except any Pledged Bond or Company Bond) shall be purchased on
the demand of the registered owner thereof on any Business Day at a price equal
to 100% of the principal amount thereof, plus accrued and unpaid interest
thereon to the date of purchase. upon delivery (by telecopy or otherwise) to
the Tender Agent at its Principal Office or any Business Day, of the following:
(i) a written irrevocable notice, which will be effective
upon receipt, which (A) states the name and address of the registered
owner, the principal amount of such Bond (and the portion thereof to
be tendered, if less than the full principal amount is to be tendered)
and the Bond number, and (B) states the date on which such Bond shall
be so purchased, which date shall be a Business Day not prior to the
seventh day next succeeding the date of the delivery of such notice to
the Tender Agent; and
(ii) such Bond (with all necessary endorsements and
guarantee of signature) attached to such notice; provided, however,
that the purchase price of such Bond shall be paid by the close of
business on the purchase date, but only upon the delivery of the Bond
to the Tender Agent and provided such Bond shall conform in all
material respects to the description thereof in such notice; and
provided, further, that if the registered owner of the tendered Bond
is an open-ended diversified management investment company
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<PAGE> 24
(registered under the Investment Company Act of 1940, as amended), the
delivery required under this paragraph (ii) need not be made until
11:00 a.m., New York City time, on the date such Bond is to be
purchased from such registered owner. Undelivered Bonds shall be
deemed to have been delivered at the time and on the date required,
and as of such date and time shall no longer be deemed to be
Outstanding under this Indenture. The registered owner of any
Undelivered Bond shall be entitled only to the purchase price payable
for such Bond on the required delivery date thereof, and such purchase
price shall be paid to such registered owner only upon surrender of
such Bond to the Tender Agent.
Notwithstanding the foregoing, if the Bonds in the Weekly Rate Mode
are held in a Book-Entry System, a Beneficial Owner shall have the right to
optionally tender for purchase its beneficial interest in any Outstanding Bonds
(or portion thereof in an Authorized Denomination) at the purchase price set
forth above, which right may be exercised as follows. Such right shall be
exercised by delivery by the Beneficial Owner to the Remarketing Agent at its
Principal Office of a notice identifying the name and address of such
Beneficial Owner and stating that such Beneficial Owner will cause its
beneficial interest (or portion thereof in an Authorized Denomination) to be
purchased, the amount of such interest to be purchased, the date on which such
interest will be purchased (which date shall be a Business Day at least seven
days after delivery of such notice to the Remarketing Agent) and specifying the
Remarketing Agent as the Participant through which the Beneficial Owner
maintains its interest. Upon delivery of such notice, the Beneficial Owner
shall cause its beneficial ownership interest in the Bonds (or the portion
thereof specified in the foregoing notice) being purchased to be transferred to
the Remarketing Agent at or prior to 11:00 a.m., New York time, on the optional
tender date, in accordance with the rules and procedures of the applicable
Securities Depository.
(b) While the Bonds are in the Daily Rate Mode, any Outstanding
Bond or portion thereof in an Authorized Denomination (except any Pledged Bond
or Company Bond) shall be purchased on the demand of the registered owner
thereof on any Business Day at a price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest thereon to the date of purchase, upon
delivery (by telecopy or otherwise) to the Tender Agent at its Principal Office
(i) no later than 10:00 a.m., New York time, on such Business Day, of a written
irrevocable notice, which will be effective upon receipt, which states the name
and address of the registered owner, the principal amount of such Bond (and the
portion thereof to be tendered, if less than the full principal amount is to be
tendered) on such Business Day and the Bond number, and (ii) no later than
11:00 a.m., New York time, on such Business Day such Bond (with all necessary
endorsements and guarantees of signature); provided, however, that the purchase
price of such Bond shall be paid by the close of business on the purchase date,
but only upon the delivery of the Bond to the Tender Agent and provided such
Bond shall conform in all material respects to the description thereof in such
notice. Undelivered Bonds shall be deemed to have been delivered at the time
and on the date required, and as of such date and time shall no longer be
deemed to be Outstanding under this Indenture. The registered owner of any
Undelivered Bond shall be entitled only to the purchase price payable for such
Bond on the required delivery date thereof, and such purchase price shall be
paid to such registered owner only upon surrender of such Bond to the Tender
Agent.
20
<PAGE> 25
Notwithstanding the foregoing, if the Bonds in the Daily Rate Mode are
held in a Book-Entry System, a Beneficial Owner shall have the right to
optionally tender for purchase its beneficial interest in any Outstanding Bonds
(or portion thereof in an Authorized Denomination) at the purchase price set
forth above, which right may be exercised as follows. Such right shall be
exercised by delivery, by the Beneficial Owner to the Remarketing Agent at its
Principal Office no later than 10:00 a.m., New York time, on the date on which
the beneficial interest of such Beneficial Owner is to be purchased, of a
notice identifying the name and address of such Beneficial Owner and stating
that such Beneficial Owner will cause its beneficial interest (or portion
thereof in an Authorized Denomination) to be purchased, the amount of such
interest to be purchased, and specifying the Remarketing Agent as the
Participant through which the Beneficial Owner maintains its interest. Upon
delivery of such notice, the Beneficial Owner shall cause its beneficial
ownership interest in the Bonds (or the portion thereof specified in the
foregoing notice) being purchased to be transferred to the Remarketing Agent at
or prior to 11:00 a.m. New York time, on the optional tender date, in
accordance with the rules and procedures of the applicable Securities
Depository.
Section 2.04. Mandatory Tenders. The Bonds are subject to
mandatory tender in whole (except as provided in (b) below) by the Bondholders
to the Tender Agent at its Principal Office on each date described below:
(a) On each Conversion Date (provided that, in the event
less than all of the Bonds are being converted from the CP Rate Mode
to the Weekly Rate Mode as described in this Indenture, only the Bonds
being converted shall be subject to mandatory tender);
(b) On each CP Rate Reset Date with respect to any Bond
(provided that only those Bonds whose interest rates are being reset
on such date shall be subject to mandatory tender);
(c) On the second Business Day prior to the release,
expiration or termination of the Letter of Credit, if the Trustee has
not received evidence satisfactory to it as required by Section
5.03(b) hereof by the 25th day preceding the scheduled Letter of
Credit release, expiration or termination date of either an extension
of the then existing Letter of Credit or the issuance of an Alternate
Credit Facility meeting the requirements set forth therefor in the
Agreement, including the Maintenance of Rating requirement (as defined
in Section 5.03(b) of this Indenture);
(d) On the date of substitution of an Alternate Credit
Facility for the then existing Letter of Credit supporting payment of
such Bonds if the Trustee has not received evidence of a Maintenance
of Rating (as defined in Section 5.03 hereof) with respect thereto by
the 25th day preceding the date of substitution of the Alternate
Credit Facility;
(e) On each optional redemption date pursuant to Section
3.01 hereof for which the Company has elected to purchase Bonds in
lieu of an optional redemption pursuant to Section 3.01(c) hereof; and
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<PAGE> 26
(f) On any date on which the Guaranty is released as
provided in Section 9.05 hereof.
The purchase price of Bonds subject to mandatory tender shall be 100%
of the principal amount thereof (except in the case of a mandatory tender
described in paragraphs (c), (d), (e) or (f) above, during, but prior to the
expiration date of, an Adjustable Rate Period in which case the purchase price
shall include a premium equal to the then applicable optional redemption
premium, if any, on the Bonds). Not later than 20 days prior to a mandatory
tender date described in (b), (c), (d) or (f) above, the Trustee shall mail
notice to all Owners of Bonds subject to mandatory tender stating that (1) due
to the occurrence of one of the events described above (which event shall be
specified), such Owner's Bonds will be subject to mandatory tender on the
mandatory tender date (which date shall be specified), (2) that, subject to
clause (4) below, all such owners who fail to tender their Bonds for purchase
on the mandatory tender date will nonetheless be deemed to have tendered their
Bonds for purchase on such date; (3) that, subject to clause (4) below, any
such Bonds not delivered to the Tender Agent on or prior to the mandatory
tender date, for which there has been irrevocably deposited in trust with the
Trustee or the Tender Agent on or prior to the mandatory tender date Available
Moneys sufficient to pay the purchase price of such Undelivered Bonds on the
mandatory tender date, shall be deemed to have been so purchased at the
purchase price, and such Bonds shall no longer be considered to be outstanding
for purposes of this Indenture and shall no longer be entitled to the benefits
of this Indenture, except for the payment of the purchase price thereof (and no
interest shall accrue thereon subsequent to the mandatory tender date) and (4)
that notwithstanding the foregoing, while the Bonds are held in the Book-Entry
System, Bonds need not be physically tendered on the mandatory tender date, and
transfers of beneficial ownership interests will be effected by the Securities
Depository in accordance with its rules and; procedures. Notice of mandatory
tenders described in clauses (a) and (e) above shall be given as part of the
notice of conversion referenced in Section 2.02(f)(ii) hereof or notice of
redemption referenced in Section 3.04 hereof, respectively. No failure on the
part of the Trustee to give such notice shall affect the requirement that Bonds
be purchased or tendered for purchase on said mandatory tender or purchase
date.
When Bonds are not in a Book-Entry System, Undelivered Bonds shall, if
Available Moneys sufficient to pay the purchase price of such Bonds in full and
available for the purchase of such Bonds have been deposited with the Tender
Agent on the mandatory tender date, shall be deemed to have been tendered for
purchase on the mandatory tender date, and from such date shall no longer be
deemed to be Outstanding for purposes of this Indenture. Owners of such Bonds
shall have no rights or benefits under this Indenture other than to receive the
purchase price for such Bonds upon surrender of such Bonds to the Tender Agent.
Notwithstanding the foregoing, if on any mandatory tender date the Bonds shall
be in the Book-Entry System, it shall not be necessary that Bonds be physically
tendered to the Tender Agent on the mandatory tender date. Transfers of
beneficial ownership interests shall be effected in accordance with the rules
and procedures established by the Securities Depository.
Upon the occurrence of any mandatory tender described in paragraphs
(c), (d), (e) or (f) above during an Adjustable Rate Period, commencing on the
date of such mandatory tender the Bonds shall bear interest in a Mode (and, in
the case of the Adjustable Rate Mode, for an
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<PAGE> 27
Adjustable Rate Period) to be designated by the Company by notice to the
Trustee given to the Trustee at least 25 days prior to such date, provided,
however, the said designated Mode or Adjustable Rate Period shall be effective
on the mandatory tender date only if each prerequisite to a conversion
specified in Section 2.02(f) shall have been satisfied. If no designation of a
Mode or an Adjustable Rate Period is made by the Company, or if the
prerequisites of Section 2.02(f) have not been satisfied, then, subject to the
same exception as is set forth in Section 2.02(e) hereof, upon the mandatory
tender date the Bonds shall convert automatically to the Weekly Rate Mode, and
the Bonds thereupon shall bear interest at the Weekly Rate determined pursuant
to Section 2.02(b).
Section 2.05. Form of Bonds. The Bonds and the certificate of
authentication, the provision for registration and the form of assignment
thereof shall be in substantially the form set forth in Exhibit A hereto, with
such appropriate variations, omissions, substitutions, insertions, notations,
legends and endorsements as may be deemed necessary or appropriate by the
officers of the Issuer executing the same and as shall be permitted or required
by the Act and this Indenture.
Section 2.06. Execution and Authentication of Bonds; Limited
Obligations. (a) The Bonds shall be executed on behalf of the Issuer with the
manual or facsimile signature of the Chairman or the Vice Chairman of the
Issuer, and attested, under a manual or facsimile impression of the seal of the
Issuer, with the manual or facsimile signature of the Secretary of the Issuer.
In case any officer of the Issuer whose signature or a facsimile thereof
appears on a Bond shall cease to be such officer before the delivery of such
Bond, such signature or such facsimile shall nevertheless be valid and
sufficient for all purposes, the same as if such officer had remained in the
office until delivery.
(b) No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit under this Indenture unless and until a
certificate of authentication on such Bond substantially in the form of Exhibit
A hereto shall have been duly executed by the Trustee, or, in the case of
purchased Bonds delivered by the Tender Agent pursuant to Section 3.10, by the
Tender Agent. Any such executed certificate upon any such Bond shall be
conclusive evidence that such Bond has been authenticated and delivered under
this Indenture. The certificate of authentication on any Bond shall be deemed
to have been executed by it if signed by an authorized officer or signatory of
the Trustee, or the Tender Agent but it shall not be necessary that the same
officer or signatory sign the certificate of authentication on all of the Bonds
issued hereunder.
(c) The obligations and agreements of the Issuer contained herein
and with respect to the Bonds shall not constitute or give rise to an
obligation of the State of New York or of the Counties of Warren and
Washington, New York and neither the State of New York nor the Counties of
Warren and Washington, New York shall be liable hereof or thereon. Such
obligations and agreements shall not constitute or give rise to a general
obligation of the Issuer, but rather shall constitute limited obligations of
the Issuer payable solely from the revenues of the Issuer derived and to be
derived from the lease of the Project pursuant to the Agreement
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<PAGE> 28
(except for revenues derived by the Issuer with respect to the Unassigned
Rights) and the other security pledged to the payment of the Bonds.
Section 2.07. Registration and Exchange of Bonds; Persons Treated
as Owners. (a) Bonds may be transferred only on the registration books of the
Issuer for the Bonds, maintained by the Trustee. Upon surrender for transfer
of any Bond to the Trustee, duly endorsed for transfer or accompanied by an
assignment duly executed by the holder or the holder's attorney duly authorized
in writing, the Trustee will authenticate a new Bond or Bonds in an equal total
principal amount and registered in the name of the transferee.
(b) Bonds may be exchanged for an equal total principal amount of
Bonds of different denominations. The Trustee will authenticate and deliver
Bonds that the Bondholder making the exchange is entitled to receive, bearing
numbers not then outstanding.
(c) The Trustee will not be required to transfer or exchange any
Bond during the period beginning 15 Business Days before the mailing of notice
calling such Bond or any portion of such Bond for redemption and ending on the
redemption date, except as provided in Sections 2.03 and 2.04 hereof.
(d) The holder of a Bond shall, except as otherwise described
herein with respect to certain rights of Beneficial Owners, be the absolute
owner of the Bond for all purposes, and payment of principal, interest or
purchase price shall be made only to or upon the written order of the holder or
the holder's legal representative.
(e) The Trustee will require the payment by a Bondholder
requesting exchange or transfer of any tax or other governmental charge
required to be paid in respect of the exchange or transfer but will not impose
any other charge.
(f) Notwithstanding the foregoing, for so long as the Bonds are
held under the Book-Entry System, transfers of beneficial ownership will be
effected pursuant to rules and procedures established by the Securities
Depository.
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds. If any
Bond is mutilated, lost, stolen or destroyed, the Trustee will authenticate a
new Bond of the same denomination if any mutilated Bond shall first be
surrendered to the Trustee, and if, in the case of any lost, stolen or
destroyed Bond, there shall first be furnished to the Issuer, the Trustee, the
Bank and the Company evidence of such loss, theft or destruction, together with
an indemnity satisfactory to each of them to save each of them harmless from
all risks related thereto, however remote. If the Bond has matured, instead of
issuing a duplicate Bond, the Trustee may with the consent of the Company pay
the Bond without requiring surrender of the Bond and make such requirements as
the Trustee deems fit for its protection, including a lost instrument bond.
The Issuer, the Company and the Trustee may charge their reasonable fees and
expenses in this connection.
Section 2.09. Cancellation of Bonds. Whenever a Bond is delivered
to the Trustee for cancellation (upon payment, redemption or otherwise), or for
transfer, exchange or replacement pursuant to Section 2.07 or 2.08, the Trustee
will promptly cancel the Bond and deliver the
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<PAGE> 29
canceled Bond or a certificate of destruction as appropriate to the Company at
its request. Upon cancellation of any tendered Bond by the Tender Agent, the
Tender Agent shall forward the canceled Bond to the Trustee.
Section 2.10. Temporary Bonds. Until definitive Bonds are ready
for delivery, the Issuer may execute and the Trustee or the Tender Agent will
authenticate temporary Bonds substantially in the form of the definitive Bonds,
with appropriate variations. The Issuer will, without unreasonable delay,
prepare and the Trustee or the Tender Agent will authenticate definitive Bonds
in exchange for the temporary Bonds. Such exchange shall be made by the
Trustee or the Tender Agent without charge.
Exchanges and transfers shall be made without charge to the
Bondholders; provided that in each case the Trustee shall require the payment
by the Bondholder requesting exchange or transfer of any tax or other
governmental charge required to be paid with respect thereto.
Section 2.11. Conditions Precedent to Authentication and Delivery
of Bonds. The Issuer shall execute and deliver the Bonds to the Trustee, and
the Trustee shall, upon receipt by the Trustee of those items specified in this
Section below, authenticate the Bonds (or cause the Tender Agent to
authenticate the Bonds) and deliver them to the persons set forth in the order
described in clause (iii) below. Prior to and as a condition precedent to the
authentication and delivery of the Bonds there shall be filed with and
delivered to the Trustee:
(i) a copy, duly certified by an authorized representative of
the Issuer, of the resolution adopted by the Issuer in accordance with
the Act authorizing the execution and delivery of this Indenture and
the issuance of the Bonds;
(ii) original duly executed and delivered counterparts of this
Indenture, the Agreement, the Guaranty and the Tax Agreement;
(iii) an opinion of Bond Counsel to the effect that Bonds
executed, authenticated and delivered as provided in this Indenture
will be duly and validly issued and will constitute valid and binding
limited obligations of the Issuer; and
(iv) the duly executed and delivered Initial Letter of Credit.
Section 2.12. Book-Entry System. (a) The Bonds shall be issued
pursuant to a Book-Entry System administered by the Securities Depository with
no physical distribution of Bond certificates to be made except as provided in
this Section 2.12. Any provision of this Indenture or the Bonds requiring
physical delivery of the Bonds shall, with respect to any Bonds held under the
Book-Entry System, be deemed to be satisfied by a notation on the registration
books maintained by the Trustee that such Bonds are subject to the Book-Entry
System.
(b) So long as a Book-Entry System is being used, one Bond in the
aggregate principal amount of the Bonds and registered in the name of the
Securities Depository Nominee will be issued and deposited with the Securities
Depository to be held in its custody. The Book-Entry System will be maintained
by the Securities Depository and the Participants and Indirect Participants and
will evidence beneficial ownership of the Bonds in Authorized Denominations,
with transfers of ownership effected on the records of the Securities
Depository, the Participants and
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<PAGE> 30
Indirect Participants pursuant to rules and procedures established by the
Securities Depository, the Participants and the Indirect Participants. The
principal or purchase price of and any premium on each Bond shall be payable to
the Securities Depository Nominee or any other person appearing on the
registration books maintained by the Trustee as the registered Holder of such
Bond or his registered assigns or legal representative at the principal office
of the Trustee. So long as the Book-Entry System is in effect, the Securities
Depository will be recognized as the Holder of the Bonds for all purposes.
Transfers of principal, purchase price, interest and any premium payments or
notices to Participants and Indirect Participants will be the responsibility of
the Securities Depository, and transfers of principal, purchase price, interest
and any premium payments or notices to Beneficial Owners will be the
responsibility of the Participants and the Indirect Participants. No other
party will be responsible or liable for such transfers of payments or notices
or for maintaining, supervising or reviewing such records maintained by the
Securities Depository, the Participants or the Indirect Participants. While
the Securities Depository Nominee or the Securities Depository, as the case may
be, is the registered owner of the Bonds, notwithstanding any other provisions
set forth herein, payments of principal or purchase price of, redemption
premium, if any, and interest on the Bonds shall be made to the Securities
Depository Nominee or the Securities Depository, as the case may be, by wire
transfer in immediately available funds to the account of such Holder. Without
notice to or the consent of the Beneficial Owners, the Trustee, with the
consent of the Company and the Securities Depository may agree in writing to
make payments of principal, redemption price or purchase price and interest in
a manner different from that set out herein. In such event, the Trustee shall
make payments with respect to the Bonds in such manner as if set forth herein.
(c) With the consent of the Remarketing Agent, the Company may at
any time elect (i) to provide for the replacement of any Securities Depository
as the depository for the Bonds with another qualified Securities Depository,
or (ii) to discontinue the maintenance of the Bonds under a Book-Entry System.
In such event, the Company shall give 30 days' prior notice of such election to
the Securities Depository (or such fewer number of days as shall be acceptable
to such Securities Depository).
(d) Upon the discontinuance of the maintenance of the Bonds under
a Book-Entry System, the Issuer will cause Bonds to be issued directly to the
Beneficial Owners of Bonds, or their designees, as further described below. In
such event, the Trustee shall make provisions to notify Participants and the
Beneficial Owners of the Bonds, by mailing an appropriate notice to the
Securities Depository, or by other means deemed appropriate by the Trustee in
its discretion, that Bonds will be directly issued to the Beneficial Owners of
Bonds as of a date set forth in such notice, which shall be a date at least 10
days after the date of mailing of such notice (or such fewer number of days as
shall be acceptable to the Securities Depository).
(e) In the event that Bonds are to be issued to the Beneficial
Owners of the Bonds, or their designees, the Issuer, at the expense of the
Company, shall promptly have prepared Bonds in certificated form registered in
the names of the Beneficial Owners of Bonds shown on the records of the
Participants provided to the Trustee, as of the date set forth in the notice
described
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<PAGE> 31
above. Bonds issued to the Beneficial Owners, or their designees, shall be in
fully registered form substantially in the form set forth in Exhibit A.
(f) If any Securities Depository is replaced as the depository for
the Bonds with another qualified Securities Depository, the Issuer, at the
expense of the Company, will issue to the replacement Securities Depository
Bonds substantially in the form set forth in Exhibit A, registered in the name
of such replacement Securities Depository.
(g) The Issuer, the Company, the Tender Agent, the Remarketing
Agent and the Trustee shall have no liability for the failure of any Securities
Depository to perform its obligation to any Participant, any Indirect
Participant or any Beneficial Owner of any Bonds, and the Issuer, the Company,
the Tender Agent, the Remarketing Agent or the Trustee shall not be liable for
the failure of any Participant, Indirect Participant or other nominee of any
Beneficial Owner of any Bonds to perform any obligation that such Participant,
Indirect Participant or other nominee may incur to any Beneficial Owner of the
Bonds.
(h) Notwithstanding any other provision of this Indenture, on or
prior to the date of issuance of the Bonds the Trustee shall have executed and
delivered to the initial Securities Depository a Letter of Representations
governing various matters relating to the Securities Depository and its
activities pertaining to the Bonds. The terms and provisions of such Letter
of Representations are incorporated herein by reference and, in the event there
shall exist any inconsistency between the substantive provisions of the said
Letter of Representations and any provisions of this Indenture, then, for as
long as the initial Securities Depository shall serve with respect to the
Bonds, the terms of the Letter of Representations shall govern.
(i) The Issuer, the Company, the Trustee and the Tender Agent may
rely conclusively upon (i) a certificate of the Securities Depository as to the
identity of the Participants in the Book-Entry System; (ii) a certificate of
any Participant as to the identity of any Indirect Participant and (iii) a
certificate of any Participant or Indirect Participant as to the identity of,
and the respective principal amount of Bonds beneficially owned by, the
Beneficial Owners.
ARTICLE III
REDEMPTION OF BONDS; PURCHASE AND REMARKETING OF BONDS
Section 3.01. Optional Redemption. The Bonds shall be subject to
optional redemption only as follows:
(a) Weekly Rate Mode, CP Rate Mode or Daily Rate Mode. While the
Bonds are in the Weekly Rate Mode or the Daily Rate Mode, the Bonds shall be
subject to optional redemption, in whole or in part on any Business Day, and
while the Bonds are in the CP Rate Mode each Bond in any given CP Rate Period
shall be subject to optional redemption in whole or in part on any Interest
Payment Date applicable to such Bond in said CP Rate Period, in all cases at
the direction of the Company, upon at least 35 days' prior written notice from
the Company to the Trustee, the Bank and the Remarketing Agent, at a redemption
price equal to 100% of the
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<PAGE> 32
aggregate principal amount of the Bonds to be redeemed, plus accrued interest
thereon to the redemption date, without premium.
(b) Adjustable Rate Mode. While the Bonds are in the Adjustable
Rate Mode, the Bonds shall be subject to optional redemption, after the dates
specified in the table below, in whole or in part on any date at the direction
of the Company, upon at least 40 days' prior written notice from the Company to
the Trustee, the Bank and the Remarketing Agent, at the applicable redemption
price (expressed as a percentage of the principal amount to be redeemed) set
forth below, plus accrued interest thereon to the date of redemption:
<TABLE>
<CAPTION>
LENGTH OF CURRENTLY
APPLICABLE ADJUSTABLE DATES AFTER WHICH REDEMPTION
RATE PERIOD IS ALLOWED AND
(expressed in whole years) REDEMPTION PRICES*
<S> <C>
greater than 10 after 10 years at 102%, declining by 1%
annually to 100%
less than or equal to 10 and greater than 7 after 5 years at 102%, declining by 1%
annually to 100%
less than or equal to 7 and greater than 4 after 3 years at 102%, declining by 1%
annually to 100%
less than or equal to 4 not callable
</TABLE>
The payment of any premium upon the optional redemption of Bonds shall
be made solely from Available Moneys.
Notwithstanding the foregoing, the Bonds when in an Adjustable Rate
Period may be subject to optional redemption upon terms different than those
set forth above (or not subject to optional redemption during such period) if
the Company delivers to the Trustee on or before the first day of such
Adjustable Rate Period a certificate specifying different optional redemption
dates or prices to be in effect during such period (or that the Bonds will not
be subject to optional redemption during such Period) and an opinion of Bond
Counsel to the effect that the adoption of such optional redemption provisions
would not adversely affect the exclusion of interest on the Bonds from the
Federal gross income of the holders thereof.
(c) Purchase in Lieu of Optional Redemption. The Company shall
have the option to cause the Bonds to be subject to mandatory tender and
purchase pursuant to Section 2.04 hereof in lieu of an optional redemption of
Bonds pursuant to Section 3.01(a) or (b) above. Such option may be exercised
by delivery by the Company to the Trustee and Remarketing Agent on or prior to
the Business Day preceding the optional redemption date of a written notice
specifying that all
- ---------------
* Measured from the start of the currently applicable Adjustable Rate
Period.
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<PAGE> 33
of the Bonds shall not be redeemed, but instead shall be subject to mandatory
tender and purchase pursuant to Section 2.04 hereof. Upon delivery of such
notice, the Bonds shall not be redeemed but shall instead be subject to
mandatory tender pursuant to Section 2.04 hereof at a tender price equal to the
price at which the Bonds would have been redeemed on the date which would have
been the optional redemption date.
Section 3.02. Extraordinary Optional Redemption. While the Bonds
are in the Adjustable Rate Mode or the CP Rate Mode, the Bonds are subject to
extraordinary redemption in whole on any date at a redemption price equal to
the principal amount of outstanding Bonds plus accrued interest to the
redemption date without premium, upon the exercise by the Company of its option
to cause the Bonds to be redeemed as a result of the occurrence of any of the
events described below:
(1) the Project Facility has been damaged or destroyed to
such an extent that, in the judgment of the Company, (i) it cannot be
reasonably restored to substantially the condition thereof immediately
preceding such damage or destruction, (ii) the Company is thereby
prevented from carrying on normal operations at the Project Facility
for a period of nine or more consecutive months following such damage
or destruction, or (iii) it would not be economically feasible for the
Company to replace, repair, rebuild or restore the same;
(2) title in and to, or the temporary use of, all or
substantially all of the Project Facility has been taken under the
exercise of the power of eminent domain (or sold in lieu of such a
taking) by any governmental authority, or person acting under
governmental authority and such a taking or sale, in the judgment of
the Company, may result in the Company being prevented thereby from
carrying on normal operations at the Project Facility for a period of
nine or more consecutive months; or
(3) as a result of any changes in the Constitution of the
State or the Constitution of the United States of America or by
legislative or administrative action (whether state or federal) or by
final decree, judgment, decision or order of any court or
administrative body (whether state or federal), the Agreement has
become void or unenforceable or impossible of performance in
accordance with the intent and purposes of the parties as expressed
therein.
To exercise its option to effect an extraordinary optional redemption,
the Company must deliver to the Trustee written notice of the occurrence of any
such event and of its election to cause the Bonds to be redeemed as a result
thereof. Such notice shall specify the redemption date which shall be at least
40 days after the date of delivery of such notice to the Trustee.
Section 3.03. Mandatory Redemption. The Bonds are subject to
mandatory redemption in whole on the earliest redemption date for which timely
notice of redemption can be given by the Trustee after the occurrence of a
Determination of Taxability at a redemption price equal to the aggregate
outstanding principal amount of the Bonds plus accrued interest thereon to the
redemption date, without premium. The foregoing amount shall constitute the
total amount
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required to be paid to the Bondholders as a result of the occurrence of a
Determination of Taxability.
The Company shall have the option to cause the Bonds to be subject to
mandatory tender and purchase pursuant to the Indenture in lieu of an optional
redemption of Bonds. Such option may be exercised by delivery by the Company
to the Trustee and Remarketing Agent on or prior to the Business Day preceding
the optional redemption date of a written notice specifying that the Bonds
shall not be redeemed, but instead shall be subject to mandatory tender and
purchase. Upon delivery of such notice, the Bonds will not be redeemed but
will instead be subject to mandatory tender and purchase. Upon tender as
described herein, the Bonds shall be payable at a tender price equal to the
price at which the Bonds would have been redeemed on the date which would have
been the optional redemption date.
Section 3.04. Notice of Redemption. (a) At least 30 days prior to
the date of any redemption of the Bonds, the Trustee shall cause notice of the
call for redemption to be sent by first class mail, postage prepaid, to the
Tender Agent, the Bank, the Remarketing Agent, the Company and the Owner of
each Bond to be redeemed. In addition, such notice shall also be given (at
least two Business Days before the redemption notice described in the preceding
sentence) by registered, certified or overnight mail, to all registered
securities depositories then in the business of holding substantial amounts of
obligations of types comprising the Bonds and to one or more national
information services that disseminate notices of redemption of obligations such
as the Bonds. Neither the failure to give any such notice nor any defect in
any notice so mailed shall affect the sufficiency or the validity of any
proceedings for the redemption of the Bonds.
(b) The redemption notice shall identify the Bonds or portions
thereof to be redeemed and shall state (1) the date of said notice and the
redemption date, (2) the redemption price, (3) the original date of execution
and delivery of the Bonds to be redeemed, (4) the rate of interest borne by the
Bonds to be redeemed, (5) the date of maturity of the Bonds, (6) the numbers
and CUSIP numbers of the Bonds to be redeemed, (7) that the redemption price of
any Bond is payable only upon the surrender of the Bond to be Trustee at its
principal corporate trust office, (8) the address at which the Bonds must be
surrendered, (9) that interest on the Bonds called for redemption ceases to
accrue on the redemption date provided that, on such date, Available Moneys are
on deposit in the Bond Fund sufficient to pay the redemption price of the Bonds
in full, and (10) such additional descriptive information identifying the Bonds
to be redeemed, including their interest rate and stated maturity date as may
be deemed appropriate by the Trustee to effect the redemption.
Any notice of optional redemption shall also state that the Company
may elect that the Bonds be subject to mandatory tender and purchase in lieu of
optional redemption at a tender price equal to the redemption price. Any
notice of optional redemption may also state (and shall state, if the Company
shall so direct) that the redemption is conditioned on receipt of moneys for
such redemption by the Trustee on or prior to the redemption date; if such
moneys are not received, the redemption of the Bonds for which notice was given
shall not be made.
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Section 3.05. Effect of Deposit of Redemption Moneys. If on any
redemption date Available Moneys sufficient to pay in full the redemption price
of the Bonds called for redemption have been deposited with the Trustee and
shall be available to be utilized to pay the redemption price of such Bonds,
such Bonds shall no longer be secured by or be deemed to be Outstanding under
the provisions of this Indenture. Interest shall not continue to accrue on
such Bonds after the redemption date. If sufficient Available Moneys shall not
be on deposit on the redemption date, such Bonds or portions thereof shall
continue to bear interest until paid at the same rate as they would have borne
had they not been called for redemption.
Section 3.06. Partial Redemption. (a) Any partial redemption of
Bonds shall be made only in Authorized Denominations. If fewer than all of the
Bonds shall be called for redemption, the portion of Bonds to be redeemed shall
be selected by lot by the Trustee from among all Outstanding Bonds; provided
that the Trustee shall first select Pledged Bonds and Company Bonds for
redemption. Each Bond shall be considered separate Bonds in Authorized
Denominations for purposes of selecting the Bonds to be redeemed. Subject to
the provisions of the Bonds with respect to the Book-Entry System, if any Bond
shall be called for redemption only in part, then the Owner of such Bond, upon
surrender of such Bond to the Trustee for payment, shall be entitled to receive
a new Bond or Bonds in the aggregate principal amount of the unredeemed balance
of the principal amount of such Bond, without charge therefor.
(b) If the Owner of any Bond which is called for redemption only
in part shall fail to present such Bond to the Trustee for payment and exchange
as aforesaid, such Bond shall, nevertheless, become due and payable on the date
fixed for redemption, to the extent called for redemption (and to that extent
only) and to such extent such Bond shall no longer be deemed to be Outstanding
for purposes of this Indenture.
(c) Notwithstanding the foregoing, if the Bonds are held in the
Book-Entry System at the time of a partial redemption of the Bonds, beneficial
ownership interests in the series of Bonds shall be selected for redemption in
accordance with the rules and procedures established by the Securities
Depository.
Section 3.07. Purchase of Tendered Bonds. (a) In performing their
duties hereunder, the Tender Agent and the Remarketing Agent shall act as
agents of (i) the persons to whom purchased Bonds are to be delivered pursuant
to Section 3.10, (ii) persons tendering such Bonds, and (iii) the Company, and
shall not be considered to be purchasing Bonds for their own account and, in
the absence of written notification from the Trustee to the contrary, shall be
entitled to assume that any Bond tendered or deemed tendered to the Remarketing
Agent or the Tender Agent for purchase is entitled under the Indenture to be so
purchased. No acceptance of Bonds by the Tender Agent or the Remarketing Agent
hereunder shall effect any merger or discharge of the indebtedness of the
Issuer evidenced by the Bonds. The Tender Agent and the Remarketing Agent
shall accept all Bonds properly tendered for purchase in accordance with the
provisions of the Bonds and as set forth in this Indenture.
(b) During any period that no Book-Entry System for the Bonds is
in effect, a Tender Agent shall be appointed as provided in Section 7.11
hereof. Immediately upon the effectiveness
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of such appointment, the Tender Agent shall establish a special trust fund
designated as the "Counties of Warren and Washington Industrial Development
Agency Industrial Development Revenue Bonds (Griffith Micro Science, Inc.
Project), Series 1994-Purchase Fund" (the "Purchase Fund"). The Tender Agent
shall hold all Bonds delivered to it in trust for the exclusive benefit of the
respective Owners of Bonds tendering such Bonds for sale until moneys
representing the purchase price of such Bonds have been delivered to or for the
account of such Owners of Bonds. Pledged Bonds, registered in the name of the
Company pursuant to Section 3.10 hereof shall be held in trust for the
exclusive benefit of the Bank. The Tender Agent shall hold all moneys
delivered to it for the purchase of Bonds in the Purchase Fund in trust, solely
for the benefit of the persons delivering such moneys until the Bonds purchased
with such moneys have been delivered to or for the account of such persons and
thereafter solely for the benefit of the persons entitled to such moneys.
Moneys held in the Purchase Fund shall not be invested. The Issuer and the
Trustee hereby authorize and direct the Tender Agent to withdraw sufficient
funds from the Purchase Fund to pay the purchase price of tendered Bonds as the
same becomes due and payable, which authorization and direction the Tender
Agent accepts.
(c) During any period the Bonds are held in a Book-Entry System,
the purchase price of tendered Bonds, (i) if derived from the source described
in Section 3.09(a), shall be paid on the tender date by the Remarketing Agent
from moneys received from the purchaser of the remarketed Bonds, and (ii) if
derived from any of the sources described in Section 3.09(b), 3.09(c) or
3.09(d) shall be paid on the tender date by the Trustee from moneys drawn on
the Letter of Credit or received from the Company, as the case may be. Moneys
received and held by the Remarketing Agent shall be held uninvested, in
separate accounts according to the source of such moneys.
Section 3.08. Remarketing of Tendered Bonds; Payment of Purchase
Price. (a) The Remarketing Agent shall use its best efforts to remarket
tendered Bonds of which it has received notice of tender from the Tender Agent
(or Beneficial Owners, as the case may be), at a price equal to 100% of the
principal amount thereof plus accrued interest to the purchase date. Such
remarketing shall be made in accordance with, and subject to the conditions of,
the provisions of the Remarketing Agreement. Bonds which have been duly
tendered for purchase and which have not been remarketed shall be purchased on
the tender date with the proceeds of an appropriate draw under the Letter of
Credit; provided however, (i) during any period the Bonds are not secured by a
Letter of Credit, or (ii) if the Bank shall fail to honor a draw on the Letter
of Credit to provide for the purchase price of tendered Bonds, then such Bonds
will be purchased by the Company on the tender date.
(b) Upon receipt of a duly tendered written notice of an optional
tender of Bonds, the Tender Agent shall notify, in writing, the Remarketing
Agent, the Company and the Trustee of the principal amount of Bonds tendered
and the date fixed for purchase of the tendered Bonds. During any period the
Bonds are in the Book-Entry System, such notice will be given, in writing, by
the Remarketing Agent to the Company and the Trustee.
(c) Prior to 4:00 p.m. on the Business Day which immediately
precedes the purchase date for any Bonds (or, in the case of Bonds in the Daily
Rate Mode, prior to 11:00 a.m. on the
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purchase date of such Bonds), the Remarketing Agent shall give notice to the
Tender Agent (if the Bonds are not then held in the Book-Entry System), the
Company and the Trustee of the principal amount of such Bonds which have been
remarketed, the names, addresses and taxpayer identification numbers of the
purchasers of such Bonds and the denominations in which the Bonds are to be
purchased by and delivered to each purchaser. If less than all of the Bonds
to be tendered on such purchase date have been remarketed, the Remarketing
Agent shall, in addition, notify the Trustee, the Tender Agent (if the Bonds
are not then held in the Book-Entry System) and the Company prior to 10:30 a.m.
(or, in the case of Bonds in the Daily Rate Mode. 11:00 a.m.) on the purchase
date of the principal amounts of Bonds which have and which have not been
remarketed and the amount of accrued interest to be paid on such Bonds on such
purchase date. Purchasers of Bonds which have been remarketed shall be
required to deliver the purchase price thereof directly to the Tender Agent for
deposit in the Purchase Fund (or, during any period the Bonds are in the
Book-Entry System, such moneys shall be transferred to the account of the
Remarketing Agent on the records of the Securities Depository) not later than
10:30 a.m. (or, in the case of Bonds in the Daily Rate Mode, 11:00 a.m.), on
the purchase date. By 11:00 a.m., on the purchase date, the Tender Agent shall
notify the Trustee, the Remarketing Agent, the Company and the Bank, by
telephone, promptly confirmed in writing, of any Bonds which have been
remarketed for which payment has not been received and the amount of
remarketing proceeds which have been received. During any period the Bonds are
in the Book-Entry System, such notice shall be given by the Remarketing Agent.
(d) Prior to 11:30 a.m., on any purchase date (whether optional or
mandatory), the Trustee shall draw upon the Letter of Credit, in an amount
equal to the purchase price of all Bonds to be purchased on such purchase date,
less the amount of remarketing proceeds of which the Trustee has notice were
deposited with the Tender Agent (or the Remarketing Agent during any period the
Bonds are in the Book-Entry System) by 11:00 a.m., on such date. In the event
of a draw on the Letter of Credit upon a mandatory tender due to a substitution
of an Alternate Credit Facility, the draw shall be made upon the Letter of
Credit being replaced. If the Bonds are not then secured by a Letter of
Credit, by 1:30 p.m. on the purchase date for any Bonds, the Tender Agent (or
the Trustee during any period the Bonds are in the Book-Entry System) shall
receive from the Company, pursuant to Section 4.2(b) of the Agreement, an
amount equal to the purchase price of all Bonds to be purchased on such date,
less the amount of remarketing proceeds of which the Trustee has notice were on
deposit with the Tender Agent or the Remarketing Agent, as the case may be, by
11:00 a.m. on such date. No draw on the Letter of Credit shall be made with
respect to Pledged Bonds or Company Bonds.
(e) The Trustee shall, to the extent it has drawn moneys under the
Letter of Credit for the purchase of Bonds, authorize direct payment by the
Bank to the Tender Agent (or, during any period the Bonds are in the Book-Entry
System, to the payee specified by the Securities Depository) of the moneys so
drawn.
(f) Notices pursuant to this Section shall be by telephone, tested
telecopy (receipt confirmed by telephone), telefacsimile transmittal or
telegram, promptly confirmed in writing, except that any drawing under the
Letter of Credit shall be in accordance with the terms thereof.
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(g) Anything in this Indenture to the contrary notwithstanding,
there shall be no obligation on the part of the Remarketing Agent to remarket
Bonds (i) if there shall have occurred and be continuing an Event of Default
under this Indenture or a Determination of Taxability, or (ii) which are
subject to mandatory tender hereunder, except as the Remarketing Agent and the
Company have otherwise agreed in the Remarketing Agreement.
(h) Any Bond optionally tendered for purchase after the date on
which such Bond has been selected for redemption or the Trustee has notified
the Bondholders of pendency of a conversion of the interest rate Mode of the
Bonds shall not be remarketed unless the purchaser has been notified by the
Trustee of the redemption or the interest rate Mode conversion, as appropriate.
Any purchaser so notified must deliver a notice to the Trustee and the Tender
Agent (or, during any period the Bonds are in the Book-Entry System, to the
Remarketing Agent) stating that such purchaser is aware of the pendency of the
redemption or of the interest rate Mode conversion, as appropriate, and
agreeing not to resell the Bonds prior to the date of such redemption or
conversion, as the case may be.
Section 3.09. Funds for Purchase Price of Bonds. On the date
Bonds are to be purchased pursuant to the optional or mandatory tender
provisions of this Indenture, the Tender Agent shall deliver the purchase price
to the tendering Bondholder (or, if the Bonds are in a Book-Entry System, the
Remarketing Agent or the Trustee, as appropriate, shall deliver the purchase
price to the appropriate payee on the records of the Securities Depository),
but only from the funds listed below, in the order of priority indicated:
(a) the proceeds of the sale of such Bonds which have
been remarketed by the Remarketing Agent to any person other than the
Company or the Issuer (or any "insider" of the Company or the Issuer
within the meaning of the Bankruptcy Code) which have been delivered
to the Tender Agent or the Remarketing Agent by 11:00 a.m., New York
time, on the purchase date;
(b) moneys drawn under the Letter of Credit;
(c) moneys deposited by the Company with the Trustee
pursuant to Section 4.2(b) of the Agreement: and
(d) moneys paid by the Company pursuant to Section 2.1(c)
of the Guaranty.
Section 3.10. Delivery of Purchased Bonds. The Tender Agent shall
make available by 2:00 p.m. on the purchase date of any tendered Bonds (whether
such tender was optional or mandatory), at its principal office in New York
City, Bonds which have been purchased with moneys described in Section 3.09(a)
for receipt by the purchaser thereof, which Bonds shall be authenticated by the
Tender Agent. Bonds purchased with moneys described in Section 3.09(a) shall
be registered in the manner directed by the Remarketing Agent and delivered to
the Remarketing Agent for redelivery to the purchasers thereof. Bonds
purchased with moneys described in Section 3.09(b) shall be delivered by the
Tender Agent to the Trustee, and registered by the Trustee in the name of the
Company indicating their status as Pledged Bonds (or if the Bonds are held in
the Book-Entry System, such Bonds shall be recorded in the books of the
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Securities Depository for the account of the Trustee and shall be deemed to be
pledged to the Bank). Bonds purchased with moneys described in Section 3.09(c)
or (d) hereof shall be registered in the name of the Company and delivered to
the Company.
Notwithstanding anything herein to the contrary, so long as the Bonds
are held under the Book-Entry System, Bonds will not be delivered as set forth
in the preceding paragraph; rather, transfers of beneficial ownership of the
Bonds to the persons indicated above will be effected pursuant to its rules and
procedures established by the Securities Depository.
Section 3.11. Pledged Bonds. If any Bond is purchased pursuant to
Section 3.07 hereof with moneys drawn under the Letter of Credit pursuant to
Section 3.09(b) hereof, if no Book-Entry System is then in effect, that Bond
shall be delivered to and held by the Trustee, registered in the name of the
Company and shall constitute a Pledged Bond until released as herein provided.
A Pledged Bond so held by the Trustee shall be released only upon receipt by
the Trustee or the Bank of an amount equal to the principal amount thereof plus
accrued interest, if any, thereon to the date of purchase and receipt by the
Trustee of written confirmation from the Bank of the reinstatement of the
amounts available to be drawn under the Letter of Credit to cover the full
principal amount of all Outstanding Bonds, plus Adequate Interest Coverage. If
a Book-Entry System is then in effect, Bonds purchased with Letter of Credit
proceeds pursuant to Section 3.09(b) hereof shall be reflected on the records
of the Securities Depository as being held for the account of the Trustee, and
the Trustee agrees that it shall hold such Bonds solely for the benefit of the
Bank. While a Book-Entry System is in effect, the Trustee shall cause the
release of such Bonds from its account on the records of the Securities
Depository only under the conditions for release of Pledged Bonds set forth
above in this paragraph.
During the Daily Rate Mode, CP Rate Mode and the Weekly Rate Mode, the
Remarketing Agent shall use its best efforts to remarket Pledged Bonds in
accordance with the provisions of the Offering Agreement. If the Remarketing
Agent remarkets any Pledged Bond, the Remarketing Agent shall give the notice
described in the first sentence of Section 3.08(c) hereof, and shall direct the
purchaser of such Pledged Bond to transfer, by 10:00 a.m. (or, in the case of
Bonds in the Daily Rate Mode, 11:00 a.m.) on the purchase date, the purchase
price of such remarketed Pledged Bond to the Bank, with notice thereof to the
Company and the Trustee. The Remarketing Agent shall deliver remarketed
Pledged Bonds to the purchasers thereof in accordance with Section 3.10 hereof.
On each Interest Payment Date prior to the release of Pledged Bonds,
the Trustee shall apply moneys in the Non-Available Moneys Account of the Bond
Fund to the payment of principal of and interest on such Pledged Bonds, but
shall not draw on the Letter of Credit or use moneys in the Letter of Credit
Account of the Bond Fund for such purpose to any extent whatsoever; and the
Trustee shall receive for the account of the Bank the interest and principal
paid in respect of such Pledged Bonds, and immediately upon such receipt the
Trustee shall pay such interest and principal over to the Bank pursuant to
written wire transfer instructions acceptable to the Trustee; provided,
however, that if at such time the Trustee has been notified in writing by the
Bank that there shall not remain any amount due and owing to the Bank under the
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Reimbursement Agreement, such interest and principal payments shall be paid
over to the Company.
It is recognized and agreed by the Trustee that while it holds Pledged
Bonds, such Pledged Bonds are held by the Trustee for the benefit of the Bank
as a first priority secured creditor.
Notwithstanding anything herein to the contrary, so long as the Bonds
are held under the Book-Entry System, Pledged Bonds shall not be delivered to
and held by the Trustee; rather transfers of beneficial ownership of Bonds to
the persons indicated above will be effected pursuant to the rules and
procedures established by the Securities Depository.
ARTICLE IV
GENERAL PROVISIONS
Section 4.01. Payment of Principal, Premium, If Any, and Interest.
The Issuer covenants that it will duly and punctually pay or cause to be paid
the principal of, premium, if any, and interest on the Bonds issued under this
Indenture at the place, on the dates and in the manner provided herein and
therein according to the true intent and meaning hereof and thereof, but solely
from the payments, revenues and receipts specifically assigned herein for such
purposes as set forth in Section 5.02 of this Indenture.
Section 4.02. Instruments of Further Assurance. (a) The Issuer
covenants that it will, at the expense of the Company, execute and deliver such
indentures supplemental hereto and such further acts, instruments and transfers
as the Trustee or the Bank reasonably may require for the better and more
effectual assignment to the Trustee of all payments, revenues and other amounts
payable under or with respect to the Agreement, the Letter of Credit and any
other income and other moneys assigned hereby to the payment of the principal
of, premium, if any, and interest on the Bonds. The Issuer further covenants
that it will not create or, to its knowledge, suffer to be created any lien,
encumbrance or charge upon its interest in the revenues and other amounts
payable under or with respect to the Trust Estate, except the lien and charge
granted hereby.
(b) The Company shall record and file financing statements and all
supplements thereto, and such other instruments (including, but not limited to,
continuation statements) as may be required from time to time by the Issuer,
the Bank or the Company to be recorded or filed, in such manner and at such
places as from time to time may be required by law in order fully to preserve
and protect the security of the Owners of the Bonds and the Bank, and the
rights of the Trustee hereunder.
Section 4.03. Tax-Exempt Status of Bonds. The Issuer and the
Trustee each covenant to commit or suffer no act within their control that
would alter the status or character of the Bonds, or the interest to be paid on
the Bonds, for purposes of Federal income taxation. The provisions of this
Section shall apply to the Trustee only to the extent that the Trustee is
acting hereunder in its sole discretion. Toward that end, the Issuer and the
Trustee agree that they will comply with and take all actions required by the
Tax Agreement.
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Section 4.04. Books, Records and Accounts. The Trustee agrees to
keep proper books for the registration of, and transfer of ownership of, each
Bond, and proper books, records and accounts in which complete and correct
entries shall be made of all transactions relating to the receipt,
disbursement, investment, allocation and application of the proceeds received
from the sale of the Bonds, the revenues received from the Agreement, the
documents executed by the Company in connection therewith, the Letter of
Credit, the funds and accounts created pursuant to this Indenture, and all
other moneys held by the Trustee hereunder. The Trustee shall, during regular
business hours and upon reasonable prior notice, make such books, records and
accounts available for inspection by the Issuer, the Company, the Bank and the
Bond Owners.
Section 4.05. Notice to Rating Agencies. The Trustee shall
provide each Rating Agency then rating the Bonds, if the Bonds are then rated,
with prompt written notice following the effective date of (a) the appointment
of any successor Trustee, Tender Agent or Remarketing Agent, (b) any change in
the identity of any Bank, (c) any supplements or amendments to this Indenture
or the Agreement, (d) the termination, expiration, extension or amendment of
the Letter of Credit, (e) the payment in full of all of the Bonds, (f) any
mandatory tender of the Bonds (which notice shall be given at least 25 days
prior to the mandatory tender date), (g) when the Bonds are no longer to be
held in the Book-Entry System or (h) any conversion to a new Mode. Each notice
to the Rating Agencies hereunder shall be directed to the respective addresses
provided by the Rating Agencies.
ARTICLE V
REVENUES AND FUNDS; LETTER OF CREDIT
Section 5.01. Application of Original Proceeds of Bonds. The
proceeds of the sale of the Bonds shall be deposited by the Trustee on the
Closing Date in the Construction Fund.
Section 5.02. Creation of Bond Fund. There is hereby created by
the Issuer and ordered established with the Trustee a trust fund to be
designated the "Counties of Warren and Washington Industrial Development Agency
(Griffith Micro Science, Inc. Project), Series 1994 Bond Fund" (the "Bond
Fund"). Within the Bond Fund there are hereby created by the Issuer and
ordered established with the Trustee three separate and segregated trust
accounts to be designated, respectively, (a) the "Available Moneys Account,"
(b) the "Non-Available Moneys Account" and (c) the "Letter of Credit Account".
There shall be deposited into the Bond Fund when received: (a) all
payments specified in Section 4.2(a) of the Agreement or Sections 2.1(a) or (b)
of the Guaranty; (b) all moneys required to be so deposited in connection with
any redemption of Bonds; (c) all moneys drawn by the Trustee under the Letter
of Credit to pay interest, premium, if any, principal or the redemption price
of any Bonds; (d) any amounts directed to be transferred into the Bond Fund
pursuant to any provision of this Indenture; and (e) all other moneys when
received by the Trustee which are required to be deposited into the Bond Fund
or which are accompanied by directions that such moneys are to be paid into the
Bond Fund. Any amounts paid to the Trustee which do not constitute Available
Moneys shall be held in the Non-Available Moneys Account and shall not be
commingled with any other moneys held by the Trustee. At such time as
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moneys in the Non-Available Moneys Account shall constitute Available Moneys,
they shall be transferred to the Available Moneys Account. Any amounts drawn
under the Letter of Credit shall be held in the Letter of Credit Account and
shall not be commingled with any other moneys held by the Trustee. Any amounts
received for deposit in the Bond Fund which constitute Available Moneys (other
than amounts drawn under the Letter of Credit), and any amounts deposited in
the Non-Available Moneys Account which at a later date become Available Moneys,
shall be held in the Available Moneys Account and shall not be commingled with
any other moneys held by the Trustee.
Section 5.03. Letter of Credit; Alternate Credit Facility. (a)
Initial Letter of Credit. The Initial Letter of Credit shall be delivered to
the Trustee simultaneously with the original issuance and delivery of the
Bonds.
(b) Alternate Credit Facility. The Company may at any time
substitute an Alternate Credit Facility for an existing Letter of Credit,
subject to the limitations set forth in this Article V. An Alternate Credit
Facility shall be an irrevocable letter of credit, bank bond purchase
agreement, bond insurance policy, revolving credit agreement, surety bond or
other agreement or instrument under which any person or entity (other than the
Issuer or the Company) undertakes to make or provide funds to make payments of
the principal and purchase price of, and interest on, the Bonds, as and when
due, provided that the Alternate Credit Facility must be effective as of a date
on or prior to the date of expiration of the then existing Letter of Credit and
must provide coverage in an amount at least equal to the sum of (A) the
aggregate principal amount of Bonds (other than Pledged Bonds or Company Bonds)
at the time Outstanding, plus (B) Adequate Interest Coverage.
Pursuant to Section 2.04 of this Indenture, if an Alternate Credit
Facility is furnished, the Bonds shall be subject to mandatory tender unless
the Company furnishes the Trustee by the 25th day prior to the scheduled Letter
of Credit expiration or termination date written evidence from each Rating
Agency having a rating in effect for the Bonds that the Rating Agency has
reviewed the proposed Alternate Credit Facility and that its replacement of the
current Letter of Credit will not by itself result in a withdrawal or reduction
of the Rating Agency's current rating for the Bonds (a "Maintenance of
Rating"). Notwithstanding the foregoing, when the Bonds are in the Adjustable
Rate Mode or the CP Rate Mode, an existing Letter of Credit may not be replaced
prior to the expiration date of the then applicable Rate Period or all then
applicable CP Rate Periods, as the case may be, with an Alternate Credit
Facility unless either (a) the Trustee is furnished with evidence of a
Maintenance of Rating by the date described above (in which case the Bonds will
not be subject to mandatory tender as a result thereof) or (b) in the event
evidence of Maintenance of Rating is not received, the substitution occurs on a
date on or after which the Bonds may be optionally redeemed pursuant to the
Indenture and the mandatory tender price payable upon the mandatory tender of
Bonds as a result of such substitution includes a premium equal to the
redemption premium at that time payable pursuant to the optional redemption
provisions of this Indenture.
The Company shall notify the Trustee of its intention to deliver an
Alternate Credit Facility at least 25 days prior to the date of such delivery.
Upon receipt of such notice, the
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Trustee will promptly mail a notice of the anticipated delivery of the
Alternate Credit Facility by first class mail to the Issuer, the Remarketing
Agent and each Bondholder at the holder's registered address.
On or prior to the delivery of any Alternate Credit Facility to the
Trustee, the Company shall furnish to the Trustee (i) a written opinion of
counsel acceptable to the Trustee stating that delivery of such Alternate
Credit Facility to the Trustee is authorized under the Agreement and this
Indenture, and complies with the terms hereof and thereof, and (ii) an opinion
of counsel to the issuer of such Alternate Credit Facility to the effect that
the Alternate Credit Facility is a valid and binding obligation of the Bank,
enforceable in accordance with its terms, subject to usual exceptions relating
to bankruptcy and insolvency. In addition, if the Alternate Credit Facility is
issued in connection with a conversion of the interest rate Mode on the Bonds
or if the Company grants a security interest in any cash, securities or
investment type property to the issuer or provider of the Alternate Credit
Facility, the Company must furnish the Trustee an opinion of Bond Counsel
stating that such grant will not adversely affect the exclusion of interest on
the Bonds from federal gross income of the owners thereof.
(c) Release of Letter of Credit. The Company may at any time
during a Daily Rate Mode or a Weekly Rate Mode or, subject to the limitations
described below, during a CP Rate Mode or Adjustable Rate Mode, direct the
Trustee to release an existing Letter of Credit and surrender such Letter of
Credit to the Bank without substituting an Alternate Credit Facility therefor.
If the Bonds are then in the CP Rate Mode or Adjustable Rate Mode, the Company
may direct such a release only on a date on which all Bonds may be optionally
redeemed pursuant to this Indenture. Upon any such direction, subject to the
limitations set forth above, the Trustee shall release the Letter of Credit and
surrender it to the Bank. Upon such release, the Bonds shall be subject to
mandatory tender and, if the Bonds are then in the CP Rate Mode or the
Adjustable Rate Mode, the mandatory tender price payable upon the mandatory
tender of Bonds as a result of the release of the existing Letter of Credit
shall include a premium equal to the redemption premium, if any, at the time
payable pursuant to the optional redemption provisions of the Indenture.
The Company shall notify the Trustee of its intention to release the
existing Letter of Credit at least 25 days prior to the date of such release.
Upon receipt of such notice, the Trustee shall promptly mail a notice of the
anticipated release of the existing Letter of Credit by first class mail to the
Issuer and the Remarketing Agent and shall mail notice to each Bondholder.
Such notice shall specify that the Letter of Credit will not be replaced by any
Alternate Credit Facility and, as a result thereof, the Bonds will be subject
to mandatory tender on the 2nd Business Day prior to the date of such release.
(d) Surrender of Letter of Credit. If at any time there shall
have been delivered to the Trustee an Alternate Credit Facility, together with
the other documents and opinions required by this Article V, then the Trustee
shall accept such Alternate Credit Facility and promptly surrender the
previously held Letter of Credit to the issuer thereof, in accordance with the
terms thereof for cancellation. If at any time there shall cease to be any
Bonds Outstanding under this Indenture, or if the Letter of Credit expires in
accordance with its terms, the Trustee shall
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promptly surrender the Letter of Credit to the issuer thereof, in accordance
with the terms thereof, for cancellation. The Trustee shall comply with the
procedures set forth in the Letter of Credit relating to the termination
thereof.
(e) Federal Income Tax Requirements Pertaining to Substitutions of
Letters of Credit Upon Certain Mode Conversions. The CP Rate Mode, the Daily
Rate Mode, the Weekly Rate Mode and each Adjustable Rate Period of one year or
less shall be referred to as a "Short-Term Mode" and each Adjustable Rate
Period of greater than one year's duration shall be referred to as a "Long-Term
Mode." Upon any conversion or change from a Short-Term Mode to a Long-Term Mode
or from a Long-Term Mode to a Short-Term Mode, if the Company then proposes to
either (i) add a Letter of Credit where none was then in effect, (ii) terminate
a Letter of Credit then in effect without replacing it with an Alternate Credit
Facility or (iii) terminate an existing Letter of Credit and substitute an
Alternate Credit Facility issued by a different Bank, the following shall
apply:
(A) If the change or conversion is from a Long-Term Mode
to a Short-Term Mode, the Bonds shall be supported by a Letter of
Credit issued by an entity with the highest generic (i.e., without
regard to "+" or "-" symbols) short-term rating on the effective date
of such change or conversion by the Rating Agency then rating the
Bonds.
(B) If the change or conversion is from a Short-Term Mode
to an Adjustable Rate Period of greater than or equal to one but less
than five years' duration, the Bonds shall be supported by a Letter of
Credit issued by an entity with a "AA" long-term rating (or its
equivalent) on the effective date of such change or conversion by the
Rating Agency then rating the Bonds.
(C) If the change or conversion is from a Short-Term Mode
to an Adjustable Rate Period of greater than or equal to five years'
duration, the Bonds shall not be supported by any Letter of Credit for
at least the duration of the Adjustable Rate Period to which the Bonds
are being converted.
Notwithstanding any of the foregoing provisions of this Section
5.03(d), the Bonds may or may not be supported by a Letter of Credit in
contravention of such provisions if there is delivered to the Trustee prior to
the date of any such change or conversion an opinion of Bond Counsel to the
effect that the deviation from the provisions of this Section 5.03 will not
adversely affect the exclusion from federal gross income of interest on the
Bonds.
Section 5.04. Letter of Credit Draws and Bond Fund Moneys to Pay
Principal, Premium or Interest. (a) On or before each Interest Payment Date,
redemption date, and date on which principal shall be due and payable on the
Bonds, whether at maturity or upon acceleration, the Trustee shall draw under
the Letter of Credit, (if then in effect) an amount which shall be sufficient
for the purpose of paying the principal of, premium, if any (if the Letter of
Credit then covers premium) and interest due and payable on the Bonds (other
than Pledged Bonds and Company Bonds) on such payment date. Such drawing shall
be made in a timely manner under the terms of the Letter of Credit in order
that the Trustee may realize funds thereunder in sufficient time to pay
Bondholders on the payment date as provided herein (and if the Bonds are
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then held in a Book-Entry System, to pay the Securities Depository in a timely
manner as required by its rules and procedures). All amounts derived by the
Trustee with respect to the Letter of Credit shall be deposited in the Letter
of Credit Account of the Bond Fund upon receipt thereof by the Trustee, as
provided in Section 5.03. If no Letter of Credit is then in effect, by 11:00
a.m. on any Interest Payment Date, redemption date, acceleration date, or the
maturity date of the Bonds, as the case may be, the Trustee shall receive from
the Company pursuant to Section 4.2(a) of the Agreement the full amount of
principal of, premium, if any, and interest due on, the Bonds on that date.
(b) The Issuer hereby authorizes and directs the Trustee to
withdraw sufficient funds from the Letter of Credit Account of the Bond Fund to
pay the principal of, premium, if any, and interest on, the Bonds as the same
become due and payable; and, in the event of a default under the Letter of
Credit, or at such time as no Letter of Credit secures the Bonds, to use all
moneys then on deposit, first in the Available Moneys Account, and thereafter
the Non-Available Moneys Account, of the Bond Fund to pay principal of,
premium, if any, and interest on, the Bonds, which authorization and direction
the Trustee hereby accepts. On any date on which moneys are to be disbursed
from the Bond Fund pursuant to the preceding sentence, if moneys remain in the
Bond Fund after such disbursement, such remaining moneys shall be disbursed to
the Bank to the extent amounts are then owed to the Bank pursuant to the
Reimbursement Agreement. The Trustee may rely on a certificate from the Bank
which certifies the amounts owed under the Reimbursement Agreement at any time.
Section 5.05. Investment of Moneys. Subject to the restrictions
hereinafter set forth in this Section 5.05 and in the Tax Agreement, any moneys
held in the Non-Available Moneys Account of the Bond Fund and the Construction
Fund shall be invested and reinvested by the Trustee upon the written
instructions of the Company in Qualified Investments, maturing no later than
the date on which it is estimated that such moneys will be required to be paid
out hereunder. Moneys held in the Available Moneys Account of the Bond Fund
shall be invested and reinvested solely in Government Obligations, maturing no
later than the date on which such moneys will be required to be paid out
hereunder. Moneys held in the Purchase Fund and the Letter of Credit Account
and moneys held pursuant to Section 5.06 hereof shall not be invested. The
Trustee may make any and all such investments through its own investment
department, or through any of its affiliates or subsidiaries. The Trustee
shall be entitled to rely on all written investment instructions provided by
the Company hereunder, and shall have no duty to monitor the compliance thereof
with the restrictions set forth in this Section 5.05 or in the Tax Agreement.
The Trustee, when authorized by the Company, may trade with itself in the
purchase and sale of securities for such investment. The Trustee shall not be
responsible or liable for the performance of any such investments or for
keeping the moneys held by it hereunder fully invested at all times other than
in accordance with the instructions of the Company. Absent the provision of
investment instructions hereunder, the Trustee shall not make any investment of
the moneys held pursuant hereto; provided, however, that the Trustee shall
notify the Company in the event any moneys are being held uninvested pursuant
hereto. Any obligations acquired by the Trustee as a result of such investment
or reinvestment shall be held by or under the control of the Trustee and shall
be deemed to constitute a part of the Fund or Account from which the moneys
used for its purchase were taken. All investment income shall be retained in
the Fund or
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Account to which the investment is credited from which such income is derived.
Although the Issuer recognizes that it may obtain a broker confirmation or
written statement containing comparable information at no additional cost, the
Issuer hereby agrees that confirmations of investments made by the Trustee
pursuant to this Section 5.05 are not required to be issued by the Trustee for
each month in which a monthly statement is rendered. No such statement need by
rendered pursuant to the provisions hereof if no activity occurred in the fund
or account during such preceding month.
Section 5.06. Moneys to Be Held in Trust; Nonpresentment of Bonds.
(a) All moneys required to be deposited with or paid to the Trustee for the
account of any Fund or Account under any provisions of this Indenture shall be
held by the Trustee in trust, and, except for moneys deposited with or paid to
the Trustee for redemption of Bonds, notice of the redemption for which has
been duly given, shall, while held by the Trustee, constitute part of the Trust
Estate and be subject to the security interest created hereby.
(b) In the event any Bond shall not be presented for payment when
the principal thereof becomes due, either at maturity or otherwise, or at the
date fixed for redemption thereof, if Available Moneys sufficient to pay such
Bond shall have been deposited in the Bond Fund, all liability of the Issuer to
the owner thereof for the payment of such Bond shall forthwith cease, determine
and be completely discharged, and thereupon it shall be the duty of the Trustee
to hold such moneys, without liability for interest thereon, for the benefit of
the owner of such Bond who shall thereafter be restricted exclusively to such
moneys, for any claim of whatever nature on his part under this Indenture or
on, or with respect to, said Bond. Such moneys shall be held in a separate and
segregated fund and shall not be invested.
(c) Any moneys so deposited with and held by the Trustee not so
applied to the payment of Bonds for at least two years after the date on which
the same shall have become due shall then be paid by the Trustee to the Bank,
upon the written direction of the Bank that amounts are due and owing the Bank
under the Reimbursement Agreement, or in any other event, to the Company upon
the written direction of the Company. Thereafter Bondholders shall be entitled
to look only to the Company for payment, the Company shall not be liable for
any interest thereon and shall not be regarded as a trustee of such moneys, and
the Trustee shall have no further responsibilities with respect to such moneys.
(d) The obligation of the Trustee under this Section to pay any
such funds to the Company shall be subject, however, to any provisions of law
applicable to the Trustee or to such funds providing other requirements for
disposition of unclaimed property.
Section 5.07. Repayment from Indenture Funds. Any amounts
remaining in any Fund or Account created under this Indenture, after payment,
or provision for payment, in full of the Bonds in accordance with Article X
hereof, the fees, charges and expenses of the Issuer, the Trustee, the Tender
Agent, the Remarketing Agent and any co-trustee appointed hereunder, and all
other amounts required to be paid hereunder or under the Agreement, and after
and to the extent that the Company shall determine that the payment of such
remaining amounts may be made without violation of the provisions of the Tax
Agreement, shall be paid, upon the
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expiration of, or upon the sooner termination of, the terms of this Indenture,
to the Bank to the extent money shall be owed to the Bank under the
Reimbursement Agreement (as evidenced by written notice thereof given to the
Trustee by the Bank) and, thereafter, to the Company.
Section 5.08. Tax Covenants. The Issuer and the Trustee covenant
with the Owners of the Bonds that, notwithstanding any other provision of this
Indenture or any other instrument, they will not knowingly make any investment
or other use of the proceeds of the Bonds or any other moneys held under this
Indenture which would cause the Bonds to be "arbitrage bonds" under Section 148
of the Code or "federally guaranteed" obligations under Section 149(b) of the
Code, and they further covenant that they will comply with all applicable
requirements of Sections 103 and 141-150 of the Code (except that the Issuer
and the Trustee shall be deemed to have complied with these requirements as
long as they act on the written direction of the Company).
Notwithstanding any other provision herein to the contrary, the
Trustee shall be permitted to transfer moneys on deposit in any of the trust
funds established hereunder (other than moneys representing remarketing
proceeds or draws under the Letter of Credit to the extent needed to pay
principal or purchase price of, premium, if any, or interest on the Bonds) to
the Rebate Fund created under the Tax Agreement in accordance with the
provisions of the Tax Agreement.
Section 5.09. Construction Fund. There is hereby created and
established with the Trustee a trust fund in the name of the Issuer to be
designated "Counties of Warren and Washington Industrial Development Agency
(Griffith Micro Science, Inc. Project), Series 1994--Construction Fund" (the
"Construction Fund" ), which shall be expended in accordance with the
provisions of the Agreement.
Section 5.10. Payments into Construction Fund; Disbursements.
Proceeds of the issuance and delivery of the Bonds shall be deposited in the
Construction Fund as provided in Section 5.01 hereof. Moneys in the
Construction Fund shall be expended on orders signed by an Authorized Company
Representative stating with respect to each payment to be made:
(a) The requisition number;
(b) The name and address of the person, firm or
corporation to whom payment is due or has been made, which may include
the Company;
(c) The amount to be or which has been paid;
(d) That each obligation mentioned therein has been
properly incurred, is a proper charge against the Construction Fund
and has not been the basis of any previous requisition;
(e) That each item for which payment is proposed to be
made is or was a part of the Project;
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(f) That after taking into account the costs proposed to
be paid or reimbursed in said certificate, at least 95% of the costs
paid or reimbursed out of the Construction Fund are amounts which will
be chargeable to the Project's capital account or which would be so
chargeable either with a proper election by the Company under the Code
or but for a proper election by the Company to deduct such amount and
were incurred and paid, or are to be incurred and paid, subsequent to
November 22, 1993;
(g) That after taking into account the costs proposed to
be paid or reimbursed in said certificate, no more than $106,000 of
the costs paid or reimbursed out of the Construction Fund are issuance
costs within the meaning of the Code; and
(h) That no Event of Default exists under the Agreement.
The Trustee is hereby authorized and directed to make each
disbursement required by the provisions of the Agreement and to issue its
checks therefor. The Trustee shall keep and maintain adequate records
pertaining to the Construction Fund and all disbursements therefrom, and after
the Project has been completed and a certificate of payment of all costs is or
has been filed as contemplated by Section 5.11 hereof, the Trustee shall file a
statement thereof with the Issuer and the Company.
Section 5.11. Completion of Project. The completion of the Project
and payment or provision made for payment of the full Cost of the Project shall
be evidenced by the filing with the Trustee of a certificate required by the
provisions of Section 3.4 of the Agreement. Any balance remaining in the
Construction Fund on the Completion Date shall be used in accordance with said
Section.
Section 5.12. Transfer of Construction Fund. If the Company
should prepay all amounts payable under Section 4.2(a) of the Agreement, any
balance then remaining in the Construction Fund shall without further
authorization be deposited in the Bond Fund by the Trustee.
Section 5.13. Custody of Funds and Accounts. Except as otherwise
expressly provided herein, all Funds and Accounts created pursuant to this
Indenture and held by the Trustee shall be held in trust, in the name of the
Issuer, for the benefit of the Bondholders and, to the extent of amounts owed
by the Company to the Bank under the Reimbursement Agreement, the Bank.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of DeFault. Each of the following shall
constitute, and is referred to in this Indenture as, an "Event of Default":
(a) a default in the payment when due of interest on any
Bond:
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(b) a default in the payment of principal of, or
premium, if any, on any Bond when due, whether at maturity, upon
acceleration or redemption, or otherwise;
(c) a default in the payment when due of the purchase
price of any Bond required to be purchased pursuant to Section 2.03 or
Section 2.04;
(d) the Issuer fails to perform in any material respect
any of its agreements in this Indenture or the Bonds (except a failure
that results in an Event of Default under clause (a), (b) or (c)
above), and which failure continues after the giving of the notice of
default and the expiration of the grace period specified in this
Section;
(e) The Company fails to perform in any material respect
any of its agreements in the Agreement or the Guaranty (except a
failure that results in an Event of Default under clause (a), (b) or
(c) of this Section), and the failure continues after the notice and
for the period specified in this Section.
(f) The Company pursuant to or within the meaning of any
Bankruptcy Law (as defined below) (1) commences a voluntary case, (2)
consents to the entry of an order for relief against it in an
involuntary case, (3) consents to the appointment of a Custodian (as
defined below) for the Company or any substantial part of its property
or (4) makes a general assignment for the benefit of its creditors.
(g) A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (1) is for relief against the
Company in an involuntary case, (2) appoints a Custodian for the
Company or any substantial part of its property or (3) orders the
winding up or liquidation of the Company, and the decree or order
remains unstayed and in effect for 90 days.
(h) the Trustee receives written notice from the Bank
that a "default" or "event of default" has occurred and is continuing
under the Reimbursement Agreement and directing the Trustee to
accelerate the Bonds pursuant to Section 6.02 hereof.
(i) the Trustee receives written notice from the Bank on
or before the date or dates specified in the Letter of Credit
following a drawing on the Letter of Credit to pay interest on the
Bonds that it will not reinstate its Letter of Credit in the amount of
the said interest drawing.
"Bankruptcy Law" means Title 11 of the United States Code or any
similar Federal or state law for the relief of debtors. "Custodian" means any
receiver, trustee, assignee. liquidator, custodian or similar official under
any Bankruptcy Law.
A default under clause (d) or (e) of this Section is not an Event of
Default until the Trustee or the holders of at least a majority in principal
amount of the Bonds then outstanding give the Issuer and the Company a notice
specifying the default, demanding that it be remedied and stating that the
notice is a "Notice of Default," and the Issuer or the Company (if the default
is under clause (d)) or the Company (if the default is under clause (e)) does
not cure the default
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within 60 days after receipt of the notice, or within such longer period as to
which the Trustee shall agree. The Trustee shall not unreasonably refuse to
agree to a longer cure period if the default can be cured but cannot reasonably
be cured within 60 days after receipt of the notice and the Issuer or the
Company has demonstrated to the Trustee that it has begun within 60 days and
continued diligent efforts to cure the default. The Issuer authorizes the
Company to perform, in the name and on behalf of the Issuer and for the purpose
of preventing the occurrence of an Event of Default, any agreement of the
Issuer in this Indenture or the Bonds.
Section 6.02. Acceleration. If an Event of Default under clause
(h) or (i) of the foregoing Section occurs, the principal and accrued interest
to the date of acceleration on the Bonds shall become due and payable
immediately. If any other Event of Default occurs and is continuing, the
Trustee by notice to the Issuer and the Company, or the holders of at least a
majority in principal amount of the Bonds then Outstanding by notice to the
Issuer, the Company and the Trustee, may declare the principal of and accrued
interest on the Bonds to be due and payable immediately. If a Letter of Credit
is in effect, and (a) the Event of Default is not under clause (h) or (i) of
the foregoing Section, (b) the Event of Default is not the result of a failure
by the Bank to honor a draw on the Letter of Credit and (c) the Trustee
believes that failure to draw immediately on the Letter of Credit is not likely
to prejudice the Bondholders' interest, the Trustee will not declare the Bonds
to be due and payable without first obtaining the Bank's consent. Upon the
principal of and accrued interest on the Bonds becoming due and payable as
provided in this Section, the Trustee shall immediately draw on the Letter of
Credit, if any, to pay the principal of and accrued interest on the Bonds. The
Trustee shall immediately give notice of acceleration to the Bondholders.
Interest on the Bonds shall cease to accrue, and the principal of and accrued
and unpaid interest on the Bonds shall, without further action, become
immediately due and payable, on the date of acceleration.
The Trustee may, and upon the request of holders of a majority in
principal amount of the Bonds then outstanding shall, rescind an acceleration
and its consequences if (a) all existing Events of Default have been cured or
waived, (b) the rescission would not conflict with any judgment or decree, (c)
all payments due the Trustee and any predecessor Trustee under Section 7.06
have been made and (d) when a Letter of Credit is in effect, the Bank consents
in writing and the Trustee receives written notice from the Bank that the
Letter of Credit has been reinstated up to the full amount available under it
immediately prior to such Event of Default (which will, in all events, include
Adequate Interest Coverage).
Section 6.03. Other Remedies. (a) If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the principal of or interest on the Bonds or to
enforce the performance of any provision of the Bonds, this Indenture, the
Agreement, the Guaranty and the Letter of Credit including, without limitation,
the exercise of any remedy granted to it in the Agreement.
(b) The Trustee may maintain a proceeding even if it does not
possess any of the Bonds or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Bondholder in exercising any right or
remedy accruing upon an Event of Default shall not
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impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
(c) During any period the Bonds are secured by the Letter of
Credit and draws thereunder have been duly honored by the Bank in accordance
with the terms and provisions of the Letter of Credit, all remedies pursued by
the Trustee upon the occurrence of an Event of Default (other than draws upon
the Letter of Credit) shall be taken only with the prior consent of the Bank.
(d) No order or decree of specific performance with respect to any
of the obligations of the Issuer hereunder or under the Agreement, the Offering
Agreement or the Tax Agreement shall be sought or enforced against the Issuer
unless (1) the party seeking such order or decree shall first have requested
the Issuer in writing to take the action sought in such order or decree of
specific performance, and ten (10) days shall have elapsed from the date of
receipt of such request, and the Issuer shall have refused to comply with such
request (or if compliance therewith would reasonably be expected to take longer
than ten (10) days shall have failed to institute and diligently pursue action
to cause compliance with such request) or failed to respond within such notice
period, (2) if the Issuer refuses to comply with such request and the Issuer's
refusal to comply is based on its reasonable expectation that it will incur
fees and expenses, the party seeking such order or decree shall have placed in
an account with the Issuer an amount or undertaking sufficient to cover such
reasonable fees and expenses, and (3) if the Issuer refuses to comply with such
request and the Issuer's refusal to comply is based on its reasonable
expectation that it or any of its members, officers, agents (other than the
Company) or employees shall be subject to potential liability, the party
seeking such order or decree shall (i) agree to indemnify and hold harmless the
Issuer and its members, officers, agents (other than the Company) and employees
against any liability incurred as a result of its compliance with such demand,
and (ii) if requested by the Issuer shall furnish to the Issuer satisfactory
security to protect the Issuer and its members, officers, agents and employees
against all liability expected to be incurred as a result of compliance with
such request.
Section 6.04. Waiver of Past Defaults. The holders of a majority
in principal amount of the Bonds then outstanding, together with the Bank, by
written notice to the Trustee, may waive an existing Event of Default and its
consequences if the Letter of Credit is reinstated up to the full amount
available under it immediately prior to such Event of Default. When an Event
of Default is waived, it is cured and stops continuing, but no such waiver
shall extend to any subsequent or other Event of Default or impair any right
consequent to it.
Section 6.05. Control by Majority. The holders of a majority in
principal amount of the Bonds then Outstanding may (with the consent of the
Bank) direct in writing the time, method and place of conducting any proceeding
for any remedy available to the Trustee or of exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or, subject to Section 7.01, that the
Trustee determines is unduly prejudicial to the rights of other Bondholders, or
would involve the Trustee in personal liability or would involve an expense or
liability unless the Trustee is indemnified, it being
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understood that (subject to Section 7.01), the Trustee shall have no duty to
ascertain whether or not such actions or forbearances are unduly prejudicial to
such Holders.
Section 6.06. Limitation on Suits. A Bondholder may not pursue any
remedy with respect to this Indenture or the Bonds unless (a) the holder gives
the Trustee notice stating that an Event of Default is continuing, (b) the
holders of at least 25% in principal amount of the Bonds then outstanding make
a written request to the Trustee to pursue the remedy, (c) such holder or
holders offer to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense and (d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity.
A Bondholder may not use this Indenture to prejudice the rights of
another Bondholder or to obtain a preference or priority over the other
Bondholders.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any holder
to receive payment of principal of and interest on a Bond, on or after the due
dates expressed in the Bond, or the purchase price of a Bond on or after the
date for its purchase as provided in the Bond, or to bring suit for the
enforcement of any such payment on or after such dates, shall not be impaired
or affected without the consent of the holder.
Section 6.08. Collection Suit by Trustee. If an Event of Default
under Section 6.01 (a), (b) or (c) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or the Bank for the whole amount remaining unpaid.
Section 6.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Bondholders
allowed in any judicial proceedings relative to the Company or the Bank, its
creditors or its property and, unless prohibited by law or applicable
regulations, may vote on behalf of the holders in any election of a trustee in
bankruptcy or other person performing similar functions.
Section 6.10. Priorities. If the Trustee collects any money
pursuant to this Article, it shall pay out the money in the following order:
FIRST: To the Trustee and the Tender Agent for amounts to which they
are entitled under Section 7.06 hereof or Section 4.3 of the Agreement, but the
Trustee may not pay itself or the Tender Agent from money drawn under. the
Letter of Credit, from the proceeds of the remarketing of any Bonds or from
amounts held by the Trustee pursuant to Article X or Section 5.06(b).
SECOND: To Bondholders for amounts due and unpaid on the Bonds for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Bonds for principal and
interest, respectively.
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THIRD: To the Bank to the extent the Bank certifies to the Trustee
that the Company is indebted to the Bank on account of draws under the Letter
of Credit or any other amounts due and payable to the Bank under the
Reimbursement Agreement.
FOURTH: To the Company.
The Trustee may fix a payment date for any payment to the Bondholders
in accordance with this Section.
ARTICLE VII
TRUSTEE, REMARKETING AGENT AND TENDER AGENT
Section 7.01. Duties of Trustee. (a) Prior to the occurrence of an
Event of Default, the Trustee shall have no liability for any action or
omission in the performance of its duties hereunder, except in the case of
negligence or willful misconduct on the part of the Trustee. During the
existence of an Event of Default, the Trustee shall exercise its rights and
powers and use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs.
(b) Except during the continuance of an Event of Default,
(i) the Trustee shall be required to perform only those
duties that are specifically set forth in this Indenture and no others
and no implied covenants or obligations should be read into this
Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that
(i) this paragraph does not limit the effect of paragraph
(b) of this Section,
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by any employee of the Trustee assigned by
the Trustee to administer its corporate trust matters (a "Responsible
Officer"), unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05; and
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(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to all the paragraphs of this Section.
(e) Before taking any action under this Indenture relating to an
event of default or in connection with its duties under this Indenture other
than making payments of principal and interest on the Bonds as they become due,
drawing on the Letter of Credit or causing an acceleration of the Bonds
whenever required by the Indenture, the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses to which it
may be put and to protect it against all liability, including, but not limited
to, any liability arising directly or indirectly under any federal, state or
local statute, rule, law or ordinance related to the protection of the
environment or hazardous substances and except liability which is adjudicated
to have resulted from its negligence or willful default in connection with any
action so taken.
(f) The Trustee shall not be liable for interest on any cash held
by it except as the Trustee may agree in writing with the Company or the Issuer
with the consent of the Company.
(g) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees, and shall be entitled to advice of counsel concerning all matters or
trusts hereof and duties hereunder, and may in all cases pay such reasonable
compensation to any attorney, agent, receiver or employee retained or employed
by it in connection herewith. The Trustee may act upon the opinion or advice
of an attorney, surveyor, engineer or accountant selected by it in the exercise
of reasonable care or, if selected or retained by the Issuer, approved by the
Trustee in the exercise of such care. The Trustee shall not be responsible for
any loss or damage resulting from any action or nonaction based on its good
faith reliance upon such opinion or advice.
(h) The permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its negligence or willful default.
(i) At any and all reasonable times, the Trustee and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives shall have the right fully to inspect any and all books, papers
and records of the Issuer pertaining to the Bonds, and to take such memoranda
from and in regard thereto as may be desired.
(j) The Trustee may (but shall be under no duty to) require of the
Issuer and the Company full information and advice as to the performance of the
covenants, conditions and agreements in the Agreement. The Trustee shall have
no obligation to perform any of the duties of the Issuer under the Agreement.
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Section 7.02. Rights of Trustee. Subject to the foregoing Section:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require a certificate of an appropriate officer or officers of the Issuer or
the Company or an opinion of counsel; provided that it may not require such a
certificate as a condition to declaring the principal of and interest on the
Bonds to be due immediately under Section 6.02 or to drawing on the Letter of
Credit or to making any payment on the Bonds. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
certificate or opinion of counsel.
Section 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Bonds and
may otherwise deal with the Issuer or with the Company or its affiliates with
the same rights it would have if it were not trustee. Any paying agent may do
the same with like rights.
Section 7.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the Bonds,
it shall not be accountable for the Company's use of the proceeds from the
Bonds paid to the Company, and it shall not be responsible for any statement in
the Bonds other than its certificate of authentication.
Section 7.05. Notice of Defaults. (a) If an event occurs which
with the giving of notice or lapse of time or both would be an Event of
Default, and if the event is continuing and if it is known to the Trustee, the
Trustee shall mail to each Bondholder and the Bank notice of the event within
30 days after it occurs. Except in the case of a default in payment or
purchase on any Bonds, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers (as defined in Section 7.01(c)) in good
faith determines that withholding the notice is in the interests of
Bondholders.
(b) The Trustee shall not be required to take notice or be deemed
to have notice of any default or Event of Default hereunder, or in any other
document or instrument executed in connection with the execution and delivery
of the Bonds, except an Event of Default under Section 6.01(a), (b), (c), (h)
or (i) hereof, unless the Trustee shall be specifically notified in writing of
such default or Event of Default by the Issuer, the Tender Agent, the Bank, the
Company or the Owners of at least 25% in aggregate principal amount of the
Bonds then Outstanding. All notices or other instruments required by this
Indenture to be delivered to the Trustee shall be delivered at the principal
corporate trust office of the Trustee and, in the absence of such notice so
delivered, the Trustee may conclusively assume there is no default except as
aforesaid.
Section 7.06. Compensation and Indemnity of Trustee. For acting
under this Indenture, the Trustee shall be entitled to payment of reasonable
fees for its services and reimbursement of advances, counsel fees and other
expenses reasonably and necessarily made or incurred by the Trustee in
connection with its services under this Indenture.
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To secure the payment or reimbursement to the Trustee provided for in
this Section, the Trustee shall have a senior claim, to which the Bonds are
made subordinate, on all money or property held or collected by the Trustee,
except that held under Article X or otherwise held in trust to pay principal of
and interest on particular Bonds and except amounts drawn under the Letter of
Credit or remarketing proceeds held by the Trustee or Tender Agent hereunder.
The Company has agreed in the Agreement to indemnify the Trustee for,
and to hold it harmless against, certain losses, liabilities and expenses
incurred by the Trustee.
Section 7.07. Eligibility of Trustee. The Trustee shall be a bank
or trust company organized and doing business under the laws of the United
States or any state or the District of Columbia, authorized under such laws to
exercise corporate trust powers, is subject to supervision or examination by
United States, state or District of Columbia authority. Any successor Trustee
must be an institution rated at least "Baa3" by Moody's Investors Service (or
Moody's Investors Service shall have provided written evidence that such
successor Trustee is otherwise acceptable to Moody's Investors Service) if the
Bonds are then rated by Moody's Investors Service, and at least "BBB-" or "A-3"
by S&P (or S&P shall have provided written evidence that such successor Trustee
is otherwise acceptable to S&P) if the Bonds are then rated by S&P, and
authorized by law to perform all the duties imposed upon it as Trustee by this
Indenture.
Section 7.08. Replacement of Trustee. The Trustee may resign by
notifying the Issuer and the Company. The holders of a majority in principal
amount of the Bonds then Outstanding may remove the Trustee by notifying the
removed Trustee and may appoint a successor Trustee with the Issuer's, the
Bank's and the Company's prior written consent. If no Event of Default shall
have occurred and be continuing, the Company may cause the Trustee to be
removed, with the consent of the Remarketing Agent, by giving notice to the
Issuer and the Bank requesting the Issuer to remove and replace the Trustee.
In addition, the Issuer shall, at the direction of the Company, remove the
Trustee if (a) the Trustee fails to comply with Section 7.07 hereof, (b) the
Trustee is adjudged a bankrupt or an insolvent, (c) a receiver or other public
officer takes charge of the Trustee or its property or (d) the Trustee
otherwise becomes incapable of acting.
If the Trustee resigns or is removed in the office of Trustee for any
reason, the Issuer, with the prior written consent of the Bank and the Company,
shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Immediately thereafter,
the retiring Trustee shall transfer all property (including the Letter of
Credit) held by it as Trustee to the successor Trustee, the resignation or
removal of the retiring Trustee shall then (but only then) become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer, the
Company, the Bank or the holders of a majority in principal amount of the Bonds
then outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
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If the Trustee fails to comply with the foregoing Section, any
Bondholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Section 7.09. Duties of Remarketing Agent. The Remarketing Agent
will determine the interest rate on the Bonds as provided in this Indenture as
the designee of the Issuer. The Remarketing Agent will remarket Bonds as
provided in this Indenture as the designee of the Company. The Remarketing
Agent may for its own account or as broker or agent for others deal in Bonds
and may do anything any other Bondholder may do to the same extent as if the
Remarketing Agent were not serving as such.
Section 7.10. Eligibility of Remarketing Agent; Replacement. The
initial Remarketing Agent shall be The First National Bank of Chicago, Chicago
Illinois (or if a transfer is effected pursuant to Section 10 of the
Remarketing Agreement, First Chicago Capital Markets, Inc.) Any successor
Remarketing Agent must be an institution rated at least "Baa3" by Moody's
Investors Service (or Moody's Investors Service shall have provided written
evidence that such successor Remarketing Agent is otherwise acceptable to
Moody's Investors Service) if the Bonds are then fated by Moody's Investors
Service, and at least "BBB" or "A-3" by S&P (or S&P shall have provided written
evidence that such successor Remarketing Agent is otherwise acceptable to S&P)
if the Bonds are then rated by S&P, and authorized by law to perform all the
duties imposed upon it by this Indenture.
The Remarketing Agent may at any time resign from its duties under
this Indenture by giving at least 30 days' written notice to the Issuer, the
Company, the Bank, the Tender Agent and the Trustee. The Trustee shall mail a
copy of such notice by certified mail to each of the Bond Owners. A
Remarketing Agent may be removed at any time at the direction of the Issuer and
the Company by an instrument signed by the Issuer and the Company and filed at
least 30 days prior to such removal with the Remarketing Agent, the Bank and
the Trustee. No removal or resignation hereunder shall become effective prior
to the acceptance of appointment of a successor Remarketing Agent hereunder.
Appointment of a successor Remarketing Agent shall be subject to the written
consent of the Bank, which shall not be unreasonably withheld.
While the Bonds are in a Book-Entry System, the Remarketing Agent
shall serve as the Participant on behalf of all of the Beneficial Owners of the
Bonds.
Section 7.11. Tender Agent. (a) During any period the Bonds shall
not be in a BookEntry System, the Company shall appoint a Tender Agent for the
Bonds, who shall be satisfactory to the Trustee and the Remarketing Agent and
who, upon acceptance of its duties, will perform the obligations of the Tender
Agent set forth in this Indenture. Any Tender Agent must be an institution
rated at least "Baa3" by Moody's Investors Service (or Moody's Investors
Service shall have provided written evidence that such successor Tender Agent
is otherwise acceptable to Moody's Investors Service) if the Bonds are then
rated by Moody's Investors Service, and at least "BBB" or "A-3" by S&P (or S&P
shall have provided written evidence that such successor Tender Agent is
otherwise acceptable to S&P) if the Bonds are then rated by S&P, and authorized
by law to perform all the duties imposed upon it as Tender Agent by this
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Indenture. The initial Tender Agent and any successor Tender Agent shall
accept its duties hereunder by a written certificate or tender agent agreement
delivered to the Trustee, which certificate or agreement shall designate the
Principal Office of the Tender Agent.
(b) The Tender Agent may at any time resign by giving thirty (30)
days' notice to the Issuer, the Trustee, the Company, the Bank and the
Remarketing Agent. Promptly upon the receipt of such notice, the Trustee shall
mail copies thereof to each registered Owner of the Bonds. No such resignation
shall be effective until a successor Tender Agent has been appointed.
(c) The Tender Agent may he removed at any time by an instrument
in writing delivered to the Trustee and the Tender Agent by the Company, with
the prior written approval of the Bank. In no event, however, shall any
removal of the Tender Agent take effect until a successor Tender Agent shall
have been appointed.
(d) The Tender Agent shall have an office in the City of New York,
New York. Written notice of the appointment of a Tender Agent shall
immediately be given by the Trustee to the Issuer and to the Bondholders. If
(i) no successor to a Tender Agent has accepted appointment in the manner
provided above within 30 days after the Tender Agent has given notice of its
resignation as provided above, or (ii) no initial Tender Agent shall have been
appointed at such time as the Bonds no longer are held in the Book-Entry
System, the Trustee shall serve as Tender Agent or shall appoint an agent
located in New York, New York to act in its stead.
Section 7.12. Successor Trustee, Remarketing Agent or Tender Agent
by Merger. If the Trustee, the Tender Agent or the Remarketing Agent
consolidates with, merges or converts into, or transfers all or substantially
all its assets (or, in the case of a bank or trust corporation, its corporate
trust assets) to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, if otherwise eligible to serve
hereunder, be the successor Trustee, Tender Agent or Remarketing Agent.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Without Consent of Bondholders. The Issuer and the
Trustee may amend or supplement this Indenture or the Bonds without notice to
or consent of any Bondholder:
(a) to cure any ambiguity, inconsistency or formal defect
or omission;
(b) to grant to the Trustee for the benefit of the
Bondholders additional rights, remedies, powers or authority;
(c) to subject to this Indenture additional collateral or
to add other agreements of the Issuer;
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(d) to modify this Indenture or the Bonds to permit
qualification under the Trust Indenture Act of 1939 or any similar
Federal statute at the time in effect, or to permit the qualification
of the Bonds for sale under the securities laws of any state of the
United States;
(e) to evidence the succession of a new Trustee or the
appointment by the Trustee or the Issuer of a co-trustee;
(f) to make any change that does not materially adversely
affect the rights of any Bondholder;
(g) to facilitate the use of the Book-Entry System;
(h) to facilitate the substitution of an Alternate Credit
Facility which is not an irrevocable letter of credit, but without
modifying the payment terms of the Bonds; or
(i) to facilitate the transfer of Bonds when the Bonds
are in the CP Rate Mode, but not in the Book-Entry System.
Section 8.02. With Consent of Bondholders. If an amendment of or
supplement to this Indenture or the Bonds without any consent of Bondholders is
not permitted by the preceding Section, the Issuer and the Trustee may enter
into such amendment or supplement with the consent of the holders of at least a
majority in principal amount of the Bonds then Outstanding. However, without
the consent of each Bondholder affected, no amendment or supplement may (a)
extend the maturity of the principal of, or the due date of interest on, any
Bond, (b) reduce the principal amount of, or rate of interest on, any Bond, (c)
effect a privilege or priority of any Bond or Bonds over any other Bond or
Bonds, (d) reduce the percentage of the principal amount the Bonds required for
consent to such amendment or supplement, (e) impair the excludability from
gross income for federal income tax purposes of interest on any Bond, (f)
eliminate the holders' rights to demand that their Bonds be purchased, or any
mandatory tender or redemption of the Bonds, (g) extend the due date for the
purchase of Bonds tendered by the holders thereof or call for mandatory tender
or redemption or reduce the purchase or redemption price of such Bonds, (h)
create a lien ranking prior to or on a parity with the lien of this Indenture
on the property described in the Granting Clause of this Indenture not
otherwise provided for herein or (i) deprive any Bondholder of the lien created
by this Indenture on such property. In addition, if moneys or Governmental
Obligations have been deposited or set aside with the Trustee pursuant to
Article X for the payment of the Bonds and the Bonds shall not have in fact
been actually paid in full, no amendment to the provisions of that Article
shall be made without the consent of the holders of each of the Bonds affected.
Section 8.03. Effect of Consents. After an amendment or supplement
becomes effective, it will bind every Bondholder unless it makes a change
described in any of the lettered clauses of the preceding Section. In that
case, the amendment or supplement will bind each Bondholder who consented to it
and each subsequent holder of a Bond or portion of a Bond evidencing the same
debt as the consenting holder's Bond.
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Section 8.04. Notation on or Exchange of Bonds. If an amendment or
supplement changes the terms of a Bond, the Trustee may require the holder to
deliver it to the Trustee. The Trustee may place an appropriate notation on
the Bond about the changed terms and return it to the holder. Alternatively,
if the Trustee, the Issuer and the Company determine, the Issuer in exchange
for the Bond will issue and the Trustee will authenticate a new Bond that
reflects the changed terms.
Section 8.05. Execution and Delivery by Trustee of Amendments and
Supplements. The Trustee shall execute and deliver any amendment or supplement
to the Indenture or the Bonds authorized by this Article if the amendment or
supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing an amendment or supplement, the Trustee will be entitled to receive
and (subject to Section 7.01) will be fully protected in relying on an opinion
of Bond Counsel stating that such amendment or supplement is authorized by this
Indenture.
Section 8.06. Company and Bank Consent Required. Any amendment or
supplement to this Indenture or the Bonds shall not become effective unless the
Company and the Bank shall deliver to the Trustee their written consents to the
amendment or supplement. The Company shall be deemed to have consented if it
shall fail to deliver a written objection to the Trustee within 30 days after
receipt by the Company of a proposed form of an amendment or supplement.
Section 8.07. Notice to Bondholders. The Trustee shall cause
notice of the execution of each supplement or amendment to this Indenture or
the Agreement to be mailed to the Bondholders. The notice shall, at the option
of the Trustee, either (a) briefly state the nature of the amendment or
supplement and that copies of it are on file with the Trustee for inspection by
Bondholders or (b) enclose a copy of such amendment or supplement.
ARTICLE IX
AMENDMENT OF AGREEMENT, GUARANTY OR LETTER OF CREDIT
Section 9.01. Without Consent of Bondholders. The Issuer may enter
into, and the Trustee may consent to, any amendment of or supplement to the
Agreement, and the Trustee may enter into any amendment of or supplement to the
Guaranty, without notice to or consent of any Bondholder, if the amendment or
supplement is (a) required or permitted by the provisions of the Agreement, the
Guaranty or this Indenture, (b) to cure any ambiguity, inconsistency or formal
defect or omission, (c) in connection with any authorized amendment of or
supplement to this Indenture, (d) to make any change that does not materially
adversely affect the rights of any Bondholder, (e) to amend the description of
the Project, provided the Trustee is provided an opinion of Bond Counsel to the
effect that such amendment will not adversely affect the excludability from
gross income of interest on the Bonds for Federal income tax purposes, or (f)
to facilitate the substitution of an Alternate Credit Facility which is not an
irrevocable letter of credit, but without modifying the payment terms of the
Bonds.
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Section 9.02. With Consent of Bondholders. If an amendment of or
supplement to the Agreement or the Guaranty without any consent of Bondholders
is not permitted by the foregoing Section, the Issuer may enter into, and the
Trustee may consent to, such amendment or supplement (or in the case of the
Guaranty, the Trustee may enter into such amendment or supplement) with the
consent of the holders of at least a majority in principal amount of the Bonds
then Outstanding. However, without the consent of each Bondholder affected, no
amendment or supplement may result in anything described in the lettered
clauses of Section 8.02.
Section 9.03. Bank Consent Required. Any amendment or supplement
to the Agreement or the Guaranty authorized by this Article shall not become
effective unless the Bank delivers to the Trustee its written consent to the
amendment or supplement.
Section 9.04. Modifications of Letter of Credit. No Letter of
Credit may be modified without the prior written consent of 100% of the holders
of the Bonds, except to (a) correct any formal defects therein, (b) effect
transfers thereof, (c) effect extensions thereof, (d) effect reductions and
reinstatements thereof in accordance with the terms of the Letter of Credit,
(e) increase the stated amount thereof, (f) effect any change which does not
have a material adverse effect upon the interests of the Bondholders, or (g)
make any amendment to be effective from and after a mandatory tender date.
Pursuant to this Indenture however, the Company has the right to obtain an
Alternate Credit Facility, subject to the requirements set forth therein
without the consent of the Bondholders.
Section 9.05. Release of Guaranty. In connection with an
assignment described in Section 8.1 of the Agreement, the Trustee shall release
the Company from its obligations under the Guaranty if so directed in writing
by the Company. In such event, the Bonds shall be subject to mandatory tender
pursuant to Section 2.04(f) hereof and the Trustee shall give the notice to
Bondholders described in said Section 2.04. No consent of the Bondholders or
the Bank and no notice to the Bondholders or the Bank other than that
referenced above or in connection with the mandatory tender of Bonds shall be
required to be obtained or given in connection with such release.
Notwithstanding the foregoing, no such release shall then be permitted if (a)
the Bonds are then in the CP Rate Mode, or (b) if the Bonds are then in an
Adjustable Rate Period of greater than one year's duration, unless the release
occurs on a date on which the Bonds may be optionally redeemed pursuant to the
Indenture and the mandatory tender price payable upon the mandatory tender of
Bonds as a result of such release includes a premium equal to the redemption
premium at that time payable pursuant to the optional redemption provisions of
the Indenture.
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.01. Bonds Deemed Paid; Discharge of Indenture. Any Bond
will be deemed paid for all purposes of this Indenture when (a) payment of the
principal of and interest on the Bond to the due date of such principal and
interest (whether at maturity, upon redemption or otherwise) either (i) has
been made in accordance with the terms of the Bond or (ii) has been
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provided for by depositing with the Trustee Available Moneys sufficient to make
such payment and/or Government Obligations (purchased with Available Moneys)
maturing as to principal and interest in such amounts and at such times as
will, in the opinion of an independent certified public accountant delivered to
the Trustee, ensure the availability of sufficient moneys to make such payment,
and (b) all compensation and expenses of the Trustee pertaining to each Bond in
respect of which such deposit is made have been paid or provided for to the
Trustee's satisfaction. When a Bond is deemed paid, it will no longer be
secured by or entitled to the benefits of this Indenture or be an obligation of
the Issuer, except for payment from moneys or Government Obligations under
clause (a)(ii) above.
Notwithstanding the foregoing, no deposit under clause (a)(ii) of the
first paragraph of this Section shall be deemed a payment of a Bond until the
Company has furnished the Trustee an opinion of Bond Counsel stating that the
deposit of such cash or Government Obligations will not cause the Bonds, or any
portion thereof, to become "arbitrage bonds" within the meaning of Section 148
of the Code and (A) notice of redemption of the Bond is given in accordance
with this Indenture or, if the Bond is not to be redeemed or paid within the
next 60 days, until the Company has given the Trustee, in form satisfactory to
the Trustee irrevocable instructions (1) to notify, as soon as practicable, the
holder of the Bond, in accordance with this Indenture, that the deposit
required by clause (a)(ii) above has been made with the Trustee and that the
Bond is deemed to be paid under this Article and stating the maturity or
redemption date upon which moneys are to be available for the payment of the
principal of the Bond, and, if the Bond is to be redeemed rather than paid at
maturity, (2) to give notice of redemption as provided herein for such Bond or
(B) the maturity of the Bond. In addition, notwithstanding the foregoing, if
the Bonds are then in the Daily Rate Mode or the Weekly Rate Mode, no deposit
under clause (a)(ii) of the first paragraph of this Section shall be deemed a
payment of a Bond unless the Trustee receives written evidence from the Rating
Agency that such deposit would not result in a reduction or withdrawal of the
ratings then maintained on the Bonds.
When all outstanding Bonds are deemed paid under the foregoing
provision of this Section, the Letter of Credit has been surrendered to the
Bank for cancellation and all amounts due and payable to the Bank under the
Reimbursement Agreement have been paid in full, the Trustee will upon request
acknowledge the discharge of the lien of this Indenture as to the Bonds,
provided, however, that the obligations under Article II in respect of the
optional tender rights of the Owners of the Bonds and the transfer, exchange,
registration, discharge from registration and replacement of Bonds shall
survive the discharge of the lien of the Indenture.
The Trustee shall provide each Rating Agency then rating the Bonds
with at least 10 days prior notice of any advance defeasance of the Bonds,
together with a copy of the opinion of independent certified public accountant
described in the first paragraph of this Section and any opinion of counsel
delivered if Available Moneys described in clause (c) of the definition thereof
are used to effect the defeasance. The Trustee shall notify each Bondholder of
the advance defeasance of the Bonds, within 10 days after such defeasance.
Section 10.02. Application of Trust Money. The Trustee shall hold
in trust moneys or Governmental Obligations deposited with it pursuant to the
preceding Section and shall apply the
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deposited money and the money from the Governmental Obligations in accordance
with this Indenture only to the payment of principal of and interest on the
Bonds and to the payment of the purchase price of Bonds demanded to be
purchased by holders.
Section 10.03. Repayment to Bank and Company. At such time as no
Bonds remain unpaid within the meaning of Section 10.01, the Trustee shall
promptly pay first to the Bank (to the extent the Bank certifies to the Trustee
that the Company is indebted to it for amounts owed under the Reimbursement
Agreement) and then to the Company upon request (i) any excess money or
securities held by the Trustee at any time under this Article and (ii) any
money held by the Trustee under any provision of this Indenture for the payment
of principal or interest or for the purchase of Bonds that remains unclaimed
for two years.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Bondholders' Consent. Any consent or other
instrument required by this Indenture to be signed by Bondholders may be in any
number of counterpart documents and may be signed by a Bondholder or by the
holder's agent appointed in writing. Proof of the execution of such instrument
or of the instrument appointing an agent and of the ownership of Bonds, if made
in the following manner, shall be conclusive for any purposes of this Indenture
with regard to any action taken by the Trustee or the Tender Agent under the
instrument:
(a) The fact and date of a person's signing an instrument may be
proved by the certificate of any officer in any jurisdiction who by law has
power to take acknowledgments within that jurisdiction that the person signing
the writing acknowledged before the officer the execution of the writing, or by
an affidavit of any witness to the signing.
(b) The fact of ownership of Bonds, the amount or amounts, numbers
and other identification of such Bonds and the date of holding shall be proved
by the registration books kept pursuant to this Indenture.
In determining whether the holders of the required principal amount of
Bonds outstanding have taken any action under this Indenture (and solely for
such purposes), Bonds owned by the Company or any person controlling,
controlled by or under common control with the Company shall be disregarded and
deemed not to be outstanding, unless the Company shall be the Owner of 100% of
the Bonds. In determining whether the Trustee and the Tender Agent shall be
protected in relying on any such action, only Bonds which the Trustee knows to
be so owned shall be disregarded.
Any consent or other instrument shall be irrevocable and shall bind
any subsequent owner of such Bond or any Bond delivered in substitution
therefor.
Section 11.02. Limitation of Rights; Rights of Bank. Nothing
expressed or implied in this Indenture or the Bonds shall give any person other
than the Trustee, the Tender Agent, the Issuer,
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<PAGE> 64
the Bank, the Company, the Remarketing Agent and the Bondholders any right,
remedy or claim under or with respect to this Indenture.
Notwithstanding any other provision of this Indenture to the contrary,
all rights of the Bank hereunder shall only be in effect when (a) either the
Letter of Credit is in effect or amounts are due and payable by the Company to
the Bank under the Reimbursement Agreement, and (b) the Bank is not in default
on any of its obligations to pay drawings under the Letter of Credit submitted
in conformity with the terms of the Letter of Credit.
Section 11.03. No Personal Liability of Issuer. The obligations and
agreements of the Issuer contained herein, in the Bonds and in the Agreement,
the Offering Agreement and the Tax Agreement and in any other instrument or
document executed in connection herewith or therewith, and any other instrument
or document supplemental hereto or thereto, shall be deemed the obligations and
agreements of the Issuer, and not of any member, officer, agent (other than the
Company) or employee of the Issuer in his individual capacity, and the members,
officers, agents (other than the Company) and employees of the Issuer shall not
be liable personally hereon or thereon or be subject to any personal liability
or accountability based upon or in respect hereof or thereof or of any
transaction contemplated hereby or thereby.
Section 11.04. Severability. If any provisions of this Indenture
shall be held or deemed to be or shall, in fact, be invalid, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to
any extent whatever.
Section 11.05. Notices. Except as otherwise provided in this
Indenture, all notices, hereunder shall be sufficiently given and shall be
deemed given when personally delivered or mailed by certified mail, postage
prepaid, or when sent by tested telecopy (receipt confirmed by telephone) or
telegram, addressed as follows:
If to the Issuer:
Counties of Warren and Washington
Industrial Development Agency
111 River Street
Hudson Falls, New York 12839
Attention: Chairman
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<PAGE> 65
If to the Trustee:
Harris Trust and Savings Bank
311 W. Monroe Street, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Group
If to the Tender Agent:
At its address specified in the certificate delivered by the
Tender Agent in which it assumes its duties hereunder.
If to the Company:
Griffith Micro Science, Inc.
745 McClintock Drive
Suite 340
Burr Ridge, Illinois 60521
Attention: Director of Finance
With a copy to:
Griffith Laboratories, Inc.
One Griffith Center
Alsip, Illinois 60658-3495
Attention: Treasurer
If to the Bank:
The First National Bank of Chicago
One First National Plaza
Suite 0088
Chicago, Illinois 60670-0088
Attention: _______________________
If to the Remarketing Agent:
The First National Bank of Chicago
One First National Plaza
Suite 0862
Chicago, Illinois 60670
Attention: Public Finance Department
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<PAGE> 66
With a copy to its Principal Office at:
The First National Bank of Chicago
One First National Plaza
Suite 0463
Chicago, Illinois 60670
Attention: Municipal Bond Department/Short-Term Trading
If to the Owner of any Bond:
The address of such Owner as reflected on the registration
books maintained by the Trustee.
If to a Rating Agency, as applicable:
Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: Structured Finance
Standard & Poor's Ratings Group
25 Broadway
New York, New York 10004
Attention: Letter of Credit Surveillance Group/Bonds
A duplicate copy of each notice given hereunder by either party hereto shall be
given to the Bank, the Tender Agent, the Remarketing Agent and the Company.
Any person or entity listed above may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates or
other communications shall be sent.
Section 11.06. Payments or Performance Due on Other Than Business
Day. If the last day for making any payment or taking any action under this
Indenture falls on a day other than a Business Day, such payment may be made,
or such action may be taken, on the next succeeding Business Day, and, if so
made or taken, shall have the same effect as if made or taken on the date
required by this Indenture.
Section 11.07. Execution of Counterparts. This Indenture may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 11.08. Applicable Law. This Indenture shall be governed by
and construed in accordance with the laws of the State.
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<PAGE> 67
IN WITNESS WHEREOF, the Issuer has caused these presents to be signed
in its name and on its behalf by its duly authorized officers, and the Trustee,
to evidence its acceptance of the trusts hereby created, has caused these
presents to be signed in its name and on its behalf by its duly authorized
officers, all as of the day and year first above written.
[SEAL] COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
ATTEST
[illegible] By: [illegible]
- --------------------------------- --------------------------------------
Secretary Vice Chairman
HARRIS TRUST AND SAVINGS BANK, as
Trustee
By: [illegible]
--------------------------------------
63
<PAGE> 68
Exhibit A
to Indenture of Trust
FORM OF BOND
[FACE OF BOND]
NO. R-__________ $________________
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1994
(GRIFFITH MICRO SCIENCE, INC. PROJECT)
DATED DATE MATURITY DATE CUSIP
Date of Issuance December 1, 2014 ______________
REGISTERED
OWNER:__________________________________________________________________________
PRINCIPAL
AMOUNT:_________________________________________________________________DOLLARS
The Counties of Warren and Washington Industrial Development Agency, a
corporate governmental agency constituting a body corporate and politic and a
public benefit corporation of the State of New York (the "State"), hereby
promises to pay to the order of the Registered Owner specified above, or
registered assigns, the Principal Amount specified above on the Maturity Date
specified above (or earlier as hereinafter provided), and to pay interest on
the Principal Amount hereof from the date specified in the Indenture
(hereinafter defined) at the rates per annum and on the dates set forth herein
(but only out of the revenues of the Issuer derived from the Agreement, as
hereinafter defined, or other moneys pledged therefor) and in accordance with
the provisions of the New York State Industrial Development Agency Act, Title I
of Article 18-A of the New York State General Municipal Law, as amended, and
Chapter 862 of the Laws of 1971 of the State of New York (collectively, the
"Act").
THE BONDS SHALL NOT CONSTITUTE OR GIVE RISE TO AN OBLIGATION OF THE
STATE OF NEW YORK OR THE COUNTIES OF WARREN AND WASHINGTON, NEW YORK AND
NEITHER THE STATE OF NEW YORK NOR THE COUNTIES OF WARREN AND WASHINGTON, NEW
YORK SHALL BE LIABLE WITH RESPECT THERETO. THE BONDS SHALL NOT CONSTITUTE NOR
GIVE RISE TO A GENERAL OBLIGATION OF THE ISSUER, BUT RATHER SHALL CONSTITUTE
LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE REVENUES OF THE
ISSUER DERIVED AND TO BE DERIVED FROM THE LEASE OF THE PROJECT PURSUANT TO THE
AGREEMENT (AS HEREINAFTER DEFINED) (EXCEPT FOR REVENUES DERIVED BY THE ISSUER
WITH RESPECT TO CERTAIN UNASSIGNED RIGHTS UNDER THE AGREEMENT) AND THE OTHER
SECURITY PLEDGED TO THE PAYMENT OF THE BONDS.
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<PAGE> 69
The principal of, premium, if any, and interest on this Bond are
payable in lawful money of the United States of America. The principal of and
premium, if any, payable upon maturity or earlier redemption of this Bond are
payable when due upon the presentation and surrender hereof at the principal
corporate trust office of Harris Trust and Savings Bank, in Chicago, Illinois,
as trustee (the "Trustee"), or any successor trustee. Each payment of interest
on this Bond shall be payable to the Registered Owner hereof as shown on the
registration books kept by the Trustee at the close of business on the Business
Day (but, during an Adjustable Rate Period of six months or more, the fifteenth
day of the calendar month) next preceding the date on which such interest
becomes due and payable (herein, a "Record Date"). Interest on this Bond shall
be payable to the Registered Owner hereof by check or draft mailed by first
class mail on the respective Interest Payment Dates (as hereinafter defined) to
the address of such Registered Owner as shown on the books kept by the Trustee
at the close of business on the relevant Record Date or such other address as
is furnished to the Trustee (in form satisfactory to the Trustee) by such owner
prior to such Record Date. Registered Owners of $1,000,000 or more in
aggregate principal amount of Bonds shall be entitled to receive interest
payments by wire transfer by providing written wire instructions to the Trustee
before the Record Date.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET
FORTH ON THE REVERSE SIDE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF FULLY SET FORTH IN THE TEXT OF THIS BOND
WRITTEN ABOVE.*
This** Bond shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the
Certificate of Authentication hereon shall have been signed by the Trustee or
the Tender Agent.
__________________________________
* Delete this sentence when bond is not in printed form.
** This word and all material after this word on this and the following page
is to appear on p. A-12 when bond is not in printed form.
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<PAGE> 70
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in
its name by the manual or facsimile signature of its Chairman or Vice Chairman
and attested with the manual or facsimile signature of the Secretary all as of
the date first above written.
[SEAL] COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
ATTEST
By: By:
------------------------------- -----------------------------------
CERTIFICATE OF AUTHENTICATION
This Bond is hereby authenticated as required by the within-referenced
Indenture of Trust.
HARRIS TRUST AND SAVINGS BANK, as
Trustee
-------------------------------------
Authorized Officer of Trustee
or Tender Agent
Date of
Authentication:
-----------
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<PAGE> 71
(REVERSE OF BOND)*
This Bond is authorized and issued under and pursuant to authority
conferred by the Act, certain proceedings of the Issuer and the Indenture of
Trust dated as of December 1, 1994 (the "lndenture") between the Issuer and the
Trustee. Certain terms used and not defined in this Bond are defined in the
Indenture. This Bond is one of the Issuer's duly authorized Industrial
Development Revenue Bonds, Series 1994 (Griffith Micro Science, Inc. Project)
(the "Bonds"), which Bonds have been issued in the aggregate principal amount
of $5,300,000 to provide funds to finance the costs of the acquisition,
construction, rehabilitation and equipping of certain industrial development
facilities (the ' Project") located in the County of Washington, New York. The
Project is leased to Griffith Micro Science, Inc., a Delaware corporation (the
"Company") pursuant to a Lease Agreement dated as of December 1, 1994 (the
"Agreement") between the Issuer and the Company. As security for the payment
of the Bonds, the Company has caused to be delivered to the Trustee a letter of
credit (the "lnitial Letter of Credit") of The First National Bank of Chicago
(the "Bank"), against which the Trustee shall be entitled to draw, in
accordance with the terms thereof, to pay when and as due, the principal or
purchase price of, and interest on, the Bonds during the term of the Initial
Letter of Credit. The Initial Letter of Credit expires on December 29, 1997,
subject to earlier termination in certain events. Under certain conditions set
forth in the Indenture, the Company may cause to be delivered an Alternate
Credit Facility (an "Alternate Credit Facility") in substitution for the Letter
of Credit then in effect or cause the Letter of Credit to be released without
substitution of any Alternate Credit Facility. The Initial Letter of Credit,
together with any Alternate Credit Facility, is hereinafter referred to as the
"Letter of Credit". The Company has guaranteed its obligations with respect to
the Bonds pursuant to a Guaranty Agreement dated as of December 1, 1994 between
the Company and the Trustee.
The Bonds are issued under and entitled to the benefits of the
Indenture. Pursuant to the Indenture, the Issuer has pledged and assigned to
the Trustee the Trust Estate as security for its obligation to pay the
principal or purchase price of, premium, if any, and interest on the Bonds.
Reference is made to the Indenture for a description of the Trust Estate and
for the provisions thereof with respect to the nature and extent of the
security granted by the Issuer to the Trustee thereunder, the rights, duties
and obligations of the Issuer and the Trustee, the rights of the registered
owners of the Bonds, and the terms on which the Bonds are issued and secured,
to all of which provisions, and to all other provisions of the Indenture, the
Registered Owner hereof by the acceptance of this Bond assents.
I. Weekly Rate Provisions
Optional Tender. During a Weekly Rate Period, this Bond or any
portion thereof in Authorized Denominations (except during any period this Bond
is a Pledged Bond or Company Bond) shall be purchased on the demand of the
registered owner thereof on any Business Day at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to
- ---------------
* Delete when bond is not in printed form.
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<PAGE> 72
the date of purchase, upon delivery to the tender agent duly appointed in
accordance with the provisions of the Indenture (together with any successor
tender agent, the "Tender Agent") at its Principal Office, on any Business Day,
of (a) a written irrevocable notice setting forth the information required by
the Indenture, including the date on which such Bond, or the portion thereof
being tendered for purchase, shall be so purchased, which date shall be a
Business Day not prior to the seventh day next succeeding the date of the
delivery of such notice to the Tender Agent, together with (b) this Bond, as
provided in the Indenture; provided, that if the registered owner of the
tendered Bond is an open-ended diversified management investment company
(registered under the Investment Company Act of 1940, as amended), the delivery
required under this clause (b) need not be made until the date such Bond is to
be purchased from such registered owner as provided in the Indenture.
Notwithstanding the foregoing, if the Bonds, are held in a Book-Entry System,
separate procedures for the optional tender of Bonds are set forth in the
Indenture.
Interest. During any period this Bond is in the Weekly Rate Mode,
interest on this Bond shall be paid on the first Business Day of each month
next succeeding the Closing Date (if applicable), each Weekly Rate Conversion
Date and on the Maturity Date specified above or such other date as the
outstanding principal amount of the Bonds is paid in full if the Bonds are in
the Weekly Rate Mode at such time (each, a "Weekly Rate Interest Payment
Date"), and shall be computed on the basis of a 365- or 366-day year, for the
actual number of days elapsed. Interest on the Bond for each Weekly Interest
Period shall be calculated as provided below and in the Indenture. During each
Weekly Rate Period, "Weekly Interest Period" shall mean the period from and
including the first day of the Weekly Rate Period through and including the
following Tuesday, and after the first Weekly Interest Period of each Weekly
Rate Period, from and including Wednesday of each week through and including
the following Tuesday, whether or not such days are Business Days, provided,
however, the initial Weekly Interest Period shall commence on the Closing Date
and end on the next following Tuesday.
On Tuesday (unless Tuesday is not a Business Day, then on the next
preceding Monday; unless Monday and Tuesday are not Business Days, then on the
next subsequent Wednesday, whether or not a Business Day) of each calendar week
during a Weekly Rate Period, with respect to each Weekly Interest Period, the
Remarketing Agent shall determine the Weekly Rate for the ensuing or current
(in the case of determinations made on Wednesday) Weekly Interest Period. The
determination of the Weekly Rate by the Remarketing Agent shall be conclusive
and binding.
The Weekly Rate for each Weekly Interest Period determined by the
Remarketing Agent shall be the lowest rate of interest which will, in the sole
judgment of the Remarketing Agent, having due regard for prevailing financial
market conditions, permit the Bonds to be remarketed at a price of par, plus
accrued interest, on the first day of the applicable Weekly Interest Period;
provided that in no case shall the Weekly Rate be more than the Maximum Rate.
In the event no Weekly Rate is determined by the Remarketing Agent for a Weekly
Interest Period, the Weekly Rate for such Weekly Interest Period shall be the
rate from time to time established pursuant to the Indenture.
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<PAGE> 73
II. Daily Rate Provisions
Optional Tender. During a Daily Rate Period, this Bond or any portion
thereof in Authorized Denominations (except during any period this Bond is a
Pledged Bond or Company Bond) shall be purchased on the demand of the
registered owner thereof on any Business Day at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase, upon delivery (by telecopy or otherwise) to the Tender Agent at
its Principal Office, (a) by 10:30 a.m., New York time, on such Business Day,
of a written irrevocable notice, which will be effective upon receipt, setting
forth the information required by the Indenture and (b) by 11:00 a.m., New York
time on such Business Day, this Bond, as provided in the Indenture.
Notwithstanding the foregoing, if the Bonds are held in a Book-Entry System,
separate procedures for the optional tender of Bonds are set forth in the
Indenture.
Interest. During any period this Bond is in the Daily Rate Mode,
interest on this Bond shall be paid on the first Business Day of each month
next succeeding the Closing Date (if applicable), each Daily Rate Conversion
Date, and on the Maturity Date specified above or such other date as the
outstanding principal amount of the Bonds is paid in full if the Bonds are in
the Daily Rate Mode at such time (each, a "Daily Rate Interest Payment Date"),
and shall be computed on the basis of a 365- or 366-day year, for the actual
number of days elapsed. Interest on the Bonds for each Daily Interest Period
shall be calculated as provided below and in the Indenture. During each Daily
Rate Period, "Daily Interest Period" shall mean the period from and including
the first day of the Daily Rate Period to but excluding the immediately
succeeding Business Day.
On the first day of each Daily Interest Period, the Remarketing Agent
shall determine the Daily Rate for such Daily Interest Period. The
determination of the Daily Rate by the Remarketing Agent shall be conclusive
and binding.
The Daily Rate for each Daily Interest Period determined by the
Remarketing Agent shall be the lowest rate of interest which will, in the sole
judgment of the Remarketing Agent, having due regard for prevailing financial
market conditions, permit the Bonds to be remarketed at a price of par, plus
accrued interest, on the first day of the applicable Daily Interest Period;
provided that in no case shall the Daily Rate be more than the Maximum Rate.
In the event no Daily Rate is determined by the Remarketing Agent for a Daily
Interest Period, then the Bonds shall thereupon bear interest at the last Daily
Rate previously determined pursuant to the Indenture.
III. CP Rate Provisions
From and after each CP Rate Conversion Date or a CP Rate Reset Date,
as appropriate, to the earlier of their redemption, the following Conversion
Date for all Bonds or the following CP Rate Reset Date applicable to such Bond,
the interest rate of this Bond shall be a CP Rate, determined as provided below
and in the Indenture. Different CP Rate Periods may apply to different Bonds
at any time and from time to time while the Bonds are in a CP Rate Mode. In
the case of each CP Rate Period, on the first day thereof, the Remarketing
Agent shall determine (i) the duration of such CP Rate Period and (ii) the CP
Rate which shall apply during such CP
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<PAGE> 74
Rate Period. The duration of a CP Rate Period so determined shall be that
which, together with all such other CP Rate Periods for all Bonds then
outstanding, in the sole judgment of the Remarketing Agent will provide the
lowest overall interest cost with respect to the Bonds, with due regard to
prevailing financial market conditions, foreseeable changes in such conditions,
the anticipated duration of the period the Bonds may remain in the CP Rate
Mode, and such other factors which the Remarketing Agent, in its sole judgment,
shall deem relevant and economically advantageous to consider. Upon
determination of the duration of a CP Rate Period with respect to any Bonds,
the Remarketing Agent shall determine the CP Rate which shall be in effect
during such CP Rate Period, which shall be the lowest rate of interest which,
in the sole judgment of the Remarketing Agent, having due regard to prevailing
financial market conditions, will permit such Bonds to be sold at par, plus
accrued interest, on the first day of such CP Rate Period. Notwithstanding the
foregoing, the CP Rate so determined shall not be more than the Maximum Rate.
Unless and until the Company elects to effect a conversion of the Bonds from
the CP Rate Mode to another Mode, the Remarketing Agent shall continually
redetermine the duration of, and the CP Rate to be effective during each new CP
Rate Period, with respect to each Bond, which will commence, without further
action on the part of the Company on each CP Rate Reset Date. If on any CP
Rate Reset Date the Remarketing Agent shall fail to determine either the
duration of, or the CP Rate to be effective during the CP Rate Period which
commences on such date, with respect to any Bonds, such Bonds without further
action on the part of any person, shall automatically convert to the Weekly
Rate Mode upon such date, and the Weekly Rate which will be effective on such
date will be determined as described in the Indenture. Such Bonds may not
thereafter be converted from the Weekly Rate Mode until such time as all Bonds
then outstanding are in the Weekly Rate Mode. Upon such automatic conversion
of a portion of the Bonds to the Weekly Rate Mode, any Bonds then remaining in
the CP Rate Mode shall be automatically converted to the Weekly Rate Mode upon
the expiration of the CP Rate Period applicable to such Bond without further
action on the part of any person (and notwithstanding any attempted act to the
contrary on the part of any person). Each determination by the Remarketing
Agent shall be conclusive and binding. While the Bonds are in the CP Rate
Mode, interest on this Bond will be payable on the first Business Day which
follows each CP Rate Period applicable to this Bond, and shall be computed on
the basis of a 365- or 366-day year, and the actual number of days elapsed.
IV. Adjustable Rate Provisions
From and after each Adjustable Rate Conversion Date or Adjustable Rate
Reset Date, the interest rate on this Bond shall be an Adjustable Rate,
determined as provided below and in the Indenture. When the Bonds are in the
Adjustable Rate Mode, the Bonds will remain in such Mode for as long as the
Company continues to deliver timely conversion notices specifying the duration
of the next Adjustable Rate Period. The Remarketing Agent, on or prior to the
commencement of each Adjustable Rate Period, shall determine the Adjustable
Rate to be borne by the Bonds during such Adjustable Rate Period, which will be
the lowest rate which, in its sole judgment having due regard for prevailing
financial market conditions, will permit the Bonds to be sold at par on the
first day of such Adjustable Rate Period. Notwithstanding the foregoing, the
Adjustable Rate shall not be more than the Maximum Rate. In the event no
Adjustable Rate
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<PAGE> 75
is determined by the Remarketing Agent for an Adjustable Rate Period, then the
Bonds shall bear interest as provided in the Indenture.
During each Adjustable Rate Period, interest on this Bond shall be
paid on each Adjustable Rate Interest Payment Date, and shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
V. Conversion Provisions
The interest rate Mode of this Bond shall be converted from one Mode
to another Mode, or from an Adjustable Rate Period of one duration to an
Adjustable Rate Period of the same or a different duration within the
Adjustable Rate Mode, if the Company shall give notice as provided in the
Indenture of its election to effect such conversion, specifying in such notice
the date on which the Conversion Date will occur (which date shall be at least
25 days after such notice is given) and, if the conversion is to an Adjustable
Rate Period, specifying the Interest Payment Date which shall be the day
following the last day of such Adjustable Rate Period. The Bonds shall be
subject to mandatory tender and purchase on the Conversion Date. In the event
any condition precedent to the conversion of the interest rate Mode of this
Bond from one Mode to another Mode, or from an Adjustable Rate Period of one
duration to an Adjustable Rate Period of the same or a different duration, is
not satisfied, this Bond shall nonetheless be subject to mandatory tender on
the Conversion Date and the Bonds shall commence bearing interest on the
Conversion Date as provided in the Indenture.
VI. Mandatory Tender
All Bonds are subject to mandatory tender in whole (except as provided
in (b) below) by the Bondholders to the Tender Agent at its Principal Office on
each date described below:
(a) On each Conversion Date (provided that, in the event
less than all of the Bonds are being converted from the CP Rate Mode
to the Weekly Rate Mode as described in the Indenture, only the Bonds
being converted shall be subject to mandatory tender);
(b) On each CP Rate Reset Date with respect to any Bond
(provided that only those Bonds whose interest rates are being reset
on such date shall be subject to mandatory tender);
(c) On the second Business Day prior to the release,
expiration or termination of the Letter of Credit, if the Trustee has
not received evidence satisfactory to it as required by the Indenture
by the 25th day preceding the scheduled release, expiration or
termination date of the Letter of Credit of either an extension of the
then existing Letter of Credit or the issuance of an Alternate Credit
Facility meeting the requirements set forth therefor in the Agreement,
including the Maintenance of Rating requirement (as defined therein);
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<PAGE> 76
(d) On the date of substitution of an Alternate Credit
Facility for the then existing Letter of Credit if the Trustee has not
received evidence of a Maintenance of Rating (as defined in the
Agreement) with respect thereto by the 25th day preceding such
substitution date;
(e) On each optional redemption date pursuant to the
Indenture for which the Company has elected to purchase Bonds in lieu
of optional redemption pursuant to the Indenture; and
(f) On any date on which the Guaranty is released prior
to maturity of the Bonds as provided in the Indenture.
The purchase price of Bonds subject to mandatory tender shall be 100%
of the principal amount thereof (except in the case of a mandatory tender
described in paragraph (c), (d), (e) or (f) above, during, but prior to the
expiration date of, an Adjustable Rate Period, in which case the purchase price
shall include a premium equal to the then applicable optional redemption
premium, if any, on the Bonds, as set forth in the Indenture). Not later than
20 days prior to any mandatory tender date described in (b), (c), (d) or (f)
above, the Trustee shall mail notice to all Owners of Bonds subject to
mandatory tender on such date stating that (1) due to the occurrence of one of
the events described above (which event shall be specified), such Owner's Bonds
will be subject to mandatory tender on the mandatory tender date (which date
shall be specified); (2) that, subject to clause (4) below, all such owners who
fail to tender their Bonds for purchase on the mandatory tender date will
nonetheless be deemed to have tendered their Bonds for purchase on such date;
(3) that subject to clause (4) below, any such Bonds not delivered to the
Tender Agent on or prior to the mandatory tender date, for which there has been
irrevocably deposited in trust with the Trustee Available Moneys sufficient to
pay the purchase price of such Undelivered Bonds on the mandatory tender date,
shall be deemed to have been so purchased at the purchase price and such Bonds
shall no longer be considered to be outstanding for purposes of the Indenture
and shall no longer be entitled to the benefits of the Indenture except for the
payment of the purchase price thereof (and no interest shall accrue thereon
subsequent to the mandatory tender date) and (4) notwithstanding the foregoing,
while the Bonds are held in the Book-Entry System, Bonds need not be physically
tendered on the mandatory tender date, and transfers of beneficial ownership
interests will be effected by the Securities Depositary in accordance with its
rules and procedures. Notice of mandatory tenders described in paragraphs (a)
and (e) above shall be given as part of the notice of conversion or optional
redemption referenced above. No failure on the part of the Tender Agent to
give such notice shall affect the requirement that Bonds be purchased or
tendered for purchase on the mandatory tender or purchase date.
Any Bond subject to mandatory tender which is not tendered on or
before the mandatory tender date shall, if Available Moneys sufficient and
available for the purchase of such Bonds have been deposited with the Tender
Agent on the mandatory tender date, be deemed to have been tendered for
purchase on the mandatory tender date, and from and after such date, interest
will no longer accrue on such Bonds. Owners of such Bonds shall have no rights
or benefits under the Indenture with respect to such Bonds other than to
receive the purchase price for such Bonds upon surrender of such Bonds to the
Tender Agent.
A-9
<PAGE> 77
VII. Redemption of Bonds
The Bonds shall be subject to optional redemption only as follows:
a. Weekly Rate Mode, CP Rate Mode or Daily Rate Mode.
While the Bonds are in the Weekly Rate Mode or the Daily Rate Mode,
they are subject to optional redemption, in whole or in part on any
Business Day in Authorized Denominations, and while the Bonds are in
the CP Rate Mode, Bonds are subject to optional redemption in whole or
in part in Authorized Denominations on any Interest Payment Date for a
given Bond, at the direction of the Company, at a redemption price
equal to 100% of the principal amount of the Bond to be redeemed, plus
accrued interest thereon to the redemption date.
b. Adjustable Rate Mode. While the Bonds are in the
Adjustable Rate Mode, they are subject to optional redemption in whole
or in part on any date, at the direction of the Company, only on the
dates and at the applicable redemption prices set forth in the
Indenture.
While the Bonds are in the Adjustable Rate Mode or the CP Rate Mode,
the Bonds are subject to extraordinary optional redemption in whole on any date
at a redemption price equal to the principal amount of Bonds plus accrued
interest to the redemption date, without premium, upon the occurrence of
certain events specified in the Indenture.
The Bonds in any Mode are subject to mandatory redemption in whole on
the next date for which timely notice of redemption can be given by the Trustee
after the occurrence of a Determination of Taxability at a redemption price
equal to the aggregate principal amount of the Bonds plus accrued interest
thereon to the redemption date, without premium.
At least 30 days prior to any redemption of Bonds, the Trustee shall
cause notice of the call for redemption to be sent by first class mail, postage
prepaid, to the Owner of each Bond to be redeemed at the address of such Owner
shown on the registration books maintained by the Trustee. Neither the failure
to give any such notice nor any defect in any notice so mailed shall affect the
sufficiency or the validity of any proceedings for the redemption of the Bonds.
The Trustee shall not be required to register the transfer of or exchange any
Bond after notice calling such Bond or portion thereof for redemption has been
mailed or during the 15-day period next preceding the mailing of a notice of
redemption of any Bonds.
If Available Moneys are deposited in the Bond Fund on the date Bonds
are to be redeemed, Bonds or portions thereof redeemed shall no longer be
secured by this Indenture and shall not be deemed to be outstanding under the
provisions of this Indenture. Interest shall not continue to accrue on the
Bonds after the date fixed for redemption, so long as Available Moneys are on
deposit to pay all principal of, premium, if any, and interest accrued on the
Bonds on such date. However, if Available Moneys shall not be on deposit on
the redemption date, such Bonds or portions thereof shall continue to bear
interest until paid at the same rate as they would have borne had they not been
called for redemption.
A-10
<PAGE> 78
Any partial redemption of Bonds shall be made only in Authorized
Denominations. If fewer than all of the Bonds shall be called for redemption,
the portion of Bonds to be redeemed shall be selected by the Trustee as
provided in the Indenture.
VIII. General Provisions
Except as provided in the Indenture, the ownership of this Bond may be
transferred (in Authorized Denominations) only upon presentation and surrender
of this Bond at the principal corporate trust office of the Trustee, together
with an assignment duly executed by the Registered Owner hereof or his duly
authorized attorney-in-fact in such form as shall be satisfactory to the
Trustee.
Provisions may be made for the payment of amounts represented by the
Bonds as provided in the Indenture, in which event all liability of the Issuer
to the Owners of the applicable Bonds for the payment of such Bonds shall
forthwith cease, terminate and be completely discharged, and thereupon it shall
be the duty of the Trustee to hold such funds (but only for the period
specified and as provided in the Indenture), without liability for interest
thereon, for the benefit of the Owners of such Bonds, who shall thereafter be
restricted exclusively to such funds for any claims of whatever nature under
the Indenture or on, or with respect to, said Bonds.
It is hereby certified and covenanted that this Bond has been duly and
validly authorized, issued and delivered; that all acts, conditions and things
required or proper to be performed, exist and be done precedent to or in the
authorization, issuance and delivery of this Bond have been performed, existed
and done in accordance with law.
The Bonds are secured by the Indenture, whereunder the Trustee
undertakes to enforce the rights of the owners of the Bonds and to perform
other duties to the extent and under the conditions stated in the Indenture.
In case an Event of Default shall occur, the principal of and interest on the
Bonds then outstanding may, and, under certain circumstances, shall, be
declared to be due and payable immediately upon the conditions and in the
manner provided in the Indenture. Under the circumstances and conditions
provided in the Indenture, the Trustee may, or shall, waive any Event of
Default under the Indenture and its consequences.
The Issuer has reserved the right to amend the Indenture, with the
consent of the Bank, as provided therein. Under some (but not all)
circumstances, amendments thereto must also be approved by the owners of either
at least a majority or 100% in aggregate principal amount of the outstanding
Bonds affected by such amendment.
A-11
<PAGE> 1
EXHIBIT 10.8(c)
================================================================================
GUARANTY AGREEMENT
DATED AS OF DECEMBER 1, 1994
BETWEEN
GRIFFITH MICRO SCIENCE, INC.
AND
HARRIS TRUST AND SAVINGS BANK,
AS TRUSTEE
$5,300,000
COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1994
(GRIFFITH MICRO SCIENCE, INC. PROJECT)
================================================================================
<PAGE> 2
THIS IS A GUARANTY AGREEMENT dated as of December 1, 1994, between
Griffith Micro Science, Inc., a Delaware corporation (the "Guarantor"), and
Harris Trust and Savings Bank (the "Trustee"), as Trustee under that certain
Indenture of Trust dated as of December 1, 1994 (the "Indenture") from the
Counties of Warren and Washington Industrial Development Agency, a corporate
governmental agency constituting a body corporate and politic and a public
benefit corporation of the State of New York (the "Issuer").
All initially capitalized terms used herein which are not otherwise
defined shall have the meaning set forth in the Indenture.
RECITALS
The Issuer concurrently herewith is issuing its Industrial Development
Revenue Bonds, Series 1994 (Griffith Micro Science, Inc. Project) in the
aggregate principal amount of $5,300,000 (the "Bonds") under and pursuant to
the Indenture.
The proceeds derived from the issuance of the Bonds are to be used to
finance a portion of the costs of acquiring, constructing, rehabilitating and
equipping certain land, building and equipment for use in the sterilization of
medical equipment, and related property, located in the Town of Kingsbury,
Washington County, New York (the "Project"). Pursuant to a Lease Agreement
dated as of December 1, 1994 (the "Agreement"), between the Issuer and the
Guarantor, the Issuer will lease the Project to the Guarantor and the Guarantor
will agree to make lease payments sufficient to provide revenues to pay the
principal of, premium, if any, and interest on the Bonds when due.
In order to enhance the marketability of the Bonds and thereby achieve
cost and other savings to the Guarantor and as an inducement to the purchase of
the Bonds by all who shall at any time become owners of the Bonds, the
Guarantor does hereby covenant and agree with the Trustee as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. The representations, warranties and agreements of the
Guarantor set forth in Section 4 of the Purchase Agreement are incorporated by
reference herein and are true and correct as of the date hereof.
ARTICLE II
COVENANTS AND AGREEMENTS
Section 2.1. The Guarantor hereby irrevocably and unconditionally
guarantees to the Trustee for the benefit of the owners from time to time of
the Bonds (a) the full and prompt payment of the principal of and premium, if
any, on the Bonds from time to time outstanding
<PAGE> 3
when and as the same shall become due, whether at the stated maturity thereof,
by acceleration, by call for redemption or otherwise, (b) the full and prompt
payment of the interest on the Bonds when and as the same shall become due (c)
the full and prompt payment of the purchase price of Bonds tendered or deemed
tendered pursuant to the Indenture when and as the same shall become due and
(d) all other amounts due and owing under the Indenture, including, without
limitation, all amounts due to the Trustee under Section 7.06 thereof. All
payments by the Guarantor shall be paid in lawful money of the United States of
America. Each and every default in payment of the principal or purchase price
of, premium, if any, or interest on any Bond shall give rise to a separate
cause of action hereunder, and separate suits may be brought hereunder as each
cause of action arises.
Section 2.2. The obligations of the Guarantor under this Guaranty shall be
absolute and unconditional and shall remain in full force and effect until the
entire principal of, premium, if any, and interest on the Bonds shall have been
paid or funds sufficient for such payment shall have been deposited with the
Trustee in trust for such purpose as provided in Article X of the Indenture and
such obligations shall not be affected, modified or impaired upon the happening
from time to time of any event other than such payment, including, without
limitation, any of the following, whether or not with notice to, or the consent
of, the Guarantor:
(a) any default, failure or delay, willful or otherwise, in the
performance by the Issuer or the Guarantor of any obligations of any kind
or character whatsoever of the Issuer under the Indenture or of the
Guarantor under the Agreement; or
(b) the compromise, settlement, release or termination, whether by
operation of law or otherwise, of any or all of the obligations,
covenants or agreements of the Issuer under the Bonds or the Indenture or
of the Guarantor under the Agreement; or
(c) the failure to give notice to the Guarantor of the occurrence of
an event of default under the terms and provisions of this Guaranty, the
Indenture or the Agreement; or
(d) the waiver of the payment, performance or observance by the
Issuer or the Guarantor of any of the obligations, covenants or
agreements of either of them contained in the Indenture, the Agreement or
this Guaranty; or
(e) the extension of the time for payment of any principal or
purchase price of, premium, if any, or interest on any Bond or under this
Guaranty or the extension or renewal of the time for performance of any
other obligations, covenants or agreements under or arising out of the
Indenture, the Agreement or this Guaranty, whether or not with notice to
the Guarantor; or
(f) the modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in the Indenture or the
Agreement; or
(g) the taking or the omission of any of the actions referred to in
the Indenture, the Agreement or this Guaranty; or
2
<PAGE> 4
(h) any failure, omission, delay or lack on the part of the Issuer
or the Trustee to enforce, assert or exercise any right, power or remedy
conferred on the Issuer or the Trustee in this Guaranty or the Indenture
or the Agreement, or any other act or acts on the part of the Issuer, the
Trustee or any of the owners from time to time of the Bonds; or
(i) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition
with creditors or re-adjustment of, or other similar proceedings
affecting the Guarantor or the Issuer or any of the assets of either of
them or any allegation or contest of the validity of this Guaranty, the
Indenture or the Agreement in any such proceeding; or
(j) to the extent permitted by law, the release or discharge of the
Guarantor from the performance or observance of any obligation, covenant
or agreement contained in this Guaranty by operation of law; or
(k) the default or failure of the Guarantor fully to perform any of
its obligations set forth in this Guaranty or in the Agreement; or
(l) the invalidity of the Agreement, the Indenture or the Bonds; or
(m) the impossibility or illegality of performance on the part of
the Issuer of its obligations under the Bonds or the Indenture or of the
Guarantor under the Agreement; or
(n) the invalidity or unenforceability against any party of the
Agreement, the Indenture, the Bonds or any other instruments or
documents; or
(o) any attachment, claim, demand, charge, lien, order, process,
encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, indebtedness,
obligations or liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any person, or any claims,
demands, charges or liens of any nature, foreseen or unforeseen, incurred
by any person, or against any sums payable under this Guaranty, so that
such sums would be rendered inadequate or would be unavailable to make
the payments herein provided; or
(p) any order, judgment, decree, ruling or regulation (whether or
not valid) of any court of any nation or of any political subdivision
thereof or any body, agency, department, official or administrative or
regulatory agency of any thereof or any other action, happening, event or
reason whatsoever which shall delay, interfere with, hinder or prevent,
or in any way adversely affect, the performance by any party of its
respective obligations under any instruments; or
3
<PAGE> 5
(q) any other circumstance which might otherwise constitute a
defense (other than final, indefeasible payment of all obligations
guaranteed hereunder) available to, or a discharge of, the Guarantor in
respect of the obligations of the Guarantor under this Guaranty.
Section 2.3. No set-off, counterclaim, reduction or diminution of an
obligation, or any defense of any kind or nature which the Guarantor has or may
have against the Issuer or the Trustee or which the Issuer may have against the
Trustee, shall be available hereunder to the Guarantor against the Trustee.
Section 2.4. The liability of the Guarantor under this Guaranty shall be
an absolute, direct, immediate and unconditional guaranty of payment and not of
collectibility and said liability shall not terminate until all amounts payable
with respect to the Bonds and the Indenture shall have been paid in full (and
said liability shall immediately be reinstated in the event that any such
amounts shall, for any reason whatsoever, be required to be returned to the
Issuer or to the Guarantor by the recipient thereof).
Section 2.5. The Guarantor hereby waives any right to require that any
action on or in respect of the Bonds be brought against the Issuer or that
resort be had to any direct or indirect security for the Bonds or for this
guaranty or any other remedy. Except only as provided in the Indenture, the
Trustee or, under the conditions set forth in the Indenture, any holder of the
Bonds may, at its option, proceed hereunder against the Guarantor in the first
instance to collect monies when due, the payment of which is guaranteed hereby,
without first proceeding against any other person and without first resorting
to any direct or indirect security therefor, or for this guaranty or any other
remedy. The liability of the Guarantor hereunder shall in no way be affected
or impaired by any acceptance by the Trustee or any holder of the Bonds of any
direct or indirect security for, or other guaranties of, any indebtedness,
liability or obligation of the Issuer or any other person to the Trustee or any
holder of the Bonds or by any failure, delay, neglect or omission by the
Trustee or any holder of the Bonds to realize upon or protect any such
indebtedness, liability or obligation or any notes or other instruments
evidencing the same or any direct or indirect security therefor or by any
approval, consent, waiver, or other action taken, or omitted to be taken, by
the Trustee or any holder of the Bonds.
Section 2.6. Upon the occurrence of any Event of Default, the Trustee, in
its sole discretion, but subject to the provisions of the Indenture, shall have
the right to proceed first directly against the Guarantor under this Guaranty
without proceeding against or exhausting any other remedies which it may have
against the Issuer, the Guarantor or any other person, firm or corporation and
without resorting to any other security held by the Issuer or the Trustee.
Section 2.7. The Guarantor hereby expressly waives: (1) notice of
acceptance of this Guaranty by the Trustee or any holder of the Bonds, or of
the reliance of the Trustee or any holder of the Bonds upon this Guaranty (it
being understood that every indebtedness, liability and obligation described in
Section 2.1 hereof shall conclusively be presumed to have been created,
contracted or incurred in reliance upon the execution of this Guaranty); (2)
demand of payment by the Trustee or any holder of the Bonds from the Issuer or
any other person indebted
4
<PAGE> 6
in any manner on or for any of the indebtedness, liabilities or obligations
hereby guaranteed; and (3) presentment for payment by the Trustee or any holder
of the Bonds or any other person of the Bonds or any other instrument, protest
thereof and notice of its dishonor to any party thereto and to the Guarantor.
To the extent permitted by applicable law, the Guarantor agrees to pay all
costs, expenses and fees, including all reasonable attorneys' fees, which may
be incurred by the Trustee in enforcing or attempting to enforce this Guaranty
following any default on the part of the Guarantor hereunder, whether the same
shall be enforced by suit or otherwise.
Section 2.8. This Guaranty is entered into by the Guarantor with the
Trustee for the benefit of the owners from time to time of the Bonds, all of
whom shall be entitled to enforce performance and observance of this Guaranty
to the same extent provided for the enforcement of remedies under the
Indenture.
Section 2.9. The Guarantor hereby waives, and agrees that it shall not
exercise, any rights of subrogation to which it may at any time be entitled by
virtue of the performance by the Guarantor of any of the obligations of the
Guarantor under this Guaranty until such time as all amounts payable under the
Bonds and the Indenture shall have been duly paid in full.
Section 2.10. So long as the Bonds or any portion thereof shall be
outstanding, the Guarantor will maintain its corporate existence, will continue
to be a corporation qualified and in good standing under the laws of each state
where such qualification is necessary for it to conduct its business and
perform its obligations under this Guaranty, will not dissolve or otherwise
dispose of all or substantially all of its assets and will not consolidate with
or merge into another legal entity or permit one or more other legal entities
(other than one or more subsidiaries of the Guarantor) to consolidate with or
merge into it, or sell or otherwise transfer to another legal entity all or
substantially all its assets as an entirety and dissolve, unless (a) in the
case of any merger or consolidation, the Guarantor is the surviving
corporation, or (b)(i) the surviving, resulting or transferee legal entity is
organized and existing under the laws of the United States, a state thereof or
the District of Columbia, and (if not the Guarantor) assumes in writing all the
obligations of the Guarantor under this Guaranty, and (ii) no event which
constitutes, or which with the giving of notice or the lapse of time or both
would constitute an Event of Default shall have occurred and be continuing
immediately after such merger, consolidation or transfer.
Section 2.11. So long as a Letter of Credit is in effect, the Guarantor,
shall not, directly or indirectly, purchase any Bonds with any funds that do
not constitute Available Moneys, except as required by Section 2.1 of this
Guaranty.
ARTICLE III
AMENDMENTS; RELEASE
Section 3.1. The Guarantor and the Trustee, at any time and from time to
time, may enter into one or more instruments supplemental hereto, under the
conditions set forth in Article IX of the Indenture. This Guaranty may be
released under the conditions set forth in Section 9.05 of the Indenture.
5
<PAGE> 7
ARTICLE IV
THE TRUSTEE
Section 4.1. The Trustee hereby accepts the trusts imposed upon it by this
Guaranty, and agrees to perform said trusts as a corporate trustee ordinarily
would perform said trusts under a corporate indenture, but only upon and
subject to the following terms and conditions set forth in Article VII of the
Indenture.
ARTICLE V
MISCELLANEOUS
Section 5.1. The obligations of the Guarantor hereunder shall arise
absolutely and unconditionally when the Bonds shall have been issued, sold and
delivered by the Issuer.
Section 5.2. This Guaranty constitutes the entire agreement, and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and may be
executed simultaneously in several counterparts, each of which shall be deemed
an original, and all of which together shall constitute one and the same
instrument.
Section 5.3. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or Sections in this Guaranty shall not affect the
validity or enforceability of the remaining portions of this Guaranty, or any
part thereof.
Section 5.4. This Guaranty shall be governed exclusively by the laws of
the State of Illinois.
Section 5.5. With the exception of rights herein expressly conferred,
nothing herein expressed or mentioned in or to be implied from this Guaranty is
intended or shall be construed to give to any person other than the parties
hereto and the owners of the Bonds any legal or equitable right, remedy or
claim under or in respect of this Guaranty. This Guaranty and all of the
covenants, conditions and provisions hereof are intended to be and are for the
sole and exclusive benefit of the parties hereto and the owners of the Bonds as
herein provided and shall inure to the benefit of and bind their respective
successors and assigns.
6
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be
executed in their respective corporate names by their respective officers,
thereunto duly authorized and their respective corporate seals to be hereto
affixed as of the date first above written.
GRIFFITH MICRO SCIENCE, INC.
By /s/ Brian J. Tuttle
-------------------------
Treasurer
[SEAL]
ATTEST:
By /s/ James S. Legg
--------------------------
Its Secretary
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: [illegible]
--------------------------------
Vice President
7
<PAGE> 1
EXHIBIT 10.8(d)
================================================================================
REIMBURSEMENT AGREEMENT
BETWEEN
THE FIRST NATIONAL BANK OF CHICAGO
AND
GRIFFITH MICRO SCIENCE, INC.
DATED AS OF DECEMBER 1, 1994
================================================================================
<PAGE> 2
REIMBURSEMENT AGREEMENT
Dated as of December 1, 1994
Griffith Micro Science, Inc.
One Griffith Center
Alsip, Illinois 60658-3495
Ladies and Gentlemen:
The Applicant (such term and each other capitalized term used herein
having the meaning set forth in Article One hereof) desires to secure a source
of funds to be devoted exclusively to the payment by the Trustee, when and as
due, of the principal of and interest on the Bonds, and has applied to the Bank
for issuance by the Bank of the Letter of Credit in an Original Stated Amount of
$5,369,699. Further, the Bank has been requested by the Applicant to provide a
reimbursement facility for drawings under the Letter of Credit and to provide
such facility in the following manner and subject to the following terms and
conditions. Accordingly, the Applicant and the Bank hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.1. Definitions. (a) As used in this Agreement:
"Acceleration Drawing" means a drawing under the Letter of
Credit resulting from the presentation of a certificate in the form of
Exhibit F to the Letter of Credit.
"Acquired Foreign Restricted Subsidiary" shall mean any
Acquired Restricted Subsidiary which is organized under the laws of any
jurisdiction outside of the United States of America.
"Acquired Restricted Subsidiary" shall mean any Person which
(a) either (i) becomes, after the date hereof, a Subsidiary through the
purchase by Griffith Labs or another Restricted Subsidiary of all or a
portion of the voting stock of such Person or (ii) is organized by
Griffith Labs or any Restricted Subsidiary to acquire all or part of
the property or operations of a Person which is not on the date hereof
a Restricted Subsidiary and (b) is designated by Griffith Labs as a
Restricted Subsidiary.
"Adjusted Consolidated Current Liabilities" shall mean as of
the date of any determination thereof, Consolidated Current Liabilities
minus the Excess Current Debt outstanding; so long as on each day that
such Excess Current Debt is outstanding the Griffith Labs could incur
Funded Debt without creating an Event of Default under Section 6.1(o)
hereof in an amount equal to such Excess Current Debt on each
determination date hereunder.
<PAGE> 3
"Adjusted Consolidated Tangible Net Worth" shall mean as of
the date of any determination thereof (a) the sum of preferred stock,
common stock, additional paid-in capital, retained earnings and
Minority Interests (other than Restricted Minority Interests), if any,
less treasury stock, all determined in accordance with GAAP, minus (b)
Excess Intangible Assets. For purposes of calculations pursuant to this
Agreement any increase or decrease in stockholders' equity attributable
to a foreign currency translation adjustment shall be excluded.
"Affiliate" means, with respect to any Person (other than a
Restricted Subsidiary), any Person that directly or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, such first Person. A Person shall be deemed to
control another Person for the purposes of this definition if such
first Person possesses, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of the second
Person, whether through the ownership of voting securities, common
directors, trustees or officers, by contract or otherwise.
"Agreement" means this Reimbursement Agreement, as amended and
supplemented.
"Applicant" means Griffith Micro Science, Inc., a Delaware
corporation and its successors and assigns.
"Available Amount" shall have the meaning set forth in the
Letter of Credit.
"Bank" - means The First National Bank of Chicago, as issuer
of the Letter of Credit, and its successors and assigns.
"Bond Documents" means the Indenture, the Lease Agreement, the
Guaranty, the Offering Agreement, the Remarketing Agreement, the
Offering Memorandum and the Bonds.
"Bonds" means the $5,300,000 aggregate principal amount of the
Issuer's Industrial Development Revenue Bonds, Series 1994 (Griffith
Micro Science Inc. Project) pertaining to the Project.
"Business Day" shall have the meaning set forth in the Letter
of Credit.
"Cap Interest Rate" shall have the meaning set forth in the
Letter of Credit.
"Capital Lease" means any lease of Property which in
accordance with GAAP would be required to be capitalized on the balance
sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the
liability shown on the balance sheet of any Person in respect of a
Capital Lease as determined in accordance with GAAP.
2
<PAGE> 4
"Change of Control" means each and every issue, sale or other
disposition of shares of any class or classes of capital stock of
Griffith Labs or Griffith Laboratories, Inc., whether by means of an
initial public offering or otherwise, which results in any Acquirer,
other than the Griffith Family Group, beneficially owning or
controlling, directly or indirectly, more than 50% (by number of votes)
of the voting stock of Griffith Labs or Griffith Laboratories, Inc. As
used herein, the term "Acquirer" shall mean one or more Persons acting
as a partnership, limited partnership, company, syndicate or other
group for the purpose of acquiring, holding or disposing of voting
stock, together with all affiliates and associates (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended) of such
Persons. As used herein, the term "Griffith Family Group" shall mean
(i) Dean L. Griffith; (ii) the spouses, lineal descendants and spouses
of the lineal descendants of Dean L. Griffith; (iii) trusts created in
whole or in substantial part for the benefit of any or all of the
Persons named in clauses (i) and (ii); and (iv) the estates or legal
representatives of the Persons named in clauses (i) and (ii).
"Closing Date" means the date on which the Letter of Credit is
issued.
"Code" means the Internal Revenue Code of 1986, and any
successor statute thereto.
"Consolidated Current Assets" and "Consolidated Current
Liabilities" shall mean as of the date of any determination thereof
such assets and liabilities of Griffith Labs and its Restricted
Subsidiaries on a consolidated basis as shall be determined in
accordance with GAAP to constitute current assets and current
liabilities, respectively.
"Consolidated Funded Debt" shall mean all Funded Debt of
Griffith Labs and its Restricted Subsidiaries, determined on a
consolidated basis eliminating intercompany items.
"Consolidated Total Assets" shall mean as of the date of any
determination thereof the total assets of Griffith Labs and its
Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Capitalization" shall mean as of the date
of any determination thereof the sum of Adjusted Consolidated Tangible
Net Worth plus Consolidated Funded Debt.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Applicant or any
Subsidiary, are treated as a single employer under Section 414 of the
Code.
"Current Debt" of any Person shall mean as of the date of any
determination thereof (a) all Indebtedness for borrowed money of any
Person other than Funded Debt of such Person and (b) Guarantees by such
Person of Current Debt of others.
3
<PAGE> 5
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" is defined in Section 6.1 hereof.
"Excess Current Debt" shall mean as of the date of any
determination thereof that portion of Current Debt outstanding which
(a) does not constitute a current maturity of Funded Debt in accordance
with GAAP, (b) does not constitute Current Debt of Griffith Labs to any
Subsidiary or of any Restricted Subsidiary to Griffith Labs or to a
wholly owned Restricted Subsidiary thereof and (c) is in excess of
$13,000,000 in aggregate principal amount. Any excess Current Debt
which is included as Consolidated Funded Debt under ss. 6.1(o) shall
continue to be deemed to be Consolidated Funded Debt until such Excess
Current Debt shall have been paid in full.
"Excess Intangible Assets" shall mean as of the date of
determination, the amount, if any, by which the book value of all
assets that are properly classified as "intangible assets" in
accordance with GAAP acquired by Griffith Labs and its Restricted
Subsidiaries after the date hereof exceeds 5% of Consolidated Total
Assets as reflected on the most recent consolidated balance sheet of
Griffith Labs.
"Excess Transferred Property" shall mean as of the date of
each incurrence of Unsupported Debt by any Acquired Foreign Restricted
Subsidiary, the amount, if any, by which the aggregate fair market
value of investments or other transfers of Property of Griffith Labs or
any Restricted Subsidiary at any time to such Acquired Foreign
Restricted Subsidiary exceeds the greater of (a) $5,000,000 and (b) 5%
of Adjusted Consolidated Tangible Net Worth as reflected on the most
recent consolidated balance sheet of Griffith Labs. Excess Transferred
Property shall be valued as of the date of investment or other transfer
thereof to an Acquired Foreign Restricted Subsidiary.
"Funded Debt" of any Person shall mean (i) all Indebtedness
for borrowed money of such Person for or which has been incurred in
connection with the acquisition of assets in each case having a final
maturity of one or more than one year from the date of origin thereof
(or which is renewable or extendible at the option of the obligor for a
period or periods more than one year from the date of origin), but
excluding all payments in respect thereof that are required to be made
within one year from the date of any determination of Funded Debt,
provided the obligation to make such payments shall constitute a
current liability of the obligor under GAAP, (ii) all Capitalized Lease
Obligations of such Person, (iii) all Guarantees by such Person of
Funded Debt of others and (iv) all Restricted Minority Interests.
"GAAP" means generally accepted accounting principles in the
United States as in effect from time to time, applied by the Applicant
and its Subsidiaries on a basis consistent with the Applicant's most
recent financial statements furnished to the Bank pursuant to Section
5.5. hereof.
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<PAGE> 6
"Governmental Approval" means an authorization, consent,
approval, license, or exemption of, registration or filing with, or
report to any Governmental Authority.
"Governmental Authority" means any nation or government, any
state, department, agency or other political subdivision thereof, and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government, and any
corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing.
"Griffith Labs Guaranty" means the Guaranty issued by Griffith
Laboratories Worldwide, Inc. ("Griffith Labs") in favor of the Bank
dated on or about the date hereof.
"Guarantees" by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing, or
in effect guaranteeing, any Indebtedness, dividend or other obligation
of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person:
(i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds
(x) for the purchase or payment of such Indebtedness or obligation, (y)
to maintain working capital or other balance sheet conditions or
otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, (iii) to lease property or
to purchase securities or other property or services primarily for the
purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment [of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness
or obligation of the primary obligor against loss in respect thereof.
For the purposes of all computations made under this Agreement: (i) a
Guaranty in respect of any Indebtedness for borrowed money shall be
deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a
Guaranty in respect of any other obligation or liability or any
dividend shall be deemed to be Indebtedness equal to the maximum
aggregate amount of such obligation, liability or dividend, (ii) the
amount of any Guaranty and the amount of Indebtedness guaranteed shall
be counted only once in any such computation and (iii) any Restricted
Upstream Guaranty shall be counted as a Guaranty.
"Indebtedness" of any Person shall mean and include all
obligations of such Person which in accordance with GAAP shall be
classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such
Person for borrowed money or which have been incurred in connection
with the acquisition of Property, (ii) obligations secured by any Lien
upon Property owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations, (iii)
obligations created or arising under any conditional sale or other
title retention agreement with respect to Property acquired by such
Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of Property, (iv)
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<PAGE> 7
Capitalized Lease Obligations and (v) Guaranties of obligations of
others of the character referred to in this definition; provided that
"Indebtedness" shall in any event exclude (x) any unfunded obligations
of the Company with respect to its retirement benefit plans and (y) any
Guaranty of an obligation which is itself included in "Indebtedness"
for purposes of any computation, test or covenant herein unless such
Guaranty constitutes a Restricted Upstream Guaranty, in which case the
primary obligation to which such Restricted Upstream Guaranty relates
shall be excluded from "Indebtedness".
"Indenture" means the Indenture of Trust dated as of the date
hereof between the Issuer and the Trustee, relating to the Bonds, as
amended and supplemented from time to time.
"Issuer" means the Counties of Warren and Washington
Industrial Development Agency and its successors and assigns.
"Lease Agreement" means the Lease Agreement dated as of the
date hereof between the Issuer and the Applicant, relating to the
Bonds, as amended and supplemented from time to time.
"Letter of Credit" means the irrevocable transferable direct
pay letter of credit issued by the Bank for the account of the
Applicant in favor of the Trustee in the form of Appendix I hereto with
appropriate insertions, as amended.
"Lien" means (i) any interest in Property which secures an
obligation owed to a Person other than the owner of such Property,
including, without limitation, any such interest arising from a
mortgage, charge, pledge, security agreement, conditional sale or trust
receipt, or arising from a lease, consignment or bailment given for
security purposes, (ii) any encumbrance or charge upon such Property
which does not secure such an obligation, and (iii) any exception to or
defect in the title to or ownership interest in such Property.
"Liquidity Advance" is defined in Section 2.3(a) hereof.
"Liquidity Drawing" means a drawing under the Letter of Credit
resulting from the presentation of a certificate in the form of Exhibit
E to the Letter of Credit.
"Minority Interests" shall mean any shares of stock of any
class of a Restricted Subsidiary (other than directors' or other
qualifying shares as required by law) that are not owned by Griffith
Labs and/or one or more of its Restricted Subsidiaries. Minority
Interests shall be valued in accordance with GAAP.
"Moody's" means Moody's Investors Service.
"Note Purchase Agreement" means the Note Purchase Agreement
dated as of August 30, 1994 re: $45,000,000 8.30% Senior Notes, Series
A, Due August 31, 2009 among Griffith Laboratories, Inc., Nationwide
Life Insurance Company, Employers Life
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<PAGE> 8
Insurance Company of Wausau, Phoenix Home Life Mutual Insurance
Company, Principal Mutual Life Insurance Company and Pan American Life
Insurance Company.
"Obligations" means the fees relating to the Letter of Credit,
any and all obligations of the Applicant to reimburse the Bank for any
drawings under the Letter of Credit, and all other obligations of the
Applicant to the Bank arising under or in relation to this Agreement.
"Offering Agent" means The First National Bank of Chicago.
"Offering Agreement" means the Offering Agreement dated as of
December 28, 1994 among The First National Bank of Chicago, the
Applicant and the Issuer.
"Offering Memorandum" means the Offering Memorandum dated
December 29, 1994, relating to the Bonds and the Project.
"Original Stated Amount" is defined in Section 2.1 hereof.
"Outstanding" or "Bonds Outstanding" shall have the same
meaning herein as in the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation, and its
successors and assigns.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof.
"Plan" means, with respect to the Applicant and each
Subsidiary at any time, an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and either (i) is maintained by
a member of the Controlled Group for employees of a member of the
Controlled Group of which the Applicant or such Subsidiary is a part,
(ii) is maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group of which
the Applicant or such Subsidiary is a part is then making or accruing
an obligation to make contributions or has within the preceding five
plan years made contributions, or (iii) under which a member of the
Controlled Group of which the Applicant or such Subsidiary is a part
has any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years or by reason of being deemed a
contributing sponsor under Section 4069 of ERISA.
"Potential Default" means an event or condition which, but for
the lapse of time or the giving of notice, or both, would constitute an
Event of Default.
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<PAGE> 9
"Prime Rate" means for any day the greater of:
(i) the rate per annum equal to the corporate base
rate of interest announced by the Bank from time to time, as
in effect on such day, with any change in the Prime Rate
resulting from a change in said corporate base rate to be
effective as of the date of the relevant change in said
corporate base rate; or
(ii) the sum of (x) the rate determined by the Bank
to be the average (rounded upwards, if necessary, to the next
higher 1/100 of 1%) of the rates per annum quoted to the Bank
at approximately 10:00 a.m. (Chicago time) (or as soon
thereafter as is practicable) on such day (or, if such day is
not a Business Day, on the immediately preceding Business Day)
by two or more Federal funds brokers selected by the Bank for
the sale to the Bank at face value of Federal funds in an
amount equal or comparable to the principal amount owed to the
Bank for which such rate is being determined, plus (y) 1/2 of
1% (0.50%).
"Project" means the industrial development facilities located
in the Town of Kingsbury, Washington County, New York being financed by
the Bonds.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible,
whether now owned or hereafter acquired.
"Related Documents" means this Agreement, the Letter of
Credit, the Bond Documents and the Griffith Labs Guaranty but shall not
include the Offering Memorandum.
"Remarketing Agent" means The First National Bank of Chicago,
as Remarketing Agent under the Indenture and the Remarketing Agreement,
and its successors and assigns pursuant thereto.
"Remarketing Agreement" means the Remarketing Agreement dated
as of the date hereof, between the Remarketing Agent and the Applicant,
as amended and supplemented, and any successor agreement thereto
entered into by the Applicant, and a successor Remarketing Agent.
"Restricted Minority Interests" shall mean all Minority
Interests created as a result of the issuance, sale, transfer or other
disposition of stock of Restricted Subsidiaries other than Unrestricted
Minority Interests. Restricted Minority Interests shall be valued as of
the date of creation of such Restricted Minority Interest.
"Restricted Subsidiary" shall mean any Subsidiary of Griffith
Labs which is designated as a Restricted Subsidiary in accordance with
the provisions SS.5.17 of the Note Purchase Agreement and as listed in
Annex A hereto from time to time as Restricted Subsidiaries. Should the
Note Purchase Agreement be terminated, the Applicant and Griffith Labs
shall continue to follow the designation provisions of Section 5.17
which shall be deemed to continue in effect for the purposes of this
Agreement.
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<PAGE> 10
"Restricted Upstream Guaranty" shall mean any Guaranty by an
Acquired Foreign Restricted Subsidiary of Indebtedness of Griffith Labs
or any Subsidiary (other than such Acquired Foreign Restricted
Subsidiary or a subsidiary of such Acquired Foreign Restricted
Subsidiary) given after the date hereof to a Person which is not a
Holder (an "Other Lender"); provided that a Restricted Upstream
Guaranty shall not include any Guaranty if concurrently with the giving
of such Guaranty to the Other Lender, such Acquired Foreign Restricted
Subsidiary shall either (a) cause the Other Lender to enter into an
intercreditor agreement with the Bank, satisfactory to the Bank in form
and substance, providing for the equal and ratable sharing between the
Bank and the Other Lender of all recoveries under such Guaranty
(including any collateral security for such Indebtedness granted to the
Other Lender) or (b) give to the Bank (i) a substantially identical
Guaranty of the Obligations hereunder and (ii) and unqualified opinion
of counsel admitted to practice law in the jurisdiction in which such
Acquired Foreign Restricted Subsidiary is organized to the effect that
the enforceability of the Guaranty of the Obligations will not be
impaired to any greater extent than the Guaranty given to the Other
Lender under the laws of such jurisdiction in the event enforcement of
such Guaranties is sought.
"Significant Restricted Subsidiary" shall mean as of any date
of determination thereof any Restricted Subsidiary having total assets
equal to at least 5% of Consolidated Total Assets or whose operating
income for the fiscal year of Griffith Labs immediately preceding the
date of any determination thereof was equal to at least 10% of the
operating income of Griffith Labs and its consolidated Subsidiaries, as
shown on the most recent consolidated statement of earnings of Griffith
Labs.
"S&P" means Standard & Poor's Ratings Group.
"Stated Expiration Date" shall have the meaning set forth in
the Letter of Credit.
"Subsidiary" means, as to the Applicant or Griffith Labs, as
the case may be, any corporation or other entity of which more than 50%
of the outstanding stock or comparable equity interests entitled to
vote in the election of the board of directors or similar governing
body of such entity is directly or indirectly owned by the Applicant or
Griffith Labs, as the case may be, by one or more Subsidiaries or by
the Applicant or Griffith Labs and one or more Subsidiaries.
"Termination Date" shall have the meaning set forth in the
Letter of Credit.
"Trustee" means Harris Trust and Savings Bank, as Trustee
under the Indenture, and any successor trustee thereunder.
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all
vested nonforfeitable accrued benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan, but
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<PAGE> 11
only to the extent that such excess represents a potential liability of
a member of the Controlled Group to the PBGC or such Plan under Title
IV of ERISA.
"Unrestricted Minority Interests" shall mean Minority
Interests created as a result of the issuance, sale, transfer or other
disposition of stock of Restricted Subsidiaries so long as the
aggregate fair market value of such stock together with all other stock
of Restricted Subsidiaries issued, transferred or otherwise disposed of
from and after the date of this Agreement does not exceed the greater
of (i) $5,000,000, or (ii) 5% of Adjusted Consolidated Tangible Net
Worth. Unrestricted Minority Interests shall be valued as of the date
of creation of such Minority Interest.
"Unrestricted Subsidiary" shall mean any Subsidiary which is
not a Restricted Subsidiary."
"Unsupported Debt" shall mean Funded Debt of an Acquired
Foreign Restricted Subsidiary which (a) constitutes the obligation
(whether as obligor or guarantor) only of such Acquired Foreign
Restricted Subsidiary and its subsidiaries and (b) which, if secured,
is secured by no Property of the Company or any Restricted Subsidiary
except such Acquired Foreign Restricted Subsidiary and its
subsidiaries.
"Welfare Plan" means a "welfare plan," as such term is defined
in Section 3(1) of ERISA.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any capitalized terms
used herein which are not specifically defined herein shall have the
same meanings herein as in the Indenture. All references in this
Agreement to times of day shall be references to Chicago time unless
otherwise expressly provided herein. Unless otherwise inconsistent with
the terms of this Agreement, all accounting terms shall be interpreted,
all accounting determinations hereunder shall be made and all financial
statements required to be delivered hereunder shall be prepared in
accordance with GAAP.
ARTICLE TWO
LETTER OF CREDIT
Section 2.1 Issuance of Letter of Credit. Upon the terms,
subject to the conditions and relying upon the representations and
warranties set forth in this Agreement or incorporated herein by
reference, the Bank agrees to issue the Letter of Credit. The Letter of
Credit shall be in the original stated amount of $5,369,699 (the
"Original Stated Amount"), which is the sum of (i) the highest
principal amount of Bonds which may from time to time be outstanding,
plus (ii) interest thereon at the Cap Interest Rate for a period of
forty eight (48) days.
Section 2.2 Letter of Credit Drawings. The Trustee is
authorized to make drawings under the Letter of Credit in accordance
with the terms thereof. The Applicant hereby directs the Bank to make
payments under the Letter of Credit in the manner therein provided. The
Applicant hereby irrevocably approves reductions and reinstatements of
the Available Amounts as provided therein.
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Section 2.3 Reimbursement of Certain Liquidity Drawings under
the Letter of Credit; Prepayment; Interest. (a) If the conditions
precedent contained in Section 3.2 hereof are satisfied at the time of
payment by the Bank of any Liquidity Drawing, each Liquidity Drawing
made under the Letter of Credit shall constitute an advance ("Liquidity
Advance") to the Applicant. The Applicant promises to pay to the Bank
each Liquidity Advance on the earliest of (i) the date on which any
Bonds purchased with funds disbursed under the Letter of Credit in
connection with such Liquidity Drawing and held by the Applicant or by
the Trustee, or its agent, for the account of the Applicant, are
redeemed or canceled pursuant to the Indenture, (ii) the date on which
any Bonds purchased by the Applicant or the Trustee, or its agent, for
the account of the Applicant, with funds disbursed under the Letter of
Credit are remarketed pursuant to the Indenture, (iii) the date on
which the Letter of Credit is replaced by a substitute letter of credit
pursuant to the terms of the Indenture, (iv) the Termination Date and
(v) the Stated Expiration Date. Subject to Section 2.10 hereof, the
Applicant also promises to pay to the Bank interest on the unpaid
principal amount of each Liquidity Advance from the date such Liquidity
Advance is made until it is paid in full as provided herein, at a rate
per annum equal to the Prime Rate from time to time in effect, payable
quarterly in arrears and on the date the Liquidity Advances is payable
as herein provided. Any Liquidity Advance not paid when due shall bear
interest at the rate per annum specified in Section 2.10 hereof,
(b) Any Liquidity Advance created pursuant to paragraph (a)
above may be prepaid in whole or in part at any time
without premium or penalty on any Business Day on not
less than one Business Day's prior written notice.
(c) Upon the Bank's receipt of any payment of prepayment of
any Liquidity Advance, the amount of such Liquidity
Advance shall be reduced by the amount of such payment
or prepayment.
Section 2.4. Reimbursement of Drawings Other Than Liquidity
Drawings Creating Liquidity Advances under the Letter of Credit. The
Applicant agrees to reimburse the Bank for the full amount of any
drawing other than a Liquidity Drawing immediately upon payment by the
Bank of such drawing. The Applicant agrees to reimburse the Bank for
the full amount of any Liquidity Drawing if the conditions precedent
contained in Section 3.2 hereof are not satisfied immediately upon
payment by the Bank of each such drawing and on the date of each such
payment. If the Applicant does not make such reimbursement on such
date, such reimbursement obligation shall bear interest at the rate per
annum specified in Section 2.10 hereof. The Bank will provide prompt
notice to the Applicant of the amount of each drawing made under the
Letter of Credit, provided that the failure to give such notice or any
error contained in such notice shall not prejudice the Bank's rights
hereunder.
Section 2.5 Fees. The Applicant hereby agrees to pay, or cause
to be paid, to the Bank:
(a) on the Closing Date for the period ending on December
31, 1994 and in advance on the first day of each
January, April, July and October occurring thereafter
to
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<PAGE> 13
the Termination Date, a non-refundable fee on the
Available Amount on each such payment date at a rate
per annum equal to seven-eighths of one percent (7/8
of 1%); and
(b) on the date of each drawing under the Letter of
Credit, a drawing fee of $150.
Section 2.6 Method of Payment; etc. All payments to be made by
the Applicant under this Agreement shall be made at the Chicago office
of the Bank not later than 2:00 p.m. on the date when due and shall be
made in lawful money of the United States of America in freely
transferable and immediately available funds. All payments under this
Agreement shall be made without counterclaim, setoff, condition or
qualification, and free and clear of and without deduction or
withholding for or by reason of any present or future taxes, levies,
imposts, deductions or charges of any nature whatsoever; in the event
that the Applicant is compelled by law to make any such deduction or
withholding. The Applicant shall nevertheless pay to the Bank such
amounts as will result in the receipt by the Bank of the sum it would
have received had no such deduction or withholding been required to be
made.
Section 2.7. Substitute Letter of Credit. The Letter of Credit
may be replaced at any time so long as (i) the Bank shall have received
payment of an amount equal to the principal amount of all Pledged Bonds
previously purchased in accordance with Section 3.09(b) of the
Indenture, (ii) all outstanding Obligations are paid in full, and (iii)
the Letter of Credit is surrendered and cancelled by the Trustee.
Section 2.8. Computation of Interest and Fees. All
computations of interest and fees payable by the Applicant under this
Agreement shall be made on the basis of a 360-day year and actual days
elapsed. Interest shall accrue during each period during which interest
is computed from and including the first day thereof to but excluding
the last day thereof.
Section 2.9. Payment Due on Non-Business Day to Be Made on
Next Business Day. If any sum becomes payable pursuant to this
Agreement on a day which is not a Business Day, the date for payment
thereof shall be extended, without penalty, to the next succeeding
Business Day, and such extended time shall be included in the
computation of interest and fees.
Section 2.10. Late Payments. If the principal amount of any
Obligation is not paid when due, such Obligation shall bear interest
until paid in full at a rate per annum equal to the Prime Rate from
time to time in effect plus two percent (2%), payable on demand.
Section 2.11. Source of Funds. All payments made by the Bank
pursuant to the Letter of Credit shall be made from funds of the Bank,
and not from the funds of any other Person.
Section 2.12 Extension of Stated Expiration Date. The
Applicant may request that the Letter of Credit be extended for a
period of one year not less than sixty (60) days before each
anniversary of the issuance of the Letter of Credit. If the Bank, in
its sole discretion, elects to extend the Stated Expiration Date then
in effect, it shall deliver to the Trustee a Notice of Extension in the
form of Exhibit K to the Letter of Credit (herein referred to as a
"Notice of Extension") designating the date to which the Stated
Expiration Date is being extended. Such
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<PAGE> 14
extension of the Stated Expiration Date shall be effective,
after receipt of such notice, on the Business Day following the date of
delivery of such Notice of Extension, and thereafter all references in
this Agreement to the Stated Expiration Date shall be deemed to be
references to the date designated as such in the most recent Notice of
Extension delivered to the Trustee. Any date to which the Stated
Expiration Date has been extended in accordance with this Section 2.12
may be extended in like manner.
Section 2.13. Amendments upon Extension. Upon any extension of
the Stated Expiration Date pursuant to Section 2.12 of this Agreement,
the Bank and the Applicant each reserves the right to renegotiate any
provision hereof.
ARTICLE THREE
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Issuance of Letter of
Credit. As conditions precedent to the obligation of the Bank to issue
the Letter of Credit, (a) the Applicant shall provide to the Bank on
the Closing Date, in form and substance satisfactory to the Bank and
its counsel, Chapman and Cutler (hereinafter, "Bank's counsel"):
(i) a written opinion or opinions of counsel to the
Applicant dated the Closing Date and addressed to the Bank;
(ii) the written opinion or a reliance letter of Chapman
and Cutler, bond counsel, dated the Closing Date and addressed to
the Bank;
(iii) the written opinion of counsel to the Issuer,
dated the Closing Date and addressed to the Bank;
(iv) a certificate signed by a duly authorized officer
of the Applicant, dated the Closing Date and stating that:
(A) the representations and warranties contained in
Article Four of this Agreement are true and correct on and as
of the Closing Date as though made on such date; and
(B) no Event of Default or Potential Default has
occurred and is continuing, or would result from the issuance
of the Letter of Credit or the execution, delivery or
performance of this Agreement or any Related Document to which
the Applicant is a party;
(v) evidence of the due authorization, execution and
delivery by the parties thereto of the Related Documents;
(vi) a copy of resolutions of the Board of Directors of
the Applicant and all other necessary corporate approvals, if any,
certified as of the Closing Date by the Secretary or Assistant
Secretary of the Applicant, authorizing, among other things, the
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execution, delivery and performance by the Applicant of
the Related Documents to which it is a party and the issuance of
the Letter of Credit;
(vii) true and correct copies of all material
Governmental Approvals, if any, necessary for the Applicant to
execute, deliver and perform the Related Documents to which it is
a party and to authorize the Applicant to obtain the issuance of
the Letter of Credit;
(viii) confirmation that the Applicant does not need any
consents and other approvals from creditors necessary for the Applicant
to execute, deliver and perform the Related Documents to which it is a
party and to authorize the Applicant to obtain the issuance of the
Letter of Credit;
(ix) certified copies of documents evidencing all
necessary action taken by the Issuer to authorize the execution
and delivery of the Related Documents to which it is a party;
(xi) evidence that the Issuer shall have duly
executed, issued and delivered the Bonds to the Trustee and the
Bond registrar shall have duly authenticated the Bonds and
delivered the Bonds against payment;
(xii) evidence of insurance showing that the Project is
being insured in such amounts and against such risks as are
customary for companies in the same or similar business;
(xiii) such other documents, certificates and opinions
as the Bank or Bank's counsel may reasonably request;
(b) no law, regulation, ruling or other action of the
United States or the State of Illinois or any political
subdivision or authority therein or thereof shall be in effect or
shall have occurred, the effect of which would be to prevent the
Bank form fulfilling its obligations under this Agreement or the
Letter of Credit; and
(c) all legal requirements provided herein incident to the
execution, delivery and performance of the Related
Documents and the transactions contemplated thereby, shall be
reasonably satisfactory to the Bank and Bank's counsel.
Section 3.2. Conditions Precedent to Liquidity Advances.
Following any payment by the Bank under the Letter of Credit, a
Liquidity Advance shall be made available to the Applicant only if on
the date of payment of such drawing by the Bank the following
statements shall be true:
(a) the representations and warranties of the
Applicant contained in Article Four of this Agreement and in
the other Related Documents are correct in all material
respects on and as of the date of such payment as though
made on and as of such date; and
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(b) no event has occurred and is continuing, or
would result from such payment, which constitutes a
Potential Default or Event of Default.
Unless the Applicant shall have previously advised the Bank
in writing that one or both of the above statements is no longer true,
the Applicant shall be deemed to have represented and warranted, to the
best of their knowledge, on the date of such payment that both of the
above statements are true and correct.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement, the
Applicant represents and warrants to the Bank as follows:
Section 4.1. Organization and Qualification. The Applicant is
duly organized, validly existing and in good standing as a corporation
under the laws of the State of Delaware, has full and adequate
corporate power to own the Project and conduct its business as now
conducted, and is duly licensed or qualified and in good standing in
each jurisdiction in which the nature of the business conducted by it
or the nature of the Project owned or leased by it requires such
licensing or qualifying. The Applicant has full right and authority to
enter into the Related Documents to which the Applicant is a party to
perform each and all of the matters and things therein provided for;
and the Related Documents to which is a party do not, nor does the
performance or observance by the Applicant of any of the matters or
things therein provided for, contravene any provision of law or any
charter or by-law provision of the Applicant or any covenant, indenture
or agreement of or affecting the Applicant or the Project.
Section 4.2. Margin Stock. Neither the Applicant nor any of
its Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any drawing under the Letter of Credit
will be used to purchase or carry any such margin stock or extend
credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 4.3. Financial Reports. The consolidated and
consolidating financial statements of Griffith Laboratories, Inc., an
Illinois corporation and its Subsidiaries as at September 25, 1993 and
the related consolidated and consolidating balance sheet and statements
of income and retained earnings of Griffith Laboratories, Inc., and its
Subsidiaries for the fiscal year then ended and accompanying notes
thereto, which financial statements are accompanied by the audit report
of KPMG Peat Marwick, LLP, independent public accountants, and the
unaudited interim consolidated and consolidating financial statements
of Griffith Labs and its Subsidiaries as at June 25, 1994 and the
related consolidated and consolidating balance sheet and statements of
income of Griffith Labs and its Subsidiaries for the nine (9) months
then ended and accompanying notes thereto, heretofore furnished to the
Bank, fairly present the consolidated financial condition of Griffith
Labs and its Subsidiaries as at said dates and the consolidated and
consolidating results of their operations for the periods then ended in
conformity with GAAP. As of the date hereof, neither Griffith Labs nor
any Subsidiary thereof have contingent liabilities
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which, taken as a whole, are material to it other than as
indicated on such financial statements. Since the date of such audited
financial statements, there have been no material adverse changes in
the condition (financial or otherwise) of Griffith Labs or any
Subsidiary thereof taken as a whole.
Section 4.4. Litigation. There is no litigation or
governmental proceeding pending, nor to the knowledge of the Applicant
threatened, against Griffith Labs or any Subsidiary thereof or any of
their respective Property which (i) if adversely determined would
result in any material adverse change in the financial condition,
Property, business or operations of Griffith Labs or any Significant
Restricted Subsidiary thereof, (ii) in any manner draws into question
the validity or enforceability of any Related Document or any security
interest created thereby, or (iii) in any way contests the existence,
organization or powers of the Applicant or the titles of their officers
to their respective offices except the litigation set forth on Schedule
I attached hereto.
Section 4.5. Taxes. Griffith Labs has filed or caused to be
filed all material tax returns required by law to be filed and has paid
or caused to be paid all taxes, assessments and other governmental
charges levied upon or in respect of any of its properties, assets or
franchises, other than taxes (i) as to which, the failure to pay, could
not have a material adverse impact on the business of Griffith Labs or
any Subsidiary thereof and (ii) the validity or amount of which are
being contested in good faith by appropriate proceedings and for which
there shall have set aside on its books adequate reserves in accordance
with GAAP. The charges, accruals and reserves on the books of Griffith
Labs and its Subsidiaries in respect of taxes for all fiscal periods
are adequate, and there is no unpaid assessment for additional taxes
for any fiscal period or any basis therefor.
Section 4.6. Approvals. No material authorization, consent,
license, exemption or filing or registration with any court or
Governmental Authority or any approval or consent of the stockholders
of the Applicant or any other Person that has not been obtained, is or
will be necessary to the valid execution, delivery or performance by
the Applicant of any of the Related Documents to which it is a party.
Section 4.7. ERISA. Griffith Labs and its Subsidiaries are in
compliance in all material respects with ERISA to the extent applicable
to them and have received no notice to the contrary from the PBGC or
any other Governmental Authority. Griffith Labs and its Subsidiaries
have no Unfunded Vested Liabilities. No condition exists or event or
transaction has occurred with respect to any Plan which could
reasonably be expected to result in the incurrence by Griffith Labs or
any Subsidiary of any material liability, fine or penalty. Neither
Griffith Labs nor any Subsidiary thereof has any contingent liability
with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation of coverage described in Part 6
of Title I or ERISA, which, is not reflected in the financial
statements of Griffith Labs and its Subsidiaries.
Section 4.8. Investment Company. Neither Griffith Labs nor
any Subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
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Section 4.9. Public Utility Holding Company. Neither Griffith
Labs nor any Subsidiary thereof is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 4.10. Incorporation of Representations and Warranties
by Reference. The Applicant hereby makes to the Bank the same
representations and warranties as are set forth by it in each Related
Document to which it is a party, which representations and warranties,
as well as the related defined terms contained therein, are hereby
incorporated herein by reference for the benefit of the Bank with the
same effect as if each and every such representation and warranty and
defined term were set forth herein in its entirety and were made as of
the date hereof. No amendment to such representations and warranties or
defined terms made pursuant to any Related Document shall be effective
to amend such representations and warranties and defined terms as
incorporated by reference herein without the prior written consent of
the Bank.
ARTICLE FIVE
COVENANTS
The Applicant will do the following so long as any amounts
may be drawn under the Letter of Credit or any Obligations remain
outstanding under this Agreement, unless the Bank shall otherwise
consent in writing:
Section 5.1. Corporate Existence, Etc. The Applicant will,
and will cause each Significant Restricted Subsidiary to, maintain its
corporate existence. The Applicant will preserve and keep in force and
effect, and cause each Subsidiary to maintain all material licenses,
permits, franchises and qualifications necessary to the proper conduct
of its business. The Applicant will continue, and will cause each
Subsidiary to continue, to engage in a business of the same general
type as now conducted by it.
Section 5.2. Maintenance of Properties. The Applicant will
maintain, preserve and keep its Property required for the conduct of
its business in good repair, working order and condition (ordinary wear
and tear excepted).
Section 5.3. Compliance with Laws; Taxes and Assessments. The
Applicant will comply, and will cause each Subsidiary to comply, with
all applicable laws, rules, regulations and orders applicable to it and
its Property, such compliance to include, without limitation, paying
all taxes, assessments and governmental charges imposed upon it or its
Property before the same become delinquent, unless and to the extent
that the same are being contested in good faith and by appropriate
proceedings and reserves are provided therefor that in the opinion of
the Applicant or such Subsidiary are adequate.
Section 5.4. Insurance. The Applicant will maintain, and will
cause each Subsidiary to maintain or be covered by, insurance with
financially sound and reputable insurance companies or associations in
such amounts and covering such risks as are customary for companies
engaged in the same or a similar business and similarly situated;
provided that the Applicant and its Subsidiaries may self-insure risks
(a) in the manner in which the Applicant and its Subsidiaries
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self-insure such risks on the Closing Date or (b) otherwise in a manner
consistent with prudent industry practice in the jurisdictions in which
the Applicant or such Subsidiaries conduct their respective operations.
The Applicant will upon request of the Bank furnish a certificate
setting forth in summary form the nature and extent of the insurance
maintained pursuant to this Section.
Section 5.5. Reports. the Applicant will, and will cause each
Subsidiary to, maintain a standard system of accounting in accordance
with GAAP and will furnish to the Bank such information respecting the
business and financial condition of Griffith Labs and its Subsidiaries
as the Bank may reasonably request; and without any request, will
furnish to the Bank:
(a) Quarterly Statements. As soon as available and in any
event within 60 days after the end of each quarterly fiscal period
(except the last) of each fiscal year, copies of:
(1) consolidated balance sheets of Griffith Labs and
its Restricted Subsidiaries as of the close of such quarterly
fiscal period, setting forth in comparative form the
consolidated figures for the fiscal year then most recently
ended,
(2) consolidated statements of earnings and changes
in stockholders' equity of Griffith Labs and its Restricted
Subsidiaries for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal
period, in each case setting forth, commencing with the
quarterly fiscal period of Griffith Labs ended December, 1995,
in comparative form the consolidated figures for the
corresponding periods of the preceding fiscal year, and
(3) consolidated statements of cash flow of Griffith
Labs and its Restricted Subsidiaries for the portion of the
fiscal year ending with such quarterly fiscal period, setting
forth, commencing with the quarterly fiscal period of Griffith
Labs ended December, 1995, in comparative form the
consolidated figures for the corresponding period of the
preceding fiscal year.
all in reasonable detail and certified as complete and correct by an
authorized financial officer of Griffith Labs;
(b) Annual Statements of Griffith Labs and its Subsidiaries.
As soon as available and in any event within 120 days after the close
of each fiscal year of Griffith Labs, copies of:
(1) consolidated and consolidating balance sheets of
Griffith Labs and its Subsidiaries as of the close of such
fiscal year, and
(2) consolidated and consolidating statements of
earnings and changes in stockholders' equity and the
consolidated statement of cash flow of Griffith Labs and its
Subsidiaries for such fiscal year,
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in each case setting forth, commencing with the financial statements
for the fiscal year of Griffith Labs ended September 30, 1995, in
comparative form the consolidated figures for the preceding fiscal
year, all in reasonable detail and accompanied by a report thereon of a
firm of independent public accountants of recognized national standing
selected by Griffith Labs to the effect that the consolidated financial
statements present fairly, in all material respects, the consolidated
financial position of Griffith Labs and its Subsidiaries as of the end
of the fiscal year being reported on and the consolidated results of
the operations and cash flow for said year in conformity with GAAP and
that the examination of such accountants in connection with such
financial statements has been conducted in accordance with generally
accepted auditing standards and included such tests of the accounting
records and such other auditing procedures as said accountants deemed
necessary in the circumstances, provided that such consolidating
statements may be furnished covering each Subsidiary or groups of
Subsidiaries in accordance with the practice of Griffith Labs at the
time of preparation of such consolidating statements for any such
fiscal year;
(c) Annual Statements of Griffith Labs and its Restricted
Subsidiaries. For any fiscal year or portion thereof during which any
Subsidiary is not also a Restricted Subsidiary, as soon as available
and in any event within 120 days after the close of such fiscal year,
copies of:
(1) consolidated balance sheets of Griffith Labs and its
Restricted Subsidiaries as of the close of such fiscal year,
and
(2) consolidated statements of earnings, changes in
stockholders' equity and cash flow of Griffith Labs and its
Restricted Subsidiaries for such fiscal year.
in each case setting forth, commencing with the financial statements
for the second consecutive fiscal year of Griffith Labs for which it is
required to furnish annual statements pursuant to this paragraph (c),
in comparative form the consolidated figures for the preceding fiscal
year, all prepared on a basis consistent with and in the same degree of
detail as the quarterly financial statements of Griffith Labs and its
Restricted Subsidiaries furnished pursuant to Section 4.3 and certified
as complete and correct by an authorized financial officer of Griffith
Labs.
(d) Audit Reports. Promptly upon receipt thereof, one copy of
each interim or special audit made by independent accountants of the
books of Griffith Labs and any management letter pertaining to Griffith
Labs from such accountants;
(e) promptly after knowledge thereof shall have come to the
attention of any responsible officer (which, for purposes of this
Section shall mean any officer of the Applicant holding a position of
executive vice president or higher) of the Applicant, written notice
(i) of any threatened or pending litigation or governmental proceeding
against the Applicant, Griffith Labs or any Significant Restricted
Subsidiary thereof which, if materially adversely determined, would
adversely effect the financial condition,
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<PAGE> 21
Property, business or operations of the Applicant or any
Subsidiary or (ii) of the occurrence of any Potential Default
or Event of Default hereunder.
Each of the financial statements furnished to the Bank
pursuant to this Section shall be accompanies by a written certificate
signed by the chief financial officer of Griffith Labs to the effect
that to the best of such officer's knowledge and belief no Potential
Default or Event of Default has occurred during the period covered by
such statements or, if any such Potential Default or Event of Default
has occurred during such period, setting forth a description of such
Potential Default or Event of Default and specifying the action, if
any, taken to remedy the same. Such certificate shall also set forth
the calculations supporting such statements in respect of Sections
6.1(m), (n) and (o) of this Agreement.
Section 5.6. Inspection. The Applicant will, and will cause
each Subsidiary to, prior to an Event of Default semi-annually and
after an Event of Default from time to time as the Bank may request,
permit the Bank and its duly authorized representatives and agents to
make reasonable visits and reasonable inspections of any of the
Properties, corporate books and financial records of the Applicant and
each Subsidiary, to examine and make copies of the books of accounts
and other financial records of the Applicant and each Subsidiary, and
to discuss the affairs, finances and accounts of the Applicant and each
Subsidiary with, and to be advised as to the same by, its officers and
independent public accountants (and by this provision the Applicant
authorizes such accountants to discuss with the Bank the finances and
affairs of the Applicant and each Subsidiary) at such reasonable times
and reasonable intervals as the Bank may designate.
Section 5.7. Related Documents. The Applicant will not amend
or consent to any amendment of any Related Document without the written
consent of the Bank which shall not be unreasonably withheld.
Section 5.8. Optional Redemption of Bonds. The Applicant will
not permit an optional redemption or purchase of Bonds under Section
3.01 of the Indenture without the consent of the Bank; provided
however, that if the Applicant has deposited with the Bank or the
Trustee an amount equal to the principal amount of Bonds to be redeemed
pursuant to Section 3.01 of the Indenture, the Bank shall consent to
such optional redemption to the extent of such amounts.
ARTICLE SIX
DEFAULTS
Section 6.1. Events of Default and Remedies. If any of the
following events shall occur, each such event shall be an "Event of
Default":
(a) any material representation or warranty made by
the Applicant in this Agreement (or incorporated herein by
reference) or in any of the other Related Documents or in any
certificate, document, instrument, opinion or financial or
other statement contemplated by or made or delivered pursuant
to or in connection with this Agreement or with any of the
other Related Documents, shall prove to have been incorrect,
incomplete or misleading in any material respect;
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(b) any "event of default" shall have occurred under
any of the Related Documents or that certain Note Purchase
Agreement Dated as of August 30, 1994 regarding the
$45,000,000 8.30% Senior Notes, Series A of Griffith Labs (as
defined respectively therein);
(c) failure to pay the Bank any Obligations when and
as due hereunder and such failure shall continue for five
days after the occurrence thereof;
(d) default in the due observance or performance by
the Applicant of any covenant set forth in Article Five
hereof and such default shall continue for fifteen days after
the earlier of (i) the day on which the President, the Chief
Financial Officer or the Treasurer of the Applicant first
obtains knowledge of such default or (ii) the day on which
written notice thereof is given to the Applicant by the Bank;
(e) default in the due observance or performance by
the Applicant of any other term, covenant or agreement set
forth in this Agreement which is not remedied within 30 days
after the earlier of (i) the day on which the President, the
Chief Financial Officer or the Treasurer of the Applicant
first obtains knowledge of such default, or (ii) the day on
which written notice thereof is given to the Applicant by the
Bank; provided that if any such default (other than one
curable by the payment of money) may be cured, but not within
such 30 day period, it shall not constitute an Event of
Default hereunder if the Applicant promptly commences to cure
such default, diligently pursues such cure to completion and
such defaults is in fact cured within 90 days thereafter;
(f) any material provision of this Agreement or any of
the Related Documents shall cease to be valid and binding, or
the Applicant shall contest any such provision, or the
Applicant or any agent or trustee on behalf of an Applicant
shall deny that it has any or further liability under this
Agreement or any of the Related Documents;
(g) Griffith Labs, the Applicant or any Significant
Restricted Subsidiary of Griffith Labs shall (i) have entered
involuntarily against it an order for relief under the
Bankruptcy Code of 1978, as amended, (ii) not pay, or admit
in writing its inability to pay, its debts generally as they
become due or suspend payment of its obligations, (iii) make
an assignment for the benefit of creditors, (iv) apply for,
seek, consent to, or acquiesce in, the appointment or a
receiver, custodian, trustee, conservator, liquidator or
similar official for it or any substantial part of its
property, (v) institute any proceeding seeking to have
entered against it an order for relief under the Bankruptcy
Code of 1978, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization,
arrangement, marshaling of assets, adjustment or composition
of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to
file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi)
fail to contest in good faith any appointment or proceeding
described in Section 6.1(h) hereof, or (vii) take any action
in furtherance of any of the foregoing purposes;
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(h) a custodian receiver, trustee, conservator,
liquidator or similar official shall be appointed for
Griffith Labs, the Applicant or any Significant Restricted
Subsidiary of Griffith Labs or any substantial part of its
property, or a proceeding described in Section 6.1(g)(v)
shall be instituted against Griffith Labs, the Applicant or
any Significant Restricted Subsidiary of Griffith Labs and
such appointment continues undischarged or any such
proceeding continues undismissed or unstayed for a period of
60 or more days;
(i) default shall occur and remain uncured for five
days under any evidence of Indebtedness in an amount not less
than $5,000,000 issued, assumed or guaranteed by Griffith
Labs, the Applicant or any Restricted Subsidiary or under any
indenture, agreement or other instrument under which the same
may be issued, and such default shall continue for a period
of time sufficient to permit the acceleration of the maturity
of any such Indebtedness (whether or not such maturity is in
fact accelerated) or any such Indebtedness shall not be paid
when and as due (whether by lapse of time, acceleration or
otherwise);
(j) Final judgment or judgments for the payment of
money aggregating in excess of $2,500,000 is or are
outstanding against Griffith Labs, the Applicant or any
Restricted Subsidiary or against any Property of Griffith
Labs, the Applicant or any Restricted Subsidiary and any one
or more of such judgments aggregating at least $1,000,000
have remained unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period equal to the longer of (i)
30 days from the date of its entry or (ii) the expiration of
the period during which no judgment creditor of Griffith
Labs, the Applicant or such Restricted Subsidiary may execute
such judgment against any such Property;
(k) either Griffith Labs, the Applicant or any member
of its Controlled Group shall fail to pay when due an amount
or amounts aggregating in excess of $4,000,000 which it shall
have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Vested Liabilities in excess
of $4,000,000 (collectively, a "Material Plan") shall be
filed under Title IV of ERISA by Griffith Labs, the Applicant
or any other member of its Controlled Group, any plan
administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer
any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against Griffith Labs, the
Applicant or any member of its Controlled Group to enforce
Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within thirty (30) days thereafter;
or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or
(l) a default shall occur and be continuing under any
agreement between either Griffith Labs, the Applicant and the
Bank or under any obligation owed by the Applicant to the
Bank; or
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(m) Griffith Labs shall, at any time, fail to maintain
and keep the ratio of Consolidated Current Assets to Adjusted
Consolidated Current Liabilities of not less than 1.1 to 1.0;
or
(n) Griffith Labs shall, at any time, fail to maintain
and keep Adjusted Consolidated Tangible Net Worth at an
amount of not less than $70,000,000; or
(o) the sum of (x) Consolidated Funded Debt of
Griffith Labs and its Restricted Subsidiaries plus (y)
Excess Current Debt treated as Funded Debt plus (z) all
Excess Transferred Property shall exceed 55% of Consolidated
total Capitalization; or
(p) Griffith Labs shall default in the performance of
any of its obligations under the Griffith Labs Guaranty or
disavow any obligation it may have thereunder; or
(q) the occurrence of a Change in Control.
Section 6.2. Remedies. Upon the occurrence of any Event of
Default the Bank may exercise any one or more of the following rights
and remedies in addition to any other remedies herein or by law
provided:
(a) by written notice to the Applicant require that the
Applicant immediately prepay to the Bank in immediately
available funds an amount equal to the Available Amount
(such amounts to be held by the Bank as collateral security
for the Obligations), provided, however, that in the case of
an Event of Default described in Section 6.1(g) or (h)
hereof, such prepayment Obligations shall automatically
become immediately due and payable without any notice
(unless the coming due of such Obligations is waived by the
Bank in writing);
(b) by notice to the Applicant, declare all Obligations
to be, and such amounts shall thereupon become, immediately
due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by
the Applicant, provided that upon the occurrence of an Event
of Default under Section 6.1(g) or (h) hereof such
acceleration shall automatically occur (unless such
automatic acceleration is waived by the Bank in writing);
(c) give notice of the occurrence of an Event of
Default to the Trustee, directing the Trustee to accelerate
the Bonds, thereby causing the Letter of Credit to expire 15
days thereafter;
(d) pursue any rights and remedies it may have under
the Related Documents;
(e) pursue any rights and remedies it may have under
the Griffith Labs Guaranty; or
(f) pursue any other action available at law or in
equity.
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ARTICLE SEVEN
MISCELLANEOUS
Section 7.1. No Deductions; Increased Costs. (a) Except as
otherwise required by law, each payment by the Applicant to the Bank
under this Agreement or any other Related Document shall be made
without setoff or counterclaim and without withholding for or on
account of any present or future taxes (other than overall net income
taxes on the recipient imposed by any jurisdiction having control of
such recipient) imposed by or within the jurisdiction in which the
Applicant is domiciled, any jurisdiction from which the Applicant makes
any payment hereunder, or (in each case) any political subdivision or
taxing authority thereof or therein. If any such withholding is so
required, the Applicant shall make the withholding, pay the amount
withheld to the appropriate Governmental Authority before penalties
attach thereto or interest accrues thereon and forthwith pay such
additional amount as may be necessary to ensure that the net amount
actually received by the Bank free and clear of such taxes (including
such taxes on such additional amount) is equal to the amount which the
Bank would have received had such withholding not been made. If the
Bank pays any amount in respect of any such taxes, penalties or
interest, the Applicant shall reimburse the Bank for that payment on
demand in the currency in which such payment was made. If the Applicant
pays any such taxes, penalties or interest, it shall deliver official
tax receipts evidencing that payment or certified copies thereof to the
Bank on or before the thirtieth day after payment.
(b) If the Code or any newly adopted law, treaty, regulation,
guideline or directive, or any change in any, law, treaty, regulation,
guideline or directive or any new or modified interpretation of any of
the foregoing by any authority or agency charged with the
administration or interpretation thereof or any central bank or other
fiscal, monetary or other authority having jurisdiction over the Bank
or the transactions contemplated by this Agreement (whether or not
having the force of law) shall:
(i) limit the deductibility of interest on funds obtained
by the Bank to pay any of its liabilities or subject the Bank
to any tax, duty, charge, deduction or withholding on or with
respect to payments relating to the Bonds, the Letter of
Credit or this Agreement, or any amount paid or to be paid by
the Bank as the issuer of the Letter of Credit (other than
any tax measured by or based upon the overall net income of
the Bank imposed by any jurisdiction having control over the
Bank);
(ii) impose, modify, require, make or deem applicable to
the Bank any reserve requirement, capital requirement,
special deposit requirement, insurance assessment or similar
requirement against any assets held by, deposits with or for
the account of, or loans, letters of credit or commitments
by, an office of the Bank;
(iii) change the basis of taxation of payments due the
Bank under this Agreement or the Bonds (other than by a
change in taxation of the overall net income of the Bank);
(iv) cause or deem letters of credit to be assets held by
the Bank and/or as deposits on its books; or
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<PAGE> 26
(v) impose upon the Bank any other condition with respect
to any amount paid or payable to or by the Bank or with
respect to this Agreement or any of the other Related
Documents;
and the result of any of the foregoing is to increase the
cost to the Bank of making any payment or maintaining the
Letter of Credit, or to reduce the amount of any payment
(whether of principal, interest or otherwise) receivable by
the Bank, or to reduce the rate of return on the capital of
the Bank or to require the Bank to make any payment on or
calculated by reference to the gross amount of any sum
received by it, in each case by an amount which the Bank in
its reasonable judgment deems material, then:
(1) the Bank shall promptly notify the Applicant in
writing of such event;
(2) the Bank shall promptly deliver to the Applicant
a certificate stating the change which has occurred or the
reserve requirements or other costs or conditions which have
been imposed on the Bank or the request, direction or
requirement with which it has complied, together with the date
thereof, the amount of such increased cost, reduction or
payment and a reasonably detailed description of the way in
which such amount has been calculated, and the Bank's
determination of such amounts, absent fraud or manifest error,
shall be conclusive; and
(3) the Applicant shall pay to the Bank, from time to
time as specified by the Bank, such an amount or amounts as
will compensate the Bank for such additional cost, reduction
or payment.
The protection of this Section 7.1(b) shall be available to
the Bank regardless of any possible contention of invalidity or
inapplicability of the law, regulation or condition which has been
imposed; provided, however, that if it shall be later determined by the
Bank that any amount so paid by the Applicant pursuant to this Section
7.1(b) is in excess of the amount payable under the provisions hereof,
the Bank shall refund such excess amount to the Applicant.
Section 7.2. Right to Setoff; Other Collateral. (a) Upon the
occurrence and during the continuance of an Event of Default, the Bank
is hereby authorized at any time and from time to time without notice
to the Applicant (any such notice being expressly waived by the
Applicant), and to the fullest extent permitted by law, to setoff, to
exercise any banker's lien or any right of attachment and apply any and
all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies at any time held and other
indebtedness at any time owing by the Bank to or for the account of the
Applicant (irrespective of the currency in which such accounts, monies
or indebtedness may be denominated and the Bank is authorized to
convert such accounts, monies and indebtedness into United States
dollars) against any and all of the Obligations of the Applicant,
whether or not the Bank shall have made any demand for any amount owing
to the Bank by the Applicant.
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(b) The rights of the Bank under this Section 7.2 are in
addition to, in augmentation of, and, except as specifically provided
in this Section 7.2, do not derogate from or impair other rights and
remedies (including, without limitation, other rights of setoff) which
the Bank may have.
Section 7.3. Indemnity. The Applicant agrees to indemnify and
hold the Bank and its directors, officers and employees harmless from
and against, and to pay on demand, any and all claims, damages, losses,
liabilities, costs and expenses whatsoever which the Bank or its
directors, officers or employees may incur or suffer by reason of or in
connection with the execution and delivery of this Agreement or the
Letter of Credit, or any other documents which may be delivered in
connection with this Agreement or the Letter of Credit, or in
connection with any payment under the Letter of Credit, including,
without limitation, the fees and expenses of counsel for the Bank with
respect thereto and with respect to advising the Bank as to its rights
and responsibilities under this Agreement and the Letter of Credit and
all fees and expenses, if any, in connection with the enforcement or
defense of the rights of the Bank in connection with this Agreement,
the Letter of Credit or any of the Related Documents, or the collection
of any monies due under this Agreement or such other documents which
may be delivered in connection with this Agreement, the Letter of
Credit or any of the Related Documents; except, only if, and to the
extent that any such claim, damage, loss, liability, cost or expense
shall be caused by the Bank's failure to act in good faith or to
observe general banking usage in connection with the Letter of Credit
or failure to examine documents presented under the Letter of Credit
with care to determine whether they comply with the terms of the Letter
of Credit (it being understood that the Bank assumes no liability or
responsibility for the genuineness, falsification or effect of any
document which appears on such examination to be regular on its face).
Promptly after receipt by the Bank of notice of the commencement, or
threatened commencement, of any action subject to the indemnities
contained in this Section, the Bank shall promptly notify the Applicant
thereof, provided that failure to give such notice shall not relieve
the Applicant from any liability to the Bank hereunder. The obligations
of the Applicant under this Section 7.3 shall survive payment of all
Obligations owed under this Agreement and the expiration of the Letter
of Credit.
Section 7.4. Obligations Absolute. The obligations of the
Applicant under this Agreement shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances.
Section 7.5. Liability of the Bank. (a) The Applicant assumes
all risks of the acts or omissions of the Trustee, or any agent of the
Trustee, and any transferee beneficiary of the Letter of Credit with
respect to its use of the Letter of Credit. Neither the Bank nor any of
its officers or directors shall be liable or responsible for: (i) the
use which may be made of the Letter of Credit or for any acts or
omissions of the Trustee and any transferee beneficiary in connection
therewith; (ii) the validity or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact prove to
be in any or all respects invalid, fraudulent or forged; or (iii) any
other circumstances whatsoever in making or failing to make payment
under the Letter of Credit; provided, however, that the Applicant shall
have a claim against the Bank, and the Bank shall be liable to the
Applicant, to the extent of any direct compensatory, as opposed to
consequential, damages suffered by the Applicant which the Applicant
proves were caused by
26
<PAGE> 28
the Bank's failure to act in good faith or to observe general
banking usage in connection with the Letter of Credit or failure to
examine documents presented under the Letter of Credit with care to
determine whether they comply with the terms of the Letter of Credit
(it being understood that the Bank assumes no liability or
responsibility for the genuineness, falsification or effect of any
document which appears on such examination to regular on its face).
The Bank is hereby expressly authorized and directed to honor any
demand for payment which is made under the Letter of Credit without
regard to, and without any duty on its part to inquire into the
existence of, any disputes or controversies between or among the
Applicant, the Trustee, any transferee beneficiary of the Letter of
Credit or any other Person or the respective rights, duties or
liabilities of any of them, or whether any facts or occurrences
represented in any of the documents presented under the Letter of
Credit are true and correct.
(b) The Bank represents and warrants to the Applicant that it
has all necessary authority to enter into this Agreement and to issue
the Letter of Credit.
Section 7.6. Participants. The Bank shall, with the
Applicant's consent (which consent shall not be unreasonably withheld),
have the right to grant participations in the Letter of Credit to one
or more other banking institutions, and such participants shall be
entitled to the benefits of this Agreement, including, without
limitation, sections 7.1, 7.3 and 7.14 hereof, to the same extent as if
they were a direct party hereto; provided, however, that no such
participation by any such participant shall in any way affect the
obligation of the Bank under the Letter of Credit; and provided further
that no such participant shall be entitled to receive payment hereunder
of any amount greater than the amount which would have been payable had
the Bank not granted a participation to such participant.
Section 7.7. Survival of this Agreement. All covenants,
agreements, representations and warranties made in this Agreement shall
survive the issuance by the Bank of the Letter of Credit and shall
continue in full force and effect so long as the Letter of Credit shall
be unexpired or any Obligations shall be outstanding and unpaid. The
obligation of the Applicant to reimburse the Bank pursuant to Sections
7.1, 7.3 and 7.14 hereof, and the obligation of the Bank to provide
notice to the Applicant under Section 7.3 hereof, shall survive the
payment of the Bonds and termination of this Agreement.
Section 7.8. Modification of this Agreement. No amendment,
modification or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by the Bank
and no amendment, modification or waiver of any provision of the Letter
of Credit, and no consent to any departure by the Applicant therefrom,
shall in any event be effective unless the same shall be in writing and
signed by the Bank. Any such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice
to or demand on the Applicant in any case shall entitle the Applicant
to any other or further notice or demand in the same, similar or other
circumstances.
Section 7.9. Waiver of Rights by the Bank. No course of
dealing or failure or delay on the part of the Bank in exercising any
right, power or privilege hereunder or under the Letter of Credit or
this Agreement shall operate as a waiver thereof, nor shall a single or
partial exercise
27
<PAGE> 29
thereof preclude any other or further exercise or the
exercise of any other right or privilege. The rights of the Bank under
the Letter of Credit and the rights of the Bank under this Agreement
are cumulative and not exclusive of any rights or remedies which the
Bank would otherwise have.
Section 7.10. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein 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.
Section 7.11. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
Illinois, without giving effect to conflict of law principles.
Section 7.12. Notices. All notices hereunder shall be given
by United States certified or registered mail or by telecommunication
device capable of creating written record of such notice and its
receipt. Notices hereunder shall be effective when received and shall
be addressed:
If to the Bank, to The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0088
Telecopy No.: (312) 732-5161
Telephone No.: (312) 732-5128
Attention: Amy L. Golz,
Assistant Vice President
If to the Applicant, to Griffith Micro Science, Inc.
One Griffith Center
Alsip, Illinois 60658-3495
Telecopy No.: (708) 597-3294
Telephone No.: (708) 371-0900
Attention: Brian J. Tuttle, Treasurer
James S. Legg,
Corporate Counsel
and Bell, Boyd & Lloyd
Three First National Plaza
Suite 3300
Chicago, Illinois 60603
Telecopy No.: (312) 372-2098
Telephone No.: (312) 807-4317
Attention: John C. Blew, Esq.
28
<PAGE> 30
If to the Trustee, to Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Telecopy No.: (312) 461-3525
Telephone No.: (312) 461-7458
Attention: Daryl Pomykala
Section 7.13. Successors and Assigns. Whenever in this
Agreement the Bank is referred to, such reference shall be deemed to
include the successors and assigns of the Bank and all covenants,
promises and agreements by or on behalf of the Applicant which are
contained in this Agreement shall inure to the benefit of such
successors and assigns. The rights and duties of the Applicant
hereunder, however, may not be assigned or transferred, except as
specifically provided in this Agreement or with the prior written
consent of the Bank, and all obligations of the Applicant hereunder
shall continue in full force and effect notwithstanding any assignment
by the Applicant of any of its rights or obligations under any of the
Related Documents or any entering into, or consent by the Applicant to,
any supplement or amendment to any of the Related Documents.
Section 7.14. Taxes and Expenses. Any taxes (other than any
tax measured by or based upon the overall net income of the Bank
imposed by any jurisdiction having control over the Bank) payable or
ruled payable by any Governmental Authority in respect of this
Agreement, the Letter of Credit or the Bonds shall be paid by the
Applicant, together with interest and penalties, if any; provided,
however, that the Applicant, may conduct a reasonable contest of any
such taxes which have been paid under protest and the amounts payable
by the Applicant hereunder shall not be duplicative of amounts payable
to the Bank under Section 7.1 hereof. The Applicant shall reimburse the
Bank for any and all out of pocket expenses and charges paid or
incurred by the Bank in connection with the preparation, execution,
delivery, administration and enforcement of this Agreement and any
amendment to this Agreement or the Letter of Credit, including
reasonable fees and disbursements of counsel to the Bank.
Section 7.15. Headings. The captions in this Agreement are
for convenience of reference only and shall not define or limit the
provisions hereof.
Section 7.16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original but all taken
together to constitute one instrument.
Section 7.17. Entire Agreement. This Agreement and the
Related Documents constitute the entire understanding of the parties
with respect to the subject matter thereof and any prior agreements,
whether written or oral, with respect thereto are superseded hereby.
29
<PAGE> 31
Please signify your agreement and acceptance of the foregoing by
executing this Agreement in the space provided below.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Kelly H. Gilroy
----------------------------------
Vice President
----------------------------------
Accepted and agreed to:
GRIFFITH MICRO SCIENCE, INC.
By /s/ Brian J. Tuttle
------------------------------
Its Treasurer
---------------------------
30
<PAGE> 32
ANNEX A
of the Reimbursement Agreement
dated as of December 1, 1994
RESTRICTED SUBSIDIARIES
JURISDICTION OF
NAME OF RESTRICTED SUBSIDIARY INCORPORATION
----------------------------- -------------
GLF Holdings Pty. Ltd. Australia
Micro-Biotrol Pty. Ltd. Australia
N.V. Griffith Laboratories S.A Belgium
Griffith Micro Science, N.V. Belgium
Griffith Laboratories, Limited Canada
Griffith Micro Science, Ltd. Canada
Griffith Laboratories Zhuhai Company Ltd. China
Griffith Colombia S.A. Colombia
Laboratorios Griffith de Centro America, S.A. Costa Rica
GMS S.A.S. France
Griffith Micro Science S.A. France
Griffith Laboratories GmbH Germany
Griffith Micro Science GmbH Germany
Griffith Laboratories, Ltd. Hong Kong
Griffith Laboratories, Ltd. Ireland
Griffith Laboratories S.r.L. Italy
Griffith Laboratories K.K. Japan
Laboratorios Griffith de Mexico, S.A. de C.V. Mexico
Griffith Micro Science, S.A. de C.V. Mexico
Bienes Raices Griffith, S.A. de C.V. Mexico
Griffith Laboratories, B.V. Netherlands
Griffith Micro Science B.V. Netherlands
GLF Holdings Ltd. New Zealand
Griffith Panama, S.A. Panama
Griffith Laboratories Pte. Ltd. Singapore
Griffith Laboratories S.A. Spain
Griffith Laboratories, Ltd. United Kingdom
Griffith Micro Science, Ltd. United Kingdom
Griffith Micro Science, Inc. USA - Delaware
Griffith Micro Science International, Inc. USA - Delaware
Synergistic Computer Services, Inc. USA - Delaware
Protein & Seasoning Services, Inc. USA - Delaware
A-1
<PAGE> 33
JURISDICTION OF
NAME OF RESTRICTED SUBSIDIARY INCORPORATION
----------------------------- --------------
Griffith Laboratories U.S.A., Inc. USA - Delaware
Custom Food Products, Inc. USA - Illinois
Griffith Design & Equipment Co. USA - Illinois
Griffith International, Inc. (DISC) USA - Illinois
A-2
<PAGE> 34
Schedule I
LITIGATION
None
<PAGE> 35
REIMBURSEMENT AGREEMENT
(This Table of Contents is not a part of
this Reimbursement Agreement
and is only for
convenience of reference)
<TABLE>
<CAPTION>
SECTION DESCRIPTION PAGE
<S> <C> <C>
ARTICLE ONE DEFINITIONS.....................................................................1
Section 1.1. Definitions................................................................1
ARTICLE TWO LETTER OF CREDIT...............................................................10
Section 2.1. Issuance of Letter of Credit..............................................10
Section 2.2. Letter of Credit Drawings.................................................11
Section 2.3. Reimbursement of Certain Liquidity Drawings under the
Letter of Credit..........................................................11
Section 2.4. Reimbursement of Drawings Other Than Liquidity Drawings
Creating Liquidity Advances under the Letter of Credit....................11
Section 2.5. Fees......................................................................12
Section 2.6. Method of Payment.........................................................12
Section 2.7. Substitute Letter of Credit...............................................12
Section 2.8. Computation of Interest and Fees..........................................12
Section 2.9. Payment Due on Non-Business Day to Be Made on Next
Section 2.10. Late Payments.............................................................12
Section 2.11. Source of Funds...........................................................13
Section 2.12. Amendments upon Extension.................................................13
ARTICLE THREE CONDITIONS PRECEDENT...........................................................13
Section 3.1. Conditions precedent to Issuance of Letter of Credit......................13
Section 3.2. Conditions Precedent to Liquidity Advances................................15
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES.................................................15
Section 4.1. Organization and Qualification............................................15
Section 4.2. Margin Stock..............................................................15
Section 4.3 Financial Reports.........................................................16
Section 4.4 Litigation................................................................16
Section 4.5. Taxes.....................................................................16
Section 4.6. Approvals.................................................................16
Section 4.7. ERISA.....................................................................17
Section 4.8. Investment Company........................................................17
</TABLE>
-i-
<PAGE> 36
<TABLE>
<S> <C> <C>
Section 4.9. Public Utility Holding Company............................................17
Section 4.10. Incorporation of Representations and Warranties by
Reference.................................................................17
ARTICLE FIVE COVENANTS......................................................................17
Section 5.1. Corporate Existence, Etc..................................................17
Section 5.2. Maintenance of Properties.................................................18
Section 5.3. Compliance with Laws; Taxes and Assessments...............................18
Section 5.4. Insurance.................................................................18
Section 5.5. Reports...................................................................18
Section 5.6. Inspection................................................................20
Section 5.7. Related Documents.........................................................21
Section 5.8. Optional Redemption of Bonds..............................................21
ARTICLE SIX DEFAULTS.......................................................................21
Section 6.1. Events of Default and Remedies............................................21
Section 6.2. Remedies..................................................................24
ARTICLE SEVEN MISCELLANEOUS..................................................................24
Section 7.1. No Deductions.............................................................24
Section 7.2. Right of Setoff...........................................................26
Section 7.3. Indemnity.................................................................26
Section 7.4. Obligations Absolute......................................................27
Section 7.5. Liability of the Bank.....................................................27
Section 7.6. Participants..............................................................28
Section 7.7. Survival of this Agreement................................................28
Section 7.8. Modification of this Agreement............................................28
Section 7.9. Waiver of Rights by the Bank..............................................28
Section 7.10. Severability..............................................................28
Section 7.11. Governing Law.............................................................29
Section 7.12. Notices...................................................................29
Section 7.13. Successors and Assigns....................................................29
Section 7.14. Taxes and Expenses........................................................30
Section 7.15. Headings..................................................................30
Section 7.16 Counterparts..............................................................30
Section 7.17. Entire Agreement..........................................................30
Signature.....................................................................................................31
</TABLE>
-ii-
<PAGE> 1
EXHIBIT 10.8(e)
[Logo] FIRST CHICAGO INTERNATIONAL TRADE BANKING
The First National Bank ONE NORTH DEARBORN - 9TH FLOOR, MAIL SUITE 0812
of Chicago CHICAGO, ILLINOIS 60670-0812 U.S.A.
TELEX: TRT 190201 FNBC UT Swift Address:FNBCUS44
ITT 4330253 FNBCUI FAX:(312) 407-1065
TEL: (312) 407-3843
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
December 29, 1994
**U.S. $5,369,699
No. 00361040
Harris Trust and Savings Bank, as trustee (the "Trustee") under the Indenture of
Trust dated as of December 1, 1994 (the "Indenture"), between Counties of
Warren and Washington Industrial Development Agency (the "Issuer"), and the
Trustee
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention: Indenture Trust Division
Ladies and Gentlemen:
We hereby establish in your favor as Trustee for the benefit of the
holders of the Bonds (as hereinafter defined), our irrevocable transferable
Letter of Credit No. 00361040 for the account of Griffith Micro Science, Inc.
(the "Applicant"), whereby we hereby irrevocably authorize you to draw on us
from time to time, from and after the date hereof to and including the earliest
to occur of our close of business on: (i) December 29, 1997 (as extended from
time to time, the "Stated Expiration Date"), (ii) the earlier of (A) the date
which is the Business Day following an Adjustable Rate Conversion Date or a CP
Rate Conversion Date (as such terms are defined in the Indenture) with respect
to all of the Bonds as such date is specified in a certificate in the form of
Exhibit A hereto (the "Conversion Date") or (B) the date on which the Bank
honors drawings under the Letter of Credit on or after the Conversion Date,
(iii) the date which is the Business Day following receipt from you of a
certificate in the form set forth as Exhibit B hereto, (iv) the date on which an
Acceleration Drawing is honored by us, and (v) the date which is fifteen (15)
days following receipt by you of a written notice from us specifying the
occurrence of an Event of Default under the Reimbursement Agreement dated as of
December 1, 1994, between the Applicant and us (the "Reimbursement Agreement")
and directing you to accelerate the Bonds (the earliest of such dates being
referred to herein as the "Termination Date"), a maximum aggregate amount not
exceeding Five Million Three Hundred Sixty-nine Thousand Six Hundred Ninety-nine
Dollars (U.S. $5,369,699 - the "Original Stated Amount") to pay principal of and
accrued interest on, or the purchase price of, the $5,300,000 Counties of Warren
and Washington Industrial Development Agency Industrial Development Revenue
Bonds Series 1994 (Griffith Micro Science, Inc. Project) issued by the Issuer
(the "Bonds"), in accordance with the terms hereof (said $5,369,699 having been
calculated to be equal to $5,300,000, the original principal amount of the
Bonds, plus $69,699 which is at least forty-eight (48) days'
<PAGE> 2
[Logo] FIRST CHICAGO INTERNATIONAL TRADE BANKING
The First National Bank ONE NORTH DEARBORN - 9TH FLOOR, MAIL SUITE 0812
of Chicago CHICAGO, ILLINOIS 60670-0812 U.S.A.
TELEX: TRT 190201 FNBC UT Swift Address:FNBCUS44
ITT 4330253 FNBCUI FAX:(312) 407-1065
TEL: (312) 407-3843
accrued interest on said principal amount of the Bonds at the rate of ten
percent (10%) per annum (the "Cap Interest Rate")). This credit is available to
you against presentation of the following documents (the "Payment Documents")
presented to The First National Bank of Chicago (the "Bank") as described below:
A certificate (with all blanks appropriately completed) (i) in
the form attached as Exhibit C hereto to pay accrued interest
on the Bonds as provided for under Section 5.04 of the
Indenture (an "Interest Drawing"), (ii) in the form attached
as Exhibit D hereto to pay the principal amount of and accrued
interest on the Bonds in respect of any redemption of the
Bonds as provided for in Section 5.04 of the Indenture (a
"Redemption Drawing"), provided that in the event the date of
redemption or purchase coincides with an Interest Payment Date
(as defined in the Indenture) the Redemption Drawing shall not
include any accrued interest on the Bonds (which interest is
payable pursuant to an Interest Drawing), (iii) in the form
attached as Exhibit E hereto, to pay the purchase price of
Bonds tendered or deemed tendered for purchase as provided for
in Section 3.08 of the Indenture which have not been
successfully remarketed or for which the purchase price has
not been received by the Tender Agent or the Remarketing Agent
(as such terms are defined in the Indenture) by 10:00 A.M.,
Chicago time, on the purchase date (a "Liquidity Drawing"),
provided that in the event the purchase date coincides with an
Interest Payment Date, the Liquidity Drawing shall not include
any accrued interest on the Bonds (which interest is payable
pursuant to an Interest Drawing), (iv) in the form attached as
Exhibit F hereto, to pay the principal of and accrued interest
in respect of Bonds the payment of which has been accelerated
pursuant to Section 5.04 of the Indenture (an "Acceleration
Drawing"), or (v) in the form attached as Exhibit G hereto to
pay the principal amount of Bonds maturing on December 1, 2014
(a "Stated Maturity Drawing"), each certificate to state
therein that it is given by your duly authorized officer and
dated the date such certificate is presented hereunder. No
drawings shall be made under this Letter of Credit for Pledged
Bonds or Company Bonds (as defined in the Indenture).
All drawings shall be made by presentation of each Payment Document at
our office at One First National Plaza, Attention: L/C Manager, Mail Suite 0236,
Chicago, Illinois 60670-0236 as aforesaid, by tested telex (at telex number
(312) 433-0253 Answerback: FNBCUI) or by telecopier (at telecopier number (312)
407-1065), without further need of documentation, including the original of this
Letter of Credit, it being understood that
<PAGE> 3
[Logo] FIRST CHICAGO INTERNATIONAL TRADE BANKING
The First National Bank ONE NORTH DEARBORN - 9TH FLOOR, MAIL SUITE 0812
of Chicago CHICAGO, ILLINOIS 60670-0812 U.S.A.
TELEX: TRT 190201 FNBC UT Swift Address:FNBCUS44
ITT 4330253 FNBCUI FAX:(312) 407-1065
TEL: (312) 407-3843
each Payment Document so submitted is to be the sole operative instrument of
drawing. You shall use your best efforts to give telephonic notice of a drawing
to the Bank at its Letter of Credit Department, ((312) 407-3943) on the Business
Day preceding the day of such drawing (but such notice shall not be a condition
to drawing hereunder and you shall have no liability for not doing so).
We agree to honor and pay the amount of any Interest, Redemption,
Liquidity, Acceleration or Stated Maturity Drawing if presented in compliance
with all of the terms of this Letter of Credit. If such drawing, other than a
Liquidity Drawing or an Interest Drawing, is presented prior to 11:00 A.M.,
Chicago time, on a Business Day, payment shall be made to the account number or
address designated by you of the amount specified, in immediately available
funds, by 10:00 A.M., Chicago time, on the following Business Day. If any such
drawing, other than a Liquidity Drawing or an Interest Drawing, is presented at
or after 11:00 A.M., Chicago time, on a Business Day, payment shall be made to
the account number or address designated by you of the amount specified, in
immediately available funds, by 1:30 P.M., Chicago time, on the following
Business Day. If a Liquidity Drawing or an Interest Drawing is presented prior
to 10:30 A.M., Chicago time, on a Business Day, payment shall be made to the
account number or address designated by you of the amount specified, in
immediately available funds, by 1:30 P.M., Chicago time, on the same Business
Day. If a Liquidity Drawing or an Interest Drawing is presented at or after
10:30 A.M., Chicago time, payment shall be made to the account number or address
designated by you of the amount specified, in immediately available funds, by
10:00 A.M., Chicago time, on the following Business Day. Payments made hereunder
shall be made by wire transfer to you or your designee or by deposit into your
account with us in accordance with the instructions specified by the Trustee in
the drawing certificate relating to a particular drawing hereunder. "Business
Day" means any day other than (i) a Saturday or Sunday or (ii) a day on which
banking institutions in the city in which the principal corporate trust office
of the Trustee is located, or in the City of Chicago, Illinois, are required or
authorized by law or executive order to remain closed, or (iii) a day on which
the New York Stock Exchange is closed.
The Available Amount (as hereinafter defined) will be reduced
automatically by the amount of any drawing hereunder; provided, however, that
the amount of any Interest Drawing hereunder, less the amount of the reduction
in the Available Amount attributable to interest as specified in a certificate
in the form of Exhibit D or H hereto, shall be automatically reinstated
effective the eleventh (11th) calendar day from the date of such drawing unless
you shall have received notice to the contrary by telecopy (or other facsimile
telecommunications) within ten (10) calendar days of the date of any Interest
Drawing. After payment by us of a Liquidity Drawing, the obligation of the Bank
to honor drawings under this Letter of Credit will be automatically reduced by
an amount equal to the Original Purchase Price (as defined below) of any Bonds
(or portions thereof) purchased pursuant to said drawing. In addition, prior to
the Conversion Date, in the event of the remarketing of the Bonds (or portions
thereof) previously purchased with the proceeds of a Liquidity Drawing, or in
the event we are otherwise reimbursed
<PAGE> 4
[Logo] FIRST CHICAGO INTERNATIONAL TRADE BANKING
The First National Bank ONE NORTH DEARBORN - 9TH FLOOR, MAIL SUITE 0812
of Chicago CHICAGO, ILLINOIS 60670-0812 U.S.A.
TELEX: TRT 190201 FNBC UT Swift Address:FNBCUS44
ITT 4330253 FNBCUI FAX:(312) 407-1065
TEL: (312) 407-3843
for amounts owing with respect to such drawing, our obligation to honor drawings
hereunder will be automatically reinstated concurrently upon receipt by us, or
the Trustee or the Tender Agent on our behalf, of an amount equal to the
Original Purchase Price of such Bonds (or portion thereof); the amount of such
reinstatement shall be equal to the Original Purchase Price of such Bonds (or
portions thereof). "Original Purchase Price" shall mean the principal amount of
any Bond purchased with the proceeds of a Liquidity Drawing plus the amount of
accrued interest on such Bond paid with the proceeds of a Liquidity Drawing (and
not pursuant to an Interest Drawing) upon such purchase.
Upon receipt by us of a certificate of the Trustee in the form of
Exhibit D or H hereto, the Letter of Credit will automatically and permanently
reduce the amount available to be drawn hereunder by the amount specified in
such certificate. Such reduction shall be effective as of the next Business Day
following the date of delivery of such certificate.
Upon any permanent reduction of the amounts available to be drawn under
this Letter of Credit, as provided herein, we may deliver to you a substitute
Letter of Credit in exchange for this Letter of Credit or an amendment to this
Letter of Credit substantially in the form of Exhibit I hereto to reflect any
such reduction. If we deliver to you such a substitute Letter of Credit you
shall simultaneously surrender to us for cancellation the Letter of Credit then
in your possession.
The "Available Amount" shall mean the Original Stated Amount (i) less
the amount of all prior reductions pursuant to Interest, Redemption, Liquidity,
Acceleration or Stated Maturity Drawings, (ii) less the amount of any reduction
thereof pursuant to a reduction certificate in the form of Exhibit D or H hereto
to the extent such reduction is not already accounted for by a reduction in the
Available Amount pursuant to (i) above, (iii) plus the amount of all
reinstatements as above provided.
Prior to the Termination Date, we may extend the Stated Expiration Date
from time to time at the request of the Applicant by delivering to you an
amendment to this Letter of Credit in the form of Exhibit K hereto designating
the date to which the Stated Expiration Date is being extended. Each such
extension of the Stated Expiration Date shall become effective on the Business
Day following delivery of such notice to you and thereafter all references in
this Letter of Credit to the Stated Expiration Date shall be deemed to be
references to the date designated as such in such notice. Any date to which the
Stated Expiration Date has been extended as herein provided may be extended in a
like manner.
Upon the Termination Date this Letter of Credit shall automatically
terminate and be delivered to the Bank for cancellation.
This Letter of Credit is transferable in whole only to your successor
as Trustee. Any such transfer (including any successive transfer) shall be
effective upon receipt by us (which receipt shall be subsequently confirmed in
writing to the transferor and the transferee by the Bank) of a signed copy of
the instrument effecting each such transfer signed by the transferor and by the
<PAGE> 5
transferee in the form of Exhibit J hereto (which shall be conclusive evidence
of such transfer) and, in such case, the transferee instead of the transferor
shall, without the necessity of further action, be entitled to all the benefits
of and rights under this Letter of Credit in the transferor's place; provided
that, in such case, any certificates of the Trustee to be provided hereunder
shall be signed by one who states therein that he is a duly authorized officer
or agent of the transferee.
Communications with respect to this Letter of Credit shall be addressed
to us at The First National Bank of Chicago, One First National Plaza, Chicago,
Illinois 60670-0236, Attention: L/C Manager, Mail Suite 0236, specifically
referring to the number of this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 (the "Uniform
Customs"), except for Article 41 and the first sentence of Article 48(g)
thereof. As to matters not governed by the Uniform Customs, this Letter of
Credit shall be governed by and construed in accordance with the laws of the
State of Illinois, including without limitation the Uniform Commercial Code as
in effect in the State of Illinois.
All payments made by us hereunder shall be made from our funds and not
with the funds of any other person.
This Letter of Credit sets forth in full the terms of our undertaking,
and such undertaking shall not in any way be modified or amended by reference to
any other document whatsoever.
THE FIRST NATIONAL BANK OF CHICAGO
By [Illegible]
----------------------------------
Its OPERATIONS OFFICER/
ASSISTANT VICE PRESIDENT
<PAGE> 6
EXHIBIT A
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
NOTICE OF CONVERSION DATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
which has been established by you for the account of [Name of Applicant], in
favor of the Trustee.
The undersigned hereby certifies and confirms that an Adjustable Rate
Conversion Date [or a CP Rate Conversion Date] with respect to all of the Bonds
has occurred on [insert date], and, accordingly, said Letter of Credit shall
terminate on the Business Day after such Conversion Date in accordance with its
terms.
All defined terms used herein which are not otherwise defined herein
shall have the same meaning as in the Letter of Credit.
-------------------------------------
as Trustee
By
-----------------------------------
[Title of Authorized Representative]
<PAGE> 7
EXHIBIT B
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
NOTICE OF TERMINATION
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
which has been established by you for the account of [Name of Applicant] in
favor of the Trustee.
The undersigned hereby certifies and confirms that [(i) no Bonds (as
defined in the Letter of Credit) remain Outstanding within the meaning of the
Indenture, (ii) all drawings required to be made under the Indenture and
available under the Letter of Credit have been made and honored, (iii) a
substitute letter of credit has been issued to replace the Letter of Credit
pursuant to the Indenture, or (iv) the Trustee is required to terminate the
Letter of Credit in accordance with the terms of the Indenture and, accordingly,
the Letter of Credit shall be terminated in accordance with its terms.
All defined terms used herein which are not otherwise defined shall
have the same meaning as in the Letter of Credit.
-------------------------------------
as Trustee
By
--------------------------------------
[Title of Authorized Representative]
<PAGE> 8
By Telecopy or Tested Telex
EXHIBIT C
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
INTEREST DRAWING CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
The undersigned individual, a duly authorized representative of
____________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
issued by The First National Bank of Chicago (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and
(iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit)
under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$____________ under the Letter of Credit pursuant to the Indenture with respect
to the payment of interest due on all Bonds outstanding on the Interest Payment
Date (as defined in the Indenture) occurring on [insert applicable date][, other
than Company Bonds or Pledged Bonds (as defined in the Indenture)].
3. The amount of the drawing is equal to the amount required to be
drawn by the Trustee pursuant to Section 5.04 of the Indenture.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms of the Indenture and, when added to the amount of any
other drawing under the Letter of Credit made simultaneously herewith, does not
exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to
______________ __________, ABA Number ________________, Account Number
________________, Attention:____________________, Re:______________________.
<PAGE> 9
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of _____________________, 19___.
---------------------------------------
as Trustee
By
------------------------------------
[Title of Authorized Representative]
<PAGE> 10
By Telecopy or Tested Telex
EXHIBIT D
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
REDEMPTION DRAWING AND REDUCTION CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
The undersigned individual, a duly authorized representative of
____________________ ________________________ (the "Beneficiary"), hereby
CERTIFIES on behalf of the Beneficiary as follows with respect to (i) that
certain Irrevocable Transferable Letter of Credit No. 00361040 dated December
29, 1994 (the "Letter of Credit"), issued by The First National Bank of Chicago
(the "Bank") in favor of the Beneficiary; (ii) those certain Bonds (as defined
in the Letter of Credit); and (iii) that certain Indenture (as defined in the
Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit)
under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$___________ under the Letter of Credit pursuant to Section 5.04 of the
Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount
of Bonds to be redeemed by the Issuer (as defined in the Letter of Credit)
pursuant to Section 5.04 of the Indenture on [insert applicable date] (the
"Redemption Date") [other than Company Bonds or Pledged Bonds (as defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) to the Redemption
Date, provided that in the event the Redemption Date coincides with an Interest
Payment Date this drawing does not include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph 2 above:
(i) $____________ is demanded in respect of the principal amount of
the Bonds referred to in subparagraph (a) above; and
(ii) $____________ is demanded in respect of accrued interest on such
Bonds.
<PAGE> 11
4. Payment by the Bank pursuant to this drawing shall be made to
______________ ________________________, ABA Number
____________________________, Account Number _______________________,
Attention:______________________________________, Re:
___________________________.
5. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to the
amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
6. Upon payment of the amount drawn hereunder, the Bank is hereby
directed to permanently reduce the Available Amount by $[insert amount of
reduction] and the Available Amount shall thereupon equal $[insert new Available
Amount]. The Available Amount has been reduced by an amount equal to the
principal of Bonds paid with this drawing and an amount equal to forty eight
(48) days' interest thereon at the Cap Interest Rate (as defined in the Letter
of Credit).
7. Of the amount of the reduction stated in paragraph 6 above:
(i) $____________ is attributable to the
principal amount of Bonds redeemed; and
(ii) $____________ is attributable to interest on
such Bonds (i.e., 48 days' interest thereon at the Cap
Interest Rate).
8. The amount of the reduction in the Available Amount has been
computed in accordance with the provisions of the Letter of Credit.
9. Following the reduction, the Available Amount shall be at least
equal to the aggregate principal amount of the Bonds outstanding (to the extent
such Bonds are not Pledged Bonds or Company Bonds (as defined in the Indenture))
plus forty eight (48) days' interest thereon at the Cap Interest Rate.
10. In the case of a redemption pursuant to Section 3.01 of the
Indenture, the Trustee, prior to giving notice of redemption to the owners of
the Bonds, received written evidence from the Bank that the Bank has consented
to such redemption.
<PAGE> 12
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of _____________________, 19___.
--------------------------------------
as Trustee
By
--------------------------------------
[Title of Authorized Representative]
<PAGE> 13
By Telecopy or Tested Telex
EXHIBIT E
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
LIQUIDITY DRAWING CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
The undersigned individual, a duly authorized representative of
_________________ (the "Beneficiary") hereby CERTIFIES as follows with respect
to (i) that certain Irrevocable Transferable Letter of Credit No. 00361040 dated
December 29, 1994 (the "Letter of Credit") issued by The First National Bank of
Chicago (the "Bank") in favor of the Beneficiary; (ii) those certain Bonds (as
defined in the Letter of Credit); and (iii) that certain Indenture (as defined
in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing under the Letter of
Credit in the amount of $____________ with respect to the payment of the
purchase price of Bonds tendered or deemed tendered for purchase in accordance
with Section 3.08 of the Indenture and to be purchased on [insert applicable
date] (the "Purchase Price") which Bonds have not been remarketed as provided in
the Indenture or the purchase price of which has not been received by the Tender
Agent or the Remarketing Agent (as such terms are defined in the Indenture) by
10:00 A.M., Chicago time, on said Purchase Date.
3. (a) The amount of the drawing is equal to (i) the principal amount
of Bonds to be purchased pursuant to the Indenture on the Purchase Date [other
than Pledged Bonds and Company Bonds (as such terms are defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) (or if none, the
date of issuance of the Bonds) to the Purchase Date, provided that in the event
the Purchase Date coincides with an Interest Payment Date this drawing does not
include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph (2) above:
<PAGE> 14
(i) $______________ is demanded in respect of the principal
portion of the purchase price of the Bonds referred to in
subparagraph (2) above; and
(ii) $______________ is demanded in respect of payment of the
interest portion of the purchase price of such Bonds.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to the
amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
5. If the Bonds are not then in a Book-Entry System (as defined in the
Indenture), the Beneficiary will register or cause to be registered in the name
of the Applicant, upon payment of the amount drawn hereunder, Bonds in the
principal amount of the Bonds being purchased with the amounts drawn hereunder
and will deliver such Bonds to the Trustee in accordance with the Indenture. If
the Bonds are then in a Book-Entry System, the records of the Securities
Depository (as defined in the Indenture) will reflect the Bonds being held for
the account of the Trustee and the Trustee will maintain such beneficial
interest for the benefit of the Bank as provided in the Indenture.
6. Payment by the Bank pursuant to this drawing shall be made to
______________ ________________________, ABA Number
____________________________, Account Number _______________________,
Attention:______________________________________, Re:
___________________________.
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of _____________________, 19___.
------------------------------------
as Trustee
By
------------------------------------
[Title of Authorized Representative]
<PAGE> 15
By Telecopy or Tested Telex
EXHIBIT F
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
ACCELERATION DRAWING CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
The undersigned individual, a duly authorized representative of
_________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
issued by The First National Bank of Chicago (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and
(iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. An Event of Default has occurred under subsection [insert
subsection] of Section 6.01 of the Indenture and the Trustee has declared the
principal of and accrued interest on all Bonds then outstanding immediately due
and payable. The Beneficiary is entitled to make this drawing in the amount of
$____________ under the Letter of Credit pursuant to Section 5.04 of the
Indenture in order to pay the principal of and interest accrued on the Bonds due
to an acceleration thereof in accordance with Section 6.02 of the Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount
of Bonds outstanding on [insert date of acceleration] (the "Acceleration Date")
[other than Pledged Bonds or Company Bonds (as such terms are defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) (or if none, the
date of issuance of the Bonds) to the Acceleration Date.
(b) Of the amount stated in paragraph 2 above:
(i) $____________ is demanded in respect of
the principal portion of the Bonds referred to in subparagraph
(a) above; and
<PAGE> 16
(ii) $____________ is demanded in respect of accrued
interest on such Bonds.
4. The amount of this drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to the
amount of any drawing under the Letter of Credit made simultaneously herewith,
does not exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to
______________ ________________________, ABA Number
____________________________, Account Number _______________________,
Attention:______________________________________, Re:
___________________________.
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of _____________________, 19___.
------------------------------------
as Trustee
By
------------------------------------
[Title of Authorized Representative]
<PAGE> 17
By Telecopy or Tested Telex
EXHIBIT G
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
STATED MATURITY DRAWING CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
The undersigned individual, a duly authorized representative of
____________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
issued by The First National Bank of Chicago (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit); and
(iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$____________ under the Letter of Credit pursuant to Section 5.04 of the
Indenture.
3. The amount of this drawing is equal to the principal amount of Bonds
outstanding on ______________, ________, the maturity date thereof as specified
in Section 5.04 of the Indenture[, other than Pledged Bonds or Company Bonds (as
such terms are defined in the Indenture)].
4. The amount of this drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to the
amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit) .
5. Payment by the Bank pursuant to this drawing shall be made to
______________ ________________________, ABA Number
____________________________, Account Number _______________________,
Attention:______________________________________, Re:
___________________________.
<PAGE> 18
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of _____________________, 19___.
------------------------------------
as Trustee
By
------------------------------------
[Title of Authorized Representative]
<PAGE> 19
EXHIBIT H
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
REDUCTION CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
The undersigned hereby CERTIFIES with respect to (i) that certain
Irrevocable Transferable Letter of Credit No. 00361040 dated December 29, 1994
(the "Letter of Credit"), issued by The First National Bank of Chicago (the
"Bank") in favor of the Beneficiary; (ii) those certain Bonds (as defined in the
Letter of Credit); and (iii) that certain Indenture (as defined in the Letter of
Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. Upon receipt by the Bank of this Certificate, the Available Amount
(as defined in the Letter of Credit) shall be reduced by $__________ and the
Available Amount shall thereupon equal $___________.
$___________ of the new Available Amount is attributable to interest.
3. The amount of the reduction in the Available Amount has been
computed in accordance with the provisions of the Letter of Credit.
4. Following the reduction, the Available Amount shall be at least
equal to the aggregate principal amount of the Bonds outstanding (other than
Pledged Bonds or Company Bonds (as such terms are defined in the Indenture))
plus forty eight (48) days' interest thereon at the Cap Interest Rate (as
defined in the Letter of Credit).
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of _____________________, 19___.
------------------------------------
as Trustee
By
------------------------------------
[Title of Authorized Representative]
<PAGE> 20
EXHIBIT I
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
NOTICE OF AMENDMENT
[TRUSTEE]
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain Reimbursement
Agreement dated as of December 1, 1994, among Griffith Micro Science, Inc. and
us, the Available Amount (as defined in the Letter of Credit) has been reduced
to $____________.
This letter should be attached to the Letter of Credit and made a part
thereof.
The First National Bank of Chicago
By
--------------------------------------
Its
----------------------------------
<PAGE> 21
EXHIBIT J
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
TRANSFER CERTIFICATE
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0236
Attention: L/C Manager
Ladies and Gentlemen:
Reference is made to that certain Irrevocable Transferable Letter of
Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit") which has
been established by the Bank in favor of
- -------------------------------------.
The undersigned, a duly authorized officer or agent of [Name of
Transferor], has transferred and assigned (and hereby confirms to you said
transfer and assignment) all of its rights in and under said Letter of Credit to
[Name of Transferee] and confirms that [Name of Transferor] no longer has any
rights under or interest in said Letter of Credit.
Transferor and Transferee have indicated on the face of said Letter of
Credit that it has been transferred and assigned to Transferee.
The undersigned, a duly authorized officer or agent of the Transferee,
hereby certifies that the Transferee is a duly authorized Transferee under the
terms of said Letter of Credit and is accordingly entitled, upon presentation of
the documents called for therein, to receive payment thereunder.
------------------------------------
Name of Transferor
By
------------------------------------
[Title of Authorized Officer
of Transferor]
------------------------------------
Name of Transferor
By
------------------------------------
[Title of Authorized Officer
of Transferor]
<PAGE> 22
EXHIBIT K
TO
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
NO. 00361040
NOTICE OF EXTENSION
[TRUSTEE]
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. 00361040 dated December 29, 1994 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain Reimbursement
Agreement dated as of December 1, 1994, between [Name of Applicant] and us, the
Stated Expiration Date (as defined in the Letter of Credit) has been extended to
______________, _______.
This letter should be attached to the Letter of Credit and made a part
thereof.
THE FIRST NATIONAL BANK OF CHICAGO
By
-------------------------------------------
Its
---------------------------------------
<PAGE> 1
EXHIBIT 10.9(a)
INDENTURE OF TRUST
BY AND BETWEEN
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
AND
HARRIS TRUST AND SAVINGS BANK,
AS TRUSTEE
____________________________________
DATED AS OF NOVEMBER 1, 1995
____________________________________
$4,500,000
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1995
(GRIFFITH MICRO SCIENCE, INC. PROJECT)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
ARTICLE I. DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions................................................................ 3
Section 1.02. Article and Section Headings............................................... 13
Section 1.03. Interpretation............................................................. 13
ARTICLE II. AUTHORIZATION AND ISSUANCE OF THE BONDS
Section 2.01. Authorization of Bonds; No Additional Bonds................................ 13
Section 2.02. Issuance of Bonds; Terms of Bonds.......................................... 13
Section 2.03. Optional Tender............................................................ 21
Section 2.04. Mandatory Tender........................................................... 23
Section 2.05. Form of Bonds.............................................................. 24
Section 2.06. Execution and Authentication of Bonds...................................... 25
Section 2.07. Registration and Exchange of Bonds; Persons Treated as Owners.............. 25
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds................................. 26
Section 2.09. Cancellation of Bonds...................................................... 26
Section 2.10. Temporary Bonds............................................................ 26
Section 2.11. Conditions Precedent to Authentication and Delivery of Bonds............... 26
Section 2.12. Book-Entry System.......................................................... 27
ARTICLE III REDEMPTION OF BONDS;
PURCHASE AND REMARKETING OF BONDS
Section 3.01. Optional Redemption........................................................ 29
Section 3.02. Extraordinary Optional Redemption.......................................... 31
Section 3.03. Mandatory Redemption....................................................... 31
Section 3.04. Notice of Redemption....................................................... 32
Section 3.05. Effect of Deposit of Redemption Moneys..................................... 32
Section 3.06. Partial Redemption......................................................... 33
Section 3.07. Purchase of Tendered Bonds................................................. 33
Section 3.08. Remarketing of Tendered Bonds; Payment of Purchase Price................... 34
Section 3.09. Funds for Purchase Price of Bonds.......................................... 36
Section 3.10. Delivery of Purchased Bonds................................................ 36
Section 3.11. Pledged Bonds.............................................................. 36
ARTICLE IV. GENERAL PROVISIONS
Section 4.01. Payment of Principal, Premium, If Any, and Interest; Limited Obligations... 38
Section 4.02. Instruments of Further Assurance........................................... 38
Section 4.03. Tax-Exempt Status of Bonds................................................. 38
Section 4.04. Books, Records and Accounts................................................ 39
Section 4.05. Notice to Rating Agencies.................................................. 39
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V REVENUES AND FUNDS; LETTER OF CREDIT
Section 5.01. Application of Original Proceeds of Bonds.......................... 39
Section 5.02. Creation of Bond Fund.............................................. 39
Section 5.03. Letter of Credit; Alternate Credit Facility........................ 40
Section 5.04. Letter of Credit Draws and Bond Fund Moneys to Pay
Principal, Premium or Interest.................................. 42
Section 5.05. Investment of Moneys............................................... 43
Section 5.06. Moneys To Be Held in Trust; Nonpresentment of Bonds................ 44
Section 5.07. Repayment from Indenture Funds..................................... 44
Section 5.08. Tax Covenants...................................................... 45
Section 5.09. Construction Fund.................................................. 45
Section 5.10. Payments into Construction Fund; Disbursements..................... 45
Section 5.11. Completion of Project.............................................. 46
Section 5.12. Transfer of Construction Fund...................................... 46
Section 5.13. Custody of Funds and Accounts...................................... 46
ARTICLE VI DEFAULTS AND REMEDIES
Section 6.01. Events of Default.................................................. 46
Section 6.02. Acceleration....................................................... 48
Section 6.03. Other Remedies..................................................... 48
Section 6.04. Waiver of Past Defaults............................................ 49
Section 6.05. Control by Majority................................................ 49
Section 6.06. Limitation on Suits................................................ 49
Section 6.07. Rights of Holders To Receive Payment............................... 49
Section 6.08. Collection Suit by Trustee......................................... 49
Section 6.09. Trustee May File Proofs of Claim................................... 49
Section 6.10. Priorities......................................................... 50
ARTICLE VII TRUSTEE, REMARKETING AGENT AND TENDER AGENT
Section 7.01. Trustee's Rights and Duties........................................ 50
Section 7.02. Trustee's Rights................................................... 52
Section 7.03. Trustee's Individual Rights........................................ 52
Section 7.04. Trustee's Disclaimer............................................... 52
Section 7.05. Notice of Defaults................................................. 53
Section 7.06. Trustee's Compensation and Indemnity............................... 53
Section 7.07. Eligibility of Trustee............................................. 53
Section 7.08. Resignation, Removal and Replacement of Trustee.................... 54
Section 7.09. Remarketing Agent's Duties......................................... 55
Section 7.10. Eligibility of Remarketing Agent; Replacement...................... 55
Section 7.11. Tender Agent....................................................... 55
Section 7.12. Successor Trustee, Remarketing Agent or Tender Agent by Merger..... 56
Section 7.13. Service in Several Capacities...................................... 56
ARTICLE VIII SUPPLEMENTAL INDENTURES
Section 8.01. Without Consent of Bondholders..................................... 56
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8.02. With Consent of Bondholders................................................. 57
Section 8.03. Effect of Consents.......................................................... 57
Section 8.04. Notation on or Exchange of Bonds............................................ 57
Section 8.05. Execution and Delivery by Trustee of Amendments and Supplements............. 58
Section 8.06. Company and Bank Consent Required........................................... 58
Section 8.07. LGC Consent Required........................................................ 58
Section 8.08. Notice to Bondholders....................................................... 58
ARTICLE IX. AMENDMENT OF AGREEMENT OR LETTER OF CREDIT
Section 9.01. Amendments to Agreement Without Consent of Bondholders...................... 58
Section 9.02. Amendments to Agreement With Consent of Bondholders......................... 58
Section 9.03. Bank Consent Required....................................................... 59
Section 9.04. Modifications of Letter of Credit........................................... 59
ARTICLE X. DISCHARGE OF INDENTURE
Section 10.01. Bonds Deemed Paid; Discharge of Indenture................................... 59
Section 10.02. Application of Trust Money.................................................. 60
Section 10.03. Repayment to Bank and Company............................................... 60
ARTICLE XI. MISCELLANEOUS
Section 11.01. Bondholders' Consent........................................................ 61
Section 11.02. Limitation of Rights; Bank's Rights......................................... 61
Section 11.03. No Personal Liability of LGC and Issuer Representatives..................... 61
Section 11.04. Severability................................................................ 62
Section 11.05. Notices..................................................................... 62
Section 11.06. Payments or Performance Due on Other Than Business Day...................... 64
Section 11.07. Execution in Counterparts................................................... 64
Section 11.08. Applicable Law.............................................................. 64
Exhibit A - Form of Bond
</TABLE>
<PAGE> 5
INDENTURE OF TRUST
This INDENTURE OF TRUST is made and entered into as of November 1, 1995,
by and between THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY, a political subdivision and a body corporate and
politic of the State of North Carolina (the "Issuer"), and HARRIS TRUST AND
SAVINGS BANK, a banking corporation organized under the laws of the State of
Illinois (the "Trustee"), as trustee.
WITNESSETH:
WHEREAS, the Issuer is authorized under the North Carolina Industrial and
Pollution Control Facilities Financing Act, which is Chapter 159C, as amended,
of the North Carolina General Carolina Statutes (the "Act"), to issue its
revenue bonds for the purpose of providing financing for "projects" located
within the Issuer's jurisdiction; and
WHEREAS, Griffith Micro Science, Inc., a Delaware corporation authorized
to do business in the State of North Carolina (the "Company"), proposes to
finance the costs of constructing certain leasehold improvements and acquiring
and installing certain equipment, all constituting certain manufacturing
facilities located in Mecklenburg County, North Carolina (the "Project"), and
to finance a portion of the cost of the Project through the issuance by the
Issuer of the Bonds provided for by this Indenture (the "Bonds"); and
WHEREAS, the Issuer has duly entered into a Loan Agreement (the
"Agreement") with the Company specifying the terms and conditions of such
financing, the loan of Bond proceeds to the Company, the use of the proceeds of
the Bonds for the Project and the Company's repayment of such loan;
WHEREAS, it has been determined that the amount necessary to finance the
Project will require the issuance, sale and delivery of Bonds in the aggregate
principal amount of $4,500,000, as provided in this Indenture;
WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued as in this Indenture provided, the valid, binding and legal
obligations of the Issuer according to the import thereof, and to constitute
this Indenture a valid assignment and pledge of the security pledged hereunder,
have been done and performed, and the creation, execution and delivery of this
Indenture of Trust, and the creation, execution and issuance of the Bonds,
subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:
GRANTING CLAUSE
To secure the timely payment of the principal of, premium, if any, and
interest on the Bonds according to their tenor and effect to secure the
Issuer's performance and observance of all of the covenants set forth in this
Indenture and in the Bonds and, on a subordinate basis, to
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secure the Company's obligation to reimburse to ABN AMBRO Bank N.V. (the "Bank")
amounts due and owing to the Bank under its Reimbursement Agreement with the
Company of even date (the "Reimbursement Agreement"), the Issuer hereby assigns
to the Trustee and grants to the Trustee a security interest in all the Issuer's
right, title and interest in and to (a) the Agreement, including the current and
continuing right to claim, collect, receive and give receipts for all amounts
payable by or receivable from the Company under the Agreement, to bring actions
and proceedings under the Agreement or for the enforcement of the Agreement and
to do all things that the Issuer is entitled to under the Agreement, but
excluding the Unassigned Rights, and (b) all moneys and securities held from
time to time by the Trustee under this Indenture as provided in this Indenture
(other than moneys and securities held in the Purchase Fund or the Rebate Fund),
all for the equal and proportionate benefit of all holders of the Bonds without
priority or distinction as to lien or otherwise of any Bonds over any other
Bonds, and, on a subordinate basis, for the Bank's benefit.
TO HAVE AND TO HOLD all and singular the Trust Estate (as defined below),
whether now owned or hereafter acquired, to the Trustee and its respective
successors in trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts set forth in this
Indenture for the equal and proportionate benefit, security and protection of
all present and future Owners of the Bonds issued under and secured by this
Indenture without privilege, priority or distinction as to the lien or
otherwise of any of the Bonds over any of the other Bonds, and, subject to the
prior interest of the Bondholders, for the equal benefit, security and
protection of the Bank to the extent of amounts owed to the Bank under the
Reimbursement Agreement;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly pay, or cause to be paid, the principal of, premium, if any, and
interest on the Bonds due or to become due thereon, at the times and in the
manner mentioned in the Bonds and as provided in Section 4.01 according to the
true intent and meaning thereof, or shall provide, as permitted hereby, for the
payment thereof in accordance with Article X, and shall well and truly keep,
perform and observe all the covenants and conditions pursuant to the terms of
this Indenture to be kept, performed and observed by it, and shall pay or cause
to be paid to the Trustee all sums of money due or to become due in accordance
with the terms and provisions hereof and the Company shall have satisfied all
Obligations (as defined in the Reimbursement Agreement) to the Bank under the
Reimbursement Agreement, then upon such final payments or deposits as provided
in Article X, this Indenture and the rights hereby granted shall cease,
terminate and be void and the Trustee shall thereupon cancel and discharge this
Indenture and execute and deliver to the Issuer and the Company such
instruments in writing as shall be requisite to evidence such discharge.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly declared,
that all Bonds issued and secured under this Indenture are to be issued,
authenticated and delivered and all of the Trust Estate is to be dealt with and
disposed of, under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes expressed in this Indenture,
and the Issuer has agreed and covenanted, and does hereby agree and
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covenant, with the Trustee and with the respective Owners, from time to time, of
the Bonds or any part thereof, and the Bank, as follows:
ARTICLE I. DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Each of the following terms shall have the
meaning assigned to it in this Section 1.01 whenever it is used in this
Indenture, unless the context in which it is used clearly requires otherwise
(certain terms used, and not defined, in this Indenture are defined in the
Agreement):
"Act" shall mean the North Carolina Industrial and Pollution Control
Facilities Financing Act, which is Chapter 159C, as amended, of the North
Carolina General Statutes.
"Adequate Interest Coverage" shall have the meaning set forth in Section
2.02(g).
"Adjustable Rate" shall mean the interest rate per annum from time to time
borne by the Bonds when in the Adjustable Rate Mode, as established in
accordance with Section 2.02(e).
"Adjustable Rate Conversion Date" shall mean each Interest Payment Date on
which the Bonds, upon having been converted to the Adjustable Rate Mode from
another Mode, shall first begin to bear interest at an Adjustable Rate in
accordance with the terms of this Indenture, and each subsequent Adjustable
Rate Reset Date.
"Adjustable Rate Interest Payment Date" shall mean (i) with respect to an
Adjustable Rate Period of at least six calendar months' duration, the first day
of the sixth calendar month following the Adjustable Rate Conversion Date and
the first day of each successive sixth calendar month, if any, of such
Adjustable Rate Period; provided, however, the final Adjustable Rate Interest
Payment Date with respect to any such Adjustable Rate Period shall be the first
Business Day of the calendar month immediately following the expiration of such
Adjustable Rate Period, or the maturity date of the Bonds (if such Adjustable
Rate Period extends to the final maturity of the Bonds), and (ii) with respect
to an Adjustable Rate Period of less than six calendar months' duration, the
first Business Day of the calendar month immediately following the end of the
Adjustable Rate Period or the maturity date of the Bonds (if such Adjustable
Rate Period extends to the final maturity of the Bonds.)
"Adjustable Rate Mode" shall mean the Mode in which the Bonds bear
interest at an Adjustable Rate.
"Adjustable Rate Period" shall mean any period of not less than one month
in duration, commencing on an Adjustable Rate Conversion Date or an Adjustable
Rate Reset Date, as appropriate, and ending on the earlier to occur of the
redemption of the Bonds, the maturity of the Bonds or the earlier to occur of
the redemption of the Bonds, the maturity of the Bonds or the day preceding the
subsequent Conversion Date or Adjustable Rate Reset Date, as appropriate.
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"Adjustable Rate Reset Date" shall mean an Adjustable Rate Interest
Payment Date on which the Bonds begin to bear interest at a new Adjustable Rate
in accordance with the terms hereof.
"Agreement" shall mean the Loan Agreement dated as of November 1, 1995,
between the Issuer and the Company, as amended and supplemented.
"Alternate Credit Facility" shall mean an irrevocable letter of credit or
other credit facility described in Section 5.03(b) delivered pursuant to such
Section in substitution for a Letter of Credit, as extended or amended from
time to time.
"Authorized Company Representative" shall mean the Company's President or
any Vice President, or any other person at the time designated to act on the
Company's behalf by a written certificate furnished to the Issuer, the
Remarketing Agent, the Bank and the Trustee.
"Authorized Denomination" shall mean $100,000 and any integral multiple
thereof or, upon conversion to any Adjustable Rate Period extending to the
final maturity of the Bonds, $5,000 or any integral multiple thereof.
"Available Moneys" shall mean:
(1) During any period the Letter of Credit is in effect:
(a) proceeds from the remarketing of any Bonds tendered for
purchase pursuant to this Indenture to any person other than
the Issuer, the Company, the Guarantor or any "insider" (as
defined in the Bankruptcy Code) of the Issuer, the Company or
the Guarantor;
(b) moneys derived from any draw on the Letter of Credit;
(c) any other moneys or securities, if there is delivered to the
Trustee an opinion of an attorney-at-law, duly admitted to
practice before the highest court of the jurisdiction in which
such attorney maintains an office, who is not a full-time
employee of the Company, the Bank, the Issuer or the
Remarketing Agent, having expertise in bankruptcy matters (who,
for purposes of such opinion, may assume that no Bondholder is
an "insider," as defined in the Bankruptcy Code), to the effect
that the use of such moneys or securities to pay the principal
or purchase price of, premium, if any, or interest on the Bonds
would not be avoidable as preferential payments under Section
547 of the Bankruptcy Code recoverable under Section 550 of the
Bankruptcy Code should the Company or the Guarantor become a
debtor in a proceeding commenced thereunder, which opinion
shall also be addressed to and acceptable to any Rating Agency
then rating the Bonds; and
(d) earnings derived from the investment of any of the foregoing;
and
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(2) During any period the Letter of Credit is not in effect, any moneys
held by the Trustee in any Fund or Account under this Indenture and
available, pursuant to the provisions hereof, to be used to pay
principal of, premium, if any, or interest on, or the purchase price
of, the Bonds.
"Available Moneys Account" shall mean the account in the Bond Fund by that
name established in the Bond Fund by Section 5.02.
"Bank" shall mean the entity issuing the Letter of Credit, if any, then in
effect, and its successors in such capacity and their assigns; or if an
Alternate Credit Facility is issued, the issuer thereof, and its successors in
such capacity and their assigns. The initial Bank shall be ABN AMRO Bank N.V.,
acting by and through its Chicago branch. All references to "Bank" shall be of
no effect at any time that no Letter of Credit is issued and secures the Bonds,
except with respect to rights of any Bank established hereunder which do not,
by their terms, expire upon the expiration of the Letter of Credit by such
Bank.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of
1978, as amended from time to time, or any substitute or replacement
legislation.
"Beneficial Owner" means the person in whose name a Bond is recorded as
beneficial owner of such Bond by the Securities Depository or a Participant or
an Indirect Participant on the records of such Securities Depository,
Participant or Indirect Participant, as the case may be, or such person's
subrogee.
"Bond Counsel" shall mean, with respect to the original issuance of the
Bonds, The Sanford Law Firm, PLLC, Raleigh, North Carolina, and thereafter, any
firm of attorneys of nationally recognized expertise with respect to the
tax-exempt obligations of political subdivisions, selected by the Company and
acceptable to the Remarketing Agent, the Trustee and the Issuer.
"Bond Fund" shall mean the fund by that name established by Section 5.02.
"Bond Owner," "Bondowner," "Owner," "owner," "Bondholder," "bondholder,"
"holder" or "owner of the Bonds," when used with respect to a Bond, shall mean
the person or entity in whose name such Bond shall be registered.
"Bond Purchase Agreement" shall mean the Bond Purchase Agreement, dated
November 14, 1995, among the Issuer, the Company and the Underwriter, including
all amendments thereof and supplements thereto.
"Bonds" shall mean the Mecklenburg Court Industrial Facilities and
Pollution Control Financing Authority $4,500,000 Industrial Development Revenue
Bonds, Series 1995 (Griffith Micro Science, Inc. Project), issued pursuant to
this Indenture.
"Book-Entry System" means a book-entry system established and operated for
the recordation of Beneficial Owners of the Bonds pursuant to Section 2.12.
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"Business Day" or "business day" shall mean any day which is not (i) a
Saturday or a Sunday, (ii) a day on which banking institutions in the cities of
New York, New York, Charlotte, North Carolina, or Chicago, Illinois (or, if
different, in the cities in which the principal corporate trust office of the
Trustee and the office of the Bank at which drawings under the Letter of Credit
are to be honored are located) are authorized or required by law or executive
order to close, or (iii) a day on which the New York Stock Exchange is closed.
"Cessation of Operation" means that the Company (or a permitted successor
or assign of the Company under Section 8.1 of the Agreement) has ceased, in the
concurrent opinion of the Issuer and the Trustee, to operate the Project as an
"industrial project for industry" within the meaning of the Act. A "Cessation
of Operation" shall not be deemed to have occurred (a) if the Company is
operating, in substitution or replacement for the Project, a facility in North
Carolina of similar size and employment levels as previously existed with
respect to the Project, or (b) in any event until 60 days shall have elapsed
after written notice has been given to the Company by the Issuer or the Trustee
that such operation shall have ceased, and the Company shall not have then
demonstrated, to the satisfaction of the Issuer and the Trustee, that the
Company (or a permitted successor or assign under such Section 8.1) is
operating the Project as an "industrial project for industry" within the
meaning of the Act or is in good faith seeking to arrange resumption of an
economically reasonable operation of the Project as an "industrial project for
industry" within the meaning of the Act.
"Closing Date" shall mean the date of initial issuance and delivery of the
Bonds to the purchasers thereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, including
regulations, rulings and revenue procedures promulgated thereunder or under the
Internal Revenue Code of 1954, as amended, as applicable to the Bonds and all
proposed (including temporary) regulations which, if adopted in the form
proposed, would apply to the Bonds. Reference to any specific Code provisions
shall be deemed to include any successor provisions.
"Company" shall mean Griffith Micro Science, Inc., a Delaware corporation,
its successors and assigns.
"Company Bonds" shall mean Bonds purchased with moneys described in
Section 3.09(c).
"Construction Fund" shall mean the fund by that name established by
Section 5.09.
"Conversion Date" shall mean an Adjustable Rate Conversion Date, a Weekly
Rate Conversion Date, a Daily Rate Conversion Date or a CP Rate Conversion
Date, as appropriate.
"CP Rate" shall mean the interest rate per annum on each Bond established
in accordance with Section 2.02(d).
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"CP Rate Conversion Date" shall mean each Interest Payment Date on which
the Bonds, having been converted to the CP Rate Mode from another Mode, first
begin to bear interest at a CP Rate in accordance with the terms hereof.
"CP Rate Interest Payment Date" shall mean with respect to each Bond, the
Business Day which immediately succeeds the last day of any CP Rate Period
applicable to such Bond.
"CP Rate Mode" shall mean the interest rate Mode in which Bonds bear
interest at the CP Rate.
"CP Rate Period" shall mean with respect to each Bond, while the Bonds are
in the CP Rate Mode, a period (a) which begins on a CP Rate Conversion Date or
a CP Rate Reset Date, as appropriate, and (b) has a duration which shall have
been set by the Remarketing Agent as provided in Section 2.02(d), from 1 to 360
days' length, and (c) which ends on a day which immediately precedes a Business
Day and which falls on or prior to the maturity date of the Bonds.
"CP Rate Reset Date" shall mean with respect to each Bond, each CP Rate
Interest Payment Date on which commences a new CP Rate Period applicable to
such Bond, whereon a new CP Rate which shall have been set pursuant to Section
2.02(d) shall first become effective.
"Daily Interest Period" shall mean, while the Bonds are in the Daily Rate
Mode, the period from and including each day which is a Business Day to but
excluding the next succeeding day which is a Business Day.
"Daily Rate" shall mean the interest rate per annum on the Bonds
established in accordance with Section 2.02(c).
"Daily Rate Conversion Date" shall mean each date on which the Bonds,
having been converted to the Daily Rate Mode from another Mode, first begin to
bear interest at a Daily Rate in accordance with the terms.
"Daily Rate Interest Payment Date" shall mean the first Business Day of
each month during which the Bonds shall be in the Daily Rate Mode, commencing
with the first Business Day of the month next succeeding each Daily Rate
Conversion Date or, if applicable, the Closing Date.
"Daily Rate Mode" shall mean the Mode in which the Bonds bear interest at
a Daily Rate.
"Daily Rate Period" shall mean the period from the Daily Rate Conversion
Date to the earlier to occur of the following Conversion Date or the date on
which principal of the Bonds is paid in full.
"Determination of Taxability" shall mean the Trustee's receipt of evidence
of a final judgment or order of a court of competent jurisdiction, or a final
ruling, technical advice
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memorandum or decision of the Internal Revenue Service to the effect that the
interest on the Bonds (other than interest on any Bond for any period during
which such Bond is held by a "substantial user" of the Project or a "related
person," as such terms are used in the Code) is includable for Federal income
tax purposes in the gross income of the Owners or Beneficial Owners thereof;
provided, however, that in no event shall a Determination of Taxability be based
upon the inclusion of interest in any minimum tax or indirect tax. No such
judgment or order or final ruling, technical advice memorandum or decision will
be considered final for this purpose, however, unless the Company has been given
written notice and, if so desired by the Company, the Company has been afforded
the opportunity to contest the same, either directly or in the name of any
Bondholder or Beneficial Owner, and until conclusion of any appellate review, if
sought.
"Event of Default," when used with respect to this Indenture, shall mean
any event specified in Section 6.01.
"Government Obligations" shall mean direct obligations of, or obligations
the timely payment of the principal of, and interest on, which are fully and
unconditionally guaranteed by the United States of America, which, at the time
of investment, are not subject to prepayment or redemption prior to maturity
and are legal investments under State law for the moneys proposed to be
invested therein.
"Guarantor" means Griffith Laboratories Worldwide, Inc., as guarantor of
the Company's obligations of the Bank under the initial Reimbursement
Agreement.
"Indenture" shall mean this Indenture of Trust, as amended and
supplemented.
"Indirect Participant" means a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository through a Participant.
"Initial Letter of Credit' shall mean the irrevocable Letter of Credit
delivered on the Closing Date by the Bank for the purpose of securing the
Bonds, as extended or amended from time to time.
"Interest Payment Date" shall mean an Adjustable Rate Interest Payment
Date, a Weekly Rate Interest Payment Date, a Daily Rate Interest Payment Date,
a CP Rate Interest Payment Date (with respect to any Bond), each date upon
which Bonds shall be subject to mandatory tender for purchase pursuant to
Section 2.04 and any date upon which the Outstanding principal amount of the
Bonds becomes due.
"Investment Grade Rating" means, as of any particular time, a rating of
the Bonds (without regard to whether such rating reflects an evaluation of the
credit-worthiness of the Company or of any other entity) by any Rating Agency
within such Rating Agency's top four generic rating categories (without regard
to any refinement or gradation within such categories by a numerical modifier
or otherwise), provided that no other Rating Agency has in effect a rating of
the Bonds that is not within such Rating Agency's top four generic rating
categories.
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"Issuer" shall mean The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority, and its successors and assigns.
"Letter of Credit" shall mean the Initial Letter of Credit and, if an
Alternate Credit Facility is issued, each Alternate Credit Facility, as
extended or amended from time to time. All references to the "Letter of
Credit" shall be of no effect at any time that no Letter of Credit secures the
Bonds, except with respect to rights of any Bank created hereunder which do
not, by their terms, expire upon the termination of the Letter of Credit issued
by such Bank.
"Letter of Credit Account" shall mean the account by that name established
in the Bond Fund pursuant to Section 5.02.
"Long-Term Mode" shall mean each Adjustable Rate Period of greater than
one year's duration.
"LGC" shall mean the North Carolina Local Government Commission.
"Maximum Rate" shall mean the rate per annum equal to the lesser of (a)
15% per annum, or (b) if a Letter of Credit is then in effect, the maximum
interest rate stated in such Letter of Credit for purposes of calculating the
interest portion of the stated amount of such Letter of Credit.
"Mode" shall mean any of the interest rate modes which may exist from time
to time with respect to the Bonds, including the Adjustable Rate Mode, the
Weekly Rate Mode, the Daily Rate Mode or the CP Rate Mode, as appropriate.
"Moody's" shall mean Moody's Investors Service, its successors and
assigns.
"Non-Available Moneys Account" shall mean the account by that name
established in the Bond Fund pursuant to Section 5.02.
"Outstanding" or "Bonds outstanding" or "Bonds then outstanding," at the
time in question, shall mean all Bonds which have been executed and delivered
by the Issuer and authenticated by the Trustee or the Tender Agent under this
Indenture, except:
(i) Bonds theretofore canceled by the Trustee or surrendered to the
Trustee for cancellation;
(ii) Bonds paid or deemed to be paid pursuant to Article X;
(iii) Bonds in lieu of or in exchange for which other Bonds shall have been
executed and delivered by the Issuer and authenticated by the Trustee
or the Tender Agent pursuant to Sections 2.07, 2.08, 2.10 or 3.06;
and
(iv) Undelivered Bonds.
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"Participant" shall mean a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository.
"Pledged Bonds" shall mean Bonds purchased with moneys provided pursuant
to Section 3.09(b).
"Principal Office" shall have the respective meanings set forth herein
under "Remarketing Agent," "Tender Agent" and "Trustee".
"Project" or "Project Facility" shall mean the manufacturing facilities
described in Exhibit B to the Agreement.
"Project Certificate" shall mean the Certificate Re: Use of Bond Proceeds
and the Project of the Company dated the Closing Date.
"Purchase Fund" shall mean the fund by that name established pursuant to
Section 3.07(b).
"Qualified Investments" shall mean, subject to any restrictions imposed by
State law, (i) Government Obligations, (ii) obligations of the Federal National
Mortgage Association, the Government National Mortgage Association or the
Federal Home Loan Mortgage Corporation, (iii) commercial paper or finance
company paper rated not less than "P-1" by Moody's Investors Service or "A-1+"
by S&P, (iv) certificates of deposit or other time or demand deposits of banks
(including, without limitation, the Trustee and the Bank) that are fully
insured by the Federal Deposit Insurance Corporation or fully secured by
obligations described in (i) or (ii) above, (v) repurchase agreements secured
by obligations described in (i) or (ii) above or bonds or obligations which are
authorized by law as security for public deposits, provided that no proceeding
under any applicable insolvency or reorganization law has been commenced by or
against the issuer of such bonds or obligations, and provided, further, that
such bonds or obligations and debt of the issuer of the repurchase agreement
bear one of the three highest full credit ratings assigned by Moody's Investors
Service and S&P, (vi) any investment fund or other investment pooling
arrangement which purchases and holds exclusively Government Obligations or
repurchase agreements meeting the requirements of (v) above, (vii) Tax-Exempt
Obligations (as defined in the Rebate Agreement) rated in one of the two
highest full rating categories by either of the Rating Agencies, and (viii) any
other investment approved in writing by the Bank. The Trustee may rely upon
the Company's certificate or direction as to the qualification of any specific
investment under this definition.
"Rating Agencies" shall mean S&P and/or Moody's, according to which of
such rating agencies then rates the Bonds; and provided that if neither of such
rating agencies then rates the Bonds, the term "Rating Agencies" shall refer to
any national rating agency (if any) which provides such rating. If at any time
only one Rating Agency then rates the Bonds, "Rating Agencies" shall at that
time mean only such Rating Agency as is then rating the Bonds.
"Rebate Fund" shall mean the fund by that name established pursuant to the
Rebate Agreement.
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"Record Date" shall mean (a) with respect to any Weekly Rate Interest
Payment Date, Daily Rate Interest Payment Date, CP Rate Interest Payment Date
or Adjustable Rate Period of less than six months in duration, the close of
business on the Business Day next preceding such Interest Payment Date, and (b)
with respect to any Adjustable Rate Interest Payment Date for an Adjustable
Rate Period of at least six months' duration, the close of business on the
fifteenth day (whether or not a Business Day) of the calendar month next
preceding such Interest Payment Date.
"Reimbursement Agreement" shall mean the initial Reimbursement Agreement
and with respect to each subsequent Letter of Credit, the agreement pursuant to
which such Letter of Credit is issued. All references to "Reimbursement
Agreement" shall be of no effect at any time that no Letter of Credit is issued
and secures the Bonds, except with respect to rights of any Bank which do not,
by their terms, expire upon the expiration of the Letter of Credit issued by
such Bank.
"Remarketing Agent" shall mean the Remarketing Agent appointed in
accordance with Section 7.10, and shall mean initially First Chicago Capital
Markets, Inc., Chicago, Illinois.
"Principal Office" of the Remarketing Agent shall mean the office thereof
designated in writing to the Issuer, the Trustee, the Bank and the Company, and
shall mean initially the Remarketing Agent's office located at One First
National Plaza, Suite 0463, Chicago, Illinois 60670-0463, Attention: Municipal
Bond Department/Short-Term Trading.
"Rebate Agreement" shall mean the Rebate Compliance Agreement dated the
Closing Date among the Company, the Issuer and the Trustee, as amended and
supplemented.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as of
November 1, 1995, between the Company and the Remarketing Agent.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw-Hill Inc., its successors and assigns.
"Securities Depository" means The Depository Trust Company and any
substitute for or successor to such securities depository that shall maintain a
Book-Entry System with respect to the Bonds.
"Securities Depository Nominee" means the Security Depository or the
nominee of such Securities Depository in whose name there shall be registered
on the registration books of the Issuer the Bonds to be delivered to such
Securities Depository during the continuation with such Securities Depository
of participation in its Book-Entry System.
"Short-Term Mode" shall mean the CP Rate Mode, the Daily Rate Mode, the
Weekly Rate Mode and each Adjustable Rate Period of one year or less.
"State" shall mean the State of North Carolina.
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"Tender Agent" shall mean the Tender Agent appointed in accordance with
Section 7.11 if the Bonds are not then in a Book-Entry System. "Principal
Office" of the Trustee shall mean the office thereof designated in writing to
the Issuer, the Trustee, the Bank, the Remarketing Agent and the Company.
"Trustee" shall mean Harris Trust and Savings Bank, Chicago, Illinois, or
any successor trustee or co-trustee serving as such under this Indenture.
"Principal Office" of the Trustee shall mean the office thereof designated in
writing to the Issuer, the Bank, The Remarketing Agent and the Company, and
shall mean initially the trustee's office at 311 West Monroe Street, 12th
Floor, Chicago, Illinois 60690.
"Trust Estate" shall mean the property conveyed to the Trustee pursuant to
the Granting Clause of this Indenture.
"Unassigned Rights" shall mean the rights of the Issuer under Sections
4.3, 6.2 and 9.3 of the Agreement, the Issuer's rights to consent to amendments
to the Agreement and its rights to receive notices under the Agreement.
"Undelivered Bonds" shall mean during any period the Bonds are not in the
Book-Entry System, Bonds for which notice of optional tender shall have been
given pursuant to Section 2.03 and Bonds subject to mandatory tender pursuant
to Section 2.04, for which Available Moneys sufficient to pay the purchase
price have been deposited with the Tender Agent on or before the purchase date
of such Bonds, but which Bonds were not delivered to the Tender Agent on or
before such purchase date.
"Underwriter" shall mean First Chicago Capital Markets, Inc., Chicago,
Illinois.
"Weekly Interest Period" shall mean, while the Bonds are in the Weekly
Rate Mode, each period from and including Wednesday of each week (and, if the
first day of any Weekly Rate Period is not a Wednesday, the Weekly Rate
Conversion Date on which such Weekly Rate Period commences) through and
including the following Tuesday, whether or not such days are Business Days.
In addition, and notwithstanding the foregoing, the initial Weekly Interest
Period shall commence on the Closing Date and shall end on the next following
Tuesday.
"Weekly Rate" shall mean the interest rate per annum on the Bonds
established in accordance with Section 2.02(b).
"Weekly Rate Conversion Date" shall mean each date on which the Bonds,
having been converted to the Weekly Rate Mode from another Mode, first begin to
bear interest at a Weekly Rate in accordance with the terms hereof.
"Weekly Rate Interest Payment Date" shall mean the first Business Day of
each month during which the Bonds are in the Weekly Rate Mode, commencing with
the first Business Day of the month following the Weekly Rate Conversion Date
or, if applicable, the Closing Date.
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"Weekly Rate Mode" shall mean the mode in which the Bonds bear interest at
a Weekly Rate.
"Weekly Rate Period" shall mean the period from the Closing Date, if
applicable, or any Weekly Rate Conversion Date to the earlier of the redemption
of the Bonds, the next following Conversion Date or the maturity date of the
Bonds.
Section 1.02. Article and Section Headings. The headings or titles of
the several Articles and Sections of this Indenture, and the Table of Contents
appended hereto, are solely for convenience of reference and shall not affect
the meaning or construction of the provisions hereof.
Section 1.03. Interpretation. The singular form of any word used herein
shall include plural, and vice versa, if applicable. The use of a word of any
gender shall include all genders, if applicable. Any reference to a particular
Article, Section or Exhibit shall be to such Article, Section or Exhibit of
this Indenture unless the context shall otherwise require. Any reference to
any time of day on any date shall be to prevailing time in New York City, New
York, on such date unless otherwise specified.
ARTICLE II.
AUTHORIZATION AND ISSUANCE OF THE BONDS
Section 2.01. Authorization of Bonds; No Additional Bonds. (a) The Bonds
are hereby authorized to be issued in a single series, which shall be
designated as The Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority Industrial Development Revenue Bonds, Series 1995
(Griffith Micro Science, Inc. Project). The Bonds shall be issued in the
aggregate principal amount of $4,500,000.
(b) The Bonds shall be issued for the purpose of providing funds for a
loan from the Issuer to the Company for the Company's financing of the
acquisition, construction and equipping of the Project, as provided in the
Agreement. No Bonds may be issued pursuant to this Indenture in addition to
those authorized by this Section 2.01, except Bonds issued upon transfer or
exchange pursuant to Section 2.07, temporary Bonds issued pursuant to Section
2.10, replacement Bonds issued pursuant to Section 2.08, Bonds issued pursuant
to Section 3.06, and Bonds delivered pursuant to Section 3.10.
Section 2.02. Issuance of Bonds; Terms of Bonds.
(a) General Provisions. The Bonds shall:
(i) be dated as provided in Section 2.02(j) below,
(ii) bear interest initially in the Weekly Mode and, thereafter, at
the rates as provided and set forth in paragraphs (b) through
(f) of this Section, until paid (computed, while the Bonds are
in the Weekly Rate Mode, the CP Rate Mode or the Daily Rate
Mode, on the basis of a 365- or 366-day year,
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<PAGE> 18
for the actual number of days elapsed and, while the Bonds are
in the Adjustable Rate Mode, on the basis of a 360-day year,
composed of twelve 30-day months), payable on each Interest
Payment Date,
(iii) all be in the same Mode at the same time (except as provided
pursuant to subsection (d) below), and
(iv) mature on November 1, 2007.
(b) Weekly Rate Provisions. The Bonds shall bear interest at a Weekly
Rate from the Closing Date (if applicable) and from each Weekly Rate Conversion
Date to the earlier of their redemption, the following Conversion Date or their
maturity date. The Weekly Rate for each Weekly Interest Period shall be the
lowest rate of interest which will, in the Remarketing Agent's sole judgment,
having due regard for prevailing financial market conditions, permit the Bonds
to be remarketed at par (plus accrued interest, if any) on the first day of
such Weekly Interest Period. Notwithstanding the foregoing, the Weekly Rate so
established shall be not more than the Maximum Rate. Each determination of a
Weekly Rate by the Remarketing Agent shall be conclusive and binding upon the
Issuer, the Company, the Trustee, the Tender Agent, the Bank and the
Bondholders. Notwithstanding the foregoing, if at any time the Remarketing
Agent shall fail to determine a Weekly Rate as set forth above, then, until the
Remarketing Agent shall next determine the Weekly Rate in such fashion, the
Weekly Rate shall be the rate from time to time established as the J.J. Kenney
index rate for high grade tax-exempt obligations having maturities of 30 days.
If such index rate is not available, the Weekly Rate shall be the rate from
time to time established by the Public Securities Association as its Municipal
Swap Index, and if such index is not available, the Weekly Rate shall be the
rate from time to time established by such other comparable index as may be
selected by the Company upon notice to the Trustee. In no event, however, may
the interest rate on the Bonds exceed the Maximum Rate. On Tuesday (unless
Tuesday is not a Business Day, then on the next preceding Monday; unless Monday
and Tuesday are not Business Days, then on the next subsequent Wednesday,
whether or not a Business Day) of each calendar week during a Weekly Rate
Period, with respect to each Weekly Interest Period, the Remarketing Agent
shall determine and furnish to the Trustee the Weekly Rate for the ensuing
Weekly Interest Period. On the Business Day preceding each Weekly Rate
Interest Payment Date, the Trustee shall furnish to the Company, the Bank and,
if the Bonds are not in a Book-Entry System, to the Tender Agent, the Weekly
Rates applicable to the Bonds from the time of the prior notice of such rates.
Should any Bondholder or Beneficial Owner request such in writing, the
Remarketing Agent shall also furnish (by first-class mail, postage prepaid) the
Weekly Rate to such requesting Bondholder or Beneficial Owner.
(c) Daily Rate Provisions.
(i) The Bonds shall bear interest at a Daily Rate from the Closing
Date (if applicable) and from each Daily Rate Conversion Date
to the earlier of their redemption, the following Conversion
Date or their maturity date. The Daily Rate for each Daily
Interest Period shall be the interest rate determined by the
Remarketing Agent on the first day of such Daily
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<PAGE> 19
Interest Period (by not later than 10:30 a.m.), which shall be
the lowest rate of interest which will, in the Remarketing
Agent's sole judgment, having due regard for prevailing
financial market conditions, permit the Bonds to be remarketed
at par (plus accrued interest, if any) on the said first day of
such Daily Interest Period. Notwithstanding the foregoing, the
Daily Rate so established shall be not more than the Maximum
Rate. If at any time the Remarketing Agent shall fail to
determine a Daily Rate for a Daily Interest Period, then the
Bonds shall thereupon automatically bear interest at the last
Daily Rate previously determined pursuant to this Indenture.
Upon such event, the Trustee shall promptly notify the
Bondholders, the Company, the Remarketing Agent, the Tender
Agent, if any, and the Bank of such fact. Each determination of
a Daily Rate by the Remarketing Agent shall be conclusive and
binding upon the Issuer, the Company, the Trustee, the Tender
Agent, the Bank and the Bondholders.
(ii) On the Business Day preceding each Interest Payment Date during
each Daily Rate Period, the Remarketing Agent will furnish to
the Trustee, and the Trustee will furnish to the Bank, the
Company and the Tender Agent, if any, the Daily Rates
applicable to the Bonds during such Daily Rate Period. Should
the Company or any Bondholder or Beneficial Owner request in
writing the Daily Rate applicable to the Bonds for any
particular day, the Remarketing Agent will furnish such Daily
Rate to the Company or such requesting Bondholder or Beneficial
Owner.
(d) CP Rate Provisions. While the Bonds are in the CP Rate Mode, each
Bond shall bear interest at a CP Rate from each CP Rate Conversion Date or CP
Rate Reset Date, as appropriate, to the earlier of its redemption, maturity,
the following Conversion Date for all Bonds or the following CP Rate Reset Date
applicable to such Bond. Different CP Rate periods may apply to different
Bonds at any time and from time to time while the Bonds are in a CP Rate Mode.
In the case of each CP Rate Period, on the first day thereof, the
Remarketing Agent shall determine (i) the duration of such CP Rate Period and
(ii) the CP Rate which shall apply during such CP Rate Period. The duration of
the CP Rate period so determined shall be that which, together with all such
other CP Rate Periods for all Bonds then Outstanding, in the Remarketing
Agent's sole judgment, will provide the lowest overall interest cost with
respect to the Bonds, with due regard to prevailing financial market
conditions, foreseeable changes in such conditions, the anticipated duration of
the period the Bonds may remain in the CP Rate Mode and such other factors
which the Remarketing Agent, in its sole judgment, shall deem relevant and
economically advantageous to consider. Upon determination of the duration of a
CP Rate Period with respect to any Bonds, the Remarketing Agent shall determine
the CP Rate which shall be in effect with respect to such Bonds during such CP
Rate Period, which shall be the lowest rate of interest which, in the
Remarketing Agent's sole judgment, having due regard to prevailing financial
market conditions, will permit such Bonds to be sold at par on the first day of
such CP Rate Period. Notwithstanding the foregoing, the CP Rate so determined
shall not be
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<PAGE> 20
more than the Maximum Rate. Unless and until the Company elects to effect a
conversion of the Bonds from the CP Rate Mode to another Mode, the Remarketing
Agent shall continually redetermine the duration of, and the CP Rate to be
effective during, each new CP Rate Period with respect to each Bond, which will
commence, without further action on the part of the Company, on each CP Rate
Reset Date with respect to such Bond. If on any CP Rate Reset Date, the
Remarketing Agent shall fail to determine either the duration of, or the CP Rate
to be effective during, the CP Rate Period which commences on such date with
respect to any Bonds, such Bonds, without further action on the part of any
person, shall automatically convert to the Weekly Rate Mode upon such date, and
the Weekly Rate which will be effective on such date will be determined as
described in Section 2.02(b). Such Bonds may not thereafter be converted from
the Weekly Rate Mode until such time as all Bonds then outstanding are in the
Weekly Rate Mode. Upon such automatic conversion of a portion of the Bonds to
the Weekly Rate Mode, any Bonds then remaining in the CP Rate Mode shall be
automatically converted to the Weekly Rate Mode upon the expiration of the CP
Rate Period applicable to such Bonds without further action on the part of any
person (and notwithstanding any attempted act to the contrary on the part of any
person). Upon such event, the Trustee shall promptly notify the affected
Bondholders, the Company, the Remarketing Agent, the Tender Agent, if any, and
the Bank of such automatic conversion. Each determination by the Remarketing
Agent pursuant to this paragraph shall be conclusive and binding upon the
Issuer, the Company, the Trustee, the Tender Agent, the Bank and the
Bondholders.
On the first day of each CP Rate Period, the Remarketing Agent shall
furnish to the Trustee, the Bank, the Company and, if the Bonds are not in a
Book-Entry System, the Tender Agent, notice of the duration of such CP Rate
period and the CP Rate to be effective during such CP Rate period. Should any
Bondholder or Beneficial Owner request notice of such items in writing, the
Remarketing Agent shall provide such notice (by first-class mail, postage
prepaid) to such requesting Bondholder or Beneficial Owner.
The Securities Depository has established separate procedures applicable
to Bonds held in the CP Rate Mode. The Issuer and the Trustee agree to comply
with such procedures whenever Bonds in the CP Rate Mode are held in a
Book-Entry System.
At any time that the Company has given notice of conversion of the Bonds
from the CP Rate Mode to another Mode as provided in Section 2.02(f), the
Remarketing Agent shall thereafter determine CP Rate Periods of such duration
so that, as soon as possible, all CP Rate Periods shall end on the same date,
which date shall be the day preceding the Conversion Date.
(e) Adjustable Rate Provisions. The Bonds shall bear interest at an
Adjustable Rate from each adjustable Rate Conversion Date or each Adjustable
Rate Reset Date, as appropriate, to the earlier of their redemption, maturity,
the following Conversion Date, the following Adjustable Rate Reset Date or the
following date on which the Bonds shall be subject to mandatory tender for
purchase pursuant to Section 2.04. Upon a conversion of the Bonds to the
Adjustable Rate Mode, the duration of the initial Adjustable Rate Period shall
be that period specified in the Company's conversion notice delivered pursuant
to Section 2.02(f)(i) for the purpose of effecting such conversion. An
Adjustable Rate Period shall be of at least one month
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<PAGE> 21
in duration and shall end on the day preceding the first Business Day of a
calendar month or, if such Adjustable Rate Period extends to the final maturity
date of the Bonds, such final maturity date. The Bonds thereupon shall remain
in the Adjustable Rate Mode for as long as the Company shall continue to deliver
timely notices pursuant to Section 2.02(f)(i) specifying the duration of the
next subsequent Adjustable Rate Period which is to commence on the expiration of
any current Adjustable Rate Period. The Remarketing Agent, on or prior to the
commencement of each Adjustable Rate Period, shall determine the Adjustable Rate
to be borne by the Bonds during such Adjustable Rate Period, which shall be the
lowest rate which, in its sole judgment having due regard for prevailing
financial market conditions, will permit the Bonds to be sold at par on the
first day of such Adjustable Rate Period. Notwithstanding the foregoing, the
Adjustable Rate shall not be more than the Maximum Rate.
If, during any period the Bonds shall be in the Adjustable Rate Mode,
either (i) the Company shall not deliver a timely conversion notice specifying
the duration of the next subsequent Adjustable Rate Period, or (ii) on or prior
to any Adjustable Rate Reset Date the Remarketing Agent shall fail to determine
the Adjustable Rate to be borne by the Bonds during such Adjustable Rate
Period, then, except as set forth below, the Bonds, without further action on
the part of any other person, shall automatically convert to the Weekly Rate
Mode on the date which otherwise would have been the Adjustable Rate Reset
Date, and the Bonds shall thereupon bear interest at the Weekly Rate determined
pursuant to Section 2.02(b). Upon such event, the Trustee shall promptly
notify the Bondholders, the Company, the Remarketing Agent, the Tender Agent,
if any, and the Bank of such automatic conversion. If, however, prior to such
date, the Bonds were in a Long-Term Mode, the Bonds shall not be automatically
converted to the Weekly Mode, as described in the preceding sentence, unless
there shall have been delivered to the Trustee on or prior to such date an
opinion of Bond Counsel to the effect that such automatic conversion will not
adversely affect the exclusion of interest on the Bonds from the Federal gross
income of the Owners thereof. Absent delivery of such opinion, the Bonds will
convert automatically on such date to the shortest possible Adjustable Rate
Period of a duration of at least one year and one day. In such event, the
Bonds shall bear interest during such period at a rate to be determined by the
Remarketing Agent as described herein, or if no rate is so determined, at a
rate equal to 90% of the average interest rate for one year U.S. Treasury
Notes, as published in the Federal Reserve Bulletin (published by the Board of
Governors of the Federal Reserve System) most recently published prior to the
Conversion Date, as determined by the Trustee. Each determination of an
Adjustable Rate by the Remarketing Agent shall be conclusive and binding upon
the Issuer, the Company, the Trustee, the Tender Agent, the Bank and the
Bondholders.
(f) Conversion Options.
(i) In General. The interest rate Mode of the Bonds shall be
converted from one Mode to another, and an Adjustable Rate Period
of one duration shall be converted to an Adjustable Rate Period of
the same or another duration, at the Company's option, if the
Company shall notify the Trustee, the Tender Agent, the Bank, the
Rating Agencies and the Remarketing Agent
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of its election to effect such a conversion and each other
condition to any such conversion set forth in this Indenture
shall have been satisfied.
Notwithstanding anything in this Indenture to the
contrary, however, in no event shall any such conversion
occur as to any Bond with respect to which a deposit has been
made pursuant to Section 10.01(a)(ii) to provide for such
Bond to be deemed paid.
In addition, in no event shall the interest rate Mode of
the Bonds be converted to the Adjustable Rate Mode for an
Adjustable Rate Period extending to the final maturity of the
Bonds unless the Company shall have provided to the Issuer
and the LGC evidence reasonably acceptable to the Issuer and
the LGC that after such conversion, the Bonds will have an
Investment Grade Rating.
The Company's conversion notice shall specify the date
on which the Conversion Date will occur (which date shall be
not sooner than 25 days after the date such notice is given)
and, if the conversion is to an Adjustable Rate Period, shall
specify the Adjustable Rate Period. Notwithstanding the
foregoing, no conversion from a Short-Term Mode to a
Long-Term Mode or from a Long-Term Mode to a Short-Term Mode
and no conversion effected in connection with either a change
in the Bank issuing the Letter of Credit, a change in the
security for the Bonds or an amendment to this Indenture or
the Agreement shall be effective unless the Company has
delivered with such notice an opinion of Bond Counsel (which
opinion must be confirmed on the Conversion Date) stating
that such conversion will not adversely affect the
excludability from gross income of interest on the Bonds for
Federal income tax purposes.
The Conversion Date shall be the date specified in the
Company notice; provided that no conversion from the
Adjustable Rate Mode shall be effective prior to the Business
Day following the last day of the Adjustable Rate Period
which is then in effect, and no such optional conversion from
the CP Rate Mode shall be effective prior to the Business Day
following the day which is the last day of the CP Rate
Periods for all of the Bonds.
If any condition precedent to conversion (including, but
not limited to, the establishment by the Remarketing Agent of
the initial interest rate to be in effect after the
Conversion Date or, if required, the delivery of the Bond
Counsel opinion described above) is not satisfied on or prior
to the Conversion Date, the Bonds shall nonetheless be
subject to mandatory tender on the Conversion Date and,
subject to the same qualifications and exceptions as are set
forth in the second paragraph of Section 2.02(e), upon such
date, the Bonds, without any further action on the part of any
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<PAGE> 23
person, shall automatically convert to the Weekly Rate Mode,
and the Bonds shall thereupon bear interest at a Weekly Rate
determined pursuant to Section 2.02(b).
(ii) Conversion Notice. At least 20 days prior to
each Conversion Date, the Trustee shall give to each
Bondholder notice by certified mail, stating: (A) the
Conversion Date, (B) that, on the Conversion Date, the Bonds
are subject to mandatory tender and purchase; (C) that,
subject to clause (E) below, all Owners who fail to tender
their Bonds for purchase on the mandatory tender date will
nonetheless be deemed to have tendered their Bonds for
purchase on such date; (D) that, subject to clause (E) below,
any Bonds not delivered to the Tender Agent on or prior to the
mandatory tender date, for which there has been irrevocably
deposited in trust with the Trustee or the Tender Agent on or
prior to the mandatory tender date Available Moneys sufficient
to pay the purchase price of such Undelivered Bonds on the
mandatory tender date, shall be deemed to have been so
purchased at the purchase price, and such Bonds shall no
longer be considered to be outstanding for purposes of this
Indenture and shall no longer be entitled to the benefits of
this Indenture, except for the payment of the purchase price
thereof (and no interest shall accrue thereon subsequent to
the mandatory tender date) and (E) that notwithstanding the
foregoing, while the Bonds are held in the Book-Entry System,
Bonds need not be physically tendered on the mandatory tender
date, and transfers of beneficial ownership interests will be
effected by the Securities Depository in accordance with its
rules and procedures.
(g) Letter of Credit Interest Coverage. The interest component of each
Letter of Credit in effect during any Mode shall be sufficient to provide
Adequate Interest Coverage (as defined below).
With respect to the Weekly Rate Mode, the Daily Rate Mode or the CP Rate
Mode, "Adequate Interest Coverage" shall mean the aggregate amount of interest
which would accrue on all Outstanding Bonds (other than Pledged Bonds and
Company Bonds) at a rate equal to 10% per annum, computed on the basis of a
365-day year, (i) for a period of forty-five (45) days, in the case of Bonds in
the Weekly Rate Mode or the Daily Rate Mode, and (ii) for a period of three
hundred eighty (380) days, in the case of Bonds in the CP Rate Mode or, in
either case, such shorter period acceptable to the Rating Agencies and which
will not result in a withdrawal or lowering of any rating on the Bonds from
that which would otherwise accrue from a longer interest coverage period.
Notwithstanding the foregoing, Adequate Interest Coverage during the Weekly
Rate Mode, the Daily Rate Mode or the CP Rate Mode may cover interest on Bonds
at a rate other than 10% per annum if (A) the Company provides the Trustee with
an opinion of Bond Counsel to the effect that such coverage and the effect of
such coverage upon clause (b) of the definition of "Maximum Rate" herein will
not adversely affect the exclusion from gross income of interest on the Bonds
for Federal income tax purposes, and (B) if the applicable rate is to be less
than 10% per annum, the Trustee shall have received written notice from the
Rating
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Agencies that such lower rate will not result in a withdrawal or lowering of any
rating on the Bonds from that which would otherwise accrue from a maintenance of
coverage at the 10% rate.
With respect to the Adjustable Rate Mode, "Adequate Interest Coverage"
shall mean the aggregate amount of interest which would accrue on all
Outstanding Bonds (other than Pledged Bonds and Company Bonds) at a rate equal
to the Adjustable Rate to be borne by the Bonds during such Mode, computed on
the basis of a 360-day year composed of twelve 30-day months, for a period of
two hundred (200) days, or with respect to an Adjustable Rate Period of less
than six months' duration, for a period equal to the number of days in such
Adjustable Rate Period plus twenty, or in either such case, such shorter period
acceptable to the Rating Agencies and which will not result in a withdrawal or
lowering of any rating on the Bonds from that which would otherwise accrue from
a longer interest coverage period.
(h) Denominations; Numbering. The Bonds are issuable only as registered
Bonds without coupons in Authorized Denominations. The Bonds shall be numbered
from 1 upwards, provided that the number assigned to each definitive Bond shall
be prefixed by the letter "R." Temporary Bonds shall be prefixed by the
letters "TR."
(i) Payment Terms. Principal of, and premium, if any, on the Bonds shall
be payable by the Trustee from moneys held by the Trustee in the Bond Fund to
the Bondholders upon presentation and surrender of the Bonds as the same become
due at the Trustee's Principal Office. The Trustee shall pay interest on the
Bonds by check or draft drawn upon the Trustee and mailed by first-class mail
on the respective Interest Payment Dates to the Bondholders at their addresses
shown on the registration books of the Trustee, or such other addresses as are
furnished to the Trustee (in form satisfactory to the Trustee) by such
Bondholders, as of the close of business on the Record Date with respect to
such Interest Payment Date; provided that payment of interest shall be made by
the Trustee by wire transfer to any Owner of $1,000,000 or more in aggregate
principal amount of Bonds upon such Owner's, providing the Trustee with written
wire transfer instructions acceptable to the Trustee before the applicable
Record Date. If and to the extent there shall be a default in the payment of
the interest due on an Interest Payment Date, such defaulted interest shall be
paid to the Bondholders in whose names any such Bonds (or any Bond or Bonds
issued upon registration of transfer or exchange thereof) are registered at the
close of business on the Business Day next preceding the date of payment of
such defaulted interest. Payment of the principal or purchase price of, and
the premium, if any, and interest on, the Bonds shall be made in such lawful
money of the United States of America as, at the respective times of payment,
shall be legal tender for the payment of public and private debts.
(j) Dating; Interest Accrual. The Bonds shall be dated, and interest on
the Bonds shall accrue from, the Closing Date, and thereafter the Bonds shall
bear interest from the Interest Payment Date next preceding the date of
authentication, unless (i) authenticated prior to the first Interest Payment
Date, in which event interest on such Bonds shall accrue from the Closing Date,
(ii) authenticated on an Interest Payment Date, in which event interest on such
Bonds shall accrue from the date of authentication, or (iii) authenticated
after a Record Date and before the following Interest Payment Date, in which
event interest on such Bonds shall accrue from the following Interest Payment
Date. If, as shown by the Trustee's records, interest on the Bonds is
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<PAGE> 25
in default, interest on Bonds issued in exchange for Bonds surrendered for
registration of transfer or exchange shall accrue from the date to which
interest has been paid in full on the Bonds, or, if no interest has been paid on
the Bonds, from the Closing Date. The amount of interest payable on the Bonds
on each Interest Payment Date shall be the amount of interest accrued thereon
from the preceding Interest Payment Date (or other date as described above) to,
but not including, the Interest Payment Date on which interest is being paid.
Section 2.03. Optional Tender. (a) While the Bonds are in the Weekly
Rate Mode, any Outstanding Bond or portion thereof in an Authorized
Denomination (except any Pledged Bond or Company Bond) shall be purchased on
the demand of the Owner thereof on any Business Day at a price equal to 100% of
the principal amount thereof, plus accrued and unpaid interest thereon to the
purchase date, upon delivery (by facsimile or otherwise) to the Tender Agent at
its Principal Office on any Business Day, of the following:
(i) a written irrevocable notice, which will be effective upon
receipt, which (A) states the name and address of the Owner,
the principal amount of such Bond (and the portion thereof to
be tendered, if less than the full principal amount is to be
tendered) and the Bond number, and (B) states the date on which
such Bond shall be so purchased, which date shall be a Business
Day not prior to the seventh day next succeeding the date of
the delivery of such notice to the Tender Agent; and
(ii) such Bond (with all necessary endorsements and guarantee of
signature) attached to such notice; provided, however, that the
purchase price of such Bond shall be paid by the close of
business on the purchase date, but only upon the delivery of
the Bond to the Tender Agent and provided such Bond shall
conform in all material respects to the description thereof in
such notice; and provided, further, that if the Owner of the
tendered Bond is an open-ended diversified management
investment company (registered under the Investment Company Act
of 1940, as amended), the delivery required under this
paragraph (ii) need not be made until 10:30 a.m. on the date
such Bond is to be purchased from such Owner. Undelivered Bonds
shall be deemed to have been delivered at the time and on the
date required, and as of such date and time shall no longer be
deemed to be Outstanding under this Indenture. The Owner of
any Undelivered Bond shall be entitled only to the purchase
price payable for such Bond on the required delivery date
thereof, and such purchase price shall be paid to such Owner
only upon surrender of such Bond to the Tender Agent.
Notwithstanding the foregoing, if the Bonds in the Weekly Rate Mode are
held in a Book-Entry System, a Beneficial Owner shall have the right to
optionally tender for purchase its beneficial interest in any Outstanding Bonds
(or portion thereof in an Authorized Denomination) at the purchase price set
forth above. Such right shall be exercised with respect to such Bonds by the
Beneficial Owner's delivery to the Remarketing Agent, at the Remarketing
Agent's Principal Office, of an irrevocable written notice identifying the name
and address of such Beneficial
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<PAGE> 26
Owner and stating that such Beneficial Owner will cause its beneficial interest
(or portion thereof in an Authorized Denomination) to be purchased, the amount
of such interest to be purchased, the date on which such interest will be
purchased (which date shall be a Business Day at least seven days after delivery
of such notice to the Remarketing Agent) and specifying the Remarketing Agent as
the Participant through which the Beneficial Owner maintains its interest. Upon
delivery of such notice, the Beneficial Owner shall cause its beneficial
ownership interest in the Bonds (or the portion thereof specified in the
foregoing notice) being purchased to be transferred to the Remarketing Agent at
or prior to 10:30 a.m. on the optional tender date, in accordance with the rules
and procedures of the applicable Securities Depository.
(b) While the Bonds are in the Daily Rate Mode, any Outstanding Bond or
portion thereof in an Authorized Denomination (except any Pledged Bond or
Company Bond) shall be purchased on the demand of the Owner thereof on any
Business Day at a price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest thereon to the date of purchase, upon delivery (by
facsimile or otherwise) to the Tender Agent at its Principal Office, of the
following:
(i) no later than 10:00 a.m. on such Business Day, of a written
irrevocable notice, which will be effective upon receipt, which
states the name and address of the Owner, the principal amount
of such Bond (and the portion thereof to be tendered, if less
than the full principal amount is to be tendered) and the Bond
number, and
(ii) no later than 10:30 a.m. on such Business Day, such Bond (with
all necessary endorsements and guarantees of signature);
provided, however, that the purchase price of such Bond shall
be paid by the close of business on the purchase date, but only
upon the delivery of the Bond to the Tender Agent and provided
such Bond shall conform in all material respects to the
description thereof in such notice.
Undelivered Bonds shall be deemed to have been delivered at the time and
on the date required, and as of such date and time shall no longer be deemed to
be Outstanding. The Owner of any Undelivered Bond shall be entitled only to
the purchase price payable for such Bond on the required delivery date thereof,
and such purchase price shall be paid to such Owner only upon surrender of such
Bond to the Tender Agent.
Notwithstanding the foregoing, if the Bonds in the Daily Rate Mode are
held in a Book-Entry System, a Beneficial Owner shall have the right to
optionally tender for purchase its beneficial interest in any Outstanding Bonds
(or portion thereof in an Authorized Denomination) at the purchase price set
forth above. Such right shall be exercised with respect to such Bonds by the
Beneficial Owner's delivery to the Remarketing Agent, at the Remarketing
Agent's Principal Office no later than 10:00 a.m. on the date on which the
beneficial interest of such Beneficial Owner is to be purchased, of an
irrevocable written notice identifying the name and address of such Beneficial
Owner and stating that such Beneficial Owner will cause its beneficial interest
(or portion thereof in an Authorized Denomination) to be purchased, the amount
of such interest
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<PAGE> 27
to be purchased, and specifying the Remarketing Agent as the Participant through
which the Beneficial Owner maintains its interest. Upon delivery of such
notice, the Beneficial Owner shall cause its beneficial ownership interest in
the Bonds (or the portion thereof specified in the foregoing notice) being
purchased to be transferred to the Remarketing Agent at or prior to 10:30 a.m.
on the optional tender date, in accordance with the rules and procedures of the
applicable Securities Depository.
Section 2.04. Mandatory Tender. The Bonds are subject to mandatory
tender in whole (except as provided in (b) below) by the Bondholders to the
Tender Agent at its Principal Office on each date described below:
(a) On each Conversion Date (provided that, if less than all of the Bonds
are being converted from the CP Rate Mode to the Weekly Rate Mode as described
in this Indenture, only the Bonds being converted shall be subject to mandatory
tender);
(b) On each CP Rate Reset Date with respect to any Bond (provided that
only those Bonds whose interest rates are being reset on such date shall be
subject to mandatory tender);
(c) On the Business Day prior to either (i) the scheduled stated
expiration date or date of termination of the Letter of Credit, if the Trustee
has not received by the 25th day preceding such scheduled Letter of Credit
expiration or termination date either an extension of the then-existing Letter
of Credit or an Alternate Credit Facility meeting the requirements set forth
therefor in Section 5.03, including the Maintenance of Rating requirement (as
defined in Section 5.03(b)), or (ii) the date on which the existing Letter of
Credit is to be released pursuant to Section 5.03(c);
(d) On the date of substitution of an Alternate Credit Facility for the
then-existing Letter of Credit if the Trustee has not received evidence of a
Maintenance of Rating with respect thereto on or prior to such substitution
date; and
(e) On each optional redemption date pursuant to Section 3.01 for which
the Company has elected to purchase Bonds in lieu of an optional redemption
pursuant to Section 3.01(c) hereof.
The purchase price of Bonds subject to mandatory tender shall be 100% of
the principal amount thereof (except in the case of a mandatory tender
described in paragraphs (c), (d) or (e) above, during, but prior to the
expiration date of, an Adjustable Rate Period, in which case the purchase price
shall include a premium equal to the then-applicable optional redemption
premium, if any, on the Bonds), plus accrued and unpaid interest, if any, to
the purchase date. Not later than 20 days prior to a mandatory tender date
described in (b), (c), or (d) above, the Trustee shall mail notice to all
Owners of Bonds subject to mandatory tender, the Remarketing Agent, the Bank,
the Company, the Rating Agencies and the Tender Agent stating that (i) due to
the occurrence of one of the events described above (which event shall be
specified), such Bonds will be subject to mandatory tender on the mandatory
tender date (which date shall be specified), (ii) that, subject to clause (iv)
below, all such Owners who fail to tender their Bonds for purchase on the
mandatory tender date will nonetheless be deemed to have tendered their Bonds
for
23
<PAGE> 28
purchase on such date, (iii) that, subject to clause (iv) below, any such Bonds
not delivered to the Tender Agent on or prior to the mandatory tender date, for
which there has been irrevocably deposited in trust with the Trustee or the
Tender Agent on or prior to the mandatory tender date Available Moneys
sufficient to pay the purchase price of such Undelivered Bonds on the mandatory
tender date, shall be deemed to have been so purchased at the purchase price,
and such Bonds shall no longer be considered to be Outstanding for purposes of
this Indenture and shall no longer be entitled to the benefits of this
Indenture, except for the payment of the purchase price thereof (and no interest
shall accrue thereon subsequent to the mandatory tender date), and (iv) that
notwithstanding the foregoing, while the Bonds are held in the Book-Entry
System, Bonds need not be physically tendered on the mandatory tender date, and
transfers of beneficial ownership interests will be effected by the Securities
Depository in accordance with its rules and procedures. Notice of mandatory
tenders described in clauses (a) and (e) above shall be given as part of the
notice of conversion referenced in Section 2.02(f)(ii) or notice of redemption
referenced in Section 3.04, respectively. No failure on the Trustee's part to
give any such notice shall affect the requirement that Bonds be tendered on the
mandatory tender date.
When Bonds are not in a Book-Entry System, Undelivered Bonds shall, if
Available Moneys sufficient to pay the purchase price of such Bonds in full and
available for the purchase of such Bonds have been deposited with the Tender
Agent on the mandatory tender date, shall be deemed to have been tendered for
purchase on the mandatory tender date, and from such date shall no longer be
deemed to be Outstanding. Owners of such Bonds shall have no rights or
benefits under this Indenture other than to receive the purchase price for such
Bonds upon surrender of such Bonds to the Tender Agent, and no interest shall
accrue thereon subsequent to the mandatory tender date. Notwithstanding the
foregoing, if on any mandatory tender date the Bonds shall be in the Book-Entry
System, it shall not be necessary that Bonds be physically tendered to the
Tender Agent on the mandatory tender date. Transfers of beneficial ownership
interests shall be effected in accordance with the rules and procedures
established by the Securities Depository.
Upon the occurrence of any mandatory tender described in paragraphs (c),
(d), (e) or (f) above during an Adjustable Rate Period, commencing on the date
of such mandatory tender the Bonds shall bear interest in a Mode (and, in the
case of the Adjustable Rate Mode, for an Adjustable Rate Period) to be
designated by the Company by notice to the Trustee given to the Trustee at
least 25 days prior to such date; provided, however, the said designated Mode
or Adjustable Rate Period shall be effective on the mandatory tender date only
if each prerequisite to a conversion specified in Section 2.02(f) shall have
been satisfied. If the Company makes no designation of a Mode or an Adjustable
Rate Period, or if the prerequisites of Section 2.02(f) have not been
satisfied, then, upon the mandatory tender date, the Bonds, subject to the same
qualifications and exceptions as are set forth in the second paragraph of
Section 2.02(e), shall convert automatically to the Weekly Rate Mode, and the
Bonds thereupon shall bear interest at the Weekly Rate determined pursuant to
Section 2.02(b).
Section 2.05. Form of Bonds. The Bonds and the certificate of
authentication, the provision for registration and the form of assignment
thereof shall be in substantially the form set forth in Exhibit A, with such
appropriate variations, omissions, substitutions, insertions,
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<PAGE> 29
notations, legends and endorsements as may be deemed necessary or appropriate by
the officers of the Issuer executing the same and as shall be permitted or
required by the Act and this Indenture.
Section 2.06. Execution and Authentication of Bonds. (a) The Bonds
shall be executed on behalf of the Issuer with the manual or facsimile
signature of the Chairman or the Vice Chairman of the Issuer's Board of
Commissioners and attested, under a manual or facsimile impression of the seal
of the Issuer, with the manual or facsimile signature of the Secretary or the
Assistant Secretary of the Issuer's Board of Commissioners. If any officer of
the Issuer whose signature or a facsimile thereof appears on a Bond shall cease
to be such officer before the delivery of such Bond, such signature or such
facsimile shall nevertheless be valid and sufficient for all purposes, the same
as if such officer had remained in the office until delivery.
(b) No Bond shall be valid or obligatory for any purpose or be entitled
to any security or benefit under this Indenture unless and until a certificate
of authentication on such Bond substantially in the form set forth in Exhibit A
shall have been duly executed by the Trustee, or, in the case of purchased
Bonds delivered by the Tender Agent pursuant to Section 3.10, by the Tender
Agent. Any such executed certificate upon any such Bond shall be conclusive
evidence that such Bond has been authenticated and delivered under this
Indenture. The certificate of authentication on any Bond shall be deemed to
have been executed by it if signed by an authorized officer or signatory of the
Trustee or the Tender Agent, but it shall not be necessary that the same
officer or signatory sign the certificate of authentication on all of the Bonds
issued hereunder.
Section 2.07. Registration and Exchange of Bonds; Persons Treated as
Owners. (a) Bonds may be transferred only on the Issuer's registration books
for the Bonds as maintained by the Trustee. Upon surrender for transfer of any
Bond to the Trustee, duly endorsed for transfer or accompanied by an assignment
duly executed by the holder or the holder's attorney duly authorized in
writing, the Trustee will authenticate a new Bond or Bonds in an equal total
principal amount and registered in the transferee's name.
(b) Bonds may be exchanged for an equal total principal amount of Bonds
of different Authorized Denominations. The Trustee will authenticate and
deliver Bonds that the Bondholder making the exchange is entitled to receive,
bearing numbers not then outstanding.
(c) The Trustee will not be required to transfer or exchange any Bond
after the mailing of notice calling such Bond or any portion of such Bond for
redemption or during the 15-day period preceding the mailing of a notice of
redemption of any Bonds, except as provided in Sections 2.03 and 2.04.
(d) The Owner of a Bond shall, except as otherwise described in this
Indenture with respect to certain rights of Beneficial Owners, be the absolute
owner of the Bond for all purposes, and payment of principal, interest or
purchase price shall be made only to or upon the written order of the Owner or
the Owner's legal representative.
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<PAGE> 30
(e) The Trustee will require the payment by a Bondholder requesting
exchange or transfer of any tax or other governmental charge required to be
paid in respect of the exchange or transfer but will not impose any other
charge.
(f) Notwithstanding the foregoing, for so long as the Bonds are held
under the Book-Entry System, transfers of beneficial ownership will be effected
pursuant to rules and procedures established by the Securities Depository.
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is
mutilated, lost, stolen or destroyed, the Trustee will authenticate a new Bond
of the same denomination if any mutilated Bond shall first be surrendered to
the Trustee, and if, in the case of any lost, stolen or destroyed Bond, there
shall first be furnished to the Issuer, the Trustee, the Bank and the Company
evidence of such loss, theft or destruction, together with an indemnity
satisfactory to each of them to save each of them harmless from all risks
related thereto, however remote. If the Bond has matured, instead of issuing a
duplicate Bond, the Trustee may with the Company's consent pay the Bond without
requiring surrender of the Bond and make such requirements as the Trustee deems
fit for its protection, including a lost instrument bond. The Issuer, the
Company and the Trustee may charge their reasonable fees and expenses in this
connection.
Section 2.09. Cancellation of Bonds. Whenever a Bond is delivered to the
Trustee for cancellation (upon payment, redemption or otherwise), or for
transfer, exchange or replacement pursuant to Section 2.07 or 2.08, the Trustee
will promptly cancel the Bond and deliver the canceled Bond or a certificate of
destruction as appropriate to the Company at its request. Upon cancellation of
any tendered Bond by the Tender Agent, the Tender Agent shall forward the
canceled Bond to the Trustee.
Section 2.10. Temporary Bonds. Until definitive Bonds are ready for
delivery, the Issuer may execute, and the Trustee or the Tender Agent will
authenticate, temporary Bonds substantially in the form of the definitive
Bonds, with appropriate variations. The Issuer will, without unreasonable
delay, prepare, and the Trustee or the Tender Agent will authenticate,
definitive Bonds in exchange for the temporary Bonds. Such exchange shall be
made by the Trustee or the Tender Agent without charge.
Section 2.11. Conditions Precedent to Authentication and Delivery of
Bonds. The issuer shall execute and deliver the Bonds to the Trustee, and the
Trustee shall, upon receipt by the Trustee of those items specified in this
Section, authenticate the Bonds (or cause the Tender Agent to authenticate the
Bonds) and deliver them to, or upon the order of, the Underwriter. Prior to
and as a condition precedent to the authentication and delivery of the Bonds
there shall be filed with and delivered to the Trustee:
(a) a copy, duly certified by an authorized representative of the
Issuer, of the resolution adopted by the Issuer in accordance with the
Act authorizing the execution and delivery of this Indenture and the
issuance of the Bonds;
(b) original duly executed and delivered counterparts of this
Indenture, the Agreement, and the Rebate Agreement;
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<PAGE> 31
(c) an opinion of Bond Counsel to the effect that Bonds executed,
authenticated and delivered as provided in this Indenture will be duly
and validly issued and will constitute valid and binding limited
obligations of the Issuer; and
(d) the duly executed and delivered Letter of Credit.
Section 2.12. Book-Entry System. (a) The Bonds shall be issued
pursuant to a Book-Entry System administered by the Securities Depository with
no physical distribution of Bond certificates to be made except as provided in
this Section. Any provision of this Indenture or the Bonds requiring physical
delivery of the Bonds shall, with respect to any Bonds held under the
Book-Entry System, be deemed to be satisfied by a notation on the registration
books maintained by the Trustee that such Bonds are subject to the Book-Entry
System.
(b) So long as a Book-Entry System is being used, one Bond in the
aggregate principal amount of the Bonds and registered in the name of the
Securities Depository Nominee will be issued and deposited with the Securities
Depository to be held in its custody. The Book-Entry System will be maintained
by the Securities Depository and the Participants and Indirect Participants and
will evidence beneficial ownership of the Bonds in Authorized Denominations,
with transfers of ownership effected on the records of the Securities
Depository, the Participants and the Indirect Participants pursuant to rules
and procedures established by the Securities Depository, the Participants and
the Indirect Participants. The principal or purchase price of and any premium
on, each Bond shall be payable to the Securities Depository Nominee or any
other person appearing on the registration books maintained by the Trustee as
the registered holder of such Bond or his registered assigns or legal
representative. So long as the Book-Entry System is in effect, the Securities
Depository will be recognized as the Holder of the Bonds for all purposes.
Transfers of principal, purchase price, interest and any premium payments or
notices to Participants and Indirect Participants will be the responsibility of
the Securities Depository, and transfers of principal, purchase price, interest
and any premium payments or notices to Beneficial owners will be the
responsibility of the Participants and the Indirect Participants. No other
party will be responsible or liable for such transfers of payments or notices
or for maintaining, supervising or reviewing such records maintained by the
Securities Depository, the Participants or the Indirect Participants. While
the Securities Depository Nominee or the Securities depository, as the case may
be, is the Owner of the Bonds, notwithstanding any other provisions set forth
in this Indenture, payments of principal or purchase price of, redemption
premium, if any, and interest on the Bonds shall be made to the Securities
Depository Nominee or the Securities Depository, as the case may be, by wire
transfer in immediately available funds to the account of such Holder. Without
notice to or the consent of the Beneficial Owners, the Trustee, with the
Company's consent, and the Securities Depository may agree in writing to make
payments of principal, redemption price or purchase price and interest in a
manner different from that set out herein. In such event, the Trustee shall
make payments with respect to the Bonds in such manner as if set forth herein.
(c) With the Remarketing Agent's consent, the Company may at any time
elect (i) to provide for the replacement of any Securities Depository as the
depository for the Bonds with another qualified Securities Depository, or (ii)
to discontinue the maintenance of the Bonds under
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<PAGE> 32
a Book-Entry System. In such event, the Trustee shall give 30 days' prior
notice of such election to the Securities Depository (or such fewer number of
days as shall be acceptable to such Securities Depository).
(d) Upon the discontinuance of the maintenance of the Bonds under a
Book-Entry System, the Issuer will cause Bonds to be issued directly to the
Beneficial Owners of Bonds, or their designees, as further described below. In
such event, the Trustee shall make provisions to notify Participants and the
Beneficial Owners of the Bonds, by mailing an appropriate notice to the
Securities Depository, or by other means deemed appropriate by the Trustee in
its discretion, that Bonds will be directly issued to the Beneficial Owners of
Bonds as of a date set forth in such notice, which shall be a date at least 10
days after the date of mailing of such notice (or such fewer number of days as
shall be acceptable to the Securities Depository).
(e) If Bonds are to be distributed to the Beneficial Owners or their
designees, the Issuer, at the Company's expense, shall promptly have prepared
Bonds in certificated form registered in the names of the Beneficial Owners
shown on the records of the Participants provided to the Trustee, as of the
date set forth in the notice described above. Bonds issued to the Beneficial
Owners, or their designees, shall be in fully registered form and substantially
in the form set forth in Exhibit A.
(f) If any Securities Depository is replaced as the depository for the
Bonds with another qualified Securities Depository, the Issuer, at the
Company's expense, will issue to the replacement Securities Depository Bonds
substantially in the form set forth in Exhibit A, registered in the name of
such replacement Securities Depository.
(g) The Issuer, the Company, the Tender Agent, the Remarketing Agent and
the Trustee shall have no liability for the failure of any Securities
Depository to perform its obligation to any Participant, any Indirect
Participant or any Beneficial owner of any Bonds, and the Issuer, the Company,
the Tender Agent, the Remarketing Agent or the Trustee shall not be liable for
the failure of any Participant, Indirect Participant or other nominee of any
Beneficial Owner of any Bonds to perform any obligation that such Participant,
Indirect Participant or other nominee may incur to any Beneficial owner of the
Bonds.
(h) Notwithstanding any other provision of this Indenture, on or prior to
the date of issuance of the Bonds the Trustee shall have executed and delivered
to the initial Securities Depository a Letter of Representations governing
various matters relating to the Securities Depository and its activities
pertaining to the Bonds. The terms and provisions of such Letter of
Representations are incorporated herein by reference and, if there shall exist
any inconsistency between the substantive provisions of such Letter of
Representations and any provisions of this Indenture, then, for as long as the
initial Securities Depository shall serve with respect to the Bonds, the terms
of the Letter of Representations shall govern.
(i) The Issuer, the Company, the Trustee and the Tender Agent may rely
conclusively upon (i) a certificate of the Securities Depository as to the
identity of the Participants in the Book-Entry System, (ii) a certificate of
any Participant as to the identity of any Indirect
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<PAGE> 33
Participant and (iii) a certificate of any Participant or Indirect Participant
as to the identity of, and the respective principal amount of Bonds beneficially
owned by, the Beneficial Owners.
ARTICLE III
REDEMPTION OF BONDS; PURCHASE AND REMARKETING OF BONDS
Section 3.01. Optional Redemption. The Bonds shall be subject to
redemption at the option of the Company, only as follows:
(a) Weekly Rate Mode, CP Rate Mode or Daily Rate Mode. While the Bonds
are in the Weekly Rate Mode or the Daily Rate Mode, the Bonds shall be subject
to optional redemption, in whole or in part in Authorized Denominations, on any
Business Day, and while the Bonds are in the CP Rate Mode, each Bond shall be
subject to optional redemption, in whole or in part in Authorized
Denominations, on any Interest Payment Date applicable to such Bond in said CP
Rate Period, in all cases at the Company's direction, upon at least 35 days'
prior written notice from the Company to the Trustee and the Remarketing Agent,
at a redemption price equal to 100% of the aggregate principal amount of the
Bonds to be redeemed, plus accrued interest thereon to the redemption date,
without premium.
(b) Adjustable Rate Mode. While the Bonds are in the Adjustable Rate
Mode, the Bonds shall be subject to optional redemption, after the dates
specified in the table below, in whole or in part on any date, at the Company's
direction, upon at least 40 days' prior written notice from the Company to the
Trustee and the Remarketing Agent, at the applicable redemption price
(expressed as a percentage of the principal amount to be redeemed) set forth
below, plus accrued interest thereon to the redemption date:
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<PAGE> 34
<TABLE>
<CAPTION>
LENGTH OF CURRENTLY DATES AFTER WHICH
APPLICABLE ADJUSTABLE REDEMPTION
RATE PERIOD(1) IS ALLOWED AND
(EXPRESSED IN WHOLE YEARS) REDEMPTION PRICES(1)
- -------------------------- --------------------
<S> <C>
greater than 10 after 10 years at 102%, declining
by 1% annually to 100%
less than or equal to 10 and greater than 7 after 5 years at 102%, declining by
1% annually to 100%
less than or equal to 7 and greater than 4 after 3 years at 102%, declining by
1% annually to 100%
less than or equal to 4 not callable
</TABLE>
The payment of any premium upon the optional redemption of Bonds shall be
made solely from Available Moneys.
Notwithstanding the foregoing, the Bonds when in an Adjustable Rate period
may be subject to optional redemption upon terms different than those set forth
above (or not be subject to optional redemption during such period) if the
Company delivers to the Trustee on or before the first day of such Adjustable
Rate Period a certificate specifying different optional redemption dates or
prices to be in effect during such period (or that the Bonds will not be
subject to optional redemption during such Period) and an opinion of Bond
Counsel to the effect that the adoption of such optional redemption provisions
would not adversely affect the exclusion of interest on the Bonds from the
Federal gross income of the holders thereof.
(c) Purchase in Lieu of Optional Redemption. The Company shall have the
option to cause the Bonds to be subject to mandatory tender and purchase
pursuant to Section 2.04 in lieu of an optional redemption of Bonds pursuant to
Section 3.01(a) or (b) above. The Company may exercise this option by
delivering to the Trustee and Remarketing Agent on or prior to the Business Day
preceding the optional redemption date of a written notice specifying that the
Bonds shall not be redeemed, but instead shall be subject to mandatory tender
and purchase pursuant to Section 2.04. Upon delivery of such notice, the Bonds
shall not be redeemed but shall instead be subject to mandatory tender pursuant
to Section 2.04 at a tender price equal to the price at which the Bonds would
have been redeemed on the date which would have been the optional redemption
date.
- ---------------------
(1) Measured from the start of the currently applicable Adjustable Rate Period.
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Section 3.02. Extraordinary Optional Redemption. While the Bonds are in
the Adjustable Rate Mode or the CP Rate Mode, the Bonds are subject to
extraordinary optional redemption in whole on any date at a redemption price
equal to the principal amount of Outstanding Bonds plus accrued interest to the
redemption date, without premium, upon the Company's exercise of its option to
cause the Bonds to be redeemed as a result of the occurrence of any of the
events described below:
(a) the Project has been damaged or destroyed to such an extent
that, in the Company's judgment, (i) it cannot be reasonably restored
within a period of nine months to substantially the condition thereof
immediately preceding such damage or destruction, (ii) the Company is
thereby prevented from carrying on normal operations at the Project for a
period of nine or more consecutive months following such damage or
destruction, or (iii) it would not be economically feasible for the
Company to replace, repair, rebuild or restore the same;
(b) title in and to, or the temporary use of, all or substantially
all of the Project has been taken under the exercise of the power of
eminent domain (or sold in lieu of such a taking) by any governmental
authority, or person acting under governmental authority, and such a
taking or sale, in the Company's judgment, may result in the Company's
being prevented thereby from carrying on normal operations at the project
for a period of nine or more consecutive months; or
(c) as a result of any changes in the Constitution of the State or
the Constitution, of the United States of America or by legislative or
administrative action (whether State or Federal) or by final decree,
judgment, decision or order of any court or administrative body (whether
State or Federal), the Agreement has become void or unenforceable or
impossible of performance in accordance with the intent and purposes of
the parties as expressed therein.
To exercise its option to effect an extraordinary optional redemption, the
Company must deliver to the Trustee written notice of the occurrence of any
such event and of its election to cause the Bonds to be redeemed as a result
thereof. Such notice shall specify the redemption date, which shall be at
least 40 days (or such shorter period acceptable to the Trustee) after the date
of delivery of such notice to the Trustee.
Section 3.03. Mandatory Redemption. (a) The Bonds shall be redeemed in
whole, on the earliest redemption date with respect to which the Trustee can
give timely notice of redemption, after the occurrence of a Determination of
Taxability, at a redemption price equal to the aggregate Outstanding principal
amount of the Bonds plus accrued interest thereon to the redemption date,
without premium. The foregoing amount shall constitute the total amount
required to be paid as a result of the occurrence of a Determination of
Taxability.
(b) The Bonds shall be redeemed in whole on the first Interest Payment
Date that is at least 45 days after the next day for which timely notice of
redemption can be given by the Trustee after the Cessation of Operation, at a
redemption price equal to the aggregate
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<PAGE> 36
Outstanding principal amount of the Bonds plus accrued interest thereon to the
redemption date, without premium.
Section 3.04. Notice of Redemption. (a) At least 30 days prior to the
date of any redemption of the Bonds, the Trustee shall cause notice of the call
for redemption to be sent by first-class mail, postage prepaid, to the Tender
Agent, the Bank, the Remarketing Agent, the Company, the issuer and the Owner
of each Bond to be redeemed. In addition, if the Bonds are not then in a
Book-Entry System, such notice shall also be given (at least two Business Days
before the redemption notice described in the preceding sentence) by
registered, certified or overnight mail, or by facsimile transmission promptly
confirmed in writing, to all registered securities depositories then in the
business of holding substantial amounts of obligations of types comprising the
Bonds and to one or more national information services that disseminate notices
of redemption of obligations such as the Bonds. Neither the failure to give
any such notice nor any defect in any notice so mailed shall affect the
sufficiency or the validity of any proceedings for the redemption of the Bonds.
(b) The redemption notice shall identify the Bonds or portions thereof to
be redeemed and shall state (i) the date of the said notice and the redemption
date, (ii) the redemption price, (iii) the original date of execution and
delivery of the Bonds to be redeemed, (iv) the rate of interest borne by the
Bonds to be redeemed, (v) the date of maturity of the Bonds, (vi) the numbers
and CUSIP numbers of the Bonds to be redeemed, (vii) that the redemption price
of any Bond is payable only upon the surrender of the Bond to the Trustee at
its principal corporate trust office, (viii) the address at which the Bonds
must be surrendered, (ix) that interest on the Bonds called for redemption
ceases to accrue on the redemption date provided that on such date Available
Moneys are on deposit in the Bond Fund sufficient to pay the redemption price
of the Bonds in full, and (x) such additional descriptive information
identifying the Bonds to be redeemed as the Trustee may deem appropriate to
effect the redemption.
Any notice of optional redemption shall also state that the Company may
elect that the Bonds be subject to mandatory tender and purchase in lieu of
optional redemption at a tender price equal to the redemption price. Any
notice of optional redemption may also state (and shall state, if the Company
shall so direct) that the redemption is conditioned on receipt of moneys for
such redemption by the Trustee on or prior to the redemption date; if such
moneys are not received, the redemption of the Bonds for which notice was given
shall not be made.
Section 3.05. Effect of Deposit of Redemption Moneys. If on any
redemption date Available Moneys sufficient to pay in full the redemption price
of the Bonds called for redemption have been deposited with the Trustee and
shall be available to be utilized to pay the redemption price of such Bonds,
such Bonds shall no longer be secured by or be deemed to be Outstanding under
the provisions of this Indenture. Interest shall not continue to accrue on
such Bonds after the redemption date. If sufficient Available Moneys shall not
be on deposit on the redemption date, such Bonds or portions thereof shall
continue to bear interest until paid at the same rate as they would have borne
had they not been called for redemption.
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Section 3.06. Partial Redemption. (a) Any partial redemption of Bonds
shall be made only in Authorized Denominations. if fewer than all of the Bonds
shall be called for redemption, the Trustee shall select the portion of Bonds
to be redeemed by lot from among all Outstanding Bonds; provided that the
Trustee shall first select Pledged Bonds and Company Bonds for redemption.
Each Bond shall be considered separate Bonds in Authorized Denominations for
purposes of selecting the Bonds to be redeemed. Subject to the provisions of
the Bonds with respect to the Bond-Entry System, if any Bond shall be called
for redemption only in part, then the Owner of such Bond, upon surrender of
such Bond to the Trustee for payment, shall be entitled to receive a new Bond
or Bonds in the aggregate principal amount of the unredeemed balance of the
principal amount of such Bond, without charge therefor.
(b) If the Owner of any Bond which is called for redemption only in part
shall fail to present such Bond to the Trustee for payment and exchange as
aforesaid, such Bond shall, nevertheless, become due and payable on the date
fixed for redemption, to the extent called for redemption (and to that extent
only) and to such extent such Bond shall no loner be deemed to be Outstanding
for purposes of this Indenture.
(c) Notwithstanding the foregoing, if the Bonds are held in the Book-Entry
System at the time of a partial redemption of the Bonds, beneficial ownership
interests in the series of Bonds shall be selected for redemption in accordance
with the rules and procedures established by the Securities Depository.
Section 3.07. Purchase of Tendered Bonds. (a) In performing their
duties under this Indenture, the Tender Agent and the Remarketing Agent shall
act as agents of the persons to whom purchased Bonds are to be delivered
pursuant to Section 3.10, of persons tendering such Bonds and of the Company
and shall not be considered to be purchasing Bonds for their own account and,
in the absence of written notification from the Trustee to the contrary, shall
be entitled to assume that any Bond tendered or deemed tendered to the
Remarketing Agent or the Tender Agent for purchase is entitled under the
Indenture to be so purchased. No acceptance of Bonds by the Tender Agent or
the Remarketing Agent under this Indenture shall effect any merger or discharge
of the indebtedness of the Issuer evidenced by the Bonds. The Tender Agent and
the Remarketing Agent shall accept all Bonds properly tendered for purchase in
accordance with the provisions of the Bonds and as set forth in this Indenture.
(b) During any period that no Book-Entry System for the Bonds is in
effect, a Tender Agent shall be appointed as provided in Section 7.11.
Immediately upon the effectiveness of such appointment, the Tender Agent shall
establish a special trust fund designated as the "The Mecklenburg County
Industrial Facilities and Pollution Control Financing Authority Industrial
Development Revenue Bonds, Series 1995 (Griffith Micro Science, Inc.
Project)--Purchase Fund" (the "Purchase Fund"). The Tender Agent shall hold
all Bonds delivered to it in trust for the exclusive benefit of the respective
Owners of Bonds tendering such Bonds for sale until moneys representing the
purchase price of such Bonds have been delivered to or for the account of such
Bondholders. The Tender Agent shall hold all moneys delivered to it for the
purchase of Bonds in the Purchase Fund in trust, solely for the benefit of the
persons delivering such moneys until the Bonds purchased with such moneys have
been delivered to or for the account of such
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persons and thereafter solely for the benefit of the persons entitled to such
moneys. Moneys held in the Purchase Fund shall not be invested. The Issuer and
the Trustee hereby authorize and direct the Tender Agent to withdraw sufficient
funds from the Purchase Fund to pay the purchase price of tendered Bonds as the
same becomes due and payable, which authorization and direction the Tender Agent
accepts.
(c) During any period the Bonds are held in a Book-Entry System, the
purchase price of tendered Bonds (i) if derived from the source described in
Section 3.09(a), shall be paid on the tender date by the Remarketing Agent from
moneys received from the purchaser of the remarketed Bonds, and (ii) if derived
from any of the sources described in Section 3.09(b) or 309(c), shall be paid
on the tender date by the Trustee from moneys drawn on the Letter of Credit or
received from the Company. Moneys received and held by the Remarketing Agent
shall be held uninvested in separate accounts according to the source of such
moneys.
Section 3.08. Remarketing of Tendered Bonds; Payment of Purchase Price.
(a) The Remarketing Agent shall use its best efforts to remarket Bonds
tendered pursuant to Section 2.03 or 2.04 of which it has received notice of
tender from the Tender Agent or the Trustee (or Beneficial Owners, as the case
may be), at a price equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date. Such remarketing shall be
made in accordance with, and subject to the conditions of, the provisions of
the Remarketing Agreement. Bonds which have been duly tendered for purchase
and which have not been remarketed shall be purchased on the tender date with
the proceeds of an appropriate draw under the Letter of Credit; provided,
however, (i) during any period the Bonds are not secured by a Letter of Credit,
or (ii) if the Bank shall fail to honor a properly presented draw on the Letter
of Credit to provide for the purchase price of tendered Bonds, then the Company
will purchase such Bonds on the tender date.
(b) Upon receipt of a duly tendered written notice of an optional tender
of Bonds, the Tender Agent shall notify in writing the Remarketing Agent, the
Company, the Bank and the Trustee of the principal amount of Bonds tendered and
the date fixed for purchase of the tendered Bonds. During any period the Bonds
are in the Book-Entry System, the Remarketing Agent will give such notice in
writing to the Company, the Bank and the Trustee.
(c) Prior to 4:00 p.m. on the Business Day which immediately precedes the
purchase date for any Bonds (or, in the case of Bonds in the Daily Rate Mode,
prior to 11:00 a.m. on the purchase date of such Bonds), the Remarketing Agent
shall give notice to the Tender Agent, the Company and the Trustee of the
principal amount of such Bonds which have been remarketed, the names, addresses
and taxpayer identification numbers of the purchasers of such Bonds and the
denominations in which the Bonds are to be purchased by and delivered to each
purchaser. If less than all of the Bonds to be tendered on such purchase date
have been remarketed, the Remarketing Agent shall, in addition, notify the
Trustee, the Tender Agent and the Company prior to 10:00 a.m. (or, in the case
of Bonds in the Daily Rate Mode, 11:00 a.m.) on the purchase date of the
principal amount of Bonds which have not been remarketed and the amount of
accrued interest to be paid on such Bonds on such purchase date. Purchasers of
Bonds which have been remarketed shall be required to deliver the purchase
price thereof directly to the
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Tender Agent for deposit in the Purchase Fund (or, during any period the Bonds
are in the Book-Entry System, such moneys shall be transferred to the
Remarketing Agent's account on the records of the Securities Depository) not
later than 10:00 a.m. (or, in the case of Bonds in the Daily Rate Mode, 11:00
a.m.), on the purchase date. By 11:00 a.m. on the purchase date, the Tender
Agent shall notify the Trustee, the Remarketing Agent, the Company and the Bank
of any Bonds which have been remarketed for which payment has not been received
and the amount of remarketing proceeds which have been received. During any
period the Bonds are in the Book-Entry System, such notice shall be given by the
Remarketing Agent.
(d) Prior to 11:30 a.m. on any purchase date (whether optional or
mandatory), the Trustee shall draw upon the Letter of Credit, if any, in an
amount equal to the purchase price of all Bonds to be purchased on such
purchase date, less the amount of remarketing proceeds of which the Trustee has
notice were deposited with the Tender Agent (or the Remarketing Agent during
any period the Bonds are in the Book-Entry System) by 11:00 a.m. on such date.
Upon a draw on the Letter of Credit upon a mandatory tender due to a
substitution of an Alternate Credit Facility, the draw shall be made upon the
Letter of Credit being replaced. If the Bonds are not then secured by a Letter
of Credit by 1:00 p.m. on the purchase date for any Bonds, the Tender Agent (or
the Trustee during any period the Bonds are in the Book-Entry System) shall
receive from the Company, pursuant to Section 4.2(b) of the Agreement, an
amount equal to the purchase price of all Bonds to be purchased on such date,
less the amount of remarketing proceeds of which the Trustee has notice were on
deposit with the Tender Agent or the Remarketing Agent, as the case may be, by
11:00 a.m. on such date. No draw on the Letter of Credit shall be made with
respect to Pledged Bonds or Company Bonds.
(e) The Trustee shall, to the extent it has drawn moneys under the Letter
of Credit for the purchase of Bonds, authorize direct payment by the Bank to
the Tender Agent (or, during any period the Bonds are in the Book-Entry System,
to the payee specified by the Securities Depository) of the moneys so drawn.
(f) Notices pursuant to this Section shall be by telephone, telefacsimile
transmittal or telegram, promptly confirmed in writing, except that any drawing
under the Letter of Credit shall be in accordance with the terms thereof.
(g) Anything in this Indenture to the contrary notwithstanding, there
shall be no obligation on the Remarketing Agent's part to remarket Bonds (i) if
there shall have occurred and be continuing an Event of Default under this
Indenture or a Determination of Taxability, or (ii) which are subject to
mandatory tender under this Indenture, except as the Remarketing Agent and the
Company have otherwise agreed in the Remarketing Agreement.
(h) Any Bond optionally tendered for purchase after the date on which
such Bond has been selected for redemption or the Trustee has notified the
Bondholders of pendency of a conversion of the interest rate Mode of the Bonds
shall not be remarketed unless the purchaser has been notified by the Trustee
of the redemption or the interest rate Mode conversion, as appropriate. Any
purchaser so notified must deliver a notice to the Trustee and the Tender Agent
(or, during any period the Bonds are in the Book-Entry System, to the
Remarketing Agent)
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stating that such purchaser is aware of the pendency of the redemption or of the
interest rate Mode conversion, as appropriate, and agreeing not to resell the
Bonds prior to the date of such redemption or conversion, as the case may be.
Section 3.09. Funds for Purchase Price of Bonds. On the date Bonds are
to be purchased pursuant to the optional or mandatory tender provisions of this
Indenture, the Tender Agent shall deliver the purchase price to the tendering
Bondholder (or, if the Bonds are in a Book-Entry System, the Remarketing Agent
or the Trustee, as appropriate, shall deliver the purchase price to the
appropriate payee on the records of the Securities Depository), but only from
the funds listed below, in the order of priority indicated.
(a) the proceeds of the sale of such Bonds which have been remarketed
by the Remarketing Agent to any person other than the Company, the Issuer
or the Guarantor (or any "insider" of the Company, the Issuer or the
Guarantor within the meaning of the Bankruptcy Code) which have been
delivered to the Tender Agent or the Remarketing Agent by 11:00 a.m., on
the purchase date;
(b) moneys drawn under the Letter of Credit; and
(c) moneys deposited by the Company with the Trustee pursuant to
Section 4.2(b) of the Agreement.
Section 3.10. Delivery of Purchased Bonds. The Tender Agent shall make
available by 4:00 p.m. on the purchase date of any tendered Bonds (whether such
tender was optional or mandatory), at its Principal Office in New York City,
Bonds which have been purchased with moneys described in Section 3.09 (a) for
receipt by the purchaser thereof, which bonds shall be authenticated by the
Tender Agent. Bonds purchased with moneys described in Section 3.09(a) shall
be registered in the manner directed by the Remarketing Agent and delivered to
the Remarketing Agent for redelivery to the purchasers thereof. Bonds
purchased with moneys described in Section 3.09(b) shall be delivered by the
Tender Agent to the Trustee, and registered by the Trustee in the name of the
Company indicating their status as Pledged Bonds (or if the Bonds are held in
the Book-Entry System, such Bonds shall be recorded in the books of the
Securities Depository for the account of the Trustee and shall be deemed to be
pledged to the Bank). Bonds purchased with moneys described in Section 3.09(c)
shall be registered in the Company's name and delivered to the Company.
Notwithstanding anything in this Indenture to the contrary, so long as the
bonds are held under the Book-Entry System, Bonds will not be delivered as set
forth in the preceding paragraph; rather, transfers of beneficial ownership of
the Bonds to the persons indicated above will be effected pursuant to its rules
and procedures established by the Securities Depository.
Section 3.11. Pledged Bonds. If any Bond is purchased pursuant to
Section 3.07 with moneys drawn under the Letter of Credit pursuant to Section
3.09(b), if no Book-Entry System is then in effect, that Bond shall be
delivered to and held by the Trustee, shall be registered in the name of the
Company and shall constitute a Pledged Bond until released as herein provided.
A Pledged Bond so held by the Trustee shall be released only upon receipt by
the Trustee or the
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Bank of an amount equal tot he principal amount thereof plus accrued interest,
if any, thereon to the date of purchase and receipt by the Trustee of written
confirmation from the Bank of the reinstatement of the amounts available to be
drawn under the Letter of Credit to cover the full principal amount of all
Outstanding Bonds plus Adequate Interest Coverage. If a Book-Entry System is
then in effect, Bonds purchased with Letter of Credit proceeds pursuant to
Section 3.09(b) shall be reflected on the records of the Securities Depository
as being held for the account of the Trustee, and the Trustee agrees that it
shall hold such Bonds solely for the Bank's benefit. While a Book-Entry System
is in effect, the Trustee shall cause the release of such Bonds from its account
on the records of the Securities Depository only under the conditions for
release of Pledged bonds set forth above in this paragraph.
During the Daily Rate Mode, CP Rate Mode, and the Weekly Rate Mode and,
subject to the Remarketing Agreement, unless otherwise directed in writing by
the Bank, the Adjustable Rate Mode, the Remarketing Agent shall use its best
efforts to remarket Pledged Bonds in accordance with the provisions of the
Remarketing Agreement. If the Remarketing Agent remarkets any Pledged Bond,
the Remarketing Agent shall give the notice described in the first sentence of
Section 3.08(c), and shall direct the purchaser of such Pledged bond to
transfer, by 10:30 a.m. (or, in the case of bonds in the Daily Rate Mode, 11:30
a.m.) on the purchase date, the purchase price of such remarketed Pledged Bond
to the Bank, with notice thereof to the Company and the Trustee. The
Remarketing Agent shall deliver remarketed Pledged Bonds to the purchasers
thereof in accordance with Section 3.10.
On each Interest Payment Date prior to the release of Pledged Bonds, the
Trustee shall apply moneys in the Non-Available Moneys Account of the Bond Fund
to the payment of principal of and interest on such Pledged Bonds, but shall
not draw on the Letter of Credit or use moneys in the Letter of Credit Account
of the Bond Fund for such purpose to any extent whatsoever; and the Trustee
shall receive for the account of the Bank the interest and principal paid in
respect of such Pledged Bonds, and immediately upon such receipt the Trustee
shall pay such interest and principal over to the Bank pursuant to written wire
transfer instructions acceptable to the Trustee; provided, however, that if at
such time the Trustee has been notified in writing by the Bank that there shall
not remain any amount due and owing to the Bank under the Reimbursement
Agreement, such interest and principal payments shall be paid over to the
Company.
The Trustee recognizes and agrees in this Indenture that while it holds
Pledged Bonds, such Pledged Bonds are held by the Trustee for the benefit of
the Bank, as a first priority secured creditor.
Notwithstanding anything in this Indenture to the contrary, so long as the
bonds are held under the Book-Entry System, Pledged Bonds shall not be
delivered to and held by the Trustee; rather transfers of beneficial ownership
of Bonds to the persons indicated above will be effected pursuant to the rules
and procedures established by the Securities Depository.
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ARTICLE IV. GENERAL PROVISIONS
Section 4.01. Payment of Principal, Premium, If Any, and Interest;
Limited Obligations. The Issuer covenants that it will duly and punctually pay
or cause to be paid the principal of, premium, if any, and interest on the
Bonds issued under this Indenture at the place, on the dates and in the manner
provided herein and therein according to the true intent and meaning hereof and
thereof, but solely from the payments, revenues and receipts specifically
assigned herein for such purposes as set forth in Section 5.02.
THE BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE
FAITH AND CREDIT OF THE STATE OF NORTH CAROLINA OR OF ANY POLITICAL SUBDIVISION
OR AGENCY THEREOF, INCLUDING MECKLENBURG COUNTY, NORTH CAROLINA, BUT SHALL BE
PAYABLE SOLELY FROM THE REVENUES AND OTHER FUNDS PLEDGED THEREFOR. THE ISSUER
SHALL NOT BE OBLIGATED TO PAY THE BONDS OR THE INTEREST THEREON EXCEPT FROM THE
REVENUES AND OTHER FUNDS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR
THE TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION OR
AGENCY THEREOF, INCLUDING THE ISSUER (WHICH HAS NO TAXING POWER) AND
MECKLENBURG COUNTY, NORTH CAROLINA, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL
OF OR THE INTEREST ON THE BONDS.
Section 4.02. Instruments of Further Assurance. (a) The Issuer covenants
that it will, at the Company's expense, execute and deliver such indentures
supplemental hereto and such further acts, instruments and transfers as the
Trustee or the Bank reasonably may require for the better and more effectual
assignment to the Trustee of all payments, revenues and other amounts payable
under or with respect to the Agreement, the Letter of Credit and any other
income and other moneys assigned hereby (or intended to be so assigned) to the
payment of the principal of, premium, if any, and interest on the Bonds. The
Issuer further covenants that it will not create or, to its knowledge, suffer
to be created any lien, encumbrance or charge upon its interest in the revenues
and other amounts payable under or with respect to the Trust Estate, except the
lien and charge granted by this Indenture.
(b) The Trustee agrees that it will, at the Company's expense pursuant to
the Agreement, cause the Company to file financing statements and all
supplements thereto, and such other instruments (including, but not limited to,
continuation statements) as may be required from time to time by the Issuer,
the Bank or the Company to be recorded or filed, in such manner and at such
places as from time to time may be required by law in order fully to preserve
and protect the security of the Bondholders and the Bank and the Trustee's
rights under this Indenture.
Section 4.03. Tax-Exempt Status of Bonds. The issuer and the Trustee
each covenant to commit or suffer no act within their control that would alter
the status or character of the Bonds, or the interest to be paid on the Bonds,
for purposes of Federal income taxation. The provisions of this Section shall
apply to the Trustee only to the event that the Trustee is acting under this
Indenture in its sole discretion. Toward that end, the Issuer agrees that it
will comply with and take all actions required of it by the Rebate Agreement.
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Section 4.04. Books, Records and Accounts. The Trustee agrees to keep
proper books for the registration of, and transfer of ownership of, each Bond,
and proper books, records and accounts in which complete and correct entries
shall be made of all transactions relating to the receipt, disbursement,
investment, allocation and application of the proceeds received from the sale
of the Bonds, the revenues received from the Agreement, the documents executed
by the Company in connection therewith, the Letter of Credit, the funds and
accounts created pursuant to this Indenture, and all other moneys held by the
Trustee under this Indenture. The Trustee shall, during regular business hours
and upon reasonable prior notice, make such books, records and accounts
available for inspection by the Issuer, the Company, the Bank and the Bond
Owners.
Section 4.05. Notice to Rating Agencies. The Trustee shall provide each
Rating Agency then rating the Bonds, if the Bonds are then rated, with prompt
written notice no later than the effective date of (a) the appointment of any
successor Trustee, Tender Agent or Remarketing Agent, (b) any change in the
identity of any Bank, (c) any supplements or amendments to this Indenture or
the Agreement, (d) the termination, expiration, extension or amendment of the
Letter of Credit, (e) the payment in full of all of the Bonds, (f) any
mandatory tender of the Bonds (which notice shall be given at least 20 days
prior to the mandatory date), or (g) when the Bonds are no longer to be held in
the Book-Entry System. Each notice to the Rating Agencies hereunder shall be
directed to the respective addresses provided by the Rating Agencies.
ARTICLE V
REVENUES AND FUNDS; LETTER OF CREDIT
Section 5.01. Application of Original Proceeds of Bonds. On the Closing
Date, the Trustee shall deposit the proceeds of the sale of the Bonds in the
Construction Fund.
Section 5.02. Creation of Bond Fund. There is hereby created by the
Issuer and ordered established with the Trustee a trust fund to be designated.
"The Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority, Series 1995 (Griffith Micro Science, Inc. Project)--Bond Fund" (the
"Bond Fund"). There are hereby created by the Issuer and ordered established
with the Trustee within the Bond Fund three separate and segregated trust
accounts to be designated, respectively, (a) the "Available Moneys Account,"
(b) the "Non-Available Moneys Account," and (c) the "Letter of Credit Account".
There shall be deposited into the Bond Fund when received: (i) all
payments specified in Section 4.2(a) of the Agreement; (ii) all moneys required
to be so deposited in connection with any redemption of Bonds; (iii) all monies
drawn by the Trustee under the Letter of Credit to pay interest, premium, if
any, principal or the redemption price of any Bonds; (iv) any amounts directed
to be transferred into the Bond Fund pursuant to any provision of this
Indenture; and (v) all other moneys when received by the Trustee which are
required to be deposited into the Bond Fund or which are accompanied by
directions that such moneys are to be paid into the Bond Fund.
Any amounts paid to the Trustee which do not constitute Available Moneys
shall be held in the Non-Available Moneys Account and shall not be commingled
with any other moneys held
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by the Trustee. At such time as money in the Non-Available Moneys Account shall
constitute Available Moneys, they shall be transferred to the Available Moneys
Account. Any amounts drawn under the Letter of Credit shall be held in the
Letter of Credit Account and shall not be commingled with any other moneys held
by the Trustee. Any amounts received for deposit in the Bond Fund which
constitute Available Money (other than amounts drawn under the Letter of
Credit), and any amounts deposited in the Non-Available Moneys Account which at
a later date become Available Moneys shall be held in the Available Moneys
Account and shall not be commingled with any other moneys held by the Trustee.
Section 5.03. Letter of Credit; Alternate Credit Facility. (a) Initial
Letter of Credit. The Initial Letter of Credit shall be delivered to the
Trustee simultaneously with the original issuance and delivery of the Bonds.
(b) Alternate Credit Facility. The Company may at any time substitute an
Alternate Credit Facility for an existing Letter of Credit, subject to the
limitations set forth in this Article V. An Alternate Credit Facility shall be
an irrevocable letter of credit, bank bond purchase agreement, bond insurance
policy, revolving credit agreement, surety bond or other agreement or
instrument under which any person or entity (other than the Issuer or the
Company) undertakes to make or provide funds to make payments of the principal
and purchase price of, and interest on, the Bonds, as and when due; provided
that the Alternate Credit Facility must be effective as of a date on or prior
to the expiration date of the then-existing Letter of Credit and must provide
coverage in an amount at least equal to the sum of (i) the aggregate principal
amount of Bonds (other than Pledged Bonds or Company Bonds) at the time
Outstanding, plus (ii) Adequate Interest Coverage.
The Company shall notify the Trustee of its intention to cause an
Alternate Credit Facility to be delivered to the Trustee at least 25 days prior
to the date of such delivery. Such notice shall specify the Bank which is to
deliver such Alternate Credit Facility and whether, based on the ratings then
in effect, the Company anticipates that the substitution of the Alternate
Credit Facility will or will not result in a Maintenance of Rating (as defined
below). Upon receipt of such notice, the Trustee will, at least 20 days prior
to the anticipated delivery date, mail a notice of the anticipated delivery of
the Alternate Credit Facility by first-class mail to the Issuer, the
Remarketing Agent, the Bank and each Bondholder. Such notice shall specify the
Bank which is to deliver the Alternate Credit Facility, whether it is
anticipated that such delivery will or will not result in a Maintenance of
Rating and, if it is anticipated that such delivery will not result in a
Maintenance of Rating, that the Bonds will be subject to mandatory tender on
the date of delivery of the Alternate Credit Facility in accordance with
Section 2.04.
The Trustee shall not accept any Alternate Credit Facility if the delivery
of such Alternate Credit Facility will to result in a Maintenance of Rating,
unless timely notice of such fact has been given to Bondholders as required
hereby and the Bonds are subject to mandatory tender pursuant to Section 2.04
in connection with the delivery of such Alternate Credit Facility.
During the Daily Rate Mode and the Weekly Rate mode, upon the delivery of
an Alternate Credit Facility, the Bonds shall be subject to mandatory tender
pursuant to Section
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2.04(c) unless (1) the Alternate Credit Facility is delivered to the Trustee by
the 25th day preceding the scheduled expiration or termination date of the
Letter of Credit then supporting the Bonds, and (2) the Trustee is provided by
such 25th day with written evidence form each Rating Agency having a rating in
effect for the Bonds that the Rating Agency has reviewed the Alternate Credit
Facility and that its replacement of the current Letter of Credit will not by
itself result in a withdrawal or reduction of the Rating Agency's current rating
for the Bonds (a "Maintenance of Rating").
On or prior to the delivery of any Alternate Credit Facility to the
Trustee, the company shall furnish to the trustee (A) a written opinion of
counsel acceptable to the Trustee stating that delivery of such Alternate
Credit Facility to the Trustee is authorized under this Indenture and complies
with the terms hereof, (B) an opinion of counsel to the issuer of such
Alternate Credit Facility to the effect that the Alternate Credit Facility is a
valid and binding obligation of the Bank, enforceable in accordance with its
terms, subject to usual exceptions relating to bankruptcy and insolvency, (C)
an opinion of counsel to the issuer of such Alternate Credit Facility to the
effect that such Alternate Credit Facility is exempt from the registration
requirements of the Securities Act of 1933, as amended, and (D) an opinion of
Bond Counsel stating that the delivery of the Alternate Credit Facility will
not adversely affect the exclusion of interest on the bonds from Federal gross
income of the Owners thereof.
(c) Release of Letter of Credit. The Company may at any time during a
Daily Rate Mode or a Weekly Rate Mode or, subject to the limitations described
below, during a CP Rate Mode or Adjustable Rate Mode, direct the Trustee to
release an existing Letter of Credit and surrender such Letter of Credit to the
Bank without substituting an Alternate Credit Facility therefor. If the bonds
are then in the CP Rate Mode or Adjustable Rate Mode, the Company may direct
such a release only on any date on which al Bonds may be optionally redeemed
pursuant to this Indenture. In connection with any such release of the Letter
of Credit, the Bonds shall be subject to mandatory tender; provided, however,
that if the Bonds are then in the CP Rate Mode or the Adjustable Rate Mode, the
mandatory tender price payable upon the mandatory tender of Bonds as a result
of the release of the existing Letter of Credit shall include a premium equal
to the redemption premium, if any, at the payable pursuant to the optional
redemption provisions of the Indenture. After such mandatory tender and,
subject to the limitations set forth above, the Trustee shall release the
Letter of Credit and surrender it to the Bank.
The Company shall notify the Trustee of its intention to release the
existing Letter of Credit at least 25 days prior to the date of such release.
Upon receipt of such notice, the Trustee shall promptly mail a notice of the
anticipated release of the existing Letter of Credit by first-class mail to the
Issuer, the Remarketing Agent and each Bondholder.
(d) Surrender of Letter of Credit. If at any time there shall have been
delivered to the Trustee an Alternate Credit Facility, together with the other
documents and opinions required by this Article V, then the Trustee shall
accept such Alternate Credit Facility and promptly surrender the previously
held Letter of Credit to the issuer thereof, in accordance with the terms
thereof for cancellation. If at any time there shall cease to be any Bonds
Outstanding under this Indenture, or if the Letter of Credit expires in
accordance with its terms, the Trustee shall
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surrender the Letter of Credit to the issuer thereof, in accordance with the
terms thereof, for cancellation. The Trustee shall comply with the procedures
set forth in the Letter of Credit relating to the termination thereof.
(e) Federal Income Tax Requirements Pertaining to Substitutions of
Letters of Credit Upon Certain Mode Conversions. Upon any conversion or change
from a Short-Term Mode to a Long-Term Mode or from a Long-Term Mode to a
Short-Term Mode, if the Company then proposes to either (i) add a Letter of
Credit where none was then in effect, (ii) terminate a Letter of Credit then in
effect without replacing it with an Alternate Credit Facility or (iii)
terminate an existing Letter of Credit and substitute an Alternate Credit
Facility issued by a different Bank, the following shall apply:
(A) If the change or conversion is from a Long-Term Mode to a
Short-Term Mode, the Bonds shall be supported by a Letter of
Credit (constituting an irrevocable direct-pay letter of
credit) issued by an entity with the highest generic (i.e.,
without regard to "+" or "-" symbols) short-term rating on the
effective date of such change or conversion by each Rating
Agency then rating the Bonds.
(B) If the change or conversion is from a Short-Term Mode to an
Adjustable Rate Period of greater than or equal to one but less
than five years' duration, the Bonds shall be supported by a
Letter of Credit (constituting an irrevocable direct-pay letter
of credit) issued by an entity with an "AA" long-term rating
(or its equivalent) on the effective date of such change or
conversion by each Rating Agency then rating the Bonds.
(C) If the change or conversion is from a Short-Term Mode to an
Adjustable Rate Period of greater than or equal to five years'
duration, the Bonds shall not be supported by any Letter of
Credit for at least the duration of the Adjustable Rate Period
to which the Bonds are being converted.
Notwithstanding any of the foregoing provisions of this Section 5.03(e),
the Bonds may or may not be supported by a Letter of Credit in contravention of
such provisions if there is delivered to the Trustee prior to the date of any
such change or conversion an opinion of Bond Counsel to the effect that the
deviation from the provisions of this Section will not adversely affect the
exclusion from the Federal gross income of interest on the Bonds.
Section 5.04. Letter of Credit Draws and Bond Fund Moneys to Pay
Principal, Premium or Interest. (a) On or before each Interest Payment Date,
redemption date, and date on which principal shall be due and payable on the
Bonds, whether at maturity or upon acceleration, the Trustee shall draw under
the Letter of Credit (if then in effect), an amount equal to the principal of,
premium, if any (if the Letter of Credit then covers premium) and interest due
and payable on the Bonds (other than Pledged Bonds and Company Bonds) on such
payment date. Such
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drawing shall be made in a timely manner under the terms of the Letter of Credit
in order that the Trustee may realize funds thereunder in sufficient time to pay
Bondholders on the payment date as provided herein. All amounts derived by the
Trustee with respect to the Letter of Credit shall be deposited in the Letter of
Credit Account of the Bond Fund upon receipt thereof by the Trustee, as provided
in Section 5.02. If no Letter of Credit is then in effect, by 1:00 p.m. on any
Interest Payment Date, redemption date, acceleration date, or the maturity date
of the Bonds, as the case may be, the Trustee shall receive from the Company
pursuant to Section 4.2(a) of the Agreement the full amount of principal of,
premium, if any, and interest due on the Bonds on that date.
(b) The Issuer hereby authorizes and directs the Trustee to withdraw
sufficient funds from the Letter of Credit Account of the Bond Fund to pay the
principal of, premium, if any, and interest on the Bonds as the same become due
and payable; and, in the event of a default under the Letter of Credit, or at
such time as no Letter of Credit secures the Bonds, to use all moneys then on
deposit, first in the Available Moneys Account and thereafter the Non-Available
Moneys Account, in the Bond Fund to pay principal of, premium, if any, and
interest on, the Bonds, which authorization and direction the Trustee hereby
accepts. On the Business Day which next succeeds any date on which monies are
to be disbursed from the Bond Fund pursuant to the preceding sentence, if
moneys then remain in the Bond Fund, such moneys shall be disbursed to the Bank
to the extent amounts are then owed to the Bank pursuant to the Reimbursement
Agreement. The Trustee may rely on a certificate from the Bank which certifies
the amounts owed under the Reimbursement Agreement at any time.
Section 5.05. Investment of Moneys. Subject to the restrictions set
forth in this Section and in the Rebate Agreement, any moneys held in the
Non-Available Moneys Account of the Bond Fund and the Construction Fund shall
be invested and reinvested by the Trustee upon the Company's written
instructions in Qualified Investments maturing no later than the date on which
it is estimated that such moneys will be required to be paid out hereunder.
Moneys held in the Available Moneys Account of the Bond Fund shall be invested
and reinvested solely in Government Obligations maturing no later than the date
on which such moneys will be required to be paid out hereunder. Moneys held in
the Purchase Fund and the Letter of Credit Account and moneys held pursuant to
Section 5.06 shall not be invested. The Trustee may make any and all such
investments through its own investment department, or through any of its
affiliates or subsidiaries. The Trustee shall be entitled to rely on all
written investment instructions provided by the Company hereunder, and shall
have no duty to monitor the compliance thereof with the restrictions set forth
in this Section 5.05 or in the Rebate Agreement. The Trustee, when authorized
by the Company, may trade with itself in the purchase and sale of securities
for such investment. The Trustee shall not be responsible or liable for the
performance of any such investments or for keeping the moneys held by it
hereunder fully invested at all times other than in accordance with the
instructions of the Company. Absent the provision of investment instructions
under this Indenture, the Trustee shall not make any investment of the moneys
held pursuant to the Indenture; provided, however, that the Trustee shall
notify the Company if any moneys are being held uninvested pursuant to this
Indenture. Any obligations acquired by the Trustee as a result of such
investment or reinvestment shall be held by or under the control of the Trustee
and shall be deemed to constitute a part of the Fund or Account from which the
moneys
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used for its purchase were taken. All investment income shall be retained in
the Fund or Account to which the investment is credited from which such income
is derived. Although the Issuer recognizes that it may obtain a broker
confirmation or written statement containing comparable information at no
additional cost, the Issuer hereby agrees that confirmations of investments made
by the Trustee pursuant to this Section 5.05 are not required to be issued by
the Trustee for each month in which a monthly statement is rendered. No such
statement need be rendered pursuant to the provisions of this Section if no
activity occurred in the fund or account during such preceding month.
Section 5.06. Moneys To Be Held in Trust; Nonpresentment of Bonds. (a)
All moneys required to be deposited with or paid to the Trustee for the account
of any Fund or Account under any provisions of this Indenture shall be held by
the Trustee in trust, and, except for moneys deposited with or paid to the
Trustee for redemption of Bonds, notice of the redemption for which has been
duly given, shall, while held by the Trustee, constitute part of the Trust
Estate and be subject to the security interest created hereby.
(b) If any Bond shall not be presented for payment when the principal
thereof becomes due, either at maturity or otherwise, or at the date fixed for
its redemption, if Available Moneys sufficient to pay such Bond shall have been
deposited in the Bond Fund, all the Issuer's liability to the owner thereof for
the payment of such Bond shall thereafter terminate and be completely
discharged, and thereupon it shall be the Trustee's duty to hold such moneys,
without liability for interest thereon, for the benefit of the owner of such
Bond who shall thereafter be restricted exclusively to such moneys, for any
claim of whatever nature on his part under this Indenture or on, or with
respect to, said Bond. Such moneys shall be held in a separate and segregated
fund and shall not be invested.
(c) Notwithstanding any provisions of this Indenture to the contrary, the
Trustee shall dispose of moneys held by it for the payment of principal of,
premium, if any, or interest on Bonds left unclaimed for five years after the
date the principal of the same becomes due in accordance with N.C. Gen. Stat.
Sec. 116B-18 or any successor provision. The owners of such Bonds shall
thereafter be entitled to look only to their remedies under N.C. Gen. Stat.
Chapter 116B or any successor provision, and all liability of the Issuer, the
Company and the Trustee with respect to such moneys shall cease.
Section 5.07. Repayment from Indenture Funds. Any amounts remaining in
any Fund or Account created under this Indenture, after payment or provision
for payment in full of the Bonds in accordance with Article X, the fees,
charges and expenses of the Issuer, the Trustee, the Tender Agent, the
Remarketing Agent and any co-trustee appointed under this Indenture, and all
other amounts required to be paid under this Indenture, or under the Agreement,
and after and to the extent that the Company shall determine that the payment
of such remaining amounts may be made without violation of the provisions of
the Rebate Agreement, shall be paid, upon the expiration of, or upon the sooner
termination of, the terms of this Indenture, to the Bank to the extent money
shall be owed to the Bank under the Reimbursement Agreement (as evidenced by
written notice thereof given to the Trustee by the Bank) and, thereafter, to
the Company.
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Section 5.08. Tax Covenants. The Issuer and the Trustee covenant with
the Owners of the Bonds that, notwithstanding any other provision of this
Indenture or any other instrument, they will not knowingly make any investment
or other use of the proceeds of the Bonds or any other moneys held under this
Indenture which would cause the Bonds to be "arbitrage bonds" under Code
Section 148 or "federally guaranteed" obligations under Code Section 149(b),
and they further covenant that they will comply with all applicable
requirements of Sections 103 and 141-150 of the Code (except that the Issuer
and the Trustee shall be deemed to have complied with these requirements as
long as they act at the Company's written direction).
Notwithstanding any other provision in this Indenture to the contrary, the
Trustee shall be permitted to transfer moneys on deposit in any of the trust
funds established under this Indenture (other than moneys representing
remarketing proceeds or draws under the Letter of Credit to the extent needed
to pay principal or purchase price of, premium, if any, or interest on the
Bonds) to the Rebate Fund created under the Rebate Agreement in accordance with
the provisions of the Rebate Agreement.
Section 5.09. Construction Fund. There is hereby created and established
with the Trustee a trust fund in the name of the Issuer to be designated "The
Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority, Series 1995 (Griffith Micro Science, Inc. Project)--Construction
Fund" (the "Construction Fund"), which shall be expended in accordance with the
provisions of the Agreement.
Section 5.10. Payments into Construction Fund; Disbursements. The
Trustee shall deposit the proceeds of the issuance and delivery of the Bonds in
the Construction Fund as provided in Section 5.01. Moneys in the Construction
Fund shall be expended on orders signed by an Authorized Company Representative
stating with respect to each payment to be made:
(a) The requisition number;
(b) The name and address of the person, firm or corporation to whom
payment is due or has been made, which may include the Company;
(c) That each obligation mentioned therein has been properly incurred, is
a proper charge against the Construction Fund and has not been the basis of any
previous requisition;
(d) That each item for which payment is proposed to be made is or was
necessary in connection with the Project;
(e) That after taking into account the costs proposed to be paid or
reimbursed in said certificate, at least 95% of the costs paid or reimbursed
out of the Construction Fund are amounts which will be chargeable to the
Project's capital account or which would be so chargeable either with a proper
election by the Company under the Code or but for a proper election by the
Company to deduct such amount and were incurred and paid, or are to be incurred
and paid, on or after December 14, 1993;
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(f) That after taking into account the costs proposed to be paid or
reimbursed in said certificate, no more than $90,000 of the costs paid or
reimbursed out of the Construction Fund are issuance costs within the meaning
of the Code; and
(g) That no Event of Default exists under the Agreement.
The Trustee is hereby authorized and directed to make each disbursement
required by the provisions of the Agreement and to issue its checks therefor.
The Trustee shall keep and maintain adequate records pertaining to the
Construction Fund and all disbursements therefrom, and after the Project has
been completed and a certificate of payment of all costs is or has been filed
as provided in Section 5.11, the Trustee shall file a statement thereof with
the Issuer and the Company.
Section 5.11. Completion of Project. The completion of the Project and
payment or provision made for payment of the full Cost of the Project shall be
evidenced by the filing with the Trustee of a certificate required by the
provisions of Section 3.4 of the Agreement. Any balance remaining in the
Construction Fund on the Completion Date shall be used in accordance with said
Section.
Section 5.12. Transfer of Construction Fund. If the Company should
prepay all amounts payable under Section 4.2(a) of the Agreement, the Trustee
shall then deposit any balance then remaining in the Construction Fund in the
Bond Fund without further authorization.
Section 5.13. Custody of Funds and Accounts. Except as otherwise
expressly provided herein, all Funds and Accounts created pursuant to this
Indenture and held by the Trustee shall be held in trust, in the Issuer's name,
for the benefit of the Bondholders and, to the extent of amounts owed by the
Company to the Bank under the Reimbursement Agreement, the Bank.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. Each of the following shall constitute,
and is referred to in this Indenture as, an "Event of Default":
(a) a default in the payment when due of interest on any Bond;
(b) a default in the payment of principal of, or premium, if any, on any
Bond when due, whether at maturity, upon acceleration or redemption, or
otherwise;
(c) a default in the payment when due of the purchase price of any Bond
required to be purchased pursuant to Section 2.03 or Section 2.04;
(d) the Issuer's failure to perform any of its agreements in this
Indenture or the Bonds (except a failure that results in an Event of Default
under clause (a), (b) or (c) above), the performance of which is material to
the Bondholders, and which failure continues after the giving of the notice of
default and the expiration of the grace period specified in this Section;
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(e) the Company's failure to perform any of its agreements in the
Agreement (except a failure that results in an Event of Default under clause
(a), (b) or (c) of this Section or a failure to perform any covenant in the
Agreement relating to the impairment of the exclusion of interest on the Bonds
from the Federal gross income of the owners thereof), and the failure continues
after the notice and for the period specified in this Section;
(f) Pursuant to or within the meaning of any Bankruptcy Law (as defined
below) (1) the Company's commencement of a voluntary case, (2) the Company's
consenting to the entry of an order for relief against it in an involuntary
case, (3) the Company's consenting to the appointment of a Custodian (as
defined below) for the Company or any substantial part of its property or (4)
the Company's making a general assignment for the benefit of its creditors.
(g) The entry by a court of competent jurisdiction of an order or decree
under any Bankruptcy Law that (1) is for relief against the Company in an
involuntary case, (2) appoints a Custodian for the Company or any substantial
part of its property or (3) orders the winding up or liquidation of the
Company, and the decree or order remains unstayed and in effect for 60 days;
(h) The Trustee's receipt of written notice from the Bank that an "event
of default" has occurred and is continuing under the Reimbursement Agreement
and directing the Trustee to accelerate the Bonds pursuant to Section 6.02; or
(i) The Trustee's receipt of written notice from the Bank on or before
the date or dates specified in the Letter or Credit following a drawing on the
Letter of Credit to pay interest on the Bonds that it will not reinstate its
Letter of Credit in the amount of such interest drawing.
"Bankruptcy Law" means Title 11 of the United States Code or any similar
Federal or state law for the relief of debtors.
"Custodian" means any receiver, trustee, assignee, liquidator, custodian
or similar official under any Bankruptcy Law.
A default under clause (d) or (e) of this Section is not an Event of
Default until the Trustee or the holders of at least a majority in principal
amount of the Bonds then Outstanding give the Issuer and the Company a notice
specifying the default, demanding that it be remedied and stating that the
notice is a "Notice of Default," and the Issuer or the Company (if the default
is under clause (d)) or the Company (if the default is under clause (e)) does
not cure the default within 60 days after receipt of the notice, or within such
longer period as to which the Trustee shall agree. The Trustee shall not
unreasonably refuse to agree to a longer cure period if the default cannot
reasonably be cured within 60 days after receipt of the notice, and the Issuer
or the Company, as the case may be, has demonstrated to the Trustee that it has
begun within 60 days and continued diligent efforts to cure the default. The
Issuer authorizes the Company to perform, in the Issuer's name and on its
behalf, and for the purpose of preventing the occurrence of an Event of
Default, any agreement of the Issuer in this Indenture or the Bonds.
Subject to Section 7.05(b), the Trustee shall promptly notify the LGC and
the Issuer of the occurrence of any Event of Default, and the Issuer and the
Trustee, as may be applicable,
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shall send a copy of any "Notice of Default" (or described in the preceding
paragraph) to the LGC.
Section 6.02. Acceleration. Upon the occurrence of an Event of Default
under clause (h) or (i) of the foregoing Section, the Trustee will declare the
principal and accrued interest to the date of acceleration on the Bonds due and
payable immediately. If any other Event of Default occurs and is continuing,
the Trustee by notice to the Issuer and the Company, or the holders of at least
a majority in principal amount of the Bonds then Outstanding by notice to the
Issuer, the Company and the Trustee, may declare the principal of and accrued
interest on the Bonds to be due and payable immediately. If a Letter of Credit
is in effect, and (a) the Event of Default is not under clause (h) or (i) of
the foregoing Section, (b) the Event of Default is not the result of a failure
by the Bank to honor a properly presented and conforming draw on the Letter of
Credit, and (c) the Trustee believes that failure to draw immediately on the
Letter of Credit is not likely to prejudice the Bondholders' interest, the
Trustee will not declare the Bonds to be due and payable without first
obtaining the Bank's consent. Upon the principal of and accrued interest on
the Bonds becoming due and payable as provided in this Section, the Trustee
shall immediately draw on the Letter of Credit, if any, to pay the principal of
and accrued interest on the Bonds. The Trustee shall immediately give notice
of acceleration to the Bondholders. Interest on the Bonds shall cease to
accrue, and the principal of and accrued and unpaid interest on the Bonds
shall, without further action, become immediately due and payable, on the date
of acceleration.
The Trustee may, and upon the request of holders of a majority in
principal amount of the Bonds then Outstanding shall, rescind an acceleration
and its consequences if (a) all existing Events of Default have been cured or
waived, (b) the rescission would not conflict with any judgment or decree, (c)
all payments due the Trustee and any predecessor Trustee under Section 7.06
have been made and (d) when a Letter of Credit is in effect, the Bank consents
in writing to the waiver of the Event of Default under the Reimbursement
Agreement, if applicable, and to the rescission of the acceleration, and the
Trustee receives written notice from the Bank that the Letter of Credit has
been reinstated up to the amount of the principal of Outstanding Bonds plus
Adequate Interest Coverage.
Section 6.03. Other Remedies. (a) If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the principal of or interest on the Bonds or to enforce
the performance of any provision of the Bonds, this Indenture, the Agreement
and the Letter of Credit including, without limitation, the exercise of any
remedy granted to it in the Agreement.
(b) The Trustee may maintain a proceeding even if it does not possess any
of the Bonds or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Bondholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
(c) During any period the Bonds are secured by the Letter of Credit and
draws thereunder have been duly honored by the Bank in accordance with the
terms and provisions of the Letter of
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Credit, all remedies pursued by the Trustee upon the occurrence of an Event of
Default (other than draws upon the Letter of Credit) shall be taken only with
the Bank's prior consent.
Section 6.04. Waiver of Past Defaults. The holders of a majority in
principal amount of the Bonds then Outstanding, or the Bank, by written notice
to the Trustee, may waive an existing Event of Default and its consequences if
the Letter of Credit is reinstated up to the full amount available under it
immediately prior to such Event of Default. When an Event of Default is
waived, it is cured and stops continuing, but no such waiver shall extend to
any subsequent or other Event of Default or impair any right consequent to it.
Section 6.05. Control by Majority. The Bank's holders of a majority in
principal amount of the Bonds then Outstanding may (with the Bank's written
consent) direct in writing the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust
or power conferred on it. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section
7.01, that the Trustee determines is unduly prejudicial to the rights of other
Bondholders, or would involve the Trustee in personal liability or would
involve an expense or liability unless the Trustee is indemnified, it being
understood that (subject to Section 7.01) the Trustee shall have no duty to
ascertain whether or not such actions or forbearance are unduly prejudicial to
such Holders.
Section 6.06. Limitation on Suits. A Bondholder may not pursue any
remedy with respect to this Indenture or the Bonds unless (a) the holder gives
the Trustee written notice stating that an Event of Default is continuing, (b)
the holders of at least 25% in principal amount of the Bonds then Outstanding
make a written request to the Trustee to pursue the remedy, (c) such holder or
holders offer to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense and (d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity.
A Bondholder may not use this Indenture to prejudice the rights of another
Bondholder or to obtain a preference or priority over the other Bondholders.
Section 6.07. Rights of Holders To Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any holder to receive payment
of principal of and interest on a Bond, on or after the due dates expressed in
the Bond, or the purchase price of a Bond on or after the date for its purchase
as provided in the Bond, or to bring suit for the enforcement of any such
payment on or after such dates, shall not be impaired or affected without the
Bondholder's consent.
Section 6.08. Collection Suit by Trustee. If an Event of Default under
Section 6.01(a), (b) or (c) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or the Bank for the whole amount remaining unpaid.
Section 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Bondholders
allowed in any judicial proceedings relative to the
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Company or the Bank, its creditors or its property and, unless prohibited by law
or applicable regulations, may vote on behalf of the holders in any election of
a trustee in bankruptcy or other person performing similar functions.
Section 6.10. Priorities. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
FIRST: To the Trustee and the Tender Agent for amounts to which they
are entitled under Section 7.06 or Section 4.3 of the Agreement, but the
Trustees may not pay itself or the Tender Agent from money drawn under the
Letter of Credit, from the proceeds of the remarketing of any Bonds or from
amounts held by the Trustee pursuant to Article X or Section 5.06(b).
SECOND: To Bondholders for amounts due and unpaid on the Bonds for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Bonds for principal and
interest, respectively.
THIRD: To the Bank to the extent the Bank certifies to the Trustee that
the Company is indebted to the Bank on account of draws under the Letter of
Credit or any other amounts due and payable to the Bank under the Reimbursement
Agreement.
FOURTH: To the Company.
The Trustee may fix a payment date for any payment to the Bondholders in
accordance with this Section.
ARTICLE VII
TRUSTEE, REMARKETING AGENT AND TENDER AGENT
Section 7.01. Trustee's Rights and Duties. (a) Prior to the occurrence
of an Event of Default, the Trustee shall have no liability for any action or
omission in the performance of its duties under this Indenture, except in the
case of the Trustee's negligence or willful misconduct. During the existence
of an Event of Default, the Trustee shall exercise its rights and powers and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default,
(i) the Trustee shall be required to perform only those duties that
are specifically set forth in this Indenture and no others, and
no implied covenants or obligations should be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed, upon certificates or
opinions furnished to the Trustee and
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conforming to the requirements of this Indenture. The Trustee,
however, shall examine the certificates and opinions to
determine whether they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that
(i) this paragraph does not limit the effect of subsection (b) of
this Section,
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by any employee of the Trustee assigned by the
Trustee to administer its corporate trust matters (a
"Responsible Officer"), unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05; and
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to all the provisions of this Section.
(e) Before taking any action under this Indenture relating to an Event of
Default or in connection with its duties under this Indenture other than (i)
making payments of principal and interest on the Bonds as they become due, or
(ii) drawing on the Letter of Credit or causing an acceleration of the Bonds
whenever required by the Indenture, the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses to which it
may be put and to protect it against all liability, including, but not limited
to, any liability arising directly or indirectly under any Federal, state or
local statute, rule, law or ordinance related to the protection of the
environment or hazardous substances and except liability which is adjudicated
to have resulted from its negligence or willful default in connection with any
action so taken.
(f) The Trustee shall not be liable for interest on any cash held by it
except as the Trustee may agree in writing with (i) the Company or (ii) the
Issuer, with the Company's consent.
(g) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees, and shall be entitled to advice of counsel concerning all matters or
trusts hereof and duties hereunder, and may in all cases pay such reasonable
compensation to any attorney, agent, receiver or employee retained or employed
by it in connection herewith. The Trustee may act upon the opinion or advice
of an attorney,
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surveyor, engineer or accountant, within the scope of such person's professional
expertise, selected by it in the exercise of reasonable care or, if selected or
retained by the Issuer, approved by the Trustee in the exercise of such care.
The Trustee shall not be responsible for any loss or damage resulting from any
action or nonaction based on its good faith reliance upon such opinion or
advice.
(h) The Trustee's permissive right to do things enumerated in this
Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful default.
(i) At any and all reasonable times, the Trustee and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives shall
have the right fully to inspect any and all books, papers and records of the
Issuer pertaining to the Bonds, and to take such memoranda from and in regard
thereto as may be desired.
(j) The Trustee may (but shall be under no duty to) require of the Issuer
and the Company full information and advice as to the performance of the
covenants, conditions and agreements in the Agreement. The Trustee shall have
no obligation to perform any of the Issuer's duties under the Agreement.
Section 7.02. Trustee's Rights. Subject to the foregoing Section:
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require a
certificate of an appropriate officer or officers of the Issuer or the Company
or an opinion of counsel; provided that it may not require such a certificate
as a condition to declaring the principal of and interest on the Bonds to be
due immediately under Section 6.02 or to drawing on the Letter of Credit or to
making any payment on the Bonds. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the certificate
or opinion of counsel.
(c) Notwithstanding anything in this Indenture to the contrary, the
Trustee and its agents shall have the right to require such additional
evidence, certificates or opinions of counsel as the Trustee may reasonably
deem appropriate to establish the Issuer's right to the withdrawal of any funds
held under this Indenture or to require the Trustee's taking of any other
action under this Indenture.
Section 7.03. Trustee's Individual Rights. The Trustee in its individual
or any other capacity may become the owner or pledgee of Bonds and may
otherwise deal with the Issuer or with the Company or its affiliates with the
same rights it would have if it were not trustee. Any paying agent may do the
same with like rights.
Section 7.04. Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or any supplemental indentures
hereto, the Agreement, the
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Letter of Credit or the Bonds or of any instruments of further assurance, or for
the sufficiency of the security for the Bonds issued under or intended to be
secured by this Indenture, it shall not be accountable for the Company's use of
the proceeds from the Bonds paid to the Company, and it shall not be responsible
for any statement in the Bonds other than its certificate of authentication.
Section 7.05. Notice of Defaults. (a) If an event occurs which, with
the giving of notice or lapse of time, or both, would be an Event of Default,
and if the event is continuing and if it is known to the Trustee, the Trustee
shall mail to each Bondholder, the Company and the Bank notice of the event
within 30 days after it occurs. Except in the case of a default in payment or
purchase on any Bonds, the Trustee may withhold the notice if and so long as it
determines in good faith that withholding the notice is in the interests of
Bondholders.
(b) The Trustee shall not be required to take notice or be deemed to have
notice of any default or Event of Default hereunder, or in any other document
or instrument executed in connection with the execution and delivery of the
Bonds, except an Event of Default under Section 6.01(a), (b), (c), (h) or (i),
except in the event of actual notice or unless the Trustee shall be
specifically notified in writing of such default or Event of Default by the
Issuer, the Tender Agent, the Bank, the Company, the Issuer or the Owners of at
least 25% in aggregate principal amount of the Bonds then Outstanding. All
notices or other instruments required by this Indenture to be delivered to the
Trustee shall be delivered at the Trustee's Principal Office and, in the
absence of such actual notice or notice so delivered, the Trustee may
conclusively assume there is no default except as aforesaid.
Section 7.06. Trustee's Compensation and Indemnity. For acting under
this Indenture, the Trustee shall be entitled to payment of reasonable fees for
its services and reimbursement of advances, counsel fees and other expenses
reasonably and necessarily made or incurred by the Trustee in connection with
its services under this Indenture.
To secure the payment or reimbursement to the Trustee provided for in this
Section, the Trustee shall have a senior claim, to which the Bonds are made
subordinate, on all money or property held or collected by the Trustee, except
that funds held under Article X or otherwise held in trust to pay principal of
and interest on particular Bonds and except amounts drawn under the Letter of
Credit or remarketing proceeds held by the Trustee or Tender Agent under this
Indenture.
The Company has agreed in the Agreement to indemnify the Trustee for, and
to hold it harmless against, certain losses, liabilities and expenses incurred
by the Trustee. This right of indemnification shall survive the discharge of
this Indenture and the Trustee's resignation or removal.
Section 7.07. Eligibility of Trustee. The Trustee shall be a bank or
trust company organized and doing business under the laws of the United States
or any state or the District of Columbia, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
United States, any state or District of Columbia authority, and having a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. Any successor Trustee must be an
institution the long-term
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debt obligations of which are rated at least "Baa3" by Moody's (or Moody's shall
have provided written evidence that such successor Trustee is otherwise
acceptable to Moody's) if the Bonds are then rated by Moody's, and at least
"BBB-" or "A-3" by S&P (or S&P shall have provided written evidence that such
successor Trustee is otherwise acceptable to S&P) if the Bonds are then rated by
S&P, and authorized by law to perform all the duties imposed upon it as Trustee
by this Indenture.
Section 7.08. Resignation, Removal and Replacement of Trustee. The
Trustee may resign by notifying the Issuer, the Company, the LGC and the Bank.
The holders of a majority in principal amount of the Bonds then Outstanding
may, with the Issuer's consent, remove the Trustee by giving written notice to
the removed Trustee, the Issuer, the Company, the Bank, the LGC and the
Remarketing Agent. If no Event of Default shall have occurred and be
continuing, the Company may cause the Trustee to be removed by giving written
notice to the removed Trustee, the Bank, the LGC and the Remarketing Agent. In
addition, the Issuer shall, at the direction of the Company, the Bank or the
Owners of a majority in principal amount of the Bonds Outstanding, remove the
Trustee if (a) the Trustee fails to comply with Section 7.07, (b) the Trustee
is adjudged a bankrupt or an insolvent, (c) a receiver or other public officer
takes charge of the Trustee or its property, or (d) the Trustee otherwise
becomes incapable of acting.
If the Trustee resigns or is removed from office for any reason, the
Company, with the prior written consent of the Bank and the Remarketing Agent,
shall promptly direct the Issuer to appoint a successor Trustee, and the Issuer
shall promptly appoint such successor Trustee; provided that if an Event of
Default shall have theretofore occurred and is continuing, the successor
Trustee may only be appointed by the holders of a majority in principal amount
of the Bonds.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee, the Issuer, the Bank, the Company, the LGC and the
Remarketing Agent. Immediately thereafter, the retiring Trustee shall transfer
all property (including the Letter of Credit) held by it as Trustee to the
successor Trustee, the resignation or removal of the retiring Trustee shall
then (but only then) become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer, the
Company, the Bank or the Holders of a majority in principal amount of the Bonds
then Outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Notice of a resignation or removal of the Trustee and the appointment of a
successor Trustee shall be given by the Issuer, the Company or the Trustee by
first-class mail to each Bondholder.
No corporation shall be eligible for appointment as successor Trustee
unless such corporation (a) meets the requirements of Section 7.07 and (b)
shall have previously been approved by the LGC for service as a corporate
trustee or obtains such approval from the LGC.
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Section 7.09. Remarketing Agent's Duties. The Remarketing Agent will
determine the interest rate on the Bonds and remarket Bonds as provided in this
Indenture. The Remarketing Agent may, for its own account or as broker or
agent for others, deal in Bonds and may do anything any other Bondholder may do
to the same extent as if the Remarketing Agent were not serving as such.
Section 7.10. Eligibility of Remarketing Agent; Replacement. The initial
Remarketing Agent shall be First Chicago Capital Markets, Inc., Chicago,
Illinois. Any successor Remarketing Agent must be an institution the long-term
debt obligations of which are rated at least "Baa3" by Moody's (or Moody's
shall have provided written evidence that such successor Remarketing Agent is
otherwise acceptable to Moody's) if the Bonds are then rated by Moody's, and at
least "BBB-" or "A-3" by S&P (or S&P shall have provided written evidence that
such successor Remarketing Agent is otherwise acceptable to S&P) if the Bonds
are then rated by S&P, and authorized by law to perform all the duties imposed
upon it by this Indenture.
The Remarketing Agent may at any time resign from its duties under this
Indenture by giving at least 30 days' written notice to the Issuer, the
Company, the Bank, the Tender Agent and the Trustee. The Trustee shall mail a
copy of such notice by certified mail to each Bondholder. A Remarketing Agent
may be removed at any time by the Issuer, at the Company's direction and with
the Bank's written consent, by an instrument signed by the Company and filed at
least 30 days prior to such removal with the Remarketing Agent and the Trustee.
No removal or resignation hereunder shall become effective prior to the
acceptance of appointment of a successor Remarketing Agent hereunder, which
successor shall be appointed by the Company with the Bank's consent, which
consent shall not be unreasonably withheld.
While the Bonds are in a Book-Entry System, the Remarketing Agent shall
serve as the Participant on behalf of all of the Beneficial Owners of the
Bonds.
Section 7.11. Tender Agent. (a) During any period the Bonds shall not be
in a Book-Entry System, the Company shall appoint a Tender Agent for the Bonds,
which shall be satisfactory to the Bank and the Remarketing Agent and which,
upon acceptance of its duties, will perform the obligations of the Tender Agent
set forth in this Indenture. Any Tender Agent must be an institution the
long-term debt obligations of which are rated at least "Baa3" by Moody's (or
Moody's shall have provided written evidence that such successor Tender Agent
is otherwise acceptable to Moody's) if the Bonds are then rated by Moody's, and
at least "BBB" or "A-3" by S&P (or S&P shall have provided written evidence
that such successor Tender Agent is otherwise acceptable to S&P) if the Bonds
are then rated by S&P, and authorized by law to perform all the duties imposed
upon it as Tender Agent by this Indenture. The initial Tender Agent and any
successor Tender Agent shall accept its duties under this Indenture by a
written certificate or tender agent agreement delivered to the Trustee, which
certificate or agreement shall designate the Tender Agent's Principal Office.
(b) The Tender Agent may at any time resign by giving thirty days' notice
to the Issuer, the Trustee, the Company, the Bank and the Remarketing Agent.
Promptly upon the receipt of such notice, the Trustee shall mail copies thereof
to each Bondholder.
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(c) The Tender Agent may be removed at any time by an instrument in
writing delivered to the Trustee and the Tender Agent by the Company, with the
Bank's prior written approval. In no event, however, shall any removal of the
Tender Agent take effect until a successor Tender Agent shall have been
appointed.
(d) The Tender Agent shall have an office in the City of New York, New
York. Upon receipt of written notice from the Company of the appointment of a
Tender Agent, the Trustee shall immediately give written notice of the
appointment of a Tender Agent to the Issuer and to the Bondholders. If (i) no
successor to a Tender Agent has accepted appointment in the manner provided
above within 30 days after the Tender Agent has given notice of its resignation
as provided above, or (ii) no Tender Agent shall have been appointed at such
time as the Bonds are no longer held in the Book-Entry System, then,
notwithstanding any other provision of this Indenture, the Trustee shall serve
as Tender Agent or shall appoint an agent located in New York, New York to act
in its stead.
Section 7.12. Successor Trustee, Remarketing Agent or Tender Agent by
Merger. If the Trustee, the Tender Agent or the Remarketing Agent consolidates
with, merges or converts into, or transfers all or substantially all its assets
(or, in the case of a bank or trust corporation, its corporate trust assets)
to, another corporation, the resulting, surviving or transferee corporation
without any further act shall, if otherwise eligible to serve hereunder, be the
successor Trustee, Tender Agent or Remarketing Agent.
Section 7.13. Service in Several Capacities. Anything in this Indenture
to the contrary notwithstanding, the same entity may serve under this Indenture
as the Trustee, the Tender Agent and the Remarketing Agent and in any other
combination of such capacities, or the same entity may serve hereunder as the
Bank, the Tender and the Remarketing Agent and in any other combination of such
capacities, to the extent permitted by law; provided, however, in that no event
shall the same entity serve under this Indenture as the Trustee and the Bank.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Without Consent of Bondholders. The Issuer and the Trustee
may amend or supplement this Indenture or the Bonds without notice to or
consent of any Bondholder:
(a) to cure any ambiguity, inconsistency or formal defect or omission;
(b) to grant to the Trustee for the benefit of the Bondholders additional
rights, remedies, powers or authority;
(c) to subject to this Indenture additional collateral or to add other
agreements of the Issuer;
(d) to modify this Indenture or the Bonds to permit qualification under
the United States Trust Indenture Act of 1939 or any similar Federal statute at
the time in effect, or to permit the qualification of the Bonds for sale under
the securities laws of any state of the United States;
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(e) to evidence the succession of new Trustee or the appointment by the
Trustee or the Issuer of a co-trustee;
(f) to make any change that does not materially adversely affect the
rights of any Bondholder;
(g) to facilitate the use of the Book-Entry System;
(h) to facilitate the substitution of an Alternate Credit Facility which
is not an irrevocable letter of credit, but without modifying the payment terms
of the Bonds; or
(i) to facilitate the transfer of Bonds when the Bonds are in the CP Rate
Mode, but not in the Book-Entry System.
Section 8.02. With Consent of Bondholders. If an amendment of or
supplement to this Indenture or the Bonds without any consent of Bondholders is
not permitted by the preceding Section, the Issuer and the Trustee may enter
into such amendment or supplement with the consent of the holders of at least a
majority in principal amount of the Bonds then Outstanding. However, without
the consent of each Bondholder affected, no amendment or supplement may (a)
extend the maturity of the principal of, or the due date of the interest on,
any Bond, (b) reduce the principal amount of, or rate of interest on, any Bond,
(c) effect a privilege or priority of any Bond or Bonds over any other Bond or
Bonds, (d) reduce the percentage of the principal amount of the Bonds required
for consent to such amendment or supplement, (e) impair the excludability from
gross income for Federal income tax purposes of interest on any Bond, (f)
eliminate the holders' rights to demand that their Bonds be purchased, or any
mandatory tender or redemption of the Bonds, (g) extend the due date for the
purchase of Bonds tendered by the holders thereof or call for mandatory tender
or redemption or reduce the purchase or redemption price of such Bonds, (h)
create a lien ranking prior to or on a parity with the lien of this Indenture
on the property described in the Granting Clause of this Indenture not
otherwise provided for in this Indenture, or (i) deprive any Bondholder of the
lien created by this Indenture on such property. In addition, if moneys or
Government Obligations have been deposited or set aside with the Trustee
pursuant to Article X for the payment of the Bonds, and the Bonds shall not
have in fact been actually paid in full, no amendment to the provisions of that
Article shall be made without the consent of the holders of each of those Bonds
affected.
Section 8.03. Effect of Consents. After an amendment or supplement
becomes effective, it will bind every Bondholder unless it makes a change
described in any of the lettered clauses of the preceding Section. In that
case, the amendment or supplement will bind each Bondholder who consented to it
and each subsequent holder of a Bond or portion of a Bond evidencing the same
debt as the consenting holder's Bond.
Section 8.04. Notation on or Exchange of Bonds. If an amendment or
supplement changes the terms of a Bond, the Trustee may require the holder to
deliver it to the Trustee. The Trustee may place an appropriate notation on
the Bond about the changed terms and return it to the holder. Alternatively,
if the Trustee, the Issuer and the Company determine, the Issuer in
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exchange for the Bond will issue and the Trustee will authenticate a new Bond
that reflects the changed terms.
Section 8.05. Execution and Delivery by Trustee of Amendments and
Supplements. The Trustee shall execute and deliver any amendment or supplement
to the Indenture or the Bonds authorized by this Article if the amendment or
supplement does not adversely affect the Trustee's rights, duties, liabilities
or immunities. If it does, the Trustee may, but need not, sign it. In signing
an amendment or supplement, the Trustee will be entitled to receive and
(subject to Section 7.01) will be fully protected in relying on an opinion of
Bond Counsel stating that such amendment or supplement is authorized by this
Indenture.
Section 8.06. Company and Bank Consent Required. An amendment or
supplement to this Indenture or the Bonds shall not become effective unless the
Company and the Bank shall deliver to the Trustee their written consents to the
amendment or supplement.
Section 8.07. LGC Consent Required. An amendment or supplement to the
Indenture (or to the Bonds or the Agreement) authorized by this Article which
has the purpose or effect of altering (a) any provision related to the Credit
Facility or any Alternate Credit Facilities, including provisions regarding
when a Credit Facility is required, (b) the permissible Authorized
Denominations, or (c) the provisions of Section 7.13, shall not take effect
without the LGC's written consent.
Section 8.08. Notice to Bondholders. The Trustee shall, at the Company's
expense, cause notice of the execution of each supplement or amendment to this
Indenture or the Agreement to be mailed to the Bondholders. The notice shall,
at the Trustee's option, either (a) briefly state the nature of the amendment
or supplement and that copies of it are on file with the Trustee for inspection
by Bondholders or (b) enclose a copy of such amendment or supplement.
ARTICLE IX.
AMENDMENT OF AGREEMENT OR LETTER OF CREDIT.
Section 9.01. Amendments to Agreement Without Consent of Bondholders.
The Issuer may enter into, and the Trustee may consent to, any amendment of or
supplement to the Agreement without notice to or consent of any Bondholder, if
the amendment or supplement is (a) required or permitted by the provisions of
the Agreement or this Indenture, (b) to cure any ambiguity, inconsistency or
formal defect or omission, (c) in connection with any authorized amendment of
or supplement to this Indenture, (d) to make any change that does not
materially adversely affect the rights of any Bondholder, (e) to amend the
description of the Project, provided in the case of (e) above, the Trustee is
provided an opinion of Bond Counsel to the effect that such amendment will not
adversely affect the excludability from gross income of interest on the Bonds
for Federal income tax purposes, or (f) to facilitate the substitution of an
Alternate Credit Facility which is not an irrevocable letter of credit, but
without modifying the payment terms of the Bonds.
Section 9.02. Amendments to Agreement With Consent of Bondholders. If an
amendment of or supplement to the Agreement without any consent of Bondholders
is not permitted by the
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foregoing Section, the Issuer may enter into, and the Trustee may consent to,
such amendment or supplement with the consent of the holders of at least a
majority in principal amount of the Bonds then Outstanding. However, without
the consent of each Bondholder affected, no amendment or supplement may result
in anything described in the lettered clauses of Section 8.02.
Section 9.03. Bank Consent Required. An amendment or supplement to the
Agreement authorized by this Article shall not become effective unless the Bank
delivers to the Trustee its written consent to the amendment or supplement.
Section 9.04. Modifications of Letter of Credit. No Letter of Credit may
be modified without the prior written consent of 100% of the Bondholders,
except to (a) correct any formal defects therein, (b) effect transfers thereof,
(c) effect extensions thereof, (d) effect reductions and reinstatements thereof
in accordance with the terms of the Letter of Credit, (e) increase the stated
amount thereof, or (f) effect any change which does not have a material adverse
effect upon the interests of the Bondholders Pursuant to this Indenture,
however, the Company has the right to obtain an Alternate Credit Facility,
subject to the requirements set forth in this Indenture, without the consent of
the Bondholders.
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.01. Bonds Deemed Paid; Discharge of Indenture. Any Bond will
be deemed paid for all purposes of this Indenture when (a) payment of the
principal of and interest on the Bond to the due date of such principal and
interest (whether at maturity, upon redemption or otherwise) either (i) has
been made in accordance with the terms of the Bond or (ii) has been provided
for by depositing with the Trustee Available Moneys sufficient to make such
payment and/or Government Obligations (purchased with Available Moneys)
maturing as to principal and interest in such amounts and at such times as
will, in the opinion of an independent certified public accountant delivered to
the Trustee, ensure the availability of sufficient moneys to make such payment,
and (b) all compensation and expenses of the Trustee pertaining to each Bond in
respect of which such deposit is made have been paid or provided for to the
Trustee's satisfaction. When a Bond is deemed paid, it will no longer be
secured by or entitled to the benefits of this Indenture or be an obligation of
the Issuer, except for payment from moneys or Government Obligations under
clause (a)(ii) above.
Notwithstanding the foregoing, no deposit under clause (a)(ii) of the
first paragraph of this Section shall be deemed a payment of a Bond until the
Company has furnished the Trustee an opinion of Bond Counsel stating that the
deposit of such cash or Government Obligations will not cause the Bonds, or any
portion thereof, to become "arbitrage bonds" within the meaning of Code Section
148 and (A) notice of redemption of the Bond is given in accordance with this
Indenture or, if the Bond is not to be redeemed or paid within the next 60
days, until the Company has given the Trustee, in form satisfactory to the
Trustee, irrevocable instructions (1) to notify, as soon as practicable, the
holder of the Bond, in accordance with this Indenture, that the deposit
required by clause (a)(ii) above has been made with the Trustee and that the
Bond is
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deemed to be paid under this Article and stating the maturity or redemption date
upon which moneys are to be available for the payment of the principal of the
Bond, and, if the Bond is to be redeemed rather than paid at maturity, (2) to
give notice of redemption as provided herein for such Bond or (B) the maturity
of the Bond.
Further, in no event shall a deposit under clause (a)(ii) of the first
paragraph of this Section be deemed a payment of any Bond that at the time of
the deposit is in the Daily Rate Mode or the Weekly Rate Mode.
When all Outstanding Bonds are deemed paid under the foregoing provision
of this Section, the Letter of Credit has been surrendered to the Bank for
cancellation and all amounts due and payable to the Bank under the
Reimbursement Agreement have been paid in full, the Trustee will upon request
acknowledge the discharge of the lien of this Indenture as to the Bonds,
provided, however, that the obligations under Article II in respect of the
optional tender rights of the Owners of the Bonds and the transfer, exchange,
registration, discharge from registration and replacement of Bonds shall
survive the discharge of the lien of the Indenture.
The Trustee shall provide each Rating Agency then rating the Bonds with at
least 10 days' prior notice of any advance defeasance of the Bonds, together
with a copy of the opinion of independent certified public accountant described
in the first paragraph of this Section and any opinion of counsel delivered if
Available Moneys described in clause (c) of the definition thereof are used to
effect the defeasance. The Trustee shall notify each Bondholder of the advance
defeasance of the Bonds, within 10 days after such defeasance.
Section 10.02. Application of Trust Money. The Trustee shall hold in
trust moneys or Government Obligations deposited with it pursuant to Section
10.01 and shall apply the deposited money and the money from the Government
Obligations in accordance with this Indenture only to the payment of principal
of, premium, if any and interest on the Bonds and to the payment of the
purchase price of Bonds demanded to be purchased by holders.
Section 10.03 Repayment to Bank and Company. (a) At such time as no
Bonds remain unpaid within the meaning of Section 10.01, the Trustee shall
promptly pay first to the Bank (to the extent the Bank certifies to the Trustee
that the Company is indebted to the Bank for amounts owed under the
Reimbursement Agreement) and then to the Company upon request (i) any excess
money or securities held by the Trustee at any time under this Article and (ii)
any money held by the Trustee under any provision of this Indenture for the
payment of principal or interest or for the purchase of Bonds that remains
unclaimed for five years.
(b) Notwithstanding any provision of this Indenture to the contrary, the
Trustee shall dispose of moneys held by it for the payment of principal of,
premium, if any, or interest on Bonds left unclaimed for five years after the
date the principal of the same becomes due in accordance with N.C. Gen. Stat.
Sec. 116B-18 or any successor provision. The owners of such Bonds shall
thereafter be entitled to look only to their remedies under N.C. Gen. Stat.
Chapter 116B or any successor provision, and all liability of the Issuer and
the Trustee on such moneys shall cease.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Bondholders' Consent. Any consent or other instrument
required by this Indenture to be signed by Bondholders may be in any number of
counterpart documents and may be signed by a Bondholder or by the holder's
agent appointed in writing. Proof of the execution of such instrument or of
the instrument appointing an agent and of the ownership of Bonds, if made in
the following manner, shall be conclusive for any purposes of this Indenture
with regard to any action taken by the Trustee or the Tender Agent under the
instrument:
(a) The fact and date of a person's signing an instrument may be proved by
the certificate of any officer in any jurisdiction who by law has
power to take acknowledgments within that jurisdiction that the person
signing the writing acknowledged before the officer the execution of
the writing, or by an affidavit of any witness to the signing.
(b) The fact of ownership of Bonds, the amount or amounts, numbers and
other identification of such Bonds and the date of holding shall be
proved by the registration books kept pursuant to this Indenture.
In determining whether the holders of the required principal amount of
Bonds Outstanding have taken any action under this Indenture (and solely for
such purposes), Bonds owned by the Company or any person controlling,
controlled by or under common control with the Company shall be disregarded and
deemed not to be Outstanding, unless the Company shall be the Owner of 100% of
the Bonds. In determining whether the Trustee and the Tender Agent shall be
protected in relying on any such action, only Bonds which the Trustee or the
Tender Agent, as the case may be, knows to be so owned shall be disregarded.
Any consent or other instrument shall be irrevocable and shall bind any
subsequent owner of such Bond or any Bond delivered in substitution therefor.
Section 11.02. Limitation of Rights; Bank's Rights. Nothing expressed or
implied in this Indenture or the Bonds shall give any person other than the
Trustee, the Tender Agent, the Issuer, the Bank, the Company, the Remarketing
Agent and the Bondholders any right, remedy or claim under or with respect to
this Indenture.
Notwithstanding any other provision of this Indenture to the contrary, all
rights of a Bank under this Indenture shall only be in effect when (a) either
the Letter of Credit issued by such Bank is in effect or amounts are due and
payable by the Company to such Bank under the applicable Reimbursement
Agreement, and (b) such Bank has not wrongfully failed to honor any properly
presented drawings under the applicable Letter of Credit made under and in
compliance with the terms of such Letter of Credit.
Section 11.03. No Personal Liability of LGC and Issuer Representatives.
No covenant, agreement or obligation contained in this Indenture or in the
Bonds shall be deemed to be a covenant, agreement or obligation of any present
or future officer, employee or agent of the LGC
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or the Issuer in such person's individual capacity, and neither the officials or
officers of the LGC or the Issuer executing this Indenture or the Bonds shall be
liable personally on the Bonds or under this Indenture or be subject to any
personal liability or accountability by reason of the issuance, execution or
delivery of the Bonds. No officer, employee or agent of the LGC or the Issuer
shall incur any personal liability with respect to any other action taken, or
not taken, by such person pursuant to this Indenture, the Agreement or the Act,
provided such person does not act with malicious intent.
Section 11.04. Severability. If any provision of this Indenture shall
be held or deemed to be or shall, in fact, be invalid, inoperative or
unenforceable, the same shall not affect any other provision or provisions
contained in this Indenture or render the same invalid, inoperative or
unenforceable to any extent whatever.
Section 11.05. Notices. Except as otherwise provided in this Indenture,
all notices shall be sufficiently given and shall be deemed given when
personally delivered or mailed by certified mail, postage prepaid, or when sent
by facsimile transmission (receipt confirmed by telephone) or telegram,
addressed as follows:
If to the Issuer:
The Mecklenburg County Industrial Facilities
and Pollution Control Financing Authority
P.O. Box 34486
Charlotte, North Carolina 28234
with a copy to:
The Mecklenburg County Industrial Facilities
and Pollution Control Financing Authority
c/o Mecklenburg County Attorney
Two First Union Center, Suite 2100
Charlotte, North Carolina 28282
If to the Trustee:
Harris Trust and Savings Bank
Attention: Indenture Trust Division
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
If to the Tender Agent:
At its address specified in the certificate delivered by the Tender
Agent in which it assumes its duties under this Indenture.
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If to the Company:
Griffith Micro Science, Inc.
c/o Griffith Laboratories Worldwide, Inc.
Attention: Treasurer
One Griffith Center
Alsip, Illinois 60658-3495
If to the Bank:
ABN AMRO Bank N.V.
Attention: Adrienne H. Baker, Assistant Vice President
135 South LaSalle Street
Chicago, Illinois 60674-9135
If to the Remarketing Agent:
First Chicago Capital Markets, Inc.
Attention: Public Finance Department
One First National Plaza
Suite 0826
Chicago, Illinois 60670-0826
With a copy to:
First Chicago Capital Markets, Inc.
Attention: Municipal Bond Department/Short-Term Trading
One First National Plaza, Suite 0467
Chicago, Illinois 60670-0467
If to the Owner of any Bond:
The address of such Owner as reflected on the registration books
maintained by the Trustee.
If to the Rating Agency:
Standard & Poor's Ratings Group
Attention: Letter of Credit Surveillance Group/Bonds
25 Broadway
New York, New York 10004
and/or the address of such other Rating Agency as then maintains a
rating on the Bonds
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If to the LGC:
North Carolina Local Government Regulators
Attention: Secretary to the Commission
Albermarle Building
325 N. Salisbury Street
Raleigh, North Carolina 27603-1385
A duplicate copy of each notice given under this Indenture by either party or
by any other person or entity shall be given to the Bank, the Tender Agent, the
Remarketing Agent, the Company and the Trustee. Any person or entity listed
above may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
Section 11.06. Payments or Performance Due on Other Than Business Day.
If the last day for making any payment or taking any action under this
Indenture falls on a day other than a Business Day, such payment may be made,
or such action may be taken, on the next succeeding Business Day, and, if so
made or taken, shall have the same effect as if made or taken on the date
required by this Indenture.
Section 11.07. Execution in Counterparts. This Indenture may be executed
in several counterparts, including separate counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.
Section 11.08. Applicable Law. The parties intend that this Indenture
shall be governed by and construed in accordance with State laws.
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IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in
its name and on its behalf by its duly authorized officers, and the Trustee, to
evidence its acceptance of the trusts hereby created, has caused these presents
to be signed in its name and on its behalf by its duly authorized officer, all
as of the date first above written.
[SEAL] THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
[ATTEST]
/s/ Linda T. Stiwalt By: /s/ Edward P. Putrett
- -------------------- -------------------------
Assistant Secretary, Chairman, Board of Commissioners
Board of Commissioners
HARRIS TRUST AND SAVINGS BANK,
AS TRUSTEE
By:
--------------------------
Vice President
[INDENTURE OF TRUST DATED AS OF NOVEMBER 1, 1995]
65
<PAGE> 70
IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in
its name and on its behalf by its duly authorized officers, and the Trustee, to
evidence its acceptance of the trusts hereby created, has caused these presents
to be signed in its name and on its behalf by its duly authorized officer, all
as of the date first above written.
[SEAL] THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
[ATTEST]
By:
- ---------------------------- -------------------------------------
Secretary, Board of Commissioners Chairman, Board of Commissioners
HARRIS TRUST AND SAVINGS BANK,
AS TRUSTEE
By: /s/
--------------------------
TRUST OFFICER
[INDENTURE OF TRUST DATED AS OF NOVEMBER 1, 1995]
66
<PAGE> 71
EXHIBIT A
TO INDENTURE OF TRUST
FORM OF BOND
[FACE OF BOND]
NO. R-____ $_______________
UNITED STATES OF AMERICA
STATE OF NORTH CAROLINA
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1995
(GRIFFITH MICRO SCIENCE, INC. PROJECT)
<TABLE>
<CAPTION>
DATED DATE MATURITY DATE CUSIP
- ---------- ------------- -----
<S> <C> <C>
[Date of Issuance] November 1, 2014 ______________
</TABLE>
REGISTERED OWNER:
--------------------------------------------------------------
PRINCIPAL AMOUNT: DOLLARS
-------------------------------------------------------
The Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority, a political subdivision and a body corporate and politic
of the State of North Carolina (the "State"), for value received, hereby
promises to pay to the order of the Registered Owner specified above, or
registered assigns, the Principal Amount specified above on the Maturity Date
specified above (subject to prepayment as described below) and to pay interest
on the Principal Amount from the date specified in the Indenture (as defined
below) at the rates per annum and on the dates set forth herein (but only out
of the revenues of the Issuer derived from the Agreement, as hereinafter
defined, or other moneys pledged therefor) and in accordance with the
provisions of the North Carolina Industrial and Pollution Control Facilities
Act, which is Chapter 159C of the North Carolina General Statutes (the "Act").
A-1
<PAGE> 72
THE BONDS SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE
FAITH AND CREDIT OF THE STATE OF NORTH CAROLINA OR OF ANY POLITICAL SUBDIVISION
OR AGENCY THEREOF, INCLUDING MECKLENBURG COUNTY, NORTH CAROLINA, BUT SHALL BE
PAYABLE SOLELY FROM THE REVENUES AND OTHER FUNDS PLEDGED THEREFOR. THE ISSUER
SHALL NOT BE OBLIGATED TO PAY THE BONDS OR THE INTEREST THEREON EXCEPT FROM THE
REVENUES AND OTHER FUNDS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR
THE TAXING POWER OF THE STATE OF NORTH CAROLINA OR OF ANY POLITICAL SUBDIVISION
OR AGENCY THEREOF, INCLUDING THE ISSUER (WHICH HAS NO TAXING POWER) AND
MECKLENBURG COUNTY, NORTH CAROLINA, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL
OF OR THE INTEREST ON THE BONDS.
The principal of, premium, if any, and interest on this Bond are payable
in lawful money of the United States of America. The principal of and premium,
if any, payable upon maturity or earlier redemption of this Bond are payable
when due upon the presentation and surrender hereof at the principal corporate
trust office of Harris Trust and Savings Bank, in Chicago, Illinois, as trustee
(the "Trustee"), or any successor trustee. Each payment of interest on this
Bond shall be payable to the Registered Owner hereof as shown on the
registration books kept by the Trustee at the close of business on the Business
Day (but, during an Adjustable Rate Period of six months or more, the fifteenth
day of the calendar month) next preceding the date on which such interest
becomes due and payable (herein, a "Record Date"). Interest on this Bond shall
be payable to the Registered Owner hereof by check or draft mailed by
first-class mail on the respective Interest Payment Dates (as hereinafter
defined) to the address of such Registered Owner as shown on the books kept by
the Trustee at the close of business on the relevant Record Date or such other
address as is furnished to the Trustee (in form satisfactory to the Trustee) by
such owner prior to such Record Date. Registered Owners of $1,000,000 or more
in aggregate principal amount of Bonds shall be entitled to receive interest
payments by wire transfer by providing written wire instructions to the Trustee
before the Record Date.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH
ON THE REVERSE SIDE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF FULLY SET FORTH IN THE TEXT OF THIS BOND WRITTEN
ABOVE.(2)
This(3) Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or the Tender
Agent.
- ------------------------
(2) Delete this sentence when bond is not in printed form.
(3) This word and all material after this word on this and the following page
is to appear on p. A-12 when bond is not in printed form.
<PAGE> 73
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in its
name by the manual or facsimile signature of its Chairman or Vice Chairman to
be sealed with its corporate seal and attested with the manual or facsimile
signature of the Secretary or the Assistant Secretary, all as of the date first
above written.
[SEAL] THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
[ATTEST]
- ------------------------ --------------------------------
ASSISTANT SECRETARY, [VICE] CHAIRMAN
BOARD OF COMMISSIONERS BOARD OF COMMISSIONERS
CERTIFICATE OF AUTHENTICATION
This Bond is hereby authenticated as required by the
within-referenced Indenture of Trust.
Date of Authentication:__________
HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE
-----------------------------------
Authorized Officer of Trustee
or Tender Agent
THIS BOND HAS BEEN APPROVED BY THE NORTH
CAROLINA LOCAL GOVERNMENT COMMISSION UNDER THE
PROVISIONS OF THE INDUSTRIAL AND
POLLUTION CONTROL FACILITIES FINANCING ACT.
- -------------------------------
Robert M. High, Secretary,
North Carolina Local Government Commission
A-3
<PAGE> 74
(REVERSE OF BOND)(4)
This Bond is authorized and issued under and pursuant to authority
conferred by the Act, certain proceedings of the Issuer and the Indenture of
Trust dated as of November 1, 1995 (the "Indenture") between the Issuer and the
Trustee. Certain terms used and not defined in this Bond are defined in the
Indenture. This Bond is one of the Issuer's duly authorized Industrial
Development Revenue Bonds, Series 1995 (Griffith Micro Science, Inc. Project)
(the "Bonds"), which Bonds have been issued in the aggregate principal amount
of $4,500,000 to provide funds to finance the costs of constructing certain
leasehold improvements and acquiring and installing certain equipment, all
constituting certain manufacturing facilities (the "Project") located in
Mecklenburg County, North Carolina.
The proceeds of the Bonds have been loaned to Griffith Micro Science,
Inc., a Delaware corporation (the "Company"), pursuant to a Loan Agreement
dated as of November 1, 1995 (the "Agreement"), between the Issuer and the
Company. As security for the payment of the Bonds, the Company has caused to
be delivered to the Trustee a letter of credit (the "Initial Letter of Credit")
of ABN AMRO Bank N.V. (the "Bank"), against which the Trustee shall be
entitled to draw, in accordance with the terms thereof, to pay when and as due,
the principal or purchase price of, and interest on, the Bonds during the term
of the Initial Letter of Credit. The Initial Letter of Credit expires on a
specified date prior to the maturity of the Bonds, subject to earlier
termination in certain events. Under certain conditions, the Company may cause
to be delivered an Alternate Credit Facility (an "Alternate Credit Facility")
in substitution for the Letter of Credit then in effect without the consent of
the holders of the Bonds. The Initial Letter of Credit, together with any
Alternate Credit Facility, is hereinafter referred to as the "Letter of
Credit." The Bonds are not secured by any lien on or security interest in the
Project.
The Bonds are issued under and entitled to the benefits of the Indenture.
Pursuant to the Indenture, the Issuer has pledged and assigned to the Trustee
the Trust Estate as security for its obligation to pay the principal or
purchase price of, premium, if any, and interest on the Bonds. Reference is
made to the Indenture for a description of the Trust Estate and for the
provisions thereof with respect to the nature and extent of the security
granted by the Issuer to the Trustee thereunder, the rights, duties and
obligations of the Issuer and the Trustee, the rights of the registered owners
of the Bonds, and the terms on which the Bonds are issued and secured, to all
of which provisions, and to all other provisions of the Indenture, the
Registered Owner hereof by the acceptance of this Bond assents.
I. Weekly Rate Provisions
Optional Tender. During a Weekly Rate Period, this Bond or any portion
thereof in Authorized Denominations (except during any period this Bond is a
Pledged Bond or Company Bond) shall be purchased on the demand of the
registered owner thereof on any Business Day at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
purchase date, upon delivery (by facsimile or otherwise) to the tender agent
duly appointed in
- ------------------------
(4) Delete when bond is not in printed form.
A-4
<PAGE> 75
accordance with the provisions of the Indenture (together with any successor
tender agent, the "Tender Agent") at its Principal Office, on any Business Day,
of (a) a written irrevocable notice setting forth the information required by
the Indenture, including the date on which such Bond, or the portion thereof
being tendered for purchase, shall be so purchased, which date shall be a
Business Day not prior to the seventh day next succeeding the date of the
delivery of such notice to the Tender Agent, together with (b) this Bond, as
provided in the Indenture; provided, that if the registered owner of the
tendered Bond is an open-ended diversified management investment company
(registered under the Investment Company Act of 1940, as amended), the delivery
required under this clause (b) need not be made until the date such Bond is to
be purchased from such registered owner, as provided in the Indenture.
Notwithstanding the foregoing, if the Bonds are held in a Book-Entry System,
separate procedures for the optional tender of Bonds are set forth in the
Indenture.
Interest. During any period this Bond is in the Weekly Rate Mode,
interest on this Bond shall be paid on the first Business Day of each month,
beginning with the first day of the month next succeeding the Closing Date (if
applicable), each Weekly Rate Conversion Date and on the Maturity Date
specified above or such other date as the outstanding principal amount of the
Bonds is paid in full if the Bonds are in the Weekly Rate Mode at such time
(each, a "Weekly Rate Interest Payment Date"), and shall be computed on the
basis of a 365- or 366-day year, as applicable, for the actual number of days
elapsed. Interest on the Bond for each Weekly Interest Period shall be
calculated as provided below and in the Indenture. During each Weekly Rate
Period, "Weekly Interest Period" shall mean the period from and including the
first day of the Weekly Rate Period through and including the following
Tuesday, and after the first Weekly Interest Period of each Weekly Rate Period,
from and including Wednesday of each week through and including the following
Tuesday, whether or not such days are Business Days, provided, however, the
initial Weekly Interest Period shall commence on the Closing Date and end on
the next following Tuesday.
On Tuesday (unless Tuesday is not a Business Day, then on the next
preceding Monday; unless Monday and Tuesday are not Business Days, then on the
next subsequent Wednesday, whether or not a Business Day) of each calendar week
during a Weekly Rate Period, with respect to each Weekly Interest Period, the
Remarketing Agent shall determine the Weekly Rate for the ensuing or current
(in the case of determinations made on Wednesday) Weekly Interest Period. The
determination of the Weekly Rate by the Remarketing Agent shall be conclusive
and binding. The Weekly Rate for each Weekly Interest Period determined by the
Remarketing Agent shall be the lowest rate of interest which will, in the
Remarketing Agent's sole judgment, having due regard for prevailing financial
market conditions, permit the Bonds to be remarketed at a price of par, plus
accrued interest, on the first day of the applicable Weekly Interest Period;
provided that in no case shall the Weekly Rate be more than the Maximum Rate.
If the Remarketing Agent fails to determine a Weekly Rate for any Weekly
Interest Period, the Weekly Rate for such Weekly Interest Period shall be the
rate from time to time established pursuant to the Indenture.
A-5
<PAGE> 76
II. Daily Rate Provisions
Optional Tender. During a Daily Rate Period, this Bond or any portion
thereof in Authorized Denominations (except during any period this Bond is a
Pledged Bond or Company Bond) shall be purchased on the demand of the
registered owner thereof on any Business Day at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase, upon delivery (by facsimile or otherwise) to the Tender Agent at
its Principal Office, (a) by 10:00 a.m., New York City time, on such Business
Day, of a written irrevocable notice, which will be effective upon receipt,
setting forth the information required by the Indenture, and (b) by 10:30 a.m.,
New York City time, on such Business Day, of this Bond, as provided in the
Indenture. Notwithstanding the foregoing, if the Bonds are held in a
Book-Entry System, separate procedures for the optional tender of Bonds are set
forth in the Indenture.
Interest. During any period this Bond is in the Daily Rate Mode, interest
on this Bond shall be paid on the first Business Day of each month, beginning
with the first day of the month next succeeding the Closing Date (if
applicable), each Daily Rate Conversion Date, and on the Maturity Date
specified above or such other date as the outstanding principal amount of the
Bonds is paid in full if the Bonds are in the Daily Rate Mode at such time
(each, a "Daily Rate Interest Payment Date"), and shall be computed on the
basis of a 365- or 366-day year, as applicable, for the actual number of days
elapsed. Interest on the Bonds for each Daily Interest Period shall be
calculated as provided below and in the Indenture. During each Daily Rate
Period, "Daily Interest Period" shall mean the period from and including the
first day of the Daily Rate Period to but excluding the immediately succeeding
Business Day.
On the first day of each Daily Interest Period, the Remarketing Agent
shall determine the Daily Rate for such Daily Interest Period. The Remarketing
Agent's determination of the Daily Rate shall be conclusive and binding.
The Daily Rate for each Daily Interest Period determined by the
Remarketing Agent shall be the lowest rate of interest which will, in the
Remarketing Agent's sole judgment, having due regard for prevailing financial
market conditions, permit the Bonds to be remarketed at a price of par, plus
accrued interest, on the first day of the applicable Daily Interest Period;
provided that in no case shall the Daily Rate be more than the Maximum Rate.
If the Remarketing Agent fails to determine a Daily Rate for any Daily Interest
Period, then the Bonds shall thereupon bear interest at the last Daily Rate
previously determined pursuant to the Indenture.
III. CP Rate Provisions
From and after each CP Rate Conversion Date or a CP Rate Reset Date, as
appropriate, to the earlier of their redemption, maturity, the following
Conversion Date for all Bonds or the following CP Rate Reset Date applicable to
this Bond, the interest rate of this Bond shall be a CP Rate, determined as
provided below and in the Indenture. Different CP Rate Periods may apply to
different Bonds at any time and from time to time while the Bonds are in a CP
Rate Mode.
A-6
<PAGE> 77
In the case of each CP Rate Period, on the first day thereof, the
Remarketing Agent shall determine (i) the duration of such CP Rate Period and
(ii) the CP Rate which shall apply during such CP Rate Period. The duration of
a CP Rate Period so determined shall be that which, together with all such
other CP Rate Periods for all Bonds then outstanding, in the Remarketing
Agent's sole judgment, will provide the lowest overall interest cost with
respect to the Bonds, with due regard to prevailing financial market
conditions, foreseeable changes in such conditions, the anticipated duration of
the period the Bonds may remain in the CP Rate Mode, and such other factors
which the Remarketing Agent, in its sole judgment, shall deem relevant and
economically advantageous to consider. Upon determining the duration of a CP
Rate Period with respect to any Bonds, the Remarketing Agent shall determine
the CP Rate which shall be in effect during such CP Rate Period, which shall be
the lowest rate of interest which, in the Remarketing Agent's sole judgment,
having due regard to prevailing financial market conditions, will permit such
Bonds to be sold at par, plus accrued interest, on the first day of such CP
Rate Period. Notwithstanding the foregoing, the CP Rate so determined shall
not be more than the Maximum Rate. Unless and until the Company elects to
effect a conversion of the Bonds from the CP Rate Mode to another Mode, the
Remarketing Agent shall continually redetermine the duration of, and the CP
Rate to be effective during each new CP Rate Period with respect to each Bond,
which will commence, without further action on the Company's part, on each CP
Rate Reset Date. If on any CP Rate Reset Date the Remarketing Agent shall fail
to determine either the duration of, or the CP Rate to be effective during the
CP Rate Period which commences on such date, with respect to any Bonds, such
Bonds, without further action on the part of any person, shall automatically
convert to the Weekly Rate Mode upon such date, and the Weekly Rate which will
be effective on such date will be determined as described in the Indenture.
Such Bonds may not thereafter be converted from the Weekly Rate Mode until such
time as all Bonds then outstanding are in the Weekly Rate Mode. Upon such
automatic conversion of a portion of the Bonds to the Weekly Rate Mode, any
Bonds then remaining in the CP Rate Mode shall be automatically converted to
the Weekly Rate Mode upon the expiration of the CP Rate Period applicable to
such Bond without further action on the part of any person (and notwithstanding
any attempted act to the contrary on the part of any person). Each
determination by the Remarketing Agent shall be conclusive and binding.
While the Bonds are in the CP Rate Mode, interest on this Bond will be
payable on the first Business Day which follows each CP Rate Period applicable
to this Bond, and shall be computed on the basis of a 365- or 366-day year, as
applicable, and the actual number of days elapsed.
IV. Adjustable Rate Provisions
From and after each Adjustable Rate Conversion Date or Adjustable Rate
Reset Date, to the earlier of its maturity, redemption, the following
Conversion Date, the following Adjustable Rate Reset Date or the following date
on which the Bond shall be subject to mandatory tender, the interest rate on
this Bond shall be an Adjustable Rate, determined as provided below and in the
Indenture. When the Bonds are in the Adjustable Rate Mode, the Bonds will
remain in such Mode for as long as the Company continues to deliver timely
conversion notices specifying the duration of the next Adjustable Rate Period.
The Remarketing Agent, on or prior to the
A-7
<PAGE> 78
commencement of each Adjustable Rate Period, shall determine the Adjustable Rate
to be borne by the Bonds during such Adjustable Rate Period, which will be the
lowest rate which, in its sole judgment having due regard for prevailing
financial market conditions, will permit the Bonds to be sold at par on the
first day of such Adjustable Rate Period. Notwithstanding the foregoing, the
Adjustable Rate shall not be more than the Maximum Rate. If the Company does
not deliver a timely conversion notice specifying the duration of the next
Adjustable Rate Period or the Remarketing Agent fails to determine an Adjustable
Rate for any Adjustable Rate Period, then the Bonds shall bear interest as
provided in the Indenture.
During each Adjustable Rate Period, interest on this Bond shall be paid on
each Adjustable Rate Interest Payment Date and shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
V. Conversion Provisions
The interest rate Mode of this Bond shall be converted from one Mode to
another Mode, or from an Adjustable Rate Period of one duration to an
Adjustable Rate Period of the same or a different duration within the
Adjustable Rate Mode, if the Company shall give notice as provided in the
Indenture of its election to effect such conversion, specifying in such notice
the date on which the Conversion Date will occur (which date shall be at least
25 days after such notice is given) and, if the conversion is to an Adjustable
Rate Period, specifying the Adjustable Rate Period. The Bonds shall be subject
to mandatory tender and purchase on the Conversion Date. If any condition
precedent to the conversion of the interest rate Mode of this Bond from one
Mode to another Mode, or from an Adjustable Rate Period of one duration to an
Adjustable Rate Period of the same or a different duration, is not satisfied,
this Bond shall nonetheless be subject to mandatory tender on the Conversion
Date and the Bonds shall commence bearing interest on the Conversion Date as
provided in the Indenture.
VI. Mandatory Tender
All Bonds are subject to mandatory tender by the Bondholders to the Tender
Agent at its Principal Office on each date described in the Indenture. The
purchase price of Bonds subject to mandatory tender shall be 100% of the
principal amount thereof (except in the case of certain mandatory tenders
during, but prior to the expiration of, certain Adjustable Rate Periods, as
described in the Indenture). Notice of a mandatory tender of Bonds shall be
given as provided in the Indenture.
Any Bond subject to mandatory tender which is not tendered on or before
the mandatory tender date shall, if Available Moneys sufficient and available
for the purchase of such Bonds have been deposited with the Tender Agent on the
mandatory tender date, be deemed to have been tendered for purchase on the
mandatory tender date, and from and after such date, interest will no longer
accrue on such Bonds. Owners of such Bonds shall have no rights or benefits
under the Indenture with respect to such Bonds other than to receive the
purchase price for such Bonds upon surrender of such Bonds to the Tender Agent.
A-8
<PAGE> 79
VII. Redemption of Bonds
The Bonds shall be subject to redemption at the Company's option only as
follows:
(a) Weekly Rate Mode, CP Rate Mode or Daily Rate Mode. While the
Bonds are in the Weekly Rate Mode or the Daily Rate Mode, they are
subject to optional redemption, in whole or in part on any Business
Day in Authorized Denominations, and while the Bonds are in the CP
Rate Mode, Bonds are subject to optional redemption in whole or in
part in Authorized Denominations on any Interest Payment Date for a
given Bond, at the direction of the Company, at a redemption price
equal to 100% of the principal amount of the Bonds to be redeemed,
plus accrued interest thereon to the redemption date, without
premium.
(b) Adjustable Rate Mode. While the Bonds are in the Adjustable
Rate Mode, they are subject to optional redemption in whole or in
part on any date, at the direction of the Company, only on the dates
and at the applicable redemption prices set forth in the Indenture.
While the Bonds are in the Adjustable Rate Mode or the CP Rate Mode, the
Bonds are subject to extraordinary optional redemption in whole on any date at
a redemption price equal to the principal amount of Bonds plus accrued interest
to the redemption date, without premium, upon the occurrence of certain events
specified in the Indenture.
The Bonds in any Mode are subject to mandatory redemption in whole on the
next date for which timely notice of redemption can be given by the Trustee
after the occurrence of a Determination of Taxability, as defined in the
Indenture, at a redemption price equal to the aggregate principal amount of the
Bonds plus accrued interest thereon to the redemption date, without premium.
The Bonds in any Mode are subject to mandatory redemption in whole on the
first Interest Payment Date that is at least 45 days after the next day for
which timely notice of redemption can be given by the Trustee after the
Cessation of Operation, as defined in the Indenture, at a redemption price
equal to the aggregate Outstanding principal amount of the Bonds plus accrued
interest thereon to the redemption date, without premium.
At least 30 days prior to any redemption of Bonds, the Trustee shall cause
notice of the call for redemption to be sent by first-class mail, postage
prepaid, to the Owner of each Bond to be redeemed at the address of such Owner
shown on the registration books maintained by the Trustee. Neither the failure
to give any such notice nor any defect in any notice so mailed shall affect the
sufficiency or the validity of any proceedings for the redemption of the Bonds.
Except as otherwise provided in the Indenture, the Trustee shall not be
required to register the transfer of or exchange any Bond after notice calling
such Bond or portion thereof for redemption has been mailed or during the
15-day period next preceding the mailing of a notice of redemption of any
Bonds.
A-9
<PAGE> 80
If Available Moneys are deposited in the Bond Fund on the date Bonds are
to be redeemed, Bonds or portions thereof redeemed shall no longer be secured
by the Indenture and shall not be deemed to be outstanding under the provisions
of the Indenture. Interest shall not continue to accrue on the Bonds after the
date fixed for redemption, so long as Available Moneys are on deposit to pay
all principal of, premium, if any, and interest accrued on the Bonds on such
date. If, however, Available Moneys shall not be on deposit on the redemption
date, such Bonds or portions thereof shall continue to bear interest until paid
at the same rate as they would have borne had they not been called for
redemption.
Any partial redemption of Bonds shall be made only in Authorized
Denominations. If fewer than all of the Bonds shall be called for redemption,
the portion of Bonds to be redeemed shall be selected by the Trustee as
provided in the Indenture.
VIII. General Provisions
Except as provided in the Indenture, the ownership of this Bond may be
transferred (in Authorized Denominations) only upon presentation and surrender
of this Bond at the principal corporate trust office of the Trustee, together
with an assignment duly executed by the Registered Owner hereof or his duly
authorized attorney-in-fact in such form as shall be satisfactory to the
Trustee.
Provisions may be made for the payment of amounts represented by the Bonds
as provided in the Indenture, in which event all liability of the Issuer to the
Owners of the applicable Bonds for the payment of such Bonds shall forthwith
cease, terminate and be completely discharged, and thereupon it shall be the
duty of the Trustee to hold such funds (but only for the period specified and
as provided in the Indenture), without liability for interest thereon, for the
benefit of the Owners of such Bonds, who shall thereafter be restricted
exclusively to such funds for any claims of whatever nature under the Indenture
or on, or with respect to, said Bonds.
It is hereby certified and covenanted that this Bond has been duly and
validly authorized, issued and delivered; that all acts, conditions and things
required or proper to be performed, exist and be done precedent to or in the
authorization, issuance and delivery of this Bond have been performed, existed
and done in accordance with law.
The Bonds are secured by the Indenture, whereunder the Trustee undertakes
to enforce the rights of the owners of the Bonds and to perform other duties to
the extent and under the conditions stated in the Indenture. If an Event of
Default shall occur, the principal of and interest on the Bonds then
outstanding may, and, under certain circumstances, shall, be declared to be due
and payable immediately upon the conditions and in the manner provided in the
Indenture. Under the circumstances and conditions provided in the Indenture,
the Trustee may, or shall, waive any Event of Default under the Indenture and
its consequences.
The Issuer has reserved the right to amend the Indenture; with the Bank's
consent, as provided therein. Under some (but not all) circumstances,
amendments thereto must also be
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<PAGE> 81
approved by the owners of either at least a majority or 100% in aggregate
principal amount of the Outstanding Bonds affected by such amendment.
A-11
<PAGE> 82
(Form of Assignment)
For value received, the undersigned hereby do(es) sell, assign and transfer
unto ____________________ the within Bond, and do(es) hereby irrevocably
constitute and appoint ____________________ attorney, to transfer such Bond on
the books of the Trustee kept for registration and transfer of the within Bond,
with full power of substitution in the premises.
Dated: ____________________
NOTE: THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS IT (THEY) APPEAR(S) UPON
THE FACE OF THE WITHIN BOND IN EVERY
PARTICULAR, WITHOUT ENLARGEMENT OR
ALTERATION OR ANY CHANGE WHATSOEVER.
SIGNATURE GUARANTEED BY:
_______________________________
NOTE: SIGNATURE(S) MUST BE
GUARANTEED BY AN "ELIGIBLE GUARANTOR
INSTITUTION" MEETING THE
REQUIREMENTS OF THE TRUSTEE, WHICH
REQUIREMENTS INCLUDE MEMBERSHIP OR
PARTICIPATION IN STAMP OR SUCH OTHER
"SIGNATURE GUARANTY PROGRAM" AS MAY
BE DETERMINED BY THE TRUSTEE IN
ADDITION TO OR IN SUBSTITUTION FOR
STAMP, ALL IN ACCORDANCE WITH THE
SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
A-12
<PAGE> 83
[FORM OF REGISTRATION INFORMATION]
Under the terms of the Indenture, the Trustee will register a Bond in the
name of a transferee only if the owner of such Bond (or his duly authorized
representative) provides as much of the information requested below as is
applicable to such owner prior to submitting this Bond for transfer.
Name:
--------------------------------------------
Address:
-----------------------------------------
Social Security or Employer
Identification Number:
----------------------
If a Trust, Name and Address of
Trustee(s) and Date of Trust:
---------------
A-13
<PAGE> 1
EXHIBIT 10.9(b)
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LOAN AGREEMENT
dated as of November 1, 1995
between
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
and
GRIFFITH MICRO SCIENCE, INC.
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$4,500,000
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1995
(GRIFFITH MICRO SCIENCE, INC. PROJECT)
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Substantially all of The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority's rights under this Agreement (but
excluding certain rights to indemnification, to payment of costs and to receive
notices), have been assigned to, and are subject to a security interest in
favor of, Harris Trust and Savings Bank, as Trustee under a related Indenture
of Trust dated as of November 1, 1995, between such Trustee and such Authority.
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LOAN AGREEMENT
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..................................................................................1
ARTICLE II REPRESENTATIONS..............................................................................2
Section 2.1. Issuer's Representations..................................................................2
Section 2.2. Company's Representations.................................................................4
ARTICLE III ISSUANCE OF BONDS; THE PROJECT...............................................................5
Section 3.1. Agreement To Issue Bonds; Application of Bond Proceeds....................................5
Section 3.2. Acquisition and Construction of Project; Changes..........................................6
Section 3.3. Disbursements from the Construction Fund..................................................6
Section 3.4. Establishment of Completion Date; Company's Obligation to Complete........................8
Section 3.5. Investment of Moneys.....................................................................10
Section 3.6. Project Operation........................................................................10
ARTICLE IV LOAN OF BOND PROCEEDS; LOAN PAYMENTS........................................................10
Section 4.1 Loan to Company..........................................................................10
Section 4.2. Loan Payments; Security for Loan.........................................................11
Section 4.3. Additional Loan Payments.................................................................11
Section 4.4. Prepayments; Payment in Full of Bonds....................................................12
Section 4.5. Company's Obligation Unconditional.......................................................12
Section 4.6. Letter of Credit.........................................................................13
Section 4.7. Purchase of Bonds Prohibited.............................................................13
Section 4.8. Mode Conversions.........................................................................13
ARTICLE V OTHER COMPANY AGREEMENTS....................................................................13
Section 5.1. Maintenance of Existence.................................................................13
Section 5.2. Qualification in State...................................................................14
Section 5.3. Arbitrage................................................................................14
Section 5.4. Company's Obligation with Respect to Exclusion of Interest Paid on the Bonds.............14
Section 5.5. Financing Statements.....................................................................15
ARTICLE VI NO RECOURSE TO ISSUER; INDEMNIFICATION......................................................16
Section 6.1. No Recourse to Issuer....................................................................16
Section 6.2. Indemnification..........................................................................16
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Section 6.3. No Warranty of Condition or Suitability by Issuer.........................................16
ARTICLE VII PROJECT COVENANTS............................................................................17
Section 7.1. Insurance.................................................................................17
Section 7.2. Prohibition of Liens......................................................................17
Section 7.3. Maintenance, Repairs, Replacements and Removals...........................................17
Section 7.4. Project Inspection........................................................................18
Section 7.5. Granting of Easements.....................................................................18
Section 7.6. Compliance with Governmental Regulations..................................................18
Section 7.7. Trustee's Right to Perform................................................................19
Section 7.8. Identification of Property................................................................19
Section 7.9. Use of Premises...........................................................................19
Section 7.10. Casualty; Condemnation....................................................................19
Section 7.11. Taxes and Assessments.....................................................................19
ARTICLE VIII ASSIGNMENT OR LEASE..........................................................................20
Section 8.1. Assignment or Lease.......................................................................20
Section 8.2. Issuer's Assignment.......................................................................20
ARTICLE IX DEFAULTS AND REMEDIES........................................................................20
Section 9.1. Events of Default; Remedies...............................................................20
Section 9.2. Delay Not Waiver; Remedies................................................................21
Section 9.3. Attorneys' Fees and Expenses..............................................................21
ARTICLE X MISCELLANEOUS................................................................................21
Section 10.1. Notices...................................................................................21
Section 10.2. Binding Effect............................................................................21
Section 10.3. Severability..............................................................................21
Section 10.4. Amendments................................................................................21
Section 10.5. Company's Right To Perform Issuer's Agreements............................................22
Section 10.6. Expiration of Bank's Rights...............................................................22
Section 10.7. Investment of Funds.......................................................................22
Section 10.8. Applicable Law............................................................................22
Section 10.9. Company's Assent to Indenture.............................................................22
Section 10.10. Captions; References to Sections..........................................................22
Section 10.11. Complete Agreement........................................................................22
Section 10.12. Termination...............................................................................22
Section 10.13. No Third Party Beneficiary................................................................23
Section 10.14. Counterparts..............................................................................23
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LOAN AGREEMENT DATED AS OF NOVEMBER 1, 1995, BETWEEN THE
MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY, A POLITICAL SUBDIVISION AND
A BODY CORPORATE AND POLITIC OF THE STATE OF NORTH
CAROLINA (THE "ISSUER"), AND GRIFFITH MICRO SCIENCE INC.,
A DELAWARE CORPORATION (THE "COMPANY").
WHEREAS, the Issuer is authorized by the North Carolina Industrial and
Pollution Control Facilities Financing Act, as amended, which is Chapter 159C
of the North Carolina General Statues (the "Act"), to provide financing for
'Projects," as defined in the Act, located within the Issuer's jurisdiction;
and
WHEREAS, the Issuer proposes to issue $4,500,000 Industrial Development
Revenue Bonds, Series 1995 (Griffith Micro Science, Inc. Project) (the
"Bonds"), pursuant to the Indenture in order to provide funds for a loan from
the Issuer to the Company for the Company's financing of the construction of
certain leasehold improvements and acquiring and installing certain equipment,
all constituting certain manufacturing facilities, as more particularly
described in Exhibit B (the "Project"); and
WHEREAS, the Company has agreed to make payments under this Agreement to
repay the loan of the Bond proceeds;
Accordingly, the Issuer and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, unless the context clearly requires
otherwise, all terms defined in Article I of the Indenture have the same
meanings in this Agreement. In addition, the following terms shall have the
following meanings in this Agreement unless the context clearly requires
otherwise.
"Completion Date" means the date the provision of the equipment and
leasehold improvements constituting the Project is certified to be complete in
accordance with the provisions of Section 3.4.
"Construction Period" means the period between the beginning of
construction and the Completion Date.
"Cost of the Project" means the sum of the items authorized to be paid
from the Construction Fund pursuant to the provisions of Section 3.3.
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"Indenture" means the Indenture of Trust relating to the Bonds, dated as
of the date of this Agreement, between the Issuer and Harris Bank and Trust
Company, at Trustee, as such Indenture of Trust may be amended or supplemented
from time to time in accordance with its terms.
"Premises" means the real property described in Exhibit A.
"Project" means the Premises, the buildings, structures and related
facilities constructed on the Premises, and those items of machinery, equipment
and other personal property acquired from the proceeds of the sale of the Bonds
or the proceeds of any payment, if any, by the Company pursuant to Section 7.3,
if any, all as more specifically described in Exhibit B.
"Qualified Costs of Construction" means that portion of the Cost of the
Project which is chargeable to the Project's capital account for Federal income
tax purposes or which would be so chargeable either with a proper election by
the Company under the Code or but for a proper election by the Company to
deduct such amount and which were incurred and paid, or are to be incurred and
paid, after December 14, 1993.
ARTICLE II
REPRESENTATIONS
Section 2.1. Issuer's Representations. The Issuer represents as follows:
(a) The Issuer (1) is a political subdivision and a body corporate and
politic created and functioning as an industrial facilities and pollution
control financing authority under the Act, (2) has full power and authority to
adopt the Bond Resolution, to enter into the transactions contemplated by this
Agreement, the Rebate Agreement, the Bond Purchase Agreement and by the
Indenture and to carry out its obligations under this Agreement, the Rebate
Agreement, the Bond Purchase Agreement and the Indenture, including the
issuance of the Bonds, (3) is not in default under any provisions of the laws
of the State and (4) by proper corporate action has duly authorized the
execution and delivery of this Agreement, the Bonds, the Rebate Agreement, the
Bond Purchase Agreement and the Indenture.
(b) Under existing status and decisions, no taxes on income or profits are
imposed on the Issuer. The Issuer will not knowingly take or omit to take any
action reasonably within its control which action or omission would impair the
exclusion of interest paid on the Bonds from the federal gross income of the
owners of the Bonds.
(c) Neither the adoption of the Bond Resolution, the Issuer's execution
and delivery of this Agreement, the Indenture, the Rebate Agreement or the Bond
Purchase Agreement nor the Issuer's consummation of the transactions
contemplated by this Agreement or thereby conflicts with, will result in a
breach of or default under or will (except with respect to the lien of the
Indenture) result in the imposition of any lien on any property of the Issuer
pursuant to the terms, conditions or provisions of any statute, order, rule,
regulation, agreement or instrument to which the Issuer is a party or by which
it is bound.
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(d) Each of this Agreement, the Rebate Agreement, the Bond Purchase
Agreement and the Indenture has been duly authorized, executed and delivered by
the Issuer and each constitutes the legal, valid and binding obligation of the
Issuer enforceable against the Issuer in accordance with its terms.
(e) To the Issuer's knowledge, there is no litigation or proceeding
pending or threatened against the Issuer or affecting it, which would adversely
affect the validity of this Agreement, the Indenture, the Rebate Agreement, the
Bond Purchase Agreement or the Bonds or the Issuer's ability to comply with its
obligations under this Agreement, the Indenture, Rebate Tax Agreement, the Bond
Purchase Agreement or the Bonds.
(f) the Issuer is not in default under any provisions of State law which
would affect its existence or its powers as referred to in the preceding
subsection (a).
(g) No event has occurred and no condition exists with respect to the
Issuer which would constitute on the Issuer's part an Event of Default under
the Indenture or this Agreement or which, with the lapse of time or with the
giving of notice or both, would become an Event of Default under the Indenture
or this Agreement.
(h) The Issuer has not pledged or hypothecated in interest in this
Agreement in any manner or for any purpose other than pursuant to the
Indenture.
(i) The Issuer hereby finds and determines, based on representations of
the Company, that all requirements of the Act have been complied with and that
the financing of the Project through the issuance of the Bonds will further the
public purposes of the Act.
(j) No member, director, officer or official of the Issuer has any
interest (financial, employment or other) in the Company or the transactions
contemplated by this Agreement.
(k) The Issuer will apply the proceeds from the sale of the Bonds as
specified in the Indenture and this Agreement. So long as any of the Bonds
remain outstanding and except as may be authorized by the Indenture, the Issuer
will not issue or sell any bonds or obligations, other than the Bonds, the
principal of or premium, if any, or interest on which will be payable from the
property described in the granting clause of the Indenture.
(l) The Project will be wholly located within Mecklenburg County, North
Carolina.
(m) The Issuer's representations and warranties contained in the Bond
Purchase Agreement are incorporated by reference herein and are true and
correct in all material respects on the Closing Date.
(n) Notwithstanding any contrary provision of this Agreement, no
obligation of the Issuer under the Bonds or this Agreement shall constitute a
debt of the State or any political subdivision or any agency thereof, including
of the Issuer or Mecklenburg County, North Carolina, or a pledge of the faith
and credit of the State or any political subdivision or any such agency,
including the Issuer or Mecklenburg Country, North Carolina. Neither the faith
and
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credit nor the taxing power of the State or any such political subdivision
or agency, including the Issuer (which has no taxing power) and Mecklenburg
County, North Carolina, is pledged to any such obligation.
Section 2.2. Company's Representations. The Company represents as
follows:
(a) The Company (1) is a corporation duly incorporated and in good
standing in the state of Delaware, (2) is duly qualified to transact business
and in good standing in the State, (3) is not in violation of any provision of
its certificate of incorporation or its by-laws, (4) has full corporate power
to own its properties and conduct its business, (5) has full legal right, power
and authority to enter into this Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Rebate Agreement and the Bond Purchase Agreement and
consummate all transactions contemplated by this Agreement, the Reimbursement
Agreement, the Remarketing Agreement, the Rebate Agreement and the Bond
Purchase Agreement and (6) by proper corporate action has duly authorized the
execution and delivery of this Agreement, the Reimbursement Agreement, the
Remarketing Agreement, the Rebate Agreement and the Bond Purchase Agreement.
(b) Neither the Company's execution and delivery of this Agreement, the
Reimbursement Agreement, the Remarketing Agreement, the Rebate Agreement or the
Bond Purchase Agreement, nor the Company's consummation of the transactions
contemplated hereby or thereby, conflicts with, will result in a breach of or
default under or will result in the imposition of any lien on any Company
property pursuant to the Company's certificate of incorporation or its by-laws
or the terms, conditions or provisions of any statute, order, rule, regulation,
agreement or instrument to which the Company is a party or by which it is
bound.
(c) This Agreement, the Reimbursement Agreement, the Remarketing
Agreement, the Rebate Agreement and the Bond Purchase Agreement have been duly
authorized, executed and delivered by the Company and constitute the legal,
valid and binding obligations of the Company in accordance with its terms.
(d) There is no litigation or proceeding pending, or the knowledge of the
Company threatened, against the Company which could adversely affect the
validity of this Agreement, the Reimbursement Agreement, the Remarketing
Agreement, the Rebate Agreement or the Bond Purchase Agreement or the ability
of the Company to comply with its obligations under this Agreement, the
Reimbursement Agreement, the Remarketing Agreement, the Rebate Agreement or the
Bond Purchase Agreement.
(e) The information contained in the Rebate Agreement, the Company's Tax
Compliance and Non-Arbitrage Certificate delivered in connection with the
original issuance of the Bonds and all other written information relating to
the Project provided by the Company to the Issuer and bond counsel for the
Bonds is true and correct.
(f) The Project will be located wholly within Mecklenburg County, North
Carolina.
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(g) The Company's representations and warranties contained in the Bond
Purchase Agreement are incorporated by reference herein and are true and
correct in all material respects on the Closing Date.
(h) All statements of facts or other information furnished by the Company
to Bond Counsel in writing in connection with Bond Counsel's opinion relating
to the Bonds, including particularly a tax certificate delivered concurrently
with the delivery of this Agreement, were true and correct when made and
nothing has come to the attention of the Company's management that would change
the truth or correctness of such statements of facts or other information
furnished to Bond Counsel.
(i) Nor later than August 1 of each year, the Company shall report to the
Issuer and the LGC, at their addresses as designated in the Indenture, the
amount of Bonds Outstanding as of the prior June 30.
ARTICLE III
ISSUANCE OF BONDS; THE PROJECT
Section 3.1. Agreement To Issue Bonds; Application of Bond Proceeds (a)
To provide .funds to finance the Cost of the Project, the Issuer agrees that it
will issue under the Indenture, sell and cause to be delivered, the Bonds,
bearing interest and maturing as set forth in the Indenture. The Issuer will
thereupon cause the proceeds received from the sale of the Bonds to be
deposited into the Construction Fund in accordance with Section 5.01 of the
Indenture.
(b) The Company hereby approves the issuance of the Bonds pursuant to the
Bond Resolution and the Indenture. The foregoing approval constitutes the
Company's acknowledgment and agreement that the Bonds, when issued, sold, and
delivered as provided in such Bond Resolution and the Indenture, will be issued
in accordance with and in compliance with this Agreement, notwithstanding any
other provisions of this Agreement or any other contract or agreement to the
contrary. Any Bondholder is entitled to rely fully and unconditionally on the
foregoing approval.
(c) Notwithstanding any provision of this Agreement or any other contract
or agreement to the contrary, the foregoing approval shall be the Company's
agreement that all convenants and provisions in this Agreement and the
Indenture affecting the Company shall, upon the delivery of the Bonds and the
Indenture, become unconditional, valid, and binding convenants and obligations
of the Company so long as any Bonds remain Outstanding. Particularly, the
Company's obligation to make, promptly when due, all payments specified in this
Agreement and the Indenture shall be absolute and unconditional, and such
obligation may be enforced as provided in this Agreement and the Indenture.
Section 3.2. Acquisition and Construction of Project; Changes. The
Company hereby agrees to provide for acquisition, construction and equipping of
the equipment and leasehold improvements planned for the Project in accordance
with this Article III, substantially in accordance with the plans and
specifications therefor prepared by it including any and all
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supplements, amendments and additions (or deletions) thereto (or therefrom);
provided, however, that such other facilities and property contemplated by such
supplements, amendments, additions or deletions to the plans and specifications
shall not materially impair the effective use or character of the Project as
contemplated by this Agreement or disqualify the Project as a 'Project" within
the meaning of the Act or result in the interest on any Bonds becoming
includable in the gross income of the owners of the Bonds for Federal income
tax purposes.
If Exhibit A or Exhibit B is to be amended or supplemented in accordance
with the provisions of Section 9.01 of the Indenture, the Issuer will enter
into, and will instruct the Trustee to consent to, an amendment of or
supplement to Exhibit A or Exhibit B upon receipt of:
(a) a copy of the proposed form of amendment or supplement to
Exhibit A or Exhibit B; and
(b) the written approving opinion of Bond Counsel to the effect that
such amendment or supplement will not have the effect of disqualifying
the Project as a "project" within the meaning of the Act or result in the
interest on any Bonds becoming includable in the gross income of the
owners of the Bonds for Federal income tax purposes.
Section 3.3. Disbursements from the Construction Fund. The Issuer
authorizes and directs the Trustee upon compliance with Section 5.10 of the
Indenture to disburse the moneys in the Construction Fund to or on behalf of
the Company for the following purposes:
(a) Payment to the Company of such amounts, if any, as shall be necessary
to reimburse the Company for advances and payments made by it prior to or after
the delivery of the Bonds for expenditures in connection with the preparation
of plans and specifications for the Project (including and preliminary study or
planning of the Project or any aspect thereof) and the acquisition,
construction or equipping of the equipment and leasehold improvements planned
for the Project.
(b) Payment of the initial or acceptance fee of the Trustee, fees of the
Trustee and any paying agent incurred during the Construction Period, fees
relating to the underwriting or placement of the Bonds, legal, financial and
accounting fees and expenses, printing and engraving costs incurred in
connection with the authorization, sale and issuance of the Bonds, the
execution of the Indenture and the preparation of all other documents in
connection therewith, and payment of all fees, costs and expenses for the
preparation of this Agreement, the Indenture, the Bonds and all related
agreements and instruments.
(c) Payment for labor, services, materials and supplies used or furnished
in the acquisition, construction, or equipping of the equipment and leasehold
improvements planned for the Project, all as provided in the plans,
specifications and work orders therefor, payment for the cost of the
construction, acquisition and installation of utility services or other
facilities, and acquisition and installation of all real property deemed
necessary in connection with the Project and payment for the miscellaneous
capitalized expenditures incidental to any of the foregoing items.
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(d) Payment of the fees, if any, for architectural, engineering, legal,
printing, underwriting and supervisory services with respect to the Project.
(e) To the extent not paid by a contractor for construction with respect
to any part of the Project, payment of the premiums on all insurance required
to be taken out and maintained during the Construction Period.
(f) Payment of the taxes, assessments and other charges, if any, that may
become payable during the Construction Period with respect to the Project, or
reimbursement thereof if paid by the Company.
(g) Payment of expenses incurred in seeking to enforce any remedy against
any contractor or subcontractor in respect of any default under a contract
relating to the Project.
(h) Interest on the Bonds during the Construction Period (or reimbursement
of the Bank for draws under the Letter of Credit to pay such interest).
(i) Fees of the Bank during the Construction Period for the issuance of
the Letter of Credit.
(j) Payment of any other costs permitted by the Act which will not affect
the exemption from Federal income taxes of interest on the Bonds.
All moneys remaining in the Construction Fund after the Completion Date
and after payment or provision for payment of all other items provided for in
the preceding subsections (a) to (j), inclusive, of this Section, shall be used
at the Company's direction in accordance with Section 3.4.
Each of the payments referred to in this Section shall be made upon
receipt by the Trustee of a written order complying with the form set forth in
Section 5.10 of the Indenture signed by an Authorized Company Representative.
The Company covenants and agrees that it will cause at least 95% of the
moneys in the Construction Fund (including any earnings on investment of such
moneys) to be disbursed for Qualified Costs of Construction and all of such
proceeds to be disbursed for costs permitted by the Act. The Company further
covenants that no more than $90,000 of the moneys in the Construction Fund will
be disbursed for payment of issuance costs within the meaning of the code.
Section 3.4. Establishment of Completion Date; Company's Obligation to
Complete. The Completion Date shall be evidenced to the Trustee and the Issuer
by a certificate signed by an Authorized Company Representative stating the
Completion Date and the Cost of the Project and stating that (a) construction
of the Project has been completed substantially in accordance with the plans,
specifications and work orders therefor and all labor, services, materials and
supplies used in such construction have been paid for (other than costs and
expenses for which payment has been withheld), (b) all other facilities
necessary in connection with the Project have
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been constructed, acquired and installed in accordance with the plans,
specifications and work orders therefor and all costs and expenses incurred in
connection therewith (other than costs and expenses for which payment has been
withheld) have been paid, and (c) at least 95% of the costs previously disbursed
and to be disbursed from the Construction Fund (including moneys to be disbursed
in accordance with the next succeeding paragraph of this Section 3.4) are
Qualified Costs of Construction, and all of such costs are costs permitted by
the Act. The Company may withhold payment and direct the Trustee to retain in
the Construction Fund an amount sufficient to pay any Cost of the Project which
has been incurred; such retained moneys shall be disbursed after the Completion
Date in the manner provided in Section 3.3. If the Company withholds the
payment of any such cost or expense of the Project the certificate shall state
the amount of such withholding and the reason therefor. Notwithstanding the
foregoing, such certificate may state that it is given without prejudice to any
rights against third parties which exist at the date of such certificate or
which may subsequently come into being. It shall be the Company's duty to cause
such certificate to be furnished to the Trustee within 60 days after the Project
shall have been completed substantially in accordance with the plans,
specifications and work orders therefor.
Moneys (including investment proceeds) remaining in the Construction Fund
on the date of such certificate may be used, at the direction of the Authorized
Company Representative, to the extent indicated, for one or more of the
following purposes:
(1) for the payment, in accordance with the provisions of this
Agreement, of any Cost of the Project not theretofore paid, as specified
in the above-mentioned completion certificate; or
(2) for transfer to the Bond Fund, but only if, and to the extent
that, the Trustee has been furnished with an opinion of Bond Counsel to
the effect that such transfer is lawful under the Act and does not
adversely affect the exclusion from Federal gross income of interest on
any of the Bonds.
Any moneys (including investment proceeds) remaining in the Construction
Fund on the date of the aforesaid certificate and not set aside for the payment
of Costs of the Project as specified in (1) above or transferred to the Bond
Fund pursuant to (2) above shall on such date be deposited by the Trustee in a
separate escrow account and used to pay all or part of the redemption price of
Bonds at the earliest practical redemption date or dates on which Bonds may be
redeemed without the payment of a premium or, at the Company's option, at an
earlier redemption date or dates; provided that, until so used such moneys may
also be used, at the direction of the Authorized Company Representative, for
one or more of the following purposes:
(A) to pay all or part of the price of purchasing Bonds on tender,
in the open market or at private sale, at a purchase price not in excess
of 100% of the principal amount of such Bonds plus accrued interest to
the date of such purchase for the purpose of cancellation;
(B) for the payment of qualifying costs of any additional
improvements to be installed or constructed on the Project site, provided
that such use of funds is permitted under the Act; or
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(C) for any other purpose permitted by the Act; provided, that the
earnings on the investment of the moneys on deposit in such escrow
account shall be transferred on each interest payment date on the Bonds
to the Bond Fund and shall be used to pay interest on the Bonds coming
due on each interest payment date on the Bonds (or to reimburse the Bank
for draws under the Letter of Credit to pay interest on the Bonds), but
no moneys on deposit in such escrow account may be used for any of the
purposes specified in this paragraph (including the redemption of Bonds)
unless and until the Trustee has been furnished with an opinion of Bond
Counsel to the effect that such use is lawful under the Act and does not
adversely affect the exclusion from gross income for Federal income tax
purposes of the interest on any of the Bonds; and provided further that,
until used for one or more of the foregoing purposes, moneys on deposit
in such escrow account may be invested in investments authorized by
Section 3.5, but may not be invested to produce a yield on such moneys
(computed from the Completion Date and taking into account any investment
of such moneys during the period from the Completion Date until such
moneys were deposited in such escrow account) greater than the yield on
the Bonds from which such proceeds were derived, all as such terms are
used in and determined in accordance with Code Section 103(c).
If the moneys in the Construction Fund available for payment of the Costs
of the Project should not be sufficient to pay the costs thereof in full, the
Company agrees to pay directly, or to deposit in the Construction Fund moneys
sufficient to pay, the costs of completing the Project as may be in excess of
the moneys available therefor in the Construction Fund. The Issuer does not
make any warranty, either express or implied, that the moneys which will be
paid into the Construction Fund and which, under the provisions of this
Agreement, will be available for payment of the Costs of the Project, will be
sufficient to pay all the costs which will be incurred in that connection. The
Company agrees that if after exhaustion of the moneys in the Construction Fund
the Company should pay, or deposit moneys in the Construction Fund for the
payment of, any portion of the said costs of the Project pursuant to the
provisions of this Section it shall not be entitled to any reimbursement
therefor from the Issuer or from the Trustee or from the owners of any of the
Bonds, nor shall it be entitled to any diminution of the amounts payable under
Article IV.
Section 3.5. Investment of Moneys. Any moneys held as a part of the Bond
Fund or the Construction Fund shall be invested or reinvested by the Trustee,
at the direction of the Authorized Company Representative as provided in
Section 5.05 of the Indenture and in the Rebate Agreement, to the extent
permitted by law in Qualified Investments. Any such investment may be
purchased at the offering or market price thereof at the time of such purchase.
The Trustee may make any and all such investments through its own bond
department.
The investments so purchased shall be held by the Trustee and shall be
deemed at all times a part of the fund for which they were made and the
interest accruing thereon and any profit realized therefrom shall be credited
to such fund and any net losses resulting from such investment shall be charged
to such fund and paid by the Company.
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Although the Company recognizes that it may obtain a broker confirmation
or written statement containing comparable information at no additional costs,
the Company hereby agrees that confirmations of investments made by the Trustee
pursuant to Section 5.05 of the Indenture are not required to be issued by the
Trustee for each month in which a monthly statement is rendered. No such
statement need be rendered pursuant to the provisions hereof if no activity
occurred in the fund or account during such preceding month.
Section 3.6. Project Operation. The Company will not, nor will it allow
any lessee or other user of the Project to, make any material change in its use
of the Project as contemplated by this Agreement, unless the Trustee and the
Issuer receive an opinion of Bond Counsel to the effect that such change will
not impair the exclusion of interest on the Bonds from the gross income of
holders of the Bonds for federal income tax purposes.
The Company agrees to operate the Project, or cause any lessee or other
user of the Project to operate the Project, as a "project" as contemplated by
the Act and in such a manner that it will not impair the exclusion of interest
on the Bonds from gross income of the holders of the Bonds for federal income
tax purposes.
Upon a sale of all or any portion of the Company's interest in the Project
(to the extent permitted under this Agreement), the Company will obtain the
agreement of the purchaser of the Project or any interest therein to comply
with the provisions of this Agreement, regardless of whether such purchaser
assumes the obligations of the Company under this Agreement generally.
ARTICLE IV
LOAN OF BOND PROCEEDS; LOAN PAYMENTS
Section 4.1. Loan to Company. The use of Bond proceeds described in
Section 3.1 shall constitute a loan of such proceeds to the Company. Such loan
shall be secured and repaid as provided in this Agreement. Such loan shall be
evidenced only by this Agreement, and not by any separate promissory note or
other instrument. Upon the delivery of the proceeds derived from the sale of
the Bonds to the Trustee, the Company shall have received, and the Issuer shall
have given, full and complete consideration for the Company's obligation to
make payments as required by this Agreement.
Section 4.2. Loan Payments; Security for Loan. As consideration for the
loan of Bond proceeds provided for by this Agreement, the Company
unconditionally agrees and guarantees to pay when due all amounts provided for
under this Agreement to be paid by the Company. Such obligations shall be
direct general obligations for the Company. All amounts payable by the Company
under this Agreement shall be payable in lawful money of the United States of
America. The Company agrees to make loan payments as follows:
(a) Principal, Premium and Interest. On or before 11:00 a.m. (local time
at the Trustee's principal corporate office) on each day on which any payment
of principal of, premium, if any or interest on the Bonds shall become due
(whether on an interest payment date, at maturity, or upon redemption or
acceleration or otherwise), the Company will pay, in
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immediately available funds, an amount which, together with other moneys held
by the Trustee in the Bond Fund and available therefor (including, without
limitation, proceeds of draws under the Letter of Credit), will enable the
Trustee to make such payment in full in a timely manner. If the Company
defaults in any payment required by this Section, the Company will pay interest
(to the extent allowed by law) on such amount until paid at the rate provided
for in the Bonds.
(b) Purchase Price. The Company agrees to pay to the Tender Agent (or if
the Bonds are in the Book Entry System, the Trustee) amounts sufficient to pay
the purchase price of Bonds on each optional or mandatory tender date pursuant
to Section 2.03 or 2.04 of the Indenture, provided that the Company shall
receive a credit for the amount of remarketing or Letter of Credit proceeds
available for such purpose under the Indenture on each such date.
In furtherance of the foregoing, so long as any Bonds are outstanding the
Company will pay all amounts required to prevent any deficiency or default in
any payment of the principal or purchase price of, premium, if any, or interest
on the Bonds, including any deficiency caused by an act or failure to act by
the Trustee, the Company, the Issuer or any other person.
All amounts payable under this Section by the Company are assigned by the
Issuer to the Trustee pursuant to the Indenture for the benefit of the
Bondholders. The Company consents to such assignment. Accordingly, the
Company will pay directly to the Trustee (or in the case of the purchase price
of Bonds when the Bonds are not in a Book Entry System, to the Tender Agent) at
its principal corporate trust office all payments payable by the Company
pursuant to this Section.
The Company will pay all amounts owing to the Bank under the Reimbursement
Agreement directly to the Bank when due and no such payment shall be made to
the Trustee.
Section 4.3. Additional Loan Payments. As additional loan payments, the
Company will also pay the following within 45 days after receipt of a bill
therefor:
(a) The Issuer's reasonable fees and expenses in connection with this
Agreement and the Bonds, such fees and expenses to be paid directly to the
Issuer; provided that the Company shall have approved such expenses in writing
prior to their incurrence.
(b) Any costs of issuance in connection with the issuance of the Bonds and
the transactions contemplated by this Agreement, including all costs and
expenses incurred by the Issuer or the Company in connection with the issuance
and sale of the Bonds, including without limitation (1) fees and expenses of
accountants, attorneys, engineers and financial advisors, (2) materials,
supplies and printing and engraving costs, (3) recording and filing fees, (4)
rating agency fees, (5) initial fees and expenses of the Trustee, Remarketing
Agent and Tender Agent, and (6) the Issuer's administrative and overhead
expenses, provided in all cases that an Authorized Company Representative shall
have approved such expenses in writing prior to their incurrence.
(c) (i) The reasonable fees and expenses of the Trustee, the Tender Agent
and all other fiduciaries and agents serving under the Indenture (including any
expenses in connection
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with any redemption of the Bonds), and (ii) all reasonable fees and expenses,
including attorneys' fees, of the Trustee for any extraordinary services
rendered by it under the Indenture. All such fees and expenses are to be paid
directly to the Trustee or other fiduciary or agent for its own account as and
when such fees and expenses become due and payable.
(d) The fees and expenses of the Remarketing Agent in accordance with the
terms of the Remarketing Agreement.
(e) All reasonable expenses and charges, legal or otherwise (including
court costs and attorneys' fees), paid or incurred by the Issuer or the Trustee
in realizing upon any of the said payments to be made by the Company or in
enforcing the provisions of this Agreement or the Indenture.
Section 4.4. Prepayments; Payment in Full of Bonds. The Company may
prepay to the Trustee all or any part of the amounts payable under Section
4.2(a) at any time, provided that the Bonds shall be subject to redemption
solely as provided in the Indenture and the Bonds. No prepayment shall relieve
the Company of its obligations under this Agreement until all the Bonds have
been paid or provision for the payment of all the Bonds has been made in
accordance with the Indenture. In the event of a mandatory redemption of the
Bonds, the Company will prepay all amounts necessary for such redemption. At
such time as no Bonds are Outstanding, the Issuer will deliver to the Company
such documents as the Company may reasonably request conveying to the Company
all such interests, if any, as the Issuer may at that time have in the Project.
Section 4.5. Company's Obligation Unconditional. The Company's
obligations to make the payments required by, and to perform its other
obligations contained in, this Agreement shall be absolute and unconditional,
and shall not be subject to diminution by set-off, recoupment, counterclaim,
abatement or otherwise. Until the principal of and interest on the Bonds shall
have been fully paid or provision for the payment of the Bonds made in
accordance with the Indenture, the Company (a) will not suspend or discontinue
any payments provided for in Section 4.2, (b) will perform and observe all its
other obligations in this Agreement, and (c) will not terminate this Agreement
for any cause, including any acts or circumstances that may constitute failure
of consideration, destruction of or damage to the Project, the taking by
eminent domain of title to or temporary use of any or all of the Project,
commercial frustration of purpose, any change in the laws of the United States
or of the State or any political subdivision of either, or any failure of the
Issuer to perform any of its agreements, whether express or implied, or any
duty, liability or obligation arising from or connected with this Agreement.
Section 4.6. Letter of Credit. The Company shall provide for the delivery
of the Initial Letter of Credit to the Trustee simultaneously with the original
issuance and delivery of the Bonds. The Company may provide for the delivery
of an Alternate Credit Facility in substitution or replacement for the
then-existing Letter of Credit or Alternate Credit Facility but only in
accordance with Section 5.03 of the Indenture.
Section 4.7. Purchase of Bonds Prohibited. So long as a Letter of Credit
is in effect, the Company shall not, directly or indirectly, purchase any Bonds
with any funds that do not constitute Available Moneys, except as required by
Section 4.2(b).
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Section 4.8. Mode Conversions. The Company has the option to cause the
interest rate on the Bonds to be converted from one Mode to another or from an
Adjustable Rate Period of one duration to an Adjustable Rate Period of the same
or a different duration. Such option may be exercised by the Company as
provided in the Indenture. The Issuer hereby grants any such options it may
have to the Company.
ARTICLE V
OTHER COMPANY AGREEMENTS
Section 5.1. Maintenance of Existence. The Company agrees that during the
term of this Agreement and so long as any Bond is outstanding, it will maintain
its corporate existence, will continue to be a corporation in good standing
under the laws of the State of Delaware and the State, will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another legal entity or permit one or more other
legal entities (other than one or more subsidiaries of the Company) to
consolidate with or merge into it, or sell or otherwise transfer to another
legal entity all or substantially all its assets as an entirety and dissolve,
unless (a) in the case of any merger or consolidation, the Company is the
surviving corporation, or (b)(i) the surviving, resulting or transferee legal
entity is organized and existing under the laws of the United States, a state
thereof or the District of Columbia, and (if not the Company) assumes in
writing all the Company's obligations under this Agreement, the Remarketing
Agreement and the Rebate Agreement, and (ii) no event which constitutes, or
which with the giving of notice or the lapse of time or both would constitute,
an Event of Default shall have occurred and be continuing immediately after
such merger, consolidation or transfer.
If a consolidation, merger or sale or other transfer is made as provided
in this Section, the provisions of this Section shall continue in full force
and effect and no further consolidation, merger or sale or other transfer shall
be made except in compliance with the provisions of this Section.
Section 5.2. Qualification in State. Subject to the provisions of Section
5.1, the Company agrees that throughout the term of this Agreement, it will
remain qualified to do business in the State.
Section 5.3. Arbitrage. The Company convenants with the Issuer and for
and on behalf of the purchasers and owners of the Bonds from time to time
Outstanding that so long as any of the Bonds remain Outstanding, moneys on
deposit in any fund in connection with the Bonds, whether or not such moneys
were derived from the proceeds of the sale of the Bonds or from any other
sources, will not be used in a manner which will cause the Bonds to be
"arbitrage bonds" within the meaning of Code Section 148. The Company also
covenants for the benefit of the Bondholders to comply with all of the
provisions of the Rebate Agreement and the Project Certificate. The Company
reserves the right, however, to make any investment of such moneys permitted by
State law, if, when and to the extent that Code Section 148 or regulations
promulgated thereunder shall be repealed or relaxed or shall be held void by
final judgment of a court of competent jurisdiction, but only if any investment
made by virtue of such repeal,
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relaxation or decision would not, in the written opinion of Bond Counsel,
result in making the interest on the Bonds includable in the federal gross
income of the owners of the Bonds.
Section 5.4. Company's Obligation with Respect to Exclusion of Interest
Paid on the Bonds. Notwithstanding any other provision of this Agreement, the
Company covenants and agrees that it will not take or authorize or permit, to
the extent such action is within the Company's control, any action to be taken
with respect to the Project, or the proceeds of the Bonds (including investment
earnings thereon), or any other proceeds derived directly or indirectly in
connection with the Project, which will result in the loss of the exclusion of
interest on the Bonds from the federal gross income of the owners of the Bonds
under Code Section 103 (except for any Bond during any period while any such
Bond is held by a person referred to in Section 147(a) of the Code); and the
Company also will not omit to take any action in its power which, if omitted,
would cause the above result. Toward that end, the Company covenants that it
will comply with all provisions of the Rebate Agreement and the Project
Certificate. This provision shall control in case of conflict or ambiguity
with any other provision of this Agreement.
In furtherance of such covenant, the Company covenants and represents as
follows:
(a) that all information provided in writing to the Issuer or Bond Counsel
with respect to the Project's expected economic life is true, accurate and
correct;
(b) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of Code Section 149(b);
(c) to pay, or cause to be paid, to the United States of America such
amounts at such times as may be necessary to fulfill the Issuer's obligation to
rebate investment earnings pursuant to Code Section 148; and, upon request, to
provide, or to cause the Trustee to provide, the Issuer with evidence of such
payments and all information related to the calculation of payment amounts as
the Issuer may reasonably request;
(d) to maintain such records, or to cause the Trustee to maintain such
records, as will enable the Company to fulfill its responsibilities under this
Section and Code Section 148 and to retain, or to cause the Trustee to retain,
such records for at least six years following the final payment of principal of
and interest on the Bonds;
(e) to provide for the preparation and filing of the required Internal
Revenue Service Form 8038 with respect to the Bonds within the time required;
(f) to provide, or to cause the Trustee to provide, the Issuer with such
information as the Issuer may reasonably require to complete any other required
Internal Revenue Service filings.
If regulations or rulings are hereafter promulgated which modify, or
expand provisions of, the Code as applicable to the Bonds, the Company shall
not be required to comply with any covenant contained herein to the extent that
failure to comply with any such modification or
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expansion, in the Opinion of Bond Counsel, will not adversely affect the
exclusion from gross income of the interest on the Bonds for federal income tax
purposes as in effect on the Closing Date. If regulations or rulings are
hereafter promulgated which impose additional requirements which are applicable
to the Bonds, the Company agrees, to the extent such compliance is within its
powers and control, to comply with the additional requirements to the extent
necessary, in the opinion of Bond Counsel, to preserve the exclusion from gross
income of the interest on the Bonds for federal income tax purposes as in effect
on the Closing Date.
Promptly after the Company first becomes aware of any Determination of
Taxability, the Company shall give written notice thereof to the Issuer, the
Trustee, and the LGC.
Section 5.5. Financing Statements. The Company shall cause such security
agreements, financing statements and all supplements thereto and other
instruments as may be required from time to time to be kept, to be recorded and
filed in such manner and in such places as may be required by law in order to
fully preserve, protect and perfect the security of the Owners of the Bonds and
the rights of the Trustee, and to perfect the security interest created by the
Indenture.
ARTICLE VI
NO RECOURSE TO ISSUER; INDEMNIFICATION
Section 6.1. No Recourse to Issuer. The Issuer will not be obligated to
pay the Bonds except from revenues provided by the Company or from other
sources specified in the Indenture. The issuance of the Bonds will not
directly or indirectly or contingently obligate the Issuer or the State to levy
or pledge any form of taxation whatever or to make any appropriation for their
payment. Neither the Issuer nor any member or officer of the Issuer nor any
person executing the Bonds shall be liable personally for the Bonds or be
subject to any personal liability or accountability by reason of the issuance
of the Bonds.
Section 6.2. Indemnification. The Company, during the term of this
Agreement releases the Issuer, the LGC, the Trustee and their members or
officers (the "Indemnified Parties") from and covenants and agrees that the
Indemnified Parties shall not be liable for, and agrees to indemnify, defend
and hold the Indemnified Parties harmless against, any loss or damage to
property or any injury to or death of any person occurring on or about or
resulting from any defect in the Project, provided that the indemnity provided
in this sentence shall be effective only to the extent of any loss that may be
sustained by an Indemnified Party in excess of the net proceeds received by
such Indemnified Party from any insurance carried with respect to the loss
sustained, and provided further, that the indemnity shall not be effective with
respect to any Indemnified Party for damages that result from the negligence or
intentional acts on the part of the such Indemnified Party. The Company will
also indemnify and save harmless the Trustee for, and hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust created under the Indenture, including the cost and expense of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under the Indenture.
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Section 6.3. No Warranty of Condition or Suitability by Issuer. The
Company recognizes that the Issuer does not deal in goods of the kind
comprising components of the Project or otherwise hold itself out as having
knowledge or skill peculiar to the practices or goods involved in the Project,
and that the Issuer is not one to whom such knowledge or skill may be
attributed by its employment of an agent or broker or other intermediary who by
his occupation holds himself out as having such knowledge or skill. The
Company further recognizes that since the components of the Project have been
and are to be designated and selected by the Company, THE ISSUER HAS NOT MADE
AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER ITEM CONSTITUTING A
PORTION THEREOF, AND THE ISSUER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR TO THE LOCATION, USE,
DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR
PURPOSE, CONDITION OR DURABILITY THEREOF, TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE
BORNE BY THE COMPANY. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE
IN THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF,
WHETHER PATENT OR LATENT, THE ISSUER SHALL HAVE NO RESPONSIBILITY OR LIABILITY
WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED AND
ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES OR
REPRESENTATIONS BY THE ISSUER, EXPRESS OR IMPLIED (TO THE EXTENT PERMITTED BY
APPLICABLE LAW), WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANOTHER LAW NOW OR HEREAFTER IN EFFECT OF OTHERWISE.
ARTICLE VII
PROJECT COVENANTS
Section 7.1. Insurance. The Company agrees to maintain, or cause to be
maintained, all necessary insurance with respect to the Project in accordance
with its customary insurance practices. The Issuer shall have no obligation to
maintain insurance with respect to the Project.
Section 7.2. Prohibition of Liens. The Company shall not, except as
permitted by Section 7.3, create or suffer to be created any lien or charge
upon the Project or any part thereof or upon the rents, contributions or
charges or receipts or revenues therefrom other than in favor of the Issuer or
the Trustee. The Company further agrees to pay or cause to be discharged or
make adequate provisions to satisfy and discharge, within 60 days or as soon
thereafter as is reasonable after the same shall accrue, any such lien or
charge and also all lawful claims or demands for labor, materials, supplies or
other charges which, if unpaid, might be or become a lien upon the Project or
any part thereof or the rents, contributions or charges or receipts or revenues
therefrom; provided, however, that nothing in this Section shall require the
Company to
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pay or cause to be discharged or make provision for any such lien or
charge so long as the validity thereof shall be contested in good faith.
Section 7.3. Maintenance, Repairs, Replacements and Removals. The Company
shall at all times during the term of this Agreement maintain, preserve and
keep the Project in good repair, working order and condition, excepting normal
wear and tear, and it will from time to time make or cause to be made all
necessary and proper repairs and replacements in connection with the
maintenance, repairs and replacements referred to in this Section. The Company
may, subject only to other applicable provisions of this Agreement, modify the
Project or make modifications, substitutions, additions, removals, or
improvements thereto from time to time, as it may deem to be desirable for its
uses and purposes, the cost of which modifications, substitutions, additions,
removals, or improvements shall be paid by the Company, and the same (other
than removals) shall be included under the terms of this Agreement as part of
the Project except for property owned by third parties which property will not
become a part of the Project. The Company will not permit any mechanics',
materialmen's or other liens to be established and remain against the Project
for labor or material furnished in connection with any modification,
substitutions, additions, removals, improvements, repairs, renewals or
replacement so made by it; provided, however, that nothing in this Section
shall require the Company to pay or cause to be discharged or make provision
for any such lien or charge so long as the validity thereof shall be contested
in good faith. Nothing contained in this Agreement shall limit the Company's
right to acquire, and to locate within the Project, such machinery, equipment,
tools, tooling, attachments and accessories thereto as the Company shall deem
appropriate, which machinery, equipment, tools, tooling, attachments and
accessories thereto; provided that such item, by its character, does not
constitute an addition, modification or improvement in an existing portion of
the Project, shall remain the property of the Company, the Company's bailor or
the lessor thereof to the Company, as the case may be.
Section 7.4. Project Inspection. The Issuer, the Trustee and their or
either of their duly authorized agents shall have the right at all reasonable
times to enter upon the Project and to examine and inspect the Project upon not
less than two Business Days' prior notice to the Company.
Section 7.5. Granting of Easements. If no Event of Default shall have
happened and be continuing, the Company may, notwithstanding anything contained
hereto to the contrary, at any time or times:
(a) Grant easements, licenses, rights of way (including the dedication of
public highways) and other rights or privileges in the nature of easements with
respect to any property included in the Project, free from the Indenture; or
(b) Release existing easements, licenses, rights of way and other rights
or privileges, all with or without consideration and upon such terms and
conditions as the Company shall determine, and the Issuer agrees that it will
execute and deliver and will direct the Trustee to execute and deliver any
instrument necessary or appropriate to confirm and grant or release any such
easement, license, right of way or privilege, or other right, upon receipt by
the Issuer and
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the Trustee of a copy of the instrument of grant or release and
a written notice signed by the Company requesting such instrument. If the
instrument of grant shall so provide, any such easement or right and rights of
such parties thereunder shall be superior to the rights of the Issuer and the
Trustee under this Agreement and the Indenture and shall not be affected by any
termination of this Agreement or default on the part of the Company hereunder.
Any payments or other consideration received by the Company for any such grant
shall be and remain the property of the Company.
Section 7.6. Compliance with Governmental Regulations. With respect to
the Project, the Company shall at all times comply with all applicable
requirements of law and with all applicable requirements of any agency, board
or commission, created under such laws or of any other duly constituted public
authority, and to the extent possible, will use the Project only for such
purposes as are lawful under the Act, provided, however, that the Company shall
be deemed in compliance with this Section so long as it is contesting in good
faith any such requirement by appropriate legal proceedings.
Section 7.7. Trustee's Right to Perform. If at any time the Company
defaults in the performance of any of its covenants under this Agreement, the
Trustee may (but shall not be obligated to) perform the same after giving the
Company ten days' notice of its intention to do so.
Section 7.8. Identification of Property. All property of a capital nature
belonging to the Company or others, as described in Section 7.3, shall be
suitably marked by the Company to identify the Company's ownership or ownership
by a third party.
Section 7.9. Use of Premises. To the extent permitted by law, the Issuer
convenants that it shall not attempt to impose upon the use or occupancy of the
Project any laws, ordinances, rules or regulations more burdensome or
restrictive than those in effect upon the date of this Agreement.
Section 7.10. Casualty; Condemnation. If the Project is damaged or
destroyed in whole or in part by casualty, whether or not covered by insurance,
or is taken, in whole or in part, by power of eminent domain, this Agreement
shall nevertheless continue in effect, without abatement or suspension of rent
for so long as this Agreement shall remain in effect and any proceeds with
respect thereto received by the Company from insurance providers or government
agencies shall be the Company's sole property.
Section 7.11. Taxes and Assessments. The Company shall have the right in
its own name and at its own expense to contest the validity or amount of any
imposition of any ad valorem taxes, by appropriate proceedings timely
instituted, provided the Company furnishes the Issuer and the Trustee written
notice of its intention to contest, diligently prosecutes such contest, and at
all times effectively stays or prevents any official or judicial sale of the
Project by reason of non-payment of any imposition. The Company agrees to and
shall hold the Issuer whole and harmless from any costs and expenses related to
any such contest, shall promptly pay any valid final adjudication enforcing any
imposition, and shall cause any final adjudication to be satisfied of record.
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The Company shall present to the Issuer proof reasonably satisfactory to
the Issuer of the payment of taxes and utility charges at such times as the
Issuer may reasonably request.
ARTICLE VIII
ASSIGNMENT OR LEASE
Section 8.1. Assignment or Lease. The Company may assign its rights and
obligations under this Agreement, and/or the Company may lease the Project as a
whole or in part; provided, however, that (a) no such assignment or lease shall
relieve the Company from primary liability for any of its obligations under
this Agreement, (b) each assignee of the Company's interest in this Agreement
shall assume the Company's obligations under this Agreement to the extent of
the interest assigned, (c) the Company shall, not less than 30 days prior to
the effective date of any such assignment or lease, furnish or cause to be
furnished to the Issuer and the Trustee a true and complete copy of each such
assignment or lease contract and, as applicable, assumption of obligations, and
(d) prior to any assignment or lease, the Company shall have caused to be
delivered to the Issuer and the Trustee an opinion of Bond Counsel to the
effect that such assignment or lease will not cause interest on the Bonds to be
includable in the gross income of the owners thereof for purposes of Federal
income taxation.
Section 8.2. Issuer's Assignment. The Issuer will assign its rights under
and interest in this Agreement (except for the Unassigned Rights) to the
Trustee pursuant to the Indenture as security for the payment of the Bonds.
Otherwise, the Issuer will not sell, assign or otherwise dispose of its rights
under or interest in this Agreement nor create or permit to exist any lien,
encumbrance or other security interest in or on such rights or interest.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default; Remedies. The occurrence of any Event of
Default under the Indenture shall constitute an Event of Default under this
Agreement for so long as such Event of Default under the Indenture is
continuing. Whenever any Event of Default has occurred and is continuing, the
Trustee may take whatever action may appear necessary or desirable to collect
the payments then due and to become due or to enforce performance of any
agreement of the Company in this Agreement. Upon any acceleration of the Bonds
under the Indenture, all amounts payable under section 4.2(a) shall be
immediately due and payable without the necessity of any action by any party.
In addition, if an Event of Default is continuing with respect to any of
the Unassigned Rights, the Issuer may take whatever action may appear necessary
or desirable to it to enforce the Company's performance of such Unassigned
Rights.
Nothing in this Agreement shall be construed to permit the Issuer, the
Trustee, any Bondholder or any receiver in any proceeding brought under the
Indenture to take possession of
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or exclude the Company from possession of the Project by reason of the
occurrence of an Event of Default.
Any amounts collected pursuant to action taken under this Section (except
for amounts payable directly to the Issuer or the Trustee pursuant to Section
4.3, 8.2 and 9.3) shall be applied in accordance with the Indenture.
Section 9.2. Delay Not Waiver; Remedies. A delay or omission by the
Issuer or the Trustee in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 9.3. Attorneys' Fees and Expenses. If the Company should default
under any provision of this Agreement and the Issuer should employ attorneys or
incur other expenses to collect any amounts due under this Agreement, or to
enforce the performance of any other duties provided for under this Agreement,
the Company will on demand pay to the Issuer the reasonable fees of such
attorneys and such other reasonable expenses so incurred by the Issuer.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices or other communications hereunder
shall be sufficiently given and shall be deemed given when delivered or mailed
as provided in the Indenture.
Section 10.2. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Issuer, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Section 6.1.
Section 10.3. Severability. If any provision of this Agreement shall be
determined to be unenforceable at any time, that shall not affect any other
provision of this Agreement or the enforceability of that provision at any
other time.
Section 10.4. Amendments. After the issuance of the Bonds, this Agreement
may be effectively modified, amended, supplemented or terminated only with the
written consent of the Trustee and the Bank, and any such modification,
amendment or supplement must be in accordance with the provisions of the
Indenture.
Section 10.5. Company's Right To Perform Issuer's Agreements. The Issuer
irrevocably authorizes and empowers the Company to perform in the name and on
behalf of the Issuer any agreement made by the Issuer in this Agreement or in
the Indenture which the Issuer fails to perform in a timely fashion if the
continuance of such failure could result in an Event of Default. This Section
does not require the Company to perform any agreement of the Issuer.
20
<PAGE> 24
Section 10.6. Expiration of Bank's Rights. It is expressly understood
that any and all provisions of this Agreement for notices or the furnishing of
documents, information or reports to the Bank and the necessity of obtaining
the Bank's consent to any modifications, amendments or supplements to this
Agreement or waivers of any of its provisions, shall cease and determine and be
of no further force and effect when (a) the Letter of Credit is not in effect
and no amounts are due and payable by the Company to the Bank under the
Reimbursement Agreement, or (b) the Bank is in default on any of its
obligations to pay drawings under the Letter of Credit submitted in conformity
with the terms of the Letter of Credit.
Section 10.7. Investment of Funds. The Issuer hereby gives its express
written authority to the Company to direct the investment of monies held by the
Trustee pursuant to the Indenture. This authority is in accordance with
Section 4.03 of the Indenture.
Section 10.8. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina.
Section 10.9. Company's Assent to Indenture. By its execution of this
Agreement, the Company hereby signifies its acceptance of its responsibilities
under the Indenture and agrees to be bound thereby.
Section 10.10. Captions; References to Sections. The captions in this
Agreement are for convenience only and do not define or limit the scope or
intent of any provisions or Sections of this Agreement. References to Articles
and Sections are to the Articles and Sections of this Agreement, unless the
context otherwise requires.
Section 10.11. Complete Agreement. This Agreement represents the entire
agreement between the Issuer and the Company with respect to its subject
matter.
Section 10.12. Termination. When no Bonds are Outstanding under the
Indenture and the Indenture is deemed discharged pursuant to Article X thereof,
the Company and the Issuer shall not have any further obligations under this
Agreement; provided that the Company's covenants in Sections 5.4 and 7.11 and
the provisions of Section 4.4 with respect to mandatory redemption of the Bonds
shall survive so long as any Bond remains unpaid.
Section 10.13. No Third Party Beneficiary. The parties agrees that it is
not intended by any of the provisions of any part of this Agreement to
establish in favor of the public or any member thereof, other than as expressly
provided in this Agreement, including the assignment of the Issuer's rights
under this Agreement to the Trustee as described in Section 8.2, the rights of
a third party beneficiary under this Agreement, as to authorize any one not a
party to this Agreement to maintain a suit for personal injuries or property
damage pursuant to the terms or provisions of this Agreement. The duties,
obligations and responsibilities of the parties to this Agreement with respect
to third parties shall remain as imposed by law.
Section 10.14. Counterparts. This Agreement may be signed in several
counterparts, including separate counterparts. Each will be an original, but
all of them together constitute the same instrument.
21
<PAGE> 25
THE MECKLENBURG COUNTY
INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING
AUTHORITY
By /s/ Edward P. Pickett
-------------------------
Chairman
[Seal]
Attest:
By /s/ Linda Stiwalt
------------------------
Assistant Secretary
GRIFFITH MICRO SCIENCE, INC.
By /s/ Brian J. Tuttle
-------------------------
Treasurer
[Seal]
Attest:
By /s/ James S. Legg
---------------------
Secretary
[LOAN AGREEMENT DATED AS OF NOVEMBER 1, 1995]
22
<PAGE> 26
EXHIBIT A
LEGAL DESCRIPTION
BEING all of Tract 3 of Withers Cove Business Park, Phase I as shown on the
plat thereof, recorded at Map Book 26, page 177, of the Mecklenburg County
Registry and more particularly described as follows:
BEGINNING at a found iron pin at the northern right of way margin
of Withers Cove Park Drive, said iron being the northeast corner
of Tract 2 as recorded in Map Book 25 page 391 of the Mecklenburg
County Registry; thence with the easterly line of Tract 2, N
36-50-34 W a distance of 670.78 feet to a set iron pin; thence
with a new line N 53-09-26 E a distance of 251.33 feet to a set
iron pin; thence with a new line S 36-50-34 E a distance of 670.78
feet to a set iron pin at the northern margin of the right of way
of Withers Cove Park Drive; thence with the right of way S
53-09-26 W a distance of 251.33 feet to the point of beginning,
containing 3.870 acres. The same being a portion of the property
conveyed from First Westinghouse Equities Corporation, a Delaware
corporation, to Withers cove Association Limited Partnership, a
Delaware limited partnership, recorded 10-15-90 in Deed Book 6373,
page 393 of the Mecklenburg County Registry.
23
<PAGE> 27
EXHIBIT B
PROJECT DESCRIPTION
The Project consists of constructing certain leasehold improvements and
acquiring and installing certain equipment. The Project consists of
constructed improvements to a new, leased 35,000 square foot manufacturing
facility located in the Withers Cove Business Park in Mecklenburg County, North
Carolina, and the purchase and installation of machinery, equipment, and other
personal property to be used in connection therewith. The Project will be used
primarily as an ethylene oxide gas contract sterilization facility for the
sterilization of prepackaged medical products and related laboratory services.
The initial configuration of the Project will include, but not be limited to,
pretreatment cells, two sterilization chambers, degassing/aeration cells, a
vacuum pump system, ethylene oxide abatement systems and racking systems.
24
<PAGE> 1
EXHIBIT 10.9(c)
================================================================================
REIMBURSEMENT AGREEMENT
BETWEEN
ABN AMRO BANK N.V.
AND
GRIFFITH MICRO SCIENCE, INC.
DATED AS OF NOVEMBER 1, 1995
================================================================================
<PAGE> 2
REIMBURSEMENT AGREEMENT
(This Table of Contents is not a part of
this Reimbursement Agreement
and is only for
convenience of reference)
<TABLE>
<CAPTION>
SECTION DESCRIPTION PAGE
<S> <C> <C>
ARTICLE ONE DEFINITIONS............................................................... 1
Section 1.1 Definitions............................................................... 1
ARTICLE TWO LETTER OF CREDIT.......................................................... 10
Section 2.1. Issuance of Letter of Credit.............................................. 10
Section 2.2. Letter of Credit Drawings................................................. 10
Section 2.3. Reimbursement of Certain Liquidity Drawings under
the Letter of Credit...................................................... 10
Section 2.4. Reimbursement of Drawings Other Than Liquidity
Drawings Creating Liquidity Advances under the Letter
of Credit................................................................. 11
Section 2.5 Fees...................................................................... 11
Section 2.6. Method of Payment....................................................... 11
Section 2.7. Substitute Letter of Credit............................................... 12
Section 2.8. Computation of Interest and Fees.......................................... 12
Section 2.9. Payment Due on Non-Business Day to Be Made on
Next Business Day......................................................... 12
Section 2.10. Late Payments............................................................. 12
Section 2.11. Source of Funds........................................................... 12
Section 2.12. Extension of Stated Expiration Date....................................... 12
Section 2.13. Amendments upon Extension................................................. 12
ARTICLE THREE CONDITIONS PRECEDENT...................................................... 13
Section 3.1. Conditions Precedent to Issuance of Letter of Credit...................... 13
Section 3.2. Conditions Precedent to Liquidity Advances................................ 14
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES............................................ 15
Section 4.1. Organization and Qualification............................................ 15
Section 4.2 Margin Stock.............................................................. 15
Section 4.3. Financial Reports......................................................... 15
Section 4.4. Litigation................................................................ 16
Section 4.5. Taxes..................................................................... 16
Section 4.6. Approvals................................................................. 16
Section 4.7. ERISA..................................................................... 16
Section 4.8. Investment Company........................................................ 16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4.9. Public Utility Holding Company......................................... 17
Section 4.10. Incorporation of Representations and Warranties
by Reference........................................................... 17
ARTICLE FIVE COVENANTS.............................................................. 17
Section 5.1. Corporate Existence, Etc............................................... 17
Section 5.2. Maintenance of Properties.............................................. 17
Section 5.3. Compliance with Laws; Taxes and Assessments............................ 17
Section 5.4. Insurance.............................................................. 18
Section 5.5. Reports................................................................ 18
Section 5.6. Inspection............................................................. 18
Section 5.7. Related Documents...................................................... 19
Section 5.8. Optional Redemption of Bonds........................................... 19
Section 5.9. Nature of Business..................................................... 19
Section 5.10. Limitation on Liens.................................................... 19
Section 5.11. Mergers, Consolidations and Sales of Assets............................ 21
Section 5.12. Guaranties............................................................. 21
ARTICLE SIX DEFAULTS............................................................... 21
Section 6.1. Events of Default and Remedies......................................... 21
Section 6.2. Remedies............................................................... 24
ARTICLE SEVEN MISCELLANEOUS.......................................................... 24
Section 7.1. No Deductions.......................................................... 24
Section 7.2. Right of Setoff........................................................ 26
Section 7.3. Indemnity.............................................................. 27
Section 7.4. Obligations Absolute................................................... 27
Section 7.5. Liability of the Bank.................................................. 27
Section 7.6. Participants........................................................... 28
Section 7.7. Survival of this Agreement............................................. 28
Section 7.8 Modification of this Agreement....................................... 28
Section 7.9. Waiver of Rights by the Bank........................................... 28
Section 7.10. Severability........................................................... 29
Section 7.11. Governing Law.......................................................... 29
Section 7.12. Notices................................................................ 29
Section 7.13. Successors and Assigns................................................. 30
Section 7.14. Taxes and Expenses..................................................... 30
Section 7.15. Headings............................................................... 30
Section 7.16. Counterparts........................................................... 31
Section 7.17. Entire Agreement....................................................... 31
Signature........................................................................................... 31
</TABLE>
ii
<PAGE> 4
REIMBURSEMENT AGREEMENT
Dated as of November 1, 1995
Griffith Micro Science, Inc.
One Griffith Center
Alsip, Illinois 60658-3495
Ladies and Gentlemen:
The Applicant (such term and each other capitalized term used herein
having the meaning set forth in Article One hereof) desires to secure a source
of funds to be devoted exclusively to the payment by the Trustee, when and as
due, of the principal of and interest on the Bonds, and has applied to the Bank
for issuance by the Bank of the Letter of Credit in an Original Stated Amount
of $4,555,480. Further, the Bank has been requested by the Applicant to
provide a reimbursement facility for drawings under the Letter of Credit and to
provide such facility in the following manner and subject to the following
terms and conditions. Accordingly, the Applicant and the Bank hereby agree as
follows:
ARTICLE ONE
DEFINITIONS
Section 1.1. Definitions. (a) As used in this Agreement:
"Acceleration Drawing" means a drawing under the Letter of Credit
resulting from the presentation of a certificate in the form of Exhibit F to
the Letter of Credit.
"Acquired Foreign Restricted Subsidiary" shall mean any Acquired
Restricted Subsidiary which is organized under the laws of any jurisdiction
outside of the United States of America.
"Acquired Restricted Subsidiary" shall mean any Person which (a) either
(i) becomes, after the date hereof, a Subsidiary through the purchase by
Griffith Labs or another Restricted Subsidiary of all or a portion of the
voting stock of such Person or (ii) is organized by Griffith Labs or any
Restricted Subsidiary to acquire all or part of the property or operations of a
Person which is not on the date hereof a Restricted Subsidiary and (b) is
designated by Griffith Labs as a Restricted Subsidiary.
"Adjusted Consolidated Current Liabilities" shall mean as of the date of
any determination thereof, Consolidated Current Liabilities minus the Excess
Current Debt outstanding; so long as on each day that such Excess Current Debt
is outstanding the Griffith Labs could incur Funded Debt without creating an
Event of Default under Section 6.1(o) hereof in an amount equal to such Excess
Current Debt on each determination date hereunder.
"Adjusted Consolidated Tangible Net Worth" shall mean as of the date of
any determination thereof (a) the sum of preferred stock, common stock,
additional paid-in capital,
<PAGE> 5
retained earnings and Minority Interests (other than Restricted Minority
Interests), if any, less treasury stock, all determined in accordance with GAAP,
minus (b) Excess Intangible Assets. For purposes of calculations pursuant to
this Agreement any increase or decrease in stockholders' equity attributable to
a foreign currency translation adjustment shall be excluded.
"Affiliate" means, with respect to any Person (other than a Restricted
Subsidiary), any Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person. A Person shall be deemed to control another Person for the
purposes of this definition if such first Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, common directors, trustees or officers, by contract or otherwise.
"Agreement" means this Reimbursement Agreement, as amended and
supplemented.
"Applicant" means Griffith Micro Science, Inc., a Delaware corporation and
its successors and assigns.
"Available Amount" shall have the meaning set forth in the Letter of
Credit.
"Bank" - means ABN AMRO Bank N.V., as issuer of the Letter of Credit, and
its successors and assigns.
"Bond Documents" means the Indenture, the Loan Agreement, the Bond
Purchase Agreement, the Remarketing Agreement, the Official Statement and the
Bonds.
"Bond Purchase Agreement" means the Bond Purchase Agreement dated as of
November 1, 1995 among First Chicago Capital Markets, Inc., the Applicant and
the Issuer.
"Bonds" means the $4,500,000 aggregate principal amount of the Issuer's
Industrial Development Revenue Bonds, Series 1995 (Griffith Micro Science, Inc.
Project) pertaining to the Project.
"Business Day" shall have the meaning set forth in the Letter of Credit.
"Cap Interest Rate" shall have the meaning set forth in the Letter of
Credit.
"Capital Lease" means any lease of Property which in accordance with GAAP
would be required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease as determined in
accordance with GAAP.
"Change of Control" means each and every issue, sale or other disposition
of shares of any class or classes of capital stock of Griffith Labs or Griffith
Laboratories, Inc., whether by means of an initial public offering or
otherwise, which results in any Acquirer, other than the Griffith Family Group,
beneficially owning or controlling, directly or indirectly, more than 50%
2
<PAGE> 6
(by number of votes) of the voting stock of Griffith Labs or Griffith
Laboratories, Inc. As used herein, the term "Acquirer" shall mean one or more
Persons acting as a partnership, limited partnership, company, syndicate or
other group for the purpose of acquiring, holding or disposing of voting stock,
together with all affiliates and associates (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended) of such Persons. As used herein,
the term "Griffith Family Group" shall mean (i) Dean L. Griffith; (ii) the
spouses, lineal descendants and spouses of the lineal descendants of Dean L.
Griffith; (iii) trusts created in whole or in substantial part for the benefit
of any or all of the Persons named in clauses (i) and (ii); and (iv) the estates
or legal representatives of the Persons named in clauses (i) and (ii).
"Closing Date"-means the date on which the Letter of Credit is issued.
"Code"-means the Internal Revenue Code of 1986, and any successor statute
thereto.
"Consolidated Current Assets" and "Consolidated Current Liabilities" shall
mean as of the date of any determination thereof such assets and liabilities of
Griffith Labs and its Restricted Subsidiaries on a consolidated basis as shall
be determined in accordance with GAAP to constitute current assets and current
liabilities, respectively.
"Consolidated Funded Debt" shall mean all Funded Debt of Griffith Labs and
its Restricted Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
"Consolidated Total Assets" shall mean as of the date of any determination
thereof the total assets of Griffith Labs and its Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Capitalization" shall mean as of the date of any
determination thereof the sum of Adjusted Consolidated Tangible Net Worth plus
Consolidated Funded Debt.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Applicant or any Subsidiary, are treated as a single
employer under Section 414 of the Code.
"Current Debt" of any Person shall mean as of the date of any
determination thereof (a) all Indebtedness for borrowed money of any Person
other than Funded Debt of such Person and (b) Guarantees by such Person of
Current Debt of others.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" is defined in Section 6.1 hereof.
"Excess Current Debt" shall mean as of the date of any determination
thereof that portion of Current Debt outstanding which (a) does not constitute
a current maturity of Funded Debt in accordance with GAAP, (b) does not
constitute Current Debt of Griffith Labs to any Subsidiary or of any Restricted
Subsidiary to Griffith Labs or to a wholly owned Restricted
3
<PAGE> 7
Subsidiary thereof and (c) is in excess of $13,000,000 in aggregate principal
amount. Any Excess Current Debt which is included as Consolidated Funded Debt
under Section 6.1(o) shall continue to be deemed to be Consolidated Funded Debt
until such Excess Current Debt shall have been paid in full.
"Excess Intangible Assets" shall mean as of the date of determination, the
amount, if any, by which the book value of all assets that are properly
classified as "intangible assets" in accordance with GAAP acquired by Griffith
Labs and its Restricted Subsidiaries after the date hereof exceeds 5% of
Consolidated Total Assets as reflected on the most recent consolidated balance
sheet of Griffith Labs.
"Excess Transferred Property" shall mean as of the date of each incurrence
of Unsupported Debt by any Acquired Foreign Restricted Subsidiary, the amount,
if any, by which the aggregate fair market value of investments or other
transfers of Property of Griffith Labs or any Restricted Subsidiary at any time
to such Acquired Foreign Restricted Subsidiary exceeds the greater of (a)
$5,000,000 and (b) 5% of Adjusted Consolidated Tangible Net Worth as reflected
on the most recent consolidated balance sheet of Griffith Labs. Excess
Transferred Property shall be valued as of the date of investment or other
transfer thereof to an Acquired Foreign Restricted Subsidiary.
"Funded Debt" of any Person shall mean (i) all Indebtedness for borrowed
money of such Person for or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of one or more than
one year from the date of origin thereof (or which is renewable or extendible
at the option of the obligor for a period or periods more than one year from
the date of origin), but excluding all payments in respect thereof that are
required to be made within one year from the date of any determination of
Funded Debt, provided the obligation to make such payments shall constitute a
current liability of the obligor under GAAP, (ii) all Capitalized Lease
Obligations of such Person, (iii) all Guarantees by such Person of Funded Debt
of others and (iv) all Restricted Minority Interests.
"GAAP" means generally accepted accounting principles in the United States
as in effect from time to time, applied by the Applicant and its Subsidiaries
on a basis consistent with the Applicant's most recent financial statements
furnished to the Bank pursuant to Section 5.5 hereof.
"Governmental Approval" means an authorization, consent, approval,
license, or exemption of, registration or filing with, or report to any
Governmental Authority.
"Governmental Authority" means any nation or government, any state,
department, agency or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government, and any corporation or other
entity owned or controlled (through stock or capital ownership or otherwise) by
any of the foregoing.
"Griffith Labs Guaranty" means the Guaranty issued by Griffith
Laboratories Worldwide, Inc. ("Griffith Labs") in favor of the Bank dated on or
about the date hereof.
4
<PAGE> 8
"Guarantees" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet conditions
or otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under this Agreement: (i) a Guaranty in respect of any Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to the principal amount
of such Indebtedness for borrowed money which has been guaranteed, and a
Guaranty in respect of any other obligation or liability or any dividend shall
be deemed to be Indebtedness equal to the maximum aggregate amount of such
obligation, liability or dividend, (ii) the amount of any Guaranty and the
amount of Indebtedness guaranteed shall be counted only once in any such
computation and (iii) any Restricted Upstream Guaranty shall be counted as a
Guaranty.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for borrowed money or which have
been incurred in connection with the acquisition of Property, (ii) obligations
secured by any Lien upon Property owned by such Person, even though such Person
has not assumed or become liable for the payment of such obligations, (iii)
obligations created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of Property, (iv) Capitalized Lease Obligations and (v) Guaranties of
obligations of others of the character referred to in this definition; provided
that "Indebtedness" shall in any event exclude (x) any unfunded obligations of
the Company with respect to its retirement benefit plans and (y) any Guaranty
of an obligation which is itself included in "Indebtedness" for purposes of any
computation, test or covenant herein unless such Guaranty constitutes a
Restricted Upstream Guaranty, in which case the primary obligation to which
such Restricted Upstream Guaranty relates shall be excluded from
"Indebtedness".
"Indenture" means the Indenture of Trust dated as of the date hereof
between the Issuer and the Trustee, relating to the Bonds, as amended and
supplemented from time to time.
"Issuer" means the Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority and its successors and assigns.
5
<PAGE> 9
"Letter of Credit" means the irrevocable transferable direct pay letter of
credit issued by the Bank for the account of the Applicant in favor of the
Trustee in the form of Appendix I hereto with appropriate insertions, as
amended.
"Lien" means (i) any interest in Property which secures an obligation owed
to a Person other than the owner of such Property, including, without
limitation, any such interest arising from a mortgage, charge, pledge, security
agreement, conditional sale or trust receipt, or arising from a lease,
consignment or bailment given for security purposes, (ii) any encumbrance or
charge upon such Property which does not secure such an obligation, and (iii)
any exception to or defect in the title to or ownership interest in such
Property.
"Liquidity Advance" is defined in Section 2.3(a) hereof.
"Liquidity Drawing" means a drawing under the Letter of Credit resulting
from the presentation of a certificate in the form of Exhibit E to the Letter
of Credit.
"Loan Agreement" means the Loan Agreement dated as of the date hereof
between the Issuer and the Applicant, relating to the Bonds, as amended and
supplemented from time to time.
"Minority Interests" shall mean any shares of stock of any class of a
Restricted Subsidiary (other than directors' or other qualifying shares as
required by law) that are not owned by Griffith Labs and/or one or more of its
Restricted Subsidiaries. Minority Interests shall be valued in accordance with
GAAP.
"Moody's" means Moody's Investors Service.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of
August 30, 1994 re: $45,000,000 8.30% Senior Notes, Series A, Due August 31,
2009 among Griffith Laboratories, Inc., Nationwide Life Insurance Company,
Employers Life Insurance Company of Wausau, Phoenix Home Life Mutual Insurance
Company, Principal Mutual Life Insurance Company and Pan American Life
Insurance Company.
"Obligations" means the fees relating to the Letter of Credit, any and all
obligations of the Applicant to reimburse the Bank for any drawings under the
Letter of Credit, and all other obligations of the Applicant to the Bank
arising under or in relation to this Agreement.
"Official Statement" means the Official Statement dated November 14, 1995,
relating to the Bonds and the Project.
"Original Stated Amount" is defined in Section 2.1 hereof.
"Outstanding" or "Bonds Outstanding" shall have the same meaning herein as
in the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation, and its successors
and assigns.
6
<PAGE> 10
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
"Plan" means, with respect to the Applicant and each Subsidiary at any
time, an employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group of which the Applicant or such Subsidiary is a
part, (ii) is maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group of which the Applicant or such
Subsidiary is a part is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
or (iii) under which a member of the Controlled Group of which the Applicant or
such Subsidiary is a part has any liability, including any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA at any time during the preceding five years or by reason of being deemed
a contributing sponsor under Section 4069 of ERISA.
"Potential Default" means an event or condition which, but for the lapse
of time or the giving of notice, or both, would constitute an Event of Default.
"Prime Rate" means for any day the greater of :
(i) the rate per annum equal to the corporate base rate of interest
for U.S. dollar loans announced by the Bank from time to time, as in
effect on such day, with any change in the Prime Rate resulting from a
change in said corporate base rate to be effective as of the date of the
relevant change in said corporate base rate; or
(ii) the sum of (x) the rate determined by the Bank to be the
average (rounded upwards, if necessary, to the next higher 1/100 of 1%)
of the rates per annum quoted to the Bank at approximately 10:00 a.m.
(Chicago time) (or as soon thereafter as is practicable) on such day (or,
if such day is not a Business Day, on the immediately preceding Business
Day) by two or more Federal funds brokers selected by the Bank for the
sale to the Bank at face value of Federal funds in an amount equal or
comparable to the principal amount owed to the Bank for which such rate
is being determined, plus (y) 1/2 of 1% (0.50%).
"Project" means the industrial development facilities located in the
unincorporated area of Mecklenburg County, North Carolina being financed by the
Bonds.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, whether now owned or
hereafter acquired.
"Related Documents" means this Agreement, the Letter of Credit, the Bond
Documents and the Griffith Labs Guaranty but shall not include the Official
Statement.
7
<PAGE> 11
"Remarketing Agent" means First Chicago Capital Markets, Inc., as
Remarketing Agent under the Indenture and the Remarketing Agreement, and its
successors and assigns pursuant thereto.
"Remarketing Agreement" means the Remarketing Agreement dated as of the
date hereof, between the Remarketing Agent and the Applicant, as amended and
supplemented, and any successor agreement thereto entered into by the
Applicant, and a successor Remarketing Agent.
"Restricted Minority Interests" shall mean all Minority Interests created
as a result of the issuance, sale, transfer or other disposition of stock of
Restricted Subsidiaries other than Unrestricted Minority Interests. Restricted
Minority Interests shall be valued as of the date of creation of such
Restricted Minority Interest.
"Restricted Subsidiary" shall mean any Subsidiary of Griffith Labs which
is designated as a Restricted Subsidiary in accordance with the provisions of
Section 5.17 of the Note Purchase Agreement and as listed in Annex A hereto
from time to time as Restricted Subsidiaries. Should the Note Purchase
Agreement be terminated, the Applicant and Griffith Labs shall continue to
follow the designation provisions of Section 5.17 which shall be deemed to
continue in effect for the purposes of this Agreement.
"Restricted Upstream Guaranty" shall mean any Guaranty by an Acquired
Foreign Restricted Subsidiary of Indebtedness of Griffith Labs or any
Subsidiary (other than such Acquired Foreign Restricted Subsidiary or a
subsidiary of such Acquired Foreign Restricted Subsidiary) given after the date
hereof to a Person which is not a Holder (an "Other Lender"); provided that a
Restricted Upstream Guaranty shall not include any Guaranty if concurrently
with the giving of such Guaranty to the Other Lender, such Acquired Foreign
Restricted Subsidiary shall either (a) cause the Other Lender to enter into an
intercreditor agreement with the Bank, satisfactory to the Bank in form and
substance, providing for the equal and ratable sharing between the Bank and the
Other Lender of all recoveries under such Guaranty (including any collateral
security for such Indebtedness granted to the Other Lender) or (b) give to the
Bank (i) a substantially identical Guaranty of the Obligations hereunder and
(ii) an unqualified opinion of counsel admitted to practice law in the
jurisdiction in which such Acquired Foreign Restricted Subsidiary is organized
to the effect that the enforceability of the Guaranty of the Obligations will
not be impaired to any greater extent than the Guaranty given to the Other
Lender under the laws of such jurisdiction in the event enforcement of such
Guaranties is sought.
"Significant Restricted Subsidiary" shall mean as of any date of
determination thereof any Restricted Subsidiary having total assets equal to at
least 5% of Consolidated Total Assets or whose operating income for the fiscal
year of Griffith Labs immediately preceding the date of any determination
thereof was equal to at least 10% of the operating income of Griffith Labs and
its consolidated Subsidiaries, as shown on the most recent consolidated
statement of earnings of Griffith Labs.
"S&P" means Standard & Poor's Ratings Group.
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"Stated Expiration Date" shall have the meaning set forth in the Letter of
Credit.
"Subsidiary" means, as to the Applicant or Griffith Labs, as the case may
be, any corporation or other entity of which more than 50% of the outstanding
stock or comparable equity interests entitled to vote in the election of the
board of directors or similar governing body of such entity is directly or
indirectly owned by the Applicant or Griffith Labs, as the case may be, by one
or more Subsidiaries or by the Applicant or Griffith Labs and one or more
Subsidiaries.
"Termination Date" shall have the meaning set forth in the Letter of
Credit.
"Trustee" means Harris Trust and Savings Bank, as Trustee under the
Indenture, and any successor trustee thereunder.
"Underwriter" means First Chicago Capital Markets, Inc.
"Unfunded Vested Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested nonforfeitable
accrued benefits under such Plan exceeds (ii) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the
PBGC or such Plan under Title IV of ERISA.
"Unrestricted Minority Interests" shall mean Minority Interests created as
a result of the issuance, sale, transfer or other disposition of stock of
Restricted Subsidiaries so long as the aggregate fair market value of such
stock together with all other stock of Restricted Subsidiaries issued,
transferred or otherwise disposed of from and after the date of this Agreement
does not exceed the greater of (i) $5,000,000, or (ii) 5% of Adjusted
Consolidated Tangible Net Worth. Unrestricted Minority Interests shall be
valued as of the date of creation of such Minority Interest.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"Unsupported Debt" shall mean Funded Debt of an Acquired Foreign
Restricted Subsidiary which (a) constitutes the obligation (whether as obligor
or guarantor) only of such Acquired Foreign Restricted Subsidiary and its
subsidiaries and (b) which, if secured, is secured by no Property of the
Company or any Restricted Subsidiary except such Acquired Foreign Restricted
Subsidiary and its subsidiaries.
"Welfare Plan" means a "welfare plan," as such term is defined in Section
3(1) of ERISA.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Any capitalized terms used herein which
are not specifically defined herein shall have the same meanings herein as in
the Indenture. All references in this Agreement to
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times of day shall be references to Chicago time unless otherwise expressly
provided herein. Unless otherwise inconsistent with the terms of this
Agreement, all accounting terms shall be interpreted, all accounting
determinations hereunder shall be made and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE TWO
LETTER OF CREDIT
Section 2.1. Issuance of Letter of Credit. Upon the terms, subject to the
conditions and relying upon the representations and warranties set forth in
this Agreement or incorporated herein by reference, the Bank agrees to issue
the Letter of Credit. The Letter of Credit shall be in the original stated
amount of $4,555,480 (the "Original Stated Amount"), which is the sum of (i)
the highest principal amount of Bonds which may from time to time be
outstanding, plus (ii) interest thereon at the Cap Interest Rate for a period
of forty five (45) days.
Section 2.2. Letter of Credit Drawings. The Trustee is authorized to make
drawings under the Letter of Credit in accordance with the terms thereof. The
Applicant hereby directs the Bank to make payments under the Letter of Credit
in the manner therein provided. The Applicant hereby irrevocable approves
reductions and reinstatements of the Available Amount as provided therein.
Section 2.3. Reimbursement of Certain Liquidity Drawings under the Letter
of Credit; Prepayment; Interest. (a) If the conditions precedent contained in
Section 3.2 hereof are satisfied at the time of payment by the Bank of any
Liquidity Drawing, each Liquidity Drawing made under the Letter of Credit shall
constitute an advance ("Liquidity Advance") to the Applicant. The Applicant
promises to pay to the Bank each Liquidity Advance on the earliest of (i) the
date on which any bonds purchased with funds disbursed under the Letter of
Credit in connection with such Liquidity Drawing and held by the Applicant or
by the Trustee, or its agent, for the account of the Applicant, are redeemed or
canceled pursuant to the Indenture, (ii) the date on which any Bonds purchased
by the Applicant or the Trustee, or its agent, for the account of the
Applicant, with funds disbursed under the Letter of Credit are remarketed
pursuant to the Indenture, (iii) the date on which the Letter of Credit is
replaced by a substitute letter of credit pursuant to the terms of the
Indenture, (iv) the Termination Date and (v) the Stated Expiration Date.
Subject to Section 2.10 hereof, the Applicant also promises to pay to the Bank
interest on the unpaid principal amount of each Liquidity Advance from the date
such Liquidity Advance is made until it is paid in full as provided herein, at
a rate per annum equal to the Prime Rate from time to time in effect, payable
quarterly in arrears and on the date the Liquidity Advances is payable as
herein provided. Any Liquidity Advance not paid when due shall bear interest
at the rate per annum specified in Section 2.10 hereof,
(b) Any Liquidity Advance created pursuant to paragraph (a) above may be
prepaid in whole or in part at any time without premium or penalty on any
Business Day on not less than one Business Day's prior written notice.
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(c) Upon the Bank's receipt of any payment or prepayment of any Liquidity
Advance, the amount of such Liquidity Advance shall be reduced by the
amount of such payment or prepayment.
Section 2.4. Reimbursement of Drawings Other Than Liquidity Drawings
Creating Liquidity Advances under the Letter of Credit. The Applicant agrees
to reimburse the Bank for the full amount of any drawing other than a Liquidity
Drawing immediately upon payment by the Bank of such drawing. The Applicant
agrees to reimburse the Bank for the full amount of any Liquidity Drawing if
the conditions precedent contained in Section 3.2 hereof are not satisfied
immediately upon payment by the Bank of each such drawing and on the date of
each such payment. If the Applicant does not make such reimbursement on such
date, such reimbursement obligation shall bear interest at the rate per annum
specified in Section 2.10 hereof. The Bank will provide prompt notice to the
Applicant of the amount of each drawing made under the Letter of Credit
provided that the failure to give such notice or any error contained in such
notice shall not prejudice the Bank's rights hereunder.
Section 2.5. Fees. The Applicant hereby agrees to pay, or cause to be
paid, to the Bank:
(a) on the Closing Date for the period ending on December 31, 1995
and in advance on the first day of each January, April, July and October
occurring thereafter to the Termination Date, a non-refundable fee on the
Available Amount on each such payment date at a rate per annum equal to
three-quarters of one percent (3/4 of 1%); and
(b) on the date of each drawing under the Letter of Credit, a drawing
fee of $150.
Section 2.6. Method of Payment; etc. All payments to be made by the
Applicant under this Agreement shall be made at the Chicago office of the Bank
not later than 2:00 p.m. on the date when due and shall be made in lawful money
of the United States of America in freely transferable and immediately
available funds. All payments under this Agreement shall be made without
counterclaim, setoff, condition or qualification, and free and clear of and
without deduction or withholding for or by reason of any present or future
taxes, levies, imposts, deductions or charges of any nature whatsoever; in the
event that the Applicant is compelled by law to make any such deduction or
withholding, the Applicant shall nevertheless pay to the Bank such amounts as
will result in the receipt by the Bank of the sum it would have received had no
such deduction or withholding been required to be made.
Section 2.7. Substitute Letter of Credit. The Letter of Credit may be
replaced at any time so long as (i) the Bank shall have received payment of an
amount equal to the principal amount of all Pledged Bonds previously purchased
in accordance with Section 3.09(b) of the Indenture, (ii) all outstanding
Obligations are paid in full, and (iii) the Letter of Credit is surrendered and
cancelled by the Trustee.
Section 2.8. Computation of Interest and Fees. All computations of
interest and fees payable by the Applicant under this Agreement shall be made
on the basis of a 360-day year and
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actual days elapsed. Interest shall accrue during each period during which
interest is computed from and including the first day thereof to but excluding
the last day thereof.
Section 2.9. Payment Due on Non-Business Day to Be Made on Next Business
Day. If any sum becomes payable pursuant to this Agreement on a day which is
not a Business Day, the date for payment thereof shall be extended, without
penalty, to the next succeeding Business Day, and such extended time shall be
included in the computation of interest and fees.
Section 2.10. Late Payments. If the principal amount of any Obligation is
not paid when due, such Obligation shall bear interest until paid in full at a
rate per annum equal to the Prime Rate from time to time in effect plus two
percent (2%), payable on demand.
Section 2.11. Source of Funds. All payments made by the Bank pursuant to
the Letter of Credit shall be made from funds of the Bank, and not from the
funds of any other Person.
Section 2.12. Extension of Stated Expiration Date. The Applicant may
request that the Letter of Credit be extended for a period of one year not less
than sixty (60) days before each anniversary of the issuance of the Letter of
Credit. If the Bank, in its sole discretion, elects to extend the Stated
Expiration Date then in effect, it shall deliver to the Trustee a Notice of
Extension in the form of Exhibit K to the Letter of Credit (herein referred to
as a "Notice of Extension") designating the date to which the Stated Expiration
Date is being extended. Such extension of the Stated Expiration Date shall be
effective, after receipt of such notice, on the Business Day following the date
of delivery of such Notice of Extension, and thereafter all references in this
Agreement to the Stated Expiration Date shall be deemed to be references to the
date designated as such in the most recent Notice of Extension delivered to the
Trustee. Any date to which the Stated Expiration Date has been extended in
accordance with this Section 2.12 may be extended in like manner.
Section 2.13. Amendments upon Extension. Upon any extension of the Stated
Expiration Date pursuant to Section 2.12 of this Agreement, the Bank and the
Applicant each reserves the right to renegotiate any provision hereof.
ARTICLE THREE
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Issuance of Letter of Credit. As
conditions precedent to the obligation of the Bank to issue the Letter of
Credit, (a) the Applicant shall provide to the Bank on the Closing Date, in
form and substance satisfactory to the Bank and its counsel, Chapman and Cutler
(hereinafter "Bank's counsel"):
(i) a written opinion or opinions of counsel to the Applicant dated
the Closing Date and addressed to the Bank;
(ii) the written opinion or a reliance letter of The Sanford Law
Firm, bond counsel, dated the Closing Date and addressed to the Bank;
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(iii) the written opinion of counsel to the Issuer, dated the Closing
Date and addressed to the Bank;
(iv) a certificate signed by a duly authorized officer of the
Applicant, dated the Closing Date and stating that:
(A) the representations and warranties contained in Article
Four of this Agreement are true and correct on and as of the Closing
Date as though made on such date; and
(B) no Event of Default or Potential Default has occurred and
is continuing, or would result from the issuance of the Letter of
Credit or the execution, delivery or performance of this Agreement or
any Related Document to which the Applicant is a party;
(v) evidence of the due authorization, execution and delivery by the
parties thereto of the Related Documents;
(vi) a copy of the resolutions of the Board of Directors of the
Applicant and all other necessary corporate approvals, if any, certified as
of the Closing Date by the Secretary or Assistant Secretary of the
Applicant, authorizing, among other things, the execution, delivery and
performance by the Applicant of the Related Documents to which it is a
party and the issuance of the Letter of Credit;
(vii) true and correct copies of all material Governmental Approvals,
if any, necessary for the Applicant to execute, deliver and perform the
Related Documents to which it is a party and to authorize the Applicant to
obtain the issuance of the Letter of Credit;
(viii) confirmation that the Applicant does not need any consents and
other approvals from creditors necessary for the Applicant to execute,
deliver and perform the Related Documents to which it is a party and to
authorize the Applicant to obtain the issuance of the Letter of Credit;
(ix) a certificate of the Secretary or Assistant Secretary of the
Applicant certifying the names and true signatures of the officers of the
Applicant authorized to sign the Related Documents to which the Applicant
is a party;
(x) certified copies of documents evidencing all necessary action
taken by the Issuer to authorize the execution and delivery of the Related
Documents to which it is a party;
(xi) evidence that the Issuer shall have duly executed, issued and
delivered the Bonds to the Trustee and the Bond registrar shall have duly
authenticated the Bonds and delivered the Bonds against payment;
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(xii) evidence of insurance showing that the Project is being insured
in such amounts and against such risks as are customary for companies in
the same or similar business;
(xiii) such other documents, certificates and opinions as the Bank or
Bank's counsel may reasonably request;
(b) no law, regulation, ruling or other action of the United States or the
State of Illinois or any political subdivision or authority therein or thereof
shall be in effect or shall have occurred, the effect of which would be to
prevent the Bank from fulfilling its obligations under this Agreement or the
Letter of Credit; and
(c) all legal requirements provided herein incident to the execution,
delivery and performance of the Related Documents and the transactions
contemplated thereby, shall be reasonably satisfactory to the Bank and the
Bank's counsel.
Section 3.2. Conditions Precedent to Liquidity Advances. Following any
payment by the Bank under the Letter of Credit, a Liquidity Advance shall be
made available to the Applicant only if on the date of payment of such drawing
by the Bank the following statements shall be true:
(a) the representations and warranties of the Applicant contained in
Article Four of this Agreement and in the other Related Documents are
correct in all material respects on and as of the date of such payment as
though made on and as of such date; and
(b) no event has occurred and is continuing, or would result from
such payment, which constitutes a Potential Default or Event of Default.
Unless the Applicant shall have previously advised the Bank in writing
that one or both of the above statements is no longer true, the Applicant shall
be deemed to have represented and warranted, to the best of their knowledge, on
the date of such payment that both of the above statements are true and
correct.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement, the Applicant
represents and warrants to the Bank as follows:
Section 4.1. Organization and Qualification. The Applicant is duly
organized, validly existing and in good standing as a corporation under the
laws of the State of Delaware, has full and adequate corporate power to own the
Project and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Project owned or leased by it
requires such licensing or qualifying. The Applicant has full right and
authority to enter into the Related Documents to
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which it is a party, to perform each and all of the matters and things therein
provided for; and the Related Documents to which the Applicant is a party do
not, nor does the performance or observance by the Applicant of any of the
matters or things therein provided for, contravene any provision of law or any
charter or by-law provision of the Applicant or any covenant, indenture or
agreement of or affecting the Applicant or the Project.
Section 4.2. Margin Stock. Neither the Applicant nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any drawing under the Letter of Credit will be used to purchase or carry any
such margin stock or extend credit to others for the purpose of purchasing or
carrying any such margin stock.
Section 4.3. Financial Reports. The consolidated and consolidating
financial statements of Griffith Laboratories, Inc., an Illinois Corporation
and its Subsidiaries as at September 24, 1995 and the related consolidated and
consolidating balance sheet and statements of income and retained earnings of
Griffith Laboratories, Inc., and its Subsidiaries for the fiscal year then
ended and accompanying notes thereto, which financial statements are
accompanied by the audit report of KPMG Peat Marwick, LLP, independent public
accountants, and the unaudited interim consolidated and consolidating financial
statements of Griffith Labs and its Subsidiaries as at June 24, 1995 and the
related consolidated and consolidating balance sheet and statements of income
of Griffith Labs and its Subsidiaries for the nine (9) months then ended and
accompanying notes thereto, heretofore furnished to the Bank, fairly present
the consolidated financial condition of Griffith Labs and its Subsidiaries as
at said dates and the consolidated and consolidating results of their
operations for the periods then ended in conformity with GAAP. As of the date
hereof, neither Griffith Labs nor any Subsidiary thereof have contingent
liabilities which, taken as a whole, are material to it other than as indicated
on such financial statements. Since the date of such audited financial
statements, there have been no material adverse changes in the condition
(financial or otherwise) of Griffith Labs or any Subsidiary thereof taken as a
whole.
Section 4.4. Litigation. There is no litigation or governmental
proceeding pending, nor to the knowledge of the Applicant threatened, against
Griffith Labs or any Subsidiary thereof or any of their respective Property
which (i) if adversely determined would result in any material adverse change
in the financial condition, Property, business or operations of Griffith Labs
or any Significant Restricted Subsidiary thereof, (ii) in any manner draws into
question the validity or enforceability of any Related Document or any security
interest created thereby, or (iii) in any way contests the existence,
organization or powers of the Applicant or the titles of their officers to
their respective offices except the litigation set forth on Schedule I attached
hereto.
Section 4.5. Taxes. Griffith Labs has filed or caused to be filed all
material tax returns required by law to be filed and has paid or caused to be
paid all taxes, assessments and other governmental charges levied upon or in
respect of any of its properties, assets or franchises, other than taxes (i) as
to which, the failure to pay, could not have a material adverse impact on the
business of Griffith Labs or any Subsidiary thereof and (ii) the validity or
amount of which are
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being contested in good faith by appropriate proceedings and for which there
shall have set aside on its books adequate reserves in accordance with GAAP.
The charges, accruals and reserves on the books of Griffith Labs and its
Subsidiaries in respect of taxes for all fiscal periods are adequate, and there
is no unpaid assessment for additional taxes for any fiscal period or any basis
therefor.
Section 4.6. Approvals. No material authorization, consent, license,
exemption or filing or registration with any court or Governmental Authority or
any approval or consent of the stockholders of the Applicant or any other
Person that has not been obtained, is or will be necessary to the valid
execution, delivery or performance by the Applicant of any of the Related
Documents to which it is a party.
Section 4.7. ERISA. Griffith Labs and its Subsidiaries are in compliance
in all material respects with ERISA to the extent applicable to them and have
received no notice to the contrary from the PBGC or any other Governmental
Authority. Griffith Labs and its Subsidiaries have no Unfunded Vested
Liabilities. No condition exists or event or transaction has occurred with
respect to any Plan which could reasonably be expected to result in the
incurrence by Griffith Labs or any Subsidiary of any material liability, fine
or penalty. Neither Griffith Labs nor any Subsidiary thereof has any
contingent liability with respect to any post-retirement benefits under a
Welfare Plan, other than liability for continuation of coverage described in
Part 6 of Title I of ERISA, which, is not reflected in the financial statements
of Griffith Labs and its Subsidiaries.
Section 4.8. Investment Company. Neither Griffith Labs nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
Section 4.9. Public Utility Holding Company. Neither Griffith Labs nor
any Subsidiary thereof is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Section 4.10. Incorporation of Representations and Warranties by
Reference. The Applicant hereby makes to the Bank the same representations and
warranties as are set forth by it in each Related Document to which it is a
party, which representations and warranties, as well as the related defined
terms contained therein, are hereby incorporated herein by reference for the
benefit of the Bank with the same effect as if each and every such
representation and warranty and defined term were set forth herein in its
entirety and were made as of the date hereof. No amendment to such
representations and warranties or defined terms made pursuant to any Related
Document shall be effective to amend such representations and warranties and
defined terms as incorporated by reference herein without the prior written
consent of the Bank.
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ARTICLE FIVE
COVENANTS
The Applicant will do the following so long as any amounts may be drawn
under the Letter of Credit or any Obligations remain outstanding under this
Agreement, unless the Bank shall otherwise consent in writing:
Section 5.1. Corporate Existence, Etc. The Applicant will, and will cause
each Subsidiary to, maintain its corporate existence. The Applicant will
preserve and keep in force and effect, and cause each Subsidiary to maintain
all material licenses, permits, franchises and qualifications necessary to the
proper conduct of its business. The Applicant will continue, and will cause
each Subsidiary to continue, to engage in a business of the same general type
as now conducted by it.
Section 5.2. Maintenance of Properties. The Applicant will maintain,
preserve and keep its Property required for the conduct of its business in good
repair, working order and condition (ordinary wear and tear excepted).
Section 5.3. Compliance with Laws; Taxes and Assessments. The Applicant
will comply, and will cause each Subsidiary to comply, with all applicable
laws, rules, regulations and orders applicable to it and its Property, such
compliance to include, without limitation, paying all taxes, assessments and
governmental charges imposed upon it or its Property before the same become
delinquent, unless and to the extent that the same are being contested in good
faith and by appropriate proceedings and reserves are provided therefor that in
the opinion of the Applicant or such Subsidiary are adequate.
Section 5.4. Insurance. The Applicant will maintain, and will cause each
Subsidiary to maintain or be covered by, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are customary for companies engaged in the same or a similar business
and similarly situated; provided that the Applicant and its Subsidiaries may
self-insure risks (a) in the manner in which the Applicant and its Subsidiaries
self-insure such risks on the Closing Date or (b) otherwise in a manner
consistent with prudent industry practice in the jurisdictions in which the
Applicant or such Subsidiaries conduct their respective operations. The
Applicant will upon request of the Bank furnish a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to
this Section.
Section 5.5. Reports. The Applicant will, and will cause each Subsidiary
to:
(a) maintain a standard system of accounting in accordance with GAAP
and will furnish to the Bank such information respecting the business and
financial condition of the Applicant and its Subsidiaries as the Bank may
reasonably request; and without any request, will furnish to the Bank
internal unaudited financial statements prepared by Applicant's management
on a quarterly or annual basis, provided that the Applicant and its
Subsidiaries shall not be obligated by the foregoing to prepare any such
internal financial statements.
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(b) promptly after knowledge thereof shall have come to the attention
of any responsible officer (which, for purposes of this Section, shall mean
any officer of the Applicant holding a position of executive vice president
or higher), written notice (i) of any threatened or pending litigation or
governmental proceeding against the Applicant or any Subsidiary thereof
which, if adversely determined, would materially adversely affect the
financial condition, Property, business or operations of the Applicant or
any Subsidiary or (ii) of the occurrence of any Potential Default or Event
of Default hereunder.
Section 5.6. Inspection. The Applicant will, and will cause each
Subsidiary to, prior to an Event of Default semi-annually and after an Event of
Default from time to time as the Bank may request, permit the Bank and its duly
authorized representatives and agents to make reasonable visits and reasonable
inspections of any of the Properties, corporate books and financial records of
the Applicant and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Applicant and each Subsidiary, and
to discuss the affairs, finances and accounts of the Applicant and each
Subsidiary with, and to be advised as to the same by, its officers and
independent public accountants (and by this provision the Applicant authorizes
such accountants to discuss with the Bank the finances and affairs of the
Applicant and each Subsidiary) at such reasonable times and reasonable
intervals as the Bank may designate.
Section 5.7. Related Documents. The Applicant will not amend or consent
to any amendment of any Related Document without the written consent of the
Bank which shall not be unreasonably withheld.
Section 5.8. Optional Redemption of Bonds. The Applicant will not permit
an optional redemption or purchase of Bonds under Section 3.01 of the Indenture
without the consent of the Bank; provided however, that if the Applicant has
deposited with the Bank or the Trustee an amount equal to the principal amount
of Bonds to be redeemed pursuant to Section 3.01 of the Indenture, the Bank
shall consent to such optional redemption to the extent of such amounts.
Section 5.9. Nature of Business. The Applicant will not engage in any
business if, as a result, the general nature of the business would be
substantially changed from the general nature of the business engaged in by it
on the date of this Agreement.
Section 5.10. Limitation on Liens. The Applicant will not create or
incur, or suffer to be incurred or to exist, any Lien on its property or
assets, whether now owned or hereafter acquired, or upon any income or profits
therefrom, or transfer any property for the purpose of subjecting the same to
the payment of obligations in priority to the payment of its general creditors,
or acquire or agree to acquire any property or assets upon conditional sales
agreements or other title retention devices, unless the Obligations shall be
validly secured, equally and ratably, with any obligation of the Applicant so
secured, except:
(a) Liens for taxes and assessments or governmental charges or levies
and Liens securing claims or demands of mechanics and materialmen, provided
payment thereof is not at the time required by Section 5.3 of the Note
Purchase Agreement;
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(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or
in respect of the Applicant shall at any time in good faith be
prosecuting an appeal or proceeding for a review and in respect of which
a stay of execution pending such appeal or proceeding for review shall
have been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including without limitation, Liens in connection
with workers' compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' Liens and statutory landlords' Liens) and
Liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other Liens of
like general nature incurred in the ordinary course of business and not
in connection with the borrowing of money; provided in each case, the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Applicant or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in
any event materially impair their use in the operation of the business of
the Applicant;
(e) Liens securing Indebtedness of the Applicant to Griffith Labs or
a Restricted Subsidiary;
(f) Liens existing on July 31, 1995 and any extension, renewal or
replacement (or successive extensions, renewals or replacements) of such
Liens; provided that no additional assets are encumbered by such Liens
and the principal amount of Indebtedness secured thereby shall not exceed
the maximum amount permitted to be outstanding under the agreement
pursuant to which such Indebtedness was issued, as such agreement exists
on the date hereof;
(g) Purchase Money Liens (as defined in the Note Purchase Agreement)
incurred after the date hereof, provided that (i) the Purchase Money Lien
shall attach solely to the capital stock or fixed assets acquired,
purchased or constructed, (ii) at the time of purchase of such capital
stock or acquisition or construction of such fixed assets, the aggregate
amount remaining unpaid on all Indebtedness secured by Purchase Money
Liens thereon, whether or not assumed by the Applicant shall not exceed
an amount equal to 100% of the fair market value at the time of purchase,
acquisition or construction of such capital stock or fixed assets (as
determined in good faith by the Board of Directors of the Applicant),
(iii) such Purchase Money Lien is created contemporaneously with, or
within 120 days after, such purchase, acquisition or the completion of
such construction; and (iv) all such Indebtedness shall have been
incurred within the applicable limitations provided in Section 5.8 of the
Note Purchase Agreement;
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<PAGE> 23
(h) Liens incurred after the date hereof given to secure Indebtedness
incurred to finance the payment of the purchase price or cost incurred in
connection with the acquisition, construction, equipping or improving of
any Designated Project (as defined in the Note Purchase Agreement),
including Liens existing on such Designated Project at the time of
acquisition thereof or at the time of acquisition by the Applicant of any
business entity then owning such Designated Project, whether or not such
existing Liens were given to secure the payment of the purchase price of
the Designated Project to which they attach so long as they were not
incurred, extended or renewed in contemplation of such acquisition,
provided that (i) the Lien shall attach solely to the Designated Project,
including without limitation any stock or other equity interest of a Person
which owns the Designated Project, in whole or in part, (ii) at the time of
acquisition or construction of such Designated Project, the aggregate
amount remaining unpaid on all Indebtedness secured by Liens on such
Designated Project whether or not assumed by the Applicant shall not exceed
an amount equal to 100% of the fair market value at the time of acquisition
or construction of such Designated Project (as determined in good faith by
the Board of Directors of the Applicant), (iii) such Lien is created
contemporaneously with, or within 180 days after, the later to occur of
such acquisition or the completion of such construction, equipping or
improvement; and (iv) all such Indebtedness shall have been incurred within
the applicable limitations provided in Section 5.8 of the Note Purchase
Agreement; and
(i) Liens incurred after the date hereof by the Applicant on fixed
assets used or intended to be used in carrying on the business of the
Applicant securing Funded Debt incurred within the limitations of Section
5.8 of the Note Purchase Agreement.
Section 5.11. Mergers, Consolidations and Sales of Assets. The Applicant
may consolidate or merge with any other corporation provided (a) no Potential
Default or Event of Default shall have occurred and be continuing or would
result from such transaction and (b)(i) the Applicant is the surviving or
continuing corporation or (ii) the surviving or continuing corporation assumes
all of the Applicant's obligations hereunder and Griffith Labs provides written
confirmation that the Griffith Labs Guaranty remains in full force and effect
(such assumption and confirmation to be in form and substance satisfactory to
the Bank).
Section 5.12. Guaranties. The Applicant will not become or be liable in
respect of Guarantees except Guarantees which are limited in amount to a stated
maximum dollar exposure or which constitute Guarantees of obligations incurred
by the Applicant in compliance with the provisions of the Note Purchase
Agreement.
ARTICLE SIX
DEFAULTS
Section 6.1. Events of Default and Remedies. If any of the following
events shall occur, each such event shall be an "Event of Default":
(a) any material representation or warranty made by the Applicant in
this Agreement (or incorporated herein by reference) or in any of the other
Related
20
<PAGE> 24
Documents or in any certificate, document, instrument, opinion or financial
or other statement contemplated by or made or delivered pursuant to or in
connection with this Agreement or with any of the other Related Documents,
shall prove to have been incorrect, incomplete or misleading in any
material respect;
(b) any "event of default" shall have occurred under any of the
Related Documents or that certain Note Purchase Agreement Dated as of
August 30, 1994 regarding the $45,000,000 8.30% Senior Notes, Series A of
Griffith Labs (as defined respectively therein);
(c) failure to pay to the Bank any Obligations when and as due
hereunder and such failure shall continue for five days after the
occurrence thereof;
(d) default in the due observance or performance by the Applicant of
any covenant set forth in Article Five hereof and such default shall
continue for fifteen days after the earlier of (i) the day on which the
President, the Chief Financial Officer or the Treasurer of the Applicant
first obtains knowledge of such default or (ii) the day on which written
notice thereof is given to the Applicant by the Bank;
(e) default in the due observance or performance by the Applicant of
any other term, covenant or agreement set forth in this Agreement which
is not remedied within 30 days after the earlier of (i) the day on which
the President, the Chief Financial Officer or the Treasurer of the
Applicant first obtains knowledge of such default, or (ii) the day on
which written notice thereof is given to the Applicant by the Bank;
provided that if any such default (other than one curable by the payment
of money) may be cured, but not within such 30 day period, it shall not
constitute an Event of Default hereunder if the Applicant promptly
commences to cure such default, diligently pursues such cure to
completion and such defaults is in fact cured within 90 days thereafter;
(f) any material provision of this Agreement or any of the Related
Documents shall cease to be valid and binding, or the Applicant shall
contest any such provision, or the Applicant or any agent or trustee on
behalf of an Applicant shall deny that it has any or further liability
under this Agreement or any of the Related Documents;
(g) Griffith Labs, the Applicant or any Significant Restricted
Subsidiary of Griffith Labs shall (i) have entered voluntarily against it
an order for relief under the Bankruptcy Code of 1978, as amended, (ii)
not pay, or admit in writing its inability to pay, its debts generally as
they become due or suspend payment of its obligations, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent
to, or acquiesce in, the appointment or a receiver, custodian, trustee,
conservator, liquidator or similar official for it or any substantial
part of its property, (v) institute any proceeding seeking to have
entered against it an order for relief under the Bankruptcy Code of 1978,
as amended, to adjudicate it insolvent, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, marshaling of assets,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to
file an answer or other pleading denying the material allegations of any
21
<PAGE> 25
such proceeding filed against it, (vi) fail to contest in good faith any
appointment or proceeding described in Section 6.1(h) hereof, or (vii)
take any action in furtherance of any of the foregoing purposes;
(h) a custodian receiver, trustee, conservator, liquidator or
similar official shall be appointed for Griffith Labs, the Applicant or
any Significant Restricted Subsidiary of Griffith Labs or any substantial
part of its property, or a proceeding described in Section 6.1(g)(v)
shall be instituted against Griffith Labs, the Applicant or any
Significant Restricted Subsidiary of Griffith Labs and such appointment
continues undischarged or any such proceeding continues undismissed or
unstayed for a period of 60 or more days;
(i) default shall occur and remain uncured for five days under any
evidence of Indebtedness in an amount not less than $5,000,000 issued,
assumed, or guaranteed by Griffith Labs, the Applicant or any Restricted
Subsidiary or under any indenture, agreement or other instrument under
which the same may be issued, and such default shall continue for a
period of time sufficient to permit the acceleration of the maturity of
any such Indebtedness (whether or not such maturity is in fact
accelerated) or any such Indebtedness shall not be paid when and as due
(whether by lapse of time, acceleration or otherwise);
(j) Final judgment or judgments for the payment of money aggregating
in excess of $2,500,000 is or are outstanding against Griffith Labs, the
Applicant or any Restricted Subsidiary or against any Property of
Griffith Labs, the Applicant or any Restricted Subsidiary and any one or
more of such judgments aggregating at least $1,000,000 have remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
period equal to the longer of (i) 30 days from the date of its entry or
(ii) the expiration of the period during which no judgment creditor of
Griffith Labs, the Applicant or such Restricted Subsidiary may execute
such judgment against any such Property;
(k) either Griffith Labs, the Applicant or any member of its
Controlled Group shall fail to pay when due an amount or amounts
aggregating in excess of $4,000,000 which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent
to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities
in excess of $4,000,000 (collectively, a "Material Plan") shall be filed
under Title IV of ERISA by Griffith Labs, the Applicant or any other
member of its Controlled Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title IV
of ERISA to terminate or to cause a trustee to be appointed to administer
any Material Plan or a proceeding shall be instituted by a fiduciary of
any Material Plan against Griffith Labs, the Applicant or any member of
its Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and
such proceeding shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material Plan must
be terminated; or
22
<PAGE> 26
(l) a default shall occur and be continuing under any agreement
between either Griffith Labs, the Applicant and the Bank or under any
obligation owed by the Applicant to the Bank; or
(m) Griffith Labs shall, at any time, fail to maintain and keep the
ratio of Consolidated Current Assets to Adjusted Consolidated Current
Liabilities of not less than 1.1 to 1.0; or
(n) Griffith Labs shall, at any time, fail to maintain and keep
Adjusted Consolidated Tangible Net Worth at an amount of not less than
$70,000,000; or
(o) the sum of (x) Consolidated Funded Debt of Griffith Labs and its
Restricted Subsidiaries plus (y) Excess Current Debt treated as Funded
Debt plus (z) all Excess Transferred Property shall exceed 55% of
Consolidated Total Capitalization; or
(p) Griffith Labs shall default in the performance of any of its
obligations under the Griffith Labs Guaranty or disavow any obligation it
may have thereunder; or
(q) the occurrence of a Change in Control.
Section 6.2. Remedies. Upon the occurrence of any Event of Default the
Bank may exercise any one or more of the following rights and remedies in
addition to any other remedies herein or by law provided:
(a) by written notice to the Applicant require that the Applicant
immediately prepay to the Bank in immediately available funds an amount
equal to the Available Amount (such amounts to be held by the Bank as
collateral security for the Obligations), provided, however, that in the
case of an Event of Default described in Section 6.1(g) or (h) hereof,
such prepayment Obligations shall automatically become immediately due
and payable without any notice (unless the coming due of such Obligations
is waived by the Bank in writing);
(b) by notice to the Applicant, declare all Obligations to be, and
such amounts shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Applicant, provided that upon the occurrence of
an Event of Default under Section 6.1(g) or (h) hereof such acceleration
shall automatically occur (unless such automatic acceleration is waived
by the Bank in writing);
(c) give notice of the occurrence of an Event of Default to the
Trustee, directing the Trustee to accelerate the Bonds, thereby causing
the Letter of Credit to expire 15 days thereafter;
(d) pursue any rights and remedies it may have under the Related
Documents;
23
<PAGE> 27
(e) pursue any rights and remedies it may have under the Griffith
Labs Guaranty; or
(f) pursue any other action available at law or in equity.
ARTICLE SEVEN
MISCELLANEOUS
Section 7.1. No Deductions; Increased Costs. (a) Except as otherwise
required by law, each payment by the Applicant to the Bank under this Agreement
or any other Related Document shall be made without setoff or counterclaim and
without withholding for or on account of any present or future taxes (other
than overall net income taxes on the recipient imposed by any jurisdiction
having control of such recipient) imposed by or within the jurisdiction in
which the Applicant is domiciled, any jurisdiction from which the Applicant
makes any payment hereunder, or (in each case) any political subdivision or
taxing authority thereof or therein. If any such withholding is so required,
the Applicant shall make the withholding, pay the amount withheld to the
appropriate Governmental Authority before penalties attach thereto or interest
accrues thereon and forthwith pay such additional amount as may be necessary to
ensure that the net amount actually received by the Bank free and clear of such
taxes (including such taxes on such additional amount) is equal to the amount
which the Bank would have received had such withholding not been made. If the
Bank pays any amount in respect of any such taxes, penalties or interest, the
Applicant shall reimburse the Bank for that payment on demand in the currency
in which such payment was made. If the Applicant pays any such taxes,
penalties or interest, it shall deliver official tax receipts evidencing that
payment or certified copies thereof to the Bank on or before the thirtieth day
after payment.
(b) If the Code or any newly adopted law, treaty, regulation, guideline or
directive, or any change in any, law, treaty, regulation, guideline or
directive or any new or modified interpretation of any of the foregoing by any
authority or agency charged with the administration or interpretation thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or the transactions contemplated by this Agreement
(whether or not having the force of law) shall:
(i) limit the deductibility of interest on funds obtained by the Bank
to pay any of its liabilities or subject the Bank to any tax, duty, charge,
deduction or withholding on or with respect to payments relating to the
Bonds, the Letter of Credit or this Agreement, or any amount paid or to be
paid by the Bank as the issuer of the Letter of Credit (other than any tax
measured by or based upon the overall net income of the Bank imposed by any
jurisdiction having control over the Bank);
(ii) impose, modify, require, make or deem applicable to the Bank any
reserve requirement, capital requirement, special deposit requirement,
insurance assessment or similar requirement against any assets held by,
deposits with or for the account of, or loans, letters of credit or
commitments by, an office of the Bank;
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<PAGE> 28
(iii) change the basis of taxation of payments due the Bank under
this Agreement or the Bonds (other than by a change in taxation of the
overall net income of the Bank);
(iv) cause or deem letters of credit to be assets held by the Bank
and/or as deposits on its books; or
(v) impose upon the Bank any other condition with respect to any
amount paid or payable to or by the Bank or with respect to this Agreement
or any of the other Related Documents;
and the result of any of the foregoing is to increase the cost to the Bank of
making any payment or maintaining the Letter of Credit, or to reduce the amount
of any payment (whether of principal, interest or otherwise) receivable by the
Bank, or to reduce the rate of return on the capital of the Bank or to require
the Bank to make any payment on or calculated by reference to the gross amount
of any sum received by it, in each case by an amount which the Bank in its
reasonable judgment deems material, then:
(1) the Bank shall promptly notify the Applicant in writing of such
event;
(2) the Bank shall promptly deliver to the Applicant a certificate
stating the change which has occurred or the reserve requirements or other
costs or conditions which have been imposed on the Bank or the request,
direction or requirement with which it has complied, together with the date
thereof, the amount of such increased cost, reduction or payment and a
reasonably detailed description of the way in which such amount has been
calculated, and the Bank's determination of such amounts, absent fraud or
manifest error, shall be conclusive; and
(3) the Applicant shall pay to the Bank, from time to time as
specified by the Bank, such an amount or amounts as will compensate the
Bank for such additional cost, reduction or payment.
The protection of this Section 7.1(b) shall be available to the Bank
regardless of any possible contention of invalidity or inapplicability of the
law, regulation or condition which has been imposed; provided, however, that if
it shall be later determined by the Bank that any amount so paid by the
Applicant pursuant to this Section 7.1(b) is in excess of the amount payable
under the provisions hereof, the Bank shall refund such excess amount to the
Applicant.
Section 7.2. Right of Setoff; Other Collateral. (a) Upon the occurrence
and during the continuance of an Event of Default, the Bank is hereby
authorized at any time and from time to time without notice to the Applicant
(any such notice being expressly waived by the Applicant), and to the fullest
extent permitted by law, to setoff, to exercise any banker's lien or any right
of attachment and apply any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or monies at any time
held and other indebtedness at any time owing by the Bank to or for the account
of the Applicant (irrespective of the currency in which such accounts, monies
or indebtedness may be denominated and the Bank is authorized to
25
<PAGE> 29
convert such accounts, monies and indebtedness into United States dollars)
against any and all of the Obligations of the Applicant, whether or not the Bank
shall have made any demand for any amount owing to the Bank by the Applicant.
(b) The rights of the Bank under this Section 7.2 are in addition to, in
augmentation of, and, except as specifically provided in this Section 7.2, do
not derogate from or impair other rights and remedies (including, without
limitation, other rights of setoff) which the Bank may have.
Section 7.3. Indemnity. The Applicant agrees to indemnify and hold the
Bank and its directors, officers and employees harmless from and against, and
to pay on demand, any and all claims, damages, losses, liabilities, costs and
expenses whatsoever which the Bank or its directors, officers or employees may
incur or suffer by reason of or in connection with the execution and delivery
of this Agreement or the Letter of Credit, or any other documents which may be
delivered in connection with this Agreement or the Letter of Credit, or in
connection with any payment under the Letter of Credit, including, without
limitation, the fees and expenses of counsel for the Bank with respect thereto
and with respect to advising the Bank as to its rights and responsibilities
under this Agreement and the Letter of Credit and all fees and expenses, if
any, in connection with the enforcement or defense of the rights of the Bank in
connection with this Agreement, the Letter of Credit or any of the Related
Documents, or the collection of any monies due under this Agreement or such
other documents which may be delivered in connection with this Agreement, the
Letter of Credit or any of the Related Documents; except, only if, and to the
extent that any such claim, damage, loss, liability, cost or expense shall be
caused by the Bank's failure to act in good faith or to observe general banking
usage in connection with the Letter of Credit or failure to examine documents
presented under the Letter of Credit with care to determine whether they comply
with the terms of the Letter of Credit (it being understood that the Bank
assumes no liability or responsibility for the genuineness, falsification or
effect of any document which appears on such examination to be regular on its
face). Promptly after receipt by the Bank of notice of the commencement, or
threatened commencement, of any action subject to the indemnities contained in
this Section, the Bank shall promptly notify the Applicant thereof, provided
that failure to give such notice shall not relieve the Applicant from any
liability to the Bank hereunder. The obligations of the Applicant under this
Section 7.3 shall survive payment of all Obligations owed under this Agreement
and the expiration of the Letter of Credit.
Section 7.4. Obligations Absolute. The obligations of the Applicant under
this Agreement shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances.
Section 7.5. Liability of the Bank. (a) The Applicant assumes all risks
of the acts or omissions of the Trustee, or any agent of the Trustee, and any
transferee beneficiary of the Letter of Credit with respect to its use of the
Letter of Credit. Neither the Bank nor any of its officers or directors shall
be liable or responsible for: (i) the use which may be made of the Letter of
Credit or for any acts or omissions of the Trustee and any transferee
beneficiary in connection therewith; (ii) the validity or genuineness of
documents, or of any endorsement(s) thereon, even if such documents should in
fact prove to be in any or all respects invalid, fraudulent or forged;
26
<PAGE> 30
or (iii) any other circumstances whatsoever in making or failing to make payment
under the Letter of Credit; provided, however, that the Applicant shall have a
claim against the Bank, and the Bank shall be liable to the Applicant, to the
extent of any direct compensatory, as opposed to consequential, damages suffered
by the Applicant which the Applicant proves were caused by the Bank's failure to
act in good faith or to observe general banking usage in connection with the
Letter of Credit or failure to examine documents presented under the Letter of
Credit with care to determine whether they comply with the terms of the Letter
of Credit (it being understood that the Bank assumes no liability or
responsibility for the genuineness, falsification or effect of any document
which appears on such examination to be regular on its face). The Bank is
hereby expressly authorized and directed to honor any demand for payment which
is made under the Letter of Credit without regard to, and without any duty on
its part to inquire into the existence of, any disputes or controversies between
or among the Applicant, the Trustee, any transferee beneficiary of the Letter of
Credit or any other Person or the respective rights, duties or liabilities of
any of them, or whether any facts or occurrences represented in any of the
documents presented under the Letter of Credit are true and correct.
(b) The Bank represents and warrants to the Applicant that it has all
necessary authority to enter into this Agreement and to issue the Letter of
Credit.
Section 7.6. Participants. The Bank shall, with the Applicant's consent
(which consent shall not be unreasonably withheld), have the right to grant
participations in the Letter of Credit to one or more other banking
institutions, and such participants shall be entitled to the benefits of this
Agreement, including, without limitation, Sections 7.1, 7.3 and 7.14 hereof, to
the same extent as if they were a direct party hereto; provided, however, that
no such participation by any such participant shall in any way affect the
obligation of the Bank under the Letter of Credit; and provided further that no
such participant shall be entitled to receive payment hereunder of any amount
greater than the amount which would have been payable had the Bank not granted
a participation to such participant.
Section 7.7. Survival of this Agreement. All covenants, agreements,
representations and warranties made in this Agreement shall survive the
issuance by the Bank of the Letter of Credit and shall continue in full force
and effect so long as the Letter of Credit shall be unexpired or any
Obligations shall be outstanding and unpaid. The obligation of the Applicant
to reimburse the Bank pursuant to Sections 7.1, 7.3 and 7.14 hereof, and the
obligation of the Bank to provide notice to the Applicant under Section 7.3
hereof, shall survive the payment of the Bonds and termination of this
Agreement.
Section 7.8 Modification of this Agreement. No amendment, modification or
waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the Bank and no amendment, modification or
waiver of any provision of the Letter of Credit, and no consent to any
departure by the Applicant therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank. Any such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Applicant in any case shall
entitle the Applicant to any other or further notice or demand in the same,
similar or other circumstances.
27
<PAGE> 31
Section 7.9. Waiver of Rights by the Bank. No course of dealing or
failure or delay on the part of the Bank in exercising any right, power or
privilege hereunder or under the Letter of Credit or this Agreement shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise or the exercise of any other right or
privilege. The rights of the Bank under the Letter of Credit and the rights of
the Bank under this Agreement are cumulative and not exclusive of any rights or
remedies which the Bank would otherwise have.
Section 7.10. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein 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.
Section 7.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois,
without giving effect to conflict of law principles.
Section 7.12. Notices. All notices hereunder shall be given by United
States certified or registered mail or by telecommunication device capable of
creating written record of such notice and its receipt. Notices hereunder shall
be effective when received and shall be addressed:
If to the Bank, to ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Telecopy No.: (312) 904-2546
Telephone No.: (312) 606-8425
Attention: Adrienne Baker, Assistant Vice President
If to the Applicant, to Griffith Micro Science, Inc.
c/o Griffith Laboratories Worldwide, Inc.
One Griffith Center
Alsip, Illinois 60658-3495
Telecopy No.: (708) 597-3294
Telephone No.: (708) 371-0900
Attention: Brian J. Tuttle, Treasurer
James S. Legg, Corporate Counsel
28
<PAGE> 32
and Bell, Boyd & Lloyd
Three First National Plaza
Suite 3300
Chicago, Illinois 60603
Telecopy No.: (312) 372-2098
Telephone No.: (312) 807-4317
Attention: John C. Blew, Esq.
If to the Trustee, to Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Telecopy No.: (312) 461-3525
Telephone No.: (312) 461-7458
Attention: Daryl Pomykala
Section 7.13. Successors and Assigns. Whenever in this Agreement the Bank
is referred to, such reference shall be deemed to include the successors and
assigns of the Bank and all covenants, promises and agreements by or on behalf
of the Applicant which are contained in this Agreement shall inure to the
benefit of such successors and assigns. The rights and duties of the Applicant
hereunder, however, may not be assigned or transferred, except as specifically
provided in this Agreement or with the prior written consent of the Bank, and
all obligations of the Applicant hereunder shall continue in full force and
effect notwithstanding any assignment by the Applicant of any of its rights or
obligations under any of the Related Documents or any entering into, or consent
by the Applicant to, any supplement or amendment to any of the Related
Documents.
Section 7.14. Taxes and Expenses. Any taxes (other than any tax measured
by or based upon the overall net income of the Bank imposed by any jurisdiction
having control over the Bank) payable or ruled payable by any Governmental
Authority in respect of this Agreement, the Letter of Credit or the Bonds shall
be paid by the Applicant, together with interest and penalties, if any;
provided, however, that the Applicant, may conduct a reasonable contest of any
such taxes which have been paid under protest and the amounts payable by the
Applicant hereunder shall not be duplicative of amounts payable to the Bank
under Section 7.1 hereof. The Applicant shall reimburse the Bank for any and
all out of pocket expenses and charges paid or incurred by the Bank in
connection with the preparation, execution, delivery, administration and
enforcement of this Agreement and any amendment to this Agreement or the Letter
of Credit, including reasonable fees and disbursements of counsel to the Bank.
Section 7.15. Headings. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
Section 7.16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original but all taken together
to constitute one instrument.
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<PAGE> 33
Section 7.17. Entire Agreement. This Agreement and the Related Documents
constitute the entire understanding of the parties with respect to the subject
matter thereof and any prior agreements, whether written or oral, with respect
thereto are superseded hereby.
Please signify your agreement and acceptance of the foregoing by executing
this Agreement in the space provided below.
Very truly yours,
ABN AMRO BANK N.V.
By /s/ Robert J. Graff
-----------------------------
Its
--------------------------
By /s/ Adrienne H. Baker
-----------------------------
Its
--------------------------
Accepted and agreed to:
GRIFFITH MICRO SCIENCE, INC.
By /s/ Brian J. Tuttle
---------------------------------
Its Treasurer
-----------------------------
30
<PAGE> 34
ANNEX A
RESTRICTED SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF RESTRICTED SUBSIDIARY INCORPORATION
<S> <C>
GLF Holdings Pty, Ltd.* Australia
GLF Holdings Ltd. Australia
Micro-Biotrol Pty, Ltd.* Australia
N.V. Griffith Laboratories S.A. Belgium
Griffith Micro Science, N.V. Belgium
Griffith Laboratories, Limited Canada
Griffith Micro Science, Ltd. Canada
Griffith Laboratories Zhuhai Company Ltd. China
Griffith Colombia S.A. Colombia
Laboratories Griffith Centro America, S.A. Costa Rica
GMS S.A.S. France
Griffith Micro Science S.A. France
Griffith Laboratories GmbH Germany
Griffith Micro Science GmbH Germany
Griffith Laboratories, Ltd. Hong Kong
Griffith Laboratories, Ltd. Ireland
Griffith Laboratories S.r.L. Italy
Griffith Laboratories K.K. Japan
Laboratories Griffith de Mexico, S.A. de C.V. Mexico
Griffith Micro Science, S.A. de C.V. Mexico
Bienes Raices Griffith, S.A. de C.V. Mexico
Griffith Laboratories, B.V. Netherlands
Griffith Micro Science B.V. Netherlands
GLF Holdings Ltd.* New Zealand
Griffith Panama, S.A. Panama
Griffith Laboratories Pte. Ltd. Singapore
Griffith Laboratories S.A. Spain
Griffith Laboratories, Ltd. United Kingdom
Griffith Micro Science, Ltd. United Kingdom
Griffith Micro Science, Inc. USA - Delaware
Griffith Micro Science International, Inc. USA - Delaware
Synergistic Computer Services, Inc. USA - Delaware
Protein & Seasoning Services, Inc. USA - Delaware
Griffith Laboratories U.S.A., Inc. USA - Delaware
Custom Food Products, Inc. USA - Illinois
Griffith International, Inc. (DISC) USA - Illinois
</TABLE>
- ---------------------------------
* Currently in process of being dissolved.
<PAGE> 35
SCHEDULE I
APPLICANT LITIGATION
None
<PAGE> 36
APPENDIX I
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
November 15, 1995
**U.S. $4,555,480
No S550123
Harris Trust and Savings Bank, as trustee (the "Trustee")
under the Indenture of Trust dated as of November l,
1995 (the "Indenture"), between Mecklenburg County
Industrial Facilities and Pollution Control Financing
Authority North Carolina (the "Issuer" ), and the
Trustee
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention: Indenture Trust Division
Ladies and Gentlemen:
We hereby establish in your favor as Trustee for the benefit of the
holders of the Bonds (as hereinafter defined), our irrevocable transferable
Letter of Credit No. S550123 for the account of Griffith Micro Science, Inc.
(the "Applicant"), whereby we hereby irrevocably authorize you to draw on us
from time to time, from and after the date hereof to and including the earliest
to occur of our close of business on: (i) November 15, 1998 (as extended from
time to time, the "Stated Expiration Date"), (ii) the earlier of (A) the date
which is the Business Day following an Adjustable Rate Conversion Date or a CP
Rate Conversion Date (as such terms are defined in the Indenture) with respect
to all of the Bonds as such date is specified in a certificate in the form of
Exhibit A hereto (the "Conversion Date") or (B) the date on which the Bank
honors drawings under the Letter of Credit on or after the Conversion Date,
(iii) the date which is the Business Day following receipt from you of a
certificate in the form set forth as Exhibit B hereto, (iv) the date on which
an Acceleration Drawing is honored by us, and (v) the date which is fifteen
(15) days following receipt by you of a written notice from us specifying the
occurrence of an Event of Default under the Reimbursement Agreement dated as of
November 1, 1995, between the Applicant and us (the "Reimbursement Agreement")
and directing you to accelerate the Bonds (the earliest of such dates being
referred to herein as the "Termination Date"), a maximum aggregate amount not
exceeding Four Million Five Hundred Fifty Five Thousand Four Hundred Eighty
Dollars (U.S. $4,555,480 - the "Original Stated Amount") to pay principal of
and accrued interest on, or the purchase price of, the $4,500,000 Mecklenburg
County Industrial Facilities and Pollution Control Financing Authority North
Carolina Industrial Development
Page 1 of 22 Pages
<PAGE> 37
Agency Industrial Development Revenue Bonds Series 1995 (Griffith Micro Science,
Inc. Project) issued by the Issuer (the "Bonds"), in accordance with the terms
hereof (said $4,555,480 having been calculated to be equal to $4,500,000, the
original principal amount of the Bonds, plus $55,480 which is at least
forty-five (45) days' accrued interest on said principal amount of the Bonds at
the rate of ten percent (10%) per annum (the "Cap Interest Rate")). This credit
is available to you against presentation of the following documents (the
"Payment Documents") presented to ABN AMRO BANK N.V. (the "Bank") as described
below:
A certificate (with all blanks appropriately
completed) (i) in the form attached as Exhibit C
hereto to pay accrued interest on the Bonds as
provided for under Section 5.04 of the Indenture (an
"Interest Drawing"), (ii) in the form attached as
Exhibit D hereto to pay the principal amount of and
accrued interest on the Bonds in respect of any
redemption of the Bonds as provided for in Section
5.04 of the Indenture (a "Redemption Drawing"),
provided that in the event the date of redemption or
purchase coincides with an Interest Payment Date (as
defined in the Indenture) the Redemption Drawing shall
not include any accrued interest on the Bonds (which
interest is payable pursuant to an Interest Drawing),
(iii) in the form attached as Exhibit E hereto, to pay
the purchase price of Bonds tendered or deemed
tendered for purchase as provided for in Section 3.08
of the Indenture which have not been successfully
remarketed or for which the purchase price has not
been received by the Tender Agent or the Remarketing
Agent (as such terms are defined in the Indenture) by
10:00 A.M., Chicago time, on the purchase date (a
"Liquidity Drawing"), provided that in the event the
purchase date coincides with an Interest Payment Date,
the Liquidity Drawing shall not include any accrued
interest on the Bonds (which interest is payable
pursuant to an Interest Drawing), (iv) in the form
attached as Exhibit F hereto, to pay the principal of
and accrued interest in respect of Bonds the payment
of which has been accelerated pursuant to Section 5.04
of the Indenture (an "Acceleration Drawing"), or (v)
in the form attached as Exhibit G hereto to pay the
principal amount of Bonds maturing on November 1, 2007
(a "Stated Maturity Drawing"), each certificate to
state therein that it is given by your duly authorized
officer and dated the date such certificate is
presented hereunder. No drawings shall be made under
this Letter of Credit for Pledged Bonds or Company
Bonds (as defined in the Indenture).
All drawings shall be made by presentation of each Payment Document at our
office at 135 South LaSalle Street, Attention: Trade Services, Chicago,
Illinois 60674-9135 as aforesaid, by tested telex (at telex number (312)
673-2700 Answerback: ABNAMROCGO) or by telecopier (at telecopier number (312)
606-8435), without further need of documentation, including the original of
this Letter of Credit, it being understood that each Payment Document
Page 2 of 22 Pages
<PAGE> 38
so submitted is to be the sole operative instrument of drawing. You shall use
your best efforts to give telephonic notice of a drawing to the Bank at its
Letter of Credit Department, ((312) 904-6323) on the Business Day preceding the
day of such drawing (but such notice shall not be a condition to drawing
hereunder and you shall have no liability for not doing so).
We agree to honor and pay the amount of any Interest, Redemption,
Liquidity, Acceleration or Stated Maturity Drawing if presented in compliance
with all of the terms of this Letter of Credit. If such drawing, other than a
Liquidity Drawing or an Interest Drawing, is presented prior to 11:00 A.M.,
Chicago time, on a Business Day, payment shall be made to the account number or
address designated by you of the amount specified, in immediately available
funds, by 10:00 A.M., Chicago time, on the following Business Day. If any such
drawing, other than a Liquidity Drawing or an Interest Drawing, is presented at
or after 11:00 A.M., Chicago time, on a Business Day, payment shall be made to
the account number or address designated by you of the amount specified, in
immediately available funds, by 1:30 P.M., Chicago time, on the following
Business Day. If a Liquidity Drawing or an Interest Drawing is presented prior
to 10:30 A.M., Chicago time, on a Business Day, payment shall be made to the
account number or address designated by you of the amount specified, in
immediately available funds, by 1:30 P.M., Chicago time, on the same Business
Day. If a Liquidity Drawing or an Interest Drawing is presented at or after
10:30 A.M., Chicago time, payment shall be made to the account number or
address designated by you of the amount specified, in immediately available
funds, by 10:00 A.M., Chicago time, on the following Business Day. Payments
made hereunder shall be made by wire transfer to you or your designee or by
deposit into your account with us in accordance with the instructions specified
by the Trustee in the drawing certificate relating to a particular drawing
hereunder. "Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the city in which the principal
corporate trust office of the Trustee is located, or in the City of Chicago,
Illinois, are required or authorized by law or executive order to remain
closed, or (iii) a day on which the New York Stock Exchange is closed.
The Available Amount (as hereinafter defined) will be reduced
automatically by the amount of any drawing hereunder; provided, however, that
the amount of any Interest Drawing hereunder, less the amount of the reduction
in the Available Amount attributable to interest as specified in a certificate
in the form of Exhibit D or H hereto, shall be automatically reinstated
effective the eleventh (11th) calendar day from the date of such drawing unless
you shall have received notice to the contrary by telecopy (or other facsimile
telecommunications) within ten (10) calendar days of the date of any Interest
Drawing. After payment by us of a Liquidity Drawing, the obligation of the
Bank to honor drawings under this Letter of Credit will be automatically
reduced by an amount equal to the Original Purchase Price (as defined below) of
any Bonds (or portions thereof) purchased pursuant to said drawing. In
addition, prior to the Conversion Date, in the event of the remarketing of the
Bonds (or portions thereof) previously purchased with the proceeds of a
Liquidity Drawing, or in the event we are otherwise reimbursed for amounts
owing with respect to such drawing, our obligation to honor drawings hereunder
will be automatically reinstated concurrently upon receipt by us, or the
Trustee or the Tender Agent on our behalf, of an amount equal to the Original
Purchase Price of such Bonds (or portion thereof); the amount of such
reinstatement shall be equal to the Original Purchase Price of such Bonds (or
portions thereof). "Original Purchase Price" shall mean the principal amount
of any
Page 3 of 22 Pages
<PAGE> 39
Bond purchased with the proceeds of a Liquidity Drawing plus the amount of
accrued interest on such Bond paid with the proceeds of a Liquidity Drawing (and
not pursuant to an Interest Drawing) upon such purchase.
Upon receipt by us of a certificate of the Trustee in the form of Exhibit
D or H hereto, the Letter of Credit will automatically and permanently reduce
the amount available to be drawn hereunder by the amount specified in such
certificate. Such reduction shall be effective as of the next Business Day
following the date of delivery of such certificate.
Upon any permanent reduction of the amounts available to be drawn under
this Letter of Credit, as provided herein, we may deliver to you a substitute
Letter of Credit in exchange for this Letter of Credit or an amendment to this
Letter of Credit substantially in the form of Exhibit I hereto to reflect any
such reduction. If we deliver to you such a substitute Letter of Credit you
shall simultaneously surrender to us for cancellation the Letter of Credit then
in your possession.
The "Available Amount" shall mean the Original Stated Amount (i) less the
amount of all prior reductions pursuant to Interest, Redemption, Liquidity,
Acceleration or Stated Maturity Drawings, (ii) less the amount of any reduction
thereof pursuant to a reduction certificate in the form of Exhibit D or H
hereto to the extent such reduction is not already accounted for by a reduction
in the Available Amount pursuant to (i) above, (iii) plus the amount of all
reinstatements as above provided.
Prior to the Termination Date, we may extend the Stated Expiration Date
from time to time at the request of the Applicant by delivering to you an
amendment to this Letter of Credit in the form of Exhibit K hereto designating
the date to which the Stated Expiration Date is being extended. Each such
extension of the Stated Expiration Date shall become effective on the Business
Day following delivery of such notice to you and thereafter all references in
this Letter of Credit to the Stated Expiration Date shall be deemed to be
references to the date designated as such in such notice. Any date to which
the Stated Expiration Date has been extended as herein provided may be extended
in a like manner.
Upon the Termination Date this Letter of Credit shall automatically
terminate and be delivered to the Bank for cancellation.
This Letter of Credit is transferable in whole only to your successor as
Trustee. Any such transfer (including any successive transfer) shall be
effective upon receipt by us (which receipt shall be subsequently confirmed in
writing to the transferor and the transferee by the Bank) of a signed copy of
the instrument effecting each such transfer signed by the transferor and by the
transferee in the form of Exhibit J hereto (which shall be conclusive evidence
of such transfer) and, in such case, the transferee instead of the transferor
shall, without the necessity of further action, be entitled to all the benefits
of and rights under this Letter of Credit in the transferor's place; provided
that, in such case, any certificates of the Trustee to be provided hereunder
shall be signed by one who states therein that he is a duly authorized officer
or agent of the transferee.
Page 4 of 22 Pages
<PAGE> 40
Communications with respect to this Letter of Credit shall be addressed to
us at ABN AMRO BANK N.V., 135 South LaSalle Street, Chicago, Illinois
60674-9135, Attention: Trade Services, specifically referring to the number of
this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this Letter
of Credit shall be governed by, and construed in accordance with, the terms of
the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (the "Uniform Customs"),
except for Article 41 and the first sentence of Article 48(g) thereof. As to
matters not governed by the Uniform Customs, this Letter of Credit shall be
governed by and construed in accordance with the laws of the State of Illinois,
including without limitation the Uniform Commercial Code as in effect in the
State of Illinois.
All payments made by us hereunder shall be made from our funds and not
with the funds of any other person.
This Letter of Credit sets forth in full the terms of our undertaking, and
such undertaking shall not in any way be modified or amended by reference to
any other document whatsoever.
ABN AMRO BANK N.V.
By
-------------------------------------
Its
----------------------------------
By
-------------------------------------
Its
----------------------------------
Page 5 of 22 Pages
<PAGE> 41
EXHIBIT A
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF CONVERSION DATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"), which
has been established by you for the account of [Name of Applicant], in favor of
the Trustee.
The undersigned hereby certifies and confirms that an Adjustable Rate
Conversion Date [or a CP Rate Conversion Date] with respect to all of the Bonds
has occurred on [insert date], and, accordingly, said Letter of Credit shall
terminate on the Business Day after such Conversion Date in accordance with its
terms.
All defined terms used herein which are not otherwise defined herein shall
have the same meaning as in the Letter of Credit.
---------------------------------------
as Trustee
By
-------------------------------------
[Title of Authorized Representative]
Page 6 of 22 Pages
<PAGE> 42
EXHIBIT B
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF TERMINATION
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"), which
has been established by you for the account of [Name of Applicant] in favor of
the Trustee.
The undersigned hereby certifies and confirms that [(i) no Bonds (as
defined in the Letter of Credit) remain Outstanding within the meaning of the
Indenture, (ii) all drawings required to be made under the Indenture and
available under the Letter of Credit have been made and honored, (iii) a
substitute letter of credit has been issued to replace the Letter of Credit
pursuant to the Indenture, or (iv) the Trustee is required to terminate the
Letter of Credit in accordance with the terms of the Indenture and,
accordingly, the Letter of Credit shall be terminated in accordance with its
terms.
All defined terms used herein which are not otherwise defined shall have
the same meaning as in the Letter of Credit.
--------------------------------------
as Trustee
By
------------------------------------
[Title of Authorized Representative]
Page 7 of 22 Pages
<PAGE> 43
By Telecopy or Tested Telex
EXHIBIT C
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
INTEREST DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of (the
"Beneficiary"), hereby CERTIFIES on behalf of the Beneficiary as follows with
respect to (i) that certain Irrevocable Transferable Letter of Credit No.
S550123 dated November 15, 1995 (the "Letter of Credit"), issued by ABN AMRO
BANK N.V. (the "Bank") in favor of the Beneficiary; (ii) those certain Bonds
(as defined in the Letter of Credit); and (iii) that certain Indenture (as
defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit)
under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of $
under the Letter of Credit pursuant to the Indenture with respect to the
payment of interest due on all Bonds outstanding on the Interest Payment Date
(as defined in the Indenture) occurring on [insert applicable date][, other
than Company Bonds or Pledged Bonds (as defined in the Indenture)].
3. The amount of the drawing is equal to the amount required to be drawn
by the Trustee pursuant to Section 5.04 of the Indenture.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms of the Indenture and, when added to the amount of any
other drawing under the Letter of Credit made simultaneously herewith, does not
exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to
__________________, ABA Number _________________, Account Number ____________,
Attention: ___________________, Re: ___________________.
Page 8 of 22 Pages
<PAGE> 44
IN WITNESS WHEREOF, this Certificate has been executed this ___________
day of ______________, 19___.
----------------------------------------
as Trustee
By
--------------------------------------
[Title of Authorized Representative]
Page 9 of 22 Pages
<PAGE> 45
By Telecopy or Tested Telex
EXHIBIT D
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
REDEMPTION DRAWING AND REDUCTION CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_______________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
issued by ABN AMRO BANK N.V. (the "Bank") in favor of the Beneficiary; (ii)
those certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit)
under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$_________ under the Letter of Credit pursuant to Section 5.04 of the
Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount
of Bonds to be redeemed by the Issuer (as defined in the Letter of Credit)
pursuant to Section 5.04 of the Indenture on [insert applicable date] (the
"Redemption Date") [other than Company Bonds or Pledged Bonds (as defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) to the Redemption
Date, provided that in the event the Redemption Date coincides with an Interest
Payment Date this drawing does not include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph 2 above:
(i) $ is demanded in respect of the principal amount of the Bonds
referred to in subparagraph (a) above; and
(ii) $ is demanded in respect of accrued interest on such Bonds.
Page 10 of 22 Pages
<PAGE> 46
4. Payment by the Bank pursuant to this drawing shall be made to , ABA
Number , Account Number , Attention: , Re: .
5. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
6. Upon payment of the amount drawn hereunder, the Bank is hereby directed
to permanently reduce the Available Amount by $[insert amount of reduction] and
the Available Amount shall thereupon equal $[insert new Available Amount]. The
Available Amount has been reduced by an amount equal to the principal of Bonds
paid with this drawing and an amount equal to forty five (45) days' interest
thereon at the Cap Interest Rate (as defined in the Letter of Credit).
7. Of the amount of the reduction stated in paragraph 6 above:
(i) $ is attributable to the principal amount of Bonds redeemed;
and
(ii) $ is attributable to interest on such Bonds (i.e., 45 days'
interest thereon at the Cap Interest Rate).
8. The amount of the reduction in the Available Amount has been computed
in accordance with the provisions of the Letter of Credit.
9. Following the reduction, the Available Amount shall be at least equal
to the aggregate principal amount of the Bonds outstanding (to the extent such
Bonds are not Pledged Bonds or Company Bonds (as defined in the Indenture))
plus forty five (45) days' interest thereon at the Cap Interest Rate.
10. In the case of a redemption pursuant to Section 3.01 of the Indenture,
the Trustee, prior to giving notice of redemption to the owners of the Bonds,
received written evidence from the Bank that the Bank has consented to such
redemption.
IN WITNESS WHEREOF, this Certificate has been executed this day of ,
19___.
-----------------------------------------
as Trustee
By
---------------------------------------
[Title of Authorized Representative]
Page 11 of 22 Pages
<PAGE> 47
By Telecopy or Tested Telex
EXHIBIT E
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
LIQUIDITY DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_________________________ (the "Beneficiary") hereby CERTIFIES as follows with
respect to (i) that certain Irrevocable Transferable Letter of Credit No.
S550123 dated November 15, 1995 (the "Letter of Credit") issued by ABN AMRO BANK
N.V. (the "Bank") in favor of the Beneficiary; (ii) those certain Bonds (as
defined in the Letter of Credit); and (iii) that certain Indenture (as defined
in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing under the Letter of
Credit in the amount of $____________ with respect to the payment of the
purchase price of Bonds tendered or deemed tendered for purchase in accordance
with Section 3.08 of the Indenture and to be purchased on [insert applicable
date] (the "Purchase Date") which Bonds have not been remarketed as provided in
the Indenture or the purchase price of which has not been received by the Tender
Agent or the Remarketing Agent (as such terms are defined in the Indenture) by
10:00 A.M., Chicago time, on said Purchase Date.
3. (a) The amount of the drawing is equal to (i) the principal amount of
Bonds to be purchased pursuant to the Indenture on the Purchase Date [other
than Pledged Bonds and Company Bonds (as such terms are defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) (or if none, the
date of issuance of the Bonds) to the Purchase Date, provided that in the event
the Purchase Date coincides with an Interest Payment Date this drawing does not
include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph (2) above:
Page 12 of 22 Pages
<PAGE> 48
(i) $__________ is demanded in respect of the principal portion of
the purchase price of the Bonds referred to in subparagraph (2) above;
and
(ii) $__________ is demanded in respect of payment of the interest
portion of the purchase price of such Bonds.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
5. If the Bonds are not then in a Book-Entry System (as defined in the
Indenture), the Beneficiary will register or cause to be registered in the name
of the Applicant, upon payment of the amount drawn hereunder, Bonds in the
principal amount of the Bonds being purchased with the amounts drawn hereunder
and will deliver such Bonds to the Trustee in accordance with the Indenture.
If the Bonds are then in a Book-Entry System, the records of the Securities
Depository (as defined in the Indenture) will reflect the Bonds being held for
the account of the Trustee and the Trustee will maintain such beneficial
interest for the benefit of the Bank as provided in the Indenture.
6. Payment by the Bank pursuant to this drawing shall be made to _________,
ABA Number __________,Account Number __________,Attention:____________,
Re:___________.
IN WITNESS WHEREOF, this Certificate has been executed this _______ day of
___________, 19___.
----------------------------------------
as Trustee
By
--------------------------------------
[Title of Authorized Representative]
Page 13 of 22 Pages
<PAGE> 49
By Telecopy or Tested Telex
EXHIBIT F
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
ACCELERATION DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of (the
"Beneficiary"), hereby CERTIFIES on behalf of the Beneficiary as follows with
respect to (i) that certain Irrevocable Transferable Letter of Credit No.
S550123 dated November 15, 1995 (the "Letter of Credit"), issued by ABN AMRO
BANK N.V. (the "Bank") in favor of the Beneficiary; (ii) those certain Bonds
(as defined in the Letter of Credit); and (iii) that certain Indenture (as
defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. An Event of Default has occurred under subsection [insert subsection]
of Section 6.01 of the Indenture and the Trustee has declared the principal of
and accrued interest on all Bonds then outstanding immediately due and payable.
The Beneficiary is entitled to make this drawing in the amount of $ under the
Letter of Credit pursuant to Section 5.04 of the Indenture in order to pay the
principal of and interest accrued on the Bonds due to an acceleration thereof
in accordance with Section 6.02 of the Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount of
Bonds outstanding on [insert date of acceleration] (the "Acceleration Date")
[other than Pledged Bonds or Company Bonds (as such terms are defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) (or if none, the
date of issuance of the Bonds) to the Acceleration Date.
(b) Of the amount stated in paragraph 2 above:
(i) $___________ is demanded in respect of the principal portion of
the Bonds referred to in subparagraph (a) above; and
(ii) $___________ is demanded in respect of accrued interest on such
Bonds.
Page 14 of 22 Pages
<PAGE> 50
4. The amount of this drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
5. Payment by the Bank pursuant to this drawing shall be made to
______________________, ABA Number __________________,
Account Number __________________, Attention: ___________________,
Re: _________________.
IN WITNESS WHEREOF, this Certificate has been executed this ______ day of
__________, 19___.
----------------------------------------
as Trustee
By
--------------------------------------
[Title of Authorized Representative]
Page 15 of 22 Pages
<PAGE> 51
By Telecopy or Tested Telex
EXHIBIT G
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
STATED MATURITY DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
___________________________ (the "Beneficiary"), hereby CERTIFIES on behalf of
the Beneficiary as follows with respect to (i) that certain Irrevocable
Transferable Letter of Credit No. S550123 dated November 15, 1995 (the "Letter
of Credit"), issued by ABN AMRO BANK N.V. (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit);
and (iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$________ under the Letter of Credit pursuant to Section 5.04 of the Indenture.
3. The amount of this drawing is equal to the principal amount of Bonds
outstanding on __________, ____________, the maturity date thereof as specified
in Section 5.04 of the Indenture[,other than Pledged Bonds or Company Bonds
(as such terms are defined in the Indenture)].
4. The amount of this drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit) .
5. Payment by the Bank pursuant to this drawing shall be made to __________
_________, ABA Number ________________, Account Number _________________,
Attention:____________________ , Re:_________________ .
Page 16 of 22 Pages
<PAGE> 52
IN WITNESS WHEREOF, this Certificate has been executed this _______ day
of ______________ , ______.
-----------------------------------------
as Trustee
By
---------------------------------------
[Title of Authorized Representative]
Page 17 of 22 Pages
<PAGE> 53
EXHIBIT H
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
REDUCTION CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned hereby CERTIFIES with respect to (i) that certain
Irrevocable Transferable Letter of Credit No. S550123 dated November 15, 1995
(the "Letter of Credit"), issued by ABN AMRO BANK N.V. (the "Bank") in favor of
the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit);
and (iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. Upon receipt by the Bank of this Certificate, the Available Amount (as
defined in the Letter of Credit) shall be reduced by $ and the Available Amount
shall thereupon equal $ _______ .$ _______ of the new Available Amount is
attributable to interest.
3. The amount of the reduction in the Available Amount has been computed
in accordance with the provisions of the Letter of Credit.
4. Following the reduction, the Available Amount shall be at least equal
to the aggregate principal amount of the Bonds outstanding (other than Pledged
Bonds or Company Bonds (as such terms are defined in the Indenture)) plus
forty-five (45) days' interest thereon at the Cap Interest Rate (as defined in
the Letter of Credit).
IN WITNESS WHEREOF, this Certificate has been executed this _____ day of __
_____________ , 19____.
-----------------------------------------
as Trustee
By
---------------------------------------
[Title of Authorized Representative]
Page 18 of 22 Pages
<PAGE> 54
EXHIBIT I
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF AMENDMENT
[TRUSTEE]
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain
Reimbursement Agreement dated as of November 1, 1995, among Griffith Micro
Science, Inc. and us, the Available Amount (as defined in the Letter of Credit)
has been reduced to $ __________ .
This letter should be attached to the Letter of Credit and made a part
thereof.
ABN AMRO BANK N.V.
By
-------------------------------------
Its
----------------------------------
By
--------------------------------------
Its
-----------------------------------
Page 19 of 22 Pages
<PAGE> 55
EXHIBIT J
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
TRANSFER CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
Ladies and Gentlemen:
Reference is made to that certain Irrevocable Transferable Letter of
Credit No. S550123 dated November 15,1995 (the "Letter of Credit") which has
been established by the Bank in favor of ____________.
The undersigned, a duly authorized officer or agent of [Name of
Transferor], has transferred and assigned (and hereby confirms to you said
transfer and assignment) all of its rights in and under said Letter of Credit
to [Name of Transferee] and confirms that [Name of Transferor] no longer has
any rights under or interest in said Letter of Credit.
Transferor and Transferee have indicated on the face of said Letter of
Credit that it has been transferred and assigned to Transferee.
The undersigned, a duly authorized officer or agent of the Transferee,
hereby certifies that the Transferee is a duly authorized Transferee under the
terms of said Letter of
<PAGE> 56
Credit and is accordingly entitled, upon presentation of the documents called
for therein, to receive payment thereunder.
-----------------------------------------
Name of Transferor
By
---------------------------------------
[Title of Authorized Officer
of Transferor]
-----------------------------------------
Name of Transferee
By
---------------------------------------
[Title of Authorized Officer
of Transferor]
Page 21 of 22 Pages
<PAGE> 57
EXHIBIT K
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF EXTENSION
[TRUSTEE]
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain
Reimbursement Agreement dated as of November 1, 1995, between [Name of
Applicant] and us, the Stated Expiration Date (as defined in the Letter of
Credit) has been extended to _____________, ____.
This letter should be attached to the Letter of Credit and made a part
thereof.
ABN AMRO BANK N.V.
By
-------------------------------------
Its
----------------------------------
By
-------------------------------------
Its
----------------------------------
Page 22 of 22 Pages
<PAGE> 1
EXHIBIT 10.9(d)
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
November 15, 1995
**U.S. $4,555,480
No. S550123
Harris Trust and Savings, Bank as trustee (the
"Trustee") under the Indenture of Trust
dated as of November 1, 1995 (the
"Indenture"), between Mecklenburg County
Industrial Facilities and Pollution Control
Financing Authority North Carolina
(the"Issuer"), and the Trustee
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention: Indenture Trust Division
Ladies and Gentlemen:
We hereby establish in your favor as Trustee for the benefit of the
holders of the Bonds (as hereinafter defined), our irrevocable transferable
Letter of Credit No. S550123 for the account of Griffith Micro Science, Inc.
(the "Applicant"), whereby we hereby irrevocably authorize you to draw on us
from time to time, from and after the date hereof to and including the earliest
to occur of our close of business on: (i) November 15, 1998 (as extended from
time to time, the "Stated Expiration Date"), (ii) the earlier of (A) the date
which is the Business Day following an Adjustable Rate Conversion Date or a CP
Rate Conversion Date (as such terms are defined in the Indenture) with respect
to all of the Bonds as such date is specified in a certificate in the form of
Exhibit A hereto (the "Conversion Date") or (B) the date on which the Bank
honors drawings under the Letter of Credit on or after the Conversion Date,
(iii) the date which is the Business Day following receipt from you of a
certificate in the form set forth as Exhibit B hereto, (iv) the date on which
an Acceleration Drawing is honored by us, and (v) the date which is fifteen
(15) days following receipt by you of a written notice from us specifying the
occurrence of an Event of Default under the Reimbursement Agreement dated as of
November 1, 1995, between the Applicant and us (the "Reimbursement Agreement")
and directing you to accelerate the Bonds (the earliest of such dates being
referred to herein as the "Termination Date"), a maximum aggregate amount not
exceeding Four Million Five Hundred Fifty Five Thousand Four Hundred Eighty
Dollars (U.S. $4,555,480 - the "Original Stated Amount") to pay principal of
and accrued interest on, or the purchase price of, the $4,500,000 Mecklenburg
County Industrial Facilities and Pollution Control Financing Authority North
Carolina Industrial Development Agency Industrial Development Revenue Bonds
Series 1995 (Griffith Micro Science, Inc. Project) issued by the Issuer (the
"Bonds"), in accordance with the terms hereof (said $4,555,480 having been
calculated to be equal to $4,500,000, the original principal amount of the
Bonds, plus $55,480 which is at least forty-five (45) days' accrued interest on
said principal amount of the Bonds at the rate of ten percent (10%) per annum
(the "Cap Interest Rate")). This credit is
<PAGE> 2
available to you against presentation of the following documents (the "Payment
Documents") presented to ABN AMRO BANK N.V. (the "Bank") as described below:
A certificate (with all blanks appropriately
completed) (i) in the form attached as Exhibit C
hereto to pay accrued interest on the Bonds as
provided for under Section 5.04 of the Indenture (an
"Interest Drawing"), (ii) in the form attached as
Exhibit D hereto to pay the principal amount of the
accrued interest on the Bonds in respect of any
redemption of the Bonds as provided for in Section
5.04 of the Indenture (a "Redemption Drawing"),
provided that in the event the date of redemption or
purchase coincides with an Interest Payment Date (as
defined in the Indenture) the Redemption Drawing shall
not include any accrued interest on the Bonds (which
interest it payable pursuant to an Interest Drawing),
(iii) in the form attached as Exhibit E hereto, to pay
the purchase price of Bonds tendered or deemed
tendered for purchase as provided for in Section 3.08
of the indenture which have not been successfully
remarketed or for which the purchase price has not
been received by the Tender Agent or the Remarketing
Agent (as such terms are defined in the Indenture) by
10:00 A.M., Chicago time, on the purchase date (a
"Liquidity Drawing"), provided that in the event the
purchase date coincides with an Interest Payment Date,
the Liquidity Drawing shall not include any accrued
interest on the Bonds (which interest is payable
pursuant to an Interest Drawing), (iv) in the form
attached as Exhibit F hereto, to pay the principal of
and accrued interest in respect of Bonds the payment
of which has been accelerated pursuant to Section 5.04
of the Indenture (an "Acceleration Drawing"), or (v)
in the form attached as Exhibit G hereto to pay the
principal amount of Bonds maturing on November 1, 2007
(a "Stated Maturity Drawing"), each certificate to
state therein that it is given by your duly authorized
officer and dated the date such certificate is
presented hereunder. No drawings shall be made under
this Letter of Credit for Pledged Bonds or Company
Bonds (as defined in the Indenture).
All drawings shall be made by presentation of each Payment Document at our
office at 135 South LaSalle Street, Attention: Trade Services, Chicago,
Illinois 60674-9135 as aforesaid, by tested telex (at telex number (312)
673-2700 Answerback: ABNAMROCGO) or by telecopier (at telecopier number (312)
606-8435), without further need of documentation, including the original of
this Letter of Credit, it being understood that each Payment Document so
submitted is to be the sole operative instrument of drawing. You shall use
your best efforts to give telephonic notice of a drawing to the Bank at its
Letter of Credit Department, ((312) 904-6323) on the Business Day preceding the
day of such drawing (but such notice shall not be a condition to drawing
hereunder and you shall have no liability for not doing so).
2
<PAGE> 3
We agree to honor and pay the amount of any Interest, Redemption,
Liquidity, Acceleration or Stated Maturity Drawing if presented in compliance
with all of the terms of this Letter of Credit. If such drawing, other than a
Liquidity Drawing or an Interest Drawing, is presented prior to 11:00 A.M.,
Chicago time, on a Business Day, payment shall be made to the account number or
address designated by you of the amount specified, in immediately available
funds, by 10:00 A.M., Chicago time, on the following Business Day. If any such
drawing, other than a Liquidity Drawing or an Interest Drawing, is presented at
or after 11:00 A.M., Chicago time, on a Business Day, payment shall be made to
the account number or address designated by you of the amount specified, in
immediately available funds, by 1:30 P.M., Chicago time, on the following
Business Day. If a Liquidity Drawing or an Interest Drawing is presented prior
to 10:30 A.M., Chicago time, on a Business Day, payment shall be made to the
account number or address designated by you of the amount specified, in
immediately available funds, by 1:30 P.M., Chicago time, on the same Business
Day. If a Liquidity Drawing or an Interest Drawing is presented at or after
10:30 A.M., Chicago time, payment shall be made to the account number or
address designated by you of the amount specified, in immediately available
funds, by 10:00 A.M., Chicago time, on the following Business Day. Payments
made hereunder shall be made by wire transfer to you or your designee or by
deposit into your account with us in accordance with the instructions specified
by the Trustee in the drawing certificate relating to a particular drawing
hereunder. "Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the city in which the principal
corporate trust office of the Trustee is located, or in the City of Chicago,
Illinois, are required or authorized by law or executive order to remain
closed, or (iii) a day on which the New York Stock Exchange is closed.
The Available Amount (as hereinafter defined) will be reduced
automatically by the amount of any drawing hereunder; provided, however, that
the amount of any Interest Drawing hereunder, less the amount of the reduction
in the Available Amount attributable to interest as specified in a certificate
in the form of Exhibit D or H hereto, shall be automatically reinstated
effective the eleventh (11th) calendar day from the date of such drawing unless
you shall have received notice to the contrary by telecopy (or other facsimile
telecommunications) within ten (10) calendar days of the date of any Interest
Drawing. After payment by us of a Liquidity Drawing, the obligation of the
Bank to honor drawings under this Letter of Credit will be automatically
reduced by an amount equal to the Original Purchase Price (as defined below) of
any Bonds (or portions thereof) purchased pursuant to said drawing. In
addition, prior to the Conversion Date, in the event of the remarketing of the
Bonds (or portions thereof) previously purchased with the proceeds of a
Liquidity Drawing, or in the event we are otherwise reimbursed for amounts
owing with respect to such drawing, our obligation to honor drawings hereunder
will be automatically reinstated concurrently upon receipt by us, or the
Trustee or the Tender Agent on our behalf, of an amount equal to the Original
Purchase Price of such Bonds (or portion thereof); the amount of such
reinstatement shall be equal to the Original Purchase Price of such Bonds (or
portions thereof). "Original Purchase Price" shall mean the principal amount
of any Bond purchased with the proceeds of a Liquidity Drawing plus the amount
of accrued interest on such Bond paid with the proceeds of a Liquidity Drawing
(and not pursuant to an Interest Drawing) upon such purchase.
3
<PAGE> 4
Upon receipt by us of a certificate of the Trustee in the form of Exhibit
D or H hereto, the Letter of Credit will automatically and permanently reduce
the amount available to be drawn hereunder by the amount specified in such
certificate. Such reduction shall be effective as of the next Business Day
following the date of delivery of such certificate.
Upon any permanent reduction of the amounts available to be drawn under
this Letter of Credit, as provided herein, we may deliver to you a substitute
Letter of Credit in exchange for this Letter of Credit or an amendment to this
Letter of Credit substantially in the form of Exhibit I hereto to reflect any
such reduction. If we deliver to you such a substitute Letter of Credit you
shall simultaneously surrender to us for cancellation the Letter of Credit then
in your possession.
The "Available Amount" shall mean the Original Stated Amount (i) less the
amount of all prior reductions pursuant to Interest, Redemption, Liquidity,
Acceleration or Stated Maturity Drawings, (ii) less the amount of any reduction
thereof pursuant to a reduction certificate in the form of Exhibit D or H
hereto to the extent such reduction is not already accounted for by a reduction
in the Available Amount pursuant to (i) above, (iii) plus the amount of all
reinstatements as above provided.
Prior to the Termination Date, we may extend the Stated Expiration Date
from time to time at the request of the Applicant by delivering to you an
amendment to this Letter of Credit in the form of Exhibit K hereto designating
the date to which the Stated Expiration Date is being extended. Each such
extension of the Stated Expiration Date shall become effective on the Business
Day following delivery of such notice to you and thereafter all references in
this Letter of Credit to the Stated Expiration Date shall be deemed to be
references to the date designated as such in such notice. Any date to which
the Stated Expiration Date has been extended as herein provided may be extended
in a like manner.
Upon the Termination Date this Letter of Credit shall automatically
terminate and be delivered to the Bank for cancellation.
This Letter of Credit is transferable in whole only to your successor as
Trustee. Any such transfer (including any successive transfer) shall be
effective upon receipt by us (which receipt shall be subsequently confirmed in
writing to the transferor and the transferee by the Bank) of a signed copy of
the instrument effecting each such transfer signed by the transferor and by the
transferee in the form of Exhibit J hereto (which shall be conclusive evidence
of such transfer) and, in such case, the transferee instead of the transferor
shall, without the necessity of further action, be entitled to all the benefits
of and rights under this Letter of Credit in the transferor's place; provided
that, in such case, any certificates of the Trustee to be provided hereunder
shall be signed by one who states therein that he is a duly authorized officer
or agent of the transferee.
Communications with respect to this Letter of Credit shall be addressed to
us at ABN AMRO BANK N.V., 135 South LaSalle Street, Chicago, Illinois
60674-9135, Attention: Trade Services, specifically referring to the number of
this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this Letter
of Credit shall be governed by, and construed in accordance with, the terms of
the Uniform Customs and Practice
4
<PAGE> 5
for Documentary Credits (1993 Revision), International Chamber of Commerce
publication No. 500 (the "Uniform Customs"), except for Article 41 and the
first sentence of Article 48(g) thereof. As to matters not governed by the
Uniform Customs, this Letter of Credit shall be governed by and construed in
accordance with the laws of the State of Illinois, including without limitation
the Uniform Commercial Code as in effect in the State of Illinois.
All payments made by us hereunder shall be made from our funds and not
with the funds of any other person.
This Letter of Credit sets forth in full the terms of our undertaking, and
such undertaking shall not in any way be modified or amended by reference to
any other document whatsoever.
ABN AMRO BANK N.V.
By: /s/ Robert J. Graft
------------------------------
Its: Group Vice President
By: /s/ Adrienne H. Baker
------------------------------
Its: Assistant Vice President
5
<PAGE> 6
EXHIBIT A
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF CONVERSION DATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"), which
has been established by you for the account [Name of Applicant], in favor of
the Trustee.
The undersigned hereby certifies and confirms that an Adjustable Rate
Conversion Date [or a CP Rate Conversion Date] with respect to all the Bonds
has occurred on [insert date], and, accordingly, said Letter of Credit shall
terminate on the Business Day after such Conversion Date in accordance with its
terms.
All defined terms used herein which are not otherwise defined herein shall
have the same meaning as in the Letter of Credit.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 7
EXHIBIT B
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF TERMINATION
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"), which
has been established by you for the account of [Name of Applicant] in favor of
the Trustee.
The undersigned hereby certifies and confirms that [(i) no Bonds (as
defined in the Letter of Credit) remain Outstanding within the meaning of the
Indenture, (ii) all drawings required to be made under the Indenture and
available under the Letter of Credit have been made and honored, (iii) a
substitute letter of credit has been issued to replace the Letter of Credit
pursuant to the Indenture, or (iv) the Trustee is required to terminate the
Letter of Credit in accordance with the terms of the Indenture and,
accordingly, the Letter of Credit shall be terminated in accordance with its
terms.
All defined terms used herein which are not otherwise defined shall have
the same meaning as in the Letter of Credit.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 8
By Telecopy or Tested Telex
EXHIBIT C
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
INTEREST DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
____________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
issued by ABN AMRO BANK N.V. (the "Bank") in favor of the Beneficiary; (ii)
those certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter or Credit):
1. the Beneficiary is the Trustee (as defined in the Letter of Credit)
under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of $_____
under the Letter of Credit pursuant to the Indenture with respect to the
payment of interest due on all Bonds outstanding on the Interest Payment Date
(as defined in the Indenture) occurring on [insert applicable date][,other than
Company Bonds or Pledged Bonds (as defined in the Indenture)].
3. The amount of the drawing is equal to the amount required to be drawn
by the Trustee pursuant to Section 5.04 of the Indenture.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms of the Indenture and, when added to the amount of any
other drawing under the Letter of Credit made simultaneously herewith, does not
exceed the Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to _________,
ABA Number ______________________, Account Number _______________, Attention:
_______________, Re: ____________.
<PAGE> 9
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of___
_____, 19__.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 10
By Telecopy or Tested Telex
EXHIBIT D
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
REDEMPTION DRAWING AND REDUCTION CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
issued by ABN AMRO BANK N.V. (the "Bank") in favor of the Beneficiary; (ii)
those certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of Credit)
under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of $
under the Letter of Credit pursuant to Section 5.04 of the Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount of
Bonds to be redeemed by the Issuer (as defined in the Letter of Credit)
pursuant to Section 5.04 of the Indenture on [insert applicable date] (the
"Redemption Date") [other than Company Bonds or Pledged Bonds (as defined in
the Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) to the Redemption
Date, provided that in the event the Redemption Date coincides with an Interest
Payment Date this drawing does not include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph 2 above:
(i) $__________ is demanded in respect of the principal amount of the
Bonds referred to in subparagraph (a) above; and
(ii) $__________ is demanded in respect of accrued interest on such
Bonds.
<PAGE> 11
4. Payment by the Bank pursuant to this drawing shall be made to _____, ABA
Number _______________, Account Number ______________, Attention:______________
Re: ____________.
5. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
6. Upon payment of the amount drawn hereunder, the Bank is hereby directed
to permanently reduce the Available Amount by $[insert amount of reduction] and
the Available Amount shall thereupon equal $[insert new Available Amount]. The
Available Amount has been reduced by an amount equal to the principal of Bonds
paid with this drawing and an amount equal to forty five (45) days' interest
thereon at the Cap Interest Rate (as defined in the Letter of Credit).
7. Of the amount of the reduction stated in paragraph 6 above:
(i) $ is attributable to the principal amount of Bonds redeemed;
and
(ii) $ is attributable to interest on such Bonds (i.e., 45 days'
interest thereon at the Cap Interest Rate).
8. The amount of the reduction in the Available Amount has been computed
in accordance with the provisions of the Letter of Credit.
9. Following the reduction, the Available Amount shall be at least equal
to the aggregate principal amount of the Bonds outstanding (to the extent such
Bonds are not Pledged Bonds or Company Bonds (as defined in the Indenture))
plus forty five (45) days' interest thereon at the Cap Interest Rate.
10. In the case of a redemption pursuant to Section 3.01 of the Indenture,
the Trustee, prior to giving notice of redemption to the owners of the Bonds,
received written evidence from the Bank that the Bank has consented to such
redemption.
IN WITNESS WHEREOF, this Certificate has been executed this ______ day of
__________, 19__.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 12
By Telecopy or Tested Telex
EXHIBIT E
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
LIQUIDITY DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
__________________ (the "Beneficiary") hereby CERTIFIES as follows with respect
to (i) that certain Irrevocable Transferable Letter of Credit No. S550123 dated
November 15, 1995 (the "Letter of Credit") issued by ABN AMRO BANK N.V. (the
"Bank") in favor of the Beneficiary; (ii) those certain Bonds (as defined in the
Letter of Credit); and (iii) that certain Indenture (as defined in the Letter of
Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing under the Letter of
Credit in the amount of $___________ with respect to the payment of the purchase
price of Bonds tendered or deemed tendered for purchase in accordance with
Section 3.08 of the Indenture and to be purchased on [insert applicable date]
(the "Purchase Date") which Bonds have not been remarketed as provided in the
Indenture or the purchase price of which has not been received by the Tender
Agent or the Remarketing Agent (as such terms are defined in the Indenture) by
10:00 A.M., Chicago time, on said Purchase Date.
3. (a) The amount of the drawing is equal to (i) the principal amount of
Bonds to be purchased pursuant to the Indenture on the Purchase Date [other
than Pledged Bonds and Company Bonds (as such terms are defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) (or if none, the
date of issuance of the Bonds) to the Purchase Date, provided that in the event
the Purchase Date coincides with an Interest Payment Date this drawing does not
include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph (92) above:
(i) $__________ is demanded in respect of the principal portion of
the portion of the purchase price of the Bonds referred to in
subparagraph (2) above; and
<PAGE> 13
(ii) $_________ is demanded in respect of payment of the interest
portion of the purchase price of such Bonds.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
5. If the Bonds are not then in a Book-Entry System (as defined in the
Indenture), the Beneficiary will register or cause to be registered in the name
of the Applicant, upon payment of the amount drawn hereunder, Bonds in the
principal amount of the Bonds being purchased with the amounts drawn hereunder
and will delivery such Bonds to the Trustee in accordance with the Indenture.
If the Bonds are then in a Book-Entry System, the records of the Securities
Depository (as defined in the Indenture) will reflect the Bonds being held for
the account of the Trustee and the Trustee will maintain such beneficial
interest for the benefit of the Bank as provided in the Indenture.
6. Payment by the Bank pursuant to this drawing shall be made to _________
____, ABA Number _________________, Account Number _________, Attention: ______
___________, Re: __________.
IN WITNESS WHEREOF, this Certificate has been executed this ____ day of __
______19__.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 14
By Telecopy or Tested Telex
EXHIBIT F
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
ACCELERATION DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_____________________ (the "Beneficiary"), hereby CERTIFIES on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable Transferable
Letter of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
issued by ABN AMRO BANK N.V. (the "Bank") in favor of the Beneficiary; (ii)
those certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. An Event of Default has occurred under subsection [insert subsection] of
Section 6.01 of the Indenture and the Trustee has declared the principal of and
accrued interest on all Bonds then outstanding immediately due and payable. The
Beneficiary is entitled to make this drawing in the amount of $_________ under
the Letter of Credit pursuant to Section 5.04 of the Indenture in order to pay
the principal of and interest accrued on the Bonds due to an acceleration
thereof in accordance with Section 6.02 of the Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount of
Bonds outstanding on [insert date of acceleration] (the "Acceleration Date")
[other than Pledged Bonds or Company Bonds (as such terms are defined in the
Indenture)], plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date (as defined in the Indenture) (or if none, the
date of issuance of the Bonds) to the Acceleration Date.
(b) Of the amount stated in paragraph 2 above.
(i) $________ is demanded in respect of the principal portion of
the Bonds referred to in subparagraph (2) above; and
(ii) $________ is demanded in respect of accrued interest on such
Bonds.
4. The amount of this drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any drawing
<PAGE> 15
under the Letter of Credit made simultaneously herewith, does not exceed the
Available Amount (as defined in the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to ________
_____, ABA Number _________________, Account Number __________, Attention: ___
____________, Re: _____________.
IN WITNESS WHEREOF, this Certificate has been duly executed this ______ day
of _______________, 19__.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 16
By Telecopy or Tested Telex
EXHIBIT G
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
STATED MATURITY DRAWING CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned individual, a duly authorized representative of ___________
(the "Beneficiary"), hereby CERTIFIES on behalf of the Beneficiary as follows
with respect to (i) that certain Irrevocable Transferable Letter of Credit No.
S550123 dated November 15, 1995 (the "Letter of Credit"), issued by ABN AMRO
BANK N.V. (the "Bank") in favor of the Beneficiary; (ii) those certain Bonds
(as defined in the Letter of Credit); and (iii) that certain Indenture (as
defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of $_____
under the Letter of Credit pursuant to Section 5.04 of the Indenture.
3. The amount of this drawing is equal to the principal amount of Bonds
outstanding on _________, ___________, the maturity date thereof as specified
in Section 5.04 of the Indenture [, other than Pledged Bonds or Company Bonds
(as such terms are defined in the Indenture)].
4. The amount of this drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any drawing under the Letter of Credit made simultaneously
herewith, does not exceed the Available Amount (as defined in the Letter of
Credit).
5. Payment by the Bank pursuant to this drawing shall be made to _________,
______, ABA Number ______________, Account Number ____________, Attention: _____
____________, Re: __________.
IN WITNESS WHEREOF, this Certificate has been duly executed this ______ day
of _______________, 19__.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 17
EXHIBIT H
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
REDUCTION CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
The undersigned hereby CERTIFIES with respect to (i) that certain
Irrevocable Transferable Letter of Credit No. S550123 dated November 15, 1995
(the "Letter of Credit"), issued by ABN AMRO BANK N.V. (the "Bank") in favor of
the Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit);
and (iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. Upon receipt by the Bank of this Certificate, the Available Amount (as
defined in the Letter of Credit) shall be reduced by $ ______ and the Available
Amount shall thereupon equal $_________. $ ________ of the new Available
Amount is attributable to interest.
3. The amount of the reduction in the Available Amount has been computed
in accordance with the provisions of the Letter of Credit.
4. Following the reduction, the Available Amount shall be at least equal
to the aggregate principal amount of the Bonds outstanding (other than Pledged
Bonds or Company Bonds (as such terms are defined in the Indenture)) plus
forty-five (45) days' interest thereon at the Cap Interest Rate (as defined in
the Letter of Credit).
IN WITNESS WHEREOF, this Certificate has been duly executed this ______ day
of_____________, 19__.
---------------------------------------
as Trustee
By ------------------------------------
[Title of Authorized Representative]
<PAGE> 18
By Telecopy or Tested Telex
EXHIBIT I
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF AMENDMENT
[TRUSTEE]
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain
Reimbursement Agreement dated as of November 1, 1995, among Griffith Micro
Science, Inc. and us, the Available Amount (as defined in the Letter of Credit)
has been reduced to $____________.
This letter should be attached to the Letter of Credit and made a part
thereof.
ABN AMRO BANK N.V.
By
---------------------------------
Its
------------------------------
By
---------------------------------
Its
------------------------------
<PAGE> 19
By Telecopy or Tested Telex
EXHIBIT J
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
TRANSFER CERTIFICATE
ABN AMRO BANK N.V.
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attention: Trade Services
Ladies and Gentlemen:
Reference is made to that certain Irrevocable Transferable Letter of
Credit No. S550123 dated November 15, 1995 (the "Letter of Credit") which has
been established by the Bank in favor of _____________.
The undersigned, a duly authorized officer or agent of [Name of
Transferor], has transferred and assigned (and hereby confirms to you said
transfer and assignment) all of its rights in and under said Letter of Credit
to [Name of Transferee] and confirms that [Name of Transferor] no longer has
any rights under or interest in said Letter of Credit.
Transferor and Transferee have indicated on the face of said Letter of
Credit that it has been transferred and assigned to Transferee.
The undersigned, a duly authorized officer or agent of the Transferee,
hereby certifies that the Transferee is a duly authorized Transferee under the
terms of said Letter of Credit and is accordingly entitled, upon presentation
of the documents called for therein, to receive payment thereunder.
-------------------------------------------
Name of Transferor
By
-----------------------------------------
[Title of Authorized Officer of Transferor]
-------------------------------------------
Name of Transferee
By
-----------------------------------------
[Title of Authorized Officer of Transferor]
<PAGE> 20
EXHIBIT K
TO
ABN AMRO BANK N.V.
LETTER OF CREDIT
NO. S550123
NOTICE OF EXTENSION
[TRUSTEE]
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, Illinois 60606
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable Letter
of Credit No. S550123 dated November 15, 1995 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain
Reimbursement Agreement dated as of November 1, 1995, between [Name of
Applicant] and us, the Stated Expiration (as defined in the Letter of Credit)
has been extended to __________, ____.
This letter should be attached to the Letter of Credit and made a part
thereof.
ABN AMRO BANK N.V.
By
--------------------------------
Its
-----------------------------
By
--------------------------------
Its
-----------------------------
<PAGE> 1
EXHIBIT 10.10
STERILIZATION PROCESSING SERVICES AGREEMENT
This agreement (the "Agreement") is made and entered into as of the 1st
day of January 1996, between the Convertors/Custom Sterile Division of Baxter
Healthcare Corporation, with its principal place of business at 1500 Waukegan
Road, McGaw Park, Illinois, 60085-6782 ("Buyer"), and Griffith Micro Science,
Inc., with its principal place of business at 2001 Spring Road, Oak Brook,
Illinois, 60521 ("Seller"). This agreement may also apply to other Baxter
divisions, subsidiaries, suppliers or contract manufacturers as mutually agreed
upon by Buyer and Seller.
1.0 TERM OF AGREEMENT. This Agreement will commence as of the 1st day of
January 1996 and shall continue for [ ** Confidential Treatment requested;
material filed separately with the Commission. ] years to [ * ]. This
Agreement may be extended for [ * ] upon the written consent of both parties.
At the end of the additional [ * ] year term, this Agreement may be extended
for additional [ * ] year terms upon the written consent of both parties.
The initial [ * ] term of this Agreement may also be extended under the
provisions of Section 3.3(d) of this Agreement. This Agreement supersedes the
Sterilization Processing Services Agreement made and entered into as of
January 1, 1993, by Buyer and Seller, including any amendments or modifications
thereto.
2.0 PURCHASE AND SALE OF PROCESSING SERVICES; LABORATORY SERVICES.
2.1 Purchase and Sale of Processing Services. On the terms and
subject to the conditions hereinafter set forth, Buyer agrees to purchase from
Seller, and Seller agrees to perform for Buyer, [ * ] during the term of this
Agreement, including any extension thereof, [ * ] ethylene oxide and ethylene
oxide/nitrogen gas sterilization processing services for the products identified
on Schedule A (the "Products") produced at Buyer's facilities identified on
Schedule A and for which Buyer does not perform its own sterilization processing
services. Such processing services shall be provided at Seller's validated
processing facilities located in [ * ], or at such other validated facility or
facilities operated by Seller as may be mutually agreed upon by both parties.
The facilities and products identified on Schedule A currently represent [ * ]
in the United States [ * ] ethylene oxide or ethylene oxide/nitrogen gas
sterilization processing [ * ] ethylene oxide and ethylene oxide/nitrogen gas
sterilization processing from Seller for the Product produced at the unlisted
facility, provided, however, that if in doing so Buyer's transportation costs
for such Product increase more than thirty percent (30%) over the transportation
costs incurred by Buyer in purchasing sterilization processing services from
Seller for the Product produced at each facility listed on Schedule A, Buyer and
Seller shall negotiate in good faith the pricing provisions of this Agreement
with respect to the Product produced at the unlisted facility and use their best
efforts to retain the economic benefits of this Agreement for both parties with
respect to the Product produced at the unlisted facility. In the event, Buyer
develops or acquires additional products during the term of this Agreement which
require ethylene oxide or ethylene oxide/nitrogen gas sterilization, [ * ] of
such products
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
<PAGE> 2
to Seller under the terms and conditions of this Agreement, to the extent Buyer
does not perform its own sterilization processing of such products. Each such
additional product shall be included within the term "Products" under this
Agreement. Except as provided in Section 4.8 of this Agreement, title to and
risk of loss of the Products shall remain with Buyer at all times.
2.2 Annual and Quarterly Forecasts. Buyer will furnish Seller with
a preliminary forecast of its requirements for sterilization processing services
for each of Buyer's manufacturing facilities for each calendar year covered by
this Agreement, including its forecasted requirements for each calendar month
and quarter within each year, no later than August 1 of the preceding year. For
purposes of this Agreement, "calendar year" shall mean each year January 1
through December 31, 1996, 1997, [ * ] and the six month period [ * ].
Buyer and Seller shall meet prior to the beginning of each calendar quarter to
review and agree upon the Buyer's forecasted requirements for sterilization
processing services for the upcoming quarter, which shall include a forecast for
each week of the quarter, and to exchange other information regarding their
business relationship. Buyer will use its best efforts to spread its
requirements for sterilization processing services during a quarter evenly
throughout the quarter.
2.3 Minimum Processing Volume. (a) Seller will process [ * ] as
provided in Section 2.1 of this Agreement [ * ].
2.3 (b) Buyer agrees that during each calendar year of the initial
term of this Agreement it will purchase, at a minimum, a dollar volume of
sterilization processing services from Seller equal to the dollar amount shown
for that calendar year in the "Total" row on Schedule B. If during any calendar
year, Buyer fails to purchase a dollar volume of sterilization processing
services from Seller in excess of [ * ] of the minimum dollar volume for that
calendar year, Seller shall have the right, at its option, [ * ]. If Buyer
has fulfilled its obligations under Sections 2.1 and 2.3(a) of this Agreement,
termination of this Agreement, renegotiation of its terms and the remedies
provided in Section 3.2(c), shall be Seller's sole remedies for Buyer's failure
to purchase sterilization processing services from Seller in excess of [ * ]
of the minimum dollar volume for a calendar year. . If during any calendar
year, Buyer purchases a dollar volume of sterilization processing services from
Seller in excess of [ * ] of the minimum dollar volume for that calendar
year, Buyer shall have the right, at its option, [ * ].
2.3 (c) If this Agreement is extended beyond [ * ], Buyer and
Seller shall agree upon the minimum dollar volume for each year, or portion
thereof, during the extension.
2.3 (d) Buyer shall be free to purchase sterilization processing
services from persons other than Seller during a calendar month to the extent
that [ * ] outside sterilization processing services for its facilities inthat
month are such that Seller cannot meet the service level requirements set forth
in Sections 2.4(a) and 2.4(b) of this Agreement, provided, however, that, with
respect to each such purchase of processing services, Buyer shall first have
offered to
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
2
<PAGE> 3
Seller the opportunity to perform such processing services on the terms
provided for in this Agreement.
2.4 Service Level Requirement. (a) Seller guarantees that it shall
complete processing within the time frame set forth in Section I of Schedule E,
as established and mutually agreed upon by both Buyer and Seller during their
quarterly review of Buyer's requirements, for Products delivered by Buyer in
accordance with the then current production schedule, including load size and
applicable high build mix for the week (as agreed to by Buyer's shipping
department and Seller's facility production scheduler) and not in excess of the
product delivery forecast agreed upon for the quarter pursuant to Section 2.2
of this Agreement. In the event Buyer delivers to Seller during a week Product
in excess of the volume set forth in the forecast agreed upon pursuant to
Section 2.2, Seller agrees to use its best efforts to complete processing
within the time frame set forth in Section I of Schedule E. For purposes of
this Agreement, a working day is any day, including Saturday and Sunday, during
which the Seller's processing facility to which the Product is shipped by Buyer
is processing any product. The "turn around period" shall commence on the
working day and at the time product is received at Seller's processing facility
and shall end on the working day and at the time the product is processed and
removed from Seller's retort vessel.
2.4 (b) If Seller's facility fails to complete processing ofProduct
that is not in excess of the volume forecasted pursuant to Section 2.2 within
the specified aeration period in Schedule E, Section II and Buyer has complied
with its obligations under Sections 2.2 and 2.3, Buyer may, at its option, and
upon prior written notice to Seller, ship that Product using the dual driver
concept for fastest delivery to another of Seller's processing facilities
selected by Seller, in which event Seller agrees to complete processing of the
Product at such other facility within the specified aeration period in Schedule
E, Section II. In the event Seller is unable to process such Product at one of
its facilities, Buyer may use another vendor of processing services. Seller
shall incur any additional processing or transportation charges, including any
incremental processing and transportation costs incurred by Buyer, in connection
with the shipment and use of another of Seller's or another vendor's facility.
In the event that Buyer uses another vendor's facility pursuant to this Section
2.4(b), Seller shall be liable for any validation costs, including Buyer's labor
and transportation costs and the cost of destructible samples, incurred by
Buyer, which costs shall not exceed [ ** Confidential Treatment requested;
material filed separately with the Commission. ] per vessel or [ * ] per
facility. Product processed by another vendor under this Section 2.4(b) shall
be applied toward Buyer's minimum dollar volume requirement set forth in Section
2.3(b).
2.4 (c) Should Buyer experience a shutdown or other service
interruption at any of Buyer's in house ethylene oxide or ethylene
oxide/nitrogen gas sterilization facilities which requires Buyer to transfer
this product to any of Seller's facilities, Seller shall be obligated to process
this product with the fastest turnaround possible and on a mutually agreed upon
schedule, but Seller is not obligated to meet the requirements set forth in
Sections 2.4(a) and 2.4(b) for this overflow volume.
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
3
<PAGE> 4
2.5 Conversion of Johnson City, Tennessee and Cleveland,
Mississippi. (a) Buyer agrees that no later than July 1, 1997, it will cease
providing internal sterilization processing services at its Johnson City,
Tennessee facility and will purchase all of the sterilization processing
services formerly provided at its Johnson City facility from Seller (at a rate
of at least [ * ] of sterilization processing services per year). Buyer
agrees not to provide internal sterilization processing services at any of its
other facilities for Products sterilized at its Johnson City facility. If Buyer
complies with the obligations of this Section 2.5(a), Seller agrees to install
in its Charlotte, North Carolina facility equipment necessary to permit Seller
to meet the requirements of Schedule E, Section II with respect to the
sterilization processing services transferred from Buyer's Johnson City facility
to Seller's Charlotte facility.
2.5 (b) Buyer agrees that no later than January 1, 1997, it will
cease providing internal sterilization processing services at its Cleveland,
Mississippi facility and will purchase all of the sterilization processing
services formerly provided at that facility from Seller (at a rate of at least
[ * ] of sterilization processing services per year). Buyer agrees not to
provide internal sterilization processing services at any of its other
facilities for Products sterilized at its Cleveland facility.
2.6 Laboratory Services. Commencing no later than June 1, 1996,
Buyer shall purchase [ * ] laboratory services from Seller for the Products
receiving sterilization processing services at Seller's Ontario and Los Angeles,
California and Charlotte, North Carolina facilities, provided that Seller's
prices for laboratory services at the time Buyer commences purchasing such
services from Seller are competitive with the prices of other providers of such
laboratory services unaffiliated with Buyer. If Buyer believes that other
providers of laboratory services are offering lower prices than Seller at the
time Buyer is to commence purchasing such services from Seller, Buyer shall
provide proof of such lower prices to Seller and Seller shall have an
opportunity to meet such lower prices. Buyer agrees to use its best efforts to
purchase from Seller [ * ] laboratory services for the Products receiving
sterilization processing services at Seller's facilities in Santa Teresa, New
Mexico and Willowbrook, Illinois, commencing no later than June 1, 1996. The
parties agree that the provision of laboratory services by Seller to Buyer will
result in incremental internal and/or external cost reductions for Buyer which
shall be applied against the cost savings Seller has agreed to provide Buyer for
1996 under Section 3.2 of this Agreement. The task force established pursuant
to Section 3.3 will determine the amount of internal and external cost
reductions that will be attributable to Seller's provision of laboratory
services.
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
4
<PAGE> 5
3.0 PRICES FOR PROCESSING SERVICES; PAYMENT TERMS; COST SAVINGS.
3.1 Prices, Payment Terms. (a) During the term of this Agreement,
Seller shall provide processing services to Buyer at the prices set forth in
Schedule B, provided, however, Seller shall be free to increase the prices set
forth in Schedule B at any time, upon thirty (30) days advance written notice to
Buyer, in an amount which permits Seller to fully recover any increase in the
costs of Seller due to (i) an increase in the price of the gas used by Seller in
providing sterilization processing services, (ii) an increase in the amount of
gas used by Seller in providing sterilization processing services, or (iii)
regulatory changes (including changes in taxes imposed on Seller). Increases in
the per pallet price in any calendar year due to regulatory changes shall not
exceed [ ** Confidential Treatment requested; material filed separately with
the Commission. ] of the average per pallet price during that calendar year.
Increases in the per pallet price in any calendar year due to increases in the
price of the gas used by Seller shall not exceed the greater of (x) [ * ] of
the average per pallet price under this Agreement on January 1 of that calendar
year or (y) an amount equal to the difference between [ * ] increased by
[ * ] each year, compounded, for each complete or partial calendar year since
the date of this Agreement, including the calendar year in which the price
increase is occurring, and the sum of [ * ] and the prior increases in per
pallet prices due to increases in the price of the gas used by Sellers since the
date of this Agreement. (By way of example, if the average per pallet price on
January 1, 1998 is [ * ] and [ * ] of the increase from the average per
pallet price of [ * ] at the start of the Agreement was the result of
increases in gas prices during 1996 and 1997, price increases during 1998 due to
increases in gas prices shall be limited to the greater of [ * ]. If Seller
incurs an increase in the price of gas and is unable to raise its prices to
Buyer under this Section to fully recover such increase, Seller shall have the
right to terminate this Agreement on thirty (30) days written notice to Buyer.
In the event of a reduction in the price of the gas used by Seller in providing
sterilization processing services under this Agreement, Seller agrees to reduce
its prices to Buyer in an amount equal to the reduction in the price of gas,
commencing on the effective date of the gas price reduction. All notices of
price changes to Buyer under this Section shall include documentation showing
the basis for the change.
3.1 (b) The prices set forth in Schedule B have been determined
based upon a pallet size of 40 x 48 inches or as mutually agreed upon in writing
by both parties and cycles times as set forth in Schedule A. In the event of a
cycle time increase of [ * ] or more from the times set forth in Schedule A,
Buyer and Seller shall negotiate an increase in the prices set forth in Schedule
B. Any change in pallet size must be agreed to by both parties in writing prior
to the use of such alternate pallet size.
3.1 (c) The prices provided for in this Section 3.1 do not
include taxes or the costs of shipping Products or samples to and from Seller's
facilities. Such costs shall be borne entirely by Buyer.
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
5
<PAGE> 6
3.1 (d) Seller will invoice Buyer for processing services rendered
by Seller under this Agreement. Payment of each invoice shall be made by Buyer
net thirty (30) days of the date of the invoice.
3.2 Cost Savings. (a) If Buyer complies with all of itsobligations
under Sections 2.1, 2.2, 2.3, and 2.5(a) and (b) of this Agreement, Seller
agrees to provide Buyer with incremental internal and external cost reductions
and rebates ("cost savings") totaling [ * ] during the initial term of this
Agreement. The amount of the cost savings for each calendar year during the
initial term is set forth in the "Cost Savings" row on Schedule B.
3.2 (b) (i) If the incremental internal and external cost
reductions that Seller provides Buyer for a calendar year fall below the cost
savings Seller has agreed to provide Buyer for that calendar year, Seller shall
pay to Buyer a rebate in an amount equal to the difference between the agreed
upon cost savings and the incremental internal and external cost reductions
achieved during that calendar year. Such payments shall be made within sixty
(60) days after the end of the calendar year. (ii) If the incremental internal
and external cost reductions that Seller provides Buyer for a calendar year
equal or exceed the cost savings Seller has agreed to provide Buyer for that
calendar year, no rebate shall be paid by Seller to Buyer for that calendar year
and the amount of the excess for that calendar year shall be applied against the
agreed upon cost savings for the following calendar year. If at the end of the
initial term of this Agreement, Seller has provided Buyer with cost savings in
excess of the agreed upon cost savings for the initial term, Buyer shall pay to
seller one-half of the excess. Such payment shall be made within sixty (60)
days after [ * ].
3.2 (c) (i) If Buyer's purchases of sterilization processing
services from Seller during a calendar year fall below [ * ] of the minimum
dollar volume for that calendar year, as provided in Section 2.3, the cost
savings that Seller has agreed to provide Buyer for that calendar year shall be
reduced to the amount shown on the applicable schedule B-1 through B-5. If
Seller has provided Buyer with incremental internal and external cost reductions
during the calendar year that exceed the reduced cost savings Seller has agreed
to provide Buyer for that calendar year, determined in accordance with this
Section, the excess cost savings for that calendar year shall be applied to the
agreed upon cost savings for the following calendar year or paid to Seller as
provided for in Section 3.2(b)(ii) of this Agreement. (ii) If Buyer's purchases
of sterilization processing services from Seller during a calendar year exceed
[ * ] of the minimum dollar volume for that calendar year, the cost savings
Seller has agreed to provide Buyer for that calendar year shall be increased to
the amount shown on the applicable schedule B-1 through B-5 for that calendar
year. For purposes of determining the percentage of the minimum dollar volume
of sterilization processing services purchased by Buyer from Seller during a
calendar year under this Section 3.2(c), the percentage shall be rounded to the
nearest whole percentage such that .5% or more will be rounded up to the next
higher whole number and less than .5% will be rounded down to the next lower
whole number.
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
6
<PAGE> 7
3.2 (d) Buyer and Seller agree that prior to entering into this
Agreement Seller made certain investments that will result in incremental
internal and external cost reductions for Buyer during 1996 in the amount of
[ * ]. This amount shall be applied against the cost savings Seller is
obligated to provide Buyer for 1996 and for the initial term of the Agreement as
set forth on Schedule B.
3.3 Cost Savings Task Force. (a) Seller and Buyer agree to
establish a cost savings task force that will be responsible for developing and
approving projects that will result in internal and/or external cost reductions
for Buyer in connection with the sterilization of the Products. Within 60 days
after the execution of this Agreement, each party will designate at least three
of its employees who are knowledgeable about laboratory, sterilization and
logistics to serve on the task force and will notify the other party of the
employees it designated. Each party may replace one or more of its
representatives on the task force with another of its employees knowledgeable in
laboratory, sterilization and logistics upon thirty (30) days prior written
notice to the other party. The task force shall meet at least once every
forty-five (45) days at an agreed upon location.
3.3 (b) Seller and Buyer agree to see to it that the task forceuses
its best efforts to design, develop and implement projects that will result in
internal and/or external cost reductions for Buyer. The task force shall
maintain detailed minutes of its meetings which minutes shall record, among
other matters, the task force's decisions to approve, disapprove, continue,
discontinue or modify each project considered by the task force. In addition,
the task force shall prepare a detailed written report for each project
considered by it. The report shall provide a description of the project, its
scope and its expected results, identify the representatives of each party that
will be involved in the design, development and implementation of the project,
provide a schedule and budget for each phase of the project, and estimate the
internal and external cost reductions to Buyer that will result from the
project. At each meeting, the task force shall review each project then being
designed, developed and implemented and shall revise and update the report for
each project to reflect the progress of and any changes to the project since the
preceding meeting of the task force. Seller shall maintain records for each
project detailing the engineering and research and development hours and
expenses (direct and indirect) attributable to each project.
3.3 (c) Upon completion of the implementation of each project, the
task force shall prepare a final report on the project which shall include a
detailed description of the cost of the project and the hours required to
design, develop and implement the project and the final estimate of the internal
and external cost reduction that will result to Buyer as a result of the
project. This final estimate shall be applied against the cost savings Seller
has agreed to provide Buyer in the calendar year in which implementation of the
project is completed.
3.3 (d) In the event the task force approves the implementation of
a project that requires a capital investment by Seller, Seller and Buyer agree
to negotiate an extension of
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the initial term of this Agreement, an increase in the price of sterilization
processing services provided for in Section 3.1 to compensate Seller for the
capital investment required by the project, and/or having Buyer incur all or
some portion of the capital investment required.
4.0 PERFORMANCE OF PROCESSING SERVICES.
4.1 Processing Cycle Parameters. (a) Seller agrees that each
class of the Products processed hereunder shall be processed in accordance with
the cycle parameters for such class of Products set forth in Schedule A attached
hereto. The parties agree that no cycle parameters will provide for gas
concentration in excess of [ * ] mg/L unless the parties agree on the pricing
for such gas concentration. Buyer may modify the cycle parameters for any class
of Products from time to time and the parties may agree upon additional cycle
parameters for new classes of Products. No cycle parameters, modifications or
additions shall become effective and binding upon the parties until the cycle
parameters, modifications or additions and the pricing therefore have been
agreed upon in a writing signed by both parties.
(b) In the event Seller becomes aware that it has failed in any
respect to process any of the Products in accordance with the applicable cycle
parameters, Seller shall notify Buyer of such nonconformity no later than the
work day following Seller's discovery of such nonconformity. In the event a
facility of Seller fails to process in accordance with applicable cycle
parameters Products accounting for in excess of the percentage specified in
Schedule E, Section III, of Products processed by that facility, Buyer may
charge Seller an amount for each variation above the specified percentage to
reflect the actual additional cost Buyer incurs in labor and testing not to
exceed [ * ].
4.2 Validation of Processing Cycle Parameters. In accordance with
Food and Drug Administration requirements, Buyer shall have exclusive
responsibility for the validation of processing cycle parameters for each class
of the Products prior to the commencement of commercial processing of such
class.
4.3 Shipment of the Products by Buyer. Buyer will assemble the
Products on slip sheets or pallets and the Products shall be accompanied by
documents setting forth the facility from which the Products are shipped, the
number of shipping cartons in the shipment by product code and part number or
catalog number, the date of the shipment and the type of sterilization
processing required (100% ethylene oxide or EtO Nitrogen). Upon receipt of a
shipment, Seller will complete a Receiving Report on the shipment. If each
batch count received is not identical to that shown on shipping papers as having
been shipped by Buyer, Seller shall notify Buyer of any discrepancy and it shall
be Buyer's responsibility to locate the lost material and, if necessary, to
notify the appropriate government agencies. No material in any batch is to be
processed, and the provisions of Section 2.4 shall not apply, until both parties
are in agreement as to the exact count. Buyer agrees to supply Seller with five
(5) copies of a material safety data sheet ("MSDS") complying with 29 CFR
1900.1200(g) with the first shipment of any hazardous chemical to Seller, and
with the first shipment following each and every revision to
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the MSDS. Upon Seller's signed receipt of shipment, Seller will be responsible
for the total count of the Products including biological indicators (test
packs) while said Products are in Seller's possession.
4.4 Use of Biological Indicators or Product Samples. In the event
Buyer desires to use microbiological test packs, indicators or product samples,
it shall furnish to Seller comprehensive instructions regarding the procedures
of their placement and their removal, packaging and shipment to a testing
laboratory for analysis, and the procedure for the removal, handling, marking
and disposition of any shipment of the Products which includes microbiological
test packs, indicators or product samples and Seller agrees to comply with such
instructions. Such test packs, indicators or samples shall be conspicuously
marked by Buyer and shall be dispersed at selected locations through each
shipment during processing in accordance with Buyer's specifications. Buyer
will be responsible for all expenses of testing, including shipment to and from
any testing laboratory and any sterility audit of the laboratory.
4.5 Records of Processing. (a) Seller shall provide Buyer on a
daily work day basis a log of Buyer's product at Seller's locations showing the
status of product within Seller's locations. Buyer will furnish an originating
document providing load number and catalog number. The log shall include, but
not be limited to, the following information in the format indicated below:
<TABLE>
<CAPTION>
LOAD LOT NUMBER DATE RECEIVED VACUGAS NUMBER PRETEMP DATE CYCLE STOP DATE B.I.* PULL DATE TURN-AROUND TIME
- --------------- ------------- -------------- ------------ --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
*Where preferred by Buyer
The log shall be transmitted to Buyer via Seller's fax and may be changed or
added to as mutually agreed to by Buyer and Seller.
4.5 (b) Seller shall provide Buyer with weekly and monthly turntime
reports and monthly non-conformance reports for each of Seller's facilities, and
for all facilities combined, that provided sterilization processing services to
Buyer during the period covered by the report.
4.6 Shipment of the Products by Seller. Seller agrees that upon
completion of processing, Seller's facilities can be used as a shipping point
for processed Products to locations determined by Buyer. Seller shall cause
the Products to be shipped in accordance with Buyer's written instructions and
Buyer shall pay all shipping charges. On all shipments of Products to be
shipped to a location other than one of Buyer's facilities, in addition to
paying all shipping charges, Buyer shall reimburse Seller for all direct and
indirect expenses incurred by Seller in preparing the shipments, including
labor and material handling expenses. When shipping the Products, Seller shall
include documents specifying the number of units in the shipment by product
code and lot number. In the event that Buyer has notified Seller that Buyer's
Product is
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<PAGE> 10
released for shipment from Seller, Seller is solely responsible for notifying
the common carrier within [ * ] from the time of notification of
release by Buyer.
4.7 Storage of the Products by Seller. Buyer will remove Product
from Seller's processed product warehouse expeditiously after processing, but
Buyer may store Product in Seller's processed product warehouse area for a
maximum of [ * ] after sterile release without extra charges for storage.
Thereafter, Seller may charge Buyer for storage in Seller's warehouse or in an
outside warehouse selected by Seller at the prevailing rate for such services
and Seller shall have the option of returning such Product to Buyer at Buyer's
expense, provided Buyer has not previously given Seller shipping instructions
for such Product.
4.8 Product Damage Caused by Seller. If Product is damaged bySeller
as a result of Seller's failure to adhere to the parameters set forth in
Schedule A or by physical mishandling by Seller, Seller shall be responsible to
Buyer for the entire costs of the Product, billed to Seller at Buyer's
established manufacturing cost. Buyer will make every effort to keep cost to a
minimum by refurbishing and/or repackaging wherever feasible.
4.9 Buyer's Access to Seller's Facilities. During routine ethylene
oxide processing, Seller will allow authorized Buyer personnel to observe the
process, monitor procedures and have access to pertinent sterilization process
records. Buyer personnel may be present throughout the qualification period.
All visits to Seller's facilities by Buyer personnel will be prearranged with
Seller's Plant Manager.
4.10 Buyer's Access to Processing Records. Upon request, Seller
shall send Buyer duplicate copies of all sterilization processing records deemed
necessary by Buyer along with microbiological test packs (if required), upon
completion of sterilization process cycles, including degassing.
4.11 Non-sterile Markings. Buyer agrees that it will ship each
pallet, carton or other designated unit of the Products completely covered and
conspicuously marked to show its "non-sterile" nature. Such marking must be
sufficiently secure to prevent its accidental removal prior to release of the
Products from quarantine by Buyer. After the processing has been completed,
Seller will attach to each pallet, carton or other container of such Products a
label bearing the following works: "VACUGAS Treated - Awaiting Sterility Test
Results." Buyer agrees that it will leave this label attached to each pallet,
carton or other container of the Products, and will keep each such pallet,
carton or other container in quarantine, until it has received a certificate of
specification compliance from its testing laboratory. As provided in Section
4.6, Seller agrees, upon authorization by Buyer, to release and ship product
after sterilization. Seller will develop a standard procedure to remove all of
Buyer's and Seller's labels showing "non-sterile" status and "Awaiting Sterility
Test Results". If non-compliance by Seller occurs, Seller shall audit the
respective facility within two (2) weeks and provide documentation of audit
results to Buyer.
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4.12 Compliance with Laws. (a) Each of the parties agrees at all
times to conduct its operations in compliance with the applicable requirements
of 21 Code of Federal Regulations Part 801.150 ("Medical devices; processing,
labeling, or repackaging") and 21 Code of Federal Regulations Part 820 ("Good
Manufacturing Practice for Medical Devices: General") or any successor
regulations. Seller agrees to obtain and keep current all applicable licenses
and permits required by applicable laws and regulations for the operation of its
plants that engage in processing under this Agreement. Seller will notify Buyer
in January of each calendar year that all applicable licenses and permits have
been obtained and are current.
(b) Buyer acknowledges that the State of California has determined
that ethylene oxide is a carcinogen and a reproductive toxin, and that it is so
listed under California's Safe Drinking Water and Toxic Enforcement Act of 1986
("Proposition 65"). The presence of ethylene oxide or other gas residues in the
Products following sterilization processing may require warning labels under
Proposition 65 or similar "right to know" laws in other states. Buyer agrees to
comply with any and all federal state and local labeling requirements.
4.13 FDA Visits to Seller's Facilities. Seller shall notify Buyer
in writing within twenty-four (24) hours of an FDA investigation or audit of any
of Seller's facilities where Seller is processing Buyer's Products. Seller
shall notify Buyer of an FDA request to review any documents, Products or
practices pertaining to Buyer. Seller agrees to provide copies of all documents
reviewed by the FDA pertaining to Buyer or Buyer's Products. Seller will
provide, within two (2) weeks from the date of exit interviews, copies of FDA
investigation/audit reports and Seller's response to FDA for facilities at which
Seller is processing Buyer's Products.
5.0 CONFIDENTIAL INFORMATION. Buyer and Seller each acknowledges that, in
the course of performing its obligations pursuant to this Agreement, it may
obtain certain confidential and/or proprietary information belonging to the
other party, its affiliates or customers. Subject to the exceptions set forth
in this Section, each party agrees that information provided to it in writing
or reduced to writing within thirty (30) days after its communication to the
receiving party and which has been marked "confidential" shall be received in
strict confidence, shall be used only for the purpose of this Agreement and
shall not be disclosed by the receiving party, its agents or employees without
the prior written consent of the disclosing party, except as may be necessary
by reason of legal and regulatory requirements beyond the receiving party's
reasonable control. This obligation of confidentiality shall survive
termination of this Agreement but shall not apply to information which is (i)
publicly known or becomes publicly known through no act of the receiving party;
(ii) rightfully received from a third party; (iii) independently developed; or
(iv) already known to the receiving party. Each party agrees that any
information disclosed to it prior to the execution and delivery of this
Agreement shall be subject to and governed by the terms of this Section.
6.0 LIMITATION OF LIABILITY; INDEMNIFICATION
6.1 Obligation of Seller. (a) The parties agree that Seller's
obligation under this Agreement is limited to processing the Products in
accordance with the cycle parameters referred to in Section 4.1 hereof. Buyer
acknowledges that many factors beyond Seller's control can
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affect the ultimate microbiological condition of the Products. Among these are
the quality, type and original bioburden of the Products and their packaging,
the atmospheric humidity in the packaging room, the configuration of the
Products, the material of construction of the Products, the adequacy of the
testing laboratory atmosphere and equipment, the competence of testing
laboratory personnel, the competence and adequacy of sampling techniques, and
the care and handling of the Products during warehousing and distribution.
BUYER ACKNOWLEDGES AND AGREES THAT BUYER IS SOLELY AND EXCLUSIVELY RESPONSIBLE
FOR THE VALIDATION OF STERILIZATION PROCESSING AND PRODUCT STERILITY ASSURANCE,
THE INTEGRITY OF PRODUCT PACKAGING AND THE ADEQUACY OF PRODUCT LABELING.
SELLER MAKES NO REPRESENTATION, GUARANTEE, OR WARRANTY, EXPRESSED OR IMPLIED,
WITH RESPECT TO THE STERILITY OF THE PRODUCTS WHICH ARE PROCESSED HEREUNDER.
(b) The parties agree that Buyer's sole and exclusive remedy in the
event of Seller's failure to process the Products in accordance with the cycle
parameters referred to in Section 4.1 shall be the remedies provided in Section
4.1(b) and 4.8. In no event shall Seller be liable for special, indirect,
incidental, or consequential damages, including but not limited to damages
arising from death, bodily injury, property damage other than damage to the
Products, loss of profits or revenue or loss of use of the Products.
6.2 Indemnification. (a) Buyer agrees to indemnify and save
Seller harmless from and against all expenses, losses, costs, deficiencies,
liabilities and damages, including reasonable attorneys' fees and expenses
(collectively, "damages") incurred or suffered by Seller arising out of or in
connection with (i) any breach by Buyer of any of its covenants or agreements
made in this Agreement, (ii) the processing of the Products, except to the
extent such damages are caused by negligent acts or omissions of Seller, or
Seller's failure to comply with the provisions of this Agreement, or (iii) any
claim that the Products are not sterile.
(b) Seller agrees to indemnify and save Buyer harmless from and
against all damages incurred or suffered by Buyer arising out of or in
connection with (i) any breach by Seller of any of its covenants or agreements
made in this Agreement and (ii) any negligent acts or omissions of Seller in the
processing of the Products.
7.0 TERMINATION
7.1 Termination for Material Breach. Upon the material breach of
any obligation under this Agreement by either party, the aggrieved party may
give to the defaulting party notice of such breach, which notice shall specify
the exact nature of the breach and shall expressly state the aggrieved party's
intention to terminate this Agreement in the event the breach is not remedied
within ninety (90) days after the receipt of such notice. If after the
expiration of such period, the defaulting party has failed or refuses to remedy
such breach, this Agreement may be terminated forthwith, effective upon notice
given by the aggrieved party to the defaulting party. The right of either party
to terminate this Agreement in the event of a breach hereof by the other party
is not an exclusive remedy for such breach, and, except as provided in Sections
2.3(b) and 6.1(b), either party shall also be entitled to any other remedy
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available under the laws of any applicable jurisdiction. This Agreement may
also be terminated by Seller or Buyer pursuant to Section 2.3(b).
7.2 No Waiver of Termination Rights. Any delay by either party
in sending any of the notices specified in Section 7.1 shall not constitute any
waiver of the sending party's right to terminate this Agreement.
7.3 Termination Not Unfair or Abusive. The parties agree that any
termination hereof according to the formalities specified herein, and based on
the conditions required by the provision under which such termination is
effected, shall not constitute an unfair or abusive termination or create any
liability not set forth in this Agreement of the terminating party to the other
party.
7.4 Survival of Certain Rights and Obligations. Neither the
expiration nor any termination of this Agreement for whatever cause shall affect
any rights or obligations of either party which have accrued as of the effective
date of such expiration or termination, nor shall it affect any rights or
obligations of either party which are intended by the parties to survive such
expiration or termination, including without limitation the rights and
obligations of the parties under Sections 5.0, 6.1, and 6.2 hereof.
8.0 GENERAL PROVISIONS
8.1 Notices. Any notice, request, information or other document to
be given hereunder to any of the parties by any other party shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer, addressed as follows:
Baxter Healthcare Corporation
Baxter Convertors/Custom Sterile
1500 Waukegan Road, Bldg. K
McGaw Park, Illinois 60085
Attn.:Director of Distribution Logistics
Custom Sterile
If to Seller, addressed as follows:
Griffith Micro Science, Inc.
2001 Spring Road, Suite 500
Oak Brook, Illinois 60521
Attn.: Peter Gortz, Vice President Sales and Marketing
Any party may change the address to which notices hereunder are to be sent to
it by giving written notice of such change of address in the manner herein
provided for giving notice. Any notice delivered personally shall be deemed to
have been given on the date it is so delivered, and
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<PAGE> 14
any notice delivered by registered or certified mail shall be deemed to have
been given on the date it is received.
8.2 No Waiver. The failure of either party hereto at any time to
require performance by the other party of any provision of this Agreement shall
in no way affect the right of such party to require performance of that
provision, and any waiver by either party of any breach of any provision of this
Agreement shall not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself or a waiver of any
right under this Agreement.
8.3 Governing Law. The validity, construction, interpretation and
enforcement of this Agreement, or any breach thereof, shall be governed by the
laws of the State of Illinois applicable to contracts made and to be performed
in that State.
8.4 Entire Agreement. This Agreement constitutes the final written
expression of the terms of agreement between the parties relating to the
subject matter contained herein and is the complete and exclusive statement of
these terms. This Agreement supersedes all prior agreements with respect to
such subject matter and merges all prior discussions between the parties. All
references to this Agreement shall be deemed to include the schedules hereto.
No provision in any purchase order or purchase order confirmation, whether
entered into prior to, concurrently with or after the execution and delivery of
this Agreement, shall be effective to the extent that such provision is
inconsistent with any provision of this Agreement
8.5 Amendments. This Agreement may be amended only by a writing
signed by a duly authorized representative of each party.
8.6 Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity, unenforceability or illegality of any provision
of this Agreement shall not in any way affect or impair the validity,
enforceability or legality of the other provisions hereof.
8.7 Force Majeure. Neither party shall be liable to the other for
any delay or default in performance of any obligation under this Agreement
rising from causes beyond its control, including without limitation fire, storm,
flood, earthquake, explosion, accident, acts of public enemies, war, rebellion,
insurrection, sabotage, epidemic, quarantine restrictions, labor disputes or
shortages, transportation embargo, or failure or delays in transportation,
inability to secure gas, acts of Good, or acts of any governmental authority or
agency thereof. If one of Seller's facilities is shut down for a period of time
pursuant to the Occupational Safety and Health Administration ("OSHA")
Regulation 29 CFR Part 1910 or the environmental regulations of any state and
the facility cannot continue processing for Buyer, Seller shall utilize any of
its other processing facilities and shall be solely responsible for any
additional processing and transportation costs resulting therefrom during the
period of the shut down.
8.8 Assignment. (a) Except as provided in subsection (b) of this
Section, this Agreement is not assignable by either party without the prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld, provided, however, either party may assign its rights
and delegate its obligations hereunder to an affiliate of the party. For
purposes
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<PAGE> 15
of this Agreement the term "affiliate" means, with respect to a specified
person, any other person which directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with,
the person specified.
8.8 (b) Baxter International Inc. ("Baxter") has publiclyannounced
its intention to spin off certain of its businesses as a separate corporation
(referred to until such time as a definitive name is announced as "NewCo"). It
is anticipated that NewCo will own the facilities listed on Schedule A, which
use or will use Seller's sterilization processing services. Buyer agrees to
assign this Agreement to NewCo and to cause NewCo to accept the assignment and
to comply with the terms and conditions of this Agreement. If some of the
business units that use Seller's sterilization processing services are retained
by Baxter, Baxter may, at its option, execute a separate unrelated agreement
with Seller.
8.9 Binding Agreement. Subject to the provisions of Section 8.8
hereof, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
8.10 Relationship. This Agreement does not create an agency
relationship or partnership between the parties, each party is an independent
contractor.
8.11 EEO Information. Seller is aware of and will comply with
applicable State and Federal laws and regulations that pertain to small business
and equal employment opportunity as attached hereto as Schedule D.
8.12 Schedules. The following schedules are attached to this
Agreement and are incorporated herein:
1. Schedule A: Process Control Standards (listed separately for
each of Buyer's manufacturing facilities).
2. Schedule B: [ * ]
3. Schedules B-1 through B-5: [ * ]
4. Schedule C: Continuing Guaranty, dated 9/28/87 (page 1 of 1).
5. Schedule D: EEO Information
6. Schedule E: Performance Criteria Schedule
In the event of any conflict between the express provisions of the
Schedule C and of this Agreement, the provisions of this Agreement shall
control.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above
written.
BAXTER HEALTHCARE CORPORATION GRIFFITH MICRO SCIENCE, INC.
By: /s/ Roger Sisterman By: /s/ Kevin M. Swan
------------------------------------- -----------------------------------
Title: Vice President of Manufacturing Title: President and C.E.O.
- ---------------------------------------- -------------------------------
Its duly authorized officer Its duly authorized officer
16
<PAGE> 17
SCHEDULE A
PROCESS CYCLE SPECIFICATIONS
<TABLE>
<CAPTION>
GMS LOCATION BAXTER DIVISION BAXTER LOCATION PRODUCTS
- ------------ --------------- --------------- --------
<S> <C> <C> <C>
[ * ] Baxter Custom Sterile [ * ]
[ * ] Baxter Healthcare [ * ]
[ * ] Baxter Convertors [ * ]
[ * ] Baxter Custom Sterile [ * ] Kits
[ * ] Baxter Custom Sterile [ * ] Kits
[ * ] Baxter Custom Sterile [ * ] Kits
[ * ] Baxter Custom Sterile [ * ] Kits
</TABLE>
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<PAGE> 18
+
[ * ]
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+ 34 pages omitted.
<PAGE> 19
SCHEDULE C
CONTINUING GUARANTEE
Seller guarantees that it will process Buyer's product according to Buyer's
specifications set forth in Schedule A and the terms and conditions of this
Agreement.
Seller will furnish to Baxter Healthcare Corporation a Certificate of Insurance
evidencing the following insurance:
- Comprehensive general liability with contractual liability
coverage in the amounts of not less than $3,000,000 per occurrence,
combined single limit.
- Statutory only workers compensation coverage.
- Employer liability in the amount of $500,000.
- Auto liability coverage in the amount of $1,000,000.
Evidence of insurance should be forwarded to Director of
Logistics/Distribution, Baxter Custom Sterile, 1500 Waukegan Road - Building K,
McGaw Park, Illinois 60085.
<PAGE> 20
BAXTER SCHEDULE D
================================================================================
As a federal government contractor, Baxter Healthcare Corporation, and its
affiliates are required to include in their subcontracts, vendor agreements and
supply contracts certain additional clauses and provisions imposed by federal
regulations. Contractor hereby agrees to the following terms and conditions
applicable to its agreements with Baxter Healthcare Corporation or its
affiliates.
I. EQUAL EMPLOYMENT OPPORTUNITY CLAUSE (Applies To Contracts Of $10,000 Or
More)
During the performance of this contract, the Contractor agrees to the
provisions of the Equal Employment Opportunity Clause contained in
Executive Order 11246 of September 24, 1965 and incorporated in 41 CFR
60-1.4(a).
II. EMPLOYMENT OF VETERANS (Applies To Contracts Of $10,000 or More)
During the performance of this contact, the Contractor agrees to comply
with the federal Vietnam Era Veterans Readjustment Act and provisions of 41
CFR 60-250.4 regarding equal employment opportunity for veterans.
III. EMPLOYMENT OF HANDICAPPED PERSONS (Applies To Contracts Of $25,000 Or
More) During the performance of this contract, the Contractor agrees to
comply with the provisions of the Rehabilitation Act of 1973 and with the
provisions of 41 CFR 60.741.4 regarding equal employment opportunities for
handicapped persons.
IV. UTILIZATION OF SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS
(Applies To Contracts Over $10,000)
(a) It is the policy of the United States that small business concerns
owned and controlled by socially and economically disadvantaged
individuals shall have the maximum practicable opportunity to participate
in the performance of contracts let by any Federal Agency.
(b) The contractor hereby agrees to carry out this policy in the
awarding of subcontracts to the fullest extent consistent with the
efficient performance of this
<PAGE> 21
contract. The contractor further agrees to cooperate in any studies or
surveys as amy be conducted by the Small Business Administration or the
contracting agency which may be necessary to determine the extent of
the contractor's compliance with the clause.
(c) (1) As used in this contact, the term "small business concern" shall
mean a small business as defined pursuant to section 3 of the Small
Business Act and relevant regulations promulgated pursuant thereto.
(2) The term "small business concern owned and operated by socially and
economically disadvantaged individuals" shall mean a small business
concern -
(i) which is at least 51 per centum owned by one or more socially and
economically disadvantaged individuals; or in the case of any public owned
business, at least 51 per centum of the stock of which is owned by one or
more socially and economically disadvantaged individuals; and
(ii) whose management and daily business operations are controlled by one
or more of such individuals. The contractor shall presume that socially
and economically disadvantaged individuals include Black Americans,
Hispanic Americans, Native Americans, Asian-Pacific Americans, and other
minorities, or any other individual found to be disadvantaged by the Small
Business Administration pursuant to section 8 (a) of the Small Business
Act.
(d) Contractors acting in good faith may rely on written representations
by their subcontractors regarding their status as a small business concern
owned and controlled by socially and economically disadvantaged
individuals.
All solicitations for negotiated for formally advertised contracts or
amendments or modifications (including contracts, amendments, and modifications
placed on a sole source basis), except those for procurement and setasides
pursuant to section 8 (a) and section 15 of the Small Business Act as amended
which individually are expected to exceed $5,000,000, or in the case of
contracts for the construction of any public facility, $1,000,000, and are
required to include the clause entitled Utilization of Small Business Concerns
and Small Business Concerns Owned and Controlled by Socially and Economically
Disadvantaged Individuals, shall include a provision which requires the
apparent successful offeror, provided the offeror is not a small business
concern, to negotiate a detailed subcontracting plan. The provision is as
follows:
1. This provision does not apply to small business concerns.
2. The term "subcontract" means any agreement (other than one
involving an employer/employee relationship) entered into by a
Federal Government prime contractor or subcontractor calling for
supplies or services required for the performance of the original
contract or subcontract.
3. The offeror acknowledges that it is aware of the subcontracting plan
requirements in this provision, and if it is the apparent successful
offeror, and if the contract offers subcontracting possibilities,
agrees to negotiate or offer a plan which includes:
a. Percentage goals (expressed in terms of percentage of total
planned subcontracting dollars) for the utilization as
subcontractors of small business
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<PAGE> 22
concerns owned and controlled by socially and economically
disadvantaged individuals; (for the purposes of the subcontracting
plan, the contractor may include all purchases which contribute to
the performance of the contract, including a proportionate share of
products, services, etc., whose costs are normally allocated as
indirect or overhead costs.)
As part of its establishment of percentage goals, the apparent
successful offeror shall also include in its subcontracting plan:
(1) A statement of: (a) total dollars planned to be subcontracted;
(b) total dollars planned to be subcontracted to small business;
and (c) total dollars planned to be subcontracted to small
disadvantaged business.
(2) A description of the principal product and service areas to be
subcontracted and an identification of those areas where it is
planned to use (i) small business subcontractors, and (ii) small
disadvantaged business subcontractors.
(3) A statement of the method used in developing proposed
subcontracting goals for (i) small business, (ii) small
disadvantaged business concerns.
(4) If the offerer includes indirect and overhead costs as an
element in establishing the goals in the subcontracting plan, the
method used in determining the proportionate share of indirect and
overhead costs incurred with (i) small business, and (ii) small
disadvantaged business subcontractors shall be explained.
b. The name of an individual within the employ of the offeror who
will administer the subcontracting program of the offeror and a
description of the duties of such individuals;
c. A description of the efforts of the offeror will take to assure
that small business concerns and small business concerns owned and
controlled by socially and economically disadvantaged individuals
will have an equitable opportunity to compete for subcontracts;
d. Assurances that the offeror will include the clause entitled
Utilization of Small Business Concerns and Small Business Concerns
Owned and Controlled by Socially and Economically Disadvantaged
Individuals in all subcontracts which offer further subcontracting
opportunities and to require all subcontractors (except small
business concerns) which receive subcontracts in excess of
$5,000,000, or in the case of a contract for the construction of
any public facility, $1,000,000, to adopt and comply with a plan
similar to the plan agreed to by the offeror. Such assurances
shall describe the offeror's procedures for the review, approval,
and monitoring for compliance with such plans;
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<PAGE> 23
e. Assurances that the offeror will submit such periodic reports
and cooperate in any studies or surveys as amy be required by the
contracting agency or the Small Business Administration in order to
determine the extent of compliance by the offeror with
subcontracting plan; and
f. A recitation of the types of records the offeror will maintain
to demonstrate procedures which have been adopted to comply with
the requirements and goals set forth in the plan, including the
establishment of source lists of small business concerns and small
business concerns owned and controlled by socially and economically
disadvantaged individuals; and efforts to identify and award
subcontracts to such small business concerns. The record shall
include at least the following (these records amy be maintained on
a plantwide of companywide basis unless otherwise indicated):
(1) Small and disadvantaged business source list, guides and other
data identifying small and small disadvantaged business vendors.
(2) Organizations contacted for small and disadvantaged business
sources.
(3) On a contract-by-contract basis, records on all subcontract
solicitations over $1,000,000, indicating on each solicitation (a)
whether small business was solicited, and if not, why not; (b)
whether small disadvantaged business was solicited, and if not, why
not; and (c) reasons for the failure of solicited small business or
small disadvantaged business to receive the subcontract award.
(4) Records to support other outreach efforts:
o Contacts with minority and small business associations;
o Contacts with business development organizations;
o Attendance at small and minority business procurement
conferences and trade fairs.
(5) Records to support internal activities to guide and encourage
buyers:
o Workshops, seminars, training programs, etc.
o Monitoring activities to evaluate compliance.
(6) On a contract basis, records to support award data submitted to
the Government to include name and address of subcontractor.
4. The offeror understands that:
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<PAGE> 24
a. No contract will be awarded unless and until an acceptable plan
is negotiated with the contracting officer which plan will be
incorporated into the contract, as a material pert thereof.
b. An acceptable plan must, in the determination of the contracting
officer, provide the maximum practicable opportunity for small
business concerns and small business concerns owned and controlled
by socially and economically disadvantaged persons to participate
in the performance of the contract.
c. If a subcontracting plan acceptable to the contract officer is
not negotiated within the time limits prescribed by the contracting
activity and such failure arises out of causes within the control
and with the fault or negligence of the offeror, the offeror shall
be ineligible for an award. The contracting officer shall notify
the contractor in writing of his reasons for determining a
subcontracting plan to be unacceptable. Such notice shall be given
early enough in the negotiation process to allow the contractor to
modify the plan within the time limits prescribed.
d. Prior compliance of the offeror with other such subcontracting
plans under previous contracts will be considered by the
contracting officer in determining the responsibility of the
offeror for award of the contract.
e. It is the offeror's responsibility to develop a satisfactory
subcontracting plan with respect to both small business concerns and
small business concerns owned and controlled by socially and
economically disadvantaged individuals and that each such aspect of
the offeror's plan will be judged independent of the other.
f. The offeror will submit, as required by the contracting officer,
subcontracting reports in accordance with the instructions thereon,
and as further directed by the contracting officer. Subcontractors
will also submit these reports to the government's contracting
officer or as otherwise directed, with a copy to the prime
contractor's designated small and disadvantaged business liaison.
5. The failure of any contractor or subcontractor to comply in
good faith with (a) the clause entitled Utilization of Small
Business Concerns and Small Business Concerns Owned and Controlled
by Socially and Economically Disadvantaged Individuals or (b) an
approved plan required by this Small Business and Small
Disadvantaged Business Subcontracting Plan (Negotiated) provision,
will be a material breach of such contract or subcontract.
V. UTILIZATION OF WOMEN-OWNED BUSINESS CONCERNS (Applies To Contracts Over
$10,000)
(a) It is the policy of the United States Government that women-owned
businesses shall have the maximum practicable opportunity to participate
in the performance of contracts awarded by any Federal agency.
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<PAGE> 25
(b) The Contractor agrees to use his best efforts to carry out this
policy in the award of subcontracts to the fullest extent consistent with
the efficient performance of this contract. As used in this contract, a
"women-owned business" concern means a business that is at least 51%
owned by a woman or women who also control and operate it. "Control" in
this context means exercising the power to make policy decisions.
"Operate" in this context means being actively involved in the day to day
management. "Women" mean all women business owners.
The following clause shall be included in all contracts, amendments or
modifications expected to exceed $5,000,000 or in the case of contracts for the
construction of any public facility, $1,000,000 which require the Utilization
Clause in (1) above:
(A) The Contractor agrees to establish and conduct a program
which will enable women-owned business concerns to be considered
fairly as subcontractors and suppliers under this contract. In this
connection, the contractor shall:
(1) Designate a liaison officer who will administer
the Contractor's "Women-Owned Business Concerns Program."
(2) Provide adequate and timely consideration of the
potentialities of know women-owned business concerns in all
"make-or-buy" decisions.
(3) Develop a list of qualified bidders that are women-owned
businesses and assure that known women-owned business concerns
have an equitable opportunity to compete for subcontracts,
particularly by making information on forthcoming opportunities
available by arranging solicitations, time for the preparation
of bids, quantities, specifications, and delivery schedules so
as to facilitate the participation of women-owned concerns.
(4) Maintain records showing (i) procedures which have been
adopted to comply with the policies set forth in this clause,
including the establishment of a source list of women-owned
business concerns; (ii) awards to women-owned businesses on the
source list by minority and nonminority women-owned business
concerns; and (iii) specific efforts to identify and award
contracts to women-owned business concerns.
(5) Include the "Utilization of Women-Owned Business
Concerns" clause in subcontracts which offer substantial
subcontracting opportunities.
(6) Cooperate in any studies and surveys of the
Contractor's women-owned business concerns procedures and
practices that the Contracting Officer may from time-to-time
conduct.
(7) Submit periodic reports of subcontracting to women-owned
business concerns with respect to the records referred to in
subparagraph (4) above,
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<PAGE> 26
in such form and manner and at such time (not more often than
quarterly) as the Contracting Officer may prescribe.
(B) The Contractor further agrees to insert, in any subcontract
hereunder which may exceed $5,000,000 or $1,000,000 in the case of
contracts for the construction of any public facility and which
offers substantial subcontracting possibilities, provisions which
shall conform substantially to the language of this clause,
including this paragraph (B), and to notify the Contracting Officer
of the Names of such subcontractors.
(C) The contractor further agrees to require written
certification by its subcontractors that they are bona fide
women-owned and controlled business concerns in accordance with the
definition of women-owned business concern as set forth in the
Utilization Clause 1(b) above at the time of submission of bids or
proposals.
VI. UTILIZATION OF LABOR SURPLUS AREA CONCERNS (Applies To Contracts Over
$10,000)
(A) It is the policy of the Government to award contracts to
labor surplus area concerns that (1) have been certified by the
Secretary of Labor (hereafter referred to respectively as certified
concerns with a first or second preference) regarding the employment
of proportionate number of disadvantaged individuals and have agreed
to perform substantially (i) in or near sections of concentrated
unemployment or underemployment or in persistent or substantial
labor surplus areas or (ii) in other areas of the United States; or
(2) are noncertified concerns which have agreed to perform
substantially in persistent or substantial labor surplus areas,
where this can be done consistent with the efficient performance of
the contract and at prices no higher than are obtainable elsewhere.
The Contractor agrees to use its best efforts to place its
subcontracts in accordance with this policy.
(B) In complying with paragraph (A) of this clause, the Contractor in
placing its subcontracts shall observe the following order of
preference: (1) certified concerns with a first preference which are
also small business concerns, (2) other certified concerns with a
first concerns, (3) certified concerns with a second preference which
are also small business concerns, (4) other certified concerns with a
second preference, (5) persistent or substantial labor surplus area
concerns which are also small business concerns, (6) other persistent
or substantial area concerns, and (7) small business concerns which
are not labor surplus area concerns.
The Contractor further agrees that the following clause shall be included
in all contracts which may exceed $500,000 which contain the clause
required above and which, in the opinion of the procuring activity, offer
substantial subcontracting possibilities. Furthermore, prime contractors
who are to be awarded contracts which may not exceed
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<PAGE> 27
$500,000 but which, in the opinion of the procuring activity, offer
substantial subcontracting possibilities, shall be urged to accept this
clause.
(A) The Contractor agrees to establish and conduct a program
which will encourage labor surplus area concerns to compete for
subcontracts within their capabilities. In this connection, the
Contractor shall -
(1) Designate a liaison with duly authorized
representatives of the Government on labor surplus area
matters, (ii) supervise compliance with the Utilization of
Concerns in Labor Surplus Areas clause, and (iii) administer
the Contractor's "Labor Surplus Area Subcontracting Program";
(2) Provide adequate and timely consideration of the
potentialities of labor surplus area concerns in all
"make-or-buy" decisions;
(3) Assure that labor surplus area concerns will have
an equitable opportunity to compete for subcontracts,
particularly by arranging solicitations, time for the
preparation of bids, quantities, specifications, and delivery
schedules so as to facilitate the participation of labor
surplus area concerns;
(4) Maintain records showing procedures which have been adopted to
comply with the polices set forth in this clause. Records
maintained pursuant to Government until the expiration of one
year after the award of this contract, or for such longer
periods as may be required by any other clause of this contract
or by applicable law or regulations; and
(5) Include the Utilization of Concerns in Labor Surplus Areas
clause in subcontracts which offer substantial labor surplus
area subcontracting opportunities.
(B) A "labor surplus area concern" is a concern that (1) has been
certified by the Secretary of Labor (hereafter referred to as a
certified-eligible concern) regarding the employment of a
proportionate number of disadvantaged individuals and has agreed to
perform substantially in or near sections of concentrated
unemployment or underemployment, in persistent or substantial labor
surplus areas, or in other areas of the United States, or (2) is a
noncertified concern which has agreed to perform a substantial
proportion of a contract in persistent or substantial labor surplus
areas. A certified-eligible concern shall be deemed to have
performed a substantial proportion of a contract in or near sections
of concentrated underemployment, in persistent or substantial labor
surplus areas, or in other areas if the costs that concern will
incur on account of manufacturing or production in or near such
sections or in such areas (by itself, if a certified concern, or by
certified concerns action as fist-tier subcontractors) amount to
more than 25
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<PAGE> 28
percent of the contract price. A concern shall be deemed to have
performed a substantial proportion of a contract in persistent or
substantial labor surplus areas (by itself or its first-tier
subcontractors) if the costs that the concern will incur on account
of production or manufacturing in such areas amount to more than 50
percent of the contract price.
(C) The Contractor further agrees to insert, in any subcontract
hereunder which may exceed $5,000,000 and which contains the
Utilization of Concerns in Labor Surplus Areas clause, provisions
which shall conform to the language of this clause, including this
paragraph, and to notify the Contracting Officer of the names of
such subcontractors.
VII. CLEAN AIR AND WATER
(Applicable only if the contract exceeds $1,000,000, or the contracting
officer has determined that orders under an indefinite quantity contract
in any one year will exceed $1,000,000, or a facility to be used has been
the subject of a conviction under the Clean Air Act (42 U.S.C.
1957c8(cX1) or the Federal Water Pollution Control Act (33 U.S.C. 1319(c)
and is listed by EPA, or the contract is not otherwise exempt.)
The contractor agrees as follows:
(A) To comply with all requirements of section 114 of the Clean
Air Act, as amended (42 U.S.C. 1857, et seq. as amended by Pub. L.
91-604 and section 306 of the Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq., as amended by Publ. 92-500), respectively,
relating to inspection, monitoring, entry, reports, and information,
as well as other requirements specified in section 114 and section
308 of the Air Act and the Water Act, respectively, and all
regulations and guidelines issued thereunder before the award of
this contract.
(B) That no portion of the work required by this prime contract
will be performed in a facility listed on the Environmental
Protection Agency List of Violating Facilities on the date when this
contract was awarded unless and until the EPA eliminates the name of
such facility or facilities from such listing.
(C) To insert the substance of the provisions of this clause into
any nonexempt subcontract, including paragraph (D).
The Contractor also agrees that it has or will provide Baxter Healthcare
Corporation with a copy of all available material safety data sheets for
products furnished under this contract. The material safety data sheets will
include such information as product ingredients; physical characteristics;
storage, transportation and disposal requirements; firefighting methods; human
exposure limitations; and other environmental and safety hazards and
precautionary measures.
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<PAGE> 29
SCHEDULE E
PERFORMANCE CRITERIA SCHEDULE - 1996
FOR BAXTER CONVERTORS/CUSTOM STERILE DIVISION
(To be reviewed quarterly)
Section
- -------
I. Turnaround period 2.4(a): Average of [ * ] working days in any
processing facility for any given month.
II. Aeration Period over which Seller agrees to meet its obligations under
Section 2.4 (b): Average of [ * ] working days in any processing
facility (including any backup facility used pursuant to Section
2.4(b)) in any given [ * ] consecutive day period.
III. Percent of loads processed with variations over which Seller agrees
to the provisions under Section 4.1(b): [ * ] of total loads in any
calendar month. Seller will make a continuing good faith effort to
reduce the percentage of total loads on which it fails to process
in accordance with cycle parameters.
- ---------------
*Confidential Treatment requested; material filed separately with the
Commission.
<PAGE> 30
Acknowledgement of and Amendment to
Sterilization Processing Services Agreement
This acknowledgement of and amendment to ("Acknowledgement") the Sterilization
Processing Services Agreement between Griffith Micro Science, Inc. ("Seller")
and the Convertors/Custom Sterile Division of Baxter Healthcare Corporation,
made and entered into as of the 1st day of January 1996 ("Sterilization
Agreement"), is made and entered into as of September 30, 1996 by and between
Seller and Allegiance Healthcare Corporation.
Recitals
On September 30, 1996, Baxter Healthcare Corporation ("Baxter") completed a
spin-off of some of its business units and facilities to a new corporation
named Allegiance Healthcare Corporation ("Allegiance"). Among the business
units and facilities included in the spin-off were those for which Seller
performs sterilization services under the Sterilization Agreement. Pursuant to
Section 8.8(b) of the Sterilization Agreement, Baxter, referred to as "Buyer"
in the Sterilization Agreement, assigned to Allegiance and Allegiance accepted
the assignment of Baxter's rights and obligations under the Sterilization
Agreement. Since September 30, 1996, Allegiance has performed all of Buyer's
obligations and accepted all of Buyer's benefits under the Sterilization
Agreement. By this Acknowledgement, the parties hereto wish to formally
document that Allegiance has succeeded to Baxter's rights and obligations under
the Sterilization Agreement and Allegiance is bound by and agrees to be bound
by the terms and conditions of the Sterilization Agreement. Allegiance and
Seller also wish to amend the Sterilization Agreement as set forth herein.
Covenants
Now, therefore, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Seller and Allegiance acknowledge and agree that (a) Baxter has assigned to
Allegiance, and Allegiance has accepted the assignment of, all of Baxter's
rights and obligations under the Sterilization Agreement, (b) all references to
Baxter or Buyer in the Sterilization Agreement shall refer to Allegiance and
(c) Allegiance is bound by the terms and conditions of the Sterilization
Agreement.
2. The address specified in Section 8.1 of the Sterilization Agreement for the
sending of notices, requests, information or other documents by Seller to Buyer
shall be changed to:
Allegiance Healthcare Corporation
1500 Waukegan Road, Bldg. K
McGaw Park, Illinois 60085
Attn.: Corporate Vice President of Manufacturing
<PAGE> 31
3. Seller and Allegiance ratify and affirm the Sterilization Agreement as
amended hereby. The Sterilization Agreement and this Acknowledgement shall be
read as one document.
IN WITNESS WHEREOF, the parties have caused this Acknowledgement to be executed
by their respective duly authorized officers.
ALLEGIANCE HEALTHCARE GRIFFITH MICRO SCIENCE, INC.
CORPORATION
By: /s/ Robert Sisterman By: /s/ John P. Sabalaskey
Title: Senior Vice President and
Title: Vice President of Manufacturing Chief Financial Officer
Its duly authorized officer Its duly authorized officer
<PAGE> 1
EXHIBIT 10.11
ARC CHEMICAL DIVISION
BALCHEM CORPORATION CONTRACT NO. 100197
SUPPLY/SERVICE AGREEMENT
THIS AGREEMENT IS ENTERED INTO THIS 29TH DAY OF SEPTEMBER, 1997, BY AND
BETWEEN ARC CHEMICAL DIVISION, BALCHEM CORPORATION, P.O. BOX 180, SLATE HILL,
NEW YORK, 10973, (HEREINAFTER REFERRED TO AS "SELLER"), AND GRIFFITH MICRO
SCIENCE, INC., (HEREINAFTER REFERRED TO AS "BUYER").
IN CONSIDERATION OF THE PROVISIONS SET FORTH HEREIN, SELLER AND BUYER
AGREE AS FOLLOWS:
1. Definitions. For the purposes of this Agreement the terms "Product",
"Current Requirements", "Container", "Buyer's Location", "Specification",
"Delivery and Shipment", "Price of Product", "Transportation Costs", and "Terms
of Payment" will have the respective meanings now or hereafter set forth in
Attachment A as incorporated herein and appropriately signed or initialed and
dated by the Buyer and Seller.
2. Sale and Purchase/Location(s). Seller shall sell and Buyer shall
purchase, on the terms and conditions set forth herein, Buyer's total present
and future requirements of Product during the term of this Agreement for use at
Buyer's location(s), and if any of the operations at Buyer's location(s) are
hereafter conducted at new or expanded location(s), the then current
requirements and the future requirements of Product at such location(s) will be
supplied by Seller to Buyer and purchased by Buyer pursuant hereto. Buyer's
Current Requirements of Product are as set forth in Attachment A. Buyer shall
keep Seller informed of any estimated changes in its Current Requirements.
3. Price and Payment. Seller will invoice Buyer and Buyer will pay Seller
for Product in accordance with the price of Product and Terms of Payment set
forth in Attachment A hereto. If Buyer fails to make timely payment in
accordance with the terms of this Agreement, or Buyer's credit becomes
impaired, as set forth in paragraph 11 hereof, Seller reserves the right to:
(a) Refuse to supply Product to Buyer under any order unless
Buyer pays cash in advance with order and/or makes payment in full
of all outstanding charges; and/or
(b) At the discretion of the Seller, assess and collect from
Buyer a late charge on any delinquent balance, computed as follows:
1.5% per month on balances over 45 days; and/or
(c) Terminate or suspend this Agreement upon thirty (30) days
written notice to Buyer, if Buyer does not rectify within a thirty
(30) day period.
Buyer shall receive no credit or refund for Product which meets the
specifications set forth in Attachment B which is delivered to Buyer but not
used.
<PAGE> 2
4. Delivery of Product: Title. Product shall be delivered by Seller in
accordance with the Delivery and Shipment provisions of Attachment A. Title
and risk of loss shall pass to Buyer F.O.B. Buyer's facility. Seller's
quantity measurements taken at Seller's facility shall govern. Except as
otherwise provided for hereunder, all drums, cylinders and other containers in
which Product is delivered are and shall remain the property of Seller and are
returnable in good condition promptly after being emptied. Buyer shall pay
demurrage charges for any such items not promptly returned within a reasonable
amount of time. (Seller's policy is demurrage after 60 days.)
Seller will:
o Endeavor, upon receipt of reasonable advance notice, to
deliver to Buyer's location(s) such quantities of Product as are
necessary to supply Buyer's requirements at such location(s). If
Seller is unable to supply gas when required, Buyer has the right to
obtain Product from another source.
Buyer will:
o Monitor the inventory of Product at Buyer's location and
regularly advise Seller of the level thereof at each such location.
o Reimburse Seller upon Seller's request, additional costs
incurred if, during Product deliveries, Seller experiences frequent
delays within Buyer's control.
o Allow deliveries to be made twenty-four (24) hours per day,
seven (7) days per week. Buyer may request that delivery be made at
specified times, and if Seller is able to do so, Buyer shall then
pay all additional expenses incurred by Seller as a result.
Deliveries which may be made during a strike or other labor disturbance
affecting Buyer shall be at Buyer's sole risk, and Buyer hereby indemnifies and
holds Seller harmless from and against all of the costs, damages, liabilities
or claims arising out of or associated with any such delivery which are not
regularly incurred by Seller in the ordinary course of normal deliveries
hereunder.
5. Specifications. All Product delivered by Seller under this Agreement
shall conform to the specification set forth in Attachment A hereto.
6. Price Adjustment. See Attachment A.
7. Taxes. Taxes imposed upon the storage, sale, transportation, delivery,
use or consumption of Product, or any other tax, howsoever denominated and
measured involving Product, shall be paid directly by Buyer, or if paid by
Seller, shall be invoiced to Buyer as a separate item and paid by Buyer to
Seller.
8. Seller's Warranty. Seller warrants that the Product delivered to Buyer
shall conform to the specification set forth on Attachment A hereto and that at
the time of delivery Seller shall have good title to and the right to transfer
such Product and that the same shall be delivered free of encumbrances and that
the drums in which the Product will be delivered will be
2
<PAGE> 3
appropriate for containing the Product and will be free from defects and leaks.
THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9. Limitation of Liability. Buyer acknowledges that there are hazards
associated with the use of the Product, that it has received Seller's current
Material Safety Data Sheet, that it understands such hazards, and that it is
the Buyer's responsibility to warn and protect its employees, independent
contractors, invitees, and others exposed to such hazards through Buyer's
storage and use of the Product. Buyer assumes all risk and liability for loss,
damage or injury to persons or to property of Buyer or the other persons
arising out of the presence of or use of the product provided such loss is not
due to Seller's negligence.
Seller's sole liability and Buyer's exclusive remedy for the non-delivery
of Product, or for the delivery of Product not conforming to the specification
(and which Seller does not elect to replace with conforming Product) shall be
limited to the purchase price of the quantity of Product. In no circumstances
shall Seller be liable, whether in contract or tort or otherwise, for any
incidental or consequential damages, including loss of use, loss of work in
process, down time or loss of profits.
In the case of non-delivery of Product, Seller is liable for [ * ] of
difference between the purchase price of the Product, if the Seller had
supplied, and the price actually paid by the Buyer for the Product from another
source.
Buyer will receive documents from Seller, including Seller's Material
Safety Data Sheet and any revision thereof, containing safety and health
information pertaining to Product, and Buyer will incorporate such information
into Buyer's safety program.
Each party hereby agrees to indemnify and hold the other party, its
affiliates and their respective employees, officers and directors harmless from
any actions, lawsuits, demands, claims, losses, expenses, costs, including but
not limited to legal fees, and damages, arising from the injury, illness or
death of the indemnifying party's employees while engaged in any activities
related to the Product(s) supplied by Seller under this Agreement, unless such
claims are incurred by any of them arising out of the other party's negligence
or its breach of its obligations hereunder.
10. Force Majeure. Neither party hereto shall be considered in default in
the performance of its obligations hereunder (other than its obligation to make
any payment of money hereunder), or be liable in damages or otherwise for any
failure or delay in performance which is due to strike, lockout, concerted act
of worker's or other industrial disturbance, fire, explosion, flood or other
natural catastrophe, civil disturbance, riot or armed conflict, whether
- ------------------------
* Confidential Treatment requested; material filed separately with Commission.
<PAGE> 4
declared or undeclared, curtailment, shortage, rationing or allocation of
normal sources of supply of labor, materials, transportation, energy, or
utilities, machinery or equipment breakdown, abnormal transportation, energy,
or utilities, machinery or equipment breakdown, abnormal demand, lack of
transportation or distribution equipment, accident, Act of God, delay of
Seller's suppliers, subcontractors, or vendors, sufferance of or voluntary
compliance with acts of government and government regulations (whether or not
valid), embargoes or any other similar or dissimilar cause which is beyond the
reasonable control of the party affected.
Neither party hereto shall be required to make any concession or grant any
demand or request to bring to an end any strike or other concerted act of
worker's.
Either party affected by an event described in this paragraph shall,
promptly upon learning of such event and ascertaining that it has or will
affect its performance hereunder, give notice to the other party, stating the
nature of the event, its anticipated duration and any action being taken to
avoid or minimize its effect.
Seller may during any period of shortages prorate the Product among its
various customers.
11. Impairment of Credit. The following activities make an impairment of
credit: any action that is brought by or against Buyer under any present or
future bankruptcy or insolvency laws seeking any reorganization, arrangement,
readjustment, liquidation, dissolution or similar relief with respect to Buyer,
or Buyer makes any assignment for the benefit of creditors, or a receiver is
appointed for Buyer, or Buyer shall fail to make payments in accordance with
the terms of this Agreement, or, Buyer's credit has been impaired.
12. Claims. Buyer shall inspect Product immediately after Product arrives
at Buyer's location(s). Buyer's failure to give notice of any claim within
thirty (30) days after the arrival of Product at Buyer's location(s) shall
constitute an unqualified acceptance by Buyer of such Product and a waiver of
Seller's claims in respect thereof.
13. Assignment. This Agreement shall be binding upon the parties and
their heirs, administrators, executors, acquirers, successors, and assignees of
either party.
14. Notice. Any notices, unless otherwise provided herein, will be in
writing. Any notice by letter under this Agreement will be deemed given on the
date such correspondence is posted.
15. Applicable Law. This Agreement is to be interpreted in accordance
with the laws of the State of New York as in effect for agreements made and
performed in New York.
16. Term. This Agreement will be in effect October 1, 1997 and will
continue in effect for a period of seven (7) years.
17. Prior Agreement. This Agreement supersedes any prior agreement or
agreements between Buyer and Seller for delivery of Product to Buyer's
Location(s), but this Agreement shall not be construed as a renunciation or
discharge of any claim in damages for an antecedent breach.
4
<PAGE> 5
18. Entire Agreement. This Agreement supersedes any prior agreement
between the parties relating to the delivery of Product. No modification or
waiver of, or addendum to this Agreement shall bind Seller unless expressly set
forth in writing and signed and accepted by an authorized representative of
Seller.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the dates above.
Submitted by: Ron Ahnell
TITLE: Sales & Marketing Mgr., Arc Chemical
DATE: September 25, 1997
BUYER'S ACCEPTANCE: SELLER'S ACCEPTANCE:
GRIFFITH MICRO SCIENCE, INC. ARC CHEMICAL DIVISION
BALCHEM CORPORATION
BY: /s/ Kevin M. Swan BY: /s/ Dino A. Rossi
---------------------------------- ----------------------------
TITLE President TITLE: President
-------------------------------- -------------------------
DATE: 10-30-97 DATE: 10-29-97
-------------------------------- ---------------------------
5
<PAGE> 6
ATTACHMENT A
ARC CHEMICAL DIVISION BALCHEM CORPORATION
INDUSTRIAL GAS SUPPLY AGREEMENT
IN THE AGREEMENT, CONTRACT NO. 1000197 AND DATED THE 29TH DAY OF SEPTEMBER,
1997
PRODUCT MEANS: Drummed 100% Ethylene Oxide
BUYERS LOCATION(S) MEANS: Total requirements for Customer location(s) in US and
Canada
SPECIFICATION MEANS: See attached Specification sheet (Attachment B)
CURRENT REQUIREMENTS MEANS: As required by Customer for location(s)
CONTAINER MEANS: 400 pound DOT Spec Packaging 5P drums
DELIVERY AND SHIPMENT MEANS: as required
[ * ]
TRANSPORTATION COSTS ARE: Included in the price of the product, FOB Buyer
TERMS OF PAYMENT MEANS: Net 30 days
REMARKS:
================================================================================
BUYER SELLER
- ----- ------
GRIFFITH MICRO SCIENCE, INC. ARC CHEMICAL DIV. BALCHEM CORP.
ACCEPTED ACCEPTED
BY: /s/ KEVIN M. SWAN BY: /s/ DINO A. ROSSI
---------------------- ------------------------------
TITLE: PRESIDENT TITLE: PRESIDENT
---------------------- ------------------------------
DATE: 10-30-97 DATE: 10-29-97
---------------------- ------------------------------
- -----------------------
* Confidential Treatment requested; material filed separately with Commission.
<PAGE> 7
ATTACHMENT "B"
ARC CHEMICAL DIVISION BALCHEM CORPORATION
P.O. BOX 180, SLATE HILL, NY 10973 - TEL. 914-355-5311; FAX 914-355-7619
PURCHASE SPECIFICATIONS
ETHYLENE OXIDE
Specification Limits
1. Acidity 20 PPM by weight, maximum, calculated as ascetic
acid. This is equivalent to 0.019 mg KOH per mg.
sample.
2. Aldehydes 30 PPM by weight, maximum, calculated as acetaldehyde.
3. Carbon Dioxide 50 PPM by weight, maximum.
4. Water 25 PPM by weight, maximum.
5. Residue 0.005 gm. Per 100 ml., maximum.
6. Color 10 maximum.
platinum-cobalt, Sunoco
APHA, BASF
7. Suspended Matter Substantially free.
8. Ethylene Oxide 99.9%, minimum.
(Purity by difference)
<PAGE> 8
+
[ * ]
- ---------------
* Confidential Treatment requested; material filed separately with Commission.
+ One page omitted.
8
<PAGE> 1
EXHIBIT 10.12
JOINT VENTURE AGREEMENT
By and Between
MDS NORDION INC.
&
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS 2
ARTICLE 2 SCOPE AND DESCRIPTION OF JOINT VENTURE 5
ARTICLE 3 RELATIONSHIP OF THE JOINT VENTURERS 5
ARTICLE 4 CONTRIBUTIONS AND OBLIGATIONS TO THE VENTURE 6
ARTICLE 5 REPRESENTATIONS AND WARRANTIES 10
ARTICLE 6 INTELLECTUAL PROPERTY 12
ARTICLE 7 TERM AND TERMINATION OF JOINT VENTURE 13
ARTICLE 8 GENERAL TERMS AND CONDITIONS 14
<PAGE> 3
JOINT VENTURE AGREEMENT
This Joint Venture Agreement is made as of the ______ day of June, 1997.
BETWEEN: MDS NORDION INC.,
a corporation incorporated under the laws of Canada,
having a place of business at 447 March Road, Kanata,
Ontario, Canada
"Nordion"
AND: GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.,
a corporation incorporated under the laws of Delaware,
having a place of business at 2001 Spring Road, Oak
Brook, Illinois, 60521-1887
"GMS"
Nordion and GMS are sometimes herein referred to collectively as the "Parties".
WHEREAS,
I Nordion has expertise and is a world leader in the design and supply of
gamma processing facilities and Cobalt-60;
II GMS has expertise and is the world leader in ethylene oxide sterilization
and management thereof;
III The Parties wish to enter into an agreement to collaborate in the
development, promotion and operation of a gamma processing facility in
Mexico City D.F., primarily for food and also for medical and other
irradiation processing;
IV The Parties seek to combine their expertise to promote and support the
benefits of irradiation processing;
V The Parties have agreed that the collaboration shall be conducted as a
company incorporated in Mexico to be formed by the Parties;
<PAGE> 4
- 2 -
VI The Parties are desirous of defining the terms, conditions, duties and
obligations of each party with respect to the funding, ownership,
organization and management of the joint venture and the manner of
allocating the work to be conducted and all other matters related or
incidental thereto.
NOW THEREFORE in consideration of the premises and the mutual covenants
set forth herein, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions Whenever used in this Agreement, the following words and
terms shall have the respective meanings ascribed to them as follows:
(a) "Agreement" means this Agreement, the Schedules attached hereto
and all instruments supplemental hereto or in amendment or
confirmation hereof, "hereof", "hereto", and "hereunder" and similar
expressions mean and refer to this Agreement and not to any
particular Article or Section; "Article", "Section", "paragraph" or
"clause'' means and refers to the specified article, section,
paragraph or clause of this Agreement;
(b) "Business Day" means any day other than Saturday, Sunday or statutory
holiday in Mexico, the State of Illinois or in the Province of
Ontario, as the case may be;
(c) "Business of the Venture" means the acquisition, ownership,
management and operation of an Irradiation Facility in Mexico City,
D.F., Mexico, and such other facilities in Mexico as may be agreed
from time to time;
<PAGE> 5
- 3 -
(d) "Initial Business Plan" means the plan attached as Schedule C
describing the implementation of the Business of the Venture and
erection of the Irradiation Facility, detailed financial forecasts of
the projected business activities and operations of the Venture,
estimates of proposed expenditures, statement of objectives and
detailed plans with respect to the implementation of the Venture and
milestones to be achieved, as mutually agreed between the Parties.
The Initial Business Plan shall provide for not significantly less
than 16,000 pallets of product to be processed in each year of the
first two (2) years of operation of the Irradiation Facility and at
least 26,300 pallets in the third year of operation to be processed
at competitive commercial rates;
(e) "Irradiation Facility" means the gamma processing facility which is
described in Schedule B and is comprised of building(s), equipment
and Cobalt-60, consistent with the projections of the Initial
Business Plan in Schedule C;
(f) "Land" means the land described in Schedule A; and
(g) The "Venture" means the incorporated company to be formed in Mexico
pursuant to this Agreement.
1.2 Headings The division of this Agreement into articles and sections and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
In this Agreement and unless the context otherwise requires, words importing the
singular number only shall include the plural and vice versa, words importing
the neuter gender shall include the masculine and feminine genders and words
importing persons shall include
<PAGE> 6
- 4 -
individuals, partnerships, associations, trusts, entities of all types,
unincorporated organizations and corporations.
1.3 Schedules The following Schedules annexed hereto are incorporated by
reference and are deemed to be part hereof.
A: Description of Land
B: Irradiation Facility
C: Initial Business Plan
D: Quote for Irradiator
E: Shareholder Agreement
F: Articles of Incorporation
1.4 Currency All payments required hereunder to be made and all currency
mentioned herein shall be in and refer to United States dollars, unless
otherwise specified.
ARTICLE 2
SCOPE AND DESCRIPTION OF JOINT VENTURE
2.1 The Parties shall incorporate a company in Mexico which will be
organized, managed and conducted in accordance with the laws of Mexico, this
Agreement and the Shareholders Agreement entered into by the Parties as of this
date ("Shareholders Agreement").
ARTICLE 3
RELATIONSHIP OF THE JOINT VENTURERS
3.1 Except as otherwise set out in this Agreement, any property of any type,
including but not limited to real, personal and intellectual property,
belonging to a Party which is used in
<PAGE> 7
- 5 -
connection with the performance of its obligations arising by virtue of this
Agreement shall remain the property of said Party and shall not be or become
the property of any other Party or the Venture.
3.2 No Agency Unless specifically provided otherwise herein or in the
Shareholders Agreement, neither Party shall be deemed to be the representative,
agent or employee of the other Party for any purpose whatsoever and no Party
shall have the authority or right to hold itself out as having the authority or
right to assume, create or undertake any obligation or incur any liability of
any kind whatsoever, express or implied, on behalf of or in the name of the
Venture or the other Party, without the express prior written consent of the
other Party. Neither Party shall have the authority or right or hold itself out
as having the authority or right to accept service of any legal process
addressed to or intended for the other Party.
3.3 No Borrowing No Party acting individually and without the consent of
the Board of Directors of the Venture shall have the right to borrow money on
behalf of or in the name of the Venture or the other Party or to pledge,
mortgage or otherwise encumber the assets or rights of the Venture or of the
other Party without the express prior written consent of the other Party.
3.4 Employees Unless otherwise provided in this Agreement or the Shareholders
Agreement, employees, agents or representatives of a Party who perform work and
services in relation to the Venture shall be and remain at all times employees,
agents, representatives of such Party and shall not at any time be deemed to be
the employees, agents or representatives of the other Party.
<PAGE> 8
- 6 -
ARTICLE 4
CONTRIBUTIONS AND OBLIGATIONS TO THE VENTURE
4.1 Obligations The Parties agree to make their contributions, to execute
the necessary agreements and documents and to meet their respective
responsibilities and obligations on a timely basis as set out herein. The
Parties recognize that taking into account uncertainties, it may be necessary
to amend certain aspects of the Initial Business Plan, which amendments will
require the advance written approval of the Parties.
4.2 Nordion Contribution Nordion shall provide to the Venture:
i) 40% of the Venture's initial capital requirements to a maximum
of US$2,400,000, paid in cash or in kind and all of which shall
be in equity.
ii) For the first twelve (12) months of commercial operation of the
Irradiation Facility, training and on-site supervision to
fulfill customary initial training requirements for such a
facility. Thereafter, Nordion agrees to provide on-going
training as required by the Venture on terms to be agreed upon
by Nordion and the Venture.
iii) As reasonably requested by the Venture and deemed appropriate
by Nordion, marketing, sales, quality assurance and other areas
of expertise, in order to assist the Venture to develop, assess
and exploit the commercial potential and opportunities
available to the Venture. Nordion will also actively promote
the Venture in seminars and printed materials as appropriate.
4.3 Nordion Obligations Nordion shall provide the following to the Venture,
on the terms set forth herein:
<PAGE> 9
- 7 -
(i) Except as the Parties otherwise agree, an irradiator capable of
meeting the operational needs and growth projections set forth
in the Initial Business Plan and which shall be designed
pursuant to and consistent with the specifications set out in
Nordion's quotation attached as Schedule D. The purchase price
payable by the Venture for the irradiator will be equal to
Nordion's actual direct labor, material and direct production
support costs plus 10%. In addition, reasonable and customary
out-of-pocket travel and site accommodation expenses incurred by
Nordion during installation of the irradiator, shall be to the
account of the Venture.
(ii) Cobalt-60 and replenishment Cobalt-60 in the form of Nordion
double encapsulated C-188 sources. The purchase price for the
Cobalt-60 payable by the Venture shall be the lesser of: (i) the
lowest price for similar quantities of Cobalt-60 available to
any customer of Nordion under a multi-year contract anywhere in
the world, including any discounts or rebates available to such
customer or (ii) the average price for similar quantities of
Cobalt-60 sold or delivered to any of Nordion's ten largest
customers within the preceding and succeeding six (6) months
from the date of any order to Nordion from the Venture. In
addition, normal and customary transport costs, container
rental, and installation shall be to the Venture's account.
Nordion shall accept the return and appropriately handle and
dispose of or recycle all Cobalt-60 sold to the Venture and the
Venture shall pay to Nordion the then-current charges for such
return.
4.4 GMS Contribution GMS shall provide to the Venture:
<PAGE> 10
- 8 -
i) 60% of the Venture's initial capital requirements to a maximum
of US$3,600,000, payable in cash or in kind and all of which
shall be in equity.
ii) As reasonably requested by the Venture and deemed appropriate by
GMS marketing, sales, quality assurance and other areas of
expertise, in order to assist the Venture to develop, assess
and exploit the commercial potential and opportunities
available to the Venture. GMS will also actively promote the
Venture in seminars and printed materials.
4.5 GMS Obligations GMS shall provide the following to the Venture, on the
terms set forth herein:
i) The Venture will employ and pay the compensation of Maria del
Carmen Casar, who is currently General Manager of GMS's Mexican
Affiliate. It is anticipated that after the Venture is formed,
Ms. del Carmen Casar will continue to provide services to GMS
and its Mexican Affiliate. In such event, the Venture shall
invoice GMS and GMS shall pay the amount of Ms. del Carmen
Casar's compensation for the time she spends on GMS services.
4.6 Venture Responsibility The Venture shall be responsible for all costs
incurred by and associated with the Business of the Venture and shall
purchase its irradiator and Cobalt-60 requirements from Nordion pursuant
to Section 4.3. Pursuant to the Initial Business Plan, the Venture shall
purchase the Land and components for and build and manage the Irradiation
Facility. All right, title and interest in and to the Land and Irradiation
Facility shall belong to the
<PAGE> 11
- 9 -
Venture. The Parties shall use best efforts to ensure that all resources
acquired by the Venture shall be at or below fair market value.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations of Nordion Nordion represents and warrants that:
(a) Nordion is a corporation duly organized, validly existing and
in good standing under the laws of Canada, and has all necessary
corporate powers to own its properties, and carry on its business as
now owned and operated;
(b) The execution and delivery of this Agreement and the consummation
by Nordion of the transactions described herein have been duly
authorized, and no further corporate action or authorization is
necessary in connection therewith;
(c) There are no actions, notices, claims, demands or other
proceedings, pending or threatened, before any court against Nordion
at the date of execution of this Agreement which would have a
material adverse affect on Nordion's ability to carry out its
obligations under this Agreement;
(d) To the best of Nordion's knowledge, the specifications set forth
in Schedule D will and the facility is sized to reasonably and cost
effectively provide for the operation and growth of the Business as
provided in Schedules B & C, except as otherwise instructed in
writing by GMS;
(e) Neither the execution, delivery or performance of this Agreement
and the related documentation contemplated herein, nor the
consummation of the transactions contemplated herein, violates any
laws or any act, decision, agreement or contract binding or
benefiting Nordion, nor modifies the effects thereof.
<PAGE> 12
- 10 -
5.2 GMS represents and warrants that:
(a) GMS is a corporation duly organized and validly existing and in
good standing under the laws of Delaware, and has all necessary
corporate powers to own its properties and carry on business as now
owned and operated;
(b) The execution and delivery of this Agreement and the consummation
by GMS of the transactions described herein, have been duly
authorized and no further corporate action or authorization is
necessary in connection therewith;
(c) There are no actions, notices, claims, demands or other
proceedings, pending or threatened, before any court against GMS at
the date of execution of this Agreement which would have a material
adverse affect on GMS's ability to carry out its obligations under
this Agreement;
(d) Neither the execution, delivery or performance of this Agreement
and the related documentation contemplated herein, nor the
consummation of the transactions contemplated herein, violates any
laws or any act, decision, agreement or contract binding or
benefiting GMS, nor modifies the effects thereof.
ARTICLE 6
INTELLECTUAL PROPERTY
6.1 Ownership and Use of Documents All documents produced for or by the
Venture shall be owned by the Venture. Notwithstanding the foregoing any
documentation and/or plans containing proprietary information belonging to
either Party hereunder shall remain the property of such Party and shall be
maintained in strict confidence by the other Party to whom such proprietary
information is disclosed.
<PAGE> 13
- 11 -
ARTICLE 7
TERM AND TERMINATION OF JOINT VENTURE
7.1 Termination This Agreement shall take effect as of the date first
written above and shall remain in force until terminated, by mutual agreement
of the Parties, or if only one of the Parties is a Shareholder of the Venture,
or at the election of a Party, exercised by giving written notice to the other
Party, upon the occurrence of any of the following events of default:
(a) If a Party (the "Defaulting Party") fails to observe or perform
any material covenant, condition or representation contained in this
Agreement or the Shareholders Agreement which results in a material
adverse effect for the Venture or the other Party, and after notice
in writing has been given by the other Party (the "Non-Defaulting
Party") to the Defaulting Party, specifying such default, with
reasonable particulars and requiring the Defaulting Party to remedy
such non-performance or non-observance and the Defaulting Party does
not do so within a period of thirty (30) calendar days or such longer
period as the Non-Defaulting Party may specify, or is reasonable in
the circumstances provided the Defaulting Party is proceeding to
remedy such default with all due diligence and such default has not
continued for longer than one hundred eighty (180) calendar days.
(b) If a Party or the Venture is dissolved, files a voluntary
petition in bankruptcy, receivership or insolvency or similar
proceedings are commenced by or against it or there is the
appointment by a court of a temporary or permanent receiver, trustee,
custodian or similar administration, which is not relieved within
sixty (60)
<PAGE> 14
- 12 -
calendar days of its institution or there is an assignment for the
benefit of creditors.
(c) The winding up of the Venture pursuant to order by a competent
authority order against the Venture or against one or both of the
Parties.
ARTICLE 8
GENERAL TERMS AND CONDITIONS
8.1 Notices All notices, requests, demands and other communications shall,
(in the absence of any specific provision to the contrary) be in writing and
delivered or sent by pre-paid registered mail or telecopy to the following
respective addresses:
to Nordion: 447 March Road
Kanata, Ontario, Canada
K2K IX8
Attention: Vice President, Market Development
To GMS: 2001 Spring Road,
Oak Brook, Illinois, U.S.A.
60521-1887
Attention: President
with a copy to:
One Griffith Center
Alsip, IL 60658-3495
U.S.A.
Attention: General Counsel
In the event that it may be reasonably anticipated that, due to any strike,
lockout, or similar event involving an interruption in postal service, any
payment or communication will be received by the addressee later than the tenth
(10th) day following the mailing date, then the mailing of any
<PAGE> 15
- 13 -
such payment or communication as aforesaid shall not be an effective means of
sending the same, but rather any payment or communication must then be sent by
an alternative means of transportation which may be reasonably anticipated will
cause the payment or communication to be received reasonably expeditiously by
the addressee and which will provide written proof of receipt. A Party may from
time to time change its address herein by providing notice to the other Parties
in accordance with this Section.
8.2 Entire Agreement Unless otherwise set out, this Agreement constitutes
the entire agreement between the Parties relating to the subject matter herein
and supersedes any and all prior agreements, negotiations, representations and
understandings whether written or oral between the Parties relating to its
subject matter. This Agreement may not be modified in any manner except by a
further written agreement signed by duly authorized officers or representatives
of each of the Parties.
8.3 Further Assurances The Parties hereto hereby covenant and agree that
they and their respective heirs, executors, administrators, successors and
assigns and nominees shall, with reasonable diligence, do all such things and
provide all such reasonable assurances and cause the Venture, as may be
reasonably required, to consummate the transactions contemplated hereby, and
each Party hereto shall provide such further documents or instruments required
by the other Party as may be reasonably necessary or desirable to effect the
purpose of this Agreement and carry out its provisions.
8.4 Waiver The failure of any Party to this Agreement to enforce at any
time any of the provisions of this Agreement or any of its rights in respect
thereto or to insist upon strict adherence to any term of this Agreement will
not be considered to be a waiver of such provision, right or term or in any way
to affect the validity of this Agreement or deprive the applicable
<PAGE> 16
- 14 -
Party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. The exercise by any Party of any of its
rights provided by this Agreement will not preclude or prejudice such Party
from exercising any other right it may have by reason of this Agreement or
otherwise, irrespective of any previous action or proceeding taken by it
hereunder. Any waiver by any Party hereto of the performance of any of the
provisions of this Agreement will be effective only if in writing and signed by
a duly authorized representative of such Party.
8.5 Indemnity Nordion and GMS shall indemnify and hold the other harmless
from and against any and all expenses, liabilities, debts, costs, claims and
demands, (including without limitation, reasonable attorney's fees) incurred as
a result of any negligent act, conduct, or omission of the responsible party or
breach of this Agreement by the responsible party, which relates to the
performance of its duties arising under this Agreement.
8.6 No Partnership Nothing in this Agreement shall be deemed in any way or
for any purpose to constitute any party a partner of any other party to this
Agreement in the conduct of any business or otherwise.
8.7 Successors and Assigns This Agreement is not assignable by any party
except insofar as its Equity Securities are transferred in accordance with its
provisions. The provisions of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, committees, successors, receivers, trustees in bankruptcy or
other legal representatives and each and every person so bound shall make,
execute and deliver all documents necessary to carry out this Agreement.
8.8 Time of the Essence Time shall be of the essence of this Agreement.
<PAGE> 17
- 15 -
8.9 Separate Counterparts This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered shall be deemed to
be an original and such counterparts together shall constitute one and the same
instrument.
8.10 Severability Each and every provision of this Agreement shall be
treated as separate and distinct and in the event of any provision hereof being
declared invalid such provision shall be deemed to be severable and all other
provisions hereof shall remain in full force and effect.
8.11 Force Majeure No Party shall be in default hereunder by reason of its
delay in the performance or failure to perform any of its obligations hereunder,
such delay or failure, without limiting the generality of the following, is
caused by strike, acts of God or the public enemy, unavailability of raw
materials, riots, acts of terrorism, interference by civil or military
authorities, decisions of competent authorities, compliance with government
laws, rules and regulations, or any fault beyond its reasonable control.
8.12 Governing Law This Agreement and the rights, and obligations and
relations of the Parties hereto, shall be governed and construed in accordance
with the laws of the State of New York and the Federal laws applicable therein
(but without giving effect to any conflict of law rules). The Parties hereto
agree that the Federal District courts of the U.S.A., Southern District of New
York shall have jurisdiction to enter any action or other legal proceedings
based on any provisions of this Agreement. Each Party does hereby attorn to the
jurisdiction of the courts of the State of New York, U.S.A.
<PAGE> 18
- 16 -
The Parties have executed this Agreement as of the date first appearing
above.
MDS NORDION INC.
by: /s/ Frank M. Fraser
------------------------------------------
Frank M. Fraser
Vice President
Market Development Division
by: /s/ David L. Nicholds
------------------------------------------
David L. Nicholds
Vice President, General Counsel
and Corporate Secretary
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
by: /s/ Kevin M. Swan
------------------------------------------
Kevin M. Swan
President - CEO
<PAGE> 19
SHAREHOLDER AGREEMENT
By and Between
MDS NORDION INC.
&
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
&
NGS
<PAGE> 20
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 INTERPRETATION................................................. 2
1.1 Definitions.................................................... 2
1.2 Limitation of Directors' and Officers' Liability............... 4
ARTICLE 2 MANAGEMENT..................................................... 5
2.1 Carrying out of the Agreement.................................. 5
2.2 Directors...................................................... 5
2.3 Removal and Replacement of Nominees............................ 5
2.4 Board Meetings................................................. 6
2.5 Function of the Board of Directors............................. 6
2.6 Actions Requiring Social Resolution............................ 7
2.7 Significant Expenditures....................................... 8
ARTICLE 3 RECORDS AND REPORTING.......................................... 8
3.1 Books and Records.............................................. 8
3.2 Fiscal Year.................................................... 8
3.3 Auditor or Accountant.......................................... 9
3.4 Reporting...................................................... 9
ARTICLE 4 TRANSFER AND DISPOSITION OF EQUITY SECURITIES.................. 10
4.1 Restriction on Transfer........................................ 10
4.2 Shareholder Consent............................................ 10
4.3 Transfers to Affiliates........................................ 10
4.4 Right of First Refusal......................................... 11
4.5 GMS Call....................................................... 12
4.6 Exercise of the Call; Supply Agreement......................... 12
4.7 Nordion Put.................................................... 14
4.8 Closing........................................................ 14
4.9 Insolvency of a Shareholder.................................... 15
ARTICLE 5 GENERAL SALE PROVISIONS........................................ 15
5.1 Sale Provisions................................................ 15
5.2 Conditions of Closing.......................................... 16
</TABLE>
<PAGE> 21
-ii-
<TABLE>
<S> <C>
5.3 Indebtedness of Seller to Corporation.......................... 16
5.4 Indebtedness of Corporation to Seller; Seller's Guaranties..... 17
5.5 Agreement Binding on Transferees............................... 17
5.6 Continuing Obligations......................................... 17
ARTICLE 6 ADDITIONAL ISSUE OF EQUITY SECURITIES.......................... 18
6.1 Pre-emptive Right.............................................. 18
6.2 Offer to Others................................................ 19
ARTICLE 7 CONFIDENTIALITY................................................ 19
7.1 Provision of Information....................................... 19
7.2 Maintenance of Confidentiality................................. 19
7.3 Survival....................................................... 20
ARTICLE 8 GENERAL........................................................ 20
8.1 Notices........................................................ 20
8.2 No Partnership................................................. 21
8.3 Successors and Assigns......................................... 21
8.4 Time of the Essence............................................ 22
8.5 Further Assurances............................................. 22
8.6 Separate Counterparts.......................................... 22
8.7 Share Certificates............................................. 22
8.8 Subdivision, Consolidation, etc. of Equity Securities.......... 23
8.9 Conflict....................................................... 23
8.10 Force Majeure.................................................. 23
8.11 Entire Agreement............................................... 24
8.12 Waiver......................................................... 24
8.13 Severability................................................... 24
8.14 Governing Law.................................................. 25
</TABLE>
<PAGE> 22
SHAREHOLDERS AGREEMENT
THIS AGREEMENT made as of the ____ day of June, 1997
AMONG: MDS NORDION INC.,
a corporation incorporated under the laws of Canada;
having a place of business at 447 March Road,
Kanata, Ontario, Canada. K2K 1X8
"Nordion"
AND: GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.,
a company incorporated under the laws of Delaware
having a place of business at 2001
Spring Road, Oak Brook, Illinois 60521-1887
"GMS"
AND:
a company to be incorporated under the laws of Mexico,
having a place of business at
the "Corporation"
WHEREAS:
I GMS and Nordion have entered into a Joint Venture Agreement dated as of
the ____ day of June, 1997 (the "Joint Venture Agreement") for the purpose
of development, promotion and operation of a gamma processing facility in
Mexico, primarily for food and also for medical and other irradiation
processing;
II GMS and Nordion have agreed that such collaboration shall be conducted by
the Corporation as an incorporated joint venture, under the name NGS, Inc.
or such other name as the Parties agree;
III the authorized capital of the Corporation consists of an unlimited number
of Common Shares;
IV at the date hereof, all of the issued and outstanding Common Shares of the
Corporation are owned by the Shareholders as follows:
<PAGE> 23
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<TABLE>
<CAPTION>
Number Subscription % Common
Shareholders of Common Shares Value Shares
<S> <C> <C> <C>
Nordion 400 40
GMS 600 60
</TABLE>
V the Shareholders have agreed to enter into this Agreement for the purpose
of providing for the management of the Corporation and the issue or
transfer of the securities of the Corporation.
NOW THEREFORE in consideration of the mutual
covenants and agreements contained in this Agreement and other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged) the Parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement the following terms shall have the following meanings:
(a) "Act" means the Mexican Corporations Act and any statute that may be
substituted therefor, as from time to time amended, and the regulations
thereto and any regulations that may be substituted therefor, as from time
to time amended.
(b) "Affiliate" means a body corporate which, now or hereafter, directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with the Shareholders. The term "control"
means the possession, directly or indirectly, of the
<PAGE> 24
-3-
power to direct or cause the direction of the management and policies of a
body corporate, whether through the ownership of more than 50% of the votes
that may be cast to elect the directors, by contract or otherwise.
(c) "Articles" means the Articles of Incorporation or Association of the
Corporation, issued under the Act, as amended.
(d) "Business of the Corporation" means the acquisition, ownership,
management and operation of an irradiation facility in Mexico City, D.F.,
Mexico and such other facilities in Mexico as may be agreed from time to
time.
(e) "Business Day" means any day other than Saturday, Sunday or statutory
holiday in Mexico, the State of Illinois or the Province of Ontario, as
the case may be.
(f) "Business Plan" means detailed financial forecast of the projected
business activities and operations of the Corporation, estimates of
proposed expenditures, statement of objectives and detailed plans with
respect to the implementation and operation of the Business of the
Corporation.
(g) "By-laws" means the by-laws of the Corporation as amended from time to
time.
(h) "Common Shares" means the fully participating shares of the Corporation
issued and outstanding from time to time, carrying the right, inter alia,
to vote in all circumstances, to receive dividends as and when declared by
the board of directors and to receive the remaining property of the
Corporation on dissolution.
(i) "Confidential Information" means any trade or industrial secret, patent,
know-how, managing, marketing and pricing information, customer lists and
customer confidential information, technical expertise or non-public
information of any other sort as may from time to time be acquired or
developed.
<PAGE> 25
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(j) "Equity Securities" means the Shares and any rights, warrants, options or
other instruments entitling the holder, whether or not on a contingency,
to acquire Shares from the Corporation, and any instruments convertible,
whether or not on a contingency, into any of the foregoing.
(k) "Shareholders" means GMS and Nordion, and Shareholder means either one of
them and any person to whom Shares are transferred or issued in accordance
with the terms of this Agreement provided in each case such person has
signed Schedule A hereto.
(l) "Shares" means the Common Shares and other voting shares of the
Corporation.
(m) "Special Resolution" means a resolution approved by holders of Shares to
which are attached not less than 75% of the votes corresponding to all
Shares having voting rights in the circumstances, expressed by votes to be
cast at a meeting of Shareholders duly called to consider such resolution,
or by a resolution in writing signed by all Shareholders.
Capitalized terms used in this Agreement and not otherwise defined herein
shall have the definitions ascribed to them in the Joint Venture Agreement
dated __________ by and between Nordion and GMS.
1.2 Limitation of Directors' and Officers' Liability
To the extent that this Agreement specifies that certain matters may only
be addressed or approved by the Shareholders, the discretion and the powers of
the directors of the Corporation to manage and to supervise the management of
the Business of the Corporation with respect to such matters are, to the extent
permitted by law, correspondingly restricted and the directors are thereby
relieved of their duties and liabilities.
<PAGE> 26
-5-
ARTICLE 2
MANAGEMENT
2.1 Carrying out of the Agreement
Each of the Shareholders shall at all times vote and act as a Shareholder
and in all other respects carry out and cause the Corporation to carry out the
provisions of this Agreement. No Shareholder shall take any action contrary to
the provisions of this Agreement.
Each of the Shareholders, to the extent that it is permitted by law to
bind its nominee(s) to do so, shall cause its nominee(s), as a director of the
Corporation, to act and vote as a director in order that the provisions of this
Agreement shall be carried out.
2.2 Directors
Until changed in accordance with the terms hereof, the Corporation shall
have a board of directors consisting of five (5) members comprised of three (3)
nominees of GMS and two (2) nominees of Nordion, all of whom shall serve
without compensation and five (5) alternate directors comprised of three (3)
nominees of GMS and two (2) nominees of Nordion, all of whom shall serve
without compensation.
2.3 Removal and Replacement of Nominees
Any Shareholder entitled to a nominee shall be entitled to remove such
nominee by notice to the nominee and to the Corporation. Any vacancy occurring
by reason of the death, disqualification, inability to act, resignation or
removal of any director, shall only be filled by the Shareholder whose nominee
was so affected so as to maintain a board of directors consisting of the number
of nominees specified in Section 2.2. Should such vacancy occur, the
Shareholder whose nominee has ceased to be a director shall use its best
efforts to replace such nominee within thirty (30) days of resignation or
removal.
<PAGE> 27
-6-
2.4 Board Meetings
Meetings of the board of directors of the Corporation shall be called by
the Chairman or the Secretary upon the reasonable request of any Shareholder or
director. No less frequently than annually, the Chairman of the board of
directors of the Corporation shall request that management of the Corporation
report to the board with respect to the current status of operations of the
Corporation and with respect to all material developments or planned action
involving the Corporation and shall present to the meeting full current
financial information. Subject as hereinafter provided, the ordinary quorum
for any meeting of the board of directors shall not be less than four (4)
directors, consisting of at least one nominee of each Shareholder. In the
event all of a Shareholder's nominated directors fail to attend two
consecutively called meetings on the same or similar agenda, the quorum shall
be three (3). Unless otherwise set out, all decisions made at such meetings
shall be made by majority rule. The board of directors of the Corporation
shall prepare and maintain minutes of each meeting of the board of directors,
which shall be signed and each page initialed by the Chairman and the Secretary
and shall be provided to each of the Shareholders within a reasonable period.
The board of directors shall designate a Chairman and a Secretary.
2.5 Function of the Board of Directors
The role of the representatives on the board of directors shall be to
consult on all matters affecting the Corporation as a whole. The board of
directors shall, except as expressly otherwise provided in this Agreement, be
responsible for and shall be empowered to function in respect of the following:
i) review and advise regarding an annual Business Plan(s) for the
operation and commercialization of the Irradiation Facility;
<PAGE> 28
-7-
ii) the exercise of control and decision making and general
policy matters related to the Corporation.
2.6 Actions Requiring Social Resolution
No action shall be taken, by the Corporation with respect to the following
matters without the majority approval of the board of directors and the
Shareholders by way of Special Resolution:
i) approval of any material change to the Initial Business Plan;
ii) any direct or indirect participation in, or establishment by,
the Corporation of any business other than the Business of the
Corporation, or any material change in the nature and purpose of the
Business of the Corporation, or the undertaking of any material
action, gratuitous act or transaction not in the ordinary course of
business;
iii) any amendment to the Articles or By-laws of the Corporation,
including but not limited to capital increases, except as otherwise
required by law;
iv) any amalgamation, spin-off, or merger of the Corporation with
any other body corporate or any reorganization of corporate
ownership structure, including, but not limited to any continuance
of or arrangement for or any dissolution, liquidation, winding up or
spin-off of the Corporation,
v) any sale, lease, exchange or other disposition of fifty
percent (50%) or more of the value of the assets or property of the
Corporation;
vi) the lending of money by the Corporation or the providing of
any guarantee or indemnity obligations by the Corporation, where the
value of each of such is greater than US$10,000, other than product
and service warranties issued in the ordinary course of the Business
of the Corporation;
<PAGE> 29
-8-
vii) any contract or transaction with a Shareholder, Affiliate or
any other person which is not at arms length;
viii) execution of technology agreements, granting of licenses or
sublicenses of patents, trade marks or technical information;
ix) any significant change in accounting practices and policies;
x) approval of annual budgets which strive to reflect the
Business Plan and achieve the profit objectives of the Corporation.
2.7 Significant Expenditures
Any expenditure by the Corporation in excess of $400,000 shall require a
Special Resolution unless GMS contributes additional equity in the Corporation
equal to the amount of such expenditure over $400,000.
ARTICLE 3
RECORDS AND REPORTING
3.1 Books and Records
Notwithstanding any contrary provision in the By-laws, the Corporation
shall at all times maintain at its registered office proper books and records
in accordance with generally accepted Mexican accounting principles and such
books and records shall accurately reflect the Corporation's operations and
financial position in accordance with recognized international accounting
standards. Such records and supporting documentation shall be, at all times,
available for inspection by the Shareholders, or their designees, during normal
business hours and without interfering with the normal course of business of
the Corporation.
3.2 Fiscal Year
The fiscal year of the Corporation in each year shall end on December 31.
<PAGE> 30
-9-
3.3 Auditor or Accountant
The auditors of the Corporation shall be KPMG or such auditors or
accountants as the Shareholders shall from time to time appoint.
3.4 Reporting
The Corporation shall, and the board of directors shall cause the officers
of the Corporation to, prepare and provide to the Shareholders:
(a) at least sixty (60) days prior to the end of each fiscal year, a
report on the progress made relating to the Business of the
Corporation as of the date of the report and activities for the
forthcoming 12-month period in U.S. dollars;
(b) within forty-five (45) days after the end of each quarter, a balance
sheet, profit and loss statement and cash-flow statement, shown in
U.S. dollars and indicating in detail how the Corporation has
performed relative to the Business Plan and comparable periods in
prior fiscal years;
(c) within one hundred and twenty (120) days of the end of each fiscal
year, audited financial statements, approved by the board of
directors;
(d) at least sixty (60) days prior to the end of each fiscal year a
Business Plan for the ensuing fiscal year; and
(e) such other information, accounts, data and projections as any
director may reasonably request from time to time.
<PAGE> 31
-10-
ARTICLE 4
TRANSFER AND DISPOSITION OF EQUITY SECURITIES
4.1 Restriction on Transfer
No Equity Securities of the Corporation or any interest therein shall be
sold, assigned, exchanged, transferred, disposed of, encumbered, pledged,
mortgaged, hypothecated, given, devised or bequeathed, directly or indirectly,
and no agreement or commitment shall be made to do any of the same except in
each case (i) with the approval of a Special Resolution or (ii) pursuant to the
applicable provisions of this Agreement, and any attempt to do so without such
consent or other than pursuant to such provisions or such agreements shall be
void and, because the Parties hereto acknowledge the inadequacy of monetary
damages in such circumstances, shall be subject to specific performance and
injunctive relief at the request of other Parties hereto.
4.2 Shareholder Consent
The Shareholders shall vote the Shares of the Corporation owned by them,
to approve as required by the Articles, any transfer of Equity Securities made
in accordance with the provisions of this Agreement.
4.3 Transfers to Affiliates
With the consent of the other Shareholders, which may not be unreasonably
withheld, all or part, of the Equity Securities held by a Shareholder may be
transferred to an Affiliate of such Shareholder. The transferee Shareholder
shall execute Schedule A hereto before such transfer can be effective.
<PAGE> 32
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4.4 Right of First Refusal
In the event that any Shareholder (the "Offeror") shall receive a bona
fide offer from a third party to purchase all but not less than all of the
Equity Securities of the Corporation owned by such Shareholder, it shall give
written notice to the other Shareholder ("Offeree") of its intention to accept
such offer (the "Selling Notice"). Such Selling Notice shall include a copy of
the third party offer to purchase, the number andoclass of the Equity
Securities subject of the offer (hereinafter in this Section 4.4 called the
"Offered Equity Securities"), the price offered by the third party which the
Offeror is prepared to accept and any other terms and conditions, provided that
such terms and conditions must not be contrary to the provisions of Article 5
of this Agreement. By delivering a Selling Notice, the Offeror represents and
warrants to the Offeree that there is no direct or indirect supplementary
consideration (whether or not in the nature of tangible or intangible assets,
money, property, securities or other benefits) to be received by the third
party or any other person in connection with such offer and that such offer is
not made as part of or in connection with any other transaction. Unless the
other Shareholder otherwise agrees, the following provisions shall govern such
purchase and sale:
(a) the Selling Notice shall be deemed to be an offer by the
Offeror, irrevocable within the time hereinafter specified for
acceptance, to sell the Offered Equity Securities to the Offeree
under the same terms and conditions offered by the third party;
(b) within thirty (30) days after receipt of the Selling Notice,
the Offeree may give to the Offeror a notice of acceptance;
(c) if the Offeree does not accept to purchase the Offered Equity
Securities, or is not prepared to purchase all the Offered Equity
Securities, then the Offeror may sell
<PAGE> 33
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all the Offered Equity Securities to the third party, provided that
such sale must close within sixty (60) days after Offeree's receipt
of the Selling Notice and the Offeror must provide the Offeree with
a certificate that the transaction closed on the same terms and
conditions as were contained in the Selling Notice.
4.5 GMS Call
At any time, at least five (5) years after the effective date of this
agreement, GMS, at its option, may notify Nordion, by written notice ("Call
Notice"), that it elects to purchase all, but not less than all, of the Equity
Securities held by Nordion (the "Call"). The call price for such Equity
Securities shall be determined as the aggregate of:
i) the greater of the price paid by Nordion for the initial
purchase of the Equity Securities of the Corporation or the fair
market value of such Equity Securities on the date of receipt of the
Call Notice, as agreed, or failing agreement, as determined by a
mutually agreed recognized appraiser, and
ii) a premium equal to 20% of the amount determined in paragraph
i) above.
Upon delivery of the Call Notice by GMS to Nordion, Nordion shall be
obligated to sell, and GMS shall be obligated to purchase, such Equity
Securities, on the date specified in the notice and Nordion shall deposit the
Equity Securities with the Secretary.
4.6 Exercise of the Call; Supply Agreement
In the event GMS exercises its Call to purchase all but not less than all
of the Equity Securities held by Nordion, GMS undertakes that GMS and its
controlled entities shall purchase from Nordion and Nordion shall sell to GMS
all of GMS's and its controlled entities' requirements for irradiation
equipment and Cobalt-60 (provided Nordion can supply such Cobalt-60 and
irradiation equipment in accordance with GMS specifications), pursuant to the
<PAGE> 34
-13-
terms and conditions of a Supply Agreement agreed to by the parties on this
date and attached as Schedule C. Key elements of the Supply Agreement include:
i) the purchase price for the irradiation equipment shall be the lesser
of fair market value or the price determined based on Nordion's
actual direct labour, material and direct production support costs
plus ten per cent (10%);
ii) the purchase price for Cobalt-60 shall be the lowest price paid over
the previous twenty-four (24) month period by a customer of Nordion
other than GMS and/or its controlled entities for similar quantities
of Cobalt 60 sold or delivered. Notwithstanding the foregoing,
Nordion may exclude one such sale within the preceding twenty-four
(24) month period from the determination of the lowest price. If no
such similar quantities have been sold or delivered, the purchase
price shall be the lesser of fair market value or the purchase price
for the next larger quantity so sold or delivered;
iii) GMS shall act reasonably in providing its specifications for such
Cobalt-60 and irradiation equipment;
iv) out-of-pocket travel, site accommodation, installation, transports
costs and container rental shall be to GMS's account;
v) for goods, services and equipment other than Cobalt-60, the delivered
cost (including taxes and all costs listed in 4.6 iv) above) must be
less than or equal to a competitive quote to supply comparable goods,
services or equipment;
vi) GMS shall have no obligations under the Supply Agreement to purchase
the requirements for Cobalt-60 and irradiation equipment for
companies it acquires after the date of this Agreement for so long as
the acquired company is obligated
<PAGE> 35
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to make such purchases under contracts in effect at the time the Call
is exercised; and
vii) Nordion shall accept the return and appropriately handle and
dispose of or recycle all Cobalt-60 sold to the Corporation or to
GMS and/or its controlled entities and the GMS and/or its controlled
entities shall pay to Nordion the then-current charges for such
return.
GMS agrees that it will not, directly or indirectly, take any action to
circumvent this section. This right and obligation shall survive termination
of this agreement by means of GMS's exercising its call. In the event Nordion
cannot meet GMS's specifications or Nordion's pricing is greater than permitted
under 4.6 v) above, GMS shall be free to purchase such goods, services or
equipment from third parties.
4.7 Nordion Put
At any time at least five (5) years after the effective date of this
agreement and upon one (1 ) year's prior written notice, Nordion, at its
option, may notify GMS by a second written notice ("Put Notice") within
eighteen months after the initial notice, that it elects that GMS purchase all,
but not less than all, of the Equity Securities held by Nordion (the "Put").
The Put price for such Equity Securities shall be as outlined on Schedule B.
Upon delivery of the Put Notice by Nordion to GMS, Nordion shall be obligated
to sell and GMS shall be obligated to purchase, the Equity Securities and
Nordion shall deposit the Equity Securities with the Secretary.
4.8 Closing
The closing date for the purchase of the Equity Securities, subject of the
Put or Call, shall not be less than thirty (30) calendar days nor more than
sixty (60) calendar days after the receipt of the Put Notice or Call Notice.
On the closing date, Nordion shall deliver the Equity Securities
<PAGE> 36
-15-
to GMS free and clear of all liens, charges and encumbrances, upon receipt of
the Put or Call price. All Mexican taxes on such sale shall be paid by the
appropriate party according to local custom.
4.9 Insolvency of a Shareholder
i) If a Party makes an assignment for the benefit of creditors
or is adjudicated a bankrupt under any bankruptcy or insolvency law,
which is not dismissed within sixty (60) calendar days thereof, the
other Party shall have the right, by providing written notice to
such Party or its representative within thirty (30) calendar days of
such assignment or adjudication, to acquire, in consideration of the
payment of $1.00, all but not less than all, of the Equity
Securities beneficially owned by such Party. The transfer of such
Equity Securities shall be effected promptly after receipt of such
notice.
ii) If a Party defaults in transferring such Equity Securities to
the other Party as provided in paragraph i) above, the Secretary of
the Corporation is authorized and directed to cause the name of the
transferee to be entered in the registers of the Corporation as the
holder of such Equity Securities. After its name has been entered
in the registers of the Corporation in exercise of the aforesaid
power, the validity of the proceedings shall not be subject to
question by any person. On such registration, the transferor shall
cease to have any right to, or in respect of such Equity Securities.
ARTICLE 5
GENERAL SALE PROVISIONS
5.1 Sale Provisions
<PAGE> 37
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A Party who sells any Equity Securities pursuant to the provisions of this
Agreement (the "Seller") shall be deemed to warrant to the other Party who
purchases such Equity Securities (the "Buyer") that, at the time of closing of
the transaction of purchase and sale in question, (a) the Seller shall have
good and marketable title to such Equity Securities and (b) the Buyer will
acquire such Equity Securities free and clear of any encumbrance of any kind,
and in addition the Seller shall indemnify and save the Buyer harmless against
any loss suffered by the Buyer as a result of there being any encumbrance upon
or any defect in the title of the Seller to such Equity Securities.
5.2 Conditions of Closing
At the time of closing of any purchase of Equity Securities of the
Corporation as set forth in this Agreement, the Seller shall present such
authorizing resolutions, orders and other instruments as counsel for the Buyer
shall reasonably consider necessary to effect and evidence a valid transfer of
such Equity Securities; and the Buyer shall pay for such Equity Securities by
wire transfer or certified cheque. If the Seller fails to comply with the
requirements set out in this Section, the Buyer shall, in addition to its other
rights and remedies, including its right to specific performance, be entitled
to rescind and shall have an action for damages.
5.3 Indebtedness of Seller to Corporation
If, on the date of closing of any sale and purchase of Equity Securities
of the Corporation, the Seller is indebted to the Corporation in an amount
recorded on the books of the Corporation and verified by the auditor or
accountant of the Corporation, as the case may be, then unless otherwise agreed
in writing between the Corporation and the Seller, the Buyer shall pay the
purchase price payable therefor by it to the Corporation by presenting and
delivering to the Secretary of the Corporation at the time of closing of such
purchase and sale, the purchase price
<PAGE> 38
-17-
for such Equity Securities and the Corporation shall apply the total purchase
price proceeds to repayment of the indebtedness of the Seller to the
Corporation. If such proceeds exceed such indebtedness, the Corporation shall
pay the excess over to the Seller at the time of closing of such purchase and
sale. In the event that the Seller sells all of the Equity Securities of the
Corporation owned by him and the indebtedness of the Seller to the Corporation
exceeds the proceeds of such sale, then the Seller shall at the date of closing
pay the balance of such indebtedness to the Corporation to retire such
indebtedness.
5.4 Indebtedness of Corporation to Seller; Seller's Guaranties
If, as of the date of closing of a sale and purchase of Equity Securities
of the Corporation to a Party pursuant to Article 4, the Corporation is
indebted to the Seller or the Seller is the guarantor of any indebtedness of
the Corporation, the Corporation or the purchasing Party shall, no later than
the time of closing, repay such indebtedness at its face value with interest
(notwithstanding the terms of such indebtedness), or assume or arrange for the
assumption of such guaranty.
5.5 Agreement Binding on Transferees
No Equity Securities of the Corporation shall be effectively issued, sold,
transferred, disposed of or conveyed, whether pursuant to any provision of
Article 4 or otherwise, until the proposed transferee or purchaser executes
Schedule A. Upon the proposed transferee or purchaser so doing, such
agreements shall inure to the benefit of and be binding upon such transferee or
purchaser.
5.6 Continuing Obligations
Any Party who sells to a person, other than its Affiliate, all of the
Equity Securities of the Corporation owned by it in accordance with the terms
of this Agreement shall thereafter be
<PAGE> 39
-18-
released and discharged from the further performance of all of its covenants and
obligations and shall have no rights hereunder from and after the date of such
sale and compliance by the transferee with Section 5.5 except for those
obligations set out in Section 7.2 and the Supply Agreement, which by their
terms, are to survive any such sale or ceasing to be a Shareholder.
ARTICLE 6
ADDITIONAL ISSUE OF EQUITY SECURITIES
6.1 Pre-emptive Right
In the event that the Corporation wishes at any time hereafter to issue
any Equity Securities, it shall offer them for purchase to all Shareholders by
notice given to each such Shareholder. Such notice shall set forth a
description of the Equity Securities to be offered, the purchase price and the
purchase date which shall be a date not earlier than forty-five (45) days after
the date of such notice. Upon receipt of such notice, each such Shareholder
shall have the right to subscribe for and purchase a number of such Equity
Securities determined by multiplying the total number of Equity Securities
offered by a fraction, the numerator of which, shall be the number of Shares
owned by such Shareholder at the date of such notice and the denominator of
which shall be the total number of Shares outstanding as at the date of such
notice. Such right shall be exercised by the Shareholder by giving notice of
acceptance to the Corporation within thirty (30) calendar days after receipt of
the notice from the Corporation. In the event that the Shareholder does
exercise such right, it shall subscribe, purchase and pay for such Equity
Securities on the purchase date set forth in the notice of the Corporation. If
the Shareholders do not subscribe for their respective proportions, the
unsubscribed Equity Securities shall be used to satisfy the subscriptions of
such Shareholders for Equity Securities in excess of
<PAGE> 40
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their proportion, but no Shareholder shall be bound to take any such Equity
Securities in excess of the amount desired.
6.2 Offer to Others
If any of the Equity Securities of any issue are not subscribed for, the
Corporation may, upon Special Resolution during the period of sixty (60) days
following the expiry of the offer to the Shareholders, offer any of the Equity
Securities not taken up by the Shareholders to any other person, provided that
the price at which such Equity Securities may be allotted and issued shall not
be less than the subscription price offered to the Shareholders and the terms
of payments shall not be more favorable than the terms offered to the
Shareholders.
ARTICLE 7
CONFIDENTIALITY
7.1 Provision of Information
Each Party as appropriate shall provide Confidential Information regarding
certain aspects of their respective businesses to the other and the Corporation
as may be reasonably required so as to permit the performance of the
obligations arising under the terms of the Joint Venture Agreement.
7.2 Maintenance of Confidentiality
Each Party shall receive and maintain Confidential Information in the
strictest of confidence and shall only use such information for the limited
purpose of enabling their respective officers, employees, representatives and
directors to fulfill their respective obligations hereunder and under the Joint
Venture Agreement and shall not disclose such information or any part thereof
to any other person or entity without the prior written consent of the party
providing such information, provided that no consent shall be required for
disclosure of such information to
<PAGE> 41
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the accountants and solicitors for each of the Shareholders. The following
information shall not constitute Confidential Information and not be deemed
industrial secrets:
(a) information which at the time of disclosure is generally
available to the public;
(b) information which, after disclosure, becomes generally
available to the public through no fault of the receiving party;
(c) information which the receiving party can show was in its
possession prior to the disclosure and which was not acquired
directly or indirectly from the other party;
(d) information which the receiving party can show was received
by it after the time of disclosure from any third party without any
obligation of confidentiality and which was not acquired from the
other party.
7.3 Survival
The obligations in this Article 7 shall survive termination or ceasing to
be a Shareholder under this Agreement for a period of five (5) years.
ARTICLE 8
GENERAL
8.1 Notices
All notices, requests, demands and other communications shall, (in the
absence of any specific provision to the contrary) be in writing and delivered
or sent by pre-paid registered mail to the following respective addresses:
to Nordion: 447 March Road
Kanata, Ontario, Canada
K2KIX8
Attention - Vice President, Market Development
To GMS- 2001 Spring Road,
Oak Brook, IL 60521-1887
<PAGE> 42
-21-
U.S.A.
Attention: President
with a copy to:
One Griffith Center
Alsip, IL 60658-3495
U.S.A.
Attention: General Counsel
In the event that it may be reasonably anticipated that, due to any strike,
lockout, or similar event involving an interruption in postal service, any
payment or communication will be received by the addressee later than the tenth
(10th) day following the mailing date, then the mailing of any such payment or
communication as aforesaid shall not be an effective means of sending the same,
but rather any payment or communication must then be sent by an alternative
means of transportation which may be reasonably anticipated will cause the
payment or communication to be received reasonably expeditiously by the
addressee and which will provide written proof of receipt. A Party may from
time to time change its address herein by providing notice to the other Parties
in accordance with this Section.
8.2 No Partnership
Nothing in this Agreement shall be deemed in any way or for any purpose to
constitute any party a partner of any other party to this Agreement in the
conduct of any business or otherwise.
8.3 Successors and Assigns
This Agreement is not assignable by any party except insofar as its Equity
Securities are transferred in accordance with its provisions. The provisions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors,
<PAGE> 43
-22-
administrators, committees, successors, receivers, trustees in bankruptcy or
other legal representatives and each and every person so bound shall make,
execute and deliver all documents necessary to carry out this Agreement.
8.4 Time of the Essence
Time shall be of the essence of this Agreement.
8.5 Further Assurances
The Parties hereto hereby covenant and agree that they and their
respective heirs, executors, administrators, successors and assigns and
nominees shall execute and deliver such further and other instruments,
agreements and writings and shall cause such meetings to be held, resolutions
passed and by-laws enacted, exercise their vote and influence, do and perform
and cause to be done and performed, such further and other acts and things that
may be reasonably necessary or desirable in order to give full effect to this
Agreement and every part of it, and for the purpose of ensuring that the
directors of the Corporation shall exercise their powers as members of the
board consistently with the provisions of this Agreement and for the purpose of
effectuating the same.
8.6 Separate Counterparts
This Agreement may be executed in one or more counterparts, each of which
when so executed and delivered shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
8.7 Share Certificates
All certificates evidencing Shares of the Corporation and all Equity
Securities held by any of Shareholders shall have the following legend endorsed
thereon forthwith after the execution of this Agreement:
<PAGE> 44
-23-
"The Corporation is bound by and the securities evidenced by this
certificate are subject to, and the disposition and transfer of such securities
are restricted by a shareholders' agreement dated as of the day of June, 1997."
8.8 Subdivision, Consolidation, etc. of Equity Securities
The provisions of this Agreement relating to Equity Securities of the
Corporation shall apply mutatis mutandis to any shares into which such Equity
Securities or any of them may be converted or changed, or to any Equity
Securities resulting from a reclassification, subdivision or consolidation of
any Equity Securities, and also to any Equity Securities of the Corporation
which are received by the holders of Equity Securities as a stock dividend, and
to any Equity Securities and also to any Equity Securities of the Corporation
which are received by the holders of Equity Securities as a stock split or
stock dividend, and to any Equity Securities or other securities of the
Corporation or of any successor body corporate which may be received by the
holders of Equity Securities on an amalgamation, reorganization, merger or
combination of the Corporation.
8.9 Conflict
In the event of any conflict or inconsistency between this Agreement and
the Joint Venture Agreement, the Articles, By-laws or resolutions passed by the
Corporation as of the date hereof, the provisions of this Agreement shall
prevail.
8.10 Force Majeure
No Party shall be in default hereunder by reason of its delay in the
performance or failure to perform any of its obligations hereunder, if such
delay or failure, without limiting the generality of the following, is caused
by strike, acts of God or the public enemy, unavailability of the supply of raw
materials, riots, acts of terrorism, interference by civil or military
authorities,
<PAGE> 45
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compliance with government laws, rules and regulations, decisions of competent
authorities or any fault beyond its reasonable control.
8.11 Entire Agreement
Unless otherwise set out, this Agreement constitutes the entire agreement
between the Parties relating to the subject matter herein and supersedes any
and all prior agreements, negotiations, representations and understandings
whether written or oral between the Parties relating to its subject matter.
This Agreement may not be modified in any manner except by a further written
agreement signed by duly authorized officers or representatives of each of the
Parties.
8.12 Waiver
The failure of any Party to this Agreement to enforce at any time any of
the provisions of this Agreement or any of its rights in respect thereto or to
insist upon strict adherence to any term of this Agreement will not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Agreement or deprive the applicable Party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. The exercise by any Party of any of its rights provided by
this Agreement will not preclude or prejudice such Party from exercising any
other right it may have by reason of this Agreement or otherwise, irrespective
of any previous action or proceeding taken by it hereunder. Any waiver by any
Party hereto of the performance of any of the provisions of this Agreement will
be effective only if in writing and signed by a duly authorized representative
of such Party.
8.13 Severability
<PAGE> 46
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Each and every provision of this Agreement shall be treated as separate
and distinct and in the event of any provision hereof being declared invalid
such provision shall be deemed to be severable and all other provisions hereof
shall remain in full force and effect.
8.14 Governing Law
This Agreement and the rights, and obligations and relations of the
Parties hereto, shall be governed and construed in accordance with the laws of
the State of New York and the Federal laws applicable therein (but without
giving effect to any conflict of law rules). The Parties hereto agree that the
Federal District courts of the U.S.A., Southern District of New York, shall
have jurisdiction to enter any action or other legal proceedings based on any
provisions of this Agreement. Each Party does hereby attorn to the
jurisdiction of the courts of the State of New York, U.S.A.
<PAGE> 47
-26-
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.
MDS NORDION INC.
by: /s/ Frank M. Fraser
---------------------------
Frank M. Fraser
Vice President
Market Development Division
by: /s/ David L. Nicholds
---------------------------
David L. Nicholds
Vice President, General Counsel
and Corporate Secretary
GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
by: /s/ Kevin M. Swan
---------------------------
Kevin M. Swan
President-CEO
<PAGE> 48
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SCHEDULE A TO SHAREHOLDERS AGREEMENT
The undersigned hereby agree to be bound by the provisions of this
Agreement as though an original signatory thereto.
---------------------------------
Name of New Shareholder
By:
------------------------------
Authorized Signer
<PAGE> 49
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SCHEDULE B TO SHAREHOLDERS AGREEMENT
The Put Price shall be determined by multiplying the US dollar value of
Nordion's initial investment in the Corporation by a fraction, the numerator of
which is the cumulative actual sales of food irradiation services by the
Corporation for the first five (5) years of sales by the Corporation after
commissioning of the Mexican facility and the denominator of which is
US$5,605,000, which is the cumulative sales of food irradiation services
projected in the Initial Business Plan for the same five (5) year period,
provided that the value of such fraction is less than or equal to one (1). In
the event the fraction is greater than 1, the Put Price shall be equal to the
amount of Nordion's initial investment in the Corporation.
<PAGE> 1
EXHIBIT 10.13
STANDARD FORM OF INDUSTRIAL LEASE
(NET)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I. DEFINITIONS.
<S> <C>
1.1 Address of Landlord.......................................................1
1.2 Address of Tenant.........................................................1
1.3 Base Rent.................................................................1
1.4 Base Year.................................................................1
1.5 Building/s................................................................1
1.6 Center....................................................................1
1.7 Common Area...............................................................1
1.8 Lease Term................................................................1
1.9 Permitted Use of the Premises.............................................2
1.10 Premises.................................................................2
1.11 Rent.....................................................................2
1.12 Additional Rent..........................................................2
1.13 Security Deposit.........................................................2
1.14 Tenant's Allocated Share.................................................2
1.15 Tenant's Proportionate Share.............................................3
1.16 Tenant's Prorata Share...................................................3
ARTICLE II. THE DEMISED PREMISES.
2.1 Lease of the Premises.....................................................3
2.2 Use of Common Area........................................................3
2.3 Quiet Enjoyment...........................................................3
2.4 Reservations by Landlord..................................................3
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
ARTICLE III. TERM OF THE LEASE.
<S> <C>
3.1 Term......................................................................4
3.2 Tender of Possession......................................................4
3.3 Holding Over..............................................................4
ARTICLE IV. RENT.
4.1 Base Rent.................................................................4
4.2 Additional Rent...........................................................4
4.2(a) Utilities and Services.............................................5
4.2(b) Insurance..........................................................5
4.2(c) Real Estate Taxes..................................................5
4.2(d) HVAC Maintenance...................................................6
4.2(e) Common Area Expenses...............................................6
4.2(f) Rent on Sales Taxes................................................7
4.3 Late Payment..............................................................7
4.4 Security Deposit..........................................................7
ARTICLE V. LANDLORD'S RIGHTS AND OBLIGATIONS.
5.1 Maintenance by Landlord...................................................7
5.2 Mortgage and Transfer; Estoppel Certificates..............................8
5.3 Landlord's Inability to Perform...........................................8
5.4 Rights of Landlord........................................................9
5.4(a) Name of Center.....................................................9
5.4(b) Redecorate.........................................................9
5.4(c) Re-Lease...........................................................9
5.4(d) Vehicles...........................................................9
5.4(e) Preservation of Center.............................................9
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE VI. TENANT'S RIGHTS AND OBLIGATIONS.
<S> <C>
6.1 Acceptance of Premises....................................................9
6.2 Alterations and Additions................................................10
6.3 Assignment and Subletting................................................10
6.4 Locks....................................................................11
6.5 Maintenance by Tenant....................................................11
6.6 Mechanic's Liens.........................................................11
6.7 Redelivery of Premises...................................................11
6.8 Signs and Advertisements.................................................11
6.9 Use of Common Areas......................................................11
6.10 Use of Premises.........................................................12
6.11 Hazardous Substances....................................................12
ARTICLE VII. INSURANCE.
7.1 Liability Insurance......................................................13
7.2 Fire and Extended Coverage Insurance.....................................13
7.3 Indemnification of Landlord..............................................13
7.4 Waiver of Subrogation....................................................14
ARTICLE VIII. EMINENT DOMAIN AND DAMAGE OR DESTRUCTION.
8.1 Eminent Domain...........................................................14
8.2 Damage or Destruction....................................................14
ARTICLE IX. DEFAULT AND REMEDIES.
9.1 Events of Default........................................................15
9.1(a) Nonpayment........................................................15
9.1(b) Noncompliance.....................................................15
9.1(c) Insolvency or Transfer............................................15
</TABLE>
iii
<PAGE> 4
<TABLE>
<S> <C>
9.1(d) Bankruptcy........................................................15
9.1(e) Receiver..........................................................15
9.2 Remedies.................................................................16
9.2(a) Repossession and Sale.............................................16
9.2(b) Releasing.........................................................16
9.2(c) Cancellation......................................................16
9.2(e) Attorney's Fees...................................................16
9.3 Remedies Cumulative......................................................16
9.4 No Waiver................................................................16
ARTICLE X. MISCELLANEOUS.
10.1 Bankruptcy or Assignment to Trustee.....................................16
10.2 Brokers.................................................................17
10.3 Captions................................................................17
10.4 Certificates of Occupancy...............................................17
10.5 Entire Agreement........................................................17
10.6 Joint and Several Liability of Multiple Tenants.........................17
10.7 Notices.................................................................17
10.8 Partial Invalidity......................................................17
10.9 Recording...............................................................17
10.10 Successors.............................................................18
10.11 Use of the Singular; Gender............................................18
10.12 Rider..................................................................18
EXHIBIT A. RULES AND REGULATIONS.
EXHIBIT B. THE CENTER AND PREMISES.
EXHIBIT C. LANDLORD'S IMPROVEMENTS TO PREMISES (if any).
EXHIBIT D. PRELIMINARY FACILITY PLANS AND SPECIFICATIONS.
</TABLE>
iv
<PAGE> 5
STANDARD FORM OF INDUSTRIAL LEASE
(NET)
THIS LEASE, made this 12th day of OCTOBER, 1992, and between GENERAL
AMERICAN LIFE INSURANCE COMPANY, a Missouri corporation, (hereinafter
"Landlord"), and GRIFFITH MICRO SCIENCE, INC. a wholly owned subsidiary of
GRIFFITH LABORATORIES WORLDWIDE, INC. (hereinafter "Tenant").
ARTICLE I. DEFINITIONS.
1.1 ADDRESS OF LANDLORD: 1100 E. ORANGETHORPE AVE., #130
ANAHEIM, CA 92801
1.2 ADDRESS OF TENANT: 7775 QUINCY STREET WILLOWBROOK, ILLINOIS 60521-5531
1.3 BASE RENT: $ 16,670.00 per month. The monthly Base Rent payable during the
Lease Term shall be adjusted as follows:
August 1, 1993 through June 30, 1996 $16,670.00
July 1, 1996 through December 31, 1998 $18,450.00
January 1, 1999 through June 30, 2001 $26,540.00
July 1, 2001 through December 31, 2003 $28,240.00
January 1, 2004 through December 31, 2005 $30,740.00
1.4 BASE YEAR: The calendar year in which this Lease commences.
1.5 BUILDING/S: The Building/s in which the Premises is located. The specific
Building in which the Premises is located contains 66,290 square feet. The
total square footage of all the Buildings in the Center is 451,279 square feet.
1.6 CENTER: The land, improvements and appurtenances depicted on Exhibit B
attached hereto and commonly referred to as: (Name of Center:) GENERAL AMERICAN
PACIFIC GATE and located at (Street Address:) AIRPORT DRIVE & WANAMAKER AVENUE
(City:) ONTARIO (State:) CALIFORNIA.
1.7 COMMON AREA:: The term "Common Area" means all the areas of the Center
designed for the common use and benefit of the Landlord and all of their
tenants, their employees, agents, customers and invitees. The Common Area
includes, but not by way of limitation, parking lots, truck courts, landscaped
areas, driveways, walks and curbs with facilities appurtenant to each as such
areas may exist from time to time.
1.8 LEASE TERM: The Lease Term shall commence on the later of AUGUST 1, 1993 or
upon the date of Substantial Completion (hereinafter defined) and shall expire
TWELVE (12) years and FIVE (5) months after the Commencement Date.
<PAGE> 6
The Commencement Date shall be defined as the later of AUGUST 1, 1993 or the
date of Substantial Completion.
The date of Substantial Completion shall be defined as 1) the date at which
Landlord, Tenant, architect and general contractor have completed an inspection
of the Premises and architect has provided notification that the "punchlist"
(hereinafter defined) has been substantially completed and one or more of the
following has occurred: a) Tenant has been provided unobstructed access to the
Premises, b) Tenant has taken initial occupancy of the Premises for the purpose
of installing furniture, fixtures and equipment or c) the Premises has passed
final inspection as evidenced by the signing off of the building permit card by
the city of Ontario, thereby approving the Premises for occupancy.
Punchlist shall be defined as the "written list of unfinished work" as
discovered at the initial post construction walk-thru between Landlord, Tenant
and general contractor and architect. The date of Substantial Completion will
not be delayed due to the repair of damage caused by Tenant's subcontractors.
Should the date of Substantial Completion be used as the Commencement Date of
the Lease, and the new Commencement Date occurs other than on the first day of
a calendar month, 1) the Base Rent payable by Tenant for the initial month of
the Lease shall be the prorated amount determined on a per diem basis and 2)
the Commencement Date specified in this Rider shall be adjusted to reflect the
new Commencement Date via the mutual execution of a Lease Start Date Agreement
as supplied by Landlord.
1.9 PERMITTED USE OF THE PREMISES: STERILIZATION OF MEDICAL EQUIPMENT AND
SUPPLIES AS LEGALLY PERMITTED
1.10 PREMISES: 66,290 square feet of space encompassing the entire Building,
together with 178,901 square feet of land which includes 53 parking spaces,
driveways and truck areas in the Center located as outlined on Exhibit B
attached hereto, and addressed as: (Street Address/Suite Number of Premises:)
687 WANAMAKER AVENUE,
ONTARIO, CA 91761.
1.11 RENT: All sums, moneys or payments required to be paid by Tenant to
Landlord pursuant to this Lease, including Base Rent and Additional Rent.
1.12 ADDITIONAL RENT: All sums, moneys or payments required to be paid by
Tenant to Landlord pursuant to this Lease other than Base Rent.
1.13 SECURITY DEPOSIT: $35,840.00.
1.14 TENANT'S ALLOCATED SHARE: The percentage figure determined by dividing the
number of square feet in the Premises by the number of square feet in the
Building that is then leased to Tenant and to other tenants.
2
<PAGE> 7
1.15 TENANT'S PROPORTIONATE SHARE: The percentage figure determined by dividing
the number of square feet in the Premises by the total number of square feet in
all the Buildings (this paragraph is applicable when the Center contains more
than one Building), which percentage figure is 14.68%. In the event that
additional square footage is added to the Center, Tenant's Proportionate Share
shall be adjusted to reflect the increased total square footage of all
buildings in the Center, as defined in Article 1.5.
1.16 TENANT'S PRORATA SHARE: The percentage figure determined by dividing the
number of square feet in the Premises by the number of square feet in a
specific Building in which the Premises is located, which percentage figure is:
100%.
ARTICLE II. THE DEMISED PREMISES.
2.1 LEASE OF THE PREMISES. In consideration of the Rents, covenants, agreements
and conditions hereinafter provided to be paid, kept, performed and observed,
the Landlord leases to the Tenant and the Tenant hereby hires for the Landlord
the Premises, upon all the terms and conditions set forth in the Lease.
2.2 USE OF COMMON AREA. Landlord grants the Tenant the nonexclusive use of the
Common Area by Tenant, Tenant's employees, agents, customers and invitees,
under all the terms and conditions hereof, which shall be subject at all times
to such reasonable, uniform and non-discriminatory rules and regulations as may
from time to time be established by Landlord.
2.3 QUIET ENJOYMENT. Landlord covenants that the Tenant, on paying Rent herein
provided and keeping, performing and observing the covenant agreements and
conditions herein required of the Tenant, shall peaceably and quietly hold and
enjoy the Premises for the Lease Term, subject, however, to the terms and
conditions of this Lease.
2.4 RESERVATIONS BY LANDLORD. Landlord excepts and reserves from the Premises
the roof and exterior walls of the Building/s, and further reserves the right
to place, install, maintain, carry through, repair and replace such utility
lines, air ducts, pipes, wires, appliances, tunneling and the like in, over,
through and upon the Premises as may be reasonably necessary and advisable for
the servicing of the Premises or any other portions of the Center. Landlord
further reserves the right, at any time, and from time to time to: (i) make
alterations, changes and additions to the Building/s and other improvements in
the Center; (ii) add additional areas to the Center and/or to exclude areas
therefrom; (iii) construct additional buildings and other improvements in the
Center; (iv) remove or relocate the whole or any part of any building or other
improvement in the Center; and (v) relocate any other tenant in the Center. It
is further understood that the existing layout of the buildings, walks,
roadways, parking areas, entrances, exits, and other improvements shall not be
deemed to be a warranty, representation or agreement on the part of the
Landlord that the Center will remain exactly as presently built, it being
understood and agreed that Landlord may change the number dimensions and
locations of the walks, buildings and parking spaces as Landlord shall deem
proper. Notwithstanding anything to the contrary, Landlord shall have no right
to make alterations, changes or additions to the Premises without Tenant's
consent. (See Rider Paragraph 48.) Further, Landlord shall not be
3
<PAGE> 8
permitted to exercise its rights under this Paragraph in a manner that
adversely affects Tenant's use of the Premises.
ARTICLE III. TERM OF THE LEASE.
3.1 TERM. Tenant shall have and hold the Premises for and during the Lease Term
subject to the payment of the Rent and the full and timely performance by
Tenant of all the covenants and conditions set forth in this Lease.
3.2 TENDER OF POSSESSION. Landlord shall use its best efforts to tender
possession of the Premises to Tenant of the commencement of the Lease Term.
Landlord shall not be subject to any liability for any failure to tender
possession of the Premises to Tenant, provided that such failure occurred as a
consequence of any circumstance or cause beyond Landlord's reasonable control
including but not limited to any Act of God. Should Landlord fail to deliver
the Premises within nine (9) months after securing all regulatory and building
permits where such failure is a result of Landlord's negligent actions and not
a result of changes as requested by Tenant or Tenant's negligent actions,
Tenant will be granted the right to terminate this Lease without penalty to
Landlord.
3.3 HOLDING OVER. In the event of a holding over by Tenant or any other
successors in interest after expiration or termination of this Lease with the
consent in writing of the Landlord, Tenant shall be deemed a Tenant sufferance
and shall pay as liquidated damages, 125% of the Base Rent then currently in
effect for the entire holdover period and all reasonable attorney's fees and
expenses incurred by Landlord enforcing its rights hereunder. Any holding over
with the consent of Landlord shall constitute Tenant a month-to-month tenant
upon and subject to all terms, covenants and conditions of this Lease.
ARTICLE IV. RENT.
4.1 BASE RENT. Tenant covenants to pay without notice, deduct, set-off or
abatement to Landlord the Base Rent in lawful money of the United States in
equal consecutive monthly installments in advance on the first day of each
month during the Lease Term. Base Rent for any partial month shall be prorated
on a per diem basis. Base Rent shall be payable to Landlord at Landlord's
Address or such other place as Landlord may designate from time to time in
writing. Tenant shall pay the first full month's Base Rent by execution of
this Lease.
4.2 ADDITIONAL RENT. Beginning on the Commencement Date and continuing for the
calendar year 1993, Tenant shall pay $5,100.00 per month to Landlord as
Additional Rent. Additional Rent is subject to periodic adjustment as stated
herein. Additional Rent is due during all months of Abated Base Rent. Tenant
covenants to pay without notice, deduct, set-off or abatement to Landlord the
Additional Rent in lawful money of the United States in equal consecutive
monthly installments in advance on the first day of each month during the Lease
Term. Additional Rent for a partial month shall be prorated on a per diem
basis. Additional Rent shall be payable to Landlord at Landlord's Address or
such other place as Landlord may designate in writing. In order to provide for
current payments of Additional Rent, Tenant agrees to pay an amount of
Additional Rent reasonably estimated by Landlord from time to time
4
<PAGE> 9
commencing on the first day of the month following the month in which Landlord
notifies Tenant of the amount of such Additional Rent. If, as finally
determined, the amount of Additional Rent owing by Tenant shall be greater than
or less than the aggregate of installments so paid to Landlord for each calendar
year, the Tenant shall pay to Landlord the amount of such underpayment, or
Landlord shall credit Tenant for the amount of such overpayment, as the case may
be. Upon the expiration of any separate bond assessments levied against the
Premises, the real estate tax portion of the monthly Additional Rent payment
shall be immediately decreased by the amount of such reduction in bond
assessment. It is the intent hereunder to estimate the amount of Additional
Rent for each calendar year then to adjust such estimate in the following year
based on the actual amount of Additional Rent owing. The obligation of Tenant
with respect to payment of Additional Rent shall survive the termination of this
Lease. A payment, refund or credit made pursuant to this paragraph shall be
made without prejudice to any right of Tenant to dispute the amount of
Additional Rent owing, or the right of Landlord to correct any items as billed
pursuant to the provisions hereof. Within 30 days of the date Landlord notifies
Tenant of the amount of Additional Rent owing, Tenant or its authorized agent
shall have the right to inspect the books of Landlord during the business hours
of Landlord at such location that Landlord during the business hours Landlord at
such location that Landlord may specify, for the purpose of verifying such
amount. Unless Tenant asserts specific errors within such days, such
notification by Landlord shall be deemed to be correct. A decrease in
Additional Rent shall reduce Tenant's liability hereunder below the amount of
Base Rent payable hereunder.
4.2(a) UTILITIES AND SERVICES. Landlord shall not be liable for any
interruption or failure whatsoever in utility services. Tenant
shall contract in its own name and pay for all charges for
electricity, gas, fuel, telephone, and any other services or
utilities used in, servicing or assessed against the Premises,
unless otherwise herein expressly provided.
4.2(b) INSURANCE. Tenant shall pay to Landlord as Additional Rent
Tenant's Prorata Share (or, Tenant's Proportionate Share in the
event there is more than one Building in the Center) of the cost of
the premiums for the All Risk insurance that Landlord maintains for
the Center.
4.2(c) REAL ESTATE TAXES. Tenant shall pay to Landlord as
Additional Rent Tenant's Prorata Share (or, Tenant's Proportionate
Share in the event there is more than one Building in the Center)
of Real Estate Taxes levied against the Center. "Real Estate
Taxes" shall mean: (a) all ad valorem Real Estate Taxes on the
Center (adjusted after protest or litigation, if any) for any part
of the term of this Lease, exclusive of penalties; (b) any taxes
which shall be levied in lieu of any such ad valorem Real Estate
Taxes; (c) any special assessments for benefits on or to the Center
paid in annual installments by Landlord; (d) occupational taxes or
excise taxes levied on rentals derived from the operation of the
property or the privilege of leasing property; (e) any private
subdivision assessment made against the Center; and (f) the
reasonable expense of protesting, negotiating or contesting the
amount or validity of any such taxes, charges or assessments, such
expense to be applicable to the period of the item contested,
protested or negotiated. Tenant,
5
<PAGE> 10
at Tenant's sole cost and expense, shall have the right to
challenge the real estate taxes levied against the Premises.
If the Lease Term shall end during a tax year ("tax year" shall
mean the annual period for which Real Estate Taxes are assessed and
levied) of which only part is included in the Lease Term, the
amount of such Additional Rent shall be prorated on a per diem
basis and shall be paid on or before the last day of the Lease
Term. If the Lease Term ends in any tax year before the amount to
be payable by Tenant has been determined under the provisions of
this Section, an amount payable for the portion of the Lease Term
during the tax year shall be reasonably estimated by Landlord and
the estimated amount shall be promptly paid by Tenant. As soon as
the amount properly payable by Tenant for the partial period has
finally been determined, the amount shall be adjusted between
Landlord and Tenant. Tenant shall be liable for all taxes levied
against personal property and trade fixtures placed by Tenant in
the Premises.
4.2(d) HVAC MAINTENANCE. Tenant shall pay all expenses incurred to
repair the heating, ventilating and air conditioning equipment
servicing the Premises. Landlord shall assign to Tenant all
warranties with respect to the HVAC system.
4.2(e) COMMON AREA EXPENSES. Tenant will pay to Landlord as
Additional Rent Tenant's Prorata Share (or, Tenant's Proportionate
Share in the event there is more than one Building in the Center)
of the Common Area Operating Cost.
"Common Area Operating Cost" means the Landlord's total cost and
expense incurred in owning, operating, maintaining and repairing
the Premises, the Building and Tenant's Proportionate Share of the
Center's common areas only. In no event will Tenant be responsible
for the payment of any costs and expenses associated with the
administration, management, operation, maintenance and repair of
any other building in the Center or service provided to any other
tenant within the Center, including but without limitation by
enumeration, costs for the total charges of any independent
contractors employed in the care, operation, repair, maintenance,
cleaning, and landscaping of the Common Area; the amount paid for
all supplies, tools, replacement parts of components, equipment and
necessities which are occasioned by everyday wear and tear of the
Common Area; the costs of machinery and equipment purchased or
leased by Landlord to perform its Common Area maintenance
obligations; and reasonable property management fees not to exceed
five percent (5%) of the gross income of the Center. Common Area
Operating Cost shall not, however, include interest on debt,
capital retirement of debt, depreciation, costs properly chargeable
to the capital account, except for capital expenditures which
reduce other operating expenses or such capital expenditures that
are required by changes in any governmental law or regulation in
which case such expenditures, plus interest on the unamortized
principal investment at ten (10%) percent per annum, shall be
amortized over the life of the improvements, and such costs shall
be directly chargeable by the
6
<PAGE> 11
Landlord to Tenant in the Tenant's Prorata Share (or, Tenant's
Proportionate Share in the event there is more than one Building in
the Center).
4.2(f) RENT ON SALES TAXES. Tenant shall pay to Landlord as
Additional Rent any Sales or Rent Taxes, however named or
designated, levied on any form of Rent or Additional Rent.
4.3 LATE PAYMENT. Tenant's failure to make any rental payment or other payment
required of Tenant hereunder within three (3) days of the due date therefor
shall automatically result in the imposition of a service charge on such late
payment in the amount of ten (10%) percent of such payment, without notice.
However, should Tenant provide evidence that the payment was delayed through
the acts or negligence of a third party postal delivery service, Tenant shall
not be responsible for the payment of late fees. Should such a delay occur,
the postal service "postmark date" shall be used as the date of reference.
4.4 SECURITY DEPOSIT. Tenant herewith deposits with Landlord the Security
Deposit as security for the performance by Tenant of every covenant and
condition of this Lease. Said Security Deposit may be mingled with other funds
of Landlord and shall bear no interest. If Tenant shall default with respect
to any covenant or condition of this Lease, Landlord may apply the whole or any
part of such Security Deposit to the payment of any sum or default, including
Rent and Additional Rent, or any sum which Landlord may be required to spend by
reason of Tenant's default. This includes, but is not limited to, applying the
Security Deposit first to any restoration, relamping, repairs and/or cleanup
costs necessary over and above normal wear and tear to the vacated space.
Should Landlord so apply the Security Deposit or a portion thereof during the
Lease Term, Tenant shall promptly reimburse Landlord for same. It is
understood that the Security Deposit is not to be considered as the last
month's rent. Should Tenant comply with all of the covenants and conditions of
this Lease, the Security Deposit or any balance thereof shall be returned to
Tenant within 30 days of the expiration of the Lease Term.
ARTICLE V. LANDLORD'S RIGHTS AND OBLIGATIONS.
5.1 MAINTENANCE BY LANDLORD. During the Lease Term, Landlord shall operate and
maintain the Common Area and shall keep and maintain the exterior walls
(excluding doors, glass or plate glass), gutters and downspouts of the
Building/s in good condition and repair. Landlord shall be under obligation
and shall not be liable for any failure to make repairs that are Landlord's
responsibility herein until and unless Tenant notifies Landlord of the
necessity therefor, in which event Landlord shall have reasonable time
thereafter to make such repairs. Landlord reserves the right to the
non-exclusive use of the roof and exterior walls of the Building/s that
Landlord is so obligated to maintain and repair. If a portion of the Center
which Landlord is obligated to maintain or repair is damaged by the negligence
of Tenant, its agents, employees or invitees, the repairs necessitated by such
damage shall be paid for by Tenant, provided such damage is not covered by
Landlord's insurance. In the event the damage is caused by Tenant's negligence
and is covered by Landlord's insurance, Tenant shall pay the deductible on
Landlord's insurance. If the maintenance or repair is not made necessary by
the negligence of
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Tenant, its agents, employees or invitees, then Tenant shall
pay to Landlord, Tenant's Prorata Share (or Proportionate Share) of such cost
and expense.
5.2 MORTGAGE AND TRANSFER; ESTOPPEL CERTIFICATES. Landlord shall have the
right to transfer, mortgage, pledge or otherwise encumber, assign or convey, in
whole or in part, the Center, the Building/s, this Lease, and all or any part
of the rights now or thereafter existing therein and all Rents and amounts
payable to Landlord under the provisions hereof. In the event of any such
transfer or transfers, Landlord herein named (and in case of subsequent
transfer, the then transferor) shall be automatically freed and relieved from
and after the date of such transfer of all personal liability respects the
performance of any covenants or agreements on the part of Landlord contained in
this Lease thereafter to be performed. Nothing herein contained shall limit or
restrict any such rights, and the rights of Tenant under this Lease shall be
subject and subordinate to all instrument, executed and to be executed in
connection with the exercise of any such rights, including, but not limited to,
the lien of any mortgage, deed of trust, or security agreement now or hereafter
placed upon Landlord's interest in the Premises. This paragraph shall be
self-operative. However, Tenant's covenants and agrees to execute and deliver
upon demand such further instruments subordinating this Lease to the lien, of
any such mortgage, deed of trust or security agreement as shall be requested by
Landlord and mortgagee or proposed mortgagee or holder of any security
agreement. In the event of any such transfer, mortgage or pledge, Tenant's
obligations to subordinate this Lease to the lien of any proposed Mortgage,
Deed of Trust or Security Agreement is conditioned upon the delivery to Tenant
and mutual execution by such proposed mortgagee or holder of such security
agreement, within a reasonable time thereafter, of an agreement not to disturb
Tenant's possession ("Non-Disturbance Agreement") so long as Tenant complies
with all of the obligations contained in this Lease. Tenant shall, within ten
(10) days after written request of Landlord, execute, acknowledge and deliver
to Landlord or to Landlord's mortgagee, proposed mortgagee, [Landlord's] Lessor
or proposed purchaser of the Center or any part thereof, any estoppel
certificates requested by Landlord from time to time, which estoppel
certificates shall show whether the lease is in full force and effect and
whether any changes may have been made to the original lease; whether the term
of the lease has commenced and full rental is accruing; whether there are any
defaults by Landlord and, if so, the nature of such defaults; whether
possession has been assumed and all improvements to be provided by Landlord
have been completed; and whether rent has been paid more than thirty (30) days
in advance and that there are no liens, charges, or offsets against rental due
or to become due and that the address shown on such estoppel is accurate.
Should Tenant fail to deliver the proposed estoppel certificate as requested
herein, such failure will be deemed as Tenant's approval of all the terms
within such estoppel certificate.
5.3 LANDLORD'S INABILITY TO PERFORM. If, by reason of: inability to obtain and
utilize labor, materials or supplies; circumstances directly or indirectly the
results of a state of war or national or local emergency; any laws, rules,
orders, regulations or requirements of any governmental authority now or
hereafter in force; strikes or riots; accident in, damage to or the making of
repairs, replacements, or improvements to, the Premises or any of the equipment
thereof; or by reason of any other cause beyond the reasonable control of the
Landlord including "Acts of God," Landlord shall be unable to perform or shall
be delayed in the performance of any covenant to supply and service, such
nonperformance or delay in performance shall not render
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Landlord liable in any respect for damages to either person or property,
constituting total or partial eviction, constructive or otherwise, work an
abatement of rent or relieve Tenant from the fulfillment of any covenant or
agreement contained in this Lease. The failure of the Landlord to perform its
obligations shall not allow the extension of the delivery of the Premises beyond
nine (9) months after securing all regulatory and building permits. Further,
should Landlord be negligent in it performance of any covenant to supply any
service, where such negligent performance results in the Premises becoming
untenantable, all rentals payable by Tenant shall be abated for the periods of
untenantability.
5.4 RIGHTS OF LANDLORD. After providing reasonable notice to Tenant, Landlord
may enter upon the Premises for the purpose of exercising any or all of the
rights hereby reserved without being deemed guilty of an eviction or
disturbance of Tenant's use or possession and without being liable in any
manner to Tenant. The reservation of these rights by Landlord shall not render
Landlord liable for not performing any of the matters specified herein.
Further, Landlord, in exercising it rights under this Paragraph, will not
interfere with the use of the Premises by the Tenant.
5.4(a) NAME OF CENTER. To change the name of the Building/s or the
Center without notice or liability of the Landlord to Tenant;
5.4(b) REDECORATE. During the last thirty (30) days of the Lease
Term or any renewal or extension thereof, if prior to that time the
Tenant has vacated the Premises, to decorate, remodel, repair,
alter or otherwise prepare the Premises for reoccupancy;
5.4(c) RE-LEASE. To exhibit the Premises to others and to display
"For Lease" signs on the Premises during the last one hundred
eighty (180) days of the Lease Term or any renewal or extension
thereof;
5.4(d) VEHICLES. To remove abandoned or unlicensed vehicles and
vehicles that are unreasonably interfering with the use of the
parking lot by others, and to charge the responsible tenant for the
expense of removing said vehicles;
5.4(e) PRESERVATION OF CENTER. To take any and all measures,
including making inspection, repairs, alterations, additions and
improvements to the Premises or to the Center as may be necessary
or desirable for the safety, protection or preservation of the
Premises or the Center or the Landlord's interests, or as may be
necessary or desirable in the operation of the Premises or the
Center.
ARTICLE VI. TENANT'S RIGHTS AND OBLIGATIONS.
6.1 ACCEPTANCE OF PREMISES. Landlord will complete the Premises in accordance
with Exhibit C, if attached hereto and the construction drawings as approved by
Landlord and Tenant. Tenant acknowledges that it will examine the Premises
before taking possession hereunder. Unless Tenant furnishes Landlord with a
notice in writing specifying any defect in the
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construction or condition of the Premises within thirty (30) days after taking
possession, such taking of possession shall be conclusive evidence as against
Tenant that at the time thereof the Premises were in good order and in
satisfactory condition. All defects discovered by the Punchlist will be cured
by the Landlord within a reasonable time thereafter.
6.2 ALTERATIONS AND ADDITIONS. Tenant shall not make any alterations,
improvements, or additions to the Premises without the prior written consent
and approval of plans therefor by Landlord. Alterations, improvements or
additions made by either of the parties upon the Premises, except moveable
furniture and equipment placed in the Premises at the expense of Tenant, shall
be the property of Landlord and shall remain upon and be surrendered with the
Premises as a part thereof at the termination of this Lease, without
disturbance, molestation, injury or damage unless Landlord elects to require
Tenant to remove such alterations or improvements from the Premises at the
expiration of this Lease. However, at the time of Landlord's consent to such
alteration, Landlord is required to provide notice to Tenant as to whether such
alteration must be removed at the termination of this Lease. Should Landlord
fail to provide such notice, Tenant shall not be required to remove the
alteration. Further, in no event shall Tenant be required to remove the
initial work as described in the mutually accepted construction drawings. In
the event damage shall be caused by moving said furniture and equipment in or
out of the Premises, said damage shall be repaired at the cost of Tenant.
6.3 ASSIGNMENT AND SUBLETTING. Tenant shall not assign or hypothecate this
Lease or sublet all or any part of the Premises to a non-related entity without
the prior written consent of Landlord. If Tenant wishes to assign or sublet
the Premises, Tenant shall give notice in writing (by certified mail or by
personal delivery of such intention to Landlord and, thereupon, Landlord shall,
within thirty (30) days of receipt of such notice, have the right to
unilaterally terminate the Lease or to approve said subletting by written
notice to Tenant. If no notice is given by Landlord, Landlord will be deemed
to have elected to approve assignment or subletting. If the assignment or
subletting is approved, rents under the sublease are greater than the rents
provided for herein, and Landlord shall have the further option either (a) to
convert the sublease into a prime Lease and receive all of the rents, in which
case Tenant will be relieved of further liability hereunder and under the
proposed sublease; and (b) to require Tenant to remain liable under this Lease,
in which event Tenant shall be entitled to retain fifty percent (50%) of such
excess rents. If the assignment or subletting is approved and rents under the
sublease are less than the rents provided for herein, Tenant shall remain
liable under all the covenants and conditions of this Lease. Landlord may
withhold its consent to any proposed assignee or subtenant which in Landlord's
judgment (a) would conflict with tenancy, use or business of any other tenant
or the tenant mix of the Center; and (b) has a net worth and/or credit history
inferior to that of Tenant, or is currently a tenant or negotiating for space
in the Center. Tenant shall have the right to assign this Lease or sublet all
or any part of the Premises to an affiliate of Tenant without Landlord's
consent, so long as the entity shall have equal net worth to that of the
Tenant. Affiliate shall mean any person, corporation, partnership or other
entity controlled by or that controls Tenant and any subsidiary, division or
affiliate of any controlled or controlling entity. This shall include
intra-corporate transfers of the Lease, and transfers in connection with
mergers and sales of all or substantially all of the assets of Tenant.
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6.4 LOCKS. No additional locks or similar devices shall be attached to any
door or window without Landlord's prior written consent. No keys for any door
other than those provided by the Landlord shall be made. If more than two keys
for one lock are desired, the Landlord will provide the same _______ payment by
the Tenant. All keys must be returned to Landlord at time of expiration or
termination of the lease.
6.5 MAINTENANCE BY TENANT. Tenant shall be responsible for maintenance and
repair to the Premises of whatsoever kind or nature that is not herein set
forth specifically as the obligation of Landlord. Tenant shall take good care
of the Premises and fixtures, and keep them in good repair form from filth,
overloading, danger of fire or any pest or nuisance, repair of damage or
breakage done by Tenant or Tenant's agents, employees or invitees, including
damage done to the Building/s by Tenant's equipment and installations. Tenant
shall be responsible for the repair and replacement of all glass and plate
glass on the Premises. In the event Tenant fails to maintain the Premises as
provided for herein Landlord shall have the right, but not the obligation, to
perform such maintenance as is required of Tenant in which event Tenant shall
reimburse Landlord for its costs in providing such maintenance or repairs
together with a ten (10%) percent charge for Landlord's overhead and Tenant
shall promptly reimburse Landlord for the amount so billed to Tenant by
Landlord.
6.6 MECHANIC'S LIENS. Tenant will not cause any mechanic's liens, or other
liens, to be placed upon the Premises, the Building/s or the Center during the
Lease Term or any extension or renewal thereof, and in case of the filing of
any such lien, Tenant will promptly pay same. Tenant agrees to pay all legal
fees that might be incurred by Landlord because of any mechanic's liens being
placed upon the Premises, as a result of Tenant's actions.
6.7 REDELIVERY OF PREMISES. No later than the last day of the Lease Term (or
any renewals or extensions thereof), Tenant will remove all Tenant's personal
property and repair all injury done by or in connection with installation or
removal of such property and surrender the Premises broom-clean (together with
all keys to the Premises) in as good a condition as they were in at the
beginning of the Lease Term, reasonable wear and tear excepted and loss by fire
and other casualty and matter that are Landlord's obligation to maintain,
replace or repair.
6.8 SIGNS AND ADVERTISEMENTS. Tenant shall not put upon nor permit to be put
upon any part of the Premises, the Building/s or the Center, any signs,
billboards or advertisements whatever in any location or any form without the
prior written consent of Landlord. A charge of $50.00 per day per sign,
billboard or advertisement will be assessed against Tenant if Tenant fails to
obtain the written consent of Landlord prior to placing any such signs.
6.9 USE OF COMMON AREAS. Tenant shall not use any part of the Center exterior
to the Premises for outside storage except for chemical and gas storage in
designated areas as approved by the city of Ontario. No trash, crates, pallets
or refuse shall be permitted anywhere on the Center outside of the Building/s
by Tenant except in enclosed metal containers to be located as directed by
Landlord. Tenant shall not park any trucks or trailers, loaded or empty,
except in front of the loading areas and in the chemical and gas storage
loading areas.
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6.10 USE OF PREMISES. The Premises hereby leased shall be used by Tenant only
for the Permitted Use of the Premises and for no other purpose. Tenant shall,
at Tenant's expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders and requirements in effect during the term or any
part of the term hereof regulating the use by Tenant of the Premises except for
structural changes to the Premises and Building as required to comply with any
statute, ordinance, rule, regulation, order or requirement imposed by any
governing municipality, unless such structural change is required as a result
of Tenant's specific use of the Premises. Tenant shall not use or permit the
use of the Premises in a manner that will tend to create waste or a nuisance,
or will tend to unreasonably disturb such other tenants in the Center. Tenant,
its employees and all persons visiting or doing business with the Tenant in the
Premises shall be bound by and shall observe the Rules and Regulations attached
to the Lease, as Exhibit A, and such further and other reasonable rules and
regulations made hereafter by the Landlord relating to the Center or the
Premises of which notice in writing shall be given to the Tenant and where such
additional rules and regulations will not adversely affect Tenant's use of the
Premises, and all such rules and regulations shall be deemed to be incorporated
into and form a part of this Lease.
6.11 HAZARDOUS SUBSTANCES. Tenant shall not cause or permit to be released
(whether by way of uncapping, pouring, spilling, spraying, spreading,
attaching, or otherwise) into or onto the Premises, or the Building/s, or the
Center, or the Common Areas (including the ground and ground water thereunder
and the sewer and drainage systems therein) any hazardous substances (as
defined or established from time to time by applicable local, state or federal
law). Tenant shall immediately notify Landlord if any such release occurs and,
as to any such release that has been caused or permitted by Tenant: (i) Tenant
shall immediately and entirely remove such released hazardous substance, and in
a manner fully in compliance with all laws pertaining to the removal and
storage or deposit thereof; and (ii) Tenant hereby agrees to hold Landlord
harmless of and from any liability, public or private, resulting to Landlord as
a result of such release. Further, should Landlord discover facts which cause
Landlord to reasonably believe that Tenant has caused a release of any
hazardous substances, then Tenant shall, upon Landlord's demand and at Tenant's
sole expense, demonstrate to Landlord (through such tests, professional
inspections, sampling or otherwise as is, in Landlord's sole judgment,
sufficient for the purpose) that Tenant has not caused or permitted any such
release of hazardous substances. Landlord warrants that, to the best of its
knowledge as of the date of execution, there are no hazardous environmental
conditions in, on or about the Premises which would constitute a violation of
any applicable law, code or ordinance. Further, it is agreed that Tenant shall
not be responsible for the removal of any hazardous environmental condition
deemed to have originated prior to Tenant's occupancy.
Landlord shall indemnify Tenant against all liabilities arising from the
detection of a hazardous environmental condition that is 1) proven to have
originated prior to Tenant's occupancy of the Premises, 2) proven to have
migrated to the Premises from sources outside of the Premises and 3) proven to
not have been caused or permitted by Tenant.
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ARTICLE VII. INSURANCE.
7.1 LIABILITY INSURANCE. Tenant covenants and agrees to maintain on the
Premises at all times during the Lease Term, or any extension or renewal
thereof, a policy or policies of comprehensive public liability and property
damage insurance with not less than $1,000,000.00 combined single limit for
both bodily injury and property damage.
7.2 FIRE AND EXTENDED COVERAGE INSURANCE. Landlord shall, throughout the Lease
Term, or any extension or renewal thereof, maintain All Risk insurance on the
property owned by Landlord located on the Center in such amounts and with such
deductibles as Landlord shall determine. Landlord's All Risk policy currently
provides property damage protection totalling $5,000,000.00 with a $10,000.00
deductible. This policy covers all physical property damage caused by fire,
wind, hail, flood, theft, vandalism and Landlord's boiler/machinery explosions.
Earthquake damage is excluded. A General liability policy is also included
which provides "trip and fall" protection of $1,000,000.00. Landlord reserves
the right to modify the terms of Landlord's All Risk policy without notice or
approval by Tenant. Landlord shall not in any way or manner insure any
property of Tenant or any property that may be in the Premises not owned by
Landlord. Tenant shall comply with all insurance regulations so that the
lowest fire, lightning, explosion, extended coverage and liability insurance
rates may be obtained; and nothing shall be done or kept in or on the Premises
by Tenant which will cause an increase in the premium for any such insurance on
the Premises or on any Building/s of which the Premises are a part or on any
contents located therein, over the rate usually obtained for the proper use of
the Premises permitted by this Lease or which will cause cancellation of any
such insurance.
7.3 INDEMNIFICATION OF LANDLORD. Other than for the loss or injury resulting
from the negligent actions or willful misconduct of Landlord, its agents,
employees or contractors, Tenant shall indemnify Landlord and save Landlord
harmless from and against any and all loss (including lost rentals payable by
Tenant or other tenants) and against all claims, actions, damages, liability
and expenses in connection with loss of life, bodily and personal injury or
damage to property arising from any occurrence in, upon or at the Premises or
any part thereof, or occasioned wholly or in part by any act or omission of
Tenant, or by anyone permitted to be on the Premises by Tenant. Other than for
the loss or injury resulting from the negligent actions or willful misconduct
of Landlord, its agents, employees or contractors, Tenant assumes all risk of
and Landlord shall not be liable for injury to person or damage to property
resulting from the conditions of the Premises or from the bursting or leaking
of any and all pipes, utility line connections, or air conditioning or heating
equipment in, on or about the Premises, or from water, rain or snow which may
leak into, issue or flow to any part of the Building/s. Other than for the
loss or injury resulting from the negligent actions or willful misconduct of
Landlord, its agents, employees or contractors, Tenant agrees, at all times, to
indemnify and hold Landlord harmless against all actions, claims, demands,
costs, damages and expenses of any kind which may be brought or made against
Landlord or which Landlord may pay or incur by reason of Tenant's occupancy of
the Premises or its negligent performance of or failure to perform any of its
obligations under this Lease. In case Landlord shall, without fault on its
part, be made a party to any litigation commenced by or against Tenant, then
Tenant shall protect and hold Landlord
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harmless and shall pay all costs, expenses and reasonable attorney's
fees incurred or paid by Landlord in connection with such litigation.
7.4 WAIVER OF SUBROGATION. Landlord and Tenant and all parties claiming under
them hereby mutually release and discharge each other from any and all
liability or responsibility or claims arising from or caused by any hazard
covered by insurance on the Premises, or covered by insurance in connection
with property or activities conducted on the Premises, regardless of the cause
of the damage or loss. The parties hereto shall give notice to their
respective insurance carriers of this waiver of subrogation.
ARTICLE VIII. EMINENT DOMAIN AND DAMAGE OR DESTRUCTION.
8.1 EMINENT DOMAIN. In the event that title to the whole or a substantial part
of the Premises shall be lawfully condemned or taken in a manner for any public
or quasi-public use, this lease and the term and estate hereby granted shall
forthwith cease and terminate as of the date of vesting of title and Landlord
shall be entitled to receive the entire award, Tenant hereby assigning to
Landlord the Tenant's interest therein, if any. However, nothing herein shall
be deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property or
fixtures belonging to Tenant, Tenant paid improvements made to the Premises or
for the interruption or damage to Tenant's business or for Tenant's moving
expenses. A sale to public or quasi-public authority under threat of
condemnation shall constitute a taking by eminent domain. In the event of any
condemnation or taking of any portion of the parking area of the Center, which
does not result in a reduction of the parking area by more than thirty-five
percent (35%) the terms of this lease shall continue in full force and effect.
If more than thirty-five percent (35%) of the parking area is taken, either
party shall have the right to terminate this lease upon giving written notice
to the other party within thirty (30) days of such taking.
8.2 DAMAGE OR DESTRUCTION. If the Premises, the Building/s or the Center or a
substantial part thereof is damaged by fire or other casualty, cause or
condition whatsoever and Landlord shall determine not to restore said Premises,
Building/s or Center and where such damage cannot be restored within one
hundred twenty (120) days, Landlord may, by written notice to Tenant given
within forty-five (45) days after such damage, terminate this Lease. Such
termination shall become effective as of the date of the damage. If this Lease
is not terminated as above provided and if the Premises are made partially or
wholly untenantable, Landlord, at its expense, shall restore the same with
reasonable promptness to the condition in which Landlord furnished the Premises
to Tenant at the commencement of the Lease Term as to those items that were
provided to the Premises at Landlord's expense without any reimbursement by
Tenant. Landlord shall be under no obligation to restore any alteration,
improvements or additions to the Premises made by Tenant or paid for by Tenant,
including, but not limited to, any of the initial tenant finish done or paid
for by Tenant or any subsequent changes, alterations or additions made by
Tenant or reimbursed by Tenant.
If, as a result of fire or other casualty, cause or condition whatsoever the
Premises are made partially or wholly untenantable and, if Landlord has not
given the forty-five (45) day notice
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above provided for and fails within one hundred twenty (120) days after such
damage occurs to eliminate substantial interference with Tenant's use of
said Premises or substantially to restore said Premises, Tenant may terminate
this Lease after the end of said one hundred twenty (120) days, effective as of
the date such damage occurs, and notice to Landlord given not later than ten
(10) days after expiration of said one hundred twenty (120) day period. If the
Premises are rendered totally untenantable but this Lease is not terminated,
all rent shall abate from the date of the fire or other relevant cause or
condition until the Premises are ready for occupancy and reasonably accessible
to Tenant. If a portion of the Premises is untenantable, rent shall be
prorated on a per diem basis and apportioned in accordance with the portion of
the Premises which is usable by the Tenant until the damaged part is ready for
Tenant's occupancy. In above cases, due allowance shall be made for reasonable
delay caused by adjustment of insurance loss, strikes, labor difficulties or
any cause beyond Landlord's reasonable control. For the purposes of this
Lease, said Premises shall be considered tenantable so long as and to the
extent that the Premises are occupied. In any event, Tenant shall be
responsible for the removal, or restoration, when applicable, of all its
damaged property and debris from the Premises, upon request by Landlord or else
Tenant must reimburse Landlord for the cost of removal.
ARTICLE IX. DEFAULT AND REMEDIES.
9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute a Default and a material breach of this Lease by
Tenant:
9.1(A) NONPAYMENT. Failure of Tenant to pay any installment of
Rent or other sum payable to Landlord hereunder on the date that
same is due and such failure shall continue for a period of five
(5) days. However, should Tenant provide evidence that the failure
of payment was a result of the acts or negligence of a third party
postal delivery service, Tenant shall not be in default. Should
such a failure occur, the postal service "postmark date" shall be
used as the date of reference.; or
9.1(B) NONCOMPLIANCE. Failure of Tenant to comply with any term,
condition or covenant of this Lease, other than the payment of Rent
or other sum of money, and such failure shall not be cured within
ten (10) days after written notice thereof has been delivered by
Landlord to Tenant; or
9.1(C) INSOLVENCY OR TRANSFER. Insolvency, the making of a
transfer in fraud of creditors or the making of an assignment for
the benefit of creditors by Tenant or any guarantor of Tenant's
obligation; or
9.1(D) BANKRUPTCY. The filing by or against Tenant or any
guarantor of Tenant's obligations hereunder of a petition in
bankruptcy or for liquidation, or adjudication as a bankrupt or
insolvent in proceedings filed by or against Tenant or such
guarantor and such action is not dismissed within sixty (60) days;
or
9.1(E) RECEIVER. Appointment of receiver or trustee for all or
substantially all of the assets of Tenant or any guarantor of
Tenant's obligations hereunder; or
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9.2 REMEDIES. In the event of the occurrence of any Default, Landlord shall
have the right, without further notice to or demand upon Tenant and without
being liable to Tenant for any damages or to any prosecution therefor, to do
any and all of the following:
9.2(A) REPOSSESSION AND SALE. Re-enter and take exclusive
possession of the Premises with legal process, refuse to allow
Tenant to enter the same or have possession thereof, change the
locks on the doors to the Premises, take possession of any
furniture or fixtures or other property in or upon the Premises
(Tenant hereby waiving the benefit of all exemptions by law), sell
the same at public or private sale without notice and apply the
proceeds thereof to the costs of sale, payment of damages and
payment of all sums owing under this Lease; and/or
9.2(B) RELEASING. Relet the Premises as agent of Tenant for the
balance of the term of this Lease or for a shorter or longer term
and receive the rents therefor, applying them first to the payment
of the expense of such reletting and, second, to the payment of
damages suffered to the Premises, and third to all sums due and to
become due under this Lease, Tenant remaining liable for and hereby
agreeing to pay Landlord any deficiency; and/or
9.2(C) CANCELLATION. Cancel and terminate the remaining term of
this Lease, and re-enter and take possession of the Premises free
of this Lease. Thereafter this Lease shall be null and void and
the Rent in such case shall be apportioned and paid on and up to
the date of such entry. Thereafter both parties shall be released
and relieved from and of any and all obligations thereafter to
accrue hereunder. Tenant shall be liable for all loss and damage
resulting from such breach or default; and/or
9.2(E) ATTORNEY'S FEES. Recover from Tenant, Landlord's attorney's
fees incurred in enforcing its rights hereunder.
9.3 REMEDIES CUMULATIVE. All rights and remedies expressly provided in this
Lease for Landlord's protection shall be cumulative as to each other and of any
other rights and remedies provided hereunder or by law.
9.4 NO WAIVER. A waiver by Landlord of a breach or default by Tenant under the
terms and conditions of this Lease shall not be construed to be a waiver of any
subsequent breach or default or of any other or the same term or condition of
this Lease, and the failure of Landlord to assert any breach or to declare a
default by Tenant shall not be construed to constitute a waiver thereof so long
as such breach or default continues unremedied.
ARTICLE X. MISCELLANEOUS.
10.1 BANKRUPTCY OR ASSIGNMENT TO TRUSTEE. Neither this Lease nor any interest
therein nor any estate hereby created shall pass to any trustee or receiver in
bankruptcy or to any other receiver or assignee for the benefit of creditors or
otherwise by operation of law during the term of this Lease or any renewal
thereof.
16
<PAGE> 21
10.2 BROKERS. Except as may be expressly set forth to the contrary in the
Rider, each party represents to the other that no person, firm, corporation or
other entity is entitled to any brokerage commission or finder's fee on account
of the execution, delivery, and consummation of this Lease. Tenant hereby
agrees to indemnify Landlord and to hold Landlord free and harmless of and from
any and all claims, losses, damages, costs and expenses of whatsoever nature,
including attorneys' fees and costs of litigation arising from or relating to
any brokerage commissions or finder's fees incurred by Tenant in connection
with this Lease. Tenant shall not be responsible for claims of brokers
alleging a contract with Landlord.
10.3 CAPTIONS. The captions used throughout this Lease are for convenience and
reference only and shall in no way be held to explain, modify, amplify, or aid
in the interpretation, construction or meaning of the provisions in this Lease.
10.4 CERTIFICATES OF OCCUPANCY. Tenant may, prior to the commencement of the
Lease Term, apply for a certificate of occupancy to be issued by municipality
in which the Premises are located, but this Lease shall not be contingent on
issuance thereof.
10.5 ENTIRE AGREEMENT. This Lease including its Exhibits and Rider, if any,
contains the entire agreement between the parties and no modification of this
Lease shall be binding upon the parties unless evidenced by an agreement in
writing signed by Landlord and Tenant after the date hereof.
10.6 JOINT AND SEVERAL LIABILITY OF MULTIPLE TENANTS. If there be more than
one Tenant named herein, the provisions of this Lease shall be applicable to
and binding upon such Tenants jointly and severally.
10.7 NOTICES. Except as otherwise herein provided, whenever by the terms of
this Lease notice shall or may be given either to Landlord or to Tenant such
notice shall be in writing and shall be deemed to have been properly delivered
if sent by certified mail, return receipt requested, postage prepaid, to
Landlord at Landlord's Address and to Tenant at the Premises, or to such other
place as Landlord or Tenant may designate in writing. The date of mailing
shall be deemed the date of delivery.
10.8 PARTIAL INVALIDITY. If any term, covenant, condition or provision of this
Lease or the application thereof to any person or circumstances shall, to any
extent be invalid, unenforceable or violate a party's legal rights, then such
term, covenant, condition or provision shall be deemed to be null and void and
unenforceable, however, all other provisions of this Lease, or the application
of such term or provision to persons or circumstances other than those which
are held invalid, unenforceable or violative of legal rights shall not be
affected thereby, and each and every other term, condition, covenant and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
10.9 RECORDING. This lease shall not be recorded by either party without the
written consent of the other.
17
<PAGE> 22
10.10 SUCCESSORS. The agreements, covenants and conditions of this Lease shall
be binding upon and inure to the benefit of the heirs, legal representatives,
successors and assigns of each of the parties hereto, except that no
assignment, encumbrance or subletting by Tenant, unless permitted by the
provisions of tease, without the written consent of Landlord shall vest any
right in the assignee, encumbrancee or sublessee of Tenant.
10.11 USE OF THE SINGULAR; GENDER. The terms "Landlord" and "Tenant," and
pronouns representing the same, wherever used herein shall include the plural
as well as the singular, the feminine as well as the masculine.
10.12 RIDER. A Rider consisting of 6 pages, with paragraphs numbered 1 through
58 consecutively, is attached hereto and made a part hereof. [Riders have been
incorporated into the main body of the lease.]
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
hereinabove stated.
LANDLORD:
GENERAL AMERICAN LIFE INSURANCE COMPANY
a Missouri Corporation
BY: /s/ Donald L. Smith
--------------------------------------
Donald L. Smith, Vice President
TENANT:
GRIFFITH MICRO SCIENCE, INC.,
a wholly owned subsidiary of
GRIFFITH LABORATORIES WORLDWIDE, INC.
-----------------------------------------
BY:
--------------------------------------
BY: /s/ William A. Fennelly
--------------------------------------
William Fennelly, Vice President
BY:
--------------------------------------
18
<PAGE> 23
EXHIBIT A
RULES AND REGULATIONS
1. Signs. Tenant shall not inscribe any inscription or post, place, or in
any manner display any sign, notice, picture, placard or advertisement
matter whatsoever anywhere in or about Premises at places visible (either
directly or indirectly as an outline or shadow on a glass part from
anywhere outside of the Premises or from public and common areas within
Premises without first obtaining Landlord's written consent thereto and
Landlord shall specify the color, size, style and material to be used.
2. Showcases. No showcase shall be placed in front of or in the lobbies or
corridors of the Premises and Landlord reserves the right to remove any
showcases so placed and all signs other than those above provided for
without notice and at the expense of the tenant responsible.
3. Installation of Signs. All exterior and interior signs must be installed
by Landlord or someone designated by Landlord and the actual cost thereof
shall be paid by Tenant and all such signs are so placed at the risk of
Tenant.
4. Telephone Connections. If Tenant desires telegraphic, cable television
or telephone connections, Landlord will direct electricians where the
wires are to be introduced and without such direction no boring or cutting
for wires shall be permitted.
5. Submission of Plans. Tenant shall submit to Landlord for Landlord's
approval, a copy of its construction and equipment layout plan prior to
commencement of construction. In the event that Tenant is unable to
obtain Landlord's approval for said plans and layout, this Lease shall at
Tenant's sole option be deemed null and void and any amounts paid by
Tenant to Landlord pursuant to this lease shall be reimbursed to Tenant
without offset.
6. No Nuisances. Tenant shall not do or permit anything to be done in the
Premises which will be dangerous to life, or limb, or which will tend to
create a nuisance or injure the reputation of the Building/s. Tenant
shall not use burning fluid, camphine, alcohol, kerosene, or anything else
in order to light or heat the Premises except steam, gas or electricity.
Tenant shall not bring into the Premises or keep therein any heating or
lighting apparatus other than that provided by Landlord; or install any
air conditioning or air cooling apparatus without the written consent of
Landlord; or in any way injure, modify, or tamper with any of such
apparatus in any manner or in any manner in violation of the regulations
of the Fire Department, or with any insurance policy upon said Building/s
or any part thereof. Tenant shall not do or permit to be done in the
Premises any activity in conflict with any of the laws, rules or
regulations of any governmental agency or municipality having
jurisdiction, or use the Premises for an illegal or immoral purpose. No
beer, wine or intoxicating liquor shall be sold on or about the Premises
without the written consent of the Landlord in each instance.
<PAGE> 24
7. Passageways. The sidewalk, passages, lobbies, corridors, elevators and
stairways shall not be obstructed by Tenant; or used except for ingress
and egress from and to the Premises. The doors, skylights, windows and
transoms that reflect or admit light into passageways or into any place in
said Building/s, shall not be covered or obstructed by Tenant.
8. Waters Closets. The water closets and other apparatus shall not be used
for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. Any
damage resulting to them from misuse shall be borne by the tenant who
shall cause it.
9. No Defacing of Offensive Business. Tenant and its employees and guests
are not to injure or deface the Building/s nor the woodwork, nor the walls
of the Premises, nor to carry on upon the premises any noisome, noxious,
noisy or offensive business nor conduct an auction therein, or interfere
in any way with other tenants or those having business with them.
10. No Lodging. No room or rooms on or about the Premises shall be occupied
or used as sleeping or lodging apartments.
11. Lock all Doors. Tenant shall, when leaving Premises at close of
business, or unoccupied at any time, lock all doors and windows and for
any default or carelessness in this respect shall make good all injury
sustained by other tenants and by Landlord or by either of them, for
damages resulting from such default or carelessness.
12. No Animals. No animal or bird shall be allowed in any part of the
Premises or Building/s without the consent of Landlord.
13. No Accumulation of Rubbish. Tenant shall not accumulate or store on or
about the Premises any waste paper, discarded records, paper files,
sweeping, rags, rubbish or other combustible matter other than the normal
accumulation needed to conduct the Permitted Use of the Premises. Nothing
shall be thrown by Tenant, its employees or guests out of the windows or
doors or down the passages or skylights or over balcony rails of the
Building/s or in the parking areas.
14. Exclusion of Peace Disturbers. Landlord reserves the right to exclude
from the Premises or Building/s all drunken persons, idlers, diseased
persons, peddlers, solicitors, persons of a general character or conduct
so as to create a disturbance, and persons entering in crowds or in such
unusual numbers as to cause inconvenience to tenants of the Building/s.
15. Changes to Rules. Landlord reserves the right to change these rules and
to make such other and further reasonable rules and regulations either as
it affects one or all tenants as in its judgment may from time to time be
needed for the safety, care and cleanliness of the Center, for the
preservation of good order therein or for any other cause. When such
changes are made such modified or new rules shall be deemed a part hereof
with the same
<PAGE> 25
effect as if written herein, when a copy shall have been
delivered to Tenant or left with some person in charge of the Premises.
16. No Live Christmas Trees. No live or fresh cut Christmas Trees are
permitted on or about the Premises.
17. No Picnics. No outside picnics or barbecues are permitted without the
prior written consent of Landlord.
18. No Outside Storage. No outside storage of any material is permitted.
<PAGE> 26
EXHIBIT B
THE CENTER AND PREMISES
[Site Plan]
<PAGE> 27
EXHIBIT C
LANDLORD'S IMPROVEMENTS TO THE PREMISES
[Site Plan]
<PAGE> 28
EXHIBIT D
Preliminary Facility Plans & Specifications
Southern California Facility
Process & Warehouse Area 62,790 Square Feet.
Architect & Engineering Landlord will bear all cost for architect
and engineering fees associated with shell
Building construction.
Building Permits Landlord will be responsible for obtaining
all building and construction permits for
the shell building.
Construction Time Landlord will provide a Building that meets
the following requirements within six months
from issuance of building permits
Office & Laboratory Area Approximately 3,500 square feet single story
office and lab area.
Site Area Site area is 178,901 square feet.
Site Location 687 Wanamaker Avenue, Ontario, CA 917__
Site Dimensions Approximately 515' x 345".
Parking Parking for approximately 53 cars and trucks.
Building Orientation Interior lot with the Building facing west.
Building Design Building to be designed and constructed in
accordance with latest engineering standards
and local codes
Office Construction Tilt up concrete panels. Attached office to
have two common walls with plant but no
direct passage from office to plant.
Office Interior Finishes Standard finish of painted drywall, metal
door frames, stained wood doors, carpet,
recessed fluorescent ceiling-mounted light
fixtures, forced-air, gas-fired HVAC to
combination mechanical to conserve energy,
walls between offices designed to limit
sound transmission through walls, insulation
in perimeter walls,
<PAGE> 29
suspended acoustical
tile ceiling and plumbing as per code.
Process & Warehouse Tilt-up concrete panel, painted concrete
Construction exterior and interior walls.
Landscaping Standard landscaping around office and
warehouse/processing areas to meet codes and
park covenants.
Roof System Glu-lam beam and wood panelized roof with
steel column supports 24' clear height.
Roof Cover 4-ply built-up with 10 year guarantee.
Roof Loan Roof shall be designed to accept load of
standard HVAC equipment for office area and
control room including exhaust fans.
Lighting Plat area light levels approximately 25 foot
candles to be provided by ceiling hung
exposed metal-halide fixtures powered by __
volts. Credit will be given for process
areas where no ceiling lighting will be
provided. Tenant to explore use of
skylights with photo cell control of all
lights with SCE.
Energy Conservation Energy conservation to be high priority in
design.
Heating Plant area to be heated by two ceiling hung
gas-fired space heaters.
Cooling Plant area will not be cooled.
Floor Design Reinforced concrete at 3,000 ___ minimum
compressive strength and ___ minimum of 6"
thick slab, designed for single wheel truck
traffic carrying average loads of 1200
pounds. Floor height to be dock high.
Truck Docks Docks to accommodate 9 trucks
simultaneously. One dock to be at front of
Building and one dock at rear of Building.
Docks to include truck seals, automatic
chocks, auto operating dock doors and
manually
<PAGE> 30
operating hydraulic levelers.
Electrical connections at Tenant expense.
Truck Apron Minimum truck turning radius of __ feet.
Electrical Service 2000 amps of 277/480 volts, 3 phase, ___ Hz
power. Eight (8) distribution panels of 200
amps and four panels of 100 amps.
Electrical distribution system with
equipment grounding. Tenant will provide
additional 208/___ volt distribution panels
and process equipment connections.
Natural Gas Supply 3,870,000 BTU/hr connected load, plus
heating load for warehouse and office areas.
Plumbing Toilet facilities to meet code for Tenant
work force and ___requirements. Process
will require make up water for 40 BHP
boiler.
One drain for each 5,000 square feet of
warehouse/processing area. Drains for
handling water used to wash floors/equipment
and infrequent use of potable water for
once-through cooling heat exchangers,
clarifier included.
Fire sprinkler in warehouse and office areas
to be built in accordance with NFPA
requirements, local code and insurance
requirements; system to be .60/3000 GPM.
<PAGE> 1
EXHIBIT 10.14
SINGLE TENANT INDUSTRIAL LEASE
------------------------------
Effective Date:
------------------------------
(The date set forth below Landlord's signature.)
BASIC LEASE INFORMATION
-----------------------
Landlord: CATELLUS DEVELOPMENT CORPORATION, a Delaware
corporation
Landlord's Address 1065 N. PacifiCenter Drive, Suite 200
For Notice: Anaheim, CA 92806
Attn: Asset Management
Telephone: (714) 630-8100
Fax: (714) 237-7425
Landlord's Address
For Payment of Rent: File #53694
Los Angeles, CA 90074-3694
Tenant: GRIFFITH MICRO SCIENCE, INC., a Delaware corporation
Tenant's Address:
For Notice: 2001 Spring Road, Suite 500
Oak Brook, IL 60521-1887
Attn: Frank Lange
Telephone: (630) 472-4501
Fax: (630) 571-1245
Project: 4801 East 50th Street, Vernon
Building: Approximately 48,315 rentable square feet as shown in
Exhibit A.
Building Address:
Street: 4801 East 50th Street
City and State: Vernon, CA 90058
Lot: The tax parcel on which the Building is located.
Term: Sixty (60) months
Commencement Date: March 1, 1997
Base Rent Per Month: Fourteen Thousand Dollars ($14,000.00) for the first
30 months and Fifteen Thousand Four Hundred Dollars
($15,400.00) for the next 30 months.
Security Deposit: Fourteen Thousand Six Hundred Seventy-Four Dollars
($14,674.00)
Broker: None
Lease Year: Shall refer to each three hundred sixty-five (365)
day period during the Term commencing on the
Commencement Date and on each anniversary thereof.
i
<PAGE> 2
Page
----
Permitted Uses: Pre and/or post sterilization warehousing and/or
sterilization processing of cosmetic, medical, and food
products, and for all ancillary uses and no other uses
shall be permitted without the prior written consent of
Landlord which shall not be unreasonably withheld.
EXHIBITS
A - Building/Lot - Premises
B - Work Letter - Not Applicable
C - Commencement Date Memorandum - Not Applicable
D - Insurance Certificate
E - Prohibited Uses
F - Rules and Regulations
G - Estoppel Certificate
The Basic Lease Information set forth above and the Exhibits attached
hereto are incorporated into and made a part of the following Lease. Each
reference in this Lease to any of the Basic Lease Information shall mean the
respective information above and shall be construed to incorporate all of the
terms provided under the particular Lease paragraph pertaining to such
information. In the event of any conflict between the Basic Lease Information
and the provisions of the Lease, the latter shall control.
LANDLORD ( ) AND TENANT ( ) AGREE.
------- -------
initial initial
ii
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PREMISES.......................................................... 1
1.1 Premises..................................................... 1
1.2 Reserved Rights.............................................. 1
2. TERM.............................................................. 1
2.1 Commencement Date............................................ 1
3. RENT.............................................................. 1
3.1 Rent......................................................... 1
3.2 Late Charge and Interest..................................... 1
3.3 Security Deposit............................................. 2
4. UTILITIES......................................................... 2
5. TAXES............................................................. 2
5.1 Real Property Taxes.......................................... 2
5.2 Personal Property Taxes...................................... 3
6. TRIPLE NET LEASE.................................................. 3
7. INSURANCE......................................................... 4
7.1 Landlord.......................................................... 4
7.2 Tenant....................................................... 4
7.3 General...................................................... 5
7.4 Indemnity.................................................... 6
7.5 Exemption of Landlord from Liability......................... 6
8. REPAIRS AND MAINTENANCE........................................... 6
8.1 Landlord..................................................... 6
8.2 Tenant....................................................... 7
9. ALTERATIONS....................................................... 7
9.1 Trade Fixtures; Alterations.................................. 7
9.2 Damage; Removal.............................................. 7
9.3 Liens........................................................ 8
10. USE............................................................... 8
11. ENVIRONMENTAL MATTERS............................................. 8
11.1 Hazardous Materials......................................... 8
11.2 Indemnification............................................. 9
11.3 Landlord's Representation................................... 9
12. DAMAGE AND DESTRUCTION...................................... 10
12.1 Casualty.................................................... 10
12.2 Tenant's Fault.............................................. 11
12.3 Uninsured Casualty.......................................... 11
12.4 Waiver...................................................... 11
</TABLE>
iii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
13. EMINENT DOMAIN...................................................... 11
13.1 Total Condemnation............................................ 11
13.2 Partial Condemnation.......................................... 11
13.3 Award......................................................... 11
13.4 Temporary Condemnation........................................ 12
14. DEFAULT............................................................. 12
14.1 Events of Defaults........................................... 12
14.2 Remedies..................................................... 12
14.3 Cumulative................................................... 14
15. ASSIGNMENT AND SUBLETTING........................................... 14
16. ESTOPPEL, ATTORNMENT AND SUBORDINATION.............................. 14
16.1 Estoppel..................................................... 14
16.2 Subordination................................................ 15
16.3 Attornment................................................... 15
17. MISCELLANEOUS....................................................... 15
17.1 General...................................................... 15
17.2 Signs........................................................ 16
17.3 Waiver....................................................... 16
17.4 Financial Statements......................................... 16
17.5 Limitation of Liability...................................... 16
17.6 Notices...................................................... 17
17.7 Brokerage Commission......................................... 17
17.8 Authorization................................................ 17
17.9 Holding Over; Surrender...................................... 17
17.10 Joint and Several............................................ 17
17.11 Covenants and Conditions..................................... 18
17.12 Addenda...................................................... 18
</TABLE>
iv
<PAGE> 5
1. PREMISES.
1.1 Premises. Landlord hereby leases to Tenant the Building and that
portion of the Lot (or all thereof if the Building constitutes the material
improvement thereon) upon which the same is situated (hereinafter collectively
referred to as the "Premises") as shown on Exhibit A attached hereto.
1.2 Reserved Rights. Landlord reserves the right to enter the Premises
upon reasonable prior notice to Tenant (except in case of an emergency) and/or
to undertake the following: inspect the Premises and/or the performance by
Tenant of the terms and conditions hereof; grant easements on the Project,
dedicate for public use portions thereof and record covenants, conditions and
restrictions ("CC&R's") affecting the Project and/or amendments to existing
CC&R's which do not unreasonably interfere with Tenant's use of the Premises;
change the name of the Project; and, during the last nine (9) months of the
Term, show the Premises to prospective tenants. Except in emergency
situations, Tenant shall have the right to accompany Landlord, its agents, or
representatives upon any such entry upon the Premises.
2. TERM.
2.1 Commencement Date. The Term of the Lease shall commence on the
Commencement Date set forth in the Basic Lease Information ("Commencement
Date"), and the Lease shall continue in full force and effect for the period of
time specified as the Term or until this Lease is terminated as otherwise
provided herein.
3. RENT.
3.1 Rent. Tenant shall pay to Landlord, at Landlord's Address for Payment
of Rent designated in the Basic Lease Information, or at such other address as
Landlord may from time to time designate in writing to Tenant for the payment
of Rent, the Base Rent, without notice, demand, offset or deduction, in
advance, on the first day of each calendar month. Upon the execution of this
Lease, Tenant shall pay to Landlord the first month's Base Rent. If the Term
commences (or ends) on a date other than the first (or last) day of a month,
Base Rent shall be prorated on a per diem basis with respect to the portion of
the first month and/or last month within the Term. All sums other than Base
Rent which Tenant is obligated to pay under this Lease shall be deemed to be
additional rent due hereunder, whether or not such sums are designated
"additional rent." The term "Rent" means the Base Rent and all additional rent
payable hereunder.
3.2 Late Charge and Interest. The late payment of any Rent will cause
Landlord to incur additional costs, including administration and collection
costs and processing and accounting expenses and increased debt service
("Delinquency Costs"). If Landlord has not received any installment of Rent
within five (5) days after such amount is due, Tenant shall pay a late charge
of ten percent (10%) of the delinquent amount, which is agreed to represent a
reasonable estimate of the Delinquency Costs incurred by Landlord. In
addition, all such delinquent amounts shall bear interest from the date such
amount was due until paid in full at a rate per annum ("Applicable Interest
Rate") equal to the lesser of (a) the maximum interest rate permitted by law or
(b) five percent (5%) above the rate publicly announced by Bank of America,
N.A. (or if Bank of America, N.A. ceases to exist, the largest bank then
headquartered in the State of California ("Bank") as its "Reference Rate." If
the use of the announced Reference Rate is discontinued by the Bank, then the
term Reference Rate shall mean the announced rate charged by the Bank which is,
from time to time, substituted for the Reference Rate. Landlord and Tenant
recognize that the damage which Landlord shall suffer as a result of Tenant's
failure to pay such amounts is difficult to ascertain and said late charge and
interest are the best estimate of the damage which Landlord shall suffer in the
event of late payment. If a
1
<PAGE> 6
late charge becomes payable for any three (3) installments of Rent within any
twelve (12) month period, then the Rent shall automatically become due and
payable quarterly in advance.
3.3 Security Deposit. Upon the execution of this Lease, Tenant shall pay
to Landlord the Security Deposit. The Security Deposit shall secure the full
and faithful performance of each provision of this Lease to be performed by
Tenant. Landlord shall not be required to pay interest on the Security Deposit
or to keep the Security Deposit separate from Landlord's own funds. If Tenant
fails to perform fully and timely all or any of Tenant's covenants and
obligations hereunder, Landlord may, but without obligation, apply all or any
portion of the Security Deposit toward fulfillment of Tenant's unperformed
covenants and/or obligations. If Landlord does so apply any portion of the
Security Deposit, Tenant shall immediately pay Landlord sufficient cash to
restore the Security Deposit to the amount of the then current Base Rent per
month. Upon any increase in Base Rent, Landlord may require the Security
Deposit to be increased by the amount of the increase in Base Rent per month.
After Tenant vacates the Premises, upon the expiration or sooner termination of
this Lease, if Tenant is not then in default, Landlord shall return to Tenant
any unapplied balance of the Security Deposit. SEE ADDENDUM
4. UTILITIES. Tenant shall make all arrangements for and shall pay all
charges for heat, water, gas, electricity, telephone and any other utilities
used on or provided to the Premises including, without limitation, paying any
deposits and "hook up charges." Landlord shall not be liable to Tenant for
interruption in or curtailment of any utility service, nor shall any such
interruption or curtailment constitute constructive eviction or grounds for
rental abatement.
5. TAXES.
5.1 Real Property Taxes. Landlord shall pay to the proper taxing
authorities as the same become due all Real Property Taxes applicable to the
Premises, subject to reimbursement by Tenant as provided below. The term "Real
Property Taxes" shall be the sum of the following: all real property taxes,
possessory-interest taxes, business or license taxes or fees, service payments
in lieu of such taxes or fees, annual or periodic license or use fees, excises,
transit and traffic charges, housing fund assessments, open space charges,
child care fees, school, sewer and parking fees or any other assessments,
levies, fees, exactions or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen (including fees "in-lieu" of any
such tax or assessment) which are assessed, levied, charged, conferred or
imposed by any public authority upon the Premises (or any real property
comprising any portion thereof) or its operations, together with all taxes,
assessments or other fees imposed by any public authority upon or measured by
any Rent or other charges payable hereunder, including any gross receipts tax
or excise tax levied by any governmental authority with respect to receipt of
rental income, or upon, with respect to or by reason of the development,
possession, leasing, operation, management, maintenance, alteration, repair,
use or occupancy by Tenant of the Premises or any portion thereof, or
documentary transfer taxes upon this transaction or any document to which
Tenant is a party creating or transferring an interest in the Premises,
together with any tax imposed in substitution, partially or totally, of any tax
previously included within the aforesaid definition or any additional tax the
nature of which was previously included within the aforesaid definition,
together with the costs and expenses (including attorneys and expert witness
fees and costs) of challenging any of the foregoing or seeking the reduction in
or abatement, redemption or return of any of the foregoing, but only to the
extent of any such reduction, abatement, redemption or return. Nothing
contained in this Lease shall require Tenant to pay any franchise, corporate,
estate or inheritance tax of Landlord, or any income, profits or revenue tax or
charge upon the net income of Landlord.
5.1.1 Reimbursement By Tenant. Tenant shall pay to Landlord an amount
equal to the Real Property Taxes then due within fifteen (15) days after
delivery to Tenant by Landlord of an invoice for the same. Landlord may, at
Landlord's option, deliver statements from
2
<PAGE> 7
different taxing authorities at different times or deliver all such statements
at one time. In addition, Landlord may elect to collect such Real Property
Taxes from Tenant in advance, on a monthly or quarterly basis, based upon
Landlord's reasonable estimate of such Real Property Taxes. If the amount of
monthly or quarterly payments for estimated Real Property Taxes received by
Landlord from Tenant is more or less than the actual Real Property Taxes due, an
appropriate adjustment shall be made by Landlord and Tenant within thirty (30)
days after determination of such adjustment.
5.1.2 Partial Years. Real Property Taxes for partial tax fiscal
years, if any, falling within the Term, shall be prorated. Tenant's obligations
for Real Property Taxes for the last full or partial year of the Term shall
survive the expiration or earlier termination of this Lease.
5.2 Personal Property Taxes. Prior to delinquency, Tenant shall pay all
taxes and assessments levied upon the trade fixtures, alterations, additions,
improvements, inventories and other personal property located and/or installed
on the Premises by Tenant; and Tenant shall provide Landlord copies of receipts
for payments of all such taxes and assessments. To the extent any such taxes
are not separately assessed or billed to Tenant, Tenant shall pay the amount
thereof as invoiced by Landlord.
6. TRIPLE NET LEASE. It is intended that this Lease be a "triple net lease,"
and that the Rent to be paid hereunder by Tenant will be received by Landlord
without any deduction or offset whatsoever by Tenant, foreseeable or
unforeseeable, unless otherwise specifically and expressly provided for in this
Lease. Except as expressly provided to the contrary in this Lease, Landlord
shall not be required to make any expenditure, incur any obligation, or incur
any liability of any kind whatsoever in connection with this Lease or the
ownership, construction, maintenance, operation or repair of the Premises.
Notwithstanding the foregoing, Tenant shall reimburse Landlord monthly, as
additional rent, for all costs and fees reasonably incurred by Landlord in
connection with the management of this Lease and the Premises including the
cost of those services which are customarily performed by a property management
services company. Management expenses shall not include the following:
6.1 Any cost or expense to the extent to which Landlord is paid
or reimbursed and/or is entitled to payment or reimbursement from
any other person;
6.2 Salaries and bonuses of officers and executives of Landlord;
6.3 The cost of any work or services performed for any facility
other than the Building;
6.4 Interest on debt or principal amortization payments or any
other payments on mortgage and rental or any other payments under
any ground lease or other underlying lease;
6.5 Any fees, costs, and commissions incurred in procuring or
attempting to procure other tenants including, but not necessarily
limited to, brokerage commissions, finders fees, attorney's fees and
expenses, entertainment costs and travel expenses;
6.6 Any costs of painting or decorating of any interior parts of
the Building other than common areas;
6.7 Landlord's general overhead except as it relates specifically
to the actual management of the Building;
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6.8 Taxes and insurance on tenant improvements in locations other than
the Premises and/or for the primary benefit and/or use by Tenant;
6.9 Capital improvements made to or capital assets acquired for the
Project after the Commencement Date unless such improvements reduce
operating expenses or are reasonably necessary for the health and
safety of the occupants of the Project or are required under any
governmental law or regulation, in which event, said capital costs,
or an allocable portion thereof, shall be amortized over the life of
the improvements as reasonably determined by Landlord, together with
interest on the unamortized balance at the Applicable Interest Rate.
7. INSURANCE.
7.1 Landlord. Landlord shall maintain insurance insuring the Building
against fire and extended coverage (including, if Landlord elects, "all risk"
coverage, earthquake/volcanic action, flood and/or surface water insurance) for
the full replacement cost of the Building, with deductibles and the form and
endorsements of such coverage as selected by Landlord, together with rental
abatement insurance against loss of Rent in an amount equal to the amount of
Rent for a period of at least twelve (12) months commencing on the date of
loss. Landlord may also carry such other insurance as Landlord may reasonably
deem prudent or advisable, including, without limitation, liability insurance
in such amounts and on such terms as Landlord shall determine (provided,
however, that Tenant shall not be required to reimburse Landlord for such
additional insurance if the additional coverage Landlord elects to carry
amounts to double coverage for risks already insured as required of Tenant in
accordance with Section 7.2 below). Tenant shall pay to Landlord an amount
equal to the premiums then due within fifteen (15) days after delivery to
Tenant by Landlord of an invoice for any such premiums. Landlord may, at
Landlord's option, elect to collect such premiums from Tenant in advance, on a
monthly or quarterly basis, based upon Landlord's reasonable estimate of such
premiums. If the amount of monthly or quarterly payments for estimated
premiums received by Landlord from Tenant are more or less than the actual
premiums due, an appropriate adjustment shall be made by Landlord and Tenant
within ninety (90) days of determination of such adjustment.
7.2 Tenant. Tenant shall, at Tenant's expense, obtain and keep in force
at all times the following insurance:
7.2.1 Commercial General Liability Insurance (Occurrence Form). A
policy of commercial general liability insurance (occurrence form) having a
combined single limit of not less than Two Million Dollars ($2,000,000) per
occurrence and Two Million Dollars ($2,000,000) aggregate per location if Tenant
has multiple locations (alternatively, Tenant may satisfy such per location
requirement by demonstrating in writing that it carries umbrella and excess
coverage of not less than Five Million Dollars ($5,000,000), providing coverage
for, among other things, blanket contractual liability, premises,
products/completed operations and personal and advertising injury coverage, with
deletion of (a) the exclusion for operations within fifty (50) feet of a
railroad track (railroad protective liability), if applicable, and (b) the
exclusion for explosion, collapse or underground hazard, if applicable, and, if
necessary, Tenant shall provide for restoration of the aggregate limit.
7.2.2 Workers' Compensation and Employer's Liability Insurance.
Workers' compensation insurance having limits not less than those required by
state statute and federal statute, if applicable, and covering all persons
employed by Tenant in the conduct of its operations on the Premises )including,
if applicable, the volunteers endorsement), together with employer's liability
insurance coverage in the amount of at lease One Million Dollars ($1,000,000);
and
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7.2.3 Property Insurance. "All risk" property insurance including
boiler and machinery comprehensive form, if applicable, covering damage to or
loss of any of Tenant's personal property, fixtures, equipment and alterations,
including electronic data processing equipment (collectively "Tenant's
Property") (and coverage for the full replacement cost thereof including
business interruption of Tenant), together with, if the property of Tenant's
invitee's is to be kept in the Premises, warehouser's legal liability or bailee
customers insurance for the full replacement cost of the property belonging to
invitee's and located in the Premises or such other amount as otherwise agreed
to by Tenant and its invitees. In the event Tenant does not carry the
warehouser's legal liability or bailee customers insurance for the full
replacement cost of the property belonging to invitees, Tenant shall, and hereby
does agree to indemnify, protect, defend by counsel acceptable to Landlord, and
hold harmless Landlord and its partners, directors, officers, employees,
shareholders, lenders, agents, contractors and each of their successors and
assigns from and against any and all claims, judgments, causes of action,
damages, penalties, costs, liabilities, and expenses, including all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon, arising at any time during or
after the Term as a result (directly or indirectly) of or in connection with
claims or causes of action brought in connection with such property belonging to
others.
7.3 General.
7.3.1 Insurance Companies. Insurance required to be maintained by
Tenant and Landlord shall be written by companies licensed to do business in the
state in which the Premises are located and having a "General Policyholders
Rating" of at least A 8 (or such higher rating as may be required by a lender
having a lien on the Premises) as set forth in the most current issue of "Best's
Insurance Guide."
7.3.2 Certificates of Insurance. Tenant shall deliver to Landlord
certificates of insurance for all insurance required to be maintained by Tenant
in the form of Exhibit D, attached hereto, no later than seven (7) days prior to
the date of possession of the Premises. Tenant shall, at least ten (10) days
prior to expiration of the policy, furnish Landlord with certificates of renewal
or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification except
after thirty (30) days prior written notice to the parties named as additional
insured in this Lease (except in the case of cancellation for nonpayment of
premium in which case cancellation shall not take effect until at least (10)
days' notice has been given to Landlord). If Tenant fails to maintain any
insurance required in this Lease, Tenant shall be liable for all losses and cost
resulting from said failure.
7.3.3 Additional Insured. Landlord and any property management
company of Landlord for the Premises shall be named as additional insured under
all of the policies required by Section 7.2.1. The policies required under
Section 7.2.1 shall provide for severability of interest.
7.3.4 Primary Coverage. All insurance to be maintained by Tenant
shall, except for workers' compensation and employer's liability insurance, be
primary, without right of contribution from insurance of Landlord. Any umbrella
liability policy or excess liability policy (which shall be in "following form")
shall provide that if the underlying aggregate is exhausted, the excess coverage
will drop down as primary insurance. The limits of insurance maintained by
Tenant shall not limit Tenant's liability under this Lease.
7.3.5 Waiver of Subrogation. Tenant waives any right to recover
against Landlord for claims for damages to Tenant's property to the extent
covered (or required by this Lease to be covered) by insurance. Landlord waives
any right to recover against Tenant for damages to Landlord's property to the
extent covered, or required by this Lease to be covered, by property insurance.
This provision is intended to waive fully, and for the benefit of Landlord and
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Tenant, any rights and/or claims which might give rise to a right of subrogation
in favor of any insurance carrier. The coverage obtained by Landlord and Tenant
pursuant to this Lease shall include, without limitation, a waiver of
subrogation endorsement attached to the certificate of insurance.
7.3.6 Notification of Incidents. Tenant shall notify Landlord within
twenty-four (24) hours after the occurrence of any accidents or incidents in the
Premises which could give rise to a claim under any of the insurance policies
required under this Section 7.
7.4 Indemnity. Tenant shall indemnify, protect, defend (by counsel
acceptable to Landlord) and hold harmless Landlord and its partners, directors,
officers, employees, shareholders, lenders, agents, contractors and each of
their successors and assigns from and against any and all claims, judgments,
causes of action, damages, penalties, costs, liabilities, and expenses,
including all costs, attorneys' fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon, arising
at any time during or after the Term as a result (directly or indirectly) of or
in connection with (i) any default in the performance of any obligation on
Tenant's part to be performed under the terms of this Lease, or (ii) Tenant's
use of the Premises, the conduct of Tenant's business or any activity, work or
things done, permitted or suffered by Tenant in or about the Premises or other
portions of the Project, except for and limited to the extent that claims are
caused by Landlord's negligence or wilful misconduct. Tenant shall in any
event undertake and pay for the cost of defense for Landlord (with counsel
reasonably acceptable to Landlord), and in the event that it is determined by a
court of competent jurisdiction that the plaintiff(s) in such action(s) is
entitled to an award based upon the comparative negligence of Landlord, any
award and the cost of defending such suit shall be allocated between Tenant and
Landlord in the proportion of the comparative negligence so determined. The
obligations of Tenant under this Section 7.4 shall survive the termination of
this Lease with respect to any claims or liability arising prior to such
termination.
7.5 Exemption of Landlord from Liability. Tenant, as a material part of
the consideration to Landlord, hereby assumes all risk of damage to property
including, but not limited to, Tenant's fixtures, equipment, furniture and
alterations or injury to persons in, upon or about the Premises or other
portions of the Project arising from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord, except to the extent such claims
are caused by Landlord's gross negligence or wilful misconduct. Tenant hereby
agrees that Landlord shall not be liable for injury to Tenant's business or any
loss of income therefrom or for damage to the property of Tenant, or injury to
or death of Tenant, Tenant's employees, invitee's, customers, agents or
contractors or any other person in or about the Premises or the Project,
whether such damage or injury is caused by fire, steam, electricity, gas, water
or rain, or from the breakage, leakage or other defects of sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said damage or injury results from conditions arising upon the
Premises, or from other sources or places, and regardless of whether the cause
of such damage or injury or the means of repairing the same is inaccessible to
Tenant, except to the extent caused by Landlord's gross negligence or wilful
misconduct.
8. REPAIRS AND MAINTENANCE.
8.1 Landlord. Landlord shall, subject to the following sentence, maintain
the structural portions of the roof, foundation, and load-bearing portions of
walls (excluding wall coverings, painting, glass and doors) of the Premises.
Landlord shall not be required to make any repair resulting from (i) any
alteration or modification to the Premises or to mechanical equipment within
the Premises performed by, for or because of Tenant or to special equipment or
systems installed by, for or because of Tenant, (ii) the installation, use or
operation of Tenant's property, fixtures and equipment, (iii) the moving of
Tenant's property in or out of the Premises, (iv) Tenant's use or occupancy of
the Premises in violation of Section 10 of this Lease or in the
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manner not contemplated by the parties at the time of the execution of this
Lease, (v) the acts or omissions of Tenant and Tenant's employees, agents,
invitees, subtenants, licensees or contractors, (vi) fire and other casualty,
except as provided by Section 12 of this Lease or (vii) condemnation, except as
provided in Section 13 of this Lease. Landlord shall have no obligation to make
repairs under this Section 8.1 until a reasonable time after receipt of written
notice from Tenant of the need for such repairs. Tenant waives any right to
repair the Premises at the expense of Landlord under any applicable governmental
laws, ordinances, statutes, orders or regulations now or hereafter in effect
which might otherwise apply.
8.2 Tenant. Except for the portions of the Premises expressly required to
be maintained by Landlord under Section 8.1, Tenant, at Tenant's expense, shall
maintain the Premises in good order, condition and repair, including, without
limitation, subfloors and floor coverings, walls and wall coverings,
mechanical, electrical, and plumbing systems, doors, windows, truck aprons,
gutters and downspouts, landscaping and any signage. Tenant shall enter into
regularly scheduled preventive maintenance/service contracts with maintenance
contractors reasonably acceptable to Landlord for servicing all hot water and
heating and air conditioning systems and equipment in the Premises. In the
event Tenant fails, in the reasonable judgment of Landlord, to maintain the
Premises in good order, condition and repair, Landlord shall have the right to
perform such maintenance, repairs or refurbishing at Tenant's expense.
9. ALTERATIONS.
9.1 Trade Fixtures; Alterations. Tenant may install necessary trade
fixtures, equipment and furniture in the Premises, provided that such items are
installed and are removable without structural or material damage to the
Premises or the Project. Tenant shall not construct, nor allow to be
constructed, any alterations or physical additions in, about or to the Premises
without obtaining the prior written consent of Landlord, which consent shall be
conditioned upon Tenant's compliance with Landlord's reasonable requirements
regarding construction of improvements and alterations but such consent
otherwise shall not be unreasonably withheld. Tenant shall submit plans and
specifications to Landlord with Tenant's request for approval and shall
reimburse Landlord for all costs which Landlord may incur in connection with
granting approval to Tenant for any such alterations and additions, including
any costs or expenses which Landlord may incur in electing to have outside
architects and engineers review said matters. Tenant shall file a notice of
completion after completion of such work and provide Landlord with a copy
thereof. Tenant shall provide Landlord with a set of "as-built" drawings for
any such work.
SEE ADDENDUM
9.2 Damage; Removal. Tenant shall repair all damage to the Premises
caused by the installation or removal of Tenant's fixtures, equipment,
furniture and alterations. Upon the termination of this Lease, Tenant shall
remove any or all alterations, additions, improvements and partitions made or
installed by Tenant and restore the Premises to its condition existing prior to
the construction of any such items; provided, and upon condition that Tenant
requests in writing the prior approval of Landlord to the construction or
installation of such items together with notice of whether or not such items
are intended to be removed or be left upon termination, Landlord shall notify
Tenant prior to installation of any improvements or alterations that Tenant
must remove such items at the end of the Lease term. In the event of the
construction of other alterations, additions, improvements and partitions not
covered by the foregoing, Landlord may permit, upon written notice to Tenant,
any such items designated by Landlord to remain on the Premises, in which event
they shall be and become the property of Landlord upon termination of this
Lease. All such removals and restoration shall be accomplished in a good and
workmanlike manner and so as not to cause any damage to the Premises or the
Project whatsoever.
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9.3 Liens. Tenant shall promptly pay and discharge all claims for labor
performed, supplies furnished and services rendered at the request of Tenant
and shall keep the Premises free of all mechanics' and materialmen's liens in
connection therewith. Tenant shall provide at least ten (10) days prior
written notice to Landlord before any labor is performed, supplies furnished or
services rendered on or at the Premises and Landlord shall have the right to
post on the Premises notices of non-responsibility. If any lien is filed,
Tenant shall cause such lien to be released and removed within ten (10) days
after the date of filing, and if Tenant fails to do so, Landlord may take such
action as may be necessary to remove such lien and Tenant shall pay Landlord
such amounts expended by Landlord together with interest thereon at the
Applicable Interest Rate from the date of expenditure. Notwithstanding the
foregoing, Tenant shall have the right to contest in good faith and with
reasonable diligence the validity of such lien provided that Tenant posts with
Landlord a bond or provides other adequate assurance of financial
responsibility, all in Landlord's sole discretion, to protect against damage or
loss to Landlord as a result of such lien.
10. USE. The Premises shall be used only for the Permitted Uses set forth in
the Basic Lease Information and for no other uses. Tenant's use of the
Premises shall be in compliance with and subject to all applicable governmental
laws, ordinances, statutes, orders and regulations and any CC&R's or any
supplement thereto recorded in any official or public records with respect to
the Project or any portion thereof. In no event shall the Premises be used for
any of the Prohibited Uses set forth on Exhibit E attached hereto. Tenant
shall comply with the rules and regulations attached hereto as Exhibit F,
together with such additional rules and regulations as Landlord may from time
to time prescribe. Tenant shall not commit waste, overload the floors or
structure of the Premises, subject the Premises or the Project to any use which
would damage the same or increase the risk of loss or violate any insurance
coverage, permit any unreasonable odors, smoke, dust, gas, substances, noise or
vibrations to emanate from the Premises, take any action which would constitute
a nuisance or would disturb, obstruct or endanger any other tenants of the
Project, take any action which would abrogate any warranties, or use or allow
the Premises to be used for any unlawful purpose. Tenant shall have the right
to use for its employees and invitees, the parking areas on the Premises.
Landlord shall not be responsible for non-compliance by any other tenant or
occupant of the Project with, or Landlord's failure to enforce, any of the
rules or regulations or any other terms or provisions of such tenant's or
occupant's lease. Tenant shall promptly comply with the reasonable
requirements of any board of fire insurance underwriters or other similar body
now or hereafter constituted. Tenant shall not do any act which shall in any
way encumber the title of Landlord in and to the Premises or the Project.
11. ENVIRONMENTAL MATTERS.
11.1 Hazardous Materials. Tenant shall not cause nor permit, nor allow
any of Tenant's employees, agents, customers, visitors, invitee's, licensees,
contractors, assignees or subtenants (collectively, "Tenant's Parties") to
cause or permit, any Hazardous Materials to be brought upon, stored,
manufactured, generated, blended, handled, recycled, treated, disposed or used
on, under or about the Premises or the Project, except for routine office and
janitorial supplies, and those substances customarily used in connection with
the practice of laboratory testing consistent with the Permitted Uses, in usual
and customary quantities stored, used and disposed of in accordance with all
applicable Environmental Laws. As used herein, "Hazardous Materials" means any
chemical, substance, material, controlled substance, object, condition, waste,
living organism or combination thereof which is or may be hazardous to human
health or safety or to the environment due to its radioactivity, ignitability,
corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially harmful
properties or effects, including, without limitation, petroleum and petroleum
products, asbestos, radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, objects, conditions,
wastes, living organisms or combinations thereof which are now or become in the
future listed, defined or
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regulated in any manner by any Environmental Law based upon, directly or
indirectly, such properties or effects. As used herein, "Environmental Laws"
means any and all federal, state or local environmental, health and/or
safety-related laws, regulations, standards, decisions of courts, ordinances,
rules, codes, orders, decrees, directives, guidelines, permits or permit
conditions, currently existing and as amended, enacted, issued or adopted in the
future which are or become applicable to Tenant, the Premises, the Building or
the Project. Tenant and Tenant's Parties shall comply with all Environmental
Laws and promptly notify Landlord of the violation of any Environmental Law or
presence of any Hazardous Materials, other than office and janitorial supplies
as permitted above, on the Premises. Upon twenty-four (24) hours prior notice,
Landlord shall have the right to enter upon and inspect the Premises and to
conduct tests, monitoring and investigations. If such tests indicate the
presence of any environmental condition which occurred during the Term of this
Lease and Tenant or Tenant's Parties caused or are likely to have caused, in
whole or in any material part, the presence of an environmental condition or a
release of Hazardous Materials on, under or about the Premises or the Project,
Tenant shall reimburse Landlord for the cost of conducting such tests. The
phrase "environmental condition" shall mean any adverse condition relating to
any Hazardous Materials or the environment, including surface water,
groundwater, drinking water supply, land, surface or subsurface strata or the
ambient air and includes air, land and water pollutants, noise, vibration, light
and odors. In the event of any such environmental condition, Tenant shall
promptly take any and all steps necessary to rectify the same to Landlord's
reasonable satisfaction or shall, at Landlord's election, reimburse Landlord,
upon demand, for the cost of Landlord of performing rectifying work. The
reimbursement shall be paid to Landlord in advance of Landlord's performing such
work, based upon Landlord's reasonable estimate of the cost thereof; and upon
completion of such work by Landlord, Tenant shall pay to Landlord any shortfall
within forty-five (45) days after Landlord bills Tenant therefore or Landlord
shall within thirty (30) days refund to Tenant any excess deposit, as the case
may be.
11.2 Indemnification. Tenant shall indemnify, protect, defend (by counsel
acceptable to Landlord) and hold harmless Landlord and its partners, directors,
officers, employees, shareholders, lenders, agents, contractors and each of
their respective successors and assigns (individually and collectively,
"Indemnitees") from and against any and all claims, judgments, causes of
action, damages, penalties, fines, taxes, costs, liabilities, losses and
expenses arising at any time during or after the Term as a result (directly or
indirectly) of or in connection with (a) Tenant and/or Tenant's Parties' breach
of any prohibition or provision of the preceding section, or (b) the presence
of Hazardous Materials on, under or about the Premises or other property as a
result (directly or indirectly) of Tenant's and/or Tenant's Parties'
activities, or failure to act, in connection with the Premises. This indemnity
shall include the cost of any required or necessary repair, cleanup or
detoxification, and the preparation and implementation of any closure,
monitoring or other required plans, whether such action is required or
necessary prior to or following the termination of this Lease. Neither the
written consent by Landlord to the presence of Hazardous Materials on, under or
about the Premises, nor the strict compliance by Tenant with all Environmental
Laws, shall excuse Tenant from Tenant's obligation of indemnification pursuant
hereto. Tenant's obligations pursuant to the foregoing indemnity shall survive
the termination of this Lease.
11.3 Landlord's Representation. Landlord hereby represents to Tenant
that, to the best of its current actual knowledge (but without any
investigation or inquiry or duty to do so), no Environmental Condition (as
defined in paragraph 11.1) presently exists as of the Effective Date on, under,
or about the Premises or the Project (a "Pre-existing Condition") except as
disclosed in the Phase I Environmental Site Assessment dated June 1993 and the
Phase II Environmental Site Assessment Report dated November 1993, as prepared
by Roy F. Weston, Inc. and Dames & Moore respectively, copies of which Tenant
acknowledges that it has received, reviewed, and approved.
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12. DAMAGE AND DESTRUCTION.
12.1 Casualty. If the Premises should be damaged or destroyed by fire or
other casualty, Tenant shall give immediate written notice to Landlord. Within
thirty (30) days after receipt thereof, Landlord shall notify Tenant whether
the necessary repairs can reasonably be made: (a) within ninety (90) days; (b)
in more than ninety (90) days but in less than one hundred eighty (180) days;
or (c) in more than one hundred eighty (180) days from the date of such notice.
12.1.1 Less Than 90 Days. If the Premises should be damaged only to
such extent that rebuilding or repairs can reasonably be completed within ninety
(90) days, this Lease shall not terminate and, provided that insurance proceeds
are available to fully repair the damage, Landlord shall repair the Premises,
except that Landlord shall not be required to rebuild, repair or replace any
alterations, partitions, fixtures, additions and other improvements
(collectively, "Improvements") which may have been placed in, on or about the
Premises by or for the benefit of Tenant. If Tenant is required to vacate all
or a portion of the Premises during Landlord's repair thereof, the Base Rent
payable hereunder shall be abated proportionately from the date Tenant vacates
all or a portion of the Premises and only during the period the Premises are
unfit for occupancy.
12.1.2 Greater Than 90 Days. If the Premises should be damaged only
to such extent that rebuilding or repairs can reasonably be completed in more
than ninety (90) days but in less than one hundred eighty (180) days, then
Landlord shall have the option of: (a) terminating the Lease effective upon the
occurrence of such damage, in which event the Rent shall be abated from the date
Tenant vacates the Premises; or (b) electing to repair the Premises, provided
insurance proceeds are available to fully repair the damage (except that
Landlord shall not be required to rebuild, repair or replace any part of the
Improvements which may have been placed in, on or about the Premises by or for
the benefit of Tenant). If Tenant is required to vacate all or a portion of the
Premises during Landlord's repair thereof, the Base Rent payable hereunder shall
be abated proportionately from the date Tenant vacates all or a portion of the
Premises and only during the period the Premises are unfit for occupancy. In
the event that Landlord should fail to substantially complete such repairs
within one hundred eighty (180) days after the date upon which Landlord is
notified by Tenant of the casualty (such period to be extended for delays caused
by Tenant or because of any items of Force Majeure, as hereinafter defined) and
Tenant has not re-occupied the Premises, Tenant shall have the right, as
Tenant's exclusive remedy, within ten (10) days after the expiration of such one
hundred eighty (180) day period, to terminate this Lease by delivering written
notice to Landlord as Tenant's exclusive remedy, whereupon all rights hereunder
shall cease and terminate thirty (30) days after Landlord's receipt of such
notice.
12.1.3 Greater Than 180 Days. If the Premises should be so damaged
that rebuilding or repairs cannot be completed within one hundred eighty (180)
days, either Landlord or Tenant may terminate this Lease by giving written
notice within ten (10) days after notice from Landlord specifying such time
period of repair; and this Lease shall terminate and the Rent shall be abated
from the date Tenant vacates the Premises. In the event that neither party
elects to terminate this Lease, Landlord shall promptly commence and diligently
prosecute to completion the repairs to the Premises, provided insurance proceeds
are available to repair the damage (except that Landlord shall not be required
to rebuild, repair or replace any improvements which may have been placed in, on
or about the Premises by or for the benefit of Tenant). If Tenant is required
to vacate all or a portion of the Premises during Landlord's repair thereof, the
Base Rent payable hereunder shall be abated proportionately from the date Tenant
vacates all or a portion of the Premises and only during the period that the
Premises are unfit for occupancy.
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12.2 Tenant's Fault. If the Premises or any portion of the Premises is
damaged resulting from the negligence or breach of this Lease by Tenant or any
of Tenant's Parties, Rent shall not be reduced during the repair of such damage
and Tenant shall be liable to Landlord for the cost of the repair caused
thereby to the extent such cost is not covered by insurance proceeds.
12.3 Uninsured Casualty. In the event that the Premises or any portion of
the Premises is damaged to the extent Tenant is unable to use the Premises and
such damage is not covered by insurance proceeds received by Landlord or in the
event that the holder of any indebtedness secured by the Premises requires that
the insurance proceeds be applied to such indebtedness, then Landlord shall
have the right at Landlord's option either (i) to repair such damage as soon as
reasonably possible at Landlord's expense, or (ii) to give written notice to
Tenant within thirty (30) days after the date of the occurrence of such damage
of Landlord's intention to terminate this Lease as of the date of the
occurrence of such damage. In the event Landlord elects to terminate this
Lease, Tenant shall have the right within ten (10) days after receipt of such
notice to give written notice to Landlord of Tenant's intention to pay the cost
of repair of such damage, in which event this Lease shall continue in full
force and effect, Landlord shall make such repairs as soon as reasonably
possible and Tenant shall reimburse Landlord for such repairs within fifteen
(15) days after receipt of an invoice from Landlord. If Tenant does not give
such notice within the ten (10) day period, this Lease shall terminate
automatically as of the date of the occurrence of the damage.
12.4 Waiver. With respect to any damage or destruction which Landlord is
obligated to repair or may elect to repair, Tenant waives all rights to
terminate this Lease pursuant to rights otherwise presently or hereafter
accorded by law.
13. EMINENT DOMAIN.
13.1 Total Condemnation. If all of the Premises is condemned by eminent
domain, inversely condemned or sold under threat of condemnation for any public
or quasi-public use or purpose ("Condemned"), this Lease shall terminate as of
the earlier of the date the condemning authority takes title to or possession
of the Premises, and Rent shall be adjusted to the date of termination.
13.2 Partial Condemnation. If any portion of the Premises is Condemned
and such partial condemnation materially impairs Tenant's ability to use the
Premises for Tenant's business as reasonably determined by Landlord, either
Landlord or Tenant shall have the option of terminating this Lease as of the
earlier of the date title vests in the condemning authority or as of the date
an order of immediate possession is issued and Rent shall be adjusted and/or
abated to the date of termination. If such partial condemnation does not
materially impair Tenant's ability to use the Premises for the business of
Tenant, Landlord shall promptly restore the Premises to the extent of any
condemnation proceeds recovered by Landlord, excluding the portion thereof lost
in such condemnation, and this Lease shall continue in full force and effect
except that after the date of such title vesting Rent shall be adjusted and/or
abated as reasonably determined by Landlord.
13.3 Award. If the Premises are wholly or partially Condemned, Landlord
shall be entitled to the entire award paid for such condemnation, and Tenant
waives any claim to any part of the award from Landlord or the condemning
authority; provided, however, Tenant shall have the right to recover from the
condemning authority such compensation as may be separately awarded to Tenant
in connection with costs in removing Tenant's merchandise, furniture, fixtures,
leasehold improvements and equipment to a new location. No condemnation of any
kind shall be construed to constitute an actual or constructive eviction of
Tenant or a breach of any express or implied covenant of quiet enjoyment.
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13.4 Temporary Condemnation. In the event of a temporary condemnation not
extending beyond the Term, this Lease shall remain in effect, Tenant shall
continue to pay Rent and Tenant shall receive any award made for such
condemnation except damages to any of Landlord's property. If a temporary
condemnation is for a period which extends beyond the Term, this Lease shall
terminate as of the date of initial occupancy by the condemning authority and
any such award shall be distributed in accordance with the preceding section.
If a temporary condemnation remains in effect at the expiration or earlier
termination of this Lease, Tenant shall pay Landlord the reasonable cost of
performing any obligations required of Tenant with respect to the surrender of
the Premises.
14. DEFAULT.
14.1 Events of Defaults. The occurrence of any of the following events
shall, at Landlord's option, constitute an "Event of Default":
14.1.1 Vacation or abandonment of the Premises without payment of Rent
for a period of thirty (30) consecutive days;
14.1.2 Failure to pay Rent on the date when due and the failure
continuing for a period of five (5) days after such payment is due;
14.1.3 Failure to perform Tenant's covenants and obligations hereunder
(except default in the payment of Rent) where such failure continues for a
period of thirty (30) days after written notice from Landlord; provided,
however, if the nature of the default is such that more than thirty (30) days
are reasonably required for its cure, Tenant shall not be deemed to be in
default if Tenant commences the cure within the thirty (30) day period and
diligently prosecutes such cure to completion;
14.1.4 The making of a general assignment by Tenant for the benefit of
creditors; the filing of a voluntary petition by Tenant or the filing of an
involuntary petition by any of Tenant's creditors seeking the rehabilitation,
liquidation or reorganization of Tenant under any law relating to bankruptcy,
insolvency or other relief of debtors and, in the case of an involuntary action,
the failure to remove or discharge the same within sixty (60) days of such
filing; the appointment of a receiver or other custodian to take possession of
substantially all of Tenant's assets or this leasehold; Tenant's insolvency or
inability to pay Tenant's debts or failure generally to pay Tenant's debts when
due; any court entering a decree or order directing the winding up or
liquidation of Tenant or of substantially all of Tenant's assets; Tenant taking
any action toward the dissolution or winding up of Tenant's affairs; the
cessation or suspension of Tenant's use of the Premises; or the attachment,
execution or other judicial seizure of substantially all of Tenant's assets or
this leasehold;
14.1.5 The making of any material misrepresentation or omission by
Tenant or any successor in interest of Tenant in any materials delivered by or
on behalf of Tenant to Landlord or Landlord's lender pursuant to this Lease; or
14.2 Remedies.
14.2.1 Termination. In the event of the occurrence of any Event of
Default, Landlord shall have the right to give a written termination notice to
Tenant and, on the date specified in such notice, this Lease shall terminate
unless on or before such date all arrears of Rent and all other sums payable by
Tenant under this Lease and all costs and expenses incurred by or on behalf of
Landlord hereunder shall have been paid by Tenant and all other Events of
Default at the time existing shall have been fully remedied to the satisfaction
of Landlord.
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14.2.1.1 Repossession. Following termination, without prejudice
to other remedies Landlord may have, Landlord may (i) peaceably re-enter the
Premises in accordance with applicable laws upon voluntary surrender by Tenant
or remove Tenant therefrom and any other persons occupying the Premises, using
such legal proceedings as may be available; (ii) repossess the Premises in
accordance with applicable laws or relet the Premises or any part thereof for
such term (which may be for a term extending beyond the Term), at such rental
and upon such other terms and conditions as Landlord in Landlord's sole but
reasonable discretion shall determine, with the right to make reasonable
alterations and repairs to the Premises; and (iii) remove all personal property
therefrom.
14.2.1.2 Unpaid Rent. Landlord shall have all the rights and
remedies of a landlord provided by applicable law, including the right to
recover from Tenant: (a) the worth, at the time of award, of the unpaid Rent
that had been earned at the time of termination, (b) the worth, at the time of
award, of the amount by which the unpaid Rent that would have been earned after
the date of termination until the time of award exceeds the amount of loss of
rent that Tenant proves could have been reasonably avoided, (c) the worth, at
the time of award, of the amount by which the unpaid Rent for the balance of the
Term after the time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, and (d) any other amount, and court
costs, necessary to compensate Landlord for all detriment proximately caused by
Tenant's default. The phrase "worth, at the time of award," as used in (a) and
(b) above, shall be computed at the Applicable Interest Rate, and as used in (c)
above, shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
14.2.2 Continuation. Even though an Event of Default may have
occurred, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession; and Landlord may enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
Rent as it becomes due. Landlord, without terminating this Lease, may, during
the period Tenant is in default, enter the Premises in accordance with legal
procedures and relet the same, or any portion thereof, to third parties for
Tenant's account and Tenant shall be liable to Landlord for all costs Landlord
incurs in reletting the Premises, including, without limitation, brokers'
commissions, expenses of remodeling the Premises to the extent not recovered
from reletting and reasonable like costs. Reletting may be for a period shorter
or longer than the remaining Term. Tenant shall continue to pay the Rent on the
date the same is due. No act by Landlord hereunder, including acts of
maintenance, preservation or efforts to lease the Premises or the appointment of
a receiver upon application of Landlord to protect Landlord's interest under
this Lease, shall terminate this Lease unless Landlord notifies Tenant that
Landlord elects to terminate this Lease. In the event that Landlord elects to
relet the Premises, the rent that Landlord receives from reletting shall be
applied to the payment of, first, any indebtedness from Tenant to Landlord other
than Base Rent and Real Property Taxes; second, all costs, including
maintenance, incurred by Landlord in reletting; and, third, Base Rent and Real
Property Taxes under this Lease. After deducting the payments referred to
above, any sum remaining from the rental Landlord receives from reletting shall
be held by Landlord and applied in payment of future Rent as Rent becomes due
under this Lease. In no event, and notwithstanding anything in Section 15 to
the contrary, shall Tenant be entitled to any excess rent received by Landlord.
If, on the date Rent is due under this Lease, the rent received from the
reletting is less than the Rent due on that date, Tenant shall pay to Landlord,
in addition to the remaining Rent due, all costs, including maintenance, which
Landlord incurred in reletting the Premises that remain after applying the rent
received from reletting as provided hereinabove. So long as this Lease is not
terminated, Landlord shall have the right to remedy any default of Tenant, to
maintain or improve the Premises, to cause a receiver to be appointed to
administer the Premises and new or existing subleases and to add to the Rent
payable hereunder all of Landlord's reasonable costs in so doing, with interest
at the Applicable Interest Rate from the date of such expenditure.
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14.3 Cumulative. Each right and remedy of Landlord provided for herein or
now or hereafter existing at law, in equity, by statute or otherwise shall be
cumulative and shall not preclude Landlord from exercising any other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity, by statute or otherwise. No payment by Tenant of a lesser amount than
the Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent; and Landlord may accept such payment without prejudice to Landlord's
right to recover the balance of such Rent or to pursue other remedies.
15. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, sublet or otherwise
transfer, whether voluntarily or involuntarily or by operation of law, the
Premises or any part thereof without Landlord's prior written approval, which
shall not be unreasonably withheld. The merger of Tenant with any other entity
or the transfer of any controlling or managing ownership or beneficial interest
in Tenant, or the assignment of a substantial portion of the assets of Tenant,
whether or not located at the Premises, shall constitute an assignment
hereunder. If Tenant desires to assign this Lease or sublet any or all of the
Premises, Tenant shall give Landlord written notice thereof with copies of all
related documents and agreements associated with the assignment or sublease,
including without limitation, the financial statements of any proposed assignee
or subtenant, forty-five (45) days prior to the anticipated effective date of
the assignment or sublease. Tenant shall pay Landlord's reasonable attorneys'
fees incurred in the review of such documentation plus an administrative fee of
Three Hundred Fifty Dollars ($350.00) for each proposed transfer. Landlord
shall have a period of thirty (30) days following receipt of such notice and
all related documents and agreements to notify Tenant in writing of Landlord's
approval or disapproval of the proposed assignment or sublease. If Landlord
fails to notify Tenant in writing of such election, Landlord shall be deemed to
have disapproved such assignment or subletting. This Lease may not be assigned
by operation of law. Any purported assignment or subletting contrary to the
provisions hereof shall be void and shall constitute an Event of Default
hereunder. If Tenant receives rent or other consideration for any such
transfer in excess of the Rent, or in case of the sublease of a portion of the
Premises, in excess of such Rent that is fairly allocable to such portion,
after appropriate adjustments to assure that all other payments required
hereunder are appropriately taken into account, Tenant shall pay Landlord fifty
percent (50%) of the difference between each such payment of rent or other
consideration and the Rent required hereunder. Landlord may, without waiving
any rights or remedies, collect rent from the assignee, subtenant or occupant
and apply the net amount collected to the Rent herein reserved and apportion
any excess rent so collected in accordance with the terms of the preceding
sentence. Tenant shall continue to be liable as a principal and not as a
guarantor or surety to the same extent as though no assignment or subletting
had been made. Landlord may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to the Lease by assignees of Tenant
without notifying Tenant or any successor of Tenant and without obtaining their
consent. No permitted transfer shall be effective until there has been
delivered to Landlord a counterpart of the transfer instrument in which the
transferee agrees to be and remain jointly and severally liable with Tenant for
the payment of Rent pertaining to the Premises and for the performance of all
the terms and provisions of this Lease relating thereto arising on or after the
date of the transfer.
16. ESTOPPEL, ATTORNMENT AND SUBORDINATION.
16.1 Estoppel. Within ten (10) days after request by Landlord, Tenant
shall deliver an estoppel certificate duly executed (and acknowledged if
required by any lender), in the form attached hereto as Exhibit G, or in such
other form as may be acceptable to the lender and Tenant, which form may
include some or all of the provisions contained in Exhibit G, to any proposed
mortgagee, purchaser or Landlord. Tenant's failure to deliver said statement
in such time period shall be an Event of Default hereunder and shall be
conclusive upon Tenant that (a) this Lease is in full force and effect, without
modification except as may be represented by
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Landlord; (b) there are no uncured defaults in Landlord's performance and Tenant
has no right of offset, counterclaim or deduction against Rent hereunder, and
(c) no more than one month's Base Rent has been paid in advance. If any
financier should require that this Lease be amended (other than in the
description of the Premises, the Term, the Permitted Use, the Rent or as will
substantially, materially and adversely affect the rights of Tenant), Landlord
shall give written notice thereof to Tenant, which notice shall be accompanied
by a Lease supplement embodying such amendments. Tenant shall, within ten (10)
days after the receipt of Landlord's notice, execute and deliver to Landlord the
tendered Lease supplement.
16.2 Subordination. This Lease shall be subject and subordinate to all
ground leases and the lien of all mortgages and deeds of trust which now or
hereafter affect the Premises or the Project or Landlord's interest therein,
and all amendments thereto, all without the necessity of Tenant's executing
further instruments to effect such subordination provided that Tenant receives
a non-disturbance agreement in a form reasonably acceptable to Tenant. If
requested, Tenant shall execute and deliver to Landlord within ten (10) days
after Landlord's request whatever documentation that may reasonably be required
to further effect the provisions of this paragraph.
16.3 Attornment. In the event of a foreclosure proceeding, the exercise
of the power of sale under any mortgage or deed of trust or the termination of
a ground lease, Tenant shall, if requested, attorn to the purchaser thereupon
and recognize such purchaser as Landlord under this Lease; provided, however,
Tenant's obligation to attorn to such purchaser shall be conditioned upon
Tenant's receipt of a non-disturbance agreement in a form reasonably acceptable
to Tenant.
17. MISCELLANEOUS.
17.1 General.
17.1.1 Entire Agreement. This Lease sets forth all the agreements
between Landlord and Tenant concerning the Premises; and there are no agreements
either oral or written other than as set forth herein.
17.1.2 Time of Essence. Time is of the essence of this Lease.
17.1.3 Attorneys' Fees. In any action or proceeding which either
party brings against the other to enforce its rights hereunder, the unsuccessful
party shall pay all costs incurred by the prevailing party, including reasonable
attorneys' fees, which amounts shall be a part of the judgment in said action or
proceeding.
17.1.4 Severability. If any provision of this Lease or the
application of any such provision shall be held by a court of competent
jurisdiction to be invalid, void or unenforceable to any extent, the remaining
provisions of this Lease and the application thereof shall remain in full force
and effect and shall not be affected, impaired or invalidated.
17.1.5 Law. This Lease shall be construed and enforced in accordance
with the laws of the state in which the Premises are located.
17.1.6 No Option. Submission of this Lease to Tenant for examination
or negotiation does not constitute an option to lease, offer to lease or a
reservation of, or option for, the Premises; and this document shall become
effective and binding only upon the execution and delivery hereof by Landlord
and Tenant.
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17.1.7 Successors and Assigns. This Lease shall be binding upon and
inure to the benefit of the successors and assigns of Landlord and, subject to
compliance with the terms of Section 15, Tenant.
17.1.8 Third Party Beneficiaries. Nothing herein is intended to
create any third party benefit.
17.1.9 Memorandum of Lease. Tenant shall not record this Lease or a
short form memorandum hereof without Landlord's prior written consent.
17.1.10 Agency, Partnership or Joint Venture. Nothing contained
herein nor any acts of the parties hereto shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture by the parties hereto
or any relationship other than the relationship of landlord and tenant.
17.1.11 Merger. The voluntary or other surrender of this Lease by
Tenant or a mutual cancellation thereof or a termination by Landlord shall not
work a merger and shall, at the option of Landlord, terminate all or any
existing subtenancies or may, at the option of Landlord, operate as an
assignment to Landlord of any or all of such subtenancies.
17.1.12 Headings. Section headings have been inserted solely as a
matter of convenience and are not intended to define or limit the scope of any
of the provisions contained therein.
17.2 Signs. All signs and graphics of every kind visible in or from
public view or the exterior of the Premises shall be subject to Landlord's
prior written approval and shall be subject to any applicable governmental
laws, ordinances, and regulations and in compliance with Landlord's signage
program. Tenant shall remove all such signs and graphics prior to the
termination of this Lease. Such installations and removals shall be made in
such manner as to avoid injury or defacement of the Premises; and Tenant shall
repair any injury or defacement, including without limitation, discoloration
caused by such installation or removal.
17.3 Waiver. No waiver of any default or breach hereunder shall be
implied from any omission to take action on account thereof, notwithstanding
any custom and practice or course of dealing. No waiver by either party of any
provision under this Lease shall be effective unless in writing and signed by
such party. No waiver shall affect any default other than the default
specified in the waiver and then such waiver shall be operative only for the
time and to the extent therein stated. Waivers of any covenant shall not be
construed as a waiver of any subsequent breach of the same.
17.4 Financial Statements. Tenant shall provide to any lender, purchaser
or Landlord, within ten (10) days after request, a current, accurate, certified
financial statement for Tenant and Tenant's business prepared under generally
accepted accounting principles consistently applied and such other certified
financial information or tax returns as may be reasonably required by Landlord,
purchaser or any lender of either, provided, however, that Tenant may require
as a condition to providing such financial statements a reasonable agreement by
such lender, purchaser, or Landlord that it will treat and hold the financial
statements as confidential (except as may be necessary to comply with
applicable law) for their own internal use for legitimate purposes directly
related to the ownership of financing of the Building or Project.
17.5 Limitation of Liability. The obligations of Landlord under this
Lease are not personal obligations of the individual partners, directors,
officers, shareholders, agents or employees of Landlord; and Tenant shall look
solely to the Premises for satisfaction of any liability of Landlord and shall
not look to other assets of Landlord nor seek recourse against the
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assets of the individual partners, directors, officers, shareholders, agents or
employees of Landlord. Whenever Landlord transfers its interest, Landlord shall
be automatically released from further performance under this Lease and from all
further liabilities and expenses hereunder and the transferee of Landlord's
interest shall assume all liabilities and obligations of Landlord hereunder from
the date of such transfer.
17.6 Notices. All notices to be given hereunder shall be in writing and
mailed postage prepaid by certified or registered mail, return receipt
requested, or delivered by personal or courier delivery, or sent by facsimile
(immediately followed by one of the preceding methods), to Landlord's Address
and Tenant's Address, or to such other place as Landlord or Tenant may
designate in a written notice given to the other party. Notices shall be
deemed served upon the earlier of receipt or three (3) days after the date of
mailing.
17.7 Brokerage Commission. Landlord shall pay a brokerage commission to
Broker in accordance with a separate agreement between Landlord and Broker.
Tenant warrants that Tenant's sole contact with Landlord or with the Premises
in connection with this transaction has been directly with Landlord and Broker
and that no other broker or finder can properly claim a right to a commission
or a finder's fee based upon contacts between the claimant and Tenant. Tenant
agrees to indemnify and hold Landlord harmless from any claims or liability,
including reasonable attorneys' fees, in connection with a claim by any person
for a real estate broker's commission, finder's fee or other compensation based
upon any statement, representation or agreement of Tenant, and Landlord agrees
to indemnify and hold Tenant harmless from any such claims or liability,
including reasonable attorneys' fees, based upon any statement, representation
or agreement of Landlord. Landlord similarity warrants that it has not used
any other broker, real estate agent, or finder except as set forth in the Basic
Lease Information.
17.8 Authorization. Each individual executing this Lease on behalf of
Tenant represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of Tenant and that such execution is binding upon
Tenant.
17.9 Holding Over; Surrender.
17.9.1 Holding Over. If Tenant holds over the Premises or any part
thereof after expiration of the Term, such holding over shall constitute a
month-to-month tenancy, at a rent equal to one hundred fifty percent (150%) of
the Base Rent in effect immediately prior to such holding over and shall
otherwise be on all the other terms and conditions of this Lease. This
paragraph shall not be construed as Landlord's permission for Tenant to hold
over. Acceptance of Rent by Landlord following expiration or termination shall
not constitute a renewal of this Lease or extension of the Term except as
specifically set forth above. If Tenant fails to surrender the Premises upon
expiration or earlier termination of this Lease, Tenant shall indemnify and hold
Landlord harmless from and against all loss or liability resulting from or
arising out of Tenant's failure to surrender the Premises, including, but not
limited to, any amounts required to be paid to any tenant or prospective tenant
who was to have occupied the Premises after the expiration or earlier
termination of this Lease and any related attorneys' fees and brokerage
commissions.
17.9.2 Surrender. Upon the termination of this Lease or Tenant's
right to possession of the Premises, Tenant will surrender the Premises,
together with all keys, in good condition and repair, reasonable wear and tear
excepted. Conditions existing because of Tenant's failure to perform
maintenance, repairs or replacements shall not be deemed "reasonable wear and
tear."
17.10 Joint and Several. If Tenant consists of more than one person, the
obligation of all such persons shall be joint and several.
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17.11 Covenants and Conditions. Each provision to be performed by Tenant
hereunder shall be deemed to be both a covenant and a condition.
17.12 Addenda. The Addenda attached hereto, if any, and identified with
this Lease are incorporated herein by this reference as if fully set forth
herein.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date set
forth above.
"Landlord" "Tenant"
CATELLUS DEVELOPMENT CORPORATION, GRIFFITH MICRO SCIENCE, INC.,
a Delaware corporation a Delaware corporation
By: [illegible] By: /s/ [Frank S. Lange]
-------------------------- --------------------------
Its: Vice President Its: V.P. Operations
---------------------- --------------------------
Date: 3/3/97 Date: 2/15/97
-------------------------- --------------------------
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ADDENDUM TO LEASE
THIS ADDENDUM TO LEASE ("Addendum") is attached to and constitutes an
integral part of the Lease between CATELLUS DEVELOPMENT CORPORATION, as
Landlord, and GRIFFITH MICRO SCIENCE, INC., as Tenant. The terms of this
Addendum shall be incorporated in the Lease for all purposes. In the event of
a conflict between the provisions of the Lease and the provisions of this
Addendum, this Addendum shall control.
ADDITION TO SECTION 9.1 - TRADE FIXTURES; ALTERATIONS. THE FOLLOWING IS HEREBY
ADDED TO THE END OF SECTION 9.1:
Notwithstanding the foregoing, Tenant shall have the right, without
Landlord's consent, to make alterations to the Premises, provided such
alteration does not include penetration of the roof, which, for any single
proposed project (or any series of related projects), does not cost more
than Ten Thousand Dollars ($10,000.00) in the aggregate; provided, that
Tenant shall provide Landlord with fifteen (15) days prior written notice
of the commencement of any such alteration and shall furnish to Landlord a
copy of Tenant's proposed plans for such alteration. Upon expiration of
earlier termination of this Lease, Tenant shall, subject to the provisions
of Section 9 of the Lease, remove all alterations made by Tenant and
restore the Premises to the condition existing prior to construction of
the alterations. In addition, Tenant may install and operate in and upon
the Premises such trade fixtures, equipment, and machinery and appliances
as it shall consider necessary for the conduct of its business without the
requirement of Landlord's prior consent, and shall retain ownership of
such items, and shall remove such items at Tenant's expense, upon the
expiration or the termination of this Lease.
THE FOLLOWING NEW SECTIONS ARE HEREBY ADDED TO THE LEASE WHICH STATE IN THEIR
ENTIRETY AS FOLLOWS:
18. Force Majeure Event. For purposes of this Lease, the term "Force Majeure
Event" shall mean and include the following: any delay caused by any action,
inaction, order, ruling, moratorium, regulation, statute, condition or other
decision of any governmental agency having jurisdiction over any portion of the
Project, over the construction anticipated to occur thereon or over any uses
thereof, or by fire, flood, inclement weather, strikes, lockouts or other labor
or industrial disturbance (whether or not on the part of agents or employees of
either party hereto engaged in the construction of the Premises), civil
disturbance, order of any government, court or regulatory body claiming
jurisdiction or otherwise, act of public enemy, war, riot, sabotage, blockade,
embargo, failure or inability to secure materials, supplies or labor through
ordinary sources by reason of shortages or priority, discovery of hazardous or
toxic materials, earthquake, or other natural disaster, or any cause whatsoever
beyond the reasonable control (excluding financial inability) of the party
whose performance is required, or any of its contractors or other
representatives, whether or not similar to any of the causes hereinabove
stated.
19. Condition of Premises.
19.1 Tenant has determined that the Premises are acceptable for Tenant's
use and Tenant acknowledges that neither Landlord nor any broker or agent has
made any representations or
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warranties in connection with the physical condition of the Premises or their
fitness for Tenant's use upon which Tenant has relied directly or indirectly for
any purpose.
19.2 Tenant acknowledges that Tenant has inspected the Premises and that
Tenant accepts the Premises in an "AS-IS" condition. Any tenant improvements
which Tenant requires in and to t he Premises shall be provided by Tenant, at
Tenant's sole expense; provided, however, all tenant improvements shall be
subject to Landlord's prior written approval and shall comply with the
provisions of Section 9.
20. Free Rent Period. Tenant's obligation to pay Base Rent shall be
conditionally abated during months two (2) and four (4) of the Term ("Free Rent
Period"). Such abatement shall apply to Base Rent only and shall not apply to
any other sums payable under this Lease. The abatement of Base Rent described
above is expressly conditioned on Tenant's performance of its obligations under
the Lease throughout the Term; and the amount of the abated Base Rent is based
in part on the amount of Base Rent due under the Lease for the full Term. If
Tenant defaults under the Lease and such default results in a termination of
the Lease prior to the expiration of the Term, then Tenant shall pay to
Landlord on the date of such termination, in addition to all other amounts and
damages to which Landlord is entitled, the amount of Base Rent which would
otherwise have been due and payable during the Free Rent Period.
21. Scheduled Base Rent Increase. Effective as of the first (1st) day of the
thirty-first (31st) month of the Term, the monthly Base Rent shall
automatically and without prior notice be increased to the amount of Fifteen
Thousand Four Hundred Dollars ($15,400.00).
22. Cancellation of Previous Lease; Transfer of Security Deposit.
22.1 This Lease supersedes and terminates, effective as of the
Commencement Date (the "Termination Date"), that certain SFLI Term Lease Land
and Improvements, Contract No. CTDC-3757, dated June 17, 1986, (together with
all amendments thereto, the "Original Lease"), by and between Landlord, as
landlord, and Tenant, as tenant. The termination of the Original Lease shall
not release Tenant from any liability or obligation under the Original Lease,
whether of indemnity or otherwise, resulting from any acts, omissions or events
occurring prior to the Termination Date, or any obligation which must
necessarily be performed after the Termination Date. Such obligations, to be
performed after the Termination Date, include, without limitation, Tenant's
obligations to remove improvements and alterations to the Premises installed by
Tenant, as set forth in Article 17 of the Original Lease and the amendments
thereto dated as of April 7, 1989, October 31, 1991, and January 16, 1992.
Nothing herein contained shall constitute a waiver by Landlord of any default
of Tenant now existing or which may arise prior to the Termination Date under
or in connection with the Original Lease, or prevent Landlord from exercising
any of its lawful remedies with respect thereto under the Original Lease or
according to law.
22.2 The security deposit held by Landlord under the Original Lease shall
be credited toward the Security Deposit required to be deposited by Tenant
pursuant to Section 3.3 of this Lease.
23. Noise From Train Operation. Lessee hereby recognizes and acknowledges that
the Premises is adjacent to the tracks of the Los Angeles Junction Railway
Company (hereinafter called "Railway") and that the operation of trains over
said tracks does and will produce vibrations and noise levels which may be
considered objectionable by the employees, agents, tenants or invitees of
Lessee. Therefore, Lessee agrees that no legal action or complaint of any kind
whatsoever shall be instituted against Lessor or Railway on Lessee's behalf as
a result of such vibrations or noise levels and to indemnify and save Lessor
and/or Railway harmless from
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<PAGE> 25
and against any loss, damage, liability or expense either might incur as a
result of such action being taken by Lessee's employees, agents, tenants or
invitees.
24. Quiet Enjoyment. Lessor hereby covenants and agrees that Lessee, its
successors and assigns, upon paying the rents and performing and fulfilling the
conditions and provisions herein upon Lessee's part to be paid or fulfilled,
shall and may peaceably and quietly hold, occupy and enjoy the Premises during
the term of this Lease from any hindrance or molestation by Lessor, or any
person or persons claiming through or under Lessor.
25. Track Clearance. Lessee shall at all times keep a space of SIX (6) feet
from the nearest rail of any railroad track entirely clear of structures,
material and obstructions of every sort and shall observe an overhead clearance
of not less than twenty-five (25) feet above the top of rail. Notwithstanding
the foregoing, Lessee may erect landing platforms which shall not be higher
than FOUR (4) feet above the top of the rails and which at no point shall be
nearer than FIVE (5) feet from the nearest rail of such track; provided,
however, if by statute or order of competent public authority greater
clearances are required, Lessee shall comply with such statute or order. In
case of a breach of these obligations, or any of them, Lessee agrees to defend
and indemnify Lessor and the Los Angeles Junction Railway Company against all
liability for loss, damage, injury and death arising therefrom whether or not
contributed to by the negligence of the Lessor or said Railway Company.
LANDLORD'S INITIALS ____ TENANT'S INITIALS _____
21
<PAGE> 26
EXHIBIT A
[Survey]
1
<PAGE> 27
EXHIBIT B
WORK LETTER
(Not Applicable to Lease)
<PAGE> 28
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
(Not Applicable to Lease)
<PAGE> 29
EXHIBIT D
[Sample Insurance Form]
<PAGE> 30
EXHIBIT E
PROHIBITED USES
The following types of operations and activities are expressly prohibited on
the Premises:
1. automobile/truck maintenance, repair or fueling;
2. battery manufacturing or reclamation;
3. ceramics and jewelry manufacturing or finishing;
4. chemical (organic or inorganic) storage, use or manufacturing
except Ethylene Oxide for permitted uses;
5. drum recycling;
6. dry cleaning;
7. electronic components manufacturing;
8. electroplating and metal finishing;
9. explosives manufacturing, use or storage;
10. hazardous waste treatment, storage, or disposal;
11. leather production, tanning or finishing;
12. machinery and tool manufacturing;
13. medical equipment manufacturing and hospitals;
14. metal shredding, recycling or reclamation;
15. metal smelting and refining;
16. mining;
17. paint, pigment and coating operations;
18. petroleum refining;
19. plastic and synthetic materials manufacturing;
20. solvent reclamation;
21. tire and rubber manufacturing;
22. above - and/or underground storage tanks; and
23. residential use or occupancy.
<PAGE> 31
EXHIBIT F
RULES AND REGULATIONS
<PAGE> 32
EXHIBIT G
TENANT ESTOPPEL CERTIFICATE
To: Bank of America National Trust
and Savings Association ("Bank")
Real Estate Industries Division No.__________
_____________________________________
_____________________________________
Attn: _______________________________
Re: Lease Dated: _________________________
Current Landlord: _________________________
Current Tenant: _________________________
Square Feet: Approximately ___________
Floor(s): _________________________
Located at: _________________________
_________________ ("Tenant") hereby certifies that as of __________ , 199_:
1. Tenant is the present owner and holder of the tenant's interest under
the lease described above, as it may be amended to date (the "Lease") with ____
as Landlord (who is called "Borrower" for the purposes of this Certificate).
(USE THE NEXT SENTENCE IF THE LANDLORD OR TENANT NAMED IN THE LEASE IS A
PREDECESSOR TO THE CURRENT LANDLORD OR TENANT.) [The original landlord under
the Lease was ______, and the original tenant under the Lease was _____.] The
Lease covers the premises commonly known as _____ (the "Premises") in the
building (the "Building") at the address set forth above.
(CHOOSE ONE OF THE FOLLOWING SECTION 2(a)s BELOW)
[2. (a) A true, correct and complete copy of the Lease (including all
modifications, amendments, supplements, side letters, addenda and riders of and
to it) is attached to this Certificate as Exhibit A.]
[2. (a) The attached Exhibit A accurately identifies the Lease and all
modifications, amendments, supplements, side letters, addenda and riders of and
to it.]
(b) (IF APPLICABLE) [The Lease provides that in addition to the
Premises, Tenant has the right to use or rent _____ [assigned/unassigned]
parking spaces near the Building or in the garage portion of the building
during the term of the Lease.]
(c) The term of the Lease commenced on _____, 199__ and will expire on
_____, _____, including any presently exercised option or renewal term. (CHOOSE
ONE OF THE FOLLOWING TWO SENTENCES.) [Tenant has no option or right to renew,
extend or cancel the Lease, or to lease additional space in the Premises or
Building, or to use any parking (IF APPLICABLE) [other than that specified in
Section 2(b) above].] [Except as specified in Paragraph(s) ____ of the Lease
(copy attached), Tenant has no option or right to renew, extend or cancel the
Lease, or to lease additional space in the Premises or
<PAGE> 33
Building, or to use any parking (IF APPLICABLE) [other than that specified in
Section 2(b) above].]
(CHOOSE ONE OF THE FOLLOWING SECTION 2(d)s)
[(d) Tenant has no option or preferential right to purchase all or any
part of the Premises (or the land of which the Premises are a part). Tenant has
no right or interest with respect to the Premises or the Building other than as
Tenant under the Lease.]
[(d) Except as specified in Paragraph(s) ____ of the Lease (copy
attached), Tenant has no option or preferential right to purchase all or any
part of the Premises (or the land of which the Premises are a part). Except
for the foregoing, Tenant has no right or interest with respect to the Premises
or the Building other than as Tenant under the Lease.]
(e) The annual minimum rent currently payable under the Lease is $____
and such rent has been paid through ____, 199__. (IF APPLICABLE). [The annual
percentage rent currently payable under the Lease is at the rate of ____ and
such rent has been paid through ____, 199__.]
(f) (IF APPLICABLE) [Additional rent is payable under the Lease for
(i) operating, maintenance or repair expenses, (ii) property taxes, (iii)
consumer price index cost of living adjustment, or (iv) percentage of gross
sales adjustments (i.e., adjustments made based on underpayments of percentage
rent). Such additional rent has been paid in accordance with Borrower's rendered
bills through ____199__. The base year amounts for additional rental items are
as follows: (1) operating, maintenance or repair expenses $____, (2) property
taxes $____, and (3) consumer price index ____ (please indicate base year CPI
level).]
(g) Tenant has made no agreement with Borrower or any agent,
representative or employee of Borrower concerning free rent, partial rent,
rebate of rental payments or any other similar rent concession (IF APPLICABLE)
[except as expressly set forth in Paragraph(s) ____ of the Lease (copy
attached)].
(h) Borrower currently holds a security deposit in the amount of $____
which is to be applied by Borrower or returned to Tenant in accordance with
paragraph(s) ____ of the Lease. Tenant acknowledges and agrees that Bank shall
have no responsibility or liability for any security deposit, except to the
extent that any security deposit shall have been actually received by Bank.
3. (a) The Lease constitutes the entire agreement between Tenant and
Borrower with respect to the Premises, has not been modified changed, altered
or amended and is in full force and effect in the form (CHOOSE ONE) [attached
as/described in] Exhibit A. There are not other agreements, written or oral,
which affect Tenant's occupancy of the Premises.
(b) All insurance required of Tenant under the Lease has been provided
by Tenant and all premiums have been paid.
(c) To the best knowledge of Tenant, no party is in default under the
Lease. To the best knowledge of Tenant, no event has occurred which, with the
giving of notice or passage of time, or both, would constitute such a default.
(d) The interest of Tenant in the Lease has not been assigned or
encumbered. Tenant is not entitled to any credit against any rent or other
charge or rent concession under the
<PAGE> 34
Lease except as set forth in the Lease. No rental payments have been made more
than one month in advance.
4. All contributions required to be paid by Borrower to date for
improvements to the Premises have been paid in full and all of Borrower's
obligations with respect to tenant improvements have been fully performed.
Tenant has accepted the Premises, subject to no conditions other than those set
forth in the Lease.
5. Neither Tenant nor any guarantor of Tenant's obligations under the
Lease is the subject of any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships.
6. (a) As used here, "Hazardous Substance" means any substance, material
or waste (including petroleum and petroleum products) which is designated,
classified or regulated as being "toxic" or "hazardous" or a "pollutant" or
which is similarly designated, classified or regulated, under any federal,
state or local law, regulation or ordinance.
(b) Tenant represents and warrants that it has not used, generated,
released, discharged, stored or disposed of any Hazardous Substances on, under,
in or about the Building or the land on which the Building is located (IF
APPLICABLE) [, OTHER THAN Hazardous Substances used in the ordinary and
commercially reasonable course of Tenant's business in compliance with all
applicable laws]. (IF APPLICABLE) [Except for such commercially reasonable use
by Tenant,] Tenant has no actual knowledge that any Hazardous Substance is
present, or has been used, generated, released, discharged, stored or disposed
of by any party, on, under, in or about such Building or land.
7. Tenant hereby acknowledges that borrower (CHOOSE ONE) intends to
encumber/has encumbered] the property containing the premises with a Deed of
Trust in favor of Bank. Tenant acknowledges the right of Borrower, Bank and
any and all of Borrower's present and future lenders to rely upon the
statements and representations of Tenant contained in this Certificate and
further acknowledges that any loan secured by any such Deed of Trust or further
deeds of trust will be made and entered into in material reliance on this
Certificate.
8. Tenant hereby agrees to furnish Bank with such other and further
estoppel as Bank may reasonably request.
------------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 1
EXHIBIT 10.15
L E A S E A G R E E M E N T
THIS LEASE made this 26 day of August, 1988, BETWEEN THE GUEVARA
CORPORATION, hereinafter sometimes called "Landlord", and GRIFFITH MICRO
SCIENCE, INC., hereinafter sometimes called "Tenant";
SECTION I. DEMISE OF PREMISES
That Landlord, having full authority to make the agreements hereinafter
set forth, for and in consideration of the covenants and agreements hereinafter
mentioned, to be kept and performed by both parties hereto, has demised and
leased to Tenant, the premises (hereinafter sometimes called the "demised
premises") in the County of Dona Ana, and State of New Mexico, and Tenant,
having full authority to rent, does hereby rent and lease said premises, known
and described as:
A portion of Section 24, Township 28 South, Range 2
East, New Mexico Principal Meridian, Dona Ana County,
New Mexico, containing 5.4181 acres, more or less, all
as more particularly described by metes and bounds
description attached hereto as Exhibit "A", and made a
part hereof for all purposes;
together with all easements, alleys, parking and loading rights, platforms,
docks, rights of ingress and egress, machinery, equipment, fixtures and
appurtenances now or hereafter belonging or appertaining to said premises; to
be occupied for the use of a manufacturing and industrial plant, or for any
other lawful purpose.
The location and dimensions of the demised premises are shown on the plat
hereto attached, marked "Exhibit "B", signed by the parties to this Lease and
hereby made a part hereof.
The parties hereto mutually agree as follows:
<PAGE> 2
SECTION II. EFFECTIVE DATE, TERM, CONSTRUCTION
2.01. Effective Date. The term of this Lease shall be ten (10) years,
commencing on the day that the Tenant initiates operation of the facility, but
in no event later than April 1, 1989, and ending on the 31st day of March,
1999.
2.02. Rent. Tenant, in consideration of said demise, does covenant and
agree with Landlord to pay as rent for said demised premises the sum of
Eighteen Thousand Nine Hundred Twenty-Five and No/100ths DOLLARS ($18,925.00),
in advance upon the first day of each and every month of the term hereof,
subject to adjustments as hereinafter set out. The rentals in this Lease
provided for shall be paid or mailed to: The Guevara Corporation, 745 Via
Mirada, El Paso, Texas, 79922, or to such other payee or address as Landlord
shall designate, in writing, to Tenant.
2.03. Construction of Premises. Landlord agrees, at Landlord's expense,
to commence by October 1, 1988, and prosecute with diligence the erection upon
the demised premises of a building and other improvements, all in accordance
with plans and specifications therefor (hereinafter referred to as "Plans")
which will be prepared at Landlord's expenses, under the supervision of
Landlord's architect. Such "Plans" shall be subject to the approval of both
Landlord and Tenant and, when approved, shall be signed by Landlord and Tenant
and made a part hereof by express reference thereto. At such time as said
"Plans" are approved by both parties hereto, Landlord shall furnish Tenant five
(5) complete sets thereof. The Tenant's approval of any "Plans" shall not
relieve Landlord of Landlord's obligations under this Lease or be construed as
an assumption by Tenant of such obligations. At any time or times prior to the
completion of said improvements, Tenant shall have the right to make minor
changes in said "Plans" by giving Landlord written notice, signed by Tenant's
Real Estate Manager, or his
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<PAGE> 3
nominee, of the changes desired by Tenant, provided such changes do not unduly
delay the making of said improvements or do not increase their cost. Similarly,
at any time or times prior to the completion of said improvements, Tenant shall
have the right to make such reasonable changes in said "Plans" and
"construction" by giving Landlord written notice, signed by Tenant's Real
Estate Manager, or his nominee, of the changes desired by Tenant, provided that
Tenant shall bear the cost and expense in making such changes and provided
further that Landlord shall have the right to reasonably extend the effective
date of the Lease. Within thirty (30) days after the commencement of the term
hereof, Landlord shall furnish Tenant two (2) complete sets of "Plans" showing
the building and all improvements "as built" on the demised premises, which
sets shall be signed by Landlord and Tenant and made a part hereof in lieu of
the "Plans" hereinabove provided to be signed and made a part hereof prior to
the commencement of construction of said improvements.
2.04. Commencement Date. Landlord agrees to commence construction within
ten (10) days of the date that (1) the Lease has been executed, (2) the plans
and specifications have been signed by the parties hereto, (3) all permits and
approvals necessary to approve the site for Tenant's intended use and for the
contemplated construction have been secured, and (4) the land which shall be
demised to Tenant has been acquired by Landlord. In the event the construction
of said building and improvements has not been commenced, through no fault of
Tenant, by the above mentioned date (October 1, 1988), then Tenant shall have
the right at any time within sixty (60) days after said date to cancel this
Lease, together with all of Tenant's obligations hereunder, by giving Landlord
written notice of such cancellation. In the event that commencement of
construction has been delayed because of actions or fault of Tenant, then the
above referenced date shall be extended by the number of days delay that are
caused by the action of Tenant.
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<PAGE> 4
2.05. Failure to Complete. In the event the erection of said building and
improvements has not been completed and the premises delivered to Tenant, as
herein provided on or before April 1, 1989, (date of delivery), through no
fault of Tenant, then Tenant shall have the right, at any time after said date,
until said building and improvements shall have been completed and the premises
so delivered to Tenant, to cancel this Lease, together with all of Tenant's
obligations hereunder, by giving Landlord written notice of such cancellation.
Provided, however, Landlord's failure to deliver the premises by April 1, 1989
is caused by actions or fault of Tenant, the date of delivery shall be extended
by the number of days delay that was caused by the actions or fault of the
Tenant.
2.06. Construction; Force Majeure. However, in the event Landlord's
failure to complete the erection of said building and improvements on or before
April 1, 1989, all as hereinabove provided in Paragraph 2.05, shall be on
account of delay occasioned by acts of God, accidents, strikes, floods,
inclement weather, fire or other casualty, or unavailability of labor or
necessary materials, said date or dates shall be extended by the period of such
delay.
2.07. Tenant's Right to Complete Construction. In the event said building
and improvements have not been completed, all as herein provided, and
possession delivered to Tenant on or before the date stipulated in Paragraph
2.05 or its extension in Paragraph 2.06 hereof, as the case may be, then Tenant
shall have the right, upon fifteen (15) days' written notice to Landlord, to
elect to take possession of the demised premises (without affecting the date of
the commencement of the term as specified in Paragraph 2.01 hereof), complete
the building and improvements in accordance with the "Plans", and recover
Tenant's cost and expense incurred thereby in the manner hereinafter provided.
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<PAGE> 5
2.08. Settlement of Disputes. In the event of any labor dispute in
connection with the erection of said building and/or improvements, Landlord
agrees to promptly adjust and settle the same in order to avoid unfavorable
publicity and unnecessary delay, in a manner mutually satisfactory to the
parties hereto. Landlord agrees that Landlord will, at its own expense, obtain
and maintain in companies and agencies approved by Tenant, public liability and
workmen's compensation insurance containing provisions and being in amounts
satisfactory to Tenant and adequate to fully protect Tenant as well as Landlord
from and against any and all liability for death or injury to person or damage
to property caused in or about or by reason of the erection of said building
and improvements. Landlord covenants that it shall cause Tenant to be named as
an additional insured in any of such policies of insurance. To the extent
possible, the additional insured shall read "Griffith Laboratories, Inc., its
affiliates and subsidiaries".
2.09. Compliance With Law. In the erection of said building and the
making of said improvements, Landlord shall conform to and comply with all
federal, state and local laws, ordinances, permits, rules and regulations
applicable to the demised premises.
2.10. Tenant's Right to Access. Landlord will permit Tenant, at Tenant's
option and without charge, to have access to said building during the progress
of construction, and before the commencement of the term hereof, for the
purpose of installing fixtures and equipment, storing, removing, and shipping
merchandise, supplies and equipment and otherwise making the premises ready for
Tenant's operations, but in so doing, Tenant shall not unreasonably interfere
with the completion of said building or improvements by Landlord. (It is
contemplated that Tenant shall have the right, after January 1, 1989, to
commence the installation of its fixtures and equipment.) During such times as
Tenant is so engaged, Landlord shall not be liable for any injury to person, or
damage to property, of Tenant's employees, licensees, or invitees from any
5
<PAGE> 6
cause whatsoever, occurring upon the demised premises, unless such injury or
damage be caused by negligence of Landlord, or of Landlord's employees, agents,
servants or contractors.
2.11. Delivery of Possession. Landlord covenants that Landlord will, on
or before the beginning of the term hereof, deliver possession of the demised
premises to Tenant in good condition and repair, ready for said occupancy, free
and clear of tenancies and occupancies, with all the improvements, additions,
alterations and repairs in this Lease provided to be made by Landlord fully
completed; and that in addition to making the improvements, additions,
alterations and repairs, if any, herein specifically provided for, Landlord
will, at its own expense, make such further additions, alterations and repairs
as may be necessary to make said demised premises and all fixtures, equipment
and appurtenances belonging to, in or about said demised premises (not
including, however, the fixtures, equipment and appurtenances of Tenant) comply
at the beginning and during the term hereof with the laws of said state,
ordinances of said city, and regulations applicable to said demised premises
and the uses thereof as aforesaid.
2.12. Delivery of Good Title. Landlord represents and warrants that
Landlord owns good title to the demised premises and all machinery, equipment
and fixtures, located therein (except the machinery, equipment and fixtures
belonging to Tenant) and that the same are now, and will be at the beginning
and during the term hereof, free and clear of all liens and encumbrances,
except the liens of current taxes not yet due or payable, and of any lien or
liens securing loan or loans now existing or hereafter placed thereon by
Landlord.
SECTION III. ADJUSTMENTS TO THE RENT
It is agreed that on the third, sixth and ninth anniversary of the
initial term, the monthly rent shall be adjusted upwards according to the
Consumer Price Index, all as more particularly
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<PAGE> 7
set out in the formula in Section 22.12. It is agreed and understood that in
no event shall any increase be greater than six percent (6%) for the preceding
adjustment period.
SECTION IV. QUIET ENJOYMENT
Subject to the provisions of Section XVII, Landlord covenants and agrees
that upon Tenant paying rent and performing all of the covenants and conditions
herein set forth, Tenant shall and may peaceably and quietly have, hold and
enjoy the premises hereby demised, for the term herein provided.
In the event the demised premises have not been delivered to Tenant at the
beginning of the term of this Lease, all as herein provided, then the covenants
and obligations of Tenant herein contained, including the covenants to pay
rent, shall abate until said premises are so delivered to Tenant.
SECTION V. OPTION
Provided Tenant is not in default hereunder, Tenant shall have four (4)
options to renew and/or extend the term of this Lease for five (5) years each
after the termination date of the initial term and the extended term, upon the
same terms and conditions as are provided herein, except that the monthly rent
payable by Tenant to Landlord during such renewal term shall be adjusted
upwards annually according to the Cost of Living Index, all as is more
particularly set out in the formula set out in Section 22.12. Said adjustment
shall be on the anniversary date of this Lease. Tenant shall, at least six (6)
months prior to the maturity date of this Lease or any extended term hereof,
give to Landlord written notice of its intention to exercise such option to
extend this Lease.
7
<PAGE> 8
SECTION VI. REPAIRS AND MAINTENANCE
6.01. Landlord's Obligation. Once the Tenant occupies the Premises,
subject only to the "punch list", with the exception of the roof as set out
below, Landlord shall have no obligation whatsoever for repairs, maintenance or
replacement, as this Lease is intended to be an absolutely net lease.
6.02. Landlord's Obligation. Landlord agrees that during the primary term
of this Lease (but not any extension thereafter), it shall repair and keep the
roof of the demised premises in good order, condition and repair, except that
Landlord shall not be required to make any such repairs which become necessary
or desirable by reason of the act or negligence of Tenant, its agents, officers
or employees. Tenant shall notify Landlord in writing immediately upon
discovery by it of any condition with respect to which Landlord is obligated to
repair. It is agreed that should Tenant exercise any option to extend this
Lease, it shall become responsible for the roof so that the Lease shall
thereafter become an absolute "net lease".
6.03. Tenant's Obligation. With the exception of Landlord's obligation to
maintain the roof during the primary term of this Lease, Tenant shall at all
times keep the Premises in good order, condition and repair, making
replacements thereof as may be necessary. All repairs, restorations and
replacements shall be of quality and class equal to the present installations
and shall be done in a good and workmanlike manner.
6.04. Landlord's Right to Make Repairs. Should Landlord be required to
make any repairs occasioned by Tenant's negligence or negligence on the part of
Tenant's officers, agents or employees or should Tenant neglect or refuse to
make repairs in accordance with Section 6.03 hereof, upon ten (10) days written
notice, Landlord may make such repairs without liability to Tenant for any loss
or damage that may accrue to Tenant's merchandise, fixtures or other
8
<PAGE> 9
property or to Tenant's business by reason thereof, and upon completion of such
repairs, Tenant shall pay to Landlord, Landlord's cost for the making of such
repairs plus fifteen percent (15%) thereof for overhead, upon presentation of
bills therefor, as additional rent. The receipted bills of mechanics or
contractors employed by Landlord showing the payment by Landlord for the making
of such repairs shall be prima facie evidence of the reasonableness of such
charges and that the same has been paid by Landlord.
6.05. Right of Access to Premises. Landlord or its agents shall have the
right to enter into the Premises at all reasonable hours and upon reasonable
notice to Tenant for the purpose of inspecting the same or for the purpose of
exhibiting the same to prospective tenants, purchasers or others. The exercise
of this right to enter the Premises shall not be deemed an eviction or
disturbance of Tenant's use of possession. Tenant will allow to have placed
"To Rent" and "For Sale" signs upon said premises within sixty (60) days prior
to the expiration of this Lease, and will not interfere with the same.
6.06. Surrender of the Premises. Upon the expiration of this Lease,
Tenant shall surrender the Premises in the same condition as it was in upon
delivery or possession thereof to Tenant, reasonable wear and tear and
unavoidable casualty excepted, and shall surrender all keys to the Premises to
Landlord at the place then fixed for the payment of rent.
SECTION VII. ALTERATIONS
Tenant shall have the right to make such alterations and improvements and
to install such electric, store and other fixtures and equipment, in or about
the demised premises, and to post or attach such signs on the interior and
exterior of said premises, or in the vicinity thereof, as Tenant may deem
desirable (provided, however, that Tenant shall not make any major alterations
affecting the structure of said building without the prior written consent of
Landlord). All signs
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<PAGE> 10
and all electric, store and other fixtures and equipment, which may be
installed, placed or attached in or about the demised premises by Tenant or any
assignee or subtenant of Tenant shall always remain the property of Tenant or
of the assignee or subtenant of Tenant so installing, placing or attaching the
same, and upon the termination by expiration of time or otherwise of this
Lease, or of any renewal thereof, or at any prior time or times, Tenant or such
assignee or subtenant of Tenant will, if it desires to do so, be permitted to
remove all or any of said signs, fixtures and equipment so installed, placed or
attached; provided, however, that any damage caused to the demised premises by
reason of such removal will be repaired by Tenant or its assignee or subtenant
so removing the same.
SECTION VIII. UTILITIES
Tenant hereby agrees to pay, in addition to the rents above specified, for
all electricity, gas and water used by it upon the demised premises.
SECTION IX. TAXES
In addition to the foregoing sums, Tenant shall, as further consideration
for this Lease, pay and discharge all taxes (including, without limitation, all
real estate, gross receipts and sales taxes), general and special assessments,
and other charges of every description which during the term of this Lease may
be levied on or assessed against the demised premises and all interest thereon
and all improvements and other property thereon, whether belonging to Landlord
or to Tenant, or to which either of them may become liable in relation thereto.
Nothing herein shall be construed to obligate the Tenant to pay any income tax
as defined by the Internal Revenue Code.
Tenant agrees to and shall protect and hold harmless Landlord and the
demised premises from liability for any and all such taxes, assessments and
charges, together with any interest,
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penalties or other sums thereby imposed, and from any sale or other proceedings
to enforce payment thereof.
During the term hereof, Tenant shall cause all taxes, assessments and
other charges levied on or imposed on any of its personal property situated in,
on or about the demised premises to be levied on or assessed separately from
the demised premises and not as a lien thereon.
All such taxes and assessments for the first and last years of this Lease
shall be prorated between Landlord and Tenant.
Tenant agrees to and shall pay all such foregoing taxes, assessments and
charges not less than twenty (20) days prior to the date of delinquency thereof
and give written notice of each such payment to Landlord within three (3) days
after such payment is made.
If Tenant fails to pay such taxes, assessments or charges, or fails to
give written notice of any payment thereof as herein provided at least twenty
(20) days prior to the time the same becomes delinquent, Landlord may, at its
option, at any time within or after such twenty (20) day period, pay such
taxes, assessments or charges, together with all penalties and interest which
may have been added thereto because of Tenant's delinquency or default, and may
likewise redeem the demised premises, or any part thereof, or the buildings or
improvements situated thereon, from any tax sale or sales. Any such amounts so
paid by Landlord shall become immediately due and payable as rent by Tenant to
Landlord, together with interest thereon at the rate of eighteen percent (18%)
per annum from the date of payment by Landlord until paid by Tenant. Any such
payment by Landlord shall not be deemed to be a waiver of any other rights
which Landlord may have under the provisions of this Lease or as provided by
law.
Tenant shall pay, prior to delinquency, all property taxes and assessments
on the furniture, fixtures, equipment and other property of Tenant at any time
situated on or installed in
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the demised premises. Nothing herein shall, however, prejudice the right of
Tenant to contest or challenge as to the size or propriety of amounts assessed.
SECTION X. INSURANCE
10.01. Tenant's Obligation. Tenant agrees that, at its own cost and
expense, it shall procure and continue in force throughout the term of this
Lease for the benefit of Landlord, Tenant and any mortgagee, general liability
insurance against any and all claims for injuries to persons or damage to
property occurring in, upon or about the demised premises, such insurance at
all times to be in an amount not less than One Million Dollars ($1,000,000.00)
for bodily injury or death arising out of any one occurrence and One Million
Dollars ($1,000,000.00) for property damage arising out of any one occurrence.
In this regard, Tenant shall name Landlord in its comprehensive general
liability insurance coverage which it procures for all of its operations.
Provided, however, that in the event the limits of such insurance are
increased, Landlord shall be included in any such increased coverage.
10.02. Indemnification of Landlord. Tenant hereby indemnifies and agrees
to hold Landlord harmless from any and all claims, actions, demands, liability
and expense in connection with loss of life, personal injury and/or damaged
property, and from any penalty or damage or charges imposed for any violation
of any laws or ordinances, arising from or out of any occurrence in, upon or at
the demised premises, or from or out of the use or occupancy by Tenant, or any
agent or concessionaire of Tenant, of the demised premises or any part thereof,
or from or out of any breach of this Lease by, or any act or omission of
Tenant, its agents, contractors, employees, servants, sublessees or
concessionaires. Provided further that the indemnity given herein shall not
apply to any claims actions, demands, liability and expenses which were caused
by the affirmative negligence of Landlord. In the event Landlord shall,
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without fault on its part, be made a party to any litigation commenced by or
against Tenant, then Tenant shall protect and hold Landlord harmless and pay
all costs and expenses incurred or paid by Landlord in connection with such
litigation. Tenant shall also pay all costs and expenses that may be incurred
or paid by Landlord in enforcing the covenants and agreements in this Lease.
Costs and expenses shall, in all cases, include reasonable attorney's fees and
other reasonable expenses incurred by Landlord in enforcing any of the
provisions of this Lease or in defending itself against any claim arising
hereunder.
10.03. Landlord's Nonliability. Neither Landlord nor Landlord's agents or
servants shall be liable, and Tenant waives all claims, for damage to persons
or property sustained by Tenant or any occupant of the demised premises or any
part thereof or any equipment or appurtenance becoming out of repair, or
resulting from any accident in or about the demised premises or resulting
directly or indirectly from any act or neglect of any tenant or occupant or of
any other person, including Landlord's agents and servants.
10.04. Property Insurance. Tenant shall, at its own expense, during the
term of this Lease, keep all buildings and structures on said premises insured
for the replacement cost, against loss or damage by fire, with extended
coverage, if obtainable, to include direct loss by windstorm, hail, explosion,
riot, or riot attending a strike, civil commotion, aircraft, vehicles, and
smoke in the aggregate amounts of not less than the full fair insurable value
thereof. Tenant shall be deemed to have complied with this condition by
providing a policy of eighty percent (80%) co-insurance in the amount set out
above, if and when available. Such policy or policies of insurance shall name
Landlord as an additional insured as its interest may appear and shall provide
that any loss shall be payable jointly to Landlord and Tenant pending election
on repair under Sections XIII and XIV and subject to the rights of any
mortgagee holding liens on the
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demised premises, which sum Landlord shall use for repair and restoration
purposes. In addition to same, Tenant shall carry business interruption
insurance equal to the amount of time needed to repair or restore the demised
premises.
10.05. Policy Requirements. All such policies of insurance shall be
written by insurance companies authorized to do business in the State of New
Mexico and shall be written in companies approved by Landlord, such approval
not to be unreasonably withheld. Certificates of insurance shall be delivered
to Landlord at least fifteen (15) days prior to the date Tenant takes
possession of the premises. Each such certificate shall contain (i) a
statement of the coverage provided by the policy; (ii) a statement of the
period during which the policy is in effect; and (iii) an agreement by the
insurance company issuing such policy that the policy will not be canceled or
reduced by the insurance company in any amount for any reason whatsoever
without at least ten (10) days prior written notice to Landlord.
10.06. Landlord's Right to Acquire Insurance. If Tenant does not maintain
such insurance in full force and effect, Landlord may notify Tenant of such
failure, and if Tenant does not deliver to Landlord within ten (10) days after
such notice certification showing all such insurance to be in full force and
effect, Landlord may, at its option, take out the necessary insurance to comply
with the provisions hereof and pay the premiums on the items specified in such
notice, and Tenant covenants thereupon on demand to reimburse and pay Landlord
any amount so paid or expended in the payment of the insurance premiums
required hereby and specified in the notice, with interest thereon at the rate
of eighteen percent (18%) per annum from the date of such payment by Landlord
until repaid by Tenant.
10.07. Waiver of Subrogation. Except as herein provided to the contrary,
Landlord and Tenant hereby release the other from any and all liability or
responsibility to the other or anyone
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claiming through or under them by way of subrogation or otherwise for any loss
or damage to property caused by fire or any of the extended coverage
casualties, even if such fire or other casualty shall have been caused by the
fault or negligence of the other party, or anyone for whom such party may be
responsible; provided, however, this release shall be applicable and in force
and effect only with respect to loss or damage occurring during such time as
the releaser's policy shall contain a clause or endorsement to the effect that
any such release shall not adversely affect or impair said policy or prejudice
the right of the releaser to cover thereunder.
SECTION XI. COMPLIANCE WITH LAWS AND REGULATIONS
Tenant shall not use or occupy or permit the demised premises to be used
or occupied, nor do or permit anything to be done in or on the demised
premises, in whole or in part, in a manner which would in any way violate any
certificate of occupancy affecting the demised premises, or make void or
voidable any insurance then in force with respect thereto, or which may make it
impossible to obtain fire or other insurance thereon required to be furnished
by Tenant hereunder, or as will cause or be apt to cause, structural injury to
the buildings or any part thereof, or as will constitute a public or private
nuisance.
During the term of this Lease, Tenant, at Tenant's sole cost and expense,
shall promptly comply with all present and future laws, ordinances, orders,
rules, regulations, and requirements of all federal, state, and municipal
governments, courts, departments, commissions, boards, and officers, any
national or local board of fire underwriters, or any other body exercising
functions similar to those of any of the foregoing, foreseen or unforeseen,
ordinary as well as extraordinary, which may be applicable to the demised
premises or any part thereof and the sidewalks, curbs, streets, and roads
adjoining the demised premises or to the use or manner of use of the demised
premises or the owners, tenants, or occupants thereof, even though such law,
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ordinance, rule, order, regulation, or requirement shall necessitate structural
changes, repairs or improvements, or the use or application of portions of the
demised premises for compliance therewith, or the removal of any encroachments
or projections, ornamental, structural or otherwise, unto or over the streets
adjacent to the demised premises, on, onto, or over other property contiguous
or adjacent thereto, and even though compliance with the provisions of this
section may interfere with the use and enjoyment of the demised premises.
Except as otherwise set forth herein, Tenant shall indemnify Landlord of
and from all fines, penalties, claims for damages of every kind and nature
arising out of Tenant's failure to comply with any such law, ordinance, order,
rule, regulation, or requirement, the intention of the parties being with
respect thereto that Tenant, during the term of this Lease, shall discharge and
perform all the obligation of Landlord with respect to the demised premises, as
well as all the obligations of Tenant, arising as aforesaid, and indemnify
Landlord therefrom, so that at all times the rental of the demised premises
shall be net to Landlord without deduction or expenses on account of any such
law, ordinance, rule, order, regulation, or requirement, whatever it may be.
SECTION XII. PARTIAL CASUALTY
In the event the demised premises are hereafter partially damaged or
destroyed or rendered partially unfit for their accustomed uses by fire or
explosion (except where caused by Tenant's negligence), or tornado, earthquake
or any casualty, then Landlord shall, at its own expense, promptly repair said
premises and restore the same to substantially the condition in which they were
immediately prior to the happening of such casualty, and from the date of such
casualty until said premises are so repaired and restored, rent shall abate in
such proportion as the part of said premises thus destroyed or rendered unfit
for such uses bears to the total premises herein demised.
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SECTION XIII. TOTAL CASUALTY
In the event the demised premises are hereafter destroyed or rendered
unfit for their accustomed uses by fire or explosion (except where caused by
Tenant's negligence), or tornado, earthquake, or any casualty, to the extent of
more than eighty percent (80%) (based on the cost to replace the premises
damaged or destroyed as compared with the market value of the improvements on
the demised premises immediately prior to such fire or other casualty, as shown
by the certificate of a reputable building contractor, satisfactory to both
Landlord and Tenant, or if no satisfactory building contractor be agreed upon
then a certificate of an architect who is a member of the local society of the
American Institute of Architects), and the insurance proceeds are insufficient
to replace the building or unavailable for a period of sixty (60) days or
longer, then Landlord shall have the right to terminate this Lease effective as
of the date of such casualty, by giving to the Tenant, within ninety (90) days
after the happening of such casualty, written notice of such termination; if
said notice be given within said ninety (90) day period, this Lease shall
terminate, as aforesaid, rent shall abate from the happening of such casualty,
and Landlord shall promptly repay to Tenant any rent theretofore paid in
advance which has not been earned at the date of such casualty. In the event
said notice be not given within said ninety (90) day period, this Lease shall
not terminate, but Landlord shall, at its own expense, promptly repair and
rebuild said premises and restore the same to substantially the condition in
which they were immediately prior to the happening of such casualty, and rent
shall abate from the date of such casualty until said premises are so repaired,
rebuilt and restored. Nothing herein shall, however, affect any rent received
by virtue of carrying business interruption insurance. Notwithstanding the
foregoing, should such damage occur within the last twenty-four (24) months of
the term of this Lease or should more than fifty percent (50%) of the total
ground floor area of the demised
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premises be damaged or destroyed by fire or other casualty, Landlord may
terminate this Lease by giving Tenant thirty (30) days written notice of its
election to do so, but such notice must be given within sixty (60) days
following the date of the casualty. Provided, however, Tenant shall have the
right to exercise any option to renew the Lease. In such event Landlord's right
to terminate shall become null and void. In the event of such termination,
rent and other charges under this Lease shall be prorated as to the date of
such casualty loss.
SECTION XIV. LANDLORD'S FAILURE TO REBUILD - TENANT'S RIGHTS
If Landlord fails to promptly repair, rebuild or restore the demised
premises, as herein provided in either Section XII or Section XIII, then Tenant
shall have the right to terminate this Lease by giving Landlord thirty (30)
days' written notice of such termination; or Tenant, at its sole option, after
written notice to Landlord, may repair, rebuild or restore said premises, and
if it does so, it shall have the right to collect directly from the insurance
companies and use for that purpose all or so much as may be necessary of the
insurance on the demised premises payable by reason of such damage or
destruction.
Notwithstanding any other provision in this Lease to the contrary,
Landlord shall not be liable to Tenant for any damage to the property of Tenant
or of others located on or in the demised premises, nor for the loss or damage
to any property of Tenant or others by theft or otherwise. Excepting only
those obligations expressly assumed by Landlord in this Lease, Landlord shall
not be liable for any injury or damage to persons or property resulting from
fire, explosion, falling plaster, gas, electricity, plumbing, heating or air
conditioning, water, rain, snow, leaks from any part of the demised premises or
from the pipes, appliances or plumbing works or from the roof, street or
subsurface of any other place or by dampness, or by any other cause of
whatsoever nature. Landlord shall not be liable for any latent defect in the
demised
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premises or in the building of which they form a part. All property of
Tenant kept or stored on the demised premises shall be so kept or stored at the
risk of Tenant only, and Tenant shall hold Landlord harmless from any claims
arising out of damage to the same, including subrogation claims by Tenant's
insurance carrier, unless such damage shall be caused by a willful act or gross
negligence of Landlord.
SECTION XV. SUBORDINATION AND ATTORNMENT
15.01. Subordination. All of the rights of Tenant hereunder are and shall
be subject and subordinate to the lien of any mortgage or mortgages now or
hereafter placed on the premises or any part thereof and to any and all
renewals, modifications, consolidations, replacements and extensions or
substitutions of any such mortgage or mortgages; provided, however, in
negotiating any new mortgage, Landlord shall obtain a provision to the effect
that so long as Tenant is not in default under this Lease, no foreclosure of
the lien of said mortgage or any other proceeding in respect thereof shall
divest, impair, modify, abrogate, or otherwise adversely affect any interest or
rights whatsoever of Tenant under this Lease. This section shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of such subordination, Tenant agrees to promptly execute and
deliver any instrument that the holder of any such mortgage may request to
evidence such subordination, and Tenant irrevocably appoints Landlord the
attorney-in-fact of Tenant to execute and deliver such instrument on behalf of
Tenant, should Tenant refuse or fail to do so promptly after request. Tenant
further agrees to provide at least annually to Landlord and mortgagee an annual
financial statement and statement of profit and loss. Provided, however, that
such parties agree to execute the usual agreement of non-disclosure reasonably
required by Tenant.
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15.02. Attornment. If the interest of Landlord under this Lease shall be
transferred by reason of foreclosure or other proceeding for enforcement of the
mortgage(s), Tenant shall be bound to the purchaser under all the terms,
covenants and conditions of this Lease for the balance of the term thereof,
with the same force and effect as if the purchaser were Landlord under this
Lease, and Tenant does hereby attorn to the purchaser, including any mortgagee
if it be the purchaser, as its Landlord, said attornment to be effective and
self-operative without the execution of any further instrument upon purchaser's
succeeding to the interest of Landlord under this Lease. The respective rights
and obligations of Tenant and purchaser upon such attornment, to the extent of
the then remaining balance of the term of this Lease and any such extensions
and renewals, shall be and are the same as now set forth herein.
SECTION XVI. EMINENT DOMAIN
16.01. Condemnation Award. In the event the demised premises, or any part
thereof, or if any part of the land described in Exhibit "A", shall be taken or
damaged by eminent domain or similar proceedings, the entire condemnation award
or awards shall belong to Landlord, except that Tenant shall be entitled to the
portion of any award, if any, allocated to the taking of or damage to Tenant's
alterations, improvements, fixtures and equipment. Tenant shall not have any
claim for the value of its unexpired lease. Tenant hereby expressly waives any
claim to any part of the condemnation award except as provided herein.
16.02. Right to Terminate. In the event more than ten percent (10%) of
the ground floor area in the demised premises shall be so taken or condemned,
then either Tenant or Landlord shall have the option of terminating this Lease
upon giving the other party written notice of such election within thirty (30)
days after possession of the part condemned has been taken by authorities
exercising jurisdiction, whereupon the term of this Lease shall be terminated
as of the
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date on which possession is so taken. Likewise, if after such taking
the parking area in the demised premises is less than what is sufficient for
parking for the demised premises, then either tenant or Landlord shall have the
option of terminating this Lease as above provided. If no election to
terminate is made, Landlord, at its own expense, shall repair and restore the
demised premises or the leasable ground floor area of the demised premises not
affected by the taking and the rent shall be proportionately reduced in the
same proportion that the square footage in the demised premises after such
taking bears to the square footage in the demised premises prior to the taking.
Any taking or condemnation of the demised premises which does not diminish the
area of leased (constructed improvements) premises shall not result in any
reduction or diminution of the rental payable hereunder unless the Lease is
terminated as provided above.
SECTION XVII. DEFAULT
17.01. Events of Default. It shall be an event of default by Tenant
hereunder if (a) Tenant shall fail to pay rent or other sums agreed to be paid
by Tenant to Landlord as herein required; or (b) Tenant shall fail to observe
or perform any of its obligations hereunder; or (c) at any time during the term
of this Lease or any extensions of the term of this Lease (i) the occupant of
the demised premises, whether it be Tenant, Tenant's assignee or subtenant of
the whole premises or any guarantor of this Lease, shall file in any court a
petition in bankruptcy or insolvency or for reorganization or for arrangement
within the meaning of Chapter XI of said Bankruptcy Act (or for reorganization
or arrangement under any future bankruptcy act for the same or similar relief),
or for the appointment of a receiver or trustee of all or a portion of such
occupant's or guarantor's property, or (ii) an involuntary petition of the kind
referred to in the preceding subdivision (i) of this subsection shall be filed
against such occupant or guarantor, and such petition shall not be vacated or
withdrawn within sixty (60) days after the date of filing
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thereof, or (iii) if the occupant or guarantor shall make an assignment for the
benefit of creditors, or (iv) if such occupant or guarantor shall be
adjudicated a bankrupt, or (v) a receiver shall be appointed for the property
of such occupant or guarantor by order of a court of competent jurisdiction
(except where such receiver shall be appointed in an involuntary proceeding, if
he shall be withdrawn within sixty (60) days from the date of his appointment).
17.02. Landlord's Remedies. Upon the occurrence of an event of default
enumerated in subsection (a) or (b) of Section 17.01 above, should such default
remain uncured after thirty (30) days written notice of default, or ten (10)
days in the case of nonpayment of rent or any other sums due hereunder,
Landlord may at once thereafter or at any time subsequent during the existence
of such breach or default, enter into and upon the demised premises or any part
thereof and repossess the same, expelling and removing therefrom all persons
and property (which property may be removed and stored at the cost and for the
account of Landlord), using such force as may be reasonably necessary, and
either (i) terminate this Lease, holding Tenant liable for damages for its
breach, or (ii) without terminating this Lease, relet the demised premises or
any part thereof upon such terms and conditions as appear advisable to
Landlord. If Landlord shall proceed in accordance with the last mentioned
alternative (ii), should the net amount received from reletting the premises
during any month or part thereof be less than the rent due and owing from
Tenant during such month or part thereof under the terms of this Lease, Tenant
shall pay such deficiency immediately upon calculation thereof and demand
therefor by Landlord. Upon the occurrence of an event of default enumerated in
subsection (c) of Section 17.01 above, Landlord may, if Landlord so elects, at
anytime thereafter terminate this Lease and the term hereof by notice in
writing to Tenant and occupant of Landlord's intention so to do, and
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this Lease and the term hereof shall expire and come to an end on the date
fixed in such notice as if said date were the date originally fixed in this
Lease for the expiration hereof.
Notwithstanding the foregoing, any event of default enumerated in Section
17.01(b), the curing of which shall actually require more than thirty (30) days
because of any cause beyond Tenant's control, shall be deemed cured by Tenant
if Tenant shall have commenced to cure said default within the thirty (30) day
period and shall thereafter have successfully prosecuted the curation of said
default with due diligence.
17.03. Landlord's Right to Cure. If Tenant shall be in default in the
performance of the covenants herein contained, Landlord shall have the right to
make any payment or perform any act required of Tenant under any provision of
this Lease, and, in exercising such rights, to incur necessary and incidental
costs and expenses, including attorney's fees. All payments made and all costs
and expenses incurred by Landlord in connection with any exercise of such
right, together with interest thereon at the highest rate permissible by law
from the respective dates of the making of such payments or the incurring of
such costs and expenses, shall be reimbursed by Tenant immediately upon demand.
Notwithstanding the foregoing, nothing herein shall imply any obligation on
the part of Landlord to make any payment or perform any act required of Tenant.
17.04. Contractual Lien. It is expressly agreed that in the event of
default by Tenant hereunder, Landlord shall have a lien upon all goods,
chattels or personal property of any description belonging to Tenant which are
placed in, or become a part of, the demised premises, as security for rent and
other sums due and to become due for the remainder of the lease term, which
lien shall not be in lieu of or in any way affect the statutory landlord's lien
given by law, but shall be cumulative thereto; and Tenant hereby grants to
Landlord a security interest in all
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such personal property placed in said demised premises for such purposes. This
shall not prevent the sale by Tenant of any merchandise in the ordinary course
of business free of such lien to Landlord. In the event Landlord exercises the
option to terminate the leasehold, reenter and relet the premises as provided
in Section 17.01, then Landlord may sell the same at public or private sale
without notice to Tenant, for cash or on credit, or for such prices and terms
as Landlord deems best, with or without having the property present at such
sale. The proceeds of such sale shall be applied first to the necessary and
proper expenses of removing, storing and selling such property then to the
payment of any rent due or to become due under this Lease with the balance, if
any, to be paid to Tenant.
17.05 Remedies Cumulative. All rights and remedies of Landlord herein
enumerated shall be cumulative and none shall exclude any other right or remedy
allowed by law. Likewise, the exercise by Landlord of any remedy provided for
herein or allowed by law shall not be to the exclusion of any other remedy.
SECTION XVIII. ASSIGNMENT; SUBLETTING
18.01. Tenant shall not, during the term of this Lease, directly or
indirectly assign, transfer, pledge, sell, or otherwise encumber all or any
part of the premises leased or Tenant's leasehold estate hereunder, or sublet
the demised premises or any portion thereof or permit anyone other than Tenant
to occupy such presses without the Landlord's prior written consent. Tenant
may, with the written consent of Landlord, which consent shall not be
unreasonably withheld, assign this Lease in whole or in part to any affiliated
entity of Tenant.
18.02. In the event Tenant desires to assign, transfer, encumber,
sublease, or permit anyone other than Tenant to occupy the demised premises, it
must first given written notice to Landlord of its desire to do so. The
written notice must contain the following: name of proposed assignee,
transferee, subtenant, or occupant; nature of proposed
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assignee's, transferee's, subtenant's, or occupant's business or undertaking to
be carried on in the demised premises; financial information and credit history
of the proposed assignee, transferee, subtenant, or occupant; and the terms and
conditions of the proposed assignment, transfer, sublease, or occupancy. A copy
of the proposed agreement concerning the assignment, transfer, sublease, or
occupancy must be attached.
18.03. The Landlord shall have a period of thirty (30) days from receipt
of Tenant's notice within which to decide on such assignment, transfer,
sublease or occupancy. Landlord's consent shall not be unreasonably withheld,
provided that the assignee, transferee, subtenant, or occupant appears to be
financially responsible and the purpose for which the premises are to be used
shall not be materially different from that provided for in the original
contract of lease. The consent by the Landlord to an assignment, transfer,
sublease, or occupancy by the persons specified in the Tenant's notice shall
not relieve Tenant from obtaining the Landlord's written consent to an
assignment, transfer, sublease or occupancy by any other person not named in
such notice. Consent by the Landlord to any assignment, transfer, sublease, or
occupancy by another person shall not relieve the Tenant of any of its
obligations under this Lease.
18.04. Any assignment, transfer, sublease or occupancy by a person other
than the Tenant in violation of the term of this Lease shall be void from the
beginning, and, at Landlord's option, may be treated as a material default by
the Tenant, entitling the Landlord to terminate the Lease and/or to pursue any
other legal remedies. Acceptance by the Landlord of rent from the assignee,
transferee, subtenant, or occupant shall not be deemed to constitute consent by
the Landlord to the assignment, transfer, sublease, or occupancy by another nor
as a waiver of Landlord's rights to terminate the Lease and/or pursue its other
legal remedies.
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18.05 The assignee, transferee, subtenant or other person permitted by the
Tenant to occupy the demised premises shall assume all the obligations of the
Tenant under this Lease, and shall be liable jointly and severally with the
Tenant for the payment of rent and the performance of the terms and conditions
of this Lease.
18.06 The Tenant shall deliver to the Landlord a copy of the assignment,
transfer, agreement, sublease, or other instrument permitting another person to
occupy the demised premises. The instrument must be in a form recordable in
the appropriate registry of property, and contain an agreement whereby the
assignee, transferee, subtenant, or occupant assumes the rights and obligations
of the Tenant to the demised premises, in such form as shall be acceptable by
Landlord. No such assignment, transfer, sublease, or occupancy shall be valid
as against Landlord until the relevant document is registered in the registry
of property. The failure or refusal of the assignee, transferee, subtenant, or
person permitted to occupy the demised premises to execute such instrument of
assumption shall not release or discharge it from liability as set forth in
this agreement.
18.07. If the Tenant is a corporation, the transfer of a majority of the
voting stock, whether by sale, consolidation, merger, reorganization, or any
other cause, or if the Tenant is a partnership, the sale or transfer of a
majority of the partnership interest, shall be deemed an assignment for
purposes of this Lease.
18.08. Landlord's Right to Assign. Landlord may (a) assign, in whole or
in part, Landlord's interest in this Lease; and (b) sell all or part of the
demised premises.
SECTION XIX. NOTICES
19.01. Notice of Landlord's Default. Notwithstanding anything to the
contrary in this Lease, Landlord shall not be in default under any provision of
this Lease unless written notice
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specifying such default is mailed to Landlord and to all mortgagees and/or
trust deed holders of which Tenant has, prior to such notice, been notified in
writing. Tenant agrees that any such mortgagee or trust deed holder shall have
the right to cure such default on behalf of Landlord within thirty (30) days
after receipt of such notice. Tenant further agrees not to invoke any remedy
for such default until said thirty (30) day period has elapsed or during any
period in which such mortgagee or trust deed holder is proceeding to cure such
default with due diligence, or is taking steps with due diligence to obtain
legal title to the demised premises and to cure the default.
19.02. Notices. All notices provided to be given under this Agreement
shall be given by certified mail or registered mail, postage prepaid, addressed
to the proper party, at the following addresses:
Landlord: The Guevara Corporation
c/o Andrew R. Guevara
745 Via Mirada
El Paso, Texas 79922
Tenant: Griffith Micro Science, Inc.
7775 Quincy Street
Willowbrook, Illinois 60521
The address of either party hereinabove set forth may be changed from time
to time by giving written notice to that effect.
19.03 Payments. All payments required to be made hereunder shall be made
at the appropriate address hereinabove or to such other address as either of
the parties may from time to time specify.
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SECTION XX. SURRENDER UPON TERMINATION; HOLDING OVER
20.01. Surrender. Upon the expiration or sooner termination of this
Lease, Tenant, at its sole expense, shall remove from the premises all
merchandise, furniture, furnishings, equipment and other personal property
belonging to it not affixed or attached to any part of the premises and shall
quietly and peaceably surrender possession of the premises in good order and
repair and in a clean and sanitary condition, reasonable wear and tear and
damage by fire, other casualty or the elements excepted. Tenant shall, at its
expense, repair any damage to the premises caused by such removal.
20.02. Holding Over. There shall not be any holding over by Tenant or any
assignee or subtenant beyond the expiration or sooner termination of the term
of this Lease; if, nevertheless, there be a holding over by Tenant or any
assignee or sub-tenant, such shall give rise to a month-to-month tenancy upon
the same terms and conditions as herein provided with rent for the period of
such holding over to be twice the minimum monthly installment of rent last paid
by Tenant during the term of this Lease.
SECTION XXI. OPTION TO PURCHASE
Tenant shall have the option to purchase the demised premises from
Landlord at any time after the fifth (5th) anniversary of this Lease. Tenant
shall provide Landlord six (6) months written notice of the exercise of the
option to purchase by Tenant and the notice shall be accompanied by Ten
Thousand Dollars ($10,000.00) as a partial payment of the purchase price. The
balance of the purchase price shall be paid by Tenant to Landlord at the time
of the transfer of title to the premises. Landlord shall transfer title to the
demised premises to Tenant by General Warranty Deed, free and clear of all
liens and encumbrances, except for easements, restrictions, and reservations of
record and running with the land and to taxes for the then current
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year. The purchase price shall be the fair market value of the property as
determined by appraisal plus any tax liability incurred by Landlord because of
such exercise of the option to purchase. Provided, however, if the option to
purchase shall be exercised after the tenth (10th) anniversary of this Lease,
the purchase price shall be only the fair market value of the property as
determined by appraisal. In this regard, each of the parties shall select an
appraiser who is a member of the American Institute of Appraisers and
experienced in valuing property similar to the demised premises within thirty
(30) days after receipt by Landlord of said written notice by Tenant. If
either party fails to name an appraiser within the specified time, the other
party may select the second appraiser. The two appraisers selected shall
proceed promptly to determine the fair market value of the demised premises.
The determination of such fair market value by the two appraisers, selected as
hereinabove provided, shall be final and binding upon the parties hereto; and
if the two appraisers so selected are unable to agree upon such fair market
value, said two appraisers shall select a third appraiser (who shall also be a
member of the American Institute of Appraisers and experienced in valuing
property similar to the demised premises), whose determination as to such fair
market value shall be averaged with the appraisals of the other two appraisers,
and the average of the three appraisals shall be conclusive evidence as to such
fair market value and shall be final and binding upon both parties. The
appraisers shall deliver a written report of their appraisal to both parties.
Each party shall pay the fees and expenses of the appraiser selected by or on
behalf of such party, and, if a third appraiser is selected, the fees and
expenses of the third appraiser shall be borne equally by the parties.
SECTION XXII. MISCELLANEOUS
22.01. Paragraph Headings. The paragraph titles herein are for
convenience only and do not define, limit or construe the contents of such
paragraphs.
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<PAGE> 30
22.02. Binding Effect. The covenants, agreements and obligations herein
contained shall extend to, bind and inure to the benefit not only of the
parties hereto but their successors and assigns.
22.03. Gender and Interpretation of Terms and Provisions. As used in this
Lease and whenever required by the context thereof, each number, both singular
or plural, shall include all numbers, and each gender shall include all
genders. Tenant and Landlord as used in this Lease or in any other instrument
referred to in, or made a part of this, shall likewise include both the
singular and the plural, a corporation, partnership, individual or person
acting in any fiduciary capacity as executor, administrator, trustee or in any
other representative capacity. All covenants herein contained on the part of
Tenant shall be joint and several.
22.04. Condition of Premises. Tenant agrees that its acceptance of the
demised premises evidenced by Tenant's entry and the possession thereof shall
constitute unqualified proof that the demised premises are, as of the date of
commencement of Tenant's occupancy thereof, in a tenantable and good condition.
22.05. Law Governing. The laws of the State of New Mexico shall govern
the validity, performance and enforcement of this Lease. Jurisdiction for any
legal action shall be in Dona Ana County, New Mexico.
22.06. Estoppel Letters. During the term of this Lease, Tenant agrees
upon request in writing from Landlord to execute, acknowledge and deliver to
Landlord a statement in writing certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications) and the dates
to which minimum rent, percentage rent and other charges have been paid. It is
understood and agreed that any such statement may be relied upon by any
prospective purchaser
30
<PAGE> 31
of the fee or any leasehold or the mortgagee, beneficiary or grantee of any
security interest, or any assignee of any thereof, under any mortgage or deed
of trust now or hereafter made covering the fee or any leasehold interest in
the demised premises or the real property covered by this Lease.
22.07. Attorney's Fees. If it shall become necessary for either of the
parties hereto to employ an attorney to enforce or defend any rights or
remedies hereunder, and should such party prevail, such party shall be entitled
to reasonable attorney's fees, court costs and other expenses incurred in such
connection.
22.08. Waiver. One or more waivers of any covenant, term or condition of
this Lease by either party shall not be construed by the other party as a
waiver of any subsequent breach of the same covenant, term or condition. The
consent or approval of either party to or of any act by the other party of a
nature requiring consent or approval shall not be deemed to waive or render
unnecessary consent to or approval of any subsequent similar act.
22.09. Severability. Every provision of this Lease is intended to be
severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Lease.
22.10. Force Majeure. Excepting only those provisions of this Lease
dealing with the right to terminate the Lease upon inability to deliver the
premises to Tenant and those specifically contemplating acts of God,
governmental, etc. (e.g., casualty, condemnation, etc.), neither Landlord nor
Tenant shall be required to perform any term, condition or covenant in this
Lease so long as such performance is delayed or prevented by force majeure.
22.11. Entire Agreement; Amendment. This Lease shall constitute the
entire understanding of the parties hereto with respect to the subject matter
hereof and no amendment,
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<PAGE> 32
modification or alteration of the terms hereof shall be binding unless the same
be in writing, dated subsequent to the date hereof and duly executed by the
parties hereto.
22.12. Adjustments in Rent. If the rent is subject to an adjustment as
set out in Section III of this Lease, or if Tenant exercises any option(s) to
extend this Lease, the minimum rent during such additional term(s) shall be
one-twelfth (1/12th) of an amount determined by multiplying the annual minimum
rent set forth in Section 2.02 of this Lease by the Cost of Living Index Number
in effect at the beginning of the applicable term and then dividing said figure
by the Index Number in effect on the Commencement Date of the Lease. For
example, assume that the Lease commences on the first day of June, 1975; that
the annual rent payable under Section 2.02 of this Lease is $24,000.00; that
the Cost of Living Index on the first day of June, 1975 is 135.0; and that the
Cost of Living Index on the first day of the first month of said renewal or
adjustment term is 155.0, then the annual adjusted rent during such renewal or
adjustment term of this Lease commencing on the first day of the first month of
such renewal or adjustment term would be $24,000.00 x 155.0 divided by 135.0
which equals $27,555.56. Therefore, the minimum rent due monthly would be
1/12th of that figure, which would be $2,296.30.
The Cost of Living Index Numbers to be used shall be the ones in effect at
the applicable date defined at the "U. S. Department of Labor, Bureau of Labor
Statistics, Consumer Price Index For All Items for Urban Wage Earners and
Clerical Workers" unadjusted for seasonal variations. The index base shall be
"1967 = 100" or such later base as may be adopted by the Bureau of Labor
Statistics so long as the base used for the respective dates is the same or
made so by proper adjustment. These index numbers are presently published in
Federal Reserve Bulletin Table A68, Column 1, "All Items".
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It is the intention of the parties that the minimum rent shall be adjusted
upward at the stated interval in the event of an increase in such Consumer
Price Index or an equivalent increase figure in the event of a reevaluation or
revision of said Index. If the Department of Labor ceases publication of said
Consumer Price Index, then another index generally accepted as authoritative
shall be established by agreement. Should the parties fail to agree, then upon
request of either party the then presiding Judge of the Judicial District Court
of Dona Ana County, New Mexico, shall select another comparable index to be
used and the substituted index so selected shall be binding on all the parties.
In no event, however, shall the monthly rent set forth in Section 2.02 of
the Lease be decreased below the sum therein specified, regardless of whether
the index number at the commencement of the renewal or adjustment term be less
than the index number on the effective date of the Lease.
22.13. Memorandum of Lease. The parties hereto agree to execute a
Memorandum of Lease to be duly executed and filed of record in the form and
content mutually satisfactory to the parties.
Section XXIII. FIRST RIGHT OF REFUSAL AND OPTION ON
CONTIGUOUS PROPERTY
23.01. Description. Landlord has acquired on behalf of itself and the
Tenant a first right of refusal and an option to purchase approximately 2.2
acres of land contiguous to the demised premises (the "Parcel") as shown on
Exhibit C according to the terms and conditions set forth hereinafter. From
the northeasterly corner of the demised premises, the dimensions of the Parcel
run easterly 75 feet, southerly 688 feet, westerly 517.98 feet, northerly 100
feet, easterly 442.98 feet and northerly 588 feet to the point of beginning, a
total of approximately 95,898 square feet.
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<PAGE> 34
23.02. First Right of Refusal. From the date hereof and through the
initial term of this Lease, Tenant, through the Landlord, shall have the right
to purchase the Parcel upon the same terms and conditions of any bona fide
offer received by the owner of the Parcel, such right to be exercised by Tenant
within thirty days' receipt from the owner of notice of the offer. This right
shall run with this Lease.
23.03. Option to Purchase. For a period of six years from the date
hereof, the Tenant, through the Landlord, shall have the option to purchase the
Parcel at a purchase price of one dollar per square foot. Tenant shall pay to
Landlord $0.07 per square foot (approximately $6,710.00) annually in arrears
for this option until the option is exercised, released or expires, whichever
occurs earlier. This option shall run with this Lease.
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<PAGE> 35
IN WITNESS WHEREOF, the undersigned Tenant and Landlord have executed this
Agreement as of the day and year first above written.
THE GUEVARA CORPORATION
By: /s/ Andrew R. Guevara
-----------------------------------
Andrew R. Guevara, President
"LANDLORD"
GRIFFITH MICRO SCIENCE, INC.
By: /s/ William C. Dow
-----------------------------------
William C. Dow, President
"TENANT"
35
<PAGE> 36
EXHIBIT "A"
The parcel of land herein described is a portion of Section 24, Township 28
South, Range 2 East, New Mexico Principal Meridian, Dona Ana County, New Mexico
and is more particularly described by metes and bounds as follows:
Commencing at found brass cap lying at the quarter corner common to Sections 13
and 24, Township 28 South, Range 2 East, New Mexico Principal Meridian; Thence,
South 44 degrees 18' 45" East, a distance of 1768.76 feet to a point lying on
the southerly right-of-way line of Airport Road, said point being the TRUE POINT
OF BEGINNING of this description;
THENCE, 388.00 feet along said right-of-way line and along the arc of a curve to
the left, having a radius of 2886.76 feet, a central angle of 07 degrees 42' 03"
and a chord which bears South 63 degrees 13' 17" East, a distance of 387.71
feet;
THENCE, South 32 degrees 06' 18" West, a distance of 588.00 feet;
THENCE, North 57 degrees 53' 42" West, a distance of 442.98 feet to a point
lying on the easterly right-of-way line of Foamex Drive;
THENCE, 402.90 feet along said right-of-way line and along the arc of a curve to
the left, having a radius of 2485.17 feet, a central angle of 09 degrees 17' 20"
and a chord which bears North 36 degrees 44' 58" East, a distance of 402.46
feet;
THENCE, North 32 degrees 06' 18" East, continuing along said right-of-way line,
a distance of 125.88 feet;
THENCE, 38.63 feet along the arc of a curve to the right, having a radius of
25.00 feet, a central angle of 88 degrees 31' 27" and a chord which bears North
76 degrees 22' 01" East, a distance of 34.90 feet to the TRUE POINT OF BEGINNING
of this description.
<PAGE> 37
EXHIBIT "B"
[Site Plan]
<PAGE> 38
ADDENDUM TO LEASE
This Addendum to Lease Agreement dated August 26, 1988, entered into by
and between THE GUEVARA CORPORATION, as "Landlord", and GRIFFITH MICRO SCIENCE,
INC., as "Tenant", for the lease of that certain property located in the County
of Dona Ana, State of New Mexico, and described as follows:
A portion of Section 24, Township 28 South, Range 2 East, New
Mexico Principal Meridian, Dona Ana County, New Mexico, containing
5.4181 acres, more or less, all as more particularly described by
metes and bounds description attached hereto as Exhibit "A", and
made a part hereof for all purposes.
For value, the parties hereby desire to amend said Lease Agreement as
follows:
1. That Section 23.01 of said Lease Agreement is hereby amended as
follows:
That the land on which Landlord has acquired on behalf of itself
and the Tenant a first right of refusal and an option to purchase
is that certain parcel of land described in Exhibit "B" attached
hereto and made a part hereof for all purposes.
2. That Section 23.03 of said Lease Agreement is hereby amended to delete
the words "(approximately $6,710.00)" from said paragraph, and the following
substituted therefor: "($6,808.50)".
3. All other terms and conditions of said Lease Agreement, unless amended
hereby, shall remain in full force and effect.
<PAGE> 39
DATED the 22nd day of September,
1988.
THE GUEVARA CORPORATION
By: /s/ Andrew R. Guevara
-----------------------------------
Andrew R. Guevara, President
"LANDLORD"
GRIFFITH MICRO SCIENCE, INC.
By: /s/ Will Dow
-----------------------------------
, President
------------------
"TENANT"
<PAGE> 40
EXHIBIT "A"
The parcel of land herein described is a portion of Section 24, Township 28
South, Range 2 East, New Mexico Principal Meridian, Dona Ana County, New Mexico
and is more particularly described by metes and bounds as follows:
Commencing at found brass cap lying at the quarter corner common to Sections 13
and 24, Township 28 South, Range 2 East, New Mexico Principal Meridian; Thence,
South 44 degrees 18' 45" East, a distance of 1768.76 feet to a point lying on
the southerly right-of-way line of Airport Road, said point being the TRUE POINT
OF BEGINNING of this description;
THENCE, 388.00 feet along said right-of-way line and along the arc of a curve to
the left, having a radius of 2886.76 feet, a central angle of 07 degrees 42' 03"
and a chord which bears South 63 degrees 13' 17" East, a distance of 387.71
feet;
THENCE, South 32 degrees 06' 18" West, a distance of 588.00 feet;
THENCE, North 57 degrees 53' 42" West, a distance of 442.98 feet to a point
lying on the easterly right-of-way line of Foamex Drive;
THENCE, 402.90 feet along said right-of-way line and along the arc of a curve to
the left, having a radius of 2485.17 feet, a central angle of 09 degrees 17' 20"
and a chord which bears North 36 degrees 44' 58" East, a distance of 402.46
feet;
THENCE, North 32 degrees 06' 18" East, continuing along said right-of-way line,
a distance of 125.88 feet;
THENCE, 38.63 feet along the arc of a curve to the right, having a radius of
25.00 feet, a central angle of 88 degrees 31' 27" and a chord which bears North
76 degrees 22' 01" East, a distance of 34.90 feet to the TRUE POINT OF BEGINNING
of this description.
<PAGE> 41
EXHIBIT "B"
2.23288-Acre Parcel
Within
Section 24
Township 28 South, Range 2 East
New Mexico Principal Meridian
Dona Ana County, New Mexico
A certain parcel of land comprising a portion of Section 24, Township 28
South, Range 2 East, New Mexico Principal Meridian, Dona Ana County, New
Mexico, which is more particularly described by metes and bounds as follows:
Beginning at the most northerly corner of the parcel herein described at a
point on curve on the south right-of-way line of Airport Road whence a found
brass cap at the quarter corner common to Section 13 and 24, Township 28 South,
Range 2 East, New Mexico Principal Meridian bears N 47 degrees 40' 46" W, a
distance of 2, 139.23 feet; thence,
Continuing along the south right-of-way line of Airport Road, easterly, a
distance of 76.14 feet along the arc of a curve bearing to the left, having a
radius of 2,886.76 feet, a central angle of 01 degrees 30' 41" and a long chord
which bears S 67 degrees 49' 39" E, a distance of 76.14 feet to a point; thence,
Leaving the south right-of-way line of Airport Road S 32 degrees 06' 18" W,
a distance of 701.13 feet to a point; thence,
N 57 degrees 53' 42" W, a distance of 536.31 feet to a point on the east
right-of-way line of Foamex Drive; thence,
Along the east right-of-way line of Foamex Drive, N 43 degrees 09' 02" E, a
distance of 25.48 feet to a point of curvature; thence,
Northerly, a distance of 76.19 feet along the arc of a curve bearing to the
left, having a radius of 2,485.17 feet, a central angle of 01 degrees 45' 24"
and a long chord which bears N 42 degrees 16' 20" E, a distance of 76.19 feet to
a point on curve; thence,
Leaving the east right-of-way of Foamex Drive, S 57 degrees 53' 42" E, a
distance of 442.98 feet to a point; thence,
N 32 degrees 06' 18" E, a distance of 588.00 feet to the point of beginning
of the parcel herein described
Said parcel contains 2.23288 acres (97,264 square feet), more or less.
<PAGE> 42
MEMORANDUM OF LEASE
THE STATE OF NEW MEXICO )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DONA ANA )
W I T N E S S E T H:
On the 26th day of August, 1988, the undersigned, THE GUEVARA CORPORATION,
as Landlord, and GRIFFITH MICRO SCIENCE, INC., as Tenant, did enter into a
Lease Agreement for a term of ten (10) years to be effective on the day that
the Tenant initiates operation of the facility, but in no event later than
April 1, 1989, and expiring on the 31st day of March, 1999, with options to
renew, for the following described real property.
A portion of Section 24, Township 28 South, Range 2
East, New Mexico Principal Meridian, Dona Ana County,
New Mexico, containing 5.4181 acres, more or less, all
as more particularly described by metes and bounds
description attached hereto as Exhibit "A", and made a
part hereof for all purposes.
WITNESS OUR HANDS this 22nd day of September, 1988.
THE GUEVARA CORPORATION
By: /s/ Andrew R. Guevara
-----------------------------------
Andrew R. Guevara, President
"Landlord"
GRIFFITH MICRO SCIENCE, INC.
By: /s/ William C. Dow
-----------------------------------
"Tenant"
<PAGE> 43
THE STATE OF TEXAS )
)
COUNTY OF EL PASO )
BEFORE ME, the undersigned authority, on this day personally appeared
ANDREW R. GUEVARA, President of THE GUEVARA CORPORATION, a corporation, known
to me to be the person whose name is subscribed to the foregoing instrument,
and acknowledged to me that he executed the same for the purposes and
consideration therein expressed, in the capacity therein stated and as the act
and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this 22nd day of September,
1988.
/s/ Diana M. Davis
--------------------------------------
My commission expires: NOTARY PUBLIC, State of Texas
8-31-92 Notary's name printed:
----------------------
--------------------------------------
[NOTARY SEAL]
<PAGE> 44
THE STATE OF ILLINOIS )
)
COUNTY OF COOK )
BEFORE ME, the undersigned authority, on this day personally appeared
WILLIAM C. DOW, PRESIDENT, of GRIFFITH MICRO SCIENCE, INC., a corporation,
known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed, in the capacity therein stated and as the
act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this 28 day of Sept., 1988.
/s/ Mary L. Knutson
--------------------------------------
My commission expires: NOTARY PUBLIC in and for said County
8-11-90 and State
---------------------- Notary's name printed:
/w/ MARY L. KNUTSON
--------------------------------------
[NOTARY SEAL]
<PAGE> 45
EXHIBIT "A"
The parcel of land herein described is a portion of Section 24, Township 28
South, Range 2 East, New Mexico Principal Meridian, Dona Ana County, New Mexico
and is more particularly described by metes and bounds as follows:
Commencing at found brass cap lying at the quarter corner common to Sections 13
and 24, Township 28 South, Range 2 East, New Mexico Principal Meridian; Thence,
South 44 degrees 18' 45" East, a distance of 1768.76 feet to a point lying on
the southerly right-of-way line of Airport Road, said point being the TRUE POINT
OF BEGINNING of this description;
THENCE, 388.00 feet along said right-of-way line and along the arc of a curve to
the left, having a radius of 2886.76 feet, a central angle of 07 degrees 42' 03"
and a chord which bears South 63 degrees 13' 17" East, a distance of 387.71
feet;
THENCE, South 32 degrees 06' 18" West, a distance of 588.00 feet;
THENCE, North 57 degrees 53' 42" West, a distance of 442.98 feet to a point
lying on the easterly right-of-way line of Foamex Drive;
THENCE, 402.90 feet along said right-of-way line and along the arc of a curve to
the left, having a radius of 2485.17 feet, a central angle of 09 degrees 17' 20"
and a chord which bears North 36 degrees 44' 58" East, a distance of 402.46
feet;
THENCE, North 32 degrees 06' 18" East, continuing along said right-of-way line,
a distance of 125.88 feet;
THENCE, 38.63 feet along the arc of a curve to the right, having a radius of
25.00 feet, a central angle of 88 degrees 31' 27" and a chord which bears North
76 degrees 22' 01" East, a distance of 34.90 feet to the TRUE POINT OF BEGINNING
of this description.
<PAGE> 1
EXHIBIT 10.16
INDUSTRIAL SPACE LEASE
THIS LEASE, made and entered into in Burr Ridge, Illinois this ____ day of
January, 1996 by and between BOULEVARD BANK, N.A., not personally but solely as
Trustee under a certain Trust Agreement dated April 14, 1986 and known as Trust
Number 8364 (hereinafter referred to as the "Landlord"), and GRIFFITH MICRO
SCIENCE, INC. (hereinafter referred to as the "Tenant"):
WITNESSETH:
1. Basic Term. This Section 1 contains basic terms of the Lease between
Landlord and Tenant. All other provisions of this Lease are to be read in
accordance with provisions herein contained.
A. Agent Morgan Realty Partners
16 W 241 S. Frontage Road, Suite 43
Burr Ridge, Illinois 60521
B. Building 16W151 Shore Court
Burr Ridge, Illinois 60521
C. Premises or Demised Approximately 11,200 sq. ft.
Premises depicted on Exhibit "A" attached
hereto
D. Commencement Date March 1, 1996
E. Broker Grubb & Ellis Company and
Paine/Wetzel Associates
F. Monthly Base Rental $6,000.00/month for months 1-36
$6,366.67/month for months 37-60
G. Expense Stop 1995 Actual
H. Tax Stop 1995 Actual
I. Initial Monthly Rent $ - 0 -
Adjustment Report
J. Security Deposit $6,000.00
K. Tenant's Proportion 25.68%
L. Term Five (5) years
M. Termination Date February 28, 2001
<PAGE> 2
N. Use Warehouse/Office Laboratory and any
lawful use incident thereto
2. Lease of Premises and Term. Landlord hereby leases to Tenant, and
Tenant accepts the demised premises (hereinafter known as "demised premises" or
"premises"), consisting of approximately 11,200 square feet for the Term as set
forth in Section 1 hereof, unless sooner terminated as provided herein,
commencing on the Commencement Date set forth in Section 1 hereof and ending on
the Termination Date set forth in Section 1 hereof to be occupied and used by
the Tenant for the Use as defined in Section 1 hereof and no other purpose,
subject to the agreements herein contained.
3. Rent. The Tenant shall pay as Base Rent to Agent at the address as set
forth in Section 1 hereof or to such other person or at such other place as
Landlord may direct in writing, the Monthly Base Rental set forth in Section 1
hereof in advance on or before the first day of each month of the Term. All
such rent shall be paid without any set-off or deduction whatsoever. Unpaid
rent shall bear interest at the rate set forth in Section 25D hereof, from the
sixth (6th) day after the date due until paid.
4. Base Rent Adjustment. In addition to the Base Rent, the Tenant shall
pay, as additional rent, the Rent Adjustment described in this Section 4
without set off or deduction to the Agent.
A. For the purpose of this Lease:
(i) The term "Calendar Year" shall mean each calendar year or a portion
thereof during the Term.
(ii) The term "Expenses" shall mean and include all expenses paid or
incurred by the Landlord or its beneficiaries for managing, owning,
maintaining, operating, insuring, replacing and repairing the Building, the
land under the Building, appurtenances and personal property used in
conjunction therewith including, without limitation, Landlord's obligations
under Section 8.
Expenses shall not include the following:
(a) all costs and expenditures for which Landlord receives
reimbursement other than by means of additional rent pursuant to the
leases of the Building;
(b) interest and principal payments on mortgage or other loans and
rental on any ground lease;
(c) all costs (if any) relating to activities for the solicitation
and execution of this or any other lease of space in the Building,
including but not
2
<PAGE> 3
limited to tenant allowances, space planning fees, legal fees for
preparing leases and amendments to leases, rent payable with respect to
any leasing office, advertising costs and real estate brokerage and
leasing commissions;
(d) salaries, and bonuses paid to executive personnel,
officers and partners of Landlord;
(e) all charges for depreciation;
(f) fines or penalties incurred due to non-compliance as of
the date hereof by Landlord or the Building or premises (other
than those aspects of the Building or premises constructed by
Tenant, and other than operations or activities of the Tenant at
the premises) with any law, governmental rule or regulation or
directive of any government authority; and
(g) property management fees in excess of four percent (4%)
of gross receipts.
The costs of capital improvements shall be includable in the
Expenses to the extent such costs are directly attributable to a
reduction in Expenses and provided that the cost of such capital
improvements shall be amortized by Landlord in accordance with the
applicable provisions of the Internal Revenue Code and regulations
promulgated in connection therewith. The costs of capital
additions shall not be includable in the Expenses. As used
herein, capital additions means expansion or addition to the
Building.
If the Building is not fully occupied during all or a portion
of any year, then Landlord may elect to make an appropriate
adjustment of the Expenses for such year utilizing generally
accepted accounting principles to determine the amount of Expenses
which would have been paid or incurred by Landlord had the
Building been 95% occupied and the amounts so determined shall be
the amount of Expenses attributable to such year.
(iii) The term "Rent Adjustments" shall mean all amounts owed by Tenant as
additional rent pursuant to this Section 4.
(iv) The term "Rent Adjustment Deposit" shall mean an amount equal to
Landlord's good faith estimate of Rent Adjustments due for any Calendar Year.
(v) The term "Taxes" shall mean real estate taxes, assessments, sewer
rents, rates and charges, transit taxes, taxes based upon the receipt of rent,
and any other federal, state or local governmental charge, general, special,
ordinary or extraordinary, which may now or hereafter be assessed against the
Project or any portion thereof in any calendar year even though real estate
taxes shall be paid or payable in the year following that for which they are
assessed. In case of special taxes or assessments which may be payable in
installments, only the amount of each installment and interest paid thereon
during a calendar year shall be included in Taxes for that
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year. Taxes shall also include any personal property taxes (attributable to the
year in which paid) imposed upon the furniture, fixtures, machinery, equipment,
apparatus, systems and appurtenances used in connection with the operation of
the Building and not imposed on tenant improvements in locations other than the
premises. Taxes shall also include the Landlord's reasonable costs and expenses
(including reasonable attorney's fees) in contesting or attempting to reduce any
taxes. Taxes shall be reduced by any recovery or refund received of taxes
previously paid by the Landlord, provided such refund relates to taxes paid by
Tenant to Landlord. If the Building is not assessed as fully improved for any
calendar year or part thereof, Landlord may make an adjustment to the amount of
Taxes which would have been assessed if the Building had been assessed as fully
improved, and the adjustment to the amount of Taxes for such calendar year to
reflect the amount of Taxes which would have been assessed if the Building had
been fully leased and occupied by tenants during such calendar year, and the
amount of any such adjustment shall be included in the amount of Taxes for such
calendar year.
(vi) The term "Project" shall mean the Building and the land (the "Land")
on which the Building is situated, and which is legally described on Exhibit
"B".
B. Tenant shall pay to the Landlord as additional rent the Tenant's
Proportion of the amount by which the Expenses and Taxes, respectively,
attributable to each calendar year of the Term exceed Tenant's Proportion of
the respective Expenses Stop and the Tax Stop. The amount of taxes
attributable to a year shall be the amount payable for such year, even though
the taxes for such calendar year relate to the prior calendar year.
C. Within one hundred twenty (120) days after the expiration of each
calendar year, Landlord will furnish Tenant a statement ("Adjustment
Statement") showing the following:
(i) Expenses and Taxes for Calendar Year last ended and the amount of
Expenses and Taxes payable by Tenant for such calendar year;
(ii) The amount of Rent Adjustments due Landlord for the Calendar Year
last ended, less credits for Rent Adjustment Deposits paid, if any; and
(iii) The Rent Adjustment Deposit due in the current Calendar Year.
D. Within thirty (30) days after Tenant's receipt of the Adjustment
Statement, Tenant shall pay to Landlord:
(i) The amount of Rent Adjustment shown on said statement to be due
Landlord for the Calendar Year last ended; plus
(ii) The amount, which when added to the Rent Adjustment Deposit
theretofore paid in the current Calendar Year would provide that Landlord
has then received such portion of the Rent Adjustment Deposit as would have
theretofore been paid to Landlord had Tenant paid one twelfth (1/12th) of
the Rent Adjustment Deposit for the current Calendar Year, to Landlord
monthly on the first day of each month of such Calendar Year.
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Commencing on the first day of the first month after Tenant's receipt of
each Adjustment Statement, and on the first day of each month thereafter
until Tenant receives a more current Adjustment Statement, Tenant shall pay
to Landlord one-twelfth (1/12th) of the Rent Adjustment Deposit shown on
said statement. During the last complete Calendar Year, Landlord may
include in the Rent Adjustment Deposit its estimate of the Rent Adjustment
which may not be finally determined until after the expiration of the Term.
The Tenant's obligation to pay the Rent Adjustment shall survive the
expiration of the Term.
E. Tenant's payment of the Rent Adjustment Deposit for each Calendar year
shall be credited against the Rent Adjustments for such Calendar Year. All
Rent Adjustment Deposits may be commingled and no interest shall be paid to
Tenant thereon. If the Rent Adjustment Deposit paid by Tenant for any Calendar
Year exceeds the Rent Adjustments for such Calendar Year, then Landlord shall
give a credit to Tenant in an amount equal to such excess against the Rent
Adjustments due to the next succeeding Calendar Year, except that if any such
excess relates to the last Calendar Year of the Term, then, provided that no
default of Tenant exists hereunder, Landlord shall refund such excess to Tenant
within thirty (3) days after determination of the amount of such excess in
accordance with the provisions of this Lease.
F. Tenant or its representative shall have the right to examine the
Landlord's books and records with respect to the items in the Adjustment
Statement during normal business hours at any time within ten (10) days
following the furnishing by the Landlord to the Tenant of such Adjustment
Statement. Unless the Tenant shall take written exception to any item within
thirty (30) days after the furnishing of the foregoing statement, such
statement shall be considered as final and accepted by the Tenant. Any amount
due to Landlord as shown on any such statement, whether or not written
exception is taken thereto, shall be paid by the Tenant within thirty (30) days
after the Landlord shall have submitted the statement, without prejudice to any
such written exception.
G. If the Commencement Date is on any day other than the first day of
January, or if the Termination Date is on any day other than the last day of
December, any Rent Adjustments due landlord shall be prorated.
5. Utilities. Tenant shall pay directly to the appropriate supplier, all
costs of all natural gas, electricity, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the premises. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services, and Tenant
shall pay such share to Landlord within fifteen (15) days after receipt of
Landlord's written statement. Tenant shall have the right to exercise
Landlord's records with regard to such metered utilities and services.
Landlord shall not in any way be liable or responsible to Tenant for any loss
or damage or expense which Tenant may sustain or incur if either the quantity
or character of such service is changed or is no longer available or suitable
for Tenant's requirements.
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6. Condition of Premises. The Tenant's taking possession of the premises
shall be deemed to be Tenant's acceptance of the demised premises in the order
and condition as then exists, except for latent defects and for a punch list of
items to be completed or repaired, signed by Landlord and Tenant within twenty
(20) days of such possession. No promise of the Landlord to alter, remodel,
decorate, clean or improve the demised premises or the Building and no
representation respecting the condition of the demised premises or the Building
have been made by the Landlord to the Tenant, unless the same is contained
herein.
7. Inability to Deliver Possession. If the Landlord shall be unable to
give possession of the demised premises on the Commencement Date for any
reason, the rent reserved and covenanted to be paid herein shall not commence
until the demised premises are available for occupancy by Tenant. No such
failure to give possession on the Commencement Date of the Term hereof shall
subject Landlord to any liability for failure to give possession nor shall same
affect the validity of this Lease or the obligation of the Tenant hereunder,
nor shall the same be construed to extend the Term or Termination Date. At the
option of Landlord to be exercised within thirty (30) days of the delayed
delivery of possession to Tenant, the Lease shall be amended so that the Term
shall be extended by the period of time possession is delayed. If the demised
premises are ready for occupancy prior to the Commencement Date and Tenant
occupies the premises prior to said date, Tenant shall pay proportionate Base
Rent and Rent Adjustments. The demised premises shall not be deemed to be
unready for Tenant's occupancy or incomplete if only minor or insubstantial
details of construction, decoration or mechanical adjustments remain to be done
in the demised premises or any part thereof.
8. Care and Maintenance. Subject to the provisions of Sections 13 and 14
hereof, Landlord shall keep and maintain the roof and structural members of the
Building and the parking lot, sidewalk, landscaping and all other areas of the
Building used or available for use by all tenants of the Building in good order
and repair, except for loss by fire or other casualty. Tenant shall, at the
Tenant's own expense, keep the demised premises in good order, condition and
repair and shall pay for the repair of any damages caused by Tenant, its
agents, employees or invitees. Tenant shall promptly arrange with Landlord, at
Tenant's sole expense, for the repair of all damage to the premises and the
replacement or repair of all damaged or broken glass (including signs thereon),
fixtures and appurtenances (including hardware, heating, cooling, ventilating,
electrical, plumbing and other mechanical facilities in the premises and which
service the premises), with materials equal in quality and class to the
original materials damaged or broken, with any reasonable period of time
specified by Landlord, all repairs and replacements to be made under the
supervision and with the prior written approval of Landlord, using contractors
or persons reasonably acceptable to Landlord. If Tenant does not promptly make
such arrangements, Landlord may, but need not, make such repairs and
replacements and one hundred ten percent (110%) of Landlord's cost for such
repairs and replacements shall be deemed Additional Rent reserved under this
Lease due and payable forthwith. Tenant shall obtain and maintain, at its sole
expense, a maintenance contract (in form and with a contractor reasonably
acceptable to Landlord providing for inspection and necessary repairs of the
heating, ventilating and air conditioning systems at least once each calendar
quarter.
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9. Alterations. The Tenant shall not do any painting or decorating, or
erect any partitions, make any alterations in or additions to the demised
premises or do any nailing, boring, or screwing into the ceilings, walls or
floors, without the Landlord's prior written consent in each and every
instance. Notwithstanding the foregoing, Tenant may install and operate in and
about the Premises such trade fixtures, equipment, machinery and appliances as
it shall consider necessary or desirable for the conduct of its business,
without Landlord's consent, and shall retain ownership of and shall have the
right to remove from the premises any such trade fixtures upon expiration or
termination of this Lease, provided Tenant is not in default under the Lease
and Tenant restores or repairs any damage to the premises resulting from such
removal. Notwithstanding anything contained in this paragraph 9, Landlord's
consent shall not be unreasonably withheld with respect to non-structural
alterations with a cost of $15,000.00 or less. Unless otherwise agreed by
Landlord and Tenant in writing, all such work shall be performed either by or
under the direction of Landlord, but at the sole cost of Tenant. The
Landlord's decision to refuse such consent shall be conclusive. If the
Landlord consents to such alterations or additions before commencement of the
work or delivery of any materials into the demised premises or into the
Building, the Tenant shall furnish the Landlord for approval: (a) Plans and
specifications; (b) Names and addresses of contractors; (c) Copies of
contracts; (d) Necessary permits; and (e) Indemnification and insurance in form
and amount satisfactory to Landlord from all contractors performing labor or
furnishing materials, insuring against any and all claims, costs, damages,
liabilities and expenses which may arise in connection with the alterations or
additions.
In the event Landlord permits the alterations or additions to be
completed by Tenant's contractor, Landlord reserves the right to require that
Tenant shall terminate its contract with any such contractor in the event said
contractor shall be engaged in a labor dispute which disrupts said contractor's
work. Landlord shall also have the right to order any contractor of Tenant who
violates any of Landlord's requirements or standards of work to cease work and
to remove himself, his equipment, and his employees from the Building.
Landlord or the managing agent of the Building shall be entitled to
charge a fee of 12% of the cost of the work for supervision and coordination of
all such alterations. Tenant agrees that its contractors shall not conduct
their work in such a manner so as to interfere with or cause any interruption of
either: (a) Landlord's construction; (b) Another tenant's occupancy or
construction; or (c) other phases of Landlord's operation of the Building.
Whether the Tenant furnishes the Landlord the foregoing or not, the
Tenant hereby agrees to indemnify and hold the Landlord, its beneficiaries,
partners, and their respective agents and employees harmless from any and all
liabilities of every kind and description which may arise out of or be connected
in any way with said alterations or additions. Unless caused by the negligence
or willful misconduct of Landlord or its agents, employees or invitees. Upon
completing any alterations or additions, the Tenant shall furnish the Landlord
with contractors' affidavits and full and final waivers of lien and receipted
bills covering all labor and materials expended and used. All alterations and
additions shall comply with all insurance requirements and with all ordinances
and regulations of any pertinent governmental authority. All alterations
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and additions shall be constructed in a good and workmanlike manner and only
good grades of materials shall be used.
All additions, decorations, fixtures, hardware, non-trade fixtures and
all improvements, temporary or permanent, in or upon the demised premises,
whether placed there by the Tenant or by the Landlord, shall, unless the
Landlord requests their removal, become the Landlord's property and shall remain
upon the demised premises at the termination of this Lease, by lapse of time or
otherwise, without compensation or allowance or credit to the Tenant. Landlord
may, at its sole option, request Tenant at the time of giving its consent to any
additions, decorations, fixtures, hardware, non-trade fixtures and all
improvements, at Tenant's sole cost, to remove same, and if at the end of the
Lease term the Tenant does not remove said additions, decorations, fixtures,
hardware, non-trade fixtures and improvements, the Landlord may remove the same,
and the Tenant shall pay the cost of such removal to the Landlord upon demand.
10. Access to Premises. The Tenant shall permit the Landlord, its agents
and designees upon reasonable prior written notice, except in case of
emergency, to erect, use, and maintain pipes, ducts, wiring, and conduits in
and through the demised premises and to have free access to the premises and
any part thereof in the event of an emergency. Landlord shall conduct such
work in a manner not to interfere unreasonably with Tenant's business at the
Premises. Landlord or Landlord's agents shall have the right to enter upon the
premises, to inspect the same and to make such decorations, repairs,
alterations, improvements, or additions to the premises or the Building as the
Landlord may deem necessary or desirable upon 24 hours' notice (except in case
of emergency), and the Landlord shall be allowed to take all material into and
upon said demised premises that may be required thereof without the same
constituting an eviction of the Tenant in whole or in part, and the rent
reserved shall in no way abate (except as provided in Section 13) while said
decorations, repairs, alterations, improvements, or additions are being made,
by reason of loss or interruption of business of the Tenant, or otherwise. If
the Tenant shall not be personally present to open and permit an entry into
said demised premises, at any time, when for any reason an entry therein shall
be necessary or permissible, the Landlord or Landlord's agents may enter the
same by a master key, without rending the Landlord or such agents liable
therefor (if during such entry Landlord or Landlord's agents shall accord
reasonable care to Tenant's property), and without in any manner affecting the
obligations and covenants of this Lease. Nothing herein contained, however,
shall be deemed or construed to impose upon the Landlord any obligations,
responsibility or liability whatsoever, for the care, supervision or repair of
the Building or any part thereof, in the exercise of any rights herein
provided.
11. Insurance. Tenant shall carry insurance during the entire Term hereof
insuring Tenant, but initially Tenant shall maintain the following coverages in
the following amounts:
A. Comprehensive public liability insurance, including the broad or
extended liability endorsement, during the entire term hereof with terms and in
companies satisfactory to Landlord to afford protection to the limits of not
less than $2,000,000 for combined single limit personal injury and property
damage liability per occurrence. And insuring as additional insureds, Landlord,
any beneficiary of Landlord, the managing agent for the Project and their
respective agents, partners and employees, as their interests may appear, with
terms, coverages
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and in companies satisfactory to Landlord, and with such increases in limits as
Landlord may from time to time request.
B. Insurance against fire, sprinkler leakage, vandalism, and the
extended coverage perils for the full insurable value of all contents of Tenant
within the premises, and of all office furniture, trade fixtures, office
equipment, merchandise and all other items of Tenant's property on the premises
and business interruption insurance.
C. Tenant shall, prior to the commencement of the Term and during the
Term thirty (30) days' prior to the expiration of the policies of insurance,
furnish to Landlord certificates evidencing such coverage, which certificates
shall state that such insurance coverage may not be changed or canceled without
at least thirty (30) days' prior written notice to Landlord and Tenant.
12. Subrogation. Landlord and Tenant agree to have all fire and extended
coverage and material damage insurance which may be carried by either of them
endorsed with a clause providing that any release from liability of or waiver
of claim for recovery from the other party or any of the parties named in
Section 11 above. Without limiting any release or waiver of liability or
recovery contained in any other Section of this Lease but rather in
confirmation and furtherance thereof, Landlord and any beneficiaries of
Landlord waive all claims for recovery from Tenant, and Tenant waives all
claims for recovery from Landlord, any beneficiaries of Landlord and the
managing agent for the Project and their respective agents, partners and
employees, for any loss or damage to any of its property insured under valid
and collectible insurance policies to the extent of any recovery collectible
under such insurance policies.
13. Untenantability. If the demised premises or in excess of thirty
percent (30%) of the Building are made untenantable by fire or other casualty,
Landlord may elect:
A. To terminate this Lease as of the date of the fire or casualty by
notice to Tenant within sixty (60) days after that date; or
B. Proceed with all due diligence to repair, restore, or rehabilitate
the Building or the demised premises (excluding leasehold improvements paid for
by Tenant) at Landlord's expenses and complete such repair, restoration or
rehabilitation within one hundred twenty (120) days of the date of the casualty,
in which latter event this Lease shall not terminate. [Text missing] period,
tenant shall have the right to terminate this lease by giving written notice to
Landlord, provided, however, that if Landlord substantially completes such
repairs within thirty (30) days of Tenant's notice, Tenant's notice shall become
null and void and the Lease shall remain in full force and effect. The time
within which Landlord shall complete such repair, rebuilding or rehabilitation
shall be extended by reason of strikes, acts of God, unavailability of materials
and such other matters beyond the reasonable control of Landlord.
In the event the Lease is not terminated pursuant to these provisions,
Base Rent shall abate only with respect to the portion of the demised premises
rendered untenantable on a per diem basis during the period of untenantability.
In the event of the termination of this Lease pursuant to this section, Base
Rent shall be apportioned on a per diem basis and paid to the date
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of the fire or other casualty. If less than thirty percent (30%) of the
Building or the demised premises are made untenantable as aforesaid during the
last year of the Term hereof, Landlord shall have the right to terminate this
Lease as of the date of the fire or other casualty by giving written notice
thereof to Tenant within sixty (60) days after the date of fire or other
casualty, in which event the Base Rent shall be apportioned on a per diem basis
and paid to the date of such fire or other casualty.
14. Eminent Domain.
A. If a portion of the Building or the demised premises shall be
lawfully taken or condemned for any public or quasi-public use of purpose or
conveyed under threat of such condemnation, and as a result thereof the premises
cannot be used for the same purpose and with the same utility as before such
taking or conveyance, the terms of this Lease shall end upon, and not before,
the date of the taking of possession by the condemning authority and without
apportionment of the award. Tenant hereby assigns to the Landlord, Tenant's
interest in such award, if any. Nothing contained in this paragraph 14 shall
prohibit Tenant from maintaining a separate cause of action against the
condemning authority for loss of personal property or relocation expenses,
provided that such action does not adversely affect Landlord's recovery against
such condemning authority. Current rent shall be apportioned as of the date of
such termination. If any part of the Building shall be so taken or condemned,
or if the grade of any street or alley adjacent to the Building is changed by
any competent authority and such taking or change of grade makes it necessary or
desirable to demolish, substantially remodel, or restore the Building, the
Landlord shall have the right to cancel this Lease upon not less than ninety
(90) days prior notice to the date of cancellation designed in the notice.
B. If a portion of the premises shall be lawfully taken or condemned or
conveyed under threat of condemnation but thereafter the premises can be used by
Tenant for the same purpose and with substantially the same utility, this Lease
shall not be terminated at Tenant's option and Landlord shall repair the
premises, and the Lease shall be amended to reduce the Tenant's Proportion and
Base Rent in the proportion of the amount taken. No money or other
consideration shall be payable by the Landlord to the Tenant for any right of
cancellation or temporary taking, and the Tenant shall have no right to share in
any condemnation award or in any judgement for damages caused by a change of
grade.
15. Waiver of Claims and Indemnity. To the extent permitted by law, and
to the extent not caused by the negligence or willful misconduct of Landlord,
its invitees, employees or agents, the Tenant releases the Landlord, its
beneficiaries, and their respective agents, employees, mortgagees, and partners
(all of said parties are, for the purposes of this Section 14, collectively
referred to as "indemnitees") from, and waives all claims for, damage to person
or property sustained by the Tenant its employees, agents, invitees and
customers or premises resulting from the Building or premises or any part of
either or any equipment or appurtenance becoming out of repair, or resulting
from any accident in or about the Building, or resulting directly or
indirectly, from any act or neglect of any tenant or occupant of the Building
or of any other person, including the indemnitees. This Section 15 shall apply
especially, but not exclusively, to the flooding of basements or other
subsurface areas, and to damage caused by refrigerators,
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sprinkling devices, air-conditioning apparatus, water, snow, frost, steam,
excessive heat or cold, falling plaster, broken glass, sewage, gas, odors or
noise, or the bursting or leaking of pipes or plumbing fixtures, and shall apply
equally whether any such damage results from the act or neglect of other
tenants, occupants or servants on the Building or of any other person, and
whether such damage be caused or result from any thing or circumstance
above-mentioned or referred to, or any other thing or circumstance whether of a
like nature or of a wholly different nature, except if caused by Landlord's
negligence or willful misconduct. If any such damage, whether to the demised
premises or to the Building or any part thereof, or whether to the Landlord or
to other tenants in the Building, results from any negligent or willful act of
the Tenant, its employees, agents, invitees and customers, the Tenant shall be
liable therefor and the Landlord may, at the Landlord's option, repair such
damage and the Tenant shall, upon demand by the Landlord, reimburse the Landlord
forthwith for the total cost of such repairs. The Tenant shall not be liable
for any damage caused by its act or neglect if the Landlord or a Tenant has
recovered the full amount of the damage from insurance and the insurance company
has waived its right of subrogation against the Tenant. All property belonging
to the Tenant or any occupant of the premises that is in the Building or the
premises shall be there at the risk of the Tenant or other person only, and the
Landlord shall not be liable for damage thereto or theft or misappropriation
thereof.
To the extent permitted by law, Tenant agrees to indemnify and save the
indemnitees harmless against any and all claims, demands, costs and expenses,
including reasonable attorney's fees for the defense thereof, arising from
Tenant's occupation of the demised premises or from any breach or default on the
part of the Tenant in the performance of any covenant or agreement on the part
of Tenant to be performed pursuant to the terms of this Lease, or from any act
or negligence of Tenant. In case of any action or proceeding brought against
any indemnitees by reason of any such claim, upon notice from Landlord, Tenant
covenants to defend such action or proceeding by counsel reasonably satisfactory
to Landlord.
16. Assignment/Subletting.
A. Tenant shall not, without Landlord's prior written consent, which
consent shall not be unreasonably withheld: (i) assign, transfer, hypothecate,
mortgage, encumber, or convey or subject to or permit to exist upon or be
subjected to any lien or charge this Lease or any interest under it; (ii) allow
any transfer of, or any lien upon, Tenant's interest in this Lease by operation
of law; (iii) sublet the demised premises in whole or in part; or (iv) allow the
use or occupancy of any portion of the premises for a use other than the Use or
by anyone other than Tenant or Tenant's employees.
Notwithstanding the foregoing, Landlord shall exercise reason in the
consideration of the granting or denying of consent to a sublease or assignment.
Landlord may take into consideration the business reputation and credit
worthiness of the proposed subtenant or assignee; any alteration of the
premises; the intended use of the premises by the proposed subtenant or
assignee; the estimated pedestrian and vehicular traffic in the premises and to
the Building which would be generated by the proposed subtenant or assignee and
any other factors which Landlord shall deem relevant. Provided further, that it
shall not be deemed unreasonable
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for Landlord to refuse consent to a sublease or assignment to any subtenant or
assignee which is a governmental agency, to a present tenant in the Building, or
to an entity with whom Landlord or its agents has discussed tenancy within the
Building.
B. The consent by Landlord to any assignment or subletting shall not be
construed as a waiver or release of Tenant from liability for the performance of
all covenants and obligations to be performed by Tenant under this lease, and
Tenant shall remain liable therefor, nor shall the collection or acceptance of
Rent from any assignee, subtenant or occupant constitute a waiver or release of
Tenant from any of its obligations or liabilities under this Lease. Any consent
given pursuant to this Section 16 shall not be construed as relieving Tenant
from the obligation of obtaining Landlord's prior written consent to any
subsequent assignment or subletting.
17. Subordination. Landlord may execute and deliver a mortgage or trust
deed in the nature of a mortgage (both sometimes hereinafter referred to as
"Mortgage") against the Building or any interest therein, including a ground
lease thereof ("Ground Lease") and sell and leaseback the underlying land.
This Lease and the rights of Tenant hereunder shall be and are hereby made
expressly subject and subordinate at all times to any ground lease of the land
or the Building, or both, now or hereafter existing and all amendments,
renewals and modifications thereto and extensions thereof, and to the lien of
any Mortgage now or hereafter encumbering any portion of the Building, and to
all advances made or hereafter to be made upon the security thereof; provided,
however, Tenant's right to possession during this Lease term shall not be
disturbed provided Tenant pays all rent and performs all obligations imposed
hereunder and is not in default under this Lease. Tenant agrees to execute and
deliver such ground lease instruments reasonably acceptable to Tenant
subordinating this Lease to any such ground lease and to the lien of any such
Mortgage, as may be requested in writing by Landlord from time to time.
Notwithstanding anything to the contrary contained herein, any mortgagee under
a Mortgage may, by notice in writing to the Tenant, subordinate its Mortgage to
this lease.
Tenant agrees to give the holder of any Mortgage, by registered or
certified mail, a copy of any notice of default served upon the Landlord by
Tenant, provided that prior to such notice Tenant has received notice (by way
of service on Tenant of a copy of an assignment of rents and leases, or
otherwise) of the address of such Mortgagees and containing a request therefor.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then if said Mortgagees notify
Tenant in writing that Mortgagees elect to cure such default said Mortgagees
shall have an additional thirty (30) days after receipt of notice thereof
within which to cure such default or, if such default cannot be cured within
that time, then such additional time as may be necessary, if, within such
thirty (30) days, any Mortgagee has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary to effect such cure).
Such period of time shall be extended by any period within which such Mortgagee
is prevented from commencing or pursuing such foreclosure proceedings
by reason of Landlord's bankruptcy. Until the time allowed as aforesaid for
said mortgagee to cure such defaults has expired without cure, Tenant shall
have no right to, and shall not,
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terminate this Lease on account of default. This Lease may not be modified or
amended so as to reduce the rent or shorten the term, or so as to adversely
affect in any other respect to any material extent the rights of the Landlord,
nor shall this Lease be cancelled or surrendered, without the prior written
consent, in each instance, of the ground lessor or the mortgagee.
18. Certain Rights Reserved to the Landlord. The Landlord reserves and
may exercise the following rights without affecting Tenant's obligations
hereunder:
A. To change the name or street address of the Building upon thirty
(30) days prior written notice to Tenant;
B. To install and maintain a sign or signs on the interior or exterior
of the Building;
C. To decorate, remodel, repair, alter or otherwise prepare the demised
premises for reoccupancy if Tenant vacates the demised premises prior to the
expiration of the Term;
D. To retain at all times pass keys to the demised premises;
E. To exhibit the demised premises to others and to display "For Rent"
signs on the demised premises during the last three months of the Term;
F. To take any and all measures, including inspections, repairs,
alterations, decorations, additions and improvements to the premises or to the
Building and to close or temporarily suspend, as may be necessary or desirable
for the safety, protection or preservation of the premises or the Building or
the Landlord's interests or the interest of other tenants, or as may be
necessary or desirable in the operation of the Building;
G. To establish and enforce such rules and regulations as Landlord
deems reasonably necessary for the operation of the Building.
H. To enter upon the demised premises upon no less than 24 hours prior
notice, except in cases of emergency and exercise any or all rights herein
reserved without being deemed guilty of an eviction or disturbance of the
Tenant's use or possession and without being liable in any manner to the Tenant
and without abatement of rent and without affecting any of the tenant's
obligations hereunder.
I. To sell, assign or transfer this Lease, in which event this Lease
shall remain in full force and effect, subject to the performance by Tenant of
all the terms, covenants and conditions on its part to be performed. In the
event that the assignee or transferee agrees to perform all the terms, covenants
and conditions of Landlord pursuant to this Lease which are to be performed by
Landlord from and after the effective date of such sale, assignment or transfer
of this Lease (as the case may be), then, upon any such sale, assignment, or
transfer other than merely as security, Tenant agrees to look solely to the
assignee or transferee with respect to all
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matters in connection with this Lease and the transferor Landlord shall be
released from any further obligations hereunder.
19. Holding Over. If the Tenant retains possession of the demised
premises or any part thereof after the termination of the Term or any extension
thereof, by lapse of time and otherwise, the Tenant shall pay the Landlord
monthly rent, at 1.50 x the rate payable for the month immediately preceding
said holding over (including increases for Rent Adjustment which Landlord may
reasonably estimate), computed on a per-month basis, for each month or part
thereof (without reduction for any such partial month) that the Tenant remains
in possession, and in addition thereto, Tenant shall pay the Landlord all
direct damages. The provisions of this paragraph do not exclude the Landlord's
rights of re-entry or any other right hereunder in accordance with local laws
and applicable judicial procedures. Any such extension or renewal shall be
subject to all other terms and conditions herein contained.
20. Landlord's Remedies.
A. Each of the following shall constitute a breach of this Lease by
Tenant: (i) Tenant fails to pay when due any installment or other payment of
Rent including without limitation Base Rent, Rent Adjustment Deposits or Rent
Adjustments and such failure continues for five (5) days after written notice
thereof to Tenant; (ii) Tenant fails to observe or perform any of the other
covenants, conditions or provisions of this Lease to be observed or performed by
Tenant and fails to cure such default within thirty (30) days after written
notice thereof to Tenant unless such default cannot be cured within that time,
then such additional time as may be necessary, if within such thirty (30) days,
Tenant has commenced and is diligently pursuing remedies to cure such default,
provided that in no event shall the time to cure such default exceeds sixty (60)
days; (iii) the interest of Tenant in this Lease is levied upon under execution
or other legal process; (iv) a petition is filed by or against Tenant to declare
Tenant bankrupt or seeking a plan of reorganization or arrangement under any
Chapter of the Bankruptcy Act, or any amendment, replacement or substitution
therefor, or to delay payment of, reduce or modify Tenant's debts, or any
petition is filed or other action taken by an unrelated third party to
reorganize or modify Tenant's debts, or any petition is filed or other action
taken to reorganize or modify Tenant's capital structure or upon the dissolution
of Tenant; [missing text] ninety (90) days after such filing; (v) Tenant is
declared insolvent by law or any assignment of Tenant's property is made for the
benefit of creditors; a receiver is appointed for Tenant or Tenant's property;
(vi) Tenant abandons the premises without the payment of Rent; or (vii) Tenant
shall repeatedly default in the timely payment of Rent or any other charges
required to be paid, or shall repeatedly default in keeping, observing or
performing any other covenant, agreement, condition or provision of this Lease,
whether or not Tenant shall timely cure any such payment or other default.
For the purposes of the foregoing, "repeated default" means the
occurrence of similar defaults three times in any twelve month period.
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<PAGE> 15
B. In the event of any breach of this Lease by Tenant, Landlord at its
option, without notice or demand to Tenant, may, in addition to all other rights
and remedies provided in this Lease, at law or in equity:
(i) Terminate this Lease and Tenant's right of possession of the
premises, and recover all damages to which Landlord is entitled under law,
specifically including, without limitation, all Landlord's reasonable expenses
of reletting (including repairs, alterations, improvements, additions,
decorations, reasonable legal fees and brokerage commissions); or
(ii) Terminate Tenant's right of possession of the premises without
terminating this Lease, in which event Landlord may, but shall use reasonable
efforts to, relet the premises, or any part thereof for the account of Tenant,
for such rent and term and upon such terms and conditions as are reasonably
acceptable to Landlord. As used herein, reasonable efforts to relet shall be
satisfied by the employment of a qualified real estate brokerage firm to relet
the premises.
For purposes of such reletting, Landlord is authorized to decorate,
repair, alter and improve the premises to the extent reasonably necessary. If
Landlord despite reasonable efforts fails to relet the premises or if the
premises are relet and a sufficient sum not be realized therefrom after payment
of all Landlord's expenses of reletting (including repairs, alterations,
improvements, additions, decorations, legal fees and brokerage commissions) to
satisfy the payment when due of rent reserved under this Lease for each such
monthly period, or if the premises have been relet, Tenant shall pay any such
deficiency monthly. Tenant agrees that Landlord may file suit to recover any
sums due to Landlord hereunder from time to time and that such suit or recovery
of any amount due Landlord hereunder shall not be any defense to any subsequent
action brought for any amount not theretofore reduced to judgement in favor of
Landlord. In the event Landlord elects, pursuant to this Subsection B of
Section 20, to terminate Tenant's right of possession only without terminating
this Lease, Landlord may, at Landlord's option, enter into the premises in
accordance with local laws and applicable judicial procedures, remove Tenant's
signs and other evidences of tenancy, and take and hold possession thereof, as
provided in Section 21 hereof; provided, such action shall not terminate this
Lease or release Tenant, in whole or in part, from Tenant's obligation to pay
the rent reserved hereunder the Term or from any other obligation of Tenant
under this Lease. Any and all property which may be removed from the premises
by the Landlord pursuant to the authority of the Lease or of law, to which the
Tenant is or may be entitled, may be handled, removed or stored by the Landlord
at the risk, cost and expense of the Tenant, and the Landlord shall in no event
be responsible for the value, preservation, or safekeeping thereof. The Tenant
shall pay to the Landlord, upon demand, any and all expenses incurred in such
removal and all storage charges against such property so long as the same shall
be in the Landlord's possession or under the Landlord's control. Any such
property of the Tenant not retaken from storage by the Tenant within thirty (30)
days after the end of the Term, however terminated, shall be conclusively
presumed to have been conveyed by the Tenant to the Landlord under this Lease as
a bill of sale without further payment or credit by the Landlord to the Tenant.
Any default by Tenant of any term or condition hereof other than the payment of
sums due hereunder may be restrained or enforced by injunction.
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<PAGE> 16
C. Tenant shall pay upon demand all costs and expenses, including
reasonable attorneys' fees incurred by Landlord in enforcing the observance and
performance by Tenant of all covenants, conditions, and provisions of this Lease
to be observed and performed by Tenant or resulting from Tenant's default under
this Lease.
D. If the term of any lease, other than this Lease, made by the Tenant
for any demised premises in the Building shall be terminated or terminable after
the making of this Lease because of any default by the Tenant under such other
lease, such fact shall empower the Landlord at the Landlord's sole opinion to
terminate this Lease by written notice to the Tenant.
21. Surrender of Possession. Upon the expiration or other termination of
the Term, Tenant shall quit and surrender to Landlord the premises, broom
clean, in good order and condition, ordinary wear excepted, surrender all keys
to the premises to Landlord, and Tenant shall remove all of its property except
as otherwise specifically provided herein. If the Tenant does not remove its
property of every kind and description from the demised premises prior to the
end of the Term, however ended, at Landlord's option, the Tenant shall
conclusively presumed to have conveyed the same to the Landlord under this
Lease as a bill of sale without further payment or credit by the Landlord to
the Tenant and the Landlord may remove the same and the Tenant shall pay the
cost of such removal to the Landlord upon demand. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of the term of this Lease.
22. Estoppel Certificate. Each party shall at any time and from time to
time upon not less than ten (10) days prior written request from the other
party execute, acknowledge and deliver to the other party, in form reasonably
satisfactory to the other party and/or mortgagee, a written statement
certifying (if true) that such party has accepted the premises, that this Lease
is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and
stating the modifications), that the other party is not in default hereunder,
the date to which the rental and other charges have been paid in advance, if
any, and such other accurate certification as may reasonably be requested by
the other party or Landlord's mortgagee, and agreeing to give copies to any
mortgagee of Landlord of all notices by Tenant to Landlord. It is intended
that any such statement delivered pursuant to this subsection may be relied
upon by any prospective purchaser or mortgagee of the premises and their
respective successors and assigns.
23. Covenant Against Liens. Tenant has no authority or power to cause or
permit any lien or encumbrance of any kind whatsoever, whether created by act
of Tenant, operation of law or otherwise, to attach to or be placed upon
Landlord's title or interest in the Building and any liens and encumbrances
created by Tenant shall attach to Tenant's interest only. Tenant covenants and
agrees not to suffer or permit any lien of mechanics or materialmen or others
to be placed against the Land, Building or the premises with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the premises, and in case of any such lien attaching,
Tenant shall have the right to contest in good faith and with reasonable
diligence the validity of any such lien, and on final determination of the
lien, Tenant covenants and agrees immediately to cause it to be released and
removed of record. In the
16
<PAGE> 17
event that Tenant consents to any lien or claim for lien, Tenant shall deliver
to Landlord a bond or other security in form, content and amount reasonably
satisfactory to Landlord within twenty (20) days after the filing of such lien
or claim for lien. If Tenant fails to have such lien or claim for lien
released, Landlord may pay or discharge the same and Tenant shall reimburse
Landlord upon demand for the amount so paid by Landlord together with any fees
or expenses incurred by Landlord in connection therewith.
24. Security Deposit. As additional security for the faithful and prompt
performance of its obligation hereunder, Tenant has concurrently with the
execution of this Lease paid the Security Deposit described in Section 1
hereof. Said Security Deposit need not be segregated and may be applied by
Landlord for the purpose of curing any default or defaults of Tenant hereunder,
in which event Tenant shall replenish said deposit in full by promptly paying
to Landlord on demand the amount so applied. Landlord shall not pay any
interest on said deposit, except as may be required by law. If Tenant has not
defaulted hereunder and Landlord has not applied said deposit to cure a
default, or Landlord has applied said deposit to cure a default and Tenant has
replenished the same, then said deposit, or such remaining portion thereof,
shall be paid to Tenant after the termination of this Lease. Said deposit
shall not be deemed an advance payment of Rent or measure of Landlord's damages
for any default hereunder by Tenant.
25. Miscellaneous.
A. No payment by Tenant or receipt by Landlord of a lesser amount than
any installment or payment of rent due shall be deemed to be other than a
payment on account of the amount due and no endorsement or statement on any
check or any letter accompanying any check or payment without prejudice to
Landlord's right to recover the balance of such installment or payment of Rent
or pursue any other remedies available to Landlord. No receipt of money by the
Landlord from the Tenant after the termination of this Lease or after the
service of any notice or after the commencement of any suit, or after final
judgement for possession of the demised premises shall reinstate, continue or
extend the term of this Lease or affect any such notice, demand or suit.
B. No waiver of any default of the Tenant hereunder shall be implied
from any omission by the Landlord to take any action on account of such default,
and if such default be repeated, no express waiver shall affect any default
other than the default specified in the express waiver and that only for the
time and to the extent therein stated.
C. The words "Landlord" and "Tenant" wherever used in the Lease shall
be construed to mean plural where necessary, and the necessary grammatical
changes required to make the provisions hereof apply either to corporations or
individuals, men or women, shall in all cases be assumed as though in each case
fully expressed. The term "Tenant" shall include the Tenant's agents,
employees, contractors, officers, invitees, successors and others using the
demised premises with the expressed or implied permission of Tenant.
D. Each provision hereof shall extend to and shall, as the case may
require, bind and inure to the benefit of the Landlord and the Tenant and their
respective heirs, legal representatives, successors and assigns in the event
this Lease has been assigned with the express
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written consent of the Landlord; provided, however, this provision shall not be
construed to permit any assignment or subletting by tenant.
E. All amounts (unless otherwise provided herein, and other than the
Base Rent and Rent Adjustment, which shall be due as hereinbefore provided) owed
by the Tenant to the Landlord hereunder shall be deemed Additional Rent and be
paid within ten (10) days from the date the Landlord renders statements of
account therefor. All such amounts (including Base Rent and Rent Adjustment)
shall bear interest from the date due until the date paid at the rate of two
percent (2%) above the prime rate of interest published by The First National
Bank of Chicago on the date that any payment is due, or at the maximum legal
rate of interest allowed by law, if such maximum legal rate is applicable and
lower. Whenever rent is referred to in this Lease, it shall include Base Rent
Adjustment and Additional Rent. In addition to the foregoing, Tenant shall pay
Landlord as a late charge the sum of $250.00 for each installment of base rent
which is received after the fifth (5th) day of any month of the Term.
F. All riders and exhibits attached to this Lease and referred to
herein are hereby made a part of this Lease as though inserted in this lease.
G. The headings of sections are for convenience only and do not limit
or construe the contents of the sections.
H. If the Tenant shall occupy the premises prior to the beginning of
the term of this Lease with the Landlord's consent, all the provisions of this
Lease shall be in full force and effect as soon as the Tenant occupies the
premises.
I. The Tenant represents that the Tenant has dealt directly with and
only with Agent and the Broker listed in Section 1 hereof, if any, as broker in
connection with this Lease and that insofar as the Tenant knows no other broker
negotiated this Lease or is entitled to any commission in connection therewith.
Each party indemnifies and holds the other party, its respective beneficiaries,
Owner and Owner's partners and their respective agents and employees harmless
from all claims of any other broker or brokers in connection with this Lease.
J. The Landlord's or Owner's title is and always shall be paramount to
the title of the Tenant, and nothing herein contained shall empower the Tenant
to do any act which can, shall or may encumber such title.
K. The laws of the State of Illinois shall govern the validity,
performance, and enforcement of this Lease.
L. If any term, covenant or condition of this Lease or application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
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M. Tenant warrants and represents that is has full power and authority
to execute this Lease. In the event Tenant is a general partnership or consists
of two or more individuals, all present and future partners or individuals, as
applicable, shall be jointly and severally liable hereunder.
N. Landlord has no obligation pursuant to this lease except as
expressly provided for herein. Landlord's liability hereunder shall cease upon
the transfer of Landlord's interest in this Lease.
O. This Lease sets forth all the covenants, promises, agreements,
conditions and understandings between Landlord and Tenant concerning the demised
premises, and there are no covenants, promises, agreements, conditions or
understandings, either oral or written between them other than herein set forth,
except as herein otherwise provided, no subsequent alteration, amendment, change
or addition to this Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by them.
P. Notices hereunder shall be in writing and shall be deemed given when
received if:
(i) Served by Landlord upon Tenant by leaving a notice at the premises
or forwarding through certified or registered mail, postage prepaid, to
Tenant at the premises.
(ii) Served by Tenant upon Landlord when addressed to Landlord and
served by forwarding through certified or registered mail, postage prepaid
to Landlord's agent at the address set forth in Section 1 with a copy to
William Biederman, Biederman & O'Keefe Ltd., 30 N. LaSalle Street, Suite
1426, Chicago, Illinois, 60602.
The address to which any notice shall be given, made or spent to either
party may be changed by written notice given by such party as above provided.
Q. This Lease does not grant any rights to light or air over about the
real property of Landlord. Landlord specifically excepts and reserves to itself
the use of any roofs, the exterior portions of the Building, all rights to and
the land and improvements below the improved floor level of the Building, to the
improvements and air rights above the Building and to the improvements and air
rights located outside the demising walls of the Building and to such areas
within the Building required for installation of utility lines and other
installations required to serve any occupants of the Building and to maintain
and repair same, and no rights with respect thereto are conferred upon Tenant,
unless otherwise specifically provided herein. Notwithstanding the foregoing,
Tenant shall have the non-exclusive right, in common with Landlord and all
others to whom Landlord has or may hereafter grant rights, to use such portions
of the Project which are not leased, or held for lease ("Common Area") of common
benefit to the tenants and occupants of the Project as Landlord deems
appropriate, subject to such reasonable regulations as Landlord may from time to
time impose.
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26. Quite Enjoyment. Subject to the provisions of this Lease, Landlord
covenants that Tenant, on paying the rent and performing the covenants of this
Lease on its part to be performed, shall and may peaceably have, hold, and
enjoy the premises for the Term.
27. Exculpation Clause. This Lease is executed by BOULEVARD BANK, N.A.,
not personally, but as Trustee as aforesaid, in the exercise of the power and
authority conferred upon and vested in it as Trustee, and under the express
direction of the beneficiaries of the said Trust. It is expressly understood
and agreed that nothing herein shall be construed as creating any liability
whatsoever against said Trustee personally, and in particular, without limiting
the generality of the foregoing, there shall be no personal liability to pay
any indebtedness accruing hereunder or to perform any covenant, either express
or implied, herein contained, or to keep, preserve, or sequester any property
of said Trust, and that all personal liability of said Trustee of every sort,
if any, is hereby expressly waived by said Tenant, and by every person now or
hereafter claiming any right or security hereunder, and that so far as the said
Trustee is concerned, the owner of any indebtedness or liability accruing
hereunder, shall look solely to the assets of said Trust and the proceeds
thereof for the payment thereof.
It is further understood and agreed that said Trustee merely holds the
naked title to the Property herein described and has no control over and under
this Lease and assumes no responsibility for: (A) Management or control of the
Property; (B) The upkeep, inspection, maintenance or repair of the Property;
(C) The collection of rents or the rental of the Property; and (D) The conduct
of any business which is carried on upon the Property.
IN WITNESS WHEREOF, this Instrument has been duly executed by the parties
hereto, as of the day and year first above written.
LANDLORD: BOULEVARD BANK, N.A., not personally, but
solely as Trustee U/T/A dated August 14, 1986
and known as Trust No. 8314
ATTEST:
By: [illegible]
- ------------------------------- ------------------------------------------
Its: Beneficiary of Trust 8314
TENANT: GRIFFITH MICRO SCIENCE, INC.
ATTEST:
[illegible] By:
- ------------------------------- -------------------------------------------
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RIDER TO INDUSTRIAL SPACE LEASE
This Rider dated January _____, 1996, by and between Boulevard Bank, N.A.,
not personally but solely as Trustee under a certain Trust Agreement dated
April 14, 1986 and known as Trust Number 8364 ("Landlord") and Griffith Micro
Science, Inc. ("Tenant").
1. Assignment/Subletting. Notwithstanding anything contained in Section
16 of the Lease, Tenant, without Landlord's consent, may assign this Lease or
sublet the premises, or any portion thereof, to its patient, any of its
subsidiaries or to any other entity affiliated with Tenant or its parent, or to
a corporation or other entity resulting from any reorganization or merger to
which Tenant, its parent or any of its subsidiaries or affiliates is a party.
In the event that Tenant assigns this Lease pursuant to the terms herein,
Tenant shall be released from all of its covenants and obligations arising
under this Lease, without the further act or agreement by Landlord, if the
assignee has a net worth of at least $1,000,000.00 at the time of such
assignment as confirmed by an independent certified public accountant based on
current financial statements and such assignee accepts and assumes all of the
Tenant's obligation under this Lease.
2. Right to Extend. Tenant is hereby granted the right to extend this
Lease for a term of five (5) years commencing March 1, 2001 and terminating
February 28, 2006 (the "Extended Term") subject to the following conditions:
(a) Tenant serves written notice on Landlord of its intent to extend the term
not less than two hundred ten (210) days prior to the expiration of the
original term (the "Extension Notice"); (b) Tenant is not in default under the
Lease either at the time it serves the said notice or at the commencement of
the Extended Term; (c) the base rental payable by Tenant during the Extended
Term shall be the "prevailing market rental rate" as hereinafter defined and
(d) during the Extended Term, all terms and conditions of the Lease shall
remain in effect and unchanged except for the Base Rental pursuant to this
Section. As used herein, the "prevailing market rental rate" shall mean and
refer to the rent at which Landlord is then marketing space in the Building,
comparable to the premises. If there is no comparable space being marketed in
the Building, Landlord and Tenant shall attempt to agree upon the prevailing
market rental rate within thirty (30) days of the date of receipt by Landlord
of the Extension Notice. If Landlord and Tenant are unable to agree upon the
prevailing market rate within said thirty (30) day period, Landlord and Tenant
shall each select a real estate broker or appraiser or other qualified person
experienced in determining market rental rates. The brokers or appraisers
shall make their determination in writing within forty-five (45) days of the
date of the receipt by Landlord of the Extension Notice. If the valuations
determined by the said brokers or appraisers are within ten (10%) percent of
one another, the average of the two valuations shall be the prevailing market
rental rate and as such, shall be the Base Rent payable of Tenant during the
Extended Term. If the valuations are not within ten (10%) percent of one
another, the two brokers or appraisers shall select a third qualified person.
The third qualified person shall make his or her determination in writing
within thirty (30) days of his or her selection. In such event, the prevailing
market rate (and the Base Rental payable by Tenant during the Extended Term)
shall be defined as the average of the two closest (in terms of dollars) of the
three valuations. Each party shall be responsible for paying for its own
valuation pursuant to this section; provided, however, that the cost of the
third appraiser or broker shall be shared equally by Landlord and Tenant.
Notwithstanding anything contained herein, in no event shall the
<PAGE> 22
prevailing market rental rate be less than the annual base rental payable by
Tenant during the final twelve (12) months.
3. Leasehold Improvements. Landlord shall use all reasonable efforts
substantially to complete within thirty (30) days of the date hereof the
leasehold improvements for which it is responsible (the "Leasehold
Improvements"). The Leasehold Improvements shall consist of the matters set
forth on Exhibit "B" attached hereto and made a part hereof by this reference.
Notwithstanding anything herein contained, if, for any reason, the
Leasehold Improvements are not substantially completed on or before March 1,
1996, the Tenant's obligation to pay rent shall not commence until the day
after the date of substantial completion of the Leasehold Improvements;
provided, however, that if Leasehold Improvements are not substantially
completed as a consequence of the acts or omissions of Tenant, Tenant shall be
obligated to pay Rent commencing on March 1, 1996. If the Landlord's Leasehold
Improvements are not substantially completed on or before March 1, 1996 and
such is not the result of the acts or omissions of Tenant, the Term shall be
extended by the number of days from March 1, 1996 to the date on which the
Leasehold Improvements are substantially completed.
If the Leasehold Improvements are not substantially completed by April 1,
1996 and such is not in consequence of the acts or omissions of Tenant, Tenant
shall have the right to terminate this Lease, without payment or penalty, by
serving written notice to Landlord on or before April 15, 1996.
4. Hazardous Materials.
(a) Tenant agrees that Tenant, its agents contractors, licensees or
invitees shall not handle, manufacture, store or dispose of any flammables,
explosives, radioactive materials, hazardous wastes or materials, toxic wastes
or materials, or other similar substances, petroleum products or derivatives
(collectively 'Hazardous Materials") on, under, or about the premises, without
Landlord's prior written consent (which consent shall not be unreasonably
withheld as long as Tenant demonstrates and documents to Landlord's reasonable
satisfaction (1) that such Hazardous Materials (A) are necessary or useful to
Tenant's business; and (B) will be used, kept in or about the premises; and (2)
that Tenant will give all required notices concerning the presence in or on the
premises or the release of such Hazardous Materials from the Premises) provided
that tenant may handle, store, use or dispose of products containing small
quantities of Hazardous Materials, which products are of a type customarily
found in offices and households (such as aerosol cans containing insecticides,
toner of copies, paints, paint remover, and the like) and provided further that
Tenant shall handle, store, use and dispose of any such Hazardous Materials in a
safe and lawful manner and shall not allow such Hazardous Materials to
contaminate the premises or the environment.
(b) Tenant further agrees that Tenant will not permit any substance
suspected of causing cancer or reproductive toxicity to come into contact with
groundwater under the premises. Any such substance coming into contact with
groundwater shall be considered a Hazardous Materials for purposes of this
Section.
<PAGE> 23
(c) (1) Notwithstanding the provisions hereinabove, Tenant may handle,
store, and use Hazardous Materials, limited to the types, amounts, and use
identified in the Hazardous Materials Exhibit attached hereto as Exhibit "C". If
no Hazardous Materials Exhibit is attached to this Lease, then this paragraph
(C) shall be of no force and effect. Tenant hereby certifies to Landlord that
the information provided by Tenant pursuant to this paragraph is true, correct,
and complete. Tenant covenants to comply with the use restrictions shown on the
attached Hazardous Materials Exhibit. Tenant's business and operations, and
more especially its handling, storage, use and disposal of Hazardous Materials
shall at all times comply with all applicable laws pertaining to Hazardous
Materials. Tenant shall secure and abide by all permits necessary for Tenant's
operations on the premises. Tenant shall give or post all notices required by
all applicable laws pertaining to Hazardous Materials. If Tenant shall at any
time fail to comply with this paragraph, Tenant shall immediately notify
Landlord in writing of such noncompliance.
(2) Tenant shall provide Landlord with copies of any Material
Safety Data Sheets (as required by Occupational Safety and Health Act) relating
to any Hazardous Materials to be used, kept, or stored at or on the premises, at
least thirty (30) days prior to the first use, placement, or storage of such
Hazardous Material on the premises. Landlord shall have ten (10) days following
delivery of such Material Safety Data Sheets to approve or forbid, in the
reasonable exercise of its discretion subject to the limitation contained in
Paragraph (C) above, such use, placement, or storage of a Hazardous Material on
the premises.
(3) Tenant shall not store any hazardous waste on the premises for
more than 90 days; "hazardous waste" having the meaning given it by the Resource
Conservation and Recovery Act of 1976, as amended. Tenant shall not install any
underground or above ground storage tanks on the premises. Tenant shall not
dispose of any Hazardous Material in the premises without the prior written
consent of Landlord.
(4) Any increase in the premiums for necessary insurance on the
Building which arises from Tenant's use or storage of Hazardous Materials shall
be solely at Tenant's expense. Tenant shall procure and maintain at its sole
expense such additional insurance as may be necessary to comply with any
requirement of any Federal, State or local governmental agency with
jurisdiction.
(d) If Landlord, in its sole discretion, believes that the premises or
the environment have become contaminated with Hazardous Materials that must be
removed under the laws of the state where the premises is located, in breach of
the provisions of this Lease, Landlord, in addition to its other rights under
this Lease, may enter upon the premises and obtain samples from the premises,
including without limitation the soil and groundwater under the premises, for
the purposes of analyzing the same to determine whether and to what extent the
premises or the environment have become so contaminated. Tenant shall reimburse
Landlord for the costs of any inspection, sampling and analysis that discloses
contamination for which Tenant is liable under the terms of this Lease. Tenant
may not perform any sampling, testing, or drilling to locate any Hazardous
Materials on the premises without Landlord's prior written consent.
<PAGE> 24
(e) Without limiting the above, Tenant shall reimburse, defend,
indemnify and hold Landlord harmless from and against any and all claims,
losses, liabilities, damages, costs and expenses, including without limitation,
loss of rental income, loss due to business interruption, and attorneys fees and
costs, arising out of or in any way connected with the use, manufacture,
storage, or disposal of Hazardous Materials by Tenant, its agents or contractors
on, under or about the premises including, without limitation, the costs of any
required or necessary investigation, repair, cleanup, or detoxification and the
preparation of any closure or other required plans in connection therewith,
whether voluntary or compelled by governmental authority. The indemnity
obligations of Tenant herein contained shall survive any termination of this
Lease. At Landlord's option, Tenant shall perform any required or necessary
investigation, repair, cleanup or detoxification of the premises. In such case,
Landlord shall have the right, in its sole discretion, to approve all plans,
consultants, and cleanup standards. Tenant shall provide Landlord on a timely
basis with (i) copies of all documents, reports, and communications with
governmental authorities; and (ii) notice and an opportunity to attend all
meetings with regulatory authorities. Tenant shall comply with all notice
requirements and Landlord and Tenant agree to cooperate with governmental
authorities seeking access to the premises for purposes of sampling or
inspection. No disturbance of Tenant's use of the premises resulting from
activities conducted pursuant to this paragraph shall constitute an actual or
constructive eviction of Tenant from the premises. In the event that such
cleanup extends beyond the termination of the Lease, Tenant's obligation to pay
Rent shall continue until such cleanup is completed and any certificate of
clearance or similar document has been delivered to Landlord. In no event shall
such period exceed six (6) months beyond the expiration date of the original
term. Rent during such period shall be at the rental applicable during final
twelve (12) months of the original term.
(f) Notwithstanding anything set forth in this Lease, Tenant shall only
be responsible for contamination of Hazardous Materials or any cleanup resulting
directly therefrom, resulting directly from matters occurring or Hazardous
Materials deposited (other than by contractors, agents or representatives
controlled by Landlord) during the Term, and any other period of time during
which Tenant is in actual or constructive occupancy of the premises. Tenant
shall take responsible precautions to prevent the contamination of the premises
with Hazardous Materials by third parties.
(g) It shall not be unreasonable for Landlord to withhold its consent
to any proposed assignment or sublease if (1) the proposed assignee's or
sublessee's anticipated use of the premises involves the generation, storage
use, treatment or disposal of Hazardous Materials; (2) the proposed assignee or
sublease has been required by any prior landlord, lender, or governmental
authority to take remedial action in connection with Hazardous Materials
contaminating a property if the contamination resulted from such assignee's or
sublessee's actions or use of the property in question; or (3) the proposed
assignee or sublessee is subject to an enforcement order issued by an
governmental authority in connection with the use, disposal or storage or a
Hazardous Material.
(h) In the event of any transfer of Tenant's interest under this Lease
or the termination of this Lease, by lapse of time or otherwise, Tenant shall be
solely responsible for
<PAGE> 25
compliance with any and all then effective federal, state or local laws
concerning (1) the physical condition of the premises or Building relating to
Tenant's use of the Premises or (2) the presence of Hazardous or toxic Materials
in or on the premises or Building (for example, the New Jersey Environmental
Cleanup Responsibility Act, the Illinois Responsible Property Transfer Act or
similar applicable state laws), including but not limited to any reporting or
filing requirements imposed by such laws, relating to Tenant's use of the
Premises.
5. Signage. Tenant shall not be permitted to post signage on the exterior
walls or doors or both of the premises, identifying Tenant without the prior
written consent of Landlord, which shall not be unreasonably withheld or
delayed. Any signage approved by Landlord shall be subject to such conditions
as Landlord shall reasonably required. Such conditions shall include, without
limitation, the following: (a) such signage is in conformity with the signage
of the other tenants at the Building; (b) such signage is in compliance with
all applicable governmental requirements and (c) Tenant shall remove such
signage upon the expiration or termination of the Lease and repair any damage
to the premises resulting from the installation or removal of such signage.
6. Parking. The parking spaces shown in Exhibit "D" attached hereto shall
be designated as Tenant's parking spaces during the term of the Lease.
<PAGE> 26
LANDLORD:
BOULEVARD BANK, N.A., not personally but
solely as Trustee under a certain Trust
Agreement dated April 14, 1986 a/k/a/
Trust Number 8364
By: [illegible]
-------------------------------------
Its: Beneficiary of Trust 8364
-------------------------------
TENANT:
GRIFFITH MICRO SCIENCE, INC.
By: [illegible]
-------------------------------------
Its:
---------------------------------
February 5, 1996
<PAGE> 27
EXHIBIT "A"
-----------
[SITE PLAN]
<PAGE> 28
EXHIBIT "B"
-----------
MODIFICATIONS TO SPACE FOR GRIFFITH MICRO SCIENCE
-------------------------------------------------
[SITE PLAN]
<PAGE> 29
EXHIBIT "C"
-----------
(HAZARDOUS MATERIAL EXHIBIT)
<PAGE> 1
EXHIBIT 10.17
INDUSTRIAL BUILDING LEASE No. 1201 GEORGE E. COLE
(For Use In Illinois) July, 1979 Legal Forms
CAUTION: Consult a lawyer before using or acting under this form.
All warranties, including merchantability and fitness, are excluded.
INDUSTRIAL BUILDING LEASE
DATE OF LEASE TERM OF LEASE MONTHLY RENT
Beginning Ending
April 12, 1984 Described in R2 of the Rider Described in R1 of the Rider
LOCATION OF PREMISES:
7775 Quincy Street, Willowbrook, IL 60521, as more fully described in the
legal description attached hereto and incorporated herein as Exhibit A
Purpose:
Sterilization process of various products.
LESSEE LESSOR
MICRO-BIOTROL CO. NAME AND Geo. A. Rediehs Co., Inc.
DIV. OF GRIFFITH LABORATORIES BUSINESS 8101 S. County Line Road
12200 S. CENTRAL AVENUE ADDRESS Hinsdale IL 60521
ALSIP, ILL 60658
In consideration of the mutual convenants and agreements herein stated,
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor solely for
the above purpose the premises designated above (the "Premises"), together with
the appurtenances thereto, for the above Term.
RENT 1. Lessee shall pay Lessor or Lessor's agent as rent for the
Premises the sum stated in R1, monthly in advance, until
termination of this lease, at Lessor's address stated above
or such other address as Lessor may designate in writing.
CONDITION 2. Lessee has examined and knows the condition of the
UPKEEP Premises and has received the same in good order and repair,
PREMISES and acknowledges that no representations as to the condition
and repair thereof have been made by Lessor, or his agent,
prior to or at the execution of this lease that are not
herein expressed; Lessee will keep the Premises including
all appurtenances, in good repair, replacing all broken
glass with glass of the same size and quality as that
broken, and will replace all damaged plumbing fixtures with
others of equal quality, and will keep the Premises in a
clean and healthful condition according to the applicable
municipal ordinances and the direction of the proper public
officers during the term of this lease at Lessee's expense,
and will remove the snow and ice from the sidewalk abutting
the Premises; and upon the termination of this lease, in any
way, will yield up the Premises to Lessor, in good condition
and repair, loss by fire and ordinary wear excepted, and
will deliver the keys therefor at the place of payment of
said rent.
LESEE NOT 3. Lessee will not allow the Premises to be used and will
MISUSE; not load floors with machinery or goods beyond the floor
SUBLET; load rating prescribed by applicable municipal ordinances,
MENT and will not allow the Premises to be occupied in whole, or
in part, by any other person, and will not sublet the same
or any part thereof, nor assign this lease without in each
case the written consent of the Lessor first had, and Lessee
will not permit any transfer by operation of law of the
interest in the Premises acquired through this lease, and
will not permit the Premises to be used for any unlawful
purpose, or for any purpose that will injure the reputation
of the building or increase the fire hazard of the building,
or disturb the tenants or the neighborhood, and will not
permit the same to remain vacant or unoccupied for more than
ten consecutive days; and will not allow any signs, cards or
placards to
1
<PAGE> 2
be posed, or placed thereon, nor permit any alteration of or
addition to any part of the Premises, except by written
consent of Lessor; all alterations and additions to the
Premises shall remain for the benefit of Lessor unless
otherwise provided in the consent aforesaid.
MECHANIC'S 4. Lessee will not permit any mechanic's lien or liens to be
LIEN placed upon the Premises or any building or improvement
thereon during the term hereof, and in case of the filing of
such lien Lessee will promptly pay same. If default in
payment thereof shall continue for thirty (30) days after
written notice thereof from Lessor to the Lessee, the Lessor
shall have the right and privilege at Lessor's option of
paying the same or any portion thereof without inquiry as to
the validity thereof, and any amounts so paid, including
expenses and interest, shall be so much additional
indebtedness hereunder due from Lessee to Lessor and shall
be repaid to Lessor immediately on rendition of bill
therefor.
INDEMNITY 5. Lessee covenants and agrees that he will protect and
FOR save and keep the Lessor forever harmless and indemnified
ACCIDENTS against and from any penalty or damages or charges imposed
for any violation of any laws or ordinances, whether
occasioned by the neglect of Lessee or those holding under
Lessee, and that Lessee will at all times protect, indemnify
and save and keep harmless the Lessor against and from any
and all loss, cost, damage or expense, arising out of or
from any accident or other occurrence on or about the
Premises, causing injury to any person or property
whomsoever or whatsoever and will protect, indemnify and
save and keep harmless the Lessor against and from any and
all claims and against and from any and all loss, cost,
damage or expense arising out of any failure of Lessee in
any respect to comply with and perform all the requirements
and provisions hereof. SEE RIDER A R24.
NON- 6. Except as provided by Illinois statute, Lessor shall not
LIABILITY be liable for any damage occasioned by failure to keep the
LESSOR Premises in repair, nor for any damage done or occasioned by
or from plumbing, gas, water, sprinkler, steam or other
pipes or sewerage or the bursting, leaking or running of any
pipes, tank or plumbing fixtures, in, above, upon or about
Premises or any building or improvement thereon nor for any
damage occasioned by water, snow or ice being upon or coming
through the roof, skylights, trap door or otherwise, or for
any damages arising from acts or neglect of any owners or
occupants of adjacent or contiguous property.
WATER, 7. Lessee will pay, in addition to the rent above specified,
GAS AND all water rents, gas and electric light and power bills
ELECTRIC taxed, levied or charged on the Premises, for and during the
CHARGES time for which this leas is granted, and in case said water
rents and bills for gas, electric light and power shall not
be paid when due, Lessor shall have the right to pay the
same, which amounts so paid, together with any sums paid by
Lessor to keep the Premises in a clean and healthy
condition, as above specified, are declared to be so much
additional rent and payable with the installment of rent
next due thereafter.
KEEP 8. Lessee at his own expense will keep all improvements in
PREMISES IN good repair (injury by fire, or other causes beyond Lessee's
REPAIR control excepted) as well as in a good tenantable and
wholesome condition, and will comply with all local or
general regulations, laws and ordinances applicable thereto,
as well as lawful requirements of all competent authorities
in that behalf. Lessee will, as far as possible, keep said
improvements from deterioration due to ordinary wear and
from falling temporarily out of repair. If Lessee does not
make repairs as required hereunder promptly and adequately,
Lessor may but need not make such repairs and pay the costs
thereof, and such costs shall be so much additional rent
immediately due from and payable by Lessee to Lessor.
ACCESS TO 9. Lessee will allow Lessor free access to the Premises for
PREMISES the purpose of examining or exhibiting the same, or to make
any needful repairs, or alternations
2
<PAGE> 3
thereof which Lessor may see fit to make.
ABANDON- 10. If Lessee shall abandon or vacate the Premises, or if
MENT AND Lessee's right to occupy the Premises be terminated by
RELETTING Lessor by reason of Lessee's breach of any of the covenants
herein, the same may be re-let by Lessor for such rent and
upon such terms as Lessor may deem fit; and if a sufficient
sum shall not thus be realized monthly, after paying the
expenses of such re-letting and collection to satisfy the
rent hereby reserved. Lessee agrees to satisfy and pay all
deficiency monthly during the remaining period of this lease
including therein all necessary repairs and alterations.
HOLDING 11. Lessee will, at the termination of this lease by lapse
OVER of time or otherwise, yield up immediate possession to
Lessor, and failing so to do, will pay as liquidated
damages, for the whole time such possession is withheld, the
sum of double the base monthly rental on a per diem basis;
but the provisions of this clause shall not be held as a
waiver by Lessor of any right of re-entry as hereinafter set
forth; nor shall the receipt of said rent or any part
thereof, or any other act in apparent affirmance of tenancy,
operate as a waiver of the right to forfeit this lease and
the term hereby granted for the period still unexpired, for
a breach of any of the covenants herein.
EXTRA FIRE 12. There shall not be allowed, kept or used on the
HAZARD Premises any inflammable or explosive liquids or materials
save such as may be necessary for use in the business of the
Lessee, and in such case, any such substances shall be
delivered and stored in amount, and used, in accordance with
the rules of the insurance carrier of the Lessee and
statutes and ordinances now or hereafter in force.
13. [SECTION DELETED]
NO RENT 14. Lessee's covenant to pay rent is and shall be
DEDUCTION independent of each and every other covenant of this lease
OR SET OFF Lessee agrees that any claim by Lessee against Lessor shall
not be deducted from rent nor set off against any claim for
rent in any action.
RENT AFTER 15. It is further agreed, by the parties thereto, that after
NOTICE OR the service of notice, or the commencement of a suit or
SUIT after final judgment for possession of the Premises, Lessor
may receive and collect any rent due, and the payment of
said rent shall not waive or affect said notice, said suit,
or said judgment.
PAYMENT 16. Lessee will pay and discharge all reasonable costs,
OF COSTS attorney's fees and expenses that shall be made and incurred
by Lessor in enforcing the covenants and agreements of this
lease, if Lessor prevails.
RIGHTS 17. The rights and remedies of Lessor under this lease are
CUMULA- cumulative. The exercise or use of any one or more thereof
TIVE shall not bar Lessor from exercise or use of any other right
or remedy provided herein or otherwise provided by law, nor
shall exercise nor use of any right or remedy by Lessor
waives any other right or remedy.
18. [SECTION DELETED]
19. [SECTION DELETED]
PLURALS; 20. The words "Lessor" and "Lessee" wherever herein
SUCCESS- occurring and used shall be construed to mean "Lessors" and
ORS Lessees" in case more than one person constitutes either
party to this lease; and all the covenants and agreements
contained shall be binding upon, and inure to, their
respective successors, heirs, executors, administrators and
assigns and may be exercised by his or their attorney or
agent.
3
<PAGE> 4
SEVERABIL- 21. Wherever possible each provision of this lease shall be
ITY interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this lease shall be
prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such
provision or the remaining provisions of this lease.
4
<PAGE> 5
ATTACH RIDERS HERE
If this instrument is executed by a corporation, such execution has been
authorized by a duly adopted resolution of the Board of Directors of such
corporation.
This lease consists of ______ pages numbered 1 to ______, including a
rider consisting of ______ pages, identified by Lessor and Lessee.
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the Date of Lease stated above.
LESSEE: LESSOR:
(seal) (seal)
- ------------------------------ -------------------------------
(seal) (seal)
- ------------------------------ -------------------------------
ASSIGNMENT BY LESSOR
On this ______________________, 19____, for value received, Lessor hereby
transfers, assigns and sets over to
__________________________________________________ all right, title and
interest in and to the above Lease and the rent thereby reserved, except rent
due and payable prior to _________________, 19_____.
(seal)
-------------------------------
(seal)
-------------------------------
GUARANTEE
On this _______________, 19____, in consideration of Ten Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the undersigned Guarantor hereby guarantees the payment
of rent and performance by Lessee, Lessee's heirs, executors, administrators,
successors or assigns of all covenants and agreements of the above Lease.
(seal)
-------------------------------
(seal)
-------------------------------
Note: Use Form Number 12-1P for assignment by Lessee.
5
<PAGE> 6
RIDER
This Rider is attached to and made a part of the Lease dated
April 12, the premises commonly known as 7775 Quincy Street,
Willowbrook, Illinois.
MONTYLY R1. The monthly rental for the premises described above
RENT shall be 6 per month for the first year of occupancy, $9,362.29
per month for the second and third years of occupancy and
$10,485.76 per month for the fourth and fifth years of
occupancy.
The monthly rental is based on a total square footage
of 44,939 at a $2.25 for year one, $2.50 for years two and three
and $2.80 for years four and five.
LEASE R2. The term of this Lease shall begin exactly 30 days
TERM after Lessee is approval by the Village of Willowbrook for
occupancy and shall continue for a term of five (5) years
ending, the day before the beginning date in the year 1989.
Lessee shall have ninety (90) days from the date of this Lease,
April 12, 1984, to attain approval for occupancy from the
Village of Willowbrook. If approval is not granted within ninety
(90) days from the date hereof Lessor may declare this Lease
null and void.
OPTIONS R3. Lessee has the option to renew this Lease for a term of
five (5) years beginning on the day after termination in 1989
and ending on the day before the starting date of this option in
the year 1994. If Lessee exercises this option and maintains
all promises and covenants listed herein Lessee has a second
option to renew this Lease for a term of five (5) years
beginning on the day after termination in 1994 and ending on the
day before the starting date of this second option in the year
1999. If Lessee exercises this second option and maintains all
promises and covenants listed herein Lessee has a third option
to renew this Lease for a term of five (5) years beginning on
the day after termination in 1999 and ending on the day before
the starting date of this third option in the year 2004. Lessee
shall notify Lessor of Lessee's decision to exercise each option
in writing six (6) months prior to the beginning dat of each
option.
The base monthly rental shall be adjusted on the
beginning date of each option (adjustment date), if the
Consumer's Price Index for Urban Wage Earners and Clerical
Workers, United States Department of Labor (based on all items
for the period 1967-100) for the month preceding the adjustment
date, is higher than the index figure for the month in which
this Lease began in 1984. The adjustment shall be made and the
rent for the balance of the term of the Lease shall be arrived
at by multiplying eighty percent (80%) of the base monthly
rental
<PAGE> 7
for years four and five, by a fraction, the numerator of which
shall be the index figure for the month preceding such
adjustment date and the denominator of which shall be the index
figure for the month in which this Lease began in 1984
provided, however, that the rent for the new period shall under
no circumstances be less than the last preceding rental. For
example: Assume the Lease begins in May of 1984 and the Index
figure for May, 1984 is 200. The adjustment date is May -
1989. Assume the last Consumer Price Index prior to May, 1989
is 220. The consumer Price Index would have been increased by
20/200 or 10% and the annual base rent would increase effective
beginning date of the first option 1989 by 8.0%. One-twelfth
(1/12) of such new rent shall be paid on the first day of each
rental month in advance, as soon as the relevant index figure
becomes available. It is understood that the above Index is now
being published monthly by the United States Department of
Labor. Should it be published at other intervals, the new
Index hereinabove mentioned shall be arrived at from the Index
or Indices published most closely approximating the month
immediately preceding the month in which the adjustment is to
be effective. Should the manner of computing such Index be
changed, the conversion factor designed by the Department to
adjust the new Index to the one previously in use and
adjustment to the new Index shall be made on the basis of such
conversion factor. Should the publication of said Index be
discontinued, then such Index as may be published by another
United States governmental agency as most nearly approximates
the Index herein first above mentioned shall govern and be
substituted as the Index to be used, subject to the application
of an appropriate conversion factor to be furnished by the
governmental agency publishing the adopted Index. In the event
of any controversy arising as the proper adjustment for rental
payments, as herein provided, Lessee shall continue paying the
rental under the last preceding rental adjustment as herein
provided, until such time as said controversy has been settled,
at which time adjustment will be made retroactive to the
beginning of the adjustment period in which the controversy
arose.
REAL R4. Lessee shall pay as additional rental for the
ESTATE demised Premises all taxes and assessments, general and
TAXES special, water and sewer charges and all other impositions,
ordinary and extra-ordinary, of every kind and nature
whatsoever, which are levied, assessed or imposed upon said
Premises or any part thereof, or upon any building or
improvements at any time situated thereon, with respect to any
periods during the term of this Lease (including any taxes
levied or assessed upon Lessor's interest under this Lease),
together with all unpaid installments becoming due and payable
during the term hereof, of special assessments levied against
said premises for improvements completed or not yet completed;
all of
2
<PAGE> 8
which taxes, assessments, charges and other impositions shall
be paid by Lessee before they shall respectively become
delinquent and in any case within such time as to prevent any
sale or forfeiture of the Premises thereof: provided, however
that the liability of the Lessee with respect to special
assessments shall be limited to the payment of such
installments which mature during the term of this Lease,
together with interest thereon, and Lessee shall not be
obligated to pay any installments maturing subsequent to the
term of this Lease. If the special assessments are for
improvements with a life longer than the term of the Lease,
Lessee shall pay its pro rata share of such special
assessments. The Lessor warrants that there are no current
special assessments or charges levied against the Premises by
the Village of Willowbrook and Lessor has no knowledge of any
proposed special assessments or charges to be levied against
the property. General taxes for 1983 (which are levied and
payable in 1984) shall be paid by the Lessor when the tax bill
is received in 1984. General taxes for 1984 shall be prorated
when the tax bill is received in 1985 so that Lessor shall pay
for all taxes up to the date when the Village approves Lessee
for occupancy and Lessee shall pay for all such taxes from said
date and afterwards. General taxes for the year 2004 (which are
levied and payable in 2005) shall be prorated based on the tax
bill for 2003 such that Lessee shall on the last day of the
term of this Lease, pay Lessor its prorated share of the amount
of such 2003 general tax bill. Similarly, if Lessee shall
decide not to renew either the first, second or third option at
that time the general taxes for the last year of the lease
shall be prorated based on the tax bill from the preceding year
and payable the last day of the term of the Lease.
INSURANCE R5. Lessee shall maintain at its expense at all times
during the term of this lease, or shall reimburse Lessor for
the cost of maintaining, comprehensive general liability
insurance for the benefit of Lessor against claims for personal
injury, death or property damage. Such comprehensive general
liability insurance shall be; either (i) in the amount of at
least One Million Dollars ($1,000,000) in respect to any one
person, and One Million Dollars ($1,000,000) in respect to
property damage, or (ii) a One Million Dollar ($1,000,000)
combined single limit policy, and shall cover the entire
Premises and any sidewalks or areaways in front of or adjoining
the Premises and shall be with insurance companies and in form
satisfactory to Lessor. Lessee shall not violate or permit to
be violated any of the conditions of any of such policies and
shall perform and satisfy all requirements of the companies
writing them. Such comprehensive general liability insurance
shall be adjusted at the beginning date of each option in the
same manner as the base monthly rental shall be adjusted as
explained in R3. However, such comprehensive general liability
insurance shall under no circumstances be less than the amount
stated above.
3
<PAGE> 9
b. Lessee shall maintain at its expense all risk property
insurance of the Premises in form and in amounts satisfactory to
the Lessor. The insurance coverage shall be in the amount of no
less than Nine Hundred Fifty Thousand ($950,000) which is the
approximate replacement cost of all buildings, improvements, and
betterments located on the Premises, with all proceeds of
insurance payable to Lessee, Lessor and any mortgages of the fee
as their respective interests appear. Lessee shall provide that
the amount of insurance coverage shall be adjusted over the term
of the Lease to compensate for inflation so that the buildings,
improvements and betterments will be insured at their current
replacement cost during the term of the lease.
c. Lessee shall at its expense maintain insurance coverage
over damage from sprinkler leakage.
d. Lessee shall deposit with Lessor policies or
certificates of insurance with respect to all insurance required
to be maintained by Lessee hereunder, each such policy or
certificate to bear an endorsement that such insurance shall not
be cancelled except on thirty (30) days written notice to Lessor
and Lessee. The policies of insurance to be maintained by Lessee
hereunder shall be written by a company or companies
satisfactory to Lessor, authorized to do business in Illinois,
and shall name Lessee, Lessor and any mortgagees of the fee as
insureds thereunder, as their respective interests may appear.
UNTENANT- R6. If the Premises are made untenantable by fire or other
ABILITY casualty, Lessee may elect:
(a) to terminate this Lease as of the date of the fire or
casualty by notice to Lessor within sixty (60) days after that
date, or
(b) to direct Lessor to proceed with all due diligence to
repair, restore and rehabilitate the Premises at Lessor's
expense in which latter event this lease shall not terminate.
In the event the Lease is not terminated pursuant to this
provision, rent shall abate on a perdiem basis during the period
of untenantability.
In the event of the termination of this Lease pursuant to
this section, rent shall be apportioned on a perdiem basis and
paid to the date of the fire or other casualty. In the event
that the demised premises are partially damaged by fire or other
casualty but are not made wholly untenantable, then Lessor shall
except during the last year of the term hereof, proceed with all
due diligence to repair and restore the Premises and the rent
shall abate in proportion to the nonusability of the Premises
during the period of untenantability.
ALTERA- R7. Lessee may after first obtaining Lessor's written
TIONS consent, at its expense, make additions to and alterations of
the building, structure or other
4
<PAGE> 10
improvement to the Premises, and Lessee may make substitutions
and ents for the same on the Premises, provided, that (i) the
market value of the Premises shall not thereby be lessened, (ii)
the foregoing actions shall be performed in a good and
workmanlike manner, and (iii) such additions, alterations,
substitutions and replacements shall be expeditiously completed
in compliance with all laws, ordinances, orders, rules,
regulations and requirements applicable thereto. All work done
in connection with each such addition, alteration, substitution
or replacement shall comply with the requirements of any
insurance policy required to be maintained by Lessee hereunder
and with the orders, rules and regulations of the National Fire
Protection Association or any other body exercising similar
functions. Lessee shall promptly pay all costs and expenses of
each such addition, alteration, substitution or replacement and
shall discharge all liens filed against the Premises arising out
of the same. Lessee shall procure and pay for all permits and
licenses required in connection with any such addition,
alteration, substitution or replacement. Lessee shall promptly
attain a waiver of lien from all persons receiving any payment
and their subcontractors, employees and suppliers of materials
and Lessee shall provide proof of such waiver upon Lessor's
written request.
b. Lessee may without Lessor's consent, at its expense,
install assemble or place upon the Premises any items of
machinery or equipment used or useful in Lessee's business, in
each case upon compliance with all the terms and conditions set
forth in paragraph R7. Such machinery or equipment shall be
and remain the property of Lessee. Lessee may remove the same
from the Premises at any time, provided that Lessee shall be
required to repair any damage to the Premises resulting from
such removal.
CONDEM- R8. If the whole of the Premises shall be taken or
aNATION condemned for a public or quasipublic use or purpose by any
competent authority or if such a portion of the premises,
including however, a portion of the improvements, shall be so
taken that as a result thereof the balance is not suitable for
Lessee's continued use or occupancy, then in either of such
events, the Lease term shall terminate upon delivery of
possession to the condemning authority and any award,
compensation or damages (hereinafter sometimes called the
"award") shall be paid to and be the sole property of Lessor
whether such award shall be paid to and be the sole property
of Lessor or whether such award shall be made as compensation
for diminution of the value of the leasehold or the fee of the
Premises or otherwise and Lessee hereby assigns to Lessor all
of Lessee's right, title and interest in and to any and all
such award. However, if Lessee receives any compensation or
award for moving expenses, Lessee shall be entitled to the
full amount of such moving compensation or award. Lessee
shall continue to
5
<PAGE> 11
perform all of the covenants and provisions of this Lease,
including ent of rent until Lessee is required to make delivery
of possession to the condemning authority.
b. If only part of the Premisis shall so be taken or
condemned, and as a result thereof the balance is suitable for
the Lessee's continued use or occupancy, this Lease shall not
terminate and Lessor at its sole cost and expense, shall repair
and restore the Premises and all improvements thereon. Lessor
shall promptly and diligently proceed to make a complete
architectural unit of the remainder of the improvements. There
shall be an equitable abatement in rental following such taking
of condemnation.
c. Lessee may at its own expense take independent action
against the public authority exercising the power of eminent
domain for any moving expenses, for the taking of any of
Lessee's trade fixtures and such other elements of damage as
may be awardable to Lessee in any independent action.
DEFAULT R9. If (i) the Premises, or any part thereof, shall become
BY vacant or deserted during the term hereof: or (ii) if default
LESSEE be made in the payment of rent or any item of additional rent,
or any part hereof and said default shall continue for a period
of ten (10) days after written notice to Lessee: or (iii) if
default be made in the performance of any of the terms,
covenants, and conditions in this Lease contained on the part
of Lessee to be kept or performed and if any default specified
in this subparagraph "(iii)" shall continue for a period of
thirty (30) days after written notice and demand, unless Lessee
in good faith commenced the curing of such default within such
thirty (30) day period and cannot with reasonable diligence
cure such default within said period of thirty (30) days, in
which event Lessee shall have reasonable time to do so; or (iv)
if at any time prior to or on the date fixed for commencement
of the term of this Lease, or at any time during the term
demised, there shall be filed by or against Lessee in any court
of competent jurisdiction a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Lessee's property,
or if Lessee makes an assignment for the benefit of creditors
or takes advantage of any insolvency act, and within thirty
(30) days thereof Lessee fails to secure a discharge thereof;
Lessor may, if Lessor so elects, at any time thereafter,
terminate this Lease and the term hereof on giving Lessee (a)
five (5) days' notice in writing of Lessor's intention to do so
if the default is the failure of Lessee to pay rent or any item
of additional rent as set forth in (ii) or (b) fifteen (15)
days' notice in writing in respect to any other event or
default set forth above.
6
<PAGE> 12
STRUC- R10. Lessor agrees to keep the buildings and improvements
TURAL in good structural condition and make all necessary structural
REPAIRS repairs needed during the term of this Lease, except for any
damage thereto caused by either (i) fire or other casualty,
except as provided for in R6 or (ii) any act or negligence of
the Lessee or its employees, agents licensees or contractors.
Structural repairs shall be deemed to be all major repairs only
to the roof, and outside masonry structure. If Lessor should
fail to cause such structural repairs to be made in a timely
fashion after written notice that said repairs are necessary,
then Lessee may cause same to be made and to deduct the
expenses thereof from the rent which is due hereunder. Lessee
shall be responsible for repairs to the roof including but not
limited to, all damage caused by wind, maintenance of perimeter
flashings, HVAC flashings and vent flashings. Lessor shall be
responsible for the life of the roof and major replacement
except as listed above.
DELAYS R11. Whenever a period of time is provided in this Lease
for Lessor or Lessee to do or perform any act or thing, Lessor
and Lessee shall not be liable or responsible for any delays
due to strikes, lockouts, casualties, acts of God, war,
governmental regulation or control or other causes beyond the
reasonable control of Lessor or Lessee and the time for
performance specified herein shall be extended for the amount
of time Lessor or Lessee is so delayed.
MUTUAL R12. Whenever (a) any loss, cost, damage or expense
WAIVER resulting from fire, explosion or any other casualty or
OF occurrence is incurred by either of the parties to this Lease
SUBRO- in connection with the Premises or the building in which the
GATION Premises are located, and (b) such party is then covered in
RIGHTS whole or in part by insurance with respect to such loss, cost,
NOTICES damage or expense, then the party so insured hereby releases
the other party from any liability it may have on account of
such loss, cost, damage or expense to the extent of any amount
recovered by reason of such insurance, and waives any right of
subrogation which might otherwise exist in or accrue to any
person on account thereof, provided that such release of
liability and waiver of the right of subrogation shall not be
operative in any case where the effect thereof is to invalidate
such insurance coverage or increase the cost thereof (provided,
that in the case of increased cost, the other party shall have
the right, within thirty (30) days following written notice, to
pay such increased cost, thereupon keeping such release and
waiver in full force and effect).
NOTICES R13. Any notice or demand from Lessor to Lessee or from
Lessee to Lessor shall be in writing and shall be mailed by
prepaid United States Registered
7
<PAGE> 13
Certified Mail, addressed to Lessee at 12200 S. Central Avenue,
llinois 60658 or some other address as Lessee shall have last
designated by notice in writing to Lessor, and, if to Lessor, to
the place then established for the payment of rent, or such
other address as Lessor shall have last designated by notice in
writing to Lessee. The customary return receipt shall be
conclusive evidence of such service.
SUBRODI- R14. That the rights and interests of Lessee under this
NATION Lease shall be subject and subordinate to any first mortgages
OF or trust deeds that are now or hereafter may be placed upon the
LEASE Premises, and to any and all advances to be made thereunder,
and to the interest thereon, and all extensions and
modifications thereof, if the mortgagee or trustee named in
said mortgages or trust deeds or their successors and assigns
shall elect to subject and subordinate the rights and interest
of Lessee under this Lease to the lien of its mortgage or trust
deed; that any mortgagee or trustee or their successors and
assigns thereto may elect to give the rights and interest of
Lessee under this lease priority over the lien of its mortgage
or trust deed; that in the event of either such election and
upon notification by such mortgagee or trustee or their
successors and assigns thereto to Lessee to that effect, the
rights and interest of Lessee under this Lease shall be deemed
to be subordinate to, or to have priority over, as the case may
be, the Lien of said mortgage or trust deed, notwithstanding
whether this Lease is dated prior to or subsequent to the date
of said mortgage or trust deed; that Lessee shall execute and
deliver whatever instruments may be required for such purposes,
and in the event Lessee does hereby make, constitute and
irrevocably appoint Lessor as its attorney in fact and in its
name, place and stead so to do. In the event such mortgagee or
trustee would become the landlord the mortgagee or trustee
agrees to allow Lessee to remain on the leased Premises as long
as Lessee is not in default on rental payments.
ESTOPPEL R15. At any time and from time to time, Lessee agrees, upon
CERTIFI- request in writing from Lessor, to execute, acknowledge and
CATES deliver to Lessor a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if there
have been modifications, that the new is in full force and
effect as modified and stating the modifications) the dates to
which the rent and other charges have been paid and any other
factual data relating to this Lease or the Premises which
Lessor may request.
ASSIGN- R16. Lessee may not sublet all or any part of the Premises
MENT or assign this lease to any person, firm or corporation without
AND the prior written consent of Lessor.
SUBLETTING
8
<PAGE> 14
RELATION- R17. Nothing contained herein shall be deemed or construed
SHIP by the parties hereto nor by any third party as creating the
OF THE relationship of principal and agent or of partnership or of
PARTIES joint venture between the parties hereto, it being understood
and agreed that neither the method of computation of rent nor
any other provision contained, nor any acts of the parties
hereto, shall be deemed to create any relationship between the
parties hereto other than the relationship of Lessor and
Lessee. Whenever herein the singular number is used, the same
shall include the plural, and the neuter gender shall include
the masculine and feminine genders.
INTEREST R18. All amounts owed by the Lessee to the Lessor
ON UNPAID hereunder shall be deemed to be additional rent and shall,
AMOUNTS unless otherwise provided herein, be paid within thirty (30)
days from the date the Lessor renders statements and account
thereof.
APPLICABLE R19. The laws of the State of Illinois shall govern the
LAW AND validity, performance and enforcement of this Lease. The
CPMSTRUC- invalidity or unenforceability of any provision of this Lease
TION shall not affect or impair any other provision. The headings
of the several paragraphs contained herein are for convenience
only and do not define, limit or construe the contents of such
paragraphs.
SHORT R20. Lessee agrees not to record this Lease, and Lessor
FORM and Lessee agree to execute, acknowledge and deliver, if either
LEASE party shall so request, a "Short Form Lease" suitable for
recording.
SECURITY R21. Lessee shall deposit with Lessor one month's rent at
DEPOSIT the beginning date of this Lease as a security deposit.1 Lessor
shall return the security deposit plus interest earned to
Lessee upon the termination of this Lease, less any amounts
required to repair and replace any damage or destruction to the
Premises caused by Lessee or its employees, agents, licensees
and contractors. In the event Lessee exercises the five (5)
year option beginning in 1989. Lessee shall deposit with Lessor
any additional monies necessary to have one (1) full month's
rental at the new base monthly rental amount on deposit as a
security deposit. This same procedure shall be followed in the
event Lessee exercises options two and three.
FIRE R22. Lessee agrees to pay for the fire alarm which is
ALARM billed on an annual basis. The fire alarm bill shall be
prorated so that Lessor shall pay for that portion up to the
date when the Village of Willowbrook approves Lessee for
occupancy and Lessee shall pay for that portion from said date
of approval and afterwards.
9
<PAGE> 15
Upon termination of the lease in either 1989, 1994, 1999 or
2004 Lessor and Lessee shall pay their prorated share of the
fire alarm bill for that final year.
IMPROVE- R23. Lessor agrees to carpet all existing offices at a cost
MENTS not to exceed Nine Dollars ($9.00) per square yard. Lessee
shall have the option to chose such carpeting and notify Lessor
of its choice.
R24. However, Lessee shall not be responsible for any acts
of negligence caused by Lessor or its agents, unless Lessor or
its agents are under the direction of Lessee.
10
<PAGE> 16
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of
the day and year first above written.
GEORGE A. REDIEHS, CO., INC.
By: /s/ George A. Rediehs
----------------------------------
George A. Rediehs
By: /s/ Georgetta R. Rediehs
----------------------------------
Georgetta R. Rediehs
ATTEST:
/s/ Carol Rediehs
- --------------------------------------
Secretary
GRIFFITH LABORATORIES
By: [illegible]
----------------------------------
MICRO BIOTROL CO.
DIVISION OF GRIFFITH LABOR
By: /s/ Donald E. Alguire
----------------------------------
President
ATTEST:
/s/ James S. Legg
- --------------------------------------
Assistant Secretary
11
<PAGE> 17
EXHIBIT A
Lot 22 is Willowbrook Executive Plaza, being a Sub of part of
the SE 1/4 of Section 26, Township 38N Range 11, E of the 3rd
Principal Meridan, according to the Plat thereof recorded July 8,
1975 as Doc. R75-33298, in DuPage County, Illinois together with
an adjoining 1.06 acres of real estate.
12
<PAGE> 18
SECOND RIDER
This Second Rider is attached to and made a part of the Lease dated April
12, 1984 for the premises commonly known as 7775 Quincy Street, Willowbrook,
Illinois.
2R1. Paragraph R2 of the first Rider to this Lease is hereby renounced in
whole by the parties to this Lease and is deleted from said Lease. Paragraph
2R2 shall be substituted for R2.
2R2. The term of this Lease shall begin exactly thirty (30) days after
Lessee is granted approval by the Village of Willowbrook for occupancy and
shall continue for a term of five (5) years ending the day before the beginning
date in the year 1989. Lessee shall have ninety (90) days from the date of
this Lease, April 12, 1984, to attain approval for occupancy from the Village
of Willowbrook. If approval is not granted within ninety (90) days from the
date hereof Lessee shall pay to the Lessor the sum of $8,426.06 per month to a
maximum amount of $25,278.18 in consideration of Lessor's extension of the time
in which approval from the Village of Willowbrook must be granted for an
additional ninety (90) days. Such payment shall not be considered rent and the
term of the Lease shall begin as set out above.
The first payment under this paragraph shall be made July 12, 1984.
Should approval by the Village of Willowbrook occur during any month for
which the payment has been made, further payments under this paragraph shall
not be required and the pro rata share of the balance paid for the remainder of
that month shall be credited towards rental payment for the first month's rent.
Thereafter, rent shall be paid according to the terms and amounts set out in
paragraph R1 of the first Rider.
2R3. If approval by the Village of Willowbrook is not granted within 180
days from the date of this Lease, Lessor may declare this Lease null and void.
<PAGE> 19
IN WITNESS WHEREOF, Lessor and Lessee have executed this Second Rider as
of the day and year first above written.
GEORGE A. REDIEHS, CO., INC.
By: /s/ George A. Rediehs
-----------------------------------
George A. Rediehs
By: /s/ Georgetta R. Rediehs
-----------------------------------
Georgetta R. Rediehs
ATTEST:
/s/ George A. Rediehs
- ------------------------------------
Secretary
GRIFFITH LABORATORIES
By: /s/ James S. Legg
-----------------------------------
Assistant Secretary
MICRO-BIOTROL CO.
DIVISION OF GRIFFITH LABORATORIES
By: /s/ Donald E. Alguire
-----------------------------------
President
ATTEST:
- ------------------------------------
Date: 6th day of July, 1984.
--------
2
<PAGE> 20
SECOND RIDER
This Second Rider is attached to and made a part of the Lease dated June
24, 1986 for the premises commonly known as 7775 Quincy Street Willowbrook
Illinois.
2R1. RENTAL ADJUSTMENTS. Reference is hereby made to paragraph R3 of the
First Rider regarding options and rental adjustments. The adjustment and
option dates are as stated in said paragraph, however, the calculation of all
three adjustments shall be as follows: if the Consumer's Price Index, titled,
"All Items and Major Group Figures for All Urban Consumers" (CPI-U) issued by
the United States Department of Labor (based on all items for the period
1967-100) for the month preceding the adjustment date is higher than the index
figure for October of 1986 for the first adjustment, October of 1989 for the
second adjustment date and October of 1994 for the third adjustment date, then
the adjustment shall be made and the rent for the next annual rental period
shall be calculated as per this paragraph, provided, however, that the rent for
the next annual rental period shall under no circumstances be less than the
then current annual rental. To figure the percentage increase between any two
(2) months subtract the CPI index figure for the earlier month from the CPI
figure for the later month, then divide that number by the index for the
earlier month and multiply by 100, then multiply that figure by 90%, since the
increase is being calculated at 90% of the full CPI increase. For example, the
CPI figure for October 1986 was 330.5 and the CPI figure for September 1989 was
374.6. The calculation would be, 374.6 - 330.5 = 44.10, 40.10 divided by 330.5
= .1335, .1335 x 100 = 13.35, 13.35 x .90 (90%) = 12.02. The annual base rent
for the next rental period would increase effective October 1,1989 by 12.02%.
One twelfth (1/12) of such new rent shall be paid on the first day of each
calendar month in advance. The rental increase for option one and option two
shall be calculated in the same way and the CPI figures to use shall be as
follows; for the first option the index for the earlier month shall be the
index figure for September 1989 and the index for the later month shall be the
index figure for September 1994, and for the second option the index for the
earlier month shall be the index figure for September 1994 and the index for
the later month shall be the figure for September 1999. The remainder of
paragraph R3 remains in full force and effect.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Second Rider to
the Lease dated June 24, 1986 this 24th day of January 1990.
LESSOR:
GEORGE A. REDIEHS COMPANY, INC.
BY: /s/ George A. Rediehs
----------------------------
George A. Rediehs ATTEST:
/s/ Georgetta R. Rediehs /s/ Russell E. Hehl
---------------------------- ----------------------
Georgetta R. Rediehs
LESSEE:
GRIFFITH MICRO-SCIENCE, INC. ATTEST:
BY:[illegible] /s/ Richard L. Rediehs
---------------------------- ----------------------
President
<PAGE> 21
THIRD RIDER
This Third Rider is attached to and made a part of the Lease dated April
12, 1984 for the premises commonly known as 7775 Quincy Street, Willowbrook,
Illinois.
3R1. Paragraph 2R3 of the Second Rider to this Lease is deleted in its
entirety.
3R2. Notwithstanding any provisions to the contrary in Paragraph 2R2, the
term of this Lease shall begin October 1, 1984, PROVIDED, however, that if
final occupancy approval by the Village of Willowbrook is not granted by
December 31, 1984, Lessee may declare this Lease null and void by written
notice, without any further liability of any kind. In such event, the Lessor
shall not be required to reimburse Lessee for any amounts previously paid or
improvements made by Lessee to the premises.
3R3. Because payments have been made through October 12, 1984 under
Paragraph 2R2 of the Second Rider, the amount of rent remaining and owed for
the month of October, 1984 shall be $5,263.40. Thereafter, rent shall be paid
according to the terms and amounts set out in Paragraph R1 of the First Rider.
3R4. This Lease and the Riders attached to it constitute the entire
agreement between the parties concerning this leasehold. Any modifications of
the terms and conditions herein must be in writing and attached hereto.
<PAGE> 22
IN WITNESS WHEREOF, Lessor and Lessee have executed this Second Rider as
of the day and year first above written.
GEORGE A. REDIEHS, CO., INC.
BY: /s/ George A. Rediehs
----------------------------
George A. Rediehs
/s/ Georgetta R. Rediehs
--------------------------------
Georgetta R. Rediehs
ATTEST:
/s/ George A. Rediehs
- ---------------------------------
Secretary
GRIFFITH LABORATORIES U.S.A., INC.
BY: /s/ James S. Legg
----------------------------
Assistant Secretary
MICRO-BRIOTROL CO.
DIVISION OF GRIFFITH LABORATORIES
U.S.A., INC.
BY: /s/ Donald E. Alguire
----------------------------
President
ATTEST:
[illegible]
- ---------------------------------
DATE: 1st day of October, 1984
2
<PAGE> 23
FOURTH RIDER
This Fourth Rider made this 29th day of November 1989 is attached to and
made a part of the Lease dated April 12, 1984 for the premises commonly known
as 7775 Quincy Street Willowbrook Illinois 60521.
4R1. LEASE TERM. Reference is hereby made to paragraph 2R2 of the Second
Rider and paragraph 3R2 of the Third Rider which both deal with the Lease Term
of this Lease. Lessor and Lessee agree that the term of this Lease did begin
on October 1, 1984. Notwithstanding any provisions to the contrary in the
above referenced paragraphs the primary term of this Lease shall continue until
September 30, 1994, and shall not end in the year 1989 as specified in
paragraph 2R2 of the Second Rider.
4R2. OPTIONS AND RENTAL ADJUSTMENTS. Paragraph R3 of the First Rider to
this Lease is hereby renounced in whole by Lessor and Lessee and is hereby
deleted in its entirety from this Lease. This paragraph 4R2 shall replace said
paragraph R3.
Lessee has the option to renew this Lease (sometimes hereinafter referred
to as "Lease #1") for a term of five (5) years beginning October 1, 1994 and
ending September 30, 1999, provided Lessee is not in default of this Lease and
Lessee maintains all promises and covenants contained in this Lease. Lessee
also has the option to renew that certain lease dated March 27, 1986 by and
between Lessor and Lessee (sometimes hereinafter referred to as "Lease #2") for
the 21,400 square foot addition to the premises located at 7775 Quincy Street
Willowbrook Illinois for a term of five (5) years beginning October 1, 1994 and
ending September 30, 1999. A copy of said Lease #2 is attached hereto a
Exhibit "B". If Lessee exercises this option Lessee must also exercise the
corresponding option in Lease #2. If Lessee does not exercise this option then
Lessee can not exercise the corresponding option in Lease #2.
If Lessee exercises this option and thereby the option in Lease #2 and
Lessee is not in default of this Lease and maintains all promises and covenants
contained herein then Lessee has a second option to renew this Lease for a term
of five (5) years beginning October 1, 1999 to September 30, 2004. If Lessee
exercises this second option then Lessee must also exercise the second option
in Lease #2 covering the same five (5) years, from October 1, 1999 to September
30, 2004. Likewise, if Lessee does not exercise this option Lessee can not
exercise the second option in Lease #2. Lessee shall notify Lessor of Lessee's
decision to exercise each option in writing six (6) months prior to the
beginning date of each option.
The base monthly rental shall be adjusted effective October 1, 1989
(sometimes hereinafter referred to as the first adjustment date) during the
term of this Lease and also on the beginning date of each option, which for the
first option shall be October 1, 1994 and for the second option shall be
October 1, 1999, (said dates may hereinafter sometimes be referred to as the
second adjustment date and the third adjustment date, respectively), as
follows: if the Consumer's Price Index, titled, "All Items and Major Group
Figures for All Urban Consumers" (CPI-U) issued by the United States Department
of Labor (based on all items for the period (1967-100) for the month preceding
the adjustment date is higher than the index figure for October of 1984 for the
first adjustment, October of 1989 for the second adjustment date and October of
1994 for the third adjustment date, then the adjustment shall be made and the
rent for the next annual rental period shall be calculated as per this
paragraph, provided, however, that the rent for the next annual rental period
shall under no circumstances be less than the then current annual rental. To
figure the percentage increase between any two (2) months subtract the CPI
index figure for the earlier month from the CPI figure for the later month,
then divide that number by the index for the earlier month and multiply by 100,
then multiply that figure by 90%, since the increase is being calculated at 90%
of the full CPI increase. For example, the CPI figure for October 1984 was
314.1 and the CPI figure for September 1989 was 374.6. The calculation would
be, 374.6 - 314.1 = 60.50, 60.50 divided by 314.1 = .1927 x 100 = 19.26, 19.26
x .90 (90%) = 17.33. The annual base rent for the next rental period would
increase effective October 1, 1989 by 17.33%. One twelfth (1/12) of such new
rent shall be paid on the first day of each calendar month in advance. The
rental increase for option one and option two shall be calculated in the same
way and the CPI figures to use shall be as follows; for the first option the
index for the earlier month shall be the index figure for September 1989 and
the index for the later month shall be the figure for September 1994, and for
the second option the index
<PAGE> 24
for the earlier month shall be the index figure for September 1994 and the
index for the later month shall be the figure for September 1999.
It is understood that the above index is now being published monthly by
the United States Department of Labor. Should it be published at other
intervals, the new index shall be arrived at from the index or indices
published most clearly approximating the month immediately preceding the month
in which the adjustment is to be effective. Should the manner of computing
such index be changed, the conversion factor designed by the Department to
adjust the new index to the one previously in use and adjustment to the new
index shall be made on the basis of such conversion factor. Should the
publication of said index be discontinued, then such index as may be published
by another United States governmental agency as most nearly approximates the
index herein first above mentioned shall govern and be substituted as the index
to be used, subject to the application of an appropriate conversion factor to
be furnished by the governmental agency publishing the adopted index. In the
event of any controversy arising as to the proper adjustment for rental
payments, or in the event calculation of the adjustment is delayed for any
reason, Lessee shall continue paying the rental under the then current rental
rate, until such time as said controversy has been settled, or the adjustment
has been calculated, at which time adjustment shall be made retroactive to
October 1, 1989 for the first adjustment, October 1, 1994 for the second
adjustment and October 1, 1999 for the third adjustment.
4R3. INSURANCE. Reference is hereby made to paragraph R5b of the First
Rider which calls for insurance coverage in the amount of Nine Hundred Fifty
Thousand ($950,000) Dollars. Said figure of Nine Hundred Fifty Thousand
($950,000) Dollars is hereby deleted and insurance coverage shall be in the
amount of no less than Two Million ($2,000,000) Dollars, which is the
approximate replacement cost of all buildings, improvements and betterments
including the 21,400 square foot addition located on the premises. The
remainder of paragraph R5b remains unchanged and in full force and effect.
4R4. SECURITY DEPOSIT. Reference is hereby made to paragraph R21 of the
First Rider. Notwithstanding anything to the contrary in said paragraph Lessee
does not have a five (5) year option in 1989. However, after the adjustment
date of October 1, 1989 Lessee shall deposit with Lessor any additional monies
necessary to have one (1) full month's rental at the new base monthly rental on
deposit as a security deposit. This same procedure shall be followed in the
event Lessee exercises options one and two. Lessee does not have a third
option.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Fourth Rider as
of the 24th day of January 1990.
GEORGE A. REDIEHS COMPANY, INC.
BY: /s/ George A. Rediehs
-------------------------------
George A. Rediehs Attest:
/s/ Georgetta R. Rediehs /s/ Russell R. Hehl
------------------------------- ----------------------------
Georgetta R. Rediehs
GRIFFITH MICRO-SCIENCE, INC. Attest:
BY: William C. Dow /s/ Richard L. Rediehs
------------------------------- ----------------------------
President
2
<PAGE> 25
FIFTH RIDER
This Rider made this 8th day of June 1992 is attached to and made a part
of the Lease dated April 12, 1984 for the premises commonly known as 7775
Quincy Street Willowbrook Illinois 60521. This Fifth Rider shall apply to the
entire premises, the original building covered by the above referenced lease
and the approximately 21,400 square foot addition completed in 1986 and leased
according to the lease dated March 27, 1986.
5R1. ROOF REPAIRS. Lessee has advised Lessor that it intends to install
a ventilation system through the premises which necessitates numerous
perforations through the roof. Lessee has also advised Lessor that Lessee has
made numerous perforations through the roof in the past in order to properly
operate Lessee's pollution control equipment, and other equipment used by
Lessee in the operation of Lessee's business. Lessee shall be solely liable
and responsible for all roof repairs, of every kind and nature, necessitated or
caused by the roof perforations. At the termination or expiration of this
Lease, Lessee shall fully repair or replace the roof to its original condition
without any perforations, whether or not such repair would be considered a
major repair as per paragraph R10 of the Lease.
5R2. ENVIRONMENTAL PERMITS AND REQUIREMENTS. Lessee is authorized by the
Illinois Environmental Protection Agency (IEPA) to operate emission sources and
air pollution control equipment consisting of Sterilization Retorts. Lessee
hereby agrees to copy Lessor on all operating permits issued to Lessee, at the
leased premises, by the IEPA and notify Lessor of all changes, modifications
and violations of said permits.
Signed this 8th day of June 1992.
/s/ William A. Fennelly
- ----------------------------------------- -----------------------------
Griffith Micro Science, Inc. Witness
Lessee
By: William A. Fennelly
Vice President - Operations
/s/ George A. Rediehs /s/ Annette Eldridge
- ----------------------------------------- -----------------------------
George A. Rediehs Co., Inc. Witness
Lessor
By: George A. Rediehs
President
file: LTRS/GMS5
<PAGE> 26
SIXTH RIDER
THIS RIDER made this 11 day of January 1995 is attached to and made a part of
the Lease dated April 12, 1984 by and between GEORGE A. REDIEHS COMPANY, INC.,
as Lessor and GRIFFITH MICRO SCIENCE, INC., as Lessee for the premises commonly
known as 7775 Quincy Street Willowbrook, Illinois 60521. This Rider shall
apply to the entire premises, the original building and the approximately
21,400 square foot addition completed in 1986 and leased to Lessee according to
the lease dated March 27, 1986.
6R1. LEASE TERM. Lessee has exercised its first option to renew the above
referenced lease for a term of five (5) years, beginning October 1, 1994 and
terminating September 30, 1999. Lessee has a second option to renew the lease
for a term of five (5) years beginning October 1, 1999 and ending September 30,
2004, so long as Lessee is not in default of the lease. Lessee shall notify
Lessor of Lessee's decision to exercise the second option in writing six (6)
months prior to the beginning date of the option, or by March 31, 1999.
6R2. RENTAL ADJUSTMENT. The annual and monthly rental shall be adjusted as
provided for in paragraph 4R2 of the Fourth Rider. The rental adjustment is
based upon the increase in the CPI from September of 1989 to September of 1994.
The calculation is as follows:
CPI for September 1989 - 374.6
CPI for September 1994 - 447.5
447.5 - 374.6 = 72.90, 72.90/374.6 = .1946 x 100 = 19.46
The lease calls for an increase that is 90% of the CPI increase.
19.46 x .90 = 17.51 or an increase of 17.51%.
The new annual rental for the first option period is $273,503.91. The
monthly rental for the first year of the first option period (10-1-94 thru
9-30-95) shall be paid as follows:
Lessee has made the following rental payments to date:
October 1994 - $19,395.79
November 1994 - $19,395.79
December 1994 - $22,741.56
January 1995 - $22,968.18
----------
$84,501.32
Lessee has requested that Lessor postpone $20,000.00 of rental payments
due in the first year of the first option period to be paid by Lessee to Lessor
in the second year of the first option period. Lessor has agreed to the
postponement of said $20,000.00. Consequently, the monthly rental due for
February 1995 thru September 1995 shall be $21,125.32. (Annual rental of
$273,503.88 - $20,000.00 = $253,503.88, $253,503.88 - $84,501.32 = $169,002.56,
$169,002.56/8 = $21,125.32)
The annual rental due for the second year of the first option period is
$293,503.88. ($273,503.88 + $20,000.00 = $293,503.88) The monthly rental due
beginning October 1, 1995 thru September 1, 1996 is $24,458.66.
($293,503.88/12 = $24,458.66)
The annual rental due for the third, fourth and fifth and final year of
the first option period is $273,503.88, and the monthly rental due is
$22,791.99.
6R3. SECURITY DEPOSIT. Lessee is not required to deposit any additional funds
into their security deposit account at this time, since with interest earned,
the account currently exceeds the monthly rental payment.
<PAGE> 27
IN WITNESS WHEREOF, Lessor and Lessee have executed this Sixth Rider as of the
11th day of January 1995.
GEORGE A. REDIEHS
/s/ George A. Rediehs
- -----------------------------------
BY: GEORGE A. REDIEHS
/s/ Carol Radichs
- -----------------------------------
ATTEST
GRIFFITH MICRO SCIENCE, INC.
/s/ Franklin S. Lange
- -----------------------------------
BY:
[illegible]
- -----------------------------------
ATTEST
2
<PAGE> 1
EXHIBIT 10.18
STANDARD COMMERCIAL LEASE CONTRACT (Approved December, 1967)
- --------------------------------------------------------------------------------
FORM 58-A MILLER'S BOOK & OFFICE SUPPLY CO. ATLANTA
THIS LEASE, made this 19th day of February 1974, by and between Cynwyd
Investments; 725 Conshohocken State Rd, Bala-Cynwyd, PA 19004, first party,
(hereinafter called "Landlord") and Griffith Laboratories, Inc.; 1415 West 37th
Street, Chicago, Illinois 60609, second party, (hereinafter called "Tenant") and
Clayton McLendon, Inc.; First National Bank Tower, #2 Peachtree Street, Atlanta,
GA 30303, third party, (hereinafter called "Agent");
W I T N E S S E T H :
PREMISES
1. The Landlord, for and in consideration of the rents, convenants,
agreements, and stipulations hereinafter mentioned, reserved, and contained, to
be paid, kept and performed by the Tenant, has leased and rented and by these
presents does lease and rent, unto the said Tenant, and said Tenant hereby
agrees to lease and take upon the terms and conditions which hereinafter appear,
the following described property (hereinafter called premises), to wit:
11,238 square feet of building area situated at the northerly end of a
building in Cobb County, Georgia, containing a total area of 150,428.34
square feet and commonly known as number 2971 Olympic Industrial Drive,
N.W., Atlanta, Georgia. Attached copy of plat market Exhibit "A" is
made a part hereof.
No easement for light or air is included in the premises.
TERM
2. To have and to hold the same for a term beginning on the first day of
March 1974, and ending on the 28th day of February, 1977, at midnight, unless
sooner terminated as hereinafter provided.
RENTAL
3. Tenant agrees to pay Landlord, by payments to Clayton McLendon, Inc.,
First National Bank Tower, #2 Peachtree Street, Agent of Landlord, who
negotiated this lease at office of Agent in Atlanta, Georgia promptly on the
first day of each month in advance during the term of this lease, a monthly
rental of Two thousand and eight hundred and seventy-five and 6/100 Dollars
($2,875.06).
AGENT'S COMMISSION
4. Landlord agrees to pay Agent as compensation for services rendered in
procuring this lease, the five month's rent hereunder, and in addition thereto
five percent (5%) of all rentals thereafter paid by Tenant under this lease.
Landlord, with consent of Tenant, hereby assigns to Agent the first month's rent
hereunder and five percent (5%) of all rentals paid under this lease. Landlord
agrees if this lease is extended, or new lease is entered into between Landlord
and Tenant covering leased premises, or any part thereof, then either of said
events, Landlord, in consideration of Agent's having procured Tenant hereunder,
agrees to pay Agent five percent (5%) of all rentals paid to Landlord by Tenant
under such extension or new lease. Agent agrees that, in the event Landlord
sells leased premises, and upon Landlord's furnishing Agent with an agreement
signed by Purchaser assuming Landlord's obligations to Agent under this lease,
Agent will release original Landlord from any further obligations to Agent
hereunder. Tenant agrees that if this lease is validly assigned by him that he
will secure from assignee an agreement in writing by assignee recognizing
assignment held by Agent, and agreeing to pay rental to Agent herein named
during period covered by lease. Agent is party to this contract solely for the
purpose of enforcing his rights under this paragraph and it is understood by all
parties hereto that Agent is acting solely in the capacity as agent for
Landlord, to whom Tenant must look as regards all covenants, agreements and
warranties herein contained, and that Agent shall never be liable to Tenant in
regard to any matter which may arise by virtue of this lease. Voluntary
cancellation of this lease shall not nullify Agent's right to collect the
commission due for the remaining term of the lease.
PURCHASE OF PROPERTY BY TENANT
5. In the event that tenant acquires title to the leased premises at any
time during the term of this lease any renewals thereof, or within six months
after the expiration of the term hereof or the extended term hereof then
Landlord shall pay Agent a commission on the sale of the property of the
Landlord based on the recommended schedule of minimum commissions of the Atlanta
Real Estate Board and in lieu of any additional rent commissions.
<PAGE> 2
UTILITY BILLS
6. Tenant shall pay water, sewer, gas, electricity, fuel, light, heat
and power bills for leased premises or used by Tenant in connection therewith.
If Tenant does not pay the same, Landlord may pay the same and such payment
shall be added to the rental of the premises.
USE OF PREMISES
7. Premises shall be used for sterilization plant purposes and no
other. Premises shall not be used for any illegal purposes nor in any manner to
create any nuisance or trespass; nor in any manner to vitiate the insurance or
increase the rate of insurance on premises.
ABANDONMENT OF LEASED PREMISES
8. Tenant agrees not to abandon or vacate leased premises during the
period of this lease, and agrees to use said premises for the purpose herein
leased until the expiration hereof.
REPAIRS BY LANDLORD
9. Landlord agrees to keep in good repair the roof, foundations, and
exterior walls of the premises, exclusive of all glass and exclusive of all
exterior doors, and underground utility and sewer pipes outside the exterior
walls of the Building, except repairs rendered necessary by the negligence of
Tenant, its agents, employees, or invitees. Landlord gives to Tenant exclusive
control of premises and shall be under no obligation to inspect said premises.
Tenant shall promptly report in writing to Landlord any defective condition
known to it which Landlord is required to repair, and failure to so report such
defects shall make Tenant responsible to Landlord for any liability incurred by
Landlord by reason of such defects.
REPAIRS BY TENANT
10. Tenant accepts the leased premises in their present condition and
as suited for the uses intended by Tenant. Tenant shall, throughout the initial
term of this lease and all renewals thereof, at its expense, maintain in good
order and repair the leased premises, including the building and other
improvements located thereon, except those repairs expressly required to be made
by Landlord. Tenant further agrees to care for the grounds around the building,
including the mowing of grass, paving, care of shrubs and general landscaping.
Tenant agrees to return said premises to Landlord at the expiration, or prior
termination, of this lease in as good condition and repair as when first
received, natural wear and tear, damage by storm, fire, lightning, earthquake or
other casualty alone excepted.
Elevators, (if any), are accepted by Tenant as in satisfactory
operating condition on this date, and Tenant, at his own expense, shall maintain
said elevators in good operating condition during the term of this lease, or any
extension thereof.
TAX ESCALLATION
11. Tenant shall pay upon demand, as additional rental during the term
of this lease and any extension or renewal thereof, the amount by which all
taxes (including, but not limited to, ad valorem taxes, special assessments and
governmental charges) on the premises for each tax year exceeds all taxes on the
premises for the first full tax year during the lease term. In the event the
premises are less than the entire property assessed for such taxes for any such
tax year, then the tax for any such year applicable to the premises shall be
determined by proration on the basis that the rentable floor area of the
premises bears to the rentable floor area of the entire property assessed. If
the final year of the lease term fails to coincide with the tax year, then any
excess for the tax year during which the term ends shall be reduced by the pro
rata part of such tax year beyond the lease term. The agent's commission shall
not apply to any such additional rental resulting from the provisions of this
paragraph.
DESTRUCTION OF, OR DAMAGE TO PREMISES
12. If premises are totally destroyed by storm, fire, lighting,
earthquake or other casualty, this lease shall terminate as of the date of such
destruction, and rental shall be accounted for as between Landlord and Tenant as
of that date. If premises are damaged but not wholly destroyed by any of such
casualties, rental shall abate in such proportion as use of premises has been
destroyed, and Landlord shall restore premises to substantially the same
condition as before damage as speedily as practicable, whereupon full rental
shall recommence.
INDEMNITY
13. Tenant agrees to indemnify and save harmless the Landlord against
all claims for damages to persons or property by reason of the use or occupancy
of the leased premises, and all expenses incurred by Landlord because thereof,
including attorneys' fees and court costs.
GOVERNMENTAL ORDERS
14. Tenant agrees, at his own expense, to promptly comply with all
requirements of any legally constituted public authority made necessary by
reason of Tenant's occupancy of said premises. Landlord agrees to
2
<PAGE> 3
promptly comply with any such requirements if not made necessary by reason of
Tenant's occupancy. It is mutually agreed, however, between Landlord and Tenant,
that if in order to comply with such requirements, the cost to Landlord or
Tenant, as the case may be, shall exceed a sum equal to one year's rent, then
Landlord or Tenant who is obligated to comply with such requirements is
privileged to terminate this lease by giving written notice of termination to
the other party, by registered mail, which termination shall become effective
sixty (60) days after receipt of such notice, and which notice shall eliminate
necessity of compliance with such requirement by party giving such notice unless
party receiving such notice of termination shall, before termination becomes
effective, pay to party giving notice all cost of compliance in excess of one
year's rent, or secure payment of said sum in manner satisfactory to party
giving notice.
CONDEMNATION
15. If the whole of the leased premises, or such portion thereof as
will make premises unuseable for the purposes herein leased, be condemned by any
legally constituted authority for any public use or purpose, then in either of
said events the term hereby granted shall cease from the time when possession
thereof is taken by public authorities, and rental shall be accounted for as
between Landlord and Tenant as of that date. Such termination, however, shall be
without prejudice to the rights of either Landlord or Tenant to recover
compensation and damage caused by condemnation from the condemnor. It is further
understood and agreed that neither the Tenant nor Landlord shall have any rights
in any award made to the other by any condemnation authority.
ASSIGNMENT AND SUBLETTING
16. Tenant may sublease portions of the leased premises to others
provided such sublessee's operation is a part of the general operation of Tenant
and under the supervision and control of Tenant, and provided such operation is
within the purposes for which said premises shall be used. Except as provided in
preceding sentence, Tenant shall not, without the prior written consent of
Landlord endorsed hereon, assign this lease or any interest hereunder, or sublet
premises or any part thereof, or permit the use of premises by any party other
than Tenant. Consent to any assignment or sublease shall not destroy this
provision, and all later assignments or subleases shall be made likewise only on
the prior written consent of Landlord. Assignee of Tenant, at option of
Landlord, shall become directly liable to Landlord for all obligations of Tenant
hereunder, but no sublease or assignment by Tenant shall relieve Tenant of any
liability hereunder.
REMOVAL OF FIXTURES
17. Tenant may (if not in default hereunder) prior to the expiration of
this lease, or any extension thereof, remove all fixtures and equipment which he
has placed in premises, provided Tenant repairs all damage to premises caused by
such removal.
CANCELLATION OF LEASE BY LANDLORD
18. It is mutually agreed that in the event the Tenant shall default in
the payment of rent herein reserved, when due, and fails to cure said default
within five (5) days after written notice thereof from Landlord; or if Tenant
shall be in default in performing any of the terms or provisions of this lease
other than the provision requiring the payment of rent, and fails to cure such
default within thirty (30) days after the date of receipt of written notice of
default from Landlord; or if Tenant is adjudicated bankrupt; or if a permanent
receiver is appointed for Tenant's property and such receiver is not removed
within sixty days after written notice from Landlord to Tenant to obtain such
removal; or if, whether voluntarily or involuntarily, Tenant takes advantage of
any debtor relief proceedings under any present or future law, whereby the rent
or any part thereof is, or is proposed to be, reduced or payment thereof
deferred; or if Tenant makes an assignment for benefit of creditors; or if
Tenant's effects should be levied upon or attached under process against Tenant,
not satisfied or dissolved with thirty (30) days after written notice from
Landlord to Tenant to obtain satisfaction thereof; then, and in any of said
events, Landlord at his option may at once, or within six (6) months thereafter
(but only during continuance of such default or condition), terminate this lease
by written notice to Tenant; whereupon this lease shall end. After an authorized
assignment or subletting of the entire premises covered by this lease, the
occurring of any of the foregoing defaults or events shall affect this lease
only if caused by, or happening to, the assignee or sublessee. Any notice
provided in this paragraph may be given by Landlord, or his attorney, or Agent
herein named. Upon such termination by Landlord, Tenant will at once surrender
possession of the premises to Landlord and remove all of Tenant's effects
therefrom; and Landlord may forthwith re-enter the premises and repossess
himself thereof, and remove all persons and effects therefrom, using such force
as may be necessary without being guilty of trespass, forcible entry or detainer
or other tort.
RELETTING BY LANDLORD
19. Landlord, as Tenant's agent, without terminating this lease, upon
Tenant's breaching this contract, may at Landlord's option enter upon and rent
premises at the best price obtainable by reasonable effort, without
advertisement and by private negotiations and for any term Landlord deems
proper. Tenant shall be liable to Landlord for the deficiency, if any, between
Tenant's rent hereunder and the price obtained by Landlord on reletting.
3
<PAGE> 4
EXTERIOR SIGNS
20. Tenant shall place no signs upon the outside walls or roof of the
leased premises except with the written consent of the Landlord. Any and all
signs placed on the within leased premises by Tenant shall be maintained in
compliance with rules and regulations governing such signs and the Tenant shall
be responsible to Landlord for any damage caused by installation, use, or
maintenance of said signs, and Tenant agrees upon removal of said signs to
repair all damage incident to such removal.
ENTRY FOR CARDING, ETC.
21. Landlord may card premises "For Rent" or "For Sale" thirty (30)
days before the termination of this lease. Landlord may enter the premises at
reasonable hours to exhibit same to prospective purchasers or tenants and to
make repairs required of Landlord under the terms hereof, or to make repairs to
Landlord's adjoining property, if any.
EFFECT OF TERMINATION OF LEASE
22. No termination of this lease prior to the normal ending thereof, by
lapse of time or otherwise, shall affect Landlord's right to collect rent for
the period prior to termination thereof.
MORTGAGEE'S RIGHTS
23. Tenant's rights shall be subject to any bona fide mortgage or deed
to secure debt which is now, or may hereafter be, placed upon the premises by
Landlord.
NO ESTATE IN LAND
24. This contract shall create the relationship of Landlord and Tenant
between the parties hereto; no estate shall pass out of Landlord. Tenant has
only a usufruct, not subject to levy and sale, and not assignable by Tenant
except by Landlord's consent.
HOLDING OVER
25. If Tenant remains in possession of premises after expiration of the
term hereof, with Landlord's acquiescence and without any express agreement of
parties, Tenant shall be a tenant at will at rental rate in effect at end of
lease; and there shall be no renewal of this lease by operation of law.
ATTORNEY'S FEES AND HOMESTEAD
26. If any rent owing under this lease is collected by or through an
attorney at law, Tenant agrees to pay ten percent (10%) thereof as attorneys'
fees. Tenant waives all homestead rights and exemptions which he may have under
any law as against any obligation owing under this lease. Tenant hereby assigns
to Landlord his homestead and exemption.
RIGHTS CUMULATIVE
27. All rights, powers and privileges conferred hereunder upon parties
hereto shall be cumulative but not restrictive to those given by law.
SERVICE OF NOTICE
28. Tenant hereby appoints as his agent to receive service of all
dispossessory or distraint proceedings and notice thereunder, and all notices
required under this lease, the person in charge of leased premises at the time,
or occupying said premises, and if no person is in charge of, or occupying said
premises, then such service or notice may be made by attaching the same on the
main entrance to said premises. A copy of all notices under this lease shall
also be sent to Tenant's last known address, if different from said premises.
WAIVER OF RIGHTS
29. No failure of Landlord to exercise any power given Landlord
hereunder, or to insist upon strict compliance by Tenant with his obligation
hereunder, and no custom or practice of the parties at variance with the terms
hereof shall constitute a waiver of Landlord's right to demand exact compliance
with the terms hereof.
TIME OF ESSENCE
30. Time is of the essence of this agreement.
DEFINITIONS
31. "Landlord" as used in this lease shall include first party, his
heirs, representatives, assigns and successors in title to premises. "Tenant"
shall include second party, his heirs and representatives, and if this lease
shall be validly assigned or sublet shall include also Tenant assignees or
sublessees, as to premises covered by such
4
<PAGE> 5
assignment or sublease. "Agent" shall include third party, his successors,
assigns, heirs, and representatives. "Landlord", "Tenant", and "Agent", include
male and female, singular and plural, corporation partnership or individual, as
may fit the particular parties.
SPECIAL STIPULATIONS
In so far as the following stipulations conflict with any of the foregoing
provisions, the following shall control:
32. If tenant is not in default at the time, he shall have an option to
renew this lease for an additional three year term beginning March 1, 1977,
provided, however, that tenant must notify Landlord on or before September
1, 1976, of his intention to do so. In the event tenant fails to notify
Landlord in writing at least six months in advance of the expiration of
this lease, then this option shall be null and void.
This lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties, not embodied herein, shall be of any force or effect.
IN WITNESS WHEREOF, the parties herein have hereunto set their hands and
seals, in triplicate, the day and year first above written.
CYNWYD INVESTMENTS
Signed, sealed and delivered as A PENNSYLVANIA
to Landlord, in the presence of: PARTNERSHIP BY:
[illegible] (Seal)
- --------------------------------- ------------------------------
(Landlord)
/s/ Mary A. Chance (Seal)
- --------------------------------- ------------------------------
Notary Public (Landlord)
(Seal)
- --------------------------------- ------------------------------
Signed, sealed and delivered as (Landlord)
to Tenant, in the presence of: GRIFFITH LABORATORIES, INC.
/s/ Joseph M. O'Neill [illegible] (Seal)
- --------------------------------- ------------------------------
(Tenant)
/s/ Edward W. Gorsky [illegible] (Seal)
- --------------------------------- ------------------------------
Notary Public (Tenant)
Signed, sealed and delivered as CLAYTON MCLENDON, INC.
to Agent, in the presence of:
/s/ Roslyn Wade By:[illegible] (Seal)
- --------------------------------- ------------------------------
Agent
/s/ Steve Beall
- ---------------------------------
Notary Public
5
<PAGE> 6
TRANSFER OF LEASE
For, and in consideration of the sum of One Dollar ($1.00), each to the other
paid, receipt of which is hereby acknowledged, and other valuable
considerations, ____________________hereby transfers and assigns
(Seller)
to______________________ all__________ rights and benefits under a written lease
(Purchaser)
from _____________________ to, _______________________ , dated
(Seller) (Tenant)
______________________, 19___ , covering premises known as____________________,
________, Georgia, and _____________________________ hereby accepts said
(Purchaser)
transfer and assignment and agrees to comply with all of Landlord's covenants
and agreements under said lease with both Tenant and Agent therein named.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals, in triplicate, this day of____________________________, 19___ .
Signed, sealed and delivered as to
Seller, in the presence of:
- -----------------------------
- ----------------------------- ----------------------------------- (SEAL)
Notary Public (Seller)
----------------------------------- (SEAL)
(Seller)
Signed, sealed and delivered as to
Purchaser, in the presence of:
- -----------------------------
- ----------------------------- ----------------------------------- (SEAL)
Notary Public (Seller)
----------------------------------- (SEAL)
(Seller)
RELEASE BY AGENT
GEORGIA, COUNTY
In consideration of___________________________having assumed
(Purchaser)
obligation to Agent under lease from ________________________________ to
(Landlord)
_____________________________________ dated________________________, 19_____ ,
(Tenant)
covering premises located at ________________________________________________,
Georgia, Agent hereby releases________________________________ from
obligations to Agent under said lease.
IN WITNESS WHEREOF, said Agent has hereunto set his hand and affixed
his seal, in triplicate, this day of______________________________, 19___.
Signed, sealed and delivered in
the presence of:
- ------------------------------------- -------------------------------- (SEAL)
(Agent)
- -------------------------------------
Notary Public
Standard Commercial Lease Contract
6
<PAGE> 7
====================================
LEASE
FROM
- -----------------------------------
- -----------------------------------
TO
- -----------------------------------
- -----------------------------------
Expires ___________________________
====================================
7
<PAGE> 8
EXHIBIT "A"
[SITE PLAN]
<PAGE> 9
LEASE ASSIGNMENT
Pursuant to the terms of a Preferred Stock Agreement between Griffith
Laboratories, Inc. and First Chicago Investment Corporation, Griffith
Laboratories U.S.A., Inc. will acquire substantially all of the assets of
Griffith Laboratories, Inc., subject to substantially all of its liabilities,
including specifically in such assets and liabilities the following described
lease:
Lease dated February 19, 1974 and expiring February 29, 1980 between Cynwyd
Investments, a Pennsylvania partnership, Landlord, and Griffith
Laboratories, Inc., an Illinois corporation, Tenant, for 11,238 square feet
of space at the northerly end of the building commonly known as 2971
Olympic Industrial Drive, N.W., Atlanta, Georgia.
The date upon which such transfer becomes effective (the "Time of Closing")
shall be no later than September 30, 1978.
By reason of such transfer, the undersigned hereby execute the following:
Assignment by Lessee
For value received, Griffith Laboratories, Inc. hereby assigns all its
right, title and interest in and to the above described lease unto Griffith
Laboratories U.S.A., Inc. effective as of the Time of Closing. This assignment
shall not release Griffith Laboratories, Inc. from its obligations under said
lease.
IN WITNESS WHEREOF, Griffith Laboratories, Inc. has caused this assignment
to be executed in its name and on its behalf by its officers thereunto duly
authorized and its corporate seal to be hereunto affixed this 26th day of July,
1978.
GRIFFITH LABORATORIES, INC.
By: [illegible]
-----------------------------
Vice President
CORPORATE SEAL
<PAGE> 10
ATTEST:
[illegible]
Assistant Secretary
2
<PAGE> 11
Acceptance by Assignee
In consideration of the above assignment, and upon the written consent of
the Lessor thereto, Griffith Laboratories U.S.A., Inc. hereby assumes and agrees
to keep, observe and perform all of the covenants, terms, promises, conditions
and provisions of the above described lease, by the Lessee therein to be kept,
observed and performed, and to make all payments provided by said lease from and
after the Time of Closing, and agrees that no further assignment or subletting
of the premises described in said lease or any part thereof, will be made except
in the manner therein described.
IN WITNESS WHEREOF, Griffith Laboratories U.S.A., Inc. has caused this
acceptance to be executed in its name and on its behalf by its officers
thereunto duly authorized and its corporate seal to be hereunto affixed this
26th day of July, 1978. GRIFFITH LABORATORIES U.S.A., INC.
By: [illegible]
-----------------------------
Vice President
CORPORATE SEAL
ATTEST:
[illegible]
- -----------------------------------
Assistant Secretary
Consent to Assignment
Fidelco Growth Investors, a Pennsylvania business trust, Landlord, hereby
consents to the assignment of the above described lease to Griffith Laboratories
U.S.A., Inc., effective as of the
3
<PAGE> 12
Time of Closing, in consideration of the covenants, promises and agreements set
forth in the above assignment and acceptance.
IN WITNESS WHEREOF, Fidelco Growth Investors has caused this consent to
assignment to be executed in its name and on its behalf by its officers
thereunto duly authorized and its corporate seal to be hereunto affixed this
23rd day of August, 1978.
By: [illegible]
---------------------------
President
CORPORATE SEAL
ATTEST:
[illegible]
- -----------------------------------
Assistant Secretary
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 26th day of July in the year 1978, before me, a Notary Public of
said State, duly commissioned and sworn, personally appeared /s/ Carl Cunningham
and /s/ M.C. Phillips, personally known to me to be the Vice President and
Assistant Secretary, respectively, of Griffith Laboratories, Inc., the
corporation which executed the within instrument, and personally known to me to
be the persons who executed the within instrument on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the same.
In witness whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Raymond A. Pozen (Seal)
---------------------------------
Notary Public
My commission expires: May 29, 1982
4
<PAGE> 13
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 26th day of July in the year 1978, before me, a Notary Public of
said State, duly commissioned and sworn, personally appeared /s/ Carl Cunningham
and /s/ M.C. Phillips, personally known to me to be the Vice President and
Assistant Secretary, respectively, of Griffith Laboratories USA, Inc., the
corporation which executed the within instrument, and personally known to me to
be the persons who executed the within instrument on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the same.
In witness whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Raymond A. Pozen
------------------------- (Seal)
Notary Public
My commission expires: May 29, 1982
STATE OF PENNSYLVANIA )
) SS.
COUNTY OF PHILADELPHIA )
On this 23rd day of August in the year 1978, before me, a Notary Public of
said State, duly commissioned and sworn, personally appeared [illegible] and
[illegible], personally known to me to be the President and Assistant Secretary,
respectively, of [Fidelco Growth Investors], the corporation which executed the
within instrument, and personally known to me to be the persons who executed the
within instrument on behalf of the corporation therein named, and acknowledged
to me that such corporation executed the same.
In witness whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
5
<PAGE> 14
/s/ Eugenie Kincade (Seal)
---------------------------------------------
Notary Public
My commission expires: EUGENIE KINCADE, NOTARY PUBLIC
PHILADELPHIA, PHILADELPHIA COUNTY
MY COMMISSION EXPIRES JAN. 28, 1981
Member, Pennsylvania Association of Notaries
6
<PAGE> 15
CLAYTON MCLENDON INC./REALTORS(R)
FIRST NATIONAL BANK TOWER, SUITE 1316
ATLANTA, GEORGIA 30303
404 658-1770
April 26, 1976
Mr. Joseph M. O'Neill
Director of Purchasing and Distribution
Griffith Laboratories, Inc.
12200 South Central Avenue
Alsip, Illinois 60658
Dear Mr. O'Neill:
This letter is to call your attention to the fact that the lease dated February
19, 1974, between Cynwyd Investments, (the owner of the property is now Fidelco
Growth Investors); Griffith Laboratories, Inc.; and Clayton McLendon, Inc.; on
the premises you are leasing at 2973 Olympic Industrial Drive, N.W., Smyrna,
Georgia, began March 1, 1974 and ends on February 28, 1977.
I also call your attention to the fact that Special Stipulation Number 32 of
that Agreement states, "If tenant is not in default at the time, he shall have
an option to renew this lease for an additional three year term beginning March
1, 1977, provided, however, that tenant must notify Landlord on or before
September 1, 1976, of his intention to do so. In the event tenant fails to
notify Landlord in writing at least six months in advance of the expiration of
this lease, then this option shall be null and void."
Mr. Georgia Smolko tells me you do intend to exercise the option to renew the
lease and I felt it our obligation to call your attention to the above. You have
been excellent tenants and I hope you will exercise the option to renew.
Sincerely,
/s/ Clayton D. McLendon
Clayton D. McLendon
CDM:pc
cc: Mr. George Smolko
<PAGE> 16
[LOGO]
GRIFFITH LABORATORIES U.S.A. 12200 SOUTH CENTRAL AVE. ALSIP, ILL. 60658
312/371-0900
July 8, 1976
Mr. Clayton D. McLendon
Clayton McLendon Inc./Realtors
First National Bank Tower
Suite 1316
Atlanta, Georgia 30303
Dear Mr. McLendon:
Griffith Laboratories is interested in extending our lease, dated February 19,
1974. Special Stipulation number 32 of that agreement states that we have an
option to renew our lease for an additional three years, beginning March 1,
1977, provided that we notify you on or before September 1, 1976.
Please accept this letter as our notification to exercise our option to renew.
Very truly yours,
GRIFFITH LABORATORIES, INC.
/s/ Joseph M. O'Neill
Joseph M. O'Neill
Director of Purchasing and Distribution
JMO/cam
cc: George Smolko
L.C. Culligan
D. Alguire
J. English
<PAGE> 17
CLAYTON MCLENDON INC./REALTORS(R)
FIRST NATIONAL BANK TOWER, SUITE 3944
ATLANTA, GEORGIA 30303
404 658-1770
July 15, 1976
Mr. Joseph M. O'Neill
Director of Purchasing and Distribution
Griffith Laboratories, Inc.
12200 South Central Avenue
Alsip, Illinois 60658
Dear Mr. O'Neill:
We are pleased that you have exercised your option to extend your lease on the
premises you occupy on Olympic Industrial Drive, NW, for an additional
three-year term beginning March 1, 1977 and terminating on February 29, 1980.
You have been excellent tenants and we are glad you have elected to remain in
this building. Please contact me when I can be helpful to you in any way.
Sincerely,
/s/ Clayton D. McLendon
Clayton D. McLendon
CDM:pc
<PAGE> 18
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT, is made as of the 16 day of November
1979 by and among GRIFFITH LABORATORIES, INC. (hereinafter referred to as
"Tenant"), SEALY (GA), a Louisiana Partnership (hereinafter referred to as
"Landlord") and CLAYTON McLENDON, INC. (hereinafter referred to as "Agent").
W I T N E S S E T H:
WHEREAS, Tenant, Cynwyd Investments and Agent entered into a Lease
Agreement dated February 19, 1974 for the lease of 11,238 square feet in a
multi-tenant industrial building commonly known as 2973 Olympic Industrial
Drive, N. W., Smyrna, Georgia for a term beginning March 1, 1974 and ending
February 28, 1977 (hereinafter referred to as the "Lease"); and
WHEREAS, Tenant exercised its option as set forth in the Lease to
extend the term of the Lease for three years beginning March 1, 1977 and ending
on February 28, 1980; and
WHEREAS, Cynwyd Investments subsequently conveyed the property on which
said multi-tenant building is located and assigned the Lease to Landlord: and
WHEREAS, the parties hereto desire to amend the terms of the Lease in
order to extend the term of the Lease for an additional one year and provided an
option for Tenant to further extend the term of the Lease an additional three
years upon the same terms and conditions as set forth in the Lease.
NOW THEREFORE, for an in consideration of the Lease and other good and
valuable consideration the parties agree as follows:
1. The term of the Lease as extended by the previous exercise of
Tenant's option to extend the term of the Lease as hereinabove set forth, shall
be extended for a one year term
<PAGE> 19
commencing March 1, 1980 and ending February 28, 1981 upon the same terms and
conditions set forth in the Lease.
2. Tenant at its option may extend the term of the Lease as amended
herein for an additional three year term commencing March 1, 1981 through and
including February 28, 1984 upon the same terms and conditions as set forth in
the Lease by notifying Landlord in writing of its intention to exercise this
option sent certified mail return receipt requested to the address set forth
below for Landlord on or before September 1, 1980 with a copy of same to Agent;
provided however, if Tenant does exercise said option, as aforesaid, the Lease
shall be deemed amended to extend the term of the Lease as aforesaid and Tenant
shall be bound thereby; and provided further if Tenant does not exercise
Tenant's option to extend the term of the Lease as aforesaid, said option shall
be deemed waived and null and void.
3. The following provision in its entirety shall be inserted into the
Lease as Paragraph #33 therein, to wit:
In the event that: (1) Landlord's premium for hazard or all risk
insurance is increased or threatened to be increased above its present rates,
(2) the insurance rating for the premises is deemed more hazardous, (3) the
Landlord's insurance policy is cancelled or threatened to be cancelled or (4)
the insurance maintained by any other Tenants within the building is cancelled,
threatened to be cancelled or the premiums therefor are increased or threatened
to be increased as a result of the maintenance, storage or use by Tenant of any
chemicals or other materials (whether or not presently being used by Tenant)
which are or are deemed by the Landlord's or other Tenant's insurance company or
their underwriters as explosive, flammable or hazardous, then, in any of said
events, upon notice to Tenant by Landlord, Tenant hereby agrees, subject to the
last sentence of this paragraph, to promptly satisfy or otherwise comply with,
at Tenant's sole
2
<PAGE> 20
cost and expense, any and all requirements of any said insurance company or its
underwriter in order to maintain Landlord's or other Tenant's insurance at its
present rates included but not limited to constructing structural improvements
within the premises and maintaining other safety precautions or procedures. In
all events, subject to the last sentence of this paragraph, Tenant hereby agrees
to pay to Landlord as additional rental hereunder the amount of any increased
insurance premiums above Landlord's present insurance premiums resulting from
said maintenance, storage or use by Tenant of any said chemicals or other said
materials. Within 45 days of receipt of notice by Tenant from Landlord, Tenant
shall decide whether to comply with the requirements of the insurance company,
including but not limited to making structural changes and paying increased
premiums, or whether to terminate this Lease; if Tenant terminates this Lease,
he shall so notify Landlord by the expiration of the above mentioned 30 day
period, and thereafter lease the premises within 30 days after sending the
termination notice; Tenant terminates, it shall pay rent only for as long as it
has occupied the premises.
4. Unless Landlord notifies Tenant in writing to the
contrary, Landlord's address for purposes of receiving notices required herein
or in the Lease shall be as follows:
Sealy (Ga)
c/o Sealy Realty Company, Inc.
1401 Petroleum Tower
Shreveport, Louisiana 71101
5. Except as expressly amended herein, all other terms and conditions
of the Lease shall remain the same and the parties hereto expressly ratify said
terms and conditions and agree to be bound thereby.
IN WITNESS WHEREOF the parties have signed and sealed this Amendment to
Lease as of the date first above written.
3
<PAGE> 21
TENANT:
Signed, sealed and delivered GRIFFITH LABORATORIES, INC.
in the presence of:
By: /s/ Robert Gralewski
- --------------------------------- ---------------------------
Unofficial Witness
[illegible] Attest: [illegible]
- --------------------------------- --------------------------
Notary Public
(CORPORATE SEAL)
AGENT:
Signed, sealed and delivered CLAYTON MCLENDON ,INC.
in the presence of:
[illegible] By: [illegible]
- --------------------------------- --------------------------
Unofficial Witness
[illegible] Attest: /s/ Inez M. McLendon
- --------------------------------- --------------------------
Notary Public, Georgia, State at Large
My Commission Expires Sept 18, 1983
(CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered SEALY(GA)
in the presence of:
/s/ Sheila Graff By: /s/ Scott P. Sealy (SEAL)
- --------------------------------- --------------------------
Unofficial Witness Scott P. Sealy
/s/ Lucille Carter Rowe Attest:
- --------------------------------- --------------------------
LUCILLE CARTER ROWE, Notary Public
Caddo Parish, Louisiana
My Commission is for Life
4
<PAGE> 22
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT, is made as of the 31st day of
October, 1980 by and among GRIFFITH LABORATORIES, U.S.A., INC., (hereinafter
referred to as "Tenant"), SEALY (GA), a Louisiana Partnership (hereinafter
referred to as "Landlord") and CLAYTON McLENDON, INC. (hereinafter referred to
as "Agent").
W I T N E S S E T H:
WHEREAS, Tenant, Cynwynd Investments and Agent entered into a Lease
Agreement dated February 19, 1974 for the lease of 11,238 square feet in a
multi-tenant industrial building commonly known as 2973 Olympic Industrial
Drive, N.W., Symrna, Georgia for a term beginning March 1, 1974 and ending
February 28, 1977 (hereinafter referred to as the "Lease"); and
WHEREAS, Cynwynd Investments subsequently conveyed the property on
which said multi-tenant building is located and assigned the Lease to Landlord;
and
WHEREAS, Tenant, Landlord and Agent entered into an Amendment to Lease
Agreement dated November 16, 1979 to extend the term commencing March 1, 1980
and ending February 28, 1981, with an option to Tenant to further extend the
term of the Lease for three years upon the same terms and conditions of the
Lease and appropriate Amendments;
NOW, THEREFORE, for and in consideration of the Lease and other good
and valuable consideration the parties agree as follows:
1. The tenant hereby exercises the option granted by the Amendment
dated November 16, 1979, to renew this Lease for a period of three years, from
March 1, 1981 to February 29, 1984 ("First Option Term"). During this First
Option Term the monthly rental shall
<PAGE> 23
be $1,873.00 per month. All other terms of the Lease Agreement and appropriate
Amendment shall remain in effect.
2. Tenant shall also have the option to renew this Lease for an
additional period ("Second Option Term") commencing at the expiration of the
First Option Term, on the same terms and conditions as contained herein, except
that the duration of the Second Option Term and the amount of rental during the
Second Option Term shall be as hereinafter provided.
The duration of the Second Option Term shall be a period of five years.
Tenant shall exercise such option to renew if at all, by delivering
written notice of such exercise to Landlord by not later than 180 days prior to
the expiration of the First Option Term hereof with a copy of same to Agent.
Within 30 days after Landlord receives Tenant's notice of exercise of the option
for the Second Option Term, Landlord shall give written notice to Tenant of the
annual rental which Landlord will accept for the Second Option Term. If Tenant
does not agree to the rental amount set forth in Landlord's notice, then
Landlord and Tenant shall in good faith negotiate to reach agreement upon a
rental acceptable to each of them. If the parties reach agreement as to rental,
the parties shall promptly thereafter execute and deliver to each other an
addendum to this Lease, setting forth the rental agreed to by Landlord and
Tenant. If the parties fail to reach agreement as to the rental for the Second
Option Term prior to 120 days prior to the expiration date of the First Option
Term, then Tenant's right to exercise such option shall terminate and be of no
effect.
3. Except as expressly amended herein, all other terms and conditions
of the Lease shall remain the same and the parties hereto expressly ratify said
terms and conditions and agree to be bound thereby.
2
<PAGE> 24
IN WITNESS WHEREOF, the parties have signed and sealed this Amendment
to Lease as of the date first above written.
Signed, Sealed and Delivered TENANT:
in the presence of:
GRIFFITH LABORATORIES, U.S.A., INC.
/s/ Dorothy M. Nelson
- -----------------------------
Unofficial Witness By: [illegible]
-------------------------
[illegible]
- ------------------------------ Attest: [illegible]
Notary Public -------------------------
(CORPORATE SEAL)
Signed, Sealed and Delivered AGENT:
in the presence of:
CLAYTON McLENDON, INC.
[illegible]
- -------------------------------
Unofficial Witness By: [illegible]
--------------------------
[illegible]
- ------------------------------ Attest: /s/ Inez M. McLendon
Notary Public -------------------------
(CORPORATE SEAL)
Signed, Sealed and Delivered LANDLORD:
in the presence of:
SEALY (GA)
[illegible]
- ---------------------------
Unofficial Witness By: /s/ Scott P. Sealy(Seal)
-----------------------------
- ---------------------------
Notary Public
3
<PAGE> 25
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT, IS MADE AS OF THE 31st DAY OF AUGUST 1983 BY
AND BETWEEN GRIFFITH LABORATORIES, U.S.A., INC., (hereinafter referred to as
"Tenant"), SEALY (GA), a Limited Partnership (hereinafter referred to as
"Landlord") and CLAYTON MC LENDON, INC. (hereinafter referred to as "Agent").
W I T N E S S E T H:
WHEREAS, Tenant, Cynwynd Investments and Agent entered into a Lease Agreement
dated February 19, 1974 for the lease of 11,238 sq. ft. in a multi-tenant
industrial building commonly known as 2973 Olympic Industrial Drive, N. W.,
Smyrna, Georgia for a term beginning March 1, 1974 and ending February 28, 1977
(hereinafter referred to as the "Lease"); and
WHEREAS, Cynwynd Investments subsequently conveyed the property on which said
multi-tenant building is located and assigned the Lease to Landlord; and
WHEREAS, Tenant, Landlord and Agent entered into an Amendment to lease Agreement
dated October 31, 1980 to extend the term commencing March 1, 1981 and ending
February 28, 1984, with an option to Tenant to further extend the term of the
Lease for three years upon the same terms and conditions of the Lease and
appropriate Amendments;
NOW, THEREFORE, for and in consideration of the Lease and other good and
valuable consideration the parties agree as follows:
1. The Tenant hereby exercises the option granted by the Amendment
dated October 31, 1980, to renew this Lease for a period of five (5) years, from
March 1, 1984 to February 28, 1989 ("Option Term"). During this Option Term the
monthly rental shall be $2,107.13 per
<PAGE> 26
month during the first three (3) years and $2,341.25 per month for the remaining
two years. All other terms of the Lease Agreement and appropriate Amendment
shall remain in full force and effect.
2. Tenant shall also have the option to renew this Lease for an
additional term of three (3) years commencing March 1, 1989 and ending February
28, 1992, under the same terms and conditions as the original Lease except the
rental for the second option shall be computed in accordance with the attached
Exhibit A.
3. Except as expressly amended herein, all other terms and conditions
of the Lease shall remain the same and the parties hereto expressly ratify said
terms and conditions and agree to be bound thereby. IN WITNESS WHEREOF the
parties have signed this Amendment to Lease as of the date first above written.
WITNESSES: TENANT:
/s/ Diane Kolar GRIFFITH LABORATORIES, U.S.A., INC.
- ------------------------------
BY /s/ Donald S. Alguire
- ------------------------------ --------------------------------------
LANDLORD:
/s/ Sheila Graff SEALY, (GA), A LIMITED PARTNERSHIP
- ------------------------------
/s/ June Tilley BY /s/ Scott P. Sealy
- ------------------------------ -----------------------------------
Scott P. Sealy, General Partner
AGENT:
----------------------------- CLAYTON MC LENDON, INC.
/s/ Dianne M. Catter BY [illegible]
- ------------------------------ -----------------------------------
2
<PAGE> 27
EXHIBIT A
OPTION TO RENEW
While this lease is in full force and effect, provided that Lessee is not in
default, of any of the terms, covenants, and conditions thereof, Lessee shall
have the right or option upon six (6) months written notice to Lessor to extend
the original term of this lease for one additional term of three (3) years. Such
extension or renewal of the original term shall be on the same terms, covenants
or conditions as provided for in the original term except that the rental during
the option period, shall be increased by an amount to be determined by
multiplying the base rental during the primary term, by the percentage increase
in the Consumer Price Index, as prepared by the U. S. Bureau of Labor
Statistics. CPI-W as used herein shall mean the Consumer Price Index, U. S.
Average, all Items, 1967=100, issued by the U. S. Bureau of Labor Statistics
Section for Urban Wage Earners and Clerical Workers.
The percentage increase shall be determined by subtracting the CPI-W for the
fourth month prior to the beginning date of the lease from the CPI-W for the
fourth month prior to the end of the lease term and dividing that difference by
the CPI-W for the fourth month prior to the beginning date of the lease term. If
an increase shall become effective by application of the foregoing, then such
increase shall be applicable for each month during such extended year term. In
all cases, the CPI-W referenced shall be that monthly published index that is
most recent to the date in question. In no event shall the rental in the renewal
term be below the rental in the original term of the lease.
If the publication of the CPI-W should be discontinued or the base year changed,
the parties hereto shall thereafter accept comparable statistics on consumer
prices for the United States as they shall be computed by an agency of the
United States or by a responsible financial periodical of recognized authority
then to be selected by the parties hereto.
<PAGE> 28
THIS AMENDMENT TO LEASE AGREEMENT is made as of the 10th day of February, 1984
by and between GRIFFITH LABORATORIES, U.S.A., INC., (hereinafter referred to as
"Tenant"), SEALY (GA), A LIMITED PARTNERSHIP (hereinafter referred to as
"Landlord") and CLAYTON MCLENDON, INC. (hereinafter referred to as "Agent").
W I T N E S S E T H:
WHEREAS, Tenant, Cynwynd Investments and Agent entered into a Lease
Agreement dated February 19, 1974 for the lease of 11,238 square feet in a
multi-tenant industrial building commonly known as 2973 Olympic Industrial
Drive, N.W., Smyrna, Georgia for a term beginning March 1, 1974, and ending
February 28, 1977 (hereinafter referred to as the "Lease"); and
WHEREAS, Cynwynd Investments subsequently conveyed the property on
which said multi-tenant building is located and assigned the Lease to Landlord;
and
WHEREAS, Tenant, Landlord and Agent entered into an Amendment to Lease
Agreement dated October 31, 1980, to extend the term commencing March 1, 1981,
and ending February 28, 1984, with an option to Tenant to further extend the
term of the Lease for three (3) years upon the same terms and conditions of the
Lease and appropriate Amendments; and
WHEREAS, by Amendment to Lease Agreement dated August 10, 1983, Tenant
exercised the option granted by the Amendment dated October 31, 1980, to renew
this Lease for a period of five (5) years, from March 1, 1984, to February 28,
1989 ("Option Term"). During this Option Term the monthly rental is $2,107.13
per month during the first three (3) years and $2,341.25 per month for the
remaining two years. All other terms of the Lease Agreement and appropriate
Amendment are in full force and effect; and
WHEREAS, Tenant has the option to renew this Lease for an additional
term of three (3) years commencing March 1, 1989, and ending February 28, 1992,
under the same terms and conditions as the original Lease except the rental for
the second option computed in accordance with said Amendment dated August 10,
1983; and
WHEREAS, Tenant desires to expand the premises subject of the Lease.
NOW, THEREFORE, for and in consideration of the Lease and other good
and valuable consideration the parties agree as follows:
1. Commencing September 1, 1984, the leased premises shall be expanded
to include the approximately 5,619 square feet of adjacent space currently
occupied by Bonded Service Company, Inc. shown on Exhibit "A" attached hereto.
2. (a) Commencing September 1, 1984, the rental due under the Lease
shall be increased by $1,053.56 per month (said increased rental computed at the
rate of $2.25 of square
<PAGE> 29
foot multiplied times 5,619 square feet). The annual rent for the entire leased
premises including the premises presently subject to the Lease and as increased
by the additional space made part of the Lease by this Amendment shall be
$37,928.28. The total monthly rent shall be $3,160.69.
(b) Commencing March 1, 1987, through and including February 28, 1989, the
total monthly rental for the entire premises subject to the Lease as expanded
hereby shall be $3,511.88 and the total annual rent shall be $42,142.50.
3. As soon as commercially reasonable after September 1, 1984, but before
October 1, 1984, Tenant hereby agrees to construct at its cost and expense, and
in a good and workmanlike manner free and clear of all liens or other
obligations, a demising wall at the column line shown on Exhibit "A". In
addition, Tenant hereby agrees to rewire and/or redirect the utility service for
said expansion space of 5,619 square feet in order that said space be included
in the service for tenant's existing space and that such expanded space be
metered as part of Tenant's existing service, at Tenant's cost and expense.
4. Landlord and Tenant acknowledge that said expanded space is presently
under lease with Bonded Service Company, Inc. until August 31, 1984, and that
this Amendment is subject to said Lease. Between the date hereof and September
1, 1984, Landlord does hereby consent to any sublease for said expanded space
entered into between Bonded Service Company, Inc. and Tenant, provided, however,
such consent is not intended to relieve Bonded Service Company, Inc. under any
of its obligations to Landlord under its Lease. In the event such sublease is
entered into, Tenant shall be responsible for constructing said demising wall
and changing said utility service in accordance with paragraph 3 above, in all
events prior to September 1, 1984.
5. Tenant hereby agrees to hold Landlord harmless from any and all claims
or liabilities resulting from Tenant's construction of said demising wall and
changes in the wiring and/or utility systems pursuant to paragraph 3 or 4
hereof. Tenant further agrees to conduct such construction activities at a
minimal interruption or interference with the leased premises or space adjacent
to said 5,619 square feet.
6. Except as the Lease is expressly amended herein, all other terms and
conditions of the Lease as previously amended shall remain the same and the
parties hereto expressly ratify said terms and conditions and agree to be bound
hereby.
2
<PAGE> 30
IN WITNESS WHEREOF, the parties have signed this Amendment to Lease as
of the date first above written.
TENANT:
GRIFFITH LABORATORIES, U.S.A., INC.
By /s/ Robert S. Gralewski
Vice President, Administration
WITNESSES: UBSCRIBED and SWORN to before me
his 23rd day of February, 1984.
/s/ Diane Kolar
- -----------------------------
/s/ Kathleen A. Lemhan
- ----------------------------- -------------------------------------
Notary Public MY COMMISSION EXPIRES
MAY 1, 1984
LANDLORD:
SEALY (GA), A LIMITED PARTNERSHIP
AGENT:
CLAYTON MCLENDON, INC.
By [illegible]
-----------------------------------
/s/ W. Eugene Hall
- --------------------------------------
/s/ Jacqueline Swaggert
- --------------------------------------
Notary Public, Georgia, State at Large
My Commission Expires Feb. 2, 1988
3
<PAGE> 31
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is entered into this 13th day of May, 1994, by
and between INDCON, L.P., successor to Adams Properties Associates (hereinafter
called "LANDLORD") and GRIFFITH MICRO SCIENCE, INC. (hereinafter called
"TENANT");
WITNESSETH;
WHEREAS, the LANDLORD and TENANT have previously entered into a Lease
Agreement dated the 19 day of February, 1974, with Amendments thereto dated,
November 16, 1977, October 31, 1980, August 31, 1983, February 10, 1984, May 5,
1994 and Lease Extensions and Modifications dated December 17, 1986 and March
19, 1992, for premises containing approximately 44,815 square feet and located
at 2971 Olympic Industrial Drive, Atlanta, Georgia (hereinafter referred to as
the "Original Lease"); and
WHEREAS, LANDLORD and TENANT are desirous of modifying and amending
certain parts of the Original Lease;
NOW THEREFORE, in consideration of TEN DOLLARS ($10.00), paid by each
of the parties to the other, the receipt of which is hereby acknowledged, it is
agreed by and between the parties that the Lease shall be hereby amended in the
following manner and upon the terms and conditions hereinafter set forth:
1. The address of the Demised Premises is hereby amended to read 2973 Olympic
Industrial Drive, Atlanta, Georgia.
Except as provided herein, all other terms, conditions, and covenants under said
Original Lease shall remain in full force and effect and cannot be modified
unless said modification is reduced to writing and signed by all parties.
Time is of the essence on this Amendment to lease.
TENANT: LANDLORD:
GRIFFITH MICRO SCIENCE, INC. INDCON, L.P.
By: Adams Properties Associates
Its General Partner
By: Continental Mortgage & Equity Trust
Its General Partner
BY: /s/ Frank S. Lange BY: [illegible]
------------------------------- ----------------------------------------
NAME: Frank S. Lange NAME:[illegible]
---------------------------- --------------------------------------
TITLE: Vice President Operations TITLE:V.P.
---------------------------- --------------------------------------
DATE: 5-13-94 DATE:5/13/94
---------------------------- --------------------------------------
WITNESS: [illegible] WITNESS: /s/ Michelle C. McDowell
-------------------------- -----------------------------------
<PAGE> 32
LEASE EXTENSION AND MODIFICATION AGREEMENT
THIS LEASE EXTENSION AND MODIFICATION AGREEMENT ("Amendment"), made and
entered into this 19th day of March, 1992, by and between ADAMS PROPERTIES
ASSOCIATES, a Georgia general partnership (hereinafter called "Landlord"), and
GRIFFITH MICRO SCIENCE, INC. (hereinafter called "Tenant"), and CLAYTON
MCLENDON, INC. (hereinafter called "Agent").
W I T N E S S E T H:
WHEREAS, by Lease Agreement, dated February 19, 1974, Cynwynd Investments,
as landlord, leased to Griffith Laboratories, Inc. certain premises (the
"Premises") situated at 2971 Olympic Industrial Drive, Atlanta, Georgia,
currently containing 44,815 square feet of office-warehouse space and;
WHEREAS, Cynwynd Investments subsequently conveyed the Premises to Sealy
(GA), A Limited Partnership, and;
WHEREAS, the Lease Agreement was modified by that certain Amendment to
Lease Agreement dated November 16, 1979, by and among Griffith Laboratories,
U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, by that certain
Amendment to Lease dated October 31, 1980, by and among Griffith Laboratories,
U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, by that certain
Amendment to Lease Agreement dated August 31, 1983, by and between Griffith
Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, and by
that certain Amendment to Lease Agreement dated February 10, 1984 by and among
Griffith Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and
Agent;
WHEREAS, Griffith Laboratories, U.S.A., Inc. formed a wholly-owned
subsidiary corporation now know as Griffith Micro Science, Inc., a Delaware
corporation, in October, 1984 and conveyed all of its assets, including the
Lease Agreement, as amended to Tenant;
WHEREAS, Sealy Consolidated Capital Properties ("SCCP") acquired the
Premises and all the right, title and interest to said Lease Agreement, as
amended, from Sealy (GA), A Limited Partnership, in May 1986;
WHEREAS, the Lease Agreement was further modified by Lease Extension and
Modification Agreement dated December 17, 1986, by and among SCCP, Griffith
Laboratories, U.S.A., Inc. and Agent (the Lease Agreement, as amended, is herein
referred to as the "Lease");
WHEREAS, SCCP changed its name on May 2, 1989, to Adams Properties
Associates.
<PAGE> 33
NOW, THEREFORE, in consideration for the mutual promises given one to the
other, the parties hereto intending to be legally bound, do hereby covenant and
agree as follows:
1. The term of the Lease is hereby extended for two (2) years, which
extended term shall begin on March 1, 1992, and shall expire on February 28,
1994.
2. The monthly base rental is hereby amended and Tenant agrees to pay to
Landlord, effective March 1, 1992, through February 28, 1994, a base rental of
$9,336.46 per month, in accordance with the terms of the Lease.
3. If Tenant is not in default of any terms or conditions of the Lease,
Tenant shall have the option to renew the Lease for two (2) additional terms of
one (1) year each. The "First Option Period" shall commence upon the expiration
of the extended term herein described and shall be on the same terms and
conditions as contained in the Lease, except the monthly base rental shall be
$10,270.00 beginning March 1, 1994 and ending February 28, 1995. Tenant shall
exercise the "First Option Period" by delivering written notice of such exercise
to Landlord no later than 180 days prior to the expiration of the extended term
described herein.
If Tenant is not in default of any terms or conditions of the "First Option
Period", Tenant shall have a further option to renew for an additional one (1)
year, "Second Option Period", upon expiration of the "First Option Period", upon
the same terms and conditions as contained in the Lease, except the monthly base
rental for the "Second Option Period" shall be $11,203.75 beginning March 1,
1995 and ending February 28, 1996. Tenant shall exercise the "Second Option
Period" by delivering written notice of such exercise to Landlord no later than
180 days prior to the expiration of the "First Option Period".
In the event Tenant fails to exercise the "First Option Period", the
"Second Option Period" shall be void and of no effect.
4. The term "Hazardous Substances", as used in the Lease and this Amendment
shall mean pollutants, contaminants, toxic or hazardous wastes or any other
substances, the use and/or the removal of which is required or the use of which
is restricted, prohibited or penalized by "Environmental Laws". The term
"Environmental Laws" as used in the Lease and this Amendment shall mean any
federal, state or local law, ordinance or other statute of a governmental or
quasi-governmental authority relating to pollution or protection of the
environment.
Tenant hereby agrees that (i) no activity will be conducted on the Premises
that will produce a Hazardous Substance, except for such activities that are
part of the ordinary course of Tenant's business activities ("Permitted
Activities"); provided said Permitted Activities are conducted in accordance
with all Environmental Laws and have been approved in advance in writing by
Landlord; Tenant shall be responsible for obtaining any required permits and
paying any fees and providing any testing required by any governmental agency;
(ii) the Premises will
2
<PAGE> 34
not be used in any manner for the storage of any Hazardous Substances, except
for the temporary storage of such materials that are used in the ordinary course
of Tenant's business ("Permitted Materials"), provided such Permitted Materials
are properly stored in a manner and location meeting all Environmental Laws and
approved in advance, in writing, by Landlord; Tenant shall be responsible for
obtaining any required permits and paying any fees and providing any testing
required by any governmental agency; (iii) no portion of the Premises will be
used as a landfill or dump; (iv) Tenant will not install any underground tanks
of any type; (v) Tenant will not allow any surface or subsurface conditions to
exist or come into existence that constitute, or with the passage of time, may
constitute a public or private nuisance; (vi) Tenant will not permit any
Hazardous Substances to be brought onto the Premises, except for the Permitted
Materials described below, and if so, brought or found located thereon, the same
shall be immediately removed, with proper disposal, and all required clean-up
procedures shall be diligently undertaken pursuant to all Environmental Laws.
Landlord or Landlord's representative shall have the right, but not the
obligation, to enter the Premises for the purposes of inspecting the storage,
use and disposal of Permitted Materials to ensure compliance with all
Environmental Laws. Should it be determined by Landlord, applying current
environmental statutes and laws that said Permitted Materials are being
improperly stored, used, or disposed of, then Tenant shall immediately take such
corrective action within twenty-four hours if possible, and, if not possible,
within a reasonable time not to exceed three (3) months; provided, however, if
such corrective action cannot be completed within said three (3) month period,
Tenant, so long as Tenant shall diligently and actively be pursuing such
corrective action, shall have a reasonable period to complete such corrective
work. If Tenant fails to take appropriate corrective action in a timely manner,
Landlord shall then have the right to perform such work and Tenant shall
promptly reimburse Landlord for any and all cost associated with said work. If
at any time during or after the term of the Lease, the Premises are found to be
so contaminated or subject to said conditions and such contamination or
condition occurred during the term of the Lease and such contamination or
condition was caused by Tenant, its employees, representatives or agents, Tenant
shall diligently institute proper and thorough clean-up procedures, at Tenant's
sole cost, and Tenant agrees to indemnify and hold Landlord harmless from all
claims, demands, actions, liabilities, costs, expenses, damages and obligations
of any nature arising from or as a result of the use of the Premises by Tenant.
The foregoing indemnification and the responsibilities of Tenant shall survive
the termination or expiration of the Lease. If such contamination or condition
occurred prior to or after the term of this Lease and was not caused by Tenant,
Landlord shall indemnify and hold Tenant harmless from all claims, demands,
actions, liabilities, costs, expenses, damages and obligations of any nature
arising from or as a result of the use of the Premises. The foregoing
indemnification and the responsibilities of Landlord shall survive the
termination or expiration of the Lease.
Landlord acknowledges that Tenant's contract sterilization operations in
the Premises require the use and storage of ethylene oxide, defined as a
Hazardous Substance under certain state and federal regulations. Tenant's
contract, sterilization operations shall be a
3
<PAGE> 35
Permitted Activity, as defined above, and ethylene oxide shall be a Permitted
Material, as defined above.
5. The Landlord under this Amendment is Adams Properties Associates, a
Georgia general partnership composed of (a) Continental Mortgage and Equity
Trust and Income Special Associates, a California general partnership as
managing partner composed of National Income Realty Trust, a California business
trust and Continental Mortgage and Equity Trust, a California business trust.
The Declarations of Trust, as amended, establishing National Income Realty Trust
and Continental Mortgage and Equity Trust, a California business trust
(collectively, the "Trusts" and severally, "Trust"), dated October 31, 1978 and
August 27, 1980, respectively, copies of which, together with all amendments
thereto (the "Declaration"), are duly recorded in the office of other recorder
of the County of Alameda, State of California, provide, with respect to each
Trust, that (a) the Trustee shall conduct the Trust's activities in the name of
the Trust, (b) the name of the Trust refers to the Trustee collectively as
trustees, but not individually or personally, (c) no trustee, shareholder,
officer, employee, or agent shall have any personal liability, jointly or
severally, for any obligation of or claim against the Trust, and (d) all persons
dealing with the Trust, in any way, must look solely to the assets of the Trust
for the payment of any claims against the Trust. Accordingly, Tenant agrees to
look solely to the respective assets of each Trust for the enforcement of any
claims against either National Income Realty Trust or Continental Mortgage and
Equity Trust.
6. Landlord hereby acknowledges the assignment of the Lease by Griffith
Laboratories, U.S.A., Inc. to Griffith Micro Science, Inc.
7. Except as the Lease is expressly amended herein, all other terms and
conditions of the Lease as previously amended shall remain the same and the
parties hereto expressly ratify said term and conditions and agree to be bound
hereby.
IN WITNESS WHEREOF, the parties have executed this Amendment in triplicate
the day and year first written above.
WITNESSES: LANDLORD
- ------------------------- ADAMS PROPERTIES ASSOCIATES
- ------------------------- By: [illegible]
------------------------------
Title: Vice President
------------------------
WITNESSES: TENANT:
- -------------------------- GRIFFITH MICRO SCIENCE, INC
4
<PAGE> 36
By: /s/ William A. Fennelly
----------------------------------
Title: Vice President, Operations
-----------------------------
AGENT:
WITNESSES: CLAYTON MCLENDON, INC.
By:
- --------------------------- ----------------------------------
Title:
- --------------------------- -----------------------------
5
<PAGE> 37
March 25, 1992
Mr. William A. Fennelly
Vice President - Operations
Griffith Micro Science
200 South Frontage Road
Suite 120
Burr Ridge, Illinois 60521
Re: 2971 Olympic, Atlanta, Georgia (the "Property")
Dear Tenant:
This is to inform you that on March 25, 1992, the Property was purchased by
Sealy Southeastern, L.P. ("Partnership") from Adams Properties Associates
("Adams") and all of Adams' right, title and interest in the lease you hold
encumbering a portion of the Property was assigned to the Partnership. Enclosed
for your files is a copy of the Assignment of Leases by and between Adams and
the Partnership and your copy of the executed Subordination, Non-Disturbance,
Attornment and Estoppel Agreement. From the date hereof, all amounts due and
payable under your Lease and all notices under the Lease should be sent to the
following address:
Sealy Southeastern, L.P.
c/o The Sealy Companies
333 Texas Street
Suite 1450
Shreveport, Louisiana 71101
Yours very truly,
PARTNERSHIP:
SEALY SOUTHEASTERN, L.P., a
Georgia limited partnership
By: Sealy Venture II, L.P., a
Georgia limited partnership,
its sole general partner
By: Sealy Industrial,
Inc., a Georgia
corporation, its sole
general partner
<PAGE> 38
By:/s/ Scott P. Sealy
-----------------------
Scott P. Sealy,
President
[CORPORATE SEAL]
ADAMS:
ADAMS PROPERTIES ASSOCIATES, a
Georgia general partnership
By: Income Special Associates,
a California general
partnership, General Partner
By: National Income Realty
Trust, a California
business trust, General
Partner
By: /s/ Peter L. Larsen
---------------------------
Name: Peter L. Larsen
---------------------------
Title: Vice President
---------------------------
[TRUST SEAL]
By: Continental Mortgage
and Equity Trust, a
California business
trust, General Partner
By: /s/ Peter L. Larsen
---------------------------
Name: Peter L. Larsen
---------------------------
Title: Vice President
---------------------------
[TRUST SEAL]
By: Continental Mortgage and
Equity Trust, a California
business trust, General
Partner
<PAGE> 39
By: /s/ Peter L. Larsen
----------------------------
Name: Peter L. Larsen
----------------------------
Title: Vice President
-------------------------
[TRUST SEAL]
<PAGE> 40
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is entered into this 13th day of May, 1994, by
and between INDCON, L.P., successor to Adams Properties Associates (hereinafter
called "LANDLORD") and GRIFFITH MICRO SCIENCE, INC. (hereinafter called
"TENANT");
WITNESSETH;
WHEREAS, the LANDLORD and TENANT have previously entered into a Lease
Agreement dated the 19 day of February, 1974, with Amendments thereto dated,
November 16, 1977, October 31, 1980, August 31, 1983, February 10, 1984, and
Lease Extensions and Modifications dated December 17, 1986 and March 19, 1992,
for premises containing approximately 44,815 square feet and located at 2971
Olympic Industrial Drive, Atlanta, Georgia (hereinafter referred to as the
"Original Lease"); and
WHEREAS, LANDLORD and TENANT are desirous of modifying and amending
certain parts of the Original Lease;
NOW THEREFORE, in consideration of TEN DOLLARS ($10.00), paid by each
of the parties to the other, the receipt of which is hereby acknowledged, it is
agreed by and between the parties that the Lease shall be hereby amended in the
following manner and upon the terms and conditions hereinafter set forth:
1. Tenant has applied for and received an Air Quality Permit #7389-033-11357
from the State of Georgia Department of Natural Resources Environmental
Protection Division with an effective date of March 24, 1994. In order for
Tenant to comply with this permit Landlord hereby grants its consent for Tenant
to group the aeration ventilation stacks and the chamber backvent into two 68
foot. stacks ("stacks") above the 25 foot roof of the Demised Premises.
2. Tenant shall bear all costs associated with the installation and maintenance
of the stacks. Upon vacation of the Demised Premises by Tenant, Tenant shall
remove, at its sole cost and expense, the aforementioned stacks. Following
installation and removal, Tenant hereby agrees to restore the roof and remaining
structure to the same condition that it was in prior to the installation of said
stacks, reasonable wear and tear excepted.
3. Tenant acknowledges and agrees that it is liable for all damages, whether to
persons or property, caused by, resulting from, or arising as a result of the
installation, maintenance or removal of the stacks, and agrees to indemnify and
hold Landlord harmless from and against all losses, costs, damages, liabilities
or actions, including reasonable attorney's fees, which may arise or which it
may incur as a result of the installation, maintenance or removal of said
stacks.
4. Tenant shall bear all costs associated with compliance with the Air Quality
Permit #7389-033-11357.
<PAGE> 41
Except as provided herein, all other terms, conditions, and covenants under the
Original Lease shall remain in full force and effect and cannot be modified
unless said modification is reduced to writing and signed by all parties.
Time is of the essence on this Amendment to lease.
TENANT: LANDLORD:
GRIFFITH MICRO SCIENCE, INC. INDCON, L.P.
By: Adams Properties Associates
Its General Partner
By: Vice President/Operations By: Continental Mortgage & Equity Trust
Its General Partner
BY /s/ Frank S. Lange BY [illegible]
------------------------------ ------------------------------------
FRANK S. LANGE
NAME NAME
--------------------------- -----------------------------------
<PAGE> 42
LEASE EXTENSION
THIS LEASE EXTENSION is made and entered into this 18th day of
March, 1994, by and among INDCON L.P SUCCESSOR TO ADAMS PROPERTIES ASSOCIATES, a
Georgia general partnership (hereinafter called "Landlord"), and GRIFFITH MICRO
SCIENCE, INC. (hereinafter called "Tenant"), and CLAYTON MCLENDON, INC.
(hereinafter called "Agent").
W I T N E S S E T H:
WHEREAS, by Lease Agreement, dated February 19, 1974, Cynwynd
Investments, as landlord, leased to Griffith Laboratories, Inc. certain premises
(the "Premises") situated at 2971 Olympic Industrial Drive, Atlanta, Georgia,
currently containing 44,815 square feet of office-warehouse space; and
WHEREAS, Cynwynd Investments subsequently conveyed the
Premises to Sealy (GA), A Limited Partnership; and
WHEREAS, the Lease Agreement was modified by that certain
Amendment to Lease Agreement dated November 16, 1979, by and among Griffith
Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, by that
certain Amendment to Lease dated October 31, 1980, by and among Griffith
Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, by that
certain Amendment to Lease Agreement dated August 31, 1983, by and between
Griffith Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and
Agent, and by that certain Amendment to Lease Agreement dated February 10, 1984
by and among Griffith Laboratories, U.S.A., Inc., Sealy (GA), A Limited
Partnership and Agent; and
WHEREAS, Griffith Laboratories, U.S.A., Inc. formed a
wholly-owned subsidiary corporation now known as Griffith Micro Science, Inc., a
Delaware corporation, in October, 1984 and conveyed all of its assets, including
the Lease Agreement, as amended to Tenant; and
WHEREAS, Sealy Consolidated Capital Properties ("SCCP")
acquired the Premises and all the right, title and interest to said Lease
Agreement, as amended, from Sealy (GA), A Limited Partnership, in May, 1986; and
WHEREAS, the Lease Agreement was further modified by Lease
Extension and Modification Agreement dated December 17, 1986, by and among SCCP,
Griffith Laboratories, U.S.A., Inc. and Agent; and
WHEREAS, SCCP changed its name on May 2, 1989 to Adams
Properties Associates; and
<PAGE> 43
WHEREAS, the Lease Agreement was further modified by Lease
Extension and Modification Agreement dated March 19, 1992, by and among Adams
Properties Associates, Griffith Micro Science, Inc. and Agent (the Lease
Agreement, as amended, is hereby referred to as the "Lease"); and
WHEREAS, by letter dated August 23, 1993 Griffith Micro
Science, Inc. notified Adams Properties Associates that it wished to exercise
its option for the First Option Period to extend the lease term through February
28, 1995.
NOW, THEREFORE, in consideration for the mutual promises given
one to the other, the parties hereto intending to be legally bound, do hereby
covenant and agree as follows:
1. The term of the Lease is hereby extended for one (1) year,
which extended term shall begin on March 1, 1994, and shall expire on February
28, 1995.
2. The monthly base rental is hereby amended and Tenant agrees
to pay to Landlord, effective March 1, 1994, through February 28, 1995, a base
rental of $10,270.00 per month, in accordance with terms of the Lease.
3. Except as the Lease is expressly amended herein, all other
terms and conditions of the Lease as previously amended shall remain the same
and the parties hereto expressly ratify said terms and conditions and agree to
be bound hereby.
IN WITNESS WHEREOF, the parties have executed this Amendment
in triplicate the day and year first written above.
LANDLORD:
INDCON, L.P.
BY: ADAMS PROPERTIES ASSOCIATES,
ITS G.P.
By: Continental Mortgage & Equity Trust,
its G.P.
By: [illegible]
--------------------------------
Title: VP
------------------------------
2
<PAGE> 44
TENANT:
GRIFFITH MICRO SCIENCE, INC.
By: /s/ F.S. Lange 2-7-94
-------------------------------------
Title: V.P. Operations
----------------------------------
AGENT:
CLAYTON MCLENDON, INC.
By: /s/ John E. Haden
-------------------------------------
John E. Haden
President
3
<PAGE> 45
LEASE EXTENSION
THIS LEASE EXTENSION is made and entered into this 4th day of
November, 1994, by and among INDCON, L.P. (hereinafter called "Landlord"), and
GRIFFITH MICRO SCIENCE, INC. (hereinafter called "Tenant").
W I T N E S S E T H:
WHEREAS, by Lease Agreement, dated February 19, 1974, Cynwynd
Investments, as landlord, leased to Griffith Laboratories, Inc. certain premises
(the "Premises") situated at 2971 Olympic Industrial Drive, Atlanta, Georgia,
currently containing 44,815 square feet of office-warehouse space, with Clayton
McLendon, Inc. (hereinafter "Agent") having procured the Lease Agreement; and
WHEREAS, Cynwynd Investments subsequently conveyed the
Premises to Sealy (GA), A Limited Partnership; and
WHEREAS, the Lease Agreement was modified by that certain
Amendment to Lease Agreement dated November 16, 1979, by and among Griffith
Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, by that
certain Amendment to Lease dated October 31, 1980, by and among Griffith
Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and Agent, by that
certain Amendment to Lease Agreement dated August 31, 1983, by and between
Griffith Laboratories, U.S.A., Inc., Sealy (GA), A Limited Partnership and
Agent, and by that certain Amendment to Lease Agreement dated February 10, 1984
by and among Griffith Laboratories, U.S.A., Inc., Sealy (GA), A Limited
Partnership and Agent; and
WHEREAS, Griffith Laboratories, U.S.A., Inc. formed a
wholly-owned subsidiary corporation now known as Griffith Micro Science, Inc., a
Delaware corporation, in October, 1984 and conveyed all of its assets, including
the Lease Agreement, as amended to Tenant; and
WHEREAS, Sealy Consolidated Capital Properties ("SCCP")
acquired the Premises and all the right, title and interest to said Lease
Agreement, as amended, from Sealy (GA), A Limited Partnership, in May, 1986; and
WHEREAS, the Lease Agreement was further modified by Lease
Extension and Modification Agreement dated December 17, 1986, by and among SCCP,
Griffith Laboratories, U.S.A., Inc. and Agent; and
WHEREAS, SCCP changed its name on May 2, 1989 to Adams
Properties Associates; and
<PAGE> 46
WHEREAS, the Lease Agreement was further modified by Lease
Extension and Modification Agreement dated March 19, 1992, by and among Adams
Properties Associates, Griffith Micro Science, Inc. and Agent; and
WHEREAS, on December 21, 1993 Agent assigned its commission
rights to Mrs. Clayton D. McLendon by written Assignment; and
WHEREAS, INDCON, L.P. acquired the Premises and all the
right, title and interest to said Lease Agreement from Adams Properties
Associates; and
WHEREAS, the Lease Agreement was further modified by Lease
Extension dated March 18, 1994, by and among INDCON, L.P., Griffith Micro
Science, Inc. and Agent (the Lease Agreement, as amended, is hereby referred to
as the "Lease"); and
NOW, THEREFORE, in consideration for the mutual promises given
one to the other, the parties hereto intending to be legally bound, do hereby
covenant and agree as follows:
1. The term of the Lease is hereby extended through June 30,
1997.
2. The monthly base rental is hereby amended, and Tenant
agrees to pay to Landlord the following base rental, per month, in accordance
with the terms of the Lease:
(a) For the period July 1, 1994 through June 30, 1995,
$10,270.10 per month;
(b) For the period July 1, 1995 through June 30, 1996,
$10,568.87 per month;
(c) For the period July 1, 1996 through June 30, 1997,
$10,904.98 per month.
3. Landlord shall reimburse Tenant for, or shall pay for, up
to $30,000.00 in improvements that Tenant has made, or will make, to the
Premises. Tenant shall furnish Landlord with invoices for any of said
improvements not yet paid for, and Landlord shall promptly pay said invoices.
Tenant shall furnish Landlord with copies of any invoices for any of said
improvements already paid for, and Landlord shall promptly reimburse Tenant for
the amount Tenant has paid.
4. Landlord shall be responsible for, and shall bear all costs
and expenses associated with, any and all alterations to the Premises which may
be required by the Americans With Disabilities Act of 1990 (the "ADA"), for the
accommodation of disabled individuals who may be employed from time to time by
Tenant, or any disabled customers, clients, guests, or invitees or sublessees
provided that the Premises remains in substantially the same condition it was in
at the time this Lease Extension is executed, except for those improvements
referred to in paragraph 3 hereof. If Tenant is notified or becomes aware of
failure of the Premises to conform with the ADA and does not notify Landlord
within thirty working days, Tenant shall indemnify and hold Landlord harmless
from and against any and all liability incurred arising from the
2
<PAGE> 47
failure of the Premises to conform with the ADA, including the cost of making
any alterations, renovations or accommodations required by the ADA, or any
government enforcement agency, or any courts, any and all fines, civil
penalties, and damages awarded against Landlord (or those awarded against Tenant
which could become a lien upon the property upon which the Premises are located)
resulting from a violation or violations of the ADA, and all reasonable legal
expenses and court costs incurred in defending claims made under the ADA,
including without limitation reasonable consultants', attorneys' and paralegals'
fees, expenses and court costs; as such results from the accommodation of
disabled individuals employed by Tenant, or Tenant's disabled customers,
clients, guests, invitees or sublessees.
5. Except as the Lease is expressly amended herein, all other
terms and conditions of the Lease as previously amended shall remain the same
and the parties hereto expressly ratify said terms and conditions and agree to
be bound hereby.
IN WITNESS WHEREOF, the parties have executed this Amendment
in triplicate the day and year first written above.
LANDLORD:
INDCON, L.P.
By: Adams Properties Associates, General Partner
By: Continental Mortgage & Equity Trust,
General Partner
By: [illegible]
---------------------------------
Title: Vice President
--------------------------------
TENANT:
GRIFFITH MICRO SCIENCE, INC.
By: /s/ Frank Lange
----------------------------------
Title: V.P. Operations
---------------------------------
3
<PAGE> 48
THIS EXTENSION AND MODIFICATION AGREEMENT (this "Extension Agreement")
is to be attached to and shall form a part of that certain Lease Agreement dated
the 19th day of February, 1974, (which together with any prior amendments,
modifications and extensions thereof is hereinafter called the Lease), and is
executed
BY AND BETWEEN
SECURITY CAPITAL INDUSTRIAL TRUST,
AS LANDLORD
AND
GRIFFITH MICRO SCIENCE, INC.
AS TENANT
AND
CLAYTON MCLENDON, INC.
AS AGENT
COVERING THE PREMISES KNOWN AS
2971 OLYMPIC INDUSTRIAL DRIVE
ATLANTA, GEORGIA 30080
WHEREAS, Landlord's predecessor in title (Cynwyd Investments) and
Tenant have heretofore made and entered into that certain Lease Agreement, dated
as of the 19th day of February, 1977 and further amended by that certain
Amendment to Lease Agreement dated as of the 16th day of November 1979 by and
between SEALY (GA), a Louisiana Partnership ("Landlord") and Agent, and GRIFFITH
LABORATORIES, U.S.A., INC. ("Tenant"), and that certain Amendment to Lease
Agreement dated as of the 31st day of October, 1990 by and between SEALY (GA), a
Limited Partnership ("Landlord") and Agent, and GRIFFITH LABORATORIES, U.S.A.,
INC., ("Tenant"), and that certain Amendment to Lease Agreement dated as of the
31st day of August, 1983 by and between SEALY (GA), a Limited Partnership
("Landlord") and Agent, and GRIFFITH LABORATORIES, U.S.A., INC., ("Tenant"), and
that certain Amendment to Lease Agreement dated as of the 10th day of February,
1984 by and between SEALY (GA), a Limited Partnership ("Landlord") and Agent,
and GRIFFITH LABORATORIES, U.S.A., INC., ("Tenant"), and that certain Extension
and Modification Agreement dated as of the 17th day of December, 1986 by and
between SEALY CONSOLIDATED CAPITAL PROPERTIES, a Joint Venture, by SEALY VENTURE
1, a Georgia Partnership Managing Partner ("Landlord") and Agent, and GRIFFITH
LABORATORIES, U.S.A., INC., ("Tenant"), and that certain Lease Extension and
Modification Agreement dated as of the 19th day of March, 1992, by and between
ADAM PROPERTIES ASSOCIATES, a Georgia general partnership ("Landlord") and
Agent, and GRIFFITH MICRO SCIENCE, INC. ("Tenant"), and that certain Lease
Extension dated as of the 18th day of March, 1994 by and between ADAM PROPERTIES
ASSOCIATES, a Georgia general partnership ("Landlord") and Agent, and GRIFFITH
MICRO SCIENCE, INC. ("Tenant"), and that certain Amendment to Lease dated as of
the 13th day of May 1994 by and between INDCON, L.P. ("Landlord") and GRIFFITH
MICRO SCIENCE, INC. ("Tenant"), and that certain Lease Extension dated as of the
4th day of November, 1994 by and between INCON, L.P. ("Landlord") and GRIFFITH
MICRO SCIENCE, INC. ("Tenant"), pursuant to which Landlord leases to Tenant
approximately 44,815 square feet of space (the "Premises"), being 2971 Olympic
Industrial Drive, Atlanta, Georgia;
WHEREAS, Landlord and Tenant desire to amend the Lease on the terms and
conditions set forth below;
<PAGE> 49
NOW THEREFORE, and in consideration of the mutual covenants and
agreements set forth in this Extension Agreement, the sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:
WITNESSETH, that the Lease is hereby renewed and extended for a further
term of eighty-four (84) months to commence on the 1st day of July, 1997 and to
end on the 30th day of June 2004, on the condition that Landlord and Tenant
comply with all of the covenants and agreements contained in the Lease and
herein, except Landlord and Tenant further amend the lease as follows:
1. The new monthly base rental as specified in Paragraph 2 of the Lease
Extension dated as of the 4th day of November, 1994 shall be as
follows:
Months Monthly Base Rent
---------- ------------------
1-24 $ 12,734.93
25-60 $ 13,668.58
61-84 $ 14,602.22
2. Tenant's operating expense escrow's to be paid monthly with the rent
shall be as follows:
Taxes: $399.61
Insurance: $149.36
CAM: $235.87
Management Fee: $260.30
-------
TOTAL: $1,045.14
OPERATING EXPENSE PAYMENTS. During each month of the Lease
Term, on the same date that Base Rent is due, Tenant shall pay Landlord
an amount equal to 1/12 of the annual cost, as estimated by Landlord
from time to time, of Tenant's Proportionate Share (hereinafter
defined) of Operating Expenses for the Building. Payments thereof for
any fractional calendar month shall be prorated. The term "Operating
Expenses" means all costs and expenses incurred by Landlord with
respect to the ownership, maintenance, and operation of the Building,
including, but not limited to costs of: Landlord's insurance;
utilities; maintenance, repair and replacement of all portions of the
Project, including without limitation, paving and parking areas, roads,
roofs, alleys, and driveways, mowing, landscaping, exterior painting,
utility lines, heating, ventilation and air conditioning systems,
lighting, electrical systems and mechanical and building systems;
amounts paid to contractors and subcontractors for work or services
performed in connection with any of the foregoing; charges or
assessments of any association to which the Building is subject; fees
payable to tax consultants and attorneys for consultation and
contesting taxes; property management fees payable to a property
manager, including any affiliate of Landlord, or if there is no
property manager, an administration fee of 15 percent of Operating
Expenses payable to Landlord; security services, if any; trash
collection, sweeping and removal; and additions or alternations made by
Landlord to the Building in order to comply with Legal Requirements
(other than those expressly required herein to be made by Tenant) or
that are appropriate to the continued operation of the Building as a
bulk warehouse facility in the market area, provided that the cost of
such additions or alternations that are required to be capitalized for
federal income tax purposes shall be amortized on a straight line basis
over a period equal to the lesser of the useful life thereof for
federal income tax purposes or 10 years. In addition, Operating
Expenses shall include the amount by which Taxes (hereinafter defined)
for each calendar year during the Lease term exceeds Taxes for the 1975
Base Year. Operating Expenses do not include costs, expenses,
depreciation or amortization for capital repairs and capital
replacements required to be made by Landlord under Paragraph 3 of this
Extension and Modification Agreement, debt service under mortgages or
ground rent under ground leases, cost of restoration to the extent of
net insurance proceeds received by Landlord with respect thereto,
leasing commissions, or the costs of renovating space for tenants.
<PAGE> 50
If Tenant's total payments of Operating Expenses for any year
are less than Tenant's Proportionate Share of actual Operating Expenses
for such year, then Tenant shall pay the difference to Landlord within
30 days after demand, and if more, then Landlord shall retain such
excess and credit it against Tenant's next payments. Any excess in the
last year of the term will be reimbursed to the Tenant within thirty
days after the expiration of the term. For purposes of calculating
Tenant's Proportionate share of Operating Expenses, a year shall mean a
calendar year except the first year, which shall begin on the
Commencement Date, and the last year, which shall end on the expiration
of this Lease. With respect to Operating Expenses which Landlord
allocates to the entire Project, Tenant's "Proportionate Share" shall
be Tenant's Proportionate Share of the Building as reasonably adjusted
by Landlord in the future for changes in the physical size of the
Premises or the Building; and, with respect to Operating Expenses which
Landlord allocates only to the Building, Tenant's "Proportionate Share"
shall be Tenant's Proportionate Share of the Building as reasonably
adjusted by Landlord in the future for changes in the physical size of
the Premises or the Building. Landlord may equitably increase Tenant's
Proportionate Share for any item of expense or cost reimbursable by
Tenant that relates to a repair, replacement, or service that benefits
only the Premises or only a portion of the Building that includes the
Premises or that varies with occupancy or use. The estimated Operating
Expenses for the Premises set forth above are only estimates, and
Landlord makes no guaranty or warranty that such estimates will be
accurate. See Addendum One, Number One
3. Any previous rental abatement shall be considered null and void.
4. Paragraph 9 of the Lease Agreement dated as of the 19th day of
February, 1974 is hereby deleted, and the following is substituted as
and shall hereafter be a part of the Lease:
LANDLORD REPAIRS. Landlord shall maintain, at its expense, the
structural soundness of the roof, foundation, and exterior walls of the
Building in good repair, reasonable wear and tear and damages caused by
Tenant excluded. The term "walls" as used in this Paragraph shall not
include windows, glass or plate glass, doors or overhead doors, special
store fronts, dock bumpers, dock plates or levelers, or office entries.
Tenant shall promptly give Landlord written notice of any repair
required by Landlord pursuant to this Paragraph, after which Landlord
shall have a reasonable opportunity to repair.
5. Paragraph 10 of the Lease Agreement dated as of the 19th day of
February, 1974 is hereby deleted, and the following is substituted as
and shall hereafter be a part of the Lease:
TENANT'S REPAIRS. Landlord, at Tenant's expense, through the operating
expense charge, shall maintain in good repair and condition the parking
areas and other common areas of the Building, including, but not
limited to driveways, alleys, landscape and grounds surrounding the
Premises. Subject to Landlord's obligations in Paragraph 3 and 9 of
this Extension and Modification Agreement, Tenant, at its expense,
shall repair, replace and maintain in good condition all portions of
the Premises and all areas, improvements and systems exclusively
serving the Premises including, without limitation, dock and loading
areas, truck doors, plumbing, water, and sewer lines up to points of
common connection, fire sprinklers and fire protection systems,
entries, doors, ceilings and roof membrane, windows, interior walls,
and the interior side of demising walls, and heating, ventilation and
air conditioning systems. Such repair and replacements include capital
expenditures and repairs whose benefit may extend beyond the Term.
Heating, ventilation and air conditioning systems and other mechanical
and building systems serving the Premises shall be maintained at
Tenant's expense pursuant to maintenance service contracts entered into
by Tenant. The scope of services and contractors under such maintenance
contracts shall be reasonably approved by Landlord. Tenant shall not
use the railroad that services the Premises. If Tenant fails to perform
any repair or replacement for which it is responsible, Landlord may
perform such work and be reimbursed by Tenant within 10 days after
demand therefor. Subject to Paragraph 9 of this Extension and
Modification Agreement, Tenant shall bear the full cost of any repair
or replacement to any part of the Building or Project that results from
damage caused by Tenant, its agents, contractors, or invitees and any
repair that benefit only the Premises.
<PAGE> 51
6. Landlord's Subordination of Lien dated as of the 16th day of August,
1988 is hereby deleted, and the following is substituted as and shall
hereafter be a part of the Lease:
SUBORDINATION. This Lease and Tenant's interest and rights
hereunder are and shall be subject and subordinate at all times to the
lien of any first mortgage, now existing or hereafter created on or
against the Project or the Premises, and all amendments, restatements,
renewals, modifications, consolidations, refinancing, assignments and
extensions thereof, without the necessity of any further instrument or
act on the part of Tenant. Tenant agrees, at the election of the holder
of any such mortgage, to attorn to any such holder. Tenant agrees upon
demand to execute, acknowledge and deliver such instruments, confirming
such subordination and such instruments of attornment as shall be
requested by any such holder. Notwithstanding the foregoing, any such
holder may at any time subordinate its mortgage to this Lease, without
Tenant's consent, by notice in writing to Tenant, and thereupon this
Lease shall be deemed prior to such mortgage without regard to their
respective dates of execution, delivery or recording and in that event
such holder shall have the same rights with respect to this Lease as
though this Lease had been executed prior to the execution, delivery
and recording of such mortgage and had been assigned to such holder.
The term "mortgage" whenever used in this Lease shall be deemed to
include deeds of trust, security assignments and any other
encumbrances, and any reference to the "holder" of a mortgage shall be
deemed to include the beneficiary under a deed of trust.
7. Paragraph 4 of the Lease Extension and Modification Agreement dated as
of the 19th day of March, 1992 is hereby deleted, and the following is
substituted as and shall hereafter be a part of the Lease.
ENVIRONMENTAL REQUIREMENTS. Except for Hazardous Material
contained in products used by Tenant in de minimus quantities for
ordinary cleaning and office purposes, Tenant shall not permit or cause
any party to bring any Hazardous Material upon the Premises or store or
use any Hazardous Material in or about the Premises without Landlord's
prior written consent. Tenant, at its sole cost and expense, shall
operate its business in the Premises in compliance with all
Environmental Requirements and shall immediately remediate any
Hazardous Materials released on or from the Project by Tenant, its
agents, employees, contractors, subtenants or invitees. The term
"Environmental Requirements" means all applicable present and future
statues, regulations, ordinances, rules, codes, judgments, orders or
other similar enactments of any governmental authority or agency
regulating or relating to health, safety, or environmental conditions
on, under, or about the Premises or the environment, including without
limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"); the Resource Conversation
and Recovery Act; and all state and local counterparts thereto, and any
regulations or policies promulgated or issued thereunder. The term
"Hazardous Materials" means and includes petroleum ( as defined in
CERCLA) and any substance, material, waste, pollutant, or contaminant
listed or defined as hazardous or toxic, under any Environmental
Requirements. See Addendum Two
<PAGE> 52
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Landlord acknowledges that Tenant's contract sterilization operations
in the Premises require the use and storage of ethylene oxide, defined
as a Hazardous Material under certain state and federal regulations.
Tenant's contract, sterilization operations shall be a permitted
activity, as defined above, and ethylene oxide shall be a permitted
hazardous material, as defined above, so long as Tenant's use and
storage of such hazardous materials is in accordance with Applicable
Environmental Requirements.
-----------------------------------------------------------------------
Tenant shall indemnify, defend, and hold Landlord harmless
from and against any and all losses (including, without limitation,
diminution in value of the Premises or the Project and loss of rental
income from the Project), claims, demands, actions, suits, damages
(including, without limitation, punitive damages), expenses (including,
without limitation, remediation, corrective action, or cleanup
expenses), and costs (including, without limitation, actual attorneys'
fees, consultant fees or expert fees) which are brought or recoverable
against, or suffered or incurred by Landlord as a result of any breach
of the obligations under this Paragraph by Tenant, its agents,
employees, contractors, subtenants, or invitees, regardless of whether
Tenant had knowledge of such noncompliance. The indemnification and
hold harmless obligations of Tenant shall survive any termination of
this Lease.
Landlord shall have access to, and a right to perform
inspections and tests of, the Premises as it may require to determine
Tenant's compliance with Environmental Requirements and Tenant's
obligations under this Paragraph. Access shall be granted to Landlord
upon Landlord's prior notice to Tenant and at such times so as to
minimize, so far as may be reasonable under the circumstances, any
disturbance to Tenant's operations. Such inspections and tests shall be
conducted at Landlord's expense, unless such inspections or tests
reveal that Tenant has not complied with any Environmental
Requirements, in which case Tenant shall reimburse Landlord for the
reasonable cost of such inspection and tests. Landlord's receipt of or
satisfaction with any environmental assessment in no way waives any
rights that Landlord holds against Tenant.
8. Paragraph 12 of the Lease Agreement dated as of the 1st day of March,
1974 is hereby deleted, and the following is substituted as and shall
hereafter be a part of the Lease:
FIRE AND CASUALTY DAMAGE. If at any time during the Lease
Term, the Premises or the Project is damaged by fire or other casualty,
Landlord shall notify Tenant, within 30 days after such damage, as to
the amount of time Landlord reasonably estimates it will take to repair
such damage. If the amount of such time exceeds 6 months, either
Landlord or Tenant may elect, upon notice to the other party delivered
as soon as practicable but no later than 30 days after Landlord's
notice, to terminate this Lease (but Landlord agrees not to terminate
this Lease unless it is terminating all Leases in the Building). If
neither party elects to terminate this Lease or if Landlord estimates
that the damage will take 6 months or less to repair, Landlord shall
promptly repair and reconstruct the improvements, subject to delays
arising from the collection of insurance proceeds or from Force Majeure
events, except that Landlord shall not be required to repair and
reconstruct any fixtures, additions, or other improvements paid for by
Tenant; and this Lease shall remain in full force and effect provided
that the Lease Term will be extended for a time equal to the period
beginning on the date the loss or damage was suffered until the repairs
and replacement are completed. Tenant at Tenant's expense shall
promptly perform, subject to delays arising from the collection of
insurance proceeds, all repairs or restoration not required to be done
by Landlord and shall promptly reenter the Premises and commence doing
business in accordance with this Lease. Notwithstanding the foregoing,
either party may terminate this Lease if the improvements are damaged
during the last year of the Lease Term and Landlord reasonably
estimates that it will take more than one month to repair such damage.
If Landlord elects to repair and/or reconstruct the damaged
improvements and such improvements are located solely within the
Premises, Tenant shall pay to Landlord the amount of the commercially
reasonable deductible under Landlord's insurance policy (currently
$10,000) within 10 days after
<PAGE> 53
presentment of Landlord's invoice. If the damage involves the premises
of other tenants, tenant shall pay the portion of the deductible in the
proportion that the cost of the repair and replacement of the Premises
bears to the total cost of repair and replacement, as determined by
Landlord.
If the Premises or a portion thereof is not usable as a result
of damage by fire or other casualty to the Premises or building in
which the Premises are located, and Landlord elects to repair and/or
reconstruct the damaged improvements, Base Rent shall abated for the
period of repair and reconstruction in the proportion which the area of
the Premises which is not usable by Tenant bears to the total area of
the premises. Such abatement shall be the sole remedy of Tenant, and to
the extent permitted by applicable law, and except as provided herein,
Tenant waives any right to terminate the Lease by reason of damage or
casualty loss.
9. Paragraph 3 of the Amendment to Lease Agreement dated as of the 16th
day of November, 1979 is hereby deleted, and the following is
substituted as and shall hereafter be a part of the Lease:
INSURANCE. Landlord shall maintain all risk property insurance
covering the full replacement cost of the Building. Landlord may, but
is not obligated to, maintain such other insurance and additional
coverage as it may deem necessary, including, but not limited to,
commercial liability insurance and rent loss insurance. The Project or
Building may be included in a blanket policy (in which case the cost of
such insurance allocable to the Project or Building will be determined
by Landlord based upon the insurer's cost calculations). Tenant shall
also reimburse Landlord for any increased premiums or additional
insurance that Landlord reasonably deems necessary as a result of
Tenant's use of the Premises.
Tenant, at its expense, shall maintain during the Lease Term:
all risk property insurance covering the full replacement cost of all
property and improvements installed or placed in the Premises by Tenant
at Tenant's expense; worker's compensation insurance with no less than
the minimum limits required by law; employer's liability insurance with
such limits as required by law; and commercial liability insurance,
with a minimum limit of $1,000,000 per occurrence and a minimum
umbrella limit of $1,000,000, for a total minimum combined general
liability and umbrella limit of $2,000,000 (together with such
additional umbrella coverage as Landlord may reasonably require) for
property damage, personal injuries, or deaths of persons occurring in
or about the Premises. Landlord may from time to time require
reasonable increases in any such limits. The commercial liability
policies shall name Landlord as an additional insured, insure on an
occurrence and not a claims-made basis, be issued by insurance
companies which are reasonably acceptable to Landlord, not be
cancelable unless 30 days prior written notice shall have been given to
Landlord, contain hostile fire endorsement and a contractual liability
endorsement and provide primary coverage to Landlord (any policy issued
to Landlord providing duplicate or similar coverage shall be deemed
excess over Tenant's policies). Such policies or certificates thereof
shall be delivered to Landlord by Tenant upon commencement of the Lease
Term and upon each renewal of said insurance.
The all risk property insurance obtained by Landlord and
Tenant shall include a waiver of subrogation by the insurers and all
rights based upon an assignment from its insured, against Landlord or
Tenant, their officers, directors, employees, managers, agents,
invitees and contractors, in connection with any loss or damage thereby
insured against. Neither party nor its officers, directors, employees,
managers, agents, invitees and contractors shall be liable to the other
for loss or damage caused by any risk coverable by all risk property
insurance, and each party waives any claims against the other party,
and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage. The failure of a party to insure
its property shall not void this waiver. Landlord and its agents,
employees and contractors shall not be liable for, and Tenant hereby
waives all claims against such parties for, business interruption and
losses occasioned thereby sustained by Tenant or any person claiming
through Tenant resulting from any accident or occurrence in or upon the
Premises or the Project from any cause whatsoever, including without
limitation, damage caused in whole or in part, directly or indirectly,
by negligence of Landlord or its agents, employees or contractors.
<PAGE> 54
10. Paragraph 15 of the Lease Agreement dated as of the 1st day of March,
1974 is hereby deleted, and the following is substituted as and shall
hereafter be a part of the Lease:
CONDEMNATION. If any part of the Premises or the Project
should be taken for any public or quasi-public use under governmental
law, ordinance, or regulation, or by right of eminent domain, or by
private purchase in lieu thereof (a "Taking" or "Taken"), and the
Taking would prevent or materially interfere with Tenant's use of the
Premises or in Landlord's judgment would materially interfere with or
impair its ownership or operation of the Project, then upon written
notice by Landlord this Lease shall terminate and Base Rent shall be
apportioned as of said date. If part of the Premises shall be Taken,
and this Lease is not terminated as provided above, the Base Rent
payable hereunder during the unexpired Lease Term shall be reduced to
such extent as may be fair and reasonable under the circumstances. In
the event of any such Taking, Landlord shall be entitled to receive the
entire price or award from any such Taking without any payment to
Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if
any, in such award. Tenant shall have the right, to the extent that
same shall not diminish Landlord's award, to make a separate claim
against the condemning authority (but not Landlord) for such
compensation as may be separately awarded or recoverable by Tenant for
moving expenses and damage to Tenant's Trade Fixtures, and the
unamortized cost (amortized over the lease term) of Tenant Improvements
paid for by Tenant, if a separate award for such items is made to
Tenant.
11. The following provisions are hereby added to the Lease as follows:
TENANT'S REMEDIES/LIMITATION OF LIABILITY. Landlord shall not
be in default hereunder and Tenant shall not have any remedy or cause
of action unless Landlord fails to perform any of its obligations
hereunder within 20 days after written notice from Tenant specifying
such failure (unless such performance will, due to the nature of the
obligation, require a period of time in excess of 20 days, then after
such period of time as is reasonably necessary). All obligations of
Landlord hereunder shall be construed as covenants, not conditions;
and, except as may be otherwise expressly provided in this Lease,
Tenant may not terminate this Lease for breach of Landlord's
obligations hereunder. All obligations of Landlord under this Lease
will be binding upon Landlord only during the period of its ownership
of the premises and not thereafter. The term "Landlord" in this Lease
shall mean only the owner, for the time being of the Premises, and in
the event of the transfer by such owner of its interest in the
Premises, such owner shall thereupon be released and discharged from
all obligations of Landlord thereafter accruing, but such obligations
shall be binding during the Lease term upon each new owner for the
duration of such owner's ownership. Any liability of Landlord under
this Lease shall be limited solely to its interest in the Project, and
no event shall any personal liability be asserted against Landlord in
connection with this Lease nor shall any recourse be had to any other
property or assets of Landlord.
LIMITATION OF LIABILITY OF TRUSTEES, SHAREHOLDERS, AND
OFFICERS OF SECURITY CAPITAL INDUSTRIAL TRUST. Any obligation or
liability whatsoever of Security Capital Industrial Trust, a Maryland
real estate investment trust, which may arise at any time under this
lease or any obligation or liability which may be incurred by it
pursuant to any other instrument, transaction, or undertaking
contemplated hereby shall not be personally binding upon, nor shall
resort for the enforcement thereof be had to the property of, its
trustees, directors, shareholders, officers, employees or agents,
regardless of whether such obligation or liability is in the nature of
contract, tort, or otherwise.
12. Paragraph 3 of the Lease Extension dated as of the 4th day of November,
1994 will be replaced with the following:
Tenant has inspected and agrees to accept the Premises on an "As Is"
basis.
13. Except as modified hereby, all terms and provisions of the Lease are
ratified and confirmed by Landlord and Tenant. In the event of any
conflicts between the provisions of the Lease and the provisions of
this Extension Agreement, the provisions of this Extension Agreement
shall supersede and control. From and
<PAGE> 55
after the date hereof, all references in the Lease Agreement to
"Lessor" shall mean "Landlord" and all references in the Lease
Agreement to "Lessee" shall mean "Tenant".
14. The Landlord's address is as follows:
SECURITY CAPITAL INDUSTRIAL TRUST
ATTN: Asset Management
780 Johnson Ferry Road
Suite 350
Atlanta, GA 30342
15. Exhibit A is attached hereto and made a part hereof for all purposes.
IN WITNESS WHEREOF, the parties hereto have signed this Extension Agreement to
be effective as of the 1st day of October, 1997.
SECURITY CAPITAL INDUSTRIAL TRUST
By: /s/ John W. Seiple, Jr.
--------------------------------
Name: John W. Seiple, Jr.
------------------------------
Title: Senior Vice President
-----------------------------
Landlord
GRIFFITH MICRO SCIENCE, INC.
By: /s/ Frank Lange
--------------------------------
Name: Frank Lange
------------------------------
Title: V.P. Operations
-----------------------------
Tenant
<PAGE> 56
ADDENDUM ONE
MISCELLANEOUS PROVISIONS
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED OCTOBER 1, 1997, BETWEEN
SECURITY CAPITAL INDUSTRIAL TRUST (Landlord)
and
GRIFFITH MICRO SCIENCE, INC. (Tenant)
1. Paragraph 2 of this Extension and Modification Agreement, captioned
"Operating Expense Payments", is revised to include the following
additional provision:
Notwithstanding the provisions of Paragraph 2 of this
Extension and Modification Agreement, captioned "Operating
Expense Payments," the paragraph is modified to include the
following additional provision:
(i) the initial estimate of monthly installments
of Operating Expenses for the year in which
this Extension and Modification Agreement
commences is set forth on page two of this
Extension and Modification Agreement.
Landlord shall give Tenant its reasonable
estimate of Operating Expenses for each
subsequent calendar year and Tenant's
estimated Proportionate Share thereof at
least thirty (30) days prior to January 1 of
each subsequent calendar year. Until such
time as Landlord forwards to Tenant said
estimate, Tenant shall not be obligated to
pay to Landlord any increases in the monthly
installments of Operating Expenses for the
previous calendar year (or the monthly
installment that would equal the actual
Operating Expense for the previous calendar
year, if such actual Operating Expenses have
been determined). Within ninety (90) days
following the end of each calendar year, or
as soon thereafter as practicable, Landlord
shall provide to Tenant a statement showing
in reasonable detail the total Operating
Expenses actually incurred by Landlord for
the prior calendar year (or partial calendar
year, if applicable) and the calculation of
Tenant's Proportionate Share thereof.
<PAGE> 57
ADDENDUM TWO
LANDLORD'S ENVIRONMENTAL REMEDIATION
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED OCTOBER 1, 1997, BETWEEN
SECURITY CAPITAL INDUSTRIAL TRUST (LANDLORD)
and
GRIFFITH MICRO SCIENCE, INC. (TENANT)
If Hazardous Materials are hereafter discovered on the Premises, and
the presence of such Hazardous Materials is not the result of Tenant's use of
the Premises or any act or omission of Tenant or its agents, employees,
contractors, subtenants or invitees, and the presence of such Hazardous
Materials results in any contamination, damages, or injury to the Premises that
materially and adversely affects: Tenant's occupancy or use of the Premises,
Landlord shall promptly take all actions at its sole expense as are necessary to
remediate such Hazardous Materials and as may be required by the Environmental
Requirements. Actual or threatened action or litigation by any governmental
authority is not a condition prerequisite to Landlord's obligations under this
paragraph. Within 30 days after notification from Tenant supported by reasonable
documentation setting forth such presence or release of Hazardous Materials, and
after Landlord has been given a reasonable period of time after such 30-day
period to conduct its own investigation to confirm such presence or release of
Hazardous Materials, Landlord shall either terminate this Lease or commence to
remediate such Hazardous Materials within 180 days after the completion of
Landlord's investigation and thereafter diligently prosecute such remediation to
completion. If Landlord fails to commence such remediation or if Landlord
commences such remediation and fails to diligently prosecute same until
completion, then Tenant as its sole remedy may terminate this Lease by written
notice to Landlord after expiration of 30 days following a notice to Landlord
that Tenant intends to terminate this Lease if Landlord does not promptly
commence or diligently prosecute the remediation within such 30-day period. If
Landlord commences remediation pursuant to this paragraph, Base Rent and
Operating Expenses shall be equitably adjusted if and to the extent and during
the period the Premises are unsuitable for Tenant's business. Notwithstanding
anything herein to the contrary, if Landlord obtains a letter from the
appropriate governmental authority that no further remediation is required prior
to the effective date of any such termination, such termination shall be null
and void and this Lease shall remain in full force and effect.
<PAGE> 58
EXHIBIT A
2971 Olympic
Industrial Drive
[ Survey ]
<PAGE> 59
SECOND EXTENSION AND MODIFICATION AGREEMENT
THIS SECOND EXTENSION AND MODIFICATION AGREEMENT (the "Amendment") is
made and entered into effective as of the 1st day of December, 1997, by and
between Security Capital Industrial Trust ("Landlord") and GRIFFITH MICRO
SCIENCE, INC. ("Tenant").
WI T N E S S E T H:
WHEREAS, Tenant and Cynwyd Investments, Landlord's predecessor in
interest, and Clayton McLendon, Inc., Agent, entered into that certain lease
dated as of the 19th day of February, 1977, and further amended by that certain
Amendment to Lease Agreement dated as of the 16th day of November 1979 by and
between SEALY (GA), a Louisiana Partnership ("Landlord") and Agent, and GRIFFITH
LABORATORIES, U.S.A., INC. ("Tenant"), and that certain Amendment to Lease
Agreement dated as of the 31st day of October, 1980 by and between SEALY (GA), a
Limited Partnership ("Landlord") and Agent, and GRIFFITH LABORATORIES, U.S.A.,
INC., ("Tenant"), and that certain Amendment to Lease Agreement dated as of the
31st day of August, 1983 by and between SEALY (GA), a Limited Partnership
("Landlord") and Agent, and GRIFFITH LABORATORIES, U.S.A., INC., ("Tenant"), and
that certain Amendment to Lease Agreement dated as of the 10th day of February,
1984 by and between SEALY (GA), a Limited Partnership ("Landlord") and Agent,
and GRIFFITH LABORATORIES, U.S.A., INC., ("Tenant"), and that certain Extension
and Modification Agreement dated as of the 17th day of December, 1986 by and
between SEALY CONSOLIDATED CAPITAL PROPERTIES, a Joint Venture, by SEALY VENTURE
1, a Georgia Partnership Managing Partner ("Landlord") and Agent, and GRIFFITH
LABORATORIES, U.S.A., INC., ("Tenant"), and that certain Lease Extension and
Modification Agreement dated as of the 19th day of March, 1992, by and between
ADAM PROPERTIES ASSOCIATES, a Georgia general partnership ("Landlord") and
Agent, and GRIFFITH MICRO SCIENCE, INC. ("Tenant"), and that certain Lease
Extension dated as of the 18th day of March, 1994 by and between ADAM PROPERTIES
ASSOCIATES, a Georgia general partnership ("Landlord") and Agent, and GRIFFITH
MICRO SCIENCE, INC. ("Tenant"), and that certain Amendment to Lease dated as of
the 13th day of May 1994 by and between INDCON, L.P. ("Landlord") and GRIFFITH
MICRO SCIENCE, INC. ("Tenant"), and that certain Lease Extension dated as of the
4th day of November, 1994 by and between INDCON, L.P. ("Landlord") and GRIFFITH
MICRO SCIENCE, INC. ("Tenant"), and that certain Extension and Modification
Agreement dated as of the 1st day of October, 1997 by and between Security
Capital Industrial Trust ("Landlord") and Agent, and GRIFFITH MICRO SCIENCE,
INC. ("Tenant"), and that certain Amendment to Commercial Lease dated as of the
1st day of August, 1997 by and between Security Capital Industrial Trust
("Landlord") and Agent, and GRIFFITH MICRO SCIENCE, INC. ("Tenant"), pertaining
to 2971 Olympic Industrial Drive, Atlanta, Georgia (the "Original Premises"),
containing approximately 44,815 square feet.
<PAGE> 60
WHEREAS, the parties hereto desire to enter into this Amendment for the
purpose of evidencing their mutual understanding and agreement regarding the
expansion of the Premises.
NOW, THEREFORE, for and in consideration of the premises hereto, the
keeping and performance of the covenants and agreements hereinafter contained,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
The Lease is hereby amended as follows:
1. Amendment to Commercial Lease. The Amendment to Commercial Lease
dated as of the 1st day of August, 1997, by and between Security Capital
Industrial Trust ("Landlord") and Agent, and GRIFFITH MICRO SCIENCE, INC.
("Tenant") is hereby terminated, effective as of November 30, 1997, provided all
provisions regarding payment of rent and other sums shall survive such
termination.
2. Premises. Effective as of December 1, 1997, the Premises is hereby
expanded to include the approximately twenty-nine thousand seven hundred seventy
two (29,772) square feet at 2971 Olympic Industrial Drive, Suite B, Atlanta,
Georgia, (the "Expansion Premises"), making the total square footage of the
Premises (now defined to include the Premises and the Expansion Premises) 74,587
square feet, as set forth in Exhibit A hereto (the "Expanded Premises").
Tenant's "proportionate share" of the Building under the Lease shall be
51.36%.
3. Rent. As of December 1, 1997, Lessee hereby agrees to pay Rent for
the Expansion Premises to Lessor, without set-off or deduction, in accordance
with the following schedule:
Months Monthly Base Rent
------ -----------------
1-7 $6,518.78
8-19 $6,518.78
20-31 $6,996.70
32-43 $6,996.70
44-55 $6,996.70
56-67 $7,474.62
68-79 $7,474.62
In addition to the rent payable, Tenant shall pay, as additional rent,
all other sums due under the Lease, including but not limited to amounts due
pursuant to Paragraphs 2, 5, and 9 of the Extension and Modification Agreement
dated as of the 1st day of October, 1997, for the Expansion Premises during the
Expansion Term.
2
<PAGE> 61
4. Condition of the Expansion Premises. Landlord shall make those
improvements to the Expansion Premises, using building standard materials,
outlined in the scope of work summary attached herein as Addendum One and made a
part hereof for all purposes, such improvements to be substantially completed
within forty-five (45) days from the Effective Date of this Second Extension and
Modification Agreement. The improvements shall be deemed "substantially
completed" when, in the reasonable opinion of both the construction manager for
such improvements, and Tenant, agree such improvements have been completed in
accordance with Addendum One, except for punch list items which do not prevent
in any material way the utilization of the Premises for the purpose for which
they were intended. Tenant shall be solely responsible for any delays caused by
the action or inaction of Tenant. Tenant shall be solely responsible for the
costs of any changes in the scope of work attached as Addendum One.
5. Security Deposit. A Security Deposit in the amount of $3,018.78,
due and payable on the Commencement Date, shall be held by Landlord as security
for the performance of Tenant's obligations under this Lease. The Security
Deposit is not an advance rental deposit or a measure of Landlord's damages in
case of Tenant's default. Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to
pay delinquent payments due under this Lease, and the cost of any damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy provided herein or provided by law. Tenant shall pay
Landlord on demand the amount that will restore the Security Deposit to its
original amount. Landlord's obligations respecting the Security Deposit is that
of a debtor, not a trustee; no interest shall accrue thereon. the Security
Deposit shall be the property of Landlord, but shall be paid to Tenant when
Tenant's obligations under this Lease have been completely fulfilled. Landlord
shall be released from any obligation with respect to the Security Deposit upon
transfer of this Lease and the Premises to a person or entity assuming
Landlord's obligations under this Paragraph 4.
6. Assignment and Subletting. Addendum Two is attached hereto and made
a part hereof for all purposes.
7. Notice. The Landlord's address is as follows:
Security Capital Industrial Trust
Attn: Asset Manager
780 Johnson Ferry Road
Suite 350
Atlanta, Georgia 30342
8. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, and shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, representatives and assigns. In the event of any inconsistency or
conflict between the terms of this Agreement and of the Lease, the terms hereof
shall control. Time is of the essence of all of the terms of this Agreement.
3
<PAGE> 62
9. Continued Validity. Except as hereinabove provided, all other terms
and conditions of the Lease shall remain unchanged and in full force and effect,
and are hereby ratified and confirmed by Tenant and Landlord. Tenant hereby
acknowledges and agrees that, as of the date hereof, the Lease is subject to no
offsets, claims, counterclaims or defenses of any nature whatsoever.
10. Limitation of Liability. Any obligation or liability whatsoever of
Security Capital Industrial Trust, a Maryland real estate investment trust,
which may arise at any time under the Lease or this Agreement or any obligation
or liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby, shall not be personally binding
upon, nor shall resort for the enforcement thereof, be had to the property of,
its trustees, directors, shareholders, officers, employees, or agents regardless
of whether such obligation or liability is in the nature of contract, tort or
otherwise.
11. Modifications. This Agreement may not be changed, modified,
discharged or terminated orally in any manner other than by an agreement in
writing signed by Tenant and Landlord or their respective heirs,
representatives, successors and permitted assigns, but subject always, in the
case of Tenant, to Landlord's prior written consent to any proposed assignment
of the Lease by Tenant.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly authorized, executed and delivered as of the day and year first above
written.
LANDLORD:
Security Capital Industrial Trust
------------------------------------------
By: /s/ John W. Seiple, Jr.
---------------------------------------
Title: Senior Vice President
-----------------------------------
<PAGE> 63
TENANT:
Griffith Micro Science, Inc.
/s/ John L. Giacomin
------------------------------------------
By: Jon L. Giacomin
---------------------------------------
Title: Vice Pres. N. A. Operations
------------------------------------
Attest: /s/ Richard L. Redichs
-----------------------------------
Title: Director of Finance & Administration
------------------------------------
(CORPORATE SEAL)
<PAGE> 64
ADDENDUM ONE
SECOND EXTENSION AND MODIFICATION AGREEMENT
DATED 1st of December, 1997 BETWEEN
SECURITY CAPITAL INDUSTRIAL TRUST ("LANDLORD")
and
GRIFFITH MICRO SCIENCE, INC. ("TENANT")
Scope of Work
Landlord shall complete the following improvements in accordance with Paragraph
3 of this Second Extension and Modification Agreement:
I. Install four (4) fire extinguishers in the warehouse area.
II. Perform the following electrical work as defined herein below:
A. recircuit office outlets,
B. provide duplex outlet at phone board,
C. recircuit warehouse outlets,
D. provide phone box with pull string,
E. provide one (1) exit emergency light,
F. provide four (4) emergency wall lights,
G. replace single pole switch,
H. recircuit warehouse lights,
I. recircuit three (3) existing unit heaters,
J. recircuit one (1) existing warehouse fan,
K. wire split system for office,
L. provide 100 Amp service.
<PAGE> 65
ADDENDUM TWO
ASSIGNMENT AND SUBLETTING (CONSENT)
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED 1st of December , 1997, BETWEEN
SECURITY CAPITAL INDUSTRIAL TRUST ("LANDLORD")
and
GRIFFITH MICRO SCIENCE, INC. ("TENANT")
(a) Landlord shall not unreasonably withhold its consent to Tenant's
request for permission to assign the Lease or sublease all of part of the
Premises. It shall be reasonable for the Landlord to withhold its consent to any
assignment or sublease in any of the following instances:
(i) The assignee or sublessee does not have a net worth
calculated according to generally accepted accounting principles at least equal
to the greater of the net worth of Tenant immediately prior to such assignment
or sublease or the net worth of the Tenant at the time it executed the Lease;
(ii) The intended use of the Premises by the assignee or
sublessee is not reasonably satisfactory to Landlord;
(iii) The intended use of the Premises by the assignee or
sublessee would materially increase the pedestrian or vehicular traffic to the
Premises or the Project;
(iv) Occupancy of the Premises by the assignee or sublessee
would, in Landlord's opinion, violate any agreement binding upon Landlord or the
Project with regard to the identity of tenants, usage in the Project, or similar
matters;
(v) The identity or business reputation of the assignee or
sublessee will, in the good faith judgment of Landlord, tend to damage the
goodwill or reputation of the Project;
(vi) The assignment or sublet is to another tenant in the
Project and is at rates which are below those charged by Landlord for comparable
space in the Project;
(vii) In the case of a sublease, the subtenant has not
acknowledged that the Lease controls over any inconsistent provision in the
sublease; or
(viii) The proposed assignee or sublessee is a government
entity.
The foregoing criteria shall not exclude any other reasonable basis for Landlord
to refuse its consent to such assignment or sublease.
(b) Any approved assignment or sublease shall be expressly subject to
the terms and conditions of this Lease.
<PAGE> 66
(c) Tenant shall provide to Landlord all information concerning the
assignee or sublessee as Landlord may request.
(d) Landlord may revoke its consent immediately and without notice if,
as of the effective date of the assignment or sublease, there has occurred and
is continuing any default under the Lease.
(e) Landlord's agreement to not unreasonably withhold its consent shall
only apply to the first assignment or sublease under the Lease.
<PAGE> 67
EXHIBIT A
[SITE PLAN]
<PAGE> 1
EXHIBIT 10.19
LEASE AGREEMENT
BETWEEN
TKC VI,
A NORTH CAROLINA LIMITED LIABILITY COMPANY,
AS LANDLORD,
AND
GRIFFITH MICRO SCIENCE, INC.,
A DELAWARE CORPORATION,
AS TENANT
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I BASIC LEASE TERMS AND DEFINITIONS......................... 1
1.1 BASIC LEASE TERMS................................... 1
1.2 ATTACHMENTS......................................... 4
ARTICLE II PREMISES.................................................. 5
2.1 DEMISE.............................................. 5
ARTICLE III TERM...................................................... 5
3.1 INITIAL TERM........................................ 5
3.2 HOLDING OVER........................................ 5
3.3 EXTENSION OF TERM................................... 6
ARTICLE IV USE....................................................... 6
4.1 PROMPT OCCUPANCY AND USE............................ 6
4.2 CESSATION OF TENANT OPERATIONS...................... 6
ARTICLE V RENTAL.................................................... 7
5.1 RENTALS PAYABLE..................................... 7
5.2 RENTAL ADJUSTMENT................................... 7
5.3 ANNUAL BASIC RENTAL................................. 8
5.4 PAYMENT OF RENTAL................................... 8
ARTICLE VI TAXES..................................................... 9
6.1 PAYMENT BY LESSEE................................... 9
6.2 PRORATION OF TAXES.................................. 9
6.3 TAXES ON RENTAL..................................... 9
ARTICLE VII LANDLORD'S WORK........................................... 10
7.1 CONSTRUCTION BY LANDLORD............................ 10
7.2 EFFECT OF TAKING POSSESSION ON TURNOVER DATE........ 10
7.3 TENANT'S TRADE FIXTURES............................. 10
ARTICLE VIII OPERATIONS................................................ 11
8.1 OPERATIONS BY TENANT................................ 11
8.2 SIGNS AND ADVERTISING............................... 12
8.3 RESTRICTIONS........................................ 12
ARTICLE IX MAINTENANCE AND REPAIRS................................... 13
9.1 MAINTENANCE AND REPAIRS............................. 13
9.2 ALTERATIONS......................................... 13
9.3 TENANT LIENS........................................ 14
i
<PAGE> 3
ARTICLE X UTILITIES................................................ 14
10.1 WATER, ELECTRICITY, TELEPHONE, SANITARY SEWER
AND NATURAL GAS.................................... 14
ARTICLE XI INSURANCE INDEMNIFICATION................................ 15
11.1 INDEMNITY BY TENANT................................ 15
11.2 TENANT'S INSURANCE................................. 15
11.3 TENANT'S INSURANCE POLICIES........................ 16
11.4 WAIVER OF SUBROGATION.............................. 16
ARTICLE XII DAMAGE AND DESTRUCTION................................... 16
12.1 REPAIR ON CASUALTY................................. 16
ARTICLE XIII CONDEMNATION............................................. 19
13.1 TERMINATION OF LEASE............................... 19
13.2 CONTINUATION OF LEASE.............................. 19
13.3 APPORTIONMENT OF AWARD............................. 19
ARTICLE XIV ASSIGNMENTS AND SUBLETTING............................... 19
14.1 LANDLORD'S CONSENT REQUIRED........................ 19
14.2 ACCEPTANCE OF RENT FROM TRANSFEREE................. 20
ARTICLE XV DEFAULT.................................................. 20
15.1 "EVENT OF DEFAULT" DEFINED......................... 20
15.2 REMEDIES........................................... 21
15.3 DAMAGES............................................ 22
15.4 ASSIGNMENT IN BANKRUPTCY........................... 23
ARTICLE XVI SUBORDINATION AND ATTORNMENT............................. 23
16.1 SUBORDINATION...................................... 23
16.2 MORTGAGEE'S UNILATERAL SUBORDINATION............... 24
16.3 ATTORNMENT......................................... 24
16.4 NON-DISTURBANCE.................................... 24
ARTICLE XVII NOTICES.................................................. 24
17.1 SENDING OF NOTICES................................. 24
17.2 NOTICE TO MORTGAGEES............................... 25
ARTICLE XVIII QUIET ENJOYMENT.......................................... 25
18.1 WARRANTY........................................... 25
ARTICLE XIX MISCELLANEOUS............................................ 25
19.1 ESTOPPEL CERTIFICATES.............................. 25
19.2 INSPECTIONS AND ACCESS BY LANDLORD................. 26
19.3 MEMORANDUM OF LEASE AND OPTION..................... 26
19.4 REMEDIES CUMULATIVE................................ 26
ii
<PAGE> 4
19.5 SUCCESSORS AND ASSIGNS............................. 26
19.6 COMPLIANCE WITH LAW AND REGULATION................. 26
19.7 CAPTIONS AND HEADINGS.............................. 27
19.8 JOINT AND SEVERAL LIABILITY........................ 27
19.9 BROKER'S COMMISSION................................ 27
19.10 NO DISCRIMINATION.................................. 27
19.11 NO JOINT VENTURE................................... 27
19.12 NO OPTION.......................................... 27
19.13 NO MODIFICATION.................................... 27
19.14 SEVERABILITY....................................... 28
19.15 THIRD PARTY BENEFICIARY............................ 28
19.16 CORPORATE TENANTS.................................. 28
19.17 APPLICABLE LAW..................................... 28
19.18 PERFORMANCE OF LANDLORD'S OBLIGATIONS BY MORTGAGEE. 28
19.19 LIMITATION ON RIGHT OF RECOVERY AGAINST LANDLORD... 28
19.20 HAZARDOUS SUBSTANCES............................... 29
19.21 ABSOLUTE NET LEASE................................. 29
19.22 LANDLORD'S CONTINGENCY/GUARANTY.................... 29
19.23 FINANCIAL STATEMENTS............................... 30
19.24 PURCHASE OPTION.................................... 30
iii
<PAGE> 5
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made as of the 9th day of June, 1994 by
and between TKC VI, a North Carolina limited liability company ("Landlord") and
GRIFFITH MICRO SCIENCE, INC., a Delaware corporation ("Tenant").
RECITALS:
A. As of June 30, 1994, Landlord anticipates being the owner of that
certain 3.87 acre parcel of property located in Mecklenburg County, North
Carolina and described on Exhibit A attached hereto (the "Property").
B. In consideration of the agreement of Landlord to construct certain
improvements to be located on the Property and the covenants and conditions set
forth in this Lease, Tenant has agreed to lease the Property, and all
improvements thereon, from Landlord on the terms and conditions contained in
this Lease.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained in this Lease and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto do hereby covenant and agree as follows:
ARTICLE I
BASIC LEASE TERMS AND DEFINITIONS
1.1 Basic Lease Terms. The terms set out and defined in this Section,
whenever used in this Lease with the first letter of each word capitalized,
shall have only the meanings set forth in this section, unless such meanings
are expressly modified, limited or expanded elsewhere in this Lease.
1.1.1 "Additional Rental" shall mean all sums payable by Tenant
pursuant to this Lease, except Annual Basic Rental.
1.1.2 "Allocated Upfit Amount" shall mean $25,000.00.
1.1.3 "Annual Basic Rental" shall be the amounts set forth below for
the applicable period, as follows:
Rent Free Months: $0.00.
Rental Years 1-3: $208,225 per year payable in twelve (12)
equal monthly installments of $17,352.08.
<PAGE> 6
Rental Years 4-6: $227,533 per year payable in twelve (12)
equal monthly installments of $18,961.08.
Rental Years 7-9: $248,632 per year payable in twelve (12)
equal monthly installments of $20,719.33.
Rental Years 1-12: $271,687 per year payable in twelve (12)
equal monthly installments of $22,640.58.
Option Term 1:
Rental Years 13-17: $292,577 per year payable in twelve (12)
equal monthly installments of $24,381.42.
Option Term 2:
Rental Years 18-22: $331,024 per year payable in twelve (12)
equal monthly installments of $27,585.33.
1.1.4 "Default Rate" shall be an annual rate of interest equal to
the lesser of (i) the maximum rate of interest which Landlord may
lawfully collect upon default, which shall be the maximum contract rate
for the amount in default, or (ii) ten percent (10%).
1.1.5 "Event of Default" shall have the meaning set forth in Section
15.1.
1.1.6 "Force Majeure" shall mean any event the occurrence of which
prevents or delays the performance by Landlord or Tenant of any
obligation imposed upon it hereunder (other than the payment of Rental)
and the prevention or cessation of which event is beyond the reasonable
control of the obligor.
1.1.7 "Hazardous Substances" shall have the meaning set forth in
Section 19.20.
1.1.8 "Improvements" shall mean any and all buildings, structures,
and other improvements now or hereafter located on the Property,
including but not limited to, the improvements contemplated by the Scope
of Landlord's Work.
1.1.9 "Initial Termination Date" shall mean the earlier to occur of
(i) Midnight on the date that is 146 months from the Rent Commencement
Date and (ii) the date that this Lease is terminated pursuant to the
express terms hereof.
1.1.10 "Landlord's Work" shall have the meaning attributed to it in
Section 7.1.
1.1.11 "Lease Termination Date" shall mean the earlier to occur of
(i) Midnight on the Initial Termination Date, as that date may be
extended pursuant to Section 3.3 hereof and (ii) the date that this Lease
is terminated pursuant to the express terms hereof.
1.1.12 "Mortgage" shall have the meaning set forth in Section 16.1.
2
<PAGE> 7
1.1.13 "Mortgagee" shall have the meaning set forth in Section 16.1.
1.1.14 "Option Term" shall mean two periods of five (5) years each,
the first commencing on the Initial Termination Date and the second
commencing on Midnight of the date that is five (5) years from the
Initial Termination Date, all as described in and contemplated by Section
3.3 of this Lease.
1.1.15 "Outside Date" shall mean December 31, 1995 or such later
date as is contemplated by the terms of Section 3.1(B) of this Lease.
1.1.16 "Permitted Encumbrances" shall mean the encumbrances to
Landlord's title to the Property as set forth on Exhibit "E" hereto.
1.1.17 "Permitted Use" shall mean any use permitted by the
provisions of the Declaration and the Permitted Encumbrances (provided
such use does not involve the use of Hazardous Substances except as set
forth on Exhibit H), including without limitation the storage,
sterilization and distribution of medical supplies and equipment,
pharmaceuticals, seasonings, spices and related food items, and other
items that are capable of being sterilized with ethylene oxide, related
office uses, and a cafeteria and vending service for employees of the
Tenant, but in no event for the operation of a restaurant, bar or tavern
for the general public. Notwithstanding the foregoing, any use
prohibited by the restrictions set forth on Exhibit C attached hereto and
made a part hereof for all purposes, shall not be a Permitted Use under
this Lease.
1.1.18 "Premises" shall mean the Property and all Improvements
(approximately 41,070 square feet).
1.1.19 "Property" shall mean the real property described on Exhibit
A attached hereto.
1.1.20 "Rent Commencement Date" shall mean the Turnover Date or such
earlier date as contemplated by the terms of Section 3.1(B) of this
Lease.
1.1.21 "Rent Free Months" shall mean the sixty (60) day period
immediately following the Rent Commencement Date.
1.1.22 "Rental" shall mean the Annual Basic Rental plus all
Additional Rental hereunder.
1.1.23 "Rental Year" shall mean a period of one (1) year, with the
first Rental Year commencing on the date that is the first day following
the end of the Rent Free Months and expiring on the day preceding the
first anniversary of the date that is the first day following the end of
the Rent Free Months, and each subsequent Rental Year commencing upon the
expiration of the prior Rental Year and continuing until the next
subsequent anniversary of the Rent Commencement Date.
3
<PAGE> 8
1.1.24 "Taxes" shall have the meaning set forth in Section 6.1.
1.1.25 "Tenant Changes" shall mean, collectively, all changes in or
modifications to the Scope of Landlord's Work as set forth on Exhibit "B"
hereto either caused or requested by Tenant or necessitated because of
changes in applicable laws, rules and regulations, including, but not
limited to, changes in zoning laws, building codes and city ordinances.
1.1.26 "Tenant Notice Address" shall mean 7775 Quincy Street,
Willowbrook, Illinois 60521.
1.1.27 "Tenant Upfit" shall mean that portion of Landlord's Work
described under Division 9 finishes of the Scope of Landlord's Work on
Exhibit "B" hereto.
1.1.28 "Term" shall mean the period of time during this Lease
between the Rent Commencement Date and the Lease Termination Date.
1.1.29 "Turnover Date" shall mean the date on which Landlord shall
have substantially completed Landlord's Work, all utilities have
connected to the Premises (subject only to the payment of any deposits)
and a Certificate of Occupancy has been issued by applicable governmental
authorities for the Premises, excluding punchlist items the cost of
completion of which shall not exceed $50,000.
1.2 Attachments. The following documents are attached hereto, and such
documents, as well as all drawings and documents prepared pursuant thereto,
shall be deemed to be a part hereof for all purposes:
Exhibit A - Legal Description of the Property
Exhibit B - Scope of Landlord's Work and Allowance
Exhibit C - Use Restrictions
Exhibit D - Memorandum of Lease and Option
Exhibit E - Permitted Encumbrances
Exhibit F - Form of Guaranty
Exhibit G - Schedule of Assigned Warranties
Exhibit H - Schedule of Hazardous Substances used by Tenant
Exhibit I - Building Layout
4
<PAGE> 9
ARTICLE II
PREMISES
2.1 Demise. Landlord hereby leases to Tenant, and Tenant hereby rents and
accepts from Landlord, the Premises on the terms and conditions contained
herein.
ARTICLE III
TERM
3.1 Initial Term.
A. Subject to the terms of Section 3.3 of this Lease, the Term of
this Lease shall commence on the Rent Commencement Date and shall
terminate on the Lease Termination Date, without the necessity of any
notice from either Landlord or Tenant.
B. Landlord shall use all reasonable efforts to cause the Turnover
Date to occur on or before February 15, 1995, subject to Force Majeure
and any delay caused by Tenant Changes or Tenant defaults hereunder.
Further, Landlord shall use commercially reasonable efforts to cause the
Turnover Date to occur prior to the Outside Date, subject to any delay
caused by Tenant Changes or Tenant defaults hereunder. If the Turnover
Date occurs after February 15, 1995 because of any delay caused by Tenant
for any reason whatsoever (including, but not limited to, Tenant
Changes), (i) the Rental Commencement Date shall precede the Turnover
Date by the number of days the Turnover Date is postponed because of
delays in Landlord's Work and (ii) Tenant shall pay to Landlord any
damage, loss, or cost suffered by Landlord as a result of an increase in
Landlord's or any third party's cost of funds from February 15, l995 to
the Turnover Date. If the Turnover Date occurs after the Outside Date
because of any delay caused by the Tenant for any reason whatsoever
(including, but not limited to, Tenant Changes), then the Outside Date
shall be extended by the same number of days that the Turnover Date is
postponed because of such delays in the Landlord's Work. If the Turnover
Date occurs after March 15, 1995 because of Landlord's default hereunder,
then the Tenant shall receive, as liquidated damages for such delay
caused by Landlord's default, one day of abatement of Annual Basic Rental
for each such day, and $7,500 per month, such sum to be prorated on a per
diem basis for periods of less than one month. If the Turnover Date does
not occur on or before the Outside Date because of Force Majeure or
Landlord's default hereunder, Tenant may, at its option, terminate this
Lease by giving written notice thereof to Landlord no later than thirty
(30) days thereafter.
3.2 Holding Over.
A. If Tenant shall be in possession of the Premises after the Lease
Termination Date, in the absence of any additional agreement extending
the Term hereof, or Landlord's demand to Tenant to sooner vacate the
Premises, the tenancy under this Lease shall be extended for ninety (90)
days with successive 90 day renewal periods
5
<PAGE> 10
unless terminated by either party upon written notice given no later than
thirty (30) days prior to the expiration of a 90 day renewal period.
Such tenancy shall be subject to all other conditions, provisions and
obligations of this Lease, except that the Annual Basic Rental shall be
125% the amount paid during the previous Rental Year.
B. Notwithstanding the terms of Section 3.2(A) above, Tenant hereby
agrees that if it fails to surrender the Premises at the end of the
initial 90 day holdover period at the end of the Term, Tenant will be
liable for any and all damages which Landlord shall suffer by reason
thereof, and Tenant will indemnify Landlord against all claims and
demands made by any succeeding tenants against Landlord resulting from
any delay by Landlord in delivering possession of the Premises to a
tenant or purchaser caused by Tenant's holding over.
3.3 Extension of Term. Tenant may extend this Lease beyond the Initial
Termination Date for one or both of the two (2) five (5) year Option Terms by
giving notice to Landlord of such extension no less than nine (9) months prior
to the Initial Termination Date or the expiration of the first Option Term, as
applicable. Upon delivery to Landlord of Tenant's notice to extend this Lease,
the stated expiration date of this Lease shall thereupon be changed to the last
day of the applicable Option Term. In the event Tenant fails to give timely
notice of its election to extend this Lease for the applicable Option Term,
then the Tenant shall be deemed to have elected not to extend this Lease and
this Lease shall terminate on the Initial Termination Date or the end of the
first Option Term, as applicable. In the event the Tenant timely exercises its
option to extend this Lease for an Option Term, then this Lease shall remain in
full force and effect during the Option Term and shall govern the rights and
responsibilities of the parties hereto during such Option Term, including, but
not limited to, the payment of all Rental required pursuant to the terms
hereof.
ARTICLE IV
USE
4.1 Prompt Occupancy and Use. Tenant, or its permitted subtenants or
assigns, shall occupy the Premises within thirty (30) days after the Turnover
Date and the Premises shall be open for business within six (6) months of the
Turnover Date and, subject to the provisions of Section 4.2 of this Lease,
Tenant, or its permitted subtenants or assigns, shall thereafter continuously
use and operate the Premises for the Permitted Use and for no other purpose
whatsoever.
4.2 Cessation of Tenant Operations. As long as Tenant continues to pay
all Rentals for the Premises as and when the same are due, the Tenant shall
have the right to temporarily discontinue its business at the Premises;
provided, however, during the time that Tenant, or its permitted subtenants or
assigns, is not conducting its or their operations at the Premises, the Tenant
agrees, at its sole cost and expense, to (i) add such additional security at
the Premises as is reasonably required by the Landlord to insure the safety of
the Premises and to prevent vandalism, mischief and general mayhem, (ii) inform
all applicable insurance carriers providing
6
<PAGE> 11
insurance covering the Premises of Tenant's discontinued use and pay the
increased cost of any additional insurance premiums required, if any, and (iii)
pay all costs and expenses of any damage to the Premises during the time that
the same is not in use to the extent insurance proceeds are not available to
pay such costs and expenses. Further, Tenant agrees that during any period the
Premises are not in use, it will make reasonable efforts to restart its or
their operations at the Premises or to present to the Landlord parties
interested in an assignment or sublease of the Premises in accordance with the
terms of Section 14.1 of this Lease. In the event Tenant, or its permitted
subtenants or assigns, have discontinued its or their operations at the
Premises for twelve (12) consecutive months or for eighteen (18) total months
during any two (2) Rental Years, whether or not consecutive, then the Landlord
shall have the right, at its option, to terminate this Lease and retake
possession of the Premises. In the event Landlord elects to terminate the
Lease then Landlord shall give Tenant thirty (30) days written notice thereof
and this Lease shall terminate as of the effective date set forth in such
notice. Tenant acknowledges that Landlord is under no obligation to terminate
this Lease and in the event that Landlord does not terminate this Lease
pursuant to the terms of this Section 4.2, the Tenant shall remain obligated
for all Rentals under this Lease and its other covenants and agreements as more
particularly set forth herein.
ARTICLE V
RENTAL
5.1 Rentals Payable. Tenant covenants and agrees to pay to Landlord as
Rental for the Premises, the following:
(a) The Annual Basic Rental specified in Section 1.1, commencing on
the Rent Commencement Date; plus
(b) all Additional Rental due from time to time hereunder.
Tenant hereby covenants and agrees with Landlord that the obligation to
pay the Rental described herein is an independent covenant and shall be due and
payable by Tenant to Landlord notwithstanding any default by Landlord of its
obligations hereunder, subject to Tenant's right of setoff as provided in
Section 19.19 hereof.
5.2 Rental Adjustment.
A. If the actual cost of the Tenant Upfit is less than the Allocated
Upfit Amount, then Landlord shall refund to the Tenant an amount equal to
the difference between (x) the Allocated Upfit Amount and (y) Landlord's
actual cost of the Tenant Upfit. If the actual cost of the Tenant Upfit
exceeds the Allocated Upfit Amount, then the Tenant shall pay all amounts
in excess of the Allocated Upfit Amount to the Landlord as Additional
Rental hereunder on or before the earlier of (i) thirty (30) days from
demand by the Landlord, and (ii) the Rent Commencement Date. Landlord
shall provide copies of all invoices for all Tenant Upfit to the Tenant
within ten (10) days of the Tenant's request therefor.
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B. Tenant shall pay directly to Landlord as Additional Rent
hereunder any and all costs and expenses, of whatever nature or kind
whatsoever, incurred by Landlord because of Tenant Changes, on or before
the earlier of (i) thirty (30) days from demand by the Landlord, and (ii)
the Rent Commencement Date. Tenant shall have the right to reasonably
approve all Tenant Changes in writing prior to any commencement of
construction on account thereof. Any delay in the completion of
Landlord's Work attributable to delays in obtaining Tenant's approval to
Tenant Changes shall be considered "delays caused by Tenant Changes" for
purposes of Section 3.1(B) above. Landlord shall provide copies of all
invoices for all Tenant Changes to the Tenant within ten (10) days of the
Tenant's request therefor.
C. Landlord and Tenant expressly agree that the removal of any rock
or unsuitable soils from the Property, and replacement thereof with
suitable soils prior to the commencement of or during Landlord's Work is
not within the Scope of Landlord's Work as set forth on Exhibit B hereto
and the cost of same shall be paid by Tenant to Landlord within ten (10)
days of Landlord's demand therefor. Landlord shall provide copies of all
invoices for all removal and replacement of rock or unsuitable soils to
the Tenant within ten (10) days of the Tenant's request therefor.
5.3 Annual Basic Rental. Annual Basic Rental shall be payable without
prior demand in equal monthly installments in advance commencing on the Rent
Commencement Date and thereafter on the first day of each full calendar month
during the Term of this Lease.
5.4 Payment of Rental. Tenant shall pay all Rental when due and payable,
without any setoff, deduction or prior demand therefor whatsoever, except as
provided in Section 19.19 hereof. If Tenant shall fail to pay any Rental
within ten (10) days of the date such payment is due, Tenant shall be obligated
to pay a late payment charge equal to the greater of One Hundred Dollars
($100.00) or two percent (2%) of such Rental payment that is past due. In
addition, any Rental which is not paid within ten (10) days after the same is
due shall bear interest at the Default Rate from the first day after the
expiration of such 10-day period until paid. Any Additional Rental which shall
become due shall be payable, unless otherwise expressly provided herein, with
the next monthly installment of Annual Basic Rental. Rental and statements
required of Tenant shall be paid and delivered to Landlord at its notice
address set out in Section 17.1 or at such other place as Landlord may, from
time to time, designate in a notice to Tenant. Any payment by Tenant or
acceptance by Landlord of a check for a lesser amount than shall be due from
Tenant to Landlord shall be treated as a payment on account. The acceptance by
Landlord of a check or other form of payment for an amount less than the amount
then due and payable, even if accompanied by a statement from Tenant that the
lesser amount is the entire amount due and acceptance of such lesser amount
shall constitute Landlord's acceptance and agreement that such lesser amount is
payment in full, shall not be deemed a waiver of Landlord's rights to collect
the amounts not tendered and any such Tenant statements shall be given no
effect, and Landlord may accept such payment without prejudice to any other
rights or remedies which Landlord may have against Tenant.
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ARTICLE VI
TAXES
6.1 Payment by Lessee. Subject to the provisions of Section 6.2, in
addition to the Annual Basic Rental, Tenant shall pay to Landlord no later than
thirty (30) days prior to the due date therefor, all ad valorem taxes and
assessments, general and special, water taxes and all other impositions,
ordinary and extraordinary of every kind and nature whatsoever, including but
not limited to maintenance assessments and other charges imposed pursuant to
the Declaration, which, during the Term of this Lease, may be levied or
assessed against the Premises and all of Tenant's interests therein. Landlord
agrees to deliver copies of statements for all of the foregoing to the Tenant
on the later to occur of (i) sixty (60) days prior to the due date thereof and
(ii) five (5) days from the date Landlord receives such statements from
applicable taxing authorities. Landlord agrees to pay all ad valorem taxes,
prior to delinquency, to the extent of the amounts paid by Tenant to Landlord,
and shall deliver to Tenant written evidence of payment thereof within thirty
(30) days thereafter. Tenant agrees to pay all other Taxes (defined below) to
the parties entitled to payment prior to delinquency. Tenant shall be
responsible for all delinquencies and penalties if the same are incurred
because Tenant did not timely remit Taxes to Landlord or because the amount
Tenant remitted to Landlord was insufficient to pay all Taxes. Otherwise,
Landlord shall be responsible for all delinquencies and penalties caused
because Landlord failed to timely pay such Taxes. Tenant shall also be solely
responsible for and pay within the time provided by law all taxes imposed on
its inventory, trade fixtures, apparatus, leasehold improvements (installed by
or on behalf of Tenant), equipment and other personal property. All taxes,
assessments and other costs to be paid by Tenant pursuant to this Section 6.1
are collectively referred to herein as the "Taxes". To the extent Tenant fails
to pay any of the Taxes when required pursuant to the terms hereof, whether to
Landlord or other parties, Landlord shall have the right to do so and upon the
Landlord's payment thereof the same shall become Additional Rental hereunder
payable by Tenant on demand by Landlord. Tenant may, at its option, contest
Taxes in either its own name or in the name of Landlord, at its own expense, in
good faith and with due diligence and as long as the Tenant contests the same
or the validity thereof by appropriate legal proceedings, unless failure to pay
Taxes during the pendency of dispute would result in a lien or foreclosure or
loss of title to the Property or the Improvements, or any part thereof, in
which case the applicable Taxes shall be paid or bonded as required by the
applicable taxing authorities. Tenant shall indemnify and hold harmless
Landlord from any and all loss, damage, cause of action or claim that results
from or is in any way related to Tenant's contest of Taxes whether in its own
or Landlord's name.
6.2 Proration of Taxes. During the first and last years of the Term, all
such taxes and assessments which shall become payable during each of the
calendar or fiscal, tax or assessment years, as applicable, shall be ratably
adjusted on a per diem basis between Landlord and Tenant in accordance with the
respective portions of such calendar, fiscal, tax, or assessment year. In the
event any special assessments are due in installments, Tenant shall pay only
those installments which are due and payable during the Term.
6.3 Taxes on Rental. In addition to the Taxes payable by the Tenant
pursuant to Section 6.1 above, Tenant shall pay to the appropriate agency any
and all sales, excise and other
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taxes (not including, however, Landlord's income, estate, gift, franchise or
similar taxes) levied, imposed or assessed by the State of North Carolina or
any political subdivision thereof or other taxing authority upon any Rental
payable hereunder.
ARTICLE VII
LANDLORD'S WORK
7.1 Construction by Landlord. Landlord shall commence no later than
August 1, 1994 (the "Start Date") and diligently pursue and complete the work
shown on the Scope of Landlord's Work set forth on Exhibit B attached hereto
(collectively, the "Landlord's Work") at Landlord's sole cost and expense,
subject to the provisions of Section 5.2 hereof. The Landlord's Work shall be
performed in a good and workmanlike manner and in substantial accordance with
all laws, ordinances, governmental permits required and/or issued therefor,
including without limitation the Americans with Disabilities Act, and in
substantial accordance with the Declaration and the Permitted Encumbrances.
7.2 Effect of Taking Possession on Turnover Date. By taking possession of
the Premises on the Turnover Date, Tenant shall be deemed to have accepted the
Premises and agreed that the obligations of Landlord to substantially complete
the Landlord's Work have been fully performed, except for punchlist items of
which Tenant notifies Landlord in writing prior to Tenant's opening for
business and latent defects not reasonably discoverable by a thorough
inspection of the Premises. Other than warranties covering structural portions
of the Improvements that Landlord is required to repair, Landlord agrees to
assign to Tenant, without warranty or recourse, the contractors and
manufacturers warranties, to the extent assignable, obtained by Landlord in
connection with the Landlord's Work and as listed on Exhibit G attached hereto
and made a part hereof for all purposes. As long as TKC VI, LLC or its
successors hold fee title to the Premises, TKC VI, LLC and its successors agree
to reasonably cooperate with Tenant in making reasonable claims on or pursuant
to any of the assigned warranties. To extent any warranty is obtained by the
Landlord in connection with Landlord's Work and is not assignable, but is
nevertheless effective in favor of Landlord, Landlord agrees to cooperate in
making necessary claims on such warranties to the extent reasonably requested
by Tenant. Failure of the company, person or entity giving the warranty to
honor the same shall be the risk of the Tenant and shall not excuse
non-performance by the Tenant under the terms of this Lease. Notwithstanding
the foregoing and except for the Landlord's agreement set forth in Section 7.1
above, nothing in this Section 7.2 shall be construed as a warranty or
representation from the Landlord to the Tenant regarding the Improvements.
7.3 Tenant's Trade Fixtures. All trade fixtures, equipment and apparatus
(as distinguished from leasehold improvements) owned by Tenant and installed in
the Premises by Tenant, at its expense, shall remain the property of Tenant and
Tenant may remove such fixtures and apparatus at any time prior to the
expiration of the Term. Notwithstanding the foregoing, Tenant shall repair any
damage to the Premises caused by the removal of its personalty, inventory,
trade fixtures, equipment and apparatus.
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ARTICLE VIII
OPERATIONS
8.1 Operations by Tenant. In regard to the use and occupancy of the
Premises, and in addition to the requirements of Section 9.1 below, Tenant will
at its expense:
(a) keep the inside and outside of all glass in the doors and windows
of the Premises clean;
(b) keep all exterior building surfaces of the Premises clean;
(c) replace promptly any cracked or broken glass of the Premises with
glass of like grade and quality;
(d) maintain the Premises in a clean, orderly and sanitary condition
and free of insects, rodents, vermin and other pests, including cleaning,
repairing or replacing all floor covering within the Premises as needed;
(e) keep any garbage, trash, rubbish or other refuse in rat-proof
containers within the Premises until removed;
(f) have such garbage, trash, rubbish and refuse removed on a timely
basis;
(g) keep all mechanical apparatus free of vibration and noise which
may be transmitted beyond the Premises;
(h) keep and maintain all landscaping in a neat and orderly condition;
(i) comply with all laws, ordinances, rules and regulations of
governmental authorities and all recommendations of any fire and liability
insurance rating organization now or hereafter in effect; and
(j) conduct its business in all respects in compliance with the terms
and conditions of the Declaration and the Permitted Encumbrances.
Further, in connection with Tenant's use and occupancy of the Premises,
Tenant will not:
(k) place or maintain merchandise, trash, refuse or other articles in
any vestibule or entry of the Premises, on the footwalks or corridors
adjacent thereto or elsewhere on the exterior of the Premises so as to
obstruct any driveway, corridor, footwalk, parking area;
(l) use or permit the use of any objectionable advertising medium
including, without limitation, loudspeakers, phonographs, public address
systems,
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sound amplifiers, reception of radio or television broadcasts
within the Premises which is in any manner audible outside of the Premises;
(m) permit undue accumulations of or burn garbage, trash, rubbish or
other refuse within or without the Premises;
(n) cause or permit objectionable odors to emanate or to be dispelled
from the Premises;
(o) receive or ship articles of any kind outside the designated
loading areas for the Premises;
(p) use or permit the use of any portion of the Premises for any
unlawful purpose or any use that is not a Permitted Use; or
(q) place a load upon any floor which exceeds the floor load which the
floor was designed to carry (4000 PSI in warehouse area and 3000 PSI in
office area).
TENANT ACKNOWLEDGES THAT LANDLORD DOES NOT PROVIDE AND HAS NO
RESPONSIBILITY FOR SECURITY OF THE PREMISES. SECURITY OF THE PREMISES IS THE
SOLE RESPONSIBILITY OF TENANT.
8.2 Signs and Advertising. No signs or other advertising shall be
permitted unless Landlord gives its prior written approval, such approval not
to be unreasonably withheld provided that such installation in no way damages
the building or the surrounding landscape. Landlord acknowledges and agrees
that Tenant may erect the signs described in the plans and specifications
attached hereto as Exhibit B. Tenant will, at its sole cost and expense,
maintain all signs and other advertising devices in good condition and repair
at all times. Tenant acknowledges and agrees that it shall not be permitted to
place any hand-lettered advertising on the exterior of the Premises or on any
glass window or door of the Premises. All signage shall be in compliance with
all applicable laws, rules and regulations.
8.3 Restrictions. The use and occupancy of the Premises are subject to
the terms and conditions of that certain Declaration of Easements, Covenants,
Conditions and Restrictions, a copy of which is attached as Exhibit C (the
"Declaration") and the Permitted Encumbrances. Tenant, by its execution of
this Lease, acknowledges receipt of a copy of the Declaration and the Permitted
Encumbrances and agrees that it has reviewed the Declarations and the Permitted
Encumbrances and shall perform all of the obligations of Landlord thereunder
during the Term. Landlord makes no representation or warranty, express or
implied, as to the Declarations or the Permitted Encumbrances. With regard to
any right or vote that Landlord, as the owner of fee title to the Premises, has
or is entitled to under the Declaration, Landlord agrees to consult with Tenant
in connection with making any such vote or exercising any right; provided,
that, all decisions to be made by the Landlord under the Declaration shall be
made by Landlord irrespective of Tenant's disagreement therewith.
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ARTICLE IX
MAINTENANCE AND REPAIRS
9.1 Maintenance and Repairs. At all times during the Term of this Lease,
Tenant shall, at its sole cost and expense, keep and maintain the Premises in a
good, first-class condition and state of repair, ordinary wear and tear and
insured casualty, and items that are Landlord's obligation to maintain or
repair only excepted. Landlord, in construction of the improvements that are
described on Exhibit "B", will use those materials and techniques customary and
typical for similar quality buildings in Mecklenburg County, North Carolina, or
such higher standard as Landlord deems desirable. Tenant shall make any and
all additions to and all alterations and repairs in, on and about the Premises
which may be required by, and shall otherwise observe and comply with, all
public laws, ordinances and regulations from time to time applicable to the
Premises. Except for the negligence or willful misconduct of Landlord and
without limiting the generality of the foregoing, Tenant will (i) keep the
interior and exterior of the Premises, together with all electrical, plumbing,
heating, ventilating, air-conditioning, and other mechanical systems and
installations therein, and all non load-bearing walls, in good order and repair
including normal and customary preventive maintenance and will make all
replacements from time to time required at its expense, and (ii) repair any
damage to the roof, load bearing walls and foundations of the Premises caused
or permitted by Tenant or its employees, invitees, contractors and agents.
Landlord will maintain and repair the roof, load-bearing walls, and foundations
of the Premises in a good, first-class condition and state of repair, except
for ordinary wear and tear, uninsured casualty and repairs Tenant is obligated
to make pursuant to Section 9.1(ii) above. Tenant will surrender the Premises
at the expiration of the Term or at such other time as it may vacate the
Premises in as good condition as when received, excepting only ordinary wear
and tear, damage by insured casualty, and repairs Landlord is obligated to make
pursuant hereto. Except as expressly required by this Section 9.1 and Section
12.1 below, Landlord shall not be required to furnish any services or
facilities or to make any repairs or alterations of any kind in or on the
Premises. However, in the event Tenant fails to perform its maintenance and
repair obligations as set forth in this Section 9.1, Landlord may, but shall
not be obligated to, do so and the cost of same shall be Additional Rental
payable to Landlord hereunder within ten (10) days of demand therefor.
9.2 Alterations. Other than carrying out Tenant's normal and ordinary
obligations of maintenance and repair as described in Section 9.1 above, and
other than alterations which do not affect the structural integrity of the
Premises and the cost of construction of which does not exceed $25,000, Tenant
will not make any alterations, renovations, improvements or other installations
in, on or to the Premises or any part thereof (including, without limitation,
any alterations of the building, structural alterations, or any cutting or
drilling into any part of the Premises or any securing of any fixture,
apparatus, or equipment of any kind to any part of the Premises) unless and
until Tenant shall have obtained Landlord's prior written approval thereof,
which approval (i) as to the installment of equipment necessary for Tenant's
operations Landlord shall not unreasonably withhold, and (ii) for any other
matter, Landlord may withhold for any reason. With regard to any alteration,
renovation, improvement or other installation that (a) Tenant either has the
right to make pursuant to the terms of this Section 9.2 without Landlord's
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consent or as to which Landlord is willing to consent, and (b) requires the
approval of the architectural control committee under and pursuant to the terms
of the Declaration, Landlord agrees, upon request by Tenant, to submit Tenant's
requests for approval of any such alteration, renovation, improvement and
installations to the architectural control committee. Tenant shall not be
required to remove any such alterations unless Landlord has specified in its
consent to such alterations that removal was required; provided, that, as to
any alterations as to which the Landlord's consent is not required, the Tenant
shall remove all such alterations if requested by Landlord upon termination of
this Lease.
9.3 Tenant Liens. No work performed by Tenant on or at the Premises,
whether in the nature of erection, construction, alteration or repair, shall be
deemed to be for the immediate use and benefit of Landlord so that no
mechanic's or other lien shall be allowed against the estate of Landlord by
reason of any consent given by Landlord to Tenant to improve the Premises.
Tenant shall pay promptly all persons furnishing labor or materials with
respect to any work performed by Tenant or its contractors on or about the
Premises. In the event any mechanic's or other lien shall at any time be filed
against the Premises by reasons of work, labor, services or materials performed
or furnished, or alleged to have been performed or furnished, to Tenant or to
anyone holding the Premises through or under Tenant, Tenant shall, subject to
its right to contest the same as provided below, forthwith cause the same to be
discharged of record or bonded to the satisfaction of Landlord. If Tenant
shall fail to cause such lien forthwith to be so discharged or bonded after
being notified of the filing thereof, and if Tenant is not duly contesting the
same as provided below, then, in addition to any other right or remedy of
Landlord, Landlord may bond or discharge the same by paying the amount claimed
to be due, and the amount so paid by Landlord including reasonable attorney's
fees incurred by Landlord either defending against such lien or in procuring
the discharge of such lien, together with interest thereon at the Default Rate,
shall be due and payable by Tenant to Landlord as Additional Rental. Tenant
may, at its option, contest such mechanics liens at its own expense, in good
faith and with due diligence unless failure to pay during the pendency of
dispute would result in a foreclosure or loss of title to the Property or the
Improvements, or any part thereof, in which case the applicable liens shall be
paid or bonded as required by Landlord. Tenant shall indemnify and hold
Landlord harmless from any and all loss, damage, cause of action or claim that
results from or is in any way related to Tenant's contest of such mechanics
liens.
ARTICLE X
UTILITIES
10.1 Water, Electricity, Telephone, Sanitary Sewer and Natural Gas.
Landlord will provide the facilities necessary to enable Tenant to obtain
water, electricity, telephone, sanitary sewer and natural gas service for the
Premises. The points for such service are shown on the plans and
specifications attached hereto as Exhibit B. Tenant shall not at any time
overburden or exceed the capacity of the mains, feeders, ducts, conduits, or
other facilities by which such utilities are supplied to, distributed in or
serve the Premises. Subject to obtaining Landlord's prior written approval,
Tenant may, at its expense, install any additional utility facilities.
Landlord shall be responsible for providing meters or other devices for the
measurement of
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utilities supplied to the Premises only to the extent shown on the Scope of
Landlord's Work attached hereto as Exhibit B. Tenant shall be solely
responsible for and promptly pay, as and when the same became due and payable,
all charges for water, sewer, electricity, gas, telephone and any other utility
used or consumed in the Premises.
ARTICLE XI
INSURANCE INDEMNIFICATION
11.1 Indemnity by Tenant. Tenant shall indemnify, hold harmless and
defend Landlord from and against any and all claims, actions, damages,
liability and expense, including, but not limited to, reasonable attorney's and
other professional fees actually incurred, in connection with loss of life,
personal injury and/or damage to property arising from or out of this Lease,
Tenant's breach of any term, covenant or agreement set forth in this Lease, or
the occupancy and use of the Premises by Tenant or any of its successors or
assigns, regardless of cause or fault (other than claims or liabilities that
result from Landlord's negligence or willful misconduct), whether in tort or in
contract, or by any criminal activity on the Premises.
11.2 Tenant's Insurance. Tenant shall procure and maintain, and pay all
premiums, fees and charges and deductibles for the purpose of procuring and
maintaining continuously throughout the Term subsequent to the Turnover Date:
(a) insurance on the Improvements and Tenant's personal property and
inventory located in the Premises against loss or damage by fire or other
casualty with endorsements providing what is commonly known as all risk
coverage (including earthquake coverage), vandalism and malicious mischief
insurance, in an amount equal to the full replacement cost thereof, with a
deductible of no greater than Twenty-Five Thousand and No/100 Dollars
($25,000.00), per loss. The deductible may be increased from time to time
with Landlord's consent, which consent shall not be unreasonably withheld.
Tenant shall maintain insurance coverage adequate to prevent Tenant or
Landlord from becoming a coinsurer of the Improvements;
(b) combined single limit general liability insurance, including
but not limited to, insurance against assumed or contractual liability
under this Lease, with respect to the Premises, to afford protection with
limits, for each occurrence, of not less than Five Million Dollars
($5,000,000.00) with respect to personal injury, death or property damage
(consisting of at least $1,000,000 of base coverage and umbrella coverage
for the remaining amount);
(c) Tenant shall require any contractor performing work on the
Premises to carry and maintain, at no expense to Landlord, worker's
compensation insurance as required by statute; and
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(d) business interruption insurance covering all Annual Basic Rental
and Additional Rental due hereunder for a period of not less than twelve
(12) months.
11.3 Tenant's Insurance Policies. All liability, casualty and other
insurance and policies of insurance referred to in Section 11.2 shall include
Landlord and Landlord's Mortgagee, if any, as an additional insureds with
regard to insurance obtained under Section 11.2(b) above, and additional loss
payees with regard to insurance obtained under Section 11.2(a) above (other
than as relates to Tenant's personal property, equipment and inventory located
at the Premises), shall insure Landlord against liability arising out of
Tenant's negligence, and shall cover any liability of Tenant that may arise
through any indemnity given by Tenant in this Lease. All policies procured
hereunder shall be issued by insurers of recognized responsibility and
reasonably acceptable to Landlord. A certificate of such insurance, together
with copies of all insurance policies required hereunder, shall be delivered to
Landlord within thirty (30) days from the date hereof and thereafter not less
than ten (10) days prior to the expiration thereof, and shall provide that such
policy may not be canceled or modified except upon not less than ten (10) days
written notice to Landlord. In the event Tenant fails to procure and maintain
the insurance required by this Article XI, then Landlord shall have the right
to do so, without notice to Tenant if Landlord discovers that insurance
coverage has lapsed, and the cost of same shall be Additional Rental payable to
Landlord hereunder within ten (10) days of demand therefor.
11.4 Waiver of Subrogation. Landlord and Tenant hereby waive any and all
rights of recovery, claim, action or cause of action against the other, its
agents, employees, officers, partners, servants or shareholders for any loss or
damage that may occur to the Premises or any personal property located therein
or arising from the indemnification provisions of Section 11.1, by reason of
any cause insured against under the terms of the all risk coverage insurance
policies obtained pursuant to this Lease, regardless of cause or origin.
Tenant agrees to have the insurance policies obtained pursuant to this Lease
endorsed to effect the terms of this Section 11.4 and shall forward copies of
the same to Landlord upon request.
ARTICLE XII
DAMAGE AND DESTRUCTION
12.1 Repair on Casualty.
(a) For purposes of this Section 12.1 the term "Total Loss" shall
mean damage or destruction to the Improvements to the extent that the cost
of repair of the Improvements as a result of the casualty is fifty percent
(50%) or more of the total replacement costs of the Improvements
determined at the time of the casualty, and the term "Partial Loss" shall
mean damage or destruction to the Improvements to the extent that the cost
of repair is less than fifty percent (50%) of the total replacement cost
of the Improvements determined at the time of the casualty. Subject to
the terms of Sections 12.1(b) and (c) below, if, during the Term of this
Lease, any damage or destruction to the Improvements occurs (whether a
Partial or a Total Loss), then Landlord shall promptly repair and
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restore the Improvements to the extent, but only to the extent, of
insurance proceeds received by the Landlord or the Landlord's Mortgagee.
In the event the insurance proceeds received on account of any Partial or
Total Loss by the Landlord or Landlord's Mortgagee are insufficient to
effect necessary repairs and restoration to the Improvements, then Tenant
shall pay to the Landlord the difference between costs of repair and
restoration and the insurance proceeds received within ten (10) days of
the Landlord's request therefor and in any event prior to commencement of
repair. Further, upon Landlord's request, Tenant shall execute such
documents and instruments as are required by the Landlord or the
Landlord's Mortgagee to confirm and ratify the enforceability, validity
and binding effect of this Lease on and upon the Tenant or any party
claiming by, through or under the Tenant having a possessory interest in
the Premises. In no event shall the Landlord be responsible for any of
Tenant's equipment, fixtures or apparatus, the same being the complete
responsibility of the Tenant. Notwithstanding the foregoing, if
insurance proceeds are unavailable because of Tenant's failure to
maintain insurance pursuant to the terms hereof, default by Tenant
hereunder or Tenant's use of the Premises, Tenant shall remit the amount
necessary to repair or restore the Premises to Landlord within ten (10)
days of Landlord's demand therefor. The Tenant acknowledges that the
Landlord's Mortgagee shall have the right to review and approve all plans
and specifications for the Improvements to be repaired or restored
pursuant to the terms hereof, and may impose such disbursement
requirements as are reasonable and customary for construction of that type
in Mecklenburg County, North Carolina. To the extent possible and
practical, the Improvements shall be rebuilt and restored as nearly as
possible to the original plans and specifications therefor and as
referenced on Exhibit B hereto with such changes therein as are
necessitated by applicable governmental rules and regulations or such
changes required by Tenant (and approved by Landlord's Mortgagee),
provided Tenant shall pay the increased cost, if any, resulting from such
changes. The Tenant shall cooperate with .the Landlord and the Landlord's
Mortgagee in connection with any repair and restoration of the Premises
and the same shall be completed with due diligence and commenced and
completed within a reasonable time after the damage or loss occurs.
Annual Basic Rental and all other Rentals hereunder shall not abate while
the Improvements are being repaired or restored, unless the Tenant has
procured rent loss insurance reasonably acceptable to the Landlord and
such insurance pays the Rentals that otherwise would be paid by the Tenant
hereunder, and in that event Rental hereunder shall abate only to the
extent of insurance proceeds received by the Landlord. In the event the
Improvements cannot be rebuilt, restored or repaired because of
prohibitions contained in then applicable zoning or other governmental
rules and regulations, then (i) all proceeds payable on account of such
casualty shall be paid to the Landlord and (ii) the Tenant shall pay to
the Landlord the difference between (a) the cost of repairing and
restoring the Improvements assuming the repairs or restoration were
permitted by such applicable zoning or other governmental laws and (b)
insurance proceeds received to the extent such difference results from
Tenant's failure to maintain the levels of
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insurance required pursuant to Section 11.2 of this Lease, and upon
Landlord's receipt of such payments this Lease shall terminate and neither
party shall have any right or obligation to the other hereunder except as
otherwise herein expressly provided.
(b) In the event of the occurrence of a Total Loss and in the event
the Improvements cannot be restored and rebuilt, in the reasonable
judgment of Landlord, within twelve (12) months from the date of the
casualty, then Tenant shall have the right to elect to terminate this
Lease by written notice to the Landlord within thirty (30) days from the
date Landlord notifies Tenant the Improvements cannot be rebuilt within
such twelve (12) month period. In the event the Tenant elects to
terminate this Lease, then (i) all proceeds payable on account of such
casualty shall be paid to the Landlord, (ii) the Tenant shall pay to the
Landlord the difference between (a) the cost of repairing and restoring
the Improvements and (b) insurance proceeds received, and (iii) Tenant
shall, at its expense, remove all rubble from the Property and restore the
Property to graded condition, free of all trash, rubbish or other remains
from the casualty.
(c) If any Partial or Total Loss occurs during the last two (2) years
of the Term of this Lease, and Tenant elects not to exercise any available
renewal Option Terms, then either Landlord or Tenant have the option of
terminating this Lease on written notice to the other within ten (10) days
of such casualty, such termination to be effective 90 days after the date
thereof or upon expiration of the term, whichever first occurs; provided,
that, if the casualty is a Partial Loss and the Landlord's Mortgagee agrees
to make insurance proceeds available for repair, Landlord will repair such
damage in accordance with the terms of Section 12.1(a) above and neither
party shall have the option of terminating this Lease. If neither party
elects to terminate this Lease, then this Lease shall remain in full force
and effect and the Improvements shall be repaired on the terms and
conditions set forth in this Section 12.1. In the event either party
terminates this Lease on notice to the other party as provided above, then
(i) all proceeds payable on account of such casualty shall be paid to the
Landlord and (ii) the Tenant shall pay to the Landlord the difference
between (A) the cost of repairing and restoring the Improvements and (B)
insurance proceeds received to the extent such difference results from
Tenant's failure to maintain the levels of insurance required pursuant to
Section 11.2 of this Lease, and upon Landlord's receipt of such payments
this Lease shall terminate and neither party shall have any right or
obligation to the other hereunder except as otherwise herein expressly
provided. Further, in the event of a Total Loss, Tenant shall, at its
expense, remove all rubble from the Property and restore the Property to
graded condition, free of all trash, rubbish or other remains from the
casualty.
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ARTICLE XIII
CONDEMNATION
13.1 Termination of Lease. In the event all or any portion of the
Premises shall be acquired for any public or quasi-public use through taking by
condemnation, eminent domain or any similar proceeding, or purchase in lieu
thereof (a "Taking"), such that Tenant determines in its reasonable discretion
that the Premises cannot continue to be operated for its then current use with
reasonably sufficient parking and in a commercially reasonable manner, then the
Term shall cease and terminate as of the date the condemning authority takes
title or possession to the affected portion of the Property, whichever first
occurs, and all Rentals shall be paid up to that date shall be immediately due
and payable to Landlord. It is agreed that the Premises can continue to be
operated for its then current use, having sufficient parking therefor, if no
more than ten percent (10%) of the parking spaces on the Premises are the
subject of the Taking and Landlord, within a reasonable period of time,
replaces the spaces so taken with spaces within a reasonable proximity to the
Premises.
13.2 Continuation of Lease. If Tenant determines after a Taking, that the
Premises can continue to be operated for its then current use with sufficient
parking, then this Lease shall remain in full force and effect in accordance
with its terms.
13.3 Apportionment of Award. In the event of any Taking, whether whole or
partial, Landlord shall be entitled to receive the entire award except for any
specific allocation for loss or disruption of Tenant's business and any other
awards to which Tenant may be entitled but which do not reduce the amount of
the award to Landlord.
ARTICLE XIV
ASSIGNMENTS AND SUBLETTING
14.1 Landlord's Consent Required. Tenant will not assign, sublease,
mortgage, pledge, transfer or otherwise hypothecate any interest in this Lease
without the prior written consent of Landlord, which consent may not be
unreasonably withheld. Tenant, however, acknowledges and agrees that it shall
be reasonable for Landlord to withhold its consent to an assignment, sublease,
mortgage, pledge, transfer or hypothecation if (a) the proposed assignee does
not have a financial condition reasonably acceptable to the Landlord, (b)
material structural alterations to the Premises are required, (c) a change in
the Permitted Use is required or (d) the Lease Guaranty, for whatever reason,
is or does not remain in full force and effect. Any attempted assignment,
subletting, mortgage, pledge, transfer or hypothecation by Tenant without
Landlord's consent shall be null and void. Further, any subletting,
assignment, mortgage, pledge, transfer or hypothecation which (i) is the result
of the sale, assignment or transfer of all or substantially all of the assets
of Tenant, with or without specific assignment of this Lease; or (ii) is to an
Affiliate, shall not require the prior consent of the Landlord but shall
otherwise be subject in all respects to (1) the Guarantor remaining obligated
under and pursuant to the Lease Guaranty, and (2) the requirement that none of
the events described in clauses (b) or (c) of this Section 14.1 above be true
subsequent to or in connection with the occurrence of any event described in
clauses (i) or (ii) above. For purposes of this Section 14.1 the following
terms shall have the ascribed
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meanings: (A) Affiliate of any Person means any Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person and, without limiting the generality of the foregoing, shall include any
Person that beneficially owns or holds fifty percent or more of any class of
voting securities of such Person and any Person owning or holding fifty percent
or more of any class or series of voting securities of such Person (or in the
case of a Person that is not a corporation, fifty percent or more of the equity
interest) of which is beneficially owned or held by such Person (for purposes
of this definition, "control" including, with correlative meanings, the terms
"controlled by" and "under common control with", as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through ownership of voting securities or by contract or otherwise), and (B)
"Person" means any corporation, partnership, trust, estate, individual,
unincorporated business entity or governmental department, administrative
agency or instrumentality. Consent by Landlord to any assignment, subletting,
mortgage, pledge, transfer or hypothecation shall not constitute a waiver of
the requirement for such consent to any subsequent assignment or subletting.
Tenant shall pay to Landlord, as Additional Rental, the actual reasonable
costs, not to exceed the sum of Five Hundred Dollars ($500.00), to cover
Landlord's administrative costs and overhead as well as all of Landlord's
out-of-pocket expenses, such as reasonable attorneys' fees, incurred in
connection with any proposed assignment, subletting or hypothecation.
14.2 Acceptance of Rent from Transferee. The acceptance by Landlord of
the payment of Rental following any attempted assignment or other transfer
prohibited by this Article shall not be deemed to be a consent by Landlord to
any such assignment or other transfer nor shall the same be deemed to be a
waiver of any right or remedy of Landlord hereunder.
ARTICLE XV
DEFAULT
15.1 "Event of Default" Defined. Any one or more of the following events
shall constitute an "Event of Default":
(a) The sale of Tenant's interest in the Premises under attachment,
execution or similar legal process; or if Tenant or any guarantor of
Tenant's obligations hereunder (each a "Guarantor") is adjudicated a
bankrupt or insolvent under any State bankruptcy or insolvency law or an
order for relief is entered against Tenant or any Guarantor under the
Federal Bankruptcy code and such adjudication or order is not vacated
within sixty (60) days.
(b) The commencement of a case under any chapter of the Federal
Bankruptcy Code by or against Tenant or any Guarantor or the filing of a
voluntary or involuntary petition proposing the adjudication of Tenant or
any Guarantor a bankrupt or insolvent, or the reorganization of Tenant or
any Guarantor, or an arrangement by Tenant or any Guarantor with its
creditors, unless the petition is filed or case commenced by a party other
than Tenant or any
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Guarantor and is withdrawn or dismissed within sixty (60) days after the
date of the filing.
(c) The admission in writing by Tenant or any Guarantor of its
inability to pay its debts when due.
(d) The appointment of a receiver or trustee for the business or
property of Tenant or any Guarantor unless such appointment shall be
vacated within thirty (30) days of its entry.
(e) The making by Tenant or any Guarantor of a general assignment for
the benefit of its creditors, or, except as permitted pursuant to Section
14.1, if in any other manner Tenant's interest in this Lease shall pass to
another by operation of law.
(f) The failure of Tenant to pay any Rental or other sum of money
within ten (10) days of written notice to Tenant of such failure to pay
the same when due. Tender of Rentals due after legal action has been
commenced against Tenant for non-payment of Rental shall not be a defense
to such action.
(g) Default by Tenant in the performance or observance of any
covenant or agreement of this Lease (other than a default involving the
payment of money), which default is not cured within twenty (20) days
after the giving of notice thereof by Landlord, unless such default is of
such nature that it cannot be cured within such twenty (20) day period, in
which case no Event of Default shall occur so long as Tenant shall
commence the curing of the default within such twenty (20) day period and
shall thereafter diligently prosecute the curing of same.
(h) The failure to open for business within six (6) months of the
Rental Commencement Date, the abandonment of the Premises by Tenant or the
failure of Tenant to operate the Premises continuously and without
interruption except as otherwise permitted pursuant to Section 4.2 of this
Lease.
15.2 Remedies. Upon the occurrence and continuance of any Event of
Default, Landlord, without notice to Tenant in any instance, may do any one of
more of the following:
(a) Perform, on behalf and at the expense of Tenant, any obligation
of Tenant under this Lease which Tenant has failed to perform and of which
Landlord shall have given Tenant notice, the cost of which performance by
Landlord, together with interest therein at the Default Rate from the date
of such expenditure, shall be deemed Additional Rental and shall be
payable by Tenant to Landlord upon demand.
(b) Terminate this Lease and collect all damages that are recoverable
at law or in equity.
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(c) Without terminating this Lease, terminate the Tenant's possessive
right of possession to the Premises, reenter and repossess the Premises
and remove the Tenant and each and every occupant therein and all of
Tenant's personalty, trade fixtures and apparatus. In the event of
reentry by Landlord, the Tenant shall be liable and damages to Landlord
for all loss sustained, including, but not limited to, the cost of
cleaning the Premises and the costs of preparing the same for reletting to
other tenants incurred reasonably and in good faith, and including
reasonable attorneys' fees actually incurred. No reentry by Landlord,
however, or any other action by Landlord shall constitute an acceptance of
surrender by the Tenant, it being understood that such tenant can be
affected only by the written agreement of Landlord and Tenants.
(d) Exercise any other legal or equitable right of remedy which it
may have under this Lease or at law.
Notwithstanding the provisions of clause (a) above and regardless of
whether an Event of Default shall have occurred, Landlord may exercise the
remedy described in clause (a) without further notice to Tenant if
Landlord, in its good faith judgment, believes it would be materially
injured by failure to take rapid action in the event of an emergency or if
Landlord reasonably believes that the unperformed obligation or pending
actions by Tenant will result in immediate and substantial harm to person
or property.
Any costs and expenses incurred by Landlord (including, without
limitation, reasonable attorneys' fees actually incurred) in enforcing any
of its rights or remedies under this Lease shall be deemed to be
Additional Rental and shall be repaid to Landlord by Tenant upon demand.
Further, in the event either Landlord or Tenant is required to institute
suit in order to enforce its rights and privileges under this Lease
against the other party, then the prevailing party in such litigation
shall be entitled to recover its attorneys' fees and court costs from the
nonprevailing party.
15.3 Damages. If Tenant's right of possession under this Lease is
terminated by Landlord pursuant to Section 15.2, then Tenant shall remain
liable for any Rental and damages which may be due or sustained by Landlord.
Tenant shall also pay to Landlord (i) all reasonable costs, fees and expenses
including, but not limited, reasonable attorneys' fees actually incurred, costs
and expenses incurred by Landlord in pursuit of its remedies hereunder, or in
reletting the Premises to others from time to time and (ii) additional damages
which shall be an amount or amounts equal to the Rental due hereunder during
the remainder of the Term less all sums received by Landlord from any reletting
of the Premises, less the reasonable costs of reletting, such as brokerage
commissions and remodeling expenses.
If this Lease is terminated pursuant to Section 15.2, Landlord may relet
the Premises or any part thereof, alone or together with other premises, for
such term or terms (which may be greater or less than the period which
otherwise would have constituted the balance of the Term)
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and on such terms and conditions (which may include concessions or free rent
and alterations of the Premises) as Landlord, in its absolute discretion, may
determine, but Landlord shall not be liable for, nor shall Tenant's obligations
hereunder be diminished by reason of, any failure by Landlord to relet the
Premises or any failure by Landlord to collect any rent due upon such
reletting. Landlord agrees to use reasonable efforts to relet the Premises.
15.4 Assignment in Bankruptcy. In the event of an assignment by operation
of law under the Federal Bankruptcy Code, or any State bankruptcy or insolvency
law and Landlord elects not to terminate or is stayed from termination of
Tenant's rights of possession under this Lease, the assignee shall provide
Landlord with adequate assurance of future performance of all of the terms,
conditions and covenants of the Lease, which shall include, but which shall not
be limited to, assumption of all the terms, covenants and conditions of the
Lease by the assignee and the making by the assignee of the following express
covenants to Landlord:
(a) That assignee has sufficient capital to pay the Rental and other
charges due under the Lease for the entire Term; and
(b) That assumption of the Lease by the assignee will not cause
Landlord to be in violation or breach of any provision in any financing
agreement.
ARTICLE XVI
SUBORDINATION AND ATTORNMENT
16.1 Subordination.
(a) Unless a Mortgagee (as hereinafter defined) shall otherwise
elect as provided in Section 16.2 of this Lease, and subject to Tenant's
right of non-disturbance set forth in Section 16.4 below, Tenant's rights
under this Lease are and shall remain subject and subordinate to the
operation and effect of:
(1) any lease of land only or of land and buildings in a
sale-leaseback transaction involving the Premises, or
(2) any mortgage, deed of trust of other security instrument
constituting a lien upon the Premises, whether the same shall be in
existence at the date hereof or created hereafter, any such lease,
mortgage, deed of trust or other security instrument being referred
to herein as a "Mortgage" and the party or parties having the
benefit of the same, whether as lessor, mortgagee, trustee or note
holder, being referred to herein as a "Mortgagee".
(b) Tenant agrees to execute any instrument or instruments reasonably
necessary or desirable to effectuate its agreement to subordinate its
interest to the interest of any Mortgagee, subject to the non-disturbance
requirements described in Sections 16.3 and 16.4 below.
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16.2 Mortgagee's Unilateral Subordination. If a Mortgagee shall elect by
notice to Tenant or by the recording of a unilateral declaration of
subordination, then this Lease and Tenant's rights hereunder shall be superior
and prior in right to the Mortgage of which such Mortgagee has the benefit,
with the same force and effect as if this Lease had been executed, delivered
and recorded prior to the execution, delivery and recording of such Mortgage.
16.3 Attornment. If any person shall succeed to all or part of Landlord's
interest in the Premises, whether by purchase, refinance, foreclosure, deed in
lieu of foreclosure, power of sale, termination of lease, or otherwise, and if
so requested or required by such successor in interest, so long as such party
agrees in writing not to disturb Tenant's interest in or possession of the
Premises pursuant to the terms of this Lease, Tenant shall attorn to such
successor in interest and shall execute such agreement in confirmation of such
attornment as such successor in interest shall reasonably request; provided,
however, that neither such successor in interest or any Mortgagee shall be (i)
bound by any payment of Rental more than one month in advance; (ii) bound by
any amendments or modifications of this Lease made without the consent of the
Mortgagee or (iii) liable for any act or omission of a prior landlord
hereunder.
16.4 Non-Disturbance. So long as no Event of Default shall exist, this
Lease shall remain in full force and effect for the full term hereof, and
Tenant's occupancy of the Premises and tenancy under this Lease shall not be
disturbed by any foreclosure proceeding or any deed in lieu of foreclosure or
other such transfer, and the subordination set forth in Section 16.1 is made
subject to Tenant's non-disturbance rights under this Section 16.4. Landlord
shall use reasonable efforts to cause its Mortgagee to execute and deliver a
subordination, non-disturbance and attornment agreement, in form and substance
reasonably acceptable to all parties, as soon as reasonably possible after the
execution hereof. In the event Landlord is not able to obtain a nondisturbance
agreement from its Mortgagee in form and substance reasonably acceptable to all
parties on or before the Purchase Date (defined in Section 19.22 below), then
Tenant shall have the right to terminate this Lease by written notice to
landlord within ten (10) days of the Purchase Date.
ARTICLE XVII
NOTICES
17.1 Sending of Notices. Any notice, request, demand, approval or consent
given or required to be given under this Lease shall be in writing and shall be
deemed to have been given as follows:
(a) If intended for Landlord on the day on which the same shall have
been mailed by United States registered or certified mail, return receipt
requested, with all postage charges prepaid, addressed to Landlord, Attn:
Greg Keith, The Keith Corporation, 2719 Coltsgate Road, Charlotte, North
Carolina 28211, with a facsimile copy thereof faxed to Landlord at (704)
365-0733; Attn: Greg Keith, on the day notice is mailed to Landlord.
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(b) If intended for Tenant, the day on which the same shall have been
mailed by United States registered or certified mail, return receipt
requested, with all postal charges prepaid, addressed to Tenant at the
Tenant Notice Address, with a facsimile copy thereof faxed to Tenant at
(708) 325-0020; Attn: VP-Operations, on the date notice is mailed to
Tenant and with a copy to the Guarantor at One Griffith Center, Alsip, IL
60658, Attn: Treasurer with an additional copy to the same address, Attn:
Legal Department, with a facsimile copy thereof faxed to Guarantor at
(708) 371-4783, Attn: Treasurer and Legal Department on the date notice is
mailed to Guarantor.
Either party may, at any time change its Notice Address (including its
facsimile number) by sending a written notice to that affect the other party
stating the change and setting forth the new address or number.
17.2 Notice to Mortgagees. If any Mortgagee shall notify Tenant in
writing that it is the holder of a Mortgage affecting the Premises, no notice,
request or demand thereafter sent by Tenant to Landlord shall be effective
unless and until a copy of the same shall also be sent to such Mortgagee in the
manner prescribed in Section 17.1 and to such address as such Mortgagee shall
designate.
ARTICLE XVIII
QUIET ENJOYMENT
18.1 Warranty. Subject only to the Permitted Encumbrances, Landlord
warrants that it has full right and authority to lease the Premises upon the
terms and conditions herein set forth; and the Tenant shall peacefully and
quietly hold and enjoy the Premises in accordance with the terms and conditions
hereof for the full term hereof, subject to the Permitted Encumbrances and so
long as Tenant does not default in the performance of any of its covenants
hereunder.
ARTICLE XIX
MISCELLANEOUS
19.1 Estoppel Certificates. At any time and from time to time, within ten
(10) days after either party delivers the requested certificate, the other
party will execute, acknowledge and deliver to the requesting party and to any
Mortgagee or other party as may be designated by the requesting party, a
certificate in the acceptable form with respect to the matters required by such
party and such other matters relating to this Lease or the status of
performance of obligations of the parties hereunder as may be reasonably
requested by the requesting party. Upon substantial completion of the
Improvements, Tenant agrees to provide Landlord with an estoppel certificate
regarding completion of the Improvements and such other matters as Landlord may
reasonably request.
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19.2 Inspections and Access by Landlord. So long as Landlord does not
unreasonably interfere with Tenant's operation, Tenant will permit Landlord,
its agents, employees and contractors to enter all parts of the Premises during
Tenant's business hours upon 24 hours' prior notice (except in the exercise of
Landlord's remedies hereunder for which no notice shall be required) to inspect
the same and to enforce or carry out any provision of this Lease, including,
without limitation, any access necessary for the making of any repairs provided
that, in an emergency situation, such access shall be at any time upon
Landlord's oral request.
19.3 Memorandum of Lease and Option. The parties hereby agree that upon
removal of the contingencies to Landlord's obligations under this Lease as set
forth in Section 19.22 below but prior to the recordation of any Mortgage, each
will execute, acknowledge and deliver a Memorandum of this Lease and Option in
substantially the form attached hereto as Exhibit "D". No such memorandum
shall include any financial terms of the Lease Agreement or Option. Recording,
filing and like charges and any stamp, charge for recording, transfer or other
tax shall, be paid by the Tenant. In the event of termination of this Lease,
within thirty (30) days after written request from Landlord, Tenant agrees to
execute, acknowledge and deliver to Landlord an agreement terminating such
short form of lease of record. If Tenant fails to execute such agreement
within that thirty (30) day period or fails to notify Landlord within that
thirty (30) days period of its reasons for refusing to execute such agreement,
Landlord is hereby authorized to execute and record such agreement terminating
the short form of lease of record. This provision shall survive any
termination of this Lease.
19.4 Remedies Cumulative. No reference to any specific right or remedy
shall preclude Landlord from exercising any other right or from having any
other remedy or from maintaining any action to which it may otherwise be
entitled at law or in equity. No failure by Landlord to insist upon the strict
performance of any agreement, term, covenant or condition hereof, or to
exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach,
shall constitute a waiver of any such breach, agreement, term, covenant, or
condition. No waiver by Landlord of any breach of Tenant under this Lease
shall affect or alter this Lease in any way whatsoever.
19.5 Successors and Assigns. Subject to Section 14.1 of this Lease, this
Lease and the covenants and conditions herein contained shall inure to the
benefit of and be binding upon Landlord, its successors and assigns, and shall
be binding upon Tenant, its successors and assigns and shall inure to the
benefit of Tenant and only such assigns of Tenant to whom the assignment of
this Lease by Tenant has been consented to by Landlord. Upon any sale or other
transfer by Landlord of its interest in the Premises and upon the express
written assumption of Landlord's obligations hereunder by the assignee of
Landlord's interest herein, Landlord shall be relieved of all of its
obligations arising under this Lease occurring after the date of such sale or
transfer.
19.6 Compliance with Law and Regulation. Tenant, at its sole cost and
expense, shall comply with and shall cause the Premises to comply with (a) all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations and ordinances effecting the Premises or the use thereof,
whether presently existing or enacted after the date hereof, and (b) all rules,
orders and regulations of the National Board of Fire Underwriters or Landlord's
fire
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insurance rating organization or other bodies exercising similar functions in
connection with the prevention of fire or the correction of hazardous
conditions which apply to the Premises. Landlord shall not unreasonably
interfere with Tenant's compliance activities, and shall not unreasonably
withhold consent to alterations required to be made by Tenant in order to
comply with the provisions of this Section 19.6. If alterations to the
Premises are required because of the terms of this Section 19.6, then the
rights and responsibilities of the parties with respect to such alterations
shall be governed by the terms of Section 9.2 of this Lease.
19.7 Captions and Headings. The Article and Section captions and headings
are for convenience of reference only and in no way shall be used to construe
or modify the provisions set forth in this Lease.
19.8 Joint and Several Liability. If two or more individuals,
corporations, partnerships or other business associations (or any combination
of two or more thereof) shall sign this Lease as Tenant, the liability of each
such individual, corporation, partnership or other business association to pay
rent and perform all other obligations hereunder shall be deemed to be joint
and several, and all notices, payments and agreements given or made by, with or
to any one of such individuals, corporations, partnerships or other business
associations shall be deemed to have been given or made by, with or to all of
them. In like manner, if Tenant shall be a partnership or other business
association, the members of which are, by virtue of statute or federal law,
subject to personal liability, the liability of each such member shall be joint
and several.
19.9 Broker's Commission. Each of the parties (i) represents and warrants
that there are no claims for brokerage commissions or finders' fees in
connection with the execution of this Lease for which the other party will be
obligated, other than to CB Commercial which will be paid in accordance with
Landlord's agreement with CB Commercial and (ii) agrees to indemnify the other
against, and hold it harmless from, all liability arising from any such claim
including, without limitation, attorneys' fees.
19.10 No Discrimination. Tenant shall not discriminate in the conduct and
operation of its business in the Premises against any person or group of
persons because of the race, creed, color, age, national origin or ancestry of
such person or group of persons.
19.11 No Joint Venture. Any intention to create a joint venture or
partnership relation between the parties hereto is hereby expressly disclaimed.
19.12 No Option. The submission of this Lease for examination does not
constitute a reservation of or option for the Premises, and this Lease shall
become effective only upon execution and delivery thereof by both parties.
19.13 No Modification. This writing is intended by the parties as a final
expression of their agreement and as a complete and exclusive statement of the
terms thereof, all negotiations, considerations and representations between the
parties having been incorporated herein. No course of prior dealings between
the parties or their officers, employees, agents or affiliates shall be
relevant or admissible to supplement, explain or vary any of the terms of this
Lease.
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Acceptance of, or acquiescence in, a course of performance rendered under this
or any prior agreement between the parties or their affiliates shall not be
relevant or admissible to determine the meaning of any of the terms of this
Lease. No representations, understandings or agreements have been made or
relied upon in the making of this Lease other than those specifically set forth
herein. This Lease can be modified only by a writing signed by the party
against whom the modification is enforceable.
19.14 Severability. If any term or provision, or any portion thereof, of
this Lease, or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances, other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
19.15 Third Party Beneficiary. Nothing contained in this Lease shall be
construed so as to confer upon any other party the rights of a third party
beneficiary except rights contained herein for the benefit of a Mortgagee.
19.16 Corporate Tenants. In the event Tenant is a corporation, the person
executing this Lease on behalf of Tenant hereby covenant and warrant that:
Tenant is a duly constituted corporation qualified to do business in the state
in which the Premises is located; all of Tenant's franchise and corporate taxes
have been paid to date; all future forms, reports, fees and other documents
necessary for Tenant to comply with applicable laws will be filed by Tenant
when due; and such persons are duly authorized by the board of directors of
such corporation to execute and deliver this Lease on behalf of the
corporation.
19.17 Applicable Law. This Lease and the rights and obligations of the
parties hereunder shall be construed in accordance with the laws of the State
of North Carolina.
19.18 Performance of Landlord's Obligations by Mortgagee. Tenant shall
accept performance of any of Landlord's obligations hereunder by any Mortgagee.
19.19 Limitation on Right of Recovery Against Landlord. Tenant
acknowledges and agrees that the liability of Landlord under this Lease shall
be limited to its interest in the Premises and any judgments rendered against
Landlord shall be satisfied solely out of the proceeds of sale of its interest
in the Premises. No personal judgment shall be against Landlord upon
extinguishment of its rights in the Premises and any judgments so rendered
shall not give rise to any right of execution or levy against Landlord's
assets. The provisions hereof shall inure to Landlord's successors and assigns
including any Mortgagee. The foregoing provisions are not intended to relieve
Landlord from the performance of any of Landlord's obligations under this
Lease, but only to limit the personal liability of Landlord in case of recovery
of a judgment against Landlord; nor shall the foregoing be deemed to limit
Tenant's rights to obtain injunctive relief or specific performance or to avail
itself of any other right or remedy which may be awarded Tenant by Law or under
this Lease. Notwithstanding the foregoing, Tenant shall be entitled to setoff
against Rent the amount of any final, non-appealable judgment entered in favor
of Tenant or Guarantor against Landlord in connection with or relating to this
Lease.
28
<PAGE> 33
19.20 Hazardous Substances. Tenant acknowledges that the only Hazardous
Substances it will use on the Premises are set forth on Exhibit H attached
hereto and Tenant's use of such Hazardous Substances shall be in accordance
with all applicable laws. In the event the Tenant begins to use Hazardous
Substances at the Premises other than those listed on Exhibit H, the Tenant
will immediately notify the Landlord of the same and provide such detail
regarding the same the Landlord may reasonably require. Prior to the
termination of the Lease, all Hazardous Substances used by the Tenant shall be
removed and remediated from the Premises at the Tenant's sole cost and expense
in accordance with all applicable laws. In no event shall the Tenant use
Hazardous Substances at the Premises violations of laws or to an extent that
will cause applicable insurance coverage to be ineffective. Tenant shall
indemnify and hold harmless Landlord from any claim, demand, liability, damage,
loss or expense that Landlord might suffer from the breach of this Section 9.20
by Tenant, its employees, officers, contractors, subcontractors, agents,
invitees, subtenants or assignees, or as the result of any Hazardous Substance
used or introduced by Tenant, its employees, officers, contractors,
subcontractors, agents, invitees, subtenants or assignees, at or to the
Premises. "Hazardous Substances" means and includes any of the substances,
materials, elements or compounds that are contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency (the
"EPA") and the list of toxic pollutants designated by the United States
Congress or the EPA and substances, materials, elements or compounds affected
by any other federal, state or local statute, law ordinance, code, rule
regulation, order or decree now or at any time hereafter in effect regulating,
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic, dangerous, restricted or otherwise regulated waste, substance
or material, as now or at any time hereafter in effect. In no event shall
Tenant have any liability with respect to Hazardous Substances used, introduced
or located on the Premises at any time by any person or entity except Tenant or
any of its employees, officers, contractors, subcontractors, agents, invitees,
subtenants, or assignees. Landlord shall provide to Tenant copies of all
environmental reports and studies obtained by Landlord in connection with its
purchase of the Premises, and shall allow Tenant reasonable access to the
Premises prior to the Turnover Date in order that Tenant may conduct such
environmental tests as Tenant may deem necessary. Landlord shall also make
reasonable, good faith efforts to cause the environmental indemnity provisions,
if any, of the purchase contract described in Section 19.22 hereof to include
Tenant, its successors and assigns, as indemnified parties and third party
beneficiaries of such indemnity provisions.
19.21 Absolute Net Lease. It is the purpose and intent of Landlord and
Tenant that the Annual Basic Rental payable hereunder shall be an absolutely
net return to Landlord, undiminished by the Taxes, or any part thereof, or any
other maintenance or repair costs (except those Landlord has expressly agreed
to bear in Section 9.1 hereof), costs of insurance, or any other charges of any
kind or nature whatsoever relating to the Premises or any Improvements, which
may arise or become due during the term of this Lease, all of which shall be
paid by Tenant. All sums payable pursuant to this Section 19.21 shall be
deemed Additional Rental payable by Tenant hereunder.
19.22 Landlord's Contingency/Guaranty. This Lease and Landlord's
obligations hereunder are subject to (i) Landlord obtaining financing
satisfactory to Landlord in its sole discretion for the purchase of the
Premises and the construction of the Improvements, and (ii)
29
<PAGE> 34
Landlord purchasing the Property on or before the 30th day of June, 1994 (the
"Purchase Date"). Tenant acknowledges that Landlord currently has a purchase
contact with Withers Cove Associates Limited Partnership, dated on or about the
date hereof, for the purchase of the Property. In the event the Landlord, for
any reason, does not or is unable to purchase the Property or obtain
appropriate financing by the Purchase Date, then Landlord, at its sole option,
may terminate this Lease and upon such termination this Lease shall
automatically be deemed null and void and neither party hereto shall have a
claim against the other. In the event the Landlord elects not to terminate
this Lease for the reasons set forth in clauses (i) or (ii) above, then the
Start Date, Turnover Date and Outside Date shall each be increased by the
number of days the Purchase Date is delayed; provided, however, that in no
event shall the Purchase Date be delayed by more than sixty (60) days.
Additionally, the obligations of Landlord hereunder are contingent upon the
receipt by Landlord of a Guaranty (the "Lease Guaranty"), in the form attached
hereto as Exhibit F, executed by Griffith Laboratories, Inc., an Illinois
corporation (the "Guarantor"), guaranteeing all of Tenant's obligations under
this Lease.
19.23 Financial Statements. Tenant shall deliver to Landlord audited
annual financial statements of Tenant and the Guarantor within 180 days from
the end of each calendar year during the Term; provided, that, as to the
Guarantor's financial statements, footnotes are not required to be included as
long as the footnotes shall be made available for Landlord's review at
Guarantor's executive offices during normal office hours. Landlord shall
maintain the confidentiality of all such financial statements, and will not
disclose such financial statements, or the contents thereof, to anyone except
(a) its management officials who are necessary to any decisions of Landlord
regarding the Lease, (b) its attorney and accountants (who shall themselves
agree to maintain such confidentiality) and (c) if required by law. The
provisions of this Section shall not be applicable if the Landlord or any
Affiliate (as defined in Section 14.1 hereof) of Landlord is engaged in the
contract sterilization business or food ingredient manufacturing or supply
business.
19.24 Purchase Option. Tenant shall have the option to purchase the
Premises at the beginning of Rental Years six, nine, and twelve. The purchase
option must be exercised no later than six (6) months after the beginning of
the applicable Rental Year. The purchase option price shall be determined by
(a) dividing the Annual Basic Rental for such Rental Year (the Rental Year in
which this purchase option is consummated) by 9.5%, and (b) adding to the
number calculated in clause (a), any yield maintenance charges or prepayment
penalties incurred by Landlord in connection with satisfying any debt secured
by the Premises in order to comply with this Section 19.24; unless any such
debt is assumed by Tenant as long as all transfer or assumption fees are paid
by Tenant. Tenant must pay such amount in cash at the closing of such
transaction and any such purchase shall be made on an "AS-IS", "WHERE IS" basis
without any representation or warranty of any kind, express or implied. The
Closing shall take place on or before ninety (90) days following Tenant's
exercise of the Option to Purchase the Premises at a place in the City of
Charlotte reasonably agreeable to the Tenant. The Landlord shall have the
right to effect a like-kind exchange under the Internal Revenue Code in
connection with the transfer of the Property on terms that do not increase or
expose the Tenant to liability on account thereof. The Landlord shall convey
fee title to the Premises by general warranty deed subject only to the
Permitted Exceptions and ad valorem taxes for the year in which Closing will
take
30
<PAGE> 35
place. At Closing, Landlord shall provide to Tenant, at Landlord's expense, an
owner's title insurance policy (exclusive of any endorsements thereto, which
shall be at the cost of Tenant) issued by a title insurance company reasonably
acceptable to Tenant insuring title to the Premises in Tenant's name subject
only to the Permitted Exceptions and such taxes. Transfer taxes shall be paid
by Landlord. All mortgage or deed of trust encumbrances, liens and charges
against the Property shall be paid and cancelled by Landlord prior to the
Closing. Landlord shall furnish an affidavit and indemnification agreement
with respect to any labor or materials furnished to the Premises by Landlord.
Landlord and Tenant shall each execute all other documents reasonably necessary
to consummate the transfer of the Premises which are reasonably required by
either party or its counsel. No purchase option will be provided on lease
renewals. The Lease shall terminate at the Closing. The risk of loss as to
the Premises shall be governed by the provisions of Article XII hereof until
the closing.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Lease Agreement enter their respective seals as of
the day and year first above written.
LANDLORD:
TKC VI, a North Carolina limited
liability company
By: [illegible]
----------------------------(SEAL)
Member
By: /s/ Kenneth R. Bealey
----------------------------(SEAL)
Kenneth R. Bealey, Member
TENANT:
GRIFFITH MICRO SCIENCE, INC.,
ATTEST: a Delaware corporation
______________________
By: /s/ Frank Lange
_________ Secretary -----------------------------
Name: Frank Lange
-----------------------------
Title: V.P. Operations
-----------------------------
[CORPORATE SEAL]
31
<PAGE> 36
EXHIBIT "A"
Legal Description
32
<PAGE> 37
ATTACHMENT B
GRIFFITH MICRO SCIENCE REVISED
CHARLOTTE, NORTH CAROLINA
SCOPE OF WORK
(Including all additions, modifications, deletions
and other changes agreed to by Landlord and Tenant)
June 6, 1994
General Requirements:
- ---------------------
- - The building will be 41,070 SF as outlined in Attachment I.
- - Design fees are included for architectural, structural steel, plumbing,
HVAC, fire protection, and electrical only.
- - We have included Builders Risk insurance.
- - We have not included any costs associated with the removal and/or
replacement of rock, and/or unsuitable soil materials.
- - We have not included any equipment connections, installations or final
connections.
- - Civil engineering,landscape design and materials testing/inspection are
included.
- - See Division 2 for a description of the proposed landscape.
Division 2 - Sitework:
- ----------------------
- - Site clearing of approximately 3.87 acres, stripping and stockpiling of
topsoil on-site as necessary to perform grading operations.
- - Site cut and fill based on a balanced site.
- - Erosion control fencing as required by local codes.
- - Soil treatment for termite control under the building.
- - Storm drainage shall consist of the following items:
18" RCP 400 LF
Catch Basins 3 each
- - Domestic water service shall consist of approximately 265 LF of 2" PVC
service.
<PAGE> 38
- - Sanitary sewer pipe for the building shall consist of approximately 265
LF of 6: sewer pipe.
- - Asphalt paving shall consist of approximately 3,900 SY of heavy-duty
paving at the truck areas consisting of 8" ABC and 3" asphalt; and
approximately 1,225 SY of regular-duty paving at the parking areas which
will consist of 6: stone base and 2: of asphalt.
- - Approximately 375 LF of 18" concrete curb is included at the car parking
area only.
- - We have included approximately 1,000 SF of 4" thick sidewalks at the
building.
- - Approximately 7,500 SF of concrete paving is included at the truck dock
apron.
- - Pavement markings are provided at the automobile parking spaces.
- - The landscape shall include the landscape planting and sprinkler
irrigation system for selected, high visibility areas of the site. The
landscaping work shall include the grassing, trees, shrubs and
groundcover for areas adjacent to the building and parking areas and shall
include the minimum planting requirements as required by the Mecklenburg
County Zoning Ordinance. The irrigation work shall be limited to those
areas adjacent to Withers Cove Drive and the front portions of the
proposed facility.
Division 3 - Concrete:
- ----------------------
- - Typical column footings are based on a minimum soil-bearing pressure of
3,000 PSF
- - Exterior precast walls shall be supported with a 2' x 1' thick
continuous concrete footing reinforced with three No. 5 reinforcing bars
in the long direction. Top of footing is assumed to be 1'-4" below finish
floor, except at the dock wall which will be a 5'-4" below finish floor.
- - Slab on grade in the warehouse and office area shall receive 2" of crushed
stone base.
- - 1/2" thick expansion joint material is included at the slab perimeter and
all interior walls.
- - 15 lb. felt paper is included at all column isolation diamonds.
- - 2" thick x 2'-0" wide rigid horizontal insulation is included under the
slab at all exterior walls.
- - Approximately 75% of the typical warehouse slab to be 6" thick 4,000 PSI
concrete slab on grade with a trowel finish. Finished floor surface shall
meet a tolerance of Ff-20, FL-15. Approximately 25% of the warehouse slab
shall receive a metallic surface hardener and will have floor flatness
tolerances of Ff = 30 and FL = 22.
- - Floor joints shall receive an epoxy caulk.
2
<PAGE> 39
- - Office area slab on grade to be 4" thick 3,000 PSI slab on grade with a
smooth trowel finish. Finished floor surface shall meet a tolerance of
Ff-20, FL-15.
- - All slabs to receive one application of spray-on cure and seal compound.
- - The 8 dock leveler pits are to be poured in-place concrete.
- - The exterior walls shall be 6" thick, insulated precast concrete with a
paint finish on the exterior surface.
Division 5 - Metals:
- --------------------
- - The roof framing shall consist of structural steel columns, joist and
joist girder roof framing. Roof deck shall be 1-1/2" 22-gauge painted
deck. Our proposal is based on the clear height requirement of 24'.
- - Miscellaneous steel items include the following:
> 22 each - pipe bollards at overhead doors and dock stairs.
> 8 each - dock pit edge angles.
> 1 each - stair and handrails at loading dock.
Division 6 - Carpentry:
- -----------------------
- - Wood roof blocking to be pressure-treated material.
Division 7 - Thermal Moisture Protection:
- -----------------------------------------
- - The building roof will consist of a 45 mil EPDM ballasted roof with a
10-year guarantee.
- - The roof will slope to the dock wall and will drain to gutters and
downspouts. Downspouts will surface drain.
- - We have included 28 each 4' x 8' skylights.
Division 8 - Doors & Windows:
- -----------------------------
- - Overhead doors, 8 each, shall be 8'-6" x 10' electrically operated with
full vertical lift tracks and are located at the truck docks and at the
gas storage dock.
- - One 15' x 14' manually operated overhead door with a high-lift track is
included at the drive-in ramp.
3
<PAGE> 40
- - Exterior personnel doors, 5 each, will consist of a hollow-metal frame,
hollow-metal door and panic hardware.
- - One pair of hollow-metal doors in a hollow-metal frame is included at the
gas storage dock.
- - Approximately 375 SF of 1" insulated tinted glass is included at the
office area. Framing shall be clear of dark bronze anodized aluminum.
- - One pair of storefront entrance doors and one single door is included at
the office entrance.
Division 9 - Finishes:
- ----------------------
- - An allowance of $10.00/SF for approximately 2,500 SF of office upfit
includes the following:
> Interior office partitions to be constructed of 3-5/8" metal stud
with 1/2" gypsum drywall on each side.
> Floor finishes.
> Doors, frames and hardware.
> Painting and wall finishes.
> Ceilings.
> Millwork.
> Specialties.
- - Exterior personnel doors and dock doors shall be painted.
- - We have not included the painting of the exposed structural steel framing
or the exposed roof deck in the warehouse area, nor have we included the
painting of the interior face of the exterior precast panel.
- - The exterior precast wall panels shall receive a painted finish on the
exterior surface.
Division 11 - Equipment:
- ------------------------
- - Dock seals and dock levelers are provided at the 8 dock doors in
accordance with the following:
> Frommell TP 901 NPC dock seals or equal.
> Rite Hite HD-1268 dock levelers or equal.
4
<PAGE> 41
Division 15 - Mechanical:
- ------------------------
* The plumbing system is based on the following:
> Toilet facilities to meet code for tenant work force and ADA
requirements. Process will require make-up water for 40 HP
boiler.
> One drain for each 5,000 SF of warehouse/processing area. Drains
for handling water used to wash floors and equipment and
infrequent use of potable water for once-through cooling heat
exchangers, clarifier included.
> Fire sprinkler in warehouse and office areas to be built in
accordance with NFPA requirements, local code and insurance
requirements: system to be .60/3000 GPM however .75/1100 GPM
for warehouse storage areas.
> For cafeteria - hot and cold water sink. Trucker toilet in small
shipping office. Office area includes locker room with two
showers and toilets.
* Heating and air conditioning is included at the office area.
* The warehouse will be heated with twenty - 10 KW electric unit
heaters.
* HVAC design specifications are:
Design Conditions:
Outdoor Summer 95o F db
Weather Winter 18o F db
Indoor Performance:
Offices Summer 74o F db
Winter 70o F db
Warehouse/ Summer
Manufacturing Winter 50o F db
Internal Conditions (Office 2,500 SF):
People 150 GSF per person
Lighting Fluorescent lay-in
1.7 watts per GSF and 10% electronic ballast load
Equipment 1 watt per GSF for office equipment
5
<PAGE> 42
Building Construction (40,710 SF):
----------------------------------
Roof R-10 Insulation
Flatt single membrane
Walls Masonry
R-8.3 insulation system
Glass Tinted insulating thermal pane
Solar = .45 Transmission = .60
Quantity not to exceed 25% of one-story wall area
Special Landings:
-----------------
Equipment None
People None
Ventilation None
Humidity None
Manufacturing & Offices:
-----------------------
Electric unit heaters and destratification fans.
Plant toilets and lockers exhaust fan.
Offices with two 5-ton heat pumps and central ducted return.
Through the wall AC unit and ceiling toilet exhaust for shipping office
and restrooms.
Breakroom odor and smoke exhaust fan.
Fire Protection:
- ----------------
* The fire protection system is based on the following:
> City connection fee, vault and backflow preventer allowance of
$15,000.
> Underground pipe extending to the building and electric booster
pump system.
> The interior fire protection system consists of a conventional wet
pipe system for the office and warehouse. System design is based
on .60 GPM over 3,000 SF.
> The coverage specified requires a city supply of 2,500 GPM at 70
PSI.
6
<PAGE> 43
Division 16 - Electrical:
- -------------------------
* The service to the building will be served by a utility company
transformer located 10' from the building. The service will consist of
one 3,000A switchboard which will serve nine 200A distribution panels and
four 100A panels. One 75 KVA transformer (480/120-208V) will be served
from one of the distribution panels. The transformer will supply 120/208V
to one 200A 120/208V panel. Eight distribution panels (200A) and four
100A panels will be for the Owner's use.
* The telephone service to the building in one 3" PVC conduit taken to a
point 100' from the office building.
* The plant area will have light levels of 25 footcandles provided by
building mounted fixtures. The parking lot adjacent to the building and
the truck area adjacent to the building will be illuminated by the
security lighting and by a pole mounted fixture. In addition, fixtures
will be furnished over all mandoors. Exits with battery backup and
emergency batter units will also be furnished. The emergency battery
units are based on an open area; any equipment installation could affect
the quantity of units.
* Electrical connections to unit heaters and destratification fans are
included.
* A quantity of 6 receptacles are installed in the warehouse. One telephone
outlet at the dock in the warehouse is furnished.
* The office area of 2,500 SF is complete with lighting fixtures,
receptacles, connections to the air conditioning unit. This is a standard
office upfit using acrylic lens fixtures.
* The fire alarm system includes only the sprinkler alarm. There is not
additional fire alarm included.
7
<PAGE> 44
BK: 06453 PG: 0318/0344 #:0156 56.00
REGISTERED FEB/11/1991 02:02PM ANNE A. POWERS REGISTER OF DEEDS MECK. CO. N.C.
FEBRUARY 5, 1991
DECLARATION OF PROTECTIVE COVENANTS AND RESTRICTIONS
FOR
WITHERS COVE BUSINESS PARK
COPY
RETURN TO: MOORE & VAN ALLEN (BOX 39)
<PAGE> 45
EXHIBIT "C"
Use Restrictions
8
<PAGE> 46
TABLE OF CONTENTS
Page
ARTICLE I - PURPOSE.................................................. 1
ARTICLE II- DEFINITIONS.............................................. 1
Section 2.1 Architectural Review Committee.................... 1
Section 2.2 Association....................................... 1
Section 2.3 Board............................................. 1
Section 2.4 Common Area....................................... 1
Section 2.5 Developer......................................... 2
Section 2.6 Design Criteria................................... 2
Section 2.7 Improvements...................................... 2
Section 2.8 Lot............................................... 2
Section 2.9 Occupant.......................................... 2
Section 2.10 Owner............................................. 2
Section 2.11 The Property...................................... 2
ARTICLE III- ASSOCIATION............................................. 3
Section 3.1 Membership........................................ 3
Section 3.2 Voting............................................ 3
ARTICLE IV- ARCHITECTURAL REVIEW COMMITTEE........................... 3
Section 4.1 Necessity of Architectural Review and Approvals... 3
Section 4.2 Approval.......................................... 3
Section 4.3 Powers and Duties................................. 4
Section 4.4 Liability......................................... 5
Section 4.5 Limitation of Action.............................. 5
ARTICLE V - REGULATION OF IMPROVEMENTS............................... 5
Section 5.1 General........................................... 5
Section 5.2 Minimum Setback/Landscape Buffer Lines............ 5
Section 5.3 Compliance........................................ 6
Section 5.4 Excavation and Site Grading....................... 6
Section 5.5 Site Furniture.................................... 6
Section 5.6 Curb Outs......................................... 6
Section 5.7 Off-Street Parking................................ 6
Section 5.8 Loading, Service and Outside Storage.............. 7
Section 5.9 Mechanical Equipment.............................. 7
Section 5.10 Hazardous Materials............................... 7
(i)
<PAGE> 47
Page
Section 5.11 Landscaping...................................... 7
Section 5.12 Underground Utilities............................ 8
Section 5.13 Height Restrictions.............................. 8
Section 5.14 Completion of the Construction................... 8
Section 5.15 Signs............................................ 8
Section 5.16 Exterior and Interior Lighting................... 9
Section 5.17 Irrigation....................................... 9
Section 5.18 Antennae......................................... 9
ARTICLE VI- MAINTENANCE............................................. 9
Section 6.1 Maintenance...................................... 9
Section 6.2 Enforcement...................................... 10
Section 6.3 Landscape Buffer Easement........................ 11
Section 6.4 Access at Reasonable Hours Responsibilities...... 11
ARTICLE VII- PROPERTY RIGHTS........................................ 11
Section 7.1 Owners' Easements of Enjoyment................... 11
Section 7.2 Permitted Operations and Uses.................... 11
Section 7.3 Delegation of Use................................ 12
Section 7.4 Other Easements.................................. 12
Section 7.5 Right of Entry................................... 12
Section 7.6 No Partition..................................... 12
ARTICLE VIII- MAINTENANCE ASSESSMENTS............................... 12
Section 8.1 Creation of the Lien and Personal Obligation of
Assessments.................................... 12
Section 8.2 Purpose of Assessments........................... 13
Section 8.3 Annual Assessments............................... 13
Section 8.4 Special Assessments.............................. 13
Section 8.5 Uniform Rate of Assessment....................... 13
Section 8.6 Date of Commencement of Annual Assessments; Due
Date........................................... 13
Section 8.7 Duties of the Board of Directors................. 13
Section 8.8 Repair Assessment................................ 13
Section 8.9 Effect of Non-Payment of Assessment: The Lien, the
Personal Obligation, Remedies of Association... 14
Section 8.10 Subordination to Lien of Mortgages............... 14
Section 8.11 Exempt Property.................................. 14
ARTICLE IX- REPURCHASE RIGHTS OF DEVELOPER.......................... 15
Section 9.1 Right to Repurchase if No Construction........... 15
(ii)
<PAGE> 48
Page
Section 9.2 Developer's Right of First Refusal on Transfer of
Unimproved Lots................................. 15
ARTICLE X- DEVELOPER'S RESERVED RIGHTS TO PROPERTY.................. 16
Section 10.1 Extension of Covenants and Restrictions to
Include Additional Property..................... 16
Section 10.2 Withdrawal of Land................................ 16
Section 10.3 Platting and Subdivision Restrictions............. 16
Section 10.4 Public Roads - Easements.......................... 17
ARTICLE XI- MISCELLANEOUS........................................... 17
Section 11.1 Term.............................................. 17
Section 11.2 Termination and Modification...................... 17
Section 11.3 Assignment of Developer's Rights and Duties....... 17
Section 11.4 Mutuality, Reciprocity; Runs with Land............ 18
Section 11.5 Notices........................................... 18
Section 11.6 Singular and Plural............................... 18
Section 11.7 Failure to Enforce Not a Waiver of Rights......... 18
Section 11.8 Condominium....................................... 18
Section 11.9 Constructive Notice and Acceptance................ 18
Section 11.10 Severability...................................... 18
Section 11.11 Captions.......................................... 19
(iii)
<PAGE> 49
DECLARATION OF PROTECTIVE COVENANTS AND RESTRICTIONS
FOR
WITHERS COVE BUSINESS PARK
THIS DECLARATION, made the 6th day of February, 1991, by WITHERS COVE
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership (hereinafter
referred to as the "Developer") which declares that the real property comprised
of the lot parcels, and sites, platted or unplatted, more legally described in
attached Exhibit "A" and incorporated herein by reference, to be known as
"WITHERS COVE BUSINESS PARK", which is currently owned by the Developer, is and
shall be held, transferred, sold, conveyed, leased, and occupied subject to the
covenants, restrictions, easements, charges and liens hereinafter set forth.
ARTICLE I
PURPOSE
The purpose of this Declaration is to insure the proper use and most
appropriate development of WITHERS COVE BUSINESS PARK (hereinafter referred to
as the "Park") through the imposition of uniform standards. It is the intent
of this Declaration to provide conditions, covenants, restrictions, etc. that
insure that the Park will always be maintained as an attractive, quality
oriented, uncongested business environment. These covenants are designed to
protect the owners, lessees, sublessees of property against improper and
undesirable uses of surrounding property. In essence, this Declaration should
guard against unwarranted property depreciation which can be caused by such
factors as haphazard and unharmonious improvements.
ARTICLE II
DEFINITIONS
The following words, when used in this Declaration, shall have the
following meanings:
Section 2.1 "Architectural Review Committee" (the "ARC") shall be
composed of no less than three (3) or more than five (5) individuals so
designated from time to time by the Board of Directors of the Association. The
individuals comprising the ARC shall have the powers as set forth herein.
Section 2.2 "Association" shall mean and refer to WITHERS COVE BUSINESS
PARK ASSOCIATION, INC., a North Carolina non-profit corporation. This is the
Declaration of Protective Covenants and Restrictions to which the Articles of
Incorporation (hereinafter referred to as the "Articles") and By-Laws
(hereinafter referred to as the "By-Laws") of the Association make reference.
Section 2.3 "Board" shall mean and refer to the Board of Directors of
the Association.
Section 2.4 "Common Area" shall mean and refer to all real and/or
personal property which the Association and/or the Developer owns or has an
interest in for the common use of the
<PAGE> 50
members of the Association, including, but not limited to, park landscape,
streetscape, park irrigation systems, entry features, directional graphic
system, drainage, landscape medians, security and safety features, sidewalks,
roads, project lighting and recreational facilities or any other use to which a
majority of the membership of the Association may accede. The Developer agrees
that all of the Common Area, fee simple title to which may be owned or held by
the Developer, shall be conveyed to the Association not later than one hundred
twenty (120) days after the developer relinquishes control of the Board.
Section 2.5 "Developer" shall mean and refer to the WITHERS COVE
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, its successors
and assigns, and include any person or entity to which Developer may assign its
rights, privileges, duties and obligations hereunder, which rights, privileges,
duties and obligations are and shall be assignable.
Section 2.6 "Design Criteria" shall mean and refer to the quality and
character specifications prepared by the Developer. Such Design Criteria may
be modified or amended from time to time in the future by Developer in its sole
discretion (subject to any necessary approval and/or changes by any regulatory
authorities of Mecklenburg county or other governing body) and shall be binding
upon all Owners and Occupants of the Park.
Section 2.7 "Improvements" shall mean and refer to any man-made changes
in the natural condition of the land including, but not limited to, structures
and construction of any kind, whether above or below the land surface such as
any building, fence, wall, sign, addition, alteration, screen enclosure, sewer,
drain, disposal, lake, waterway, road, paving, utilities, grading, landscaping,
signs and exterior illumination and shall not be limited to any changes in any
exterior color or shape and any new exterior construction or exterior
improvement.
Section 2.8 "Lot" shall mean and refer to any parcel of the property in
the Park, together with any and all improvements thereon.
Section 2.9 "Occupant" shall mean and refer to any person or organization
which has occupied, purchased, leased, rented or is otherwise licensed or
legally entitled to occupy and/or use any Lot(s) or Improvement(s) in the Park
(whether or not such right is exercised) as well as their heirs, assigns, and
successors in interest.
Section 2.10 "Owner" shall mean and refer to the record owner, whether
one or more partners, person, trusts, corporations, or other entity, of the fee
simple interest to a Lot or any other portion of the Property, including
contract sellers (but not contract purchasers) their heirs, successors,
personal representatives or assigns. An Owner may, upon written notice to the
Developer and/or the Association, assign all or part of his rights, but not his
duties hereunder, to the Owner's tenant.
Section 2.11 The "Property" shall mean WITHERS COVE BUSINESS PARK
(hereinafter referred to as the "Park") and refers to all of the real property
described in Exhibit "A" hereof and any portion thereof, and any and all
improvements thereon and additions thereto, as are subject to this Declaration.
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ARTICLE III
ASSOCIATION
Section 3.1 Membership. Every person or entity who is a record fee
simple Owner of a Lot, including the Developer, at all times as long as it owns
all or any part of the Property subject to this Declaration, shall be a member
of the Association, provided that any such person or entity who holds such
interest only as security for the performance of an obligation shall not be a
member. When one or more persons or entities holds fee simple title to any
part of the Property, all such persons or entities shall be members but voting
power is limited as provided in the Articles. Membership shall be appurtenant
to, and may not be separated from, the ownership of a Lot.
Section 3.2 Voting. Voting rights in the Association shall be as are set
forth in the Articles.
ARTICLE IV
ARCHITECTURAL REVIEW COMMITTEE
Section 4.1 Necessity of Architectural Review and Approvals.
(A) No Improvement of any kind shall be commenced, constructed, erected,
placed, altered or maintained upon any Lot, nor shall any addition, change, or
alteration thereon or thereof be made, nor shall any subdivision platting or
replatting or any Lot be made until plans and specifications with respect
thereto, in manner and form satisfactory to the ARC showing the proposed
Improvements, plot layout and all exterior elevations, materials and colors,
signs and landscaping, traffic engineering, number and size and layout of
parking spaces, grading, easements and utilities, proposed building use, size,
and number of employees, and such other information as may be requested by the
ARC have been submitted to and approved in writing by the ARC. Such plans and
specifications shall be submitted in writing over the signature of the Owner or
the Owner's authorized agent.
(B) No Lot shall be subdivided or re-platted and no portion thereof less
than the entire Lot shall be conveyed without the prior written consent of the
ARC and the Board.
Section 4.2 Approval. Approval shall be based, among other things, upon
(i) the size and square footage of the Project; (ii) the adequacy of building
site dimensions; (iii) the conformity and harmony of exterior design with
neighboring structures; (iv) the effect of location and use of Improvements on
neighboring building sites; (v) the intended operations and uses; (vi) the
relation of the Improvements with the topography; (vii) the grade and finished
ground elevation of the building site being improved to that of neighboring
building sites; (viii) proper facing of main elevation with respect to nearby
streets; and (iv) the conformity of the plans and specifications with the
Design Criteria. The ARC shall not arbitrarily or unreasonably withhold its
approval of such plans and specifications. If ARC has not responded to Owner
within thirty (30) days of acknowledged receipt of plans and specifications by
the ARC, said plans and
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specifications shall be deemed to have been approved by the ARC: a written
request for further information will satisfy the ARC's obligation to respond.
Section 4.3 Powers and Duties. The ARC shall have the following powers
and duties:
(A) To recommend, from time to time, to the Board modifications and/or
amendments to the Design Criteria. Any modification or amendment to the Design
Criteria shall be consistent with the provisions of this Declaration, and shall
not be effective until adopted by a majority of the members of the Board at a
meeting duly called and noticed and at which a quorum is present and voting and
are approved in writing by the Developer. Notice of any modification or
amendment to the Design Criteria, including a verbatim copy of such change or
modification shall be delivered to each member of the Association; provided
that, the delivery to each member of the Association of notice and a copy of
any modification or amendment to the Design Criteria shall not constitute a
condition precedent to the effectiveness or validity of such change or
modification.
(B) To require submission to the ARC of at least three (3) complete sets
of all plans and specification for any Improvement, the construction or
placement of which is proposed upon any Lot. The ARC may also require
submission of samples of building materials and colors proposed for use on any
Lot, and may require such additional information as reasonably may be necessary
for the ARC to evaluate completely the proposed Improvement in accordance with
this Declaration and the Design Criteria. Reviews shall be coordinated with
any required City and County approvals or approvals of other governing bodies.
(C) To approve or disapprove any Improvement or change or modification
thereto, the construction, erection, performance or placement of which is
proposed upon any Lot and to approve or disapprove any exterior additions,
changes, modifications, or alterations therein or thereon. All decisions of
the ARC shall be submitted in writing to the Owner and the Board, and evidence
thereof may, but need not, be made by a certificate, in recordable form,
executed under seal by the President or any Vice President of the Association.
Any party aggrieved by a decision of the ARC shall have the right to make a
written request to the Board, within thirty (30) days of such decision, for a
review thereof. The determination of the Board upon reviewing any such
decision shall in all events be final and dispositive upon all parties.
(D) If any Improvement is changed, modified or altered without prior
approval of the ARC, then the Owner shall upon demand cause the Improvements to
be restored and to comply with the plans and specifications originally approved
by the ARC and shall bear all costs and expenses of such restoration, including
the costs and reasonable attorney's fees of the ARC.
(E) To adopt a schedule of reasonable fees for processing requests for ARC
approval of proposed Improvements. Such fees, if any, shall be payable to the
Association in cash, at the time that plans and specifications are submitted to
the ARC. In the event such fees, as well as any other costs or expenses of the
ARC pursuant to any other provisions of this
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Article are not paid by the Owner, they shall become a lien of the Association
on the Lot, pursuant to Article 8.9 hereof.
(F) To retain professional advisors such as attorneys and architects as
may be necessary in the exercise of its powers.
(G) To perform such incidental acts as may be necessary in the exercise of
its powers.
Section 4.4 Liability. Neither the ARC nor Developer or their respective
successors or assigns shall be liable in damages to anyone submitting plans to
them for approval, or to any Owner affected by this Declaration, by reason of
mistake in judgment, negligence or nonfeasance arising out of or in connection
with the approval, disapproval or failure to approve any such plans and
specifications. Every person or entity who submits plans to the ARC for
approval agrees, by submission of such plans and specifications, and every
Owner or tenant of any Lot agrees, by acquiring title thereto or an interest
therein, that he will not bring any action or suit against the ARC or Developer
to recover any such damages.
Section 4.5 Limitation of Action. Notwithstanding anything to the
contrary herein contained, after the expiration of one (1) year from the
completion of any Improvement, (evidenced by issuance of a Certificate of
Occupancy by the appropriate governing agency) said Improvement shall, in favor
of purchasers and encumbrances, in good faith and for value, be deemed to be in
compliance with all provisions of this Article, unless actual notice of such
noncompliance or noncompletion, executed by the Association, shall appear of
record in the Public Records of Mecklenburg County, North Carolina, or unless
legal proceedings shall have been instituted to enforce compliance or
completion.
ARTICLE V
REGULATION OF IMPROVEMENTS
Section 5.1 General. No Improvement shall be commenced, erected,
constructed, altered, or maintained upon any Lot, nor shall any change or
alteration thereon or thereof be made, nor any subdivision, plat or replat be
made unless and until the plans, specifications and location shall have been
submitted to and approved in writing by the ARC as more fully set forth in
Article IV of this Declaration.
Section 5.2 Minimum Setback/Landscape Buffer Lines. No structure of any
kind, and no part thereof shall be placed on any site closer to a property line
than herein provided, unless specifically approved, in writing, by the ARC.
Preliminary guidelines are as illustrated in the following table:
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<TABLE>
<CAPTION>
Set Backs For Buildings Facing:
Front Side Rear
<S> <C> <C> <C>
Westinghouse Boulevard 80' 30' 60'
Steele Creek Road 80' 30' 60'
Quality Drive 80' 30' 60'
Withers Cove Park Drive 80' 30' 60'
Cul-de-sac Rail Lots 80' 30' rail spur
Where Westinghouse Blvd., Quality Dr.
or WC Park Dr. in the side yard - 40' 60'
Corner Lots with Bldg. facing corner 80' 40' 60'
Parking Set Backs for Buildings Facing:
Front Side Rear
Westinghouse Boulevard 40' 10' 10'
Steele Creek Road 40' 10' 10'
Quality Drive 30' 10' 10'
Withers Cove Park Drive 30' 10' 10'
Cul-de-sac Rail Lots 30' 10' 10'
Where Westinghouse Blvd., Quality Dr.
or WC Park Dr. is the side yard - 30' 10'
Corner Lots with Bldg. facing corner 40' 30' 10'
</TABLE>
Section 5.3 Compliance. Each Owner shall comply in all respects with
local laws issued by Mecklenburg County, North Carolina, or other applicable
governing agency.
Section 5.4 Excavation and Site Grading. No excavation shall be made
except in connection with construction of an Improvement, and upon completion
thereof, exposed openings shall be backfilled, graded, and leveled. Site
grading shall be subject to the approval of the ARC and shall be in conformance
with the Design Criteria.
Section 5.5 Site Furniture. Site furniture and mechanical equipment
visible from a street shall be considered as landscape elements, and all site
furniture, including exterior lighting fixtures, shall be subject to the
approval of the ARC as elsewhere herein provided, and in conformance with the
Design Criteria.
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Section 5.6 Curb Cuts. It is intended that curb cuts be minimized and
designed in accordance with the Design Criteria.
Section 5.7 Off-Street Parking. No parking shall be permitted on any
street, lawn, median strip, public walkway, swale, berm or other unpaved area
or at any place other than on the paved parking spaces. Each Owner and tenant
shall be responsible for compliance with the foregoing by his employees and
visitors. Off-street parking shall be provided by each Owner and tenant for
customers and visitors. The location, number and size of parking spaces shall
be in accordance with the Design Criteria, subject to approval by the ARC
pursuant to Article IV hereof. All off-street parking, access drives and
loading areas shall be paved and properly graded to assure proper drainage.
Proper visual screening, trees, earth mounding and other landscaping must be
provided between any parking lot and any street. If parking requirements
increase as a result of the change in the number of employees, additional
off-street parking shall be provided to satisfy the intent of this Article. If
governmental zoning requirements shall ever exceed the above minimum standards,
then such zoning requirements shall become the minimum standards.
Section 5.8 Loading, Service and Outside Storage. Each Lot shall provide
sufficient on-site loading facilities to accommodate site activities. All
loading movement, including turnarounds, shall be made off of the public
right-of-way. Loading docks shall be located and screened so as to minimize
their visibility from any street or other right-of-way. Screening of service
areas, loading docks and so forth may consist of any approved combination of
earth mounding, landscaping, walls and/or fencing.
Section 5.9 Mechanical Equipment. All roof-top mechanical equipment
shall be screened from the view of adjacent streets and buildings with material
compatible with the building architecture or by the use of a parapet wall.
Ground-mounted equipment such as power transformers and air conditioning
equipment shall be screened from public view by fencing or landscaping, all of
which shall be approved in writing by the ARC with its approval of the Plans.
Section 5.10 Hazardous Materials. The storage of hazardous materials
shall be permitted only in strict accordance with any applicable law,
ordinance, rule or regulation and any hazardous waste management plans adopted
by government having legal jurisdiction over the Property or as may be prepared
by the Developer for the Property in addition to all statutes, rules,
regulations or ordinances applicable thereto.
Section 5.11 Landscaping.
(A) All Lots shall be landscaped in accordance with the Design Criteria
and approved in writing by the ARC prior to any development of the building
site. Such landscaping plan shall include information regarding the type of
sodding, the type of seeding, the types of trees, hedges and shrubs and
information regarding other customary landscape treatment for the entire site,
including fences, walls and screening. All landscaping plans shall also
include an underground lawn sprinkling system. All landscaping shall be
undertaken, completed and maintained in accordance with such approved plan and
said plan may not be altered, amended or revised without submitting the revised
landscaping plan for prior written approval by the ARC.
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(B) All landscaping required hereunder or otherwise to be provided on any
Lots shall be completed within sixty (60) days after the substantial completion
of construction of any buildings to be constructed on the Lot; provided,
however, if weather conditions do not at such time permit, then such
landscaping shall be completed as soon thereafter as weather conditions permit.
If any Owner fails to undertake and complete his landscaping within the time
limit previously set forth herein, the Developer, his agents or the Association
may, at its option, after giving the Owner ten (10) days written notice
forwarded to Owner, undertake and complete the landscaping of the building site
in accordance with the landscaping plan. If Developer undertakes and completes
such landscaping because of the failure of Owner to complete the same, the
costs of such landscaping shall be assessed against the Owner, and if said
assessment is not paid within thirty (30) days after written notice of such
assessment from Developer, said assessment will constitute a lien on the Lots
and may be enforced as set forth in Article VIII hereof.
Section 5.12 Underground Utilities. All utility connections, including
all gas docks, propane tanks, electrical and telephone connections and
installations of wires to buildings shall be designed and installed in
accordance with the Design Criteria. Except as hereinafter specified, no pipe,
conduit, cable or line for water, gas, sewage, drainage, steam, electricity or
any other energy or service shall be installed or maintained (outside of any
building) by any Owner above the surface of the ground. Notwithstanding the
foregoing, Developer, but no other Owner, may grant easements for and cause
temporary and permanent overhead electricity lines and supporting structures to
be installed on the Property solely for the purpose of providing service to
same.
Section 5.13 Height Restrictions. No building or appurtenance including,
but not limited to, water towers, standpipes, penthouses, elevators or elevator
equipment, stairways, ventilating fans or similar equipment required to operate
and maintain any building, fire or parapet walls, skylights, tanks, cooling or
other towers, wireless radio or television masts, or flagpoles shall exceed any
height restrictions by any governing municipal or regulatory agencies and the
Design Criteria.
Section 5.14 Completion of the Construction. After commencement of
construction of any structure, the Owner shall diligently prosecute the work
thereon, to the end that the structure shall not remain in a partly finished
condition any longer than reasonably necessary for completion thereof.
Section 5.15 Signs.
(A) All signs and displays, both permanent and temporary, including
without limitation "for sale" or "for lease" signs, shall have the prior
written approval of the ARC as to size, color, location and content and shall
be in conformance with the Design Criteria and any applicable laws and
ordinances.
(B) The naming of a building shall be at the discretion of the Developer.
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(C) The Developer may erect a sign or signs identifying, describing or
advertising the Park or any of its available buildings or land.
(D) Parking of trucks, vans, campers or any other vehicle or movable
objects having sides which identify the business with signs, insignias or logos
will not be permitted in the front of the building for any extended period.
(E) During the construction of a building, signs identifying the Owner,
architect, general contractor, construction lender and the like shall be
permitted as described in the Design Criteria.
Section 5.16 Exterior and Interior Lighting. No exterior lighting of any
nature shall be installed or operated without the prior written approval of the
ARC. Exterior lighting on all lots shall be limited to signs and security and
safety illumination of streets or roadways, parking lots, access drives and
walks, building entrances, loading areas and service areas and exterior
lighting of overall building surfaces. All interior and exterior lighting must
be arranged or shielded so as to avoid excessive glare or reflection onto any
portion of any adjacent street or into the path of oncoming vehicles or onto
any adjacent property. No flashing, traveling, animated or intermittent
lighting shall be visible from the exterior of any building. Pole mounted
exterior fixtures shall be limited to a maximum height of thirty (30) feet, or
in compliance with the governing municipal and regulatory authorities and the
Design Criteria.
Section 5.17 Irrigation. Automatic irrigation systems shall be required
and shall be designed and installed in accordance with the Design Criteria.
Irrigation water shall be pumped from lakes, wells or a public water source.
Should on-site wells be used in place of lakes or a public water source, wells
shall be dug to a depth free of iron-staining deposits to prevent water
staining of walks and buildings through irrigation sprays. Wells shall also
contain de-rusting equipment as approved by the ARC.
Section 5.18 Antennae. No antennae or satellite dishes for receipt or
transmission of television signals or any other form of electromagnetic
radiation shall be erected, used or maintained on any Site except if approved
by the ARC.
ARTICLE VI
MAINTENANCE
Section 6.1 Maintenance Responsibilities. Owners and Occupants of any
Lot shall, jointly and severally, have the duty and responsibility, at their
sole cost and expense, to keep that part of the Park so owned or occupied,
including buildings, Improvements, and grounds (whether or not located in a
public right of way) in connection therewith, in a well maintained, safe, clean
and attractive condition at all times. Such maintenance includes, but is not
limited to, the following:
(A) Removing promptly all litter, trash, refuse and wastes;
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(B) Mowing of lawn no less often than when the grass is more than
five (5) inches high; if the Lot is unimproved, weeds must be cut
below twenty-four (24) inches and grass within the landscaped buffer
easement as well as in the right of way abutting the front of the
Lot must be maintained to a height of no more than five (5) inches;
(C) Pruning of trees and shrubbery except those trees and shrubs
planted by Developer and maintained by the Association;
(D) Watering and fertilizing;
(E) Keeping exterior lighting, signs, and mechanical facilities
in working order except street lighting maintained by the
Association;
(F) Keeping lawn and landscaped areas alive, mowed, free of weeds
and attractive, including areas in public rights of way abutting the
Lot;
(G) Keeping parking areas, driveways and roads in good repair;
(H) Complying with all governmental, health, police and fire
requirements, statutes and regulations;
(I) Striping and sealing of parking and driveway areas;
(J) During construction, it shall be the responsibility of each
Owner to insure that construction sites are kept free of unsightly
accumulations of rubbish and scrap materials, and that construction
materials, trailers, shacks and the like are kept in a neat and
orderly manner;
(K) Keeping all site irrigation and drainage systems in good
repair and working order;
(L) Repairing buildings and Improvements so that no building or
other Improvement falls into disrepair and each Improvement shall at
all times be kept in good condition and repair and adequately
painted or otherwise finished in accordance with the plans and
specifications; and
(M) Painting of all exterior painted surfaces shall be done at
least every five (5) years, unless a waiver is obtained from the
ARC.
Section 6.2 Enforcement. If, in the opinion of the Developer and/or the
Association, any such Owner or Occupant has failed in any of the foregoing
duties or responsibilities, then the Developer and/or the Association may give
such person written notice of such failure and such person must within ten (10)
days after receiving such notice, perform the care and maintenance required.
Should any such person fail to fulfill this duty and responsibility within such
period, then the Developer and/or the Association, through its authorized
agents, shall have the right and power to enter onto the premises and perform
such care and maintenance without any liability for damages for wrongful entry,
trespass or otherwise to any person. The Owners and Occupants for
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which such work is performed shall jointly and severally be liable for the cost
of such work and shall promptly reimburse the Developer and/or the Association
for such cost. If such Owner or Occupant shall fail to reimburse the Developer
and/or the Association within thirty (30) days after receipt of a statement for
such work from the Developer and/or the Association, then said indebtedness
shall be a debt of all of said persons jointly and severally, and shall
constitute a lien against the Lot on which said work was performed. Such lien
shall have the same attributes as the lien for assessments and special
assessments set forth in Article VIII and the Developer and/or the Association
shall have identical powers and rights in all respects including, but not
limited to, the right of foreclosure.
Section 6.3 Landscape Buffer Easement. Any Owner having property
fronting on major thoroughfares, secondary roadways, or other accessways shall
grant through this Declaration a twenty (20) foot landscape easement across the
setback fronting such roadways in addition to any area within the public right
of way. These landscape setbacks fronting the roadways may be maintained by
the Association at its election. Should the Association elect to maintain this
landscaping, the cost of this landscape maintenance shall be a part of the
overall Association annual assessment budget.
Section 6.4 Access at Reasonable Hours. For the purpose of performing
the maintenance authorized by this Article, the Association, through its duly
authorized agents or employees, shall have the right, after reasonable notice
to the Owner, to enter upon any Lot, Property or the exterior of any
Improvements thereon at reasonable hours.
ARTICLE VII
PROPERTY RIGHTS
Section 7.1 Owners' Easements of Enjoyment. Every Owner shall have a
right and easement of enjoyment in and to the Common Area which shall be
appurtenant to and shall pass with the title to each Lot, subject to the
following:
(A) The right of the Association to take such steps as are
reasonably necessary to protect the Common Area against foreclosure;
(B) All provisions of this Declaration, and plat of all or any
part or parts of the Property, and the Articles and By-Laws of the
Association;
(C) Rules and regulations governing use and enjoyment of the
Common Area adopted by the Association; and
(D) Restrictions contained on any and all plats of all or any
part of the Common Area or filed separately with respect to all or
any part or parts of the Property.
Section 7.2 Permitted Operations and Uses. These include office,
warehousing, light manufacturing, research and development, and business, of a
kindred nature including accessory or directly related services in compliance
with all ordinances of Mecklenburg County, and other
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governmental entities. Unless otherwise specifically prohibited by the
governing municipal and regulatory agencies, the Design Criteria or this
Declaration, any operation and use, as described above, will be permitted if it
is performed or carried out entirely within a building that is so designed and
constructed that the enclosed operations and uses do not cause or produce a
nuisance to adjacent sites such as, but not limited to, vibration, sound,
electromechanical disturbance, radiation, air or water pollution, dust or
emission of odorous, toxic or non-toxic matter. Further, no illegal, noxious
or offensive trade, service or activity shall be permitted.
Section 7.3 Delegation of Use. Subject to such limitations as may be
imposed by the By-Laws, each Owner may delegate his right of enjoyment in and
to the Common Area and facilities to its tenants and invitees.
Section 7.4 Other Easements.
(A) Ten (10) foot easements along every property line of each lot for
installation and maintenance of utilities and drainage facilities are hereby
reserved by Developer. Within these easements, no structure, planting, or
other material shall be placed or permitted to remain which may damage or
interfere with the installation and maintenance of utilities, or which may
damage, interfere with, or change the direction of flow of drainage facilities
in the easements. The easement area of each Lot and any Improvements therein
shall be continuously maintained by the Owner, except for Improvements which
are the responsibility of a public authority or utility company.
(B) No permanent Improvement of any kind other than surface parking areas
shall be built, erected, or maintained on any such easement, reservation, or
right-of-way, and such easements, reservations, and rights-of-way shall at all
times be open and accessible to public and quasi-public utility corporations,
their employees and contractors, and shall also be open and accessible to
Developer all of whom shall have the right and privilege of doing whatever may
be necessary in, on, under, and above such locations to carry out any of the
purposes for which such easements, reservations, and rights-of-way are
reserved.
Section 7.5 Right of Entry. The Association, through its duly authorized
employees and contractors, shall have the right after reasonable notice to the
Owner thereof, to enter any Lot or other Property subject to this Declaration
at any reasonable hour on any day to perform such inspection and/or maintenance
as may be authorized herein.
Section 7.6 No Partition. There shall be no judicial partition of the
Common Area, nor shall Developer, or any Owner or any other person acquiring
any interest in the Park or any part thereof, seek judicial partition thereof.
ARTICLE VIII
MAINTENANCE ASSESSMENTS
Section 8.1 Creation of the Lien and Personal Obligation of Assessments.
Each Owner, (by acceptance of a deed for a Lot, whether or not it shall be so
expressed in any such deed or other conveyance) including any purchaser at a
judicial sale, shall be deemed to covenant and
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agree to pay to the Association any annual assessments or charges, and any
special assessments to be fixed, established and collected from time to time as
hereinafter provided. All such assessments, together with interest thereon,
and costs of collection thereof, as set forth in Section 8.9, shall be a charge
on the Lot(s) and shall be a continuing lien upon the Lot(s) against which each
such assessment is made, and shall also be the personal obligation of the
Owner. No Owner of a Lot may waive or otherwise escape liability for the
assessments provided for herein by non-use of the Common Area or by
abandonment. No portion of any Property which does not constitute a Lot will
be liable for any annual or special assessment under this Section.
Section 8.2 Purpose of Assessments. The annual and special assessments
levied by the Association shall be used exclusively for the purpose of
promoting the health, beauty, safety, security and welfare of the Owners and in
particular for the improvements and maintenance of the Common Areas and of any
easement in favor of the Association and maintenance and beautification of
public rights-of-way if not maintained by a public body, including, but not
limited to, the cost of taxes, insurance, labor, equipment, materials,
management, maintenance and supervision thereof, as well as for such other
purposes as are permissible activities of, and undertaken by, the Association.
Section 8.3 Annual Assessments. Except as hereinafter provided, the
annual assessment, excluding any special assessment, shall be set by a majority
vote of the Board. The amount of the annual assessment shall be determined by
the Board in accordance with the projected financial needs of the Association.
The decision of the Board as to such amount shall be final.
Section 8.4 Special Assessments. In addition to any annual assessments,
the Association may levy in any assessment year a special assessment,
applicable to that year only, for the purpose of defraying, in whole or in
part, the cost of any construction, reconstruction, unexpected repair or
replacement of a capital improvement as approved by the Board, including the
necessary fixtures and personal property related thereto, or to make up the
difference between actual operating costs and the annual assessment provided
that any such assessment shall have the assent of a majority of the Owners who
are voting in person at a meeting duly called for this purpose, written notice
of which shall be sent to all Owners at least five (5) days but not more than
thirty (30) days in advance and shall set forth the purpose of the meeting.
Section 8.5 Uniform Rate of Assessment. All regular and special
assessments shall be at a uniform rate for each acre in the Association
exclusive of Common Areas.
Section 8.6 Date of Commencement of Annual Assessments; Due Date. The
assessments for which provision is herein made shall commence on January 1,
1992, and continue thereafter on a calendar year basis. The due date of any
assessment shall be fixed in the resolution authorizing such assessments, and
any such assessments shall be payable in advance in quarterly, semi-annual, or
annual installments, as determined by the Board.
Section 8.7 Duties of the Board of Directors. At least thirty (30) days
prior to January 1 of each year, the Board shall determine the amount of the
assessment against each Lot. In addition, at such time the Board shall prepare
a roster of the Lots and assessments applicable thereto which shall be kept in
the office of the Association and shall be open to inspection by an
13
<PAGE> 62
owner. Written notice of the assessment shall be sent to every Owner subject
thereto not later than thirty (30) days prior to January 1 of each year. The
Association shall upon demand furnish to any Owner liable for said assessment a
certificate in writing signed by an officer of the Association, setting forth
whether said assessment has been paid.
Section 8.8 Repair Assessment. If in the process of construction upon
any Lot in the making of any Improvement, the Owner, its employees, agents or
independent contractors cause damage to any other Lot, Improvement, Common
Area, dedicated roads or to any other property owned by someone else within the
Park, the Owner shall be responsible for such damage. If the Association,
either voluntarily or involuntarily, makes repairs or otherwise cures the
damage caused by the Owner, its employees, agents or independent contractor,
the Owner shall be obligated to reimburse the Association for all expenses the
Association incurred in curing the damage. Such amount shall be treated as a
special assessment and the Association shall have all rights and powers as
provided in this Article.
Section 8.9 Effect of Non-Payment of Assessment: The Lien, the Personal
Obligation, Remedies of Association. If the assessment is not paid within
thirty (30) days after the due date, which shall be set by the Board, the
assessment shall bear interest from the date due at the rate of fifteen (15%)
percent per annum. The lien of the Association upon a Lot shall be effective
from and after recording, in the Public Records of Mecklenburg County, North
Carolina, a claim of lien stating the description of the Lot encumbered
thereby, the name of the Owner, the amount and the date when due. Such claim
of lien shall include not only assessments which are due and payable when the
claim of lien is recorded, plus interest, costs, attorney's fees, advances to
pay taxes and prior encumbrances and interest thereon, but also such claim of
lien shall include such additional assessments which accrue from the due date
until the entry of a judgment in favor of the Association with respect to such
lien. Such claims of lien shall be signed and verified by an officer or agent
of the Association. Upon full payment of all sums secured by such claim of
lien, the same shall be satisfied of record. If the claim of lien is not
satisfied, the Association may at any time thereafter bring an action to
foreclose the lien against the Lot(s) in like manner as a foreclosure of a
mortgage on real property, and/or a suit on the personal obligation against the
Owner(s), and there shall be added to the amount of such assessment the cost of
preparing and filing the complaint in such action including a reasonable
attorney's fee, and in the event a judgment is obtained, such judgment shall
include interest on the assessment as above provided and a reasonable
attorney's fee to be fixed by the Court, together with the cost of the action.
Section 8.10 Subordination to Lien of Mortgages. The lien of the
assessments for which provision is herein made, as well as in any other Article
of this Declaration, shall be subordinate to the lien of any mortgage to a
federal or state chartered bank, life insurance company, federal or state
savings and loan association, real estate investment trust, retirement fund or
institutional mortgage company. Such subordination shall apply only to the
assessments which have become due and payable prior to a sale or transfer of
such Lot pursuant to a decree of foreclosure of such mortgage or pursuant to a
Deed or transfer in lieu of foreclosure. No sale or other transfer shall
relieve any Lot from liability for any assessment thereafter becoming due, nor
from the lien of any such subsequent assessment. The written opinion of either
the Developer or the Association that the lien is subordinate to a mortgage
shall be dispositive of any questions of subordination.
14
<PAGE> 63
Section 8.11 Exempt Property. The Board shall have the right to exempt
any Lot subject to this Declaration from the assessments, charge and lien
created herein provided that such part of the Property exempted is used (and as
long as it is used) for any of the following purposes:
(A) As an easement or other interest therein dedicated and accepted by the
local public authority and devoted to public use;
(B) As Common Area as defined in Section 2.4 hereof; and
(C) As Property exempted from ad valorem taxation by the laws of the State
of North Carolina, to the extent agreed to by the Association.
Notwithstanding any provision herein, no Lot devoted to light industrial,
research, office park or related use or commercial use shall be exempt from
said assessment, charges or lien.
ARTICLE IX
REPURCHASE RIGHTS OF DEVELOPER
Section 9.1 Right to Repurchase if No Construction. If, after one (1)
year from the date of a sale of any Lot within the Park, any Owner shall not
have begun in good faith the construction of an accepted and approved building
upon such site, the Developer, at his option, may require the Owner to reconvey
the Lot to the Developer, free and clear of all encumbrances except this
Declaration. The repurchase price shall be the price paid by the Owner for the
Lot, when purchased from the Developer less any unpaid balances of any liens,
mortgages or encumbrances owed the Developer or the Association. The Developer
shall give thirty (30) days written notice of intent to repurchase. In the
event the Owner refuses or fails to reconvey the Lot, the Developer may seek
specific performance of this covenant by filing an action in a court of
competent jurisdiction. The Developer may also recover its court costs and
reasonable attorney fees in enforcing this provision.
Section 9.2 Developer's Right of First Refusal on Transfer of Unimproved
Lots. In addition to the Developer's rights under Section 9.1, and regardless
of the length of time of ownership of the Lot, no Lot or interest therein, upon
which a building has not been constructed shall be sold or transferred unless
and until the Owner of such Lot shall have first offered to sell such Lot to
Developer and Developer has waived, in writing, its right to repurchase said
Lot. This is to be accomplished in the following manner:
(A) Any Owner to make a bona fide sale of his Lot or other Property or any
interest therein shall give to the Developer notice of such intention, together
with a fully executed copy of the proposed contract of sale (the "Proposed
Contract"). Within thirty (30) days of receipt of such notice and information,
Developer shall either exercise, or waive exercise of, its right of first
refusal. If Developer elects to exercise its right of first refusal, it shall,
within thirty (30) days after receipt of such notice and information, deliver
to the Owner an agreement to purchase the Lot or Property upon the following
terms:
15
<PAGE> 64
(1) The price to be paid and the terms of payment shall be that
stated in the Proposed Contract; and
(2) The sale shall be closed within thirty (30) days after the
delivery or making of said agreement to purchase.
If the Developer shall fail to exercise or waive exercise of its right of first
refusal within the said thirty (30) days of receipt of the Proposed Contract,
Developer's right of first refusal shall be deemed to have been waived and
Developer shall furnish a certificate of waiver as herein provided in
subsection (B).
(B) If the Developer shall elect to waive its right of first refusal, or
shall fail to exercise said right within thirty (30) days of receipt of the
Proposed contract, the Developer's waiver shall be evidenced by a certificate
executed by the Developer in recordable form which shall be delivered to the
Proposed Contract purchaser and may be recorded by the Owner in the Public
Records of Mecklenburg County, North Carolina.
(C) This Section shall not apply to any transfer to or sale by any
national or state bank, life insurance company, federal or state savings and
loan association, real estate investment trust, retirement fund or
institutional mortgage company which acquires its title as a result of owning a
mortgage upon the Lot concerned, and this shall be so whether the title is
acquired by deed from the mortgagor or its successors in title or through
foreclosure proceedings. This Section shall also not apply to any sale by any
such institution which so acquires title. Neither shall this Section require
the waiver by the Developer as to any transfer of title to a Lot at a duly
advertised public sale with open bidding which is provided by law such as, but
not limited to, execution sale, foreclosure sale, judicial sale or tax sale or
any Lot upon which a building has been constructed and for which certificate of
occupancy has been issued therefor.
ARTICLE X
DEVELOPER'S RESERVED RIGHTS TO PROPERTY
Section 10.1 Extension of Covenants and Restrictions to Include
Additional Property. The Developer may, at any time, make subject to this
Declaration other properties now or hereafter owned by the Developer by
executing an instrument in writing applying this Declaration to such other
properties and by recording the instrument in the Public Records of Mecklenburg
County, North Carolina.
Section 10.2 Withdrawal of Land. Developer may, but shall have no
obligation to, withdraw at any time or from time to time portions of the land
described in Exhibit "A" provided only that the withdrawal of lands as
aforesaid shall not, without the joinder or consent of a majority of the
members of the Association, materially increase the prorata share of expenses
of the Association payable by the Owners remaining subject hereto after such
withdrawal. The withdrawal of lands as aforesaid shall be made and evidenced
by filing in the Public Records of Mecklenburg County, North Carolina, a
supplementary Declaration with respect to the lands to be withdrawn. Developer
reserves the right to so amend and supplement this Declaration
16
<PAGE> 65
without the consent or joinder of the Association or of any Owner and/or
mortgagee of land in the Park.
Section 10.3 Platting and Subdivision Restrictions. The Developer shall
be entitled at any time and from time to time, to plat and/or replat all or any
part of the Property, and to file subdivision restrictions and/or amendments
thereto with respect to any undeveloped portion or portions of the Property.
Section 10.4 Public Roads - Easements. The Developer reserves the right
from time to time hereafter to delineate, plat, grant or reserve within the
remainder of the Park not previously conveyed such public streets, roads,
sidewalks, ways and appurtenances thereto, and such easements for drainage and
public utilities, as it may deem necessary or desirable for the development of
the Park (and from time to time to change the location of the same) free and
clear of this Declaration and to dedicate the same to public use or to grant
the same to any governing municipal or regulatory authority, including any
appropriate public utility corporations.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Term. This Declaration, every provision hereof and every
covenant, condition, restriction and reservation contained herein shall
continue in full force and effect for a period of thirty (30) years from the
date hereof, and shall thereafter be renewed automatically for successive five
(5) year periods unless and until terminated as provided in Section 11.2
hereof.
Section 11.2 Termination and Modification. This Declaration, or any
provision hereof, or any covenant, condition or standard contained herein, may
be terminated, extended, modified or amended, as to the whole of said property
or any portion thereof, with the written consent of the Owners of sixty-six and
two-thirds (66 2/3%) percent of the Property then subject to this Declaration
(excluding mortgagees and the holders of other security devices who are not in
possession and lessees) based on the number of acres owned as compared to the
total number of acres subject to this Declaration (excluding the Common Areas);
provided, however, that so long as Developer owns any part/portion of the
Property subject to this Declaration, no such termination, extension,
modification or amendment shall be effective without the written approval of
Developer. No such termination, extension, modification or amendment shall be
effective until a proper instrument in writing has been executed and
acknowledged and recorded in the Public Records of Mecklenburg County, North
Carolina. No such termination, extension, modification or amendment shall
affect any plans, specifications or use previously approved by Developer or the
ARC under Article IV hereof or any improvements theretofore or thereafter made
pursuant to such approval.
Section 11.3 Assignment of Developer's Rights and Duties. Any and all of
the rights, power and reservations of the Developer herein contained may be
assigned to any person, corporation or association which will assume the duties
of the Developer pertaining to the particular rights, powers and reservations
assigned, and upon any such person, corporation or association evidencing its
consent in writing to accept such assignment and assume such duties,
17
<PAGE> 66
he or it shall, to the extent of such assignment, have the same rights and
powers and be subject to the same obligations and duties as are given to and
assumed by Developer herein. If at any time the Developer ceases to exist and
has not made such an assignment, a successor Developer may be appointed in the
same manner as this Declaration may be terminated, extended, modified or
amended. The Developer may from time to time delegate any or all of its
rights, powers, discretion and duties hereunder to such agents as it may
nominate. Any such assignment shall be in writing and recorded in the Public
Records of Mecklenburg County, North Carolina. Such assignee shall thereupon
have the same rights, title, powers, obligations, discretion and duties as are
herein reserved to the Developer and the Developer shall automatically be
released from such responsibility.
Section 11.4 Mutuality, Reciprocity; Runs with Land. All covenants,
restrictions, conditions and agreements contained herein are made for the
direct, mutual and reciprocal benefit of each and every Lot and other Property
in favor of every other Lot and other Property; shall create reciprocal rights
and obligations between all grantees of said Lot and other Property, their
heirs, successors, personal representatives and assigns; and, shall, as to the
Owner of each Lot, his heirs, successors, personal representatives and assigns,
operate as a covenant running with the land for the benefit of all other Lots.
The terms and provisions contained in this Declaration shall bind and inure to
the benefit of the Developer, each Owners of additional property made subject
to this Declaration and their respective heirs, successors, personal
representatives and assigns.
Section 11.5 Notices. Any notice required or permitted herein shall be
in writing and mailed, postage prepaid by registered or certified mail, return
receipt requested and shall be directed as follows: If intended for a Lot Owner
(A) to the address of the building Lot if improved; (B) if the Lot is not
improved, to the address set forth in the purchase contract or purchase
contract application; or (C) if none of the foregoing, to the last known
address of the Owner. If intended for Developer, to the address as set forth
below:
6060 St. Albans Street
Charlotte, North Carolina 28287
Section 11.6 Singular and Plural. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context requires.
Section 11.7 Failure to Enforce Not a Waiver of Rights. Any waiver or
failure to enforce any provision of this Declaration in a particular situation
shall not be deemed a waiver or abandonment of such provision as it may apply
in any other situation or to the same or a similar situation at any other
location in the Park or of any other provision of this Declaration.
Section 11.8 Condominium. No restriction contained herein shall be
construed to limit or prevent a Lot and the Improvements thereon from being
submitted to a plan of condominium ownership and particularly the recordation
of a plan of condominium ownership for any Lot shall not be construed as
constituting a subdivision of the Lot.
18
<PAGE> 67
Section 11.9 Constructive Notice and Acceptance. Every person who now or
hereafter owns or acquires any right, title or interest in or to any portion of
said property is and shall be conclusively deemed to have consented and agreed
to every covenant, condition and restriction contained in the instrument by
which such person acquired an interest in said Property.
Section 11.10 Severabilily. All of the conditions, covenants,
restrictions and reservations contained in this Declaration shall be construed
together, but if it shall at any time be held that any one of said conditions,
covenants, restrictions and reservations, or any part thereof is invalid, or
for any reason becomes unenforceable, no other conditions, covenants,
restrictions and reservations or any part thereof shall be thereby affected or
impaired.
Section 11.11 Captions. The captions, section numbers and article
numbers appearing in this Declaration are inserted only as a matter of
convenience and in no way define, limit, construe or describe the scope or
intent of such sections or articles, nor in any way modify or affect this
Declaration.
IN WITNESS WHEREOF, the Developer has caused these presents to be executed
as required by law on the day and year first above written.
Attest: Withers Cove Associates
Limited Partnership
By: /s/ Virgil H. White
------------------- By: Queens Properties, Inc.
Its General Partner
Secretary
-------------------
(Corporate Seal) By: /s/ Richard M. Porter
---------------------
President
---------
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, Maryann McGarity, a Notary Public of the County and State aforesaid,
certify that Virgil H. White personally came before me this day and
acknowledged that he is ________ Secretary of Queens Properties, Inc., a North
Carolina corporation, and that by authority duly given and as the act of the
corporation as managing General Partner of Withers Cove Associates Limited
Partnership, the foregoing instrument was signed in its name by its ________
President, sealed with its corporate seal and attested by him as its
___________ Secretary.
19
<PAGE> 68
WITNESS my hand and official stamp or seal, this 6th day of February, 1991.
/s/ Maryann McGarity
---------------------------
Notary Public
My commission expires:
My Commission Expires October 27, 1992
(SEAL)
20
<PAGE> 69
BK: 06459 PG: 0348/ 35 #:0039 12.00
REGISTERED FEB/21/1991 09:37 AM ANNE A. POWERS REGISTER OF DEEDS MECK. CO. N.C.
Drawn by and mail to:
Moore & Van Allen (MAD)
3000 NCNB Plaza
Charlotte, NC 28280
STATE OF NORTH CAROLINA
ADDENDUM TO PROTECTIVE COVENANTS
COUNTY OF MECKLENBURG FOR WITHERS COVE BUSINESS PARK
THIS FIRST ADDENDUM is made as of the 12th day of February, 1991 by First
Westinghouse Equities Corporation, a Delaware corporation ("Grantor"), for and
on behalf of itself and its successors and assigns:
W I T N E S S E T H:
WHEREAS, Grantor sold to Withers Cove Associates Limited Partnership, a
Delaware limited partnership ("Developer"), certain property in Mecklenburg
County, North Carolina which is now encumbered by the Protective Covenants for
Withers Cove Business Park, recorded in Book 6453, Page 318, Mecklenburg County
Registry (the "Declaration"); and
WHEREAS the Declaration provides that the Developer may add additional
property to this Declaration; and
WHEREAS, Grantor contemplated the development of a business park on the
property sold to Developer; and
WHEREAS, Grantor now desires to subject a portion of its remaining
property to the easements, covenants, conditions and restrictions of the
Declaration.
NOW, THEREFORE, Grantor, for and in consideration of the benefits accruing
under the Declaration to its land and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, hereby desires to
subject and does subject the property described on Exhibit A attached hereto
and incorporated herein by reference (the "New Property") to all the easements,
covenants, conditions and restrictions under the Declaration and to all the
benefits and privileges granted thereunder; provided, however, that the New
Property will not be subject to the assessments required in Article VIII of the
Declaration until such time as the New Property or any party thereof is owned
by Developer. Grantor further covenants and agrees that:
1. The New Property shall be added to Withers Cove Business Park
and shall be forever subject and subordinate to the Declaration.
2. Any succeeding owner of the New Property, or any part
thereof, shall be entitled to all benefits granted unto
<PAGE> 70
CONSENT OF DEVELOPER
Withers Cove Associates Limited Partnership, a Delaware limited
partnership, hereby consents, if any such consent is required, to the addition
of the New Property to the privileges and controls of the Declaration and
consents to the non-accessibility of the New Property.
IN WITNESS WHEREOF, Grantor has executed this instrument under seal by
duly authorized officers as of the 6th day of February, 1991.
WITHERS COVE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: Queens Properties, Inc., a
North Carolina corporation,
its managing general partner
ATTEST: By: /s/ Richard M. Porter
----------------------------------
Title: President
-------------------------------
/s/ Virgil H. White
- ------------------------
Secretary
- --------------
(CORPORATE SEAL)
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, Mary Ann McGarity, a Notary Public of the County and State aforesaid,
certify that Virgil H. White personally came before me this day and
acknowledged that (s)he is ___________ Secretary of Queens Properties, Inc., a
North Carolina corporation, and that by authority duly given an as the act of
the corporation as managing general partner of Withers Cove Associates Limited
Partnership, a Delaware limited partnership, the foregoing instrument was
signed in its name by its ______________ President, sealed with its corporate
seal and attested by him/her as its _______________ Secretary.
WITNESS my hand and official stamp or seal, this 6th day of February,
1991.
/s/ Maryann McGarity
---------------------------
Notary Public
My commission expires:
My Commission Expires October 27, 1992
(SEAL)
<PAGE> 71
BK: 07234 PG: 0494/0495 #:0320 8.00
JUDITH A GIBSON REG OF DEEDS MECK NC
FILED FOR REGISTRATION 03/24/93 16:03
STATE OF NORTH CAROLINA AMENDMENT TO DECLARATION
OF PROTECTIVE COVENANTS
COUNTY OF MECKLENBURG AND RESTRICTIONS FOR WITHERS
COVE BUSINESS PARK
THIS AMENDMENT TO DECLARATION OF PROTECTIVE COVENANTS AND RESTRICTIONS FOR
WITHERS COVER BUSINESS PARK is made and entered into as of the 15th day of
March, 1993, by WITHERS COVE ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited
partnership ("Developer").
PRELIMINARY STATEMENT
Developer has heretofore entered into that certain Declaration of
Protective Covenants and Restrictions for Withers Cove Business Park (the
"Declaration") dated February 6, 1991 and recorded in Book 6453, Page 318 in
the Office of the Register of Deeds for Mecklenburg County, North Carolina (the
"Mecklenburg Public Registry"), as supplemented by Addendum to Protective
Covenants for Withers Cove Business Park ("Addendum") dated February 12, 1991
and recorded in Book 6459, Page 348 in the Mecklenburg Public Registry.
Pursuant to Section 11.2 of the Declaration, the owners of sixty-six and
two-thirds percent (66 2/3%) of the Property (as defined in the Declaration)
have the right to amend the Declaration. Developer is the owner of more than
66 2/3% of the Property. Developer wishes to amend the Declaration as herein
provided.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, receipt and sufficiency of which is hereby
acknowledged, Developer, for itself, its successors and assigns, does hereby
amend and modify the Declaration by deleting Section 5.10 from the Declaration
in its entirety and by substituting in lieu thereof the following new Section
5.10.:
"Section 5.10 Hazardous Materials. The storage of hazardous
materials shall be permitted only in strict accordance with any
applicable law, ordinance, rule or regulation and any hazardous
waste management plans adopted by government having legal
jurisdiction over the Property."
Except as amended hereby or in the Addendum, the Declaration shall remain
in full force and effect; and, as amended hereby, the Declaration and Addendum
are hereby ratified and affirmed.
Box 9 COPY
<PAGE> 72
IN WITNESS WHEREOF Developer has caused these presents to be executed as
required by law on the day and year first above written.
WITHERS COVE ASSOCIATES
LIMITED PARTNERSHIP
ATTEST: By: Queen Properties, Inc.,
its General Partner
/s/ Virgil H. White
- -------------------
Secretary By: /s/ Richard M. Porter
------------------------------
[CORPORATE SEAL] Richard M. Porter,
President
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
This 24th day of March, 1993, personally came before me Richard M. Porter
, who being by me duly sworn, says that he is the President of Queens
Properties, Inc., a general partner of WITHERS COVE ASSOCIATES LIMITED
PARTNERSHIP and that the seal affixed to the foregoing instrument in writing is
the corporate seal of the corporation, and that said writing was signed and
sealed by him, in behalf of said corporation, by its authority duly given. And
the said Richard M. Porter acknowledged the said writing to be the act and deed
of said corporation.
/s/ MaryAnn McGarity
----------------------------
Notary Public
My commission expires: November 9, 1997
[NOTARIAL SEAL]
<PAGE> 73
EXHIBIT "E"
Permitted Encumbrances
All matters of record affecting the Property as of the date hereof, except
those items that could interfere with the Permitted Use.
<PAGE> 74
EXHIBIT "F"
LEASE GUARANTY
In consideration of the making of that certain Lease Agreement (the
"Lease") dated as of June 9, 1994, by and between TKC VI, as Landlord, and
GRIFFITH MICRO SCIENCE, INC., as Tenant, and for the purpose of inducing
Landlord to enter into and make the Lease, the undersigned hereby
unconditionally guarantee (i) the full and prompt payment of rent and all other
sums required to be paid by Tenant under the Lease (collectively, the
"Guaranteed Payments") and (ii) the full and faithful performance of all terms,
conditions, covenants, obligations and agreements contained in the Lease on the
Tenant's part to be performed (collectively, the "Guaranteed Obligations"), and
the undersigned further promise to pay all of Landlord's costs and expenses
(including reasonable attorney's fees actually incurred) incurred in collecting
the Guaranteed Payments or successfully enforcing the Guaranteed Obligations or
incurred in successfully enforcing this guaranty.
1. Landlord may at any time and from time to time, without notice to or
consent by the undersigned, take any or all of the foregoing actions without
affecting or impairing the liability and obligations of the undersigned on this
guaranty:
(a) grant an extension or extensions of time of payment of
any Guaranteed Payment or time for performance of any Guaranteed
Obligation;
(b) grant an indulgence or indulgences in any Guaranteed
Payment or in the performance of any Guaranteed Obligation;
(c) modify or amend the Lease or any term thereof, or any
obligation of Tenant arising thereunder;
(d) consent to any assignment or assignments, sublease or
subleases and successive assignments or subleases by Tenant;
(e) consent to an extension or extensions of the term of the
Lease;
(f) accept other guarantors; and/or
(g) release any person primarily or secondarily liable.
The liability of the undersigned under this guaranty shall not be affected
or impaired by any failure or delay by Landlord in enforcing any Guaranteed
Payment or Guaranteed Obligation or this guaranty or any security therefor or
in exercising any right or power in respect thereto, or by any compromise,
waiver, settlement, change, subordination, modification or disposition of any
Guaranteed Payment or Guaranteed Obligation or of any security therefor. In
order to hold the undersigned liable hereunder, there shall be no obligation on
the part of Landlord, at any time, to resort to Tenant for payment or to any
other guaranty or to any security or other rights
<PAGE> 75
and remedies, and Landlord shall have the right to enforce this guaranty
irrespective of whether or not other proceedings or actions are pending or
being taken seeking resort to or realization upon or from any of the foregoing.
In that regard, the undersigned hereby waive the benefits of any provision of
law requiring that the Landlord exhaust any right or remedy, or take any
action, against the Tenant, any other guarantor, any other person or property
including, but not limited to, the provisions of N.C. Gen. Stat. Section 26-7
through 26-9, inclusive, as amended or otherwise.
2. The undersigned waive all diligence in collection or in protection of
any security, presentment, protest, demand, notice of dishonor or default,
notice of acceptance of this guaranty, notice of any extensions granted or
other action taken in reliance hereon and all demands and notices of any kind
in connection with this guaranty or any Guaranteed Payment or Guaranteed
Obligation.
3. The undersigned hereby acknowledge full and complete notice and
knowledge of all the terms, conditions, covenants, obligations and agreements
of the Lease.
4. The payment by the undersigned of any amount pursuant to this guaranty
shall not in any way entitle the undersigned to any right, title or interest
(whether by subrogation or otherwise) of the Tenant under the Lease or to any
security being held for any Guaranteed Payment or Guaranteed Obligation.
5. This guaranty shall be continuing, absolute and unconditional and
remain in full force and effect until the date on which all Guaranteed payments
are made, all Guaranteed Obligations are performed, and all obligations of the
undersigned under this guaranty are fulfilled.
6. This guaranty also shall bind the successors and assigns of the
undersigned and shall inure to the benefit of Landlord, its successors and
assigns.
7. This guaranty shall be construed according to the laws of the State of
North Carolina and shall be performed in Charlotte, Mecklenburg County, North
Carolina.
8. The obligations of each guarantor shall be joint and several, and
Landlord may enforce this guaranty against either guarantor without joinder of
the other guarantor hereunder.
9. The Landlord and the undersigned intend and believe that each provision
of this guaranty comports with all applicable law. However, if any provision
of this guaranty is found by a court to be invalid for any reason, the
remainder of this guaranty shall continue in full force and effect and the
invalid provision shall be construed as if it were not contained herein.
<PAGE> 76
IN WITNESS WHEREOF, the undersigned have executed this guaranty this 16th
day of June, 1994.
GUARANTOR:
GRIFFITH LABORATORIES, INC.
an Illinois corporation
Attested by:
/s/ James S. Legg By: /s/ Joseph R. Maslick
- --------------------- ---------------------------------
Assistant Secretary Name: Joseph R. Maslick
- --------- -------------------------------
Title: Executive Vice President
------------------------------
[Corporate seal]
ADDRESS: 1 Griffith Center
----------------------------
Alsip, Illinois 60658
----------------------------
Fax: (708) 371-4783
----------------------------
<PAGE> 77
EXHIBIT "G"
SCHEDULE OF ASSIGNED WARRANTIES
<PAGE> 78
EXHIBIT "H"
SCHEDULE OF HAZARDOUS SUBSTANCES
USED BY TENANT
Ethylene Oxide
Propylene Oxide
Sulfuric Acid
Sodium Phosphate
Sodium Hydroxide
Sodium Sulfite
Freon-12 (dichlorodifluoromethane)
Freon-22 (chlorodifluoromethane)
<PAGE> 79
EXHIBIT "I"
BUILDING LAYOUT
(Including all additions, modifications, deletions
and other changes agreed to by Landlord and Tenant)
[Diagram of Building Layout]
<PAGE> 1
EXHIBIT 10.21
1
MEMORANDUM OF AGREEMENT OF LEASE ENTERED INTO AT THE CITY AND DISTRICT OF
MONTREAL IN THE PROVINCE OF QUEBEC ON THE 20th DAY OF JANUARY 1992.
BETWEEN: CYTREN INDUSTRIAL CORPORATION
a body politic and corporate duly incorporated, having its head
office and principal place of business at 5490 Royalmount, Suite 200,
Montreal, Quebec H4P 1H7, hereinacting through and represented by
Andre Mani, its officer hereunto duly authorized as he declares,
(hereinafter called the <LESSOR>),
AND: GRIFFITH MICRO SCIENCE LTD.
hereinacting through and represented by Axel Breuer, its officer
hereunto duly authorized as he declares,
(hereinafter called the <LESSEE>)
1. DESCRIPTION AND LEASE OF PREMISES
Lessor, in consideration of the rent, covenants and agreements hereinafter
contained on the part of Lessee to be paid, kept and performed, hereby leases
to Lessee and Lessee does hereby hire and take from Lessor that designated
portion containing approximately TEN THOUSAND NINE HUNDRED AND TWENTY SQUARE
FEET (10,920 FT(2)), subject to adjustments based on actual measurements by
Lessor and representing SIXTEEN POINT FIVE PERCENT (16.5%) of total rentable
area of the building of which the Leased Premises form part, as shown outlined
on sketch annexed hereto as Schedule <A>, bearing civic number 2323, 2325 &
2329 46TH AVENUE, LACHINE, QC. H8T 3C9 and being part of the Building erected
upon that certain parcel of land known as lot # 895-4, 896-16-2 Parish of
Lachine, Registration Division Montreal, City of Lachine (hereinafter referred
to as the <Leased Premises>).
The area is measured from the exterior face of all exterior walls and from
the centre line of all interior walls separating the Leased Premises from
adjacent premises.
2. TERM OF LEASE
The Term of this Lease shall be for THREE (3) YEARS and shall commence on
the 1st day of AUGUST 1992 and terminate on the 31st day of JULY 1995 unless
sooner terminated under the provisions hereof.
Should the Lessee continue to occupy the Leased Premises after the expiry
of the Term without a written agreement, there shall be no tacit renewal and
the Lessee shall pay the Lessor rent and other charges for the period of
occupancy as set out in this Lease or renewal thereof, plus fifty percent (50%)
thereof, without prejudice to such further damage claims as may be
<PAGE> 2
2
available to the Lessor against the Lessee. However, the Lessee is not to have
the right to such occupancy beyond the expiry of the Term.
3. USE OF PREMISES
Lessee covenants that the premises shall be used solely for the purpose
of: OFFICES, STORAGE AND PROCESSING OF HEALTH CARE PRODUCTS.
There shall be no outside storage permitted of any kind on any part of the
land.
4. NET RENT
Lessee covenants and agrees to pay the Lessor in lawful money of Canada
without deduction, without necessity of any demand thereof abatement or set
off, a net annual rental calculated on the basis of $4.70 per square foot,
payable in equal consecutive monthly instalments of FOUR THOUSAND TWO HUNDRED
AND SEVENTY SEVEN DOLLARS ($4277.00) each payment due in advance on the first
day of each month during the Term hereof.
The rent as herein provided shall be paid to Lessor and/or its nominee at
the head office of the Lessor, at 5490 Royalmount, Suite 200, Town of Mount
Royal, Quebec H4P 1H7 or at such other place in Canada as shall be designated
by Lessor in writing to Lessee.
5. RENT ON NET RETURN BASIS
It is intended that the rent provided for in this Lease shall be an
absolute net return to Lessor for the Term of this Lease, regardless of the
condition of the Leased Premises (subject to Clause #46 of the present), free
of any and all costs, expenses of any nature whatsoever, taxes and charges with
respect to the Leased Premises, the contents thereof, or the business carried
on therein, other than any income or profit taxes which may be levied against
Lessor and any interest or amortization charges of Lessor in respect of
mortgages or hypothecs and the Lessee shall pay all such costs, expenses and
charges.
6. PROPORTIONATE EXPENSE RENTAL
Without limiting the obligations of the Lessee, the Lessee shall pay
during the Term of this Lease, as additional rental to the Lessor, in the
proportion that the area of the Leased Premises bears to the total rentable
area of the Building of which the Leased Premises form part, the aggregate of
(adjusted in the first and last year of the Term):
6.1.1 TAXES
The Lessee shall pay, whether they be special or general, its
proportionate share of all taxes, property taxes, municipal taxes, school
taxes, water & business taxes, rates including local improvement rates, duties
and assessments and any tax on capital that may be levied, rated, charged or
assessed against or related to the Building and/or all equipment and facilities
thereon or therein, and/or the land and appurtenant land on which the Building
is situated, and/or any property on or in the Building owned or brought thereon
or therein by Lessor or Lessee, and any
<PAGE> 3
3
and every of its assignees or sublessees and its and their respective officers,
agents, employees, servants, visitors or licensees and/or against Lessor or
Lessee in respect thereof, whether such taxes, rates, duties or assessments are
charged by a municipal, parliamentary, school, or any other body of competent
jurisdiction as well as all reasonable expenses related to the contestation of
any part of said charges, all of which may be referred to as Taxes.
6.1.2 CHANGE IN TAXING SYSTEM
If, during the term of the Lease, any fiscal authority makes any change,
either by statute, regulation, or otherwise, in the method of taxation, such
that any of the said Taxes are replaced or changed, or if a new tax or form of
tax or assessment or the like is charged or imposed, and whether such new tax
is imposed on the Lessor or on the rents or revenues of the Immoveable of which
the Leased Premises form part, or the rents or revenues of leasing the
Immoveable, or any part thereof, the word "Taxes" will include such new tax,
assessment or the like. If any fiscal authority eliminates any tax, assessment
or the like, presently forming part of the Taxes, the Lessor will eliminate
such tax, assessment or the like from the Taxes.
6.2 INSURANCE
The Lessee shall pay its proportionate share of all premiums with respect
to insurance to be placed by Lessor and described as follows:--
(i) Fire, extended Coverage and Malicious Damage insurance for the full
insurable value procurable at the time, of the Building, its improvements
and equipment and in addition upon the full annual rental income thereof;
(ii) Broad Boiler and Unfired Pressure Vessels insurance, including Repair or
Replacement and rental income coverages in an amount reasonably
satisfactory to Lessor;
(iii) Such other insurance as institutional lenders may require or as it may be
or may become customary for owners of property to carry as respects loss
of or damage to the Leased Premises or liability arising therefrom. The
aforesaid insurance premiums shall include an amount reasonably
determined as being equivalent to a fair premium for the deductible
portion of the insurance policy in question, provided that the total sum
payable by the Lessee shall not exceed the amount that would be payable
by Lessee if the insurance policy would not have any deductible portion.
Lessee will pay the amount of any increase in insurance premiums on the
whole of the Building of which the Leased Premises form part if such
increase is caused by Lessee's operations in the Leased Premises.
6.3 OTHER EXPENSES
Without limiting the generality of the foregoing, the Lessee shall pay its
proportionate share of all costs related to the maintenance and repair and
reasonable replacement of the washrooms, corridors, malls, driveways and
parking, heating and air-conditioning equipment and services and all other
equipment, areas, and all facilities and services available at the
<PAGE> 4
4
commencement of the Term or added or provided at any time thereafter, (should
such services, etc. be and to the extent that they are available).
The Lessee shall furthermore pay its proportionate cost of the expense
incurred to keep the exterior of the Leased Premises in good order and
condition and to provide winter and summer exterior ground maintenance.
The Lessee undertakes to pay to the Lessor an administrative fee of
fifteen percent (15%) of all sums due to the Lessor under this Lease, save for
the monthly net rental. Notwithstanding the above, where certain expenses
relate only to a portion of the Building in which the Lessee is located, then
the proportion shall be that which the area of the Leased Premises bears to the
portion of the Building in question.
7. LESSEE'S CONTRIBUTION
Notwithstanding anything to the contrary hereinabove contained, the Lessor
may, instead of billing individually for taxes and other items to be paid by
the Lessee, as hereinabove stipulated, estimate the amounts payable by the
Lessee under the provisions of this Lease for such periods as the Lessor may
determine, (but not exceeding twelve months) the Lessee hereby agreeing to pay
to the Lessor such amounts in monthly instalments in advance to cover Lessor's
estimated disbursements during said period together with the rental payments as
hereinabove provided. Following the expiration of the period for which such
estimated payments have been made, the Lessor shall deliver to the Lessee a
statement of the actual costs payable pursuant to clause 6. If the amounts
actually due by the Lessee for such period exceed the amount so collected by
the Lessor, the Lessee shall pay same forthwith upon receipt of said statement,
and if the amounts due by the Lessee for the said period are less than the
amount actually collected by the Lessor, then the Lessor may remit same
forthwith or credit same to the next ensuing payments becoming due by the
Lessee to the Lessor.
All sums due by the Lessee to the Lessor in virtue of this Lease, whether
under this clause or otherwise, will be considered as rent for all legal
purposes.
The Lessee hereby agrees, to present to the Lessor, at the beginning of
each calendar year throughout the Term of the Lease, a series of monthly
post-dated cheques for the period of the ensuing calendar year, in amounts
fixed in accordance with Clauses 4 and 7.
Late Payments: The acceptance by the Lessor of any postdated cheque or
money due for rent after its due date is to be considered as a mode of
collection only, without novation of, nor derogation from, any of the Lessor's
rights, recourses and actions in virtue of this Lease which demands punctual
payment of all obligations.
8. TAXES, ASSESSMENTS, ETC.
8.1 Lessee will in each and every year during the Term of this Lease pay and
discharge or cause to be paid and discharged, all business taxes, licence
fees, public utility charges, water rates, sewer rates and other like
fees, charges, rates and assessments that may be
<PAGE> 5
5
levied, charged, rated or assessed against the Leased Premises and/or all
equipment and facilities thereon or therein, and/or any property on the
Leased Premises owned or brought thereon by Lessor or Lessee, and any and
every of its assignees or sublessees and its and their respective
officers, agents, employees, servants, visitors or licensees and/or
against Lessor or Lessee in respect thereof, and every tax and licence
fee in respect of any and every business carried on therein, or in
respect of the occupancy of the Leased Premises by Lessee (and any and
every of its assignees or sublessees) whether such licence fees, charges,
rates, assessments and taxes are charged by a municipal, parliamentary,
school or any other body of competent jurisdiction, and all charges for
public utilities including electric current, gas, water, steam or hot
water used upon or in respect of the Leased Premises and for fitting,
machines, apparatus, meters or other things leased in respect thereof,
and for all work or services performed by any corporation or commission
in connection with such utilities; and will indemnify, and keep
indemnified Lessor from and against payment of all losses, costs, charges
and expenses occasioned by, or arising from any and every such licence
fee, charge, rate, assessment and tax. Lessee will furnish to Lessor
within ten (10) days after the date on which the same become due and
payable, receipts or other appropriate evidence as to the payment of each
such tax, rate, charge, assessment duty and licence fee.
8.2 The Lessee undertakes to pay, or cause to be paid, during the term of
this Lease, all goods and services taxes, value added taxes, and all
similar taxes, assessed presently or in the future on or with respect to
the Rent and/or any other sum payable to the Lessor or for the benefit of
the Lessor, and regardless of the party on whom all such taxes may be
imposed by any fiscal authority.
8.3 If pursuant to any law or regulation or the like, any said taxes or
assessment is or becomes payable by the Lessor or by owners of property,
or if the method of collection of such taxes or assessments is changed
such that the Lessor is subject to them rather than the Lessee, the Lessee
undertakes to reimburse the Lessor, within seven (7) days of a request
made to the Lessee to do so, the Lessee's share of all sums so charged or
assessed against the Lessor, which shall be the proportion that the area
of the Leased Premises bears to the total leased area of the Building, and
the Lessee shall indemnify the Lessor and hold the Lessor harmless from
all the costs and expenses related thereto.
9. LESSEE'S INSURANCE
Lessee covenants that nothing will be done or omitted to be done whereby
any policy shall be cancelled or the premises rendered uninsurable.
The Lessee shall, at its expense, procure and maintain at all times during
the continuance of this Lease, such insurance as will protect the Lessee and
the Lessor from any claim for personal injury including death, and for property
damage in any way arising out of or attributable to the exercise by the Lessee,
or others, of any of the privileges or rights herein granted. This insurance
shall provide a combined minimum limit of $2,000,000 or such higher amount as
<PAGE> 6
6
Lessor may reasonably require for personal injury and property damage and shall
extend to cover any liability assumed by the Lessee under this Lease.
The Lessee shall forward to the Lessor the original of the insurance policy and
evidence of renewals thereof during the continuance of this Lease. The Lessee
hereby agrees and understands that the placing of such insurance shall in no
way relieve the Lessee from any obligation assumed under this Lease, and that
failure by the Lessee to remit to Lessor, within ten (10) days of demand, proof
of the above-mentioned coverage will entitle the Lessor to obtain said
insurance and to charge Lessee for same.
10. UTILITIES & HEATING
The Lessee shall pay for its electricity, water, heat, gas, telephone,
pest control, garbage removal and all public utilities with respect to the
Leased Premises, and shall keep the premises suitably heated.
11. MAINTENANCE AND REPAIRS
Notwithstanding the provisions of articles 1604 (2) & 1605 and 1627 of the
Civil Code of the Province of Quebec, the Lessee, at its own expense, shall
operate, maintain and keep the Leased Premises including all facilities,
equipment and services, both inside and outside, available to the Lessee
exclusively, in such good order and condition, both inside and outside, as they
would be kept by a careful owner, and shall promptly make all needed repairs
and replacements to the Leased Premises (save and except for structural defects
or repairs which shall be defined as being repairs or replacements to the
foundations, bearing walls and roof steel deck), which a careful owner would
make, including, without limitations, the water, gas, drain and sewer
connections, pipes and mains, electrical wiring, water closets, sinks and
accessories thereof, and all equipment belonging to or connected with the
Leased Premises or used in its operation.
The Lessee undertakes to obtain and pay for full maintenance, repair and
replacement services and/or insurance contracts as may be available from firms
approved by the Lessor (such approval not to be unreasonably withheld), with
respect to the maintenance, repair and replacement of the heating, ventilating
and air conditioning equipment, if provided in the Leased Premises, the whole
without prejudice to the other obligations of the Lessee with respect to such
equipment. The Lessee shall forward, without any further demand, to the Lessor
copies of such contracts and evidence of renewals thereof during the
continuance of this Lease.
12. IMPROVEMENTS AND ALTERATIONS
Lessee shall have the right to make at its own expense, subject to the
prior written consent of the Lessor, whose consent may not be unreasonably
withheld, additions, alterations and changes in and to the Leased Premises
provided however, that no such work shall be commenced except with the prior
written consent of Lessor and except on compliance with the following
conditions:
<PAGE> 7
7
a) Lessee shall furnish to Lessor plans and specifications showing in
reasonable complete detail the work proposed to be carried out and the
estimated cost thereof and Lessor shall approve or reject such plans and
specifications within thirty (30) days after receipt of the same. If such
plans and specifications are approved, all work shall be carried out in
compliance with the same;
b) The value of the Leased Premises shall not, as a result of any work
proposed to be carried out by Lessee, be less than the value of the Leased
Premises before the commencement of such work and Lessor shall be the sole
judge of such value;
c) All work shall be carried out with reasonable dispatch and in a good
workmanlike manner and in compliance with all applicable permits,
authorizations and building and zoning by-laws and with all regulations and
requirements of all competent authorities having jurisdiction over the Leased
Premises;
d) In all events, Lessee shall be required to use Lessor's mechanical,
electrical and plumbing trades for Lessee's mechanical, electrical and plumbing
requirements, which shall be coordinated by Lessor at Lessee's expense;
e) The Leased Premises shall at all times be free of all conditional bills
of sale, pledges, registered privileges, workmen's and suppliers' liens and
other similar liens and charges. Lessor may require Lessee to furnish security
satisfactory to Lessor guaranteeing the completion of the work and the payment
of the cost thereof free and clear of all conditional bills of sale, pledges,
privileges, workmen's and suppliers' liens and other similar liens and charges,
as well as for the replacement of the Leased Premises to their former state, as
specified in clause 21 below;
f) Lessee shall maintain Worker's Compensation insurance covering all
persons employed in connection with the work and shall produce evidence of such
insurance to Lessor and shall also maintain such general liability insurance
for the protection of Lessor and Lessee as Lessor may require.
g) All work, when completed, shall be comprised in, and form part of the
Leased Premises and shall be subject to all the provisions of this Lease and
Lessee shall not have any right to claim compensation therefor and the same
shall not be removed by Lessee on termination of this Lease, unless the Lessor
requests that part or all of it be removed, in which case the Lessee shall
comply and shall repair any damage related thereto or caused thereby.
h) Should the Lessee, after having obtained written consent from the
Lessor, effect changes in the partitions or otherwise modify the Leased
Premises, and accordingly had to relocate or modify the heating and, if
applicable, the air conditioning equipment, such changes and/or modifications
would have to be effected at the sole cost and risk of the Lessee.
<PAGE> 8
8
13. INSPECTION AND REPAIR
Lessor and its agents shall have the right, at all reasonable times during
the Term of this Lease to enter the Leased Premises to examine the condition
thereof and to ascertain whether Lessee is performing its obligations
hereunder, and Lessee shall make any repairs and/or sign the necessary service
contract which Lessor deems necessary as a result of such examination. If
Lessee fails to make any such repairs and/or sign the necessary service
contract within thirty (30) days after notice from Lessor requesting Lessee so
to do, provided that such repairs may reasonably be made within the said
period, Lessor may, without prejudice to any other rights or remedies it may
have, make such repairs and charge the cost thereof to Lessee together with an
administration fee of 15%. Nothing in this Clause shall be construed to
obligate or require Lessor to make any repairs but Lessor shall have the right
at any time to make any emergency repairs without notice to Lessee and charge
the cost thereof to Lessee. Any costs chargeable to Lessee hereunder shall be
payable forthwith on demand as additional rent. Lessor will be entitled to
request from Lessee a deposit or acceptable bank guarantee equivalent to the
value of said needed repairs until Lessee completes them.
14. FURNISH STATEMENT
Lessee shall from time to time at the request of Lessor produce to Lessor
satisfactory evidence of the due payment by Lessee of all payments required to
be made by Lessee under this Lease.
15. FAILURE OF LESSEE TO PERFORM
If Lessee fails to pay any taxes, rates, insurance premium, charges or
debts which it owes or has herein covenanted to pay or has undertaken to
contract, Lessor may pay or contract the same and shall be entitled to charge
the sums so paid or contracted to Lessee who shall pay them forthwith on demand
together with an administration fee of 15%, as additional rent and Lessor, in
addition to any other rights, shall have the same remedies and may take the
same steps for the recovery of rent in arrears under the Terms of this Lease;
all arrears of rent and any monies paid by Lessor or due by Lessee to Lessor
under this Lease, shall bear interest at the rate of twenty four percent (24%)
per annum or two (2%) percent per month from the time such arrears become due
until paid to Lessor. Lessor may demand such sums from Lessee even before
payment by Lessor.
16. DEFAULT
Without prejudice to all of the rights and recourses available to the
Lessor, the following shall be considered special defaults under the Terms of
this Lease;
a) in the event that Lessee shall be in default under any provision of
this Lease providing for the payment of rent or additional rent and such
default shall continue for ten (10) days after the due date;
<PAGE> 9
9
b) in the event that Lessee shall be adjudicated a bankrupt or make any
general assignment for the benefit of creditors, or take, or attempt to take,
the benefit of any insolvency or bankruptcy Act, or if a petition in bankruptcy
shall be granted against Lessee, or if a receiver or trustee be appointed for
the property of Lessee, or any part thereof, or any execution be issued
pursuant to a judgment, rendered against Lessee or pursuant to this Lease, or
if the estate of Lessee hereunder be transferred or pass to or devolve upon any
other person or corporation by operation of law; or if the Lessee abandons the
Leased Premises or if they are vacant or unattended for more than ten (10)
days, or occupied by persons other than the Lessee without Lessor's written
consent; or
c) in the event that Lessee shall be in default in observing any covenant
herein contained and/or performing any of its obligations contained in the
Lease (other than a default in the payment of rent or additional rent) and such
default shall continue for thirty (30) days after written notice specifying
such default shall have been given to Lessee by Lessor.
In the event of any special default under the Terms of this Lease, the
Lessor without prejudice to any rights or remedies it may have hereunder or by
law shall have the right to terminate this Lease forthwith upon written notice
given to Lessee by Lessor. Lessee upon such a termination of this Lease shall
thereupon quit and surrender the Leased Premises to Lessor and Lessor, its
agents and servants, may immediately or at any time thereafter, re-enter the
Leased Premises and dispossess Lessee, and remove any and all persons and any
or all property therefrom whether by summary dispossession proceedings or by
any suitable action or proceeding at law, or otherwise without being liable to
prosecution or damages therefor.
In case of any termination, or in case Lessee, in the absence of such
termination, shall be dispossessed by or at the instance of Lessor in any
lawful manner, whether by force or otherwise, rent for the balance of the
original Term of the Lease shall immediately become due and payable and this
Lease shall immediately, at the option of the Lessor, become forfeited and
terminated and the Lessor may, without notice or any form of legal process,
forthwith re-enter upon and take possession of the Leased Premises and remove
the Lessee's effects therefrom, the whole without prejudice to and under
reserve of all of the rights and recourse of the Lessor to claim any and all
losses and damages sustained by the Lessor by reason of and arising from any
default of the Lessee.
In the event of the bankruptcy of the Lessee, the Lessor shall be entitled
to rent for the following three (3) months, as accelerated rent, without
prejudice to all of the other rights of the Lessor under the circumstances.
17. LIQUIDATION SALES, ETC.
The Lessee undertakes not to carry out or permit a bankruptcy or
liquidation sale or sale of second hand goods, war surplus goods, insurance
salvage stock or auction in or from the Leased Premises. The Lessee
acknowledges that a violation of the present clause will cause irreparable
injury to the Lessor and consents to the Lessor enforcing the present clause by
way of interim and interlocutory injunction, without prejudice to such other
rights as the Lessor may have under the circumstances.
<PAGE> 10
10
18. EXPIRATION OF LEASE
The Lessee shall at the expiration or sooner termination of the Term of
this Lease peaceably surrender and yield up unto Lessor the Leased Premises
together with all buildings, alterations, replacements, additions, erections,
and improvements (leasehold or otherwise), including, but not limited to
electrical installations, electric or other fixtures, offices, partitions,
divisions, showrooms, air-conditioning and heating equipment, panelling,
built-in furniture, wall-to-wall carpets, attached carpets or other floor
coverings, attached cabinets, attached conveyor systems, attached racks, or
other attached equipment, wiring, switches, meters, meter boxes and
transformers, which at any time during the Term hereof shall be placed, made,
installed, fixed or attached therein or thereon by the Lessee, in good repair
and condition, subject to reasonable wear and tear only, and without any
compensation whatsoever being allowed to the Lessee for same. Lessee shall not
remove or alter any of the foregoing during the Term of the Lease or Renewal
or Extension thereof, without the written consent of the Lessor. However, the
Lessor shall have the right to require the Lessee, prior to or after the
termination of the Lease or any renewal or extension thereof, to remove any or
all of the foregoing items, in which case the Lessee shall remove the items
requested to be removed, repairing any damage related thereto or caused
thereby, and to the extent required by the Lessor, the Lessee shall leave the
Leased Premises in their original good and clean state and condition, subject
to reasonable wear and tear.
The Lessee shall give the Lessor six (6) months written notice prior to
the date of termination of this Lease or any renewal thereof, of its intention
to vacate the Leased Premises, failing which the Lessor may, at its option,
give written notice to the Lessee within a period of not less than thirty (30)
days before the date of termination of the Lease that the Lease is renewed for
a further period of twelve (12) months, and upon the Lessor giving such written
notice, the Lease shall be thereby so renewed at the rent and other terms and
conditions as may then apply.
19. SIGNS
Lessor shall have the right at all times during the Term of this Lease to
place upon the Leased Premises a notice of reasonable dimensions and reasonably
placed, so as not to interfere with the business of the Lessee, stating that
the Leased Premises are for sale and for nine (9) months prior to the
termination of this Lease, Lessor shall have the right to place upon the Leased
Premises a similar notice that the Leased Premises are for rent and Lessee will
not remove such notice or knowingly permit same to be removed.
Lessor shall have the right to exhibit the Leased Premises from time to
time to any insurer, prospective mortgagee, purchaser or Lessee at all
reasonable hours.
Any exterior signs or any signs visible from the exterior will be subject
to the Lessor's prior approval in writing and installation if approved will be
at the sole expense of the Lessee. All such signs shall comply with the lawful
requirements of municipal and governmental authorities.
<PAGE> 11
11
20. SUBLETTING BY LESSEE
Subject to the provisions hereinafter detailed, the Lessee shall have the
right to sublet the Leased Premises or any portion thereof or assign its rights
in the present Lease with the consent of the Lessor which consent shall not be
unreasonably withheld and providing that the Leased Premises are utilized only
for the purposes stipulated in Clause 3 hereof. Notwithstanding such
subletting and assignment, the Lessee shall remain jointly and severally liable
with such sublessee or assignee for the performance of all the terms and
conditions of the present Lease.
If the Lessee wishes to so sublet or assign, it must submit to the Lessor
a copy of the offer to sublet or assign, together with a request for consent of
the Lessor, and the Lessor shall have thirty (30) days from receipt thereof to
take the Leased Premises or portion in question as sublessee at the same rental
rate and other terms and conditions of this Lease or, at the Lessor's option,
to cancel this Lease as of the effective commencement date of such offer to
sublet or assign.
However, should the Lessor not exercise its right to take the Leased
Premises as sublessee, or to cancel this Lease, the Lessor shall not thereby be
precluded from withholding its consent to the said sublet or assignment,
provided said consent shall not be unreasonably withheld.
21. DESTRUCTION OF PREMISES
Provided, and it is hereby expressly agreed that if and whenever during
the Term hereby leased, the Building or the portion of the Building hereby
leased shall be destroyed or damaged by fire, lightning or tempest, or any of
the other perils insured against under the provisions of Clause 6 (b), then and
in every such event;
a) if the damage or destruction is such that the portion of the Building
hereby leased, or the Building is rendered wholly or partially unfit for
occupancy or it is impossible or unsafe to use and occupy it and if in either
event the damage, in the opinion of Lessor to be given to Lessee within thirty
(30) business days of the happening of such damage or destruction, cannot be
repaired with reasonable diligence within one hundred and eighty (180) days
from the happening of such damage or destruction, then either Lessor or Lessee
may within five (5) days next succeeding the giving of the Lessor's opinion as
aforesaid, terminate this Lease by giving to the other notice in writing of
such termination, in which event this Lease and the term hereby leased shall
cease and be at an end as of the date of such destruction or damage and the
rent and all other payments for which Lessee is liable under the terms of this
Lease shall be apportioned and paid in full to the date of such destruction or
damage; in the event that neither Lessor or Lessee so terminate this Lease, the
Lessor shall repair the said Building (excluding the Lessee's Leasehold
Improvements) with all reasonable speed and the rent hereby reserved shall
abate from the date of the happening of the damage until the damage shall be
made good to the extent of enabling Lessee to use and occupy the Leased
Premises;
b) if the damage be such that the portion of the Building hereby leased is
wholly unfit for occupancy, or if it is impossible or unsafe to use or occupy
it but if in either event the
<PAGE> 12
12
damage, in the opinion of Lessor, to be given to Lessee within thirty (30)
business days from the happening of such damage, can be repaired with
reasonable diligence within one hundred and eighty (180) days of the happening
of such damage, then the rent hereby reserved shall abate from the date of the
happening of such damage until the damage shall be made good to the extent of
enabling Lessee to use and occupy the Leased Premises and Lessor shall repair
the damage (excluding the Lessee's Leasehold Improvements) with all reasonable
speed;
c) if, in the opinion of the Lessor, the damage can be made good, as
aforesaid, within one hundred and eighty (180) days of the happening of such
destruction or damage and the damage is such that the portion of the Building
leased is capable of being partially used for the purposes for which it is
hereby leased, then until such damage has been repaired the rent shall abate in
the proportion that the part of the portion of the Building leased is rendered
unfit for occupancy bears to the whole of the said portion of the Building
leased and Lessor shall repair the damage (excluding the Lessee's Leasehold
Improvements) with all reasonable speed.
Notwithstanding the above, should the Building and/or Leased premises be
totally destroyed then Lessor shall have the right to relocate Lessee in
comparable space in the vicinity of the Building within a reasonable time
period but in no case later than the dates mentioned above.
Should any mortgage creditor who may have an interest in any insurance
proceeds refuse to permit the use of such proceeds for the repair, replacement,
rebuilding and/or restoration as hereinabove provided and for the payment of
amounts expended for such purposes, then the Lessor's obligation to repair or
rebuild as provided for hereinabove shall cease and shall be null and void and
the Lease shall be cancelled effective as of the date of the damage, unless,
the Lessor, at the Lessor's sole option, chooses to repair or rebuild.
22. COMPLIANCE WITH LAWS AND REGULATIONS
The Lessee shall, at its own expense, promptly comply with the
requirements of every applicable statute, law and ordinance and with every
applicable lawful regulation or order with respect to the removal of any
encroachment placed by the Lessee, or to the condition, equipment, maintenance,
or use or occupation of the Leased Premises, including the making of any
alteration, addition in or to any structure upon, connected with or appurtenant
to the Leased Premises, whether or not such alterations be structural or be
required on account of any particular use to which the Leased Premises or part
thereof may be put and whether or not such requirement, regulation or order be
of a kind now existing or within the contemplation of the parties hereto; and
shall comply with any applicable regulation, recommendation or order of the
Insurer's Advisory Organization, or any body having similar functions or of any
liability or fire insurance company by which the Lessor and/or the Lessee may
be insured.
23. LESSOR'S PRIVILEGE
Lessee covenants with Lessor to furnish the Leased Premises with and to
maintain at all times thereon a sufficient quantity of furniture, fixtures and
other effects free of any liens or rights of third parties to secure the
payment of at least twelve months' rent and rental accessories.
<PAGE> 13
13
It is further agreed that all goods, chattels, fixtures and other moveable
property owned by Lessee which are, or may be, put into the Leased Premises
during the Term hereof, shall at all times be subject to a privilege in favour
of Lessor, and chargeable for all rent hereunder and the fulfillment of all
other covenants and agreements herein contained, and Lessee declares that all
the moveable effects owned by Lessee and which Lessee places in the Leased
Premises shall be subject to Lessor's privilege, and free of any liens or
rights of Third parties unless Lessor specifically agrees in writing to any
Third Party liens or rights. In the event of any default of the Lessee under
this clause, the Lessee undertakes to provide to the Lessor alternate security
equivalent to twelve (12) months rent and rental accessories, such as cash, or
a satisfactory commercial bank guarantee.
24. INDEMNIFICATIONS
Except if caused directly by the gross negligence of the Lessor, the
Lessor shall not be liable nor responsible in any way for any injury of any
nature whatsoever that may be suffered or sustained by the Lessee or any
employee, agent or customer of the Lessee or any other person who may be upon
the Leased Premises or for any loss of or damages to any property belonging to
the Lessee or to its employees or to any other person while such property is on
the Leased Premises and in particular (but without limiting the generality of
the foregoing) the Lessor shall not be liable for any damage or damages of any
nature whatsoever to any such property caused by the failure by reason of a
breakdown or other cause, to supply adequate drainage, snow or ice removal, or
by reason of the interruption of any public utility or service or in the event
of steam, water, rain or snow which may leak into, issue, or flow from any part
of the Building or from the water, steam, sprinkler, or drainage pipes or
plumbing works of the same, or from any other place or quarter or for any
damage caused by anything done or omitted by any lessee, but the Lessor shall
use all reasonable diligence to remedy such condition, failure or interruption
of service when not directly or indirectly attributable to the Lessee, after
notice of same, when it is within its power and obligations so to do. Nor
shall the Lessee be entitled to any abatement of rental in respect of any such
condition, failure or interruption of service.
The Lessee will indemnify and save harmless the Lessor from and against
all fines, liability, damages, suits, claims, demands and actions of any kind
or nature which the Lessor shall or may become liable for or suffer by reason
of any breach, violation or non-performance by the Lessee of any covenant, term
or provision hereof or by reason of any injury (including death resulting at
any time therefrom) or damage to property occasioned to or suffered by any
person or persons including the Lessor by reason of any such breach, violation
or non-performance or of any wrongful act, neglect or default on the part of
the Lessee or any of its employees, officers, agents, suppliers, or invitees.
25. ASSIGNMENT BY LESSOR
Lessee hereby covenants and agrees that it will, if and whenever
reasonably required by Lessor at Lessor's expense, consent to and become a
party to any instrument or instruments permitting a mortgage, trust deed or
hypothec to be placed on the Leased Premises hereinabove described or any part
thereof of which the Leased Premises are a part as security for any
<PAGE> 14
14
indebtedness covered by the said trust deed, mortgage or hypothec and
subordinating this Lease to the said trust deed, mortgage or hypothec. Such
consent by Lessee will not diminish the rights of Lessee under this Lease
provided the Lessee is not in default under the terms and conditions of this
Lease.
26. FLOOR LOADING
Lessee shall not bring upon the Leased Premises or any part thereof any
machinery, equipment, article or thing that by reason of its weight or size
might damage the Leased Premises and will not at any time overload the floors
of the Leased Premises and if any damage is caused to the Leased Premises by
any machinery, equipment, article or thing or by overloading or by any act,
neglect or misuse on the part of Lessee or any of its invitees, agents or
employees or any person having business with Lessee, Lessee will forthwith pay
to Lessor the cost of making good the same.
27. CONDITION OF LEASED PREMISES
The Lessee acknowledges having examined the Leased Premises and accepts
same in their present state, without any expressed or implied representation or
warranties from the Lessor and without any warranties against apparent or
latent defects and without any recourse against Lessor based on the nature,
state or use of the Leased Premises or based on its utilization or the
utilizations of the Leased Premises or part of same which could be affected.
28. OCCUPANCY
If the Lessor is unable to give possession of the Leased Premises to the
Lessee on the date of commencement of the Term due to the non-completion of
construction, repairs, improvements, additions, or alterations to the Leased
Premises, or the Building containing same, the Lease shall not be void or
voidable nor shall the Lessor be liable for any loss or damage resulting
therefrom. However, the rent payable hereunder shall abate until the Leased
Premises are substantially completed for the purposes intended.
Should the reason for the Lessor's delay in substantially completing the
Leased Premises be attributable to the Lessee, the Rental Commencement Date
shall be deemed to be the date the Lessor would have substantially completed
the Leased Premises for the purposes they were intended, if the Lessee had not
delayed such completion, and in such case the Lessor shall deliver to the
Lessee a letter specifying such date. The letter of the Lessor shall be final
and binding on the Lessee.
Should the Lessee take occupancy of the Leased Premises prior to the
commencement date of the Term, the Lessee shall from the date of such
possession be bound by all the provisions of this Lease (save for the payment
of Minimum Net Rent), and without limiting the generality of the foregoing the
Lessee shall be liable for all damages caused by its actions or omissions or
those of its contractors, sub-contractors, agents, servants and employees. The
Lessee acknowledges that should there be work to be effected by the Lessor, it
shall be carried on during the Lessee's occupancy and therefore, the Lessee
will not hold the Lessor responsible for
<PAGE> 15
15
any delays, damage, theft, fire or any other unforseen event that may occur.
The Lessor will commence and terminate the work as outlined in the Lease at its
earliest convenience.
29. PERMITS, ETC.
The Lessee shall obtain all necessary permits and licenses required for
the occupancy and carrying on of its business, the Lessor making no warranties
whatsoever regarding zoning, permits and licences which may be required by the
Lessee. Should the Lessee fail to obtain any required permit and/or licence,
it shall remain bound to perform its obligations under the present Lease.
30. RULES AND REGULATIONS
The Lessor shall have the right to make reasonable rules and regulations
as in its discretion may from time to time be needful for the safety, care,
cleanliness and proper administration of the Building including the Leased
Premises, and for the preservation of good order therein, and the same shall be
observed and performed by the Lessee and by the clerks, servants, employees,
agents, invitees and customers, of the Lessee, and all such rules and
regulations now or hereafter to be established by the Lessor as herein provided
shall form part of this Lease as if now set forth at length herein.
31. ACCESS TO LEASED PREMISES
A) The Lessor shall have the right of access to the Leased Premises to
perform such work as it chooses to do upon the Leased Premises, the Lessee
renouncing any claim to any indemnity or diminution of rent, provided the same
be carried out with reasonable diligence.
B) The Lessee, its employees, agents and customers will have access to the
Leased Premises at all times; should the Lessee, its employees, agents and
customers wish to use any land of the Lessor adjacent to the Leased Premises to
enter or leave the Leased Premises, they undertake to use at their risk the way
specifically designated for such purpose by the Lessor, and they may also use
at their risk and in common with others, the parking and shipping areas
designated by the Lessor, if provided;
C) The Lessor reserves the right to change or relocate the said roadways,
parking or shipping areas, at its convenience and in its sole discretion;
D) The Lessee will not use the said roadways, parking or shipping areas
for any other purpose except for parking in the spaces designated or as access
to the Leased Premises or shipping areas as designated by the Lessor;
E) The Lessee, its employees, agents and customers may at their risk use,
in common with others who will have obtained the permission of the Lessor, all
common corridors, stairways, or vestibules of the Building providing access to
the Leased Premises, if available, as well as common parking and access roads
to the Building;
<PAGE> 16
16
F) The Lessor will with reasonable diligence maintain all such common
access roads, parking areas, shipping areas, corridors, stairways, vestibules,
or other common areas giving access to the Leased Premises and the Lessee will
pay to the Lessor all such maintenance costs as provided for in Article 6 (c)
hereof.
32. INCONVENIENCE
The Lessee will not hold the Lessor in any way responsible for any damages
or annoyance which the Lessee may sustain through the fault of any Lessee or
Lessees who occupy any Leased Premises adjacent to, near or above the Leased
Premises, and not use the Leased Premises for any purpose, notwithstanding
anything stated herein, which may cause noise, disturbance or noxious odour, to
the discomfort of the other Lessees and neighbours, and renounces to any claims
it may have or acquire against the Lessor under Article 1636 of the Civil Code
of the Province of Quebec.
33. EXPROPRIATION
In the event that all or part of the Leased Premises are expropriated,
which would prevent the use or occupation of the inside floor space of the
building (which forms the major part of the Leased Premises), in whole or in
part, then the Lessee shall be entitled to a diminution of the rental payable
hereunder during the period and for the area of eviction only. Such diminution
of rent shall be reckoned from the date the Lessee is forced to vacate the said
inside floor space and shall be calculated on a pro-rata basis, the whole
without any other claims by the Lessee against the Lessor for any loss or
damages occasioned by said eviction and/or loss of use.
34. EXTENSIONS & LOCATION
The Lessor shall have the right at its option and from time to time during
the Lease term to make extensions and/or additions and/or to add one or more
additional floors or storeys onto all or part of the building comprising the
Leased Premises.
In the event the Lessee exercises said option, the Lessee agrees to permit
the Lessor to install and/or to extend and/or to add the required improvements
including supports, beams, wiring, piping, stairways, elevators, ramps, vents,
ducts, shafts and openings for view or light and the like and to close all
borrowed lights and the windows and openings which may be required to be closed
as a consequence of such construction, the whole without any claims for
disturbance and/or inconveniences and the like which may be caused to the
Lessee, provided always that the required work is carried out within a
reasonable delay and that this clause shall not absolve or release the Lessor
from Liability in respect for damages or any loss caused to the Lessee as a
consequence of any wilful act of the Lessor, its employees or representatives
as a consequence of said additions and/or extensions and provided that the
Lessee shall be granted a proportionate reduction in rent as compensation for
loss of use of its inside floor space (during the period and for the area of
loss only). All the foregoing without any other claims by the Lessee against
the Lessor for damages and loss of use.
<PAGE> 17
17
In the event any such change results in additional land being utilized to
service the Building, such additional land shall be deemed included in the land
appurtenant to the Building for all purposes. In the event any change
contemplated herein results in a change in the rentable area of the Building,
the Lessee's Proportionate Share shall be modified accordingly.
Lessor shall furthermore have the right at any time or from time to time,
either during the term of the Lease or prior to the date of coming into force
thereof, to change the location of the Leased Premises, containing
approximately the same area, by giving Lessee a thirty (30) days written
notice. Should the Lessor desire to move Lessee, the cost of moving Lessee's
equipment, furniture and the like shall be made at Lessor's expense, the Lessee
to have no claims against Lessor for business interruption, inconvenience and
the like.
Should the Lessee's remaining Term in the new location be less than six
(6) months and Lessee & Lessor have not agreed on an extension then Lessor
shall have the right to cancel this Lease at its sole discretion.
35. COSTS & REGISTRATION
The Lessee shall not register this Lease otherwise than by memorial and
then only after receiving the prior written consent of the Lessor to such
memorial. Such memorial may only mention the land description, area of the
Leased Premises and the Term of the Lease but there shall be no reference to
Rent or other financial matters. Upon the termination of this Lease, the
Lessee shall radiate, at its expense, the registration of such memorial, the
Lessee hereby expressly and irrevocably appointing the Lessor as attorney for
the Lessee with full power and authority to radiate such memorial and to
execute and deliver in the name of the Lessee any instruments or certificates
required for such purpose. The Lessee hereby undertakes to forthwith sign and
deliver to the Lessor any further power of attorney or document which the
Lessor may request to confirm the foregoing. The Lessor shall furthermore have
the right to require a reasonable deposit to cover the cost of such radiation
should he be obliged to effect same.
36. SECURITY DEPOSIT
Any prepaid rent or security deposit or other security given to the Lessor
shall be security for the performance of all of the obligations of the Lessee
under this Lease or any renewal or extension thereof.
In the event of the termination or cancellation of this Lease or of any
extension or renewal thereof prior to the contractual termination date by the
fault of the Lessee, then any prepaid rent or sums remitted to the Lessor as
security shall vest with the Lessor without prejudice to the Lessor's claim for
accelerated rent or damages or other sums due.
37. COLLECTION
Should any rental payments and/or any sums due under this Lease be unpaid
for more than ten (10) days, or cheques covering same be returned by the bank,
Lessee agrees to remit a further amount equivalent to fifteen percent (15.0%)
of that late or returned payment to cover
<PAGE> 18
18
Lessor's administrative costs. Such additional sums shall be payable in
addition to any costs which the Lessee is obliged by law to pay to its
attorneys and in addition to any damage for which the Lessee may be liable to
the Lessor. Such additional sums shall be deemed to be additional rent and may
be collected as such.
38. CONSTITUTE OR TENURE SYSTEM ACT
The Lessee hereby renounces any rights which it may have or acquire under
the Constitute or Tenure System Act 1964 R.S.Q., Chapter 322, to purchase or
acquire the land hereby leased or the land on which the Premises hereby leased
are situated.
39. WAIVER
The failure of Lessor to insist upon a strict performance of any of the
agreements, terms, covenants and conditions hereof shall not be deemed a waiver
of any rights or remedies that Lessor may have and shall not be deemed a waiver
of any subsequent breach or default in any such agreements, terms, covenants
and conditions.
40. NOTICES
Any notice or demand given by Lessor to Lessee shall be deemed to be duly
given when served upon Lessee personally, or when left upon the Leased
Premises, or when sent by telecopier, or when mailed to Lessee at the address
of the Leased Premises.
Lessee elects domicile at the Leased Premises for the purpose of service
of all notices, writ of summons or other legal documents in any suit at law,
action or proceeding which Lessor may take under this Lease.
Any notice or demand given by Lessee to Lessor shall be deemed to be duly
given when served upon Lessor personally or when mailed to Lessor at the
address designated by Lessor for purposes of payment of the rent hereunder.
41. DESCRIPTIVE HEADINGS
The descriptive headings of this Lease are inserted for convenience in
reference only and do not constitute a part of this Lease.
42. INTERPRETATION
This Lease shall be construed and governed by the laws of the Province of
Quebec. Should any of the provisions of this Lease and/or its conditions be
illegal or not enforceable under the Laws of the Province of Quebec, it or they
shall be considered severable and the Lease and its conditions shall remain in
force and be binding upon the parties as though the said provision or
provisions had never been included.
Words importing the singular number only shall include the plural and
vice-versa and words importing the masculine gender shall include the feminine
gender and words importing
<PAGE> 19
19
persons shall include firms and unless the contrary intention appears the words
"Lessor" and "Lessee" wherever they appear in this Lease shall mean
respectively "Lessor, its executors, administrators, successors and/or
assigns", and "Lessee", its executors, administrators, successors and/or
assigns", and if there is more than one Lessee or Lessor or the Lessee or
Lessor is a female person or a corporation this Lease shall be read with all
grammatical changes appropriate by reason thereof; and all covenants,
liabilities and obligations shall be joint and several.
43. INTERVENTION
44. LANGUAGE
The parties hereby confirm that they have requested that the present
document be drafted in the English language.
Les parties confirment par les presentes qu'ils ont demande que le present
document soit redige dans la langue anglaise.
45. PRIOR AGREEMENTS
The present Lease cancels and supersedes any and all prior leases and
agreements, written or otherwise, entered into the Lessor and the Lessee
regarding the premises leased hereunder. This Lease and such rules and
regulations as may be adopted and promulgated by the Lessor from time to time
constitute the entire agreement between the parties.
46. SPECIAL CONDITIONS
1. For purposes of Lessee's planned installation of pollution abatement
equipment only and any further major equipment installation, the Lessors
standard 15% supervision fee shall be reduced to 10% payable to the Lessor
and shall only be applicable to the costs lessee shall incur by any of
Lessors approved changes and modifications to the building structure.
Building structure being defined as roof, load bearing walls, steel
support columns, concrete floor and the erection of any block walls, as
well as any changes and modifications to the building mechanical systems
which shall be defined as the sprinkler system, air conditioning,
ventilation, heating, electrical and plumbing systems. It is understood
that said supervision fee shall not be applicable to the direct cost of
the pollution abatement equipment or any other peripheral devices or units
directly associated with the pollution abatement equipment such as motors,
generators, compressors and necessary hardware.
2. The Lessee shall obtain the Lessor's approval which shall not be
unreasonably withheld prior to the Lessee commencing any electrical work
in the Building. Furthermore, the Lessee ensures that any new electrical
work shall not diminish the existing power requirements of any of the
other Lessees in the Building, also should it be deemed necessary by the
Utility Authorities and/or Lessor that the Lessee requires additional
space within the property for the construction of an electrical room, it
is agreed that the
<PAGE> 20
20
Lessee shall be responsible to pay the proportionate increase in rent due
to the Lessee's additional space requirement and any additional
construction costs incurred by Lessor to provide such an area. The whole
at Lessee's sole cost and expense and subject to the approval of the
necessary utility authorities and subject to such an area in the Building
being available for the Lessee.
3. The Lessee acknowledges having read and understood Clause No. 27 of this
Lease.
4. Should the Lessee require larger premises than the 10,920 square feet the
Lessee now occupies at any time up to July 31, 1995 and should the Lessor
have such larger premises available in one of our many properties in the
area and the parties mutually agree on the terms and conditions of a Lease
which will then be signed at the time by both parties, this Lease shall be
cancelled as of the commencement date of the new Lease without penalty and
provided the Lessee has fulfilled all the terms and conditions of this
Lease up to the date of cancellation.
5. OPTION TO RENEW
Provided the Lessee is not in default and on the condition that the
Lessee has fully complied with all of its obligations under its present
Lease, the Lessee shall have the right to renew its lease, once only, for
a further period of THREE (3) YEARS, commencing AUGUST 1, 1995 and
terminating JULY 31, 1998 under the same terms and conditions, save for
the rental which shall be increased to $5.00 net per square foot per
annum; provided the Lessor receives written notice from the Lessee of it
intention to renew its Lease, no later than six (6) months prior to the
expiration of said Lease, failing which this Option to Renew shall be
considered null and void and of no further effect.
<PAGE> 21
21
IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THE FOREGOING DEED OF LEASE
ON THE 3rd DAY OF FEBRUARY, 1992.
- ---------------- CYTREN INDUSTRIAL CORPORATION
WITNESS
[illegible]
- ----------------- Per: /s/ Andre Mani
WITNESS ----------------------------------
Andre Mani (LESSOR)
- ----------------- GRIFFITH MICRO SCIENCE LTD.
WITNESS
- ----------------- Per: [illegible]
WITNESS ----------------------------------
Axel Breuer (LESSEE)
<PAGE> 22
22
EXTRACT OF A RESOLUTION FROM THE BOARD OF DIRECTORS
CORPORATION NAME: GRIFFITH MICRO SCIENCE LTD.
- ------------------------------------------------
EFFECTIVE: February 3, 1992
--------------------------------------
RESOLVED:
THAT the Corporation be and it is hereby authorized to lease from CYTREN
INDUSTRIAL CORPORATION the premises described in the Deed of Lease to be
entered into between the Corporation and CYTREN INDUSTRIAL CORPORATION, a copy
thereof attached hereto;
THAT the said Deed of Lease be and it is hereby approved;
THAT AXEL BREUER be and he is hereby authorized to sign, for and on behalf
of the Corporation, the said Deed of Lease with such amendments as he may deem
necessary;
THAT AXEL BREUER be and he is hereby authorized to do all things and to
sign all other documents necessary or useful to give full effect to this
resolution.
CERTIFIED COPY
[illegible]
---------------------------------
(Secretary)
---------------------------------
(Title)
- ---------------------------------
Affix Corporation Seal
<PAGE> 23
SCHEDULE A
[Survey]
<PAGE> 24
LEASE EXTENSION AGREEMENT
- --------------------------------------------------------------------------------
LEASE EXTENSION AGREEMENT MADE AND ENTERED INTO IN THE CITY AND DISTRICT OF
MONTREAL, PROVINCE OF QUEBEC, ON THIS ______ DAY OF THE MONTH OF APRIL 1998.
BETWEEN: 46th AVENUE INVESTMENTS LIMITED, a legal person, duly incorporated
under the Canada Business Corporation Act, having its head office
and principal place of business at 8300 Pie IX, Montreal, Province of
Quebec H1Z 4E8, herein acting through and represented by Mr. Jordan
Aberman duly authorized as he declares;
(hereinafter called the "Lessor")
AND: GRIFFITH MICRO SCIENCE LTD / GRIFFITH MICRO SCIENCE LTEE, a legal
person, duly incorporated under the Canada Business Corporations Act,
having its head office at 757 Pharmacy Avenue, Scarborough, Province
of Ontario, M1L 3J8 and principal place of business at 2323, 46th
Avenue, Lachine, Province of Quebec, H8T 3C9, herein acting through
and represented by Mr. John Gilbert, its ______________, duly
authorized as he so declares:
(hereinafter called the "Lessee")
WHEREAS the Lessor is the owner of that certain building bearing civic address
2305 to 2379, 46th Avenue, in the City of Lachine, Province of Quebec,
("Building") in virtue of the transfer from Cytren Industrial Corporation of
its interest in the said Building;
WHEREAS in virtue of a lease dated January 20, 1992 ("Lease"), the Lessee
leased those certain premises bearing civic address 2323, 46th Avenue, in the
City of Lachine, Province of Quebec, having approximately TEN THOUSAND NINE
HUNDRED TWENTY square feet (10,920 sq. ft.) ("Leased Premises") in the Building
from Cytren Industrial Corporation for a period of THREE (3) years commencing
on August 1, 1992 and terminating on July 31, 1995;
WHEREAS by a letter of renewal dated April 13, 1995 (the "First Renewal"),
Cytren Industrial Corporation exercised its option to renew the Lease, as per
Clause 18 (2), and the term has been extended for an additional period of ONE
(1) year commencing on August 1, 1995 and terminating on July 31, 1996, upon
the terms and conditions set forth in the First Renewal;
WHEREAS by a letter of renewal dated May 6, 1996 (the "Second Renewal"), Cytren
Industrial Corporation exercised its option to renew the Lease, as per Clause
18 (2), and the term has been extended for an additional period of ONE (1) year
commencing on August 1, 1996 and terminating on July 31, 1997, upon the terms
and conditions set forth in the Second Renewal;
WHEREAS by a letter of renewal dated February 5, 1997 (the "Third Renewal"),
Cytren Industrial Corporation exercised its option to renew the Lease, as per
Clause 18 (2), and the term has been extended for an additional period of ONE
(1) year commencing on August 1, 1997 and terminating on July 31, 1998, upon
the terms and conditions set forth in the Third Renewal;
WHEREAS the Lease as modified by the First Renewal, the Second Renewal and the
Third Renewal are hereinafter collectively referred to as the "Lease" and the
Term as extended by the First Renewal, the Second Renewal and the Third Renewal
are hereinafter collectively referred to as the "Term";
<PAGE> 25
WHEREAS the Lessor and the Lessee agreed by this lease extension agreement (the
"Lease Extension Agreement") to extend the Term of Lease for a further period
of TEN (10) months, upon the terms and conditions hereinafter set forth;
THE PARTIES AGREE AS FOLLOWS:
1. The preamble hereinabove shall form an integral part of the present Lease
Extension Agreement as if herein recited at length;
2. The Lease Extension Agreement is made upon and subject to the same terms and
conditions as set forth in the Lease save only as modified by the terms hereof;
3. The Term of the Lease as specified in Clause 2 of the Lease shall be renewed
and extended for an additional period of TEN (10) months which shall commence
on August 1, 1998 and shall terminate on May 31, 1998, unless sooner terminated
under the provisions hereof;
4. Effective August 1, 1998 until May 31, 1999, the Lessee shall pay to the
Lessor a net net rent as follows:
"4. NET NET RENT - 4.1 - The Lessee covenants and agrees to
pay to the Lessor in lawful money of Canada without
deduction, abatement or set off, the sum of FORTY FIVE
THOUSAND FIVE HUNDRED DOLLARS ($45,500.00) plus G.S.T. and
Q.S.T. payable in equal consecutive monthly installments of
FOUR THOUSAND FIVE HUNDRED FIFTY DOLLARS ($4,550.00) plus
G.S.T. and Q.S.T., subject to any taxes of similar nature,
each in advance on the first day of each month during the
term of this Lease."
5. The Lessee represents that it has examined and viewed the Leased Premises
and accepts same in their present condition. the present Lease Extension
Agreement is not subject to the Sections applicable to the leasehold
improvements of the Lease which condition has already been satisfied;
6. The first sentence of the last sentence of Clause 6.3, entitled "6.3 Other
Expenses", shall be deleted and replaced by the following sentence:
"The Lessee undertakes to pay to the Lessor an
administrative fee of FIVE percent (5%) on all sums due to
the Lessor under this Lease".
7. The amount of insurance requested in Clause 9 of the Lease shall be
increased to an amount not less than two million dollars ($2,000,000.00) during
the term of this Lease Extension Agreement, and any renewal and/or extension
hereof;
8. No alteration, amendment, change or addition to this Lease Extension
Agreement is binding upon the Lessor unless it is in writing and signed by the
Lessee and an authorized representative of the Lessor. The Lessor and the
Lessee acknowledge and covenant to have read, examined, understood and approved
all the provisions of this Lease Extension Agreement, including, without
restriction, all schedules attached hereto and forming part hereof;
9. The parties confirm that in all other respects, the terms, covenants and
conditions of the Lease remain unchanged, and in full force and effect, except
as modified by this Lease Extension Agreement. It is understood and agreed
that all terms and expressions when used in this Lease Extension Agreement,
unless a contrary intention is expressed herein, have the same meaning as they
have in the Lease;
10. The parties confirm that it is their wish that this Lease Extension
Agreement be drawn up in English. Les parties aux presentes confirmant leur
volonte que cotte convention solt redigee en englais.
<PAGE> 26
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF this Lease Extension Agreement has been executed by the
undersigned on the dates indicated above.
46th AVENUE INVESTMENTS LIMITED
(Lessor)
- -------------------------- --------------------------------
Witness: Per: Mr. Jordan Aberman
- --------------------------
Witness:
GRIFFITH MICRO SCIENCE LTD/
GRIFFITH MICRO SCIENCES LTEE
(Lessee)
[Illegible] /s/ Mr. John Gilbert
- -------------------- --------------------------------
Witness: Per: Mr. John Gilbert
[Illegible]
- --------------------
Witness:
<PAGE> 1
EXHIBIT 10.22
THIS LEASE AGREEMENT IS SUBSCRIBED BY INMOBILIARIA AZABI, S.A. DE C.V. TO BE
CALLED "AZABI" REPRESENTED, WITHOUT DISTINCTION, BY MESSERS. ALBERTO BALAS
SALAME OR SALOMON BALAS SALAME AS THE TENANT ON ONE SIDE AND GRIFFITH MICRO
SCIENCE, S.A. DE C.V. TO BE CALLED "GRIFFITH MICRO SCIENCE" AS THE LESSEE,
REPRESENTED BY Q.F.B. MARIA DEL CARMEN CASAR LARA, IN HER CHARGE OF GENERAL
REPRESENTATIVE AND "BIENES RAICES GRIFFITH, S.A. DE C.V." TO BE CALLED "BIENES"
AS THE BAIL, REPRESENTED BY C.P. ROBERTO VILLARREAL FLORES, ON THE OTHER SIDE.
ALL OF THE ABOVE BECOME LIABLE ACCORDING TO THE FOLLOWING DECLARATIONS AND
CLAUSES.
D E C L A R A T I O N S
1. The representative of "AZABI" declares:
a) That it has enough competence and legal faculty to become liable in the
terms and conditions of this lease agreement, according to the legal
documents attached to this contract that are part of this same contract.
b) That "AZABI" wants to lease to "GRIFFITH MICRO SCIENCE" the property
covered by this contract and that this property has all the proper
authorizations from the local, state and federal authorities to be used as
industrial plant and administrative offices.
c) That its legal address is James Watt 22 Ind. Cuamatia, Cuautitlan
Izcalli, Mexico and it is mentioned for all the effects that could develop
from this contract.
II. The representative of "GRIFFITH MICRO SCIENCE" declares:
a) That it has legal faculty to become liable in the terms and conditions
mentioned in this contract, according to the legal documents attached to
this contract that are part of this same contract.
b) That the represented company is a Mexican society legally established and
its objective is to sanitize and sterilize all kind of products, as well
as a laboratory to support the sanitary regulations.
c) That its legal address is James Watt 22 Ind. Cuamatia, Cuautitlan
Izcalli, Mexico, that is mentioned for all the effects that could develop
from this contract.
d) That it wants to get a lease agreement on the property motive of this
contract to install its industrial plant in this same address.
<PAGE> 2
III. The representative of "BIENES" declares:
a) That the represented company is a Mexican society legally established and
that it has the legal faculties to subscribe this contract as bail of
"GRIFFITH MICRO SCIENCE", according to the legal documents attached to
this contract that are part of the same.
b) That its legal address is Carretera Monterrey-Saltillo, Kilometro 67
1/2, Santa Catarina, Nuevo Leon, that is mentioned for all the effects
that could develop from this contract.
According to the previous declarations and after recognizing the representation
of the parts in this contract, they are willing to become liable to the
following:
C L A U S E S
FIRST - OBJECTIVE
In its character of tenant "AZABI" leases to "GRIFFITH MICRO SCIENCE", that as
the lessee, takes the land and constructions located and James Watt 22 Ind.
Cuamatia, Cuautitlan Izcalli, Mexico. They consist of the following surfaces
and facilities, that are described in Attachment I for more clarity, that
becomes a part of this contract after it has been duly signed by the parts.
<TABLE>
<S> <C>
Industrial plant with a surface of 2,630.00 m2
Offices on 1st floor and 2nd floor in the plant 468.60 m2
Green areas 352.43 m2
Parking lot 239.20 m2
Entrance Area 232.33 m2
-----------
3,922.56 m2
</TABLE>
SECOND - TERM
The duration of this contract is of five ruling years for both parties, the
effectivity is from 1st March 1998 to 28 February 2003.
If any of the parties want to end or continue the contract at the ending date,
a written notification should be made to the other party with a minimum of 90
days in advance.
2
<PAGE> 3
THIRD - PRICE
"GRIFFITH MICRO SCIENCE" will pay to "AZABI" as monthly payment for rent of the
property described in the First Clause, the amount of ------------------------
$102,603.16 (A HUNDRED AND TWO THOUSAND SIX HUNDRED AND THREE 16/100 MEXICAN
PESOS) plus the I.V.A. (Value Added Tax or other tax determined). The amount
should be covered as advanced monthly payments within the first ten (10) days
of each month, against the submission of the legal receipt that should cover
all the applicable fiscal regulations.
The rent would include natural months and it should be covered completely, even
when the property is in use for periods less than a month.
FOURTH - PRICE INCREASE
Once the first twelve months of rent have passed, the monthly rent that
"GRIFFITH MICRO SCIENCE" would pay to "AZABI", according to the previous
clause, will increase 100% the percentage of inflation determined by Banco de
Mexico, S.A., according to the General Price Index to the Consumer. In the
case that the mentioned index is not longer used or published, the substitute
index will be considered.
It is understood that if a drastic change in the economic situation of the
country (excessive inflation, devaluation of the peso, etc.) takes place, it
will cause the revision of the rent price.
FIFTH - PENAL CLAUSE
If the rented property is not vacant by the end of this contract, the lessee
should pay, as monthly rent, the equivalent payment paid at the fifth year of
this contract plus 150% (A HUNDRED AND FIFTY PERCENT) of the inflation
percentage of the previous year.
This last rent will rule for the sixth year and the next years. If the lessee
continues, automatic increases similar to the mentioned in the first paragraph
will take place.
All of the above will be applicable, unless a new contract is settled and
signed.
SIXTH - SERVICES
"GRIFFITH MICRO SCIENCE" should pay and contract on its own and change the
electric power needed to perform its activities. Also, "GRIFFITH MICRO
SCIENCE" will cover the charges for water consumption.
"GRIFFITH MICRO SCIENCE" receives from "AZABI" four telephone lines, which
should be returned free of debts when the property is vacant. The telephone
numbers are: 872-39-30, 872-39-69, 872-29-80 and 872-39-99.
3
<PAGE> 4
SEVENTH - PROPOSE
The property, motive of this lease contract, will be used by "GRIFFITH MICRO
SCIENCE" to install a plant to sanitize and sterilize all kind of products, as
well as a laboratory to support the sanitary regulations.
EIGHTH - FACILITIES
"AZABI" authorizes "GRIFFITH MICRO SCIENCE" categorically to make the
adaptations, installations and arrangements within the property that would be
necessary to accomplish its objectives. For the leased property to cover all
the required areas to perform the industrial activities and commercial and
administrative operations expressed but not limited, mentioned in the above
clause.
The above mentioned authorization will be conditioned to the avoidance of any
modifications that would affect the basic structure of the installations at the
time of designation of the property. These installations are included in the
attached inventory, that is part of this contract. "GRIFFITH MICRO SCIENCE" is
under the obligation to return the property according to this inventory, except
for the normal detriment due to usage.
"GRIFFITH MICRO SCIENCE" is committed to return the property according to the
inventory including all the installations that would have been done.
NINETH - TAXES
"GRIFFITH MICRO SCIENCE" will cover exclusively the value-added tax derived
from the rent. The property taxes of the accounts registered for this
property, as well as the revenues or any other taxes, rights and duties will be
covered by "AZABI".
TENTH - SUB-LEASING
"GRIFFITH MICRO SCIENCE" is allowed to sub-lease the property, totally or
partially, providing that a written authorization is granted by "AZABI".
"AZABI" shall not deny the authorization in the cases that the term in force of
the contract or contracts of sub-leasing does not exceed the term in force for
the present contract. Also, that the sub-lessee would be a Mexican company
that belongs to the same group of economic interests as "GRIFFITH MICRO
SCIENCE" belongs.
After the sub-leasing contract, the sub-lessee will be obliged to the same
terms that "GRIFFITH MICRO SCIENCE" is, under the present contract. Besides,
"GRIFFITH MICRO SCIENCE" will remain responsible as if it continued using and
enjoying the property under this contract before "AZABI".
4
<PAGE> 5
ELEVENTH - JURISDICTION
For all matters related to interpretation and fulfilment of this contract, the
parties agree to observe the jurisdiction and competence of the courts of the
Federal District and the dispositions of the Civil Code of the Federal
District. They refuse any other tribunals that would apply due to their
present or future addresses or for any other reason.
TWELFTH - INSURANCE
"GRIFFITH MICRO SCIENCE" will take an insurance on behalf of "AZABI" that will
cover the rented property against Explosion, Fire, Earthquakes and Civil
Responsibility. It will also be responsible to insure all its belongings
inside the place without responsibility for "AZABI" and should provide an
updated copy of the insurance to "AZABI".
THIRTEENTH - STRIKE OR CLOSING
In the case that the activities developed in the rented property are suspended
due to strike, closing, sinister or other causes, the lessee and its bails
agree to pay on time the rent and other benefits outlined in this contract for
the time that the situation remains.
The parties understand the extent, effects and force of the contents of each
clause of this contract. They sign it in conformity on the margin of all and
each of its pages and on the bottom of this page in Mexico, Distrito Federal on
the First Day of March 1998.
"THE TENANT" "THE LESSEE"
- ------------------------------------- --------------------------------------
INMOBILIARIA AZABI, S.A. DE C.V. GRIFFITH MICRO SCIENCE, S.A. DE C.V.
SR. SALOMON BALAS S. Q.F.B. MA. DEL CARMEN CASAR LARA
"THE BAIL"
-------------------------------------
BIENES RAICES GRIFFITH, S.A. DE C.V.
C.P. ROBERTO VILLARREAL FLORES
5
<PAGE> 1
EXHIBIT 10.23
TENANCY AGREEMENT
PARTIES:
The undersigned,
STICHTING PENSIOENFONDS DE EENDRAGT,
having its registered office in Hoofddorp,
hereafter called "the lessor"
declares to have leased to the other undersigned party,
GRIFFITH MICRO SCIENCE BV
legally represented by Mr. D. Barrie and/or C.W. Van Poppel,
having its registered office in Zoetermeer / The Netherlands
hereafter called "the tenant",
who declares to have accepted the lease:
OBJECT:
The commercial property with the accompanying ground, located in Zoetermeer,
Storkstraat 8, well-known to the parties, who do not request any further
description,
hereafter called the leased premises.
The agreement is entered into in accordance with the following terms and
conditions:
ARTICLE 1: GENERAL
1. The tenant and the lessor commit themselves towards one another to all legal
obligations of both parties and to those imposed by the local regulations and
practices, in as far as the current tenancy agreement does not deviate
therefrom.
2. If the tenant or the lessor do not carry out any of their obligations
imposed by law, by the local regulations and practices or by the current
agreement, or carry them out too late, the defaulting party is liable and the
other party is entitled to compensations for all damages and interests
resulting from this negligence, without any prejudice to the recourses the
latter party is entitled to by law, as per the local regulations and
practices in order to enforce the execution or the termination of the
agreement.
ARTICLE 2: TERM OF THE TENANCY AGREEMENT
1. The tenancy agreement is entered into for a period of five years starting on
July 1st, 1991 and thus ending on June 30th, 1996.
2. The rental period is supposed to have been tacitly extended for a period of
five consecutive years unless if the tenant declares by registered letter to
the lessor no later than twelve months before the expiry of the period
mentioned in article 2, paragraph 1,
<PAGE> 2
that he wants to terminate the tenancy agreement as per the said expiry date of
the contract. Afterwards there is an option of one year.
3. During the period(s) stated in the second paragraph of this article, all
conditions of this agreement apply, excluding a new option term of five
years.
ARTICLE 3: RENT
1. The rent is fixed at 115,000.-- DFL (one hundred and fifteen thousand
guilders) per year, to be paid in advance in quarterly instalments, each of
one fourth of the annual rent. All instalments are payable on the first day
of each relating calendar quarter. The first instalment relates to the period
of August 15th, 1991 to October 1st, 1991 and amounts to 14,375. DFL
(fourteen thousand three hundred and seventy-five guilders). This rent will
be increased with the turnover tax allowed by the government. Refer to the
clauses of article 14 of this agreement.
2. The lessor and the tenant agree that the rent will be readjusted yearly on
July 1st. The first readjustment will be made on July 1st, 1992. For the
readjustment the following formula will be used:
a
- x c = new rent
b
In this formula:
a: stands for the family consumption index of the calendar year, relating to
families of employees having a family income below the maximum wage level
for entitlement to national health insurance in 1985 (1985 = 100) as
published by the Central Bureau of Statistics ("Centraal Bureau voor de
Statistiek" (CBS)) and this for the calendar year immediately preceding
the date of the readjustment of the rent.
b: stands for the same figure as described in "a" but relating to the
calendar year 1990
c: stands for the initial rent.
3. When the CBS publishes the above-mentioned index figure based on a new basic
year, this new formula will be used for the yearly readjustment of the rent,
if necessary subject to the application of a coupling ratio. In case the
parties do not agree on this subject, the opinion of CBS will be decisive.
4. In no circumstances the rent will be lower than the rent of the preceding
year of lease.
5. In case the above-mentioned data of the Central Bureau of Statistics are
missing, the readjustment of the rent will be calculated in consultation with
CBS according to similar criteria.
<PAGE> 3
ARTICLE 4: PAYMENTS
1. All payments due to the lessor by the tenant following this agreement
will only be paid by the tenant to the lessor in valid Dutch currency and
without any compensation nor discount whatsoever on the bank account or
the transfer account designated by the lessor.
2. In case of late payment by the tenant of the rents or any other amounts
which he is due now or in future following this agreement, he is due an
interest of 1,5% per month on the overdue amount, always rounded up to a
full month, without prejudice to the lessor's other rights and powers.
3. Furthermore the tenant shall compensate to the lessor any damage the latter
might suffer due to the tenant's negligence and/or accelerated termination
of the tenancy agreement. In case of non-payment of the rent or of any
other amounts, the judicial and extrajudicial expenses resulting from the
recovery procedures, are at the tenant's expense. The parties fix the
extrajudicial expenses at a minimum amount of 15% of the due and unpaid
amounts, exclusive of V.A.T., with a minimum of 1,000.- guilders.
4. If the tenant fails to comply with his obligations as imposed on him by
law, by the local regulations and practices and/or by this agreement,
after he has been summoned to comply with them, the lessor has the right
to terminate the rent immediately at any moment before the end of the
term, without any other summons or judicial intervention being necessary.
5. Those stipulations do not harm the lessor's right, as per the
stipulations of articles 1302 and 1303 of the Code of Civil law, to claim
the ipso jure cancellation of the tenancy agreement and the evacuation of
the leased property with compensation for damages, expenses and interests,
on the basis of default of the tenant.
ARTICLE 5: DESTINATION AND USAGE
1. The leased property is destined to be used as a business accommodation
and can only be used as such. The lessor is not responsible for the
suitability of the leased property for the indicated destination.
2. The leased property can not be given any other destination without the
written permission of the lessor. This also applies to any changes to or
extensions of activities within the said destination in as far as they
lead to substantially higher dangers.
3. The tenant shall use the leased property as a good family father and in
compliance with the destination stated in paragraph 1, and shall furnish
it and keep it furnished with sufficient inventory in accordance with the
destination. The tenant shall not cause any inconvenience to third
parties.
4. The maximal permissible load on the floors amounts to 2,500.- kg per
square meter of floor area, including dividing walls. All damages
resulting from the so-called "load per spot" are at the tenant's expense.
The lessor bears the costs of repairs relating to any subsidence of the
floor, but not the costs for resulting damage to the tenant's property.
<PAGE> 4
5. The tenant must take personal care of applying for any permits and/or
exemptions that are needed for the execution of the business. Refusal or
withdrawal of such permits can never lead to termination or nullity of
this tenancy agreement nor to any actions against the lessor.
6. The tenant and the lessor shall strictly comply with all regulations and
instructions prescribed by the competent authorities and/or fire insurers
relating to the leased property or the usage thereof.
7. The tenant bears all risks for damages to the facilities installed by
him. The tenant commits himself to take sufficient insurance to cover this
risk.
ARTICLE 6: COMPLETION AND ACCEPTANCE
1. The state the leased property is in at the beginning of the tenancy term
shall be recorded in a dated inventory of fixtures as between lessor and
tenant that is signed by both parties. At the end of the term of the
tenancy agreement the tenant shall return the leased property to the lessor
in the state mentioned in the inventory of fixtures as between lessor and
tenant, except for usual wear and tear. At the end of the term, both
parties shall make a joint inspection of the leased property and shall
agree in writing as to the way in which the repairs the lessor deems to be
necessary following the inspection will be performed at the tenant's
expense. If for any reason whatsoever no inventory of fixtures as between
lessor and tenant was drawn up at the beginning of the lease term, the
leased property is considered to have been surrendered by the lessor to the
tenant in good condition.
2. The tenant waives all rights he can claim from the lessor in case the
latter can not put the leased property at the tenant's disposal at the
agreed date, on condition that there is no fair reason to hold the lessor
responsible for this delay.
3. The tenant declares to have sufficient knowledge of the properties of the
leased property and not to want any additional description.
ARTICLE 7: CHANGES TO THE LEASED PROPERTY
1. The tenant is not entitled to make any structural or other arrangements in,
on or to the leased property, to make any changes to or to demolish any
parts of the leased property without the written permission of the lessor.
Requests to do so must to be made in writing to the lessor and must be
accompanied by drawings in threefold and of a technical description. The
lessor can attach any conditions he deems fit to such a permission that is
to be granted.
2. At the end of the lease term, the tenant shall leave as such whatever
changes, additions or demolitions he has made in, to or on the leased
property with the said permission of the lessor, without being able to
claim any compensation whatsoever from the lessor. However, at the end of
the lease term the lessor can claim that the leased property is partly or
totally returned to its original state at the tenant's expense and risk.
<PAGE> 5
3. In consultation with the lessor and subject to his permission, the tenant
is allowed to make passages between number 8 and number 10 at his own
expense and at his own risk.
ARTICLE 8: SUBLETTING
1. The tenant shall not sublet the leased property to third parties nor give
third parties the right to use the leased property, either partly or
totally, without the lessor's written permission. The lessor shall only
refuse this permission if he has reasonable grounds to do so.
2. The tenant shall not contribute any rental rights to any company nor use
his rental rights in such context without the prior written permission of
the lessor.
ARTICLE 9: LIABILITY
1. The tenant is liable for all damages to the leased property or to the
buildings the leased property is part of, which are inflicted by himself
or by the persons he has admitted to the leased property, unless if the
tenant gives sufficient proof that those damages can not be imputed to him
or said persons.
2. The lessor is not responsible for the consequences of any visible and/or
invisible faults in or around the leased property, except if those faults
are the result of the lessor's gross negligence as to the maintenance he is
responsible for. Moreover the lessor is not responsible for any damages due
to circumstances beyond one's control, for which the lessor declares not to
accept any liability. The lessor is never responsible for any immaterial
damage, including loss of profits.
3. The lessor is not responsible for damage to or failure of equipment due to
storm, snow, frost or rain, efflux of gas, water and electricity, failures
in the supply and/or exhaust of gas, water and electricity, nor for any
damage the tenant could suffer due to failures in any supplies and
services, delivered or performed by whoever and at any moment and relating
to the leased property, unless if this damage results from gross negligence
of the lessor. The tenant indemnifies the lessor against third party claims
regarding any damage to third parties resulting from the circumstances
described in the previous sentence.
4. The tenant is responsible in case anything is changed to, added to or
demolished in the leased property without the written permission of the
lessor. Those terms do not apply to the movables which have been installed
in the leased property, neither attached to the land nor the buildings, and
in accordance with the stipulations of article 5 of this agreement, for the
purpose of executing the tenant's business in the leased property.
5. At the end of the lease period the lessor will have to leave all changes,
additions or demolitions that have been made to the leased property with
the permission of the lessor, in the state in which they are, without
being able to claim any compensation from the lessor. However, this does
not impedes the lessor's right to claim that the leased premises shall be
partly or totally returned to their initial state at the end of the lease
period and this at the expense and the risk of the tenant.
<PAGE> 6
6. In case of damage or failures to the installations belonging to the
leased property resulting from the use of or due to faults and/or failures
to installations which are used by the tenant and which do not belong to
the leased property (even if the lessor has granted permission for such
use), the tenant shall refund to the lessor any expenses the lessor has to
make in order to repair the damage and/or neutralise such faults and/or
failures.
7. Moreover, the tenant shall indemnify the lessor for all claims of third
parties and joint users of the general facilities in case they suffer any
damage due to the use by the tenant of the facilities he has installed in
the leased property.
8. The tenant must make sure that no persons are on the roof or the terrace
and that no objects whatsoever are placed on the roof or the terrace. The
tenant is responsible for assuring that this stipulation is observed. In
case this stipulation is violated, all repairs of any damages resulting
from this violation are at the tenant's expense and will be carried out by
him. If the tenant fails to comply with this clause, the lessor can have
the repairs carried out and can recover the resulting costs from the
tenant.
9. The tenant indemnifies the lessor against any third party claims,
including claims from government authorities, relating to any pollution in
the leased property or its environment resulting from the activities of
the tenant or any persons the latter has admitted to the leased promises
at that particular place. Moreover all expenses the lessor has to make as
a result of such pollution are at the tenant's expense. This stipulation
also remains in vigour after the expiry of this agreement.
ARTICLE 10: MAINTENANCE
1. All maintenance that is necessary for the constructive maintenance of the
leased property and the installations that belong to the leased property
as per this agreement, is at the lessor's expense.
2. All daily maintenance activities and periodical inspections relating to
the daily use of the heating systems are at the tenant's expense. The
tenant will enter into a service agreement for those activities after
consultation with the lessor.
The service agreement shall at least contain the following elements:
a. repairing failures to the installations;
b. treatment of complaints relating to the installations;
c. reporting to both lessor and tenant;
d. periodical inspection and maintenance of the installations based on
the frequencies prescribed by the lessor.
e. Duty of the tenant and the installer to inform the lessor in case
of termination of the service agreement.
3. If the lessor suspects that the tenant fails or has failed to comply with
the above-mentioned obligation, the tenant must give sufficient proof
showing that he has complied with the above-mentioned obligation upon the
lessor's written request. If the lessor has not received any sufficient
proof (as the lessor deems fit) no later than five days after the date of
the request, the lessor has the right, without any authority of the court
whatsoever, to take, at his own expense, all actions the tenant should take
as per the above-mentioned stipulations, after which all expenses relating
hereto can be
<PAGE> 7
recovered from the tenant. This authority does not impede on the lessor's
right to recover from the tenant any damage, resulting from the lessor's
negligence.
4. Without prejudice to the stipulations of the above paragraphs, the tenant
is responsible at all times for the surveillance and the daily maintenance
of the installations.
5. All maintenance activities relating to the daily use and all small
repairs as stipulated in article 1619 of the Code of Civil law are at the
tenant's expense. Those maintenance activities include:
Installations:
- cleaning, operation, inspection, surveillance, keeping in working
order and adjustment of the installations;
- delivery and processing of consumables such as: filters, lubricants,
straps, chemicals, Freon, small packings, light bulbs, strip lights and
cleansing agents;
- rectifying failures and performing small repairs, other than
replacement of components of the installations;
- repairs or occasional replacement of simple of switching equipment;
- having the prescribed inspections performed.
Structural:
- cleaning of the leased property, especially mains, drains, smoke
exhausts, roofs and gutters;
- keeping in working order, repairing and if necessary occasionally
replacing hinges and locks;
- repairing local differences in height in the pavements;
- keeping in working order, repairing and if necessary occasionally
replacing sanitary equipment and taps;
- the total interior maintenance of the ceilings and the finishing of
walls and floors;
- replacing broken glass by identical glass;
- maintenance of the planting.
The tenant shall always have the necessary repairs performed as soon as
possible.
6. The tenant shall tolerate all maintenance works, repairs and/or
renovations to the leased property, to the building the leased property is
part of and to the adjacent premises, without being entitled to any
damages or decrease of the rent whatsoever, even if the activities go on
for more than forty days.
<PAGE> 8
ARTICLE 11: PREVENTION OF DAMAGE
1. The tenant shall in all circumstances take all necessary measures to
prevent and/or limit the damage to the leased property and/or the adjacent
premises and the properties of the lessor and of third parties.
2. The tenant shall immediately report to the lessor all detected and/or
impending damage, as well as negligence of the maintenance companies
mentioned in paragraph 2 of article 10 which might result in damages to
the installations mentioned in that article.
3. The tenant shall give the lessor or the persons calling at the tenant at
the lessor's request, access to the leased property in order to make
inspections and/or if required allow them to perform any maintenance works
to the leased property, without requesting anything in exchange. If the
tenant fails to do so, the lessor has the right to recover the extra costs
resulting therefrom from the tenant.
ARTICLE 12: SERVICES AND SUPPLIES
1. The costs of the standing charges and the consumption of water, gas,
district heating, oil and electricity for the leased property as well as
all costs relating to any essential transformer or to the extension of the
existing installation, are at the tenant's expense.
ARTICLE 13: DUTIES AND TAXES
1. The professional duties and taxes on the leased property are at the
lessor's expense, unless if specified otherwise by law or if agreed
otherwise between the tenant and the lessor, however on the understanding
that any government taxes that are imposed after the date on which this
agreement comes into force, are at the tenant's expense.
2. The taxes and duties as stated in the first and second paragraphs of this
article can only be passed on if and when the increases of those taxes and
duties or their creation after the starting date of the tenancy agreement
are not compensated in terms of percentage by the increase of the rent as
stipulated in the second paragraph of article 3 or by the dissolution of
existing taxes after the commencement of the rent.
3. Taxes, professional and non-professional duties and increases thereof
which are imposed to the lessor and which result from the use of the
leased property or are related to the professional activities performed
there and/or resulting from matters installed in/at the leased property by
the tenant, including charges levied locally on projections over public
land, will also be reimbursed to the lessor by the tenant.
<PAGE> 9
ARTICLE 14: EXHAUSTION BECAUSE OF TAXED LETTING
1. The rent will be increased with the turnover tax allowed by the government.
By signing the present agreement the tenant authorises the lessor to make
an appeal as stated in article 11, paragraph 1, subparagraph 5e of the law
of 1968 relating to the turnover tax, also on his behalf.
ARTICLE 15: BANK GUARANTY
1. As a surety for the compliance with this agreement and for the payment of
all sums the tenant is due to the lessor or to his rightful claimants at
any time, including damages, interests and expenses, the tenant will pay
into the hands of the lessor a guaranty for number 10, supplied by a
certified bank and approved by the lessor in accordance with the existing
model, for an amount of 34,069.- DFL (thirty-four thousand and sixty-nine
guilders).This payment shall be made no later than on the day on which this
agreement comes into force. In case the tenant does not comply with this
obligation, he is due a penalty to the lessor for each day the tenant is in
default. This penalty amounts to 1% of the amount of the bank guaranty that
is to be given to the lessor. The lessor will claim this penalty as
additional rent being due.
2. At the expiry of the tenancy agreement, the bank guaranty is returned to
the tenant after the leased property has been returned in good condition
and the tenant has complied with al his obligations as per this agreement.
3. The tenant must immediately pay up the bank guaranty as soon as the
lessor has called upon this bank guaranty. In case the guaranty has not
been paid up 14 days after the lessor has summoned the tenant to do so,
the penalty clause stated in this article will come into force.
4. During the term of the agreement the tenant can not request that any
amount due to the lessor will be balanced against this bank guaranty.
5. During the full term of this agreement, the lessor has the authority to
claim at any moment that the amount mentioned in the bank guaranty be
adapted to the annual rent which is in force.
ARTICLE 16: TERMINATION OF THE RENT
1. During a period of twelve months prior to the expiry of the tenancy
agreement and also in case of intentions for a private or public sale, the
tenant shall consent with visits of the leased property. Such visits shall
always take place after consultation with the tenant. Moreover, the tenant
shall agree with the fact that placards or notice boards mentioning a sale,
auction or lease are being put up.
2. At the end of the tenancy agreement the tenant shall evacuate the leased
property on time and shall return it to the lessor well-maintained and
well-cleaned.
<PAGE> 10
3. Nevertheless, if the tenant has left any goods in the leased property
after having evacuated the leased property or after the date on which he
should have evacuated the premises, he will be deemed to have given up his
rights to those goods and any proceeds whatsoever resulting therefrom
irrevocably and without any compensation whatsoever, in favour of the
lessor. The lessor then has the choice between accepting the goods as his
property and renouncing such acceptance. In both cases the lessor still has
the right to recover from the tenant the costs relating to the removal of
such goods. In case any of the removed goods belong to third parties, the
tenant shall indemnify the lessor against all third party claims resulting
form the removal.
4. If the lessor does not receive the keys on time at the end of the tenancy
agreement, he has the right to gain access to the leased property, at the
tenant's expense, without prejudice to the tenant's obligation to
compensate all further damages that might result from his negligence.
ARTICLE 17: CODE OF ORDER
1. The tenant shall not put up any publicity, texts, banners or other
designations in, on or in the neighbourhood of the leased property without
explicit written permission of the lessor, and if necessary, of the city
council or other competent authorities. The lessor also reserves the right
for himself and/or for third parties to put up any publicity or
designations in, on or in the neighbourhood of the leased property after
consultation with the tenant and in as far as this does not harm the tenant
in his professional activities or does not cause him any inconvenience.
2. Without the explicit written permission of the lessor, no installations
for wireless telegraphy, telephone or television can be put up on, at or
near the leased property, irrespective of whether those installations have
a temporary or permanent nature. Moreover no wirings for radio, television
or other wirings can be attached to the leased property.
ARTICLE 18: MANAGING COMPANY
1. Until further written notice of the lessor, the lessor appoints Zadelvast
Beheer B.V., registered in Utrecht, Vredenburg 137 as the managing company
of the leased property, respectively the building the leased property is
part of.
2. For the purposes relating to the execution of this agreement and in case of
premature termination of the rent, including cancellation and eviction, the
lessor will be represented by the managing company in whose office the
lessor elects domicile. The tenant shall consult with the managing company
on all matters relating to this agreement.
<PAGE> 11
ARTICLE 19: DOMICILE
1. For all purposes relating to the execution of this agreement (premature
termination, including cancellation and eviction), the tenant declares to
elect domicile in the leased property without surcease, unless if the
lessor has agreed with the election of another domicile by the tenant.
ARTICLE 20: DISPUTES
1. All disputes resulting from this agreement or from any other agreements
that might result from it will be settled by the competent judge in
Utrecht.
ARTICLE 21: SPECIAL CLAUSES
1. In addition to the stipulations of article 2 of this agreement, the
parties have agreed that the tenant has the right to terminate this
agreement prematurely subject to a notice of twelve full calendar months,
in case the business relationship between the tenant and Becton &
Dickinson comes to an end. The tenant must give written proof of the
termination of this relationship.
2. In addition to the stipulations of article 6 of this agreement, it is
stated that the tenant has taken over the following goods/objects from the
previous tenant in the current state and that upon expiry of this
agreement those goods/objects will be returned to their original state at
the tenant's expense:
a) all available net curtains and rails
b) floor covering office
c) wooden wall rear steps
d) wired glass windows rear steps
ARTICLE 22: APPLICABLE LAW
1. This agreement is governed exclusively by the law of the Netherlands.
ARTICLE 23: POLLUTION OF THE LAND
1. The tenant indemnifies the lessor against all claims of third parties,
including government authorities, relating to any pollution in, at or
around the leased property as a result of the activities performed there
by the tenant. All expenses the lessor has to bear as a result of any
pollution are also at the tenant's expense.
2. If in case of any third party claim the tenant is of the opinion that the
alleged pollution does not result from any of the activities he performed
in, at or around the leased property, the tenant needs to give proof
thereof.
3. No time limit whatsoever applies to the preceding paragraphs; they thus
remain valid for many a long day to come.
<PAGE> 12
ARTICLE 24: PARKING FACILITIES
1. Parking spaces shall only be used for the storage of passenger cars.
2. The parking of cars is at the risk of the owner of the vehicle.
Consequently the lessor is not responsible for any theft, damages,
perishing of goods belonging to the tenant or the user, nor for the
consequences of any physical injuries the persons sustained in or close to
the parking space.
3. The lessor has the right to change the allotment of parking spaces or to
prescribe other rules relating to parking.
ARTICLE 25: DISCHARGE PERMISSION FOR THE TENANT
Prior to taking possession of the leased property, the tenant must make a
request to the local authorities to obtain a permission to discharge waste
water. The tenant shall to take into account that he is due a contribution to
the exploitation expenses relating to the transport and treatment of waste
water. The amount of this contribution will be fixed by the authorities.
Drawn up in two copies and signed,
in Hoofddorp in Zoetermeer
August 1991 August 1991
The lessor The tenant
(signature + name in printing) (signature + name in printing)
<PAGE> 1
EXHIBIT 10.24
TENANCY AGREEMENT
Between the undersigned:
1. the Limited Liability Company "NIMCO",
having its registered office at 2410 Herentals, Hikstraat 35,
hereby represented by two directors,
Mr. Frans Wuyts
and
Mrs. Francine Dom
hereafter called "the lessor"
and
2. the Limited Liability Company "GRIFFITH MICRO SCIENCE"
having its registered office at 2410 Herentals, Toekomstlaan, Wolfstee
Industriepark,
hereby represented by Mr. Marc Van Moerbeke,
hereafter called "the tenant"
THE FOLLOWING HAS BEEN AGREED:
This agreement replaces the tenancy agreement of July 1st, 1987, signed on July
15th, 1987.
ARTICLE 1
The lessor lets to the tenant, who accepts:
the offices and warehouses located in an industrial building in Herentals,
Industrieterrein, Atealaan 1, having a surface area of approximately 4,680 m2,
as per the annexed ground plan, including parking space, well-known to the
tenant.
ARTICLE 2
The present tenancy agreement is entered into for a period of five years,
starting at July 1st, 1990 and ending on June 30th, 1995.
After expiry of the above-mentioned term the present agreement will be tacitly
renewed for a period of five (5) years, unless if the tenant gives notice
before October 1st, 1994 that he wants to end this agreement.
After July 1st, 2000, the tenancy agreement is tacitly renewed for consecutive
periods of one year, unless if one of the parties gives notice before October
1st.
<PAGE> 2
ARTICLE 3 - RENT
The rent is fixed at 3,200,000.- BEF (three million two hundred thousand
Belgian Franc) per year, payable in advance in four (4) instalments of
800,000.- BEF (eight hundred thousand Belgian Franc), respectively on July 1st,
October 1st, January 1st and April 1st of each year.
In the transition period only the quarterly rent of July 1st, 1990 will be
fixed at 500,000.- BEF (five hundred thousand Belgian Franc).
The payments are only valid if they are deposited on the lessor's bank account
with the "Nationale Maatschappij voor Krediet aan de Nijverheid", number
145-370000116-13.
Payments by post or bank do not make the debt collectable.
The rent is linked to the index of retail prices and will be adjusted
proportionally when this index rises or falls.
The following formula is used for the calculation:
original rent x new index
-------------------------
pivotal index
The pivotal index is the index of June 1990.
The adjustment is made on an annual basis and then remains valid for the
following twelve months. The first adjustment will thus take place on July 1st,
1991.
This stipulation applies to both sides, ipso jure and without any summons.
Any omission to comply with this stipulation does not entail any cession of
rights.
ARTICLE 4
The tenant commits himself to pay, as from the moment he takes possession of
the rented premises, all expenses that are due for the use of water, gas and
electricity, including the maintenance fees and the rental fees for the meters.
The lessor puts all currently existing connections for gas, water and
electricity at the tenant's disposal. All other connections or adjustments are
at the tenant's expense.
All taxes for the rented part will be borne by the tenant. For the previous
tenancy agreement this amounted to 200,000.- BEF per year and for the
additional part this also amounts to 200,000.- BEF or a total amount of
400,000.- BEF per year. In case the rateable value ("kadastraal inkomen")
changes, the above-mentioned amount will be increased or decreased
proportionally.
ARTICLE 5
The tenant will occupy the premises like a good family father and will bear all
expenses for the maintenance of the premises and all rent repairs that are
stipulated in the common law.
2
<PAGE> 3
The tenant will replace all broken or cracked windows, he will repair and
maintain all doors and gates, will keep all wells and drains clean, will take
care of the interior paintwork and the wallpaper in the premises and will be
responsible for keys and locks.
Moreover the tenant will take all necessary precautions to protect pumps, taps
and pipes against frost.
Until December 31st, 1992 the tenant will have all small maintenance work to
the roof carried out and he can deduct the costs thereof from the quarterly
rent, on condition that he has first presented a copy of the invoice to the
lessor.
The lessor hereby gives the tenant the permission, as of January 1st, 1993, to
have the roof renovated if necessary at his expenses, after having had the
offer signed by the lessor for agreement.
The tenant can possibly deduct the amount of the invoice for this renovation in
equal parts from the quarterly payments as from April, 1993 until April, 1995
(last payment of the rent for the first five years of the current tenancy
agreement).
ARTICLE 6
The tenant will be entitled to have improvements or alterations made to the
rented premises, provided that nor the safety, nor the health nor the aesthetic
aspects of the building are jeopardised, and subject to the prior permission of
the lessor.
Any changes, alterations or newly built parts, without any exception
whatsoever, being made with or without the permission of the lessor, ipso jure
and without any compensation whatsoever become the property of the
lessor-owner, who has the liberty of keeping them or having them removed at the
end of the term of the tenancy.
During the term of the tenancy the alterations remain the property of the
tenant and this is also applies at the end of the term of the tenancy, insofar
as they consist of movable and reusable parts, such as partition walls and the
like.
ARTICLE 7
Subletting and transfer of the rent are forbidden, unless with prior written
agreement of the lessor.
The current tenant however remains fully severally liable for all obligations
resulting from this agreement.
ARTICLE 8
During all terms of notice, during the sixteen months prior to the expiry of
the tenancy agreement, and in case the rented premises are put up for sale, the
tenant is bound to open the premises for inspection by interested buyers at
least two days a week, for two hours in the afternoon, and to have two notices
put up.
3
<PAGE> 4
In case the premises are sold, the new owner will have to comply with the
current agreement. In case of notice ipso jure upon sale, for other reasons
than late payment or expiry of the tenancy agreement, the owner will compensate
the alteration expenses incurred by the tenant before the latter leaves the
rented premises. This compensation amounts to the total amount reduced with an
annual depreciation of 8%.
ARTICLE 9
The tenant is bound to take a rent insurance for the full term of the tenancy
agreement with a reputable insurance company registered in Belgium. At the
lessor's first request, the tenant is bound to give proof of this insurance and
of the payment of the last premium that was due.
ARTICLE 10
The lessor or his proxy will be entitled to enter the rented premises at all
times, as determined by law.
ARTICLE 11
The parties explicitly state that the current property purely has a civil
character and that the rented property therefore can not be used for commercial
purposes, neither globally nor partly.
As such the law on the agreements for commercial rent does not apply to the
current agreement.
ARTICLE 12
The parties explicitly agree that the tenant is not bound to pay a rent deposit
to the lessor.
ARTICLE 13
For the execution of this agreement the parties choose their domicile as
follows:
the lessor: in his registered office
the tenant: in his registered office.
ARTICLE 14
The expenses and the registration fee for the amount up to 1,300,000.- BEF that
are due relating to this tenancy agreement, will be borne and paid by the
tenant; the other part of the registration fee is at the lessor's expense.
For registration purposes the charges are assessed at 8% of the rent.
4
<PAGE> 5
Drawn up in Herentals on June 25th, 1990 in 3 copies, of which one is destined
for registration.
THE TENANT THE OWNER
Subject to agreement For agreement and acceptance
and acceptance by the lessor Subject to I.O.K.'s agreement
with this rent.
5
<PAGE> 1
EXHIBIT 10.25
COMMERCIAL LEASE CONTRACT
governed by decree no. 53-960 dated September 30th, 1953
Between the undersigned:
SCI ELDE
Le Parc des Cedres, 516, rue d'Anse,
69400 Villefranche sur Saone,
represented by Mr. DEGUERRY Louis in his capacity of manager
hereafter called "the lessor"
on the one hand,
and:
GRIFFITH MICRO SCIENCES
8, rue Parmentier
60290 Rantigny,
Limited liability company with a capital of 10.250.000,- FF, registered in the
trade register of Beauvais with the number B 344 047 97;
represented by Mr. BARRIE Dirk in his capacity of European Group Director
hereafter called "the tenant"
on the other hand,
<PAGE> 2
CONTENTS
Chapter I - Designation
Article 1 - Object
Article 2 - Designation
Article 3 - Term
Article 4 - Inventory of fixtures as between lessor and tenant
Article 5 - Destination
Chapter II - Expenses and conditions
Article 6 - General conditions of possession
Article 7 - Works, installations, equipment
Article 8 - Maintenance
Article 9 - Visits and surveillance of the premises
Article 10 - Charges, taxes and duties
Article 11 - Insurances
Article 12 - Transfer of the lease contract
Article 13 - Subletting
Article 14 - Telephone and other telecommunications
Article 15 - Restitution of the premises
Chapter III - Financial obligations
Article 16 - Rent
Article 17 - Taxes
Article 18 - Expenses and attendant expenses
Article 19 - Terms of payment
Article 20 - Deposit
Article 21 - Readjustment of the rent
Chapter IV - Other obligations
Article 22 - Resolutive clause
Article 23 - Charges and registration
Article 24 - Election of domicile
Chapter V - Special conditions
Article 25 - Designation
Article 26 - Reference dates
Article 27 - Destination
Article 28 - Annual basic rent
Article 29 - Provisions on expenses
Article 30 - Deposit
Article 31 - Reference index
Article 32 - Fees for the company AUGUSTE-THOUARD & ASSOCIES
<PAGE> 3
The following conditions have been agreed for this commercial lease contract:
CHAPTER 1 - DESCRIPTION
Article 1 - OBJECT
The lessor rents to the tenant, who accepts, the premises of which he is the
owner and which are described in article 25 of this contract.
Article 2 - DESIGNATION
The tenant declares having visited the real estate that is the object of this
contract and knowing it as it exists, extends, wears and behaves without any
further designation being necessary.
It is specified herewith that any differences between the dimensions and
surfaces mentioned in the present lease contract or resulting form any annexed
floor plan and the real dimensions of the premises, can not justify any
reduction or increase of the rent, since the parties refer to the consistency
of the premises as they exist.
Article 3 - TERM
The present lease contract is entered into for the period stated in article 26
of this contract.
The contract will terminate under the conditions fixed by law. The tenant is
entitled to terminate the contract at the expiry of each triennial period by
notifying the lessor by means of an extrajudicial notice no later than six
months before the expiry of the relevant triennial period.
Article 4 - INVENTORY OF FIXTURES AS BETWEEN LESSOR AND TENANT
A contradictory inventory of fixtures as between lessor and tenant will be
drawn up by both parties at the moment the tenant takes possession of the
premises. The expenses of this inventory will be split between both parties on
a fifty-fifty basis.
If, for whatever reason, no inventory of fixtures as between lessor and tenant
is drawn up, and particularly in case the tenant fails to do so, the real
estate that is the object of this contract, will be considered to have been in
perfect state when it was leased.
Article 5 - DESTINATION
The tenant needs to use the real estate that is the object of this contract
within the scope of his activities and for the exclusive use as described in
article 27 of this contract, quietly and in accordance with articles 1728 and
1729 of the Code of Civil law.
This destination can not be changed without prior written approval of the
lessor. The said real estate shall in any case be used for commercial purposes
that can not affect the purpose or the nature of the rented premises.
<PAGE> 4
It is explicitly agreed that the tenant will refrain from holding any auction
sales of furniture or other objects in the said premises.
The tenant declares to take personal care of any authorisations that would be
necessary for the execution of its activities in the real estate, especially
permissions and other. The tenant commits himself to comply with all
regulations and decrees, administrative injunctions or any modifications
thereof at his own expense, dues, risks and danger during the full term of the
lease agreement, such that the lessor can never be pursued or troubled in this
respect.
The lessor reserves the right to let other premises in the real estate to
someone else, whoever it be, even for activities that are in competition with
the tenant's activities.
Chapter II - Expenses and conditions
The current lease contract is entered into under the common expenses and
conditions and those by law, and in accordance with the following conditions.
The tenant commits himself to observe those expenses and conditions without
being able to claim any termination nor reduction of the rent, nor any damages.
Any modifications can only be made upon mutual written and detailed agreement
of the parties. Therefore any tolerance or passive attitude of the lessor can
never be considered as establishing a right, even after some length of time.
The lessor can put an end to those tolerances or passive attitudes at any
moment.
Article 6 - GENERAL CONDITIONS OF POSSESSION
The tenant takes possession of the premises that are the object of this lease
contract in the state in which they are at the moment he takes possession of
the premises, without being able to claim any reduction of the rent, nor any
installation or repairs whatsoever from the lessor, either now or in future. In
case any authority whatsoever would claim the premises that are the object of
the present lease contract to be modified at whatever moment, and even if this
claim relates to circumstances beyond one's control, all expenses and
consequences of this modification are fully and permanently borne by the tenant
who commits himself to pay them. Those works have to be finished with in the
specified deadlines such that the lessor can not be held responsible.
The tenant will furnish the leased premises and will constantly keep them
furnished during the full term of the lease contract with furniture, movables
and goods of a quality and a value large enough to be substituted for the
payment of the rent and the performance of the conditions of the lease
contract. The lessor reserves the right to inspect the said furnishing at the
premises at any moment, during office hours and with a notice of 24 hours.
In case of catastrophe, the amounts that are due to the tenant by the insurance
companies serve as the guaranty for the lessor in place of the material, goods
and movables until these have been replaced. To this effect, this agreement
serves as a guaranty for the lessor for all insurance compensations for the
amount of all sums that are due to him. The holder of the present agreement has
the authority to make whatever summons necessary.
<PAGE> 5
The tenant has to comply with all the expenses for city, police and roads which
are commonly at the tenant's expense, such that the lessor can in no case be
held liable. In case of expropriation for public purposes, the tenant can not
make any claims to the lessor.
The tenant has to refrain from all activities that can be detrimental to the
activities of the other occupants, he has to make sure that he or his officers
do not disturb the quiet of the real estate. He has to make sure the real
estate is kept in good order as far as cleanliness, hygiene and service are
concerned, notably he can not do any work whatsoever that could bother the
other occupants.
The tenant needs to take personal care of the guarding and the surveillance of
the premises he has rented. In particular he can not hold the lessor
responsible in case an existing guard post is removed.
In general, all abuse of possession can lead to the termination of this
contract fifteen days after a fruitless summons, even if this abuse was only
provisional and only lasted for a short period of time.
The tenant can in no way hold the lessor responsible for any temporary
discontinuance or reduction of services such as surveillance, gas, water,
electricity, telephone, heating, etc.
In case regulations for joint ownership of the real estate exist now or in
future, the tenant needs to comply with the conditions of the said regulations
and with all decisions taken by the meeting of the joint owners. The tenant
explicitly declares to have received a copy of the regulations for joint
ownership before this very day.
The tenant also needs to respect the articles and conditions, the interior
regulations and the regulations of the industrial zone if necessary, such that
the lessor is never troubled in this respect. The tenant declares to have
received the indicated documents before this very day.
In case the real estate the rented premises depend on or the real estate
complex it is part of, comprises an inter-office restaurant, and if a
partnership is set up between the tenants of the real estate or real estate
complex for the functioning of this inter-office restaurant, the tenant commits
himself to join this partnership.
Article 7 - WORKS, INSTALLATIONS, EQUIPMENT
The tenant will keep the rented premises well-maintained and will have all
repairs carried out at his own expense during the term of the lease contract,
except for those mentioned in article 606 of the Code of Civil law.
The tenant has to permit all repairs, reconstruction and renovation works which
the lessor has carried out during the term of the lease contract in the real
estate which is the object of the this contract, irrespective of the nature and
the duration of those works, even if the duration exceeds forty days, and this
explicitly notwithstanding article 1724 of the Code of Civil law. The tenant
can not claim any indemnity nor reduction of the rent due to the said works.
The tenant can not carry out any works in the rented real estate that could
change the destination of the building or could damage its solidity, nor can he
put a load on the floors
<PAGE> 6
exceeding their maximal supporting power under penalty of being responsible for
any disturbances or accidents.
If the premises are totally or partly heated by means of a heating system
integrated in the ceilings or the floors, the tenant can not perform any
drilling activities that could damage this heating system, irrespective of
whether it consists of heating cables, wiring or any other systems.
For all works entailing changes to the distribution systems, demolition or
drilling of walls, beams or floors, installations of machinery irrespective of
their source of energy, the prior written agreement of the lessor is needed.
The said works have to be carried out at the expense and at the risk of the
tenant in accordance with the rules in vigour and under the surveillance of an
architect or a consultancy agency for technical studies approved by the lessor.
The fees of the architect or the consultancy agency for technical studies are
at the tenant's expense.
The tenant can not modify the existing layout of the premises, nor can he
install any new dividing walls, even of the removable type, without the
lessor's prior written approval of the intended distribution plan.
However, the lessor hereby permits the tenant as from now on to erect dividing
walls as per the annexed floor plan, and to modify the electrical installation
in order to permit lighting by zone.
All embellishment works, improvements, installations of dividing walls or any
constructions whatsoever including those that can be imposed by legal
dispositions or regulations, that are carried out by the tenant at the moment
he takes possession of the premises or during the term of the lease contract,
become the lessor's property when the tenant leaves the premises at the end of
the term of the lease contract, and at any moment and for whatever reason,
without the tenant being entitled to any compensation and subject to the
lessor's right of demanding that the premises be returned to its initial state,
either partly or in total, at the tenant's expense, even for works that were
explicitly authorised by the lessor. It is however stated that all
installations and equipments which are not fixed to the property and can as
such not be considered as being immovable objects, remain the tenant's property
and shall be removed by him when he leaves the leased property, leaving him
under the obligation to return the leased property which is the object of this
contract, to its original state.
The tenant is not entitled to put up any tablet, sign, blinds or shutters or
realise any installation whatsoever effecting the exterior aspect of the
building without the lessor's prior written agreement. If necessary the tenant
will request the authorisations stated in the provisions ruling the real estate
which the premises are part of and which is the object of this agreement. In
this respect it is stated that the tenant will personally request all the
necessary administrative authorisations and will personally pay any duties that
could be due in this respect, such that the lessor can never be bothered for
this matter.
Article 8 - MAINTENANCE
The tenant has to maintain and replace, if necessary and for whatever reason,
including wear and tear and force majeur, all installations destined for his
personal use (air-conditioning, electrical installations, ventilation), as well
as latches and locks of windows,
<PAGE> 7
doors and shutters, plate-glass panes and windows, parquet floors, tiles, floor
coverings, panelwork, ...
The tenant is responsible for any accidents that are caused by those objects.
The tenant will take all necessary precautions against frost.
The tenant will have all flues that are put at his disposal swept in accordance
with the existing regulations.
If those works have not been carried out eight days after a fruitless summons,
the lessor can take over from the tenant and can have those works carried out
by a company of his choice, at the expenses of the tenant, subject to any
expenses for returning the premises to their initial state following any
damages caused by the non-observance of the provisions of this clause.
The tenant can not do anything that might deteriorate the premises. He needs to
inform the lessor immediately of any mutilation of the property, of any
degradations or damages that could be done to the real estate that is the
object of this contract and due to which works will have to be carried out that
are at the lessor's expense.
Moreover, as from the moment on which the rented premises are put at his
disposal, the tenant will pay the share relating to the rented premises of all
taxes resulting from the collective services, of all equipment in the real
estate complex and of the expenses relating to the conservation, the
maintenance and the administration of the collective parts of the real estate
complex and of the activity zone of which the said premises are part.
Article 9 - VISIT AND SURVEILLANCE OF THE PREMISES
During the full term of the lease contract, the tenant has to allow the
lessor's representatives to visit the rented real estate in order to inspect
its condition. At the lessor's first request the tenant needs to give all
justifications he could be asked for regarding the correct implementation of
the lease contract. Those visits can only be made during office hours and
subject to a notice of at least 24 hours.
In case of termination of the lease contract, the tenant has to allow the
lessor or his representatives to visit the said real estate during a period of
six months prior to his actual departure date. Moreover, the lessor is entitled
to put up any signs or posters during this same period at the places which he
deems fit and the tenant has to agree with this. Those visits can only be made
during office hours and subject to a notice of at least 24 hours given by the
lessor.
Article 10 - CHARGES, TAXES AND DUTIES
The tenant must pay all personal contributions, trade income taxes, tenancy
taxes and any other taxes whatsoever. He must also pay the taxes for garbage
collection, the taxes for drainage through the sewer system, the taxes on
sweeping, all municipal or other taxes whatsoever and any tax increase that
could be created, irrespective of its nature and name. The tenant must pay the
said taxes and charges during the term of the lease contract and
<PAGE> 8
must reimburse to the lessor any sums the latter has advanced in this respect,
especially the land tax.
In general the tenant must pay all present or future charges, irrespective of
their nature, due on the leased real estate or on the tenancy, as well as the
fees for management, syndics and trade unions, such that the rent fixed
hereafter which the lessor receives is net of all charges.
Article 11 - INSURANCES
The lessor will immediately arrange for guaranties for the financial
consequences of the civil liability he might incur in his capacity of owner.
He must insure the total real estate complex at it's new construction value
against the risks of fire, explosions, storms, hurricanes, cyclones, water
damage, crashes of aircraft, strikes, riots and public disorder, assaults,
natural disasters, with one or more insurance companies that are known to be
solvent and he must maintain this insurance during the full term of the lease
contract.
The lessor commits himself to have the insurance companies renounce any
recourse against the tenant for the insurance polices that are subscribed as
such.
The tenant must take out an insurance for sufficient amounts with insurance
companies that are known to be solvent, for the equipments and embellishments,
even those with a fixed destination, his furniture, his material and his goods
against the risks of fire, explosion, lightning, hurricanes, storms, assaults,
natural disasters and extensions, including riots and water damage, theft and
broken glass, including damages due to theft and recourses of neighbours and
third parties.
The tenant declares to renounce all recourse in case of accidents against the
lessor, the tenants or occupants of the buildings and their personnel, as well
as against all agents of the lessor and their personnel. The tenant commits
himself to obtain the same renunciation from his insurers.
The tenant will take an insurance policy for "civil liability" for an unlimited
amount for all bodily injuries and guarantying the financial consequences of
the said responsibilities which he might incur in consideration of material and
immaterial bodily injuries caused to third parties.
Copies of the policies subscribed by the tenant must be remitted to the lessor,
either by the tenant himself or by his counsel and proof must be given of the
payment of the premiums.
The policies must contain a clause stipulating that the insurers commit
themselves to inform the lessor immediately if the policies are terminated for
any reason whatsoever.
Settlement and execution of the policies
The tenant will reimburse to the lessor the total amount of all insurance
expenses that were paid by the latter.
<PAGE> 9
The tenant commits himself to inform the lessor of all elements or events that
could increase his risks and to modify the rate of the premium that applies to
the rented premises. In case the tenant's activities influence the conditions
for insuring the adjacent buildings or premises, the tenant will pay the
additional premiums due by the parties of the said premises or buildings.
The tenant's insurance policies must provide that their termination can only
take effect fifteen days after the notification of the insurers to the lessor.
The tenant must give the lessor's insurers free access to the premises, in
order to permit them to evaluate the risks they have to cover.
The tenant commits himself to have the installations and equipments of the
rented premises, and especially the emergency equipment (fire extinguishers),
examined on a regular basis so as to inspect their functioning and their
conformity with the regulations.
Those examinations will be performed at the tenant's expense by an organism
approved by the plenary assembly of the insurance companies against fire
(C.E.P., VERITAS, ...).
The tenant must have his contract adjusted at the lessor's request, he must
respect the suggestions made in the report of the control agency and must carry
out any works whatsoever that are necessary to make sure everything is in
conformance with the regulations.
Article 12 - TRANSFER OF THE LEASE CONTRACT
The tenant can not transfer his right to the present lease contract, either
fully or partly, without the explicit written approval of the lessor, except if
the lease contract is transferred with the business.
The tenant can not be substituted by natural persons or legal persons in the
rented real estate, especially by way of free management of the business.
Following any transfer that is agreed with notwithstanding this article, the
lessor may elect to terminate this lease contract.
Moreover, the transferring tenant will jointly and severally with his
transferee and any successive transferees vouch for the payment of the rents
and attendant expenses and for all compensations relating to the occupation,
and in general, for the execution of the clauses and conditions of this lease
contract.
Consequently all successive tenants, even those who do not occupy the leased
premises having transferred their rights to the lease contract, will be held
jointly and severally responsible for paying to the lessor any rents and
expenses and for executing all clauses and conditions of the lease agreement,
without being able to raise the benefit of discussion or of division.
The above-mentioned stipulations apply to all cases of conveyance whatsoever.
In case rights to the lease contract are transferred to a company, the
above-mentioned clause applies to any transfers made to a new or an existing
company. The conveyance should be carried out in the presence of the lessor or
his proxy. They have to be summoned by means
<PAGE> 10
of a simple registered letter with acknowledgement receipt addressed to the
lessor's registered office or to the domicile of the proxy, no later than
fifteen days in advance.
The transfer will be established by means of a deed drawn up by a notary public
or other public officer except for derogations by the lessor. An original copy
of the deed relating to the transfer will be transmitted to the lessor free of
charges. The lessor can use this deed as a writ of execution against the
transferees.
In case of a winding up by decision of the court or of measures for judicial
rectification of the tenant company, the rights to the lease contract can only
be transferred by the syndic or the liquidator in accordance with the
above-mentioned conditions.
Article 13 - SUBLETTING
Any total or partial subletting of the premises by the tenant is explicitly
forbidden, as it is the parties' joint intention that the leased premises are
an indivisible whole.
However, the tenant can always propose a subletting to the lessor, who is under
no obligation to accept.
In case the subletting is accepted, the tenant remains solely responsible
towards the lessor for the execution of all the obligations of this lease
contract. The subtenants can not have any additional rights whatsoever in
comparison with the principal tenant.
Moreover, and in case of any partial subletting, it is the parties' joint
intention that the leased premises are an indivisible whole. The sublettings
can not be remonstrated with the lessor. The tenant commits himself to inform
all subtenants and to stipulate in all subletting contracts whatsoever, that
the lessor, as per the present lease contract, has no privity whatsoever with
the subtenants and that the latter explicitly renounce any actions and any
rights versus the lessor, especially for a renewal of the subletting agreement.
Moreover, the tenant commits himself versus his total or partial subtenants to
assume the payment of any compensations whatsoever, in particular those that
might be due by virtue of the release of the premises.
In case any sublettings or transfers are made, all insurance contracts of the
subtenants and transferees need to contain a clause stipulating the
renunciation of all recourses against the lessor, in application of article 11
of this lease contract.
Article 14 - TELEPHONE AND OTHER COMMUNICATIONS
The tenant will personally take all administrative steps in order to obtain the
connections of telephone lines, telex lines or other lines of communication
with which the rented premises are equipped. The said tenant explicitly commits
himself to terminate his subscriptions by the date of his departure.
<PAGE> 11
Article 15 - RESTITUTION OF THE PREMISES
At the expiry of the lease contract the tenant should inform the lessor fifteen
days in advance of the date on which he will move out. The tenant should also
transmit his new address to the lessor.
Prior to moving out, the tenant must pay the total rent and attendant expenses
prior to removing even part of his furniture or materials. He must also prove
by means of receipts that he has paid all the contributions that were at his
expense, both for the prior years and for the current year.
No later than at the expiry date of the lease contract, the tenant must ensure
that the leased real estate is in perfect state of repairs and maintenance.
This will be inspected by means of an inventory of fixtures as between lessor
and tenant. As soon as this inspection has been completed, the tenant has to
return the keys to the lessor. In case the tenant is not present at the date
and time fixed by the lessor for drawing up the inventory of fixtures as
between lessor and tenant, this inventory will be drawn up by a process-server.
The relating costs are at the tenant's expense.
In case repairs or works prove to be necessary, the tenant will inform the
lessor within 48 hours of his intention to execute them himself. The parties
agree to have those works inspected by the lessor. If the tenant fails to
inform the lessor of his intentions, the lessor will have the repairs executed
at the tenant's expense. If the premises can not be rented again prior to the
execution of the works for which the tenant is responsible and that are stated
in the inventory of fixtures as between lessor and tenant, the tenant will pay
to the lessor a compensation equal to the amount of the last rent in force and
to the expenses relating thereto and this until the works have been carried
out. Such compensation, which is fixed excluding any taxes and duties, which
are also at the tenant's expense, must be paid under the same conditions as
stipulated in article 19.
Chapter III - Financial obligations
Article 16 - RENT
The present lease contract is entered into with an annual basic rent, the
amount of which is mentioned in article 28 and that will be adjusted under the
legal conditions and under the conditions stipulated in article 21. Taking into
account the interior works the tenant needs to have performed for the execution
of its activities, the lessor grants him an exemption from rent from September
1st until December 31st 1996.
Article 17 - TAXES
V.A.T.: The above-mentioned rent and its attendant expenses are exclusive of
all taxes. The tenant commits himself to pay in the hands of the lessor the
amount of the value added tax or any other new tax or any tax replacing
existing taxes at the rates that are legally in vigour at the date of the
respective payments.
<PAGE> 12
Article 18 - EXPENSES AND ATTENDANT EXPENSES
The tenant will pay all expenses, contributions, insurances, management fees
for the premises, taxes and allowances mentioned in the preceding articles. He
will reimburse to the lessor the amount of all other expenses for exploitation,
repairs or maintenance relating to the real estate and equipments, irrespective
of their nature, both in the leased premises and in the common parts of the
real estate.
This reimbursement will be paid by a call for a quarterly provision paid by the
tenant, together with each rent instalment, as foreseen in article 29.
At the end of each financial year, the lessor will draw up a final settlement
of all the expenses that were actually paid, of which the provisions that were
already paid will be deducted. The regularisation of the accounts, the call for
the additional expenses or the deduction of the excess payments from the next
instalment, will be effected together with the call for the next rent payment.
Article 19 - TERMS OF PAYMENT
The tenant commits himself to pay to the lessor the rent and the attendant
expenses in four equal instalments paid in advance respectively on January 1st,
April 1st, July 1st and October 1st of each year. If necessary, the first and
the last rents are payable proportionately to the period of time.
The rents and the amounts due are payable at the domicile of the lessor or his
proxy. The tenant must take all necessary actions to insure that the payments
are in the lessor's possession by the contractual expiry dates.
In case of non-payment, even partial, at the expiry date of the rent, the
balance will be increased with an amount of 10% (ten percent) of the rent
excluding taxes, taxes that are moreover at the tenant's expense.
Article 20 - DEPOSIT
In order to guaranty his obligations, the tenant will pay to the lessor as a
deposit a bank guaranty of the annexed type, equal to three months' rent.
This guaranty will be returned after the tenant's departure, on condition that
he has executed all clauses and conditions of the lease contract, especially
after the necessary works have been carried out in order to return the leased
premises to a perfect state for renting.
In case of adjustments or changes to the fixed rent, the present deposit will
be adjusted proportionately to the new rent and under the same conditions, such
that it is always equal to three months' rent excluding taxes.
In case any tax whatsoever becomes be due at any moment whatsoever, the tenant
commits himself to reimburse it to the lessor at the latter's first written
request.
<PAGE> 13
In case this lease contract is terminated due to non-performance of the
conditions due to the tenant, the lessor is entitled to keep the said deposit as
damages, without prejudice to any other damages.
Article 21 - READJUSTMENT OF THE RENT
The rent is indexed on a yearly basis.
The rent will be adjusted upwards or downwards each year on September 1st, ipso
jure and without any formality nor request whatsoever, proportionally to the
quarterly index of the construction cost published by the INSEE.
The initial reference index is stipulated in article 31: it is the last
quarterly index known at the date on which the lease contract takes effect.
The index for comparison used for the calculation of the first readjustment
will be the same quarterly index as the initial reference index but of the
following year. This index for comparison will be the reference index for the
next readjustment, and so on.
It is stipulated explicitly that the present clause refers to the conventional
indexation that does not refer to the legal triennial readjustment foreseen in
articles 26 and 27 of the decree of September 30th, 1953 and that is a matter
of right.
This disposition is an essential and decisive condition of the present lease
contract; without this condition the lease contract would not have been
consented with.
In case of modification or replacement of the chosen index, the new index will
ipso jure replace the old index in the conditions and in accordance with the
published ratio's. This replacement takes effect retroactively as from the date
at which the contractual index can no longer be applied.
In case of pure and simple discontinuance of the above-mentioned index, it will
be replaced by a new index mutually agreed by the parties, or in case the
parties do not reach an agreement, by an expert chosen by the parties. In case
the parties can not reach an agreement as to the choice of the expert, the
latter will be designated by the judge responsible for leases ("Juge des
Loyers") referred to by the first party to take action.
Chapter IV - Other obligations
Article 22 - RESOLUTIVE CLAUSE
It is explicitly agreed that in case of non-execution of all or one of the
above-mentioned conditions, the lessor has the right to terminate the lease
contract ipso jure without having to serve any legal formalities if a summons
to execute the conditions has not had any effects after a period of one month.
The lessor can have the tenant evicted from the leased premises by simple
judgement in chambers by the President of the court of first instance
("Tribunal de Grande Instance"). The lessor reserves the right to assert his
titles to any rents due, damages and expenses, without prejudice to his right
to submit to the judge for a judgement on the merits any actions he thinks fit.
In case of non-payment of only on
<PAGE> 14
instalment of the rent, the lessor also has the right to have the tenant evicted
in the same way and subject to the same conditions, but no sooner than one month
after a summons to pay has remained without any effect.
Any offer to make the payment or to execute the conditions after the expiry of
the above-mentioned delay is deemed to be null and void and non-existent and
can not obstruct the termination requested by the lessor.
In case of termination or eviction, the rents paid in advance, if any, remain
the property of the lessor as damages, without prejudice to the right to any
larger damages and without prejudice to the application of article 1760 of the
Code of Civil law, and this notwithstanding the eviction.
If, after the termination, the premises are not restored to the lessor at the
agreed date and free of any occupation, occupation damages are due by the
tenant or his rightful claimants until the actual restoration. Those occupation
damages are equal to 2% (2 percent) of the quarterly rent including all taxes
per day of delay, increased with all rights to damages in favour of the lessor.
The said occupation damages are exclusive of all taxes and duties. Moreover the
taxes and duties are borne by the debtor of the said damages.
Under no circumstances and for no reason whatsoever can the above clause be
deemed as being a threat or as being a style clause. It contains an explicit
derogation, intended as such and accepted by the parties in the last paragraph
of article 1184 of the Code of Civil law.
All duties and taxes relating to any sums due to the lessor by the tenant
within the scope of this contract and its continuations will be borne by the
tenant.
Article 23 - CHARGES AND REGISTRATION
The tenant will pay all charges, duties and fees relating to the present
contract, as well as those resulting from it, especially the commercialisation
fees of the company AUGUSTE-THOUARD ET ASSOCIES, as indicated in article 32 .
The tenant admits having been informed of the amount of the said charges and
fees prior to the signing of this contract.
The tenant or his rightful claimants have to refund to the lessor the charges
for the extrajudicial notice and other law costs justified by his breaches of
the clauses and conditions of this contract.
In case the lessor decides to have the lease contract registered, all stamp
duties and registration fees are at the tenant's expense.
All duties and taxes relating to any sums due to the lessor by the tenant under
the terms of this contract and its continuations are at the tenant's expense.
Article 24 - ELECTION OF DOMICILE
For the execution of the present contract, the lessor elects his domicile in
his registered office and the tenant elects his domicile in the leased
premises.
<PAGE> 15
Chapter V - Special conditions
Article 25 - DESIGNATION OF THE LEASED REAL ESTATE
The real estate that is being leased is located in ANSE (69480), avenue de
Lossburg, Zone Industrielle.
It includes: an enclosed territory with a surface area of approximately
10,000.- m2 upon which a building has been erected consisting of 4 halls that
can be used as workshops with a surface area of 2,520.- m2 and an office space
on the first floor with a total surface area of 390 m2.
List of facilities:
The premises contain the following facilities:
- - an installation for electrical lighting and distribution system with
distribution boxes and outlets in the workshops and with wiring;
- - a heating system with gas and aerothermic heaters in the workshops and with
electrical convector heaters in the offices;
- - an installation for compressed air and a compressor;
- - a gantry crane of 3.2 ton in the south hall;
- - a room that can be used as office for the workshop, a refectory, sanitary
installations and cloakroom.
Article 26 - REFERENCE DATES
- - Date on which the lease contract comes into force: September 1st, 1996.
- - Expiry date of the lease contract: August 30th, 2005.
- - Date on which the real estate is at the tenant's disposal: September 1st,
1996.
- - Date of the first rent payment: January 1st, 1997.
- - Triennial expiry dates: August 30th, 1999 and August 30th, 2002.
Article 27 - DESTINATION
Activities of the tenant: sterilisation of medical products and corresponding
activities such as laboratory work, packaging, storage, display and other
activities relating to the market of medical equipment in general.
Article 28 - ANNUAL BASIC RENT
Annual basic rent (excl. duties) 750,000.- FF
Value added tax (duty in force) 154,500.- FF
Annual basic rent (all duties included) 904,500.- FF
Article 29 - PROVISIONS ON EXPENSES
In settlement of the expenses, the lessor will request from the tenant a
provision that is still to be fixed. This provision will be modified on an
annual basis in accordance with the estimated budget.
<PAGE> 16
Article 30 - DEPOSIT
At the moment this lease contract is signed, the deposit corresponding to three
months' rent excluding duties amounts to 187,500.- FF.
Article 31 - REFERENCE INDEX
INSEE index of the cost of construction works for the 4th quarter of 1993,
being 1013.
Article 32 - FEES FOR THE COMPANY AUGUSTE-THOUARD ET ASSOCIES
Basis: 750,000.- FF
Amount excl. duties: 112,500.- FF
Amount all duties included: 135,675.- FF
Date on which the amounts are recoverable: the date on which the lease
contract is signed.
Drawn up in three copies,
September 9th, 1996
<PAGE> 1
EXHIBIT 10.26
TENANCY AGREEMENT FOR BUSINESS ACCOMMODATIONS
AND PROPERTIES
Between:
real estate company Helmut von Heesen GmbH & Co. KG,
represented by Wolfgang Steinweg, management,
registered in 60313 Frankfurt/Main, GroBe Eschenheimer StraBe 41a,
hereafter called "the lessor";
and
Fa. Griffith Laboratories GmbH,
represented by the manager
registered in 64546 Morfelden, DreieichstraBe 7-9,
hereafter called "the tenant".
ARTICLE 1: LEASED PROPERTY
1. The tenancy agreement relates to the plot of land located in 64546,
Morfelden, DreieichstraBe 7a, for the exploitation of a warehouse for
finished products of the Fa. Griffith, in the following premises: 1
warehouse (central hall), 2 toilets, 2 offices in the warehouse, with no
corresponding housing accommodation.
2. No garage, no shed.
3. The lessor has delivered all existing keys to the tenant for the term of
the tenancy.
4. The following faults were noticed upon transfer of the leased property
(in case an inventory of fixtures as between lessor and tenant was drawn
up, that document applies): none.
ARTICLE 2: TENANCY TERM - NOTICE
1. The tenancy agreement comes into force on October 1st, 1995, respectively
on the date on which the building is finished. The tenancy agreement is
entered into for a period of 24 months and expires on September 30th, 1997.
The agreement expires 24 months after the agreement comes into force
following completion and transfer of the building.
2. Written notice must be given no later than the third working day of the
first month of the term of notice.
3. No claims for compensation can be made against the lessor in case the
premises are not free on time or are not available for occupation on time,
except if this is due to intent or gross negligence of the lessor.
4. The tenancy agreement is not tacitly renewed in accordance with article
568 of the Code of Civil law ("BGB").
ARTICLE 3: RENT
1a) The monthly rent amounts to 5,000.- DM (five thousand DM), excluding
legal V.A.T. in vigour at the moment, being 15%.
<PAGE> 2
b) The following working expenses (mentioned in appendix 3 to article 27 II
of the BVO in the current version) are not included in the above-mentioned
rent and shall therefore be paid separately:
<TABLE>
<S> <C>
Distribution formula based on
the number of persons, the
leased surface area, the
splits or the meters
1. Water as per own hours
2. Drains (water) as per own hours
3. Lighting, electricity (in own meters
as far as this does not belong
to heating)
4. Garbage collection in accordance with dispositions
5. Land tax in accordance with dispositions
6. Cleaning of the streets in accordance with dispositions
7. Chimney sweeping (in as far as per invoice
as this does not belong to
heating)
8. Public-liability insurance as per insurance policy
9. Janitor not applicable
10. Maintenance of the garden not applicable
11. Clearing of snow and tenant's responsibility
spreading salt in case of
glaze ice
12. Lifting of people and loads not applicable
13. Shared aerial and not applicable
connection to band widths
14. Cleaning of the building not applicable
15. Cleaning and maintenance tenant's responsibility
of heating equipment
16. Hot-water supply not applicable
17. Heating own heating equipment
18. Maintenance costs for fire tenant's responsibility
extinguishers, tanks and
safety equipment to prevent
leakages
19. Cleaning of pavements tenant's responsibility
</TABLE>
c) The lessor has the right to apportion the management expenses
proportionately to the tenant.
d) During the tenancy term the lessor can change the distribution formula at
the beginning of a new calculation period in accordance with his best
judgement. The split or the new definition of a distribution formula shall
be made in accordance with the legal provisions, especially relating to
the regulations on heating expenses.
2. In case the lessor has to pay higher taxes due to the increase of the
working expenses or the creation of any new working expenses, the tenant
shall pay the corresponding increase as from the moment on which it comes
into being.
3. In case of the option relating to turnover tax, the lessor can charge
turnover tax on rents, working expenses and management expenses at the
legal rate which is in vigour at that particular moment.
ARTICLE 4: READJUSTMENT OF THE RENT
In case the monthly index for the cost-of-living for four person households of
employees and workers with an average income, as published by the
"Statistischen Bundesamt", goes up or down by more than five points in
comparison with the index figure that was in vigour at the
<PAGE> 3
moment the agreement was entered into or at the moment of a new agreement,
both parties have the right to request a readjustment of the rent. October 1st
1995 = 100 (index increases with 0,5% are taken into account) In case the
parties fail to agree on the amount of the rent, the Chamber of Commerce will
appoint an expert at the request of one or both parties. This expert will act
as a referee in accordance with article 317 of the Code of Civil law and will
decide, to the best of his judgement, if any readjustment of the rent will be
made and if so, for what amount. The new rent will then be binding for both
parties as from the first day of the month following the request for a
readjustment of the rent to the contracting party. The costs of such procedures
will be borne by both parties in accordance with the winning and losing
positions in the discussions prior to the appeal to the Chamber of Commerce.
ARTICLE 5 - PAYMENT OF THE RENT
1. The rent is to be paid to the lessor or to his proxy who is entitled to
accept the payment, at the Frankfurter Sparkasse, Ffm, account number
62091, BLZ 500 502 01, in advance, without any expenses whatsoever
and no later than on the third working day of each month. All attendant
expenses are to be paid together with the rent, except if it has been
agreed otherwise. Whether or not payments are made in due course relates
to the moment on which the money reaches the lessor, not to the moment on
which the tenant has made the payment. In case of increase or decrease of
the working expenses, the lessor has the right to adjust the advances
accordingly. The monthly advances amounts to:
a) for heating expenses: //// DM
b) for other working expenses: 1,000.- DM, excluding legal V.A.T.
2. In case of late payment of the rent by the tenant, the payments shall be
charged to the expenses, interests and any other debts if there is any
danger of prescription, except if the tenant takes any other measures.
ARTICLE 6 - COMPENSATION, RETENTION
1. Any compensations or retentions by the tenant versus any claims for rent
and attendant expenses are only permitted in case of uncontested claims
and claims which have been assessed finally and conclusively.
2. Any compensations or retentions due to any claims resulting from any
other debts are ruled out, except in case of uncontested claims and of
claims which have been assessed finally and conclusively. Any claims for
compensation in accordance with article 538 of the Code of Civil law are
ruled, except in case of intent and gross negligence of the lessor.
ARTICLE 7 - CENTRAL HEATING
1. The leased premises shall be adequately heated on working days during
the heating period (October 1st through April 30th) during the working
hours in as far as no other heating times are necessary for the
professional activities. Outside of the heating period, heating can only
be requested if the outside temperature drops under 12 degrees centigrade
at 21.00 hrs for three consecutive days.
<PAGE> 4
No (replacement) heating can be requested in case of failures, force
majeur, official regulations or any other impossibility to supply the
heating (such as fuel shortage), except if the impossibility is due to the
lessor's intent or gross negligence. The tenant's rights as per article
537 of the Code of Civil law are not affected. The tenant can not claim
any damages whatsoever, except in case of intent or gross negligence of
the lessor. The lessor shall make sure any failures whatsoever are
remedied as soon as possible.
2. The working expenses for the central heating equipment consist of
the expenses for the use and delivery of fuel, the expenses for the
necessary current, the expenses for the operation, surveillance and
maintenance of the equipment, the regular checks on the functioning and
the safety of the equipment and its tuning by a specialist, the cleaning
of the equipment, including the cleaning of the oil tank and the
professional premises, including the cleaning of the premises after the
delivery of fuel, the expenses for measurements in accordance with the
German law on emissions and the taxes for chimney sweeping, in as far as
they are not settled in any other way, and the expenses for rent, use,
etc. of equipment destined for the registration of the consumption, as
well as the expenses for dividing and calculating the costs. The expenses
for the supply of district heating include the expenses for the supply of
heating (standing charges, working expenses and settlements) and the
expenses for the exploitation of the relevant equipment in the premises as
mentioned above.
3. In case one of the tenants does not use the heating equipment, this does
not release him from his obligations to pay his share of the heating
expenses.
4. The expenses of any necessary intermediate meters are borne by the tenant
for whom this meter is destined.
5. In case the premises of the tenant have their own heating equipment, the
tenant shall use this equipment, maintain it and have it cleaned at least
once a year at his own expense. Moreover he shall fulfil the obligations
mentioned in article 7, paragraph 2.
ARTICLE 8 - HOT-WATER SUPPLY
The working expenses relating to the central equipment for hot-water supply
include the expenses for water supply, in as far as they are not settled
separately, and the expenses for the heating of the water in accordance with
article 7, paragraph 2. The expenses for the water supply include the expenses
for the usage of water, the standing charges and the rent of the meters, the
expenses for the use of intermediate meters, the expenses for the exploitation
of the own installation for water supply and the own installation for water
treatment, including the base materials for the water treatment.
The expenses for the district supply of hot water include the expenses for the
supply of hot water (standing charges, working expenses and settlement) and the
expenses for the exploitation of the corresponding installation at the premises
in accordance with article 7, paragraph 2.
ARTICLE 9 - USE OF ELEVATORS
1. No claims whatsoever can be made as to the use of the elevators in case
they are stopped due to power failure, essential repairs or official
regulations, except in case of intent or gross negligence from the part of
the lessor.
<PAGE> 5
ARTICLE 10 - USE OF THE LEASED PROPERTY, TRANSFER OF USE
1. The tenant can only use the leased property for other purposes and for any
other businesses than those stipulated in article 1 with the written
permission of the lessor. He can not cease the business either partly or
totally. No animals can be kept without the written permission of the
lessor.
2. Without written permission of the lessor the tenant is not entitled to
sublet or to transfer the use to third parties. For companies any change
of ownership or any changes relating to the legal form, concern a transfer
of use. A permission is only given for each particular case; it can be
withdrawn at all times.
3. In case of transfer of use, the tenant already at this moment transfers
to the lessor any claims he has against his subtenants and users and the
right of distraint for an amount equal to the rent due to the lessor.
4. The tenant shall not sell or offer for sale any products for which
another tenant already has the permission to sell them at the premises.
5. The lessor is not compelled to put the joint technical equipment of the
premises at the tenant's disposal or to keep it into action outside the
usual working and office hours.
6. The following faults were noticed upon transfer of the leased property
(in case an inventory of fixtures as between lessor and tenant was drawn
up, that document applies): (none mentioned).
ARTICLE 11 - SIGNS AND ADVERTISING BOARDS
1. The tenant is entitled to put up one company sign. The lessor indicates
the place where this sign shall be put up and decides how it shall be
implemented.
The lease and use of the exterior walls and the styling of the windows is
settled in a separate agreement.
2. Upon termination of the tenancy agreement, the tenant shall remove all
signs and advertising boards and shall have all damage resulting from
putting up, using and removing those signs and advertising boards
repaired. However, the tenant is allowed to leave or put up a small sign
referring to his new address for months (no less than 3 months) at a
place which is to be determined by the lessor.
ARTICLE 12 - OFFICIAL PERMITS, DANGERS RESULTING FROM THE USE OF EQUIPMENTS AND
INSTALLATIONS BY THE TENANT
1. The lessor is not responsible for the issue of permits for the intended
business and its installations, nor for maintaining such permits. This
especially applies to concessions. The tenant shall make sure at his own
expense that all requirements for his business are met and that this will
remain as such in future. This also applies to advertising boards, etc.
The tenant shall comply with the regulations of the labour inspection or
any other instances at his own expense.
2. However, article 12 paragraph 1 does not apply in case the nature and the
location of the leased property are not fit for the agreed purpose of the
agreement.
3. Before installing any machinery, heavy objects, other equipments or
installations in the leased property, the tenant shall ask the lessor
about the permitted load on the floors and he shall ask the written
permission of the lessor. The tenant is responsible for all damages
resulting from the non-observance of those stipulations. In case of any
negative effects on the building, vibrations, cracks, etc. resulting from
the equipments and installations, the lessor can withdraw the permission
he has granted before. The tenant is
<PAGE> 6
responsible for all installations and equipments he has installed and
uses. If the placement or the use of the tenant's installations and
equipments results in any unreasonable disadvantages or damages, the
tenant shall remove those installations and equipments or refrain from
using them if he can not solve those problems in any other way.
4. The tenant shall take an insurance against traffic accidents on the
leased premises, on the access roads to the land and on the public roads
in front of the land.
ARTICLE 13 - MAINTENANCE OF AND REPAIRS TO THE LEASED PROPERTY
1. The tenant shall insure sufficient cleaning, ventilation, and heating in
the leased property and he shall treat the equipments and installations in
said property cautiously and safeguard them against any vermin.
2. The tenant shall pay compensations for damages to the leased property and
to the building, to all installations belonging to the leased property or
the building, in as far as they were inflicted by him, his officers or his
subtenants. This also applies to damages inflicted by visitors, suppliers
and craftsmen in as far as they were acting on the tenant's behalf. The
tenant shall prove that he was not responsible for the damages.
3. The tenant is responsible for having all aesthetic repairs to the leased
property carried out within a reasonable period of time. Such aesthetic
repairs consist of: wallpapering, painting or whitewashing of walls and
ceilings, painting of floors and radiators, including heating pipes,
inside doors, windows and the inside of outside doors. Moreover, the
tenant shall replace the following objects, in as far as he has a direct
influence on them, except if he can prove that any damages were not
inflicted by him: especially locks of windows and doors, locks of
shutters, blinds, lighting equipment and gongs, thermometers, locks, water
taps, flushing equipment for toilets, washbasins and outlet pipes, supply
pipes and drains, fires, stoves, gas equipment and electrical equipment,
similar equipment and installations for the water supply, including the
equipment to maintain it or repair it, damaged glass and display windows.
Naturally treated wood shall not be treated with paint.
The tenant shall have all heating, ventilation and similar equipment, water
heaters, equipment for hot-water supply, fires and stoves cleaned at least
once a year by a specialist.
4. Upon expiry of the tenancy agreement, the tenant shall remove all plugs
and shall repair all the holes such that they are invisible. In case of
such adjustments, which were not explicitly approved of by the lessor, or
which the lessor should not have approved of in order to preserve his
rights, the tenant shall pay damages.
Furthermore the tenant shall have the following works carried out: (none
mentioned).
If the tenant does not comply with his obligations within the set term and
despite threats of challenge, the lessor can have the necessary works
carried out at the tenant's expense.
5. Upon expiry of the tenancy agreement, the lessor can also exert his
rights to enforcement and compensations as stipulated in paragraphs 1
through 4 in case a successive tenant has had those works carried out.
6. The tenant shall immediately inform the lessor of all damages in or to
the leased property. The tenant shall pay compensations for any consequent
damages resulting from the late reporting of the initial damage, in as far
as he has concealed the faults on purpose or has not noticed them due to
gross negligence.
7. The lessor is not responsible for any damages to the objects and
installations of the tenant, irrespective of the nature, source, duration
and range of the damages, except if
<PAGE> 7
they were due to the intent or the gross negligence of the lessor.
Otherwise the lessor's liability is basically limited to the amount of the
public liability insurance.
ARTICLE 14 - CHANGES TO THE LEASED PROPERTY MADE BY THE TENANT
1. Changes to the leased property, especially installations and renovations
and the like, can only be carried out with the written permission of the
lessor. At the lessor's request, the tenant shall remove such
installations and renovations, either partly or totally, when he moves out
of the premises and shall return the leased property to it's original
state, without any reservation whatsoever as to the lessor's permission.
2. If, at the end of the tenancy agreement, the tenant wants to remove any
equipment he has added to the leased property, he shall first give the
lessor the possibility to purchase this equipment. For this purpose, the
tenant shall inform the lessor of he price, of the production expenses and
of the moment on which the equipment was produced. If the lessor wants to
pay the said equipment, he shall pay to the tenant a suitable
compensation.
3. Any gas equipment and electrical equipment shall only be connected to the
existing mains in as far as they do not exceed the permitted load. Any
further equipment can only be connected subject to the written approval of
the lessor. Said approval can be denied if the mains can not cope with any
additional load and if the tenant refuses to pay the expenses for the
necessary changes to the mains.
ARTICLE 15 - STRUCTURAL CHANGES AND IMPROVEMENTS BY THE LESSOR
1. The lessor is entitled to have any improvements and structural changes
which are necessary for the maintenance or for a more economical use of
the property, for the expansion of the building or the leased property,
for averting impending dangers or for repairing damages, carried out
without the tenant's permission. This also applies to all works and
structural measures which, even though they are not absolutely necessary,
are useful, especially those relating to the modernisation of the
building. The tenant shall make sure the relevant premises are accessible
and shall not hinder nor slow down the execution of the works. If the
tenant does not comply with this obligation, the damages resulting
therefrom will be at his expense. The professional interests of the tenant
have to be taken into account.
2. In case any measures are taken to increase the utility value of the
leased premises, such as expansion of a main road, construction of sewers,
connection of the premises to public utilities, expansion or improvement
of piping systems, conversion from coal heating to gas or oil heating,
district heating or other heating and energy systems (including conversion
to electrical heating and electrical equipment), the lessor has the right
to increase the rent with an amount of 14% p.a. to compensate for the
expenses of the above-mentioned measures.
The new rent is due after the works are finished and at the beginning of
the month following the summons made by the lessor.
ARTICLE 16 - ACCESS TO THE LEASED PROPERTY
During the usual working hours the tenant shall give the lessor, agents,
experts and interested parties, subject to prior notice, the opportunity to
inspect the leased property in
<PAGE> 8
view of assessing its structural status, in view of a new lease, a sale, etc.
In case of any danger the leased property shall be accessible at any time
during day and night.
ARTICLE 17 - TERMINATION OF THE TENANCY AGREEMENT
1. Irrespective of the obligation to carry out any aesthetic repairs, the
tenant shall return the leased property in a clean state. In case the
tenant does not comply with this obligation or does not comply with it in
due time, the lessor can have the leased property cleaned at the tenant's
expense.
The tenant's obligation to keep the leased property clean extends to all
objects within the leased property, in as far as they do not belong to the
lessor. In case the tenant does not comply with this obligation, the lessor
is entitled to have those objects removed at the tenant's expense. The
lessor is under no obligation to store any objects.
2. In case of immediate termination of the tenancy agreement by the lessor,
the tenant is responsible until the end of the agreed tenancy term for the
loss of rent resulting from the lack of occupancy of the leased property
or resulting from the fact that the former rent can no longer be charged
in case of a new lease.
3. In case the parties have agreed that the tenant shall pay advances to
working expenses which are settled once a year, this arrangement remains
in force. For all working expenses for which the amount is only
established once a year, the amount is split between the old and the new
tenant, respectively lessor, proportionately to the term of the rent, in
as far as no special payments have been agreed.
4. At the expiry of the tenancy term, the tenant shall return all keys, even
those he has had made himself, to the lessor.
ARTICLE 18 - PARTIES CONSISTING OF MORE THAN ONE PERSON
1. The lessor and the tenant are always considered as being as the
contracting parties of this tenancy agreement, even if they consist of
more than one person. If the tenant consists of more than one person, they
are jointly and severally liable for all their obligations resulting from
this tenancy agreement.
2. If the tenant consists of more than one person, they hereby give each
other proxy for giving and receiving declarations having an effect on each
of the persons; this does not apply to notices and rent increases.
ARTICLE 19 - CHANGES TO THE AGREEMENT
Side agreements, changes, supplements and termination of the agreement shall be
agreed upon in writing. This also applies to all commitments, permissions,
waivers and agreements whatsoever.
ARTICLE 20 - PLACE OF IMPLEMENTATION
The place of implementation for all obligations resulting from this agreement
is Frankfurt/Main.
<PAGE> 9
ARTICLE 21 - DEPOSIT
1. For the compliance with the obligations he has under this agreement, the
tenant gives the lessor a deposit in money for an amount of --- DM (no
amount specified).
2. The deposit is payable upon the signing of the contract.
3. In case the land/the building/the leased part of the property are being
sold, the tenant agrees with the fact that the deposit paid by him will be
transferred to the new owner.
In case of sale, the lessor commits himself towards the tenant to force the
new owner to return the deposit in as far as it is not being used as
compensation.
ARTICLE 22 - VALIDITY OF THE TERMS AND CONDITIONS OF THE AGREEMENT
1. The nullity of one or more conditions of this agreement does not impede
on the validity of the other conditions.
2. This tenancy agreement replaces all previous agreements.
ARTICLE 23 - OTHER CLAUSES
The appendix to the tenancy agreement dated July 13th, 1995 is an essential
part of the agreement.
ARTICLE 24 - CODE OF ORDER
1. All halls and landings, corridors and stairways shall be thoroughly
cleaned at least once a week and shall be treated with a suitable
cleansing agent. Yards, sheds, parking lots and the like shall be swept
clean every week. The tenant is always responsible for the above
activities, as well as for clearing all snow and ice from the footpaths
and access roads to the building and for spreading salt in case of glaze
ice. Otherwise all local police regulations shall be observed. Snow and
ice shall be removed from all balconies. In case of any problems
whatsoever as to the cleaning of the premises or the removal of snow and
ice, the lessor is entitled to have those activities performed by a third
party. The expenses are apportioned following the appropriate criteria, at
the parties' best judgement.
Objects, machinery, installations and utilities can only be cleaned within
the leased property.
The tenant shall have all outlets of toilets and sinks of which he has the
exclusive use, cleaned at his own expense and shall have all obstructions
to such outlets removed immediately. The tenant is liable for his officers
and customers.
2. In case the land is polluted in any way, the tenant shall have this
pollution remedied immediately.
3. Placement and storage of any objects (boxes, goods, etc.) outside the
leased property is not allowed. Motorcycles, mopeds and similar vehicles
can only be stored in the premises destined for that use with permission
of the lessor and in accordance with the police regulations. Vehicles can
only be stored and parked in the yards upon written permission of the
lessor.
4. All windows shall be closed when it rains, snows or storms. Whenever any
damage to the roof or any entry of water is noticed, the lessor shall be
informed immediately.
5. The domestic waste shall be made smaller prior to being deposited in the
appropriate garbage cans. Due care shall be taken in order to ensure that
the stairways, the entry to
<PAGE> 10
the building and the place where the garbage cans are stored will not be
polluted. In case such pollution does occur nevertheless, the tenant shall
immediately arrange for the necessary cleaning. Ashes shall only be
deposited in the appropriate containers after they have cooled down.
Packaging material resulting from professional activities or similar waste
material shall never be deposited in the garbage cans destined for domestic
waste.
6. All entrances that are equipped with doors (cellar, attic, storage room,
etc.) shall always be kept closed. In case arrangements have been made
relating to the closing times for the front door, they need to be observed
at all times.
7. If changes and appendices to this code of order prove to be necessary in
order to maintain the peace and order in the leased property, the lessor
is allowed to take the necessary actions.
Morfelden, July 13th, 1995
The lessor The tenant
Manfred Keupp Griffith Micro Science Gmbh
Tax consultant DreiechstraBe 7
FrankfurterstraBe 14B 64546 Morfelden
61118 Bad Vilbel Dirk Barrie
Proxy
Wolfgang Steinweg
GroBe EschenheimerstraBe 41A
60313 Frankfurt
<PAGE> 11
Appendix to the professional tenancy agreement of July 13th
for the warehouse (central hall), Dreiechstrasse 7a, 64546 Morfelden
1. The lessor shall inform the tenant in writing about the completion of the
building activities for the hall four weeks before the completion. The
term stated in this written communication serves as the term of this
tenancy agreement.
2. The lessor will transfer the professional building in the following
state, at his expense:
a) loading platform (either fixed or moveable as desired) constructed at
the right side of the building to serve as a connection with the
existing hall of Fa. Griffith.
b) all walls of the hall are painted (both inside and outside)
c) new smooth industrial floor-covering in the whole surface of the
hall, except for the toilets and the offices in the warehouse
d) both toilets equipped with objects and equipment, ready for use and
well-fastened
e) both offices in the warehouse ready for use
f) Upon the transfer of the hall the tenant will inspect whether all
damages have been repaired.
3. Upon the first expiry of the agreement after 24 months, the tenant has an
option to renew the agreement for consequent terms of one year; he shall
inform the lessor in writing no later than six months before the expiry of
the contract in case he wants to use this option.
4. The tenant commits himself to have the warehouse completely renovated by
professionals (to the state it was in at the moment it was transferred)
before returning it at the end of the contract.
5. The lessor commits himself to construct a new office in accordance with
the presented plan. Consequently the rent specified in article 3 of the
tenancy agreement is increased annually with an amount which is calculated
as follows:
Costs of construction x 8 = extra net rent p.a.
---------------------
100
excluding legal V.A.T. in vigour at that time.
All offers shall be accepted by the tenant first.
Morfelden, July 13th, 1995
The lessor The tenant
Wolfgang Steinweg, Dirk Barrie
GroBe Eschenheimer StraBe 41a, Griffith Micro Science GmbH
60313 Frankfurt/Main DreiechstraBe 7
64527 Morfelden
<PAGE> 12
First supplement to the professional tenancy agreement of July 13th, 1995
for the warehouse DreiechstraBe 7a, 64546 Morfelden
1. In accordance with article 5 of the appendix to the above-mentioned
tenancy agreement the following net rent results from the attached
specifications of architect Peter Emmel dated August 12th, 1996 relating
to the building of a new office.
131,916.79 x 8
--------------
100 = DM 10,553.34 p.a.
10,553.34 / 12 months = DM 879.44
+ 15% V.A.T. DM 131.92
----------------
Total rent DM 1,011.36
========== ================
2. This agreement comes into force as from April 1st, 1996.
A detailed list of the building activities outlined by architect Emmel
dated August 12th, 1996 is annexed hereto.
3. This agreement is an essential part of the tenancy agreement of July
13th, 1995.
Frankfurt/Main, September 16th, 1996
The lessor The tenant
Helmut von Heesen GmbH & Co KG Fa. Griffith Laboratories GmbH
represented by the manager represented by the manager
D. BARRIE
<PAGE> 1
EXHIBIT 10.27
ASSIGNMENT OF INTELLECTUAL PROPERTY
1. Griffith Laboratories International, Inc., a Delaware corporation
("GLII"), owns all of the outstanding capital stock of Griffith Micro Science
International, Inc., a Delaware corporation ("GMSI"). GLII also owns, and
currently licenses to GMSI or its subsidiaries, certain intellectual property
used by GMSI in its business. GLII has agreed that, as a contribution to the
capital of GMSI, GLII will transfer to GMSI all of the intellectual property of
GLII of every kind and description, tangible and intangible, used in the
business of GMSI or its subsidiaries.
2. Pursuant to authority conferred by the board of directors of GLII,
GLII hereby assigns to GMSI, its successors and assigns, the entire right, title
and interest throughout the world in and to:
(a) All formulas, inventions, improvements and discoveries and
patent applications and patents directed to any of the same, any and
all trade secrets, proprietary information, know-how and other like
intangibles, and any and all licenses under such rights of others, held
or owned by GLII on the date hereof and used in the business of GMSI or
its subsidiaries.
(b) All trademarks, service marks, trade names, slogans, business
names, distinctive indicia and any and all other words, names, symbols
or devices, and any combinations thereof, and any licenses under such
rights of others, held or owned by GLII and used in the business of
GMSI or its subsidiaries; provided that the assignment set forth in
this Section 2(b) shall be subject to the rights of GLII in certain
circumstances to cause GMSI to cease using the word "Griffith" as set
forth in the Shareholder Agreement dated [_________ __,] 1998 between
GLII and GMSI.
(c) All literary, intellectual and artistic property and any
licenses under such rights of others held or owned by GLII and used in
the business of GMSI or its subsidiaries.
3. This Assignment is for the full term and duration of any
governmental grants of such rights, and any renewals or extensions thereof and
includes the right of recovery for any
<PAGE> 2
past infringements of any such rights as well as the rights of GLII as licensor
of any such rights which have been licensed to others to the extent thereof.
This Assignment likewise includes the good will of the business connected with
and symbolized by the said trademarks together with all the rights and
privileges incidental thereto without exception.
4. To the extent that any asset, claim, or right to be assigned to GMSI
herein shall be unassignable, this Assignment shall not constitute an assignment
thereof, and to the extent that the assignment of any such asset, claim, or
right shall require the consent of another party thereto, this Assignment shall
not constitute an assignment of the same (unless or until such consent is
obtained) if an attempted assignment without such consent of said other party
would in any material way affect the rights of GLII thereunder. If such consent
is not obtained or if an attempted assignment would be ineffective or would
materially affect GLII's rights thereunder so GMSI would not in fact receive all
such rights, GLII will cooperate with GMSI in any reasonable arrangement
designed to provide for GMSI, its successors and assigns, the benefits under any
such assets, claims, or rights, which are not assigned hereby.
5. GLII further hereby authorizes GMSI to apply for and obtain the
recordal of this Assignment in its favor. GLII agrees, without further
consideration, to cause to be performed such lawful acts and to be executed such
further assignments, applications, powers of attorney and other lawful documents
as GMSI may reasonably request to effectuate fully this Assignment and to permit
to be duly recorded as the registered owner or proprietor of each of the rights
hereby assigned in the appropriate offices, bureaus and tribunals of the United
States, including the United States Patent Office and Copyright Office, the
several states and territories of the United States, and the various foreign
countries and territories of the world, such that GMSI from this day forward
shall be considered the sole owner of each of such rights with the right to
2
<PAGE> 3
exploit the same as its own property and to dispose of the same as best suits
its interests in the same manner as could GLII had this Assignment not been
made, free of any claim whatsoever on the part of GLII at any time or place.
[GLII further agrees to cause any of its subsidiaries which own intellectual
property used in the business of GMSI or its subsidiaries to assign such
intellectual property to GMSI.] GLII hereby appoints, to act on its behalf,
[_____________, _____________ and _____________,] or any one of them acting
alone and without the others, to perform any and all such lawful actions and to
execute such further assignments, applications, powers of attorney and other
lawful documents as GMSI may reasonably request.
6. This Assignment further includes the power to GMSI to confer ample,
complete and sufficient power of attorney in order that others may be authorized
to apply and take all necessary steps before the appropriate offices, bureaus
and tribunals of the United States, the several states and territories of the
United States and the various foreign countries and territories of the world
regarding such assigned rights, and, in general, do everything before the
appropriate offices, bureaus and tribunals that may be necessary for the
defense, protection and maintenance of such assigned rights including
authorization to substitute the power of attorney.
7. By these presents GMSI does hereby accept this Assignment, authorize
the recording thereof with the appropriate authorities aforesaid, and covenant
to perform those acts which may be necessary to perpetuate its rights in and to
the intellectual property transferred hereby.
8. GLII acknowledges that all royalties due to it under GMSI's license
of the rights assigned hereby have been paid in full, and no further payments
are due from GMSI to GLII with respect to such license.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed and their corporate seals hereto affixed by their respective officers
thereunto duly authorized this [_____] day of [_________], 1998.
GRIFFITH LABORATORIES GRIFFITH MICRO SCIENCE INTERNATIONAL, INC.
INTERNATIONAL, INC.
By: By:
--------------------------- ----------------------------------
4
<PAGE> 5
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
BE IT REMEMBERED that on this ______ day of _________, 1998, personally
came before me, a Notary Public in and for the County and State aforesaid,
_____________________, being the person who executed the foregoing instrument on
behalf of Griffith Laboratories International, Inc., known to me personally to
be such, and acknowledged said instrument by him executed to be his free act and
deed and the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and sale of office the
day and year aforesaid.
[Notarial Seal] -----------------------------------
Notary Public
County of Cook, State of Illinois
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
BE IT REMEMBERED that on this ______ day of _________, 1998, personally
came before me, a Notary Public in and for the County and State aforesaid,
_____________________, being the person who executed the foregoing instrument on
behalf of Griffith Micro Science International, Inc., known to me personally to
be such, and acknowledged said instrument by him executed to be his free act and
deed and the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and sale of office the
day and year aforesaid.
[Notarial Seal] -----------------------------------
Notary Public
County of Cook, State of Illinois
5
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Griffith Micro Science International, Inc.
Griffith Micro Science, Inc., a Delaware corporation
Griffith Micro Science, Inc., a Utah corporation
GMS Holdings B.V., a Dutch company
Griffith Micro Science B.V., a Dutch Company
Griffith Micro Science, N.V., a Belgian company
Griffith Micro Science Wallonie S.A., a Belgian company
Griffith Mediris, a Belgian Company
Griffith Micro Science, GmbH, a German company
Griffith Micro Science Limited, a United Kingdom company.
Griffith Micro Science, SAS, a French company
Griffith Micro Science, S.A. , a French company
GMS Holdings, S. de R.L. de C.V., a Mexican company
Griffith Micro Science, S.A. de C.V., a Mexican company
NGS enterprises, S. de R.L. de C.V., a Mexican company
Griffith Micro Science Limited, a Canadian company
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<DEPRECIATION> 42,696
<TOTAL-ASSETS> 69,141
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<BONDS> 18,891
0
0
<COMMON> 10
<OTHER-SE> 31,147
<TOTAL-LIABILITY-AND-EQUITY> 69,141
<SALES> 34,917
<TOTAL-REVENUES> 34,917
<CGS> 23,845
<TOTAL-COSTS> 23,845
<OTHER-EXPENSES> 7,941
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<INTEREST-EXPENSE> 538
<INCOME-PRETAX> 2,568
<INCOME-TAX> 925
<INCOME-CONTINUING> 1,643
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,643
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.71
</TABLE>
