<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1995.
REGISTRATION STATEMENT NO. 33-59811
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
UNITED STATIONERS SUPPLY CO. UNITED STATIONERS INC.
(EXACT NAME OF CO-REGISTRANT AS (EXACT NAME OF CO-REGISTRANT AS
SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
ILLINOIS 36-2431718 DELAWARE 36-3141189
(STATE OR OTHER (I.R.S. EMPLOYER (STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION JURISDICTION OF IDENTIFICATION
INCORPORATION OR NUMBER) INCORPORATION OR NUMBER)
ORGANIZATION) ORGANIZATION)
5112
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
THOMAS W. STURGESS
CHAIRMAN OF THE BOARD
750 N. ST. PAUL STREET, SUITE 1200
DALLAS, TEXAS 75201
(214) 720-1313
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
LAWRENCE D. STUART, JR.
WEIL, GOTSHAL & MANGES
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201-6950
(214) 746-7700
----------------
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, check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED PER UNIT (1) PRICE (1) FEE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12 3/4% Senior
Subordinated Notes
Due 2005............. $150,000,000 100% $150,000,000 $51,724.14(3)
- -------------------------------------------------------------------------------
Senior Subordinated
Guarantee (2).. -- -- -- --
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f).
(2) The 12 3/4% Senior Subordinated Notes Due 2005 are guaranteed by United
Stationers Inc. on a senior subordinated basis. No additional
consideration will be paid in respect of the Guarantee.
(3) Previously paid in connection with initial filing of Registration
Statement on June 2, 1995.
----------------
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
UNITED STATIONERS SUPPLY CO.
UNITED STATIONERS INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE LOCATION IN
THE PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-1
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<S> <C>
1.Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus................. Cover Page of Registration Statement; Outside
Front Cover Page of Prospectus
2.Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front and Outside Back Cover Pages of
Prospectus
3.Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges. Prospectus Summary; Risk Factors; The Company;
Selected Consolidated Financial Data
4.Use of Proceeds...................... Use of Proceeds
5.Determination of Offering Price...... Not Applicable
6.Dilution............................. Not Applicable
7.Selling Security Holders............. Not Applicable
8.Plan of Distribution................. Front Cover Page of Prospectus; The Exchange
Offer; Plan of Distribution
9.Description of Securities to be
Registered......................... Description of the New Notes
10.Interests of Named Experts and
Counsel............................ Not Applicable
11.Information with Respect to
Co-Registrants .................... Cover Page of Registration Statement; Prospectus
Summary; Risk Factors; The Company; The
Acquisition; Capitalization; Selected
Consolidated Financial Data; Pro Forma Combined
Financial Information; Management's Discussion
and Analysis of Financial Condition and Results
of Operations; Business; Management; Certain
Transactions; Financing the Acquisition;
Description of Capital Stock; Ownership of
Voting Securities; Legal Matters
12.Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 ANY 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 28, 1995
OFFER FOR ALL OUTSTANDING
12 3/4% SENIOR SUBORDINATED NOTES DUE 2005
[LOGO OF IN EXCHANGE FOR
UNITED 12 3/4% SENIOR SUBORDINATED NOTES DUE 2005
STATIONERS OF
APPEARS HERE] UNITED STATIONERS SUPPLY CO.
--------------
United Stationers Supply Co. (the "Company"), an Illinois corporation which
is the direct operating subsidiary of United Stationers Inc. ("United"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange $1,000 principal amount of its 12
3/4% Senior Subordinated Notes due 2005 (the "New Notes") for each $1,000
principal amount of its 12 3/4% Senior Subordinated Notes due 2005 (the "Old
Notes"), of which an aggregate principal amount of $150,000,000 is outstanding.
The form and terms of the New Notes are identical to the form and terms of the
Old Notes except that (i) interest on the New Notes shall accrue from the last
date on which interest was paid on the Old Notes, (ii) certain provisions
relating to an increase in the stated rate of interest on the Old Notes shall
be eliminated and (iii) the New Notes have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and will not bear any legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be issued pursuant to, and entitled to the benefits of,
the Indenture governing the Old Notes. The New Notes will be fully and
unconditionally guaranteed on a senior subordinated basis (the "Guarantees") by
United and any future domestic Restricted Subsidiary of the Company. The
Exchange Offer is being made in order to satisfy certain contractual
obligations of the Company. See "The Exchange Offer" and "Description of the
New Notes." The Old Notes and the New Notes are sometimes referred to
collectively herein as the "Notes."
Interest on the Notes will be payable semiannually on May 1 and November 1 of
each year, commencing November 1, 1995. The Notes will be redeemable at the
option of the Company, in whole or in part, at any time on or after May 1, 2000
at the redemption prices set forth herein, together with accrued and unpaid
interest, if any, to the date of redemption. In addition, on or prior to May 1,
1998, the Company may redeem up to $50.0 million principal amount of the Notes
with the proceeds of one or more Public Equity Offerings at 112.75% of the
aggregate principal amount thereof, together with accrued and unpaid interest,
if any, to the date of redemption; provided that Notes having an aggregate
principal amount of at least $100.0 million remain outstanding immediately
after any such redemption. Upon the occurrence of a Change of Control, each
holder of the Notes may require the Company to repurchase all or a portion of
such holder's Notes at 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of repurchase. If a Change of
Control occurs, there can be no assurance that the agreements controlling the
Company's then-existing Senior Indebtedness would permit the Company to make
payments pursuant to a Change of Control Offer without the prior repayment of
such Senior Indebtedness or that the Company would have available funds
sufficient to purchase all Notes that might be delivered by the holders
thereof. Such limitations may have the effect of delaying or deterring a third-
party takeover of the Company. See "Description of New Notes -- Certain
Covenants" and "--Purchase of Notes Upon a Change of Control."
The Notes and the Guarantees will be subordinated to all Senior Indebtedness
of the Company and Senior Guarantor Indebtedness of each Guarantor,
respectively. After giving pro forma balance sheet effect to the repurchase of
certain preferred stock to be effected with the proceeds of the Old Notes as if
such transaction had occurred on March 31, 1995, there would have been
approximately $435.7 million of Senior Indebtedness and Senior Guarantor
Indebtedness of United outstanding on such date, substantially all of which
represents Indebtedness or guarantees of Indebtedness under the New Credit
Facilities which is secured by substantially all of the assets of the Company;
in addition, after taking into account approximately $68.1 million of
outstanding letters of credit, there would have been approximately $32.8
million available to be drawn by the Company as secured Senior Indebtedness
under the revolving credit portion of the New Credit Facilities, which amount
would have been secured Senior Guarantor Indebtedness of United, and there
would have been approximately $264.1 million of Indebtedness of the Company
that would have been pari passu to the New Notes. See "Risk Factors--Limited
Practical Value of Guarantees by United."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on , 1995, unless
extended (as so extended, the "Expiration Date"). Tenders of Old Notes may be
withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties, the Company believes the New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and such holder has
no arrangement or understanding with any person to participate in the
distribution of such New Notes. Because the Company has not obtained a no-
action letter with respect to the Exchange Offer, there can be no assurance
that the staff of the Commission would make a similar determination with
respect to the resale of the New Notes. See "The Exchange Offer--Purpose and
Effect." Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the Old
Notes. If a market for the New Notes should develop, the New Notes could trade
at a discount from their principal amount. The Company currently does not
intend to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system and no active public market
for the New Notes is currently anticipated. The Company will pay all the
expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to the Exchange Offer.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH HOLDERS OF OLD
NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------
THE DATE OF THIS PROSPECTUS IS , 1995.
<PAGE>
AVAILABLE INFORMATION
United is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information filed by United with the Commission may be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at Seven World Trade Center, 13th Floor, New York, New York
10007 and at Northwestern Atrium Center, 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661-2551. Copies of such material can also be obtained from
the principal office of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
Regardless of whether United or the Company is subject to Section 13(a) or
15(d) of the Exchange Act, United and the Company will, to the extent permitted
under the Exchange Act, file with the Commission the annual reports, quarterly
reports and other documents which United or the Company would have been
required to file with the Commission pursuant to such Section 13(a) or 15(d) if
United and the Company were so subject, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which United and the Company would have been required so to file such documents
if United and the Company were so subject. United and the Company will also in
any event (x) within 15 days of each Required Filing Date transmit by mail to
all holders of the Notes and file with the trustee under the Indenture copies
of the annual reports, quarterly reports and other documents which United and
the Company would have been required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act if United and the Company were so
subject and (y) if filing such documents by United and the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request, supply copies of such documents to any prospective holder of the
Notes. In addition, for so long as any of the Old Notes remain outstanding,
United has agreed to make available to any prospective purchaser of the Old
Notes or beneficial owner of the Old Notes in connection with any sale thereof
the information required by paragraph (d)(iv) of Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act").
The Company and United have filed with the Commission a Registration
Statement on Form S-1 (together with all amendments thereto, the "Registration
Statement") under the Securities Act with respect to the New Notes offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of such materials can also
be obtained at prescribed rates from the Public Reference Section of the
Commission, Washington, D.C. 20549. Statements contained in this Prospectus as
to the contents of any agreement or other document referred to are not
necessarily complete and, in each instance, reference is made to the copy of
such agreement or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.
UNTIL , 1995 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements, and
the related notes thereto, included elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, (i) references to "ASI"
herein include Associated Stationers, Inc. and the predecessor thereof as
constituted prior to the merger thereof with and into the Company (the
"Subsidiary Merger"), with the Company as the surviving corporation, (ii)
references to "Associated" herein include Associated Holdings, Inc. and ASI and
the respective predecessors thereof as constituted prior to the merger of
Associated with and into United (the "Merger" and, together with the Subsidiary
Merger, the "Mergers"), with United as the surviving corporation, (iii)
references to the "Company" herein include the Company, as the surviving
corporation in the Subsidiary Merger, and its consolidated subsidiaries as
constituted after consummation of the Subsidiary Merger or, prior to the
consummation of the Subsidiary Merger of ASI with and into the Company, the
Company and its consolidated subsidiaries as constituted prior to the
Subsidiary Merger, and (iv) references to "United" herein are to United, as the
surviving corporation in the Merger, and its consolidated subsidiaries
(including the Company) as constituted after consummation of the Merger or,
prior to consummation of the Merger of Associated with and into the United,
United and its consolidated subsidiaries (including the Company) as constituted
prior to the Merger. The Company is currently engaged in implementing its
consolidation plan to integrate the two separate office products wholesale
businesses conducted by the Company and ASI prior to the Acquisition (as
hereinafter defined). See "Risk Factors -- Risks Inherent In Implementation of
Consolidation Plan" and "Business -- Consolidation Plan and Benefits of the
Acquisition." Operating data presented herein for 1994 on a pro forma basis
includes calendar year 1994 data for Associated and data for the twelve months
ended November 30, 1994 for United. Operating data presented herein for the
three months ended March 31, 1995 on a pro forma basis includes three months
ended March 31, 1995 data for Associated and three months ended February 28,
1995 data for United.
THE COMPANY
OVERVIEW
The Company is the largest office products wholesaler in the United States.
As a result of the merger of the Company with ASI on March 30, 1995, the
Company's net sales on a pro forma basis for 1994 were approximately $2.0
billion and for the three months ended March 31, 1995 were approximately $0.6
billion. Through its extensive office products catalogs, the Company markets a
full line of over 25,000 (post-consolidation) branded and private brand office
and other related business products ("office products"), including traditional
office supplies; office furniture and desk accessories; office machines,
equipment and supplies; computer hardware, peripherals and supplies; and
facilities management supplies, including sanitation products and janitorial
items. These products are offered through a network of 39 (post-consolidation)
strategically located distribution centers to over 14,000 resellers, consisting
principally of commercial dealers and contract stationers, retail dealers,
superstores, mail order companies and mass merchandisers.
Although the office products distribution industry has seen many changes over
the past decade, including the growth of national superstores and a
consolidation among wholesalers, dealers and contract stationers, large
national wholesalers have continued to perform a significant role in the
distribution of office products. For manufacturers, the wholesaler provides
wide market coverage, assumes credit risk, carries inventory and processes
smaller orders than manufacturers can economically service. In addition,
wholesalers provide resellers with prompt service and delivery, a source for
filling small quantity orders and the opportunity to obtain credit, minimize
investment in inventory and access marketing resources and technical support.
3
<PAGE>
COMPETITIVE STRENGTHS
The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:
. Largest Office Products Wholesaler. As the largest office products
wholesaler in the United States, the Company has substantial purchasing
power and can realize significant economies of scale.
. High Level of Customer Service. The Company provides its customers with a
broad product selection, a high degree of product availability,
expeditious distribution and comprehensive customer assistance.
. Diverse Customer Base. With over 14,000 resellers as customers, the
Company has one of the broadest customer bases in the industry.
. State-of-the-Art Distribution Capabilities. The Company's network of 39
(post-consolidation) distribution centers located throughout the United
States employs state-of-the-art technology to efficiently distribute
products to customers.
. Growth of Private Brand Products. The Company offers a growing line of
over 1,300 private brand products under the Universal(TM) brand name,
which the Company believes is the broadest private brand product offering
in the industry.
. Experienced Management Team. The Company's senior management team
comprises individuals who combine many years of experience in the office
products distribution industry, including experience in acquiring and
integrating companies in the office products industry. See "Business --
Competitive Strengths".
BUSINESS STRATEGY
The Company's business strategy is to seek to improve its competitive
position and grow its revenues and profitability through (i) the continuation
of a high level of customer service, (ii) expanding the breadth of both its
product line and its customer base and (iii) continuing an emphasis on cost
effective operations. There can be no assurance that the Company will be able
to effect its business strategy in a timely manner, if at all. See "Business --
Business Strategy".
CONSOLIDATION PLAN AND BENEFITS OF THE ACQUISITION
Consistent with its business strategy, since the consummation of the
Acquisition on March 30, 1995, the Company has been engaged in implementing its
consolidation plan to integrate its business with the business of ASI. Through
the integration of distribution facilities and product lines in a manner
designed to enable the Company to offer its customers better service and
selection, the Company expects to improve its competitive position. In
addition, the Company plans to achieve cost savings and other benefits from the
elimination of redundant or overlapping functions and facilities and by
minimizing overlapping products. Elements of the consolidation plan include (i)
consolidating the product offerings of ASI and the Company by minimizing
overlapping products while at the same time adding more niche products, (ii)
qualifying for improved terms with vendors as a result of placing higher volume
purchases among fewer suppliers, (iii) consolidating distribution centers by
eliminating eight redundant facilities and achieving more efficient operations
in the four market areas that will continue to have two facilities, (iv)
reducing corporate overhead, (v) eliminating redundant sales representatives
and (vi) increasing sales of private brand products and off-shore sourcing of
these and other products. Management anticipates that the implementation of its
consolidation plan should result in significant cost savings and synergies
which will enhance the Company's financial and operational performance.
4
<PAGE>
Management estimates that, upon phase-in of its consolidation plan over a 12-
month period following the Acquisition, the Company expects to realize
approximately $26.0 million per year in savings as a result of a successful
implementation of its consolidation plan, although the Acquisition is also
likely to result in a reduction in the rate of revenue growth for some period
following the Acquisition as a result of the loss of some customers to
competition. See "Risk Factors -- Risk Inherent In Implementation of
Consolidation Plan," "Pro Forma Combined Financial Information" and
"Business -- Consolidation Plan and Benefits of the Acquisition."
THE ACQUISITION
On March 30, 1995, pursuant to an Agreement and Plan of Merger dated as of
February 13, 1995 (the "Merger Agreement"), and in accordance with the terms of
Associated's related Offer to Purchase dated February 21, 1995 (the "Offer to
Purchase"), Associated purchased (together with the Mergers, the "Acquisition")
92.5% of the outstanding shares of common stock, $0.10 par value (the
"Shares"), of United for $15.50 per Share, or approximately $266.6 million in
the aggregate, pursuant to a tender offer (the "Offer") that expired on March
22, 1995. Immediately thereafter, the Mergers were consummated, with Associated
and ASI merging with and into United and the Company, respectively, and United
and the Company continuing as the respective surviving corporations. As a
result of share conversions in the Merger, immediately after the Merger, the
former holders of Associated Common Stock (as hereinafter defined) and warrants
or options to purchase Associated Common Stock owned Shares and warrants or
options to purchase Shares constituting in the aggregate approximately 80% of
the Shares on a fully diluted basis, while pre-Merger holders of Shares (other
than Associated-Owned Shares and Treasury Shares (each as hereinafter defined))
owned in the aggregate approximately 20% of the Shares on a fully diluted
basis. See "The Acquisition."
To finance the Offer, refinance existing debt of ASI, United and the Company,
redeem United stock options and pay related fees and expenses, Associated, ASI,
United and the Company entered into (i) the New Credit Facilities (as
hereinafter defined) with a group of banks and financial institutions led by
The Chase Manhattan Bank (National Association) ("Chase Bank") providing for
term loan borrowings of $200.0 million and revolving loan borrowings of up to
$300.0 million and (ii) a senior subordinated bridge loan facility with The
Roebling Fund, whose investors comprise a group of banks and financial
institutions, including Chase Bank, in the aggregate principal amount of $130.0
million (the "Subordinated Bridge Facility"). In addition, simultaneously with
the consummation of the Offer, Associated obtained $12.0 million from the sale
of additional shares of Associated Common Stock primarily to certain existing
holders of Associated Common Stock, which proceeds were used to finance the
purchase of a portion of Shares pursuant to the Offer. The Company used a
portion of the net proceeds of the Old Notes to refinance the Subordinated
Bridge Facility. See "Financing the Acquisition."
5
<PAGE>
The following table sets forth the approximate aggregate sources and uses of
funds necessary to consummate the Acquisition:
<TABLE>
<CAPTION>
SOURCES: (DOLLARS IN THOUSANDS)
<S> <C>
New Credit Facilities (1)......................... $416,537
Subordinated Bridge Facility (2).................. 130,000
Equity Investment................................. 12,000
--------
Total Sources................................... $558,537
========
USES:
Purchase Shares in Offer.......................... $266,629
Refinance Existing Company Debt................... 180,752
Refinance Existing ASI Debt....................... 78,856
Estimated Fees and Expenses (3)................... 29,300
Other (4)......................................... 3,000
--------
Total Uses...................................... $558,537
========
</TABLE>
- --------
(1) Borrowings under the New Credit Facilities at the time the Acquisition was
consummated consisted of term loan borrowings of $200.0 million and
revolving loan borrowings of approximately $206.8 million. Also included is
approximately $9.7 million of additional revolving loan borrowings drawn to
pay fees and expenses after consummation of the Acquisition.
(2) Refinanced with a portion of the net proceeds of the Old Notes.
(3) Excludes approximately $2.6 million borrowed by the Company and $3.2
million borrowed by ASI prior to closing of the Offer to pay fees and
expenses in connection with consummation of the Acquisition. These amounts
are included under "Refinance Existing Company Debt" and "Refinance
Existing ASI Debt," respectively, above. Estimated Fees and Expenses
include the discount received by Chase Securities, Inc. ("Chase Securities"
or the "Initial Purchaser") on the Old Notes.
(4) This amount was used to repurchase United stock options. This amount
excludes approximately $3.2 million borrowed by the Company prior to
closing of the Offer to discharge compensation and other liabilities in
connection with consummation of the Acquisition. This latter amount is
included under "Refinance Existing Company Debt" above.
6
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer applies to $150,000,000 aggregate principal amount of the
Old Notes. The form and terms of the New Notes are the same as the form and
terms of the Old Notes except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof. The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture pursuant to which the Old Notes were
issued. See "Description of the New Notes."
The Exchange Offer.......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, $150,000,000 aggregate
principal amount of the Old Notes are
outstanding. The terms of the New Notes and the
Old Notes are substantially identical.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to unrelated third parties, the Company believes
that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by
any person receiving such New Notes, whether or
not such person is the holder (other than any
such holder or such other person which is an
"affiliate" of the Company within the meaning of
Rule 405 promulgated under the Securities Act),
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that (i) such New Notes are
acquired in the ordinary course of business of
such holder or such other person, (ii) neither
the holder nor such other person is engaging in
or intends to engage in a distribution of such
New Notes and (iii) neither such holder nor such
other person has an arrangement or understanding
with any person to participate in the
distribution of such New Notes. See "The Exchange
Offer -- Purpose and Effect."
Following the consummation of the Exchange Offer
(except as set forth in the second paragraph
under "Exchange Offer--Purpose and Effect"),
holders of Old Notes not tendered will not have
any further registration rights and the Old Notes
will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes
could be adversely affected upon consummation of
the Exchange Offer if such holder does not
participate in the Exchange Offer. See "Exchange
Offer--Purpose and Effect."
Registration Agreement...... The Old Notes were sold by the Company on May 3,
1995 in a private placement. In connection
therewith, the Company entered into a
Registration Rights Agreement with the Initial
Purchaser (the "Registration Agreement")
providing for the Exchange Offer. See "The
Exchange Offer -- Purpose and Effect."
7
<PAGE>
Expiration Date............. The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1995, or such later
date and time to which it is extended.
Withdrawal.................. The tender of Old Notes pursuant to the Exchange
Offer may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Any Old Notes not accepted for exchange for any
reason will be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
customary conditions, certain of which may be
waived by the Company. See "The Exchange Offer --
Conditions."
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile,
together with the Old Notes and any other
required documentation, to the Exchange Agent at
the address set forth herein. By executing the
Letter of Transmittal, each holder will represent
to the Company that, among other things, (i) the
New Notes acquired pursuant to the Exchange Offer
are being obtained in the ordinary course of
business of the person receiving such New Notes,
whether or not such person is the holder, (ii)
neither the holder nor any such other person is
engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the
holder nor any such other person has an
arrangement or understanding with any person to
participate in the distribution of such New Notes
and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule
405 promulgated under the Securities Act, of the
Company. Pursuant to the Registration Agreement,
the Company is required to file a registration
statement for a continuous offering pursuant to
Rule 415 under the Securities Act in respect of
the Old Notes of any holder that indicates in the
Letter of Transmittal that it cannot make such
representations to the Company and that it wishes
to have its Old Notes registered under the
Securities Act. See "The Exchange Offer--
Procedures for Tendering."
Acceptance of Old Notes and
Delivery of New Notes...... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the
Exchange Offer will be delivered promptly
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
8
<PAGE>
Exchange Agent.............. The Bank of New York is serving as Exchange Agent
in connection with the Exchange Offer.
Federal Income Tax
Consequences............... The exchange pursuant to the Exchange Offer
should not be a taxable event for federal income
tax purposes. See "Certain Federal Income Tax
Considerations."
USE OF PROCEEDS
There will be no cash proceeds to the Company from the exchange pursuant to
the Exchange Offer. The proceeds received by the Company from the offer of the
Old Notes were used (i) to repay the loan (the "Bridge Loan") under the
Subordinated Bridge Facility (plus accrued interest thereon) and (ii) to pay
down the Term Loan Facilities (as hereinafter defined). If the necessary
consents are obtained, the Company intends to pay a dividend to United in an
amount sufficient to repurchase all of the outstanding shares of Series B
Preferred Stock (as hereinafter defined), together with accrued and unpaid
dividends thereon, with a portion of the proceeds from the Old Notes. See
"Financing the Acquisition."
TERMS OF THE NEW NOTES
Maturity Date............... May 1, 2005.
Interest Payment Dates...... May 1 and November 1 of each year, commencing
November 1, 1995.
Optional Redemption......... The Notes will be redeemable at the option of the
Company at any time on or after May 1, 2000, in
whole or in part, at redemption prices set forth
herein plus accrued and unpaid interest, if any,
to the date of redemption. In addition, on or
prior to May 1, 1998, the Company may redeem up
to $50.0 million aggregate principal amount of
the Notes with the proceeds of one or more Public
Equity Offerings (as hereinafter defined) at
112.75% of the principal amount thereof, together
with accrued and unpaid interest, if any, to the
date of redemption; provided that Notes having an
aggregate principal amount of $100.0 million
remain outstanding immediately after any such
redemption. See "Description of the New Notes --
Optional Redemption."
Change of Control...........
Upon the occurrence of a Change of Control (as
defined), each holder of the Notes may require
the Company to repurchase all or a portion of
such holder's Notes at 101% of the principal
amount thereof, together with accrued and unpaid
interest, if any, to the date of repurchase. See
"Description of the New Notes -- Certain
Covenants." If a Change of Control occurs, there
can be no assurance that the agreements
controlling the Company's then-existing Senior
Indebtedness would permit the Company to make
payments pursuant to a Change of Control Offer
without the prior repayment of such Senior
Indebtedness or that the Company would have
available funds sufficient to purchase all Notes
that might be delivered by the
9
<PAGE>
holders thereof. Such limitations may have the
effect of delaying or deterring a third-party
takeover of the Company.
Subordination............... The Notes and the Guarantees will be subordinated
to all Senior Indebtedness of the Company and
Senior Guarantor Indebtedness of each Guarantor,
respectively, which will include, without
limitation, all indebtedness incurred under the
New Credit Facilities. After giving pro forma
balance sheet effect to the repurchase of Series
B Preferred Stock, together with accrued and
unpaid dividends thereon, that may be effected
with a portion of the proceeds from the Old Notes
as if such transaction had occurred on March 31,
1995, there would have been approximately $435.7
million of Senior Indebtedness and Senior
Guarantor Indebtedness of United outstanding on
such date, substantially all of which is secured
by substantially all of the assets of the
Company; in addition, after taking into account
approximately $68.1 million of outstanding
letters of credit, there would have been
approximately $32.8 million available to be drawn
by the Company as secured Senior Indebtedness
under the revolving credit portion of the New
Credit Facilities, which amount would have been
secured Senior Guarantor Indebtedness of United,
and approximately $264.1 million of Indebtedness
of the Company that would have been pari passu to
the New Notes. See "Risk Factors -- High
Leverage," "-- Subordination" and "--Limited
Practical Value of Guarantees by United" and
"Capitalization."
Guarantees.................. The Notes will be fully and unconditionally
guaranteed on a senior subordinated basis as to
payment of principal, premium, if any, and
interest by United and by any future domestic
Restricted Subsidiary (as hereinafter defined) of
the Company. The Company has no present intention
to acquire any domestic Restricted Subsidiary.
United conducts no independent operations. Its
only asset is the capital stock of the Company.
See "Risk Factors--Limited Practical Value of
Guarantees by United."
Certain Covenants........... The indenture governing the Notes (the
"Indenture") contains certain covenants,
including limitations on the incurrence of
indebtedness, the making of restricted payments,
transactions with affiliates, the existence of
liens, disposition of proceeds of asset sales,
the making of guarantees by restricted
subsidiaries, transfers and issuances of stock of
subsidiaries, the imposition of certain payment
restrictions on restricted subsidiaries and
certain mergers and sales of assets. See
"Description of the New Notes -- Certain
Covenants."
Exchange Offer;Registration
Rights..................... Pursuant to the Registration Agreement, United
and the Company have agreed to use their best
efforts to (i) file with
10
<PAGE>
the Securities and Exchange Commission (the
"Commission") on or prior to June 2, 1995, and
cause to become effective on or prior to August
31, 1995, a registration statement (the "Exchange
Offer Registration Statement") with respect to a
registered offer under the Securities Act to
exchange the New Notes for the Old Notes in
accordance with the terms of the Exchange Offer
and (ii) cause such Exchange Offer to be
consummated on or prior to September 30, 1995.
In the event that either (i) the Exchange Offer
Registration Statement is not declared effective
on or prior to August 31, 1995, (ii) the Exchange
Offer is not consummated on or prior to September
30, 1995 or (iii) changes in law or the
applicable interpretation of the Commission staff
do not permit the Company to effect the Exchange
Offer and a shelf registration statement pursuant
to the Securities Act (a "Shelf Registration
Statement") with respect to the Old Notes is not
declared effective under the Securities Act on or
prior to the later of (x) August 31, 1995 and (y)
the 45th calendar day after the publication of
the change in law or interpretation, the interest
rate borne by the Old Notes shall be increased by
one-half of one percent per annum following the
relevant date described in clause (i), (ii) or
(iii), as applicable. The aggregate amount of
such increase from the original interest rate
pursuant to these provisions will in no event
exceed one-half of one percent per annum. See
"The Exchange Offer -- Adjustment to Old Notes."
Such increase will cease to be effective on the
date of effectiveness of the Exchange Offer
Registration Statement, consummation of the
Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be. See
"The Exchange Offer."
RISK FACTORS
Investment in the Notes involves a high degree of risk. For a discussion of
certain considerations relevant to an investment in the Notes, see "Risk
Factors."
11
<PAGE>
SUMMARY FINANCIAL DATA
Set forth below and on the following pages is summary pro forma information
for United and summary historical financial information for United and
Associated. United, which has no operations independent of those of the
Company, unconditionally guarantees the Notes on a senior subordinated basis.
Associated had no operations independent of those of ASI.
UNITED -- PRO FORMA
The unaudited pro forma combined financial data set forth below should be
read in conjunction with the unaudited Pro Forma Combined Financial Statements
included elsewhere herein, which are based on the historical financial
statements of Associated and United after giving effect to: (i) the purchase
accounting and other merger related adjustments relating to the Acquisition and
(ii) the refinancing of certain debt and repurchase of the Series B Preferred
Stock assumed to be effected with the proceeds of the offering of Old Notes, as
described in the notes thereto. The unaudited pro forma combined financial data
is intended for informational purposes only and is not necessarily indicative
of the future financial position or future results of operations of United
after the Acquisition, or of the financial position or results of operations of
United that would have actually occurred had the Acquisition occurred on the
date or been in effect for the period presented. The unaudited pro forma
combined financial data should be read in conjunction with, and is qualified in
its entirety by, the historical consolidated financial statements of United and
Associated, including the related notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1994 MARCH 31, 1995
---------------------- ----------------------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C>
INCOME STATEMENT DATA (1)(2):
Net sales........................ $1,982,070 $568,912
Cost of sales (3)................ 1,535,609 443,777
---------- --------
Gross profit..................... 446,461 125,135
Warehouse, distribution, selling,
general and administrative ex-
penses (3)...................... 370,517 98,391
---------- --------
Income from operations........... 75,944 26,744
Interest expense, net (4)........ (48,825) (14,298)
Other income, net................ 86 20
---------- --------
Income before income taxes....... 27,205 12,466
Income taxes..................... 10,467 4,894
---------- --------
Net income....................... $ 16,738 $ 7,572
========== ========
OPERATING AND OTHER DATA (1):
EBITDA (5)....................... $ 109,571 $ 35,076
EBITDA margin (6)................ 5.5% 6.2%
Depreciation and amortization.... $ 33,541 $ 8,312
Capital expenditures, net........ 10,509 3,244
Ratio of EBITDA to interest ex-
pense........................... 2.2x 2.5x
BALANCE SHEET DATA (AT PERIOD
END) (1):
Working capital.................. $347,285
Total assets..................... 975,949
Total debt and capital leases
(7)............................. 585,720
Redeemable preferred stock....... 17,037
Redeemable warrants.............. 11,879
Stockholders' equity (excluding
redeemable preferred stock and
redeemable warrants)............ 45,459
</TABLE>
See footnotes on following page.
12
<PAGE>
(1) The unaudited pro forma income statement and operating and other data is
presented giving effect to (i) the Acquisition as if it had been
consummated on January 1, 1994 and (ii) the refinancing of certain debt and
the repurchase of Series B Preferred Stock (including accrued and unpaid
dividends thereon) assumed to be effected with the proceeds of the Old
Notes as if such refinancing and repurchase had been consummated one month
thereafter. The unaudited pro forma balance sheet data is presented giving
effect to the Acquisition and the refinancing of certain debt and the
repurchase of Series B Preferred Stock (including accrued and unpaid
dividends thereon) assumed to be effected with the proceeds of the Old
Notes as if all such transactions had been consummated on March 31, 1995.
Although United was the surviving corporation in the Merger, the
transaction was treated as a reverse acquisition for accounting purposes
with Associated as the acquiring corporation. Accordingly, the pro forma
income statement for the year ended December 31, 1994 combines Associated
for its fiscal year ended December 31, 1994 with United for its twelve
month period ended November 30, 1994 (the date of its fiscal quarter ending
nearest to December 31, 1994), the pro forma income statement for the three
months ended March 31, 1995 combines Associated for the three months ended
March 31, 1995 with United for the three months ended February 28, 1995 and
the pro forma balance sheet data as of March 31, 1995 for United include
the preliminary purchase price allocation, which may be revised at a later
date, and other Merger related adjustments. United's historical statement
of income previously reported on a fiscal year ended August 31, 1994 has
been adjusted to reflect the twelve month period ended November 30, 1994.
(2) The pro forma income statement data excludes (i) the extraordinary non-
recurring write-off of approximately $2.4 million ($1.4 million net of tax
benefit of $1.0 million) of financing costs and original issue discount
relating to the retirement of debt, (ii) a non-recurring charge for
restructuring of approximately $9.8 million ($5.9 million net of tax
benefit of $3.9 million), for costs expected to be incurred in connection
with integration and transition (e.g., severance and the cost of closing
certain facilities operated by Associated prior to the Merger) and (iii)
compensation expense relating to employee stock options of approximately
$1.5 million ($0.9 million net of tax benefit of $0.6 million).
Approximately $14.6 million of additional integration and transition costs
(e.g., severance and the cost of closing facilities operated by United
prior to the Merger) will be recorded as additional costs of the Merger, in
accordance with the purchase method of accounting. The above-referenced
restructuring reserve and the purchase accounting reserve relating to the
integration and transition expenses total $24.4 million and are reflected
as a reserve in the Pro Forma Combined Balance Sheet. See "Pro Forma
Combined Financial Information."
(3) Includes estimated cost savings of $26.0 million for the year ended
December 31, 1994 and $6.5 million for the three months ended March 31,
1995 that United expects to realize from the actions that management has
committed to undertake pursuant to its consolidation plan that has been
approved by the Board of Directors of the Company, as if the consolidation
plan had been implemented in full as of January 1, 1994. United plans to
implement its consolidation plan over a 12-month period following the
Acquisition. See "Risk Factors -- Implementation of Consolidation Plan" and
"Business -- Consolidation Plan and Benefits of the Acquisition."
(4) Pro forma interest expense is based on historical interest rates in effect
during the year ended December 31, 1994 and the three months ended March
31, 1995 in calculating the basis for variable rates. Average 30-day LIBOR
in effect for the year ended December 31, 1994 ranged from 3.15% to 6.09%
and for the three months ended March 31, 1994 was 6.125%. The average prime
rate during January 1994 was 6.0% and for the three months ended March 31,
1995 ranged from 8.50% to 9.0%. At March 31, 1995, 30-day LIBOR was 6.125%
and the prime rate was 9.0%. If the March 31, 1995 interest rates were used
as base interest rates instead of the historical rates, pro forma interest
expense for United would amount to $56.1 million instead of $48.8 million
for the year ended December 31, 1994. Each 1/8 of 1% change in the base
interest rate for variable rate debt has a $521 thousand effect on annual
pro forma interest expense for United. In April 1995, the Company entered
into three-year interest rate protection arrangements totaling $200,000,000
pursuant to which the Company (i) is protected to the extent that the 3-
month LIBOR interest rate exceeds 8.0% and (ii) is liable to the extent
that such interest rate drops below 6.0%.
(5) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt.
13
<PAGE>
EBITDA should not be considered in isolation from or as a substitute for net
income, cash flows from operating activities or other consolidated income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or liquidity.
(6) EBITDA margin represents EBITDA as a percentage of net sales.
(7) Total debt and capital leases includes current maturities.
UNITED -- HISTORICAL
The summary financial information of United set forth below for each of the
fiscal years in the five-year period ended August 31, 1994 and the seven months
ended March 30, 1995 has been derived from the financial statements of United,
which have been audited by Arthur Andersen LLP, independent public accountants
for the years ended August 31, 1991 through 1994, and by Ernst & Young LLP,
independent public accountants, for the seven months ended March 30, 1995.
Audited financial statements for the fiscal years ended August 31, 1990 and
1991 are not included in this filing. The summary financial information at and
for the seven-month period ended March 31, 1994 is unaudited and in the opinion
of management reflects all adjustments considered necessary for a fair
presentation of such data. The results of operations for any interim period are
not necessarily indicative of results of operations for the fiscal year and
should be read in conjunction with, and is qualified in its entirety by,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Historical Results of Operations of United" and "-- Historical
Liquidity and Capital Resources of United" and the financial statements of
United included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, SEVEN MONTHS ENDED
------------------------------------------------------ --------------------
MARCH 31, MARCH 30,
1990 1991 1992 1993 1994 1994 1995
-------- -------- ---------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $993,178 $951,109 $1,094,275 $1,470,115 $1,473,024 $871,585 $980,575
Gross profit on sales... 224,230 218,708 245,687 344,519 322,901 195,865 206,718
Operating expenses...... 195,863 195,694 219,285 298,405 286,607 170,420 201,801
Income from operations.. 28,367 23,014 26,402 46,114 36,294 25,445 4,917
Interest expense, net... 7,350 6,082 6,503 9,550 10,461 5,837 7,500
Income before income
taxes.................. 21,361 16,918 20,263 36,919 26,058 19,725 (2,542)
Income taxes............ 8,523 7,008 8,899 15,559 10,309 8,185 4,692
Net income.............. 12,838 9,910 11,364 21,360 15,749 11,540 (7,234)
OPERATING AND OTHER
DATA:
EBITDA (1).............. $ 43,851 $ 41,912 $ 46,645 $ 67,712 $ 57,755 $ 37,665 $17,553
EBITDA margin (2)....... 4.4% 4.4% 4.3% 4.6% 3.9% 4.3% 1.8%
Depreciation and
amortization........... $ 15,140 $ 18,912 $ 19,879 $ 21,243 $ 21,236 $ 12,103 $12,595
Net capital
expenditures........... 15,067 15,765 8,291 29,958 10,499 4,287 7,764
BALANCE SHEET DATA (AT
PERIOD END):
Working capital......... $134,420 $135,347 $ 214,611 $ 216,074 $ 239,827 $297,099 $257,600
Total assets............ 401,661 409,958 601,465 634,786 618,550 608,728 711,839
Total debt and capital
leases(3).............. 73,683 73,123 150,728 150,251 155,803 227,626 233,406
Stockholders'
investment............. 177,777 181,584 223,387 237,697 246,010 243,636 233,125
</TABLE>
- --------
(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability
or liquidity.
(2) EBITDA margin represents EBITDA as a percentage of net sales.
(3) Total debt and capital leases includes current maturities but excludes
original issue discount.
14
<PAGE>
ASSOCIATED -- HISTORICAL
The summary financial information of Associated set forth below with respect
to the period from January 31, 1992 (when certain of the assets and certain
liabilities of ASI were acquired (the "Boise Transaction") from the Wholesale
Division of Boise Cascade Office Products Corporation ("BCOP")) through
December 31, 1992 and the years ended December 31, 1993 and 1994 has been
derived from and should be read in conjunction with, and is qualified in its
entirety by, "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Historical Results of Operations of Associated" and
"-- Historical Liquidity and Capital Resources of Associated" and the financial
statements of Associated included elsewhere in this Prospectus, which have been
audited by Arthur Andersen LLP, independent public accountants. The data at and
for the years ended December 31, 1990 and 1991 and the one month ended January
31, 1992 are derived from the unaudited financial statements of BCOP for such
periods. Associated has accounted for the Boise Transaction using the purchase
method of accounting. There are material operational and accounting differences
between BCOP and Associated resulting from the Boise Transaction. Accordingly,
the historical financial data of BCOP may not be comparable in all material
respects with data of Associated. The data at and for the three months ended
March 31, 1994 and 1995 are unaudited and in the opinion of management reflect
all adjustments considered necessary for a fair presentation of such data. On
March 30, 1995, Associated merged with United. Although United was the
surviving corporation in the Merger, the transaction was treated as a reverse
acquisition for accounting purposes, with Associated as the acquiring
corporation. Therefore, the income statement and operating and other data for
the three months ended March 31, 1994 and 1995 reflect the financial
information of Associated only. The balance sheet data at March 31, 1995
reflect the consolidated balances of Associated and United including the
preliminary purchase price allocation, which may be revised at a later date,
and other Merger-related adjustments. The balance sheet data at March 31, 1994
reflect Associated only.
<TABLE>
<CAPTION>
PREDECESSOR(1)(2) ASSOCIATED
------------------------------- ---------------------------------------------------
JANUARY 1 JANUARY 31
YEAR ENDED TO TO YEAR ENDED THREE MONTHS
DECEMBER 31, JANUARY 31, DECEMBER 31, DECEMBER 31, ENDED MARCH 31,
------------------ ----------- ------------ ------------------ ------------------
1990(3) 1991(4) 1992(5) 1992 1993 1994 1994 1995
-------- -------- ----------- ------------ -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $443,547 $411,343 $39,016 $365,944 $462,531 $477,445 $123,850 $137,272
Gross profit............ 112,324 103,253 9,142 89,398 112,280 120,169 29,688 33,704
Operating
expenses (6)........... 90,773 88,374 7,723 79,889 102,274 103,020 26,752 38,708
Income (loss) from
operations............. 21,551 14,879 1,419 9,509 10,006 17,149 2,936 (5,004)
Interest expense........ -- -- -- 4,782 6,263 6,753 1,732 2,203
Income (loss) before
income taxes and
extraordinary item..... -- -- -- 4,727 3,743 10,396 1,204 (7,207)
Income taxes (benefit).. -- -- -- 1,777 781 3,993 462 (2,973)
Income (loss) before ex-
traordinary item....... -- -- -- 2,950 2,962 6,403 742 (4,234)
Extraordinary item...... -- -- -- -- -- -- -- (1,449)
Net income (loss)....... -- -- -- 2,950 2,962 6,403 742 (5,683)
OPERATING AND OTHER
DATA:
EBITDA (7).............. $ 24,511 $ 18,028 $ 1,661 $ 14,875 $ 16,481 $ 23,505 $ 4,525 $ 6,228
EBITDA margin (8)....... 5.5% 4.4% 4.3% 4.1% 3.6% 4.9% 3.7% 4.5%
Depreciation and
amortization........... $ 2,960 $ 3,149 $ 242 $ 5,366 $ 6,475 $ 6,356 $ 1,589 $ 1,473
Capital expenditures,
net.................... 8,129 273 (36) 4,289 3,273 554 242 182
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR(1) ASSOCIATED
----------------- --------------------------------------------
AT DECEMBER 31, AT MARCH 31,
-------------------------------------------- -----------------
1990(3) 1991(4) 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 60,726 $ 54,373 $ 46,396 $ 57,302 $ 56,454 $ 56,795 $340,626
Total assets............ 151,432 140,756 179,069 190,979 192,479 172,250 975,949
Total debt and capital
leases (9)............. -- -- 78,297 86,350 64,623 74,650 572,857
Redeemable preferred
stock.................. -- -- 18,949 20,996 23,189 21,530 23,761
Redeemable warrants..... -- -- 1,435 1,435 1,650 1,435 11,879
Total stockholders' or
predecessor division
equity................. 102,871 93,642 10,466 11,422 24,775 20,843 45,459
</TABLE>
- --------
(1) The capital structure and accounting basis of the assets and liabilities of
the predecessor of ASI, BCOP, differ from those of Associated and ASI.
Accordingly, certain of the financial information for periods before
January 31, 1992 is not comparable to that for periods after January 31,
1992 and therefore is not presented in this table.
(2) The Predecessor operated as a segment of BCOP. BCOP did not allocate income
tax or interest expense to the Predecessor. Accordingly, actual operating
results for the Predecessor reflect only income from operations before
interest expense and income taxes.
(3) Derived from the unaudited financial statements of BCOP at and for the year
ended December 31, 1990.
(4) Derived from the unaudited financial statements of BCOP at and for the year
ended December 31, 1991.
(5) Derived from the unaudited financial statements of BCOP for the one month
ended January 31, 1992.
(6) Includes restructuring charge of $9.8 million for the three months ended
March 31, 1995.
(7) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and restructuring charge and extraordinary item, and is
presented because it is commonly used by certain investors and analysts to
analyze and compare companies on the basis of operating performance and to
determine a company's ability to service and incur debt. EBITDA should not
be considered in isolation from or as a substitute for net income, cash
flows from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
(8) EBITDA margin represents EBITDA as a percentage of net sales.
(9) Total debt and capital leases is defined as long-term debt including
current maturities but excluding original issue discount, plus deferred
obligations due to the holder of the Associated Class B redeemable
preferred stock.
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Notes offered hereby.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon and in the
Offering Memorandum dated April 26, 1995, because the Old Notes were issued
pursuant to exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the Old Notes may not be offered or sold unless registered
under the Securities Act and applicable state securities laws, or pursuant to
an exemption therefrom, or in a transaction not subject to the Securities Act
and applicable state securities laws. The Company does not intend to register
the Old Notes under the Securities Act and, after consummation of the Exchange
Offer, will not be obligated to do so except under limited circumstances. See
"The Exchange Offer--Purpose and Effect." Based on an interpretation by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that the New Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business, such holders have no arrangement
with any person to participate in the distribution of such New Notes and
neither such holders nor any such other person is engaging in or intends to
engage in a distribution of such New Notes. Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution." To
the extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."
HIGH LEVERAGE
As a result of the Acquisition and the refinancing of certain debt and,
assuming necessary consents are obtained, the repurchase of the Series B
Preferred Stock (including accrued and unpaid dividends thereon) which the
Company expects to effect with the proceeds of the Old Notes, the Company has
significant debt and debt service obligations. Assuming the Acquisition and
such refinancing and repurchase had occurred on March 31, 1995, and after
giving effect to the debt, redeemable preferred stock and redeemable warrants
of United "pushed down" to the accounts of the Company, (i) the Company would
have had $585.7 million of long-term indebtedness (including current
maturities), $17.0 million of redeemable preferred stock, $11.9 million of
redeemable warrants, and $45.5 million of common stock and other stockholders'
equity; (ii) the Company would have had a long-term indebtedness to redeemable
preferred stock, redeemable warrants and total stockholders' equity ratio of
7.9 to 1; and (iii) the Company would have had a long-term indebtedness,
redeemable preferred stock and redeemable warrants to total stockholders'
equity ratio of 13.5 to 1. See "Pro Forma Combined Financial Information." By
contrast, after giving effect to "push-down" accounting, the Company's
historical long-term indebtedness, redeemable preferred stock and redeemable
warrants to stockholders' equity ratio as of March 31, 1995 was 13.4 to 1 and
its historical long-term indebtedness to redeemable preferred stock plus
redeemable warrants plus stockholders' equity ratio as of March 31, 1995 was
7.1 to 1.
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The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, potential acquisition opportunities, general
corporate purposes or other purposes may be impaired; (ii) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of principal and interest on its indebtedness; (iii) the Company may be
more vulnerable to economic downturns, may be limited in its ability to
withstand competitive pressures and may have reduced flexibility in responding
to changing business and economic conditions; and (iv) fluctuations in market
interest rates will affect the cost of the Company's borrowings to the extent
not covered by interest rate hedge agreements because interest under the New
Credit Facilities will be payable at variable rates. The Company's ability to
service its indebtedness will be dependent on its future performance, which
will be affected by prevailing economic conditions and financial, business and
other factors, certain of which are beyond the Company's control.
The Company believes that, based upon current levels of operations, it should
be able to meet its debt service obligations, including principal and interest
payments on the Notes, when due. However, if the Company cannot generate
sufficient cash flow from operations to meet its debt service obligations,
defaults may occur thereunder and the Company might be required to refinance
its indebtedness. There is no assurance that refinancings could be effected on
satisfactory terms or would be permitted by the terms of the New Credit
Agreement.
SUBORDINATION
The indebtedness evidenced by the Notes and the Guarantees (including
principal, premium, if any, and interest) will be subordinated in right of
payment to present and future Senior Indebtedness of the Company and Senior
Guarantor Indebtedness of each Guarantor. In the event of the dissolution or
liquidation of United or the Company, or in the case of certain events of
default with respect to the Notes or such Senior Indebtedness or Senior
Guarantor Indebtedness, certain creditors of the Company holding Senior
Indebtedness or of any Guarantor holding Senior Guarantor Indebtedness will be
entitled to be paid in full before any payment is made to holders of the Notes
or the Guarantees. Senior Indebtedness and Senior Guarantor Indebtedness would
currently include, among other things, the debt incurred under the New Credit
Facilities and, in the case of Senior Indebtedness, the Company's current and
future obligations under capitalized leases. After giving pro forma effect to
the Acquisition and the refinancing of certain debt and repurchase of Series B
Preferred Stock, together with accrued and unpaid dividends thereon, assumed to
be effected with the proceeds of the Old Notes as if all such transactions had
occurred on March 31, 1995, there would have been approximately $435.7 million
of Senior Indebtedness and Senior Guarantor Indebtedness of United outstanding
on such date, substantially all of which represents Indebtedness or guarantees
of Indebtedness under the New Credit Facilities which would have been secured
by substantially all of the assets of the Company; in addition, after taking
into account approximately $68.1 million of outstanding letters of credit,
there would have been approximately $32.8 million available to be drawn by the
Company as secured Senior Indebtedness under the revolving credit portion of
the New Credit Facilities, which amounts would have been secured Senior
Guarantor Indebtedness of United; and, on a pro forma basis on such date,
Indebtedness pari passu to the Notes would have been $264.1 million,and there
would not have been any Indebtedness subordinated to the Notes. See "Pro Forma
Combined Financial Information." The Indenture does not prohibit or limit the
designation of Indebtedness otherwise permitted to be incurred as Senior
Indebtedness or Senior Guarantor Indebtedness. See "Description of the New
Notes -- Subordination."
LIMITED PRACTICAL VALUE OF GUARANTEES BY UNITED
United unconditionally guarantees, on a senior subordinated basis, all
payments of principal, premium, if any, and interest on the Notes. However,
since at present United's only significant asset is the capital stock of the
Company (and such asset is pledged to the lenders under the New Credit
Facilities), if the Company should be unable to meet its payment obligations
with respect to the Notes, it is unlikely that United would be able to do so.
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RESTRICTIVE COVENANTS
The Indenture and the credit agreement (as amended, the "New Credit
Agreement") for the New Credit Facilities contain numerous restrictive
covenants that will limit the discretion of management with respect to certain
business matters. These covenants place significant restrictions on, among
other things, the ability of the Company to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments, investments,
loans and guarantees and to sell or otherwise dispose of assets and merge or
consolidate with another entity. The New Credit Agreement also contains a
number of financial covenants that require the Company to meet certain
financial ratios and tests. See "Financing the Acquisition." A failure to
comply with the obligations in the New Credit Agreement or the Indenture could
result in an event of default under the New Credit Agreement, or an Event of
Default (as hereinafter defined) under the Indenture, which, if not cured or
waived, could permit acceleration of the indebtedness thereunder and
acceleration of indebtedness under other instruments that may contain cross-
acceleration or cross-default provisions. Other indebtedness of the Company and
its subsidiaries that may be incurred in the future may contain financial or
other covenants more restrictive than those applicable under the New Credit
Agreement. The New Credit Agreement restricts the prepayment, purchase,
redemption, defeasance or other payment of any of the principal of the Notes so
long as any loans remain outstanding under the New Credit Agreement.
RISKS INHERENT IN IMPLEMENTATION OF CONSOLIDATION PLAN
The Company's future operations and earnings will be largely dependent upon
the Company's ability to integrate the businesses separately conducted by ASI
and the Company prior to the Merger. The Company must, among other things,
eliminate approximately 10,000 overlapping items from its catalogs to be
distributed in the fourth calendar quarter of 1995, close redundant
distribution centers effectively, while at the same time maximizing retention
of the related business, and eliminate certain corporate and sales positions
and otherwise reduce combined administrative costs and expenses. There can be
no assurance that the Company will successfully integrate the former separate
businesses of ASI and the Company, and a failure to do so would have a material
adverse effect on the Company's results of operations and financial condition.
Additionally, although the Company does not currently have any acquisition
plans, the need to focus management's attention on integration of the former
businesses and implementation of the Company's consolidation plan may limit the
Company's ability to successfully pursue acquisitions or other opportunities
related to its business for the foreseeable future.
As discussed under "Business -- Consolidation Plan and Benefits of the
Acquisition" and as presented under "Pro Forma Combined Financial Information,"
management estimates that the Company expects to realize significant cost
savings as a result of a successful implementation of its consolidation plan.
The achievement of these savings is significantly dependent on the successful
implementation of such plan. There can be no assurances, however, that such
savings will be achieved or sustained. In addition, the Company believes that
the Acquisition is likely to result in a reduction in the rate of revenue
growth for some period following the Acquisition as a result of the loss of
customers to competition.
COMPETITION
The Company operates in a highly competitive environment. The Company
competes to obtain reseller purchases both with office products manufacturers
and with other national, regional and specialty wholesalers of office products,
office furniture, computers and related items. A trend toward consolidation has
occurred in recent years throughout the office products industry. Although as
the result of such consolidations at the national full-line wholesale level
only one competitor (S.P. Richards) remains, consolidation of commercial
dealers and contract stationers has also resulted in an increased ability of
those resellers to buy goods directly from manufacturers. In addition, over the
last decade,
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office products superstores (which largely buy directly from manufacturers)
have entered virtually every major metropolitan market and commercial dealers,
contract stationers and retail dealers have formed buying groups to purchase
directly from manufacturers on a collective basis. Increased competition in the
office products industry has also led to heightened price awareness among
consumers, making purchasers of commodity type office products extremely price
sensitive and requiring the Company to increase its efforts to convince
resellers of the continuing advantages of its competitive strengths (as
compared to those of manufacturers and other wholesalers), such as marketing
and catalog programs, speed of delivery, and the ability to offer resellers a
broad line of business products from multiple manufacturers with lower minimum
order quantities on a "one-stop shop" basis. See "Business --Competition."
CHANGING END USER DEMANDS
The Company's sales and profitability are largely dependent on its ability to
continually enhance its product offerings to meet changing end user demands.
End users' traditional demands for office products have changed over the last
several years as a result of (i) increased recycling efforts, (ii) efforts by
various businesses to establish "paperless" work environments, (iii) the
widespread use of computers and other technological advances, resulting in the
elimination or reduction in use of traditional office supplies and (iv) a trend
toward non-traditional offices, such as home-offices. The Company's ability to
continually monitor and react to such trends and changes in end user demands
will be necessary to avoid adverse effects on its sales and profitability.
SERVICE INTERRUPTIONS
Substantially all of the Company's shipping, warehouse and maintenance
employees at certain of the Company's facilities in Chicago, Detroit,
Philadelphia, Baltimore, Los Angeles, Minneapolis and New York City are covered
by various collective bargaining agreements, which expire at various times
during the next three years. Although the Company considers its relationships
with its employees to be satisfactory, a prolonged labor dispute could have a
material adverse effect on the Company's business as well as the Company's
results of operations and financial condition. In addition, the Company's
ability to readily deliver its products could be impaired by work stoppages by
its employees. Although the Company has maintained service levels during past
work stoppages by distributing to its customers from unaffected distribution
centers, profitability has been reduced during such periods as a result of
higher distribution costs. The Company's ability to receive and distribute
products is largely dependent on the availability of trucks utilized by both
manufacturers and the Company, and therefore the occurrence of a national
trucking strike could also impair the Company's operations. The Company's
service levels would also be affected in the event of an interruption in
operation of its computers or telecommunications network on a company-wide
scale for an extended period of time, although the Company has developed
contingency plans to limit its exposure. The Company has not experienced any
work stoppages for the financial periods presented herein that had a material
effect on the Company's operations and financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company's continued success largely will depend on the efforts and
abilities of its executive officers and certain other key employees,
particularly Mr. Thomas W. Sturgess, the Company's Chairman of the Board,
President and Chief Executive Officer, Mr. Michael D. Rowsey and Mr. Steven R.
Schwarz, each an Executive Vice President of the Company, and Mr. Daniel H.
Bushell, the Company's Chief Financial Officer, the loss of any of whom could
have a material adverse effect on the Company. Although all but Mr. Sturgess
have entered into employment agreements with the Company as described under
"Management," the Company is currently integrating two formerly separate
management teams and any officer could choose to resign at any time. On May 31,
1995, Jeffrey K.
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Hewson resigned as President and Chief Executive Officer of United and the
Company, and Thomas W. Sturgess, Chairman of the Board of United and the
Company, assumed such responsibilities. The Company currently does not have any
"key man" life insurance for its key personnel.
CONTROL BY WINGATE PARTNERS
As of the date of this Prospectus, approximately 75% of the outstanding
Shares were controlled by the Voting Trust (as hereinafter defined), the five
trustees of which hold all voting power to vote such Shares and may act by
majority vote of the trustees. Three of the five trustees serve as indirect
general partners of Wingate Partners, L.P. ("Wingate Partners") or Wingate
Partners II, L.P. ("Wingate II"), each of which is a Delaware limited
partnership and a private investment firm located in Dallas, Texas. In
addition, the trustees are obligated to nominate and vote for a board of
directors of United of which directors designated by Wingate Partners comprise
a majority. Four of the current nine directors of United are indirect general
partners of Wingate Partners or Wingate II. The Company is a wholly owned
subsidiary of United. Consequently, Wingate Partners and Wingate II and their
indirect general partners will control United and, through control of United,
the Company and, thus, will have the power to elect a majority of the directors
thereof and to approve any action requiring stockholder approval. See
"Management --Directors and Executive Officers," "Certain Transactions" and
"Ownership of Voting Securities."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Substantially all of the net proceeds of the offering of the Old Notes were
used to refinance the Bridge Loan under the Subordinated Bridge Facility, repay
approximately $6.5 million outstanding under the Term Loan Facilities and, upon
receipt of necessary consents, are expected to be used to pay a dividend to
United to repurchase the outstanding shares of Series B Preferred Stock,
together with accrued and unpaid dividends thereon. In addition, pursuant to
the Merger, United assumed all of the obligations of Associated; pursuant to
the Subsidiary Merger, the Company assumed all obligations of ASI; and,
pursuant to the Indenture, each future domestic Restricted Subsidiary of the
Company will guarantee the Notes. Accordingly, the obligations of the Company
under the Notes and the obligations of United and any future Restricted
Subsidiary under the Guarantees may be subject to review under relevant federal
and state fraudulent conveyance statutes ("fraudulent conveyance statutes") in
a bankruptcy, reorganization or rehabilitation case or similar proceeding or a
lawsuit by or on behalf of unpaid creditors of the Company, United or any
future Restricted Subsidiary. If a court were to find under relevant fraudulent
conveyance statutes that, at the time of issuance, incurrence or assumption by
any debtor of obligations under the Notes, Guarantees, the Bridge Loan or the
term or revolving loans ("Senior Loans") under the New Credit Facilities, (a)
such debtor incurred such obligation with the intent of hindering, delaying or
defrauding current or future creditors or (b)(i) such debtor received less than
reasonably equivalent value or fair consideration for incurring such obligation
and (ii)(A) was insolvent or was rendered insolvent by reason of such
incurrence, (B) was engaged, or about to engage, in a business or transaction
for which its assets constituted unreasonably small capital, or (C) intended to
incur, or believed that it would incur, obligations beyond its ability to pay
as such obligations matured (as all of the foregoing terms are defined in or
interpreted under such fraudulent conveyance statutes), such court could
subordinate such obligations to presently existing and future indebtedness of
such debtor, as the case may be, and take other action detrimental to the
holders of the Notes, including, under certain circumstances, invalidating the
Notes or the Guarantees.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction which is being applied. Generally, however, a
company would be considered insolvent for purposes of the foregoing if, at the
time it incurs any given obligation, the sum of the company's debts (including
unliquidated or contingent debt) is greater than all the company's property at
a fair valuation, or if the present fair saleable value of the company's assets
is less than the amount that will be required to pay its probable liability on
its existing debts (including unliquidated or contingent debt) as they become
absolute and matured.
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On the basis of the historical financial information of United and Associated
and other factors, management believes that (i) each obligation of each debtor
was and is being incurred for proper purposes and in good faith and (ii) (A)
after giving effect to the Acquisition, the Mergers, the Bridge Loan, the
Senior Loans and related transactions, each such prior or current debtor
received or is receiving reasonably equivalent value and fair consideration for
incurring such obligation and (B) each such prior or current debtor was, is and
will be solvent under the foregoing standards, had, has and will have
sufficient capital for carrying on their businesses, was, is and will be able
to pay their debts as they mature, and had, has and will have sufficient assets
to satisfy any probable money judgment against it in any pending action. There
can be no assurance, however, as to whether a court would concur in such view.
LIQUIDITY OF THE NOTES
The New Notes are being offered to the holders of the Old Notes. Although the
Initial Purchaser currently makes a market in the Old Notes and has informed
the Company that it currently intends to make a market in the New Notes, it is
not obligated to do so, and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Notes. The Company does not
intend to apply for listing of the Notes on any securities exchange or for
quotation through the Nasdaq National Market System.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on May 3, 1995 in a private placement.
In connection therewith, the Company entered into the Registration Agreement,
which requires that the Company file the Exchange Offer Registration Statement
under the Securities Act with respect to the New Notes and, upon the
effectiveness of such Exchange Offer Registration Statement, offer to the
holders of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive
legend and, with the exceptions provided below, may be reoffered and resold by
the holder without registration under the Securities Act. The Registration
Agreement further provides that the Exchange Offer Registration Statement must
be declared effective on or prior to August 31, 1995. Upon the completion of
the Exchange Offer (unless any holder is unable to make the requisite
representations in order to participate in the Exchange Offer), the Company's
obligations with respect to the registration of the Old Notes and the New Notes
will terminate. A copy of the Registration Agreement has been filed as an
exhibit to the Exchange Offer Registration Statement of which this Prospectus
is a part. As a result of the filing and the effectiveness of the Exchange
Offer Registration Statement, certain prospective increases in the interest
rate on the Old Notes provided for in the Registration Agreement and the
Indenture will not occur. Following the consummation of the Exchange Offer
(except as set forth in the paragraph immediately below), Holders of Old Notes
not tendered will not have any further registration rights and the Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for the Old Notes could be adversely affected upon
consummation of the Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to the
Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, (ii)
neither the holder nor any such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii) neither the holder nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, and (iv) neither the holder
nor any such other person is an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of the Company. In the event that any
holder of Old Notes cannot make the requisite representations to the Company in
order to participate in the Exchange Offer, such holder can elect, by so
indicating on the Letter of Transmittal and providing certain additional
necessary information, to have such holder's Old Notes registered in a "shelf"
registration statement on an appropriate form pursuant to Rule 415 under the
Securities Act. In the event that the Company is obligated to file a "shelf"
registration statement, it will be required to keep such "shelf" registration
statement effective for a period of 180 days. Other than as set forth in this
paragraph, no holder will have the right to participate in the "shelf"
registration statement nor otherwise to require that the Company register such
holder's Notes under the Securities Act. See "-- Procedures for Tendering."
Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that, with the
exceptions set forth below, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any person receiving such New Notes, whether or not such person
is the holder (other than any such holder or such other person which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of business of such holder or such other person and neither
such holder nor such other person has an arrangement or understanding with any
person to participate in the distribution of such New Notes. Any holder who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes cannot rely on such interpretation by the staff
of the Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in
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connection with a secondary resale transaction. Each broker-dealer that
receives New Notes for its own account in exchange for Old Notes, where such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the consummation of the Exchange Offer (except as set forth in the
second paragraph under " -- Purpose and Effect" above), holders of Old Notes
not tendered will not have any further registration rights and the Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for a holder's Old Notes could be adversely
affected upon consummation of the Exchange Offer if such holder does not
participate in the Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus and
in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only
in integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are the same as the form and terms of the
Old Notes except that the New Notes have been registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.
As of May 3, 1995, $150,000,000 aggregate principal amount of the Old Notes
was outstanding and there were five registered holders. This Prospectus,
together with the Letter of Transmittal, is being sent to such registered
Holders and to others believed to have beneficial interests in the Old Notes.
Holders of Old Notes do not have any appraisal or dissenters' rights under the
Business Corporation Act of the State of Illinois or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Securities Act and
the rules and regulations of the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes when,
as, and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the New Notes from the Company. If any tendered Old Notes
are not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
" --- Fees and Expenses" below.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ,
1995, unless the Company, in its sole discretion, extends the Exchange Offer,
in which case the term "Expiration Date"
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shall mean the latest date and time to which the Exchange Offer is extended. In
order to extend the Exchange Offer, the Company will notify the Exchange Agent
and each registered holder of any extension by oral or written notice prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. The Company reserves the right, in its sole
discretion, (i) to delay accepting any Old Notes, to extend the Exchange Offer
or, if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (ii)
to amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign, and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent
prior to the Expiration Date. In addition, either (i) certificates for such Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a "Book-
Entry Confirmation") of such Old Notes, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the Holder must comply with the guaranteed delivery procedures described
below. To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under "-- Exchange Agent" prior to the Expiration Date.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES,
OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership
of the Old Notes in such beneficial owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership may
take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
Old Notes tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantee must be by a member firm of a
25
<PAGE>
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends
to notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall
incur any liability for failure to give such notification. Tenders of Old Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date or, as set forth below under
" -- Conditions," to terminate the Exchange Offer and, to the extent permitted
by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, (ii) neither the holder nor
any such other person is engaged in or intends to engage in a distribution of
such New Notes, (iii) neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, and (iv) neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company.
In the event that any holder of Old Notes cannot make the requisite
representations to the Company in order to participate in the Exchange Offer,
such holder can elect, by so indicating on the Letter of Transmittal and
providing certain additional necessary information, to have such holder's Old
Notes registered in a "shelf" registration statement on an appropriate form
pursuant to Rule 415 under the Securities Act. Such election must be made by
the Expiration Date in order for such holder to participate in the "shelf"
registration.
26
<PAGE>
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering Holder thereof (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer to transfer such Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of Old
Notes may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "-- Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written,
telegraphic, telex, or facsimile transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth
27
<PAGE>
under " -- Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee register the transfer of such Old Notes into the name of the person
withdrawing the tender, and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. All questions as
to the validity, form, and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validity tendered for exchange for purposes of the Exchange Offer.
Any Old Notes which have been tendered for exchange but which are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "--Procedures for
Tendering" above at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept Old Notes for exchange, or to issue New Notes in
exchange for Old Notes, and may terminate or amend the Exchange Offer as
provided herein, if at any time before the acceptance of such Old Notes for
exchange any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transactions contemplated by the Exchange Offer, or assessing or seeking
any damages as a result thereof, or (ii) resulting in a material delay in
the ability of the Company to accept for exchange or exchange some or all
of the Old Notes pursuant to the Exchange Offer, or any statute, rule,
regulation, order, interpretation or injunction shall be sought, proposed,
introduced, enacted, promulgated or deemed applicable to the Exchange Offer
or any of the transactions contemplated by the Exchange Offer by any
government or governmental authority, domestic or foreign, or any action
shall have been taken, proposed or threatened, by any government or
governmental authority or agency or court, domestic or foreign, that in the
sole judgment of the Company, might directly or indirectly result in any of
the consequences referred to in clauses (i), (ii) above or, in the sole
judgment of the Company, might otherwise make it inadvisable to proceed
with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or the over-the-counter market, (ii) any limitation by
any governmental agency or authority which adversely affects the ability of
the Company to complete the transactions contemplated by the Exchange
Offer, (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation by any
governmental agency or authority which adversely affects the extension of
credit or (iv) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United States,
or, in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof;
which, in the reasonable judgment of the Company in any case, and regardless of
the circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or with
such acceptance for exchange or with such exchange.
28
<PAGE>
If the Company determines, in its reasonable discretion, that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the Expiration
Date, subject, however, to the rights of holders to withdraw such Old Notes
(see "Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all validly tendered Old Notes which
have not been withdrawn. If such waiver constitutes a material change to the
Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered holders, and
the Company will extend the Exchange Offer for a period of five to 10 business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to 10 business day period.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
ADJUSTMENT TO OLD NOTES
Pursuant to the Registration Agreement, United and the Company have agreed to
use their best efforts to (i) cause to become effective on or prior to August
31, 1995, the Exchange Offer Registration Statement with respect to a
registered offer under the Securities Act to exchange the New Notes for the Old
Notes in accordance with the terms of the Exchange Offer and (ii) cause such
Exchange Offer to be consummated on or prior to September 30, 1995.
In the event that either (i) the Exchange Offer Registration Statement is not
declared effective on or prior to August 31, 1995, (ii) the Exchange Offer is
not consummated on or prior to September 30, 1995 or (iii) changes in law or
the applicable interpretation of the Commission staff do not permit the Company
to effect the Exchange Offer and a Shelf Registration Statement with respect to
the Old Notes is not declared effective under the Securities Act on or prior to
the later of (x) August 31, 1995 and (y) the 45th calendar day after the
publication of the change in law or interpretation, the interest rate borne by
the Old Notes shall be increased by one-half of one percent per annum following
the relevant date described in clause (i), (ii) or (iii), as applicable. The
aggregate amount of such increase from the original interest rate pursuant to
these provisions will in no event exceed one-half of one percent per annum.
Such increase will cease to be effective on the date of effectiveness of the
Exchange Offer Registration Statement, consummation of the Exchange Offer or
the effectiveness of a Shelf Registration Statement, as the case may be.
ASSISTANCE
All executed Letters of Transmittal should be directed to the Exchange Agent.
Questions and requests for assistance and requests for additional copies of
this Prospectus, the Letter of Transmittal and other related documents should
be directed to the Exchange Agent as provided below.
29
<PAGE>
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions, requests for assistance and requests for additional copies of
this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:
THE BANK OF NEW YORK
By Registered or Certified Facsimile Transmission By Hand/Overnight
Mail: Number: Delivery:
(212) 571-3080
101 Barclay Street - 7E 101 Barclay Street
(For Eligible Institutions
Only) Corporate Trust Services
Window
New York, New York
Confirm by Telphone:
Attn: Reorganization Ground Level
Section (212) 815-2742
New York, New York 10286
Attn: Reorganization
Section
For Information Call:
(212) 815-6333
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail, however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be $
which includes fees and expenses of the Trustee, accounting, legal, printing,
and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
30
<PAGE>
THE COMPANY
The Company is the largest office products wholesaler in the United States.
As a result of the Merger of the Company with ASI on March 30, 1995, the
Company's net sales on a pro forma basis for 1994 were approximately $2.0
billion and for the three months ended March 31, 1995 were approximately $0.6
billion. Through its extensive office products catalogs, the Company markets a
full line of over 25,000 (post-consolidation) branded and private brand office
products, including traditional office supplies; office furniture and desk
accessories; office machines, equipment and supplies; computer hardware,
peripherals and supplies; and facilities management supplies, including
sanitation products and janitorial items. These products are offered through a
network of 39 (post-consolidation) strategically located distribution centers
to over 14,000 resellers, consisting principally of commercial dealers and
contract stationers, retail dealers, superstores, mail order companies and
mass merchandisers.
Although the office products distribution industry has seen many changes
over the past decade, including the growth of national superstores and a
consolidation among wholesalers, dealers and contract stationers, large
national wholesalers have continued to perform a significant role in the
distribution of office products. For manufacturers, the wholesaler provides
wide market coverage, assumes credit risk, carries inventory and processes
smaller orders than manufacturers can economically service. In addition,
wholesalers provide resellers with prompt service and delivery, a source for
filing small quantity orders and the opportunity to obtain credit, minimize
investment in inventory and access marketing resources and technical support.
The Company is currently engaged in implementing its consolidation plan to
integrate the two separate office products wholesale businesses conducted by
the Company and ASI prior to the Acquisition. See "Business -- Consolidation
Plan and Benefits of the Acquisition" and "Risk Factors --Risks Inherent in
Implementation of Consolidation Plan." The Company is a wholly owned
subsidiary of United, which has no operations independent of those of the
Company.
United is a holding company with no independent operations. United's only
significant asset is the stock of the Company.
The Company was incorporated in Illinois in 1922, and United was
incorporated in Delaware in 1981. The principal executive offices of the
Company and United are each located at 2200 East Golf Road, Des Plaines,
Illinois 66016-1267, telephone number (708) 699-5000.
USE OF PROCEEDS
There will be no cash proceeds to the Company or United from the exchange
pursuant to the Exchange Offer. The net proceeds to the Company from the sale
of the Old Notes were $144.5 million (after approximately $5.5 million in
estimated fees and expenses related to the offering). Such net proceeds were
used (i) to repay the Bridge Loan, scheduled to mature on March 29, 1996, in
the principal amount of $130.0 million, plus accrued interest thereon (at an
annual rate of 13%) of approximately $1.6 million, (ii) to repay approximately
$4.1 million of the outstanding amounts under the Tranche A Facility (as
hereinafter defined), scheduled to mature on March 31, 2000, plus accrued
interest thereon (at an annual rate of 8.9%) of approximately $0.02 million,
(iii) to repay approximately $2.4 million of the outstanding Tranche B
Facility (as hereinafter defined), scheduled to mature on February 28, 2002,
plus accrued interest thereon (at an annual rate of 9.4%) of approximately
$0.01 million and (iv) for general corporate purposes. In the event the
necessary consents are obtained, the Company is permitted under its lending
arrangements and intends to pay a dividend to United in an amount sufficient
to repurchase the Series B Preferred Stock of United, together with accrued
and unpaid dividends thereon with a portion of the proceeds from the sale of
the Old Notes. The lenders under the Bridge Loan were The Roebling Fund, a
statutory business trust, and Chase Bank, each of which is an affiliate of the
Initial Purchaser. The lenders under the Term Loan Facility and the Revolving
Credit Facility also include Chase Bank. For further information regarding the
Bridge Loan and the New Credit Facilities, see "Financing the Acquisition."
31
<PAGE>
THE ACQUISITION
On March 30, 1995, pursuant to the Merger Agreement and in accordance with
the terms of the Offer to Purchase, Associated purchased 92.5% of the
outstanding Shares at a purchase price of $15.50 per share, or approximately
$266.6 million in the aggregate, pursuant to the Offer that expired on March
22, 1995. On March 30, 1995, at the time (the "Effective Time") the Mergers
were consummated, Associated and ASI merged with and into United and the
Company, respectively, and United and the Company continued as the respective
surviving corporations. For a discussion of the financing of the Acquisition,
see "Financing the Acquisition" and "Ownership of Voting Securities."
At the Effective Time of the Merger, (i) each Share (other than those Shares
owned by Associated or its affiliates (the "Associated-Owned Shares"), Shares
held by United or its subsidiaries (the "Treasury Shares") (which were
canceled) and Shares as to which statutory appraisal rights were validly
exercised and perfected in respect of the Merger and not withdrawn (the
"Dissenting Shares")) remained outstanding and unaffected by the Merger, (ii)
each share of Class A Common Stock, $0.01 par value, and Class B Common Stock,
$0.01 par value (collectively, the "Associated Common Stock"), of Associated
outstanding immediately prior to the Merger was converted into 3.446286 Shares
and each warrant or option to acquire shares of Associated Common Stock
outstanding immediately prior to the Merger was converted into the right to
purchase 3.446286 Shares for each share of Associated Common Stock into which
such warrant or option was exercisable immediately prior to the Merger, (iii)
each outstanding share of Class A Preferred Stock, $0.01 par value, of
Associated was converted into one share of Series A Preferred Stock, $0.01 par
value (the "Series A Preferred Stock"), of United, (iv) each outstanding share
of Class B Preferred Stock, $0.01 par value, of Associated was converted into
one share of Series B Preferred Stock, $0.01 par value (the "Series B Preferred
Stock"), of United, and (v) each outstanding share of Class C Preferred Stock,
$0.01 par value, of Associated was converted into one share of Series C
Preferred Stock, $0.01 par value (the "Series C Preferred Stock"), of United.
In addition, prior to consummation of the Merger, the Company made adjustments
to all stock options held by executive officers and directors of United such
that such options were redeemed at the Effective Time, with the holders thereof
being entitled to receive cash in settlement thereof. As used herein, the term
"Shares" includes shares of Nonvoting Common Stock, $0.01 par value, of United,
which are immediately convertible into Shares for no additional consideration.
Immediately following the Merger, the number of outstanding Shares was
5,998,117 (or 6,973,720 on a fully-diluted basis), of which (i) the former
holders of Associated Common Stock and warrants or options to purchase
Associated Common Stock in the aggregate owned 4,603,373 Shares constituting
approximately 76.8% of the outstanding Shares and outstanding warrants or
options for 975,603 Shares (collectively 80.0% on a fully-diluted basis) and
(ii) pre-Merger holders of Shares (other than Associated-Owned Shares and
Treasury Shares) in the aggregate owned 1,394,744 Shares constituting
approximately 23.2% of the outstanding Shares (or 20.0% on a fully-diluted
basis).
Upon consummation of the Merger, seven of the nine directors of United
serving prior thereto were replaced by nominees designated by Associated. Such
directors designated by Associated comprise the persons who were the directors
of Associated prior to the Acquisition. See "Management."
Prior to the Acquisition, Associated, through its wholly owned subsidiary,
ASI, was engaged in the wholesale distribution of a broad line of office
products. Associated and ASI were formed in January 1992 and August 1991,
respectively, by Wingate Partners.
32
<PAGE>
CAPITALIZATION
The following table sets forth the historical debt and capitalization of
United as of March 31, 1995 and as adjusted as of March 31, 1995 to give pro
forma effect to the issuance and subsequent exchange of Old Notes and the
application of the net proceeds therefrom to repay in full the Bridge Loan
incurred in connection with the Acquisition, assuming necessary consents are
obtained, to repurchase all of the outstanding shares of Series B Preferred
Stock, together with accrued and unpaid dividends thereon, and to reduce
outstanding amounts borrowed under the Term Loan Facilities. See "Use of
Proceeds." United, which has no operations independent of those of the Company,
unconditionally guarantees the Notes on a senior subordinated basis. The table
should be read in conjunction with "Pro Forma Combined Financial Information."
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
AT MARCH 31, 1995 AT MARCH 31, 1995
----------------- -----------------
(DOLLARS IN THOUANDS)
(UNAUDITED)
<S> <C> <C>
Current maturities of long-term debt....... $ 17,138 $ 16,618
--------- ---------
Long-term debt, excluding current maturi-
ties:
Revolving Credit Facility................ $ 199,708 $ 199,071
Term Loan Facilities..................... 184,000 178,020
Bridge Loan.............................. 130,000 --
Senior Subordinated Notes................ -- 150,000
Other Long-Term Debt..................... 42,011 42,011
--------- ---------
Total long-term debt................... 555,719 569,102
--------- ---------
Redeemable preferred stock:
Series A................................. 6,950 6,950
Series B................................. 6,724 --
Series C................................. 10,087 10,087
--------- ---------
Total redeemable preferred stock....... 23,761 17,037
--------- ---------
Redeemable warrants........................ 11,879 11,879
--------- ---------
Total stockholders' equity................. 45,459 45,459
--------- ---------
Total capitalization (including current
maturities of long-term debt)............. $ 653,956 $ 660,095
========= =========
</TABLE>
33
<PAGE>
PRO FORMA COMBINED FINANCIAL INFORMATION
The accompanying unaudited Pro Forma Combined Financial Statements are based
on the historical financial statements of Associated and United after giving
effect to (i) the purchase accounting and other merger related adjustments
relating to the Acquisition and (ii) the issuance and sale of the Old Notes and
the application of the net proceeds therefrom to repay in full the Bridge Loan
incurred in connection with the Acquisition and, assuming necessary consents
are obtained, to repurchase all of the outstanding shares of Series B Preferred
Stock, together with accrued and unpaid dividends thereon, and to reduce
outstanding amounts borrowed under the Term Loan Facilities to the extent of
the remaining net proceeds, all as described in Notes to Pro Forma Combined
Financial Information. The Pro Forma Balance Sheet is presented giving effect
to the issuance and sale of the Old Notes and the refinancing of certain debt
and repurchase of the Series B Preferred Stock, together with accrued and
unpaid dividends thereon, to be effected with the proceeds thereof as if all
such transactions had been consummated on December 31, 1994. The Pro Forma
Combined Income Statement for the year ended December 31, 1994 is presented
giving effect to (i) the Acquisition as if it had been consummated on January
1, 1994 and (ii) the refinancing of certain debt and repurchase of the Series B
Preferred Stock, together with accrued and unpaid dividends thereon, to be
effected with the proceeds from the Old Notes as if such refinancing and
repurchase had been consummated one month after consummation of the
Acquisition.
Although United was the surviving corporation in the Merger, the transaction
was treated as a reverse acquisition for accounting purposes with Associated as
the acquiring corporation. Accordingly, the Pro Forma Balance Sheet as of March
31, 1995 for United reflects the consolidated balances of Associated and
United, including the preliminary purchase price allocation, which may be
revised at a later date, and other Merger-related adjustments, the Pro Forma
Combined Income Statement for the year ended December 31, 1994 combines
Associated for its fiscal year ended December 31, 1994 with United for its
twelve month period ended November 30, 1994 and the Pro Forma Combined Income
Statement for the three months ended March 31, 1995 combines Associated for the
three months ended March 31, 1995 with United for the three months ended
February 28, 1995. United's historical statement of income previously reported
on a fiscal year ended August 31, 1994 has been adjusted to reflect the twelve
month period ended November 30, 1994.
The unaudited Pro Forma Combined Financial Statements are intended for
informational purposes only and are not necessarily indicative of the future
financial position or future results of operations of United after the
Acquisition, or of the financial position or results of operations of United
that would have actually occurred had the Acquisition occurred on the date or
been in effect for the period presented.
Pro forma interest expense included in the Pro Forma Combined Income
Statement is based on historical interest rates in effect during the year ended
December 31, 1994 and the three months ended March 31, 1995 in calculating the
basis for variable rates. Average 30-day LIBOR in effect for the year ended
December 31, 1994 ranged from 3.15% to 6.09% and for the three months ended
March 31, 1995 was 6.125%. The average prime rate during the three months ended
March 31, 1994 was 6.02%. In comparison, at March 31, 1995, the prime rate was
9.0%. If the March 31, 1995 interest rates were used as base interest rates
instead of the historical rates, pro forma interest expense for United would
amount to $56.1 million instead of $48.8 million for the year ended December
31, 1994. Each 1/8 of 1% change in the base interest rate for variable rate
debt has a $521 thousand effect on annual pro forma interest expense for
United. In April 1995, the Company entered into three-year interest rate
protection arrangements totaling $200,000,000 pursuant to which the Company (i)
is protected to the extent that the 3-month LIBOR interest rate exceeds 8.0%
and (ii) is liable to the extent that such interest rate drops below 6.0%.
The Pro Forma Combined Income Statement excludes (i) the extraordinary non-
recurring write-off of approximately $2.4 million ($1.4 million net of tax
benefit of $1.0 million) of financing costs and original issue discount
relating to debt retired, (ii) a non-recurring charge for restructuring of
approximately $9.8 million ($5.9 million net of tax benefit of $3.9 million)
for costs expected to be incurred in connection with integration and transition
(e.g., severance and the cost of closing certain facilities operated by
Associated prior to the Merger) and (iii) compensation expense relating to
employee stock options of approximately $1.5 million ($0.9 million net of tax
benefit of $0.6 million). Pro forma net income available to common stockholders
and net income per common and common equivalent share exclude the charge to
retained earnings to adjust Redeemable Warrants to the put value, due to the
non-recurring nature of this charge.
The unaudited Pro Forma Combined Financial Statements and the accompanying
notes should be read in conjunction with, and are qualified in their entirety
by, the historical consolidated financial statements of United and Associated,
including the related notes thereto, included elsewhere herein.
34
<PAGE>
UNITED STATIONERS INC.
PRO FORMA BALANCE SHEET
MARCH 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNITED
STATIONERS INC.
AT MARCH 31, PRO FORMA PRO
1995 ADJUSTMENTS FORMA
--------------- ----------- --------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 21,611 $ -- $ 21,611
Accounts receivable.................... 201,056 -- 201,056
Inventories............................ 396,085 -- 396,085
Other current assets................... 25,135 -- 25,135
-------- ------ --------
Total current assets................. 643,887 -- 643,887
Property, plant and equipment............ 222,330 -- 222,330
Goodwill................................. 71,628 -- 71,628
Other assets............................. 38,104 -- 38,104
-------- ------ --------
TOTAL ASSETS............................. $975,949 $ -- $975,949
======== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................... $183,994 $ -- $183,994
Accrued and other current liabilities.. 102,129 (6,139)(a) 95,990
Short-term debt and current maturities
of
long-term debt........................ 17,138 (520)(b) 16,618
-------- ------ --------
Total current liabilities............ 303,261 (6,659) 296,602
Deferred income taxes.................... 31,469 -- 31,469
Other liabilities........................ 4,401 -- 4,401
Total long-term debt..................... 555,719 13,383 (b) 569,102
Total redeemable preferred stock......... 23,761 (6,724)(c) 17,037
Redeemable warrants...................... 11,879 -- 11,879
Stockholders' equity..................... 45,459 -- 45,459
-------- ------ --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.................................. $975,949 $ -- $975,949
======== ====== ========
</TABLE>
See accompanying notes to Pro Forma Combined Financial Information.
35
<PAGE>
ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
ASSOCIATED UNITED
HOLDINGS, INC. STATIONERS INC.
FOR THE YEAR FOR THE TWELVE
ENDED MONTHS ENDED
DECEMBER 31, NOVEMBER 30, PRO FORMA PRO FORMA
1994 1994 ADJUSTMENTS COMBINED
-------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales............... $ 477,445 $1,504,625 $ -- $1,982,070
Cost of sales........... 357,276 1,181,541 (3,208)(d) 1,535,609
--------- ---------- ------- ----------
Gross profit............ 120,169 323,084 3,208 446,461
Warehouse, distribution,
selling, general and
administrative
expenses............... 103,020 284,484 (16,987)(e) 370,517
--------- ---------- ------- ----------
Income from operations.. 17,149 38,600 20,195 75,944
Interest expense, net... (6,753) (11,155) (30,917)(f) (48,825)
Other income, net....... -- 86 -- 86
--------- ---------- ------- ----------
Income before income
taxes.................. 10,396 27,531 (10,722) 27,205
Income taxes............ 3,993 10,763 (4,289)(g) 10,467
--------- ---------- ------- ----------
Net income.............. 6,403 16,768 (6,433) 16,738
Preferred Stock
dividends issued and
accrued................ 2,193 -- (566)(h) 1,627
--------- ---------- ------- ----------
Net income available to
common stockholders.... $ 4,210 $ 16,768 $(5,867) $ 15,111
========= ========== ======= ==========
Net income per common
and common equivalent
share:
Primary............... $ 3.51 $ 0.90 $ 2.21
========= ========== ==========
Fully diluted......... $ 3.49 $ 0.90 $ 2.21
========= ========== ==========
Weighted average common
and common equivalent
shares:
Primary............... 1,199,000 18,589,209 6,844,597
========= ========== ==========
Fully diluted......... 1,205,000 18,589,209 6,844,597
========= ========== ==========
OPERATING AND OTHER
DATA:
EBITDA*............... $ 23,505 $ 60,100 $25,966 $ 109,571
EBITDA margin**....... 4.9% 4.0% -- 5.5%
Depreciation and
amortization......... $ 6,356 $ 21,414 $ 5,771 $ 33,541
Capital expenditures,
net.................. 554 9,955 -- 10,509
Ratio of EBITDA to
interest expense..... 3.5x 5.3x -- 2.2x
Ratio of earnings to
fixed charges***...... 2.4x 3.0x -- 1.5x
</TABLE>
- --------
* EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability
or liquidity.
** EBITDA margin represents EBITDA as a percentage of net sales.
*** For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes plus fixed charges. Fixed
charges consist of interest expense, net of interest income, including
amortization of discount and financing costs and one-third of the operating
rental expense which Management believes is representative of the interest
component of rent expense.
See accompanying notes to Pro Forma Combined Financial Information.
36
<PAGE>
ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
PRO FORMA COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
ASSOCIATED UNITED
HOLDINGS, INC. STATIONERS INC.
FOR THE FOR THE THREE
THREE MONTHS MONTHS ENDED
ENDED FEBRUARY 28, PRO FORMA PRO FORMA
MARCH 31, 1995 1995 ADJUSTMENTS COMBINED
-------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales............... $ 137,272 $ 431,640 $ -- $ 568,912
Cost of sales........... 103,568 341,011 (802)(d) 443,777
--------- ---------- ------- ---------
Gross profit............ 33,704 90,629 802 125,135
Warehouse, distribution,
selling, general
and administrative
expenses............... 28,949 75,191 (5,749)(i) 98,391
Restructuring charge.... 9,759 -- (9,759)(j) --
--------- ---------- ------- ---------
Income (loss) from
operations............. (5,004) 15,438 16,310 26,744
Interest expense, net... (2,203) (3,191) (8,904)(k) (14,298)
Other income, net....... -- 20 -- 20
--------- ---------- ------- ---------
Income (loss) before
income taxes and
extraordinary item..... (7,207) 12,267 7,406 12,466
Income taxes (benefit).. (2,973) 4,905 2,962 (g) 4,894
--------- ---------- ------- ---------
Income (loss) before
extraordinary item..... (4,234) 7,362 4,444 7,572
Extraordinary item...... (1,449) -- 1,449 (l) --
--------- ---------- ------- ---------
Net income (loss)....... (5,683) 7,362 $ 5,893 7,572
Preferred Stock
dividends issued and
accrued................ 573 -- (142)(h) 431
--------- ---------- ------- ---------
Net income (loss)
available to common
stockholders $ (6,256) $ 7,362 $ 6,035 $ 7,141
========= ========== ======= =========
Net income (loss) per
common and common
equivalent share
(primary and fully
diluted):
Income (loss) before
extraordinary item.... $ (0.80) $ 0.40 $ 1.04
Extraordinary item..... (0.24) -- --
--------- ---------- ---------
Net income (loss) per
common and common
equivalent share...... $ (1.04) $ 0.40 $ 1.04
========= ========== =========
Weighted average common
and common equivalent
shares:
Primary................ 5,998,077 18,595,600 6,894,076
========= ========== =========
Fully diluted.......... 5,998,077 18,595,600 6,898,757
========= ========== =========
OPERATING AND OTHER
DATA:
EBITDA*................ $ 6,228 $ 20,855 $17,752 $ 35,076
EBITDA margin**........ 4.5% 4.8% -- 6.2%
Depreciation and
amortization.......... $ 1,473 $ 5,397 $ 1,442 $ 8,312
Capital expenditures,
net................... 182 3,062 -- $ 3,244
Ratio of EBITDA to
interest expense...... 2.8x 6.5x -- 2.5x
Ratio of earnings to
fixed charges***...... 2.0x 4.2x -- 1.8x
</TABLE>
- --------
* EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and restructuring charge and extraordinary item and is
presented because it is commonly used by certain investors and analysts to
analyze and compare companies on the basis of operating performance and to
determine a company's ability to service and incur debt. EBITDA should not
be considered in isolation from or as a substitute for net income, cash
flows from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
** EBITDA margin represents EBITDA as a percentage of net sales.
*** For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes and extraordinary item plus
restructuring and fixed charges. Fixed charges consist of interest expense,
net of interest income, including amortization of discount and financing
costs and one-third of the operating rental expense which Management
believes is representative of the interest component of rent expense.
See accompanying notes to Pro Forma Combined Financial Information.
37
<PAGE>
ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The Pro Forma Combined Financial Statements have been prepared giving
effect to the following:
(1) Associated acquired 92.5% of United's outstanding Shares for $15.50 per
Share, or an aggregate of approximately $266.6 million.
(2) Outstanding options to purchase United's Shares were retired for $15.50
per share less the exercise price, or an aggregate of approximately
$3.0 million.
(3) Certain pre-Merger stockholders of Associated purchased 340,158 new
shares of Associated Common Stock for $12.0 million prior to the
Merger.
(4) As a result of the Acquisition, stockholders of United whose Shares
were not acquired in the Offer hold a 20.0% ownership interest in
United after the Merger on a fully diluted basis. Chase Manhattan
Investment Holdings, Inc. ("CMIHI") received a 2.0% ownership interest
in United on a fully diluted basis and received an additional 2.0%
ownership interest shortly after the issuance of the Old Notes. The
remaining 76.0% of Shares of United on a fully diluted basis were
allocated pro rata to pre-Merger holders of Associated Common Stock and
warrants or options exercisable for Associated Common Stock. Shares of
Associated Common Stock were converted into Shares of United in the
Merger.
(5) The total purchase price for United, including the ownership interest
held by the pre-Merger stockholders of United, based on the per share
price of $15.50, plus transaction costs of $6.2 million was
approximately $294.5 million. The purchase price has been preliminarily
allocated to the net assets of United based on estimated fair values at
the date of acquisition with the excess of cost over fair value
allocated to goodwill. The purchase price allocation to property, plant
and equipment is amortized over the estimated useful lives ranging from
3 to 40 years. Goodwill is amortized over 40 years.
The total purchase price of United by Associated and its allocation to
assets and liabilities acquired on a preliminary basis is as follows:
<TABLE>
<S> <C>
Purchase price:
Price of United Shares purchased by Associated................ $ 266,629
Fair value of United Shares not acquired in Offer............. 21,618
Transaction costs ............................................ 6,225
---------
Total purchase price........................................ $ 294,472
=========
Allocation of purchase price on a preliminary basis:
Current assets................................................ $ 509,610
Property, plant and equipment................................. 178,005
Goodwill...................................................... 71,076
Other assets.................................................. 9,253
Liabilities assumed........................................... (473,472)
---------
Total purchase price........................................ $ 294,472
=========
</TABLE>
(6) The accrual by United on a pre-Merger basis of severance payments to be
made to United's management personnel under existing employment
contracts is assumed to have totaled $17.9 million. The non-recurring
charge to net income recorded by United on a pre-Merger basis (i.e., in
the period immediately preceding the period covered by the Pro Forma
Combined Income Statement) for severance payments under employment
contracts, insurance benefits under employment contracts, legal,
accounting and other professional services fees, the retirement of
outstanding options to purchase Shares of United, and fees for letters
of credit related to severance payments and other costs is assumed to
have totaled $17.1 million, net of the tax benefit.
38
<PAGE>
ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
(UNAUDITED)
(7) For purposes of determining the put value of Lender Warrants ("Redeemable
Warrants") and the value of employee stock options ("Options"), the
quoted market price of Shares of United at the date of the Acquisition is
assumed to have been $15.50 per share.
(8) The net proceeds from the offering of Old Notes are assumed to have been
used to refinance the Subordinated Bridge Facility in full and to reduce
outstanding amounts under the Term Loan Facilities. On the assumption
that necessary consents are obtained, the remaining net proceeds are
assumed to have been used to repurchase all outstanding shares of Series
B Preferred Stock, including accrued and unpaid dividends thereon.
(9) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. The Subordinated Bridge
Facility, which carries a variable interest rate based on the prime rate,
is assumed to be outstanding for one month after the consummation of the
Merger. Pro forma interest expense on the Subordinated Bridge Facility
was calculated using an average prime rate of 6.0%. One month after the
closing date, the Subordinated Bridge Facility is assumed to have been
refinanced with a portion of the proceeds from the Old Notes carrying an
assumed fixed interest rate of 12.75%. For the Term Loan Facilities and
the Revolving Credit Facility, pro forma interest expense was calculated
on a monthly basis using as a base interest rate the average historical
30-day LIBOR in effect for the month. Average monthly LIBOR in effect for
the year ended December 31, 1994 ranged from 3.15% to 6.09% and for the
three months ended March 31, 1995 was 6.125%. Using 30-day LIBOR and the
prime rate each as of March 31, 1995 (6.125% and 9.0%, respectively) as
the base interest rates would increase pro forma interest expense by $7.3
million for the year ended December 31, 1994. Each 1/8 of 1% change in
the base interest rate for variable rate debt has a $521 thousand effect
on annual pro forma interest expense.
(10) Estimated cost savings of $26 million that the Company expects to
realize from the actions that Management has committed to undertake
pursuant to its consolidation plan that has been approved by the Board
of Directors of the Company have been reflected in the Pro Forma
Combined Income Statement as if the Company's consolidation plan had
been implemented in full as of January 1, 1994. The Company plans to
implement its consolidation plan over a 12-month period following the
Acquisition. See footnotes (d), (e) and (i) below. See "Business --
Consolidation Plan and Benefits of the Acquisition" and "Risk
Factors -- Consolidation Plan."
(11) Income taxes have been provided for all adjustments at an assumed rate
of 40.0%.
(12) In computing per share information, dividends on preferred stock are
assumed to have been paid in preferred shares at the rate of 13.0% per
annum for Series A Preferred Stock and 10.0% per annum for Series B
and Series C Preferred Stock. Series B Preferred Stock is assumed to
have been outstanding for only one month. The preferred stock
dividends reduce the net income available to common stockholders by
$1.6 million for the year ended December 31, 1994 and $0.4 million for
the three months ended March 31, 1995.
39
<PAGE>
ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
(UNAUDITED)
Pro forma adjustments have been made to the Pro Forma Balance Sheet to
reflect the following (in thousands):
(a) Reflects payment of accrued interest on debt retired and financing
costs related to the offering of the Old Notes.
<TABLE>
<S> <C>
Accrued interest................................................... $1,639
Offering costs..................................................... 4,500
------
$6,139
======
</TABLE>
(b) Reflects retirement of historical debt and issuance of new debt in
connection with the Old Notes offering and exchange of the New Notes for
Old Notes.
<TABLE>
<S> <C>
Current maturities of long-term debt retired with a portion
of the proceeds from the Old Notes offering................. $ (520)
=========
Debt retired with proceeds from the Old Notes offering....... $(136,617)
Issuance and subsequent exchange of Old Notes................ 150,000
---------
Adjustments to long-term debt.............................. $ 13,383
=========
</TABLE>
(c) Reflects repurchase of Series B Preferred Stock and accrued and
unpaid dividends thereon (assuming necessary consents are obtained).
Pro forma adjustments have been made to the Pro Forma Combined Income
Statement to reflect the following (in thousands):
(d) Reflects estimated cost savings due to an increase in credits
received from vendors as a result of increased purchase volumes with such
vendors.
(e) Reflects (i) estimated cost savings as a result of actions that
United expects to undertake pursuant to a plan that has been approved by
the Board of Directors of the Company and (ii) incremental depreciation and
amortization. United's plan to achieve the cost savings includes
eliminating eight redundant distribution centers, reducing corporate
overhead and eliminating redundant sales representatives. The Company is
committed to effect this plan within one year of the acquisition. See "Risk
Factors -- Risks Inherent in Implementation of Consolidation Plan."
<TABLE>
<S> <C>
Decrease in selling expenses due to reductions in combined
sales force................................................... $ (3,840)
Decrease in warehouse and distribution expenses due to closing
of duplicate facilities....................................... (8,873)
Decrease in general and administrative expenses due to
elimination of duplicate corporate overhead................... (10,045)
--------
Aggregate decrease in expenses................................. (22,758)
Incremental amortization of goodwill........................... 662
Incremental depreciation of plant, property and equipment...... 5,109
--------
$(16,987)
========
</TABLE>
40
<PAGE>
ASSOCIATED HOLDINGS, INC. AND UNITED STATIONERS INC.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONCLUDED)
(UNAUDITED)
(f) Adjusts interest expense for the following:
<TABLE>
<S> <C>
Incremental interest expense on debt........................... $(28,737)
Amortization of financing costs and original issue discount
relating to retired debt...................................... 1,277
Amortization of financing costs................................ (2,593)
Accretion of interest on liability recorded relating to
severance payments to be made to United's management personnel
under existing employment contracts........................... (864)
--------
$(30,917)
========
</TABLE>
(g) Reflects income tax effect of the pro forma adjustments.
(h) Reflects adjustment of preferred stock dividends to reflect
repurchase of Series B Preferred Stock.
(i) Reflects (i) estimated cost savings as a result of actions that
United expects to undertake pursuant to a plan that has been approved by
the Board of Directors of the Company and (ii) incremental depreciation and
amortization. United's plan to achieve the cost savings includes
eliminating eight redundant distribution centers, reducing corporate
overhead and eliminating redundant sales representatives and eliminating
the effect of compensation expense relating to employee stock options. The
Company is committed to effect this plan within one year of the
acquisition. See "Risk Factors -- Risks Inherent In Implementation of
Consolidation Plan."
<TABLE>
<S> <C>
Decrease in selling expenses due to reductions in combined sales
force.......................................................... $ (960)
Decrease in warehouse and distribution expenses due to closing
of duplicate facilities........................................ (2,218)
Decrease in general and administrative expenses due to
elimination of duplicate corporate overhead.................... (2,511)
-------
Aggregate decrease in expenses.................................. (5,689)
Incremental amortization of goodwill............................ 165
Incremental depreciation of plant, property and equipment....... 1,277
Compensation expense related to employee stock options.......... (1,502)
-------
$(5,749)
=======
</TABLE>
(j) Eliminates effect of a non-recurring charge for restructuring costs
expected to be incurred in connection with integration and transition
(e.g., severance and the cost of closing certain facilities operated by
Associated prior to the Merger).
(k) Adjusts interest expense for the following:
<TABLE>
<S> <C>
Incremental interest expense on debt............................ $(8,359)
Amortization of financing costs and original issue discount
relating to retired debt....................................... 319
Amortization of financing costs................................. (648)
Accretion of interest on liability recorded relating to
severance payments to be made to United's management personnel
under existing employment contracts............................ (216)
-------
$(8,904)
=======
</TABLE>
(l) Eliminates effect of the non-recurring write-off of financing costs
and original issue discount relating to debt which was retired.
41
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below and on the next page is selected historical financial
information for United and Associated. United, which has no operations
independent of the Company, unconditionally guarantees the Notes on a senior
subordinated basis. Associated had no operations independent of those of ASI.
UNITED -- HISTORICAL
The selected consolidated financial information of United set forth below
for each of the fiscal years in the five-year period ended August 31, 1994 and
the seven months ended March 30, 1995 has been derived from the financial
statements of United, which have been audited by Arthur Andersen LLP,
independent public accountants for the years ended August 31, 1991 through
1994, and by Ernst & Young LLP, independent public accountants, for the seven
months ended March 30, 1995. Audited financial statements for the fiscal years
ended August 31, 1990 and 1991 are not included in this filing. The summary
financial information at and for the seven-month period ended March 31, 1994
is unaudited and in the opinion of management reflects all adjustments
considered necessary for a fair presentation of such data. The results of
operations for any interim period are not necessarily indicative of results of
operations for the fiscal year and should be read in conjunction with, and is
qualified in its entirety by, "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Historical Results of
Operations of United" and "-- Historical Liquidity and Capital Resources of
United" and the financial statements of United included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED AUGUST 31, ENDED
------------------------------------------------------ --------------------
MARCH 31, MARCH 30,
1990 1991 1992 1993 1994 1994 1995
-------- -------- ---------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $993,178 $951,109 $1,094,275 $1,470,115 $1,473,024 $871,585 $980,575
Cost of sales........... 768,948 732,401 848,588 1,125,596 1,150,123 675,720 773,857
-------- -------- ---------- ---------- ---------- -------- --------
Gross profit on sales.. 224,230 218,708 245,687 344,519 322,901 195,865 206,718
Operating expenses...... 195,863 195,694 219,285 298,405 286,607 170,420 174,021
Merger Related Costs.... -- -- -- -- -- -- 27,780
-------- -------- ---------- ---------- ---------- -------- --------
Income from operations. 28,367 23,014 26,402 46,114 36,294 25,445 4,917
Interest expense, net... 7,350 6,082 6,503 9,550 10,461 5,837 7,500
Other income (expense),
net.................... 344 (14) 364 355 225 117 41
-------- -------- ---------- ---------- ---------- -------- --------
Income before income
taxes................. 21,361 16,918 20,263 36,919 26,058 19,725 (2,542)
Income taxes............ 8,523 7,008 8,899 15,559 10,309 8,185 4,692
-------- -------- ---------- ---------- ---------- -------- --------
Net income............. $ 12,838 $ 9,910 $ 11,364 $ 21,360 $ 15,749 $ 11,540 $ (7,234)
======== ======== ========== ========== ========== ======== ========
Net income per common
share.................. $ 0.83 $ 0.64 $ 0.71 $ 1.15 $ 0.85 $ 0.62 $ (0.39)
Cash dividends declared
per share.............. 0.40 0.40 0.40 0.40 0.40 0.30 0.30
OPERATING AND OTHER
DATA:
EBITDA (1).............. $ 43,851 $ 41,912 $ 46,645 $ 67,712 $ 57,755 $ 37,665 $ 17,553
EBITDA margin (2)....... 4.4% 4.4% 4.3% 4.6% 3.9% 4.3% 1.8%
Depreciation and
amortization........... $ 15,140 $ 18,912 $ 19,879 $ 21,243 $ 21,236 $ 12,103 $ 12,595
Net capital
expenditures........... 15,067 15,765 8,291 29,958 10,499 4,287 7,764
Ratio of earnings to
fixed charges (3)...... 3.5x 3.3x 3.4x 4.0x 3.0x 3.8x 0.7x
BALANCE SHEET DATA (AT
PERIOD END):
Working capital......... $134,420 $135,347 $ 214,611 $ 216,074 $ 239,827 $297,099 $257,600
Total assets............ 401,661 409,958 601,465 634,786 618,550 608,728 711,839
Total debt and capital
leases(4).............. 73,683 73,123 150,728 150,251 155,803 227,626 233,406
Stockholders'
investment............. 177,777 181,584 223,387 237,697 246,010 243,636 233,125
</TABLE>
- --------
(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.
(2) EBITDA margin represents EBITDA as a percentage of net sales.
(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes plus fixed charges. Fixed
charges consist of interest expense, net, including amortization of
discount and financing costs and one-third of the operating rental expense
which management believes is representative of the interest component of
rent expense.
(4) Total Debt and Capital Leases is defined as long-term debt including
current maturities but excluding original issue discount.
42
<PAGE>
ASSOCIATED -- HISTORICAL
The selected consolidated financial information of Associated set forth
below with respect to the period from January 31, 1992 (when certain of the
assets and certain liabilities of ASI were acquired from the Wholesale
Division of BCOP) through December 31, 1992 and the years ended December 31,
1993 and 1994 has been derived from and should be read in conjunction with,
and is qualified in its entirety by, "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Historical Results of
Operations of Associated" and "-- Historical Liquidity and Capital Resources
of Associated" and the financial statements of Associated included elsewhere
in this Prospectus, which have been audited by Arthur Andersen LLP,
independent public accountants. The data at and for the years ended December
31, 1990 and 1991 and the one month ended January 31, 1992 are derived from
the unaudited financial statements of BCOP for such periods. Associated has
accounted for the Boise Transaction using the purchase method of accounting.
There are material operational and accounting differences between BCOP and
Associated resulting from the Boise Transaction. Accordingly, the historical
financial data of BCOP may not be comparable in all material respects with
data of Associated. The data at and for the three months ended March 31, 1994
and 1995 are unaudited and in the opinion of management reflect all
adjustments considered necessary for a fair presentation of such data. On
March 30, 1995, Associated was merged with United. Although United was the
surviving corporation in the Merger, the transaction was treated as a reverse
acquisition for accounting purposes, with Associated as the acquiring
corporation. Therefore, the income statement and operating and other data for
the three months ended March 31, 1994 and 1995 reflect the financial
information of Associated only. The balance sheet data at March 31, 1995
reflect the consolidated balances of Associated and United. The balance sheet
data at March 31, 1994 reflect Associated only.
<TABLE>
<CAPTION>
PREDECESSOR(1)(2) ASSOCIATED
------------------------------- ---------------------------------------------------
JANUARY 1 JANUARY 31
YEAR ENDED TO TO YEAR ENDED THREE MONTHS
DECEMBER 31, JANUARY 31, DECEMBER 31, DECEMBER 31, ENDED MARCH 31,
------------------ ----------- ------------ ------------------ ------------------
1990(3) 1991(4) 1992(5) 1992 1993 1994 1994 1995
-------- -------- ----------- ------------ -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT (DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA) PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $443,547 $411,343 $39,016 $365,944 $462,531 $477,445 $123,850 $137,272
Cost of goods sold...... 331,223 308,090 29,874 276,546 350,251 357,276 94,162 103,568
-------- -------- ------- -------- -------- -------- -------- --------
Gross profit........... 112,324 103,253 9,142 89,398 112,280 120,169 29,688 33,704
Operating expenses(6)... 90,773 88,374 7,723 79,889 102,274 103,020 26,752 38,708
-------- -------- ------- -------- -------- -------- -------- --------
Income (loss) from
operations............ $ 21,551 $ 14,879 $ 1,419 9,509 10,006 17,149 2,936 (5,004)
======== ======== =======
Interest expense........ -- -- -- 4,782 6,263 6,753 1,732 2,203
-------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item.... -- -- -- 4,727 3,743 10,396 1,204 (7,207)
Income taxes (benefit).. -- -- -- 1,777 781 3,993 462 (2,973)
-------- -------- -------- -------- --------
Income (loss) before ex-
traordinary item....... -- -- -- 2,950 2,962 6,403 742 (4,234)
Extraordinary item...... -- -- -- -- -- -- -- (1,449)
-------- -------- -------- -------- --------
Net income (loss)...... -- -- -- $ 2,950 $ 2,962 $ 6,403 $ 742 $ (5,683)
======== ======== ======== ======== ========
Fully diluted earnings
per common share....... -- -- -- $ 1.32 $ 0.78 $ 3.51 $ 0.05 $ (1.04)
Cash dividends declared
per share.............. -- -- -- -- -- -- -- --
OPERATING AND OTHER
DATA:
EBITDA (7).............. $ 24,511 $ 18,028 $ 1,661 $ 14,875 $ 16,481 $ 23,505 $ 4,525 $ 6,228
EBITDA margin (8)....... 5.5% 4.4% 4.3% 4.1% 3.6% 4.9% 3.7% 4.5%
Depreciation and
amortization........... $ 2,960 $ 3,149 $ 242 $5,366 $6,475 $6,356 $ 1,589 $ 1,473
Capital expenditures,
net.................... 8,129 273 (36) 4,289 3,273 554 242 182
Ratio of earnings to
fixed charges (9)...... -- -- -- 1.89x 1.52x 2.35x 1.61x 2.0x
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR(1) ASSOCIATED
----------------- --------------------------------------------
AT DECEMBER 31, AT MARCH 31,
-------------------------------------------- -----------------
1990(3) 1991(4) 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 60,726 $ 54,373 $ 46,396 $ 57,302 $ 56,454 $ 56,795 $340,626
Total assets............ 151,432 140,756 179,069 190,979 192,479 172,250 975,949
Total debt and capital
leases (10)............ -- -- 78,297 86,350 64,623 74,650 572,857
Redeemable preferred
stock.................. -- -- 18,949 20,996 23,189 21,530 23,761
Redeemable warrants..... -- -- 1,435 1,435 1,650 1,435 11,879
Total stockholders' or
predecessor division
equity................. 102,871 93,642 10,466 11,422 24,775 20,843 45,459
</TABLE>
- -------
(1) The capital structure and accounting basis of the assets and liabilities
of the predecessor of ASI, BCOP, differ from those of Associated and ASI.
Accordingly, certain of the financial information for periods before
January 31, 1992 is not comparable to that for periods after January 31,
1992 and therefore is not presented in this table.
(2) The Predecessor operated as a segment of BCOP. BCOP did not allocate
income tax or interest expense to the Predecessor. Accordingly, actual
operating results for the Predecessor reflect only income from operations
before interest expense and income taxes.
(3) Derived from the unaudited financial statements of BCOP at and for the
year ended December 31, 1990.
(4) Derived from the unaudited financial statements of BCOP at and for the
year ended December 31, 1991.
43
<PAGE>
(5) Derived from the unaudited financial statements of BCOP for the one month
ended January 31, 1992.
(6) Includes restructuring charge of $9.8 million for the three months ended
March 31, 1995.
(7) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and restructuring charge and extraordinary item, and is
presented because it is commonly used by certain investors and analysts to
analyze and compare companies on the basis of operating performance and to
determine a company's ability to service and incur debt. EBITDA should not
be considered in isolation from or as a substitute for net income, cash
flows from operating activities or other consolidated income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
(8) EBITDA margin represents EBITDA as a percentage of net sales.
(9) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes and extraordinary item plus
restructuring and fixed charges. Fixed charges consist of interest expense,
net, including amortization of discount and financing costs and one-third
of the operating rental expense which management believes is representative
of the interest component of rent expense.
(10) Total debt and capital leases is defined as long-term debt including
current maturities but excluding original issue discount, plus deferred
obligations due to the holder of the Associated Class B redeemable
preferred stock.
44
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except as otherwise indicated, the following discussion and analysis of the
results of operations and financial condition of United and Associated covers
periods before completion of the Acquisition. Accordingly, the discussion and
analysis of such periods do not reflect the significant impact that the
Acquisition and the financing thereof will have on United after the Merger. See
"Pro Forma Combined Financial Information" and "Business -- Consolidation Plan
and Benefits of the Acquisition." United, which has no operations independent
of those of the Company, fully and unconditionally guarantees the Notes on a
senior subordinated basis. Associated had no operations independent of those of
ASI.
HISTORICAL RESULTS OF OPERATIONS OF UNITED
General
The Company was incorporated in 1922 under the name Utility Supply Co. and
has operated under its present name since 1960. As part of the Company's
business strategy, United acquired Stationers Distributing Company, Inc.
("SDC") in June 1992 in order to increase its share of the office products
wholesale market. On March 30, 1995, Associated and United consummated the
Acquisition.
United's results of operations, expressed as the percentage which each line
item represents of total net sales, for each of its fiscal years 1992, 1993 and
1994 and the seven-month periods ended March 31, 1994 and March 30, 1995, are
set forth below:
<TABLE>
<CAPTION>
FOR THE
SEVEN MONTHS
YEAR ENDED ENDED
AUGUST 31, -------------------
------------------- MARCH 31, MARCH 30,
1992 1993 1994 1994 1995
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
NET SALES............................. 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF SALES......................... 77.5 76.6 78.1 77.5 78.9
----- ----- ----- ----- -----
Gross Profit on Sales................ 22.5 23.4 21.9 22.5 21.1
OPERATING EXPENSES:
Warehousing, Marketing and
Administrative Expenses............. 19.5 20.3 19.4 19.6 17.7
Restructuring Charge................. 0.6 -- -- -- --
Merger-Related Costs................. -- -- -- -- 2.9
----- ----- ----- ----- -----
Income from Operations............... 2.4 3.1 2.5 2.9 0.5
OTHER INCOME (EXPENSES)
Interest Expense..................... (0.6) (0.6) (0.7) (0.8) (0.8)
Interest Income...................... -- -- -- -- --
Other, Net........................... -- -- -- -- --
----- ----- ----- ----- -----
Income (Loss) Before Income taxes.... 1.8 2.5 1.8 2.3 (0.3)
INCOME TAXES.......................... 0.8 1.0 0.7 0.9 0.4
----- ----- ----- ----- -----
Net Income (Loss).................... 1.0% 1.5% 1.1% 1.4% (0.7)%
===== ===== ===== ===== =====
</TABLE>
Comparison of the Seven Months Ended March 30, 1995 and March 31, 1994
Net Sales. Net sales were $980.6 million for the seven months ended March 30,
1995, a 12.5% increase from net sales of $871.6 million in the comparable
period in 1994. The primary reason for the increase is growth in unit volume.
Gross Profit on Sales. Gross profit as a percent of net sales was 21.1% for
the seven months ended March 30, 1995, compared with 22.5% in the comparable
period in 1994. This lower margin rate is primarily the result of a shift in
the sale of products to items that have lower gross margins and is consistent
with the margin rate achieved in the latter half of United's fiscal year ended
August 31, 1994.
Operating Expenses. Operating expenses as a percent of net sales increased to
20.6% in the seven month period ended March 30, 1995 from 19.6% in the
comparable period in 1994. The increase is primarily attributable to $27.8
million ($18.5 million net of tax benefit of $9.3 million) of merger-related
45
<PAGE>
costs consisting of severance payments under employment contracts; insurance
benefits under employment contracts; legal, accounting and other professional
services fees; the retirement of stock options; and fees for letters of credit
related to employment contracts and other costs. Operating expenses as a
percent of net sales prior to the merger-related costs were 17.7% for the seven
month period ended March 30, 1995. This decline from the comparable period in
1994 is a result of savings in employee-related payroll and freight expenses.
Income From Operations. Income from operations as a percent of net sales was
0.5% in the seven month period ended March 30, 1995, compared with 2.9% in the
comparable period in 1994. The decrease was attributable to the merger-related
costs discussed under "Operating Expenses" above. Income from operations as a
percent of net sales was 3.3% in the seven month period ended March 30, 1995,
excluding the merger-related costs.
Interest Expense. Interest expense was $7.6 million for the seven month
period ended March 30, 1995, compared with $6.1 million for the same period in
1994. The increase was due to higher interest expense from increased debt to
meet working capital and other capital expenditure needs and higher interest
rates on borrowings.
Income Before Income Taxes. Income (loss) before income taxes as a percent of
net sales was a loss of 0.3% in the seven month period ended March 30, 1995,
compared to income of 2.3% in the comparable period of 1994. The decrease in
income before income taxes was attributable to the factors stated above.
Income Taxes. The effective tax rate for the seven month period ended March
30, 1995 was (184.6%), compared with 41.5% for the seven month period ended
March 31, 1994. The increase is primarily due to non-deductible merger related
costs and the non-deductible amortization of goodwill.
Net Income. Net income (loss) was a loss of $7.2 million for the seven month
period ended March 30, 1995, compared with income of $11.5 million for the same
period in 1994. Net income (loss) per share was a loss of $0.39 in the seven
month period ended March 30, 1995, compared with income of $0.62 for the same
period in 1994, due to the factors set forth above.
Comparison of the Fiscal Years Ended August 31, 1994 and 1993
Net Sales. Net sales increased to $1,473.0 million in fiscal 1994 from
$1,470.1 million in fiscal 1993, a 0.2% increase reflecting a slight increase
in unit volume. Sales in the early part of fiscal 1994 were affected by a
temporary drop in in-stock service levels and the discontinuing of nearly
12,000 items as a final step in the consolidation process of the June 1992
acquisition of SDC. Sales were also negatively impacted by the SDC acquisition-
related operational disruptions in the west and southwest regions. Sales grew
in the fourth quarter by 3.4%, reversing the decline experienced in the prior
two quarters.
Gross Profit on Sales. Gross profit on sales decreased to $322.9 million in
fiscal 1994 from $344.5 million in fiscal 1993, a 6.3% decrease, due
principally to a decrease in gross margin. Gross margin decreased to 21.9% in
fiscal 1994 from 23.4% in fiscal 1993. The decline primarily reflects higher
levels of rebates and volume allowances earned by United's customers as a
result of ongoing consolidations. Gross margins over the last half of fiscal
1994 were relatively stable reflecting the slowing pace of dealer
consolidations. In addition, gross margin was affected by a LIFO charge (an
increase to "cost of sales") of $2.2 million in fiscal 1994 versus LIFO income
(a decrease to "cost of sales") of $4.7 million in fiscal 1993, and a shift in
the sale of products to items that have lower gross margins.
Operating Expenses. Operating expenses decreased to $286.6 million in fiscal
1994 from $298.4 million in fiscal 1993, a 4.0% decrease. Operating expenses as
a percentage of net sales decreased to 19.4% in fiscal 1994 from 20.3% in
fiscal 1993. The decrease is the result of streamlining United's work processes
and reducing payroll and freight expense.
Income From Operations. Income from operations decreased to $36.3 million in
fiscal 1994 from $46.1 million in fiscal 1993, a 21.3% decrease, and as a
percentage of net sales was 2.5% in fiscal 1994, compared with 3.1% in fiscal
1993, for the reasons stated above.
46
<PAGE>
Interest Expense. Interest expense increased to $10.7 million in fiscal 1994
from $9.8 million in fiscal 1993, an 8.9% increase, primarily due to additional
debt incurred to support working capital and other capital expenditures.
Income Before Income Taxes. Income before income taxes decreased to $26.1
million in fiscal 1994 from $36.9 million in fiscal 1993, a 29.4% decrease, for
the reasons stated above.
Certain interim expense and inventory estimates are recognized throughout the
fiscal year relating to shrinkage, inflation and product mix. The results of
the year-end close and physical inventory reflected a favorable adjustment with
respect to such estimates, resulting in approximately $0.5 million of
additional net income, which is reflected in the fourth quarter of fiscal 1994.
Income Taxes. Income taxes decreased to $10.3 million in fiscal 1994 from
$15.6 million in fiscal 1993, a $5.3 million decrease. The effective tax rates
for 1994 and 1993 were 39.6% and 42.1%, respectively. The decrease is primarily
due to the liquidation of a foreign subsidiary and a decrease in the effective
state income tax rate, offset by an increase in the non-deductible losses in
United's foreign operation and the non-deductible amortization of goodwill.
Net Income. Net income decreased to $15.7 million in 1994 from $21.4 million
in 1993, a decrease of $5.7 million, or 26.3%. Net income as a percentage of
net sales decreased to 1.1% in 1994 from 1.5% in 1993 for the reasons stated
above.
Comparison of the Fiscal Years Ended August 31, 1993 and 1992
Net Sales. Net sales increased to $1,470.1 million in fiscal 1993 from
$1,094.3 million in fiscal 1992, a 34.3% increase. This increase was due to an
increase in sales volume substantially attributable to the June 1992
acquisition of SDC.
Gross Profit on Sales. Gross profit on sales increased to $344.5 million in
fiscal 1993 from $245.7 million in fiscal 1992, a 40.2% increase, due to an
increase in sales and gross margin. Gross margin increased to 23.4% in fiscal
1993 from 22.5% in fiscal 1992, caused by LIFO income (a decrease to "cost of
sales") of $4.7 million in fiscal 1993 versus a LIFO charge (an increase to
"cost of sales") of $2.7 million in fiscal 1992 and a favorable product mix.
Operating Expenses. Operating expenses increased to $298.4 million in fiscal
1993 from $219.3 million in fiscal 1992, a 36.1% increase. Operating expenses
as a percentage of net sales increased to 20.3% in fiscal 1993 from 20.1% in
fiscal 1992. This increase was the result of higher expense levels associated
with offering a free-freight marketing program to customers and costs related
to temporarily managing the separate product offerings of United and SDC. In
addition, United incurred delays in its SDC acquisition-related facilities
consolidations, which resulted in additional expenses. Operating expenses for
1992 include a $5.9 million pre-tax restructuring charge related to severance
payments and the closing of certain United facilities associated with the
acquisition of SDC.
Income From Operations. Income from operations increased to $46.1 million in
fiscal 1993 from $26.4 million in fiscal 1992, a 74.7% increase, and as a
percentage of net sales was 3.1% in fiscal 1993, compared with 2.4% in fiscal
1992, for the reasons stated above.
Interest Expense. Interest expense increased to $9.8 million in fiscal 1993
from $7.0 in fiscal 1992, a 41.1% increase, primarily due to the full-year
impact of the additional debt incurred in connection with the acquisition of
SDC and the debt required to meet working capital and other capital expenditure
needs.
Income Before Income Taxes. Income before income taxes increased to $36.9
million in fiscal 1993 from $20.3 million in fiscal 1992, an 82.2% increase,
for the reasons stated above.
Certain interim expense and inventory estimates are recognized throughout the
fiscal year relating to shrinkage, inflation and product mix. The results of
the year-end close and physical inventory
47
<PAGE>
reflected a favorable adjustment with respect to such estimates, resulting in
approximately $2.6 million of additional net income, which is reflected in the
fourth quarter of fiscal 1993.
Income Taxes. Income taxes increased to $15.6 million in fiscal 1993 from
$8.9 million in fiscal 1992, a $6.7 million increase. The effective tax rates
for the fiscal years ending August 31, 1993 and August 31, 1992 were 42.1% and
43.9%, respectively. The decrease is primarily due to a decline in the non-
deductible losses in United's foreign operation and a decrease in the effective
state tax rate, offset by an increase in the federal tax rate.
Net Income. Net income increased to $21.4 million in 1993 from $11.4 million
in 1992, an increase of $10.0 million, or 88.0%. Net income as a percentage of
net sales increased to 1.5% in 1993 from 1.0% in 1992 for the reasons stated
above.
HISTORICAL RESULTS OF OPERATIONS OF ASSOCIATED
General
Associated was formed by an investor group led by Wingate Partners in 1992 to
effect the Boise Transaction, in which Associated purchased the wholesale
office products operations of BCOP for approximately $87.1 million. The Boise
Transaction was consummated through a combination of bank debt and equity
financing.
As part of Associated's strategy to increase sales, management has worked to
expand Associated's geographical presence in order to increase market share. In
1992, Associated acquired Lynn-Edwards Corp. ("Lynn Edwards"), a regional west
coast office products wholesaler, for approximately $2.4 million, plus assumed
liabilities of approximately $7.2 million (the "Lynn-Edwards Acquisition"). The
Lynn-Edwards Acquisition added two distribution facilities. Associated also
opened two new distribution facilities in 1992 and 1993 in the Chicago and
Baltimore metropolitan markets, respectively. On March 30, 1995, Associated and
United consummated the Acquisition.
Associated's results of operations, expressed as the percentage which each
line item represents of total net sales, for each of the periods ended December
31, 1992, 1993 and 1994 and the three months ended March 31, 1994 and 1995, are
set forth below:
<TABLE>
<CAPTION>
11 MONTHS
FROM YEAR ENDED THREE MONTHS
INCEPTION DECEMBER ENDED
THROUGH 31, MARCH 31,
DECEMBER 31, ------------ --------------
1992 1993 1994 1994 1995
------------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
NET SALES.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF GOODS SOLD................. 75.6 75.7 74.8 76.0 75.5
----- ----- ----- ------ ------
Gross profit..................... 24.4 24.3 25.2 24.0 24.5
OPERATING EXPENSES:
Warehouse and distribution
expenses......................... 16.5 17.0 16.3 16.7 15.3
Selling, general and
administrative expenses.......... 5.3 5.1 5.3 4.9 5.8
Restructuring charge.............. -- -- -- -- 7.1
----- ----- ----- ------ ------
Income (loss) from operations.... 2.6 2.2 3.6 2.4 (3.7)
INTEREST EXPENSE................... 1.3 1.4 1.4 1.4 1.6
----- ----- ----- ------ ------
Income (loss) before income taxes
and extraordinary item.......... 1.3 0.8 2.2 1.0 (5.3)
INCOME TAXES (BENEFIT)............. 0.5 0.2 0.9 0.4 (2.2)
Extraordinary item............... -- -- -- -- (1.0)
----- ----- ----- ------ ------
Net income (loss)................ 0.8% 0.6% 1.3% 0.6% (4.1)%
===== ===== ===== ====== ======
</TABLE>
Comparison of the Three Months Ended March 31, 1995 and 1994
Net Sales. Net sales were $137.3 million for the first quarter of 1995, a
10.8% increase over net sales of $123.9 million in the comparable period in
1994. The sales growth reflects increased unit volume.
48
<PAGE>
Gross Profit. Gross profit as a percent of net sales increased to 24.6% in
the first quarter of 1995 from 24.0% in the first quarter of 1994. The increase
reflects higher levels of vendor volume allowances and increased forward-buying
efforts in anticipation of future price increases. The increase was partially
offset by a higher level of volume allowances earned by Associated's customers.
Operating Expenses. Operating expenses as a percent of net sales increased to
28.2% in the first quarter of 1995 from 21.6% in the first quarter of 1994. The
actual results for the quarter ended March 31, 1995 include a restructuring
charge of $9.8 million ($5.9 million net of tax benefit of $3.9 million). The
restructuring charge includes severance costs totaling $3.0 million. The
restructuring plan specifies that certain distribution, sales, and corporate
positions, approximately 330 in total, will be eliminated substantially within
a one-year period. As of March 31, 1995, no employees had been terminated and
no benefits had been paid or charged against the reserve. The restructuring
charge also includes distribution center closing costs totaling $4.7 million
and stockkeeping unit reduction costs totaling $2.1 million. The restructuring
plan specifies the closing of eight redundant distribution centers and the
elimination of overlapping inventory items from the Company's catalogs
substantially within a one-year period. Distribution center closing costs
include (i) the net occupancy costs of leased facilities after they are vacated
until expiration of leases and (ii) the losses on the sale of owned facilities
and the facilities' furniture, fixtures, and equipment. Stockkeeping unit
reduction costs include losses on the sale of inventory items which have been
discontinued solely as a result of the Acquisition and Merger. As of March 31,
1995, no amounts had been charged against the reserve.
The decrease in operating expenses as a percent of net sales before the
restructuring charge is primarily due to improved productivity and higher sales
volume, partially offset by Merger related compensation expense relating to an
increase in the value of employee stock options of approximately $1.5 million
($0.9 million net of tax benefit of $0.6 million). Operating expenses in the
first quarter of 1995 as a percent of net sales before the restructuring charge
and the compensation expense relating to the redemption of stock options were
20.0%.
Income (Loss) from Operations. Income (loss) from operations as a percent of
net sales was a negative 3.6% in the first quarter of 1995 (a positive 3.5%
before the restructuring charge) compared with a positive 2.4% in the first
quarter of 1994.
Interest Expense. Interest expense increased to $2.2 million in the first
quarter of 1995 from $1.7 million in 1994. The increase is primarily due to
higher interest rates.
Income (Loss) Before Income Taxes. Income (loss) before income taxes as a
percent of net sales was a negative 5.3% in the first quarter of 1995 compared
to a positive 1.0% in the first quarter of 1994. Net income (loss) before
extraordinary items and preferred stock dividends was a negative $4.2 million
(net income of $1.5 million before the restructuring charge) in the first
quarter of 1995 compared to a positive $0.7 million in the first quarter of
1994. An extraordinary item, the loss on early retirement of debt related to
the Merger of $2.4 million ($1.4 million after tax benefit), was recognized in
the first quarter of 1995. The net income (loss) attributable to common stock
after the extraordinary item was a negative $6.3 million (net loss of $0.5
million before the restructuring charge) in the first quarter of 1995 compared
to a positive $0.2 million in the first quarter of 1994.
Comparison of the Years Ended December 31, 1994 and 1993
Net Sales. Net sales increased to $477.4 million in 1994 from $462.5 million
in 1993, a 3.2% increase, primarily as a result of inclusion in 1994 of the
full year of sales from Associated's new Baltimore distribution facility and
increased unit sales volume to existing Associated customers as, in
management's estimation, Associated's customers channeled more of their
purchasing through Associated with the goal of reducing their internal
inventory levels.
49
<PAGE>
Gross Profit. Gross profit increased to $120.2 million in 1994 from $112.3
million in 1993, a 7.0% increase, primarily due to increased unit volume as
well as Associated's lower net cost of goods, as a percentage of sales,
resulting from increased allowances granted to Associated by its suppliers.
Management of Associated believes improvement in vendor allowances was due to
competition among Associated's vendors that resulted in increased purchasing
leverage. The increase in gross profit also resulted in part from Associated's
increased forward-buying efforts, as management better identified and utilized
product pricing opportunities available in the marketplace. Gross profit
increases were partially offset by increased allowances extended by Associated
to its customers in response to increased competition.
Warehouse and Distribution Expenses. Warehouse and distribution expenses
decreased to $77.9 million in 1994 from $78.5 million in 1993, a 0.8% decrease,
due to management's increased emphasis on improved productivity through
manpower planning programs including (i) staggered work hours, (ii) personnel
redeployment and (iii) operational analysis. An additional contributor to this
decrease was the reduction in delivery costs, as a percentage of net sales,
through the continued evaluation and refinement of delivery routes.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $25.2 million in 1994 from $23.8 million
in 1993, a 5.8% increase, mostly attributable to lump-sum incentive awards
earned in 1994 by employees and management based on Associated's increased
level of profitability.
Income From Operations. Income from operations increased to $17.1 million in
1994 from $10.0 million in 1993, a 71.4% increase, and as a percentage of net
sales was 3.6% in 1994, compared with 2.2% in 1993, for the reasons stated
above.
Interest Expense. Interest expense increased to $6.8 million in 1994 from
$6.3 million in 1993, a 7.8% increase, as a result of an increase in the
weighted average interest rate on the Old Associated Revolver (as hereinafter
defined) in effect during the year from 7.75% in 1993 to 8.90% in 1994, which
was offset in part by a reduction in average revolving debt balances to $39.6
million in 1994 from $46.9 million in 1993.
Income Before Income Taxes. Income before income taxes increased to $10.4
million in 1994 from $3.7 million in 1993, a 177.7% increase, for the reasons
stated above.
Income Taxes. Income taxes increased to $4.0 million in 1994 from $0.8
million in 1993, a $3.2 million increase. The effective tax rates for 1994 and
1993 were 38.4% and 20.9%, respectively. The increase in rate was due primarily
to the effect of the change in the amount of tax valuation allowances.
Net Income. Net income increased to $6.4 million in 1994 from $3.0 million in
1993, an increase of $3.4 million, or 116.2%. Net income as a percentage of net
sales increased to 1.3% in 1994 from 0.6% in 1993 for the reasons stated above.
Comparison of Year Ended December 31, 1993
and the Eleven Month Period From Inception Through December 31, 1992
Net Sales. Net sales increased to $462.5 million in 1993 from $365.9 million
for the eleven month period ended December 31, 1992. This increase was due to
the inclusion of a full year of Associated operations in 1993, an increase in
sales volume attributable to the October 1992 acquisition of Lynn-Edwards and
an increase in unit sales volume to both existing and new Associated customers.
Gross Profit. Gross profit increased to $112.3 million in 1993 from $89.4
million for the eleven month period ended December 31, 1992, but remained
relatively stable as a percentage of net sales at 24.3% in 1993 compared to
24.4% for the eleven month period ending December 31, 1992. The
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integration of Lynn-Edwards was accomplished without significant deterioration
in gross margin as management focused on cost containment and inventory
assimilation.
Warehouse and Distribution Expenses. Warehouse and distribution expenses
increased to $78.5 million in 1993 from $60.6 million for the eleven month
period ended December 31, 1992, primarily due to the inclusion of a full year
of expenses of Associated's operations in 1993 and the Lynn-Edwards
Acquisition. Additional expenses were incurred as management and general
staffing were increased during the assimilation of Lynn-Edwards's operations.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased to $23.8 million in 1993 from $19.3 million
for the eleven month period ended December 31, 1992, primarily due to the
inclusion of a full year of Associated's operations and the Lynn-Edwards
Acquisition, increased staffing requirements related to the Lynn-Edwards
Acquisition and a non-recurring customer sales promotion held in 1993.
Income from Operations. Income from operations increased to $10.0 million in
1993 from $9.5 million for the eleven month period ended December 31, 1992, and
as a percentage of net sales was 2.2% in 1993, compared with 2.6% for the
eleven month period ending December 31, 1992 for the reasons stated above.
Interest Expense. Interest expense increased to $6.3 million in 1993 from
$4.8 million for the eleven month period ended December 31, 1992, primarily due
to the full-year impact of additional debt incurred in connection with the
Lynn-Edwards Acquisition and indebtedness incurred to meet working capital and
capital expenditure needs. This expense was offset, in part, by lower weighted
average interest rates on the Old Associated Revolver (as hereinafter defined)
in effect during the year, which declined from 8.0% for the eleven month period
ended December 31, 1992 to 7.75% in 1993.
Income Before Income Taxes. Income before income taxes decreased to $3.7
million in 1993 from $4.7 million for the eleven month period ended December
31, 1992 for the reasons stated above.
Income Taxes. The effective tax rates for the years ended December 31, 1993
and for the eleven month period ended December 31, 1992 were 20.9% and 37.6%,
respectively. The decrease was primarily due to lower required provisions in
1993.
Net income. Net income remained level at $3.0 million for 1993 and the eleven
month period ended December 31, 1992 and as a percentage of net sales decreased
to 0.6% in 1993 from 0.8% for the eleven month period ended December 31, 1992
for the reasons stated above.
HISTORICAL LIQUIDITY AND CAPITAL RESOURCES OF UNITED
United is a holding company and, as a result, United's primary source of
funds is cash generated from operating activities of its operating subsidiary,
the Company, and bank borrowings by the Company. United's statement of cash
flows for the periods indicated is summarized below.
<TABLE>
<CAPTION>
SEVEN MONTHS
ENDED
------------------
YEAR ENDED AUGUST 31, MARCH MARCH
------------------------- 31, 30,
1992 1993 1994 1994 1995
------- ------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by (Used in)
Operating Activities........... $(2,538) $36,002 $ 8,108 $(55,757) $(47,553)
Net Cash Used in Investing
Activities..................... (45,629) (29,958) (10,499) (4,287) (7,764)
Net Cash Provided by (Used in)
Financing Activities........... 48,542 (10,097) 1,422 62,514 62,912
</TABLE>
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<PAGE>
Operating Activities. The decrease in net cash used in operating activities
from $55.8 million in the seven months ended March 31, 1994 to $47.6 million in
the seven months ended March 30, 1995 is primarily due to increases in accounts
payable and accrued liabilities partially offset by an increase to inventory.
Investing Activities. The increase in net cash used in investing activities
from $4.3 million in the seven months ended March 31, 1994 to $7.8 million in
the seven months ended March 30, 1995 is primarily due to the acquisition of
property, plant, and equipment.
Financing Activities. The increase in net cash provided by financing
activities from $62.5 million in the seven months ended March 31, 1994 to $62.9
million in the seven months ended March 30, 1995 is primarily due to increases
in short-term debt partially offset by an increase in payments on long-term
obligations.
The decrease in net cash provided by operations from $36.0 million in fiscal
1993 to $8.1 million in fiscal 1994 was primarily attributable to a decrease in
accounts payable and accrued liabilities as well as lower net income in 1994,
partially offset by a decrease in accounts receivable and inventory. The
substantial increase in net cash provided by operations from a use of cash of
$2.5 million in fiscal 1992 to $36.0 million of cash being provided in fiscal
1993 was primarily the result of an increase in accrued liabilities, net
income, accounts payable, deferred taxes and inventory, partially offset by an
increase in accounts receivable.
Net cash used in investing activities declined from $30.0 million in fiscal
1993 to $10.5 million in fiscal 1994, as a result of a commensurate decline in
capital expenditures. The $30.0 million of capital expenditures in fiscal 1993
includes the purchase of $16.0 million of computer and related hardware. Net
cash used in investing activities in fiscal 1992 included $37.3 million of cash
as part of the purchase price of SDC. Net capital expenditures in fiscal 1994,
1993, and 1992 were $10.5 million, $30.0 million and $8.2 million,
respectively.
Net cash of $1.4 million was provided by financing activities in fiscal 1994
as compared to a net use of cash in financing activities in fiscal 1993 of
$10.1 million. Net cash provided by financing activities in fiscal 1992
primarily reflects additional debt to finance the acquisition of SDC.
The Company's credit agreement ("Old Company Credit Agreement") in effect
prior to consummation of the Offer consisted of a $130.0 million reducing
revolving credit facility ("Old Company Revolver") and a $30.0 million term
loan (the "Old Company Term Loan") (collectively, the "Old Company Credit
Facilities"). The Old Company Revolver provided for revolving credit loans up
to the amount of the commitment, which reduced upon quarterly decreases to
$83.6 million at maturity. The borrowing capacity under the Old Company
Revolver at March 30, 1995 was $119.3 million versus the total borrowed at
March 31, 1994 of $123.0 million. Interest was payable at varying rates in the
Old Company Credit Agreement. The Old Company Revolver was to mature on August
31, 1997. The Old Company Term Loan was payable on September 30, 1995. As of
March 30, 1995, borrowings outstanding under the Old Company Term Loan were
$30.0 million. In addition, prior to the consummation of the Offer the Company
borrowed $6.0 million pursuant to a $30.0 million revolving line of credit
("Overline Facility"). Debt maturities (other than amounts borrowed under the
Old Company Credit Facilities) were as follows: $6.3 million in fiscal 1995,
$7.4 million in fiscal 1996, $8.2 million in fiscal 1997 and $8.8 million in
fiscal 1998. The Old Company Credit Facilities and the Overline Facility were
refinanced as part of the Acquisition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Post-Merger
Liquidity and Capital Resources."
HISTORICAL LIQUIDITY AND CAPITAL RESOURCES OF ASSOCIATED
Associated was a holding company and, as a result, Associated's primary
source of funds was cash generated from operating activities of its operating
subsidiary, ASI, and bank borrowings by ASI. The Old Associated Credit
Agreement (as hereinafter defined) included restrictions on the ability of ASI
to
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<PAGE>
transfer cash to Associated which could be used by Associated to pay cash
dividends on its redeemable preferred stock. Associated's statement of cash
flows for the periods indicated is summarized below.
<TABLE>
<CAPTION>
11 MONTH
PERIOD FROM THREE MONTHS
INCEPTION ENDED
THROUGH YEAR ENDED MARCH 31,
DECEMBER 31, ------------------ ------------------
1992 1993 1994 1994 1995
------------ -------- -------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by (Used
in) Operating Activities. $ 19,759 $(18,192) $ 13,636 $ 3,183 $ 2,087
Net Cash Used in Investing
Activities............... (96,796) (3,276) (554) (242) (257,441)
Net Cash Provided by (Used
in) Financing Activities. 85,290 14,203 (12,224) (2,651) 274,861
</TABLE>
Operating Activities. The decline in net cash provided by operating
activities from $3.2 million in the first three months of 1994 to $2.1 million
in the first three months of 1995 is primarily due to an increase in accounts
payable partially offset by a decrease in inventory.
Investing Activities. The net cash used in investing activities for the three
months ended March 31, 1995 reflects the acquisition of United on March 30,
1995.
Financing Activities. The net cash provided by financing activities for the
three months ended March 31, 1995 reflects the issuance of debt to finance the
acquisition of United.
Net cash provided by operating activities for 1994 increased to $13.6 million
from a use of cash of $18.2 million in 1993. This increase in 1994 was
principally due to an increase in accounts payable, a lesser increase in
inventory levels and an increase in net income. Associated used $18.2 million
of cash in operations in 1993 as compared to operating activities being a
source of cash of $19.8 million in 1992. The decrease primarily was attributed
to (i) a reduction in accounts payable in 1993 and (ii) an increase in
inventory in 1993 due to a full year of Associated's operations, additional
inventory to support the Lynn-Edwards Acquisition and an overall increase in
sales volume. During the eleven months ended December 31, 1992, Associated
deferred payment on purchases from or services rendered in the amount of $9.0
million pursuant to a transition services agreement. During 1994, Associated
settled the obligation by issuing 58,653 shares of Associated Common Stock.
Net cash used in investing activities in 1994 was $0.6 million, reflecting
capital expenditures necessary to maintain existing assets. Net cash used in
investing activities in 1993 was $3.3 million stemming mostly from capital
expenditures in connection with the opening of the new Baltimore facility and
those expenditures related to the assimilation of the Lynn-Edwards Acquisition.
Net cash used in investing activities in 1992 was $96.8 million which primarily
consisted of $82.1 million of cash used for the acquisition of certain BCOP
assets. In addition, $2.7 million was incurred to effect the Lynn-Edwards
Acquisition. In 1993, the selling stockholders of Lynn-Edwards returned $0.3
million of the $2.7 million to Associated pursuant to a subsequent agreement
between the parties as to the purchase price of Lynn-Edwards. Capital
expenditures in 1992 were $4.3 million. A total of $7.7 million of acquisition
costs were incurred in 1992 in connection with the Lynn-Edwards Acquisition and
the Boise Transaction.
Net cash used in financing activities in 1994 was $12.2 million which was
attributable to the pay down of debt under the Old Associated Credit Facilities
(as hereinafter defined). Net cash provided by financing activities in 1993 was
$14.2 million due to $11.5 million of borrowings under the Old Associated
Credit Facilities and an equipment loan and cash overdrafts of $6.1 million due
to timing of payroll, partially offset by scheduled principal payments of $3.4
million. Net cash provided by financing activities in 1992 was $85.3 million
which reflects the initial capitalization of Associated in connection with its
formation and additional debt incurred to finance the Lynn-Edwards Acquisition.
Borrowings under the Old Associated Credit Facilities in 1992 were partially
offset by scheduled amortization payments of $8.1 million.
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<PAGE>
Associated's credit agreement ("Old Associated Credit Agreement") in effect
prior to consummation of the Offer consisted of a $65.0 million revolving
credit facility ("Old Associated Revolver"), a $20.0 million term loan, Tranche
A, and a $10.0 million term loan, Tranche B (together, the "Old Associated Term
Loans") (collectively, the "Old Associated Credit Facilities"). The Old
Associated Revolver provided for revolving credit loans up to the amount of the
commitment, based on eligible receivables and inventory, as defined in the Old
Associated Credit Agreement. The borrowing capacity under the Old Associated
Revolver at December 31, 1994 was $62.5 million versus the total borrowed at
December 31, 1994 of $39.9 million. Interest was payable at a rate per annum
of 1.75% plus the higher of either the prime rate or 0.5% plus the federal
funds rate, as defined in the Old Associated Credit Agreement. The Old
Associated Revolver was to mature on January 31, 1997. Prepayments were
required when cash flow, as defined in the Old Associated Credit Agreement,
exceeded specified levels. Term Loan Tranches A and B were payable in 57 and 24
monthly installments commencing on April 30, 1992 and January 31, 1997,
respectively. As of December 31, 1994, total borrowings under the Old
Associated Term Loans, excluding original issue discount, were $21.0 million.
Debt maturities, excluding the original issue discount, were as follows: $5.9
million in 1995, $7.0 million in 1996, $46.3 million in 1997 and $5.5 million
in 1998. The Old Associated Credit Facilities were refinanced as part of the
Acquisition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Post-Merger Liquidity and Capital Resources."
POST-MERGER LIQUIDITY AND CAPITAL RESOURCES
In connection with consummation of the Acquisition, Associated received an
equity investment of $12.0 million primarily from existing stockholders and
borrowed an aggregate of $416.5 million under the New Credit Facilities and
$130.0 million under the Subordinated Bridge Facility, all as described under
"Financing the Acquisition." The proceeds of these investments and borrowings
were used to (i) finance the purchase of Shares pursuant to the Offer, (ii)
refinance certain existing indebtedness of Associated (including all amounts
outstanding under the existing Old Associated Credit Facilities) and certain
indebtedness of United and the Company (including all amounts outstanding under
the existing Old Company Credit Facilities), (iii) redeem United stock options
and (iv) pay fees and expenses relating to the Acquisition.
The New Credit Facilities consist of a Tranche A Facility providing for a
$125.0 million term loan requiring repayment in 20 quarterly installments, a
Tranche B Facility providing for a $75.0 million term loan requiring repayment
in 28 quarterly installments and a Revolving Credit Facility in the aggregate
amount of $300.0 million. The New Credit Agreement contains restrictions on,
among other things, dividends by the Company to United. For a more detailed
description of the payment and other terms of the New Credit Facilities, see
"Financing the Acquisition -- Loan Facilities -- New Credit Facilities."
Including amounts borrowed to consummate the Acquisition, total scheduled
mandatory principal payments due on long-term debt from 1995 through 2000 are
expected to be $156.3 million.
Quarterly dividends currently accrue on United's three outstanding series of
the Merger Preferred Stock (as hereinafter defined) at the respective rates of
10.0% (for Series A) and 9.0% (for Series B and C) per annum (or, when
dividends are not paid in cash, 13.0% (for Series A) and 10.0% (for Series B
and C)), and may be paid in the form of additional shares of the respective
series of Merger Preferred Stock (except, in the case of the Series C Preferred
Stock, for dividends payable after January 31, 1999). Based upon the Company's
anticipated operating results and the requirements under the New Credit
Agreement and the Indenture, management expects to pay dividends on the Merger
Preferred Stock when such dividends become due and payable in kind (rather than
in cash) for the foreseeable future. If the necessary consents are obtained,
the Company expects to pay a dividend to United in an amount sufficient to
repurchase all the outstanding shares of Series B Preferred Stock, together
with accrued and unpaid dividends thereon, with a portion of the proceeds from
the Old Notes.
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<PAGE>
The New Credit Facilities permit capital expenditures for the Company of up
to $12.0 million for the post-merger portion of its fiscal year ending December
31, 1995. Capital expenditures will be financed from internally generated funds
and the New Credit Facilities.
Management anticipates making changes in the operations of the Company and
ASI as conducted prior to the Acquisition as described under "Business --
Consolidation Plan and Benefits of the Acquisition." Based on internally
generated funds and the expected results of these changes, management believes
that United's cash on hand, anticipated funds generated from operations and
available borrowings under the New Credit Facilities will be sufficient to meet
the short term and long term operating and capital needs of United after the
Acquisition as well as to service its debt in accordance with its terms. There
is, however, no assurance this will be accomplished.
INFLATION AND CHANGING PRICES
Inflation during the last three years has not been a significant factor to
operations. United's business is not generally governed by contracts that
establish prices substantially in advance of the receipt of goods or services.
As suppliers increase their prices for merchandise to United, United generally
seeks to increase its prices to its customers.
SEASONALITY
Although the Company's sales are generally relatively level throughout the
year, the Company's sales vary to the extent of seasonal differences in the
buying patterns of end users who purchase office products. In particular, the
Company's sales are generally higher than average during the months of January
through March when many offices begin operating under new annual budgets.
The Company experiences significant seasonality in terms of its capital
needs, with highest requirements in December and January reflecting a build up
in inventory prior to the peak sales period. In 1994, on a pro forma basis as
if the Acquisition occurred on January 1, 1994, outstanding balances on the
revolving credit facilities of the Company ranged between $236 million in
January to $138 million in September. The Company believes that its current
availability under the Revolving Credit Facility is sufficient to satisfy such
seasonal capital needs for the foreseeable future.
55
<PAGE>
BUSINESS
OVERVIEW
The Company is the largest office products wholesaler in the United States.
As a result of the Merger of the Company with ASI on March 30, 1995, the
Company's net sales on a pro forma basis for 1994 were approximately $2.0
billion for the year ended December 31, 1994 and $0.6 billion for the three
months ended March 31, 1995. Through its extensive office products catalogs,
the Company markets a full line of over 25,000 (post-consolidation) branded and
private brand products, including traditional office supplies; office furniture
and desk accessories; office machines, equipment and supplies; computer
hardware, peripherals and supplies; and facilities management supplies,
including sanitation products and janitorial items. These products are offered
through a network of 39 (post-consolidation) strategically located distribution
centers to over 14,000 resellers, consisting principally of commercial dealers
and contract stationers, retail dealers, superstores, mail order companies and
mass merchandisers.
Although the office products distribution industry has seen many changes over
the past decade, including the growth of national superstores and a
consolidation among wholesalers, dealers and contract stationers, large
national wholesalers have continued to perform a significant role in the
distribution of office products. For manufacturers, the wholesaler provides
wide market coverage, assumes credit risk, carries inventory and processes
smaller orders than manufacturers can economically service. In addition,
wholesalers provide resellers with prompt service and delivery, a source for
filling small quantity orders and the opportunity to obtain credit, minimize
investment in inventory and access marketing resources and technical support.
The Company is currently engaged in implementing its consolidation plan to
integrate the two separate office products wholesale businesses conducted by
the Company and ASI prior to the Acquisition. See "Business -- Consolidation
Plan and Benefits of the Acquisition" and "Risk Factors -- Implementation of
Consolidation Plan." The Company was originally incorporated under the name
Utility Supply Co. in 1922 and has operated under its present name since 1960.
COMPETITIVE STRENGTHS
The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:
Largest Office Products Wholesaler. As the largest office products wholesaler
in the United States, the Company has substantial purchasing power and can
realize significant economies of scale. The Company obtains products from over
500 manufacturers, for many of whom the Company believes it is a significant
customer. The Company's size also enables it to seek cost-effective sourcing of
product in the United States and, in many cases, worldwide. In addition, the
Company's size allows it to maintain a broad and deep product selection,
permitting resellers to hold less inventory while still providing end users
with a high level of service.
High Level of Customer Service. The Company provides its customers with a
broad product selection, a high degree of product availability, expeditious
distribution and comprehensive customer assistance. The Company seeks to base
its business decisions on an "If I were the customer. . ." approach. With over
25,000 products being offered, the Company believes that it has the broadest
selection of office products available in the industry, enabling resellers in
most cases to do "one-stop shopping" for all of their office products needs.
The Company's broad product selection, inventory procurement and management
procedures and state-of-the-art distribution facilities enable it to achieve an
order fill rate in excess of 90%. The Company's management information systems
have been designed, in part, to enable Management to monitor five key measures
of customer satisfaction: fill rate, order accuracy, inventory accuracy, on-
time delivery and accessibility to customers. The Company
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<PAGE>
makes substantially all of its orders nationwide available by next day delivery
to assist resellers in successfully meeting end users' demands. The Company
publishes a wide array of product catalogs ranging from its full-line catalogs
to custom specialty catalogs to meet end user needs for information on specific
product offerings. Most of these product catalogs are custom imprinted with
particular resellers' names, which enables the reseller to distribute the
catalogs directly to its customers and garner repeat orders. In addition, the
Company provides its customers with a variety of support services such as its
"wrap and pack" program which offers resellers the option to receive orders
packaged in accordance with the specifications of particular end users. This
service allows resellers to lower their inventory investment and minimize
double handling costs while allowing them to continue to offer a wide product
range. The Company also offers a furniture set-up program in which the Company
delivers furniture directly to consumers on the reseller's behalf, thereby
enabling the reseller to offer a wide range of furniture on a cost-effective
basis.
The Company also provides its resellers a variety of electronic order entry
systems, pricing software programs and business management and marketing
training programs. For instance, the Company maintains electronic data
interchange ("EDI") systems that link the Company to selected resellers, and
multifaceted interactive order systems that link the Company to selected
resellers and such resellers to their ultimate end users. The Company's
sophisticated electronic management systems enable dealers to manage critical
business functions including order entry, purchasing, pricing, accounts
receivable, accounts payable and inventory control. The Company's matrix
pricing software program permits resellers to identify the optimum pricing mix
between high and low margin items, thereby enabling resellers to enhance their
operating margins. The Company's specialized business management programs
enhance particular resellers' ability to increase profits by providing a higher
level of service to the end user while the Company's marketing training
programs are designed to instruct resellers on how to market to the end user
based upon a total cost of procurement approach rather than focusing on
specific product prices. The Company continually reviews additional services
that might be helpful to its customers.
Diverse Customer Base. With over 14,000 resellers as customers, the Company
has one of the broadest customer bases in the industry. The Company's customers
include full-line office products resellers, such as commercial dealers and
contract stationers, retail dealers, office products superstores, mail order
companies and mass merchandisers, as well as specialized resellers, such as
office furniture, janitorial and computer dealers. No single reseller accounted
for more than 3.2% of the Company's net sales in 1994 on a pro forma basis. The
Company plans to continue to expand its customer base by (i) maintaining and
building its business with commercial dealers and contract stationers who,
through consolidation, continue to increase in size, (ii) developing additional
programs for marketing and buying groups that represent groups of dealers,
(iii) expanding relationships with the major office products superstore chains
and (iv) continuing to focus on niche markets, including specialty dealers
(e.g., furniture, janitorial and computer dealers) and particular end users
(e.g., healthcare, legal, financial and advertising specialty businesses).
State-of-the-Art Distribution Capabilities. The Company's network of 39
(post-consolidation) distribution centers located throughout the United States
employs state-of-the-art technology to efficiently distribute products to
customers. For example, as described above, the Company has developed EDI
capabilities that link the Company to the majority of its resellers and
multifaceted interactive order systems that link the Company to selected
resellers and such resellers to the ultimate end user. In 1994 on a pro forma
basis, approximately 85% of all of the Company's orders were received
electronically. The Company also uses a proprietary computer-based system to
enhance fill rates by automatically searching alternative distribution centers
for products and routing those products for shipment. In addition, the
Company's advanced communication system with many of its resellers is intended
to enhance the Company's ability to efficiently manage and distribute its
inventory.
Growth of Private Brand Products. The Company offers a growing line of over
1,300 private brand products under the Universal brand name, which the Company
believes is the broadest private brand
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<PAGE>
product offering in the industry. Universal brand products represented
approximately 9% of the Company's net sales in 1994 on a pro forma basis. Prior
to the Merger, the Universal private brand line was offered only by the Company
but will now also be marketed to ASI's customers. The Company believes its
private brand products offer significant benefits both to the reseller, by
providing an alternative to branded products that offers similar quality at a
moderate price, and to the manufacturer, by enabling the manufacturer to
increase sales without diluting its brand name pricing structure. The Company
sees significant opportunity to expand its private brand product line in the
future. To further develop the Universal brand, the Company recently opened a
trading company in Hong Kong to facilitate the global purchasing of products.
Experienced Management Team. The Company's senior management team comprises
individuals who combine many years of experience in the office products
distribution industry. Management also has had significant experience in
acquiring and integrating companies in the office products industry through the
SDC Acquisition by United and the Lynn-Edwards Acquisition by Associated, each
in 1992.
BUSINESS STRATEGY
The Company's business strategy is to seek to improve its competitive
position and grow its revenues and profitability through (i) the continuation
of a high level of customer service, (ii) expanding the breadth of both its
product line and its customer base, and (iii) a continuing emphasis on cost
effective operations.
High Level of Customer Service. Customer service has been an important factor
in the Company's business strategy in the increasingly competitive office
products industry. The Company intends to continue its efforts to differentiate
itself from competitors by providing its customers with a broad product
selection, a high degree of product availability, expeditious distribution and
a variety of customer services. The Company plans to accomplish these goals by
continuing to (i) offer one of the broadest product selections available in the
industry, (ii) achieve high fill rates to assure availability of product to its
resellers, (iii) offer next day delivery on substantially all of its orders and
(iv) assist its resellers by offering electronic order entry systems, pricing
software programs and business management and marketing training programs, as
well as continually reviewing additional support services which might be
helpful to resellers. In addition, because resellers sell directly to end
users, the Company has also focused on the needs of the end user by designing
informative, user-friendly catalogs and marketing programs to assist the
reseller's sales efforts.
Expanding Product Line and Customer Base. The Company's product line
expansion plans include growing its ancillary product lines, such as office
furniture, computer hardware, peripherals and supplies and facilities
management supplies, which the Company believes allow it to gain incremental
sales from its existing resellers and thereby strengthen its position with
resellers as a "one-stop shop." In addition, ancillary products allow the
Company to enter additional distribution channels and, by adding new types of
resellers beyond full-line office products dealers alone, to expand its
customer base. The Company also plans to continue to expand its customer base
by developing additional programs for marketing and buying groups, expanding
relationships with superstore chains and maintaining and building its business
with commercial dealers and contract stationers. The Company also expects to
expand its private brand product offerings within these new product lines and
to begin marketing private brand items to ASI's customers. In addition, the
Company plans to evaluate opportunities for growth in market share in
connection with the trend toward direct delivery of products to end users
through arrangements with various resellers seeking to minimize inventory
investment. The Company believes that there is opportunity to capture a portion
of the sizeable percentage of total shipments by office products manufacturers
currently sold directly to resellers or end users without wholesaler
involvement.
Cost Effective Operations. The Company intends to continue to actively seek
cost reductions at both the corporate and operating levels in order to continue
to operate in a cost effective manner.
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Examples of such cost reductions include (i) reduced merchandise costs through
suppliers' incentives, (ii) continued efforts to increase inventory turnover
without lowering service levels, (iii) reduced payroll and benefits costs
through improved labor allocation, (iv) reduced freight costs through ongoing
refinements to delivery systems, (v) increased sourcing of certain products
off-shore, (vi) continued development of computer systems and (vii)
streamlining of work practices and procedures.
CONSOLIDATION PLAN AND BENEFITS OF THE ACQUISITION
Consistent with its business strategy, since the consummation of the
Acquisition on March 30, 1995 the Company has been engaged in implementing its
consolidation plan to integrate its business with the business of ASI. Through
the integration of distribution facilities and product lines in a manner
designed to enable the Company to offer its customers increased service and
product availability, the Company expects to improve its competitive position.
In addition, the Company plans to achieve cost savings and other benefits from
the elimination of redundant or overlapping functions and facilities and by
minimizing overlapping products.
In implementing its consolidation plan, another critical objective will be to
maintain and enhance customer relationships, service and marketing programs of
the combined businesses. Management believes that the Company's experience
integrating the SDC Acquisition in 1992, together with ASI's experience
integrating the Lynn-Edwards Acquisition in 1992, will enhance the Company's
ability to implement its strategy while maintaining competitive levels of
customer service.
Management anticipates that the implementation of its consolidation strategy
should result in significant cost savings and synergies which will enhance the
Company's financial and operational performance. Management estimates that,
upon phase-in of its consolidation plan over a 12-month period following the
Acquisition, the Company expects to realize approximately $26.0 million per
year in savings as a result of a successful implementation of its consolidation
plan, although the Acquisition is likely to result in a reduction in the rate
of revenue growth for some period following the Acquisition as a result of the
loss of some customers to competition. See "Risk Factors -- Implementation of
Consolidation Plan" and "Pro Forma Combined Financial Information."
Consolidate Number of Product Offerings and Increase Volume. Management plans
to consolidate the Company's product offerings by eliminating approximately
10,000 overlapping items from the catalogs that management expects will be
distributed in the fourth calendar quarter of 1995, while at the same time
adding more niche products, including more specialty items. In addition,
following the Acquisition, the Company is expected to have substantially
greater sales volume than either ASI or the Company separately prior to the
Acquisition. Management believes that the Company will benefit by being able to
(i) qualify for improved terms with vendors as a result of placing higher
volume purchases among fewer suppliers, (ii) offer a more diverse product line,
thereby enhancing end user purchasing options and (iii) achieve higher fill
rates as a result of greater inventory and warehousing capacity.
Consolidate Distribution Centers. Management has identified eight redundant
distribution centers between ASI and the Company prior to the Merger and plans
to close such redundant facilities within 12 months of the Merger. Management
currently estimates that the first facility will be closed in October of 1995.
Management believes that the Company will benefit by achieving cost reductions
arising from the elimination of such facilities. After the elimination of such
redundant distribution centers, the aggregate number of distribution centers
will be 39, which is greater than the number of distribution centers operated
by either company separately. Management believes that such increased number of
the Company's distribution centers and, in some markets, the proximity of
distribution centers to each other, ultimately will improve service levels and
make additional inventory available through the Company's automated inventory
management system and, as a result, improve the delivery services of the
Company. In addition, the Company intends to achieve cost savings from more
efficient operation post-Merger of two distributions centers in each of the
Chicago, Sacramento, Nashville and
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Minneapolis/St. Paul market areas, where the size of existing facilities
requires, or demand is sufficient to support, multiple facilities.
Reduce Corporate Overhead. Management has identified a number of corporate
positions which it believes can be eliminated in the Company and plans to
eliminate such positions and to close Associated's corporate headquarters.
Additionally, management plans to eliminate redundant sales positions where
customer coverage overlaps. Management believes that the Company will benefit
by realizing savings (phased in over a 12-month period) from reduced payroll,
benefits and other related expenses derived from (i) the elimination of such
positions, (ii) the closing of Associated's corporate headquarters and (iii)
the consolidation of legal, audit and tax consulting functions of Associated
and United prior to the Merger. Management has specifically identified 330
employees to be terminated, each of their job classifications or functions, and
their location. Sales representatives and headquarter employees have been given
termination notices. Distribution center employees will specifically be
notified prior to the closing of their respective distribution centers. In
addition, the Company has begun modifying and consolidating its computer
systems.
Expand Private Brand Products and Off-Shore Sourcing. Because of the cost
advantages and popularity of United's Universal private brand products,
management plans to market both the Universal line and off-shore sourced
products to ASI's customers as well as use the combined volume of the Company
after the Merger to enhance the Company's ability, when appropriate, to
introduce new private brand products and, as appropriate, to source certain
additional products off-shore. Management believes that the Company will
benefit from such strategy by increasing sales of private brand and off-shore
products, which should provide higher profit margins to both resellers and the
Company.
THE OFFICE PRODUCTS DISTRIBUTION INDUSTRY
The Company operates in a large, fragmented and rapidly consolidating
industry. The office products distribution industry consists of several
different channels by which office products are distributed from the
manufacturer to the end user. These channels include both routes in which
resellers buy through wholesalers and routes in which resellers purchase
directly from manufacturers. Due to consolidation, the distinct boundaries that
once clearly defined distribution channels have become blurred. The industry
today consists principally of wholesalers, commercial dealers and contract
stationers, retail dealers, office products superstores, mail order companies
and mass merchandisers.
Wholesalers. Wholesalers purchase products directly from manufacturers and
sell them directly to resellers who, in turn, sell the products to end users.
The wholesale segment of the office products distribution industry consists of
national, specialty and regional wholesalers. The two national wholesalers
(i.e., the Company and S.P. Richards) compete with a full product offering and
extensive marketing and distribution services for their reseller customers.
Specialty wholesalers focus on limited product lines such as computer supplies,
legal supplies, medical filing systems, office furniture or janitorial
products. Regional wholesalers generally offer a full range of office products
and marketing services on a smaller scale and within a much more limited
geographic area than national wholesalers.
For manufacturers, the wholesaler provides wide market coverage, assumes
credit risk, carries inventory and processes smaller orders than manufacturers
can economically service. Wholesalers also provide resellers with prompt
service and delivery, a source for placing small quantity orders and the
opportunity to obtain credit, minimize investment in inventory and access
marketing resources and technical support. In order for resellers, such as
superstores, to perform these functions themselves, a source of significant
capital is generally required for both investment in systems and additional
distribution facilities, as well as for the working capital requirements needed
to establish appropriate inventory levels.
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Office products wholesalers compete not only with other wholesalers but also
with office products manufacturers. See "Business -- Competition" and "Risk
Factors -- Competition." A sizeable percentage of total shipments by office
products manufacturers are currently sold directly to resellers or end users
without wholesaler involvement.
Commercial Dealers and Contract Stationers. The most significant reseller
channel for office product distribution continues to be commercial dealers and
contract stationers who serve medium- and large-sized business customers
through the use of catalogs and sales forces. These resellers typically stock
products in distribution centers and deliver them to customers on a next-day
basis against orders received electronically, by telephone or fax, or taken by
a salesperson on the customer's premises. Major commercial dealers and contract
stationers purchase in large quantities directly from manufacturers, rely upon
wholesalers for inventory backup and product breadth and offer significant
volume-related discounts and a high level of service to their customers.
Retail Dealers. Retail office products dealers typically serve small- and
medium-sized businesses, home offices and individuals. For many years, retail
dealers consisted principally of a large number of independent dealers,
operating one or a few relatively small stores in a single local area. During
the last decade, however, the office products retail market has undergone
significant change, including the elimination or consolidation of many retail
dealers, as a result of the emergence and rapid growth of discount office
supply retailers, which are known as superstores. To compete with the lower
prices generally offered by superstores, many independent retail dealers have
joined marketing or buying groups to negotiate on a collective basis directly
with manufacturers and wholesalers.
Office Products Superstores. Superstores employ a warehouse format, are
typically open for business seven days a week, stock a large number and broad
range of items in inventory (typically in the range of 5,000 products),
purchase in volume and typically take delivery at their stores for the most
part direct from manufacturers and offer many of their products at discounts
from manufacturers' list prices. Virtually every major metropolitan area in the
United States is now served by at least one, and most by several, office
products superstores, and the three largest superstore companies (Office Depot,
OfficeMax and Staples) operate and advertise nationally with stores in many
metropolitan areas. Superstores also purchase from wholesalers for "fill-in"
needs and to fill customer orders from special wholesaler catalogs made
available to end users in certain superstores when the superstore does not
carry an item. This allows the superstores to expand the range of products
offered without increasing their on hand inventory levels.
Mail Order Companies. Mail order marketers of office products typically serve
small and medium-sized business customers and home offices. While their
procurement and order fulfillment functions are similar to contract stationers,
they rely exclusively on catalogs and other database marketing programs, rather
than direct sales forces, to sell their product offerings. Their operations are
based upon large, proprietary customer data bases and sophisticated circulation
strategies drawn from consumer marketing programs. Mail order companies
purchase both from wholesalers and manufacturers.
Mass Merchandisers. The mass market retailers (e.g., Sears, Wal-Mart
Stores/Sam's Club, Price/Costco, Kmart and Target) have recently taken a
growing interest in office products. Office supplies is one of many categories
of products more typically available in these stores.
PRODUCTS
The Company markets a broad array of products, which include traditional
office supplies; office furniture and desk accessories; office machines,
equipment and supplies; computer hardware, peripherals and supplies; and
facilities management supplies. The Company's core business continues to be
traditional office supplies, which includes both brand-name products and the
Company's private brand products marketed under the Universal name. As part of
the Company's business strategy to
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acquire incremental sales and increase market share through ancillary product
offerings, the Company began to focus on niche markets in fiscal year 1991 and
has expanded steadily upon this concept since then. A furniture division was
established to offer national delivery and product "set-up" capabilities to
office products dealers as well as to attract new furniture dealers. The
Company's sale of this division's items such as leather chairs, wooden and
steel desks and computer furniture has enabled it to become the nation's
largest office furniture wholesaler, with the Company currently offering nearly
3,000 furniture items from 80 different manufacturers. The Company's "Pro-
Image" program enables resellers with no previous expertise to provide high-end
furniture and office design services to end users. Another one of the Company's
niche markets is business presentation products. The Company also sells
computers, printers, modems, monitors and supplies with major brand names
through its MicroUnited Division. Additionally, the Company offers its
"Signature Image" program, which provides traditional office products resellers
with access into the advertising products market (such as imprinted and logo
items). The Company's newest product line encompasses the facilities management
supplies market, which includes janitorial and sanitation supplies, specialty
mailroom and warehouse items, kitchen and cafeteria items, first aid products
and ergonomic products designed to enhance worker productivity, comfort and
safety.
CUSTOMERS
The Company principally sells to resellers of office products, consisting
primarily of commercial dealers and contract stationers, retail dealers,
superstores, mail order companies and mass merchandisers. In addition, the
Company sells to office furniture dealers, computer resellers and janitorial
and sanitation supply distributors. In 1994 on a pro forma basis, no single
reseller accounted for more than 3.2% of the Company's consolidated net sales.
Commercial dealers and contract stationers are the most significant reseller
channel for office product distribution and typically serve large businesses,
institutions and government agencies. Through consolidation, these dealers are
getting larger and becoming even more important to the Company. Commercial
dealers and contract stationers remain one of the Company's fastest growing
customers classes.
The number of retail dealers has been declining for some time as the result
of individual retail dealers' inability to successfully compete with the
growing number of superstores and, more recently, as a result of dealerships
being acquired and brought under an umbrella of common ownership. However, many
retail office products dealers continue to thrive, adapting to the highly
competitive environment with the help of resources the Company offers. Many
retail dealers, commercial dealers and contract stationers have joined forces
in marketing or buying groups in order to increase purchasing leverage. The
Company believes it is the leading wholesale source for many of these groups,
providing not only merchandise but also special programs that enable these
dealers to take advantage of their combined strengths.
While the Company maintains and builds its business with commercial dealers
and contract stationers and retail dealers, it has also initiated relationships
with most major office products superstore chains. The Company sells
superstores commodity items as "fill-ins" when they are out of stock. In
addition, the Company has installed order stations in many superstores that
display the Company's catalogs thereby allowing end users to order products
from the Company through the superstore that the superstore does not carry in
stock.
Through its furniture division, the Company offers middle-grade office
furniture to both office products and office furniture dealers. The Company
also provides computer-related products to most categories of computer
resellers through its MicroUnited division and sells janitorial products to
sanitation supply distributors. The Company provides marketing materials and
professional expertise to meet the various needs of these specialized
resellers.
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MARKETING AND CUSTOMER SUPPORT
The Company concentrates its marketing efforts on providing value-added
services to resellers. The Company distributes products that are generally
available at similar prices from multiple sources, and most of its customers
purchase their products from more than one source. As a result, the Company
seeks to differentiate itself from its competitors through broad product
offerings, a high degree of product availability, a variety of customer
services and expeditious distribution capabilities.
In addition to emphasizing its broad product line, extensive inventory,
computer integration and national distribution capabilities, the Company's
marketing programs have relied upon two additional major components. First, the
Company produces an extensive array of catalogs for commercial dealers,
contract stationers and retail dealers that are usually custom imprinted with
each resellers' name and sold to these resellers who, in turn, distribute the
catalogs to their customers. Second, the Company provides its resellers with a
variety of dealer support and marketing services, including business management
systems, promotional programs and price services. These services are designed
to aid the reseller in differentiating itself from its competitors by
addressing the steps in the consumer's procurement process.
Currently, substantially all of the Company's products are sold through its
comprehensive office product catalogs and flyers. These materials include full
line catalogs, promotional pieces and specialty catalogs for the legal,
financial, healthcare, office furniture, facilities management and advertising
specialty markets. Catalogs also are provided for a variety of end user
markets, including: annual General Line Catalogs listing 25,000 items; an
annual office furniture catalog featuring furniture and accessories; an Office
Impressions catalog featuring the Company's private-brand furniture; a
quarterly Concept 90 catalog offering approximately 1,000 high-volume commodity
products; Office Saver and Flexi Flyer promotional pieces targeted at deep
discount markets; annual Universal and Universal Plus catalogs promoting the
Company's private-brand merchandise; an annual Computer Products Catalog
offering hardware, peripherals and supplies; an annual Computer Concepts
catalog; Specialty Market catalogs targeting healthcare, legal, financial and
advertising specialty businesses; an annual Facilities Management Supply
catalog featuring janitorial and sanitation supplies and ergonomic products; a
business presentation products catalog; and Access, a new promotional flyer
offering related office products distributed to end users on behalf of
resellers. Because commercial dealers, contract stationers and retail dealers
typically distribute only one wholesaler's catalogs in order to streamline
order entry, the Company attempts to maximize the distribution of its catalogs
by offering advertising credits to resellers, based on the volume of products
purchased, which can be used to offset the cost of catalogs.
To assist its resellers with pricing, the Company offers a matrix pricing
software program. Traditionally, resellers have priced products on a discount
from list price basis. With the advent of the superstore, pricing has shifted
towards a net pricing approach, whereby the superstore sells certain products
at significant discounts, assuming that it can recapture the discounts through
the sale of other higher margin products. The Company's matrix pricing program
provides the reseller with a tool to assist it in identifying the optimum
pricing mix between high and low margin items and, as a result, enables the
reseller to enhance its operating margins.
The Company provides sales representatives and managers of selected resellers
the opportunity to participate in marketing training programs sponsored by it.
Similar to its matrix pricing software, the Company's training programs are
designed to instruct the resellers in how to market to the end user based upon
a total cost of procurement approach, and thereby to minimize the focus on
specific product prices. Since the inception of the Company's program, over
3,000 individuals have attended such training programs.
The Company offers to its resellers a variety of electronic order entry
systems and business management and marketing programs which enhance the
reseller's ability to manage its business
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profitably. For instance, the Company maintains EDI systems that link the
Company to selected resellers, and multifaceted interactive order systems that
link the Company to selected resellers and such resellers to the ultimate end
user. The Company's most sophisticated electronic management system enables
dealers to manage critical business functions including order entry,
purchasing, pricing, accounts receivable, accounts payable and inventory
control. In July 1993, the Company entered into a joint venture with a software
developer, investing approximately $0.9 million as of February 28, 1995 for its
45% equity interest in a new corporation called United Business Computers, Inc.
to enhance, market and support PC-based dealer operating systems compatible
with the Company's system. The Company estimates that in 1994 on a pro forma
basis, approximately 85% of its orders were received electronically.
In addition to the Company's Pro-Image and Signature Image business
management and marketing programs described above, the Company also offers
resellers its "Desk Top Marketing" software program, which enables the reseller
to identify potential customers in a given market based upon parameters
selected by the reseller. The Company also offers, on an exclusive basis, the
Customer Self-Service program, which allows the reseller to provide end users
with on-line access to such reseller's computer for ordering, product inquiries
and promotion information.
DISTRIBUTION
Management has determined that, as a result of the Merger, eight of the
Company's 47 current regional distribution centers are redundant and,
accordingly, plans to close such redundant facilities within 12 months of the
Merger. As a result, the Company will have a network of 39 (post-consolidation)
regional distribution centers located in 35 metropolitan areas in 24 states,
most of which will carry the Company's full line of inventory. In addition, the
Company intends to achieve cost savings from the more efficient operation post-
Merger of two distribution centers in each of four market areas, where size of
existing facilities requires, or demand is sufficient to support, multiple
facilities. For a discussion of the benefits arising from the elimination of
such facilities, see "Business -- Consolidation Plan and Benefits of the
Acquisition."
The Company supplements its regional distribution centers with local
distribution points throughout the United States that serve as reshipment
points for orders filled at the regional distribution centers. The Company
utilizes over 500 trucks owned, leased or contracted for by the Company to
enable direct delivery from the regional distribution centers and local
distribution points to resellers.
The Company's distribution capabilities are augmented by its proprietary,
computer-based system. If a reseller places an order for an item that is out of
stock at the Company location which usually serves the particular reseller, the
Company's system will automatically search for the item at two alternative
distribution centers. If the item is available at an alternative location, the
system will automatically forward the order to that alternate location, which
will then coordinate shipping with the primary facility and provide a single
on-time delivery to the reseller. The system effectively provides the Company
with added inventory support, which enables it to provide higher service levels
to the reseller, to reduce back orders and to minimize time spent searching for
merchandise substitutes, all of which contribute to the Company's high fill
rate and efficient levels of inventory balances. See "Risk Factors -- Service
Interruptions."
Another service offered by the Company to selected resellers is its "wrap and
pack" program, which allows resellers the option to receive orders in
accordance with the specifications of particular end users. For example, when a
reseller receives orders from a number of separate end users, the Company
groups and wraps the items separately by end user so that the reseller need
only deliver the package. The "wrap and pack" program is attractive to
resellers because it eliminates the need to break down case shipments and to
repackage the orders before delivering them to the end user.
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MERCHANDISING AND PURCHASING
The Company utilizes over 500 suppliers of its products. As a centralized
corporate function, the Company's merchandising department interviews and
selects suppliers and products for inclusion in the catalogs. Selection is
based upon end user acceptance and demand for the product and the
manufacturer's total service, price and product quality offering. In 1994 on a
pro forma basis, no supplier accounted for more than 9.4% of the Company's
aggregate purchases. The Company believes it is a significant customer for many
vendors.
The Company, like many other wholesalers, has a centrally controlled,
computerized forward buying program under which the Company, from time to time,
purchases items of inventory in advance of its specific needs when favorable
purchasing opportunities present themselves.
COMPETITION
The Company competes with office products manufacturers and with other
national, regional and specialty wholesalers of office products, office
furniture, computers and related items. Most wholesale distributors of office
products conduct operations regionally and locally, sometimes with limited
product lines such as writing instruments or computer products. Other
wholesalers, including the Company, carry a full line of business products.
Manufacturers typically sell their products through a variety of distribution
channels, including business products wholesalers and resellers.
Competition between the Company and manufacturers is based primarily upon net
pricing, minimum order quantity and product availability. Although
manufacturers may provide lower prices to resellers than the Company does, the
Company's marketing and catalog programs, combined with speed of delivery and
its ability to offer resellers a broad line of business products from multiple
manufacturers on a "one-stop shop" basis and with lower minimum order
quantities, are important factors in enabling the Company to compete
effectively. Competition between the Company and other wholesalers is based
primarily on net pricing to resellers, breadth of product lines, availability
of products, speed of delivery to resellers, fill rates and the quality of its
marketing and other services. The Company believes it is competitive in each of
these areas.
A trend toward consolidation has occurred in recent years throughout the
office products industry. Although at the national wholesale level only one
competitor (S.P. Richards) remains, consolidation of commercial dealers and
contract stationers has also resulted in an increased ability of those
resellers to buy goods directly from manufacturers. In addition, over the last
decade, office products superstores (which largely buy directly from
manufacturers but offer fewer items than the Company) have entered virtually
every major metropolitan market and dealers and contract stationers have formed
buying groups to purchase directly from manufacturers on a collective basis.
Increased competition in the office products industry has also led to
heightened price awareness among consumers, making commodity type office
products extremely price sensitive and requiring the Company to increase its
efforts to convince resellers of the continuing advantages of its competitive
strengths (as compared to those of manufacturers and other wholesalers), such
as marketing and catalog programs, speed of delivery, and the ability to offer
resellers a broad line of business products from multiple manufacturers with
lower minimum order quantities on a "one-stop shop" basis. See "Risk Factors --
Competition."
EMPLOYEES
At March 1, 1995, the Company and ASI employed approximately 5,015 persons in
the aggregate. Management has determined that as a result of the Merger,
certain warehouse, corporate and sales positions within the Company will be
eliminated. For a discussion of management's plans with respect to the
elimination of such positions and the resulting expected benefits to the
Company, see "Business
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- -- Consolidation Plan and Benefits of the Acquisition -- Consolidate
Distribution Centers," "-- Reduce Corporate Overhead" and "-- Reduce Sales
Representatives."
The Company considers its relationships with its employees to be
satisfactory. Substantially all of the shipping, warehouse and maintenance
employees at certain of the Chicago, Detroit, Philadelphia, Baltimore, Los
Angeles, Minneapolis and New York City facilities are covered by various
collective bargaining agreements. The agreements expire at various times during
the next three years. See "Risk Factors -- Service Interruptions."
LEGAL PROCEEDINGS
The Company is involved in legal proceedings arising in the ordinary course
of its business. The Company is not involved in any legal proceeding that it
believes will result, individually or in the aggregate, in a material adverse
effect upon its financial condition or results of operations.
PROPERTIES
The Company considers its properties to be suitable and adequate for their
intended uses. These properties consist of the following:
Executive Offices. The Company's office facility in Des Plaines, Illinois has
approximately 135,800 square feet of office and storage space. In September
1993, approximately 47,000 square feet of office space located in Mount
Prospect, Illinois was leased by the Company. This lease expires in four years,
with an option to renew for two five-year terms.
The Company currently leases 20,568 square feet of office space in Itasca,
Illinois which previously served as Associated's corporate headquarters and
7,095 square feet of office space in Pittsburgh, Pennsylvania as a sales
office. As a result of the closing of Associated's corporate headquarters, the
Company plans to terminate the lease in Itasca, Illinois.
Local Distribution Points. The Company also operates 28 local distribution
points. Two are leased by the Company; the other local distribution points are
operated through cross-docking arrangements with third party distribution
companies.
Canadian Office. The Company currently leases a sales office in Woodbridge,
Ontario (7,000 sq. ft.). This lease expires August 31, 1995 with an option to
renew for one additional year.
Hong Kong Trading Office. United Stationers Hong Kong Limited leases 1,500
square feet for a trading office in Hong Kong with the lease expiring on
October 14, 1995.
Distribution Centers. The Company presently operates 47 distribution centers
in 24 states, with eight scheduled for closing in the near future as part of
the Company's consolidation plan. The following table sets forth information
regarding the principal leased and owned properties.
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<TABLE>
<CAPTION>
APPROXIMATE
SQUARE FEET
---------------
METROPOLITAN DATE OF LEASE
STATE CITY AREA SERVED OWNED LEASED EXPIRATION(2)
- ----- ------------------- --------------------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Arizona................. Tempe Phoenix -- 110,000 3/31/01
California.............. City of Industry(1) Los Angeles -- 99,999 4/30/96
California.............. City of Industry Los Angeles 344,487 125,000 5/31/98
California.............. Sacramento Sacramento -- 150,207 5/30/03(3)
California.............. Sacramento Sacramento -- 263,000 7/31/08
Colorado................ Denver Denver 104,244 -- --
Colorado................ Denver(1) Denver -- 132,618 8/31/95
Florida................. Hialeah(1) Miami -- 94,080 12/31/99
Florida................. Jacksonville Jacksonville 95,500 -- --
Florida................. Tampa Tampa 128,000 -- --
Florida................. Ft. Lauderdale Miami -- 151,500 7/31/03
Georgia................. Smyrna(1) Atlanta 129,396 -- --
Georgia................. Norcross Atlanta 287,700 -- --
Illinois................ Carol Stream Chicago -- 139,444 6/30/97
Illinois................ Forest Park Chicago 222,280 106,000 11/30/95
Illinois................ Greenville St. Louis 210,000 -- --
Indiana................. Indianapolis Indianapolis 128,000 -- --
Louisiana............... Harahan New Orleans -- 104,385 3/31/10
Maryland................ Elkridge(1) Baltimore/Wash., D.C. -- 84,000 7/15/04
Maryland................ Harmans Baltimore/Wash., D.C. 323,980 170,000 2/29/96
Massachusetts........... Woburn Boston 372,000 -- --
Michigan................ Livonia Detroit 229,700 33,500 8/31/96
Minnesota............... Brooklyn Park Minneapolis/St. Paul 127,480 -- --
Minnesota............... Eagan Minneapolis/St. Paul 210,468 -- --
Missouri................ Kansas City Kansas City -- 77,244 5/31/00
New Jersey.............. Edison New York 257,578 133,177 6/30/98
New Jersey.............. Pennsauken Philadelphia 231,000 25,316 3/31/96
New York................ Coxsackie Albany 256,600 -- --
North Carolina.......... Charlotte Charlotte 104,000 -- --
North Carolina.......... Charlotte(1) Charlotte -- 81,726 7/31/97
Ohio.................... Cincinnati Cincinnati 108,778 -- --
Ohio.................... Columbus Columbus -- 126,665 8/31/99
Ohio.................... Cincinnati(1) Cincinnati -- 81,400 12/31/95
Ohio.................... Twinsburg Cleveland 206,136 -- --
Ohio.................... Valley View(1) Cleveland 233,508 -- --
Oklahoma................ Tulsa Tulsa 75,100 22,500 12/31/97
Oregon.................. Portland Portland -- 65,850 2/28/97
Tennessee............... Memphis Memphis -- 78,280 3/31/10
Tennessee............... Nashville Nashville -- 66,000 4/30/98
Tennessee............... Nashville Nashville -- 59,250 9/30/95
Texas................... Dallas Dallas 223,230 159,873 9/30/99
Texas................... Houston Houston -- 143,859 6/30/96
Texas................... Lubbock Lubbock -- 58,725 4/27/98
Texas................... San Antonio San Antonio -- 63,098 3/31/10
Utah.................... Salt Lake City Salt Lake City -- 89,324 9/30/99
Washington.............. Tukwila Seattle -- 144,031 3/31/97
Wisconsin............... Milwaukee Milwaukee 67,300 -- --
</TABLE>
- --------
(1) The Company plans to close the indicated eight facilities within 12 months
of the Merger. See "Business -- Consolidation Plan and Benefits of the
Acquisition."
(2) Except as specifically indicated, with respect to facilities subject to
more than one lease, references are to the earliest possible expiration
date.
(3) A portion of the lease covering 30,947 square feet of such property expires
on March 31, 1996.
The Company also owns 54,500 square feet of warehouse space in Jacksonville,
Florida, which it subleases to a third party.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
In connection with the consummation of the Acquisition, seven of the nine
directors of United and all but one of the five directors of the Company
serving prior thereto were replaced by nominees designated by Associated. The
directors of United designated by Associated comprise the persons who were the
directors of Associated prior to the Acquisition. In addition, certain persons
serving as executive officers of the Company or Associated prior to the Merger
will no longer be serving in such capacity.
Set forth below is certain information with respect to those individuals who
are currently serving as members of the Boards of Directors and as executive
officers of United and the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Thomas W. Sturgess 44 Director, Chairman of the Board, President and
Chief Executive Officer of United and the Company
Michael D. Rowsey 42 Director and Executive Vice President of United and
the Company
Steven R. Schwarz 41 Director of the Company; Executive Vice President
of United and the Company
Daniel H. Bushell 43 Director of the Company; Executive Vice President,
Chief Financial Officer and Secretary of United
and the Company
Gary G. Miller 45 Director of United; Assistant Secretary of United
and the Company
James T. Callier, Jr. 60 Director of United
Daniel J. Good 54 Director of United
Frederick B. Hegi, Jr. 51 Director of United
Jeffrey K. Hewson 51 Director of United and the Company
James A. Johnson 41 Director of United; Assistant Secretary of United
and the Company
Joel D. Spungin 56 Director of United
</TABLE>
Set forth below is a description of the backgrounds of the directors and
executive officers of United and the Company. There is no family relationship
between any directors or executive officers of United or the Company.
THOMAS W. STURGESS became President and Chief Executive Officer of United and
the Company on May 31, 1995 and Chairman of the Board of Directors of United
and the Company upon consummation of the Offer. Prior to the Merger, Mr.
Sturgess served as Chairman of the Board and Chief Executive Officer of
Associated since January 1992 and had been Chairman of the Board and Chief
Executive Officer of ASI since December 1994. Mr. Sturgess has served since
1987 as a general partner of various entities affiliated with Wingate Partners
("Wingate entities"), including the indirect general partner of each of Wingate
Partners and Wingate II. Mr. Sturgess currently serves as Chairman of the Board
of Redman Industries, Inc., a manufactured housing producer ("Redman"), as well
as RBPI Holding Corporation, a manufacturer and distributor of aluminum and
vinyl windows ("RBPI"). He is a director of Loomis Armored Inc., a provider of
armored car and related services ("Loomis"), AmeriStat Mobile Medical Services,
Inc., a provider of ambulance services ("AmeriStat"), and Century Products
Company, a manufacturer and distributor of baby seats and other juvenile
products ("Century Products").
MICHAEL D. ROWSEY was elected to the Board of Directors of United and the
Company upon consummation of the Offer and became Executive Vice President of
United and the Company upon consummation of the Merger. Prior to the Merger,
Mr. Rowsey had been a director of Associated since 1992 and President and Chief
Operating Officer of Associated since January 1992. From 1979 to
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<PAGE>
January 1992, Mr. Rowsey served in various capacities with BCOP, most recently
as the North Regional Manager.
STEVEN R. SCHWARZ was elected to the Board of Directors of the Company upon
consummation of the Offer and became Executive Vice President of United and the
Company upon consummation of the Merger. Prior thereto, he was Senior Vice
President, Marketing of United since June 1992 and had previously been Senior
Vice President, General Manager, MicroUnited since 1990 and Vice President,
General Manager, MicroUnited since September 1989. He had held a staff position
in the same capacity since February 1987.
DANIEL H. BUSHELL became Executive Vice President and Secretary of the
Company and United on June 27, 1995, and was elected to the Board of Directors
of the Company upon consummation of the Offer and became Chief Financial
Officer of United and the Company upon consummation of the Merger. Mr. Bushell
served as Vice President of the Company and Assistant Secretary of the Company
and United from consummation of the Merger until June 27, 1995. Prior thereto,
Mr. Bushell had been Chief Administrative and Chief Financial Officer of
Associated and ASI since January 1992. From 1978 to January 1992, Mr. Bushell
served in various capacities with ACE Hardware Corporation, most recently as
Vice President of Finance.
GARY G. MILLER was elected to the Board of Directors of United upon
consummation of the Offer and became Assistant Secretary of United and the
Company on June 27, 1995. Mr. Miller served as Vice President and Secretary of
the Company and United from consummation of the Merger until June 27, 1995.
Prior thereto, Mr. Miller had been a director of Associated since 1992 and Vice
President and Secretary of Associated since January 1992. Mr. Miller also
currently serves as President of Cumberland Capital Corporation ("Cumberland"),
a private investment firm which is located in Fort Worth, Texas and is a
stockholder of United. In addition, from 1977 to December 1993, Mr. Miller
served as Executive Vice President, Chief Financial Officer and a director of
AFG Industries, Inc., and its parent company, Clarity Holdings Corp. He is
Chairman of the Board of CFData Corp., a nationwide provider of check
collection and check verification services and is Vice President, Finance and
Administration of Fore Star Golf, Inc., which was formed in 1993 to own and
operate golf facilities.
JAMES T. CALLIER, JR. was elected to the Board of Directors of United upon
consummation of the Offer. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Callier is an indirect general partner of Wingate
Partners, and has served as President of Callier Consulting, Inc., an
investment management firm, since 1985. Mr. Callier currently serves as
Chairman of the Board of Century Products, as a director of Redman, RBPI and
Loomis and as an advisory director of Wingate II.
DANIEL J. GOOD was elected to the Board of Directors of United upon
consummation of the Offer. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Good is Chairman of Good Capital Co., Inc. ("Good
Capital"), a private investment firm and investment advisory firm founded in
1989 and located in Lake Forest, Illinois, which is a stockholder of United.
Mr. Good is also Vice Chairman of Golden Cat Corporation, a producer and
distributor of cat care products and a producer of industrial absorbent
materials. Mr. Good serves on the Board of Directors of Supercuts, Inc. Prior
to founding Good Capital, Mr. Good was managing director of the Merchant
Banking Group of Shearson Lehman Hutton, Inc.
FREDERICK B. HEGI, JR. was elected to the Board of Directors of United upon
consummation of the Offer. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Hegi is a general partner of various Wingate
entities, including the indirect general partner of each of Wingate Partners
and Wingate II. Since May 1982, Mr. Hegi has served as President of Valley View
Capital Corporation, a private investment firm. Mr. Hegi also currently serves
as Chairman of the Board of Loomis Holding Corporation, the parent corporation
of Loomis, Tahoka First Bancorp, Inc., a bank holding company, and Cedar Creek
Bancshares, Inc., a bank holding company, and as a director of RBPI, Century
Products, Lone Star Technologies, Inc., a diversified company engaged in the
manufacturing of steel pipe and in commercial banking services, Cattle
Resources, Inc., a manufacturer of animal feeds and operator of commercial
cattle feedlots and various funds managed by InterWest Partners.
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<PAGE>
JEFFREY K. HEWSON served as President and Chief Executive Officer of United
and the Company from consummation of the Merger until May 31, 1995. Prior
thereto, he was President and Chief Operating Officer of United and the Company
since April 1991. He had been Executive Vice President of United and the
Company since March 1990. Prior to that, he had been President of ACCO
International's U.S. Division since 1989 and President of its Canadian Division
since 1987. ACCO International is a manufacturer of traditional office products
and a subsidiary of American Brands, Inc., which is a global consumer products
holding company.
JAMES A. JOHNSON was elected to the Board of Directors of United upon
consummation of the Merger. Prior to the Merger, he had been a director of
Associated since 1992. Mr. Johnson is a general partner of various Wingate
entities, including the indirect general partner of each of Wingate Partners
and Wingate II. From 1980 until he joined Wingate Partners in 1990, Mr. Johnson
served as a Principal of Booz-Allen & Hamilton, an international management
consulting firm. Mr. Johnson currently serves as a director of Century Products
and AmeriStat.
JOEL D. SPUNGIN has served as a member of the Board of Directors of United
since 1972 and prior to the consummation of the Offer was a member of the Board
of Directors of the Company, and Chairman of the Board of Directors of United
and the Company and prior to the Merger was Chief Executive Officer of United
and the Company since August 1988. From October 1989 until April 1991, he was
also President of United and the Company. Prior to that, since March 1987, Mr.
Spungin was Vice Chairman of the Board and Chief Executive Officer of United
and the Company. Previously, since August 1981, Mr. Spungin was President and
Chief Operating Officer of United and the Company. He also serves as a director
of AAR Corp.
Approximately 75% of the Shares expected to be outstanding on the date of
this Prospectus are held in a voting trust (the "Voting Trust") pursuant to a
Voting Trust Agreement dated as of January 31, 1992 (the "Voting Trust
Agreement"). The trustees of the Voting Trust are Thomas W. Sturgess, Frederick
B. Hegi, Jr., James A. Johnson, Daniel J. Good and Gary G. Miller. The trustees
of the Voting Trust hold all voting power to vote the Shares held in the Voting
Trust and may act by a majority vote of the trustees. The trustees agree to
vote all Shares in trust to elect a board of directors of United with (i) a
least one representative designated by Good Capital, (ii) at least one
representative designated by ASI Partners, L.P., the general partner of which
is Cumberland, (iii) at least one representative designated by certain key
executives (consisting of Messrs. Rowsey, Eberspacher, Schleppe and L. Miller)
of United and (iv) such number of directors designated by Wingate Partners as
will represent a majority of the total number of directors. The Voting Trust
terminates on January 31, 2002 or upon the consummation of an underwritten
public offering of the Shares which meets certain criteria specified in the
Voting Trust Agreement. The Voting Trust Agreement does not apply to the
election of directors of the Company, although by virtue of the power to elect
the directors of United the trustees of the Voting Trust will indirectly have
the power to elect the directors of the Company. Officers of United and the
Company are elected by their respective Boards of Directors and hold office
until their respective successors are duly elected and qualified.
United's Restated Certificate of Incorporation (as hereinafter defined)
provides that the Board of Directors of United shall be divided into three
classes, each class as nearly equal in number as possible, and each term
consistent of three years. The Directors currently in each class are as
follows: Class I (having terms expiring in 1996) -- Messrs. Good, Johnson and
Hewson; Class II (having terms expiring in 1997) -- Messrs. Sturgess, Hegi and
Rowsey; and Class III (having terms expiring in 1998) -- Messrs. G. Miller,
Callier and Spungin.
Certain directors of United who are not officers or employees of United or
the Company currently receive an annual retainer fee of $18,000, plus a fee of
$1,000 for each board meeting attended and a fee of $600 for each committee
meeting attended. An additional fee of $250 per committee meeting is
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<PAGE>
currently paid to the chairman of each committee. When United's business
requires an overnight stay for a board or committee meeting, an additional $600
is currently paid. Certain of such fees may be deferred under the Directors'
Deferred Compensation Plan. United also has a retirement program for its
outside directors who have served at least one year as a director. Under the
program, directors are entitled to receive, upon their retirement from the
board after the age of 65, 50.0% of their last annual retainer per year of
service for those directors with less than seven years of service and 100.0% of
their last annual retainer per year of service as a director for those with
seven or more years of service. In addition, all directors are reimbursed for
travel expenses incurred in attending meetings. United also maintains a term
life insurance policy in the amount of $100,000 for the benefit of each
director. United is in the process of evaluating the extent to which the fees
and other benefits currently received by directors of United and the Company
will be retained, modified or terminated for directors of United and the
Company after the Merger.
EXECUTIVE COMPENSATION FOR UNITED
Compensation for executive officers of United and the Company is currently
governed by plans and other arrangements established by United for the benefit
of the employees of both United and the Company. United is in the process of
evaluating the extent to which the benefit plans and arrangements and other
matters relating to executive compensation described below that were in effect
for officers and employees of United and the Company prior to the Merger will
be retained, modified or terminated for officers and employees of United and
the Company after the Merger.
Compensation Table. The following table sets forth the compensation paid
during United's last three fiscal years to the Chief Executive Officer and each
of the four most highly compensated officers of United in all capacities in
which they served at the end of United's fiscal year ended August 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------- ----------------------------
AWARDS
OTHER ------------------
ANNUAL RESTRICTED OPTIONS INCENTIVE ALL OTHER
COMPEN- STOCK (NUMBER PLAN COMPEN-
NAME AND FISCAL SALARY SATION AWARDS OF PAYOUTS SATION
PRINCIPAL POSITION YEAR (1) BONUS (2) (4) SHARES) (5) (2)(6)
------------------ ------ -------- -------- -------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel D. Spungin 1994 $431,667 $ -- $ (3) $ -- 45,000 $41,198 $11,416
Chairman and Chief 1993 420,500 201,344 (3) -- -- 37,683 13,243
Executive Officer 1992 401,975 262,006 -- -- 30,000 12,088 --
Jeffrey K. Hewson 1994 309,167 -- (3) -- 38,000 23,169 5,076
President and Chief 1993 286,250 119,074 (3) -- -- 14,283 6,382
Operating Officer 1992 268,750 158,125 -- 85,000 50,000 -- --
Ronald W. Weissman 1994 216,500 19,530 (3) -- -- 12,902 5,199
Executive Vice President 1993 213,750 74,810 (3) -- -- 14,833 7,378
1992 207,500 107,625 -- -- 7,500 4,489 --
Allen B. Kravis 1994 188,469 -- (3) -- 21,000 11,451 4,559
Sr. Vice Pres., Chief 1993 175,250 65,260 (3) -- -- 9,834 6,494
Financial Officer 1992 158,583 81,488 -- 21,250 25,000 2,105 --
Steven R. Schwarz 1994 181,890 15,818 (3) -- 21,000 9,677 822
Sr. Vice President 1993 169,875 57,279 (3) -- -- 8,226 2,861
1992 152,250 66,500 -- 34,375 15,000 918 --
</TABLE>
- --------
(1) Includes compensation amounts earned during the fiscal year but deferred
pursuant to Section 401(k) of the Internal Revenue Code under United's
Profit Sharing PluSavings Plan.
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<PAGE>
(2) Disclosure of "Other Annual Compensation" and "All Other Compensation" is
not required for the fiscal year ended August 31, 1992.
(3) No amounts of "Other Annual Compensation" were paid to any named executive
officer, except for perquisites and other personal benefits which for each
executive officer did not exceed the lesser of $50,000 or 10.0% of such
individual's salary and bonus for the indicated fiscal year.
(4) Restricted stock awards are valued at the market price on date of grant.
Grants are made under the 1981 Stock Incentive Award Plan, and include tax
withholding rights which permit the officer to elect to have shares
withheld to satisfy federal, state and local tax withholding requirements
when the shares become unrestricted, generally three years after the grant
date. Dividends are paid on restricted shares at the same rate paid to all
shareholders. On August 31, 1994, Mr. Schwarz held 2,500 shares of
restricted stock valued at year-end market value for Shares of $9.50 per
share, or a total value of $23,750.
(5) Includes payments from Executive Bonus Plan (as hereinafter defined) of
awards earned in prior years payable in three annual installments as shown
below. Awards are partly (30.0%) in cash and partly (70.0%) in Share Units
(as hereinafter defined) which are converted to and paid out in common
stock. Cash payments include earnings on the cash amounts based on United's
return on equity or the treasury bill rate. Stock payments are valued at
the stock price as of the date of the award of Share Units:
<TABLE>
<CAPTION>
SPUNGIN HEWSON WEISSMAN KRAVIS SCHWARZ
------- ------ -------- ------ -------
<S> <C> <C> <C> <C> <C>
1994:
Cash................................ $15,789 $8,885 $4,975 $4,402 $3,730
Stock............................... 25,409 14,284 7,927 7,049 5,947
1993:
Cash................................ 13,224 4,478 5,173 3,328 2,687
Stock............................... 24,460 9,805 9,659 6,506 5,539
1992:
Cash................................ 5,059 -- 1,878 880 386
Stock............................... 7,029 -- 2,611 1,225 532
</TABLE>
(6) Includes premiums paid during 1994 for Split Dollar Life, Group Life and
Accidental Death insurance policies (Mr. Spungin $11,416, Mr. Hewson
$5,076, Mr. Weissman, $5,199, Mr. Kravis $4,559 and Mr. Schwarz $822).
United made no contributions to its Profit Sharing PluSavings Plan for the
indicated officers during 1994.
Option Grants. Options were granted during United's fiscal year ended August
31, 1994 to all of the executives named in United's Summary Compensation Table
on October 22, 1993 and August 24, 1994, all of which were redeemed upon
consummation of the Merger. The following table contains information concerning
such grants:
72
<PAGE>
OPTION GRANTS DURING LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
OPTIONS TOTAL OPTIONS ANNUAL RATES OF STOCK
GRANTED GRANTED TO PRICE APPRECIATION FOR
(NUMBER OF EMPLOYEES EXERCISE OR OPTION TERM (5)
SHARES) IN FISCAL YEAR BASE PRICE EXPIRATION -----------------------
NAME (1) (4) (PER SHARE) DATE 5% 10%
---- ---------- -------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joel D. Spungin 25,000(2) 6.2% $16.25 10/21/99 $138,164 $313,447
20,000(3) 5.0% 10.00 08/23/98 43,101 92,820
Jeffrey K. Hewson 20,000(2) 5.0% 16.25 10/21/99 110,531 250,757
18,000(3) 4.5% 10.00 08/23/98 38,791 83,538
Ronald W. Weissman -0- -- -- -- -- --
Allen B. Kravis 12,000(2) 3.0% 16.25 10/21/99 66,319 150,454
9,000(3) 2.2% 10.00 08/23/98 19,396 41,769
Steven R. Schwarz 12,000(2) 3.0% 16.25 10/21/99 66,319 150,454
9,000(3) 2.2% 10.00 08/23/98 19,396 41,769
</TABLE>
- --------
(1) Options were granted under the 1981 Stock Incentive Award Plan at market
price on the date of grant.
(2) Options granted October 22, 1993 became exercisable in four equal annual
increments commencing October 21, 1994.
(3) Options granted August 24, 1994 became exercisable in three equal annual
increments commencing August 23, 1995.
(4) Based on 401,050 options granted to employees during the fiscal year.
(5) The amounts under the columns labeled "5%" and "10%" are included pursuant
to certain rules of the Commission, and are not intended to forecast future
appreciation, if any, in the price of the Shares. The actual value of the
options will vary in accordance with the market price of the Shares; any
such variance will affect all stockholders commensurately.
The following table contains information concerning option exercises during
United's fiscal year ended August 31, 1994 by each of the named executive
officers and the fiscal year end values:
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR- OPTIONS AT FISCAL
SHARES END YEAR-END (1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel D. Spungin -- $ -- 88,310 67,800 $6,192 $4,128
Jeffrey K. Hewson -- -- 47,000 71,000 8,310 5,540
Ronald W. Weissman -- -- 71,610 12,500 5,160 3,440
Allen B. Kravis -- -- 44,750 38,000 3,840 2,560
Steven R. Schwarz -- -- 26,450 35,000 3,870 2,580
</TABLE>
- --------
(1) The values given are based on the closing price of the Shares on August 31,
1994 which was $9.50, less the exercise price, before payment of applicable
income taxes.
Bonus Plans. A Management Incentive Plan ("MIP") provides annual incentive
compensation opportunities to officers and other upper management level
participants based on United's performance, region or division performance, and
personal performance. Under the MIP, annual targets are set by the Board of
Directors and bonuses are awarded under a formula based on percentage
attainment of the targets. The incentive awards for the Chief Executive Officer
("CEO"), Chief Operating
73
<PAGE>
Officer ("COO") and Chief Financial Officer ("CFO") are based solely on the
earnings performance of United. If United fails to produce minimum targeted
results, no incentives are paid to the CEO, COO or CFO. For fiscal year 1994,
United failed to meet the targets set by the Compensation Committee; therefore,
no bonuses were earned by the executive officers based on United's performance
although certain officers (other than the CEO, COO and CFO) did earn bonuses
based on personal performance targets.
United's Executive Bonus Plan ("EBP") applied to the Company's officers prior
to the Merger. While the EBP provided annual incentive opportunity, it also
focuses on long-term results. Annual targets were established by the
Compensation Committee measured by return on equity ("ROE") or the treasury
bill rate. Bonus awards were made annually, if earned, based on the percentage
achievement of targets set, with 50% of the awards deferred and paid over a
three-year period. Of the deferred amounts, approximately 30% is in cash to be
paid in three annual installments. The deferred cash portion was to increase
based on the subsequent ROE performance. The other 70% of the deferred award
was converted to "Share Units" having a value equal to the market price of one
share of Common Stock. Thus the value of the Share Units rises and falls in
response to market fluctuations. The Share Units are converted into Shares upon
distribution in three annual increments. For fiscal year 1994, no bonuses were
earned under the EBP because United failed to meet the ROE target set by the
Compensation Committee.
Based on amendments to the MIP and the EBP completed shortly before the
execution of the Merger Agreement, amounts accrued under the EBP in respect of
Messrs. Spungin, Hewson, Weissman, Kravis and Schwarz (collectively, the
"Protected Employees") were paid out based on United's performance through the
date of the consummation of the Offer for the portion of the plan year through
the last day of the month in which the Merger occurred and amounts accrued
through March 30, 1995 under the MIP in respect of the Protected Employees have
not been paid as of June 2, 1995 (such amounts are guaranteed under the Bonus
Trust Agreement (as hereinafter defined)). In addition, amounts shall be paid
out for the balance of the plan year under the MIP at 100% of the financial
targets under that plan. The Bonus Trust Agreement (as hereinafter defined)
secures the amount reasonably estimated by United to be owed to the Protected
Employees of United with respect to the EBP and MIP with respect to the current
fiscal year. The amount of the bonus under the MIP for the post-Merger
remainder of the current fiscal year was established at 100% of the bonus
opportunity for each of the Protected Employees. The amount of the bonus to
which each Protected Employee was entitled for the pre-Merger portion of the
current fiscal year was established, in accordance with the terms of the MIP,
at 150% of the bonus opportunity under such plan. These bonus payments are
expected to be made by the trustee under the Bonus Trust Agreement on or before
October 1995. Following the payment of all bonuses, the trust created by the
Bonus Trust Agreement shall terminate.
United adopted a severance plan for the officers of the Company shortly
before the execution of the Merger Agreement which provides a severance payment
of one year's base salary if an officer is terminated without cause or leaves
after remaining for the full transition period requested by United.
Prior to the consummation of the Offer, United, as settlor, entered into an
irrevocable trust agreement (the "Benefits Trust Agreement") with American
National Bank and Trust Company of Chicago, as trustee (the "Benefits
Trustee"). The Benefits Trust Agreement secures the payment of all amounts owed
to certain employees under their amended employment contracts, certain
obligations of United to provide post-employment medical benefits, certain
severance benefits to former employees, and related costs. Under the terms of
the Benefits Trust Agreement and the Merger Agreement, United has caused an
irrevocable letter of credit in the initial amount of $24.0 million to be
furnished to the Benefits Trustee by Chase Bank. Each compensation or benefit
payment by the Benefits Trustee reduces the amount of the letter of credit. To
the extent that United makes payments of compensation and benefits covered by
the Benefits Trust Agreement or otherwise satisfies its obligation to these
current and former employees (or, in some cases, their eligible dependents or
surviving beneficiaries) and obtains a waiver from such persons, the letter of
credit will be reduced as provided in such waiver.
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<PAGE>
Prior to the consummation of the Offer, United, as settlor, entered into an
irrevocable trust agreement (the "Bonus Trust Agreement") with the Benefits
Trustee. The Bonus Trust Agreement secures the amount reasonably estimated by
United to be owed to certain employees for amounts accrued and to be accrued
under the MIP. Under the terms of the Bonus Trust Agreement, United has caused
an irrevocable letter of credit in the amount of approximately $3.4 million
(the "Bonus LOC") to be furnished by Chase Bank to the Benefits Trustee. The
Benefits Trustee will draw on the Bonus LOC (without the necessity of a default
by United) on October 16, 1995 to make distributions to trust beneficiaries for
amounts accrued through the date of the Merger under United's MIP, unless such
amounts have been previously paid. After this one-time distribution, the trust
will be closed.
Spungin Employment Contract. Prior to the execution and delivery of the
Merger Agreement, Joel D. Spungin had an employment and consulting agreement
under which Mr. Spungin was to be employed at a salary of not less than
$425,000, plus participation in all bonus, stock options and other benefit
plans generally available to executive officers of United.
United has amended the employment agreement with Mr. Spungin, effective as of
the consummation of the Offer. On March 20, 1995, Mr. Spungin resigned his
offices with United and was relieved of all duties thereto, except that he
remains an employee of United, and shall, subject to nomination and election,
serve as a member of the Board of Directors of United. His term of employment
will continue until August 31, 1995, unless terminated by either Mr. Spungin or
United. Mr. Spungin will continue to be paid his current employee benefits and
salary until August 31, 1995. On September 1, 1995, Mr. Spungin shall become an
executive consultant to United for a period of 11 years in accordance with the
terms of his amended employment agreement. Mr. Spungin will act as a consultant
to Thomas W. Sturgess, chairman of the board of directors of United and the
Company, through August 31, 1996, and will continue to serve on the board of
directors of United, for which he will receive no additional fees. United shall
pay the sum of $2,276,209 to Mr. Spungin on September 1, 1995, and for the
period of September 1, 1995 through August 31, 1996, United shall pay Mr.
Spungin $530,000 in equal or nearly equal monthly installments. Beginning on
September 1, 1996 and continuing until the end of the consulting term, United
shall make a monthly payment of approximately $34,269.63 to Mr. Spungin
amounting to a total of $6,918,565.
Mr. Spungin and his spouse will receive coverage under United's present
medical plan for their lives, subject to a $1,000,000 lifetime maximum payment
limit in the aggregate for each of them. United is not permitted to terminate
such coverage without also terminating United's medical plan. If Mr. Spungin or
his spouse lose their medical coverage on account of a termination of United's
medical plan or United's failure to provide such medical coverage, (i) United
will pay premiums not to exceed, in the aggregate, $242,701 (such amount shall
not be applied against the $1,000,000 per person lifetime maximum) for
individual insurance coverage until Mr. Spungin and his spouse become eligible
for Medicare, (ii) United will pay premiums for Medicare supplemental policies
for the remainder of their lives (such amount shall not be applied against the
$1,000,000 per person lifetime maximum) and (iii) at any time Mr. Spungin and
his spouse are not reimbursed for medical expenses under such individual
insurance policies, United will pay or reimburse such medical expenses incurred
by Mr. Spungin and his spouse up to a $1,000,000 lifetime maximum payment for
each of them. If United fails to obtain an individual insurance policy within
30 days after termination of United's medical plan, it shall then pay Mr.
Spungin the sum of $242,701 in addition to expenses which may be paid under his
$1,000,000 million lifetime maximum benefit referred to in clause (iii) above.
United's obligation to provide such medical payments may be satisfied by
payments made under the Benefits Trust Agreement.
A failure by Mr. Spungin to render services to United or his disability shall
not cause a forfeiture of his entitlement to any amount or benefit under his
employment agreement. Upon Mr. Spungin's death, his spouse shall receive the
remainder of the salary and consulting payments due.
If United breaches any of its obligations to Mr. Spungin, he may resign and
remain entitled to the amounts under his employment agreement. Further, if
United fails to make any payment to which Mr.
75
<PAGE>
Spungin is entitled when due, all the unpaid consulting payments and fringe
benefits shall become payable immediately. Substantially all of United's
obligations are secured by the Benefits Trust Agreement.
Hewson Employment Contract. Mr. Hewson resigned as President and Chief
Executive Officer of United and the Company on May 31, 1995. Effective as of
the consummation of the Offer, United amended the employment agreement with Mr.
Hewson to, among other matters, reduce his term of employment to not more than
one year, eliminate his consulting term and provide for additional bonuses. In
recognition of Mr. Hewson's efforts prior to the consummation of the Offer and
his expected responsibilities following the consummation of the Offer, United
agreed to make a single payment of $875,000 to Mr. Hewson on September 26, 1995
(180 days after the consummation of the Offer). On the expiration of Mr.
Hewson's term of employment, he became entitled to receive an aggregate amount
equal to $1,575,000, which, except in limited circumstances, will commence with
an initial payment of $650,370 and the remainder payable monthly in equal
installments of $26,418.
Mr. Hewson and his spouse (and their eligible dependent children) became
entitled, upon the termination of Mr. Hewson's employment, to post-employment
medical coverage under United's medical plan until he reaches age 65 and his
spouse will also continue to be covered until she reaches age 65, subject to a
$1,000,000 maximum benefit payment limit, in the aggregate. United is not
permitted to terminate such coverage without also terminating United's medical
plan. If such plan is terminated, Mr. Hewson will be entitled to receive until
age 65 (but for not more than 18 months) (i) monthly payments equal to the
conversion premium under such plan and (ii) reimbursements for medical expenses
not covered by any insurance policy up to an aggregate of $300,000 for Mr.
Hewson and his eligible dependents, subject to an aggregate limit of $700,000
for all officers referred to as "contract officers" under the medical plan.
Other Executive Employment Contracts. Prior to the execution and delivery of
the Merger Agreement, employment and consulting agreements were also entered
into with Ronald W. Weissman, Allen B. Kravis, Steven R. Schwarz, Robert H.
Cornell, Otis H. Halleen, Jerold A. Hecktman and Ted S. Rzeszuto. The
agreements generally provide for annual compensation of not less than the
officer's salary at the time the employment agreement was made, plus
participation in all bonus, stock option and other benefit plans generally
available to executive officers of United. The existing employment agreements
with Messrs. Schwarz, Cornell, Halleen, Hecktman and Rzeszuto were amended or
restated, effective as of the consummation of the Offer to, among other
matters, reduce the term for which United is obligated to employ these officers
and to encourage these officers not to voluntarily resign during the
transitional period following the consummation of the Offer. Existing letters
describing Ergin Uskup's terms of employment have been substituted by a new
employment agreement which is intended to encourage Mr. Uskup not to
voluntarily resign for the one-year period following the consummation of the
Offer.
Each amendment provides that the term of employment shall be limited to one
year following the consummation of the Offer unless, within 30 days after the
consummation of the Offer, United notifies the officer of an earlier date of
termination. Further, each amendment eliminates the four-year consulting term
previously included in the employment agreements. Upon completion of the term
of employment, each officer (other than Mr. Uskup) shall be entitled to a bonus
equal to two times his highest annual compensation (including salary,
retirement benefit accruals and incentive compensation) paid or accrued during
the preceding five years, except the officer shall not be entitled to such
bonus if he voluntarily resigns without good reason (as defined in the
employment agreement, as amended) or is terminated by United for breach of a
fiduciary duty to United. Upon completion of his term of employment, Mr. Uskup
shall be entitled to receive a bonus equal to his annual salary. The stay
bonuses
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<PAGE>
are secured as an obligation of the trust under the Benefits Trust Agreement.
Jeffrey K. Hewson, Steven R. Schwarz, Robert H. Cornell, Otis H. Halleen, Ted
S. Rzeszuto, Jerold A. Hecktman and Ergin Uskup are entitled to receive stay
bonuses of $1,575,000, $678,227, $602,985, $589,210, $511,297, $492,050 and
$175,000, respectively. The aggregate amount of stay bonuses under all
amendments to the employment agreements is $5,520,066.
As to certain current and former officers, amendments preclude United from
eliminating their eligibility for retiree medical coverage under United's
medical plan so long as United maintains such plan. In the event such medical
plan is terminated, United shall provide each officer with a monthly amount
equivalent to the current monthly premium under United's group medical plan to
convert to an individual medical policy for a period not to exceed 18 months.
This transition medical coverage also applies to Melvin L. Hecktman, James A.
Pribel and certain former employees currently entitled to retiree medical
coverage. In addition, for not more than 18 months, the covered officers and
their eligible dependents would be entitled to reimbursement of medical
expenses which are not covered by such individual medical policy or other
medical insurance, up to an aggregate of $300,000 for each such officer and his
dependents, subject to an aggregate limit of $700,000 for all of the covered
officers and their dependents.
The amendments also update the employment agreements to reflect the salary
and employee benefits to which the officers are currently entitled. The
amendments also set forth a procedure for an officer to exercise his right to
resign for good reason (as defined in the employment agreement, as amended) or
for United to terminate his employment for a breach of his fiduciary duty.
Profit Sharing PluSavings Plan. United has a qualified Profit Sharing
PluSavings Plan (the "Profit Sharing Plan") in which all salaried employees and
certain hourly paid employees of United and its subsidiaries are eligible to
participate following completion of six consecutive months of employment. The
Profit Sharing Plan provides for annual contributions by United in an amount
determined by the Board of Directors of United. The Profit Sharing Plan
consists of a "Basic Contribution," "Excess Contribution" and "Matching
Contributions." The Basic Contribution is allocated based on the ratio of each
participant's earnings to the earnings of all participants for the year.
Allocations under the Excess Contribution are based upon participants' earnings
in excess of 85% of the Social Security Taxable Wage Base. The portion vested
under the Basic Contribution described above will be immediately fully vested
in the participant's account. The portion described under the Excess
Contribution vests 10% each year for the first four years and 20% per year
thereafter, until fully vested after seven years. Upon retirement, death or
disability, a participant or his beneficiary is entitled to the entire amount
of his account. A participant whose employment terminates for any reason other
than retirement, death or disability is entitled to only the vested portion of
his account. The plan also permits employees to have contributions made as
401(k) salary deferrals on their behalf and to make after-tax voluntary
contributions.
United did not make any contribution to the Profit Sharing Plan for the year
ended August 31, 1994 (except for the Matching Contributions described below).
The Profit Sharing Plan provides that United may match employee contributions
made as 401(k) salary deferrals. United is contributing $.25 for each $1.00 of
pre-tax employee contributions, on contributions up to 4% of eligible wages.
For the fiscal year ended August 31, 1994, United paid $494,347 in matching
contributions.
Pension Plans. United maintains a noncontributory pension plan covering
officers of United and the Company (the "Pension Plan"). Employees are eligible
to participate following the conclusion of twelve consecutive months of
employment and the attainment of age 21. The Pension Plan provides for annual
retirement benefits at age 65 equal to one percent of an employee's career-
average annual
77
<PAGE>
compensation (as reported to the Internal Revenue Service) multiplied by the
number of years of credited service up to a maximum of 40 years; however, an
employee's annual compensation for each year of service prior to September
1989, is deemed to be the compensation earned by such employee during the
twelve month period ending on August 31, 1989. An employee's pension rights
fully vest after five years of service. These benefits are in addition to
normal Social Security retirement benefits. Alternative benefit options of
early retirement, joint and survivor annuity, and disability are also
available. All such options are of actuarially equivalent value to the basic
pension. The normal retirement age under this plan is 65.
The following table sets forth the estimated annual benefits upon retirement
at age 65 under the Pension Plan to the five executive officers individually
named in United's Summary Compensation Table (calculated on the basis of
estimated years of service at retirement age and levels of compensation paid in
calendar year 1994, assuming 5.5% compounded annual increases):
<TABLE>
<CAPTION>
ESTIMATED
ANNUAL
PENSION AT
NAME OF PARTICIPANT RETIREMENT
------------------- ----------
<S> <C>
Joel D. Spungin................................................ $150,493
Jeffrey K. Hewson.............................................. 37,607
Ronald W. Weissman............................................. 65,071
Allen B. Kravis................................................ 43,813
Steven R. Schwarz.............................................. 85,042
</TABLE>
As of August 31, 1994, the credited years of service under the Pension Plan
for the five individuals named were as follows: Mr. Spungin, 36 years; Mr.
Hewson, 4 years; Mr. Weissman, 26 years; Mr. Kravis, 19 years and Mr. Schwarz,
17 years.
United's contributions to the Pension Plan are not allocated to the accounts
of the individual participants.
In connection with the Merger, the Pension Plan was amended to provide that
the actuarial factors employed by the plan may not be adjusted in a manner that
would reduce lump sum benefits payable under the Pension Plan.
United also maintains a number of retirement benefit plans for its employees
who are covered under collective bargaining agreements.
Supplemental Benefits Plan. The Board of Directors of United has adopted a
nonqualified unfunded program ("Supplemental Benefits Plan") to provide for the
payment to individuals of benefits which would otherwise be payable under
United's Pension Plan and Profit Sharing Plan but which may not be paid under
such plans due to limits imposed by Sections 401(a)(17) and 415 of the Internal
Revenue Code. In addition, the plan also provides that a participant in the
plan who has reached 40 years of service and age 65, but continues as an
employee (for example, under a consulting agreement) would be able to elect to
receive, upon retirement, the lump sum amount to which he or she would have
been entitled had retirement begun at age 65. As of September 1, 1994, Messrs.
Spungin, Hewson, Weissman, Kravis and Schwarz would be entitled to receive
potential annual pension payments, pursuant to the Supplemental Benefits Plan,
of approximately $93,089, $109,434, $4,303, $17,625 and $79,031 respectively,
commencing at normal retirement age.
Amendments to Medical Plan. United amended its medical plan shortly before
the execution of the Merger Agreement. United's medical plan was amended to
generally provide that: (i) the plan cannot be changed or terminated with
respect to certain designated officers or early retirees; and (ii) certain
designated officers (upon termination of employment) and early retirees and
their spouses can continue
78
<PAGE>
to participate in the medical plan until age 65 under the same general terms
and conditions applicable to active employees, subject to an aggregate maximum
benefit limit of $250,000 for each early retiree and $1,000,000 for certain
designated officers. The medical plan was also amended to provide that, in the
event of its termination, United will provide certain funds to designated
individuals for a specified period of time for the purpose of (i) obtaining
health insurance; and (ii) reimbursing such individuals for medical expenses in
the event of their uninsurability or catastrophic illness.
Compensation Committee Interlock and Insider Participation. Compensation
decisions for executive officers of United and the Company for the fiscal year
ending August 31, 1994 were made by the compensation committee of the Board of
Directors of United consisting of E. David Coolidge III (Chairman), Jack J.
Crocker, David R. Smith, Jack Twyman and, upon the retirement of Jack J.
Crocker in January 1994, Douglas K. Chapman. None of such persons was during
such fiscal year, or was formerly, an officer or employee of United or the
Company. Mr. Coolidge is the Managing Partner of William Blair & Company, which
from time to time has rendered investment banking and related services to
United, for which United has paid customary fees. After the Merger, the Company
does not expect to have a compensation committee or other committee of the
Board of Directors of United or the Company performing similar functions.
Decisions concerning compensation of executive officers are expected to be made
by the Board of Directors of the Company which will include Thomas W. Sturgess,
Daniel H. Bushell and Michael D. Rowsey, each of whom is an executive officer
of United and the Company.
EXECUTIVE COMPENSATION FOR ASSOCIATED
Cash Compensation. The following table sets forth all cash compensation paid
by ASI, as well as certain other compensation paid as accrued, during
Associated's last three fiscal years to the Chief Executive Officer and each of
the four most highly compensated officers of Associated in all capacities in
which they served at the end of Associated's fiscal year ended December 31,
1994.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION(1)
- ------------------ ------ -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Thomas W. Sturgess(2)... 1994 $ 0 $ 0 $ 0 $ 0
Chairman of the Board
and 1993 0 0 0 0
Chief Executive Officer 1992 0 0 0 0
Edward R. Simon, Jr.(3). 1994 171,358 0 --(4) 1,750
Former Chairman of the
Board 1993 291,684 0 100,744(5) 4,290
and Chief Executive
Officer of ASI 1992 0 0 0 0
Michael D. Rowsey....... 1994 211,752 85,000 --(4) 3,220
President and Chief 1993 209,748 0 --(4) 4,447
Operating Officer 1992 186,758 15,000 51,310(5) 2,537
Daniel J. Schleppe...... 1994 184,848 36,969 --(4) 2,812
Vice President 1993 183,318 0 0 3,883
1992 163,834 7,500 0 2,221
Daniel H. Bushell....... 1994 181,728 80,000 --(4) 2,764
Chief Administrative
Officer and 1993 179,730 0 0 3,803
Chief Financial Officer 1992 155,848 15,000 --(4) 2,156
Robert W. Eberspacher... 1994 169,074 42,585 21,997(6) 2,572
Vice President 1993 163,668 0 0 3,460
1992 145,608 9,000 55,038(5) 1,967
</TABLE>
- --------
(1) Reflects (a) term life insurance premiums paid by Associated on behalf of
such individuals and (b) amounts contributed on behalf of such individuals
to the Associated Profit Sharing and Savings Plan.
(2) Mr. Sturgess was elected Chairman of the Board and Chief Executive Officer
of Associated effective January 1992. Although Mr. Sturgess did not receive
a salary for his services to Associated, he serves as a general partner of
various Wingate entities including the indirect general partner of Wingate
Partners. Wingate Partners earned annual management fees from Associated of
$350,000, $210,000 and $320,833 with respect to fiscal years 1994, 1993 and
1992, respectively, for providing management services to Associated
pursuant to an Investment Banking Fee and Management Agreement described
below under "Certain Transactions -- Management Agreements." None of the
compensation received by Mr. Sturgess from Wingate Partners is specifically
allocated based upon services provided by him to Associated.
(3) Mr. Simon resigned as Chairman of the Board and Chief Executive Officer of
ASI effective December 18, 1994.
(4) Amounts do not exceed the lesser of $50,000 or 10.0% of the individual's
salary and bonus for the indicated fiscal year.
(5) Amounts represent relocation expenses paid by Associated on behalf of such
executives.
(6) Includes $1,997 and $20,000 paid by Associated as reimbursement for spousal
travel expenses and club membership dues, respectively, on behalf of Mr.
Eberspacher.
Employment Agreements. Prior to the consummation of the Merger, Associated
entered into employment agreements with the following former executive officers
of Associated pursuant to which such executives have agreed to serve in the
capacities and for the salaries listed below. Such employment agreements are
now obligations of United.
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<PAGE>
<TABLE>
<CAPTION>
EMPLOYEE POSITION SALARY
-------- -------- --------
<C> <S> <C>
Michael D. Rowsey....... President and Chief Operating Officer of
Associated and ASI $200,000
Daniel J. Schleppe...... Executive Vice President of Associated and
ASI 175,000
Daniel H. Bushell....... Chief Administrative and Chief Financial
Officer of Associated and ASI 170,000
Robert W. Eberspacher... Vice President, Northern Operations of ASI 155,000
Duane J. Ratay.......... Vice President, Corporate Operations of
ASI 125,112
Lawrence E. Miller...... Vice President of Marketing of ASI 125,000
</TABLE>
Such salaries are subject to increase at the discretion of the Board of
Directors of United. In addition, the agreements provide for payment of an
annual bonus to such executives, based on the performance of United and such
executive's performance, in such amount, if any, as determined in good faith by
the Board of Directors of United. The agreements were initially scheduled to
terminate on January 31, 1995, but by their terms have been extended on a year
to year basis until terminated in writing by either party at least sixty (60)
days prior to the end of such term. If, prior to expiration, such employee's
employment is terminated by United other than for cause, such executive will be
entitled to a continuation of base salary and benefits for one year after
termination.
Stock Option Plan. Associated adopted the Associated Holdings, Inc. 1992
Management Stock Option Plan (the "Management Stock Option Plan") pursuant to
which incentive and non-qualified stock options could be issued to certain of
its officers, key employees and directors. A total of 86,735 shares of
Associated Common Stock was reserved for issuance under the Management Stock
Option Plan. In connection with the Merger, United assumed all of the
obligations of Associated under the Management Stock Option Plan, with an
aggregate of 202,962 Shares being authorized for issuance under the plan.
The Management Stock Option Plan, as amended, is administered by the Board of
Directors of United, although the plan provides that the Board of Directors of
United may designate an option committee to administer the plan. Options
outstanding under the Management Stock Option Plan as of the Merger Date became
exercisable for a number of Shares equal to the number of such Shares that
would have been received in respect of such option if it had been exercised
immediately prior to the Effective Time. See "The Acquisition."
Under the Management Stock Option Plan, certain executive officers, key
employees and directors are eligible to receive incentive and non-qualified
options to purchase shares of Associated Common Stock. Subject to restrictions
contained in the Management Stock Option Plan, stock options are exercisable at
such time and on such terms as the Board of Directors of Associated determined.
The exercise price of any option granted pursuant to the Management Stock
Option Plan is not permitted to be less than the fair market value per Share on
the date of grant, as determined by the board of directors of United. Subject
to certain additional limitations, no option by its terms was permitted to be
exercisable after the expiration of ten years from the date of grant, or such
other period (in the case of non-qualified options) or such shorter period (in
the case of incentive options) as the Board of Directors of United in its sole
discretion may determine. Stock options are not transferable, except by legal
will and by the laws of descent and distribution.
An optionee under the Management Stock Option Plan must pay the full option
price upon exercise of an option (i) in cash, (ii) with the consent of the
Board of Directors of United, by delivering Shares already owned by such
optionee (including Shares to be received upon exercise of the option) and
having a fair market value at least equal to the exercise price or (iii) in any
combination of the foregoing. United may require the optionee to satisfy
federal tax withholding obligations with respect to the exercise of options by
(i) additional withholding from the employee's salary, (ii) requiring the
optionee to pay in cash or (iii) reducing the number of Shares to be issued
(except in the case of incentive options).
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<PAGE>
As of the date of this Prospectus, options to purchase an aggregate of
105,047 Shares subject to the terms and conditions of the Management Stock
Option Plan are outstanding. In addition, in accordance with the terms of
Executive Stock Purchase Agreements ("Executive Purchase Agreements") pursuant
to which Messrs. Rowsey, Schleppe, Eberspacher and L. Miller purchased shares
of Associated Common Stock and Associated Class A Preferred Stock and which
United assumed in the Merger, United is obligated to issue options exercisable
for an aggregate of 72,248 Shares to such executives by January 31, 1996 so
long as such executives continue to be employed by the Company at the time of
issuance. Accordingly, United has reserved an additional 72,248 Shares for
issuance upon exercise of options to be granted in accordance with the
Executive Purchase Agreements. The outstanding options have an exercise price
of $2.90 per Share and vest in four equal annual installments beginning on the
first anniversary of the date of grant. Of the options granted under the
Management Stock Option Plan, options representing an aggregate of 77,306
Shares have been granted to the named executive officers of Associated, as
follows:
<TABLE>
<CAPTION>
EMPLOYEE
STOCK
OPTIONS
(NUMBER
OF
NAME SHARES)
---- --------
<S> <C>
Michael D. Rowsey.............................................. 22,254
Daniel J. Schleppe............................................. 18,928
Daniel H. Bushell.............................................. 18,928(1)
Robert W. Eberspacher.......................................... 17,196
</TABLE>
- --------
(1) Does not include the additional option approved by the Board of Directors
of Associated described below.
The above options were granted effective January 31, 1992. The number of
Shares subject to such options are subject to reduction to the extent Wingate
Partners and its affiliates do not achieve certain internal rates of return on
their investment in United and, unless certain internal rates of return to
Wingate Partners and its affiliates are met, such options automatically
terminate (and any Shares previously acquired on exercise of such options are
deemed canceled). Such options terminate in any event on January 31, 1999.
Prior to the consummation of the Offer, the Board of Directors of Associated
approved (i) the grant of an additional option exercisable for an aggregate of
18,928 Shares at an exercise price of $2.90 per Share to Mr. Bushell and (ii)
the establishment of a bonus pool consisting of an aggregate of up to $150,000
which was awarded to Messrs. Rowsey and Bushell in connection with the
consummation of the Offer.
Compensation Committee Interlocks and Insider Participation. During
Associated's fiscal year ended December 31, 1994, Associated had no
Compensation Committee or other committee of the Board of Directors performing
similar functions. Decisions concerning compensation of executive officers were
made during such fiscal year by the Board of Directors of Associated, which
included Thomas W. Sturgess and Michael D. Rowsey, each of whom was an
executive officer of Associated.
CERTAIN TRANSACTIONS
CERTAIN AGREEMENTS REGARDING THE SHARES
In connection with the Boise Transaction in 1991, Messrs. Rowsey, Schleppe,
Eberspacher and L. Miller purchased shares of Associated Common Stock pursuant
to the Executive Purchase Agreements, which agreements, as now in effect after
the Merger, (i) require, under certain circumstances, that United issue options
exercisable for an aggregate of 72,248 Shares by January 31, 1996 to such
executives (see "Management -- Executive Compensation for Associated -- 1992
Stock
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<PAGE>
Option Plan"), (ii) allow each executive to cause United to repurchase (subject
to cash availability and lending restrictions) such executive's Shares in the
event of such executive's death, retirement or disability at the fair market
value thereof at the time of repurchase and (iii) enable United to repurchase
an executive's Shares upon such executive's death, retirement, disability or
termination of employment at the net book value thereof at the date of such
termination.
Associated, Wingate Partners, Cumberland, ASI Partners, L.P., Good Capital,
Boise Cascade Corporation ("Boise Cascade") and certain other holders of
Associated Common Stock (including Messrs. Rowsey, Schleppe, Eberspacher and L.
Miller) entered into the Associated Holdings, Inc. Stockholders Agreement,
dated as of January 31, 1992 (the "Stockholders Agreement"), which was
terminated as of the date of the Merger. The Stockholders Agreement provided
for, among other things, certain restrictions on transfer of Shares held by the
parties to the agreement and preemptive rights with respect to certain
issuances by United of Shares. Pursuant to the Stockholders Agreement, parties
thereto purchased Associated Common Stock offered in connection with the Offer.
See "Financing the Acquisition -- Equity Investment."
Also in connection with the Boise Transaction, Associated, on January 31,
1992, entered into a registration rights agreement (the "Stockholders
Registration Rights Agreement") with Wingate Partners, Cumberland, ASI
Partners, L.P., Good Capital, Boise and certain other holders of Associated
Common Stock (including Messrs. Rowsey, Schleppe, Eberspacher and L. Miller)
pursuant to which it granted to such stockholders certain rights with respect
to registration under the Securities Act of shares of Associated Common Stock
held by them. United assumed the obligation of Associated under the Stockholder
Registration Rights Agreement by operation of law in connection with the Merger
and such agreement has been amended accordingly. Under the amended agreement, a
holder of 20.0% of the Shares subject to the agreement can, in certain
circumstances, require United to effect up to three registrations of all or
part of such holder's Shares. United is not required to honor any request to
register Shares if the request is received either prior to March 30, 1996 or
less than 300 days following the effective date of any previous registration
statement filed in connection with any such request. Upon receipt of a written
request to register a holder's Shares, United must send notice to the other
holders subject to the agreement and permit them to also request to have their
respective Shares registered under the Securities Act. Registrations effected
at the request of the holders will be at the expense of United (excluding
underwriting discounts and commissions).
Prior to the Merger, substantially all shares of Associated Common Stock were
held in the Voting Trust pursuant to the Voting Trust Agreement. As of the
Effective Time, the Voting Trust Agreement was amended to govern Shares held by
the parties thereto in substantially the same manner as such agreement
previously governed shares of Associated Common Stock. The trustees of the
Voting Trust are Thomas W. Sturgess, Frederick B. Hegi, Jr., James A. Johnson,
Daniel J. Good and Gary G. Miller. The trustees of the Voting Trust hold all
voting power to vote the Shares held in the Voting Trust and may act by a
majority vote of the trustees. The trustees agree to vote all of the Shares
held in trust to elect a board of directors of United with (i) a least one
representative designated by Good Capital, (ii) at least one representative
designated by ASI Partners, L.P., the sole general partner of which is
Cumberland (iii) at least one representative designated by certain former key
executives (consisting of Messrs. Rowsey, Eberspacher, Schleppe and L. Miller)
of Associated and (iv) such number of directors that will represent a majority
of the total number of directors designated by Wingate Partners. Except with
respect to Boise Cascade, the Voting Trust terminates on January 31, 2005 or
upon the consummation of an underwritten public offering of the Shares which
meets certain criteria specified in the Voting Trust Agreement. Boise Cascade's
rights and obligations under the Voting Trust Agreement will terminate on March
30, 1997. The Voting Trust Agreement does not apply to the election of
directors of the Company. Officers of United and the Company are elected by
their respective boards of directors and hold office until their respective
successors are duly elected and qualified.
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<PAGE>
BOISE WARRANTS
In connection with the Boise Transaction, Associated entered into a warrant
agreement with Boise Cascade pursuant to which it issued to Boise Cascade
warrants (the "Boise Warrants") entitling the holder thereof to acquire an
aggregate of 23,129 shares of Associated Common Stock for an exercise price of
$1.00 per share. Associated amended the Boise Warrants prior to the Merger Date
to apply to the Shares in the same manner as they formerly applied to
Associated Common Stock. Accordingly, the holder thereof is presently entitled
to acquire an aggregate of 77,104 Shares for an exercise price of $0.29 per
Share. The following is a summary of the material terms of the Boise Warrants:
The Boise Warrants contain customary antidilution provisions and are
exercisable through January 31, 2002. In addition, United is entitled to
repurchase the Boise Warrants at any time after the repurchase or redemption of
all outstanding shares of Series B Preferred Stock at an aggregate purchase
price which would provide Boise Cascade with a yield from issue of at least 15%
on its investment in the Series B Preferred Stock (including the related
preferred stock of Associated prior to the Merger), giving effect to dividends
received by Boise Cascade.
The Boise Warrants provide the holders with certain "tag along rights" which
entitle such holders to participate, on a pro rata basis, in certain sales of
Shares by Wingate Partners, Cumberland, Good Capital or any other controlling
stockholder of United. Pursuant to the Boise Warrants, Wingate Partners has
been granted certain "go along rights" which are triggered (subject to certain
exceptions) in the event (i) Wingate Partners sells 100% of its equity interest
in United in a private offering, (ii) all or substantially all of the assets of
United are sold and the proceeds of such sale are distributed to the
stockholders of United or (iii) United participates in a merger or
consolidation. In the event Wingate Partners exercises its "go along rights" in
connection with the occurrence of one of the events described above, each
holder of Boise Warrants would become obligated to sell all Boise Warrants and
Shares held by such holders in the applicable transaction and to vote all
Shares in favor of such transaction.
The holders of the Boise Warrants are entitled, pursuant to the terms of the
Boise Warrants, to preemptive rights with respect to certain issuances of
Shares by United. The Boise Warrants also contain certain covenants and
agreements with respect to, among other things, (i) transactions with
affiliates (other than certain specified transactions with Wingate Partners,
Cumberland and Good Capital), (ii) certain mergers, reorganizations,
recapitalization and other events with respect to the Shares, (iii) the
repurchase or redemption of Shares, (iv) changes of the fiscal year of United,
(v) the taking of actions that would cause United or any subsidiary of United
to own less than 80% of any subsidiary of United, (vi) delivery of financial
statements of United, (vii) board observation rights for meetings of the Boards
of Directors of United and its subsidiaries and (viii) indemnification.
Associated obtained the consent of Boise Cascade to the consummation of the
Offer, the Merger and the transactions contemplated thereby. In connection with
the issuance of the Boise Warrants, Associated entered into the Stockholder
Registration Rights Agreement with the holders of the Boise Warrants among
others.
LENDER WARRANTS
In connection with the Boise Transaction, Associated entered into a warrant
agreement with CMIHI (the "Lender Warrant Agreement") pursuant to which it
issued to CMIHI and certain of Associated's senior lenders warrants (the
"Lender Warrants") entitling the holders thereof to acquire an aggregate of
150,340 shares of Associated Common Stock (or, at such holder's option,
nonvoting common stock of Associated) for an exercise price of $0.01 per share.
The Lender Warrants were issued in two tranches representing an aggregate of
34,694 shares of Associated Common Stock (the "Tranche A Warrants") and 115,646
shares of Associated Common Stock (the "Tranche B Warrants"), respectively.
84
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In connection with the purchase by Associated of Lynn-Edwards in 1992, the
Tranche B Warrant holders received additional Tranche B Warrants exercisable
for an additional 39,878 shares of Associated Common Stock. In addition, an
antidilution adjustment mechanism in the Lender Warrant Agreement caused the
holders of the Tranche A and Tranche B Warrants to be entitled to purchase an
additional 2,017 and 9,040 shares of Associated Common Stock, respectively, on
a pro rata basis as an adjustment relating to the issuance of shares of
Associated Common Stock to Boise.
The Tranche A and Tranche B Warrants were assumed by United upon consummation
of the Merger and now allow the holders thereof to acquire an aggregate of
122,316 and 549,644 Shares (or, at such holder's option, shares of Nonvoting
Common Stock), respectively, at an exercise price of $0.0029 per share;
provided, however, that the exercise price shall never be less than par value
of the Shares or Nonvoting Common Stock, as applicable. Prior to the Merger,
Wingate Partners, Wingate II, Wingate Affiliates, L.P., Wingate Affiliates II,
L.P. and Daniel J. Good purchased from one of Associated's former senior
lenders Tranche A and Tranche B Warrants exercisable for an aggregate of
238,795 Shares for an aggregate of approximately $1.7 million.
The following is a summary of the material terms of the Lender Warrants:
The Lender Warrants contain customary antidilution provisions and are
exercisable through January 31, 2001. In addition, United is entitled to
repurchase the Lender Warrants at any time after January 31, 1999 at the
greater of the then fair market value of the Shares (less the applicable
exercise price for the Lender Warrants) or the Equity Value (which is defined
generally as (i) five times United's and its consolidated subsidiaries'
earnings before interest, taxes and depreciation and amortization minus (ii)
non-convertible debt of United and its consolidated subsidiaries minus (iii)
preferred stock of United plus (iv) cash and cash equivalents). In the event
United repurchases Lender Warrants or Shares pursuant to the call option
granted under the Lender Warrants and, within twelve months after the date of
such repurchase, United, any subsidiary of United, or Wingate Partners,
Cumberland or Good Capital or their subsidiaries, or affiliates (but excluding
any limited partners of Wingate Partners as such) or associates has entered
into any contract relating to a merger of United or sale of all or
substantially all of the assets of United or any subsidiary of United (a "Look
Back Event"), then United is required to make a payment to each holder whose
Lender Warrants or Shares were repurchased in an amount generally equal to (i)
the excess of the fair market value of the consideration received by United,
the subsidiaries and the stockholders of United (on a per share basis) in
connection with the Look Back Event over (ii) the sum of (a) the amount paid to
such holder pursuant to the exercise by United of its call option plus (b)
imputed interest on such amount through the date of repurchase at the base rate
under United's existing senior credit agreement.
The Lender Warrants also contain certain put rights which require United to
repurchase such Lender Warrants upon the earlier of January 31, 1997 or the
occurrence of certain extraordinary corporate events. The purchase price
payable by United or the Company upon the exercise of the put rights is the
greater of the then fair market value of the Shares (less the applicable
exercise price of the Lender Warrants) or the Equity Value. Because Associated
refinanced all of its existing indebtedness in connection with the Acquisition
(including its indebtedness under old Associated Term Loans), the Lender
Warrants were amended to provide that no put rights may be exercised thereunder
until February 10, 1996.
The Lender Warrants provide the holders with certain "tag along rights" which
entitle such holders to participate, on a pro rata basis, in certain sales of
Shares by Wingate Partners, Cumberland, Boise Cascade, Good Capital or any of
their subsidiaries, affiliates (but excluding any limited partners of Wingate
as such) or associates. Pursuant to the Lender Warrants, Wingate Partners has
been granted certain "go along rights" which are triggered (subject to certain
exceptions) in the event (i) Wingate Partners sells 100% of its equity interest
in United in a private offering, (ii) all or substantially all of the assets of
United are sold and the proceeds of such sale are distributed to the
stockholders of United or (iii) United participates in a merger or
consolidation. In the event Wingate Partners exercises its "go along rights" in
connection with the occurrence of one of the events described above, each
holder of
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Lender Warrants would become obligated to sell all Lender Warrants and Shares
held by such holders in the applicable transaction and to vote all Shares in
favor of such transaction.
The Lender Warrants contain a mechanism whereby after the Lender Warrants (or
a portion thereof) have been sold pursuant to the put rights, tag along rights,
or go along rights under the Lender Warrants (provided that such events have
occurred prior to January 31, 1999), each holder of Tranche B Warrants is
required to refund to United a portion of the aggregate amount earned by such
holder on its Tranche B Warrant investment (the "Refunded Amount"). The
Refunded Amount is only required to be paid in the event the amount earned by
all holders of the Tranche B Warrants exceeds $6,500,000 and such holders
received an internal rate of return on their investment represented by the
Tranche B portion of the Old Associated Term Loans of at least 25%. The
Refunded Amount ranges from 10.0% of amounts earned on the Tranche B Warrants
to 40% of such amounts, depending upon the amount by which the aggregate amount
earned by all holders of the Tranche B Warrants exceeds $6,500,000 and the
internal rate of return received by such holders on their investment
represented by the Tranche B portion of the Old Associated Term Loans exceeds
25%.
Pursuant to the terms of the Lender Warrants, if, at any time, United does
not have securities registered under Section 12(b) or 12(g) of the Exchange Act
and is not required to file reports under Section 15(d) of the Exchange Act,
the holders of the Lender Warrants will be entitled to preemptive rights with
respect to certain issuances of Shares by United and to board observation
rights for meetings of the boards of directors of United and its subsidiaries.
The Lender Warrants also contain certain covenants and agreements with respect
to, among other things, (i) transactions with affiliates (other than the
payment of a limited amount of management fees to Wingate Partners, Cumberland
and Good Capital), (ii) certain mergers, reorganizations, recapitalization and
other events with respect to the Shares, (iii) the redemption of Shares, (iv)
changes of the fiscal year of United, (v) the taking of actions that would
cause United or any subsidiary of United to own less than 80% of any subsidiary
of United, except that United and each subsidiary of United may own a
percentage of the stock of any such subsidiary not lower than the percentage
owned at the effective time of the Merger, (vi) delivery of financial
statements of United, and (vii) indemnification.
In connection with the issuance of the Lender Warrants, Associated, on
January 31, 1992, entered into a registration rights agreement (the "Lender
Registration Rights Agreement") with the holders of the Lender Warrants
pursuant to which it granted to such holders certain rights with respect to
registration under the Securities Act of shares of Associated Common Stock
issuable to them upon exercise of the Lender Warrants. United assumed the
obligations of Associated under the Lender Registration Rights Agreement by
operation of law in connection with the Merger and such agreement has been
amended accordingly. Pursuant to the amended agreement, United agreed to use
its best efforts to effect a "shelf" registration of all Shares issuable or
issued upon exercise of the Lender Warrants and subject to the agreement as
promptly as practicable following the sixtieth day after the Merger. In
addition, the holders of a majority of the Shares issuable or issued upon
exercise of the Lender Warrants and subject to the agreement will be able to
require United, after consummation of a public offering of Shares meeting
certain specified criteria, and after satisfaction of certain other conditions,
to effect up to five registrations of all or part of the Shares held by them.
United is not required to honor any request to register Shares if the request
is received less than 300 days following the effective date of any previous
registration statement filed in connection with any such request. Upon receipt
of a written request to register a holder's Shares, United must send notice to
the other holders subject to the agreement and permit them to also request to
have their respective Shares registered under the Securities Act. Registrations
effected at the request of the holders will be at the expense of United
(excluding underwriting discounts and commissions).
MANAGEMENT AGREEMENTS
Pursuant to an Investment Banking Fee and Management Agreement dated as of
January 31, 1992 among Associated, ASI and Wingate Partners, Wingate Partners
provided certain financial advisory
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services to Associated and ASI in connection with the Boise Transaction, in
exchange for a one-time fee of $500,000 (which was paid in January 1992 upon
the consummation of the Boise Transaction). United assumed the obligation of
Associated under such agreement by operation of law in connection with the
Merger and such agreement has been amended accordingly. Pursuant to the amended
agreement Wingate Partners has agreed to provide certain oversight and
monitoring services to United and the Company and their subsidiaries, in
exchange for an annual fee of up to $725,000, payment (but not accrual) of
which is subject to restrictions under the New Credit Agreement related to
certain United performance criteria. At the Effective Time, United paid
aggregate fees to Wingate Partners of $2.3 million for services rendered in
connection with the Acquisition. Pursuant to the $350,000 annual fee limit
previously in effect under such agreement, Wingate Partners earned an aggregate
of $350,000, $210,000 and $320,833 with respect to each of Associated's fiscal
years ended 1994, 1993 and 1992, respectively, for such oversight and
monitoring services. Under the amended agreement, United is obligated to
reimburse Wingate Partners for its out-of-pocket expenses and indemnify Wingate
Partners and its affiliates from loss in connection with these services. The
agreement expires on January 31, 2002, provided that the agreement continues in
effect on a year to year basis thereafter unless terminated in writing by one
of the parties at least 180 days before the expiration of the primary term or
any subsequent yearly term.
Pursuant to an Investment Banking Fee and Management Agreement dated as of
January 31, 1992 among Associated, ASI and Cumberland, Cumberland provided
certain financial advisory services to Associated and ASI in connection with
the Boise Transaction, in exchange for a one-time fee of $500,000 (which was
paid in January 1992 upon consummation of the Boise Transaction). United
assumed the obligation of Associated under such agreement by operation of law
in connection with the Merger and such agreement has been amended accordingly.
Pursuant to the amended agreement, Cumberland has agreed to provide certain
oversight and monitoring services to United and the Company and their
subsidiaries, in exchange for (i) an annual fee of up to $137,500, payment (but
not accrual) of which is subject to restrictions under the New Credit Agreement
related to certain United performance criteria and (ii) previously issued
shares of Associated Common Stock that converted in the Merger into 77,063
Shares. Subject to certain exceptions, the issuance of such Shares is subject
to rescission if the agreement is terminated before January 31, 2002. At the
Effective Time, United paid aggregate fees to Cumberland of $100,000 for
services rendered in connection with the Acquisition. Pursuant to the $75,000
annual fee limit previously in effect under such agreement, Cumberland earned
$75,000, $45,000 and $68,750 with respect to each of Associated's fiscal years
ended 1994, 1993 and 1992, respectively, for such oversight and monitoring
services. United is also obligated to reimburse Cumberland for its out-of-
pocket expenses and indemnify Cumberland and its affiliates from loss in
connection with these services. The agreement expires on January 31, 2002,
provided that the agreement continues in effect on a year to year basis
thereafter unless terminated in writing by one of the parties at least 180 days
before the expiration of the primary term or any subsequent yearly term.
Pursuant to an Investment Banking Fee and Management Agreement dated as of
January 31, 1992 among Associated, ASI and Good Capital, Good Capital provided
financial advisory services to Associated and ASI in connection with the Boise
Transaction in exchange for 31,480 shares of Associated Common Stock and 185
shares of Associated class A preferred stock. United assumed the obligations of
Associated under such agreement by operation of law in connection with the
Merger and such agreement has been amended accordingly. Pursuant to the amended
agreement, Good Capital has agreed to provide certain oversight and monitoring
services to United and the Company and their subsidiaries, in exchange for (i)
an annual fee of up to $137,500, payment (but not accrual) of which is subject
to restrictions under the New Credit Agreement related to certain United
performance criteria and (ii) previously issued shares of Associated Common
Stock that converted in the Merger into 77,063 Shares. Subject to certain
exceptions, the issuance of such Shares are subject to rescission if the
agreement is terminated before January 31, 2002. At the Effective Time, United
paid aggregate fees to Good Capital of $100,000 for services rendered in
connection with the Acquisition. Pursuant to the
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$75,000 annual fee limit previously in effect under such agreement, Good
Capital earned an aggregate of $75,000, $45,000 and $68,750 in each of
Associated's fiscal years ended 1994, 1993 and 1992, respectively, of which
Associated has paid Good Capital $45,000, $45,000 and $68,750, respectively,
for such oversight and monitoring services. United is also obligated to
reimburse Good Capital for its out-of-pocket expenses and indemnify Good
Capital and its affiliates from loss in connection with these services. The
agreement expires on January 31, 2002, provided that the agreement continues in
effect thereafter on a year to year basis unless terminated in writing by one
of the parties at least 180 days before the expiration of the primary term or
any subsequent yearly term.
CERTAIN INTERESTS OF CHASE BANK
Chase Bank has certain interests in the Acquisition and in the Company in
addition to its affiliate, Chase Securities which served as the Initial
Purchaser of the Old Notes and received a discount in the amount of $4.5
million.
Upon consummation of the sale of the Old Notes, CMIHI, an affiliate of Chase
Bank, beneficially owned 9.85% of the Shares outstanding as a result of its
ownership of (i) certain Lender Warrants received in connection with the Boise
Transaction that entitle CMIHI to purchase 237,748 Shares for $0.01 per Share,
(ii) 240,023 shares of Nonvoting Common Stock purchased or received in
connection with the Acquisition and (iii) 139,474 shares of Nonvoting Common
Stock issued to CMIHI upon consummation of the sale of the Old Notes. See
"Certain Transactions -- Lender Warrants" and "Financing the Acquisition --
Loan Facilities -- New Credit Facilities."
Chase Securities served as financial advisor to Associated in connection with
the Acquisition. Chase Bank is the agent and a lender under the New Credit
Facilities. In addition, in connection with the Offer, Chase Securities served
as dealer manager and Chase Bank served as depositary for tendered Shares. A
substantial portion of the net proceeds of the Old Notes were used to repay the
Bridge Loan and a portion of the remainder was used to prepay loans under the
Term Loan Facilities. See "Use of Proceeds." The lenders under the Bridge Loan
were Chase Bank, an affiliate of the Initial Purchaser, and The Roebling Fund,
a statutory business trust, of which Chase Bank serves as manager and is a
substantial beneficial owner. In all such capacities, Chase Bank and its
affiliates received or will receive an aggregate of approximately $23.3 million
in fees (although certain of such fees were shared with other members of the
lending groups) and had certain of their expenses reimbursed.
MISCELLANEOUS
Melvin L. Hecktman, who resigned as vice chairman of United effective
September 1, 1993, had a consulting agreement with United by which Mr.
Hecktman, until February 28, 1995, received annual compensation of $275,000,
plus participation in all bonus and other benefit plans generally available to
executive officers of United. The amount of his consulting compensation was
subject to reduction by the amount of compensation he may receive from new
employment. Under the terms of the consulting agreement, Mr. Hecktman was to
render such advisory and consulting services as requested by United. Mr.
Hecktman was restricted from disclosing proprietary materials and confidential
information. In addition, Mr. Hecktman was restricted from being employed by or
consulting with any competing firm during the consulting period.
Mr. Coolidge, a director of the Company until consummation of the Merger, is
the Managing Partner of William Blair & Company, which from time to time has
rendered investment banking and related services to United, for which United
has paid customary fees (including a fee of approximately $2.0 million in
connection with investment banking services and a fairness opinion rendered in
connection with the Acquisition).
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FINANCING THE ACQUISITION
GENERAL
The total amount of funds required by Associated to consummate the
Acquisition, redeem United stock options, refinance certain existing
indebtedness of the Company, United and ASI and pay related fees and expenses
was approximately $558.5 million. In connection with the Acquisition, aggregate
proceeds of approximately $416.5 million under the New Credit Facilities,
together with the $130.0 million in proceeds of the Bridge Loan under the
Subordinated Bridge Facility, were used to (i) to finance the purchase of
Shares pursuant to the Offer, (ii) refinance certain existing indebtedness of
ASI, United and the Company, (iv) redeem United stock options and (v) pay
certain of the fees, expenses and financing costs relating to the Acquisition.
In addition, simultaneously with the consummation of the Offer, Associated
obtained $12.0 million from the sale of additional shares of Associated Common
Stock primarily to certain existing holders of Associated Common Stock or
warrants to purchase the same that was used to finance the purchase of Shares
pursuant to the Offer. See "Financing the Acquisition -- Equity Investment."
The aggregate proceeds under the New Credit Facilities consist of $125.0
million under the Tranche A Facility (as hereinafter defined), $75.0 million
under the Tranche B Facility (as hereinafter defined) and approximately $216.5
million under the Revolving Credit Facility.
The following table sets forth the approximate amounts and sources and uses
of funds that were necessary to consummate the Offer and the Merger:
<TABLE>
<CAPTION>
(DOLLARS
IN
THOUSANDS)
<S> <C>
Sources:
New Credit Facilities(1)........................................... $416,537
Subordinated Bridge Facility (2)................................... 130,000
Equity Investment.................................................. 12,000
--------
Total Sources.................................................. $558,537
========
Uses:
Purchase Shares.................................................... $266,629
Refinance Existing Company Debt.................................... 180,752
Refinance Existing ASI Debt........................................ 78,856
Estimated Fees and Expenses (3).................................... 29,300
Other (4).......................................................... 3,000
--------
Total Uses..................................................... $558,537
========
</TABLE>
- --------
(1) Includes borrowings of approximately $206.8 million at the time of
consummation of the Acquisition and an additional approximately $9.7
million of additional revolving loan borrowings used to pay fees and
expenses after the Acquisition.
(2) Refinanced with a portion of the net proceeds of the Old Notes.
(3) Excludes approximately $2.6 million borrowed by the Company and $3.2
million borrowed by ASI prior to closing of the Offer to pay fees and
expenses in connection with consummation of the Acquisition. These amounts
are included under "Refinance Existing Company Debt" and "Refinance
Existing ASI Debt," respectively, above. Estimated Fees and Expenses
include the Initial Purchaser's discount.
(4) This amount was used to redeem United stock options. This amount excludes
approximately $3.2 million borrowed by the Company prior to closing of the
Offer to discharge compensation and other liabilities in connection with
consummation of the Acquisition. This latter amount is included under
"Refinance Existing Company Debt" above.
LOAN FACILITIES
New Credit Facilities. Immediately prior to acceptance for payment of Shares
in the Offer, Associated and ASI entered into the New Credit Agreement with
Chase Bank, as agent, and a group of
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banks and financial institutions (including Chase Bank, the "Senior Lenders"),
providing for (a) a tranche A term loan facility (the "Tranche A Facility") in
an aggregate principal amount of $125,000,000, (b) a tranche B term loan
facility in an aggregate principal amount of $75,000,000 (the "Tranche B
Facility" and, together with the Tranche A Facility, the "Term Loan
Facilities") and (c) a revolving credit facility (the "Revolving Credit
Facility" and, together with the Term Loan Facilities, the "New Credit
Facilities") in an aggregate principal amount of up to $300,000,000, including
a $90,000,000 sublimit available for issuance of letters of credit. Upon
consummation of the Mergers, the obligations of Associated and ASI in respect
of the New Credit Agreement were assumed by United and the Company,
respectively.
The following is a summary of the principal terms of the New Credit
Agreement, which summary does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the New
Credit Agreement, a copy of which is available upon request to the Company. See
"Available Information."
The loans outstanding under the Term Loan Facilities and the Revolving Credit
Facility bear interest, at the Company's option, equal to (i) the Base Rate (as
hereinafter defined) plus 2.25% (if the Tranche B Facility) or 1.75% (if either
the Tranche A Facility or the Revolving Credit Facility) or (ii) LIBOR (as
defined), based on one, two, three or six month periods, provided that until
the date 90 days after the Merger Date, each interest period shall be one month
and shall be coterminous with other outstanding LIBOR loans, plus 3.25% (if the
Tranche B Facility) or 2.75% (if the Tranche A Facility or the Revolving Credit
Facility), with the applicable margins for all but the Tranche B Facility being
subject to reductions based on a debt to cash flow ratio test.
Amounts outstanding under the Tranche A Facility are required to be repaid in
20 consecutive quarterly installments, the first four of which (each in the
aggregate principal amount of $3,750,000) will be due on the last day of each
of the first four calendar quarters commencing with the quarter ending June 30,
1995. Subsequent quarterly payments under the Tranche A Facility are each in
the aggregate principal amount of $6,250,000 for each of the eight consecutive
calendar quarters commencing with the quarter ending June 30, 1996 and
$7,500,000 for each of the eight consecutive calendar quarters commencing with
the quarter ending June 30, 1998. Amounts outstanding under the Tranche B
Facility will be repaid in 28 consecutive quarterly installments, the first
twenty of which (in the aggregate principal amount of $250,000 each) will be
due on the last day of each of the first twenty calendar quarters commencing
with the quarter ending June 30, 1995. The remaining eight installments in the
aggregate principal amount of $8,750,000 each will be due on the last day of
each calendar quarter commencing with the quarter ending June 30, 2000. The
final installments under the Tranche A Facility and the Tranche B Facility will
be payable on March 31, 2000 and March 31, 2002, respectively. The Revolving
Credit Facility will mature on March 31, 2000. A portion of the proceeds from
the Old Notes was used to prepay approximately $4.1 million (plus interest
accrued thereon) of amounts outstanding under the Tranche A Facility and
approximately $2.4 million (plus interest accrued thereon) of amounts
outstanding under the Tranche B Facility.
The Revolving Credit Facility is subject to (i) a borrowing base equal to 80%
of Eligible Receivables (as defined in the New Credit Agreement) plus 50% of
Eligible Inventory (as defined in the New Credit Agreement) (provided that no
more than 60% or, during certain periods 65%, of the Borrowing Base may be
attributable to Eligible Inventory) plus the aggregate amount of cover for
Letter of Credit Liabilities (as defined) and (ii) the requirement that, for
each fiscal year commencing January 1, 1996, the Company must repay revolving
loans so that for a consecutive period of 30 days in each fiscal year the
aggregate revolving loans do not exceed $200,000,000.
Loans under the Term Loan Facilities and the Revolving Credit Facility may be
prepaid at any time and are subject to certain mandatory prepayments out of (i)
net proceeds in excess of $15,000,000 received from the issuance of equity by
the Company or any of its subsidiaries after the Merger Date, (ii) net proceeds
from certain asset sales in excess of $10,000,000 and (iii) 50% of the
Company's Excess Cash Flow (as defined) if the Debt to Cash Flow Ratio (as
defined) as of the last day of the
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fiscal year is less than 3 to 1 and otherwise 75% of the Company's Excess Cash
Flow. Optional prepayments under the Term Loan Facilities will be applied, pro
rata to loans outstanding under the Tranche A Facility and the Tranche B
Facility (pro rata to the remaining installments). Mandatory prepayments will
be applied first, pro rata to loans outstanding under the Tranche A Facility
and the Tranche B Facility (pro rata to the remaining installments), and
second, to the permanent reduction of commitments (and the payment of loans
outstanding) under, the Revolving Credit Facility.
The Term Loan Facilities and the Revolving Credit Facility are guaranteed, on
a joint and several basis, by United and will be guaranteed by all of the
direct and indirect domestic subsidiaries of the Company (if any).
The Term Loan Facilities and the Revolving Credit Facility are secured by
perfected first priority pledges of the stock of the Company, all of the stock
of the domestic direct and indirect subsidiaries of the Company and certain of
the stock of all of the foreign direct and indirect subsidiaries of the Company
and security interests in and liens upon all accounts receivable, inventory,
contract rights and other personal and real property of the Company and its
domestic subsidiaries.
The New Credit Agreement contains representations and warranties, affirmative
and negative covenants and events of default customary for financings of the
type. The Company has obtained the consent of the requisite percentage of
Senior Lenders under the New Credit Agreement to permit the repurchase of the
Series B Preferred Stock, together with accrued and unpaid dividends thereon,
although additional consents from other persons are required to effect such
redemption.
United and the Company are obligated under the New Credit Agreement to pay
the costs and expenses arising in connection with the preparation, execution,
and delivery of the New Credit Agreement and to indemnify the Senior Lenders
(and their respective officers, directors, employees and affiliates) against
certain liabilities in connection with the Acquisition and the New Credit
Facilities.
At the closing of the Offer, 40,471 shares of Associated nonvoting common
stock were issued to CMIHI (which shares converted into 139,474 shares of
Nonvoting Common Stock in the Merger). Upon consummation of the offering of the
Old Notes, 139,474 additional shares of Nonvoting Common Stock (representing an
additional 2% of the Shares on a fully diluted basis) were issued to CMIHI.
Subordinated Bridge Facility. Immediately prior to the acceptance for payment
of Shares in the Offer, Associated and ASI entered into the Subordinated Bridge
Facility with The Roebling Fund, as agent and lender, and Chase Bank, as
lender, providing for the Bridge Loan to ASI in an aggregate principal amount
of $130,000,000. Upon consummation of the Mergers, the obligations of
Associated and ASI in respect of the Subordinated Bridge Facility were assumed
by United and the Company, respectively. The Subordinated Bridge Facility
(together with approximately $1.6 million in accrued and unpaid interest
thereon) was refinanced in full from a portion of the proceeds of the sale of
the Old Notes. See "Use of Proceeds."
EQUITY INVESTMENT
Associated obtained $12,000,000 from the sale of additional shares of
Associated Common Stock prior to the consummation of the Offer to Wingate
Partners, Wingate II, certain affiliates thereof, CMIHI, Daniel J. Good, ASI
Partners, L.P., ASI Partners II, L.P. and others, which amount was used to
finance part of the purchase of Shares pursuant to the Offer.
FEES AND EXPENSES
An aggregate of approximately $35.1 million of fees and expenses was incurred
by Associated and United in connection with the Acquisition. Such amounts
include usual and customary fees and expenses for accounting, lending,
financial advisory, dealer-manager, legal, printing, appraisal, consulting and
related services, a substantial portion of which have been paid to Chase Bank
and its affiliates. See "Certain Transactions -- Certain Interests of Chase
Bank."
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DESCRIPTION OF CAPITAL STOCK
CAPITAL STOCK OF UNITED
The authorized capital stock of United consists of 46,500,000 shares,
consisting of (a) 1,500,000 shares of a class designated as Preferred Stock,
$0.01 par value (the "Preferred Stock"), (b) 40,000,000 shares of a class
designated as Common Stock, par value $0.10 per share (the "Common Stock"), and
(c) 5,000,000 shares of a class designated as Nonvoting Common Stock, $0.01 par
value (the "Nonvoting Common Stock"). Of the authorized shares of capital
stock, 5,648,935 shares of Common Stock, 379,497 shares of Nonvoting Common
Stock and an aggregate of 21,811.1093 shares of Preferred Stock, consisting of
5,000 shares of Series A Preferred Stock, 6,724.4436 shares of Series B
Preferred Stock, and 10,086.6657 shares of Series C Preferred Stock (the Series
A, Series B and Series C Preferred Stock being collectively referred to herein
as the "Merger Preferred Stock"), are outstanding. If the necessary consents
are obtained, the Company expects to pay a dividend to United in an amount
sufficient to repurchase all of the outstanding shares of Series B Preferred
Stock, plus all accrued and unpaid dividends thereon, from the proceeds of the
Old Notes.
The following is a summary of the terms of Merger Preferred Stock. Such
summary does not purport to be complete and is qualified in its entirety by
reference to United's restated certificate of incorporation, as amended (the
"Restated Certificate of Incorporation"), a copy of which is available upon
request to the Company. See "Available Information."
Dividends. The holders of Series A Preferred Stock are entitled to receive
dividends at a rate of 10% per annum applied to a dividend base per share of
$1,000 (the "Dividend Base") payable on April 30, July 31, October 31 and
January 31 (each a "Dividend Payment Date") of each year, subject as described
below under "Description of Capital Stock -- Capital Stock of United --
Dividend and Redemption Restrictions." If United fails to pay a dividend in
cash on any Dividend Payment Date or fails to make any redemption payment when
due, the dividend rate shall be retroactively increased to 13% per annum and
shall remain at such rate until the failure is cured.
The holders of Series B Preferred Stock and Series C Preferred Stock are
entitled to receive dividends at a rate of 9% per annum applied to the Dividend
Base, payable on each Dividend Payment Date, subject as described below under
"Description of Capital Stock -- Capital Stock of United --Dividend and
Redemption Restrictions." In the event United fails to pay a dividend in cash
on the Series B or Series C Preferred Stock on any Dividend Payment Date or
fails to make any redemption payment in respect of the Series B or Series C
Preferred Stock when due, the dividend rate thereon shall retroactively be
increased to 10% per annum and shall remain at such rate until such failure is
cured.
The dividends on the Merger Preferred Stock are cumulative and shall accrue,
whether or not declared or restricted by the terms of any loan agreements and
regardless of whether there are funds legally available for payment of the
dividends. In the discretion of the Board of Directors of United, the dividends
may be payable in cash or in additional shares of the same class of Merger
Preferred Stock. Dividends on the Series C Preferred Stock may be payable in
additional shares of Series C Preferred Stock only for Dividend Payment Dates
occurring on or prior to January 31, 1999.
If at any time United fails to pay any dividends on the Dividend Payment Date
or United fails to redeem the requisite number of shares of a series of Merger
Preferred Stock (the "Defaulted Series"), United shall not (a) declare or pay
any dividend on any Junior Shares (as defined below) or make any payment on
account of, or set apart money for, a sinking or other analogous fund, for the
purchase, redemption or other retirement of any Junior Shares or make any
distribution with respect thereto (other than in Junior Shares); (b) purchase
any shares of a Defaulted Series (except for a consideration payable in Junior
Shares) or redeem fewer than all of the shares of the Defaulted Series
outstanding;
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or (c) permit any subsidiary of United to purchase any Junior Shares or permit
any subsidiary to purchase fewer than all of the shares of the Defaulted Series
then outstanding, unless, at the time of such dividend, payment, distribution,
purchase or redemption, all accrued and unpaid dividends on shares of the
Defaulted Series are contemporaneously paid in full in cash or additional
shares of the Defaulted Series and all shares of the Defaulted Series which the
Company so failed to redeem are contemporaneously redeemed.
United also may not take any of the actions specified in (a), (b) or (c) in
the previous paragraph in respect of the Series B or Series C Preferred Stock
in excess of $1 million for all such actions unless at the time such action is
taken: (i) United has redeemed for cash all shares of Series B and Series C
Preferred Stock, if any, which have been issued to the holders of Series B and
Series C Preferred Stock, respectively, as in-kind dividends; (ii) United and
its wholly-owned subsidiaries, on a consolidated basis, have common equity
computed in accordance with generally accepted accounting principles after
giving effect to any purchases, redemptions, payments, distributions or
disbursements under (a), (b) or (c) above, of at least $26 million; (iii) if
any such purchases, redemptions, payments, distributions or disbursements
specified in (a), (b) or (c) above are to be made after July 31, 1999, then all
shares of Series B Preferred Stock shall have been redeemed or otherwise
retired; and (iv) if any such purchases, redemptions, payments, distributions
or disbursements specified in (a), (b) or (c) above are to be made on or after
the dates required for redemptions of shares of Series C Preferred Stock
specified below, then that portion of such Series C Preferred Stock so required
to be redeemed as of such dates shall have been redeemed or otherwise retired.
Notwithstanding the previous sentence, nothing in this paragraph limits
United's obligation to make payments or disbursements for any amount it is
obligated to pay under or pursuant to the Lender Warrants; and nothing in this
paragraph limits United or its subsidiaries from re-purchasing Shares or
options to purchase Shares held by any employee of United or its subsidiaries
in connection with the termination of such employee's employment.
Redemption. United will be required to redeem all shares of the Series A
Preferred Stock and Series B Preferred Stock on July 31, 1999 and to redeem the
Series C Preferred Stock on January 31, 2002 each for the sum of $1,000 per
share plus the aggregate of accrued and unpaid dividends to such date, subject
to appropriate adjustments in the event of a stock split, reverse stock split
or similar transaction (the "Redemption Price"), subject as described below
under "Description of Capital Stock-- Capital Stock of United -- Dividend and
Redemption Restrictions." The Series C Preferred Stock redemptions will be
required to be made in four quarterly installments on April 30, 2001, July 31,
2001, October 31, 2001 and January 31, 2002.
In the event of a Cash-Out Event (as hereinafter defined) and, in such event,
at the request of a holder of Merger Preferred Stock, United will be required
to redeem all of such holder's shares of preferred stock then outstanding at
the Redemption Price, subject as described below under "Description of Capital
Stock -- Capital Stock of United -- Dividend and Redemption Restrictions." If
pursuant to the sale or Change in Control (as hereinafter defined) of United,
the holders of Shares receive cash, Shares or common stock or other securities
of any corporation that is the successor to substantially all of the business
or assets of United or the ultimate parent of such successor which is (or will,
upon distribution thereof, be) listed on the New York Stock Exchange or the
American Stock Exchange, or approved for quotation on the Nasdaq National
Market ("Marketable Securities") or a combination thereof, then, United may at
its option and in lieu of the cash redemption described in the previous
sentence, redeem the Merger Preferred Stock by converting each share into cash,
Marketable Securities or a combination thereof, in the same proportions
received by the holders of Shares, the value of which shall equal the
Redemption Price. "Cash-Out Event" means the occurrence of a Business Sale, a
Change in Control, a Qualified Public Offering or a Recapitalization. In the
case of the Series C Preferred Stock, "Cash-Out Event" shall also include the
expiration of the agreement between United (as successor to Associated) and
Affiliated Computer Services, Inc. providing for the furnishing of information
systems services for United (as successor to Associated), or the early
termination of such
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<PAGE>
agreement for any reason other than termination of such agreement by Affiliated
Computer Services, Inc. For purposes of the foregoing, "Business Sale" means a
transaction or a series of transactions, whether effected by sale or exchange
of securities or assets, merger or consolidation, or otherwise, that results in
the sale of United or its business to any person (i) who, immediately prior to
the contemplated transaction, does not own in excess of 5.0% of the Shares on a
fully diluted and converted basis (a "5.0% Owner"), (ii) who is not
controlling, controlled by or under common control with United or any such 5.0%
Owner and (iii) who is not the spouse or descendant of any such 5.0% Owner or a
trust for the benefit of such 5.0% Owner or such other persons ("Independent
Third Party") or group of Independent Third Parties, pursuant to which such
Independent Third Party or group of Independent Third Parties would acquire (a)
capital stock of United possessing the voting power under normal circumstances
to elect a majority of the Board or (b) all or substantially all of United's
assets determined on a consolidated basis; "Change in Control" means an
occurrence by which Wingate Partners and its affiliates and Cumberland and its
affiliates shall have collectively sold or otherwise disposed of and received
the pecuniary benefit of 33 1/3% of the Shares legally or beneficially owned by
them collectively as of January 31, 1992, subject to appropriate adjustment in
the event of a stock split, reverse stock split or similar transaction and
excluding any sales or other dispositions made by any of them to employees of
United or of any of its subsidiaries of up to 10.0% of such holdings;
"Qualified Public Offering" means a sale in a public offering or series of
public offerings, registered under the Securities Act, of Shares; provided,
however, that such offering or series of offerings shall not be deemed to be a
Qualified Public Offering unless such offering or offerings shall have resulted
in (A)(i) public ownership of not less than 20.0% of the Shares of United on a
fully-diluted basis (which such Shares are listed upon the New York Stock
Exchange, the American Stock Exchange or are approved for quotation on the
Nasdaq National Market), and (ii) such offering or offerings shall have
resulted in receipt by United of aggregate cash proceeds (after deduction of
underwriter discounts and the costs associated with such offering or offerings)
of at least $37.5 million, or (B) the holders of Shares of United receive, as a
result of such offering or offerings, cash, Marketable Securities or a
combination thereof valued at not less than $1.0 million; and
"Recapitalization" means a recapitalization of United pursuant to which the
holders of Shares of United receive cash, securities (other than shares junior
to the Series B or Series C Preferred Stock), property or other assets and such
consideration is valued at not less than $1.0 million.
United may, at its option, redeem any portion or all of any series of the
Merger Preferred Stock outstanding at the Redemption Price. Any such redemption
of shares of Series A Preferred Stock must be made ratably among the holders of
Series A Preferred Stock, and any redemption of shares of Series B Preferred
Stock or Series C Preferred Stock must be made ratably among the holders of
both Series B and Series C Preferred Stock.
Exchange Notes. Provided United has paid all accrued dividends on the
outstanding shares of Series A Preferred Stock, United may redeem all shares of
Series A Preferred Stock then outstanding in exchange for subordinated notes
that shall have a maturity date of July 31, 1999 and shall bear interest at the
rate of 10.0% for interest paid in cash or 13.0% for interest paid in kind
("Series A Exchange Notes"). The Series A Exchange Notes issued to each holder
shall be in an aggregate principal amount equal to the Redemption Price.
Provided United has redeemed any outstanding shares of Series A Preferred
Stock and has paid all accrued dividends on the outstanding shares of Series B
and Series C Preferred Stock, United may redeem all shares of Series B and
Series C Preferred Stock in exchange for respective subordinated notes (the
"Series B Exchange Notes" and the "Series C Exchange Notes," respectively). The
Series B Exchange Notes will have a maturity date of July 31, 1999 and the
Series C Exchange Notes will mature on January 31, 2002, with any payments on
the Series C Exchange Notes to be in four equal installments on April 30, 2001,
July 31, 2001, October 31, 2001, and January 31, 2002. Both Series B
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<PAGE>
and Series C Exchange Notes shall bear interest at the rate of 11.0% for
interest paid in cash or 12.0% for interest paid in kind. The Series B and
Series C Exchange Notes issued to each holder shall be in an aggregate
principal amount equal to the Redemption Price of the redeemed shares.
Payments on the Series A, Series B and Series C Exchange Notes will be
subordinated to any obligations of United for borrowed money (including all
amounts owing under the Guarantees and the New Credit Facilities) and, in the
case only of the Series B and Series C Exchange Notes, will be subordinated to
Series A Exchange Notes.
Voting Rights. Holders of shares of Merger Preferred Stock generally will
have no voting rights. However, United shall not, without the affirmative vote
or written consent of the holders of at least 51.0% of all outstanding shares
of a series of Merger Preferred Stock voting separately as a series (the
"Affected Series") (a) amend any provision of the certificate of incorporation
or by-laws of United in any manner which adversely (and, in the case of the
Series A Preferred Stock only, materially) affects the relative rights,
preferences, qualifications, powers, limitations or restrictions of the
Affected Series; (b) either (i) in the case of Series A Preferred Stock,
increase the authorized number of shares of Preferred Stock, or authorize,
issue or otherwise create securities convertible into any shares of capital
stock of United other than Junior Shares, or (ii) in the case of Series B or
Series C Preferred Stock, increase the authorized number of shares of capital
stock of United, or authorize, issue or otherwise create securities convertible
into any shares of capital stock of the corporation other than Series A (only
for purposes of paying dividends in kind on Series A Preferred Stock), Series B
or Series C Preferred Stock, Common Stock or Junior Shares; or (c) voluntarily
effect any reclassification of the Affected Series.
Whenever dividends on any series of Merger Preferred Stock are in arrears in
an amount equal to at least six quarterly dividends (an "Impaired Series"), (i)
the number of members of the Board of Directors of United shall be increased by
one for each Impaired Series and (ii) the holders of each Impaired Series
(voting separately as a series) will have the exclusive right to vote for and
elect one additional director of United. The right of the Impaired Series to
vote for an additional director shall terminate when all accrued and unpaid
dividends on the Impaired Series have been declared and paid in cash or in-kind
or set apart for payment.
Liquidation Preferences. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of United, the holders of the Merger
Preferred Stock shall be entitled to receive an amount equal to the Redemption
Price of such shares held by them in preference to and in priority over any
distributions upon Junior Shares. If the assets of United are not sufficient to
pay in full the Redemption Price to holders of Series A Preferred Stock, the
holders of all such shares shall share ratably (to the exclusion of any other
holders of capital stock) in such distribution of assets. If the assets of
United are not sufficient to pay in full the Redemption Price to holders of
Series B and Series C Preferred Stock, after payment in full of the Redemption
Price of the Series A Preferred Stock, the holders of all such shares shall
share ratably (to the exclusion of any other holders of capital stock) in such
distribution of assets.
"Junior Shares" means with respect to the priority of any class or series of
Preferred Stock, shares of Common Stock or shares of any other series or class
of Preferred Stock of United which are designated as junior to such series in
United's certificate of incorporation or any amendment thereto, or in the
resolution designating the class or series of such Preferred Stock and any
warrants, options or other rights to acquire or purchase such securities. The
shares of Series B and Series C Preferred Stock are Junior Shares in relation
to the Series A Preferred Stock. Any shares of additional Preferred Stock,
regardless of designation, shall be deemed Junior Shares in relation to the
Series A, Series B and Series C Preferred Stock.
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Dividend and Redemption Restrictions. Notwithstanding the foregoing, no
dividend payment or redemption may be made with respect to any Merger Preferred
Stock if such payment or redemption would contravene the provisions of the
Restated Certificate of Incorporation, the Debt Agreements or any law or
regulation. "Debt Agreements" is defined to mean the New Credit Facilities, the
Indenture for the Notes and any agreements evidencing any renewal, extension,
refinancing, refunding or replacement thereof.
CAPITAL STOCK OF THE COMPANY
The authorized capital stock of the Company consists of 890,000 shares of
common stock, par value $1.00 per share, 880,000 of which are outstanding and
owned beneficially and of record by United.
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OWNERSHIP OF VOTING SECURITIES
All of the issued and outstanding capital stock of the Company is owned
beneficially and of record by United. The following table sets forth, based on
information available to the Company as of , 1995, certain information
regarding the beneficial ownership of the Common Stock and the Series A,
Series B and Series C Preferred Stock of United as of the date of this
Prospectus by (i) each person who is known to United to beneficially own more
than 5% of any class of United's capital stock, (ii) each of the directors of
United and the Company, (iii) each named executive officer identified under
" Management -- Executive Compensation for United" or under "Management --
Executive Compensation for Associated," except to the extent no longer
serving as an officer or employee of United or the Company, and (iv) all
current directors and executive officers of United and the Company as a group.
See "Financing the Acquisition."
<TABLE>
<CAPTION>
COMMON STOCK (1) SERIES A PREFERRED (2) SERIES B PREFERRED (2)
---------------------- ---------------------------- ------------------------
DIRECTORS, EXECUTIVE PERCENT NUMBER PERCENT NUMBER PERCENT
OFFICERS AND NUMBER OF OF OF OF OF
5.0% STOCKHOLDERS OF SHARES CLASS(3) SHARES CLASS(3) SHARES CLASS(3)
-------------------- --------- -------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Wingate Partners, L.P... 2,788,023(4) 44.70% 3,148(5) 62.96% -- --%
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
ASI Partners, L.P....... 870,416(6) 14.44 1,212(7) 24.24 -- --
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Cumberland Capital 870,416(6) 14.44 1,212(7) 24.24 -- --
Corporation............
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Boise Cascade 272,632(8) 4.47 -- -- 6,724 100.00
Corporation............
One Jefferson Square
Boise, Idaho 83702
Chase Manhattan 617,245(9) 9.85 -- -- -- --
Investment Holdings,
Inc....................
1 Chase Manhattan Plaza
New York, New York
10081
Affiliated Computer -- -- -- -- -- --
Services, Inc..........
2828 North Haskell
Avenue
Dallas, Texas 75204
Thomas W. Sturgess (10). -- -- -- -- -- --
Gary G. Miller (11)..... -- -- -- -- -- --
Daniel J. Good.......... 102,434(12) 1.69 -- -- -- --
Jeffrey K. Hewson....... 1,038 * -- -- -- --
Michael D. Rowsey (13).. 58,968(14) * 55 1.09 -- --
Daniel J. Schleppe (13). 56,474(15) * 55 1.09 -- --
Steven R. Schwarz....... 315 * -- -- -- --
Daniel H. Bushell....... 23,965(16) * -- -- -- --
James T. Callier, Jr. -- -- -- --
(10)................... -- --
Frederick B. Hegi, Jr. -- -- -- --
(10)................... -- --
James A. 15 * -- --
Johnson(10)(13)........ 9,585 *
Joel D. Spungin......... 6,686(17) * -- -- -- --
Robert W. Eberspacher 55 1.09 -- --
(13)................... 55,175(18) *
All current directors
and executive officers
as a group
(11 persons) (10)-(18). 202,992(19) 3.34 70 1.39 -- --
<CAPTION>
SERIES C PREFERRED (2)
-------------------------
DIRECTORS, EXECUTIVE PERCENT
OFFICERS AND NUMBER OF
5.0% STOCKHOLDERS OF SHARES CLASS(3)
-------------------- ----------- -------------
<S> <C> <C>
Wingate Partners, L.P... -- --%
750 N. St. Paul Street
Suite 1200
Dallas, Texas 75201
ASI Partners, L.P....... -- --
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Cumberland Capital -- --
Corporation............
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Boise Cascade -- --
Corporation............
One Jefferson Square
Boise, Idaho 83702
Chase Manhattan -- --
Investment Holdings,
Inc....................
1 Chase Manhattan Plaza
New York, New York
10081
Affiliated Computer 10,086 100.00
Services, Inc..........
2828 North Haskell
Avenue
Dallas, Texas 75204
Thomas W. Sturgess (10). -- --
Gary G. Miller (11)..... -- --
Daniel J. Good.......... -- --
Jeffrey K. Hewson....... -- --
Michael D. Rowsey (13).. -- --
Daniel J. Schleppe (13). -- --
Steven R. Schwarz....... -- --
Daniel H. Bushell....... -- --
James T. Callier, Jr. -- --
(10)...................
Frederick B. Hegi, Jr. -- --
(10)...................
James A. -- --
Johnson(10)(13)........
Joel D. Spungin......... -- --
Robert W. Eberspacher -- --
(13)...................
All current directors
and executive officers
as a group
(11 persons) (10)-(18). -- --
</TABLE>
- -------
* Represents less than 1.0%.
(1) All Shares shown in the table, other than Shares beneficially owned by
CMIHI and Messrs. Hewson, Schwarz and Spungin are held in the Voting
Trust. See "Certain Transactions -- Certain Agreements Regarding the
Shares." The trustees of the Voting Trust are Messrs. Sturgess, Hegi,
Johnson, Good and G. Miller.
(2) Except under limited circumstances, the holders of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock are not
entitled to vote. See "Description of Capital Stock -- Capital Stock of
United -- Voting Rights."
(3) For purposes of calculating the beneficial ownership of each stockholder,
it was assumed (in accordance with the Commission's definition of
"beneficial ownership") that such stockholder had exercised all options
or warrants by which such stockholder had the right, within 60 days
following , 1995, to acquire shares of such class of stock.
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<PAGE>
(4) Includes (i) 2,078,434 Shares owned by Wingate Partners, (ii) 456,137
Shares owned by Wingate II, (iii) 36,078 Shares owned by Wingate
Affiliates and (iv) 7,884 Shares owned by Wingate Affiliates II, L.P.
Also includes Lender Warrants exercisable for an aggregate of 209,490
Shares (or shares of Nonvoting Common Stock, at the holder's option)
purchased by such entities from one of Associated's former senior
lenders.
(5) Includes (i) 3,094 Shares owned by Wingate Partners and (ii) 54 Shares
owned by Wingate Affiliates.
(6) Includes (i) 715,201 Shares owned by ASI Partners, L.P., (ii) 78,152
Shares owned by ASI Partners II, L.P. and (iii) 77,063 Shares owned by
Cumberland. Cumberland serves as the general partner of both ASI
Partners, L.P. and ASI Partners II, L.P.
(7) Includes 1,212 shares of Series A Preferred Stock owned by ASI Partners,
L.P., as to which Cumberland serves as general partner.
(8) Includes (i) 195,528 Shares owned by Boise Cascade and (ii) 77,104 Shares
issuable upon exercise of a Boise Warrant.
(9) Consists of 237,748 Shares (or shares of Nonvoting Common Stock, at the
holder's option) issuable upon exercise of Lender Warrants which are
immediately exercisable at $0.01 per Share, 240,023 shares of Nonvoting
Common Stock held by such holder and 139,474 shares of Nonvoting Common
Stock that were issued upon consummation of the sale of the Old Notes.
Subject to certain restrictions, the Nonvoting Common Stock is
convertible at any time at the option of the holder into Shares for no
additional consideration. See "Certain Transactions -- Lender Warrants"
and "Financing the Acquisition -- Loan Facilities -- New Credit
Facilities."
(10) Does not include shares owned by Wingate Partners, Wingate II, Wingate
Affiliates or Wingate Affiliates II, L.P. Each of Messrs. Sturgess, Hegi
and Callier is a general partner of Wingate Affiliates, and an indirect
general partner of Wingate Partners and, accordingly, may be deemed to
beneficially own the Shares owned of record by Wingate Partners and
Wingate Affiliates. Each of Messrs. Sturgess, Hegi and Johnson is a
general partner of Wingate Affiliates II, L.P. and an indirect general
partner of Wingate II and, accordingly, may be deemed to beneficially own
the Shares owned of record by Wingate II and Wingate Affiliates II, L.P.
(11) Does not include shares owned by ASI Partners, L.P., ASI Partners II,
L.P. or Cumberland. Mr. Miller is President and a stockholder of
Cumberland and, accordingly, may be deemed to beneficially own the shares
owned of record by ASI Partners, L.P., ASI Partners II, L.P. and
Cumberland.
(12) Includes Lender Warrants exercisable for an aggregate of 21,377 Shares
(or shares of Nonvoting Common Stock, at the holder's option) purchased
by Mr. Good from one of Associated's former senior lenders. Does not
include 181,950 Shares owned by Good Capital. Mr. Good is Chairman and a
controlling stockholder of Good Capital and, accordingly, may be deemed
to beneficially own the shares owned of record by Good Capital.
(13) Includes shares owned directly and by an individual retirement account
for the sole benefit of such individual.
(14) Includes (i) 42,278 Shares owned by or for the benefit of Mr. Rowsey and
(ii) 16,690 Shares issuable upon exercise of options which are, subject
to certain restrictions described under""Management -- Executive
Compensation for Associated -- 1992 Stock Option Plan," imme-diately
exercisable at $2.90 per share.
(15) Includes (i) 42,278 Shares owned by or for the benefit of Mr. Schleppe
and (ii) 14,196 Shares issuable upon exercise of options which are,
subject to certain restrictions, immediately exercisable at $2.90 per
share.
(16) Includes (i) 9,769 Shares owned by or for the benefit of Mr. Bushell and
(ii) 14,196 Shares issuable upon exercise of options which are, subject
to certain restrictions, immediately exercisable at $2.90 per share.
(17) Includes (i) 3,217 Shares owned by Mr. Spungin, (ii) an aggregate of
2,918 Shares owned by trusts and a partnership under Mr. Spungin's
direction and (iii) an aggregate of 551 Shares owned by relatives of Mr.
Spungin.
(18) Includes (i) 42,278 Shares owned by or for the benefit of Mr. Eberspacher
and (ii) 12,897 Shares issuable upon exercise of options which are,
subject to certain restrictions, immediately exercisable at $2.90 per
share.
(19) Includes an aggregate of (i) 150,729 Shares owned by the current
directors and executive officers of United and the Company, (ii) 30,886
Shares issuable upon exercise of options which are, subject to certain
restrictions, immediately exercisable at $2.90 per share and (iii) 21,377
Shares issuable upon exercise of a Lender Warrant owned by a director of
United.
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DESCRIPTION OF THE NEW NOTES
The New Notes will be issued under an Indenture dated as of May 3, 1995 (the
"Indenture") among the Company, United, as Guarantor, and The Bank of New York,
as trustee (the "Trustee"), a copy of the form of which is available upon
request to the Company. See "Available Information." The Old Notes were also
issued pursuant to the Indenture. Upon the effectiveness of the Exchange Offer
Registration Statement, the Indenture will be subject to and governed by the
Trust Indenture Act. The following summary of the material provisions of the
Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by the Trust Indenture Act. For definitions of certain capitalized
terms used in the following summary, see "Description of the New Notes --
Certain Definitions." References in this "Description of the New Notes" to the
Company or United are to United Stationers Supply Co. or United Stationers
Inc., respectively, excluding any subsidiaries thereof, and their successors.
GENERAL
The Notes will mature on May 1, 2005, will be limited to $150,000,000
aggregate principal amount at any one time outstanding (including any New Notes
that may be issued from time to time in exchange for the Old Notes as described
under "The Exchange Offer") and will be unsecured senior subordinated
obligations of the Company. Each Note will bear interest at the rate set forth
on the cover page hereof from May 3, 1995 or from the most recent interest
payment date to which interest has been paid, payable semi-annually on May 1
and November 1 in each year, commencing November 1, 1995, to the Person in
whose name the Note (or any predecessor Note) is registered at the close of
business on the April 15 or the October 15 next preceding such interest payment
date. For a description of the circumstances under which the interest rate on
the Old Notes may be increased from the rate set forth on the cover page of
this Prospectus, see "The Exchange Offer -- Adjustment to Old Notes."
Principal of (and premium, if any, on) and interest on the Notes will be
payable, and the Notes will be exchangeable and transferable, at the office or
agency of the Company in the City of New York maintained for such purposes
(which initially will be the office of the Trustee maintained at 101 Barclay
Street, 21st Floor, New York, New York 10286 Attention: Corporate Trust
Administration); provided, however, that payment of principal or interest may
be made at the option of the Company by check mailed to the Person entitled
thereto as shown on the security register. The Notes will be issued only in
fully registered form without coupons, in denominations of $1,000 and any
integral multiple thereof. No service charge will be made for any registration
of transfer, exchange or redemption of Notes, except in certain circumstances
for any tax or other governmental charge that may be imposed in connection
therewith.
Initially, the Company was permitted to issue only the Old Notes; however,
the Company may issue New Notes in exchange for a like principal amount of Old
Notes in connection with the Exchange Offer. Upon any such exchange the Old
Notes so exchanged shall be cancelled and shall no longer be deemed outstanding
for any purpose. In no event shall the aggregate principal amount of Old Notes
and New Notes outstanding exceed $150,000,000. The Old Notes and the New Notes
shall be one class for all purposes under the Indenture, including, without
limitation, amendments, waivers, redemptions, Change of Control Offers, and
Offers, and for purposes of this "Description of the New Notes," all references
herein to "Notes" shall be deemed to refer collectively to Old Notes and New
Notes, unless the context otherwise requires.
OPTIONAL REDEMPTION
The Notes will be subject to redemption at any time on or after May 1, 2000,
at the option of the Company, in whole or in part, on not less than 30 nor more
than 60 days' prior notice in amounts of
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<PAGE>
$1,000 or an integral multiple thereof at the following redemption prices
(expressed as percentages of the principal amount), if redeemed during the 12-
month period beginning May 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000.............................................................. 106.375%
2001.............................................................. 104.781%
2002.............................................................. 103.188%
2003.............................................................. 101.594%
</TABLE>
and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
relevant interest payment dates).
In addition, at any time or from time to time prior to May 1, 1998, the
Company may redeem Notes having a principal amount of up to $50.0 million
within 180 days following one or more Public Equity Offerings with the net
proceeds of such offerings at a redemption price equal to 112.75% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of redemption (subject to the right of holders of record on relevant
record dates to receive interest due on relevant interest payment dates);
provided that immediately after giving effect to each such redemption, at least
$100.0 million aggregate principal amount of the Notes remain outstanding.
If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable.
SINKING FUND
The Notes will not be entitled to the benefit of any sinking fund or other
mandatory redemption obligation prior to maturity.
SUBORDINATION
The payment of the principal of (and premium, if any, on) and interest on,
the Notes will be subordinated, as set forth in the Indenture, in right of
payment to the prior payment in full of all Senior Indebtedness in cash or in
any other form acceptable to the holders of Senior Indebtedness (or such
payment shall be duly provided for to the satisfaction of the holders of the
Senior Indebtedness). The Notes will be senior subordinated indebtedness of the
Company ranking pari passu with all other existing and future senior
subordinated indebtedness of the Company and senior to all existing and future
Subordinated Indebtedness of the Company.
During the continuance of any default in the payment of any Senior
Indebtedness beyond any applicable grace period, no payment (other than
payments previously made pursuant to the provisions described under
"Description of Notes -- Defeasance or Covenant Defeasance of Indenture") or
distribution of any assets of the Company of any kind or character shall be
made by the Company on account of principal of (and premium, if any, on) or
interest on, the Notes or on account of the purchase, redemption, defeasance or
other acquisition of the Notes (other than such payments or distributions as
may be agreed to by the lenders under the Senior Bank Facility in accordance
with the terms of the Senior Bank Facility) unless and until such default shall
have been cured or waived or shall have ceased to exist or the Senior
Indebtedness with respect to which such payment default shall have occurred
shall have been discharged or paid in full in cash or in any other form
acceptable to the holders of such Senior Indebtedness (or such payment shall be
duly provided for to the satisfaction of the holders of
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the Senior Indebtedness), after which the Company shall resume making any and
all required payments in respect of the Notes, including any missed payments.
During the continuance of any non-payment event of default with respect to
any Designated Senior Indebtedness (as such event of default is defined in the
instrument creating or evidencing such Designated Senior Indebtedness) pursuant
to which the maturity thereof may be accelerated (a "Non-payment Default") and
after receipt by the Trustee and the Company from a representative of the
holders of such Designated Senior Indebtedness of written notice of such event
of default, no payment (other than payments previously made pursuant to the
provisions described under "Description of Notes -- Defeasance or Covenant
Defeasance of Indenture") or distribution of any assets of the Company of any
kind or character (other than such payments or distributions as may be agreed
to by the holders of such Designated Senior Indebtedness in accordance with the
terms of the agreement governing such Designated Senior Indebtedness) shall be
made by the Company on account of any principal of (and premium, if any, on) or
interest on the Notes or on account of the purchase, redemption, defeasance or
other acquisition of the Notes for the period specified below (the "Payment
Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of the
Non-payment Default by the Trustee from a Representative of the holder of any
Designated Senior Indebtedness and shall end on the earliest of (i) the first
date on which 179 days shall have elapsed since the receipt of such written
notice, (ii) the date on which such Non-payment Default is cured, waived or
ceases to exist or on which such Designated Senior Indebtedness is discharged
or paid in full in cash or in any other manner acceptable to the holders of
Designated Senior Indebtedness (as determined in accordance with the terms of
the agreement governing such Designated Senior Indebtedness) (or the date on
which payment shall be duly provided for to the satisfaction of the holders of
such Designated Senior Indebtedness) or (iii) the date on which such Payment
Blockage Period shall have been terminated by written notice to the Company or
the Trustee from the Representative of, or the holders of at least a majority
in principal amount of, the Designated Senior Indebtedness initiating such
Payment Blockage Period, after which, in the case of clause (i), (ii) and
(iii), the Company shall resume making any and all required payments in respect
of the Notes, including any missed payments. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Company or the Trustee of the notice initiating such Payment Blockage Period
(such 179-day period referred to as the "Initial Period"). Any number of
notices of Non-payment Defaults may be given during the Initial Period;
provided that during any 365 consecutive day period, only one such period
during which payment of principal of, or interest on, the Notes may not be made
may be commenced, and the duration of such period may not exceed 179 days. No
Non-payment Default with respect to Designated Senior Indebtedness which
existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such event of default has been cured or waived for a
period of not less than 90 consecutive days.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the subordination
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof. See "Description of the New Notes -- Events of Default."
The Indenture provides that, in the event of any insolvency, bankruptcy or
reorganization case or proceeding, or any receivership, liquidation, or other
similar case or proceeding, relative to the Company or to its creditors, as
such, or to its assets, or any liquidation, dissolution or other winding up of
the Company, whether voluntary or involuntary, or any assignment for the
benefit of creditors or any other marshalling of assets or liabilities of the
Company, all Senior Indebtedness must be paid in full in cash
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or in any other form acceptable to the holders of Senior Indebtedness (or such
payment shall be duly provided for to the satisfaction of the holders of Senior
Indebtedness), before any payment or distribution is made on account of the
principal of, premium, if any, or interest on the Notes.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and funds which would be
otherwise payable to the holders of the Notes will be paid to the holders of
the Senior Indebtedness to the extent necessary to pay the Senior Indebtedness
in full in cash or in any other form acceptable to the holders of Senior
Indebtedness, and the Company may be unable to meet its obligations fully with
respect to the Notes.
"Senior Indebtedness" means the principal of, premium, if any, and interest
(including interest accruing after the filing of a petition initiating any
proceeding under any state, federal or foreign bankruptcy law whether or not
allowable as a claim in such proceeding) on any Indebtedness of the Company
(except as otherwise provided in this definition), whether outstanding on the
Closing Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall include
the principal of (and premium, if any) and interest (including interest
accruing after the filing of a petition initiating any proceeding under any
state, federal or foreign bankruptcy laws whether or not allowable as a claim
in such proceeding) and all other obligations of every nature of the Company
from time to time owed under the Senior Bank Facility (including, without
limitation, agency fees, commitment fees and letter of credit fees); provided,
however, that any Indebtedness under any refinancing, refunding or replacement
of the Senior Bank Facility shall not constitute Senior Indebtedness to the
extent that the Indebtedness thereunder is by its express terms subordinate to
any other Indebtedness of the Company. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include any of the following (whether or not
constituting Indebtedness under the Indenture): (i) Indebtedness evidenced by
the Notes, (ii) Indebtedness that, by its express terms, is subordinate or
junior in right of payment to any Indebtedness of the Company, (iii)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock,
(v) any liability for foreign, federal, state, local or other taxes owed or
owing by the Company, (vi) Indebtedness of the Company to a Subsidiary, and
(vii) any trade payables.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under the
Senior Bank Facility; and (ii) any other Senior Indebtedness outstanding in a
principal amount of at least $50 million, and which is specifically designated
by the Company in the agreement governing or the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness."
GUARANTEES
Payment of the Notes is guaranteed by United on a senior subordinated basis
and will be guaranteed on a senior subordinated basis by any newly formed
domestic Restricted Subsidiary of the Company created or acquired after the
Closing Date. The Company has no present intention to form any domestic
Restricted Subsidiary.
Each Guarantee of the Notes will be an unsecured senior subordinated
obligation of the Guarantor, ranking pari passu with, or senior in right of
payment to, all other existing and future indebtedness of such Guarantor that
is expressly subordinated to Senior Guarantor Indebtedness of such Guarantor.
The Indebtedness of any Guarantor evidenced by its Guarantee will be
subordinated to Senior Guarantor Indebtedness of such Guarantor to the same
extent as the Notes are subordinated to Senior Indebtedness, and during any
period when payment on the Notes is prohibited pursuant to the subordination
provisions of the Indenture, payment on any Guarantee will be similarly
prohibited.
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"Senior Guarantor Indebtedness" means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including interest accruing after
the filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy laws whether or not allowable as a claim in such proceeding)
on any Indebtedness of such Guarantor (except as otherwise provided in this
definition), whether outstanding on the Closing Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to such Guarantor's Guarantee of the Notes. Without limiting
the generality of the foregoing, "Senior Guarantor Indebtedness" shall include
the principal of (and premium, if any) and interest (including interest
accruing after the filing of a petition initiating any proceeding under any
state, federal or foreign bankruptcy laws whether or not allowable as a claim
in such proceeding) and all other obligations of every nature of any Guarantor
from time to time owed under the Senior Bank Facility; provided, however, that
any Indebtedness under any refinancing, refunding or replacement of the Senior
Bank Facility shall not constitute Senior Guarantor Indebtedness to the extent
that the Indebtedness thereunder is by its express terms subordinate to any
other Indebtedness of any Guarantor. Notwithstanding the foregoing, "Senior
Guarantor Indebtedness" shall not include any of the following (whether or not
constituting Indebtedness under the Indenture): (i) Indebtedness evidenced by
the Guarantees of the Notes, (ii) Indebtedness that, by its express terms, is
subordinate or junior in right of payment to any Indebtedness of any Guarantor,
(iii) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 United States Code, is without recourse to
any Guarantor, (iv) Indebtedness which is represented by Redeemable Capital
Stock, (v) any liability for foreign, federal, state, local or other taxes owed
or owing by any Guarantor, (vi) Indebtedness of any Guarantor to a Subsidiary,
and (vii) any trade payables.
"Designated Senior Guarantor Indebtedness" means (i) all Senior Guarantor
Indebtedness under the Senior Bank Facility; and (ii) any other Senior
Guarantor Indebtedness outstanding in a principal amount of at least $50
million, and which is specifically designated by the Guarantor in the agreement
governing or the instrument evidencing such Senior Guarantor Indebtedness as
"Designated Senior Guarantor Indebtedness."
Each Guarantor shall not, and (except in the case of United) the Company will
not permit any Guarantor to, in a single transaction or through a series of
related transactions, merge or consolidate with or into any other corporation
(other than the Company or any Restricted Wholly Owned Subsidiary) or other
entity, sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of such Guarantor's properties and assets on a Consolidated
basis to any entity (other than the Company or any Restricted Wholly Owned
Subsidiary) unless at the time and after giving effect thereto: (i) either
(1) such Guarantor shall be the continuing corporation or partnership or (2)
the entity (if other than such Guarantor) formed by such consolidation or into
which such Guarantor is merged or the entity which acquires by sale,
assignment, conveyance, transfer, lease or disposition the properties and
assets of such Guarantor shall be a corporation duly organized and validly
existing under the laws of the United States, any state thereof or the District
of Columbia and shall expressly assume by a supplemental indenture, executed
and delivered to the Trustee, all the obligations of such Guarantor under its
Guarantee of the Notes and the Indenture; (ii) immediately before and
immediately after giving effect to such transaction or transactions, no Default
or Event of Default shall have occurred and be continuing; and (iii) such
Guarantor shall have delivered to the Trustee an Officers' Certificate and an
opinion of counsel in form and substance reasonably satisfactory to the
Trustee, each stating that such consolidation, merger, sale, assignment,
conveyance, transfer, lease or disposition and such supplemental indenture
comply with the Indenture, and thereafter all obligations of the predecessor
shall terminate; provided that the foregoing shall not apply to any Guarantor
(other than United) if (A) immediately after such merger, consolidation, sale,
assignment, conveyance, transfer, lease or other disposition, the Person
surviving such merger or consolidation or the assignee, conveyee, transferee,
lessee or recipient of such other disposition is not a Subsidiary and (B) the
"Limitation on Sale of Assets" covenant of the Indenture is complied with in
connection with such transaction.
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In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraph in which any Guarantor
is not the continuing corporation, the successor Person formed or remaining
shall succeed to, and be substituted for, and may exercise every right and
power of, such Guarantor and the Guarantor will be discharged from all
obligations and covenants under the Indenture and its Guarantee.
After giving pro forma balance sheet effect to the Acquisition and the
refinancing of certain debt and repurchase of the Series B Preferred Stock,
including accrued and unpaid dividends thereon, assumed to be effected with the
proceeds of the Old Notes as if all such transactions had occurred on March 31,
1995, there would have been approximately $394.2 million of Senior Indebtedness
of the Company (all of which would have been Designated Senior Indebtedness)
and approximately $394.2 million of Senior Guarantor Indebtedness of United
(all of which would have been Designated Senior Guarantor Indebtedness)
outstanding on such date, substantially all of which represents Indebtedness or
guarantees of Indebtedness under the New Credit Facilities which is secured by
substantially all of the assets of the Company and United, respectively; in
addition, after taking into account approximately $68.1 million of outstanding
letters of credit, there would have been approximately $32.8 million available
to be drawn by the Company as secured Senior Indebtedness under the revolving
credit portion of the New Credit Facilities (all of which would have been
Designated Senior Indebtedness), which amount would have been secured Senior
Guarantor Indebtedness of United (all of which would have been Designated
Senior Guarantor Indebtedness); and there would have been approximately $264.1
million of Indebtedness of the Company that would have been pari passu to the
New Notes. See "Risk Factors -- Subordination" and "-- Limited Practical Value
of Guarantees by United," "Capitalization" and "Pro Forma Combined Financial
Information."
CERTAIN COVENANTS
The Indenture contains, among others, the covenants described below.
Limitation on Incurrence of Indebtedness. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, create, issue, assume, incur,
guarantee, or otherwise in any manner become directly or indirectly liable for
(collectively, "incur") any Indebtedness (including any Acquired Indebtedness);
provided that the Company may incur Indebtedness (including any Acquired
Indebtedness) if (A) the Consolidated Fixed Charge Coverage Ratio of the
Company for the four full fiscal quarters immediately preceding the incurrence
of such Indebtedness taken as one period (and after giving pro forma effect to
(i) if the computation of the Consolidated Fixed Charge Coverage Ratio is made
on any date prior to the end of the four full fiscal quarters immediately
following the effective date of the Merger, the consummation of the Merger and
the financing related thereto (but excluding any anticipated savings, whether
or not related thereto), including the issuance of the Notes as though they had
been issued and outstanding at the effective time of the Merger and the
incurrence of indebtedness under the Senior Bank Facility and, in each case,
the application of the proceeds thereof, as though such transaction had
occurred on the first day of the four full fiscal quarters commencing
immediately prior to the effective date of the Merger, (ii) the incurrence of
such Indebtedness and the application of the net proceeds therefrom, including
to refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, at the beginning of such four-quarter
period; (iii) the incurrence, repayment or retirement of any other Indebtedness
by the Company and its Restricted Subsidiaries since the first day of such
four-quarter period as if such Indebtedness was incurred, repaid or retired at
the beginning of such four-quarter period (except that, in making such
computation, the amount of Indebtedness outstanding under any revolving credit
facility shall be computed based upon the average daily balance of such
Indebtedness during such four-quarter period); (iv) in the case of Acquired
Indebtedness, the related acquisition as if such acquisition occurred at the
beginning of such four-quarter period; and (v) any acquisition or disposition
by the Company or its Restricted Subsidiaries of any company or any business or
any assets out of the ordinary course of business, whether by merger, stock
purchase or sale or asset purchase or sale, as if such acquisition or
disposition, as the case may be, occurred at the beginning of such four-quarter
period, and any related incurrence or repayment of Indebtedness, in each case
since the first day of such four-quarter
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period, assuming such acquisition or disposition had been consummated on the
first day of such four-quarter period) is (x) for the period from the Closing
Date through May 3, 1998 at least equal to 2.00:1.00 and (y) thereafter at
least equal to 2.25:1.00 and (B) if such Indebtedness is Subordinated
Indebtedness, such Indebtedness shall have an Average Life to Stated Maturity
longer than the Average Life to Stated Maturity of the Notes and a final Stated
Maturity of principal later than the final Stated Maturity of principal of the
Notes.
(b) The foregoing limitation will not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company (x) outstanding at any time in an
aggregate principal amount not to exceed an amount equal to $200 million
minus all principal amounts actually repaid under the term loan portion of
the Senior Bank Facility, including any such amount repaid as provided
under the "Limitation on Sale of Assets" covenant described below, and (y)
outstanding at any time in an aggregate amount equal to the greater of (I)
the Borrowing Base and (II) $300 million;
(ii) subject to the "Limitation on Guarantees of Indebtedness" covenant,
Guarantees by Restricted Subsidiaries of Senior Indebtedness of the
Company; provided that such Indebtedness of the Company is incurred in
compliance with the provisions of the Indenture;
(iii) Indebtedness of the Company pursuant to the Notes and Indebtedness
of any Guarantor pursuant to its Guarantee of the Notes;
(iv) Indebtedness of the Company outstanding on the Closing Date;
(v) Indebtedness of the Company owing to a Restricted Wholly Owned
Subsidiary, provided that any such Indebtedness (x) is made pursuant to an
intercompany note in the form attached to the Indenture and (y) is
subordinated in right of payment to the prior payment and performance of
the Company's obligations under the Notes, if applicable; provided further
that (A) any disposition, pledge or transfer of any such Indebtedness to a
Person (other than a disposition, pledge or transfer to a Restricted Wholly
Owned Subsidiary or a pledge to or for the benefit of any holder of Senior
Indebtedness) or (B) any transaction pursuant to which such Restricted
Wholly Owned Subsidiary ceases to be a Restricted Wholly Owned Subsidiary
shall be deemed to be an incurrence of such Indebtedness by the Company not
permitted by this clause (v);
(vi) Indebtedness of a Restricted Wholly Owned Subsidiary owing to the
Company or to a Restricted Wholly Owned Subsidiary; provided that, with
respect to Indebtedness owing to any Restricted Wholly Owned Subsidiary,
(x) any such Indebtedness is made pursuant to an intercompany note in the
form attached to the Indenture and (y) any such Indebtedness shall be
subordinated in right of payment to the payment and performance of such
Subsidiary's obligations under its Guarantee of the Notes, if applicable;
provided further that (A) any disposition, pledge or transfer of any such
Indebtedness to a Person (other than a disposition, pledge or transfer to
the Company or a Restricted Wholly Owned Subsidiary or a pledge to or for
the benefit of any holder of Senior Indebtedness) shall be deemed to be an
incurrence of such Indebtedness by the obligor not permitted by this clause
(vi), and (B) any transaction pursuant to which any Restricted Wholly Owned
Subsidiary, which has Indebtedness owing to the Company or any other
Restricted Wholly Owned Subsidiary, ceases to be a Restricted Wholly Owned
Subsidiary shall be deemed to be an incurrence of Indebtedness by such
Subsidiary that is not permitted by this clause (vi);
(vii) any renewals, extensions, substitutions, refundings, refinancings
or replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (iii) and (iv) of this paragraph (b) (including any
successive refinancings), so long as the aggregate principal amount of
Indebtedness represented thereby is not increased by such refinancing,
except by an amount equal to the lesser of (x) the stated amount of any
premium, interest or other payment required to be paid in connection with
such a refinancing pursuant to the terms of the Indebtedness being
refinanced or (y) the amount of premium, interest or other payment actually
paid at such time to refinance the Indebtedness, plus, in either case, the
amount of expenses incurred in connection
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with such refinancing; provided that in the case of Pari Passu Indebtedness
or Subordinated Indebtedness, (A) such new Indebtedness does not have a
shorter Average Life to Stated Maturity or a final Stated Maturity of
principal earlier than the Indebtedness being refinanced, (B) in the case
of Pari Passu Indebtedness, such new Indebtedness is pari passu with, or
subordinated to, the Notes and (C) in the case of Subordinated
Indebtedness, such new Indebtedness is subordinated to the Notes at least
to the same extent as the Indebtedness being refinanced; and provided
further that in no event may Indebtedness of the Company be refinanced with
Indebtedness of any Restricted Subsidiary pursuant to this clause (vii);
(viii) Indebtedness of the Company consisting of Capitalized Lease
Obligations or purchase money obligations, in addition to that described in
clauses (i) through (vii) of this paragraph (b), not to exceed $10 million
outstanding at any one time in the aggregate;
(ix) Indebtedness of the Company (whether or not constituting purchase
money obligations or Capitalized Lease Obligations) not to exceed $20
million at any one time outstanding; and
(x) Indebtedness of the Company consisting of bona fide Interest Rate
Agreements designed to protect the Company from, or control the exposure of
the Company to, fluctuations in interest rates in respect of Indebtedness.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, any shares of its Capital Stock (other than dividends or distributions
payable solely in shares of its Qualified Capital Stock or in options,
warrants or other rights to acquire such Qualified Capital Stock and other
than dividends and distributions paid to the Company);
(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any shares of the Capital Stock of United, the Company or
any Restricted Subsidiary (other than any Restricted Wholly Owned
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to the relevant scheduled
principal payment, sinking fund or maturity, any Subordinated Indebtedness;
or
(iv) make any Investment in any Person, including, without limitation,
any Unrestricted Subsidiary (other than any Permitted Investments)
(the foregoing actions described in clauses (i) through (iv), collectively,
"Restricted Payments") unless after giving effect to the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, as
determined in good faith by the Board of Directors of the Company, such
determination to be conclusive and evidenced by a Board Resolution), (A) no
Default or Event of Default shall have occurred and be continuing and such
Restricted Payment shall not cause or constitute any of the foregoing; (B)
immediately before and immediately after giving effect to such transaction on a
pro forma basis, the Company could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the "Limitation on Indebtedness"
covenant; and (C) the aggregate amount of all such Restricted Payments declared
or made after the Closing Date (including such Restricted Payment) does not
exceed the sum of:
(I) 50% of the aggregate cumulative Consolidated Net Income (or, if such
aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company accrued on a cumulative basis during the period
(taken as one accounting period) beginning on the date of the Merger and
ending on the last day of the Company's last fiscal quarter ending prior to
the date of the Restricted Payment;
(II) the aggregate Net Cash Proceeds received after the Closing Date by
the Company from the issuance or sale (other than to any of its
Subsidiaries) of its shares of Qualified Capital Stock
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or any options, warrants or rights to purchase such shares of Qualified
Capital Stock (less the value of any equity security referred to (and
determined in accordance with) the parenthetical in clause (a)(i) of the
definition of Consolidated Interest Expense);
(III) the aggregate Net Cash Proceeds received after the Closing Date by
the Company (other than from any of its Subsidiaries) upon the exercise of
any options, warrants or rights to purchase shares of Qualified Capital
Stock of the Company;
(IV) the aggregate Net Cash Proceeds received after the Closing Date by
the Company from Indebtedness of the Company or Redeemable Capital Stock of
the Company that has been converted into or exchanged for Qualified Capital
Stock of the Company (or options, warrants or rights to purchase such
Qualified Capital Stock), to the extent such Indebtedness of the Company or
Redeemable Capital Stock of the Company was originally incurred or issued
for cash, plus the aggregate Net Cash Proceeds received by the Company at
the time of such conversion or exchange;
(V) without duplication of any of the foregoing, 100% of the aggregate
Net Cash Proceeds received by the Company as a capital contribution from
United; plus
(VI) to the extent not included in Consolidated Net Income, the net
reduction (received by the Company or any Restricted Subsidiary in cash) in
Investments (other than Permitted Investments) made by the Company and the
Restricted Subsidiaries since the Closing Date, not to exceed, in the case
of any Investments in any Person, the amount of Investments (other than
Permitted Investments) made by the Company and the Restricted Subsidiaries
in such Person since the Closing Date.
(b) Notwithstanding the foregoing, and in the case of clauses (ii), (iii),
(iv), (v), (vi), (vii), (viii) and (ix) below, so long as there is no Default
or Event of Default continuing, the foregoing provisions shall not prohibit
the following actions:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this "Limitation on
Restricted Payments" covenant (such payment shall be deemed to have been
paid on such date of declaration for purposes of the calculation required
by paragraph (a) of this "Limitation on Restricted Payments" covenant);
(ii) the repurchase, redemption, or other acquisition or retirement of
any shares of any class of Capital Stock of the Company or warrants,
options or other rights to acquire such stock in exchange for, or out of
the Net Cash Proceeds of a substantially concurrent issue and sale (other
than to a Subsidiary) for cash of, any Qualified Capital Stock of the
Company or warrants, options or other rights to acquire such stock;
(iii) any repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of a substantially
concurrent issuance and sale (other than to a Subsidiary) for cash of, any
Qualified Capital Stock of the Company or warrants, options or other rights
to acquire such stock;
(iv) the repurchase, redemption, defeasance, retirement or other
acquisition for value or payment of principal of any Subordinated
Indebtedness through the issuance of Indebtedness meeting the requirements
of clause (vii) of paragraph (b) of the "Limitation on Indebtedness"
covenant;
(v) the repurchase, redemption, acquisition or retirement of shares of
Capital Stock of United or options, warrants or other rights to purchase
such shares held by officers or employees or former officers or employees
of United and the Subsidiaries (or their estates or beneficiaries), upon
death, disability, retirement, or termination of employment, pursuant to
the terms of any employee stock option or stock purchase plan or agreement
under which such shares were acquired; provided that the aggregate
consideration paid for all such shares following the Closing Date does not
exceed $600,000 in any fiscal year of the Company; and provided further
that the amount by which $600,000
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exceeds the amount so used in any fiscal year of the Company shall be
available to be so used in subsequent fiscal years of the Company,
notwithstanding the immediately preceding proviso;
(vi) payments to United, to the extent used by United to pay its
operating and administrative expenses including, without limitation,
directors' fees, legal and audit expenses, Commission compliance expenses
and corporate franchise and other taxes, not to exceed $500,000 in any
fiscal year of the Company;
(vii) payments to United, not to exceed $250,000 in the aggregate after
the Closing Date, to the extent used by United to make cash payments to
holders of its Capital Stock in lieu of the issuance of fractional shares
of Capital Stock and to redeem or repurchase stock purchase or similar
rights issued as a shareholder rights device;
(viii) payments to United of up to $1,000,000 in any fiscal year of the
Company, to the extent used by United to satisfy its payment obligations
under the Management Services Agreements; and
(ix) the payment of dividends or the making of distributions to United,
within 30 days of the Closing Date, to the extent that United, within such
30 days, uses such dividends and distributions to redeem or repurchase all
or any portion of United's Series B Preferred Stock that is outstanding on
the Closing Date (plus any shares of Series B Preferred Stock issued as
dividends on such outstanding shares after the Closing Date and prior to
such redemption or repurchase); and the purchase by the Company of all or
any portion of United's Series B Preferred Stock that is outstanding on the
Closing Date (plus any shares of Series B Preferred Stock issued as
dividends on such outstanding shares after the Closing Date and prior to
such purchase), within 30 days of the Closing Date; provided that the
aggregate amount of all such payments by the Company under this clause (ix)
shall not exceed $7.0 million.
The actions described in clauses (i) through (iii) and clauses (v) through
(vii) of this paragraph (b) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph (b) but shall reduce
the amount that would otherwise be available for Restricted Payments under
clause (C) of paragraph (a) of this "Limitation on Restricted Payments"
covenant (provided that any dividend paid pursuant to clause (i) of this
paragraph (b) shall reduce the amount that would otherwise be available under
clause (C) of paragraph (a) of this "Limitation on Restricted Payments"
covenant when declared, but not also when paid pursuant to such clause (i))
and the actions described in clauses (iv), (viii) and (ix) of this paragraph
(b) shall be permitted to be taken in accordance with this paragraph and shall
not reduce the amount that would otherwise be available for Restricted
Payments under clause (C) of paragraph (a).
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets or property or the rendering of any services) with any
Affiliate of the Company (other than a Restricted Wholly Owned Subsidiary of
the Company) unless (i) such transaction or series of transactions is in
writing on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than would be available in a comparable
transaction in arm's-length dealings with an unrelated third party, (ii) with
respect to any such transaction or series of transactions involving aggregate
payments in excess of $1.0 million, the Company delivers an officers'
certificate to the Trustee certifying that such transaction or series of
related transactions complies with clause (i) above and such transaction or
series of related transactions has been approved by the Board of Directors of
the Company, and (iii) with respect to a transaction or series of related
transactions involving aggregate value in excess of $5.0 million, the Company
delivers to the Trustee an opinion of an independent investment banking firm
of national standing stating that the transaction or series of transactions is
fair to the Company or such Restricted Subsidiary from a financial point of
view.
The foregoing shall not apply to the performance of obligations under the
Management Service Agreements and the Employment Contracts, in each case as in
effect on the Closing Date.
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Limitation on Senior Subordinated Indebtedness. The Company and each
Guarantor will not, directly or indirectly, incur or otherwise permit to exist
any Indebtedness that is subordinate in right of payment to any Indebtedness
of the Company or such Guarantor, as the case may be, unless such Indebtedness
is also pari passu with the Notes or the Guarantee of the Notes by such
Guarantor, as the case may be, or subordinate in right of payment to the Notes
or such Guarantee of the Notes, as the case may be, to at least the same
extent as the Notes or such Guarantee are subordinate in right of payment to
Senior Indebtedness or Senior Guarantor Indebtedness, as the case may be, as
set forth in the Indenture.
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, incur, assume or suffer to
exist any Lien of any kind upon any of its property or assets (including any
shares of Capital Stock or Indebtedness of any Restricted Subsidiary), owned
on the Closing Date or acquired after the Closing Date, or any income or
profits therefrom, except if the Notes (or the Guarantee of the Notes, in the
case of Liens on properties or assets of a Restricted Subsidiary that is a
Guarantor) and all other amounts due under the Indenture are directly secured
equally and ratably with (or prior to in the case of Liens with respect to
Subordinated Indebtedness) the obligation or liability secured by such Lien,
excluding, however, from the operation of the foregoing any of the following:
(a) any Lien existing as of the Closing Date;
(b) any Lien arising by reason of (i) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (ii) taxes, assessments or other governmental charges not yet
delinquent or which are being contested in good faith; (iii) security for
payment of workers' compensation or other insurance; (iv) good faith
deposits in connection with tenders, leases or contracts (other than
contracts for the payment of money); (v) zoning restrictions, easements,
licenses, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor irregularities of title (and
with respect to leasehold interests, mortgages, obligations, liens and
other encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased property,
with or without consent of the lessee), none of which materially impairs
the use of any property or assets material to the operation of the business
of the Company or any Restricted Subsidiary or the value of such property
or assets for the purpose of such business; (vi) deposits to secure public
or statutory obligations, or in lieu of surety or appeal bonds with respect
to matters not yet finally determined and being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection
thereof; or (vii) operation of law in favor of mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of
business for sums which are not yet delinquent or are being contested in
good faith by negotiations or by appropriate proceedings which suspend the
collection thereof;
(c) any Lien now or hereafter existing on property of the Company or any
Guarantor securing Senior Indebtedness or Senior Guarantor Indebtedness, as
the case may be, of such Person;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company, which Indebtedness is permitted under the
"Limitation on Indebtedness" covenant; provided that any such Lien only
extends to the assets that were subject to such Lien securing such Acquired
Indebtedness prior to the related acquisition; and
(e) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (d) so
long as the amount of property or assets subject to such Lien is not
increased thereby.
Limitation on Sale of Assets. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 75% of the proceeds
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from such Asset Sale are received in cash and (ii) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value of the shares or assets sold.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale is not
applied to repay permanently any Senior Indebtedness or Senior Guarantor
Indebtedness then outstanding as required by the terms thereof, and the Company
determines not to apply such Net Cash Proceeds to the prepayment of such Senior
Indebtedness or Senior Guarantor Indebtedness or if no such Senior Indebtedness
or Senior Guarantor Indebtedness is then outstanding, then the Company may,
within 12 months of the Asset Sale, invest (or enter into a written, legally
binding commitment to invest, provided that the investment provided for in such
commitment is actually made within 24 months of the Asset Sale) the Net Cash
Proceeds in other properties and assets that will be used in the businesses of
the Company existing on the Closing Date or in any company having such
properties and assets. The amount of such Net Cash Proceeds neither used to
permanently repay or prepay Senior Indebtedness or Senior Guarantor
Indebtedness nor used or invested as set forth in this paragraph (b)
constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals $10.0 million or
more, the Company shall, within 15 Business Days: make an offer (an "Offer") to
purchase, for cash, at 100% of the principal amount thereof, plus accrued and
unpaid interest to the repurchase date (the "Repurchase Date"), in accordance
with the procedures set forth in the Indenture the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Notes, and the denominator of which is the sum of the outstanding
principal amount of the Notes and any Pari Passu Indebtedness that is required
to be repurchased under the instrument governing such Pari Passu Indebtedness
and (ii) to the extent required by such Pari Passu Indebtedness, the Company
shall make an offer to purchase or, if required by the terms of such Pari Passu
Indebtedness, otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari
Passu Repayment") in an amount (the "Pari Passu Debt Amount") equal to the
excess of the Excess Proceeds over the Note Amount; provided that in no event
shall the Pari Passu Debt Amount exceed the principal amount of such Pari Passu
Indebtedness plus the amount of any premium, if any, and accrued and unpaid
interest required to be paid to repurchase such Pari Passu Indebtedness. To the
extent that the aggregate principal amount of and accrued but unpaid interest
with respect to the Notes tendered pursuant to the Offer is less than the Note
Amount relating thereto or the aggregate amount of Pari Passu Indebtedness that
is purchased is less than the Pari Passu Debt Amount, the Company may use such
amounts not necessary to purchase the tendered Notes and the Pari Passu
Indebtedness required to be purchased for any purpose not prohibited by the
Indenture. Upon completion of the purchase of all the Notes tendered pursuant
to an Offer and the purchase of the Pari Passu Indebtedness pursuant to a Pari
Passu Repayment, the amount of Excess Proceeds, if any, shall be reset at zero.
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws and
regulations in connection with an Offer.
Limitation on Issuances of Guarantees of Indebtedness. (a) The Company will
not permit any Restricted Subsidiary to incur any Guaranteed Debt, other than
Guaranteed Debt in respect of Senior Indebtedness of the Company; provided
that, concurrently with the incurrence of such Guaranteed Debt by any
Restricted Subsidiary, the Restricted Subsidiary incurring such Guaranteed Debt
(if it is not a Guarantor) shall execute a supplemental indenture setting forth
such Restricted Subsidiary's senior subordinated guarantee of the Notes, such
guarantee to be on the same terms as United's Guarantee of the Notes. Neither
the Company nor any Guarantor shall be required to make a notation on the Notes
or the Guarantees to reflect such Guarantee. In connection with such Guarantee
of the Notes, such Restricted Subsidiary shall waive, and agree that it will
not in any manner whatsoever claim or take the
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benefit or advantage of, any rights or reimbursement, indemnity or subrogation
or any other rights against the Company or any Guarantor as a result of any
payment by such Restricted Subsidiary with respect to such Guaranteed Debt.
(b) United will not incur any Guaranteed Debt with respect to any Pari Passu
Indebtedness or Subordinated Indebtedness unless such Guaranteed Debt is
subordinated (at least to the extent that Notes are subordinated in right of
payment to Senior Indebtedness) in right of payment to (or, in the case of
Guaranteed Debt with respect to Pari Passu Indebtedness, is pari passu in right
of payment with) United's Guarantee of the Notes.
(c) The Company will cause each of its domestic Restricted Subsidiaries,
other than the Joint Venture, promptly upon becoming a Restricted Subsidiary,
to execute a supplemental indenture providing for a Guarantee of the Notes on
the same terms as United's Guarantee of the Notes, including, without
limitation, the waiver and agreement referred to in the last sentence of
paragraph (a) above. Neither the Company nor any Guarantor shall be required to
make a notation on the Notes or the Guarantees to reflect such Guarantee.
Limitation on Subsidiary Capital Stock. The Company will not transfer, and
will not permit the transfer or issuance of, any Capital Stock of any
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except for (i) Capital Stock issued to and held
by the Company or a Restricted Wholly Owned Subsidiary, (ii) Capital Stock
issued by a Person prior to the time (A) such Person becomes a Restricted
Subsidiary, (B) such Person merges with or into a Restricted Subsidiary or (C)
a Restricted Subsidiary merges with or into such Person; provided that such
Capital Stock was not issued or incurred by such Person in anticipation of the
type of transaction contemplated by subclause (A), (B) or (C), (iii) the
transfer of all of the Capital Stock of a Restricted Subsidiary or (iv) the
issuance or transfer of directors' qualifying shares or a de minimis number of
shares required to be held by foreign nationals, in each case to the extent
required by applicable law. The foregoing shall not prohibit the pledge of any
shares of Capital Stock permitted under the "Limitation on Liens" covenant.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends, in cash or otherwise, or make any
other distribution on or in respect of its Capital Stock, (ii) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make
any loans or advances to, or Investments in, the Company or any other
Restricted Subsidiary or (iv) transfer any of its properties or assets to the
Company or any other Restricted Subsidiary, except in any such case (1) any
encumbrance or restriction pursuant to an agreement in effect on the Closing
Date (2) any encumbrance or restriction, with respect to a Person that becomes
a Subsidiary after the Closing Date, in existence at the time such Person
becomes a Subsidiary and not incurred in connection with, or in contemplation
of, such Person becoming a Subsidiary; (3) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(1) and (2), or in this clause (3), provided that the terms and conditions of
any such encumbrances or restrictions are not materially less favorable to the
Holders of the Notes than those under or pursuant to the agreement so extended,
renewed, refinanced or replaced; (4) any encumbrance or restriction created
pursuant to an asset sale agreement, stock sale agreement or similar instrument
pursuant to which a bona-fide Asset Sale the proceeds of which are applied as
provided in the Indenture is to be consummated, so long as such restriction or
encumbrance shall apply only to the assets subject to such Asset Sale and shall
be effective only for a period from the execution and delivery of such
agreement or instrument through the earlier of the consummation of such Asset
Sale or the termination of such agreement or instrument; (5) customary non-
assignment provisions of any lease governing any leasehold interest of the
Company or any Restricted Subsidiaries; (6) to the extent required by the
Indenture; and (7) any encumbrance or restriction existing under or by reason
of applicable law.
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Purchase of Notes upon a Change of Control. If a Change of Control shall
occur at any time, then each holder of Notes shall have the right to require
that the Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount of such
Notes, plus accrued and unpaid interest, if any, to the date of purchase (the
"Change of Control Purchase Date"), pursuant to the offer described below (the
"Change of Control Offer") and the other procedures set forth in the Indenture.
Within 15 days following any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each
holder of Notes by first-class mail, postage prepaid, at his address appearing
in the security register, stating, among other things, (i) the purchase price
and the purchase date which shall be a Business Day no earlier than 30 days nor
later than 60 days from the date such notice is mailed, or such later date as
is necessary to comply with requirements under the Exchange Act; (ii) that any
Note not tendered will continue to accrue interest; (iii) that, unless the
Company defaults in the payment of the purchase price, any Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Purchase Date; and (iv) certain other procedures
that a holder of Notes must follow to accept a Change of Control Offer or to
withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of the
Notes seeking to accept the Change of Control Offer. The Senior Bank Facility
prohibits the purchase of the Notes by the Company prior to full repayment of
Indebtedness thereunder and, upon a Change of Control, all amounts outstanding
under the Senior Bank Facility may become due and payable. There can be no
assurance that, in the event of a Change in Control, the Company will be able
to obtain the necessary consents from the lenders under the Senior Bank
Facility to consummate a Change of Control Offer. The failure of the Company to
make or consummate the Change of Control Offer or pay the Change of Control
Purchase Price when due would result in an Event of Default and would give the
Trustee and the holders of the Notes the rights described under "Description of
Notes -- Events of Default," subject to the subordination provisions of the
Indenture.
"Change of Control" is defined in the Indenture to mean the occurrence of any
of the following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of the
Permitted Holders, becomes the ultimate "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than
50% of the voting power of the total outstanding Voting Stock of United (or any
successor) or the Company (or any successor) voting as one class; (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of United or the Company (together
with any new directors whose election to such Board of Directors or whose
nomination for election by the shareholders of such Person, was approved by a
vote of 66 2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of
such Board of Directors then in office; (iii) United or the Company conveys,
transfers, or leases or otherwise disposes of all or substantially all of its
assets to any Person (other than one or more of the Permitted Holders); (iv)
United (or any successor) or the Company (or any successor) is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under "Description of
Notes -- Consolidation, Merger, Sale of Assets"; and (v) the failure of United
(or any successor) to "beneficially own" 100% of the voting power of the total
outstanding Voting Stock of the Company (or any successor).
The phrase "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing
law of the Indenture) to represent a specific quantitative test. As a
consequence, in the event the holders of the Notes elected to exercise their
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rights under the Indenture and the Company elected to contest such election,
there could be no assurance as to how a court interpreting New York law would
interpret such phrase.
The existence of a Holder's right to require the Company to purchase such
Holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction which constitutes a Change of Control.
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
United will not, and will not permit any Subsidiary to, create or permit to
exist or become effective any restriction (other than restrictions in effect on
the Closing Date with respect to Indebtedness outstanding on the Closing Date
and refinancings thereof and customary default provisions) that would
materially impair the ability of the Company to make a Change of Control Offer
to purchase the Notes or, if such Change of Control Offer is made, to pay for
the Notes tendered for purchase.
Provision of Financial Statements. Whether or not United or the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, United and the Company
will, to the extent permitted under the Exchange Act, deliver to the Commission
for filing the annual reports, quarterly reports and other documents which
United and the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) if United and the Company were so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which United and the Company
would have been required to so file such documents if United and the Company
were so subject (subject to a five day grace period). United and the Company
will also in any event (x) within 15 days of each Required Filing Date (subject
to a five day grace period) (i) transmit by mail to all Holders, as their names
and addresses appear in the security register, without cost to such Holders and
(ii) file with the Trustee copies of the annual reports, quarterly reports and
other documents which United and the Company would have been required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if
United and the Company were subject to such Sections and (y) if filing such
documents by United and the Company with the Commission is not permitted under
the Exchange Act, promptly upon written request, supply copies of such
documents to any prospective Holder at United's and the Company's cost
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company shall not, in a single transaction or through a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets as an entirety to any Person or group of
affiliated Persons (and the Company will not permit any Restricted Subsidiary
to enter into any such transaction or transactions if such transaction or
transactions, in the aggregate, would result in the sale, assignment,
conveyance, transfer, lease or disposal of all or substantially all of the
properties and assets of the Company and its Restricted Subsidiaries on a
Consolidated basis to any other Person or group of affiliated Persons) unless
at the time and after giving effect thereto: (i) either (a) the Company shall
be the continuing corporation or (b) the Person (if other than the Company)
formed by such consolidation or into which the Company or such Subsidiary is
merged or the Person which acquires by sale, assignment, conveyance, transfer,
lease or disposition of all or substantially all of the properties and assets
of the Company or such Subsidiary, as the case may be, substantially as an
entirety (the "Surviving Entity") shall be a corporation duly organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person shall expressly assume, by
a supplemental indenture executed and delivered to the Trustee, all the
obligations of the Company under the Notes and the Indenture, and the Indenture
shall remain in full force and effect; (ii) immediately before and immediately
after giving effect to such transaction or transactions, no Default
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or Event of Default shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a pro forma basis, the Consolidated
Net Worth of the Company (or of the Surviving Entity if other than the
Company), is equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction or transactions; (iv) immediately before
and immediately after giving effect to such transaction on a pro forma basis
(on the assumption that the transaction occurred on the first day of the four-
quarter period immediately prior to the consummation of such transaction with
the appropriate adjustments with respect to the transaction being included in
such pro forma calculation), the Company (or the Surviving Entity if other than
the Company), could incur at least $1.00 of additional Indebtedness under the
"Limitation on Indebtedness" covenant (other than Permitted Indebtedness); and
(v) the Company or the Surviving Entity shall have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each to the effect
that such consolidation, merger, transfer, sale, assignment, conveyance, lease
or other transaction and the supplemental indenture in respect thereto comply
with the Indenture and that all conditions precedent herein provided for
relating to such transaction have been complied with.
In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraph in which the Company
is not the continuing corporation, the successor Person formed or remaining
shall succeed to, and be substituted for, and may exercise every right and
power of the Company and the Company will be discharged from all obligations
and covenants under the Indenture and the Notes.
EVENTS OF DEFAULT
The following will be "Events of Default" under the Indenture:
(i) failure to pay any interest on any Note when it becomes due and
payable, and such failure shall continue for a period of 30 days;
(ii) failure to pay the principal of (or premium, if any, on) any Note at
its Maturity (upon acceleration, optional or mandatory redemption, required
repurchase or otherwise);
(iii) (a) failure to perform, or breach of, any covenant or agreement of
the Company, United or any Guarantor under the Indenture (other than a
default in the performance of, or breach of, a covenant or agreement which
is specifically dealt with in clause (i) or (ii) or in clauses (b), (c) and
(d) of this clause (iii)), and such default or breach shall continue for a
period of 30 days after written notice of such failure has been given, by
certified mail, (x) to the Company by the Trustee or (y) to the Company and
the Trustee by the holders of at least 25% in aggregate principal amount of
the outstanding Notes, specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default" under
the Indenture; (b) default in the performance or breach of the provisions
described under "Description of Notes -- Consolidation, Merger, Sale of
Assets"; (c) the Company shall have failed to make or consummate an Offer
in accordance with the provisions of the "Limitation on Sale of Assets"
covenant; or (d) the Company shall have failed to make or consummate a
Change of Control Offer in accordance with the provisions of the "Purchase
of Notes Upon a Change of Control" covenant;
(iv) one or more defaults shall have occurred under any agreements,
indentures or instruments under which the Company or any Restricted
Subsidiary then has outstanding Indebtedness in excess of $10 million
principal amount in the aggregate and, if not already matured at its final
maturity in accordance with its terms, such Indebtedness shall have been
accelerated;
(v) any Guarantee shall for any reason cease to be, or shall be asserted
in writing by such Guarantor, United or the Company not to be, in full
force and effect and enforceable in accordance with its terms or any
Subsidiary shall fail to Guarantee the Notes as required by the "Limitation
on Issuances of Guarantees of Indebtedness" covenant;
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(vi) one or more judgments, orders or decrees for the payment of money in
excess of $10 million, either individually or in the aggregate (net of
amounts covered by insurance, bond, surety or similar instrument), shall be
entered against the Company, United or any Restricted Subsidiary, or any of
their respective properties, and shall not be discharged and either (a) any
creditor shall have commenced an enforcement proceeding upon such judgment,
order or decree or (b) there shall have been a period of 60 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of an appeal or otherwise, shall not be in effect;
(vii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company,
United or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (b) a decree or order adjudging the
Company, United or any Significant Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company, United or any Significant Subsidiary under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company, United or any Significant Subsidiary or of any substantial
part of their respective properties, or ordering the winding up or
liquidation of their affairs, and any such decree or order for relief shall
continue to be in effect, or any such other decree or order shall be
unstayed and in effect, for a period of 60 consecutive days; or
(viii) (a) the Company, United or any Significant Subsidiary commences a
voluntary case or proceeding under any applicable Bankruptcy Law or any
other case or proceeding to be adjudicated bankrupt or insolvent, (b) the
Company, United or any Significant Subsidiary consents to the entry of a
decree or order for relief in respect of the Company, United or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (c) the Company, United or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (d) the
Company, United or any Significant Subsidiary (x) consents to the filing of
such petition or the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company, United or any Significant Subsidiary or of any substantial
part of their respective properties or (y) makes an assignment for the
benefit of creditors or (e) the Company, United or any Significant
Subsidiary takes any corporate action in furtherance of any such actions in
this paragraph (viii).
If an Event of Default (other than as specified in clauses (vii) and (viii)
of the prior paragraph) shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may, and the Trustee at the request of such Holders shall, declare
all unpaid principal of (and premium, if any, on) and accrued interest on all
the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders of the Notes); provided
that so long as the Senior Bank Facility is in effect, such declaration shall
not become effective until the earlier of (a) five business days after receipt
of such notice of acceleration from the Holders or the Trustee by the agent
under the Senior Bank Facility or (b) acceleration of the Indebtedness under
the Senior Bank Facility. Thereupon such principal shall become immediately
due and payable, and the Trustee may, at its discretion, proceed to protect
and enforce the rights of the holders of Notes by appropriate judicial
proceeding. If an Event of Default specified in clause (vii) or (viii) of the
prior paragraph occurs, then all the Notes shall ipso facto become and be
immediately due and payable, in an amount equal to the principal amount of the
Notes, together with accrued and unpaid interest, if any, to the date the
Notes become due and payable, without any declaration or other act on the part
of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Notes outstanding, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
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(i) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all Notes, and (iii) to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Notes; and (b) all Events of Default, other
than the non-payment of principal of the Notes which has become due solely by
such declaration of acceleration, have been cured or waived; and (c) the
rescission will not conflict with any judgment or decree.
The Holders of not less than a majority in aggregate principal amount of the
Notes outstanding may on behalf of the Holders of all the Notes waive any past
defaults under the Indenture and its consequences, except a default in the
payment of the principal of (and premium, if any, on) or interest on any Note,
or in respect of a covenant or provision which under the Indenture cannot be
modified or amended without the consent of the Holder of each Note outstanding.
The Company is also required to notify the Trustee within five business days
of the occurrence of any Default.
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided that if it acquires any conflicting
interest, it must eliminate such conflict upon the occurrence of an Event of
Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, elect to have the obligations
of the Company and each Guarantor and any other obligor upon the Notes, if any,
discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Notes, except for (i)
the rights of holders of outstanding Notes to receive payments in respect of
the principal of (and premium, if any, on) and interest on such Notes when such
payments are due, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes, and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and (iv) the defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company and each Guarantor
released with respect to certain covenants that are described in the Indenture
("covenant defeasance") and any omission to comply with such obligations shall
not constitute a Default or an Event of Default with respect to the Notes. In
the event covenant defeasance occurs, certain events (not including non-
payment, enforceability of any Guarantee, bankruptcy and insolvency events)
described in "Description of Notes -- Events of Default" will no longer
constitute an Event of Default with respect to the Notes.
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay and discharge the principal of (and
premium, if any, on) and interest on the outstanding Notes on the Stated
Maturity of such principal or installment of principal (or, if specified by the
Company in an Officers' Certificate delivered to the Trustee at the time of
such deposit, any date upon which the Company would be entitled to redeem all
Notes outstanding); (ii) in the case of defeasance, the Company shall have
delivered to the Trustee an opinion of independent counsel in the United States
stating that since the Closing Date (A) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling or (B) there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel in
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the United States shall confirm that, the holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
of such defeasance had not occurred; (iii) in the case of covenant defeasance,
the Company shall have delivered to the Trustee an opinion of independent
counsel in the United States to the effect that the holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax purposes
as a result of such covenant defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred; (iv) no Default or
Event of Default shall have occurred and be continuing on the date of such
deposit; (v) such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest with respect to any securities of the Company or
any Guarantor; (vi) such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, the Indenture or any
other material agreement or instrument to which the Company or any Guarantor is
a party or by which it is bound; (vii) the Company shall have delivered to the
Trustee an opinion of independent counsel to the effect that (A) the trust
funds will not be subject to any rights of holders of Senior Indebtedness or
Senior Guarantor Indebtedness, including, without limitation, those arising
under the Indenture and (B) after the 123rd day following the deposit, the
trust funds will not be subject to the avoidance under any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (viii) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the Notes or any Guarantee over the
other creditors of the Company or any Guarantor or with the intent of
defeating, hindering, delaying or defrauding creditors of the Company, any
Guarantor or others; (ix) no event or condition shall exist that would prohibit
the Company from making payments of the principal of (and premium, if any on)
and interest on the Notes on the date of such deposit; and (x) the Company
shall have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to
either defeasance or covenant defeasance, as the case may be, have been
complied with.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (a) either (i) all the Notes theretofore authenticated and delivered
(other than lost, stolen or destroyed Notes which have been replaced or paid)
have been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation (x) have become due and
payable, (y) will become due and payable at their Stated Maturity within one
year or (z) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company, and the Company or any
Guarantor has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, including
principal of (and premium, if any, on) and accrued interest at such Stated
Maturity or redemption date; (b) the Company or any Guarantor has paid or
caused to be paid all other sums payable under the Indenture by the Company and
each Guarantor; and (c) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of counsel each stating that (i) all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with and (ii) such satisfaction and discharge will
not result in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which the Company or
any Guarantor is a party or by which the Company or any Guarantor is bound.
MODIFICATIONS AND AMENDMENTS
Without the consent of any Holders, the Company, the Guarantors and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental to the Indenture for any of
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the following purposes: (1) to add to the covenants of the Company and the
Guarantors for the benefit of the Holders, or to surrender any right or power
therein conferred upon the Company and the Guarantors; (2) to add additional
Events of Default; (3) to evidence and provide for the acceptance of the
appointment under the Indenture by a successor Trustee; (4) to secure the
Notes; (5) to cure any ambiguity, to correct or supplement any provision in the
Indenture which may be defective or inconsistent with any other provision in
the Indenture, or to make any other provisions with respect to matters or
questions arising under the Indenture, provided that such actions pursuant to
this clause shall not adversely affect the interests of the Holders in any
material respect; or (6) to comply with any requirements of the Commission in
order to effect and maintain the qualification of the Indenture under the Trust
Indenture Act; provided that certain legal opinions and Officers' Certificates
are delivered.
Modifications and amendments of the Indenture may be made by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate outstanding principal amount of the Notes; provided,
however, that no such modification or amendment may, without the consent of the
holder of each outstanding Note affected thereby: (i) change the Stated
Maturity of the principal of, or any installment of interest on, any Note or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which the principal of any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof; (ii) amend, change or modify
the obligation of the Company to make and consummate an Offer with respect to
any Asset Sale or Asset Sales in accordance with the "Limitation on Sale of
Assets" covenant or the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control in accordance with
the "Purchase of Notes upon a Change of Control" covenant, including, without
limitation, amending, changing or modifying any definitions with respect
thereto; (iii) reduce the percentage in principal amount of outstanding Notes,
the consent of whose holders is required for any such modifications and
amendments, or the consent of whose holders is required for any waiver; (iv)
modify any of the provisions relating to supplemental indentures requiring the
consent of holders or relating to the waiver of past defaults or relating to
the waiver of certain covenants, except to increase the percentage of
outstanding Notes required for such actions or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each of each Note affected thereby; (v) except as otherwise
permitted under "Description of the New Notes -- Consolidation, Merger, Sale of
Assets," consent to the assignment or transfer by the Company or any Guarantor
of any of its rights and obligations under the Indenture; or (vi) amend or
modify any of the provisions of the Indenture relating to the subordination of
the Notes or any Guarantee in any manner adverse to the holders of the Notes.
GOVERNING LAW
The Indenture, the Notes and the Guarantees are governed by, and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Restricted Subsidiary or (ii) assumed in connection
with the acquisition of assets from such Person. Acquired Indebtedness shall be
deemed to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a Subsidiary.
"Affiliate" means, with respect to any specified Person, (i) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) any other Person that owns,
directly or indirectly, 10% or more of such specified Person's Capital Stock or
any executive officer or director of any such specified Person or other Person
or, with respect to any natural Person, any person having a relationship with
such Person by blood, marriage or adoption
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not more remote than first cousin. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding any of the foregoing, for purposes of the Indenture,
The Chase Manhattan Corporation and its subsidiaries shall be deemed not to be
an Affiliate of United, the Company or any Subsidiary.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
Sale and Leaseback Transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (i) any Capital
Stock of any Subsidiary; (ii) all or substantially all of the properties and
assets of any division or line of business of the Company or any Restricted
Subsidiary; or (iii) any other properties or assets of the Company or any
Restricted Subsidiary, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include (x) any
transfer of properties or assets (A) that is governed by the first paragraph
under "-- Consolidation, Merger, Sale of Assets" or (B) that is by the Company
to any Restricted Wholly Owned Subsidiary, or by any Restricted Wholly Owned
Subsidiary to the Company or any Restricted Wholly Owned Subsidiary in
accordance with the terms of the Indenture or (y) transfers of properties and
assets listed on Schedule I to the Indenture.
"Average Life to Stated Maturity" means, as of the date of determination with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a) 80%
of the face amount of all accounts receivable of the Company and its Restricted
Subsidiaries as of such date and (b) 50% of the book value (calculated on a
FIFO basis) of all inventory owned by the Company and its Restricted
Subsidiaries as of such date, all calculated on a consolidated basis and in
accordance with GAAP. To the extent that information is not available as to the
amount of accounts receivable or inventory as of a specific date, the Company
may utilize the most recent available quarterly or annual financial report for
purposes of calculating the Borrowing Base.
"Capital Lease Obligation" means any obligations of the Company and its
Restricted Subsidiaries on a Consolidated basis under any capital lease of real
or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations, partnership interests or other equivalents (however designated)
of such Person's capital stock.
"Closing Date" means May 3, 1995.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) the sum of Consolidated Net Income (Loss),
Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated
Non-cash Charges deducted in computing Consolidated Net Income (Loss) in each
case, for such period, of the Company and its Restricted Subsidiaries on a
Consolidated basis, all determined in accordance with GAAP to (b) the sum of
Consolidated Interest Expense for such period and cash and non-cash dividends
required to be paid or accrued on any Preferred Stock of
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the Company and its Restricted Subsidiaries during such period; provided that
(i) in making such computation, the Consolidated Interest Expense attributable
to interest on any Indebtedness computed on a pro forma basis and (A) bearing a
floating interest rate, shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period and (B) which
was not outstanding during the period for which the computation is being made
but which bears at the option of the Company, a fixed or floating rate of
interest, shall be computed by applying at the option of the Company, either
the fixed or floating rate and (ii) in making such computation, the
Consolidated Interest Expense of the Company and its Restricted Subsidiaries
attributable to interest on any Indebtedness under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries for such period as determined in accordance with GAAP
on a Consolidated basis.
"Consolidated Interest Expense" of the Company means, without duplication,
for any period, the sum of (a) the interest expense of the Company and its
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount (other than debt discount
attributable solely to a discount in the purchase price of Indebtedness sold
with an equity security, to the extent of the amount of the value reasonably
attributed in good faith to such equity security at the time of such sale and
reflected in an Officers' Certificate delivered promptly thereafter to the
Trustee), (ii) the net cost under Interest Rate Agreements (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) accrued interest and (v) the amortization of deferred
financing costs, plus (b) (i) the interest component of the Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
during such period and (ii) all capitalized interest of the Company and its
Restricted Subsidiaries, less (c) the amortization of any deferred financing
costs incurred with respect to the issuance of the Notes or the borrowings
under the Senior Bank Facility, to the extent paid prior to or on the Closing
Date, in each case as determined in accordance with GAAP on a Consolidated
basis.
"Consolidated Net Income (Loss)" of the Company means, for any period, the
Consolidated net income (or loss) of the Company and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income (loss), by excluding,
without duplication, (i) all extraordinary gains or losses (less all fees and
expenses relating thereto), (ii) the portion of net income (or loss) of the
Company and its Restricted Subsidiaries allocable to minority interests in
unconsolidated Persons to the extent that cash dividends or distributions have
not actually been received by the Company or one of its Restricted
Subsidiaries, (iii) net income (or loss) of any Person combined with the
Company or any of its Restricted Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) net gains (or losses), less all fees and expenses relating
thereto, in respect of dispositions of assets other than in the ordinary course
of business and the net income of any Unrestricted Subsidiary, except to the
extent paid to the Company or any Restricted Subsidiary in cash as a dividend
or distribution or (vi) the net income of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"Consolidated Net Worth" of any Person means the Consolidated stockholders'
equity (excluding Redeemable Capital Stock) of such Person and its subsidiaries
(or, in the case of United or the Company, the Restricted Subsidiaries), as
determined in accordance with GAAP on a Consolidated basis.
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"Consolidated Non-cash Charges" of the Company means, for any period, the
aggregate depreciation, amortization and other non-cash charges of the Company
and its Restricted Subsidiaries on a Consolidated basis reducing the
Consolidated Net Income of the Company and its Restricted Subsidiaries for such
period, as determined in accordance with GAAP (excluding any non-cash charge
which requires an accrual or reserve for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries (or, in the case of United
or the Company, the Restricted Subsidiaries) if and to the extent the accounts
of such Person and each of its subsidiaries (or, in the case of United or the
Company, the Restricted Subsidiaries) would normally be consolidated with those
of such Person, all in accordance with GAAP. The term "Consolidated" shall have
a similar meaning.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Employment Agreements" means the several employment agreements, dated on or
prior to the Closing Date, between or among United and/or the Company and each
of Joel D. Spungin, Jeffrey K. Hewson, Ronald W. Weissman, Allen B. Kravis,
Steven R. Schwarz, Robert H. Cornell, Otis H. Halleen, Jerold A Hecktman, Ted
S. Rzeszuto, Michael D. Rowsey, Daniel J. Schleppe, Daniel H. Bushell, Robert
D. Eberspacher, Duane J. Ratay and Lawrence E. Miller.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing
buyer under no compulsion to buy as determined by the Board of Directors in
good faith and evidenced by a resolution of the Board of Directors.
"GAAP" or "Generally Accepted Accounting Principles" means generally accepted
accounting principles in the United States, consistently applied, which are in
effect at the time any given calculation is made.
"Guarantee" means the guarantee by any Guarantor of the Company's Indenture
Obligations pursuant to a guarantee given in accordance with the Indenture.
"Guaranteed Debt" of any Person means, without duplication, all Indebtedness
of any other Person guaranteed directly or indirectly in any manner by such
Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services without requiring that
such property be received or such services be rendered), (iv) to maintain
working capital or equity capital of the debtor, or otherwise to maintain the
net worth, solvency or other financial condition of the debtor or (v) otherwise
to assure a creditor against loss; provided that the term "guarantee" shall not
include endorsements for collection or deposit, in either case in the ordinary
course of business.
"Guarantor" means United and each Restricted Subsidiary that is organized
under the laws of the United States or any state or territory thereof,
including the District of Columbia, other than the Joint Venture.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities now or hereafter outstanding,
if, and to the extent, any of the foregoing would
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appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (ii) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding trade payables arising
in the ordinary course of business, (iv) all obligations under Interest Rate
Agreements of such Person, (v) all Capital Lease Obligations of such Person,
(vi) all Indebtedness referred to in clauses (i) through (v) above of other
Persons and all dividends of other Persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vii) all Guaranteed Debt of such Person and
(viii) all Redeemable Capital Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price. For purposes hereof, the "maximum
fixed repurchase price" of any Redeemable Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest
rate protection agreements (including, without limitation, interest rate swaps,
caps, floors, collars and similar arrangements) and/or other types of interest
rate hedging agreements from time to time.
"Investments" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase, acquisition or ownership by such Person of any Capital Stock,
bonds, notes, debentures or other securities issued by, any other Person and
all other items that would be classified as investments on a balance sheet
prepared in accordance with GAAP. In addition, the Fair Market Value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary shall be deemed to be an "Investment"
made by the Company in such Unrestricted Subsidiary. The amount of any non-cash
Investment shall be equal to the Fair Market Value of the assets invested, as
determined in good faith by (i) in the case of any Investment in excess of
$500,000, the Board of Directors of the Company (provided that such
determination is evidenced by a Board Resolution) or (ii) in any other case, an
executive officer of the Company.
"Joint Venture" means United Business Computers, Inc., a Delaware
corporation.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable,
now owned or hereafter acquired.
"Management Services Agreements" means the several investment banking fee and
management agreements dated on or prior to the Closing Date, among United, the
Company and Wingate Partners L.P., Cumberland Capital Corporation and Good
Capital Co., Inc., as amended to the Closing Date.
"Maturity" when used with respect to any Note means the date on which the
principal of such Note becomes due and payable as therein provided or as
provided in the Indenture, whether at Stated Maturity, the Repurchase Date or
the redemption date and whether by declaration of acceleration, Offer in
respect of Excess Proceeds, Change of Control, call for redemption or
otherwise.
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<PAGE>
"Merger" means, collectively, the merger of Associated with and into United
and the merger of ASI with and into the Company.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or Temporary Cash
Investments (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage
commissions and other actual fees and expenses (including fees and expenses of
counsel and investment bankers) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) payments made to retire
Indebtedness where payment of such Indebtedness is secured by the assets or
properties the subject of such Asset Sale, (iv) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (v) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP or, until no longer required by
contract with the buyer, as required by contract with the buyer, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected
in an Officers' Certificate delivered to the Trustee and (b) with respect to
any issuance or sale of Capital Stock or options, warrants or rights to
purchase Capital Stock or Indebtedness or Capital Stock that have been
converted into or exchanged for Capital Stock, the proceeds of such issuance or
sale in the form of cash or Temporary Cash Investments, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Temporary Cash Investments (except
to the extent that such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of attorneys' fees, accountants'
fees and brokerage, consultation, underwriting and other fees and expenses
actually incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Pari Passu Indebtedness" means any Indebtedness of the Company or a
Guarantor that is pari passu in right of payment to the Notes or a Guarantee of
the Notes, as the case may be.
"Permitted Holders" means Wingate Partners, L.P., Wingate Partners II, L.P.,
Wingate Affiliates, L.P., and Wingate Affiliates II, L.P. (collectively,
"Wingate Partners"), ASI Partners, L.P., ASI Partners II, L.P., Cumberland
Capital Corporation, Good Capital Co., Inc., Daniel J. Good, Boise Cascade
Corporation, Chase Manhattan Investment Holdings, Inc., James A. Johnson,
Michael D. Rowsey, Daniel J. Schleppe, Daniel H. Bushell and Robert W.
Eberspacher, all such Persons being stockholders of United on the Closing Date,
together with (i) the direct and indirect general partners of Wingate Partners
and (ii) any entity controlled by Wingate Partners, in each case on April 26,
1995.
"Permitted Investment" means (i) investments in the Company or any Restricted
Wholly Owned Subsidiary or any Person which, as a result of such Investment,
becomes a Restricted Wholly Owned Subsidiary; (ii) Indebtedness of the Company
or a Restricted Subsidiary described under clauses (v) and (vi) of the
definition of "Permitted Indebtedness"; (iii) Temporary Cash Investments; (iv)
Investments acquired by the Company or any Restricted Subsidiary in connection
with an Asset Sale permitted under the "Limitation on Sale of Assets" covenant
to the extent such Investments are non-cash proceeds as permitted under such
covenant; (v) guarantees of Indebtedness otherwise permitted by the Indenture;
(vi) Investments in existence on the Closing Date; (vii) customer advances not
to exceed $250,000 at any one time outstanding; (viii) travel and relocation
loans and advances made to employees in the ordinary course of business not to
exceed $200,000 at any one time outstanding; (ix) Investments received in
settlement of defaulted receivables or in connection with the bankruptcy or
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<PAGE>
reorganization of suppliers and customers and in connection with the settlement
of other disputes with customers and suppliers arising in the ordinary course
of business; and (x) additional Investments not to exceed $1 million at any one
time outstanding.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred stock whether now outstanding, or issued after the Closing
Date, and including, without limitation, all classes and series of preferred or
preference stock.
"Public Equity Offering" means a bona-fide underwritten sale to the public of
Common Stock of the Company or of United, to the extent that the net cash
proceeds thereof are paid to the Company as a capital contribution, pursuant to
a registration statement (other than Form S-8 or a registration statement
relating to securities issuable by any benefit plan of United, the Company or
any Subsidiary) that is declared effective by the Securities and Exchange
Commission.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable or
otherwise, is or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity.
"Representative" means, with respect to any Designated Senior Indebtedness or
Designated Senior Guarantor Indebtedness, the indenture trustee or other
trustee, agent or representative in respect of such Indebtedness; provided that
if, and so long as, any such Indebtedness lacks such a representative, then the
"Representative" with respect to such Indebtedness shall be the holders of a
majority in outstanding principal amount (or, if no amounts thereunder are
outstanding, the committed amounts) of such Indebtedness.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.
"Senior Bank Facility" means the Senior Bank Facility, each dated as of March
30, 1995, among the Company, United, the subsidiaries of the Company, if any,
identified on the signature pages thereof under the caption "Subsidiary
Guarantors," the lenders named therein and Chase Bank, as agent, including a
term loan made pursuant to the term loan agreement, a revolving credit loan
made pursuant to the revolving credit loan agreement, and any ancillary
documents executed in connection therewith, as such agreements may be amended,
renewed, extended, substituted, refinanced, restructured, replaced,
supplemented or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions, substitutions, refinancings,
restructuring, replacements, supplementations or other modifications of the
foregoing, including the addition of new lenders or agents). For purposes of
the Indenture, "Senior Bank Facility" shall include any amendments, renewals,
extensions, substitutions, refinancings, restructuring, replacements,
supplements or any other modifications that increase the principal amount of
the Indebtedness or the commitments to lend thereunder; provided that, for
purposes of the definition of "Permitted Indebtedness," no such increase
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<PAGE>
may result in the principal amount of Indebtedness under the Credit Agreement
exceeding the amount permitted by subparagraphs (b)(i) and (b)(ii) of the
"Limitation on Indebtedness" covenant; and provided further that there shall at
any time be only one instrument that constitutes the "Senior Bank Facility"
under the Indenture. The Senior Bank Facility on the date hereof consists of
the New Credit Facilities referred to elsewhere in this Prospectus.
"Significant Subsidiary" means, at any date of determination any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of the Company, accounted for more than 10% of the Consolidated revenues
of the Company or (ii) as of the end of such fiscal year, was the owner of more
than 10% of the Consolidated assets of the Company, all as set forth on the
most recently available Consolidated financial statements of the Company for
such fiscal year.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a Guarantor
subordinated in right of payment to the Notes or a Guarantee of the Notes, as
the case may be.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries.
"Temporary Cash Investments" means (i) any evidence of Indebtedness with a
maturity of one year or less and issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to principal,
premium, if any, and interest by the United States of America, (ii) any
certificate of deposit with a maturity of one year or less and issued by, or a
time deposit of, a commercial banking institution that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $500,000,000 whose debt has a rating, at the time as
of which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. ("Moody's") or any successor rating agency or
"A-1" (or higher) according to Standard and Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper with a maturity of one year or
less and issued by a corporation (other than an Affiliate or Subsidiary of
United) organized and existing under the laws of any state of the United States
of America or the District of Columbia with a rating, at the time as of which
any investment therein is made, of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P and (iv) any money market deposit accounts
issued or offered by a domestic commercial bank having capital and surplus in
excess of $500,000,000.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means (1) any Subsidiary which at the time of
determination shall be designated an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below), (2) any Subsidiary
of an Unrestricted Subsidiary, and (3) United Stationers Hong Kong Limited and
United Worldwide Limited, each of which is a corporation organized under the
laws of Hong Kong. The Board of Directors of the Company may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary so long as (a) neither the Company nor any Restricted
Subsidiary is directly or indirectly liable for any Indebtedness of such
Subsidiary (except pursuant to a guarantee that, if it had been made after such
designation, would have been permitted to be made under the "Limitation on
Restricted Payments" covenant, including permitted Investments), (b) no default
with respect to any Indebtedness of such Subsidiary would permit (upon notice,
lapse of time or otherwise) any holder of any other Indebtedness of the Company
or any Restricted Subsidiary having a principal amount of $10 million or more
to declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity, (c) neither the Company
nor any Restricted Subsidiary has, prior to the date of such designation, made
an Investment in such Subsidiary unless the amount of such Investment, if it
had been made after the date of such designation, would have been permitted
under the "Limitation on
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<PAGE>
Restricted Payments" covenant (including Permitted Investments), (d) neither
the Company nor any Restricted Subsidiary has a contract, agreement,
arrangement, understanding or obligation of any kind, whether written or oral,
with such Subsidiary other than those that might be obtained at the time from
Persons who are not Affiliates of the Company. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee by filing a
Board Resolution with the Trustee giving effect to such designation and, for
purposes of the "Limitation on Restricted Payments" covenant, shall constitute
the making of an Investment in such Unrestricted Subsidiary as provided under
the definition of Investment. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Restricted Subsidiary if immediately
after giving effect to such designation there would be no Default or Event of
Default under the Indenture and the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on
Indebtedness" covenant.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares or a de minimus number of shares
required, under applicable law, to be owned by foreign nationals) is owned by
the Company or another Wholly Owned Subsidiary; and "Restricted Wholly Owned
Subsidiary" means a Wholly Owned Subsidiary that is a Restricted Subsidiary.
126
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does
not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could adversely affect a holder of the
New Notes. The description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO HIM OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer should
not constitute a material modification of the terms of the Old Notes and,
therefore, such exchange should not constitute an exchange for federal income
tax purposes. Accordingly, such exchange should have no federal income tax
consequences to holders of Old Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, for 90 days following the later of (i) the effective date of the
Registration Statement and (ii) the first date upon which the New Notes were
bona fide offered to the public, all dealers effecting transactions in the New
Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or though brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that
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<PAGE>
requests such documents in the Letter of Transmittal. The Company has agreed to
pay all expenses incident to the Exchange Offer other than commissions or
concessions of any brokers or dealers.
LEGAL MATTERS
Certain legal matters in connection with the New Notes will be passed upon
for United and the Company by Weil, Gotshal & Manges, a partnership including
professional corporations, Dallas, Texas.
EXPERTS
The consolidated financial statements of United as of August 31, 1993 and
1994 and for the years ended August 31, 1992, 1993 and 1994 included in this
Prospectus and the consolidated financial statements of Associated as of
December 31, 1993 and 1994 and from inception, January 31, 1992, through
December 31, 1992 and for the years ended December 31, 1993 and 1994 included
in this Prospectus have been audited by Arthur Andersen LLP, and the
consolidated financial statements of United as of March 30, 1995 and for the
seven months ended March 30, 1995 included in this Prospectus have been audited
by Ernst & Young LLP, independent public accountants, as indicated in their
respective reports with respect thereto, and are included herein in reliance
upon the authority of said firms as experts in accounting and auditing.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
UNITED STATIONERS INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Report of Independent Auditors............................................ F-2
Report of Independent Public Accountants.................................. F-3
Consolidated Balance Sheets as of August 31, 1993, August 31, 1994 and
March 30, 1995........................................................... F-4
Consolidated Statements of Operations for the years ended August 31, 1992,
August 31, 1993, August 31, 1994 and for the seven months ended March 31,
1994 (unaudited) and March 30, 1995...................................... F-6
Consolidated Statements of Changes in Stockholders' Investment for the
years ended August 31, 1992, August 31, 1993, August 31, 1994 and for the
seven months ended March 30, 1995........................................ F-7
Consolidated Statements of Cash Flows for the years ended August 31, 1992,
August 31, 1993, August 31, 1994 and for the seven months ended March 31,
1994 (unaudited) and March 30, 1995...................................... F-8
Notes to Consolidated Financial Statements................................ F-9
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
Report of Independent Public Accountants.................................. F-19
Consolidated Balance Sheets as of December 31, 1993 and 1994.............. F-20
Consolidated Statements of Income for the Period from Inception, January
31, 1992, through December 31, 1992 and for the Years Ended December 31,
1993 and 1994............................................................ F-21
Consolidated Statements of Stockholders' Equity for the Period from
Inception, January 31, 1992, through December 31, 1992 and for the Years
Ended December 31, 1993 and 1994 ........................................ F-22
Consolidated Statements of Cash Flows for the Period from Inception,
January 31, 1992, through December 31, 1992 and for the Years Ended
December 31, 1993 and 1994............................................... F-23
Notes to Consolidated Financial Statements................................ F-24
Supplemental Consolidated Quarterly Financial Information (unaudited)..... F-36
Condensed Consolidated Balance Sheets as of March 31, 1995 (unaudited) and
December 31, 1994 (audited).............................................. F-37
Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 1995 (unaudited) and March 31, 1994 (unaudited)................ F-38
Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1995 (unaudited) and March 31, 1994 (unaudited)................ F-39
Notes to Condensed Consolidated Financial Statements...................... F-40
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of
Directors of United Stationers Inc. :
We have audited the accompanying consolidated balance sheet of UNITED
STATIONERS INC. and SUBSIDIARY as of March 30, 1995 and the related
consolidated statements of operations, changes in stockholders' investment and
cash flows for the seven months then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of United Stationers
Inc. and Subsidiary at March 30, 1995 and the consolidated results of their
operations and their cash flows for the seven months then ended in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
June 27, 1995
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of
Directors of United Stationers Inc. :
We have audited the accompanying consolidated balance sheets of UNITED
STATIONERS INC. (a Delaware Corporation) AND SUBSIDIARIES as of August 31, 1993
and 1994, and the related consolidated statements of income, changes in
stockholders' investment and cash flows for fiscal years ended August 31, 1992,
1993 and 1994. 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 United
Stationers Inc. and Subsidiaries as of August 31, 1993 and 1994, and the
results of its operations and its cash flows for the fiscal years ended August
31, 1992, 1993 and 1994, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Chicago, Illinois,
October 6, 1994.
F-3
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AUG. 31,
----------------- MARCH 30,
ASSETS 1993 1994 1995
------ -------- -------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................ $ 7,889 $ 6,920 $ 14,515
Accounts receivable, less reserves for doubtful
accounts of $3,964 in 1993, $4,010 in 1994 and
$4,775 in 1995.................................. 188,396 187,565 188,672
Inventories...................................... 229,760 225,794 306,741
Deferred income taxes and prepaid expenses....... 16,426 15,512 22,987
-------- -------- --------
Total current assets........................... $442,471 $435,791 $532,915
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and buildings............................... $ 90,147 $ 92,099 $ 92,907
Fixtures and equipment........................... 144,625 151,793 152,059
Leasehold improvements........................... 46 36 85
-------- -------- --------
Total property, plant and equipment............ $234,818 $243,928 $245,051
Less -- Accumulated depreciation and amortization
................................................ 97,182 114,364 118,219
-------- -------- --------
Net property, plant and equipment.............. $137,636 $129,564 $126,832
-------- -------- --------
GOODWILL, NET...................................... $ 43,484 $ 42,369 $ 41,719
-------- -------- --------
OTHER ASSETS....................................... $ 11,195 $ 10,826 $ 10,373
-------- -------- --------
Total assets................................... $634,786 $618,550 $711,839
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-4
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AUG. 31,
------------------ MARCH 30,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 1993 1994 1995
---------------------------------------- -------- -------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Short-term debt and current maturities of long-
term obligations.............................. $ 3,448 $ 6,338 $ 43,501
Accounts payable............................... 150,374 121,793 146,222
Accrued expenses............................... 69,175 65,055 77,219
Accrued income taxes........................... 3,400 2,778 8,373
-------- -------- --------
Total current liabilities.................... $226,397 $195,964 $275,315
-------- -------- --------
DEFERRED INCOME TAXES............................ $ 14,484 $ 17,427 $ 13,494
-------- -------- --------
LONG-TERM OBLIGATIONS:
Long-term debt................................. $146,735 $149,465 $173,933
Other liabilities.............................. 9,473 9,684 15,972
-------- -------- --------
Total long-term obligations.................. $156,208 $159,149 $189,905
-------- -------- --------
STOCKHOLDERS' INVESTMENT:
Preferred stock, no par value, authorized
1,500,000 shares, no shares issued or
outstanding................................... $ -- $ -- $ --
Common stock, $0.10 par value, authorized
40,000,000 shares, issued 18,586,627 shares in
1993, 18,592,054 shares in 1994 and 18,610,929
shares in 1995................................ 1,859 1,859 1,861
Capital in excess of par value................. 91,687 91,729 91,912
Retained earnings.............................. 144,292 152,448 139,495
Less -- 9,993 shares, 1,828 shares and 14,347
shares of common stock in treasury at cost in
1993, 1994 and 1995, respectively............. (141) (26) (143)
-------- -------- --------
Total stockholders' investment............... $237,697 $246,010 $233,125
-------- -------- --------
Total liabilities and stockholders'
investment.................................. $634,786 $618,550 $711,839
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-5
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUG. 31, SEVEN MONTHS ENDED
---------------------------------- -----------------------
MARCH 31, MARCH 30,
1992 1993 1994 1994 1995
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $1,094,275 $1,470,115 $1,473,024 $ 871,585 $ 980,575
COST OF SALES........... 848,588 1,125,596 1,150,123 675,720 773,857
---------- ---------- ---------- ---------- ----------
Gross profit on
sales............... $ 245,687 $ 344,519 $ 322,901 $ 195,865 $ 206,718
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSE:
Warehousing, marketing
and administrative
expenses............. $ 213,372 $ 298,405 $ 286,607 $ 170,420 $ 174,021
Merger-related costs.. -- -- -- -- 27,780
Restructuring charge.. 5,913 -- -- -- --
---------- ---------- ---------- ---------- ----------
Total operating
expenses........... $ 219,285 $ 298,405 $ 286,607 $ 170,420 $ 201,801
---------- ---------- ---------- ---------- ----------
Income from
operations......... $ 26,402 $ 46,114 $ 36,294 $ 25,445 $ 4,917
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense...... $ (6,980) $ (9,849) $ (10,722) $ (6,095) $ (7,640)
Interest income....... 477 299 261 258 140
Other, net............ 364 355 225 117 41
---------- ---------- ---------- ---------- ----------
Total other income
(expense).......... $ (6,139) $ (9,195) $ (10,236) $ (5,720) $ (7,459)
---------- ---------- ---------- ---------- ----------
Income before income
taxes.............. $ 20,263 $ 36,919 $ 26,058 $ 19,725 $ (2,542)
INCOME TAXES............ 8,899 15,559 10,309 8,185 4,692
---------- ---------- ---------- ---------- ----------
Net Income.......... $ 11,364 $ 21,360 $ 15,749 $ 11,540 $ (7,234)
========== ========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING............ 16,088,450 18,559,600 18,587,282 18,585,451 18,593,614
========== ========== ========== ========== ==========
NET INCOME PER COMMON
SHARE.................. $ 0.71 $ 1.15 $ 0.85 $ 0.62 $ (0.39)
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-6
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CAPITAL
IN
NUMBER OF EXCESS TOTAL
COMMON COMMON OF PAR RETAINED TREASURY STOCKHOLDERS'
SHARES STOCK VALUE EARNINGS STOCK INVESTMENT
---------- ------ ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, AUGUST 31,
1991................... 15,535,013 $1,554 $54,557 $125,704 $(231) $181,584
Net Income............ -- -- -- 11,364 -- 11,364
Issuance of common
shares............... 3,016,169 301 36,643 -- -- 36,944
Cash dividends--$0.40
per share on common
stock................ -- -- -- (6,535) -- (6,535)
Disposition of
treasury stock....... -- -- -- -- 30 30
---------- ------ ------- -------- ----- --------
BALANCE, AUGUST 31,
1992................... 18,551,182 $1,855 $91,200 $130,533 $(201) $223,387
Net Income............ -- -- -- 21,360 -- 21,360
Issuance of common
shares............... 35,445 4 487 -- -- 491
Cash dividends--$0.40
per share on common
stock................ -- -- -- (7,601) -- (7,601)
Disposition of
treasury stock....... -- -- -- -- 60 60
---------- ------ ------- -------- ----- --------
BALANCE, AUGUST 31,
1993................... 18,586,627 $1,859 $91,687 $144,292 $(141) $237,697
Net Income............ -- -- -- 15,749 -- 15,749
Issuance of common
shares............... 5,427 -- 42 -- -- 42
Cash dividends--$0.40
per share on common
stock................ -- -- -- (7,593) -- (7,593)
Disposition of
treasury stock....... -- -- -- -- 115 115
---------- ------ ------- -------- ----- --------
BALANCE, AUGUST 31,
1994................... 18,592,054 $1,859 $91,729 $152,448 $ (26) $246,010
Net Loss.............. -- -- -- (7,234) -- (7,234)
Issuance of common
shares............... 18,875 2 183 -- -- 185
Cash dividends--$0.30
per share on common
stock................ -- -- -- (5,719) -- (5,719)
Acquisition of
treasury stock....... -- -- -- -- (117) (117)
---------- ------ ------- -------- ----- --------
BALANCE, MARCH 30, 1995. 18,610,929 $1,861 $91,912 $139,495 $(143) $233,125
========== ====== ======= ======== ===== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-7
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUG.
31, SEVEN MONTHS ENDED
---------------------------- --------------------------
MARCH 31, MARCH 30,
1992 1993 1994 1994 1995
-------- -------- -------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income............ $ 11,364 $ 21,360 $ 15,749 $ 11,540 $ (7,234)
Adjustments to
reconcile net income
to net cash provided
by (used in)
operating activities,
net of SDC purchase
in 1992--
Loss on sale of
fixed assets....... $ 55 $ 476 $ 579 $ 494 $ 200
Depreciation and
amortization....... 19,879 21,243 21,236 12,103 12,595
(Decrease)/increase
in deferred taxes.. (8,240) 2,261 2,943 1,298 (3,933)
Increase/(decrease)
in accounts
payable............ 7,195 15,259 (28,581) (64,918) 24,429
(Decrease)/increase
in accrued
liabilities........ (2,896) 3,655 (7,522) (14,407) 17,260
(Increase)/decrease
in accounts
receivable......... (12,681) (20,016) 831 8,062 (1,107)
(Increase)/decrease
in inventories..... (15,776) (7,353) 3,966 (7,818) (80,947)
Decrease in prepaid
expenses........... 3,940 1,392 914 (752) (7,475)
Increase in other
assets............. (5,378) (2,275) (2,007) (1,359) (1,341)
-------- -------- -------- -------- --------
Total adjustments. $(13,902) 14,642 $ (7,641) $(67,297) $(40,319)
-------- -------- -------- -------- --------
Net cash provided
by (used in)
operating
activities....... $ (2,538) $ 36,002 $ 8,108 $(55,757) $(47,553)
-------- -------- -------- -------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisition of
property, plant and
equipment............ $ (8,342) $(30,008) $(10,719) $ (4,487) $ (7,799)
Proceeds from
disposition of
property, plant and
equipment............ 51 50 220 200 35
Payment for purchase
of SDC, net of cash
acquired of $2,480... (37,338) -- -- -- --
-------- -------- -------- -------- --------
Net cash used in
investing
activities....... $(45,629) $(29,958) $(10,499) $ (4,287) $ (7,764)
-------- -------- -------- -------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Increase/(decrease) in
short-term debt...... $ 1,636 $ (481) $ (2,855) $ 33 $ 5,660
Payments on long-term
obligations.......... (4,213) (4,537) (1,533) (1,269) (4,541)
Additions to long-term
obligations.......... 57,460 1,971 13,246 69,348 67,444
Issuance of common
shares............... 164 491 42 25 185
Payment of dividends.. (6,535) (7,601) (7,593) (5,738) (5,719)
Disposition of
treasury stock....... 30 60 115 115 (117)
-------- -------- -------- -------- --------
Net cash provided
by (used in)
financing
activities....... $ 48,542 $(10,097) $ 1,422 $ 62,514 $ 62,912
-------- -------- -------- -------- --------
NET INCREASE/(DECREASE)
IN CASH AND CASH
EQUIVALENTS............ $ 375 $ (4,053) $ (969) $ 2,470 $ 7,595
CASH AND CASH
EQUIVALENTS at the
beginning of the year.. 11,567 11,942 7,889 7,889 6,920
-------- -------- -------- -------- --------
CASH AND CASH
EQUIVALENTS at the end
of the year............ $ 11,942 $ 7,889 $ 6,920 $ 10,359 $ 14,515
======== ======== ======== ======== ========
Supplemental Disclosures
of Cash Flow
Information:
Cash paid during the
year for:
Interest (net of
amount
capitalized)....... $ 6,722 $ 8,972 $ 10,199 $ 5,943 $ 6,851
Income taxes........ 14,489 18,395 6,229 6,054 9,257
-------- -------- -------- -------- --------
Supplemental Schedule of
Noncash Investing and
Financing Activities:
Fair value of assets
acquired............. $175,359 $ -- $ -- $ -- $ --
Cash paid............. (39,818) -- -- -- --
Common stock issued... (36,780) -- -- -- --
-------- -------- -------- -------- --------
Liabilities
assumed/incurred....... $ 98,761 $ -- $ -- $ -- $ --
-------- -------- -------- -------- --------
Investment in business
venture................ $ -- $ 742 $ -- $ -- $ --
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-8
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUBSEQUENT EVENT
On March 30, 1995, pursuant to an Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc.,
a Delaware corporation ("Associated") and United Stationers Inc., a Delaware
corporation (the "Company") and Associated's related Offer to Purchase dated
February 21, 1995 (the "Offer"), Associated purchased 17,201,839 shares of
Common Stock, $0.10 par value (the "Shares"), of the Company at a purchase
price of $15.50 per share, or approximately $266.6 million, from the Company's
stockholders. On March 30, 1995, pursuant to the terms of the Merger Agreement,
Associated was merged with and into the Company, with the Company surviving
(the "Merger"), and immediately thereafter, Associated Stationers, Inc., a
Delaware corporation and wholly owned subsidiary of Associated ("ASI") was
merged with and into United Stationers Supply Co., an Illinois corporation and
wholly owned subsidiary of the Company ("USSC"), with USSC surviving. The
acquisition of the Shares by Associated pursuant to the Offer together with the
Merger is referred to herein as the "Acquisition." Although the Company was the
surviving corporation in the Merger, the transaction was treated as a reverse
acquisition for accounting purposes with Associated as the acquiring
corporation.
Immediately following the Merger, the number of outstanding Shares was
5,998,117 (or 6,973,720 on a fully diluted basis), of which (i) the former
holders of Class A Common Stock, $0.01 par value, and Class B Common Stock,
$0.01 par value, of Associated ("Associated Common Stock") and warrants or
options to purchase Associated Common Stock in the aggregate owned 4,603,373
Shares constituting approximately 76.8% of the outstanding Shares and
outstanding warrants or options for 975,603 Shares (collectively 80.0% on a
fully diluted basis) and (ii) pre-Merger holders of Shares (other than
Associated-owned Shares and treasury Shares) in the aggregate owned 1,394,744
Shares constituting approximately 23.2% of the outstanding Shares (or 20.0% on
a fully diluted basis). As used in this paragraph, the term "Shares" includes
shares of Nonvoting Common Stock, $0.01 par value, of the Company, which are
immediately convertible into Shares for no additional consideration.
To finance the Offer, refinance existing debt of ASI, the Company and USSC,
repurchase stock options and pay related fees and expenses, Associated, ASI,
USSC and the Company entered into (i) new credit facilities ("New Credit
Facilities") with a group of banks and financial institutions providing for
term loan borrowings of $200.0 million and revolving loan borrowings of up to
$300.0 million and (ii) a senior subordinated bridge loan facility in the
aggregate principal amount of $130.0 million (the "Subordinated Bridge
Facility"). In addition, simultaneously with the consummation of the Offer,
Associated obtained $12.0 million from the sale of additional shares of
Associated Common Stock, which proceeds were used to finance the purchase of a
portion of the Shares pursuant to the Offer.
On May 3, 1995, USSC completed the issuance of $150.0 million of 12 3/4%
Senior Subordinated Notes (the "Notes") due 2005. The net proceeds of the Notes
(after discount and fees of approximately $5.5 million) were used to pay
certain expenses, to repay the $130.0 million Subordinated Bridge Facility
(together with $1.6 million in accrued and unpaid interest thereon), to repay a
portion of the Tranche A and Tranche B term loans (totaling approximately $6.5
million) and provide working capital. In the event the necessary consents are
obtained, the Company expects to repurchase the Series B Preferred Stock,
together with accrued and unpaid dividends thereon (approximately $7.0
million).
The New Credit Facilities contain certain financial covenants covering the
Company and its subsidiaries on a consolidated basis, including, without
limitation, covenants relating to tangible net worth, capitalization, fixed
charge coverage, capital expenditures and payment of dividends by the Company.
F-9
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Effective for 1995, the Company changed its fiscal year from a year end of
August 31 to December 31. The financial statements included herein represent
the final financial statements of the Company through the date of the
consummation of the Merger. Future financial statements of the Company will
reflect Associated and its acquisition of the Company, and will be on the basis
of a December 31 fiscal year end.
As part of the Merger, the Company incurred approximately $27.8 million of
merger-related costs. The amount consisted of severance payments under
employment contracts ($9.6 million); insurance benefits under employment
contracts ($7.4 million); legal, accounting and other professional services
fees ($5.2 million); retirement of stock options ($3.0 million); and fees for
letters of credit related to employment contracts and other costs ($2.6
million).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of United
Stationers Inc. and its wholly owned subsidiaries ("the Company"). Investments
in 20% to 50% owned companies are accounted for by the equity method. All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain prior-year amounts have been reclassified to conform
with current-year presentations.
Revenue Recognition
Sales and provisions for estimated sales returns and allowances are recorded
at the time of shipment.
Cash and Cash Equivalents
Investments in low-risk instruments which have an original maturity of three
months or less are considered to be cash equivalents. Cash equivalents are
stated at cost which approximates market value. The Company's cash equivalent
policy conforms to the requirements of Financial Accounting Standard No. 95.
Inventories
Inventories constituting approximately 82% of total inventories at August 31,
1993, August 31, 1994 and March 30, 1995 have been valued under the last-in,
first-out (LIFO) method with the remainder of the inventory valued under the
first-in, first-out (FIFO) method. Inventory valued under the FIFO and LIFO
accounting methods are recorded at the lower of cost or market. If the lower of
FIFO cost or market method of inventory accounting had been used by the Company
for all inventories, merchandise inventories would have been approximately
$16,679,000, $18,854,000 and $21,797,000 higher than reported at August 31,
1993, 1994 and March 30, 1995, respectively.
In 1994, liquidations of certain LIFO inventories had the effect of
increasing net earnings by $830,000 or $0.04 per share.
Depreciation and Amortization
Depreciation and amortization are determined by using the straight-line
method over the estimated useful lives of the assets.
F-10
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The estimated useful life assigned to fixtures and equipment is from two to
10 years; the estimated useful life assigned to buildings does not exceed 40
years; leasehold improvements and assets under capital leases are amortized
over the lesser of their useful lives or the term of the applicable lease.
Goodwill reflecting the excess of cost over the value of net assets of
businesses acquired is being amortized on a straight-line basis over 40 years.
The cumulative amount of goodwill amortized at August 31, 1993, 1994 and March
30, 1995 is $1,200,000, $2,315,000 and $2,965,000, respectively.
Software Capitalization
The Company capitalizes major internal and external systems development costs
determined to have benefits for future periods. Amortization expense is
recognized over the periods in which the benefits are realized, generally not
to exceed three years. Systems development costs capitalized were $4,202,000,
$1,955,000, $2,166,000 and $1,896,000 in 1992, 1993, 1994 and 1995,
respectively. Amortization expense was $3,384,000, $2,946,000, $2,376,000 and
$1,795,000 in 1992, 1993, 1994 and 1995, respectively.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables and debt instruments. The book
value of cash and cash equivalents, trade receivables and trade payables are
considered to be representative of their respective fair values.
Borrowings under the Company's Reducing Revolving Credit and Term Loan
Agreement are considered to be at fair market value. The Company had
approximately $66.1 million, $62.7 million and $62.4 million of long-term debt
(excluding borrowings under the Company's Reducing Revolving Credit and Term
Loan Agreement) outstanding as of August 31, 1993, 1994 and March 30, 1995,
respectively. The approximate fair value was $68.0 million, $59.8 million and
$61.3 million as of August 31, 1993, 1994 and March 30, 1995, respectively. The
fair value is based on the current rates offered to the Company for debt of
similar maturities. The fair values on the long-term debt financial instruments
are not necessarily indicative of the amounts that would be realized in a
current market exchange and exclude any liquidation or origination costs.
Foreign Currency Translation
All assets and liabilities of the Company's foreign operations are translated
at current exchange rates. Revenues and expenses are translated at average
exchange rates for the year in accordance with Statement of Financial
Accounting Standard No. 52. The amounts for all years presented were
immaterial.
Earnings Per Share
Earnings per share and the effect on earnings per share of potentially
dilutive stock options are computed by the treasury stock method. This
computation takes into account the weighted average number of shares
outstanding during each year, outstanding stock options and their exercise
prices, and the market price of the stock throughout the year. The exercise of
outstanding stock options would not result in a material dilution of earnings
per share.
F-11
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. BUSINESS COMBINATION AND RESTRUCTURING CHARGE
On June 24, 1992, the Company acquired all of the outstanding capital stock
of SDC Distributing Corp., parent of Stationers Distributing Company, Inc.
("SDC"). The results of operations of SDC have been included in the Company's
consolidated financial statements since June 25, 1992.
The following summarized unaudited pro forma results of operations for the
years ended August 31, 1991 and 1992 assume the acquisition occurred at the
beginning of the respective periods. These pro forma results have been prepared
for comparative purposes only and do not purport to be indicative of the
results of operations that actually would have resulted had the combination
been in effect on the dates indicated, or which may result in the future.
<TABLE>
<CAPTION>
1991 1992
---------- ----------
(IN THOUSANDS OF
DOLLARS, EXCEPT SHARE
DATA) (UNAUDITED)
<S> <C> <C>
Net Sales........................................... $1,378,734 $1,445,900
Net Income.......................................... 14,070 20,444
Net Income per Share................................ 0.76 1.10
</TABLE>
In the fourth quarter of 1992, the Company recorded a $5.9 million pre-tax
restructuring charge related to severance payments and closing of certain
facilities associated with the acquisition.
4. LONG-TERM DEBT
Long-term debt consists of the following amounts (in thousands of dollars):
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Mortgages, 9,0% to 12.5%, due in installments until
2002, secured by the Regional Distribution Centers
in Livonia, Michigan; Pennsauken, New Jersey;
Dallas, Texas; Woburn, Massachusetts; and The City
of Industry, California............................ $ 13,615 $ 13,182 $ 12,908
Industrial development bonds, interest at 69% of
prime, maturing in 2015, secured by land, buildings
and certain equipment located in Edison, New
Jersey............................................. 8,000 8,000 8,000
Industrial development bonds, at market interest
rates, maturing at various dates through 2011...... 14,300 14,300 14,300
Industrial development bonds, at 66% to 79% of
prime, maturing at various dates through 2005...... 15,500 15,500 15,500
Unsecured loan, at 9.65%, maturing at various dates
through 1998....................................... 14,300 11,450 11,450
Other long-term debt................................ 356 303 276
Term Loan........................................... 30,000 30,000 30,000
Revolver............................................ 54,000 63,000 125,000
-------- -------- --------
$150,071 $155,735 $217,434
-------- -------- --------
Less--current maturities............................ 3,336 6,270 43,501
-------- -------- --------
$146,735 $149,465 $173,933
======== ======== ========
</TABLE>
The prevailing prime interest rate at August 31, 1993, August 31, 1994 and
March 30, 1995 was 6.0%, 7.8% and 9.0%, respectively.
F-12
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has a $160.0 million Reducing Revolving Credit and Term Loan
Agreement ("Credit Agreement") with a group of seven lenders (the "Lenders").
The Credit Agreement consists of a $130.0 million revolving credit facility
("Revolver") and a $30.0 million term loan ("Term Loan"). Proceeds are used to
finance working capital requirements and capital expenditures of the Company.
The Revolver provides for revolving credit loans up to the amount of the
commitment until August 31, 1997, at the Company's option. The initial $130.0
million commitment decreases to $83.6 million as of August 31, 1997 based on
quarterly decreases which began in May 1994 as specified in the Credit
Agreement. As of August 31, 1994, the Revolver commitment is $126.0 million.
Under the terms of the Credit Agreement, the Company is required to pay a
facility fee of 3/16 of 1% of the total available Revolver. The Term Loan (as
amended) matures on September 30, 1995 (or earlier upon certain subsequent
offerings by the Company of debt or equity). The Term Loan can be prepaid
without penalty. Interest on both loans is payable at varying rates provided
for in the Credit Agreement.
On February 28, 1995, the Company entered into a $30.0 million line of
credit with a major bank. This credit facility was entered into to meet
seasonal requirements after the Revolver and Term Loan was fully utilized, and
bore interest at agreed upon market rates. The Company had $6.0 million
outstanding under this agreement immediately prior to the Merger. This
agreement was terminated in connection with the Merger.
The Credit Agreement contains certain financial covenants covering the
Company and its subsidiary on a consolidated basis, including, without
limitation, covenants relating to the consolidated current ratio, tangible net
worth, capitalization, fixed charge coverage, capital expenditures and payment
of dividends by the Company.
The net book value of assets subject to secured mortgages and industrial
development bonds as of August 31, 1993 and 1994 was $28,962,000 and
$28,610,000, respectively.
Maturities of long-term debt (excluding amounts borrowed under the Credit
Agreement), for the following periods as indicated, are as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
YEAR (EXCEPT 1995) AMOUNT
------------------ -------
<S> <C>
Nine Months Ending December 31, 1995............................. $ 6,125
1996............................................................. 8,167
1997............................................................. 8,218
1998............................................................. 8,824
1999............................................................. 6,129
Later years...................................................... 24,971
-------
$62,434
=======
</TABLE>
As part of the Merger, approximately $180 million of debt at March 30, 1995
was refinanced. The refinanced debt consisted of various mortgages, the
Edison, New Jersey industrial development bonds, the private placement loan,
and the Term Loan and Revolver.
5. PENSION PLANS AND POSTRETIREMENT BENEFITS
The Company has pension plans in effect for substantially all employees.
Non-contributory plans covering non-union employees provide pension benefits
that are based on years of credited service and a percentage of annual
compensation. Non-contributory plans covering union members generally
F-13
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
provide benefits of stated amounts based on years of service. The Company funds
the plans in accordance with current tax laws.
The Company also has a non-contributory, non-qualified plan ("Supplemental
Benefits Plan") in effect for certain executives. The Company has not funded
this plan.
Pension expense in 1992, 1993, 1994 and 1995 was approximately $866,000,
$1,269,000, $1,755,000, $1,707,000, respectively.
The following table sets forth the plans' funded status at August 31, 1993,
August 31, 1994 and March 30, 1995 (in thousands of dollars):
<TABLE>
<CAPTION>
SUPPLEMENTAL
PENSION PLANS BENEFIT PLANS
------------------------- ---------------------
1993 1994 1995 1993 1994 1995(1)
------- ------- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Actuarial Present Value of
Benefits Obligation
Vested benefits............. $15,063 $15,215 $16,446 $ 442 $ 549 $ 0
Non-vested benefits......... 1,702 1,887 1,682 4 16 0
------- ------- ------- ----- ----- ---
Accumulated benefits
obligation................... $16,765 $17,102 $18,128 $ 446 $ 565 $ 0
Effect of projected future
compensation levels.......... 2,356 2,982 2,511 119 328 0
------- ------- ------- ----- ----- ---
Projected benefits obligation. $19,121 $20,084 $20,639 $ 565 $ 893 $ 0
Plan assets at fair value..... 20,875 21,000 22,683 -- -- 0
------- ------- ------- ----- ----- ---
Projected benefits obligation
less than (in excess of) plan
assets....................... $ 1,754 $ 916 $ 2,044 $(565) $(893) $ 0
Unrecognized net gain due to
past experience different
from assumptions............. (279) 266 (914) (9) 189 0
Unrecognized prior service
cost......................... 1,270 1,347 1,101 160 131 0
Unrecognized net obligation
(asset) at September 1, 1985
to be amortized over 3 to 12
years in 1994 and 4 to 13
years in 1993................ (561) (467) (412) 120 90 0
------- ------- ------- ----- ----- ---
Prepaid (accrued) pension
liability recognized in
Consolidated Balance
Sheets..................... $ 2,184 $ 2,062 $ 1,819 $(294) $(483) $ 0
======= ======= ======= ===== ===== ===
</TABLE>
- --------
(1) The Supplemental Benefit Plan was funded and paid out as a result of the
merger.
The plans' assets consist of debt securities, equity securities and
government securities. Net periodic pension cost for 1992, 1993, 1994 and 1995
for pension and supplemental benefits plans includes the following components
(in thousands of dollars):
<TABLE>
<CAPTION>
1992 1993 1994 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Service cost--benefits earned during the
period........................................ $1,055 $1,293 $1,863 $1,084
Interest cost on projected benefits obligation. 952 1,209 1,436 905
Actual return on assets........................ (983) (3,235) 263 (780)
Net amortization and deferral.................. (158) 2,002 (1,807) 494
------ ------ ------ ------
Net periodic pension cost.................... $ 866 $1,269 $1,755 $1,707
====== ====== ====== ======
</TABLE>
The projected benefit obligations for 1992, 1993, 1994 and 1995 were
determined using an assumed discount rate of 7.5%, 7.25%, 7.5% and 7.5%,
respectively. In 1992, 1993, 1994 and 1995,
F-14
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the assumed rate of compensation increase ranged from 0% to 5.5%. The expected
long-term rate of return on assets used in determining net periodic pension
cost was 7.5%.
The Company provides an unfunded health care plan to substantially all
retired non-union employees and their dependents. Eligibility requirements are
based on the individual's age (minimum age of 55), years of service and hire
date. The benefits are subject to retiree contributions, deductibles, co-
payment provisions and other limitations.
During the first quarter of 1994, the Company adopted Statement of Financial
Accounting Standard No. 106 (SFAS 106), "Employer's Accounting for
Postretirement Benefits Other Than Pensions." SFAS 106 requires companies to
accrue the expected cost of postretirement health care and life insurance
benefits throughout the employee's active service period. Previously,
postretirement health care costs were recognized as claims were paid. The
Company elected to amortize the unfunded Accumulated Postretirement Benefit
Obligation (APBO) over 20 years.
The assumed health care average cost trend rate used in measuring the APBO at
March 30, 1995 was 11.0% in 1995 and 3% in 1996 and beyond. Beginning in 1996,
retirees will pay the difference between actual plan costs and the portion of
cost paid by the Company which is limited to a cost trend rate of 3%. The
assumed discount rate was 7.75%. A 1% increase in the care cost trend rate
would increase the APBO as of March 30, 1995 by approximately $339,000 and the
sum of the 1995 annual service cost and interest cost by approximately $35,000.
The cost of postretirement health care benefits for the year ended August 31,
1994 and seven months ended March 30, 1995 are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Service cost.................................................... $246 $109
Interest on accumulated benefits obligation..................... 146 106
Amortization of transition obligation........................... 100 58
---- ----
Net postretirement benefit cost............................... $492 $273
==== ====
</TABLE>
The following table sets forth the amounts recognized in the Company's
Balance Sheet at August 31, 1994 and March 30, 1995 (in thousands of dollars):
<TABLE>
<CAPTION>
AUG. 31, MARCH 30,
1994 1995
-------- ---------
<S> <C> <C>
Retirees.............................................. $ (601) $ (781)
Other active plan participants........................ (1,634) (1,758)
------- -------
Total APBO............................................ $(2,235) $(2,539)
Unrecognized transition obligation.................... 1,897 1,838
Unrecognized net (gain)............................... (76) 63
------- -------
Accrued postretirement benefit obligation............. $ (414) $ (638)
======= =======
</TABLE>
Prior to 1994, the cost of providing postretirement health care benefits net
of retiree contributions was $33,396 in 1992 and $46,777 in 1993.
The Company has a qualified Profit Sharing Plan in which all salaried
employees and certain hourly paid employees of the Company are eligible to
participate upon completion of six consecutive months of employment. The Profit
Sharing Plan provides for annual contributions by the Company in an amount
F-15
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
determined by the Board of Directors. The Plan also permits employees to have
contributions made as 401(k) salary deferrals on their behalf and to make
after-tax voluntary contributions. The Plan provides that the Company may match
employee contributions as 401(k) salary deferrals. Company contributions to the
Plan for both profit sharing and matching of employee contributions were
approximately $1.0 million in 1992, $1.4 million in 1993, $0.5 million in 1994
and $0.8 million in 1995.
6. STOCK INCENTIVE PLANS
As a result of the change in control of the Company, the Company paid out
approximately $3.0 million to option holders representing the difference
between the tender offer price of the stock ($15.50 per share) and the option
exercise price. The amount was included in merger-related costs in 1995.
Under the Directors' Stock Option Plan, the Company granted options for 7,500
shares at a price of $19.25 per share in 1993, 7,500 shares at a price of
$15.25 per share in 1994 and 7,500 shares at a price of $13.75 per share in
1995. The Directors' Option Plan provides for the granting of options covering
up to 100,000 shares of the Company's common stock, subject to anti-dilution
adjustments. Options are exercisable at any time after they are granted, but
for not more than ten years after the option's grant. As of the period ended
1993, 1994, and 1995, 45,500, 41,000 and 0 options, respectively, were
outstanding at a price range of $8.75 to $22.13 per share.
During fiscal 1995, options for a total of 100,000 shares at $10.50 were
granted to certain officers. The grant was approved at the 1995 Annual Meeting
held in January.
Under the Company's 1981 Stock Incentive Award Plan, options outstanding had
an exercisable life of either five, six or ten years from the date of grant.
The Company granted certain officers 16,700 and 15,000 shares of restricted
stock in 1991 and 1992, respectively. There have been no restricted stock
grants since 1992. The grants of restricted shares resulted in deferred
compensation expense of $699,000 of which $185,000, $132,000, $39,000 and
$16,000 was recognized in 1992, 1993, 1994 and 1995, respectively. The
unrecognized portion of deferred compensation was $55,000, $16,000 and $0 as of
August 31, 1993, August 31, 1994 and March 30, 1995, respectively. Under the
terms of the grant, the stock does not vest to the employee until completion of
three years of employment after the date of grant. The 1981 Stock Incentive
Award Plan was terminated by the Company's Board of Directors on March 30,
1995.
In 1989, the Board of Directors terminated the 1985 Non-qualified Stock
Option Plan so that no further stock options would be issued under this plan.
The termination of the plan did not affect the options previously granted and
outstanding. No option could have been exercised more than ten years after its
grant.
F-16
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table summarizes the transactions of the 1981 and 1985 Option
Plans for 1993, 1994 and 1995.
<TABLE>
<CAPTION>
1981 STOCK INCENTIVE
AWARD PLAN
(EXCLUDING RESTRICTED OPTION PRICE OPTION PRICE OPTION PRICE
STOCK) 1993 RANGE 1994 RANGE 1995 RANGE
--------------------- ------- ------------- --------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of the
period................. 995,520 $ 8.64-$19.39 891,350 $ 8.64-$19.39 1,135,060 $ 8.64-$19.39
Granted................. 18,000 $13.75-$14.00 401,050 $10.00-$16.25 100,000 $10.50
Exercised............... (37,040) $ 8.64-$17.48 (3,520) $ 8.64-$13.75 (22,860) $ 8.64-$ 9.29
Cancelled............... (85,130) $ 8.64-$19.39 (153,820) $ 8.64-$19.39 (1,212,200) $ 8.64-$19.39
------- --------- ----------
Options outstanding at
end of the period...... 891,350 1,135,060 --
======= ========= ==========
<CAPTION>
1985 NON-QUALIFIED OPTION PRICE OPTION PRICE OPTION PRICE
STOCK OPTION PLAN 1993 RANGE 1994 RANGE 1995 RANGE
- ------------------------ ------- ------------- --------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of the
period................. 143,000 $14.78-$18.09 109,500 $14.78-$18.09 109,500 $14.78-$18.09
Granted................. -- -- -- -- -- --
Exercised............... (5,000) $18.09 -- -- -- --
Cancelled(1)............ (28,500) $14.78-$18.09 -- -- (109,500) $14.78-$18.09
------- --------- ----------
Options outstanding at
end of the period...... 109,500 109,500 --
======= ========= ==========
</TABLE>
- --------
(1) As a result in change in control of the Company, the Company paid out to
option holders the difference between the tender offer price of the stock
($15.50 per share) and the option exercise price. The total amount was
included in merger-related costs in 1995.
7. LEASES
The Company has entered into several non-cancelable long-term leases on
property and equipment. Future minimum lease payments for non-cancelable leases
in effect at March 30, 1995 having initial remaining terms of more than one
year are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
OPERATING LEASES
---------------------------
LEASE SUBLEASE NET LEASE
YEAR (EXCEPT 1995) PAYMENTS INCOME PAYMENTS
- ------------------ -------- -------- ---------
<S> <C> <C> <C>
Nine months ending December 31, 1995................ $ 9,165 $ 617 $ 8,548
1996................................................ 9,894 269 9,911
1997................................................ 7,712 199 7,513
1998................................................ 5,811 146 5,665
1999................................................ 4,275 61 4,067
Later years......................................... 14,263 -- 14,263
------- ------ -------
Total minimum lease payments........................ $51,120 $1,292 $49,967
======= ====== =======
</TABLE>
Rental expense for all operating leases was approximately $11,546,000,
$14,917,000, $13,549,000 and $7,731,000 in 1992, 1993, 1994 and 1995,
respectively.
8. INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes," which was
adopted in 1992.
The Company does not intend to provide Federal income taxes on the
undistributed earnings for its foreign subsidiaries. The Company's policy is to
leave the income in the country of origin until such time as all Federal income
tax due upon its distribution will be fully offset by foreign tax credits. As
of March 30, 1995, neither foreign subsidiary had undistributed earnings.
F-17
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
The Company provides for income taxes at statutory rates based on income
reported for financial statement purposes. A summary of income tax expense is
shown below (in thousands of dollars):
<TABLE>
<CAPTION>
1992 1993 1994 1995
------- ------- ------- --------
<S> <C> <C> <C> <C>
Taxes currently payable
Federal.................................. $ 8,565 $ 7,972 $ 7,059 $ 14,122
Other tax credits........................ (37) (10) (5) --
State.................................... 2,501 2,274 1,591 2,584
Prepaid and deferred taxes................. (2,130) 5,323 1,664 (12,014)
------- ------- ------- --------
$ 8,899 $15,559 $10,309 $ 4,692
======= ======= ======= ========
</TABLE>
The deferred tax assets and liabilities result from timing differences in the
recognition of certain income and expense items for financial and tax
accounting purposes. The sources of these differences and the related tax
effects were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
AUGUST 31, 1993 AUGUST 31, 1994 MARCH 30, 1995
------------------- ------------------- -------------------
ASSETS LIABILITIES ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Reserves for returns,
rebates and allowances. $14,250 $ -- $14,593 $ -- $18,869 $ --
Reserves for direct
acquisition costs...... 3,887 -- 1,700 -- 1,477 --
Reserves for
restructuring charges.. 1,720 -- 332 -- 10 --
Merger-related costs.... -- -- -- -- 6,737 --
Reserves for worker's
compensation insurance. 3,818 -- 3,905 -- 3,814 --
Accelerated
depreciation........... -- 15,252 -- 17,360 -- 17,716
Software capitalization. -- 1,913 -- 1,595 -- 1,465
Inventory reserves and
related purchase
accounting differences. -- 7,738 -- 7,143 -- 6,142
All other............... 3,613 1,836 4,843 2,472 4,554 2,629
------- ------- ------- ------- ------- -------
Total................... $27,288 $26,739 $25,373 $28,570 $35,461 $27,952
======= ======= ======= ======= ======= =======
</TABLE>
In the consolidated balance sheets, these deferred assets and deferred
liabilities are classified as deferred tax assets or deferred income tax
liabilities, based on the classification of the related asset or liability for
financial reporting. A deferred tax liability or asset that is not related to
an asset or liability for financial reporting, including deferred tax assets
related to carryforwards, are classified according to the expected reversal
date of the temporary difference.
A valuation allowance of $1,504,000 was recorded at August 31, 1993. No
valuation allowance was recorded in 1994 or 1995.
The table below records the differences between the statutory income tax rate
and the Company's effective income tax rate:
<TABLE>
<CAPTION>
1992 1993 1994 1995
---- ---- ---- ------
<S> <C> <C> <C> <C>
Statutory Federal income tax......................... 34.0% 34.7% 35.0% 35.0%
State income taxes, net of the Federal income tax
benefit............................................. 6.6 6.1 4.8 (4.9)
Losses from foreign subsidiaries..................... 3.3 1.3 1.9 --
Liquidation of a foreign subsidiary.................. -- -- (3.9) --
Non-deductible goodwill amortization................. -- .9 1.5 (9.0)
Other, net........................................... -- (.9) .3 (205.7)
---- ---- ---- ------
Effective income tax rate............................ 43.9% 42.1% 39.6% 184.6%
==== ==== ==== ======
</TABLE>
F-18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Associated Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of ASSOCIATED
HOLDINGS, INC. (a Delaware corporation) AND SUBSIDIARY as of December 31, 1993
and 1994, and the related consolidated statements of income, stockholders'
equity and cash flows from inception, January 31, 1992 through December 31,
1992, and for the years ended December 31, 1993 and 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Associated
Holdings, Inc. and subsidiary as of December 31, 1993 and 1994, and the results
of their operations and their cash flows from inception, January 31, 1992,
through December 31, 1992, and for the years ended December 31, 1993 and 1994
in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois,
January 23, 1995 (except with
respect to the matters discussed
in Note 14 as to which the date
is February 13, 1995)
F-19
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
ASSETS 1993 1994
------ -------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash....................................................... $ 991 $ 1,849
Accounts receivable, less allowance for doubtful accounts
of $4,058 and $4,036, respectively........................ 35,320 35,180
Vendor and other receivables............................... 9,691 9,959
Inventories................................................ 82,618 88,197
Other current assets....................................... 3,053 3,795
-------- --------
Total current assets..................................... 131,673 138,980
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land....................................................... 7,327 7,315
Buildings.................................................. 27,990 27,976
Machinery and equipment.................................... 18,829 18,875
Furniture and fixtures..................................... 4,226 4,111
-------- --------
58,372 58,277
Less -- Accumulated depreciation and amortization.......... 8,747 12,830
-------- --------
Net property, plant and equipment........................ 49,625 45,447
-------- --------
OTHER LONG-TERM ASSETS....................................... 9,681 8,052
-------- --------
$190,979 $192,479
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Cash overdrafts............................................ $ 9,145 $ 9,597
Current maturities of long-term debt....................... 4,828 5,901
Accounts payable........................................... 41,400 44,754
Accrued liabilities........................................ 16,734 18,994
Other current liabilities.................................. 2,264 3,280
-------- --------
Total current liabilities................................ 74,371 82,526
-------- --------
LONG-TERM OBLIGATIONS:
Long-term debt, less current maturities.................... 71,940 58,279
Deferred obligations and other long-term liabilities....... 10,815 2,060
-------- --------
Total long-term obligations.............................. 82,755 60,339
-------- --------
REDEEMABLE PREFERRED STOCK (Note 7):
Preferred Stock A, $0.01 par value; 15,000 authorized;
5,000 issued and outstanding; 1,138 and 1,788,
respectively, accrued..................................... 6,138 6,788
Preferred Stock B, $0.01 par value; 15,000 authorized;
5,943 and 6,560, respectively, issued and outstanding..... 5,943 6,560
Preferred Stock C, $0.01 par value; 15,000 authorized;
8,915 and 9,841, respectively, issued and outstanding..... 8,915 9,841
-------- --------
20,996 23,189
-------- --------
REDEEMABLE WARRANTS (Note 8)................................. 1,435 1,650
-------- --------
STOCKHOLDERS' EQUITY (Note 9):
Additional preferred stock, $0.01 par value; 200,000
authorized; 0 issued and outstanding...................... -- --
Common Stock Class A, $0.01 par value; 5,000,000
authorized; 896,258, and 954,911 respectively, issued and
outstanding; 0 and 5,435, respectively, accrued........... 9 10
Common Nonvoting Stock Class B, $0.01 par value; 5,000,000
authorized; 0 issued and outstanding...................... -- --
Capital in excess of par................................... 8,766 17,879
Warrants outstanding and accrued........................... 231 260
Retained earnings.......................................... 2,416 6,626
-------- --------
Total stockholders' equity............................... 11,422 24,775
-------- --------
$190,979 $192,479
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-20
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, -----------------
1992 1993 1994
------------ -------- --------
<S> <C> <C> <C>
NET SALES....................................... $365,944 $462,531 $477,445
COST OF GOODS SOLD.............................. 276,546 350,251 357,276
-------- -------- --------
Gross profit................................ 89,398 112,280 120,169
-------- -------- --------
OPERATING EXPENSES:
Warehouse and distribution expenses........... 60,593 78,482 77,859
Selling, general and administrative expenses.. 19,296 23,792 25,161
-------- -------- --------
79,889 102,274 103,020
-------- -------- --------
Income from operations...................... 9,509 10,006 17,149
INTEREST EXPENSE................................ 4,782 6,263 6,753
-------- -------- --------
Income before income taxes.................. 4,727 3,743 10,396
INCOME TAXES.................................... 1,777 781 3,993
-------- -------- --------
Net income.................................. 2,950 2,962 6,403
PREFERRED STOCK DIVIDENDS ISSUED AND ACCRUED.... 1,449 2,047 2,193
-------- -------- --------
Net income attributable to common
stockholders' equity....................... $ 1,501 $ 915 $ 4,210
======== ======== ========
EARNINGS PER COMMON AND DILUTIVE COMMON
EQUIVALENT SHARE............................... $ 1.32 $ 0.78 $ 3.51
======== ======== ========
EARNINGS PER COMMON SHARE -- ASSUMING FULL
DILUTION....................................... $ 1.32 $ 0.78 $ 3.49
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-21
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
REDEEMABLE NUMBER CAPITAL
PREFERRED STOCK REDEEMABLE OF IN TOTAL
-------------------- WARRANTS COMMON COMMON EXCESS WARRANTS RETAINED STOCKHOLDERS'
A B C TOTAL OUTSTANDING SHARES STOCK OF PAR OUTSTANDING EARNINGS EQUITY
------ ------ ------ ------- ----------- ------- ------ ------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
JANUARY 31, 1992... $5,000 $5,000 $7,500 $17,500 $1,000 896,258 $ 9 $ 7,778 $231 $ -- $ 8,018
Net income........ -- -- -- -- -- -- -- -- -- 2,950 2,950
Stock dividends
issued ($75.00
per share)....... -- 384 577 961 -- -- -- -- -- (961) (961)
Stock dividends
accrued (97.50
per share)....... 488 -- -- 488 -- -- -- -- -- (488) (488)
Payment on notes
receivable from
stockholders..... -- -- -- -- -- -- -- 947 -- -- 947
Issuance of
warrants......... -- -- -- -- 435 -- -- -- -- -- --
------ ------ ------ ------- ------ ------- --- ------- ---- ------ -------
DECEMBER 31, 1992.. 5,488 5,384 8,077 18,949 1,435 896,258 9 8,725 231 1,501 10,466
Net income........ -- -- -- -- -- -- -- -- -- 2,962 2,962
Stock dividends
issued ($100.00
per share)....... -- 559 838 1,397 -- -- -- -- -- (1,397) (1,397)
Stock dividends
accrued ($130.00
per share)....... 650 -- -- 650 -- -- -- -- -- (650) (650)
Payment on notes
receivable from
stockholders..... -- -- -- -- -- -- -- 41 -- -- 41
------ ------ ------ ------- ------ ------- --- ------- ---- ------ -------
DECEMBER 31, 1993.. 6,138 5,943 8,915 20,996 1,435 896,258 9 8,766 231 2,416 11,422
Net income........ -- -- -- -- -- -- -- -- -- 6,403 6,403
Stock dividends
issued ($100.00
per share)....... -- 617 926 1,543 -- -- -- -- -- (1,543) (1,543)
Stock dividends
accrued ($130.00
per share)....... 650 -- -- 650 -- -- -- -- -- (650) (650)
Payment on notes
receivable from
stockholders..... -- -- -- -- -- -- -- 51 -- -- 51
Issuance of common
shares........... -- -- -- -- -- 58,653 1 8,999 -- -- 9,000
Common shares
accrued.......... -- -- -- -- -- 5,435 -- 63 -- -- 63
Warrants accrued.. -- -- -- -- 215 -- -- -- 29 -- 29
------ ------ ------ ------- ------ ------- --- ------- ---- ------ -------
DECEMBER 31, 1994.. $6,788 $6,560 $9,841 $23,189 $1,650 960,346 $10 $17,879 $260 $6,626 $24,775
====== ====== ====== ======= ====== ======= === ======= ==== ====== =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-22
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, ----------------
1992 1993 1994
------------ ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 2,950 $ 2,962 $ 6,403
------- ------- -------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities--
Depreciation and amortization............... 5,366 6,475 6,356
Services provided under transition services
agreement.................................. 9,000 -- --
Provision for noncurrent taxes.............. 1,605 167 250
Common shares accrued....................... -- -- 63
Warrants accrued............................ -- -- 244
Changes in assets and liabilities, net of
effects from purchase of Lynn-Edwards for
the eleven months ended December 31, 1992--
(Increase) decrease in accounts
receivable............................... 7,582 (879) 140
Increase in vendor and other receivables.. (6,322) (2,368) (268)
Increase in inventory..................... (11,111) (14,998) (5,579)
Increase in other assets.................. (616) (3,990) (598)
Increase (decrease) in accounts payable... 10,988 (5,493) 3,354
Increase in accrued liabilities........... 4,740 1,381 2,260
(Decrease) increase in other liabilities.. (4,423) (1,449) 1,011
------- ------- -------
Total adjustments....................... 16,809 (21,154) 7,233
------- ------- -------
Net cash provided by (used in) operating
activities............................. 19,759 (18,192) 13,636
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of net assets of BCOP (Note 1).... (82,122) -- --
Acquisition of net assets of Lynn-Edwards
(Note 1)..................................... (2,673) 313 --
Acquisition costs............................. (7,712) (67) --
Capital expenditures.......................... (4,289) (3,273) (554)
Other......................................... -- (249) --
------- ------- -------
Net cash used in investing activities... (96,796) (3,276) (554)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial capitalization--
Revolver.................................... 36,081 -- --
Long-term debt.............................. 30,000 -- --
Issuance of common and preferred stock...... 19,325 -- --
Net borrowings (repayment) under revolver..... 2,230 9,500 (7,900)
Increase in cash overdrafts................... 1,787 6,108 452
Principal payments on debt.................... (8,067) (3,446) (4,827)
Borrowings under financing agreements......... 2,987 2,000 --
Collections from stockholders................. 947 41 51
------- ------- -------
Net cash provided by (used in) financing
activities............................. 85,290 14,203 (12,224)
------- ------- -------
NET CHANGE IN CASH.............................. 8,253 (7,265) 858
CASH, beginning of period....................... 3 8,256 991
------- ------- -------
CASH, end of period............................. $ 8,256 $ 991 $ 1,849
======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-23
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA )
1. BASIS OF PRESENTATION:
Associated Holdings, Inc. ("AHI") and Associated Stationers, Inc. ("ASI"), a
wholly owned subsidiary of AHI, both Delaware corporations (collectively the
"Company"), were formed to acquire certain assets and assume certain
liabilities (the "Acquisition") of the Wholesale Division of Boise Cascade
Office Products Corporation ("BCOP").
The Acquisition was consummated effective January 31, 1992, for approximately
$87,122, of which $82,122 was paid in cash and $5,000 was paid in preferred
stock. The transaction was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to acquired assets
and liabilities based on their fair market values as of January 31, 1992, as
follows:
<TABLE>
<S> <C>
Cash and accounts receivable..................................... $36,774
Inventory........................................................ 50,324
Other current assets............................................. 277
Property, plant and equipment.................................... 49,150
Accounts payable................................................. (30,624)
Accrued expenses and other liabilities........................... (18,779)
-------
$87,122
=======
</TABLE>
On October 27, 1992, L. E. Acquisition Corp., a wholly owned subsidiary of
ASI and a Delaware corporation, acquired all of the outstanding capital stock
of Lynn-Edwards Corp. ("Lynn-Edwards"), a privately held office products
wholesaler, for approximately $2,360. Lynn-Edwards was headquartered in
Sacramento, California, and operated distribution centers in Sacramento and Los
Angeles, California. On October 28, 1992, the L. E. Acquisition Corp. name was
relinquished and the Lynn-Edwards Corp. name was assumed.
The acquisition of Lynn-Edwards was effective as of September 30, 1992. The
acquisition has been accounted for as a purchase transaction and, accordingly,
the purchase price was allocated to assets and liabilities based on their
estimated fair market values as of the effective date of the transaction. At
October 1, 1992, the allocation was based on preliminary estimates of the fair
value of the net assets. In July, 1993, agreement was reached with the selling
shareholders of Lynn-Edwards regarding the final purchase price. The excess of
the purchase price over the estimated fair value of net tangible assets
acquired of $5,242 is being amortized on a straight-line basis over 40 years.
On March 23, 1994, Lynn-Edwards was merged into ASI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include AHI and its wholly owned
subsidiary, ASI. The consolidated financial statements include Lynn-Edwards in
the results of operations since its acquisition date. All significant
intercompany accounts and transactions have been eliminated. Certain prior-year
amounts have been reclassified to conform to the current-year presentation.
Cash and Cash Equivalents
Cash equivalents are composed of highly liquid investments with an original
maturity of three months or less. As a result of the Company's cash management
system, checks issued but not
F-24
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
presented to the banks for payment may create negative book cash balances. Such
negative balances are classified as bank overdrafts.
Inventory
All inventory is purchased in a state ready for resale to customers and is
considered finished goods. Inventory is stated at the lower of cost or market.
Cost is determined using the first-in, first-out ("FIFO") method for all
inventory.
Property, Plant and Equipment
Property and equipment purchased by the Company through the acquisitions
referred to in Note 1 are stated at fair market value on the date of
acquisition as prescribed by the purchase method of accounting. Subsequent
purchases of property and equipment are stated at cost.
Depreciation and amortization are determined by using the straight-line
method over the estimated useful lives of the fixed assets. The following
useful lives are used for recording depreciation for financial reporting
purposes:
<TABLE>
<S> <C>
Buildings......................... 40 years
Machinery and equipment........... 3-15 years
Furniture and fixtures............ 3-10 years
Assets held under capital lease... Lesser of useful lives or term of lease
</TABLE>
Repairs and maintenance are charged to expense as incurred.
Software Capitalization
Significant system development costs determined to have benefits for future
periods are capitalized at cost. Software costs and software development costs
of $513, $767 and $780 as of December 31, 1992, 1993 and 1994, respectively,
were capitalized and subject to amortization. Amortization expense is
recognized over the periods in which benefits are realized, generally not to
exceed five years. Amortization expense for the eleven months ended December
31, 1992 and for the years ended December 31, 1993 and 1994, was $88, $128 and
$157, respectively. Capitalized software, net of accumulated amortization, as
of December 31, 1993 and 1994, was $551 and $407, respectively.
Intangibles
Intangible assets, included in other long-term assets on the accompanying
consolidated balance sheets, consist principally of excess purchase price over
net tangible assets of businesses acquired ("goodwill"). Goodwill is amortized
on a straight-line basis over periods not exceeding 40 years. The Company
continually evaluates whether events or circumstances have occurred indicating
that the remaining estimated useful life of goodwill may not be appropriate.
When factors indicate that goodwill should be evaluated for possible
impairment, the Company uses an estimate of the acquired business' undiscounted
future operating income compared to the carrying value of goodwill to determine
if a write-off is necessary. Gross goodwill as of December 31, 1993 and 1994
was $5,242. Accumulated goodwill amortization as of December 31, 1993 and 1994,
was $164 and $295, respectively.
The Company incurred legal and other direct costs in connection with the
issuance of its outstanding debt. These transaction costs of $4,217 and $2,945
at December 31, 1993 and 1994, respectively, net of accumulated amortization,
are included in other long-term assets. Accumulated transaction cost
amortization as of December 31, 1993 and 1994, was $2,034 and $3,306,
respectively. These costs are being amortized over the weighted average term of
the related outstanding debt.
F-25
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
Effective January 31, 1992, the Company adopted Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes." Accordingly, the
Company records a provision for income taxes using the "liability" method of
accounting for income taxes. Deferred tax assets and liabilities, less an
appropriate valuation allowance, are recorded for all temporary differences
between financial and tax reporting and are the result of differences in the
timing of recognition of certain income and expense items for financial and tax
accounting purposes. Deferred tax expense (benefit) results from the net
changes during the year in the deferred tax assets and liabilities and the
valuation allowance.
3. DEBT:
Long-term debt consists of the following as of December 31, 1993 and 1994:
<TABLE>
<CAPTION>
1993 1994
------- -------
<S> <C> <C>
Revolver................................................. $47,810 $39,910
Term loan--
Tranche A, due in installments until December, 1996.... 15,000 11,000
Tranche B, due in installments from January, 1997
until December, 1998.................................. 10,000 10,000
Original issue discount -- tranche B..................... (582) (443)
Capital lease obligation, 8.87% interest rate............ 2,540 2,052
Equipment loan, 7.99% interest rate...................... 2,000 1,661
------- -------
76,768 64,180
Less -- Current maturities............................... (4,828) (5,901)
------- -------
$71,940 $58,279
======= =======
</TABLE>
In connection with the Acquisition, and as amended in connection with the
acquisition of Lynn-Edwards, the Company entered into a $95,000 Second Amended
and Restated Credit Agreement ("Credit Agreement"). The Credit Agreement
consists of a $65,000 revolving credit facility ("Revolver"), a $20,000 term
loan, Tranche A, and a $10,000 term loan, Tranche B ("Term Loan"). The proceeds
of the Revolver and the Term Loan were used to fund the Acquisition, to fund
the purchase of the outstanding capital stock of Lynn-Edwards, to pay off
certain indebtedness of Lynn-Edwards at the acquisition date and to pay
expenses related to these two transactions. In addition, proceeds were used to
finance the working capital requirements of the combined companies.
The Revolver provides for revolving credit loans up to the amount of the
commitment based on eligible receivables and inventory, as defined in the
Credit Agreement. Interest is payable at a rate per annum of 1 3/4% plus the
higher of either the prime rate or 1/2% plus the federal funds rate, as
defined. The Revolver terminates on January 31, 1997. Prepayments are required
when cash flow, as defined, exceeds specified levels. The Revolver interest
rates and outstanding amounts during the year and at the end of the year are as
follows:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, ----------------
1992 1993 1994
------------ ------- -------
<S> <C> <C> <C>
Interest rate at end of year............... 7.75% 7.75% 10.25%
Weighted average interest
rate during year.......................... 8.00% 7.75% 8.90%
Average amount outstanding
during year............................... $26,811 $46,864 $39,556
Maximum month-end balance
during year............................... 36,081 58,510 53,810
======= ======= =======
</TABLE>
F-26
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Term loan tranche A is payable in 57 monthly installments which commenced on
April 30, 1992. Interest is payable at a rate per annum of 2% plus the higher
of either the prime rate or 1/2% plus the federal funds rate, as defined. The
weighted average interest rate was 8.25%, 8.00% and 9.15% during the eleven
months ended December 31, 1992 and the years 1993 and 1994, respectively. The
interest rate was 8.00% and 10.50% at December 31, 1993 and 1994, respectively.
Term loan tranche B is payable in 24 monthly installments, commencing on
January 31, 1997. Interest is payable at a rate per annum of 5% plus the higher
of either the prime rate or 1/2% plus the federal funds rate, as defined. The
weighted average interest rate was 11.25%, 11.00% and 12.15% during the eleven
months ended December 31, 1992 and the years 1993 and 1994, respectively. The
interest rate was 11.00% and 13.50% at December 31, 1993 and 1994,
respectively.
The Credit Agreement contains certain covenants and provisions which, among
others, include restrictions on dividend payments, required levels of total
capital, required ratio of current assets to current liabilities and
restrictions on capital expenditures. Borrowings under the Credit Agreement are
collateralized by substantially all of the real and personal property of the
Company.
The Company entered into a capital lease in December, 1992, for substantially
all of the equipment at the Carol Stream warehouse facility. As of December 31,
1993 and 1994, assets recorded under this capital lease were approximately
$3,002 with related accumulated amortization of $425 and $726, respectively. As
of December 31, 1993 and 1994, total obligations under this capital lease were
$2,540 and $2,052, respectively, of which $488 and $534 is recorded as a
current liability, respectively. The lease agreement contains certain financial
covenants and provisions, including a maximum level of debt to tangible net
worth, a required level of tangible net worth, and a ratio of cash flow, as
defined, to the current portion of long-term debt.
In 1993, Lynn-Edwards entered into a $2,000 term loan to finance the purchase
of capital equipment. The loan agreement contains certain financial covenants
and provisions, including a maximum level of debt to tangible net worth, a
required level of tangible net worth and a ratio of cash flow, as defined, to
current portion of long-term debt. The loan is amortized over 60 equal
installments.
Debt maturities, excluding the original issue discount, for the five years
following the period ended December 31, 1994, are as follows:
<TABLE>
<S> <C>
1995...................................... $ 5,901
1996...................................... 6,980
1997...................................... 46,276
1998...................................... 5,466
1999...................................... --
-------
$64,623
=======
</TABLE>
Maturities of long-term debt in 1997 include a balance under the Revolver of
$39,910.
Fair Market Value of Financial Instruments
The carrying value of cash and cash equivalents and short-term debt
approximates fair value because of the short-term maturity of the instruments.
Management believes that the fair value of the Revolver and Term Loan
approximates its carrying value as of December 31, 1993 and 1994, respectively,
because the interest rate on the debt is a floating rate tied to the prime
rate.
F-27
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. LEASE OBLIGATIONS:
The Company leases certain facilities under noncancelable operating leases
expiring through July, 2004, with various renewal options.
The following table shows future minimum annual lease commitments on
noncancelable operating leases. The table excludes real estate taxes,
insurance, maintenance and other costs related to the properties which are paid
by the Company.
<TABLE>
<S> <C>
1995........................................................... $ 2,696
1996........................................................... 2,498
1997........................................................... 1,940
1998........................................................... 1,568
1999........................................................... 1,449
Thereafter..................................................... 3,804
-------
Total minimum lease payments................................... $13,955
=======
</TABLE>
Rent expense for operating leases was approximately $1,590 for the eleven
months ended December 31, 1992, and $2,711 and $2,952 for the years ended
December 31, 1993 and 1994, respectively.
5. RETIREMENT BENEFITS:
Defined Contribution Plan
The ASI Profit Sharing and Savings Plan ("the Plan") is a Section 401(k) plan
with a discretionary profit sharing component which commenced on April 1, 1992.
The Plan and the trust established pursuant to the Plan are intended to meet
the requirements of the Employee Retirement Income Security Act of 1974
("ERISA") and qualify under Sections 401(a) and 501(a) of the Internal Revenue
Code of 1986, as amended. The Plan covers substantially all full-time employees
of the Company. Pursuant to the Plan, the Company matched employee
contributions in the amount of $0.50 for each $1.00 contributed through July,
1993, and $0.25 for each $1.00 contributed subsequently, up to an employee
contribution maximum of 6.0% of compensation, as defined. The expense under the
above plan was $256 for the eleven months ended December 31, 1992 and $435 and
$277 for the years ended December 31, 1993 and 1994, respectively.
Postretirement Benefits
In December, 1990, the Financial Accounting Standards Board ("FASB") issued
Standard No. 106, "Accounting for Postretirement Benefits Other Than Pensions."
This standard requires that the expected cost of these postemployment benefits
be charged to expense during the years that the employees render service. The
Company does not offer postretirement benefits to its employees.
F-28
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES:
At January 31, 1992, the date of the Acquisition, the Company had a net
deferred tax asset primarily due to the higher tax basis allocated to the net
assets acquired, including intangible assets and certain reserves. A valuation
allowance was established at the date of the Acquisition for the entire amount
of the net deferred tax asset.
For the eleven months ended December 31, 1992, and the years ended December
31, 1993 and 1994, and components of the provision for income taxes were as
follows:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEARS ENDED
THROUGH DECEMBER 31,
DECEMBER 31, ---------------
1992 1993 1994
------------ ------- ------
<S> <C> <C> <C>
Currently payable--
Federal...................................... $ 1,584 $ 227 $3,090
State........................................ 193 554 903
------- ------- ------
Total currently payable.................... 1,777 781 3,993
------- ------- ------
Deferred, net--
Federal...................................... 1,107 1,012 166
State........................................ 163 148 24
Valuation allowance reduction................ (1,270) (1,160) (190)
------- ------- ------
Total deferred, net........................ -- -- --
------- ------- ------
Provision for income taxes..................... $ 1,777 $ 781 $3,993
======= ======= ======
</TABLE>
The components of the deferred income tax provision (benefit) were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Accelerated tax depreciation...................... $ 308 $ (42) $ (266)
Amortization of intangible assets................. 822 897 897
Acquisition accruals.............................. 1,130 415 297
Sales discounts and deferred revenue.............. (119) (297) (1,014)
Other............................................. (871) 187 276
Valuation allowance reduction..................... (1,270) (1,160) (190)
------- ------- -------
Provision (benefit) for deferred income taxes..... $ -- $ -- $ --
======= ======= =======
</TABLE>
F-29
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reconciliations of the statutory federal income tax rates to the effective
income tax rates were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
THROUGH
DECEMBER 31, YEARS ENDED DECEMBER 31,
--------------- -------------------------------
1992 1993 1994
--------------- --------------- --------------
% OF % OF % OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Tax provision based on the
federal statutory rate......... $ 1,607 34.0% $ 1,273 34.0% $3,535 34.0%
State and local income taxes --
net of federal income tax
benefit........................ 197 4.2 492 13.2 607 5.8
Reserves........................ 1,243 26.3 176 4.7 41 .4
Valuation allowance reduction... (1,270) (26.9) (1,160) (31.0) (190) (1.8)
------- ----- ------- ----- ------ ----
Provision for income taxes...... $ 1,777 37.6% $ 781 20.9% $3,993 38.4%
======= ===== ======= ===== ====== ====
</TABLE>
The amounts of deferred tax assets and deferred tax liabilities at December
31, 1993 and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1993 1994
-------------------- --------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Depreciation and amortization.... $ -- $ 603 $ -- $390
Intangible assets................ 2,766 -- 1,869 --
Allowance for doubtful accounts.. 1,598 -- 1,664 --
Inventory reserves and
adjustments..................... 1,433 -- 1,264 --
Accrued expenses................. 4,577 608 4,566 --
------- ------ ------- ----
10,374 1,211 9,363 390
Valuation allowance.............. (9,163) -- (8,973) --
------- ------ ------- ----
Total.......................... $ 1,211 $1,211 $ 390 $390
======= ====== ======= ====
</TABLE>
7. REDEEMABLE PREFERRED STOCK:
AHI has 245,000 authorized shares of preferred stock (nonvoting), consisting
of 15,000 shares of $0.01 par value Class A preferred stock, 15,000 shares of
$0.01 par value Class B preferred stock, 15,000 shares of $0.01 par value Class
C preferred stock, and 200,000 shares of $0.01 par value Additional preferred
stock. All preferred stock issued at the date of inception was valued at the
amount of cash paid or assets received for the stock at $1,000 per share. As of
December 31, 1993 and 1994, there were 5,000 shares of Class A preferred stock
issued and outstanding, and 1,138 and 1,788 shares which have been accrued as
dividends but not issued, respectively. As of December 31, 1993 and 1994, there
were 5,943 and 6,560 shares of Class B preferred stock and 8,915 and 9,841
shares of Class C preferred stock issued and outstanding, respectively. There
were no shares of Additional preferred stock issued and outstanding as of
December 31, 1993 or 1994. These shares are senior in preference to the common
stock of the Company.
Class A preferred stock must be redeemed by the Company on July 31, 1999.
Dividends are cumulative at a rate of 10% per annum, payable quarterly on April
30, July 31, October 31 and January 31. In the event that the Company does not
pay dividends in cash, the dividend rate increases to 13%
F-30
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
per annum and is payable in stock. Class B and C preferred stock are junior in
relation to the Class A preferred stock. During the eleven months ended
December 31, 1992, 488 shares of Class A preferred stock were accrued but not
issued. During each of the years ended December 31, 1993 and 1994, 650 shares
of Class A preferred stock were accrued but not issued.
Class B preferred stock must be redeemed by the Company on July 31, 1999.
Class C preferred stock is redeemable in four equal quarterly installments on
April 30, 2001, July 31, 2001, October 31, 2001, and January 31, 2002.
Dividends for both Class B and C are cumulative at a rate of 9% per annum.
Dividends are payable quarterly on April 30, July 31, October 31 and January
31. In the event that the Company does not pay dividends in cash, the dividend
rate increases to 10% per annum and is payable in stock. During the eleven
months ended December 31, 1992, noncash dividends were declared and issued for
both Class B and C preferred stock in the amount of 384 and 577 shares,
respectively. During the year ended December 31, 1993, noncash dividends were
declared and issued for both Class B and C preferred stock in the amount of 559
and 838 shares, respectively. During the year ended December 31, 1994, noncash
dividends were declared and issued for both Class B and C preferred stock in
the amount of 617 and 926 shares, respectively.
Redemption of preferred stock, for the five years following the period ended
December 31, 1994, are as follows:
<TABLE>
<S> <C>
1995............................. --
1996............................. --
1997............................. --
1998............................. --
1999............................. $13,348
</TABLE>
All classes of preferred stock may be redeemed at the option of the issuer at
any time. All classes of preferred stock have a redemption and liquidation
value of $1,000 per share plus the aggregate of accrued and unpaid dividends on
such shares to date.
8. REDEEMABLE WARRANTS:
The Company has 190,218 warrants ("Lender Warrants") outstanding as of
December 31, 1993 and 1994, which allow the holders thereof to buy shares of
AHI common stock at an exercise price of $0.01 per share. Of the Lender
Warrants, 150,340 were valued at the date of inception at the negotiated amount
of $6.65 per warrant while the remaining 39,878 warrants were valued at $10.92
per warrant. In addition, 18,821 additional Lender Warrants have been accrued
but not issued, as of December 31, 1994. The exercise period expires January
31, 2002. These warrants were valued at $11.43 per warrant.
The Lender Warrants contain certain put rights which allow the holders
thereof to put the Warrants to AHI upon the earlier of January 31, 1997 or the
occurrence of certain extraordinary corporate events. The purchase price
payable upon the exercise of the put rights is the greater of the then fair
market value or equity value of the warrants, as defined, less the applicable
exercise price of the warrants. Payment of the Lender Warrants can only occur
after repayment of all debt outstanding under the Credit Agreement or with the
consent of the lenders and/or agent under the Credit Agreement.
9. STOCKHOLDERS' EQUITY:
Common Stock and Warrants
AHI has 10,000,000 authorized shares of common stock, consisting of 5,000,000
shares of $0.01 par value Class A voting common stock and 5,000,000 shares of
$0.01 par value Class B nonvoting common stock. Each holder of Class A common
stock is entitled to one vote for each share of common stock held of record by
such holder. No dividends on common shares were accrued or paid for the
F-31
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
eleven months ended December 31, 1992, or for the years ended December 31,
1993 and 1994. All common stock issued at the date of inception was valued at
the amount of cash paid for the stock or, in the case of services rendered or
to be rendered, at $10.00 per share.
As of December 31, 1993 and 1994, the Company has 23,129 warrants
outstanding which allow the holders to buy shares of AHI common stock at an
exercise price of $1 per share. At the date of inception, these warrants were
valued at $10.00 per warrant. In addition, 2,506 warrants have been accrued
but not issued, as of December 31, 1994. These warrants were valued at $11.43
per warrant. The exercise period expires January 31, 2002.
Earnings Per Share
The Company presents earnings per share on both a primary and fully diluted
basis. Earnings per common and dilutive common equivalent share amounts were
computed by dividing net income, after deducting dividends on preferred stock,
by the weighted average number of common and dilutive common equivalent shares
outstanding during the period. The weighted average number of shares includes
the dilutive effect of warrants computed using the treasury stock method, as
well as the common shares that would result from the conversion of the
deferred obligation related to the TS Agreement.
Earnings per common share assuming full dilution amounts were computed by
dividing net income, after deducting dividends on preferred stock, by the
weighted average number of fully diluted common shares outstanding during the
period. The weighted average number of shares includes the dilutive effect of
warrants computed using the treasury stock method, as well as the common
shares that would result from the conversion of the deferred obligation
related to the TS Agreement.
For the eleven months ended December 31, 1992, and the year ended December
31, 1993 employee stock options (discussed in Note 9) were not included in
either the weighted average number of common and dilutive common equivalent
shares or the weighted average shares on a fully diluted basis, as they would
have an anti-dilutive result. For the year ended December 31, 1994, the stock
options of one employee were included in the weighted average share
computations, as they had a dilutive result. The remainder of the employee
stock options were not included in the weighted average share computations for
the year ended December 31, 1994, as they would have an anti-dilutive effect.
The net income, preferred stock dividends and shares used to compute primary
and fully diluted earnings per share are presented in the following table.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, -------------
1992 1993 1994
------------ ------ ------
<S> <C> <C> <C>
PRIMARY
Net Income........................................ $2,950 $2,962 $6,403
Preferred stock dividends issued and accrued...... 1,449 2,047 2,193
------ ------ ------
Net income attributable to common stockholders'
equity........................................... $1,501 $ 915 $4,210
====== ====== ======
Average number of common and dilutive common
equivalent shares................................ 1,139 1,171 1,199
FULLY DILUTED
Net income........................................ $2,950 $2,962 $6,403
Preferred stock dividends issued and accrued...... 1,449 2,047 2,193
------ ------ ------
Net income attributable to common stockholders'
equity........................................... $1,501 $ 915 $4,210
====== ====== ======
Average number of shares, assuming full dilution.. 1,139 1,171 1,205
</TABLE>
F-32
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. EMPLOYEE STOCK OPTION AND AWARD PLANS:
On January 31, 1992, the stockholders of AHI approved the adoption of the AHI
1992 Management Stock Option Plan (the "Plan"). The purpose of the Plan is to
promote the interests of the Company and its shareholders by providing the
officers and other key employees with additional incentive and the opportunity
through stock ownership to increase their proprietary interest in the Company
and their personal interest in its continued success. As of December 31, 1994,
86,735 shares of common stock have been authorized for grant under the Plan.
Under the terms of the Plan, the option price at the time any option is
granted will not be less than the fair market value per share. The shares
granted to date have an exercise price of $10 per share and vest at a rate of
25% annually, subject to certain internal rate of return hurdles. As of
December 31, 1994, six persons held such options. No options were exercisable
as of December 31, 1994. Changes in stock options outstanding were as follows:
<TABLE>
<CAPTION>
SHARES
-------
<S> <C>
Granted as of the date of Inception.............................. 21,684
Granted........................................................ 31,585
Exercised...................................................... --
Expired or terminated.......................................... --
-------
Granted as of December 31, 1992.................................. 53,269
Granted........................................................ --
Exercised...................................................... --
Expired or terminated.......................................... --
-------
Granted as of December 31, 1993.................................. 53,269
Granted........................................................ 4,163
Exercised...................................................... --
Expired or terminated.......................................... (25,904)
-------
Granted as of December 31, 1994.................................. 31,528
=======
</TABLE>
11. SUPPLEMENTAL CASH FLOW DISCLOSURES:
In addition to the information provided in the statement of cash flows, the
following are supplemental disclosures of cash flow information for the eleven
months ended December 31, 1992 and the twelve months ended December 31, 1993
and 1994;
<TABLE>
<CAPTION>
1992 1993 1994
------ ------ ------
<S> <C> <C> <C>
Cash paid during the year for--
Interest.......................................... $4,694 $6,119 $6,588
Income taxes...................................... 135 630 2,118
====== ====== ======
</TABLE>
The following are supplemental disclosures of noncash investing and financing
activities for the eleven months ended December 31, 1992 and the twelve months
ended December 31, 1993 and 1994;
. In 1992, the Company issued common stock warrants, valued at $435, in
connection with the acquisition of Lynn-Edwards.
. On January 31, 1992, the Company issued common stock warrants valued at
$1,231 for services rendered in connection with the Acquisition.
. On January 31, 1992, the Company issued common stock valued at $462 for
services to be rendered to ASI through 2002.
F-33
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
. On January 31, 1992, the Company issued common stock valued at $315 for
services rendered in connection with the Acquisition.
. On January 31, 1992, the Company issued Class A preferred stock valued at
$185 for services rendered in connection with the Acquisition.
. On January 31, 1992, the Company issued Class B preferred stock valued at
$5,000 as partial payment for the Acquisition.
. In 1994, the Company issued $9,000 of common stock to retire a $9,000
deferred obligation related to a Transition Services Agreement ("TS
Agreement").
. In 1994, the Company accrued $63 for common stock shares to be issued at
less than fair market value.
. In 1994, the Company accrued $244 for warrants which have an exercise
price less than the fair market value of the common stock.
12. TRANSACTIONS WITH RELATED PARTIES:
The Company has management and advisory services agreements with three
investor groups which own the majority of AHI's Class A common and Class A
preferred stock. These investor groups provided certain financial advisory
services to the Company in connection with the Acquisition in exchange for an
aggregate of $1.0 million; 31,480 shares of AHI Class A common stock with a
recorded value of $315,000; and 185 shares of AHI Class A preferred stock with
a recorded value of $185,000.
In addition, these same investor groups provide certain oversight and
monitoring services to the Company, in exchange for management fees and out-of-
pocket expenses. The expense related to the above agreements was $475 and $90
of out-of-pocket expenses for the eleven months ended December 31, 1992, $283
and $47 of out-of-pocket expenses for the year ended December 31, 1993 and $500
and $68 of out-of-pocket expenses for the year ended December 31, 1994.
Pursuant to the Credit Agreement, the aggregate payments under these agreements
cannot exceed $500 per year plus reasonable out-of-pocket expenses.
In addition, on January 31, 1992, two of these same investor groups received
an aggregate of 46,258 shares of AHI Class A common stock (shares can be
rescinded if the agreement is terminated prior to January 31, 2002) as deferred
compensation for future services. The deferred compensation related to these
shares had a recorded value of $463,000 at January 31, 1992 and were fully
amortized during the 11 month period ended December 31, 1992.
On January 31, 1992, the Company entered into the TS Agreement with the
holder of the Class B preferred stock (nonvoting). The TS Agreement stipulated
that the Company receive certain services for between two months and two years
from January 31, 1992. The services included dual facility services (including
inventory purchases), information systems services and freight consolidation
services. In return, the Company made monthly payments, as defined. Under this
agreement, the Company purchased services of $21,000 (including inventory
purchases of $13,175) during the eleven months ended December 31, 1992 and
$1,980 and $825 during the twelve months ended December 31, 1993 and 1994,
respectively. The TS Agreement also allowed for deferment of up to $9,000 in
payments. During the eleven months ended December 31, 1992, the Company
deferred $9,000 in payments. This deferred obligation is recorded in deferred
obligations and other long-term liabilities on the balance sheet at December
31, 1993.
During 1994, per the TS Agreement, the Company settled the obligation by
issuing 58,653 shares of AHI Class A common stock to the holder of the Class B
preferred stock.
F-34
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
The holder of the Class B preferred stock is also a supplier to the Company.
The total inventory purchases from this supplier were $17,963 during the eleven
months ended December 31, 1992 and $21,903 and $26,728 during the twelve months
ended December 31, 1993 and 1994, respectively. As of December 31, 1993 and
1994, $1,413 and $2,293 were due to this supplier and recorded in trade
accounts payable.
The holder of the Class B preferred stock is also a customer of the Company.
Net sales to this customer were $11,860 during the eleven months ended December
31, 1992 and $19,153 and $33,447 during the twelve months ended December 31,
1993 and 1994, respectively. Accounts receivable from this customer were $145
and $299 as of December 31, 1993 and 1994, respectively.
On January 31, 1992, the Company entered into a data processing facilities
management agreement with the holder of the Class C preferred stock
(nonvoting). The agreement expires in July 2002, and has minimum monthly
payments which began in August 1992, ranging from $522 to $689. Payments
pursuant to the above agreement were $3,023 for the eleven months ended
December 31, 1992 and $10,336 and $10,630 for the twelve months ended December
31, 1993 and 1994, respectively. The Company had prepaid $956 and $1,934 as of
December 31, 1993 and 1994, respectively, for future services. In addition,
$1,755 and $1,931 was accrued as of December 31, 1993 and 1994, respectively,
for services provided which had not yet been billed. At December 31, 1994, the
remaining aggregate minimum monthly payments over the term of the agreement
were $50,078.
Per the agreement, in the event the agreement is terminated for cause by the
holder of the Class C preferred stock prior to expiration, the Company agrees
to pay 80% of the remaining minimum monthly charges. In the event the agreement
is terminated by the Company, the Company agrees to pay the lesser of $11,000
or 80% of the remaining minimum monthly charges, as well as the redemption or
purchase of the Class C preferred stock as discussed in Note 7.
13. CONCENTRATION OF CREDIT RISK:
The Company's principal customers are in the retail office supply industry.
Their financial position has been considered in determining the Company's
allowance for doubtful accounts.
14. SUBSEQUENT EVENT:
On February 13, 1995, AHI and United Stationers Inc. ("USI") entered into a
Merger Agreement. Under the terms of the Merger Agreement, the current
shareholders of USI would receive $15.50 per share for 92.5% of their shares
and the remaining 7.5% of their shares would represent (in aggregate) 20% of
the common stock of the combined entity, which will continue to be publicly
traded.
In connection with the possible merger, ASI paid commitment fees to a lender
subsequent to December 31, 1994.
F-35
<PAGE>
ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY
SUPPLEMENTAL CONSOLIDATED
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Summarized quarterly financial information for the two years ended December
31, 1994 is as follows:
<TABLE>
<CAPTION>
QUARTER
------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
FISCAL YEAR 1993
Net sales............................... $115,936 $105,226 $124,993 $116,376
Gross profit on sales................... 28,115 24,749 30,804 28,612
Net income (loss)....................... 596 (1,293) 3,218 441
Earnings (loss) per share............... 0.08 (1.54) 2.31 (0.07)
FISCAL YEAR 1994
Net sales............................... $123,850 $109,979 $120,982 $122,634
Gross profit on sales................... 29,688 27,870 31,273 31,338
Net income (loss)....................... 742 534 2,703 2,424
Earnings (loss) per share............... 0.18 (0.01) 1.79 1.55
</TABLE>
F-36
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1994 1995
------ ------------ -----------
(AUDITED) (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................... $ 1,849 $ 21,611
Accounts receivable, net............................ 45,139 201,056
Inventories......................................... 88,197 396,085
Other current assets................................ 3,795 25,135
-------- --------
Total Current Assets.............................. $138,980 $643,887
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost................ $ 58,277 $236,150
Less--Accumulated depreciation and amortization..... (12,830) (13,820)
-------- --------
Net Property, Plant and Equipment................. $ 45,447 $222,330
-------- --------
GOODWILL, NET......................................... $ 4,948 $ 71,628
-------- --------
OTHER ASSETS, NET..................................... $ 3,104 $ 38,104
-------- --------
TOTAL ASSETS.......................................... $192,479 $975,949
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Short-term debt and current maturities of long-term
obligations........................................ $ 5,901 $ 17,138
Accounts payable.................................... 54,351 183,994
Accrued liabilities................................. 18,994 88,694
Other liabilities................................... 3,280 13,435
-------- --------
Total Current Liabilities......................... $ 82,526 $303,261
-------- --------
DEFERRED TAXES........................................ $ 2,060 $ 31,469
-------- --------
LONG-TERM OBLIGATIONS:
Senior Revolver Loan................................ $ 39,910 $199,708
Bridge Loan......................................... 130,000
Senior Term Loan--Tranche A......................... 6,000 110,000
Senior Term Loan--Tranche B......................... 9,557 74,000
Other Long-Term Debt................................ 42,011
Other Long-Term Liabilities......................... 2,812 4,401
-------- --------
TOTAL LONG-TERM OBLIGATIONS........................... $ 58,279 $560,120
-------- --------
REDEEMABLE PREFERRED STOCK............................ $ 23,189 $ 23,761
-------- --------
REDEEMABLE WARRANTS................................... $ 1,650 $ 11,879
-------- --------
STOCKHOLDERS' EQUITY.................................. $ 24,775 $ 45,459
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY.............. $192,479 $975,949
======== ========
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these balance sheets.
F-37
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-----------------------------
MARCH 31, 1994 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
NET SALES....................................... $ 123,850 $ 137,272
COST OF GOODS SOLD.............................. 94,162 103,568
--------- ---------
Gross profit................................ $ 29,688 $ 33,704
--------- ---------
OPERATING EXPENSES:
Warehousing, marketing and administrative
expenses..................................... $ 26,752 $ 28,949
Restructuring charge (Note 1)................. 9,759
--------- ---------
Total operating expenses.................... $ 26,752 $ 38,708
--------- ---------
Income (loss) from operations............... $ 2,936 $ (5,004)
INTEREST EXPENSE, net........................... 1,732 2,203
--------- ---------
Income (loss) before income taxes and
extraordinary item........................... $ 1,204 $ (7,207)
INCOME TAXES (BENEFIT).......................... 462 (2,973)
--------- ---------
Income (loss) before extraordinary item..... $ 742 $ (4,234)
EXTRAORDINARY ITEM--loss on early retirement of
debt, net of taxes ($967) (Note 5)............ (1,449)
--------- ---------
NET INCOME (LOSS)............................... $ 742 $ (5,683)
PREFERRED STOCK DIVIDENDS ISSUED AND ACCRUED.... 534 573
--------- ---------
Net income (loss) attributable to common
shareholders............................... $ 208 $ (6,256)
========= =========
Net Income (Loss) Attributable to Common and
Common Equivalent Share (Primary and Fully
Diluted):
Earnings (loss) before extraordinary item..... $ .05 $ (.80)
Extraordinary item............................ (.24)
--------- ---------
Net income (loss) attributable to common and
common equivalent share.................... $ .05 $ (1.04)
========= =========
Average Number of Common Shares Used in Primary
Calculation.................................... 4,090,433 5,998,077
========= =========
Average Number of Common Shares Used in Fully
Diluted Calculation............................ 4,140,320 5,998,077
========= =========
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
F-38
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-----------------------------
MARCH 31, 1994 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities.... $ 3,183 $ 2,087
------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of the Company--net of cash
acquired of approximately $14,500............. $(257,259)
Capital expenditures........................... $ (242) (182)
------- ---------
Net cash used in investing activities........ $ (242) $(257,441)
------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt............................... $ 536,708
Retirements and payments of debt............... $(1,000) (266,920)
Net borrowings (repayment) under revolver...... (1,500) 18,100
Financing costs................................ (24,873)
Issuance of common stock....................... 12,000
Other.......................................... (151) (154)
------- ---------
Net cash provided by (used in) financing
activities.................................. $(2,651) $ 274,861
------- ---------
NET CHANGE IN CASH............................... $ 290 $ 19,507
Cash and Cash Equivalents, beginning of period... 991 2,104
------- ---------
Cash and Cash Equivalents, end of period......... $ 1,281 $ 21,611
======= =========
Other Cash Flow Information
Cash payments during the quarter for:
Income taxes paid............................ $ 304 $ 1,834
Interest paid................................ 1,706 2,050
Noncash investing and financing activities:
Common stock issued in exchange for services
related to financing the acquisition of the
Company..................................... $ 2,100
Common stock issued to retire a deferred
obligation related to an agreement for
contracted services......................... $ 9,000
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
F-39
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BUSINESS COMBINATION AND RESTRUCTURING CHARGE
On March 30, 1995, pursuant to an Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc.,
a Delaware corporation ("Associated") and United Stationers Inc., a Delaware
corporation (the "Company") and Associated's related Offer to Purchase dated
February 21, 1995 (the "Offer"), Associated purchased 17,201,839 shares of
Common Stock, $0.10 par value (the "Shares"), of the Company at a purchase
price of $15.50 per share, or approximately $266.6 million, from the Company's
stockholders. On March 30, 1995, pursuant to the terms of the Merger Agreement,
Associated was merged with and into the Company, with the Company surviving
(the "Merger"), and immediately thereafter, Associated Stationers, Inc., a
Delaware corporation and wholly owned subsidiary of Associated ("ASI") was
merged with and into United Stationers Supply Co., an Illinois corporation and
wholly owned subsidiary of the Company ("USSC"), with USSC surviving. The
acquisition of the Shares by Associated pursuant to the Offer together with the
Merger is referred to herein as the "Acquisition."
Immediately following the Merger, the number of outstanding Shares was
5,998,077 (or 6,973,720 on a fully diluted basis), of which (i) the former
holders of Class A Common Stock, $0.01 par value, and Class B Common Stock,
$0.01 par value, of Associated ("Associated Common Stock") and warrants or
options to purchase Associated Common Stock in the aggregate owned 4,603,333
Shares constituting approximately 76.7% of the outstanding Shares and
outstanding warrants or options for 975,643 Shares (collectively 80.0% on a
fully diluted basis) and (ii) pre-Merger holders of Shares (other than
Associated-owned Shares and treasury Shares) in the aggregate owned 1,394,744
Shares constituting approximately 23.3% of the outstanding Shares (or 20.0% on
a fully diluted basis). As used in this paragraph, the term "Shares" includes
shares of Nonvoting Common Stock, $0.01 par value, of the Company, which are
immediately convertible into Shares for no additional consideration.
To finance the Offer, refinance existing debt of ASI, the Company and USSC,
repurchase stock options and pay related fees and expenses, Associated, ASI,
USSC and the Company entered into (i) new credit facilities ("New Credit
Facilities") with a group of banks and financial institutions providing for
term loan borrowings of $200.0 million and revolving loan borrowings of up to
$300.0 million and (ii) a senior subordinated bridge loan facility in the
aggregate principal amount of $130.0 million (the "Subordinated Bridge
Facility"). In addition, simultaneously with the consummation of the Offer,
Associated obtained $12.0 million from the sale of additional shares of
Associated Common Stock, which proceeds were used to finance the purchase of a
portion of the Shares pursuant to the Offer.
On May 3, 1995, USSC completed the issuance of $150.0 million of 12 3/4%
Senior Subordinated Notes (the "Notes") due 2005. The net proceeds of the Notes
(after discount and fees of approximately $5.5 million) were used to pay
certain expenses, to repay the $130.0 million Subordinated Bridge Facility
(together with $1.6 million in accrued and unpaid interest thereon), to repay a
portion of the Tranche A and Tranche B term loans (totaling approximately $6.5
million) and provide working capital. In the event the necessary consents are
obtained, the Company expects to repurchase the Series B Preferred Stock,
together with accrued and unpaid dividends thereon, for approximately $7.0
million.
Although the Company was the surviving corporation in the Merger, the
transaction was treated as a reverse acquisition for accounting purposes with
Associated as the acquiring corporation. The total purchase price of
approximately $293.4 million was allocated to assets and liabilities of the
Company based on the estimated fair value as of the date of acquisition. The
allocation was based on preliminary estimates which may be revised at a later
date. The excess of consideration paid over the estimated
F-40
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
fair value of net assets acquired in the amount of $66.7 million has been
recorded as goodwill and is being amortized on a straight-line basis over 40
years.
Effective for 1995, the Company changed its fiscal year from a year-end of
August 31 to December 31. A report on Form 8-K was filed on April 26, 1995,
reporting that the Company had changed its fiscal year end to December 31. A
Form 10-K was filed by the Company on June 27, 1995 which included audited
financial statements for the period from September 1, 1994 through March 30,
1995, the date on which the Merger was consummated.
The Condensed Consolidated Balance Sheet combines Associated and the Company
as of March 31, 1995 and reflects a preliminary allocation of the purchase
price which may be revised at a later date. The Condensed Consolidated Balance
Sheet as of December 31, 1994 reflects Associated only. The Condensed
Consolidated Statements of Operations reflects the results of operations for
Associated only for the three months ended March 31, 1995 and March 31, 1994.
The Condensed Consolidated Statement of Cash Flows for the three months ended
March 31, 1995 and March 31, 1994 reflects that of Associated only, including
the effects of the Acquisition and Merger.
The actual results for the quarter ended March 31, 1995 include a
restructuring charge of $9.8 million ($5.9 million net of tax benefit of $3.9
million). The restructuring charge includes severance costs totaling $3.0
million. The restructuring plan specifies that certain distribution, sales, and
corporate positions, approximately 330 in total, will be eliminated
substantially within a one-year period. As of March 31, 1995, no employees have
been terminated and no benefits have been paid or charged against the reserve.
The restructuring charge also includes distribution center closing costs
totaling $4.7 million and stockkeeping unit reduction costs totaling $2.1
million. The restructuring plan specifies the closing of eight redundant
distribution centers and the elimination of overlapping inventory items from
the Company's catalogs substantially within a one-year period. Distribution
center closing costs include (i) the net occupancy costs of leased facilities
after they are vacated until expiration of leases and (ii) the losses on the
sale of owned facilities and the facilities' furniture, fixtures, and
equipment. Stockkeeping unit reduction costs include losses on the sale of
inventory items which have been discontinued solely as a result of the
acquisition and Merger. As of March 31, 1995, no amounts have been charged
against the reserve.
The actual results for the quarter ended March 31, 1995 also include
compensation expense relating to an increase in the value of employee stock
options of approximately $1.5 million, ($0.9 million net of tax benefit of $0.6
million) as a result of the Acquisition and Merger and an extraordinary write-
off of approximately $2.4 million ($1.4 million net of tax benefit of $1.0
million) of financing costs and original issue discount relating to the debt
retired. See Note 5--Extraordinary Item.
The unaudited Pro Forma Combined Financial Statements for the two companies
for the year ended December 31, 1994 were included in the Company's Form 8-K
dated April 14, 1995.
The following summarized unaudited pro forma operating data for the three
months ended March 31, 1995 and 1994 is presented giving effect to the
Acquisition as if it had been consummated at the beginning of the respective
periods and, therefore, reflects the results of the Company and Associated on a
consolidated basis for the period from January 1, 1995 through March 31, 1995
and January 1, 1994 through March 31, 1994, respectively. These pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of the results of operations that actually would have resulted
had the combination been in effect on the dates indicated, or which may result
in the future. The pro forma results exclude one-time non-recurring charges or
credits directly attributable to the transaction. The estimated cost savings
that the Company expects to realize ($26.0 million on a total year basis and
$6.5 million on a quarterly basis) pursuant to its consolidation plan that has
been approved by the Board of Directors of the Company have been reflected in
the pro forma results as if the Company's consolidation plan had been
implemented in full for the periods reflected. The Company plans to implement
its consolidation plan over a 12-month period following the Acquisition.
F-41
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The pro forma income statement adjustments consisted of (i) estimated cost
savings of $6.5 million that the Company expects to realize, (ii) increased
depreciation expense resulting from the write-up of certain fixed assets to
fair value, (iii) additional incremental goodwill amortization, (iv) additional
incremental interest expense due to debt issued, net of debt retired, (v)
reduction in preferred stock dividends due to the assumed retirement of the
Series B Preferred Stock, which the Company is permitted to redeem pursuant to
its New Credit Facilities.
<TABLE>
<CAPTION>
PRO FORMA QUARTER
ENDED MARCH 31
-------------------
1994 1995
--------- ---------
(IN THOUSANDS OF
DOLLARS, EXCEPT
SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Net sales............................................... $ 503,919 $ 587,170
Net income.............................................. $ 4,405 $ 9,409
Preferred stock dividends issued and accrued............ $ 393 $ 442
Net income available to common stockholders............. $ 4,012 $ 8,967
Net income per common and common equivalent share:
Primary............................................... $ 0.98 $ 1.30
Fully diluted......................................... $ 0.97 $ 1.30
Weighted average number of common shares outstanding:
Primary............................................... 4,090,433 6,894,076
Fully diluted......................................... 4,138,023 6,898,757
</TABLE>
The pro forma net sales amount of $587.2 million for the first quarter of
1995 reflects $449.9 million in net sales for the Company and $137.3 million
for Associated. The pro forma net sales amount of $503.9 million for the first
quarter of 1994 reflects $380.1 million in net sales for the Company and $123.8
million for Associated.
These pro forma results have been prepared for comparative purposes only and
do not purport to be indicative of the results of operations that actually
would have resulted had the combination been in effect on the dates indicated,
or which may result in the future.
(2) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1995, Associated changed its method of accounting for
the cost of inventory from the FIFO method to the LIFO method. Associated made
this change in contemplation of its acquisition of the Company (accounted for
as a reverse acquisition) so that its method would conform to that of the
Company. Associated believes that in an inflationary environment the LIFO
method provides a better matching of current costs and current revenues and
that earnings reported under the LIFO method are more easily compared to that
of other companies in the wholesale industry where the LIFO method is common.
This change resulted in a charge to pre-tax income of approximately $0.5
million ($0.3 million net of tax benefit) or $.05 per common and common
equivalent share for the quarter ended March 31, 1995. The cumulative effect of
this accounting change for years prior to 1995 is not determinable, nor are the
pro forma effects of retroactive application of the LIFO method to prior years.
The Associated LIFO reserve as of March 31, 1995 was $0.5 million.
F-42
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARY
(ASSOCIATED HOLDINGS, INC. AND SUBSIDIARY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(3) BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are unaudited,
except for the Associated Consolidated Balance Sheet as of December 31, 1994,
which is condensed from the audited Consolidated Balance Sheet of Associated at
that date. Certain prior-year amounts have been reclassified to conform with
current-year presentations. These financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of the Company's management, the condensed
consolidated financial statements for the unaudited interim periods presented
include all adjustments necessary to fairly present the results of such interim
periods and the financial position as of the end of said periods. Other than
the restructuring charge, the extraordinary item and the compensation expense
relating to employee stock options, these adjustments were of a normal
recurring nature and did not have a material impact on the financial statements
presented. Certain interim expense and inventory estimates are recognized
throughout the fiscal year relating to marginal income tax rates, shrinkage,
inflation and product mix. Any appropriate adjustments to reflect actual
experience, which historically have been immaterial, will be recognized in the
fourth quarter.
(4) EXTRAORDINARY ITEM
The Extraordinary Item reflects the write-off of financing costs and original
issue discount relating to the retired debt which was being amortized over the
life of the original debt.
(5) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON AND COMMON EQUIVALENT SHARES
Net income (loss) per common and common equivalent shares is based on net
income (loss) after preferred stock dividend requirements. Net income per
common and common equivalent share in the first quarter of 1994 on a primary
and fully diluted basis are computed using the weighted average number of
shares outstanding adjusted for the effect of stock options and warrants
considered to be dilutive common stock equivalents. For the first quarter of
1995, the stock options and warrants were excluded from the calculation of net
loss attributable to common and common equivalent shares as they would be anti-
dilutive.
F-43
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR UNITED. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION OF THE NEW NOTES IN ANY JU-
RISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICI-
TATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE
NEW NOTES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN A CHANGE IN FACTS SET FORTH IN THIS PROSPECTUS OR IN THE
AFFAIRS OF UNITED OR THE COMPANY SINCE THE DATE HEREOF.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Summary................................................................... 3
Risk Factors.............................................................. 17
The Exchange Offer........................................................ 23
The Company............................................................... 31
Use of Proceeds........................................................... 31
The Acquisition........................................................... 32
Capitalization............................................................ 33
Pro Forma Combined Financial Information.................................. 34
Selected Consolidated Financial Data...................................... 42
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 45
Business.................................................................. 56
Management................................................................ 68
Certain Transactions...................................................... 82
Financing the Acquisition................................................. 89
Description of Capital Stock.............................................. 92
Ownership of Voting Securities............................................ 97
Description of the New Notes.............................................. 99
Certain Federal Income Tax Considerations................................. 127
Plan of Distribution...................................................... 127
Legal Matters............................................................. 128
Experts................................................................... 128
Index to Financial Statements............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$150,000,000
[LOGO OF UNITED STATIONERS APPEARS HERE]
UNITED STATIONERS SUPPLY CO.
UNITED STATIONERS INC.
12 3/4% SENIOR SUBORDINATED
NOTES DUE 2005
--------------------------
PROSPECTUS
--------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable in connection with the
offering of the securities to be registered and offered hereby. All of such
expenses are estimates, other than the registration fee payable to the
Securities and Exchange Commission.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $51,724.14
Printing and Engraving Expenses..................................
Legal Fees and Expenses..........................................
Accounting Fees and Expenses.....................................
Miscellaneous....................................................
----------
Total.......................................................... $
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation and the By-laws of the Company provide for the
indemnification of directors and officers to the fullest extent permitted by
the Business Corporation Act of the State of Illinois ("IBCA"). Pursuant to
Section 8.75 of the IBCA, the Company generally has the power to indemnify its
present and former directors and officers against expenses incurred by them in
connection with any suit to which such directors and officers are, or are
threatened to be made, a party by reason of their serving in such positions, so
long as they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the Company, and with respect to
any criminal action, they had no reasonable cause to believe their conduct was
unlawful.
Indemnification is not available if such person has been adjudged to have
been liable to the Company, unless and only to the extent the court in which
such action was brought determines that, despite the adjudication of liability,
but in view of all the circumstances, the person is reasonably and fairly
entitled to indemnification for such expenses as the court shall deem proper.
The Company has the power to purchase and maintain insurance for such persons.
The statute also expressly provides that the power to indemnify authorized
thereby is not exclusive of any rights granted under any bylaw, agreement, vote
of shareholders or disinterested directors, or otherwise.
The above discussion of the Articles of Incorporation and By-laws of the
Company and of Section 8.75 of the IBCA is not intended to be exhaustive and is
qualified in its entirety by such Articles of Incorporation, By-laws and the
IBCA.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, 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 thereof in the successful
defense of any action, suit or proceeding) is asserted by a 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 of 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.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On May 3, 1995, the Company sold $150,000,000 aggregate principal amount of
12 3/4% Senior Subordinated Notes due 2005 (the "Old Notes") in a private
placement in reliance on Rule 144A under the Securities Act, at a price equal
to 100% of the stated principal amount of such Old Notes.
Exemption from registration with respect to the above-described sale was
claimed under Section 4(2) of the Securities Act regarding transactions by an
issuer not involving any public offering.
ITEM 16. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<C> <C> <S>
3.1 -- Articles of Incorporation of the Company, as amended (2).
3.2 -- By-Laws of the Company (1).
3.3 -- Restated Certificate of Incorporation of United (Exhibit 3(a) to
United's Report on Form 10-K dated November 19, 1987) (6).
3.4 -- Certificate of Ownership and Merger merging Associated into United
(4).
3.5 -- Bylaws of United, as amended (3).
4.1 -- Indenture, dated as of May 3, 1995, among the Company, as Issuer,
United, as Guarantor, and The Bank of New York, as Trustee (4).
4.2 -- Form of Old Note (included in Exhibit 4.1, Exhibit A) (4).
4.3 -- Form of New Note (included in Exhibit 4.1, Exhibit A) (4).
5 -- Opinion of Weil, Gotshal & Manges as to the securities registered
hereby (3).
9.1 -- Voting Trust Agreement, dated as of January 31, 1992, among United,
the stockholders party thereto and Messrs. Sturgess, Hegi, Miller,
Good and Johnson, as voting trustees (2).
9.2 -- First Amendment to Voting Trust Agreement, dated as of March 30,
1995, among United, the stockholders party thereto and Messrs.
Sturgess, Hegi, Miller, Good and Johnson, as voting trustees (2).
9.3 -- Letter agreement, dated March 30, 1995, between United (as
successor-in-interest to Associated) and Boise Cascade regarding
the Voting Trust Agreement (2).
10.1 -- Credit Agreement, dated as of March 30, 1995, among the Company,
United, certain Lenders named therein and Chase Bank, as Agent and
Lender (4).
10.2 -- Waiver and Amendment No. 1, dated as of April 13, 1995, among the
Company, United, each of the lenders party thereto and Chase Bank
(2).
10.3 -- Assumption Agreement, dated as of March 30, 1995, among the
Company, United and Chase Bank, as agent (included in Exhibit 10.1,
Exhibit F) (4).
10.4 -- Form of Revolving Credit Note, issuable under the Credit
Agreement (included in Exhibit 10.1, Exhibit A-1) (4).
10.5 -- Form of Tranche A Term Loan Note, issuable under the Credit
Agreement (included in Exhibit 10.1, Exhibit A-2) (4).
10.6 -- Form of Tranche B Term Loan Note, issuable under the Credit
Agreement (included in Exhibit 10.1, Exhibit A-3) (4).
10.7 -- Security Agreement, dated as of March 30, 1995, between the Company
and Chase Bank, as agent (included in Exhibit 10.1, Exhibit C) (4).
10.8 -- Form of Indenture of Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of March 30, 1995, by the
Company in favor of Chase Bank (included in Exhibit 10.1, Exhibit
E) (4).
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <C> <S>
10.9 -- Registration Rights Agreement, dated as of April 26, 1995, among
the Company, United and the Initial Purchaser (2).
10.10 -- Purchase Agreement, dated April 26, 1995, among the Company,
United and the Initial Purchaser (2).
10.11 -- Registration Rights Agreement, dated as of January 31, 1992,
between United (as successor-in-interest to Associated) and CMIHI
(included in Exhibit 10.14, Annex 2) (2).
10.12 -- Amendment No. 1 to Registration Rights Agreement, dated as of
March 30, 1995, among United (as successor-in-interest to
Associated), CMIHI and certain other holders of Lender Warrants
(2).
10.13 -- Amended and Restated Registration Rights Agreement, dated as of
March 30, 1995, among United (as successor-in-interest to
Associated), Wingate Partners, Cumberland Capital Corporation,
Good Capital Co., Inc., Boise Cascade and certain other United
stockholders (2).
10.14 -- Warrant Agreement, dated as of January 31, 1992, among United (as
successor-in-interest to Associated), the Company (as successor-
in-interest to ASI) and CMIHI (2).
10.15 -- Amendment No. 1 to Warrant Agreement, dated as of October 27,
1992, among United (as successor-in-interest to Associated), the
Company (as successor-in-interest to ASI), CMIHI and the other
parties thereto (2).
10.16 -- Amendment No. 2 to Warrant Agreement, dated as of March 30, 1995,
among United (as successor-in-interest to Associated), the Company
(as successor-in-interest to ASI), CMIHI and the other parties
thereto (2).
10.17 -- Warrant Agreement, dated as of January 31, 1992, between United
(as successor-in-interest to Associated) and Boise Cascade (2).
10.18 -- Amendment No. 1 to Warrant Agreement, dated as of March 30, 1995,
between United (as successor-in-interest to Associated) and Boise
Cascade (2).
10.19 -- Investment Banking Fee and Management Agreements, dated as of
January 31, 1992, among United, the Company and each of Wingate
Partners, Cumberland Capital Corporation and Good Capital Co.,
Inc. (2).
10.20 -- Amendment No. 1 to Investment Banking Fee and Management
Agreements, dated as of March 30, 1995, among the Company, United
and each of Wingate Partners, Cumberland Capital Corporation and
Good Capital Co., Inc. (2).
10.21 -- Employment Agreements, dated as of January 31, 1992, among United
(as successor-in-interest to Associated), the Company (as
successor-in-interest to ASI) and each of Michael D. Rowsey,
Robert W. Eberspacher, Lawrence E. Miller, Daniel J. Schleppe,
Duane J. Ratay and Daniel H. Bushell (2).
10.22 -- 1992 Management Stock Option Plan, dated as of January 31, 1992
(2).
10.23 -- Amendment No. 1 to 1992 Management Stock Option Plan, dated as of
March 30, 1995 (2).
10.24 -- Letter agreements, dated January 31, 1992, between United (as
successor-in-interest to Associated) and each of Michael D.
Rowsey, Robert W. Eberspacher, Lawrence E. Miller, Daniel J.
Schleppe, Duane J. Ratay and Daniel H. Bushell regarding grants of
stock options (2).
10.25 -- Amendment to Stock Option Grants, dated as of March 30, 1995,
between United (as successor-in-interest to Associated) and each
of Michael D. Rowsey, Robert W. Eberspacher, Lawrence E. Miller,
Daniel J. Schleppe, Duane J. Ratay and Daniel H. Bushell (2).
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <C> <S>
10.26 -- Executive Stock Purchase Agreements, dated as of January 31, 1992,
among United (as successor-in-interest to Associated) Wingate
Partners, ASI Partners, L.P. and each of Michael D. Rowsey, Robert
W. Eberspacher, Lawrence E. Miller and Daniel J. Schleppe (2).
10.27 -- First Amendments to Executive Stock Purchase Agreements, dated as
of March 30, 1995, among United (as successor-in-interest to
Associated) Wingate Partners, ASI Partners, L.P. and each of
Michael D. Rowsey, Robert W. Eberspacher, Lawrence E. Miller and
Daniel J. Schleppe (2).
10.28 -- Agreement for Data Processing Services, dated January 31, 1992,
between the Company (as successor-in-interest to ASI) and
Affiliated Computer Services, Inc. (3).
10.29 -- Lease Agreement, dated as of March 4, 1988, between Crow-Alameda
Limited Partnership and Stationers Distributing Company, Inc., as
amended (2).
10.30 -- Industrial Real Estate Lease, dated as of May 17, 1993, among
Majestic Realty Co. and Patrician Associates, Inc., as landlord,
and United Stationers Supply Co., as tenant (2).
10.31 -- Standard Industrial Lease, dated as of March 15, 1991, between
Shelley B. & Barbara Detrik and Lynn Edwards Corp. (2).
10.32 -- Lease Agreement, dated as of January 12, 1993, as amended, among
Stationers Antelope Joint Venture, AVP Trust, Adon V. Panattoni
and Yolanda M. Panattoni, as landlord, and United Stationers
Supply Co., as tenant (2).
10.33 -- Lease, dated as of February 1, 1993, between CMB Florida Four
Limited Partnership and United Stationers Supply Co., as amended
(2).
10.34 -- Standard Industrial Lease, dated March 2, 1992, between Carol
Point Builders I and Associated Stationers, Inc. (2).
10.35 -- Lease, dated March 22, 1973, between National Boulevard Bank of
Chicago, as trustee under Trust Agreement dated March 15, 1973 and
known as Trust No. 4722, and United Supply Company, as amended
(2).
10.36 -- Lease Agreement, dated July 20, 1993, between OTR, acting as the
duly authorized nominee of the Board of the State Teachers
Retirement System of Ohio, and United Stationers Supply Co., as
amended (2).
10.37 -- Lease Agreement, dated as of December 20, 1988, between Corporate
Property Associates 8, L.P., and Stationers Distributing Company,
Inc., as amended (2).
10.38 -- Industrial Lease, dated as of February 22, 1988, between Northtown
Devco and Stationers Distributing Company, as amended (2).
10.39 -- Lease, dated as of April 17, 1989, between Isaac Heller and United
Stationers Supply Co., as amended (2).
10.40 -- Lease Agreement, dated as of May 10, 1984, between Westbelt
Business Park Joint Venture and Boise Cascade Corporation, as
amended (2).
10.41 -- Lease, dated as of January 19, 1981, between Propco, Inc. and
Crown Zellerbach Corporation, as amended (2).
10.42 -- Lease Agreement, dated as of December 20, 1988, between Corporate
Property Associates 8, L.P., and Stationers Distributing Company,
Inc., as amended (2).
10.43 -- Lease Agreement, dated as of August 17, 1981, between Gulf United
Corporation and Crown Zellerbach Corporation, as amended (2).
10.44 -- Lease Agreement, dated as of March 31, 1978, among Gillich O.
Traughber and J.T. Cruin, Joint Venturers, and Boise Cascade
Corporation, as amended (2).
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <C> <S>
10.45 -- Lease Agreement, dated November 7, 1988, between Dalwere II
Associates and Stationers Distributing Company, Inc., as amended
(2).
10.46 -- Lease Agreement, dated November 7, 1988, between Central East
Dallas Development Limited Partnership and Stationers Distributing
Company, Inc., as amended (2).
10.47 -- Lease Agreement, dated as of March 17, 1989, between Special Asset
Management Company of Texas, Inc., and Stationers Distributing
Company, Inc., as amended (2).
10.48 -- Sublease, dated January 9, 1992, between Shadrall Associates and
Stationers Distributing Company, Inc. (2).
10.49 -- Lease Agreement, dated as of December 20, 1988, between Corporate
Property Associates 8, L.P., and Stationers Distributing Company,
Inc., as amended (2).
10.50 -- Industrial Lease, dated as of June 12, 1989, between Stationers
Distributing Company, Inc. and Dual Asset Fund V, as amended (2).
10.51 -- Lease Agreement, dated as of July, 1994, between Bettilyon
Mortgage Loan Company and United Stationers Supply Co. (2).
10.52 -- Agreement of Lease, dated as of January 5, 1994, between the
Estate of James Campbell, deceased, and United Stationers Supply
Co. (2).
10.53 -- First Amendment to Agreement for Data Processing Services, dated
as of , 1995, between the Company and Affiliated Computer
Services, Inc. (3).
10.54 -- Executive Bonus Plan (Exhibit 10(a)(i)(F) to United's Report on
Form 10-K dated November 17, 1988) (6).
10.55 -- Amendment to Executive Bonus Plan adopted February 13, 1995 (5).
10.56 -- Supplemental Benefits Plan as amended and restated as of July 13,
1988 (Exhibit 10(a)(H)(1) to United's Report on Form 10-K dated
November 17, 1988) (6).
10.57 -- Management Incentive Plan (Exhibit 10(a)(i)(L) to Registrant's
Report of Form 10-K dated November 17, 1988) (6).
10.58 -- Amendment to Management Incentive Plan (Exhibit 10(a)(i)(C)(1) to
United's Report on Form 10-K dated November 23, 1994) (6).
10.59 -- Amendment to Management Incentive Plan adopted February 13, 1995
(5).
10.60 -- Profit Sharing PluSavings Plan (Exhibit 10(a)(i)(F)(2)(f) to
United's Report on Form 10-K dated November 20, 1989) (6).
10.61 -- United Stationers Supply Co. Pension Plan as amended (See United's
Reports on Form 10-K for the fiscal years ended August 31, 1985,
1986, 1987 and 1989) (6).
10.62 -- Amendment to Pension Plan adopted February 10, 1995 (5).
10.63 -- Amended and Restated Employment and Consulting Agreement dated
April 15, 1993 between United, the Company and Joel D. Spungin
(Exhibit 10(b) to United's Report on Form 10-K dated November 22,
1993) (6).
10.64 -- Amendment dated February 13, 1995 to the Amended and Restated
Employment and Consulting Agreement between United, the Company
and Joel D. Spungin (5).
10.65 -- Form of Employment and Consulting Agreement between United, the
Company and certain executive officers (Exhibit 10(j) to United's
Report on Form 10-K dated November 19, 1987) (6).
10.66 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Jerold A. Hecktman (5).
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <C> <S>
10.67 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Ted S. Rzeszuto (5).
10.68 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Otis H. Halleen (5).
10.69 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Robert H. Cornell (5).
10.70 -- Amendment dated February 13, 1995 to Employment and Consulting
Agreement between United, the Company and Steven R. Schwarz (5).
10.71 -- Employment and Consulting Agreement dated March 1, 1990 between
United, the Company and Jeffrey K. Hewson (Exhibit 10(l) to
United's Report on Form 10-K dated November 20, 1990) (6).
10.72 -- Amendment dated April 10, 1991 of Employment and Consulting
Agreement between United, the Company and Jeffrey K. Hewson
(Exhibit 10(l)(i) to United's Report on Form 10-K dated November
25, 1991) (6).
10.73 -- Amendment dated September 1, 1994 of Hewson Employment and
Consulting Agreement (Exhibit 10(e)(ii) to United's Report on Form
10-K dated November 23, 1994) (6).
10.74 -- Amendment to Employment and Consulting Agreement dated February
13, 1995 between United, the Company and Jeffrey K. Hewson (5).
10.75 -- Severance Agreement between United, the Company and James A.
Pribel dated February 13, 1995 (5).
10.76 -- Letter Agreement dated February 13, 1995 between United and Ergin
Uskup (5).
10.77 -- Form of Director's Agreement to Cash Out and Cancel Stock Options
dated February 13, 1995 (Exhibit 10.53 to United's Form 10-K dated
June 27, 1995) (6).
10.78 -- Form of Employee's Agreement to Cash Out and Cancel Stock Options
dated February 13, 1995 (Exhibit 10.54 to United's Form 10-K dated
June 27, 1995) (6).
10.79 -- USI Employee Benefits Trust Agreement dated March 21, 1995 between
United and American National Bank and Trust Company of Chicago as
Trustee (5).
10.80 -- USI Bonus Benefits Trust Agreement dated March 21, 1995 between
United and American National Bank and Trust Company of Chicago as
Trustee (5).
10.81 -- Certificate of Insurance covering directors' and officers'
liability insurance effective November 1, 1994 through November 1,
1995 (Exhibit 10.57 to United's Form 10-K dated June 27, 1995)
(6).
10.82 -- Amendment to Medical Plan Document for United (5).
10.83 -- United Severance Plan, adopted Feburary 10, 1995 (5).
21 -- Subsidiaries of the Company (2).
23.1 -- Consent of Weil, Gotshal & Manges (included in the opinion filed
as Exhibit 5 to the Registration Statement) (3).
23.2 -- Consent of Arthur Andersen LLP, independent certified public
accountants (2).
23.3 -- Consent of Arthur Andersen LLP, independent certified public
accountants (2).
23.4 -- Consent of Ernst & Young LLP, independent certified public
accountants (2).
24 -- Form T-1 of The Bank of New York, as Trustee under the Indenture
filed as Exhibit 4.1 (3).
99 -- Preferability Letter of Ernst & Young LLP, independent certified
public accountants, relating to change in accounting methods (2).
</TABLE>
II-6
<PAGE>
- --------
(1) Previously filed.
(2) Filed herewith.
(3) To be filed by amendment.
*(4) Incorporated by reference to United's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1995.
*(5) Incorporated by reference to United's Schedule 14D-9 dated February 21,
1995.
*(6) Incorporated by reference to other prior filings of United as indicated.
* For Exchange Act filings, see Commission File No. 0-10653.
(B) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted since the required information is either not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
ITEM 17. UNDERTAKINGS.
(a) See Item 14.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to 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 time it was declared effective.
(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any
delayed offering or throughout a continuous offering.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE COMPANY AND UNITED
HAVE EACH DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DALLAS, STATE OF
TEXAS, ON THE 28TH DAY OF JULY, 1995.
United Stationers Supply Co.
By: /s/ Thomas W. Sturgess
----------------------------------
Thomas W. Sturgess
Chairman of the Board
United Stationers Inc.
By: /s/ Thomas W. Sturgess
-----------------------------
Thomas W. Sturgess
Chairman of the Board
EACH PERSON WHOSE SIGNATURE TO THIS REGISTRATION STATEMENT APPEARS BELOW
HEREBY APPOINTS THOMAS W. STURGESS AND DANIEL H. BUSHELL, AND EACH OF THEM,
EITHER ONE OF WHOM MAY ACT WITHOUT THE JOINDER OF THE OTHER, AS HIS ATTORNEY-
IN-FACT TO SIGN ON HIS BEHALF INDIVIDUALLY AND IN THE CAPACITY STATED BELOW AND
TO FILE ALL FURTHER PRE- AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION
STATEMENT, WHICH AMENDMENTS MAY MAKE SUCH CHANGES IN AND ADDITIONS TO THIS
REGISTRATION STATEMENT AS SUCH ATTORNEY-IN-FACT MAY DEEM NECESSARY OR
APPROPRIATE.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas W. Sturgess Chairman, President July 28, 1995
- ------------------------------------- and Chief Executive
THOMAS W. STURGESS Officer of United
and the Company
(principal
executive officer
of the Company and
United)
/s/ Daniel H. Bushell Executive Vice July 28, 1995
- ------------------------------------- President, Chief
DANIEL H. BUSHELL Financial Officer
and Secretary of
United and the
Company; Director
of the Company
(principal
financial and
accounting officer
of the Company and
United)
/s/ Michael D. Rowsey Director of United July 28, 1995
- ------------------------------------- and the Company
MICHAEL D. ROWSEY
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director of the July 28, 1995
- ------------------------------------- Company
STEVEN R. SCHWARZ
/s/ Frederick B. Hegi, Jr. Director of United July 28, 1995
- -------------------------------------
FREDERICK B. HEGI, JR.
/s/ James A. Johnson Director of United July 28, 1995
- -------------------------------------
JAMES A. JOHNSON
/s/ Gary G. Miller Director of United July 28, 1995
- -------------------------------------
GARY G. MILLER
* /s/ Thomas W. Sturgess
- -------------------------------------
THOMAS W. STURGESS
ATTORNEY-IN-FACT
</TABLE>
II-9
<PAGE>
Exhibit 3.1
-----------
Certificate Number 9307
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
To all to whom these Presents Shall Come, Greeting:
Whereas, a STATEMENT OF INCORPORATION, duly signed, acknowledged and certified
under oath has been filed in the Office of the Secretary of State, on the 11th
day of April A.D. 1922 for the organization of the UTILITY SUPPLY COMPANY under
and in accordance with the provisions of "AN ACT IN RELATION TO CORPORATIONS FOR
PECUNIARY PROFIT" approved June 28, 1919, and in force July 1, 1919, and
amendments thereof a copy of which statement is hereto attached;
Now Therefore, I, LOUIS L. EMMERSON, Secretary of State of the State of
Illinois, by virtue of the powers and duties vested in me by law, do hereby
certify that the said UTILITY SUPPLY COMPANY is a legally organized Corporation
under the laws of this State.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois. Done at the City of
Springfield this 11th day of April A.D. 1922 and of the
Independence of the United States the one hundred and 46th.
LOUIS L. EMMERSON
----------------------------------------------------
SECRETARY OF STATE
<PAGE>
(THIS STATEMENT MUST BE FILED IN DUPLICATE)
STATE OF ILLINOIS, )
)
COOK County,) ss.
- ------------------------- )
To LOUIS L. EMMERSON, Secretary of State:
We, the undersigned, adult citizens of the United States, at least one of
whom is a citizen of Illinois,
===============================================================================
ADDRESS
NAME NUMBER STREET CITY STATE
- -------------------------------------------------------------------------------
Israel Kriloff 5121 Indiana Ave., Chicago, Ill.
- -------------------------------------------------------------------------------
Morris Wolf 3327 Flornoy St., Chicago, Ill.
- -------------------------------------------------------------------------------
Harry Hechtman 2109 S. Harding Ave., Chicago, Ill.
- -------------------------------------------------------------------------------
propose to form a corporation under an Act of the General Assembly of the State
of Illinois, entitled, "An Act in relation to corporations for pecuniary
profit, "approved June 28, 1919, in force July 1, 1919; and, for the purpose of
such organization, we hereby state as follows, to-wit:
1. The name of such corporation is UTILITY SUPPLY COMPANY
2. The object for which it is formed is to buy, sell, exchange,
manufacture and deal in office supplies of every nature and description
and to buy, sell, exchange, manufacture and deal in general
merchandise.
3. The duration of the corporation is Ninety-nine Years (99) years.
----------------------------
Avenue
4. The location of the principal office is 166 W. Adams Street, Street,
-----------------------
CHICAGO , County of COOK State of Illinois
----------------------- -------------------
Preferred $ none
5. The total authorized capital stock is Common $30,000.00 and
shares of Preferred
-------- Common without par value.
6. The amount of each share having a par value is One Hundred Dollars
($100.00)
7. The number of shares having a par value is three hundred (300)
8. The number of shares of no par value is none
<PAGE>
9. The name and address of the subscribers to the capital stock, and the
amount subscribed and paid in by each, are as follows:
<TABLE>
<CAPTION>
==========================================================================================
ADDRESS NUMBER AMOUNT
NAME NUMBER STREET CITY STATE OF SUB- AMOUNT
SHARES SCRIBED PAID IN
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Israel Kriloff 5121 Indiana Ave., Chicago, Illinois 75 $7,500.00 $7,500.00
- ------------------------------------------------------------------------------------------
Morris Wolf 3327 Flornoy St., Chicago, Illinois 75 7,500.00 7,500.00
- ------------------------------------------------------------------------------------------
Harry Hechtman 2109 S. Harding Ave., Chicago, Illinois 75 7,500.00 7,500.00
- ------------------------------------------------------------------------------------------
Louis Kriloff 5121 Indiana Ave., Chicago, Illinois 75 7,500.00 7,500.00
- ------------------------------------------------------------------------------------------
</TABLE>
10.*
<PAGE>
11. Amount of capital stock which it is proposed to issue at once:
Preferred $
(a) On shares having no par value none ---------
Common $
---------
Preferred $
(b) On shares having a par value of $30,000.00 ---------
Common $30,000.00
---------
12. Amount of capital stock actually paid in:
Preferred $
(a) On shares having no par value none ---------
Common $
---------
Preferred $
(b) On shares having a par value of $30,000.00 ---------
Common $30,000.00
---------
13. Amount of capital stock paid in cash is Ten Thousand Dollars
$10,000.00
14. Capital stock paid in property, appraised as follows: Twenty Thousand
$20,000.00
15. The location and a general description of such property is as follows:
166 W. Adams Street, Chicago, Illinois, which contains stock,
fixtures, merchandise and furniture, the reasonable value of which is
$20,000.00.
16. The management of the corporation shall be vested in three directors.
17. The names and addresses of the first board of directors, at least one
of whom is a resident of Illinois, and the respective term for which elected are
as follows:
===============================================================================
NAME ADDRESS TERM FOR WHICH
NUMBER STREET CITY STATE ELECTED
- -------------------------------------------------------------------------------
Israel Kriloff 5121 Indiana Ave., Chicago, Ill. 1 year
- -------------------------------------------------------------------------------
Morris Wolf 3327 Flornoy St., Chicago, Ill. 1 year
- -------------------------------------------------------------------------------
Harry Hechtman 2109 S. Harding Ave., Chicago, Ill. 1 year
- -------------------------------------------------------------------------------
===============================================================================
18. Subject to the conditions and limitations prescribed by "The General
Corporation Act" of Illinois, this corporation shall have the following powers,
rights and privileges:
To have succession by its corporate name for the period limited in its
certificate of incorporation, or any amendment thereof;
To sue or be sued in its corporate name;
To have and use a common seal and after the same at pleasure;
To have a capital stock of such an amount, and divided into shares with a
par value, or without a par value, and to divide such capital stock into such
classes, with such preferences, rights, values and interests as may be provided
in the article of incorporation, or any amendment thereof;
To acquire, and to own, possess and enjoy so much real and personal
property as may be necessary for the transaction of the business of such
corporation, and to lease, mortgage, pledge, sell, convey or transfer the same;
and to acquire and to own real property, improved or unimproved, for the purpose
of providing homes for its employees or aiding its employees to acquire and own
homes and to improve, lease, mortgage, contract to sell, convey or transfer the
same, and to loan money to its employees for such purpose upon such terms as may
be agreed upon.
To own, purchase or otherwise acquire, whether in exchange for the issuance
of its own stock, bonds, or other obligations or otherwise, and to hold, vote,
pledge, or dispose of the stocks, bonds, and other evidences of indebtedness of
any corporation, domestic or foreign;
To borrow money at such rate of interest as the corporation may determine
without regard to or restrictions under any usury law of this State and to
mortgage or pledge its property, both real and personal, to secure the payment
thereof;
To elect officers, appoint agents, define their duties and fix their
compensation;
To lease, exchange or sell all of the corporate assets with the consent of
two-thirds of all of the outstanding capital stock of the corporation at any
annual meeting or at any special meeting called for that purpose;
To make by-laws not inconsistent with the laws of this State for the
administration of the business and interests of such corporation;
To conduct business in this State, other states, the District of Columbia,
the territories, possessions, and dependencies of the United States and in
foreign countries and to have one or more offices of this State, and to hold,
purchase, mortgage, and convey real and personal property outside of this State
necessary and requisite to carry out the object of the corporation;
In time of war to transact any lawful business in aid of the United States
in the prosecution of war, to make donations to associations and organizations
aiding in war activities and to loan money to the State or Federal government
for war purposes;
<PAGE>
To cease doing business and to surrender its charter;
To have and to exercise all the powers necessary and convenient to carry
into effect the purpose for which such corporation is formed.
19. An estimate of the per cent. of tangible property of the corporation
to be used in Illinois for the following year is 100%
20. An estimate of the per cent. of the business of the corporation which
will be transacted at or from places of business in Illinois for the following
year is 100%
21. Give the location of the principal places of business of the
corporation for the following year and an estimate of the amount of business
which will be transacted through each.
166 W. Adams Street, Chicago, Illinois, 100%
Israel Kriloff
Morris Wolf
Harry Hechtman
Louis Kriloff Incorporators
OATH AND ACKNOWLEDGMENT.
STATE OF ILLINOIS, )
)
COOK County ) ss.
- ------------------- )
I, Charles Waldman, a Notary Public do hereby certify that on the 5th day
of April A.D. 1922, personally appeared before me Israel Kriloff, Morris Wolf,
Harry Hechtman and Louis Kriloff, to me personally known to be the same persons
who executed the foregoing and severally acknowledged that they executed the
same for the purposes therein set forth, and being duly sworn hereby declared on
oath that the foregoing statements made, subscribed and verified by them are
true in substance and in fact.
In Witness Whereof, I have hereunto set my hand and seal the day and year
above written.
/s/ Charles Waldman
-----------------------------------
Notary Public.
[SEAL]
===============================================================================
CORPORATION FOR PECUNIARY
PROFIT.
Fees payable in advance.
Statement of Incorporation of
UTILITY SUPPLY COMPANY
===============================================================================
[STAMP APPEARS HERE]
INCORPORATION FEES,
Initial fee of 1/20 of one per cent. on the authorized capital stock, with
a minimum fee of $20.00, also franchise fee as required by Section 129 of the
General Corporation Act.
===============================================================================
*Note.--In paragraph 10 you should set out a brief description of the
rights and preferences of the holders of preferred stock, or any other provision
for the regulation of the business and the conduct of the affairs of the
corporation. In case of a building corporation you will also give in the same
space a specific and definite description of the site of such building. In order
to avoid delay read carefully each paragraph in the statement before
interpointing the data required. Beware execution of the statement compare every
recital in the statement and see whether or not it balances with every other
recital relating to the same matter.
<PAGE>
Certificate Number 698
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
To all to whom these Presents Shall Come, Greeting:
Whereas, from a certificate duly signed and verified under oath filed in
the Office of the Secretary of State on the 20th day of March A.D. 1929 it
appears that at a meeting of the stockholders of the UTILITY SUPPLY COMPANY duly
convened a resolution was passed to increase capital stock in accordance with
the provisions of an Act entitled "AN ACT IN RELATION TO CORPORATIONS FOR
PECUNIARY PROFIT" approved June 28, 1919, in force July 1, 1919, and all
ads amendatory thereof, a copy of which certificate is hereto attached;
Now Therefore, I. William J. Stratton, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law do hereby certify that
UTILITY SUPPLY COMPANY has legally increased capital stock from $30,000.00 to
$100,000.00 as provided in the aforesaid Act.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of
Springfield this 20th day of March A.D. 1929 and of the
Independence of the United States the one hundred and 53rd.
[SEAL]
WILLIAM J. STRATTON
-----------------------------
SECRETARY OF STATE.
<PAGE>
NOTICE: This certificate is to be used for increasing the capital stock.
Other changes in the Articles of Incorporation included in resolution increasing
the capital stock may also be included in this certificate.
FORM K
THIS CERTIFICATE MUST BE FILED IN DUPLICATE
STATE OF ILLINOIS )
)
County of Cook ) ss.
------------------)
I hereby certify that at a special meeting of the Stockholders of the
UTILITY SUPPLY COMPANY held at Chicago, Illinois on 1st day of September A.D.
1928, at 2:00 o'clock P.M., pursuant to notice required by law, which said
notice was delivered personally (or deposited in the post office properly
posted) at least ten days before the time fixed for such meeting, properly
addressed to each stockholder, signed in the manner provided in the by-laws of
said Corporation, stating the time, place and object of such meeting.
The following resolution was adopted, at least two-thirds of all the votes
represented by the whole stock of said Corporation issued and outstanding voting
therefor:
RESOLVED, That the capital stock is hereby increased from $30,000.00
consisting of 300 shares of the par value of $100.00 per share and no shares of
stock of no par value $100,000 consisting of 1000 shares of the par value of
$100.00 per share and no shares of no par value.
<PAGE>
In case additional space is required insert sheets of legal cap paper here,
leaving two inches at top of each sheet for the purpose of binding in the
certificate.
The total amount of capital stock already authorized is $30,000.00
-----------
The amount of the increased capital stock which is proposed to issue at
once and which will be paid in cash is as follows: none
(common $ none
shares having a par value of $ per share is( ---------
- -------- -------- (preferred $ none
---------
(common $ none
shares having no par value is( ------
- -------- (preferred $ none
------
The amount of the increased capital stock which is proposed to issue at
once for property, and appraised value thereof is as follows:
(common $20,000.00
200 shares having a par value of $100.00 per share is( ---------
- -------- -------- (preferred $ None
---------
(common $ None
No shares having no par value is( ------
- -------- (preferred $ None
------
The location and a general description of such property is as follows:
All of the furniture, fixtures, equipment, accounts receivable, stock in
trade and good-will of the Chicago Loose Leaf Mfg. Co., a corporation, 317 W.
Monroe Street, Chicago, Illinois.
Affix Corporate Seal
Here Attest: /s/ Harry Hechtman
----------------------------------
Secretary.
<PAGE>
STATE OF ILLINOIS )
)
County of Cook ) ss.
--------------------- )
I, Morris Wolf, being duly sworn, declare on oath that I am President of
the Corporation mentioned in the foregoing certificate, and that the statements
therein made are true in substance and in fact.
IN WITNESS WHEREOF, I have hereunto set my hand, and caused the seal of
said Corporation to be affixed, this 18th day of March, A. D. 1929.
/s/ Morris Wolf
------------------------------
President.
Subscribed and sworn to before me this 18th day of March A. D. 1929.
/s/ SIGNATURE ILLEGIBLE
-------------------------------
Notary Public.
Affix
Notarial Seal
Here
FORM K.
Box 1648 No. 111748
===============================================================================
CERTIFICATE
of
Increase of Capital Stock from
$30,000.00 to $100,000.00
of
The UTILITY SUPPLY COMPANY
317 W. Monroe Street.
Chicago, Illinois
===============================================================================
The fees required are covered by Sections 96, 97, 105, 107 and 129 of the
General Corporation Act.
Blanks for filing amendments where the notice prescribed by statute is
waived will be furnished upon request.
<PAGE>
Certificate Number 4551
--------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of Utility Supply Company have been filed in the Office of the
Secretary of State on the 29th day of December A.D. 1936, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
Now Therefore, I, Edward J. Hughes, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate of
amendment and attach thereto a copy of the Articles of Amendment to the Articles
of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield
this 29th day of December A.D. 1936 and of the Independence of the
(SEAL) United States the one hundred and 61st.
/S/ EDWARD J. HUGHES
------------------------------------
SECRETARY OF STATE.
<PAGE>
Date 12/27/36
------------------------
Filing Fee $20.00
-----------------
Clerk [INITIALS APPEAR HERE]
-----------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
------------------------------
To EDWARD J. HUGHES
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles
of Incorporation and pursuant to the provisions of Section 55 of "The
Business Corporation Act" of the State of Illinois, hereby executes the
following Articles of Amendment:
ARTICLE FIRST: The name of the corporation is: [STAMP APPEARS HERE]
UTILITY SUPPLY COMPANY
ARTICLE SECOND: The following amendment or amendments were adopted in
the manner prescribed by "The Business Corporation Act" of the State of
Illinois:
BE IT RESOLVED that the capitalization of this corporation be increased from
One Hundred Thousand Dollars ($100,000.00), consisting of One Thousand (1000)
shares of common stock of the par value of One Hundred Dollars ($100.00) per
share, to Two Hundred Thousand Dollars ($200,000.00) consisting of Two Thousand
shares (2000) of common stock of the par value of One Hundred Dollars ($100.00)
per share.
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the adoption of
voting does not apply said amendment or amendments was 880; and the
to the amendment number of shares of each class entitled to vote as a
voted on.) class on the adoption of said amendment or amendments,
and the designation of each such class were as
follows:
Class Number of Shares
Common 880
(Disregard separation ARTICLE FOURTH: The number of shares voted for
into classes if class said amendment or amendments was 660; and the
voting does not apply number of shares voted against said amendment or
to the amendment amendments was none. The number of shares of each
voted on.) class entitled to vote as a class voted for and
against said amendment or amendments, respectively,
was:
Class Number of Shares Voted
For Against
Common 660 None
<PAGE>
(Disregard this Article ARTICLE FIFTH: The manner in which the exchange,
where the amendments reclassification, or cancellation of issued shares,
contain no such or the reduction of the number of authorized shares
provisions.) of any class below the number of issued shares of
that class, provided for by said amendment or
amendments, shall be effected, is as follows:
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in which
where amendments do not said amendment or amendments effect a change in the
affect stated capital or amount of stated capital or the amount of paid-in
paid-in surplus.) surplus, or both, is effected is as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital and
where amendments do not of paid-in surplus as changed by said amendment or
affect stated capital and amendments are as follows:
paid-in surplus.)
Before Amendment After Amendment
Stated capital..... $ $
Paid-in surplus.... $ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its__________President, and its
corporate seal to be hereto affixed, attested by its__________Secretary, this
28th day of December, 1936.
UTILITY SUPPLY COMPANY
-----------------------------------------
PLACE By /s/ Morris Wolf
(CORPORATE SEAL) ---------------------------------------
HERE Its President
ATTEST:
/s/ Harry Hecktman
- ----------------------------------
Its Secretary
STATE OF ILLINOIS
--------------------------)
COUNTY OF COOK ) ss.
-------------------------)
I, HARRY G. HERSHENSON, a Notary Public, do hereby certify that on the 28th
day of December 1936, MORRIS WOLF personally appeared before me and, being first
duly sworn by me, acknowledged that he signed the foregoing document in the
capacity therein set forth and declared that the statements therein contained
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ Harry G. Hershenson
---------------------------------------
Notary Public
PLACE
(NOTARIAL SEAL)
HERE
Box 1648 File 748
=========================
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
UTILITY SUPPLY COMPANY
-------------------------
Increased number of shs from 1,000
Shs Pv to 2,000 Shs Pv
[STAMP APPEARS HERE]
Filing Fee $20.00
=========================
<PAGE>
Certificate Number 11497
--------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of Utility Supply Company have been filed in the Office of the
Secretary of State on the 9th day of June A.D. 1944, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
Now Therefore, I, Edward J. Hughes, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate of
amendment and attach thereto a copy of the Articles of Amendment to the Articles
of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield
this 9th day of June A.D. 1944 and of the Independence of the United
(SEAL) States the one hundred and 68th.
/S/ EDWARD J. HUGHES
------------------------------------
SECRETARY OF STATE.
<PAGE>
Date 6-9-44
------------------------
Filing Fee $20.00
-----------------
Clerk /s/ WEL
-----------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
------------------------------
To EDWARD J. HUGHES
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is: [STAMP APPEARS HERE]
UTILITY SUPPLY COMPANY
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
BE IT RESOLVED that the capitalization of this corporation be increased from
Two Hundred Thousand Dollars ($200,000.00), consisting of Two Thousand (2000)
shares of common stock of the par value of One Hundred Dollars ($100.00) per
share, to Three Hundred Thousand Dollars ($300,000.00), consisting of Three
Thousand Shares (3,000) of common stock of the par value of One Hundred Dollars
($100.00) per share.
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the adoption of
voting does not apply said amendment or amendments was 2,000; and the
to the amendment number of shares of each class entitled to vote as a
voted on.) class on the adoption of said amendment or amendments,
and the designation of each such class were as
follows:
Class Number of Shares
Common 2,000
(Disregard separation ARTICLE FOURTH: The number of shares voted for
into classes if class said amendment or amendments was 2,000; and the
voting does not apply number of shares voted against said amendment or
to the amendment amendments was none. The number of shares of each
voted on.) class entitled to vote as a class voted for and
against said amendment or amendments, respectively,
was:
Class Number of Shares Voted
For Against
Common 2,000 None
<PAGE>
(Disregard this Article ARTICLE FIFTH: The manner in which the exchange,
where the amendments reclassification, or cancellation of issued shares,
contain no such or the reduction of the number of authorized shares
provisions.) of any class below the number of issued shares of
that class, provided for said amendment or
amendments shall be effected, is as follows:
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in which
where amendments do not said amendment or amendments effecting a change in
affect stated capital or the amount of stated capital or the amount of paid-in
paid-in surplus.) surplus, or both, is as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital and
where amendments do not of paid-in surplus as changed by said amendment
affect stated capital and or amendments are as follows:
paid-in surplus.)
Before Amendment After Amendment
Stated capital..... $ $
Paid-in surplus.... $ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its__________President, and its
corporate seal to be hereto affixed, attested by its__________Secretary, this
7th day of June, 1944.
UTILITY SUPPLY COMPANY
-----------------------------------------
PLACE By /s/ Morris Wolf
(CORPORATE SEAL) ---------------------------------------
HERE Its President
ATTEST:
/s/ Harry Hecktman
- ----------------------------------
Its Secretary
STATE OF ILLINOIS
--------------------------)
COUNTY OF COOK ) ss.
-------------------------)
I, L.J. Schenkl, a Notary Public, do hereby certify that on the 7th day of
June 1944, MORRIS WOLF personally appeared before me and, being first duly
sworn by me, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ L.J. Schenkl
---------------------------------------
Notary Public
PLACE
(NOTARIAL SEAL)
HERE
Box 1648 File 748
=========================
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
-------------------------
Increase number of authorized
shares from 2,000 Shs. Pv. to
3,000 Shs. Pv.
[STAMP APPEARS HERE]
Filing Fee $20.00
=========================
<PAGE>
Certificate Number 12396
--------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of Utility Supply Company have been filed in the Office of the
Secretary of State on the 13th day of December A.D. 1944, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
Now Therefore, I, Richard Yates Rowe, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of amendment and attach thereto a copy of the Articles of Amendment
to the Articles of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield
this 13th day of December A.D. 1944 and of the Independence of the
(SEAL) United States the one hundred and 69th.
/S/ RICHARD YATES ROWE
------------------------------------
SECRETARY OF STATE.
<PAGE>
Date 12-13-44
------------------------
Filing Fee $20.00
-----------------
Clerk /s/ WEL
-----------------------
ARTICLES OF AMENDMENT
TO THE
[STAMP APPEARS HERE]
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
------------------------------
To RICHARD YATES ROWE
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
UTILITY SUPPLY COMPANY
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
RESOLVED that the aggregate number of shares
which the corporation will have authority to issue
hereafter will be four thousand (4,000) of one
class with the par value of $100.00 per share.
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the adoption of
voting does not apply said amendment or amendments was 3,000; and the
to the amendment number of shares of each class entitled to vote as a
voted on.) class on the adoption of said amendment or amendments,
and the designation of each such class were as
follows:
Class Number of Shares
Common 3,000
(Disregard separation ARTICLE FOURTH: The number of shares voted for
into classes if class said amendment or amendments was 3,000; and the
voting does not apply number of shares voted against said amendment or
to the amendment amendments was none. The number of shares of each
voted on.) class entitled to vote as a class voted for and
against said amendment or amendments, respectively,
was:
Class Number of Shares Voted
For Against
Common 3,000 None
<PAGE>
(Disregard this Article ARTICLE FIFTH: The manner in which the exchange,
where the amendments reclassification, or cancellation of issued shares,
contain no such or the reduction of the number of authorized shares
provisions.) of any class below the number of issued shares of
that class, provided for said amendment or
amendments, shall be effected, is as follows:
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in which
where amendments do not said amendment or amendments effecting a change in
affect stated capital or the amount of stated capital or the amount of paid-in
paid-in surplus.) surplus, or both, is as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital and
where amendments do not of paid-in surplus as changed by said amendment
affect stated capital or amendments are as follows:
and paid-in surplus.)
Before Amendment After Amendment
Stated capital..... $ $
Paid-in surplus.... $ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its__________President, and its
corporate seal to be hereto affixed, attested by its__________Secretary, this
11th day of December, 1944.
UTILITY SUPPLY COMPANY
-----------------------------------------
PLACE By /s/ Morris Wolf
(CORPORATE SEAL) ---------------------------------------
HERE Its President
ATTEST:
/s/ Harry Hecktman
- ----------------------------------
Its Secretary
STATE OF ILLINOIS
--------------------------)
COUNTY OF COOK ) ss.
-------------------------)
I, RUTH L. RIFF, a Notary Public, do hereby certify that on the 11th day of
December 1944, MORRIS WOLF personally appeared before me and, being first duly
sworn by me, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ Ruth L. Riff
---------------------------------------
Notary Public
PLACE
(NOTARIAL SEAL)
HERE
Box 1648 File 748
=========================
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
-------------------------
Increase number of authorized shares
from 3,000 Shs. Pv. to 4,000 Shs. Pv.
[STAMP APPEARS HERE]
Filing Fee $20.00
=========================
<PAGE>
Certificate Number XXXX
--------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of UTILITY SUPPLY COMPANY have been filed in the Office of the
Secretary of State on the 23rd day of August A.D. 1946, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
Now Therefore, I, Edward J. Barrett, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of amendment and attach thereto a copy of the Articles of Amendment
to the Articles of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield
this 23rd day of August A.D. 1946 and of the Independence of the
(SEAL) United States the one hundred and 71st.
/S/ EDWARD J. BARRETT
------------------------------------
SECRETARY OF STATE.
<PAGE>
Date 8-23-46
------------------------
Filing Fee $20.00
-----------------
Clerk /s/ WEL
-----------------------
(File in Duplicate)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
------------------------------ [STAMP APPEARS HERE]
(Exact Corporate Name)
To EDWARD J. BARRETT
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
UTILITY SUPPLY COMPANY
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
State of Illinois:
RESOLVED that the aggregate number of shares
which the corporation will have authority to issue
hereafter will be six thousand (6,000) of one
class with the par value of $100.00 per share.
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the adoption of
voting does not apply said amendment or amendments was 4,000; and the
to the amendment number of shares of each class entitled to vote as a
voted on.) class on the adoption of said amendment or amendments,
and the designation of each such class were as
follows:
Class Number of Shares
Common 4,000
(Disregard separation ARTICLE FOURTH: The number of shares voted for
into classes if class said amendment or amendments was 4,000; and the
voting does not apply number of shares voted against said amendment or
to the amendment amendments was ________________. The number of
voted on.) shares of each class entitled to vote as a class
voted for and against said amendment or amendments,
respectively, was:
Class Number of Shares Voted
For Against
Common 4,000 None
<PAGE>
(Disregard this Article ARTICLE FIFTH: The manner in which the exchange,
where the amendments reclassification, or cancellation of issued shares,
contain no such or a reduction of the number of authorized shares of
provisions.) any class below the number of issued shares of that
class, provided for said amendment or amendments,
shall be effected, is as follows:
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in which
where amendments do not said amendment or amendments effecting a change in
affect stated capital or the amount of stated capital or the amount of paid-in
paid-in surplus.) surplus, or both, is as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital and
where amendments do not of paid-in surplus as changed by said amendment or
reduce stated capital.) amendments are as follows:
Before Amendment After Amendment
Stated capital..... $ $
Paid-in surplus.... $ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its__________President, and its
corporate seal to be hereto affixed, attested by its__________Secretary, this
8th day of August, 1946.
UTILITY SUPPLY COMPANY
-----------------------------------------
(Exact Corporate Name)
PLACE By /s/ Morris Wolf
(CORPORATE SEAL) ---------------------------------------
HERE Its President
ATTEST:
/s/ Harry Hecktman
- ----------------------------------
Its Secretary
STATE OF ILLINOIS
--------------------------)
COUNTY OF COOK ) ss.
-------------------------)
I, L.J. Schenkl, a Notary Public, do hereby certify that on the 8th day of
August 1946, MORRIS WOLF personally appeared before me and, being first duly
sworn by me, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ L.J. Schenkl
---------------------------------------
Notary Public
PLACE
(NOTARIAL SEAL)
HERE
Box 1648 File 748
=========================
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
UTILITY SUPPLY COMPANY
-------------------------
increase number authorized shares
from 4000 SHS PV to 6000 SHS PV
[STAMP APPEARS HERE]
FILE IN DUPLICATE
Filing Fee $20.00
=========================
<PAGE>
Certificate Number 7953
--------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of Utility Supply Company have been filed in the Office of the
Secretary of State on the 30th day of December A.D. 1957, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
Now Therefore, I, Charles F. Carpentier, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of amendment and attach thereto a copy of the Articles of Amendment
to the Articles of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield
this 30th day of December A.D. 1957 and of the Independence of the
(SEAL) United States the one hundred and 82nd.
/S/ CHARLES F. CARPENTIER
------------------------------------
SECRETARY OF STATE.
<PAGE>
----------------------------------
(Do not write in this space)
Date Paid 12-30-57
License Fee $
Franchise Tax $
(File in Duplicate) Filing Fee $20.00
Clerk /s/ G.E.P.
----------------------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
------------------------------
(Exact Corporate Name)
To CHARLES F. CARPENTIER, [STAMP APPEARS HERE]
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
UTILITY SUPPLY COMPANY
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
<PAGE>
BE IT RESOLVED that the aggregate number of shares which the corporation is
authorized to issue, is changed from six thousand (6000) common shares of One
Hundred Dollars ($100.00) par value, to Two Hundred Ninety Thousand (290,000)
Class A of One Dollar ($1.00) par value, and Six Hundred Thousand Class B of One
Dollar ($1.00) par value.
BE IT FURTHER RESOLVED that each of the presently issued and outstanding six
thousand (6,000) common shares of One Hundred Dollars ($100.00) par value be and
the same is hereby changed into one hundred (100) shares Class B of One Dollar
($1.00) par value authorized herein.
BE IT FURTHER RESOLVED that the Class A shares shall be preferred over the
Class B shares as to dividends only and shall not be preferred as to the assets
of the corporation; and that the holders of Class B shares shall not receive any
dividends whatsoever unless and until the holders of Class A shares shall have
been paid an equal dividend.
BE IT FURTHER RESOLVED that the holders of Class B shares shall have the option
of converting said shares of Class B shares to Class A shares in the same
proportion as the existing stock holding of Class B shares bears to the total
issue of Class B shares; that this option shall be available to the holders of
Class B shares only when the corporation has in its possession Class A Treasury
Stock or unissued Class A shares.
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the adoption of
voting does not apply said amendment or amendments was Six Thousand (6,000);
to the amendment and the number of shares of each class entitled to
voted on.) vote as a class on the adoption of said amendment or
amendments, and the designation of each such class
were as follows:
Class Number of Shares
Common 6,000
(Disregard separation ARTICLE FOURTH: The number of shares voted for
into classes if class said amendment or amendments was Six Thousand (6,000);
voting does not apply and the number of shares voted against said amendment
to the amendment or amendments was none. The number of shares of each
voted on.) class entitled to vote as a class voted for and
against said amendment or amendments, respectively,
was:
Class Number of Shares Voted
For Against
Common 6,000 None
<PAGE>
(Disregard this Article ARTICLE FIFTH: The manner in which the exchange,
where this amendment reclassification, or cancellation of issued shares,
contains no such or a reduction of the number of authorized shares of
provisions.) any class below the number of issued shares of that
class, provided for in, or effected by, this
amendment, is as follows:
Each of the presently issued and outstanding
shares of $100.00 par value be and the same is hereby
changed into one hundred (100) shares of Class B of
$1.00 par value as authorized by the Amendment.
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in which
where amendment does not said amendment or amendments effect a change in the
affect stated capital or amount of stated capital or the amount of paid-in
paid-in surplus.) surplus, or both, is as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital and
where amendment does not of paid-in surplus as changed by this amendment are
affect stated capital or as follows:
paid-in surplus.)
Before Amendment After Amendment
Stated capital..... $ $
Paid-in surplus.... $ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its__________President, and its
corporate seal to be hereto affixed, attested by its__________Secretary, this
4th day of December, 1957.
UTILITY SUPPLY COMPANY
-----------------------------------------
(Exact Corporate Name)
PLACE By /s/ Morris Wolf
(CORPORATE SEAL) ---------------------------------------
HERE Its President
ATTEST:
/s/ Harry Hecktman
- ----------------------------------
Its Secretary
STATE OF ILLINOIS
--------------------------)
COUNTY OF COOK ) ss.
-------------------------)
I, L.J. Schenkl, a Notary Public, do hereby certify that on the 4th day of
December 1957, MORRIS WOLF personally appeared before me and, being first duly
sworn by me, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ L.J. Schenkl
---------------------------------------
Notary Public
PLACE
(NOTARIAL SEAL)
HERE
Box 1648 File 748
=========================
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
UTILITY SUPPLY COMPANY
-------------------------
[STAMP APPEARS HERE]
FILE IN DUPLICATE
Filing Fee $20.00
=========================
<PAGE>
Certificate Number 1877
--------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[LOGO APPEARS HERE]
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Articles of amendment to the Articles of Incorporation duly signed and
verified of Utility Supply Company have been filed in the Office of the
Secretary of State on the 15th day of February A.D. 1960, as provided by "THE
BUSINESS CORPORATION ACT" of Illinois, in force July 13, A.D. 1933.
Now Therefore, I, Charles F. Carpentier, Secretary of State of the State of
Illinois, by virtue of the powers vested in me by law, do hereby issue this
certificate of amendment and attach thereto a copy of the Articles of Amendment
to the Articles of Incorporation of the aforesaid corporation.
IN TESTIMONY WHEREOF, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, Done at the City of Springfield
this 15th day of February A.D. 1960 and of the Independence of the
(SEAL) United States the one hundred and 84th.
/S/ CHARLES F. CARPENTIER
------------------------------------
SECRETARY OF STATE.
<PAGE>
----------------------------------
(Do not write in this space)
Date Paid 2-15-60
License Fee $
Franchise Tax $
(File in Duplicate) Filing Fee $20.00
Clerk /s/ G.E.P.
----------------------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
UTILITY SUPPLY COMPANY
------------------------------
(Exact Corporate Name)
To CHARLES F. CARPENTIER, [STAMP APPEARS HERE]
Secretary of State
Springfield, Illinois
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is:
UTILITY SUPPLY COMPANY
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
RESOLVED that the corporate name be
changed from UTILITY SUPPLY COMPANY
to UNITED STATIONERS SUPPLY CO.
<PAGE>
(Disregard separation ARTICLE THIRD: The number of shares of the
into classes if class corporation outstanding at the time of the adoption of
voting does not apply said amendment or amendments was 616,000; and the
to the amendment number of shares of each class entitled to vote as a
voted on.) class on the adoption of said amendment or amendments,
and the designation of each such class were as
follows:
Class Number of Shares
A 16,000
B 600,000
(Disregard separation ARTICLE FOURTH: The number of shares voted for
into classes if class said amendment or amendments was 616,000; and the
voting does not apply number of shares voted against said amendment or
to the amendment amendments was ________________. The number of
voted on.) shares of each class entitled to vote as a class
voted for and against said amendment or amendments,
respectively, was:
Class Number of Shares Voted
For Against
A 16,000 None
B 600,000 None
<PAGE>
(Disregard this Article ARTICLE FIFTH: The manner in which the exchange,
where this amendment reclassification, or cancellation of issued shares,
contains no such or a reduction of the number of authorized shares of
provisions.) any class below the number of issued shares of that
class, provided for in, or effected by, this
amendment, is as follows:
(Disregard this Paragraph ARTICLE SIXTH: Paragraph 1: The manner in which
where amendment does not said amendment or amendments effect a change in the
affect stated capital or amount of stated capital or the amount of paid-in
paid-in surplus.) surplus, or both, is as follows:
(Disregard this Paragraph Paragraph 2: The amounts of stated capital and
where amendment does not of paid-in surplus as changed by this amendment are
affect stated capital or as follows:
paid-in surplus.)
Before Amendment After Amendment
Stated capital..... $ $
Paid-in surplus.... $ $
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be executed in its name by its__________President, and its
corporate seal to be hereto affixed, attested by its__________Secretary, this
11th day of February, 1960.
UTILITY SUPPLY COMPANY
-----------------------------------------
(Exact Corporate Name)
PLACE By /s/ Morris Wolf
(CORPORATE SEAL) ---------------------------------------
HERE Its President
ATTEST:
/s/ Harry Hecktman
- ----------------------------------
Its Secretary
STATE OF ILLINOIS
--------------------------)
COUNTY OF COOK ) ss.
-------------------------)
I, RUTH L. RIFF, a Notary Public, do hereby certify that on the 11th day of
February, 1960 MORRIS WOLF personally appeared before me and, being first duly
sworn by me, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ Ruth L. Riff
---------------------------------------
Notary Public
PLACE
(NOTARIAL SEAL)
HERE
Box 1648 File 748
=========================
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
UTILITY SUPPLY COMPANY
-------------------------
Change of Name
Change of Name
[STAMP APPEARS HERE]
FILE IN DUPLICATE
Filing Fee $20.00
=========================
<PAGE>
Certificate 1648 748 1
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
To all to whom these Presents Shall Come, Greeting:
Whereas, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION, duly signed and
verified of UNITED STATIONERS SUPPLY CO. incorporated under the laws of the
State of ILLINOIS have been filed in the Office of the Secretary of State, as
provided by The "Business Corporation Act" of Illinois, in force July 13, A.D.
1933.
Now Therefore, I, JIM EDGAR, Secretary of State of the State of Illinois by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach thereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois. Done at the City of
(SEAL) Springfield this 28th day of August A.D. 1981 and of the
Independence of the United States the two hundred and 6th
/s/ Jim Edgar
----------------------------------------
SECRETARY OF STATE
<PAGE>
Form BCA-55
(File in Duplicate)
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
TO JIM EDGAR -----------------------------
Secretary of State (Do not write in this space)
Springfield, Illinois Date Paid 8-28-81
License Fee $
Franchise Tax $2,500
Filing Fee $
Clerk
-----------------------------
The undersigned corporation, for the purpose of amending its Articles of
Incorporation and pursuant to the provisions of Section 55 of "The Business
Corporation Act" of the State of Illinois, hereby executes the following
Articles of Amendment:
ARTICLE FIRST: The name of the corporation is: UNITED STATIONERS SUPPLY CO.
ARTICLE SECOND: The following amendment or amendments were adopted in the
manner prescribed by "The Business Corporation Act" of the State of Illinois:
RESOLVED: That the Articles of Incorporation of United Stationers Supply Co.
be amended so that the aggregate number of shares which the corporation is
authorized to issue is changed from 290,000 shares of Class A Common Stock, par
value $1 per share, and 600,000 shares of Class B Common Stock, par value $1 per
share, to 890,000 shares of Common Stock, par value $1 per share.
FURTHER RESOLVED: That each outstanding Class A share and each outstanding
Class B share shall, upon the filing of Articles of Amendment to the
corporation's Articles of Incorporation to the foregoing effect, be changed into
one share of Common Stock, par value $1 per share, without any other or further
action.
FURTHER RESOLVED: That the officers of this corporation are hereby authorized,
directed and empowered to take all necessary action to carry out the foregoing
resolutions.
ARTICLE THIRD: The number of shares of the corporation outstanding at the time
of the adoption of said amendment or amendments was 841,800; and the number of
shares of each class entitled to vote as a class on the adoption of said
amendment or amendments, and the designation of each such class were as follows:
(Disregard separation into classes Class Number of Shares
if class voting does not apply to
the amendment voted on.)
Class A 248,300
Class B 593,500
NOTE: On the date of adoption of the amendment as additional
shares were held in treasury and not entitled to vote.
Class Number of Shares
N/A
ARTICLE FOURTH: The number of shares voted for said amendment or amendments
was 837,800 and the number of shares voted against said amendment or amendments
was -0-. The number of shares of each class entitled to vote as a class voted
for and against said amendment or amendments, respectively, was:
(Disregard separation into classes Class Number of Shares Voted
if class voting does not apply to For Against
the amendment voted on.)
Class A 244,300 -0-
Class B 593,500 -0-
<PAGE>
Item 1. On the date of the adoption of this amendment, restating the articles of
incorporation, the corporation had shares issued, itemized as follows:
(Disregard these items unless Class Series Number of Par value per share
the amendment restates the (If Any) Shares or statement that
articles of incorporation.) shares are without
par value
N/A
Item 2. On the date of the adoption of this amendment restating the articles of
incorporation, the corporation had a stated capital of $ and a paid-in
surplus of $ or a total of $ .
N/A
ARTICLE FIFTH: The manner in which the exchange, reclassification, or
cancellation of issued shares, or a reduction of the number of authorized shares
of any class below the number of issued shares of that class, provided for in,
or effected by, this amendment, is as follows:
(Disregard this Article where this amendment contains no such provisions.)
Upon the filing of this amendment, all outstanding Class A and Class B shares
shall automatically be changed and converted into shares of Common Stock, all of
a single class, with a par value of $1 per share.
ARTICLE SIXTH: Paragraph 1: The manner in which said amendment or amendments
effect a change in the amount of stated capital or the amount of paid-in
surplus, or both, is as follows:
(Disregard this Paragraph where amendment does not affect stated capital or
paid-in surplus.)
N/A
Paragraph 2: The amounts of stated capital and of paid-in surplus as changed
by this amendment are as follows:
(Disregard this Paragraph where amendment does not affect stated capital or
paid-in surplus.) N/A
Before Amendment After Amendment
Stated capital................ $ $
Paid-in surplus............... $ $
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of
Amendment to be executed in its name by its President, and its
corporate seal to be hereto affixed, attested by its Secretary,
this 21st day of August, 1981.
UNITED STATIONERS SUPPLY CO.
------------------------------------
Exact Corporate Name
Place
(CORPORATE SEAL) By /s/ Joel D. Spungin
Here ------------------------------------
Its President
ATTEST:
/s/ Jerold A. Hecktman
- --------------------------------
Its Secretary
As authorized officers, we declare that this document has been examined by us
and is, to the best of our knowledge and belief, true, correct and complete.
Form BCA-55
File #1648-748-1
===============================================================================
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
SECRETARY OF STATE
CORPORATION DEPARTMENT
SPRINGFIELD, ILLINOIS 62756
TELEPHONE (217) 782-1832
FILE IN DUPLICATE
Filing Fee $25.00
Filing Fee for Re-Stated Articles $100.00
===============================================================================
<PAGE>
File Number 1648 748 1
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
Whereas, ARTICLES OF MERGER OF
UNITED STATIONERS SUPPLY CO.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, Jim Edgar, Secretary of State of the State of Illinois, by
virtue of the powers vested in me by law, do hereby issue this certificate and
attach thereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
(SEAL) Springfield this 3rd day of April A.D. 1986 and of the
Independence of the United States the two hundred and 10th
/s/ Jim Edgar
----------------------------------------
SECRETARY OF STATE
<PAGE>
BCA-11.25/11.30 (Rev. Jul. 1984)
Submit in Duplicate File #1648-748-1
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF MERGER,
CONSOLIDATION, EXCHANGE
Remit payment in check or Money Order, --------------------------
payable to "Secretary of State". This Space for Use By
Secretary of State
DO NOT SEND CASH! Date 4/3/86
Filing Fee $100.00
Filing Fee is $100, but if merger or consoli- Clerk
dation of more than 2 corporations $50 for --------------------------
each additional corporation.
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation(s) hereby adopt(s) the following Articles of Merger,
Consolidation or Exchange. (Strike inapplicable words)
1. The names of the corporations proposing to merge and the State or Country of
their incorporation, are:
Name of Corporation State or Country of Incorporation
United Stationers Supply Co. Illinois #1648-748-1 NSS
Johnson & Staley, Inc. Delaware #5326-335-6
2. The laws of the State or Country under which each corporation is incorporated
permit such merger, consolidation or exchange.
3. The name of the surviving corporation is United Stationers Supply Co. and it
shall be governed by the laws of Illinois.
4. The plan of merger is as follows:
If not sufficient space to cover this point, add one or more sheets of this size
<PAGE>
PLAN AND AGREEMENT OF MERGER
THIS AGREEMENT dated March 28, 1986 by and between:
JOHNSON & STALEY, INC., a Delaware corporation ("J&S")
and
UNITED STATIONERS SUPPLY CO., an Illinois corporation ("USSCo.")
Said corporations are hereinafter sometimes called "Constituent Corporations".
A. J&S is a corporation organized and existing under the laws of the State
of Delaware. The authorized capital stock of J&S consists of 1,000 shares
of common stock, $1.00 par value per share, all of which shares are
issued and outstanding.
B. USSCo. is a corporation organized and existing under the laws of the
State of Illinois. The authorized capital stock of USSCo. consists of
890,000 shares of common stock, $1.00 par value per share, of which
847,250 shares are issued and outstanding.
C. All of the issued and outstanding shares of both Constituent Corporations
are held by United Stationers, Inc.
D. The parties desire to provide for the merger of J&S into USSCo. by a
statutory merger of the parties intended to qualify as a tax-free
reorganization under Section 368(a)(1) of the Internal Revenue Code of
1954 as amended.
THEREFORE, in consideration of the mutual covenants and agreements herein, the
parties agree to the following terms and conditions of merger and the mode of
carrying it into effect:
<PAGE>
1. Merger. Pursuant to and in accordance with this Agreement, J&S shall be
merged into USSCo., which shall be the surviving corporation, and the separate
existence of J&S shall cease upon the effectiveness of its merger with and into
USSCo.
Upon the merger becoming effective, USSCo. shall possess all the rights and
privileges, powers and franchises, and be subject to all the restrictions,
disabilities and duties of the Constituent Corporations; and all property,
real, personal and mixed and all debts due to either of the Constituent
Corporations on whatever account and all other things in action or belonging to
either of the Constituent Corporations shall be vested in USSCo., and all and
every other interest shall be thereafter as effectively the property of USSCo.
as they were of the respective Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the merger,
but all rights of creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities, obligations and duties of the respective Constituent Corporations
shall attach to USSCo. and may be entered against it to the same extent as if
the debts, liabilities, obligations and duties had been contracted by it.
2. Effective Date. The merger shall be effective March 31, 1986 for accounting
purposes only.
3. Name. The name of the surviving corporation shall continue to be United
Stationers Supply Co.
4. Articles of Incorporation and By-Laws. The Articles of Incorporation and
By-Laws of USSCo. in effect on the effective date of the merger shall be the
Articles of Incorporation and By-Laws of the surviving corporation.
<PAGE>
5. Office and Registered Agent. The principal office, the registered office
and the registered agent of USSCo. on the effective date of the merger shall
remain the same.
6. Officers and Directors. The persons who are officers and/or directors of
USSCo. on the effective date of the merger shall continue to be the respective
directors and officers of the surviving corporation until the next annual
meeting of the shareholder and directors of USSCo. and until their successors
are elected and qualified.
7. Conversion of Shares. The manner and basis of converting the shares of the
Constituent Corporations into shares of USSCo. shall be as follows:
As of the effective date and without any action by the holders of such shares,
each share of stock of J&S outstanding on the effective date of the merger shall
be converted into 32,750 shares of USSCo. Each of the parties hereto agree that,
at anytime after the effective time of the merger the surviving corporation
shall issue, or shall have returned to it, such number of shares of USSCo., if
any, as are necessary to correct the foregoing exchange ratio such that the
holders of the shares of stock of J&S, outstanding, at the effective time of the
merger shall have received that number of shares of USSCo. which will have the
fair market value equivalent to the fair market value of J&S immediately prior
to the merger, determined on the basis of the respective "tangible net book
value" of each Constituent Corporation. "Tangible net book value" shall mean the
excess of the value of the tangible assets of the corporation over all
liabilities of the corporation as of the effective date.
<PAGE>
5. The plan of merger was approved, (a) as to each corporation not organized in
Illinois, in compliance with the laws of the state under which it is
organized, and (b) as to each Illinois corporation, as follows:
(The following items are not applicable to mergers under (S)11.30--90% owned
subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
<TABLE>
<CAPTION>
By the shareholders, a resolu-
tion at the board of directors
having been duly adopted and By written consent of the
submitted to a vote at a meet- shareholders having not less
ing of shareholders. Not less than the minimum number of
than the minimum number of votes required by statute and By written consent
votes required by statute and by the articles of incorpora- of ALL, the share-
by the articles of incorporation tion. Shareholders who have holders entitled to
voted in favor of the action not consented in writing have vote on the action
taken. been given notice in accor- in accordance with
Name of Corporation (S) 11.20) dance with (S)7.10 ((S)11.20) (S)7.10 & (S)11.20
- ------------------- -------------------------------- ------------------------------- -------------------
<S> <C> <C> <C>
United Stationers Supply Co. /_/ /_/ /X/
Johnson & Staley, Inc. /_/ /_/ /X/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
</TABLE>
- --------------------------------------------------------------------------------
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of Illinois:
a. The surviving, new or acquiring corporation may be served with process in
the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and in
any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the State
of Illinois against the surviving, new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of the
State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of "The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
- --------------------------------------------------------------------------------
<PAGE>
7. (Complete this item if reporting a merger under (S)11.30-90% owned subsidiary
provisions.)
a. The number of outstanding shares of each class of each merging subsidiary
corporation and the number of such shares of each class owned immediately
prior to the adoption of the plan of merger by the parent corporation,
are:
<TABLE>
<CAPTION>
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
<S> <C> <C>
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
</TABLE>
b. The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was , 19 .
Was written consent for the merger or written waiver of the 30 day period
by the holders of all the outstanding shares of all subsidiary
corporations received? /_/ Yes /_/ No
(If the answer is "No", the duplicate copies of the Articles of Merger may
not be delivered to the Secretary of State until after 30 days following
the mailing of a copy of the plan of merger and of the notice of the right
to dissent to the shareholders of each merging subsidiary corporation.)
The undersigned corporation has caused these articles to be signed by its duly
authorized officers, each of whom affirm, under penalties of perjury, that the
facts stated herein are true.
Dated March 31, 1986
attested by /s/ Jerold A. Hecktman
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Jerold A. Hecktman, Secretary
-------------------------------
(Type or Print Name and Title)
Dated March 31, 1986
attested by /s/ Jerold A. Hecktman
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Jerold A. Hecktman, Secretary
------------------------------
(Type or Print Name and Title)
Dated , 1986
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
United Stationers Supply Co.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Allen B. Kravis
- ----------------------------------------
(Signature of President or Vice President)
Allen B. Kravis, Vice President
- ----------------------------------------
(Type or Print Name and Title)
Johnson & Staley, Inc.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Allen B. Kravis
- ----------------------------------------
(Signature of President or Vice President)
Allen B. Kravis, Vice President
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ----------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
<PAGE>
Form BCA-11.25/11.30
File No.
================================================================================
ARTICLES OF MERGER,
CONSOLIDATION, EXCHANGE
Filing Fee $100.00, but if a merger or a consolidation of more than two
corporations, $50 for each additional corporation.
FILED
JIM EDGAR
Secretary of State
PAID
APR 04 1986
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone 217-782-6961
================================================================================
<PAGE>
File Number 1648-748-1
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
Whereas, ARTICLES OF MERGER OF
UNITED STATIONERS SUPPLY CO.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
(SEAL) Springfield, this 24th day of June A.D. 1992 and of the
Independence of the United States the two hundred and 16th.
/s/ George H. Ryan
----------------------------------------
SECRETARY OF STATE
<PAGE>
ARTICLES OF MERGER
CONSOLIDATION OR EXCHANGE
Form BCA-11.25
(Rev. Jan. 1991) File # D1648-748-1
- --------------------------------------------------------------------------------
George H. Ryan SUBMIT IN DUPLICATE
Secretary of State -----------------------
Department of Business Services This space for use by
Springfield, IL 62756 Secretary of State
Telephone (217) 782-6961
- ----------------------------------------- Date 6-24-92
DO NOT SEND CASH!
Remit payment in check or money Filing Fee $100.00
order, payable to "Secretary of State."
Filing Fee is $100, but if merger or con- Approved: X
solidation of more than 2 corporations.
$50 for each additional corporation.
- --------------------------------------------------------------------------------
FILED PAID
JUN 24 1992 JUN 23 1992
Secretary of State
GEORGE H. RYAN
merge
1. Names of the corporations proposing to consolidate and the state or
country of their incorporation: exchange shares
Name of Corporation State or Country of Incorporation
United Stationers Supply Co.
1648-748-1 Illinois
- --------------------------------------- ---------------------------------------
Stationers Distributing Company, Inc.
5551-380-5 Delaware
- --------------------------------------- ---------------------------------------
- --------------------------------------- ---------------------------------------
- --------------------------------------------------------------------------------
2. The laws of the state or country under which each corporation is incorporated
permit such merger, consolidation or exchange.
- --------------------------------------------------------------------------------
3. (a) Name of the surviving corporation: United Stationers Supply Co.
-----------------------------------
(b) It shall be governed by the laws of: Illinois
-----------------------------------
- --------------------------------------------------------------------------------
4. Plan of merger is as follows:
If not sufficient space to cover this point,
add one or more sheets of this size.
See attached Exhibit A
EXPEDITED
JUN 24 1992
SECRETARY OF STATE
<PAGE>
Exhibit A
PLAN OF MERGER
This is a plan of merger for the merger (the "Merger") by United Stationers
Supply Co., an Illinois corporation (the "Corporation" or, in its capacity as
the surviving corporation of the Merger, the "Surviving Corporation") of its
wholly-owned subsidiary, Stationers Distributing Company, Inc., a Delaware
corporation (the "Subsidiary") with and into the Corporation.
Article I
1.1 The Merger.
The Subsidiary shall be merged into the Corporation pursuant to Section
11.30 of the Business Corporation Act of 1983 of the State of Illinois (the
"BCA"), and the separate corporate existence of the Subsidiary will cease.
1.2 Effectiveness.
The Merger shall be effective at 3:00 p.m., Central Daylight Savings Time,
on the date that Articles of Merger providing for the Merger are filed with the
Secretary of State of the State of Illinois in accordance with the BCA (the
"Effective Time").
Article II
2.1 Articles of Incorporation.
At the Effective Time, the Articles of Incorporation of the Corporation as
in effect immediately prior to the Effective Time will be the Articles of
Incorporation of the Surviving Corporation, and thereafter may be amended in
accordance with their terms and as provided by law.
2.2 By-laws.
At the Effective Time, the By-laws of the Corporation as in effect
immediately prior to the Effective Time will be the By-laws of the Surviving
Corporation, and thereafter may be amended or repealed in accordance with their
terms.
2.3 Officers.
At the Effective Time, the officers of the Corporation immediately prior to
the Effective Time will be the officers of the Surviving Corporation and will
hold office from the Effective Time until their respective successors shall have
been duly elected or appointed and qualified in the manner provided in the
Articles of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by law, or until their earlier death, resignation or removal.
<PAGE>
2.4 Directors.
At the Effective Time, the directors of the Corporation immediately prior to
the Effective Time will be the directors of the Surviving Corporation and will
hold office from the Effective Time for the balance of the respective terms for
which they were previously elected as directors of the Corporation and until
their respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and By-laws of the Surviving
Corporation, or as otherwise provided by law, or until their earlier death,
resignation or removal.
Article III
3.1 Conversion of Shares.
At the Effective Time, each issued and outstanding share of common stock,
par value $1.00 per share, of the Corporation will remain issued and outstanding
and will represent one fully-paid and non-assessable share of common stock, par
value $1.00 per share, of the Surviving Corporation, and each issued and
outstanding share of common stock, par value $0.10 per share, of the Subsidiary
will be cancelled and retired and no payment shall be made with respect thereto.
2
<PAGE>
merger
5. Plan of consolidation was approved, as to each corporation not organized in
exchange
Illinois, in compliance with the laws of the state under which it is
organized, and (b) as to each Illinois corporation, as follows:
not applicable
(The following items are not applicable to mergers under (S) 11.30-90% owned
subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
<TABLE>
<CAPTION>
By the shareholders, a resolu-
tion of the board of directors
having been duly adopted and By written consent of the
submitted to a vote at a meet- shareholders having not less
ing of shareholders. Not less than the minimum number of
than the minimum number of votes required by statute and By written consent
votes required by statute and by the articles of incorpora- of ALL the share-
by the articles of incorporation tion. Shareholders who have holders entitled to
voted in favor of the action not consented in writing have vote on the action
taken. been given notice in accor- in accordance with
Name of Corporation ((S) 11.20) dance with (S) 7.10 ((S) 11.220) (S) 7.10 & (S) 11.20
- ------------------- -------------------------------- -------------------------------- --------------------
<S> <C> <C> <C>
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
</TABLE>
- --------------------------------------------------------------------------------
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of Illinois:
a. The surviving, new or acquiring corporation may be served with process in
the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and in
any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the State
of Illinois against the surviving, new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of the
State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of "The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
- --------------------------------------------------------------------------------
<PAGE>
7. (Complete this item if reporting a merger under (S)11.30-90% owned subsidiary
provisions.)
a. The number of outstanding shares of each class of each merging subsidiary
corporation and the number of such shares of each class owned immediately
prior to the adoption of the plan of merger by the parent corporation,
are:
<TABLE>
<CAPTION>
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
<S> <C> <C>
Stationers Distributing 1,000 1,000
Company, Inc.
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
</TABLE>
b. The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was , 19 .
not applicable
Was written consent for the merger or written waiver of the 30-day period
by the holders of all the outstanding shares of all subsidiary
corporations received? /_/ Yes /_/ No
(If the answer is "No", the duplicate copies of the Articles of Merger may
not be delivered to the Secretary of State until after 30 days following
the mailing of a copy of the plan of merger and of the notice of the right
to dissent to the shareholders of each merging subsidiary corporation.)
8. The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirms, under penalties of perjury, that
the facts stated herein are true.
Dated June 24, 1992
attested by /s/ Otis H. Halleen
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Otis H. Halleen, Secretary
-------------------------------
(Type or Print Name and Title)
Dated , 19
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
Dated , 19
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
United Stationers Supply Co.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Jeffrey K. Hewson
- ----------------------------------------
(Signature of President or Vice President)
Jeffrey K. Hewson, President
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ---------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ----------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
<PAGE>
File Number 1648-748-1
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
Whereas, ARTICLES OF MERGER OF
UNITED STATIONERS SUPPLY CO.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach thereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
(SEAL) Springfield, this 24th day of June A.D. 1992 and of the
Independence of the United States the two hundred and 16th
/s/ George H. Ryan
----------------------------------------
SECRETARY OF STATE
<PAGE>
ARTICLES OF MERGER
CONSOLIDATION OR EXCHANGE
Form BCA-11.25
(Rev. Jan. 1991) File # D1648-748-1
George H. Ryan
Secretary of State SUBMIT IN DUPLICATE
Department of Business Services
Springfield, IL 62756 This space for use by
Telephone (217) 782-6961 Secretary of State
DO NOT SEND CASH! Date 6/24/92
Remit payment in check or money
order, payable to "Secretary of State." Filing Fee $100.00
Filing Fee is $100, but if merger or con-
solidation of more than 2 corporations, Approved: X
$50 for each additional corporation.
FILED
JUNE 24, 1992
GEORGE H. RYAN
SECRETARY OF STATE
PAID
JUNE 23, 1992
- --------------------------------------------------------------------------------
1. Names of the corporations proposing to merge, and the state or country of
their incorporation:
Name of Corporation State or Country of Incorporation
United Stationers Supply Co. 1648-748-1 Illinois
SDC Distributing Corp. NR Delaware
- ----------------------------------------- ---------------------------------
- ----------------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
2. The laws of the state or country under which each corporation is
incorporated permit such merger, consolidation or exchange.
- --------------------------------------------------------------------------------
3. (a) Name of the surviving corporation: United Stationers Supply Co.
(b) it shall be governed by the laws of: Illinois
- --------------------------------------------------------------------------------
4. Plan of merger is as follows:
If not sufficient space to cover this point,
add one or more sheets of this size.
SEE ATTACHED EXHIBIT A
EXPEDITED
JUNE 24, 1992
SECRETARY OF STATE
<PAGE>
Exhibit A
SUMMARY PLAN OF MERGER
The plan of merger for the merger (the "Merger") of SDC Distributing Corp.,
a Delaware corporation ("SDC"), with and into United Stationers Supply Co., an
Illinois corporation (the "Corporation" or, in its capacity as the surviving
corporation of the Merger, the "Surviving Corporation") as set forth in an
Agreement and Plan of Merger dated as of June 24, 1992 (the "Plan of Merger")
among United Stationers Inc., a Delaware corporation, the Corporation and SDC.
The following is a summary of the Plan of Merger.
Article I
1.1 The Merger.
SDC shall be merged into the Corporation pursuant to Section 11.25 of the
Business Corporation Act of 1983 of the State of Illinois (the "BCA"), and the
separate corporate existence of SDC will cease.
2.2 Effectiveness.
The Merger shall be effective at 10:00 a.m., Central Daylight Savings Time,
on the date the Articles of Merger providing for the Merger are filed with the
Secretary of State of the State of Illinois in accordance with the BCA
("Effective Time").
Article II
2.1 Articles of Incorporation.
At the Effective Time, the Articles of Incorporation of the Corporation as
in effect immediately prior to the Effective Time will be the Articles of
Incorporation of the Surviving Corporation, and thereafter may be amended in
accordance with their terms and as provided by law.
2.2 By-laws.
At the Effective Time, the By-laws of the Corporation as in effect
immediately prior to the Effective Time will be the By-laws of the Surviving
Corporation, and thereafter may be amended or repealed in accordance with their
terms.
2.3 Officers.
At the Effective Time, the officers of the Corporation immediately prior to
the Effective Time will be the officers of the Surviving Corporation and will
hold office from the Effective Time until their successors shall have been duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation and By-laws of the Surviving
<PAGE>
Corporation, or as otherwise provided by law, or until their earlier death,
resignation or removal.
2.4 Directors.
At the Effective Time, the directors of the Corporation immediately prior to
the Effective Time will be the directors of the Surviving Corporation and will
hold office from the Effective Time for the balance of the respective terms for
which they were previously elected as directors of the Corporation and until
their respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and By-laws of the Surviving
Corporation, or as otherwise provided by law, or until their earlier death,
resignation or removal.
Article III
3.1 Conversion of Shares.
1. At the Effective Time, each issued and outstanding share of common stock,
$0.10 par value per share, of SDC ("SDC Common") will be converted into the
right to receive:
(a) for each share of SDC Common held by a stockholder of SDC who has
irrevocably elected to receive cash in exchange for his shares of SDC
Common: $11.636364 per share in cash (the "Cash Stockholder Per Share
Amount"); or
(b) for each share of SDC Common held by a stockholder of SDC (a
"Continuing Stockholder") who has irrevocably elected to receive
consideration (the "Combined Consideration") consisting of a combination of
cash and shares of common stock, $0.10 par value per share ("Parent
Common"), of United Stationers Inc., a Delaware corporation and the sole
shareholder of the Corporation ("Parent") in exchange for their shares of
SDC Common:
(i) .549451 of a share of Parent Common:
(ii) $2.818729 in cash; and
(iii) .109890 of a share of Parent Common and $0.031868 in cash to
be deposited into an escrow fund.
In lieu of any fractional shares of Parent Common to be issued directly
to a Continuing Stockholder in the Merger, such Continuing Stockholder will
receive cash in an amount equal to the fractional share multiplied by
$13.333333.
(c) Upon consummation of the Merger, each share of SDC Common will be
cancelled and retired and will cease to exist, and such holder of SDC Common
will thereafter cease to have any rights with respect to such share of SDC
Common, except
2
<PAGE>
the right to receive either the Cash Stockholder Per Share Amount or the
Combined Consideration, as the case may be.
2. All issued and outstanding shares of capital stock of the Corporation
will remain issued and outstanding and will represent one fully-paid and
non-assessable share of common stock par value $1.00 per share, of the Surviving
Corporation.
3
<PAGE>
5. Plan of merger was approved, as to each corporation not organized in
Illinois, in compliance with the laws of the state under which it is
organized, and (b) as to each Illinois corporation, as follows:
(The following items are not applicable to mergers under (S)11.30-90% owned
subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
<TABLE>
<CAPTION>
By the shareholders, a resolu-
tion of the board of directors
having been duly adopted and By written consent of the
submitted to a vote at a meet- shareholders having not less
ing of shareholders. Not less than the minimum number of
than the minimum number of votes required by statute and By written consent
votes required by statute and by the articles of incorpora- of ALL the share-
by the articles of incorporation tion. Shareholders who have holders entitled to
voted in favor of the action not consented in writing have vote on the action
taken. been given notice in accor- in accordance with
Name of Corporation ((S) 11.20) dance with (S) 7.10 ((S) 11.220) (S) 7.10 & (S) 11.20
- ------------------- -------------------------------- ------------------------------- --------------------
<S> <C> <C> <C>
United Stationers Supply Co. /_/ /_/ /X/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
</TABLE>
- --------------------------------------------------------------------------------
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of Illinois:
a. The surviving, new or acquiring corporation may be served with process in
the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and in
any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the State
of Illinois against the surviving, new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of the
State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of "The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
- --------------------------------------------------------------------------------
<PAGE>
7. (Complete this item if reporting a merger under (S)11.30-90% owned subsidiary
provisions.)
n/a
a. The number of outstanding shares of each class of each merging subsidiary
corporation and the number of such shares of each class owned immediately
prior to the adoption of the plan of merger by the parent corporation,
are:
<TABLE>
<CAPTION>
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
<S> <C> <C>
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
</TABLE>
b. The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was , 19 .
Was written consent for the merger or written waiver of the 30-day period
by the holders of all the outstanding shares of all subsidiary
corporations received? /_/ Yes /_/ No
(If the answer is "No", the duplicate copies of the Articles of Merger may
not be delivered to the Secretary of State until after 30 days following
the mailing of a copy of the plan of merger and of the notice of the right
to dissent to the shareholders of each merging subsidiary corporation.)
8. The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirm, under penalties of perjury, that
the facts stated herein are true.
Dated June 24, 1992
attested by /s/ Otis H. Halleen
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Otis H. Halleen, Secretary
-------------------------------
(Type or Print Name and Title)
Dated June 24, 1992
attested by /s/ B. Neal Perkey
-----------------------------
(Signature of Secretary or
Assistant Secretary)
B. Neal Perkey, Asst. Secretary
------------------------------
(Type or Print Name and Title)
Dated , 19
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
United Stationers Supply Co.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Jeffrey K. Hewson
- ----------------------------------------
(Signature of President or Vice President)
Jeffrey K. Hewson, President
- ----------------------------------------
(Type or Print Name and Title)
SDC Distributing Corp.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Richard A. Baker
- ----------------------------------------
(Signature of President or Vice President)
Richard A. Baker, President
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ----------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
<PAGE>
File Number 1648-748-1
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
Whereas, ARTICLES OF MERGER OF
UNITED STATIONERS SUPPLY CO.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
(SEAL) Springfield, this 23rd day of MARCH A.D. 1995 and of the
Independence of the United States the two hundred and 19th.
/s/ George H. Ryan
----------------------------------------
Secretary of State
<PAGE>
ARTICLES OF MERGER
CONSOLIDATION OR EXCHANGE
Form BCA-11.25
(Rev. Jan. 1991) File # 1648-748-1
George H. Ryan
Secretary of State SUBMIT IN DUPLICATE
Department of Business Services
Springfield, IL 62756 This space for use by
Telephone (217) 782-6961 Secretary of State
DO NOT SEND CASH! Date 3/23/95
Remit payment in check or money
order, payable to "Secretary of State." Filing Fee $100.00
Filing Fee is $100, but if merger or con-
solidation of more than 2 corporations, Approved: X
$50 for each additional corporation.
FILED
MARCH 23, 1995
GEORGE H. RYAN
SECRETARY OF STATE
PAID
MARCH 27, 1995
- --------------------------------------------------------------------------------
1. Names of the corporations proposing to merge, and the state or country of
their incorporation:
Name of Corporation State or Country of Incorporation
UNITED STATIONERS SUPPLY CO. Illinois 1648-748-1
MICROUNITED INC. Delaware 5356-555-7
- ----------------------------------------- ---------------------------------
- ----------------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
2. The laws of the state or country under which each corporation is
incorporated permit such merger, consolidation or exchange.
- --------------------------------------------------------------------------------
3. (a) Name of the surviving corporation: UNITED STATIONERS SUPPLY CO.
(b) it shall be governed by the laws of: ILLINOIS
- --------------------------------------------------------------------------------
4. Plan of merger is as follows:
If not sufficient space to cover this point,
add one or more sheets of this size.
See attached Exhibit A
EXPEDITED
MARCH 23, 1995
SECRETARY OF STATE
EXPEDITED
AUGUST 31, 1994
SECRETARY OF STATE
<PAGE>
PLAN AND AGREEMENT OF MERGER
THIS AGREEMENT dated as of August 31, 1994 by and between: MICROUNITED INC., a
Delaware corporation ("MU"), and UNITED STATIONERS SUPPLY CO., an Illinois
corporation ("USSCo.") (Said corporations are hereinafter sometimes called
("Constituent Corporations"), and UNITED STATIONERS INC., a Delaware corporation
("Parent").
A. MU is a corporation organized and existing under the laws of the State
of Delaware. The authorized capital stock of MU consists of 1,000
shares of common stock, $1.00 par value per share, all of which shares
are issued and outstanding.
B. USSCo. is a corporation organized and existing under the laws of the
State of Illinois. The authorized capital stock of USSCo. consists of
890,000 shares of common stock, $1.00 par value per share, 880,000 of
which shares are issued and outstanding.
C. All of the issued and outstanding shares of both Constituent
Corporations are held by Parent.
D. Parent desires to provide for the merger of MU into USSCo. by a
statutory merger of the parties intended to qualify as a tax-free
reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986 as amended.
E. Parent, as the sole shareholder of each of the Constituent Corporations
waives the 30-day period for notice as specified in Section 11.30(b) of
the Illinois Business Corporation Act of 1983 ("BCA").
<PAGE>
THEREFORE, the parties agree to the following terms and conditions of merger and
the mode of carrying it into effect:
1. Merger. Pursuant to Section 11.30 of the BCA and in accordance with this
Agreement, MU shall be merged into USSCo., which shall be the surviving
corporation, and the separate existence of MU shall cease upon the effectiveness
of its merger with and into USSCo.
2. Effectiveness. The merger shall be effective at 5:00 p.m. Central
Daylight Savings Time, on the date the Articles of Merger are filed with the
Secretary of State of the State of Illinois in accordance with the BCA. Upon the
merger becoming effective, USSCo. shall possess all the rights and privileges,
powers and franchises, and be subject to all the restrictions, disabilities and
duties of the Constituent Corporations; and all property, real, personal and
mixed and all debts due to either of the Constituent Corporations on whatever
account and all other things in action or belonging to either of the Constituent
Corporations shall be vested in USSCo., and all and every other interest shall
be thereafter as effectively the property of USSCo. as they were of the
respective Constituent Corporations, and the title to any real estate vested by
deed or otherwise in either of the Constituent Corporations shall not revert or
be in any way impaired by reason of the merger, but all rights of creditors and
all liens upon any property of either of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities, obligations and duties of the
respective Constituent Corporations shall attach to USSCo., and may be entered
against it to the same extent as if the debts, liabilities, obligations and
duties had been contracted by it.
3. Name. The name of the surviving corporation shall continue to be United
Stationers Supply Co.
4. Articles of Incorporation and By-Laws. The Articles of Incorporation and
By-Laws of USSCo. in effect on the effective date of the merger shall be the
Articles of Incorporation and By-Laws of the surviving corporation.
5. Office and Registered Agent. The principal office, the registered office
and the registered agent of USSCo. on the effective date of the merger shall
remain the same.
2
<PAGE>
6. Officers and Directors. The persons who are officers and/or directors of
USSCo. on the effective date of the merger shall continue to be the respective
directors and officers of the surviving corporation until the next annual
meeting of the shareholder and directors of USSCo. and until their successors
are elected and qualified.
IN WITNESS WHEREOF, the parties, pursuant to the authority duly given by
resolutions adopted by their respective Boards of Directors, have caused this
Agreement to be duly executed as of the date shown above.
UNITED STATIONERS INC.
A Delaware corporation
ATTEST:
/s/ Otis H. Halleen By: /s/ Joel D. Spungin
- ---------------------------------- ------------------------------------------
Secretary Joel D. Spungin, Chairman of the Board
and Chief Executive Officer
(SEAL)
MICROUNITED INC.
A Delaware corporation
ATTEST:
/s/ Otis H. Halleen By: /s/ Allen B. Kravis
- ---------------------------------- ------------------------------------------
Secretary Allen B. Kravis, Sr. Vice President
(SEAL)
UNITED STATIONERS SUPPLY CO.
ATTEST: an Illinois corporation
/s/ Otis H. Halleen By: /s/ Allen B. Kravis
- ---------------------------------- ------------------------------------------
Secretary Allen B. Kravis, Sr. Vice President
(SEAL)
3
<PAGE>
5. Plan of merger was approved, as to each corporation not organized in
Illinois, in compliance with the laws of the state under which it is
organized, and (b) as to each Illinois corporation, as follows:
Not Applicable
(The following items are not applicable to mergers under (S) 11.30-90% owned
subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
<TABLE>
<CAPTION>
By the shareholders, a resolu-
tion of the board of directors
having been duly adopted and By written consent of the
submitted to a vote at a meet- shareholders having not less
ing of shareholders. Not less than the minimum number of
than the minimum number of votes required by statute and By written consent
votes required by statute and by the articles of incorpora- of ALL the share-
by the articles of incorporation tion. Shareholders who have holders entitled to
voted in favor of the action not consented in writing have vote on the action
taken. been given notice in accor- in accordance with
Name of Corporation ((S) 11.20) dance with (S) 7.10 ((S) 11.220) (S) 7.10 & (S) 11.20
- ------------------- -------------------------------- -------------------------------- --------------------
<S> <C> <C> <C>
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
</TABLE>
- --------------------------------------------------------------------------------
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of Illinois:
a. The surviving, new or acquiring corporation may be served with process in
the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and in
any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the State
of Illinois against the surviving, new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of the
State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of "The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
- --------------------------------------------------------------------------------
<PAGE>
7. (Complete this item if reporting a merger under (S)11.30-90% owned subsidiary
provisions.)
a. The number of outstanding shares of each class of each merging subsidiary
corporation and the number of such shares of each class owned immediately
prior to the adoption of the plan of merger by the parent corporation,
are:
<TABLE>
<CAPTION>
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
<S> <C> <C>
MicroUnited Inc. 1,000 1,000
United Stationers Supply Co. 880,000 880,000
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
</TABLE>
b. The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was , 19 .
Not Applicable
Was written consent for the merger or written waiver of the 30-day period
by the holders of all the outstanding shares of all subsidiary
corporations received? /_/ Yes /_/ No
(If the answer is "No", the duplicate copies of the Articles of Merger may
not be delivered to the Secretary of State until after 30 days following
the mailing of a copy of the plan of merger and of the notice of the right
to dissent to the shareholders of each merging subsidiary corporation.)
8. The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirms, under penalties of perjury, that
the facts stated herein are true.
Dated August 31, 1992
attested by /s/ Otis H. Halleen
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Otis H. Halleen, Secretary
-------------------------------
(Type or Print Name and Title)
Dated , 19
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
Dated , 19
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
UNITED STATIONERS INC.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Allen B. Kravis
- ----------------------------------------
(Signature of President or Vice President)
Allen B. Kravis, Sr. Vice President
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ---------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ----------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
<PAGE>
File Number 1648-748-1
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
Whereas, ARTICLES OF MERGER OF
UNITED STATIONERS SUPPLY CO.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of
(SEAL) Springfield, this 30th day of MARCH A.D. 1995 and of the
Independence of the United States the two hundred and 19th.
/s/ George H. Ryan
----------------------------------------
Secretary of State
<PAGE>
ARTICLES OF MERGER
CONSOLIDATION OR EXCHANGE
Form BCA-11.25
(Rev. Jan. 1995) File # 1648-748-1
George H. Ryan
Secretary of State SUBMIT IN DUPLICATE
Department of Business Services
Springfield, IL 62756 This space for use by
Telephone (217) 782-6961 Secretary of State
DO NOT SEND CASH! Date 3/30/95
Remit payment in check or money
order, payable to "Secretary of State." Filing Fee $100.00
Filing Fee is $100, but if merger or
consolidation of more than 2 corpo- Approved: X
rations, $50 for each additional cor-
poration.
FILED
MARCH 30, 1995
GEORGE H. RYAN
SECRETARY OF STATE
PAID
MARCH 30, 1995
- --------------------------------------------------------------------------------
1. Names of the corporations proposing to merge, and the state or country of
their incorporation:
Name of Corporation State or Country Corporation File No.
Of Incorporation
UNITED STATIONERS SUPPLY CO. Illinois 1648-748-1
ASSOCIATED STATIONERS, INC. Delaware 5662-169-5
- ----------------------------- ----------------- -------------------
- ----------------------------- ----------------- -------------------
- --------------------------------------------------------------------------------
2. The laws of the state or country under which each corporation is
incorporated permit such merger, consolidation or exchange.
- --------------------------------------------------------------------------------
3. (a) Name of the surviving corporation: UNITED STATIONERS SUPPLY CO.
(b) it shall be governed by the laws of: Illinois
- --------------------------------------------------------------------------------
4. Plan of merger is as follows: See Exhibit A, attached hereto.
If not sufficient space to cover this point,
add one or more sheets of this size.
EXPEDITED
MARCH 30, 1995
SECRETARY OF STATE
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of March 30, 1995, is made
and entered into between Associated Stationers, Inc., a Delaware corporation
("ASI"), and United Stationers Supply Co., an Illinois corporation (USSC").
1. Parties to the Merger; Effective Date. Pursuant to the provisions of this
Agreement and Plan of Merger, the General Corporation Law of the State of
Delaware (the "DGCL") and the Business Corporation Act of the State of Illinois
(the "IBCA"), ASI shall be merged with and into USSC (the "Merger"). USSC, which
shall be the surviving corporation, is hereinafter sometimes referred to as the
"Surviving Corporation." The Merger shall become effective upon the filing of
properly executed articles of merger (the "Articles of Merger") in the office of
the Secretary of State. As used in this Agreement and Plan of Merger, the term
"Effective Date" shall mean the date and time at which a certificate of merger
has been issued by the Secretary of State of the State of Illinois.
2. Capitalization of Constituent Corporations. (a) The authorized capital
stock of ASI is 3,000 shares of common stock, $0.01 par value ("ASI Common
Stock"), of which 1,000 shares are validly issued and outstanding, fully paid,
non-assessable and owned by United Stationers Inc., a Delaware corporation
("USI").
(b) The authorized capital stock of USSC is 890,000 shares of common
stock, $1.00 par value ("USSC Common Stock"), of which 880,000 shares are
validly issued and outstanding, fully paid, non-assessable, and owned by USI.
3. Effect of the Merger. (a) From and after the Effective Date (i) the
Articles of Incorporation and Bylaws of USSC in effect immediately prior to the
Effective Date shall continue to be its Articles of Incorporation and Bylaws
until amended or repealed in a manner provided by law; (ii) each of the officers
and directors of USSC in office immediately prior to the Effective Date shall
remain its officers and directors until their respective successors are duly
elected or appointed; and (iii) USI, as the former holder of the shares of USSC
Common Stock and ASI Common Stock, shall only be entitled to the rights provided
in this Agreement and Plan of Merger or to its dissenters' rights provided by
the IBCA or the DGCL.
4. Conversion of Securities. (a) Each authorized or issued and outstanding
share of USSC Common Stock shall not in any way be affected by the Merger.
<PAGE>
(b) All shares of ASI Common Stock outstanding on the Effective Date
shall be cancelled and cease to be outstanding, without any payment being made
in respect thereof.
5. Transfer of Certificates. After the Effective Date there shall be no
transfers on the stock transfer books of ASI of the shares of ASI Common Stock
which were issued and outstanding immediately prior to the Effective Date.
6. Amendment and Termination. The Boards of Directors of USSC and ASI may
amend this Agreement and Plan of Merger at any time prior to the Effective Date.
An amendment made subsequent to the submission of the plan to the shareholder of
either party to the Merger shall not (i) alter or change the amount or kind of
securities or cash which the shareholders of ASI will have the right to receive
in the Merger or (ii) alter or change any of the terms or conditions of the plan
if such alteration or effect would adversely affect the shares of any class or
series of either USSC or ASI.
The Boards of Directors of USSC and ASI may terminate and abandon this
Agreement and Plan of Merger at any time prior to the Effective Date, subject to
any contractual rights, without further shareholder action, in such manner as
shall be agreed upon by USSC and ASI.
7. Counterparts. This Agreement and Plan of Merger may be executed in or
more counterparts, each of which shall be deemed to be an original, but which
together shall constitute a single agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed and attested by the duly authorized officers as of the
date first written above.
ASSOCIATED STATIONERS, INC.
By: /s/ Thomas W. Sturgess
-----------------------------------
Thomas W. Sturgess
Chairman of the Board
ATTEST:
/s/ Gary G. Miller
- -----------------------------------
Gary G. Miller
Secretary
3
<PAGE>
UNITED STATIONERS SUPPLY CO.
By: /s/ Thomas W. Sturgess
-----------------------------------
Thomas W. Sturgess
Chairman of the Board
ATTEST:
/s/ Gary G. Miller
- ------------------------------------
Gary G. Miller
Secretary
4
<PAGE>
merger
5. Plan of consolidation was approved, as to each corporation not organized in
exchange
Illinois, in compliance with the laws of the state under which it is
organized, and (b) as to each Illinois corporation, as follows:
(The following items are not applicable to mergers under (S) 11.30-90% owned
subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
<TABLE>
<CAPTION>
By the shareholders, a reso-
lution of the board of direc-
tors having been duly By written consent of the
adopted and submitted to a shareholders having not less
vote at a meeting of share- than the minimum number of
holders. Not less than the votes required by statute and By written consent
minimum number of votes by the articles of incorpora- of ALL the share-
required by statute and by tion. Shareholders who have holders entitled to
the articles of incorporation not consented in writing have vote on the action
voted in favor of the action been given notice in accor- in accordance with
Name of Corporation taken. ((S) 11.20) dance with (S) 7.10 ((S) 11.220) (S) 7.10 & (S) 11.20
- ------------------- -------------------------------- -------------------------------- --------------------
<S> <C> <C> <C>
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
- -------------------------- /_/ /_/ /_/
</TABLE>
- --------------------------------------------------------------------------------
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of Illinois:
a. The surviving, new or acquiring corporation may be served with process in
the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and in
any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the State
of Illinois against the surviving, new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of the
State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of "The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
- --------------------------------------------------------------------------------
<PAGE>
7. (Complete this item if reporting a merger under (S)11.30-90% owned subsidiary
provisions.)
a. The number of outstanding shares of each class of each merging subsidiary
corporation and the number of such shares of each class owned immediately
prior to the adoption of the plan of merger by the parent corporation,
are:
<TABLE>
<CAPTION>
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
<S> <C> <C>
Associated Stationers, Inc. 1,000 1,000
United Stationers Supply Co. 880,000 880,000
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
- ------------------------------ ----------------------------- ----------------------------------
</TABLE>
b. (Not applicable to 100% owned subsidiaries)
The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was , 19 .
Was written consent for the merger or written waiver of the 30-day period
by the holders of all the outstanding shares of all subsidiary
corporations received? /_/ Yes /_/ No
(If the answer is "No", the duplicate copies of the Articles of Merger may
not be delivered to the Secretary of State until after 30 days following
the mailing of a copy of the plan of merger and of the notice of the right
to dissent to the shareholders of each merging subsidiary corporation.)
8. The undersigned corporation have caused these articles to be signed by their
duly authorized officers, each of whom affirms, under penalties of perjury, that
the facts stated herein are true. (All signatures must be in BLACK INK.)
Dated March 30, 1995
attested by /s/ Daniel H. Bushell
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Daniel H. Bushell, Assistant Secretary
--------------------------------------
(Type or Print Name and Title)
Dated March 30, 1995
attested by /s/ Daniel H. Bushell
-----------------------------
(Signature of Secretary or
Assistant Secretary)
Daniel H. Bushell, Assistant Secretary
--------------------------------------
(Type or Print Name and Title)
Dated , 19
attested by
-----------------------------
(Signature of Secretary or
Assistant Secretary)
------------------------------
(Type or Print Name and Title)
United Stationers Supply Co.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Thomas W. Sturgess
- ----------------------------------------
(Signature of President or Vice President)
Thomas W. Sturgess, Chairman
- ----------------------------------------
(Type or Print Name and Title)
Associated Stationers, Inc.
- ----------------------------------------
(Exact Name of Corporation)
by /s/ Thomas W. Sturgess
- ----------------------------------------
(Signature of President or Vice President)
Thomas W. Sturgess, Chairman
- ----------------------------------------
(Type or Print Name and Title)
- ----------------------------------------
(Exact Name of Corporation)
by
- ----------------------------------------
(Signature of President or Vice President)
- ----------------------------------------
(Type or Print Name and Title)
<PAGE>
Form BCA (12 or 110)
1648-748-1 Date 10/14/??
Filing Fee $5.00
Clerk AG
CERTIFICATE OF CHANGE OF REGISTERED AGENT AND REGISTERED OFFICE BY
A FOREIGN OR DOMESTIC CORPORATION OF ILLINOIS
STATE OF ILLINOIS )
) ss.
COOK COUNTY )
TO Michael J. Howlett
Secretary of State,
Springfield, Illinois
The undersigned corporation, organized and existing under the laws of the
State of Illinois for the purpose of changing its registered agent and its
registered office, or both, in Illinois as provided by "The Business Corporation
Act," of Illinois represents that:
1. The name of the corporation is UNITED STATIONERS SUPPLY CO.
2. The address, including street and number, if any, or its present registered
office (before change) is 1701 South First Avenue, Maywood, Illinois 60153
3. Its registered office (including street and number if any change in the
registered office is to be made) is hereby changed to c/o C T Corporation
System, 208 S. LaSalle Street, in the City of CHICAGO (60604) County of
COOK.
4. The name of its present registered agent (before change) is Harry Hecktman.
5. The name of the new registered agent is C T CORPORATION SYSTEM
6. The address of its registered office and the address of the business office
of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly authorized by the board of
directors.
(OVER)
(ILL. - 215 - 6/27/73)
<PAGE>
IN WITNESS WHEREOF, the undersigned corporation has caused this report to be
executed in its name by its Vice President, attested by its Secretary, this 3rd
day of October, A.D. 1980.
UNITED STATIONERS SUPPLY CO.
---------------------------------------
(Exact Corporate Title)
By /s/ M. Gardner
---------------------------------------
Vice President
Place
(Corporate Seal)
Here
Attest:
Jerold A. Hecktman
- --------------------------
Secretary
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
I, George Chrismer, a Notary Public, do hereby certify that on the 3rd day of
October, A.D. 1980, personally appeared before me Marshall Gardner who declares
he is Vice President of the corporation, executing the foregoing document, and
being duly sworn, acknowledged that he signed the foregoing document in the
capacity therein set forth and declared that the statements therein contained
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
Place /s/ George K. Chrismer
(Notarial Seal) -----------------------------------
Here Notary Public
STATE OF ILLINOIS
MY COMMISSION EXPIRES DEC. 7, 1980
PAID
OCT. 14, 1980
FORM BCA (12 OR 110)
Box D 1648 File 748-1
===============================================================================
CHANGE OF REGISTERED AGENT
AND OFFICE OF
United Stationers Supply Co.
Filing Fee $1.00
NOTICE
This certificate must be filed in duplicate. The corporation cannot act as its
own registered agent.
The registered office may be, but need not be, the same as the place of
business of the corporation, but the registered office and the address of the
registered agent must be the same.
Any subsequent change in the registered office or agent must be reported
immediately to the Secretary of State on blanks furnished for that purpose.
FILED
OCT. 11, 1980
Alan J. Dixon
Secretary of State
================================================================================
<PAGE>
STATE OF ILLINOIS
Office of the Secretary of State
I hereby certify that this is a true and correct copy, consisting of Eighty-
One pages, as taken from the original on file in this office.
/s/ George H. Ryan
(SEAL) -------------------------------
GEORGE H. RYAN
SECRETARY OF STATE
DATED: April 25, 1995
By: /s/ James P. Presley, Jr.
-------------------------------
EXPEDITED
SECRETARY OF STATE
APR 25 1995
EXP. FEES 25.00
COPY-CERT. 45.00
<PAGE>
EXHIBIT 9.1
ASSOCIATED HOLDINGS, INC.
VOTING TRUST AGREEMENT
----------------------
This Voting Trust Agreement (this "Agreement") is made and entered
into as of January 31, 1992, by and among Associated Holdings, Inc., a Delaware
corporation (the "Company"), the beneficial owners of shares of Common Stock
(the "Common Stock") of the Company, whose names are set forth on the signature
pages hereto (the "Beneficiaries"), and Gary G. Miller, Daniel J. Good, Thomas
W. Sturgess, Frederick B. Hegi, Jr., and James A. Johnson as the voting trustees
pursuant to this Agreement (the "Trustees").
WHEREAS, the Beneficiaries deem it in the best interest of the Company
and themselves to act together concerning the direction of the affairs of the
Company in order to secure continuity and stability of policy and management and
to promote the continuous and uninterrupted development of the business and, to
that end, to unite the voting power held by them and vest such voting power in
the Trustees as provided herein.
NOW THEREFORE, the Company, the Beneficiaries and the Trustees agree
as follows:
1. Parties. Any owner of, or person entitled to acquire, fully paid
-------
and nonassessable shares of the Class A Common Stock of the Corporation (the
"Common Stock") may become a party to this Agreement at any time by executing a
counterpart signature page to this Agreement and by depositing with the Trustees
the certificate or certificates representing his Common Stock, together with a
proper and sufficient instrument, duly executed, for the transfer to the
Trustees.
Each Beneficiary expressly covenants that upon his obtaining any
shares of the Common Stock, by virtue of the exercise of rights he now owns or
acquires in the future or upon obtaining such shares by any other means, he
promptly will transfer such stock to the Trustees as provided in this paragraph
1. The Company agrees that it will not, without the consent of the Trustees,
issue or sell any Common Stock or any options or other rights to acquire Common
Stock to any Beneficiary without first obtaining such Beneficiary's agreement to
deposit any such Common Stock (and any Common Stock obtained upon exercise or
conversion of any such options or rights) with the Trustees pursuant to this
Agreement.
2. Voting Trust Certificates. Upon deposit of the certificates as
-------------------------
provided in paragraph 1, the Trustees shall deliver or cause to be delivered to
each Beneficiary a voting trust certificate of the same number of shares of
Common Stock as is represented by the certificate(s) so deposited, which voting
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trust certificate(s) shall be substantially in the following form, with such
appropriate omissions, variations and insertions as may be approved by the
Voting Trustees:
ASSOCIATED HOLDINGS, INC.
(a Delaware corporation)
No. ____________ _____________ Shares
This certifies that [stockholder] has deposited the number
-----------
of shares set forth above of the Common Stock of the above-named
corporation with the Voting Trustees hereinafter named, under an
agreement among the corporation, Daniel J. Good, Frederick B. Hegi,
Jr., James A. Johnson, Gary M. Miller and Thomas W. Sturgess as Voting
Trustees, and certain beneficial owners of shares of Common Stock of
the corporation, dated as of January 31, 1992. This certificate and
the interest represented by it are transferable on the books of the
Voting Trustees and only upon the presentation and surrender hereof.
The holder of this certificate takes its subject to all of the terms
and conditions of the Voting Trust Agreement, and as a party to that
Agreement is entitled to the benefits thereof. This Voting Trust
Certificate is subject to certain restrictions on the transfer hereof
contained in that certain Stockholders Agreement dated as of January
31, 1992, as amended from time to time.
IN WITNESS WHEREOF, the Voting Trustees have caused this
certificate to be signed this ____ day of _________________, 19___.
------------------------------------
Gary G. Miller
------------------------------------
Daniel J. Good
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------------------------------------
Thomas W. Sturgess
------------------------------------
Frederick B. Hegi, Jr.
------------------------------------
James A. Johnson
Voting Trustees
3. Powers of the Trustees. Shares of Common Stock, the certificates
----------------------
evidencing which shall have been deposited with the Trustees as provided in
paragraph 1, shall be vested in the Trustees and shall be transferred into the
names of the Trustees upon the Company's books. The Trustees shall, as to all
stock so held by them, possess and be entitled to exercise all rights of the
Beneficiaries of every kind, including the right to vote for election and/or
removal of directors and all such other matters as may be voted upon by the
Beneficiaries, except as otherwise provided by this Agreement and the
Stockholders Agreement dated as of January 31, 1992, among the Company and
certain beneficial owners of shares of Common Stock of the Company and warrants
for the purchase of Common Stock of the Company, as the same may be amended from
time to time (the "Stockholders' Agreement"). The Trustees may be directors of
the Company and may vote all shares of Common Stock deposited pursuant to this
Agreement in favor of their election as directors; provided, that all votes for
--------
the election of directors of the Company shall be cast as provided hereinbelow.
The holders of voting trust certificates shall not have any right with respect
to any such stock held by the Trustees to vote, take part in or consent to any
corporate or stockholders' action of the Company, except as provided herein.
The Trustees shall vote on matters which may come before them at any
meeting of the Company's stockholders, and shall vote for directors of the
Company as specified herein. The Trustees may vote all shares of Common Stock
held pursuant to this Agreement in person or by such person or persons as they
shall select as their proxy.
The Trustees shall vote all of the Common Stock held by them in order
to:
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(i) elect to the Board of Directors of the Company:
a. at least one representative designated by Good Capital
Co., Inc.;
b. at least one representative designated by ASI Partners,
L.P.;
c. such number of directors that shall constitute at least a
majority of the directors of the Company at all times as
designated by Wingate Partners, L.P.; and
d. one representative designated by the Key Executives (as
defined below) for so long as such Key Executives retain the
right to designate such representative. As used herein, the term
"Key Executives" shall mean, collectively, Michael D. Rowsey,
Robert D. Eberspacher, Daniel J. Schleppe, and Lawrence E.
Miller.
(ii) Remove as a director (with or without cause) any representative so
designated, upon, and only upon, the written request of the entity, group
or individual set forth above as designating such representative (the
"Appointing Principal").
(iii) Fix the authorized number of directors on the Company's Board of
Directors at not less than seven directors (provided that a greater number
may from time to time be set by the board in order to give effect fully to
the provisions of this paragraph).
(iv) On any other matter on which shares of Common Stock deposited
pursuant to this Agreement shall be voted or shall have the right to give
or withhold consent, the Trustee shall vote (or refrain from voting) in
accordance with the written directions from the holders of Voting Trust
Certificates representing not less than 66-2/3% of the shares of Common
Stock held in trust pursuant to this Agreement, or in the absence of such
written direction, as the Trustees may determine in their sole discretion.
4. Liability of Trustees. No Trustee shall be liable for any error
---------------------
of judgment or mistakes of law, or other mistake, or for anything including in
connection with his voting of the Common Stock, save only his own willful
misconduct or gross negligence. It is expressly understood and agreed that the
Trustees shall be indemnified and held harmless by the Company from any and all
expenses, costs, damages or other liabilities in voting the Common Stock and
otherwise acting as Trustees hereunder.
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5. Decisions by the Trustees. The decision or act of a majority of
-------------------------
the Trustees, whether at a meeting or by writing, with or without a meeting,
shall for all purposes of this Agreement, including but not limited to the
exercise of the voting power of the shares of Common Stock held in trust
hereunder, be required for any decision or act of the Trustees pursuant to this
Agreement. The Trustees may, in their discretion, establish rules of action,
consistent with the provisions of this Agreement, that govern their actions
pursuant to this Agreement.
6. Reimbursement and Indemnity of Trustee. The Trustees shall be
--------------------------------------
reimbursed by the Company for any reasonable expenses and indemnified by the
Company for all liabilities incurred by them in connection with their duties
under this Agreement, including the disbursement and reasonable compensation of
their agents, attorneys, employees, and officers whom they may employ in
carrying out the terms and provisions of this Agreement.
7. Replacement of the Trustees. Any of the Trustees may resign at
---------------------------
any time by delivering to the other Trustees his resignation in writing. Any of
the Trustees may be removed at any time (with or without cause) by the
Appointing Principal for such Trustee by written notice to the Trustees. In the
case of death, disability, resignation or removal of any Trustee, the resulting
vacancy shall be filled by the appointment of a successor by the Appointing
Principal. Each such successor shall become a Trustee by executing a
counterpart of this Voting Trust Agreement, as then in effect. Upon becoming a
Trustee, a successor shall have all title, rights and powers of a Trustee named
in this Agreement. The Appointing Principals are:
(a) Wingate Partners, L.P. - As to Thomas W. Sturgess, Frederick
B. Hegi, Jr., and James A. Johnson
(b) ASI Partners, L.P. - As to Gary G. Miller.
(c) Good Capital Co., Inc. - As to Daniel J. Good.
8. Transfer of Voting Trust Certificates. During the term of this
-------------------------------------
Agreement, each Beneficiary agrees that the sale, transfer, assignment, pledge
or other disposition of his or her interests in any voting trust certificate (a
"Transfer") shall be subject to any limitations and restrictions on transfer
noted on the voting trust certificate, including those limitations and
restrictions contained in the Stockholders Agreement.
9. Dividends and Other Rights. The holder of each voting trust
--------------------------
certificate shall be entitled to receive all dividends, distributions, and sales
proceeds, if any, collected by the Trustees upon the like number of shares of
Common Stock of
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the Company as specified in the voting trust certificate; provided, that any
dividends or distributions consisting of shares of Common Stock or other voting
securities of the Company shall be retained by the Trustees pursuant to this
Agreement.
10. Filing of Agreement. A copy of this Agreement shall be filed by
-------------------
the Trustees in the registered office of the Company within the State of
Delaware, and shall be open to the inspection of any stockholder of the Company
or any beneficiary of the trust created under this Agreement daily during
business hours.
11. Amendment. (a) If at any time the Trustees shall deem it
---------
advisable to amend this Agreement, they shall, by resolution adopted or signed
by all of the Trustees, declare such amendment advisable, and shall submit such
amendment to the holders of the voting trust certificates for their approval at
a meeting called for that purpose, or for approval by written consent in lieu of
a meeting. Notice of such meeting shall be given in the manner provided for
stockholders' meetings in the bylaws of the Company.
(b) Subject to the last sentence of this subsection (b), if the
proposed amendment shall be approved by the vote, in person or by proxy, of the
holders of voting trust certificates for 66-2/3% of the shares of Common Stock
held in trust, a certificate to that effect shall be made and verified by the
chairman and secretary of the meeting and filed in the Company's registered
office in Delaware. Upon such filing, the proposed amendment shall become a
part of this Agreement, with the same force and effect as it originally set
forth herein. No amendment to this Agreement that materially and adversely
affects the rights of a Beneficiary hereunder shall be enforceable against such
Beneficiary until such Beneficiary has consented in writing to such amendment;
provided that any amendment made for the purpose of adding an additional party
(including, without limitation, an additional Beneficiary) hereto shall not be
deemed to materially or adversely affect the rights of any other Beneficiary
hereto.
12. Termination. (a) This Agreement shall terminate upon the earlier
-----------
of (i) ten years from the date hereof, unless extended as provided in Section
218 of the Delaware General Corporation Law, or (ii) the consummation of a
Qualified Public Offering. As used herein, the term Qualified Public Offering
shall mean the sale in an underwritten public offering or a series of public
offerings, registered under the Securities Act of 1933, as amended, of Common
Stock which results in public ownership of not less than 20% of the outstanding
Common Stock of the Company determined on a fully diluted basis, which shares of
Common Stock are listed upon the New York Stock Exchange, the American Stock
Exchange or are approved for quotation on the
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NASDAQ National Market System and which offerings shall have resulted in the
receipt by the Company and any selling stockholders of aggregate cash proceeds
(after deduction of underwriter discounts and the costs associated with the
offerings) of at least $37.5 million.
(b) Upon the termination of this Agreement, the holders of voting
trust certificates will be entitled, upon surrender for cancellation of such
certificates and upon payment of any transfer tax required by law, to receive
certificates for the number of shares of Common Stock represented by their
respective voting trust certificates. The Beneficiaries acknowledge and agree
that, upon termination of this Agreement, each Beneficiary, as a holder of
Common Stock, shall be subject to all obligations and entitled to all rights as
a stockholder of the Company and the assignee of the Trustees.
13. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision never had been contained herein.
14. Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
15. Successors and Assigns. Except as otherwise provided herein,
----------------------
this Agreement will bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns, the Trustees and their respective
successors, and the Beneficiaries and any subsequent holders of voting trust
certificates and the respective successors and assigns of each of them, so long
as they hold voting trust certificates.
16. Counterparts. This Agreement may be executed in separate
------------
counterparts each of which will be an original and all of which taken together
will constitute one and the same agreement.
17. Remedies. The Trustees shall be entitled to enforce their rights
--------
under this Agreement specifically, to recover damages by reason of any breach of
any provision of this
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Agreement and to exercise all other rights existing in their favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that the Trustees may in
their sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
18. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed registered or
certified (postage and registration or certification fees prepaid) or sent by
facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the address indicated on the signature page hereto and to any
subsequent holder of voting trust certificates subject to this Agreement at such
address as indicated by the Trustees records, or at such address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally, three days after deposit in the U.S. mail,
on the date of delivery by facsimile, and one day after deposit with a reputable
overnight courier service.
19. Legends. Voting Trust Certificates evidencing shares of Common
-------
Stock deposited in trust pursuant to the terms of this Agreement shall bear such
legend or legends as the Company shall reasonably deem necessary to protect the
parties hereto.
20. Governing Law. The Corporate law of the State of Delaware shall
-------------
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and any exhibits and schedules hereto shall be
governed by the internal law, and not the law of conflicts, of the State of
Illinois.
21. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
ISSUER:
------
ASSOCIATED HOLDINGS, INC.,
a Delaware corporation
By:
-------------------------------
Its: Chairman of the Board and
Chief Executive Officer
Address: 1075 Hawthorne Drive
Itasca, IL 60143
Telecopy No.: 708-773-6491
BENEFICIARIES:
-------------
WINGATE PARTNERS, L.P., a Delaware
limited partnership
By: Wingate Management Company,
L.P., a Delaware limited
partnership
By:
-----------------------------
Thomas W. Sturgess,
General Partner
Address: 750 North St. Paul
Suite 1200
Dallas, Texas 75201
Telecopy No.: 214-871-8799
CUMBERLAND CAPITAL CORPORATION,
a Delaware corporation
By:
-----------------------------
Gary G. Miller,
President
Address: 301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Telecopy No.: 817-870-2685
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ASI PARTNERS, L.P., a Delaware
limited partnership
By: CUMBERLAND CAPITAL CORPORATION,
a Delaware corporation,
its general partner
By:
-----------------------------
Gary G. Miller,
President
Address: 301 Commerce Street,
Suite 3300
Forth Worth, TX 76102
Telecopy No.: 817-870-2685
GOOD CAPITAL CO., INC., a Delaware
corporation
By:
-----------------------------
Daniel J. Good,
President
Address: 1211 Lake Road
Lake Forest, IL 60045
Telecopy No.: 708-234-8663
BOISE CASCADE CORPORATION, a
Delaware corporation
By:
-----------------------------
Carol Moerdyk,
Vice President
Address: One Jefferson Square
Boise, Idaho 83702
ATTN: General Counsel
Telecopy No.: 208-384-7945
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-------------------------------------
Michael D. Rowsey
Address: 2370 Sonnington Drive
Dublin, OH 43017
Telecopy No.: 614-876-4922
-------------------------------------
Daniel J. Schleppe
Address: 20 The Landing
Atlanta, GA 30350
Telecopy No.:
----------------
-------------------------------------
Robert D. Eberspacher
Address: 6907 Huntfield Drive
Charlotte, NC 28226
Telecopy No.:
-----------------
-------------------------------------
Lawrence E. Miller
Address: 415 Sterling Road
Kenilworth, IL 60043
Telecopy No.:
-----------------
VOTING TRUSTEES:
----------------
-------------------------------------
Gary G. Miller
Address: c/o Cumberland
Capital Corporation
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Telecopy No.: 817-870-2685
-------------------------------------
Daniel J. Good
Address: 1211 Lake Road
Lake Forest, IL 60045
Telecopy No.: 708-234-8663
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-------------------------------------
Thomas W. Sturgess
Address: c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, TX 75201
Telecopy No.: 214-871-8799
-------------------------------------
Frederick B. Hegi, Jr.
Address: c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, TX 75201
Telecopy No.: 214-871-8799
-------------------------------------
James A. Johnson
Address: c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, TX 75201
Telecopy No.: 214-871-8799
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EXHIBIT 9.2
FIRST AMENDMENT TO VOTING TRUST AGREEMENT
-----------------------------------------
This FIRST AMENDMENT TO VOTING TRUST AGREEMENT (this "Amendment Agreement")
-------------------
is made and entered into as of the Effective Time (hereinafter defined), by and
among United Stationers Inc., a Delaware corporation and successor-in-interest
to AHI (as hereinafter defined) (the "Surviving Corporation"), the beneficial
---------------------
owners of shares of common stock, $.10 par value ("Common Stock"), of the
------------
Surviving Corporation, whose names are set forth on the signature pages hereto
(the "Beneficiaries"), and Gary G. Miller, Daniel J. Good, Thomas W. Sturgess,
-------------
Frederick B. Hegi, Jr., and James A. Johnson as the voting trustees (the
"Trustees"), pursuant to the Voting Trust Agreement (hereinafter defined).
--------
RECITALS
A. Associated Holdings, Inc., a Delaware corporation ("AHI"),
---
Beneficiaries and Trustees are parties to that certain Voting Trust Agreement
dated as of January 31, 1992 (the "Voting Trust Agreement");
----------------------
B. Pursuant to that certain Agreement and Plan of Merger (the "Merger
------
Agreement"), dated as of February 13, 1995, between AHI and the Surviving
- ---------
Corporation, AHI was merged with and into the Surviving Corporation (the
"Merger"), with the Surviving Corporation surviving the Merger (the time upon
------
which the Merger became effective pursuant to the terms and conditions of the
Merger Agreement and as defined therein, is referred to herein as the "Effective
---------
Time"); and
- ----
C. In connection with the Merger, the parties to the Voting Trust
Agreement desire to amend the Voting Trust Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Surviving Corporation, Beneficiaries and Trustees hereby agree
as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
-----------
shall have the respective meanings assigned to such terms in the Voting Trust
Agreement.
<PAGE>
2. Amendments. The Voting Trust Agreement is hereby amended as follows:
----------
(a) All references to the "Company" in the Voting Trust Agreement
shall mean the Surviving Corporation.
(b) All references to "Common Stock" in the Voting Trust Agreement
shall mean the common stock, $.10 par value, of the Surviving Corporation.
(c) The first sentence of Section 1 of the Voting Trust Agreement
shall be amended by deleting the words "Class A Common Stock of the
Corporation" and replacing them with the words "common stock, $.10 par
value, of the Company".
(d) Section 2 of the Voting Trust Agreement shall be amended by
deleting the language directly following "as may be approved by the Voting
Trustees:" in its entirety and substituting therefor the following:
"UNITED STATIONERS INC.
(a Delaware corporation)
No. ____________ ____________ Shares
This certifies that [stockholder] has deposited the number of
-----------
shares set forth above of the Common Stock of the above-named
corporation with the Voting Trustees hereinafter named, under an
agreement among the corporation, Daniel J. Good, Frederick B. Hegi,
Jr., James A. Johnson, Gary G. Miller and Thomas W. Sturgess as Voting
Trustees, and certain beneficial owners of shares of Common Stock of
the corporation, dated as of January 31, 1992, as amended as of March
__, 1995. The certificate and the interest represented by it are
transferable only on the books of the Voting Trustees, and only upon
the presentation and surrender hereof. The holder of this certificate
takes it subject to all of the terms and conditions of the Voting
Trust Agreement, as amended, and as a party to such Voting Trust
Agreement is entitled to the benefits thereof. This Voting Trust
Certificate is subject to certain restrictions on the transfer hereof
contained in that certain Stockholders Agreement, dated as of January
31, 1992, as amended from time to time.
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IN WITNESS WHEREOF, the Voting Trustees have caused this
certificate to be signed this ____ day of _____________, 19__.
__________________________ _________________________
Thomas W. Sturgess, Gary G. Miller,
Voting Trustee Voting Trustee
__________________________ _________________________
Frederick B. Hegi, Jr., Daniel J. Good,
Voting Trustee Voting Trustee
__________________________
James A. Johnson,
Voting Trustee"
(e) Section 12(a) of the Voting Trust Agreement is amended and
restated in its entirety to read as follows:
"(a) This Agreement shall terminate upon the earlier of (i)
January 31, 2005 or (ii) the consummation of a Qualified Public
Offering. As used herein, the term Qualified Public Offering shall
mean the sale after the date hereof in an underwritten public offering
or a series of public offerings, registered under the Securities Act
of 1933, as amended, of Common Stock which results in public ownership
of not less than 20% of the outstanding Common Stock of the Company
determined on a fully diluted basis, which shares of Common Stock are
listed upon the New York Stock Exchange, the American Stock Exchange
or are approved for quotation on the NASDAQ National Market System and
which offerings shall have resulted in the receipt by the Company and
any selling stockholders of aggregate cash proceeds (after deduction
of underwriter discounts and the costs associated with the offerings)
of at least $50 million."
3. Voting Trust Certificates. At the Effective Time, the Beneficiary's
-------------------------
voting trust certificate or certificates representing shares of class A common
stock, $.01 par value, of AHI ("AHI Common Stock") deposited under the Voting
----------------
Trust Agreement, shall represent the right to receive a voting trust certificate
representing the number of shares of Common Stock into
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which the number of shares of AHI Common Stock represented by such Beneficiary's
voting trust certificate was converted pursuant to the terms of the Merger
Agreement.
4. Voting Trust Agreement Otherwise Unchanged. Except as expressly
------------------------------------------
amended hereby, the Voting Trust Agreement shall remain unchanged and in full
force and effect.
5. Counterparts. This Amendment Agreement may be executed in any number
------------
of counterparts, each of which shall constitute one and the same instrument.
6. Successors and Assigns. The rights and obligations of the parties
----------------------
hereunder shall be binding upon and inure to the benefit of the Surviving
Corporation, Beneficiaries and Trustees and each of their respective successors
and assigns.
7. Headings. The headings of the sections of this Amendment Agreement
--------
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
8. Governing Law. This Amendment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Illinois, without giving
effect to conflict of law principles.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement to be effective as of the Effective Time.
SURVIVING CORPORATION
---------------------
UNITED STATIONERS INC.
By:______________________________________
Name:
Title:
TRUSTEES
--------
_________________________________________
Thomas W. Sturgess
_________________________________________
Frederick B. Hegi, Jr.
_________________________________________
James A. Johnson
_________________________________________
Gary G. Miller
_________________________________________
Daniel J. Good
5
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BENEFICIARIES
-------------
WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT
COMPANY, L.P., its general
partner
By:______________________________________
Thomas W. Sturgess
General Partner
WINGATE AFFILIATES, L.P.
By:______________________________________
Thomas W. Sturgess
General Partner
WINGATE PARTNERS II, L.P.
By: WINGATE MANAGEMENT
COMPANY II, L.P., its general
partner
By: WINGATE MANAGEMENT
LIMITED, L.L.C., its general
partner
By:______________________________________
Thomas W. Sturgess
Principal
6
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WINGATE AFFILIATES II, L.P.
By:______________________________________
Thomas W. Sturgess
General Partner
ASI PARTNERS, L.P.
By: CUMBERLAND CAPITAL
CORPORATION, its general
partner
By:______________________________________
Gary G. Miller
President
ASI PARTNERS II, L.P.
By: CUMBERLAND CAPITAL
CORPORATION, its general
partner
By:______________________________________
Gary G. Miller
President
CUMBERLAND CAPITAL
CORPORATION
By:______________________________________
Gary G. Miller
President
7
<PAGE>
GOOD CAPITAL CO., INC.
By:______________________________________
Daniel J. Good
President
BOISE CASCADE CORPORATION
By:______________________________________
Name:
Title:
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<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Michael D. Rowsey
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
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<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Daniel J. Schleppe
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
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<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Robert W. Eberspacher
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
11
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Lawrence E. Miller
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
12
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Neil Bailey
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
13
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Theresa K. Blake
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
14
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Robert Deiters
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
15
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Thomas Hupp
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
16
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Kenneth Larson
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
17
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Rudy Mayo
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
18
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Paul Pisarski
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
19
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Roger Richey
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
20
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Ralph Swiatek
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
21
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Thomas Trost
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
22
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Cheryl Zupke
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
23
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of that certain Individual Retirement Account (the "IRA")
---
set forth in the Payment Terms Notification dated as of November __, 1992, the
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Thomas Koppleman
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
24
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of an Individual Retirement Account (the "IRA"), the
---
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
James A. Johnson
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
25
<PAGE>
_________________________________________
Jay I. Applebaum
_________________________________________
William Bazant
_________________________________________
Daniel H. Bushell
_________________________________________
William Figurelli
_________________________________________
Jeff Frantz
_________________________________________
David Grove
_________________________________________
John D. Kennedy
_________________________________________
James Lyon
_________________________________________
Duane J. Ratay
_________________________________________
Glenn E. Stephens
26
<PAGE>
_________________________________________
Craig Zupke
27
<PAGE>
PAT INVESTMENTS
By:______________________________________
Name:
Title:
28
<PAGE>
_________________________________________
Daniel J. Good
29
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of an Individual Retirement Account (the "IRA"), the
---
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Daniel H. Bushell
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
30
<PAGE>
The Beneficiary hereby acknowledges that this Amendment Agreement is
executed below on the Beneficiary's behalf. If the Beneficiary owns Common
Stock as beneficiary of an Individual Retirement Account (the "IRA"), the
---
Beneficiary further acknowledges that the trustee of the IRA (the "IRA Trustee")
-----------
has been instructed by the Beneficiary to execute this Amendment Agreement and
that the Beneficiary approves, as IRA beneficiary, the execution by IRA Trustee
of this Amendment Agreement.
BENEFICIARY
-----------
_________________________________________
Duane J. Ratay
FOR SIGNATURE BY TRUSTEE OF BENEFICIARY'S IRA, IF APPLICABLE:
IRA TRUSTEE:
_________________________________________
By:______________________________________
Name:
Title:
Address:
_________________________________________
_________________________________________
31
<PAGE>
EXHIBIT 9.3
ASSOCIATED HOLDINGS, INC.
1075 Hawthorn Drive
Itasca, Illinois 60143
March 29, 1995
BOISE CASCADE CORPORATION
1111 West Jefferson Street
Boise, Idaho 83702
Attention: Matthew Broad
Ladies and Gentlemen:
Reference is made to that certain Voting Trust Agreement, dated as of
January 31, 1992 (the "Agreement"), among Associated Holdings, Inc. (the
"Company"), the voting trustees named therein and the beneficiaries named
therein (including Boise Cascade Corporation ("Boise")). The Company intends to
merge (the "Merger") with and into United Stationers Inc. ("USI"), with USI
surviving the Merger (as such, the "Surviving Corporation"). As a result of the
Merger, the Class A Common Stock, par value $0.01 per share, of the Company will
be converted into shares of Common Stock, par value $0.10 per share ("Surviving
Corporation Common Stock"), of the Surviving Corporation in accordance with the
Agreement and Plan of Merger, dated as of February 13, 1995, between the Company
and USI.
Each party hereto hereby acknowledges and agrees that (i) the term "Common
Stock" in the Agreement shall include Surviving Corporation Common Stock (and
any securities issued in respect of or in exchange for such shares of Surviving
Corporation Common Stock, including any securities into which such shares may be
converted), (ii) the term "Company" shall include the Surviving Corporation, as
successor-in-interest to the Company, and (iii) Boise's rights and obligations
under the Agreement shall terminate on the second anniversary of the effective
time of the Merger.
Each party hereto hereby represents and warrants to each other party hereto
that the execution, delivery and performance of this letter agreement and any
and all documents executed and/or delivered in connection herewith have been
authorized by all requisite corporate or other action on the part of such party
and will not violate its respective charter, bylaws or other governing document
(if any), or any material agreement to which it is a party.
<PAGE>
THIS LETTER AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ANY CHOICE OF LAW RULES THEREOF.
This letter agreement and the documents referred to herein contain the
complete agreement and understanding of the parties hereto with respect to the
matters covered hereby and they rescind and supersede any prior agreements,
negotiations, commitments, writings and understandings which may have in any way
related to the subject matter hereof and thereof. This letter agreement may be
executed in any number of counterparts each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this letter agreement in
one or more counterparts, each of which shall be deemed to be one and the same
instrument, as of the date first above written.
ASSOCIATED HOLDINGS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
BOISE CASCADE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
2
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
WAIVER AND AMENDMENT NO. 1
WAIVER AND AMENDMENT NO. 1 dated as of April 13, 1995, between UNITED
STATIONERS SUPPLY CO., a corporation duly organized and validly existing under
the laws of the State of Illinois (the "Company"); UNITED STATIONERS INC., a
-------
corporation duly organized and validly existing under the laws of the State of
Delaware ("the Guarantor" and, together with the Company, the "Obligors"); each
------------- --------
of the lenders that is a signatory hereto; and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), a national banking association, as agent for the Lenders
under the Credit Agreement referred to below (in such capacity, together with
its successors in such capacity, the "Agent").
-----
The Company, the Guarantor, certain lenders and the Agent are parties
to a Credit Agreement dated as of March 30, 1995 (as heretofore modified and
supplemented and in effect on the date hereof, the "Credit Agreement"),
----------------
providing, subject to the terms and conditions thereof, for extensions of credit
(by making of loans and issuing letters of credit) to be made by said lenders to
the Company in an aggregate principal or face amount not exceeding $500,000,000.
The Company, the Guarantor, certain lenders and the Agent wish to amend the
Credit Agreement in certain respects, and accordingly, the parties hereto hereby
agree as follows:
Section 1. Definitions. Except as otherwise defined in this Waiver
-----------
and Amendment No. 1, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Waivers. Notwithstanding anything to the contrary
-------
contained in Section 9.07, 9.09 or 9.16 of the Credit Agreement and subject to
Section 5 below, but effective as of the date hereof,
(a) the Lenders hereby agree and consent to the issuance of the
Take-Out Notes in an aggregate principal amount not to exceed
$150,000,000, provided that the proceeds of such issuance are applied as
follows (and the Lenders hereby consent to such application):
(i) First, an amount of such proceeds equal to (x) $130,000,000
-----
plus (y) accrued interest on the Bridge Loans as of the date of such
----
issuance shall be applied to the payment in full of the Bridge Loans;
<PAGE>
-2-
(ii) Second, $6,500,000 of such proceeds shall be applied to the
------
prepayment of the Term Loans in accordance with Section 2.09 of the
Credit Agreement; and
(iii) Finally, the remaining amount of such proceeds shall be
-------
applied to the prepayment of the Revolving Credit Loans; and
(b) the Lenders hereby agree and consent to the redemption in full
(but not any partial redemption) or repurchase of all (but not less than
all) of the Guarantor's Class B Preferred Stock at any time, unless a
Default has occurred and is continuing at the time the Guarantor has
committed so to repurchase or redeem such Class B Preferred Stock, provided
that (i) such redemption or repurchase is for an aggregate price of not
more than $7,500,000, (ii) the Guarantor shall have received all applicable
consents thereto (other than any such consent required under the Credit
Agreement waived hereby), (iii) any such Class B Preferred Stock so
repurchased shall be immediately retired, (iv) such redemption or
repurchase shall be permitted only if the Take-Out Notes are issued in the
aggregate principal amount of $150,000,000 and (v) such redemption or
repurchase shall have taken place not more than 60 days after the Guarantor
has committed to such repurchase or redemption.
Section 3. Amendments. Subject to the satisfaction of the conditions
----------
precedent specified in Section 5 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:
3.01. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
3.02. Section 9.10 of the Credit Agreement shall be amended by adding
immediately after clause (b) thereto the following:
"minus (c) at any time after the redemption in full or repurchase and
retirement of all of the Class B Preferred Stock of the Guarantor,
$3,750,000."
Section 4. Representations and Warranties. Each of the Guarantor and
------------------------------
the Company represents and warrants to the Lenders that (a) no Default has
occurred and is continuing and
<PAGE>
-3-
(b) the representatives and warranties set forth in Section 8 of the Credit
Agreement and in each other Basic Document to which the Guarantor or the
Company is a party are true and complete on the date hereof as if made on and as
of the date hereof (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date) and as
if each reference in said Section 8 to "this Agreement" included reference to
this Waiver and Amendment No. 1.
Section 5. Effectiveness. As provided in Sections 2 and 3 above, the
-------------
waivers of and amendments to the Credit Agreement set forth in said Sections 2
and 3 shall become effective, as of the date hereof, upon the execution and
delivery hereof.
Section 6. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Waiver and
Amendment No. 1 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Waiver and Amendment No. 1 by signing any
such counterpart. This Waiver and Amendment No. 1 shall be governed by, and
construed in accordance with, the law of the State of New York.
<PAGE>
-4-
IN WITNESS WHEREOF, the parties hereto have caused this Waiver and
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.
UNITED STATIONERS SUPPLY CO.
By /s/ ^SIGNATURE APPEARS HERE^
--------------------------------
Title: CFO
UNITED STATIONERS INC.
By /s/ ^SIGNATURE APPEARS HERE^
--------------------------------
Title: CFO
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ John J. Coyle
-------------------------------
Title: Vice President
ARAB BANKING CORPORATION
(B.S.C.)
By /s/ Grant E. McDonald
-------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By /s/ ^SIGNATURE APPEARS HERE^
-------------------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ ^SIGNATURE APPEARS HERE^
-------------------------------
Title: Assistant Vice President
<PAGE>
-5-
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ ^SIGNATURE APPEARS HERE^
----------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By /s/ ^SIGNATURE APPEARS HERE^
----------------------------------
Title: Vice President & Deputy
General Manager
NATIONSBANK, N.A. (CAROLINAS)
By /s/ Louise C. Comiskey
----------------------------------
Title: Vice President
VAN KAMPEN MERRITT PRIME RATE
INCOME TRUST
By /s/ Jeffrey W. Malliet
----------------------------------
Title: Vice Pres. & Portfolio Mgr.
BANK OF AMERICA ILLINOIS
By /s/ ^SIGNATURE APPEARS HERE^
----------------------------------
Title: Vice President
BANK ONE, MILWAUKEE, NA
By /s/ ^SIGNATURE APPEARS HERE^
----------------------------------
Title: Vice President
<PAGE>
-6-
THE CIT GROUP/BUSINESS CREDIT,
INC.
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Assistant Secretary
NATIONAL CANADA FINANCE CORPORATION
By /s/ C.F. Martin, Jr.
---------------------------------
Title: Vice President & Branch Mgr.
By /s/ Leroy A. Irvin
---------------------------------
Title: Vice President
SANWA BUSINESS CREDIT CORPORATION
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: 1st Vice President
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Senior Account Executive
BANK OF SCOTLAND
By /s/ Elizabeth Wilson
---------------------------------
Title: Vice President & Branch Manager
THE NORTHERN TRUST COMPANY
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Vice President
<PAGE>
-7-
CORESTATES BANK, N.A.
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Vice President
COMERICA BANK
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF MARYLAND
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION CHICAGO BRANCH
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Chief Manager
NBD BANK
By /s/ ^SIGNATURE APPEARS HERE^
---------------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Pierre Jean de Filippis
---------------------------------
Title: General Manager
By /s/ Rosemary Davis
---------------------------------
Title: Vice President
<PAGE>
-8-
SOCIETY NATIONAL BANK
By /s/ ^SIGNATURE APPEARS HERE^
--------------------------------
Title: Assistant Vice President
THE BANK OF TOKYO TRUST COMPANY
By /s/ John P. Judge
--------------------------------
Title: ^TO COME^
UNION BANK
By /s/ ^SIGNATURE APPEARS HERE^
-------------------------------
Title: Vice President
MICHIGAN NATIONAL BANK
By /s/ ^SIGNATURE APPEARS HERE^
-------------------------------
Title: Vice President
CREDITANSTALT CORPORATE FINANCE,
INC.
By /s/ Christina T. Schoen
-------------------------------
Title: Vice President
By /s/ Gregory F. Mathis
-------------------------------
Title: Vice President
KEYPORT LIFE INSURANCE COMPANY
By /s/ Stewart R. Morrison
-------------------------------
Title: V.P. and Chief Investment Officer
<PAGE>
-9-
STICHTING RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS 2
(ROSA2)
By CHANCELLOR SENIOR SECURED
MANAGEMENT, INC., as
Portfolio Advisor
By /s/^SIGNATURE APPEARS HERE^
---------------------------
Title: Vice President
RESTRUCTURED OBLIGATIONS BACKED
BY SENIOR ASSETS B.V.
By CHANCELLOR SENIOR SECURED
MANAGEMENT, INC., as
Portfolio Advisor
By /s/ ^SIGNATURE APPEARS HERE^
----------------------------
Title: Vice President
CERES FINANCE, LTD.
By CHANCELLOR SENIOR SECURED
MANAGEMENT, INC., as
Financial Managager
By /s/ ^SIGNATURE APPEARS HERE^
----------------------------
Title: Vice President
STRATA FUNDING LTD.
By CHANCELLOR SENIOR SECURED
MANAGEMENT, INC., AS
Financial Manager
By /s/ ^SIGNATURE APPEARS HERE^
-----------------------------
Title: Vice President
<PAGE>
-10-
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ JOHN J. BOYLE
-------------------------------
Title: JOHN J. BOYLE
VICE PRESIDENT
<PAGE>
EXHIBIT 10.9
- --------------------------------------------------------------------------------
Registration Rights Agreement
Dated as of May 3, 1995
among
United Stationers Inc.,
United Stationers Supply Co.
and
Chase Securities, Inc.
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into May 3, 1995 among UNITED STATIONERS SUPPLY CO., an Illinois
corporation (the "Company"), UNITED STATIONERS INC. ("United"), a Delaware
corporation, and CHASE SECURITIES, INC. (the "Initial Purchaser").
This Agreement is made in connection with the Purchase Agreement dated
April 26, 1995 among the Company, United and the Initial Purchaser (the
"Purchase Agreement"), which provides for the sale by the Company to the Initial
Purchaser of an aggregate of $150,000,000 principal amount of the Company's
12 3/4% Senior Subordinated Notes due 2005 (the "Securities"). In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide to the Initial Purchaser and its direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time.
"Closing Date" shall mean the Closing Date as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble and also
-------
includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company; provided, however, that such
-------- -------
depositary must have an address in the Borough of Manhattan, in the City of
New York.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2(a) hereof.
<PAGE>
2
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Securities" shall mean 12 3/4% Senior Subordinated Notes due
-------------------
2005 issued by the Company under the Indenture containing terms identical
to the Securities (except that (i) interest thereon shall accrue from the
last date on which interest was paid on the Securities or, if no such
interest has been paid, from the date of their original issue, (ii) the
transfer restrictions thereon shall be eliminated and (iii) certain
provisions relating to an increase in the stated rate of interest thereon
shall be eliminated), to be offered to Holders of Securities in exchange
for Securities pursuant to the Exchange Offer.
"Holders" shall mean the Initial Purchaser, for so long as it owns any
-------
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture.
"Indenture" shall mean the Indenture relating to the Securities dated
---------
as of May 3, 1995 between the Company, United and The Bank of New York, as
trustee, as the same may be amended from time to time in accordance with
the terms thereof.
"Initial Purchaser" shall have the meaning set forth in the preamble.
-----------------
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Securities; provided
--------
that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Company shall be disregarded in determining whether such
consent or approval was given by the Holders of such required percentage or
amount.
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and
<PAGE>
3
supplements to a prospectus, including post-effective amendments, and in
each case including all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
------------------
"Registrable Securities" shall mean the Securities; provided, however,
---------------------- -------- -------
that Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to such Securities shall have been
declared effective under the 1933 Act and such Securities shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities
shall be entitled to be sold to the public pursuant to Rule 144(k) (or any
similar provision then in force, but not Rule 144A) under the 1933 Act,
(iii) such Securities shall have ceased to be outstanding or (iv) such
Securities have been exchanged for Exchange Securities upon consummation of
the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company and United with this Agreement,
including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. ("NASD") registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws and compliance with the rules of the
NASD (including reasonable fees and disbursements of one counsel for any
underwriters or Holders in connection with blue sky qualification of any of
the Exchange Securities or Registrable Securities), (iii) all printers'
fees and expenses with respect to word processing, printing and
distributing any Registration Statement, any Prospectus and any amendments
or supplements thereto, (iv) all rating agency fees, (v) all fees and
disbursements relating to the qualification of the Indenture under
applicable securities laws; (vi) the fees and disbursements of the Trustee
and its counsel and any escrow agent or custodian; (vii) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, (viii) the
fees and disbursements of counsel for the Company and, in the case of a
Shelf Registration statement required to be filed under Section 2(b)(i),
(ii) or (iii), the reasonable fees and disbursements of one counsel for the
Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Initial Purchaser); (ix) the fees and
disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, and (x) in the
case of a Shelf Registration statement required to be filed under Section
2(b)(i), (ii) or (iii), any reasonable disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and the
reasonable fees and expenses of any special experts retained by the Company
in connection with any Registration Statement, but excluding fees of
counsel to the underwriters (other than fees and expenses set forth in
clause (ii) above) or the Holders (other than fees and expenses set forth
in clause
<PAGE>
4
(viii) above) and underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments
and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities on an appropriate form under
Rule 415 under the 1933 Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Trustee" shall mean the trustee with respect to the Securities under
-------
the Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer
------------------------------- --------------
Registration. To the extent not prohibited by any applicable law or applicable
- ------------
interpretation of the Staff of the SEC, the Company shall use its best efforts
(i) to file within 30 days after the Closing Date an Exchange Offer Registration
Statement covering the offer by the Company to the Holders to exchange all of
the Registrable Securities for Exchange Securities, (ii) to cause such Exchange
Offer Registration Statement to be declared effective by the SEC within 120 days
after the Closing Date, (iii) to cause such Registration Statement to remain
effective until the closing of the Exchange Offer and (iv) to consummate the
Exchange Offer within 150 days following the Closing Date. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder (other than Participating Broker-Dealers (as defined in Section 3(f)
hereof) eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder is not an affiliate of the Company within
the meaning of Rule 405 under the 1933 Act, acquires the Exchange Securities in
the ordinary course of such Holder's business and has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Securities) to
<PAGE>
5
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the 1933 Act.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder, at its address reflected on the security
register, a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal
(a "Letter of Transmittal") and related documents;
(ii) keep the Exchange Offer open for not less than 30 calendar days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) permit Holders to withdraw tendered Registrable Securities at
any time prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open, by sending to
the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Securities delivered for exchange, and a statement
that such Holder is withdrawing his election to have such Securities
exchanged; and
(iv) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Registrable Securities duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the Letter of
Transmittal;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange by the
Company; and
(iii) cause the Trustee promptly to authenticate and deliver Exchange
Securities to, or upon the instructions of, each Holder of Registrable
Securities equal in principal amount to the Registrable Securities of such
Holder so accepted for exchange.
Interest on each Exchange Security will accrue from the last date on
which interest was paid on the Registrable Securities surrendered in exchange
therefor or, if no interest has been paid on the Registrable Securities, from
the date of its original issue. The
<PAGE>
6
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer, or the making of any exchange by a Holder, does not violate
applicable law or any applicable interpretation of the Staff of the SEC. Each
Holder of Registrable Securities (other than Participating Broker-Dealers) who
wishes to exchange such Registrable Securities for Exchange Securities in the
Exchange Offer will be required to represent that (i) it is not an affiliate of
United or the Company, (ii) any Exchange Securities to be received by it were
acquired in the ordinary course of its business and (iii) at the time of the
commencement of the Exchange Offer, it has no arrangement with any person to
participate in the distribution (within the meaning of the 1933 Act) of the
Exchange Securities. The Company shall inform the Initial Purchaser of the
names and addresses of the Holders to whom the Exchange Offer is made, and the
Initial Purchaser shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
(b) Shelf Registration. (i) If, because of any change in law or
------------------
applicable interpretations thereof by the Staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
(ii) upon the request of the Initial Purchaser (with respect to any Registrable
Securities which it acquired directly from the Company) within 30 calendar days
after the Closing Date if the Initial Purchaser shall hold Registrable
Securities which it acquired directly from the Company and if the Initial
Purchaser is not permitted, in the opinion of counsel to the Initial Purchaser
addressed to the Company (which counsel shall be reasonably acceptable to the
Company), pursuant to applicable law or applicable interpretation of the Staff
of the SEC to participate in the Exchange Offer, or (iii) if any Holder other
than the Initial Purchaser is not eligible to participate in the exchange offer
due to a change in law or the applicable interpretation of the staff of the
Commission and such holder so notifies the Company, the Company shall, at its
cost,
(A) as promptly as practicable, file with the SEC a Shelf Registration
Statement relating to the offer and sale of the Registrable Securities
(limited solely to the Initial Purchaser if clause (ii) alone applies) by
the Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders of such Registrable Securities
and set forth in such Shelf Registration Statement, and use its best
efforts to cause such Shelf Registration Statement to be declared effective
by the SEC by the later of (1) 120 days after the Closing Date and (2) 45
days after publication of the change in law or interpretation. In the
event that the Company is required to file a Shelf Registration Statement
upon the request of the Initial Purchaser pursuant to clause (ii) above,
the Company shall file and have declared effective by the SEC both an
Exchange Offer Registration Statement pursuant to Section 2(a) hereof with
respect to all Registrable Securities and a Shelf Registration Statement
(which may be a combined Registration Statement with the Exchange Offer
Registration Statement) with respect to offers and sales of Registrable
Securities held by the Initial Purchaser after completion of the Exchange
Offer;
<PAGE>
7
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of (i), in the case of clause
2(b)(i) above, three years from the date the Shelf Registration Statement
is declared effective by the SEC, or (ii) in the case of clauses 2(b)(ii)
and 2(b)(iii) above, three years after the closing date, or in any case
such shorter period which will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or cease to be outstanding;
and
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Shelf Registration Statement complies in all
material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement does not, when it becomes
effective, contain 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 not misleading and (iii) any Prospectus forming part of
any Shelf Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements, in light of the circumstances under which
they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement if reasonably requested by the Majority Holders
with respect to information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any such amendment to
become effective and such Shelf Registration to become usable as soon as
thereafter practicable and to furnish to the Holders of Registrable Securities
copies of any such supplement or amendment promptly after its being used or
filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) or 2(b).
(d) Effective Registration Statement. An Exchange Offer Registration
--------------------------------
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
-------- -------
after it has been declared effective, the offering of Registrable Securities
pursuant to a Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
(e) Increase in Interest Rate. In the event that (i) the Exchange
-------------------------
Offer Registration Statement is not filed with the SEC on or prior to the 30th
calendar day after the
<PAGE>
8
Closing Date (unless changes in law or the applicable interpretation of the
staff of the Commission do not permit the Company to effect the Exchange Offer,
in which case clause (iv) shall apply), (ii) the Exchange Offer Registration
Statement is not initially declared effective on or prior to the 120th calendar
day after the Closing Date (unless changes in law or the applicable
interpretation of the staff of the Commission do not permit the Company to
effect the Exchange Offer, in which case clause (iv) shall apply) or (iii) the
Exchange Offer is not consummated on or prior to the 150th day after the Closing
Date (unless changes in law or the applicable interpretation of the staff of the
Commission do not permit the Company to effect the Exchange Offer, in which case
clause (iv) shall apply) or (iv) a Shelf Registration Statement required under
Section 2(b)(i) hereof with respect to the Registrable Securities is not
initially declared effective on or prior to the later of 120th calendar day
after the Closing Date or the 45th calendar day after the publication of the
change in law or interpretation, the interest rate borne by the Securities shall
be increased by one-half of one percent per annum following such 30-day period
in the case of clause (i) above, such 120-day period in the case of clause (ii)
above, such 150-day period in the case of clause (iii) above or such 120-day or
45-day period in the case of clause (iv) above (as applicable); provided that
--------
the aggregate increase in such interest rate will in no event exceed one-half of
one percent per annum. Immediately upon (A) the filing of the Exchange Offer
Registration Statement after the 30-day period described in clause (i) above,
(B) the effectiveness of the Exchange Offer Registration Statement after the
120-day period described in clause (ii) above, (C) the consummation of the
Exchange Offer after the 150-day period described in clause (iii) above or (D)
the effectiveness of a Shelf Registration Statement after such 120-day or 45-day
period described in clause (iv) above (as applicable), the interest rate borne
by the Securities from the date of such filing, effectiveness or consummation,
as the case may be, will be reduced to the original interest rate.
(f) Specific Enforcement. Without limiting the remedies available to
--------------------
the Initial Purchaser and the Holders, the Company acknowledges that any failure
by the Company to comply with its obligations under Section 2(a) and Sections
2(b) hereof may result in material irreparable injury to the Initial Purchaser
or the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchaser or any Holder may obtain such relief
as may be required to specifically enforce the Company's obligations under
Section 2(a) and Section 2(b) hereof.
(g) Acknowledgment of Holders. Each Holder shall be deemed to have
-------------------------
agreed that any broker-dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the Exchange
Offer must comply with the registration and prospectus delivery requirements of
the 1933 Act in connection with secondary resale transactions and that such
secondary resale transactions should be covered by an effective registration
statement.
<PAGE>
9
3. Registration Procedures. In connection with the obligations of
-----------------------
the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within the
time period specified in Section 2 hereof, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in the
case of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and (iii) shall comply as to form in
all material respects with the requirements of the applicable form and include
or incorporate by reference all financial statements required by the SEC to be
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period;
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed if required pursuant to Rule 424 under the
1933 Act; comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof; and keep each Prospectus current
during the period described under Section 4(3) and Rule 174 under the 1933 Act
that is applicable to transactions by brokers or dealers with respect to
Exchange Securities or Registrable Securities;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being filed
and advising such Holders that the distribution of Registrable Securities will
be made in accordance with the method elected by the Majority Holders; and (ii)
furnish to each Holder of Registrable Securities, to counsel for the Initial
Purchaser, to counsel for the Holders and to each underwriter of an underwritten
offering of Registrable Securities, if any, without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits (including those incorporated by reference) in
order to facilitate the public sale or other disposition of the Registrable
Securities; and (iii) subject to the last paragraph of Section 3 hereof, hereby
consent to the use of the Prospectus or any amendment or supplement thereto by
each of the selling Holders of Registrable Securities in connection with the
offering and sale in accordance with applicable law of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto;
<PAGE>
10
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with the
Holders in connection with any filings required to be made with the NASD, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable such Holder to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however, that the
-------- -------
Company shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d) or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities and counsel for the Initial Purchaser promptly and, if
requested by such Holder or counsel, confirm such advice in writing promptly (i)
when a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to such offering cease to be true and correct in all
material respects, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, (vi) of the happening of any event or the discovery of any facts
during the period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus untrue
in any material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein not
misleading and (vii) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate;
(f) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Initial Purchaser and its counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel) and make representatives of the
Company as shall be reasonably requested by the Initial Purchaser and their
counsel (and, in
<PAGE>
11
the case of a Shelf Registration Statement, the Holders or their counsel)
available for discussion of such document and shall not at any time file or make
any amendment to the Registration Statement, any Prospectus or any amendment of
or supplement to a Registration Statement or a Prospectus or any document which
is to be incorporated by reference into a Registration Statement or a
Prospectus, of which the Initial Purchaser and its counsel (and, in the case of
a Shelf Registration Statement, the Holders and their counsel) shall not have
previously been advised and furnished a copy or to which the Initial Purchaser
or its counsel (and, in the case of a Shelf Registration Statement, the Holders
or their counsel) shall reasonably object unless counsel for the Company advises
the Company that such filing by the Company is required under applicable law;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchaser and (ii) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Securities copies of any request by the SEC or
any state securities authority for amendments or supplements to a Registration
Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as practicable
and provide immediate notice to each Holder of the withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and cause such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least two business days prior to the closing of any sale
of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Section 3(e)(vi)
hereof, use its best efforts to prepare a supplement or post-effective amendment
to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain at the time of such delivery any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company agrees to notify each Holder to suspend use of the
Prospectus as promptly as practicable after
<PAGE>
12
the occurrence of such an event, and each Holder hereby agrees to suspend use of
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission. At such time as such public disclosure
is otherwise made or the Company determines that such disclosure is not
necessary, in each case to correct any misstatement of a material fact or to
include any omitted material fact, the Company agrees promptly to notify each
Holder of such determination and to furnish each Holder such numbers of copies
of the Prospectus, as amended or supplemented, as such Holder may reasonably
request;
(l) obtain a CUSIP number for all Exchange Securities, or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities or the Registrable Securities, as the case may be, in a
form eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities, or Registrable Securities, as the case may be, (ii)
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and (iii) execute, and use its best efforts to cause
the Trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
the Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including customary underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the Majority
Holders) in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) to the extent possible, make such representations and warranties
to the Holders of such Registrable Securities and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company and, subject to the
proviso in the first sentence of the last paragraph of this clause (n),
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and
the Majority Holders of the Registrable Securities being sold) addressed to
each selling Holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in sales of securities or
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
<PAGE>
13
(iii) obtain "cold comfort" letters and, subject to the proviso in the
first sentence of the last paragraph of this clause (n), updates thereof
from the Company's independent certified public accountants addressed to
the underwriters, if any, and use reasonable best efforts to have such
letter addressed to the selling Holders of Registrable Securities, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in connection
with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders and an
agent of the Holders providing for, among other things, the appointment of
such agent for the selling Holders for the purpose of soliciting purchases
of Registrable Securities, which agreement shall be in form, substance and
scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same to
set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth in
Section 6 hereof with respect to the underwriters and all other parties to
be indemnified pursuant to said Section; and
(vi) deliver such other documents and certificates as may be
reasonably requested and as are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Registration Statement
(and, if appropriate, each post-effective amendment thereto) and (ii) each
closing under any underwriting or similar agreement as and to the extent
required thereunder; provided that the updates referred to in clauses (ii) and
--------
(iii) of this paragraph (n) shall only be required in the case of (A) any
closing with respect to sales under such Shelf Registration Statement of
Securities having a principal amount of $7.5 million or more or, if the Initial
Purchaser shall waive such updates under clause (A), then (B) in the case of up
to three such closings. In the case of any underwritten offering, the Company
shall provide written notice to the Holders of all Registrable Securities of
such underwritten offering at least 30 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice shall (x) offer each
such Holder the right to participate in such underwritten offering, (y) specify
a date, which shall be no earlier than 10 days following the date of such
notice, by which such Holder must inform the Company of its intent to
participate in such underwritten offering and (z) include the instructions such
Holder must follow in order to participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available for inspection
by one representative appointed by the Majority Holders of the Registrable
Securities and any underwriters participating in any disposition pursuant to a
Shelf Registration Statement and one counsel or accountant retained by such
Holders or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such
persons, and cause the respective officers, directors, employees, and any other
<PAGE>
14
agents of the Company to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement; provided, however, that any records, information or
-------- -------
documents that are designated by the Company as confidential at the time of
delivery of such records, information or documents shall be kept confidential by
such persons, unless (i) such records, information or documents are in the
public domain or otherwise publicly available; (ii) disclosure of such records,
information or documents is required by court or administrative order, provided
that such person will, promptly upon learning that disclosure of such
information is sought in a court of competent jurisdiction, give notice to the
Company so that the Company may at its expense undertake appropriate action to
prevent disclosure of the information deemed to be confidential, (iii)
disclosure of such records, information or documents, in the opinion of counsel
to such person, is otherwise required by law (including, without limitation,
pursuant to the requirements of the 1933 Act) or (iv) upon the advice of
counsel, disclosure of such records, information or documents is necessary to
avoid or correct a misstatement or omission in the Registration Statement;
(p) in the case of a Shelf Registration, use its best efforts to cause
all Registrable Securities to be listed on any securities exchange on which
similar debt securities issued by the Company are then listed if requested in
writing by the Majority Holders or by the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any;
(q) in the case of a Shelf Registration, use its best efforts to cause
the Registrable Securities to be rated with the appropriate rating agencies, if
so requested by the Majority Holders or by the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any, unless the Registrable
Securities are already so rated;
(r) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering at least 12 months
which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder; and
(s) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Section 3(e)(ii)-
(vi) hereof, such Holder will
<PAGE>
15
forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession or certify in writing that such copies
have been destroyed, in each case other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company shall give any
such notice to suspend the disposition of Registrable Securities pursuant to a
Shelf Registration Statement as a result of the happening of any event or the
discovery of any facts, each of the kind described in Section 3(e)(vi) hereof,
the Company shall be deemed to have used its best efforts to keep the Shelf
Registration Statement effective during such period of suspension provided that
the Company shall use its best efforts to file and have declared effective (if
an amendment) as soon as practicable an amendment or supplement to the Shelf
Registration Statement and shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice to and including the date when the Holders shall have received copies of
the supplemented or amended Prospectus necessary to resume such dispositions.
4. Underwritten Registrations. If any of the Registrable Securities
--------------------------
covered by any Shelf Registration are to be sold in an underwritten offering as
contemplated by Section 3 hereof, the investment banker or investment bankers
and manager or managers (and their counsel) that will manage the offering will
be agreed to by the Company and the Majority Holders of such Registrable
Securities included in such offering.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (b) completes, executes and delivers all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
of such Holder under the terms of such underwriting arrangements.
5. Participation of Broker-Dealers in Exchange Offer
-------------------------------------------------
(a) The Staff of the SEC has taken the position that any broker-
dealer that receives Exchange Securities for its own account in the Exchange
Offer in exchange for Registrable Securities that were acquired by such broker-
dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer") may be deemed to be an "underwriter" within the
meaning of the 1933 Act in connection with any resale of such Exchange Notes.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution
<PAGE>
16
containing a statement to the above effect and the means by which Participating
Broker-Dealers may resell the Exchange Securities owned by them, such Prospectus
may be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligations under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding any other provision of this
Agreement, the Company agrees (x) that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such modifications thereto as may be,
reasonably requested by the Initial Purchaser or one or more Participating
Broker-Dealers, in each case as provided in clause (ii) below, in order to
expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 5(a) above and (y) without limiting the preceding clause (x), to
maintain the effectiveness of the Registration Statement for such purposes for
the earlier of one year or until such Participating Broker Dealers have sold all
Exchange Securities (as determined in accordance with FIFO accounting), but in
any event only if applicable interpretations of the Staff continue to require
Prospectus delivery; provided that:
--------
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(k), for a period exceeding 180 days
after the last Exchange Date (as such period may be extended pursuant to
the last paragraph of Section 3 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 5; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to the Company by the Initial Purchaser or with the
reasonable request in writing to the Company by one or more broker-dealers
who certify to the Initial Purchaser and the Company in writing that they
anticipate that they will be Participating Broker-Dealers; and provided
--------
further that, in connection with such application of the Shelf Registration
-------
procedures set forth in Section 3 to an Exchange Offer Registration, the
Company shall be obligated (x) to deal only with one entity representing
the Participating Broker-Dealers, which shall be the Initial Purchaser
unless it elects not to act as such representative, (y) to pay the fees and
expenses of only one counsel representing the Participating Broker-Dealers,
which shall be counsel to the Initial Purchaser unless such counsel elects
not to so act and (z) to cause to be delivered only one, if any, "cold
comfort" letter with respect to the Prospectus in the form existing on the
last
<PAGE>
17
Exchange Date and with respect to each subsequent amendment or supplement,
if any, effected during the period specified in clause (i) above.
(c) The Initial Purchaser shall have no liability to the Company or
any Holder with respect to any request that it may make pursuant to this Section
5.
Section 6. Indemnification. (a) The Company and United each agree
---------------
jointly and severally to indemnify and hold harmless the Initial Purchaser, each
Holder, including Participating Broker Dealers, each underwriter who
participated in an offering of the Registrable Securities and each person, if
any, who controls such parties within the meaning of Section 15 of the 1933 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto) or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or
United by the Initial Purchaser expressly for use in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the
<PAGE>
18
Prospectus (or any amendment or supplement thereto); and provided, further, that
-------- -------
the Company will not be liable to the Initial Purchaser or any person
controlling the Initial Purchaser with respect to any such untrue statement or
omission made in any preliminary prospectus that is corrected in the Prospectus
(or any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Securities from the Initial Purchaser in
reliance upon a preliminary prospectus but was not sent or given a copy of the
Prospectus (as amended or supplemented) at or prior to the written confirmation
of the sale of such Securities to such person in any case where such delivery of
the Prospectus (as so amended or supplemented) is required by the 1933 Act,
unless such failure to deliver the Prospectus (as amended or supplemented) was a
result of noncompliance by the Company with Section 3 of this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold harmless each
of the Company, United and each person, if any, who controls the Company or
United within the meaning of Section 15 of the 1933 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity agreement
in Section (a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company or United by the
Initial Purchaser expressly for use in the Registration Statement (or any
amendment thereto), or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) In the case of a Shelf Registration, each Holder agrees, severally
and not jointly, to indemnify and hold harmless the Company, United, the Initial
Purchaser, each underwriter who participates in an offering of Registrable
Securities and the other selling Holders and each person, if any, who controls
such persons within the meaning of Section 15 of the 1933 Act, against any and
all losses, liabilities, claims, damages and expenses described in the indemnity
contained in (a) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company or United by such Holder, expressly for use
in the Registration Statement (or any amendment thereto), or the Prospectus (or
any amendment or supplement thereto); provided, however, that no such Holder
-------- -------
shall be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to such
Shelf Registration Statement.
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying
<PAGE>
19
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(e) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 6 is for
any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, United and the Initial
Purchaser shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity incurred by the
Company, United and the Initial Purchaser, as incurred, in such proportions that
the Initial Purchaser is responsible for that portion represented by the
percentage that the initial purchaser's discount appearing on the cover page of
the Prospectus bears to the price to investors appearing thereon, and the
Company and United are responsible for the balance; provided, however, that no
-------- -------
person guilty of fraudulent misrepresentation (within the meaning of Section
1(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls the Initial Purchaser within the meaning of
Section 5 of the 1933 Act shall have the same rights to contribution as the
Initial Purchaser, and each director of the Company or United, each officer of
the Company or United who signed the Registration Statement, and each person, if
any, who controls the Company or United within the meaning of Section 5 of the
1933 Act shall have the same rights to contribution as the Company or United.
7. Miscellaneous. (a) Rule 144 and Rule 144A. Regardless of
------------- ----------------------
whether the Company is subject to the reporting requirements of Section 13 or 15
of the 1934 Act, the Company covenants that it will file the reports that would
be required to be filed by it under Section 13(a) or 15(d) of the 1934 Act and
the rules and regulations adopted by the SEC thereunder if such Sections were
applicable to it, and that if it ceases to be permitted to file such reports, it
will upon the request of any Holder of Registrable Securities (i) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act and (ii) deliver such information to a prospective purchaser
as is reasonably necessary to permit sales pursuant to Rule 144A under the 1933
Act, in each case, to the extent required from time to time to enable such
Holder to sell its Registrable Securities without registration under the 1933
Act within the limitation of the exemptions provided by (x) Rule 144 under the
1933 Act, as such Rule may be amended from time to time, (y) Rule 144A under the
1993 Act, as such Rule may be amended from time to time, or (z) any similar
rules or regulations hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
<PAGE>
20
(b) No Inconsistent Agreements. Neither the Company or United has
--------------------------
entered into nor will the Company or United on or after the date of this
Agreement enter into, any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The Company and United represent and
warrant that the rights granted to the Holders hereunder do not conflict with
and are not inconsistent with the rights granted to the holders of the Company's
other issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure; provided, however, that no amendment, modification,
-------- -------
supplement or waiver or consent to any departure from the provisions of Section
6 hereof shall be effective as against any Holder of Registrable Securities
unless consented to in writing by such Holder.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 7(d), which address initially is, with respect to the Initial Purchaser,
the address set forth in the Purchase Agreement and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
--------
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms hereof or of the Purchase
<PAGE>
21
Agreement or the Indenture. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. The Initial Purchaser shall be third
-----------------------
party beneficiary to the agreements made hereunder between the Company, on the
one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
PERFORMED ENTIRELY IN THAT STATE.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
<PAGE>
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
UNITED STATIONERS INC.
By:
----------------------------------------
Name:
Title:
UNITED STATIONERS SUPPLY CO.
By:
-----------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above
written:
CHASE SECURITIES, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.10
UNITED STATIONERS SUPPLY CO.
$150,000,000 Senior Subordinated Notes due 2005
______________
Purchase Agreement
------------------
April 26, 1995
Chase Securities, Inc.
One Chase Manhattan Plaza
New York, New York 10081
Ladies and Gentlemen:
United Stationers Supply Co., an Illinois corporation (the "Company"),
a wholly-owned subsidiary of United Stationers Inc., a Delaware corporation (the
"Guarantor"), proposes to issue and sell to you (the "Initial Purchaser") an
aggregate of $150,000,000 principal amount of its 12 3/4% Senior Subordinated
Notes due 2005 (the "Securities"). The securities will be unconditionally
guaranteed by the Guarantor (the "Guarantee"). The Securities are to be issued
pursuant to an indenture to be dated as of May 3, 1995 (the "Indenture") among
the Company, the Guarantor, and The Bank of New York, as trustee (the
"Trustee"). The Securities and the Indenture are more fully described in the
Offering Memorandum referred to below. Capitalized terms used herein and not
otherwise defined herein have the respective meanings specified in the Offering
Memorandum.
The Securities will be offered and sold to you without being
registered under the Securities Act of 1933, as amended (the "1933 Act"), in
reliance on an exemption therefrom. The Company has prepared a preliminary
offering memorandum, dated April 5, 1995 (such preliminary offering memorandum
being hereinafter referred to as the
<PAGE>
2
"Preliminary Offering Memorandum"), and an offering memorandum, dated April 26,
1995 (such offering memorandum, in the form first furnished to the Initial
Purchaser for use in connection with the offering of the Securities, being
hereinafter referred to as the "Offering Memorandum"), setting forth information
regarding the Company and the Securities. The Company hereby confirms that it
has authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities to such
potential purchasers as specified therein.
The Company understands that you propose to make an offering of the
Securities on the terms set forth in the Offering Memorandum, as soon as you
deem advisable after this Agreement has been executed and delivered only (i) to
persons in the United States whom you reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the 1933 Act, as such rule may be amended from time to time ("Rule 144A"),
in transactions under Rule 144A, (ii) to a limited number of other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
Regulation D of the 1933 Act ("Accredited Investors")) in private sales exempt
from registration under the 1933 Act and/or (iii) to non-U.S. persons outside
the United States to whom offers and sales of the Securities may be made in
reliance upon Regulation S under the 1933 Act.
The holders of the Securities will be entitled to the benefits of a
Registration Rights Agreement, in substantially the form attached hereto as
Exhibit A with such changes as shall be agreed to by the parties hereto (the
"Registration Rights Agreement"), pursuant to which the Company has agreed to
use its best efforts to file within 30 days of the date of original issue of the
Securities a registration statement (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering the Securities
or the Exchange Securities referred to in the Registration Rights Agreement
under the 1933 Act.
Section 1. Representations and Warranties. (a) The Company
------------------------------
represents and warrants to, and agrees with, the Initial Purchaser that:
(i) As of the date of each of the Preliminary Offering Memorandum and
the Offering Memorandum, and at all times subsequent thereto up to the Time
of Delivery, none of the Preliminary Offering Memorandum, the Offering
Memorandum nor any amendment or supplement thereto prepared by the Company
and delivered to the Initial Purchaser for use prior to the Time of
Delivery included or will 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
were made, not misleading; provided, however, that this representation and
-------- -------
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by the Initial Purchaser expressly for use therein.
<PAGE>
3
(ii) The Preliminary Offering Memorandum, the Offering Memorandum
and the amendments or supplements thereto prepared by the Company and
delivered to the Initial Purchaser for use prior to the Time of Delivery,
as of their respective dates, collectively contain all the information
specified in, and meet the requirements of, Rule 144A(d)(4).
(iii) Arthur Andersen LLP, who are reporting upon the audited
financial statements included in the Registration Statement, are
independent public accountants as required by the 1933 Act and the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations").
(iv) This Agreement has been duly authorized, executed and delivered
by each of the Company and the Guarantor.
(v) The consolidated financial statements included in the Offering
Memorandum present fairly the consolidated financial position of each of
the Guarantor and its subsidiaries and Associated Holdings, Inc.
("Associated") and its subsidiaries as of the dates indicated and the
consolidated results of operations and the consolidated cash flows of the
Guarantor and its subsidiaries and Associated and its subsidiaries for the
periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved other than the change in
accounting for inventories to the LIFO method effective January 1, 1995.
The selected financial data included in the Offering Memorandum present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements
included in the Offering Memorandum. The pro forma financial statements
and other pro forma financial information included in the Offering
Memorandum present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to
pro forma financial statements, have been properly compiled on the pro
forma bases described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(vi) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Offering
Memorandum; and the Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect
<PAGE>
4
on the Company, the Guarantor and the Subsidiaries (as defined herein),
considered as one enterprise.
(vii) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with
corporate power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Offering
Memorandum; and the Guarantor is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on the Company, the Guarantor and the Subsidiaries,
considered as one enterprise.
(viii) The Guarantor's only direct subsidiary is the Company. The
Company's only subsidiaries are United Business Computers, Inc. ("UBC"),
United Stationers Hong Kong Limited ("USHK"), United Worldwide Limited
("UW"), CJS/GT Corporation ("CJS") and 4303 Pleasantville Road Associates,
L.P. ("4303" and, together with UBC, USHK, UW and CJS, the "Subsidiaries").
Each Subsidiary is a corporation or limited partnership, as applicable,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority under
such laws to own, lease and operate its properties and conduct its
business; and each Subsidiary is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on the Company, the Guarantor and the Subsidiaries,
considered as one enterprise. All of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable. All of the outstanding shares of
capital stock of the Company are owned by the Guarantor free and clear of
any pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind, except as disclosed in the Preliminary Offering Memorandum and
the Offering Memorandum. Schedule 1(a)(viii) attached hereto sets forth
the Company's ownership of capital stock of each Subsidiary. The Company
owns such capital stock of each such Subsidiary free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance of
any kind, except as disclosed in the Preliminary Offering Memorandum and
the Offering Memorandum or as set forth in Schedule 1(a)(viii) attached
hereto.
(ix) The table in the Offering Memorandum under the caption
"Capitalization," under "Pro Forma at December 31, 1994," sets forth the
pro forma
<PAGE>
5
consolidated capitalization of the Guarantor as of the date indicated
therein, as adjusted to give effect to the consummation of the Mergers.
(x) The Indenture has been duly authorized by the Company and by
the Guarantor, will be substantially in the form heretofore delivered to
you and, when duly executed and delivered by the Company, the Guarantor and
the Trustee, will constitute a valid and binding obligation of the Company
and the Guarantor, enforceable against the Company and the Guarantor in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent conveyances or transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law);
and the Indenture conforms in all material respects to the description
thereof in the Offering Memorandum.
(xi) The Securities have been duly authorized by the Company, and
the Guarantee has been duly authorized by the Guarantor. When executed,
authenticated, issued and delivered by the Company in the manner provided
for in the Indenture and sold and paid for as provided in this Agreement,
the Securities will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except as enforcement thereof may
be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent conveyances or transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and the Guarantee, when the Indenture has
been duly executed and delivered by the Guarantor, will constitute a valid
and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, except as enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent conveyances or transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law); and each of the Securities and the Guarantee conforms in all
material respects to the descriptions thereof in the Offering Memorandum.
(xii) The Registration Rights Agreement has been duly authorized by
the Company and the Guarantor, will be substantially in the form heretofore
delivered to you and, when duly executed and delivered by the Company, the
Guarantor and the Initial Purchaser, will constitute a valid and binding
obligation of the Company and
<PAGE>
6
the Guarantor, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent conveyances or
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law); and the
Registration Rights Agreement conforms in all material respects to the
description thereof in the Offering Memorandum.
(xiii) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and non-
assessable; all of the outstanding shares of capital stock of the Guarantor
have been duly authorized and validly issued and are fully paid and non-
assessable; no holder thereof is or will be subject to personal liability
by reason of being such a holder; and none of the outstanding shares of
capital stock of the Guarantor was issued in violation of the preemptive
rights of any stockholder of the Guarantor.
(xiv) Since the respective dates as of which information is given in
the Offering Memorandum, except as otherwise stated therein or contemplated
thereby, there has not been (A) any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company, the Guarantor and the Subsidiaries, considered as
one enterprise, (B) any transaction entered into by the Company, the
Guarantor or any Subsidiary, other than in the ordinary course of business,
that is material to the Company, the Guarantor and the Subsidiaries,
considered as one enterprise, or (C) any dividend or distribution of any
kind declared, paid or made by the Company or the Guarantor on their
capital stock except for dividends declared on the Guarantor's Series A, B
and C Preferred Stock effective April 30, 1995.
(xv) None of the Company, the Guarantor nor any Subsidiary is in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it is a
party or by which it may be bound or to which any of its properties may be
subject, except for such defaults that are disclosed in the Offering
Memorandum or that would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company, the Guarantor and the Subsidiaries, considered as
one enterprise. The execution and delivery of the Indenture by the Company
and the Guarantor, the execution and delivery of this Agreement by the
Company and the Guarantor, the issuance and delivery by the Company of the
Securities, the consummation by each of the Company, the Guarantor and each
Subsidiary of the transactions contemplated in this Agreement and in the
Offering Memorandum, and the compliance by each of the
<PAGE>
7
Company and the Guarantor with the terms of the Indenture have been duly
authorized by all necessary corporate action on the part of each of the
Company and the Guarantor and do not and will not result in any violation
of the charter or by-laws of the Company, the Guarantor or any Subsidiary,
and do not and will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company, the Guarantor or any Subsidiary under (A) any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company, the Guarantor or any
Subsidiary is a party or by which it may be bound or to which any of its
properties may be subject (except for such violations, conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company, the
Guarantor and the Subsidiaries, considered as one enterprise) or (B) any
existing applicable law, rule, regulation (other than the securities or
blue sky laws of any states), judgment, order or decree of any government,
governmental authority or court, domestic or foreign, having jurisdiction
over the Company, the Guarantor or any Subsidiary or any of their
respective properties (except for such violations, conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company, the Guarantor and
the Subsidiaries, considered as one enterprise).
(xvi) No authorization, approval, consent, order, registration or
qualification of or with any government, governmental instrumentality or
court, domestic or foreign (other than under the securities or blue sky
laws of the various states), except such authorizations, approvals,
consents, orders, registrations or qualifications as have already been
obtained, is required for the consummation by the Company, the Guarantor or
any Subsidiary of the transactions contemplated in this Agreement and in
the Offering Memorandum, and the valid authorization, issuance, sale and
delivery of the Securities by the Company, or for the execution, delivery
or performance of the Indenture by the Company and the Guarantor.
(xvii) Except as disclosed in the Offering Memorandum, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Guarantor or any Subsidiary that is required to be disclosed in the
Offering Memorandum or that could reasonably be expected to result in any
material adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company, the
Guarantor and the Subsidiaries, considered as one enterprise, or that could
reasonably be expected to materially and adversely affect the properties or
assets of the
<PAGE>
8
Company, the Guarantor and the Subsidiaries, considered as one enterprise,
or that could reasonably be expected to adversely affect the consummation
of the transactions contemplated by this Agreement, or that seeks to
enjoin, invalidate or obtain any award or damages in respect of, the
Acquisition; the aggregate of all pending legal or governmental proceedings
that are not described in the Offering Memorandum to which the Company, the
Guarantor or any Subsidiary is a party or which affect any of their
respective properties, including ordinary routine litigation incidental to
the business of the Company, the Guarantor or any Subsidiary, would not
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company, the
Guarantor and the Subsidiaries, considered as one enterprise.
(xviii) The Company, the Guarantor and the Subsidiaries each have
good and marketable title to all properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as (A) are described in the
Offering Memorandum or (B) are neither material in amount nor materially
significant in relation to the business of the Company, the Guarantor and
the Subsidiaries, considered as one enterprise; all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company, the Guarantor
and the Subsidiaries hold properties described in the Offering Memorandum,
are in full force and effect, and none of the Company, the Guarantor nor
any Subsidiary has any notice of any material claim of any sort that has
been asserted by anyone adverse to the rights of the Company, the Guarantor
or any Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of such corporation to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xix) The Company, the Guarantor and the Subsidiaries each owns,
possesses or has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as presently conducted, and none of
the Company, the Guarantor nor any Subsidiary has received any notice of
proceedings relating to revocation or modification of any such licenses,
permits, certificates, consents, orders, approvals or authorizations.
(xx) The Company, the Guarantor and the Subsidiaries each owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
licenses, trademarks, service marks and trade names necessary to carry on
its business as presently conducted, and none of the Company, the Guarantor
nor any Subsidiary has received any notice of infringement of or conflict
with asserted rights of others with respect to any patents, patent
licenses, trademarks, service marks or trade names that
<PAGE>
9
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, could materially adversely affect the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company, the Guarantor and the Subsidiaries, considered as one enterprise.
(xxi) To the best knowledge of the Company, no labor problem exists
with its employees or with employees of the Subsidiaries or is imminent
that could reasonably be expected to adversely affect the Company, the
Guarantor and the Subsidiaries, considered as one enterprise, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or the Subsidiaries' principal suppliers,
contractors or customers that could reasonably be expected to materially
adversely affect the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company, the Guarantor and the
Subsidiaries, considered as one enterprise.
(xxii) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in stabilization or manipulation of the price of the
Securities.
(xxiii) All United States federal income tax returns of the Company,
the Guarantor and the Subsidiaries required by law to be filed have been
filed and all taxes shown by such returns or otherwise assessed, which are
due and payable, have been paid, except assessments against which appeals
have been or will be promptly taken and as to which adequate reserves have
been provided. The United States federal income tax returns of the Company
through the fiscal year ended August 31, 1990 and of Stationers
Distributing Company, Inc. through December 31, 1991 have been settled and
no assessment in connection therewith has been made against the Company.
The Company, the Guarantor and the Subsidiaries each has filed all other
tax returns that are required to have been filed by it pursuant to
applicable foreign, state, local or other law except insofar as the failure
to file such returns would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company, the Guarantor and the Subsidiaries, considered as
one enterprise, and has paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Company, the Guarantor and the
Subsidiaries, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company in respect of any income
and corporation tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional income
tax for any years not finally determined, except to the extent of any
inadequacy that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company, the Guarantor and the Subsidiaries, considered as one
enterprise.
<PAGE>
10
(xxiv) The Company, the Guarantor and the Subsidiaries each maintains
a system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxv) No event of default exists under any material contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument constituting Senior Indebtedness (as defined in the Indenture).
(xxvi) The Company is, and immediately after the Closing Time will
be, Solvent. As used herein, the term "Solvent" means, with respect to the
Company on a particular date, that on such date (A) the fair market value
of the assets of the Company is greater than the total amount of
liabilities (including contingent liabilities) of the Company, (B) the
present fair salable value of the assets of the Company is greater than the
amount that will be required to pay the probable liabilities of the Company
on its debts as they become absolute and matured, (C) the Company is able
to pay its debts and other liabilities, including contingent obligations,
as they mature and (D) the Company does not have an unreasonably small
capital.
(xxvii) Except as would not individually or in the aggregate have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company, the
Guarantor and the Subsidiaries, considered as one enterprise, (A) each of
the Company, the Guarantor and each Subsidiary is in material compliance
with all applicable Environmental Laws, (B) each of the Company, the
Guarantor and each Subsidiary has all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or, to the knowledge of
the Company, threatened Environmental Claims against the Company, the
Guarantor or any Subsidiary, and (D) there are no conditions with respect
to any property or operations of the Company, the Guarantor or any
Subsidiary that could reasonably be expected to form the basis of an
Environmental Claim against the Company, the Guarantor or any Subsidiary.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any applicable United States
(or other applicable jurisdiction's) federal, state, provincial, local or
municipal statute, law, rule, regulation, ordinance, code, legally binding
policy or rule of common law and
<PAGE>
11
any applicable judicial or administrative interpretation thereof including
any applicable and binding judicial or administrative order, consent decree
or judgment, relating to the environment, health, safety or any hazardous
chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority. "Environmental Claims" means
any and all administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
(xxviii) Assuming the accuracy of your representations contained in
Section 2(d) hereof, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchaser under, or in
connection with the initial resale of such Securities by the Initial
Purchaser in accordance with, this Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(xxix) None of the Company or any affiliate (as such term is defined
in Rule 501(b) of Regulation D under the 1933 Act) of the Company, or any
person acting on behalf thereof (other than you, as to whom the Company
makes no representation), has engaged in any directed selling efforts (as
such term is defined in Regulation S ("Regulation S") under the 1933 Act)
with respect to any Securities offered and sold in reliance on Rule 903 of
Regulation S, and the Company and such affiliates, and such other persons
acting on behalf thereof (other than you and any initial purchasers of the
Securities from you), have complied with the offering restrictions
requirement of Regulation S with respect to such Securities if any are
imposed prior to the Time of Delivery.
(xxx) The Company has complied and will comply with all the
provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
statutes, and all regulations promulgated thereunder relating to issuers
doing business in Cuba.
(xxi) The Company and each Subsidiary maintain reasonably adequate
insurance covering their respective properties, operations, personnel and
business.
(xxxii) Neither the Company nor the Guarantor is an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(b) Any certificate signed by any officer of the Company, the
Guarantor or any Subsidiary and delivered to the Initial Purchaser or to counsel
for the Initial Purchaser
<PAGE>
12
shall be deemed a representation and warranty by the Company to the Initial
Purchaser as to the matters covered thereby.
Section 2. Sale and Delivery to the Initial Purchaser; Closing. (a)
---------------------------------------------------
On the basis of the representations and warranties herein contained and subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from
the Company, at a purchase price of 97% of the principal amount thereof, plus
accrued interest, if any, from May 3, 1995 to the Time of Delivery hereunder,
$150,000,000 aggregate principal amount of Securities.
(b) Securities to be purchased by the Initial Purchaser hereunder, in
such authorized denominations and registered in such names as the Initial
Purchaser may request upon at least forty-eight hours prior notice to the
Company, shall be delivered by or on behalf of the Company to you for the
account of the Initial Purchaser, against payment by the Initial Purchaser or on
its behalf of the purchase price therefor by wire transfer to the Company's
account at The Chase Manhattan Bank (National Association), all at the office of
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, at 10:00
a.m., New York time, on May 3, 1995 or at such other time and date as the
Initial Purchaser and the Company may agree upon in writing, such time and date
being herein called the "Time of Delivery." Such certificates will be made
available for checking and packaging at least twenty-four hours prior to the
Time of Delivery.
(c) Upon the authorization by the Initial Purchaser of the release of
the Securities, the Initial Purchaser proposes to offer the Securities for sale
only upon the terms and conditions set forth in the Offering Memorandum.
(d) The Initial Purchaser represents and warrants that it is an
Accredited Investor. The Initial Purchaser agrees with the Company that it (a)
will not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) and (b) will offer and sell the
Securities only upon the terms and conditions set forth in the Offering
Memorandum. The Initial Purchaser represents and warrants to and agrees with
the Company that the Securities have been and will be offered for sale and will
be sold by the Initial Purchaser solely to (i) persons reasonably believed by it
to be "qualified institutional buyers" within the meaning of Rule 144A under the
Act and/or (ii) a limited number of persons who are institutional "accredited
investors" within the meaning of Rule 501(a) (1), (2), (3) or (7) under the Act,
and that the Initial Purchaser has not and will not offer the Securities for
sale by means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Act. The Initial Purchaser agrees that, prior
to or simultaneously with the confirmation of sale by the Initial Purchaser to
any purchaser of any of the Securities purchased by it from the Company pursuant
hereto, it shall furnish to that purchaser a copy of the Offering
<PAGE>
13
Memorandum (and any amendment thereof or supplement thereto that the Company
shall have furnished to you prior to the date of such confirmation of sale).
Section 3. Certain Covenants of the Company. The Company covenants
--------------------------------
with the Initial Purchaser as follows:
(a) to furnish the Initial Purchaser with copies of the Offering
Memorandum in such quantities as the Initial Purchaser may from time to time
reasonably request, and if at any time prior to the completion of the sale of
the Securities by the Initial Purchaser to third parties any event shall have
occurred as a result of which the Offering Memorandum as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made when such Offering
Memorandum is delivered, not misleading, to promptly inform the Initial
Purchaser and prepare and furnish without charge to the Initial Purchaser and to
any dealer in securities as many copies as the Initial Purchaser may from time
to time reasonably request of an amended Offering Memorandum or a supplement to
the Offering Memorandum which will correct such statement or omission or effect
such compliance and to which the Initial Purchaser shall not have reasonably
objected after being furnished copies thereof;
(b) before amending or supplementing either the Preliminary Offering
Memorandum or the Offering Memorandum, to furnish to you a copy of each such
proposed amendment and not to use any such proposed amendment or supplement to
which you reasonably object.
(c) promptly from time to time to take such action as the Initial
Purchaser may reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Initial Purchaser may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the placement of the Securities, provided that in connection therewith
--------
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(d) none of the Company or any of its affiliates (as such term is
defined in Rule 501(b) of Regulation D under the 1933 Act) will offer, sell or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the 1933 Act) which could be integrated with the sale of the
Securities in a manner that would require the registration of any of the
Securities under the 1933 Act;
(e) during the period from the Time of Delivery to the earlier of (i)
three years after the Time of Delivery or (ii) the date of effectiveness of the
Registration Statement, the Company will not, and will not permit any of its
affiliates (as such term is
<PAGE>
14
defined in Rule 144 under the 1933 Act) to, resell any of the Securities that
have been reacquired thereby, except for Securities purchased by the Company or
any of its affiliates and resold in a transaction registered under the 1933 Act;
(f) the Company will, so long as any Securities issued by it are
outstanding, file on a timely basis with the Commission, to the extent such
filings are accepted by the Commission and whether or not the Company has a
class of securities registered under the 1934 Act, the annual reports, quarterly
reports and other documents that the Company would be required to file if it
were subject to Section 13 or Section 15 of the 1934 Act. For a period of five
years after the Time of Delivery, the Company will furnish to you copies of all
such reports and information, together with such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities issued by it;
(g) each Security will bear the following legend until, in the opinion
of counsel for the Company, such legend shall no longer be necessary or
advisable because such Security is no longer subject to the restrictions on
transfer described therein:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER
THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE ISSUER OF THIS SECURITY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
<PAGE>
15
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT
OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT
TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE
COMPANY AND THE TRUSTEE AND (ii) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE;
(h) except following the effectiveness of the Registration Statement,
none of the Company or any affiliate (as such term is defined in Rule 501(b) of
Regulation D under the 1933 Act) of the Company, or any person acting on behalf
thereof (other than you), will engage in any directed selling efforts (as such
term is defined under Regulation S) with respect to any Security, and each of
the Company and such affiliates, and such other persons acting on behalf
thereof, will comply with the offering restrictions requirement of Regulation S,
if any have been imposed;
(i) not to solicit any offer to buy or offer or sell any Securities by
means of any form of general solicitation or general advertising (as those terms
are used in Regulation D under the 1933 Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the 1933 Act;
(j) for a period of five years following the date hereof, to furnish
promptly to the Initial Purchaser copies of each report provided by the Company
to the holders of the Securities;
<PAGE>
16
(k) to comply with all of its agreements set forth in the Registration
Rights Agreement and all of its agreements set forth in the representation
letter of the Company to DTC relating to the approval of the Securities by DTC
for book-entry transfer;
(l) to use its reasonable best efforts to effect the inclusion of the
Securities in PORTAL;
(m) until completion of the Exchange Offer, to furnish at its expense,
upon the request of holders of Securities and prospective purchasers of
Securities, information satisfying the requirement of Rule 144A(d)(4);
(n) The Company has complied and will comply with all the provisions
of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes, and
all regulations promulgated thereunder relating to issuers doing business in
Cuba.
(o) neither it nor the Guarantor will be or become, at any time prior
to the expiration of three years after the Time of Delivery, an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under the Investment Company Act;
(p) to apply the net proceeds from the sale of the Securities for the
purposes set forth in the Offering Memorandum; and
(q) to supply to the Initial Purchaser a solvency letter from
Valuation Research Corp. to the effect of Section 1(a)(xxvi) hereof in form and
substance reasonably satisfactory to the Initial Purchaser.
Section 4. Payment of Expenses. The Company and Guarantor will
-------------------
jointly and severally pay and bear all costs and expenses incident to the
performance of their obligations under this Agreement, including (a) the
preparation and printing of the Preliminary Offering Memorandum and the Offering
Memorandum and any amendments or supplements thereto, and the cost of furnishing
copies thereof to the Initial Purchaser, (b) the preparation, printing and
distribution of this Agreement, the Indenture, the Registration Rights
Agreement, the Securities, the Blue Sky Survey and the Legal Investment Survey,
(c) the delivery of the Securities to the Initial Purchaser, (d) the fees and
disbursements of the Company's counsel and accountants, (e) the qualification of
the Securities under the applicable securities laws in accordance with Section
3(b) and any filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and disbursements of
counsel for the Initial Purchaser in connection therewith and in connection with
the Blue Sky Survey and the Legal Investment Survey, (f) any fees charged by
rating agencies for rating the Securities, (g) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee, in
connection with the
<PAGE>
17
Indenture and the Securities, (h) all fees and expenses in connection with the
registration of the Securities in accordance with the Registration Rights
Agreement, (i) all fees and expenses in connection with the designation of the
Securities as PORTAL securities, (j) fees and disbursements of Valuation
Research Corp. in connection with the solvency letter required by Section 5(g),
and (k) all other costs and expenses incident to the performance of their
obligations hereunder which are not otherwise specifically provided for in this
Section.
If this Agreement is terminated by the Initial Purchaser in accordance
with the provisions of Section 5 or 9(a)(i), the Company shall reimburse the
Initial Purchaser for all its out-of-pocket expenses, including the fees and
disbursements of counsel for the Initial Purchaser.
Section 5. Conditions of Initial Purchaser's Obligations. The
---------------------------------------------
obligations of the Initial Purchaser to purchase and pay for the Securities that
it has agreed to purchase hereunder are subject to the accuracy of the
representations and warranties of the Company contained herein or in
certificates of any officer of the Company, the Guarantor or any Subsidiary
delivered pursuant to the provisions hereof, to the performance by the Company
and the Guarantor of their respective obligations hereunder, and to the
following further conditions:
(a) At the Closing Time, you shall have received a signed opinion of
Weil, Gotshal & Manges, counsel for the Company and the Guarantor, dated as
of the Closing Time, in form and substance satisfactory to counsel for the
Initial Purchaser, to the effect that:
(i) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted.
(ii) All of the outstanding shares of the Guarantor's capital
stock are duly authorized, validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof, and have not been issued in violation of any preemptive
rights of any stockholder of the Guarantor.
(iii) The execution, delivery and performance of the Indenture,
the Registration Rights Agreement and this Agreement by the Guarantor
have been duly authorized by all necessary corporate action on the
part of the Guarantor. Each of the Indenture, the Registration Rights
Agreement and this Agreement has been duly and validly executed and
delivered by the Guarantor and (assuming the due authorization,
execution and delivery thereof by each of the other parties thereto,
including the Company) constitutes the legal, valid and
<PAGE>
18
binding obligation of the Guarantor and the Company, as applicable,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors rights
and remedies generally, and subject as to enforceability to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except
that rights to indemnification and contribution under this Agreement
and the Registration Rights Agreement may be limited by federal or
state securities laws or public policy relating thereto and subject to
the qualification that such counsel expresses no opinion as to the
effect on the Indenture or this Agreement of the laws of any
jurisdiction other than federal law and the laws of the States of New
York and Texas wherein any purchaser of the Securities may be located
or wherein enforcement of the Indenture or the Purchase Agreement may
be sought which limits the rate of interest legally chargeable or
collectible.
(iv) Assuming the due authorization and execution of the
Securities by the Company, the Securities, when duly authenticated by
the Trustee in accordance with the terms of the Indenture and duly
delivered against receipt of payment therefor in accordance with the
terms of this Agreement, will constitute the legal, valid and binding
obligation of the Company, enforceable against it in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)
and subject to the qualification that such counsel expresses no
opinion as to the effect on the Securities of the laws of any
jurisdiction other than federal law and the laws of the States of New
York and Texas wherein any purchaser of the Securities may be located
or wherein enforcement may be sought which limits the rate of interest
legally chargeable or collectible.
(v) The execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement by the Company and the
Guarantor, the issuance and delivery of the Securities by the Company
and the consummation by the Company and the Guarantor of the
transactions contemplated thereby and compliance by the Company and
the Guarantor with any of the provisions thereof will not (a) conflict
with, constitute a default under or violate (i) any of the terms,
conditions or provisions of the certificate of incorporation or by-
laws of the Guarantor, United Business Computers, Inc. or the
Subsidiaries,
<PAGE>
19
(ii) any of the terms, conditions or provisions of any document,
agreement or other instrument to which the Guarantor, the Company or
any Subsidiary is a party or by which it is bound of which we are
aware (except for such conflicts, defaults or violations that would
not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company, the Guarantor and the Subsidiaries, considered as one
enterprise), (iii) any New York, Delaware corporate or federal law or
regulation (other than federal and state securities or blue sky laws,
as to which such counsel expresses no opinion) or (iv) any judgment,
writ, injunction, decree, order or ruling of any court or government
authority binding on the Company, the Guarantor or any Subsidiary of
which such counsel is aware or (b) result in the creation of any lien
on any of the material assets or properties of the Company, the
Guarantor or any Subsidiary pursuant to any material agreement to
which the Company, the Guarantor or any Subsidiary is a party of which
we are aware.
(vi) The Indenture, the Securities, the Registration Rights
Agreement, the Credit Agreement, dated as of March 30, 1995, among the
Company, the Guarantor, The Chase Manhattan Bank (National
Association), and the lenders party thereto, and Article Fourth of the
Restated Certificate of Incorporation of the Guarantor, as amended to
the date hereof, conform in all material respects to the descriptions
thereof in the Offering Memorandum.
(vii) No consent, approval, waiver, license or authorization or
other action by or filing with any New York, Delaware corporate or
federal governmental authority is required in connection with the
execution and delivery by the Company of the Securities or for the
execution, delivery or performance of the Indenture by the Company and
the Guarantor, except for federal and state securities or blue sky
laws, as to which such counsel expresses no opinion in this paragraph
(vii).
(viii) Except as disclosed in the Offering Memorandum, to our
knowledge, there is no litigation, proceeding or governmental
investigation pending or overtly threatened against the Company or the
Guarantor or any of the Subsidiaries that relates to any of the
transactions contemplated by the Agreement, the Indenture, the
Securities and the Registration Rights Agreement or which, if
adversely determined, would have a material adverse effect on the
business, assets or financial condition of the Guarantor, the Company
and the Subsidiaries taken as a whole or on the ability of either the
Guarantor or the Company to perform its respective obligations under
the Agreement, the Indenture, the Securities and the Registration
Rights
<PAGE>
20
Agreement to which it is a party or to consummate the transactions
contemplated by the Offering Memorandum.
(ix) Such counsel has participated in conferences with officers
and other representatives of the Guarantor and the Company and
representatives of the independent public accountants for the
Guarantor and the Company in connection with the preparation of the
Offering Memorandum and although such counsel has not independently
verified and is not passing upon and assumes no responsibility for the
accuracy, completeness or fairness of the statements contained in the
Offering Memorandum (except to the extent specified in the foregoing
opinion) no facts have come to such counsel's attention which lead
such counsel to believe that the Offering Memorandum, at any time from
the date thereof through the Time of Delivery, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel expresses
no view with respect to the financial statements and related notes,
the projections and the other financial, statistical and accounting
data included in or appended as exhibits to the Offering Memorandum).
Such opinion shall be to such further effect with respect to other legal
matters relating to this Agreement and the sale of the Securities pursuant
to this Agreement as counsel for the Initial Purchaser may reasonably
request no less than two business days prior to the Time of Delivery. Such
counsel may also state that, insofar as such opinion involves factual
matters, such counsel has relied, to the extent such counsel deems proper,
upon certificates of officers of the Company, the Guarantor and the
Subsidiaries and certificates of public officials; provided that copies of
such certificates have been delivered to the Initial Purchaser.
(b) At the Closing Time, you shall have received a signed opinion of
Altheimer & Gray, local counsel for the Company and the Guarantor, dated as
of the Closing Time, in form and substance satisfactory to counsel for the
Initial Purchaser, to the effect that:
(i) The Company is a corporation organized, validly existing, and
in good standing under the laws of the State of Illinois with the
corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Offering Memorandum.
(ii) The Company is qualified to transact business as a foreign
corporation in good standing in the states listed on Schedule 1
thereto.
<PAGE>
21
(iii) All of the outstanding shares of stock of the Company are
held by the Guarantor and have been duly authorized, validly issued,
fully paid and non-assessable.
(iv) Each of the Indenture, the Securities, the Registration
Rights Agreement and this Agreement have been duly authorized and
executed by the Company.
(v) No authorization, approval, consent or license of any
government or government instrumentality (other than under any
securities or blue sky laws) is required for the valid authorization,
issuance, sale and delivery of the Securities.
(vi) The execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement by the Company, the issuance and
delivery of the Securities, the consummation by the Company of the
transactions contemplated thereby in the Offering Memorandum and
compliance by the Company with the terms of this Agreement, the
Indenture and the Registration Rights Agreement do not and will not
result in any violation of the charter or by-laws of the Company.
(c) At the Closing Time, you shall have received the favorable
opinion of Shearman & Sterling, counsel for the Initial Purchaser, dated as
of the Closing Time, to the effect that the opinion delivered pursuant to
Sections 5(a) appears on its face to be appropriately responsive to the
requirements of this Agreement except, specifying the same, to the extent
waived by you, and with respect to the incorporation and legal existence of
the Company, the incorporation and legal existence of the Guarantor, the
Securities, this Agreement, the Indenture, the Registration Rights
Agreement, the Preliminary Offering Memorandum, the Offering Memorandum and
such other related matters as you may require. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to you. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company, the
Guarantor and the Subsidiaries and certificates of public officials;
provided that such certificates have been delivered to the Initial
Purchaser.
(d) At the Closing Time, (i) the Offering Memorandum, as it may then
be amended or supplemented, shall not contain 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 not misleading,
(ii) there shall not have been, since the respective
<PAGE>
22
dates as of which information is given in the Offering Memorandum, any
material adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company, the
Guarantor and the Subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (iii) no action, suit or
proceeding shall be pending or, to the knowledge of the Company,
threatened against the Company, the Guarantor or any Subsidiary that could
reasonably be expected to result in any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company, the Guarantor and the Subsidiaries, considered as
one enterprise other than as set forth in the Offering Memorandum and no
proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company, the Guarantor or any Subsidiary before or
by any government, governmental instrumentality or court, domestic or
foreign, that could reasonably be expected to result in any material
adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company, the Guarantor and
the Subsidiaries, considered as one enterprise, other than as set forth in
the Offering Memorandum, (iv) the Company and the Guarantor shall have
complied with all agreements and satisfied all conditions on their
respective parts to be performed or satisfied at or prior to the Closing
Time, (v) no event of default shall exist under any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
constituting Senior Indebtedness (as defined in the Indenture) and (vi) the
other representations and warranties of the Company set forth in Section
1(a) shall be accurate as though expressly made at and as of the Closing
Time. At the Closing Time, you shall have received a certificate of the
President or a Vice President, and the Chief Financial Officer, Treasurer
or Controller, of the Company and the Guarantor, dated as of the Closing
Time, to such effect.
(e) You shall have received on each of the date hereof and the Closing
Date a letter, dated the date hereof or the Closing Date, as the case may
be, in form and substance satisfactory to you, from Arthur Andersen LLP,
the Company's independent public accountants, containing statements and
information of the type ordinarily included in accountants "comfort
letters" to underwriters with respect to the financial statements and
certain financial information (other than pro forma financial information)
contained in the Offering Memorandum;
(f) You shall have received on each of the date hereof and the Closing
Date a letter, dated the date hereof or the Closing Date, as the case may
be, in form and substance satisfactory to you, from Ernst & Young LLP, the
Company's independent public accountants, containing statements and
information of the type ordinarily included in accountants "comfort
letters" to underwriters with respect to the pro forma financial
information contained in the Offering Memorandum;
<PAGE>
23
(g) You shall have received a solvency letter from Valuation Research
Corp. to the effect of Section 1(a)(xxvi) hereof in form and substance
reasonably satisfactory to you.
(h) at the Time of Delivery, the Registration Rights Agreement shall
have been duly executed and delivered by the Company and the Guarantor.
(i) At the Closing Time, counsel for the Initial Purchaser shall have
been furnished with all such documents, certificates and opinions as they
may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Securities as contemplated in this Agreement and
the matters referred to in Section 5(d) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company, the performance of any of the covenants of the
Company, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company at or prior to the Closing Time in
connection with the authorization, issuance and sale of the Securities as
contemplated in this Agreement shall be reasonably satisfactory in form and
substance to the Initial Purchaser and to counsel for the Initial
Purchaser.
Section 6. Indemnification. (a) The Company and the Guarantor
---------------
each agree jointly and severally to indemnify and hold harmless the Initial
Purchaser and each person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon an untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company or the Guarantor; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any
<PAGE>
24
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum (or any amendment or supplement thereto); and provided,
--------
further, that the Company will not be liable to the Initial Purchaser or any
- -------
person controlling the Initial Purchaser with respect to any such untrue
statement or omission made in any preliminary prospectus that is corrected in
the Prospectus (or any amendment or supplement thereto) if the person asserting
any such loss, claim, damage or liability purchased Securities from the Initial
Purchaser in reliance upon a preliminary prospectus but was not sent or given a
copy of the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as so amended or supplemented) is required by
the 1933 Act, unless such failure to deliver the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 3 of
this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company and the Guarantor, and each person, if any, who controls the Company or
the Guarantor within the meaning of Section 15 of the 1933 Act, against any and
all loss, liability, claim, damage and expense described in the indemnity
agreement in Section (a), as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in any
preliminary offering memorandum or the Offering Memorandum (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchaser expressly for use in such
preliminary offering memorandum or the Offering Memorandum (or any amendment or
supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
Section 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnity provided for in Section
6 is for any
<PAGE>
25
reason held to be unenforceable by the indemnified parties although applicable
in accordance with its terms, the Company and the Guarantor on the one hand and
the Initial Purchaser on the other shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity incurred by the Company and the Initial Purchaser, as incurred, in
such proportions that the Initial Purchaser is responsible for that portion
represented by the percentage that the Initial Purchaser's discount appearing on
the cover page of the Offering Memorandum bears to the price to investors
appearing thereon, and the Company and the Guarantor are responsible for the
balance; provided, however, that no person guilty of fraudulent
-------- -------
misrepresentation (within the meaning of Section 1(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Initial Purchaser within the meaning of Section 5 of the 1933 Act
shall have the same rights to contribution as the Initial Purchaser, and each
person, if any, who controls the Company or the Guarantor within the meaning of
Section 5 of the 1933 Act shall have the same rights to contribution as the
Company and the Guarantor.
Section 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
- --------
statements of the Company, the Guarantor, the Initial Purchaser, or their
respective officers set forth in or made pursuant to this Agreement will remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Company, the Guarantor, the Initial Purchaser or any person
who controls the Company, the Guarantor or the Initial Purchaser within the
meaning of Section 5 of the 1933 Act and will survive delivery of and payment
for the Securities.
Section 9. Termination of Agreement. (a) The Initial Purchaser may
------------------------
terminate this Agreement, by notice to the Company, at any time at or prior to
the Closing Time (i) if there has been, since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition (financial or otherwise), earnings, business affairs or business
prospects of the Company, the Guarantor and the Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in the Initial Purchaser's judgment, impracticable
to market the Securities or enforce contracts for the sale of the Securities or
(iii) if trading in any securities of the Company or the Guarantor has been
suspended by the Commission or the National Association of Securities Dealers,
Inc., or if trading generally on either the American Stock Exchange or the New
York Stock Exchange or in the over-the-counter market has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by such exchange or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority or (iv) if a banking moratorium has been declared by
either federal, New York or Illinois authorities.
<PAGE>
26
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 6, 7 and 8 shall remain in effect.
Section 10. Notices. All statements, requests, notices, and
-------
agreements hereunder shall be in writing, and if to the Initial Purchaser shall
be delivered or sent by mail, telex or facsimile transmission to Chase
Securities, Inc., at One Chase Manhattan Plaza, New York, New York 10081,
Attention: Syndicate Desk; if to the Company or the Guarantor shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company and the Guarantor set forth in the Offering Memorandum, Attention:
Secretary.
Section 11. Parties. This Agreement is made solely for the benefit
-------
of the Initial Purchaser, the Company, the Guarantor and, to the extent
expressed, any person who controls the Company, the Guarantor or the Initial
Purchaser within the meaning of Section 15 of the 1933 Act, and their respective
executors, administrators, successors and assigns and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from the Initial Purchaser of the Securities.
Section 12. Governing Law and Time. This Agreement shall be governed
----------------------
by the laws of the State of New York. Specified times of the day refer to New
York City time.
Section 13. Counterparts. This Agreement may be executed in one or
------------
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
<PAGE>
27
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
the Initial Purchaser, this instrument will become a binding agreement among the
Company, the Guarantor and the Initial Purchaser in accordance with its terms.
Very truly yours,
UNITED STATIONERS SUPPLY CO.
By:
-------------------------------
Name:
Title:
UNITED STATIONERS INC.
By:
-------------------------------
Name:
Title:
Accepted as of the date hereof:
CHASE SECURITIES, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
Schedule 1(a)(viii)
The Company owns all of the outstanding capital stock of each of USHK,
UWL and CJS. The Company owns 55 shares of UBC common stock directly of record,
as well as 22 shares of UBC common stock subject to the right of T.J. Crayne,
the other holder of UBC common stock, to receive such shares in the event that
UBC meets certain performance criteria. As of April 26, 1995, 122 shares of UBC
common stock were outstanding. CJS owns an 83% interest in 4303.
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
----------------------------------------------------------------------
Registration Rights Agreement
Dated as of ____________, 1995
among
United Stationers Inc.,
United Stationers Supply Co.
and
Chase Securities, Inc.
----------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into May 3, 1995 among UNITED STATIONERS SUPPLY CO., an Illinois corporation
(the "Company"), UNITED STATIONERS INC. ("United"), a Delaware corporation, and
CHASE SECURITIES, INC. (the "Initial Purchaser").
This Agreement is made in connection with the Purchase Agreement dated
April 26, 1995 among the Company, United and the Initial Purchaser (the
"Purchase Agreement"), which provides for the sale by the Company to the Initial
Purchaser of an aggregate of $150,000,000 principal amount of the Company's
12 3/4% Senior Subordinated Notes due 2005 (the "Securities"). In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide to the Initial Purchaser and its direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time.
"Closing Date" shall mean the Closing Date as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble and also
-------
includes the Company's successors.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company; provided, however, that such
-------- -------
depositary must have an address in the Borough of Manhattan, in the City of
New York.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case
<PAGE>
2
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchange Securities" shall mean ___% Senior Subordinated Notes due
-------------------
2005 issued by the Company under the Indenture containing terms identical
to the Securities (except that (i) interest thereon shall accrue from the
last date on which interest was paid on the Securities or, if no such
interest has been paid, from the date of their original issue, (ii) the
transfer restrictions thereon shall be eliminated and (iii) certain
provisions relating to an increase in the stated rate of interest thereon
shall be eliminated), to be offered to Holders of Securities in exchange
for Securities pursuant to the Exchange Offer.
"Holders" shall mean the Initial Purchaser, for so long as it owns any
-------
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture.
"Indenture" shall mean the Indenture relating to the Securities dated
---------
as of April ___, 1995 between the Company, United and The Bank of New York,
as trustee, as the same may be amended from time to time in accordance with
the terms thereof.
"Initial Purchaser" shall have the meaning set forth in the preamble.
-----------------
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Securities; provided
--------
that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Company shall be disregarded in determining whether such
consent or approval was given by the Holders of such required percentage or
amount.
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
------------------
"Registrable Securities" shall mean the Securities; provided, however,
---------------------- -------- -------
that Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to such Securities shall have been
declared effective under the 1933 Act
<PAGE>
3
and such Securities shall have been disposed of pursuant to such
Registration Statement, (ii) such Securities shall be entitled to be sold
to the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the 1933 Act, (iii) such Securities shall
have ceased to be outstanding or (iv) such Securities have been exchanged
for Exchange Securities upon consummation of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company and United with this Agreement,
including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. ("NASD") registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws and compliance with the rules of the
NASD (including reasonable fees and disbursements of one counsel for any
underwriters or Holders in connection with blue sky qualification of any of
the Exchange Securities or Registrable Securities), (iii) all printers'
fees and expenses with respect to word processing, printing and
distributing any Registration Statement, any Prospectus and any amendments
or supplements thereto, (iv) all rating agency fees, (v) all fees and
disbursements relating to the qualification of the Indenture under
applicable securities laws; (vi) the fees and disbursements of the Trustee
and its counsel and any escrow agent or custodian; (vii) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, (viii) the
fees and disbursements of counsel for the Company and, in the case of a
Shelf Registration statement required to be filed under Section 2(b)(i),
(ii) or (iii), the reasonable fees and disbursements of one counsel for the
Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Initial Purchaser); (ix) the fees and
disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, and (x) in the
case of a Shelf Registration statement required to be filed under Section
2(b)(i), (ii) or (iii), any reasonable disbursements of the underwriters
customarily required to be paid by issuers or sellers of securities and the
reasonable fees and expenses of any special experts retained by the Company
in connection with any Registration Statement, but excluding fees of
counsel to the underwriters (other than fees and expenses set forth in
clause (ii) above) or the Holders (other than fees and expenses set forth
in clause (viii) above) and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments
and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
---
<PAGE>
4
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities on an appropriate form under
Rule 415 under the 1933 Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Trustee" shall mean the trustee with respect to the Securities under
-------
the Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer
------------------------------- --------------
Registration. To the extent not prohibited by any applicable law or applicable
- ------------
interpretation of the Staff of the SEC, the Company shall use its best efforts
(i) to file within 30 days after the Closing Date an Exchange Offer Registration
Statement covering the offer by the Company to the Holders to exchange all of
the Registrable Securities for Exchange Securities, (ii) to cause such Exchange
Offer Registration Statement to be declared effective by the SEC within 120 days
after the Closing Date, (iii) to cause such Registration Statement to remain
effective until the closing of the Exchange Offer and (iv) to consummate the
Exchange Offer within 150 days following the Closing Date. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder (other than Participating Broker-Dealers (as defined in Section 3(f)
hereof) eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder is not an affiliate of the Company within
the meaning of Rule 405 under the 1933 Act, acquires the Exchange Securities in
the ordinary course of such Holder's business and has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Securities) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the 1933 Act.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder, at its address reflected on the security
register, a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal
(a "Letter of Transmittal") and related documents;
(ii) keep the Exchange Offer open for not less than 30 calendar days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) permit Holders to withdraw tendered Registrable Securities at
any time prior to the close of business, New York City time, on the last
business day on which
<PAGE>
5
the Exchange Offer shall remain open, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Securities delivered for exchange, and a statement that such
Holder is withdrawing his election to have such Securities exchanged; and
(iv) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Registrable Securities duly tendered and
not validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the Letter of
Transmittal;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange by the
Company; and
(iii) cause the Trustee promptly to authenticate and deliver Exchange
Securities to, or upon the instructions of, each Holder of Registrable
Securities equal in principal amount to the Registrable Securities of such
Holder so accepted for exchange.
Interest on each Exchange Security will accrue from the last date on
which interest was paid on the Registrable Securities surrendered in exchange
therefor or, if no interest has been paid on the Registrable Securities, from
the date of its original issue. The Exchange Offer shall not be subject to any
conditions, other than that the Exchange Offer, or the making of any exchange by
a Holder, does not violate applicable law or any applicable interpretation of
the Staff of the SEC. Each Holder of Registrable Securities (other than
Participating Broker-Dealers) who wishes to exchange such Registrable Securities
for Exchange Securities in the Exchange Offer will be required to represent that
(i) it is not an affiliate of United or the Company, (ii) any Exchange
Securities to be received by it were acquired in the ordinary course of its
business and (iii) at the time of the commencement of the Exchange Offer, it has
no arrangement with any person to participate in the distribution (within the
meaning of the 1933 Act) of the Exchange Securities. The Company shall inform
the Initial Purchaser of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchaser shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
(b) Shelf Registration. (i) If, because of any change in law or
------------------
applicable interpretations thereof by the Staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
(ii) upon the request of the Initial Purchaser (with respect to any Registrable
Securities which it acquired directly from the Company) within 30 calendar days
after the Closing Date if the Initial Purchaser shall hold Registrable
Securities which it acquired directly from the Company and if the Initial
Purchaser is not permitted, in the opinion of counsel to the Initial Purchaser
addressed to the
<PAGE>
6
Company (which counsel shall be reasonably acceptable to the Company), pursuant
to applicable law or applicable interpretation of the Staff of the SEC to
participate in the Exchange Offer, or (iii) if any Holder other than the Initial
Purchaser is not eligible to participate in the exchange offer due to a change
in law or the applicable interpretation of the staff of the Commission and such
holder so notifies the Company, the Company shall, at its cost,
(A) as promptly as practicable, file with the SEC a Shelf Registration
Statement relating to the offer and sale of the Registrable Securities
(limited solely to the Initial Purchaser if clause (ii) alone applies) by
the Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders of such Registrable Securities
and set forth in such Shelf Registration Statement, and use its best
efforts to cause such Shelf Registration Statement to be declared effective
by the SEC by the later of (1) 120 days after the Closing Date and (2) 45
days after publication of the change in law or interpretation. In the
event that the Company is required to file a Shelf Registration Statement
upon the request of the Initial Purchaser pursuant to clause (ii) above,
the Company shall file and have declared effective by the SEC both an
Exchange Offer Registration Statement pursuant to Section 2(a) hereof with
respect to all Registrable Securities and a Shelf Registration Statement
(which may be a combined Registration Statement with the Exchange Offer
Registration Statement) with respect to offers and sales of Registrable
Securities held by the Initial Purchaser after completion of the Exchange
Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of (i), in the case of clause
2(b)(i) above, three years from the date the Shelf Registration Statement
is declared effective by the SEC, or (ii) in the case of clauses 2(b)(ii)
and 2(b)(iii) above, three years after the closing date, or in any case
such shorter period which will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or cease to be outstanding;
and
(C) notwithstanding any other provisions hereof, use its best efforts
to ensure that (i) any Shelf Registration Statement complies in all
material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement does not, when it becomes
effective, contain 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 not misleading and (iii) any Prospectus forming part of
any Shelf Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements, in light of the circumstances under which
they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend the
Shelf Registration Statement if reasonably requested by the Majority Holders
with respect to information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any such amendment to
become effective and such Shelf
<PAGE>
7
Registration to become usable as soon as thereafter practicable and to furnish
to the Holders of Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) or 2(b).
(d) Effective Registration Statement. An Exchange Offer Registration
--------------------------------
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
-------- -------
after it has been declared effective, the offering of Registrable Securities
pursuant to a Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
(e) Increase in Interest Rate. In the event that (i) the Exchange
-------------------------
Offer Registration Statement is not filed with the SEC on or prior to the 30th
calendar day after the Closing Date (unless changes in law or the applicable
interpretation of the staff of the Commission do not permit the Company to
effect the Exchange Offer, in which case clause (iv) shall apply), (ii) the
Exchange Offer Registration Statement is not initially declared effective on or
prior to the 120th calendar day after the Closing Date (unless changes in law or
the applicable interpretation of the staff of the Commission do not permit the
Company to effect the Exchange Offer, in which case clause (iv) shall apply) or
(iii) the Exchange Offer is not consummated on or prior to the 150th day after
the Closing Date (unless changes in law or the applicable interpretation of the
staff of the Commission do not permit the Company to effect the Exchange Offer,
in which case clause (iv) shall apply) or (iv) a Shelf Registration Statement
required under Section 2(b)(i) hereof with respect to the Registrable Securities
is not initially declared effective on or prior to the later of 120th calendar
day after the Closing Date or the 45th calendar day after the publication of the
change in law or interpretation, the interest rate borne by the Securities shall
be increased by one-half of one percent per annum following such 30-day period
in the case of clause (i) above, such 120-day period in the case of clause (ii)
above, such 150-day period in the case of clause (iii) above or such 120-day or
45-day period in the case of clause (iv) above (as applicable); provided that
--------
the aggregate increase in such interest rate will in no event exceed one-half of
one percent per annum. Immediately upon (A) the filing of the Exchange Offer
Registration Statement after the 30-day period described in clause (i) above,
(B) the effectiveness of the Exchange Offer Registration Statement after the
120-day period described in clause (ii) above, (C) the consummation of the
Exchange Offer after the 150-day period described in clause (iii) above or (D)
the effectiveness of a Shelf Registration Statement after such 120-day or 45-day
period described in clause (iv) above (as applicable), the interest rate borne
by the Securities from the date of such filing, effectiveness or consummation,
as the case may be, will be reduced to the original interest rate.
(f) Specific Enforcement. Without limiting the remedies available to
--------------------
the Initial Purchaser and the Holders, the Company acknowledges that any failure
by the
<PAGE>
8
Company to comply with its obligations under Section 2(a) and Sections 2(b)
hereof may result in material irreparable injury to the Initial Purchaser or the
Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchaser or any Holder may obtain such relief
as may be required to specifically enforce the Company's obligations under
Section 2(a) and Section 2(b) hereof.
(g) Acknowledgment of Holders. Each Holder shall be deemed to have
-------------------------
agreed that any broker-dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the Exchange
Offer must comply with the registration and prospectus delivery requirements of
the 1933 Act in connection with secondary resale transactions and that such
secondary resale transactions should be covered by an effective registration
statement.
3. Registration Procedures. In connection with the obligations of
-----------------------
the Company with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement, within the
time period specified in Section 2 hereof, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Company, (ii) shall, in the
case of a Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and (iii) shall comply as to form in
all material respects with the requirements of the applicable form and include
or incorporate by reference all financial statements required by the SEC to be
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary under applicable
law to keep such Registration Statement effective for the applicable period;
cause each Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed if required pursuant to Rule 424 under the
1933 Act; comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof; and keep each Prospectus current
during the period described under Section 4(3) and Rule 174 under the 1933 Act
that is applicable to transactions by brokers or dealers with respect to
Exchange Securities or Registrable Securities;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least five days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being filed
and advising such Holders that the distribution of Registrable Securities will
be made in accordance with the method elected by the Majority Holders; and (ii)
furnish to each Holder of Registrable Securities, to counsel for the Initial
Purchaser, to counsel for the Holders and to each underwriter of an underwritten
offering of Registrable Securities, if any, without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other
<PAGE>
9
documents as such Holder or underwriter may reasonably request, including
financial statements and schedules and, if the Holder so requests, all exhibits
(including those incorporated by reference) in order to facilitate the public
sale or other disposition of the Registrable Securities; and (iii) subject to
the last paragraph of Section 3 hereof, hereby consent to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of Registrable Securities in connection with the offering and sale in accordance
with applicable law of the Registrable Securities covered by the Prospectus or
any amendment or supplement thereto;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Securities shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with the
Holders in connection with any filings required to be made with the NASD, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable such Holder to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however, that the
-------- -------
Company shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d) or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities and counsel for the Initial Purchaser promptly and, if
requested by such Holder or counsel, confirm such advice in writing promptly (i)
when a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request by the
SEC or any state securities authority for post-effective amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to such offering cease to be true and correct in all
material respects, (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, (vi) of the happening of any event or the discovery of any facts
during the period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus untrue
in any material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein not
misleading and (vii) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate;
(f) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a
<PAGE>
10
Prospectus or any document which is to be incorporated by reference into a
Registration Statement or a Prospectus after initial filing of a Registration
Statement, provide copies of such document to the Initial Purchaser and its
counsel (and, in the case of a Shelf Registration Statement, the Holders and
their counsel) and make representatives of the Company as shall be reasonably
requested by the Initial Purchaser and their counsel (and, in the case of a
Shelf Registration Statement, the Holders or their counsel) available for
discussion of such document and shall not at any time file or make any amendment
to the Registration Statement, any Prospectus or any amendment of or supplement
to a Registration Statement or a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which the Initial Purchaser and its counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) shall not have previously
been advised and furnished a copy or to which the Initial Purchaser or its
counsel (and, in the case of a Shelf Registration Statement, the Holders or
their counsel) shall reasonably object unless counsel for the Company advises
the Company that such filing by the Company is required under applicable law;
(g) (i) in the case of an Exchange Offer, furnish counsel for the
Initial Purchaser and (ii) in the case of a Shelf Registration, furnish counsel
for the Holders of Registrable Securities copies of any request by the SEC or
any state securities authority for amendments or supplements to a Registration
Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as practicable
and provide immediate notice to each Holder of the withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(j) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and cause such Registrable Securities to be in
such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least two business days prior to the closing of any sale
of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of any
event or the discovery of any facts, each as contemplated by Section 3(e)(vi)
hereof, use its best efforts to prepare a supplement or post-effective amendment
to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain at the time of such delivery any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company
<PAGE>
11
agrees to notify each Holder to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and each Holder hereby agrees
to suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission. At such time as such
public disclosure is otherwise made or the Company determines that such
disclosure is not necessary, in each case to correct any misstatement of a
material fact or to include any omitted material fact, the Company agrees
promptly to notify each Holder of such determination and to furnish each Holder
such numbers of copies of the Prospectus, as amended or supplemented, as such
Holder may reasonably request;
(l) obtain a CUSIP number for all Exchange Securities, or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities or the Registrable Securities, as the case may be, in a
form eligible for deposit with the Depositary;
(m) (i) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities, or Registrable Securities, as the case may be,
(ii) cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and (iii) execute, and use its best efforts to cause
the Trustee to execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
the Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration, enter into agreements
(including customary underwriting agreements) and take all other customary and
appropriate actions (including those reasonably requested by the Majority
Holders) in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration:
(i) to the extent possible, make such representations and warranties
to the Holders of such Registrable Securities and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company and, subject to the
proviso in the first sentence of the last paragraph of this clause (n),
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and
the Majority Holders of the Registrable Securities being sold) addressed to
each selling Holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in sales of securities or
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and, subject to the proviso in
the first sentence of the last paragraph of this clause (n), updates
thereof from the Company's
<PAGE>
12
independent certified public accountants addressed to the underwriters, if
any, and use reasonable best efforts to have such letter addressed to the
selling Holders of Registrable Securities, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders and an
agent of the Holders providing for, among other things, the appointment of
such agent for the selling Holders for the purpose of soliciting purchases
of Registrable Securities, which agreement shall be in form, substance and
scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same to
set forth indemnification provisions and procedures substantially
equivalent to the indemnification provisions and procedures set forth in
Section 6 hereof with respect to the underwriters and all other parties to
be indemnified pursuant to said Section; and
(vi) deliver such other documents and certificates as may be
reasonably requested and as are customarily delivered in similar offerings.
The above shall be done at (i) the effectiveness of such Registration Statement
(and, if appropriate, each post-effective amendment thereto) and (ii) each
closing under any underwriting or similar agreement as and to the extent
required thereunder; provided that the updates referred to in clauses (ii) and
--------
(iii) of this paragraph (n) shall only be required in the case of (A) any
closing with respect to sales under such Shelf Registration Statement of
Securities having a principal amount of $7.5 million or more or, if the Initial
Purchaser shall waive such updates under clause (A), then (B) in the case of up
to three such closings. In the case of any underwritten offering, the Company
shall provide written notice to the Holders of all Registrable Securities of
such underwritten offering at least 30 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice shall (x) offer each
such Holder the right to participate in such underwritten offering, (y) specify
a date, which shall be no earlier than 10 days following the date of such
notice, by which such Holder must inform the Company of its intent to
participate in such underwritten offering and (z) include the instructions such
Holder must follow in order to participate in such underwritten offering;
(o) in the case of a Shelf Registration, make available for inspection
by one representative appointed by the Majority Holders of the Registrable
Securities and any underwriters participating in any disposition pursuant to a
Shelf Registration Statement and one counsel or accountant retained by such
Holders or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such
persons, and cause the respective officers, directors, employees, and any other
agents of the Company to supply all information reasonably requested by any such
representative, underwriter, special counsel or accountant in connection with a
Registration Statement; provided, however, that any records, information or
-------- -------
documents that are designated by the Company as confidential at the time of
delivery of such records, information or documents shall be kept confidential by
such persons, unless (i) such records, information or documents are in the
public domain or otherwise publicly available;
<PAGE>
13
(ii) disclosure of such records, information or documents is required by court
or administrative order, provided that such person will, promptly upon learning
that disclosure of such information is sought in a court of competent
jurisdiction, give notice to the Company so that the Company may at its expense
undertake appropriate action to prevent disclosure of the information deemed to
be confidential, (iii) disclosure of such records, information or documents, in
the opinion of counsel to such person, is otherwise required by law (including,
without limitation, pursuant to the requirements of the 1933 Act) or (iv) upon
the advice of counsel, disclosure of such records, information or documents is
necessary to avoid or correct a misstatement or omission in the Registration
Statement;
(p) in the case of a Shelf Registration, use its best efforts to cause
all Registrable Securities to be listed on any securities exchange on which
similar debt securities issued by the Company are then listed if requested in
writing by the Majority Holders or by the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any;
(q) in the case of a Shelf Registration, use its best efforts to cause
the Registrable Securities to be rated with the appropriate rating agencies, if
so requested by the Majority Holders or by the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any, unless the Registrable
Securities are already so rated;
(r) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering at least 12 months
which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder; and
(s) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter and its counsel.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in
Section 3(e)(ii)-(vi) hereof, such Holder will forthwith discontinue disposition
of Registrable Securities pursuant to a Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all copies in its possession
or certify in writing that such copies have been destroyed, in each case other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. If the Company shall give any such notice to suspend the disposition of
Registrable Securities pursuant to a Shelf Registration Statement as a result of
the happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(vi) hereof, the Company shall be deemed to have used
its best
<PAGE>
14
efforts to keep the Shelf Registration Statement effective during such period of
suspension provided that the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Shelf Registration Statement and shall extend the period
during which the Registration Statement shall be maintained effective pursuant
to this Agreement by the number of days during the period from and including the
date of the giving of such notice to and including the date when the Holders
shall have received copies of the supplemented or amended Prospectus necessary
to resume such dispositions.
4. Underwritten Registrations. If any of the Registrable Securities
--------------------------
covered by any Shelf Registration are to be sold in an underwritten offering as
contemplated by Section 3 hereof, the investment banker or investment bankers
and manager or managers (and their counsel) that will manage the offering will
be agreed to by the Company and the Majority Holders of such Registrable
Securities included in such offering.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (b) completes, executes and delivers all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
of such Holder under the terms of such underwriting arrangements.
5. Participation of Broker-Dealers in Exchange Offer
-------------------------------------------------
(a) The Staff of the SEC has taken the position that any broker-dealer
that receives Exchange Securities for its own account in the Exchange Offer in
exchange for Registrable Securities that were acquired by such broker-dealer as
a result of market-making or other trading activities (a "Participating Broker-
Dealer") may be deemed to be an "underwriter" within the meaning of the 1933 Act
in connection with any resale of such Exchange Notes.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Securities owned by
them, such Prospectus may be delivered by Participating Broker-Dealers to
satisfy their prospectus delivery obligations under the 1933 Act in connection
with resales of Exchange Securities for their own accounts, so long as the
Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding any other provision of this
Agreement, the Company agrees (x) that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such modifications thereto as may be,
reasonably requested by the Initial Purchaser or one or more Participating
Broker-Dealers, in each case as provided in clause (ii) below, in order to
expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 5(a) above and (y) without limiting the preceding clause (x), to
maintain the effectiveness of the Registration Statement
<PAGE>
15
for such purposes for the earlier of one year or until such Participating Broker
Dealers have sold all Exchange Securities (as determined in accordance with FIFO
accounting), but in any event only if applicable interpretations of the Staff
continue to require Prospectus delivery; provided that:
--------
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(k), for a period exceeding 180 days
after the last Exchange Date (as such period may be extended pursuant to
the last paragraph of Section 3 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 5; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to the Company by the Initial Purchaser or with the
reasonable request in writing to the Company by one or more broker-dealers
who certify to the Initial Purchaser and the Company in writing that they
anticipate that they will be Participating Broker-Dealers; and provided
--------
further that, in connection with such application of the Shelf Registration
-------
procedures set forth in Section 3 to an Exchange Offer Registration, the
Company shall be obligated (x) to deal only with one entity representing
the Participating Broker-Dealers, which shall be the Initial Purchaser
unless it elects not to act as such representative, (y) to pay the fees and
expenses of only one counsel representing the Participating Broker-Dealers,
which shall be counsel to the Initial Purchaser unless such counsel elects
not to so act and (z) to cause to be delivered only one, if any, "cold
comfort" letter with respect to the Prospectus in the form existing on the
last Exchange Date and with respect to each subsequent amendment or
supplement, if any, effected during the period specified in clause (i)
above.
(c) The Initial Purchaser shall have no liability to the Company or
any Holder with respect to any request that it may make pursuant to this Section
5.
Section 6. Indemnification. (a) The Company and United each agree
---------------
jointly and severally to indemnify and hold harmless the Initial Purchaser, each
Holder, including Participating Broker Dealers, each underwriter who
participated in an offering of the Registrable Securities and each person, if
any, who controls such parties within the meaning of Section 15 of the 1933 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto) or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto)
<PAGE>
16
or the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or
United by the Initial Purchaser expressly for use in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto); and provided, further, that the Company
-------- -------
will not be liable to the Initial Purchaser or any person controlling the
Initial Purchaser with respect to any such untrue statement or omission made in
any preliminary prospectus that is corrected in the Prospectus (or any amendment
or supplement thereto) if the person asserting any such loss, claim, damage or
liability purchased Securities from the Initial Purchaser in reliance upon a
preliminary prospectus but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the Prospectus
(as so amended or supplemented) is required by the 1933 Act, unless such failure
to deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 3 of this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold harmless each
of the Company, United and each person, if any, who controls the Company or
United within the meaning of Section 15 of the 1933 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity agreement
in Section (a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company or United by the
Initial Purchaser expressly for use in the Registration Statement (or any
amendment thereto), or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
<PAGE>
17
(c) In the case of a Shelf Registration, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, United,
the Initial Purchaser, each underwriter who participates in an offering of
Registrable Securities and the other selling Holders and each person, if any,
who controls such persons within the meaning of Section 15 of the 1933 Act,
against any and all losses, liabilities, claims, damages and expenses described
in the indemnity contained in (a) hereof, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto) or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company or United by such Holder, expressly
for use in the Registration Statement (or any amendment thereto), or the
Prospectus (or any amendment or supplement thereto); provided, however, that no
-------- -------
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Shelf Registration Statement.
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
(e) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 6 is for
any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, United and the Initial
Purchaser shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity incurred by the
Company, United and the Initial Purchaser, as incurred, in such proportions that
the Initial Purchaser is responsible for that portion represented by the
percentage that the initial purchaser's discount appearing on the cover page of
the Prospectus bears to the price to investors appearing thereon, and the
Company and United are responsible for the balance; provided, however, that no
-------- -------
person guilty of fraudulent misrepresentation (within the meaning of Section
1(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls the Initial Purchaser within the meaning of
Section 5 of the 1933 Act shall have the same rights to contribution as the
Initial Purchaser, and each director of the Company or United, each officer of
the Company or United who signed the Registration Statement, and each person, if
any, who controls the Company or United within the meaning of Section 5 of the
1933 Act shall have the same rights to contribution as the Company or United.
7. Miscellaneous. (a) Rule 144 and Rule 144A. Regardless of
------------- ----------------------
whether the Company is subject to the reporting requirements of Section 13 or 15
of the 1934 Act, the Company covenants that it will file the reports that would
be required to be filed by it
<PAGE>
18
under Section 13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder if such Sections were applicable to it, and that
if it ceases to be permitted to file such reports, it will upon the request of
any Holder of Registrable Securities (i) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the 1933
Act and (ii) deliver such information to a prospective purchaser as is
reasonably necessary to permit sales pursuant to Rule 144A under the 1933 Act,
in each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under the 1933 Act within
the limitation of the exemptions provided by (x) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (y) Rule 144A under the 1993 Act, as
such Rule may be amended from time to time, or (z) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. Neither the Company or United has
--------------------------
entered into nor will the Company or United on or after the date of this
Agreement enter into, any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The Company and United represent and
warrant that the rights granted to the Holders hereunder do not conflict with
and are not inconsistent with the rights granted to the holders of the Company's
other issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure; provided, however, that no amendment, modification,
-------- -------
supplement or waiver or consent to any departure from the provisions of Section
6 hereof shall be effective as against any Holder of Registrable Securities
unless consented to in writing by such Holder.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 7(d), which address initially is, with respect to the Initial Purchaser,
the address set forth in the Purchase Agreement and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
<PAGE>
19
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
--------
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms hereof or of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The Initial Purchaser shall be third
-----------------------
party beneficiary to the agreements made hereunder between the Company, on the
one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
PERFORMED ENTIRELY IN THAT STATE.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
<PAGE>
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
UNITED STATIONERS INC.
By:
---------------------------------------
Name:
Title:
UNITED STATIONERS SUPPLY CO.
By:
---------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above
written:
CHASE SECURITIES, INC.
By:
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.12
-------
AMENDMENT NO. 1 dated as of March 30, 1995, between CHASE MANHATTAN
HOLDINGS, INC., certain other holders of Registrable Securities under the
Registration Rights Agreement referred to below and ASSOCIATED HOLDINGS, INC., a
Delaware corporation (the "Issuer").
------
The parties are parties to a Registration Rights Agreement dated as of
January 31, 1992 (as heretofore modified and supplemented and in effect on the
date hereof, the "Registration Rights Agreement"), providing, subject to the
-----------------------------
terms and conditions thereof, for the registration of certain securities under
the Securities Act of 1933, as amended. The parties wish to expand the
definition of Registrable Securities under the Agreement and to amend the
Registration Rights Agreement in certain other respects, and accordingly, hereby
agree as follows:
Section 1. Definitions. Except as otherwise defined in this
-----------
Amendment No. 1, terms defined in the Registration Rights Agreement are used
herein as defined therein.
Section 2. Amendments. The Registration Rights Agreement shall be
----------
amended as follows:
2.01. Section 1 shall be amended by adding the following paragraph at
the end thereof:
"(f) Anything in this Agreement (including Section 1(b)) to the
contrary notwithstanding, the Issuer will use its best efforts to effect a
"shelf" registration of all Registrable Securities on Form S-3 pursuant to
Rule 415 under the Securities Act as promptly as practicable following the
60th day after the merger of the Issuer into United Stationers Inc. (upon
which merger United Stationers Inc. will become the Issuer under this
Agreement). The registration statement shall permit resale by the holders
thereof in any manner including in an underwritten offering."
2.02. Section 3(b) shall be amended by adding at the end thereof the
words "or in the case of the registration statement referred to in Section 1(f),
------------
three years from the effective date of the merger referred to therein".
2.03. The definition of "Registrable Securities" in Section 9 is
hereby amended in its entirety to read as follows:
"Registrable Securities" means (i) shares of Common Stock or Other
----------------------
Securities issued or issuable upon exercise of the Warrants or conversion
of non-voting stock of Issuer issued pursuant to certain Subscription
Agreements or issued in consideration of the arrangement of certain loans
<PAGE>
2
pursuant to the letter agreement dated March 30, 1995 between the Issuer
and the Investor and (ii) any securities issued or issuable with respect to
any securities referred to in clause (i) by way of stock dividend, stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (x) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (y) they shall have been
distributed to the public pursuant to Rule 144, or (z) they shall have
eased to be outstanding. Securities beneficially owned by Issuer or any
Affiliate (other than an institutional investor) shall not be deemed
Registrable Securities.
Section 2.04. The definition of Requesting Holders in Section 9 is
hereby amended by adding at the end thereof the words "or included in the shelf
registration referred to in Section 1(f)".
------------
Section 3. Miscellaneous. Except as herein provided, the Registration
-------------
Rights Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By /s/ ^SIGNATURE APPEARS HERE^
-----------------------------
Name:
Title:
ASSOCIATED HOLDINGS, INC.
By
-----------------------------
Name:
Title:
<PAGE>
2
pursuant to the letter agreement dated March 30, 1995 between the Issuer
and the Investor and (ii) any securities issued or issuable with respect to
any securities referred to in clause (i) by way of stock dividend, stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (x) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (y) they shall have been
distributed to the public pursuant to Rule 144, or (z) they shall have
ceased to be outstanding. Securities beneficially owned by Issuer or any
Affiliate (other than an institutional investor) shall not be deemed
Registrable Securities.
Section 2.04. The definition of Requesting Holders in Section 9 is
hereby amended by adding at the end thereof the words "or included in the shelf
registration referred to in Section 1(f)".
------------
Section 3. Miscellaneous. Except as herein provided, the Registration
-------------
Rights Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By
-------------------------------
Name:
Title:
ASSOCIATED HOLDINGS, INC.
By /s/ Daniel H. Bushell
-------------------------------
Name: Daniel H. Bushell
Title: Chief Financial Officer
<PAGE>
3
THE PROVIDENT BANK
By:
------------------------------
Name:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By: /s/ Grant E. McDonald
------------------------------
Name: Grant E. McDonald
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH
By:
------------------------------
Name:
Title:
WHIRLPOOL FINANCIAL CORPORATION
By:
------------------------------
Name:
Title:
<PAGE>
3
THE PROVIDENT BANK
By
------------------------------
Name:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH
By /s/ Brady S. Sadek
------------------------------
Name: Brady S. Sadek
Title: Vice President & Deputy
General Manager
WHIRLPOOL FINANCIAL CORPORATION
By
------------------------------
Name:
Title:
<PAGE>
3
THE PROVIDENT BANK
By
------------------------------
Name:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH
By
------------------------------
Name:
Title:
WHIRLPOOL FINANCIAL CORPORATION
By /s/ David Kleinman
------------------------------
Name: David Kleinman
Title: VP & Managing Director
<PAGE>
EXHIBIT 10.13
UNITED STATIONERS INC.
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement") dated as of March __, 1995 is made and entered into by and among
UNITED STATIONERS INC., a Delaware corporation and successor-in-interest to
Associated (as hereinafter defined) (the "Issuer"), each party hereto whose name
appears on the signature pages hereto (each an "Initial Holder" and collectively
the "Initial Holders"), and each other person or entity who may execute this
Agreement in the future or who may execute a separate agreement to be bound by
the terms hereof (each Initial Holder and each such other person or entity a
"Holder", and collectively the "Holders"). This Agreement amends and restates in
its entirety that certain Registration Rights Agreement, dated as of January 31,
1992 (the "Existing Registration Rights Agreement"), among the Holders and
Associated Holdings, Inc., a Delaware corporation that has merged (the "Merger")
with and into the Issuer as of the date hereof. Capitalized terms not otherwise
defined herein have the meanings set forth in Section 8.
---------
WHEREAS, in connection with the Merger, the parties to the Existing
Registration Rights Agreement deem it desirable to amend and restate the
Existing Registration Rights Agreement, effective as of the effective time of
the Merger, pursuant to Section 9(c) thereof as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Requested Registrations.
-----------------------
(a) Registration Requests. From and after the date hereof, upon the
---------------------
written request of a Holder of at least 20% of the Registrable Securities
requesting that Issuer effect a registration under the Securities Act of all or
part of such Holder's Registrable Securities and specifying the number of
Registrable Securities to be registered and the intended method of disposition
thereof (a "Registration Request"), Issuer will promptly, and in no event more
than ten (10) Business Days after receipt of such Registration Request, give
written notice (a
<PAGE>
"Notice of Requested Registration") of such request to all other Holders of
Registrable Securities, and thereupon will use all commercially reasonable
efforts to effect the registration under the Securities Act of:
(A) the Registrable Securities which Issuer has been so requested to
register by such Requesting Holder, and
(B) all other Registrable Securities the Holders of which have made
written requests to Issuer for registration thereof within twenty (20) days
after the giving of the Notice of Requested Registration (which requests
shall specify the intended method of disposition thereof),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities so to be registered. If
requested by the Holders of a majority of the Registrable Securities requested
to be included in any Requested Registration, the method of disposition of all
Registrable Securities included in such registration shall be an underwritten
offering effected in accordance with Section 4(a). Subject to subsection (e)
------------
below, Issuer may include in such registration other securities for sale for its
own account or for the account of any other Person.
(b) Limitations on Requested Registrations. Notwithstanding anything
--------------------------------------
herein to the contrary, Issuer shall not be required to honor a request for a
Requested Registration if:
(i) such request is received by Issuer less than three hundred sixty-
five (365) days after the date hereof;
(ii) in the case of a Long-Form Registration, Issuer has previously
effected two (2) Effective Long-Form Registrations;
(iii) in the case of a Short-Form Registration, Issuer has previously
effected three (3) Effective Short-Form Registrations;
(iv) in the case of either a Long-Form Registration or a Short-Form
Registration, Issuer has previously effected three (3) Effective Short-Form
Registrations and/or Long-Form Registrations; or
(v) such request is received by Issuer less than three hundred (300)
days following the effective date of any previous registration statement
filed in connection with a
2
<PAGE>
Requested Registration, regardless of whether any Holder of Registrable
Securities exercised its rights under this Agreement with respect to such
registration, unless such previous registration constituted a Cutback
Registration.
(c) Registration Statement Form. Requested Registrations shall be on
---------------------------
such appropriate registration form promulgated by the Commission as shall be
selected by Issuer, and shall be reasonably acceptable to the Holders of a
majority of the Registrable Securities to which such registration relates, and
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods specified in their request for such registration,
provided, that such registration form is available under the terms of this
- --------
Agreement. Notwithstanding the forgoing, if Issuer selects a Form S-3 and the
use of such form is available under the terms of this Agreement and is permitted
by law, the Holders of a majority of the Registrable Securities to which such
registration relates may notify Issuer in writing that, in the judgment of such
holders (or, if applicable, the Managing Underwriter), the inclusion of some or
all of the information required in a more detailed form specified in such notice
is of material importance to the success of the Public Offering of such
Registrable Securities, in which case Issuer shall supplement or amend the Form
S-3 to include such information.
(d) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with any Requested Registration.
(e) Priority in Cutback Registrations. If a Requested Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in any such registration, to
the extent of the number which the Managing Underwriter advises Issuer can be
sold in such offering, (i) first, the securities of Issuer proposed to be
-----
included in such registration in accordance with the priorities then existing
among Issuer and the holders of such securities pursuant to any agreement
between such holders and Issuer, including the Other Registration Rights
Agreement, and (ii) second, any other securities of Issuer, including
------
Registrable Securities, proposed to be included in such registration pro rata
--- ----
among the holders thereof, including the Holders. Any securities excluded from
such registration shall be withdrawn from and shall not be included in such
Requested Registration.
3
<PAGE>
2. Piggyback Registrations.
-----------------------
(a) Right to Include Registrable Securities. Notwithstanding any
---------------------------------------
limitation contained in Section 1, if Issuer at any time proposes after the date
---------
hereof to effect a Piggyback Registration, it will each such time give prompt
written notice (a "Notice of Piggyback Registration") to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 2, which Notice of Piggyback Registration shall include a
---------
description of the intended method of disposition of such securities. Upon the
written request of any such Holder made within fifteen (15) days after receipt
of a Notice of Piggyback Registration (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), Issuer will use all commercially
reasonable efforts to include in the registration statement relating to such
Piggyback Registration all Registrable Securities which Issuer has been so
requested to register. Notwithstanding the foregoing, if, at any time after
giving a Notice of Piggyback Registration and prior to the effective date of the
registration statement filed in connection with such registration, Issuer shall
determine for any reason not to register or to delay registration of such
securities, Issuer may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Requesting Holder
entitled to do so to request that such registration be effected as a Requested
Registration under Section 1, and (ii) in the case of a determination to delay
---------
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities. No
registration effected under this Section 2 shall relieve Issuer of its
---------
obligations to effect a Requested Registration under Section 1.
---------
(b) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with each Piggyback Registration.
(c) Priority in Cutback Registrations. If a Piggyback Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in such registration to the
extent of the amount of the securities which the Managing Underwriter advises
Issuer can be sold in such offering:
4
<PAGE>
(i) if such registration involves a primary offering of Issuer's
securities, (x) first, the securities proposed by Issuer to be sold for its
-----
own account, and (y) second any other securities of Issuer, including
------
Registrable Securities, proposed to be included in such registration pro
---
rata among the holders thereof, including the Holders; and
----
(ii) if such registration does not involve a primary offering, (X)
first, any securities of Issuer proposed to be included in such
-----
registration in accordance with the priorities then existing among Issuer
and such holders thereof pursuant to any agreement between such holders and
Issuer, including securities under the Other Registration Rights Agreement,
and (y) second, any other securities of Issuer to be included in such
------
registration shall be allocated among the holders thereof pro rata on the
--- ----
basis of the number of securities, including Registrable Securities,
requested to be included by such holders, including the Holders.
Any securities excluded from such registration shall be withdrawn from and shall
not be included in such Piggyback Registration.
3. Registration Procedures. If and whenever Issuer is required to
-----------------------
use all commercially reasonable efforts to effect the registration of any
Registrable Securities under the Securities Act pursuant to Section 1 or Section
--------- -------
2, Issuer will use all commercially reasonable efforts to effect the
- -
registration and sale of such Registrable Securities in accordance with the
intended methods of disposition thereof specified by the Requesting Holders.
Without limiting the foregoing, Issuer in each such case will, as expeditiously
as possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and use commercially reasonable efforts to
cause such registration statement to become effective as soon as practicable,
provided that as far in advance as practical before filing such registration
- --------
statement or any amendment or supplement thereto, Issuer will furnish to the
Requesting Holders copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such registration
statement and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such
5
<PAGE>
registration statement, in accordance with the intended methods of disposition
thereof, until the earlier of (i) such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement and (ii) two hundred
and seventy (270) days after such registration statement becomes effective;
(c) promptly notify each Requesting Holder and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any post
effective amendment thereto, when the same has become effective;
(ii) of any written request by the Commission for amendments or
supplements to such registration statement or prospectus;
(iii) of the notification to Issuer by the Commission of its initiation
of any proceeding with respect to the issuance by the Commission of, or of
the issuance by the Commission of, any stop order suspending the
effectiveness of such registration statement; and
(iv) of the receipt by Issuer of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale
under the applicable securities or blue sky laws of any jurisdiction;
(d) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
holder's Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of its Registrable Securities;
(e) use all commercially reasonable efforts to register or qualify
all Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each holder thereof
shall reasonably request, to
6
<PAGE>
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder, except that Issuer shall not for any such purpose be required (i) to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this paragraph (e) be obligated
-------------
to be so qualified, (ii) to subject itself to taxation in any such jurisdiction
or (iii) to consent to general service of process in any jurisdiction;
(f) use all commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable each Holder thereof to consummate the disposition of such Registrable
Securities;
(g) upon the request of (a) the Managing Underwriter, or (b) those
Requesting Holders who hold at least a majority of the Registrable Securities to
be included in a Requested Registration, effect a stock split in respect of the
Common Stock by means of a stock dividend on the Common Stock or a subdivision
of the Common Stock, or a combination of the Common Stock, such stock split or
combination to be in form, scope and substance satisfactory to the Managing
Underwriter or such Requesting Holders, as the case may be;
(h) use all commercially reasonable efforts to obtain a comfort
letter or comfort letters from the Issuer's independent public accountants in
customary form and covering such matters of the type customarily covered by
comfort letters as the Requesting Holders who hold at least a majority of the
Registrable Securities to be included in a Requesting Registration or the
Managing Underwriter reasonably request;
(i) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which any prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and at the request of any such holder promptly prepare and
furnish to such holder a reasonable number of copies of a supplement to or an
7
<PAGE>
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(j) otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than eighteen
(18) months, beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(k) make available for inspection by any Requesting Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of Issuer (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise any
due diligence responsibility, and cause Issuer's officers, directors and
employees to supply all information reasonably requested by any such Inspector
in connection with such registration statement, and permit the Inspectors to
participate in the preparation of such registration statement and any prospectus
contained therein and any amendment or supplement thereto.
(l) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement; and
(m) use all commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be listed, upon official
notice of issuance, on any securities exchange on which any of the securities of
the same class as the Registrable Securities are then listed.
Issuer may require each Holder of Registrable Securities as to which
any registration is being effected to, and each such Holder, as a condition to
including Registrable Securities in such registration, shall, furnish Issuer
with such information and affidavits regarding such Holder and the distribution
of such securities as Issuer may from time to time reasonably request in
8
<PAGE>
writing in connection with such registration; provided, however, that Issuer
-------- -------
will not file any registration statement under the Securities Act which refers
to any Holder of any Registrable Securities by name or otherwise as the Holder
of any securities of Issuer, unless it shall first have given to such Holder the
right to require (a) the insertion therein of language, in form and substance
-
satisfactory to such Holder, to the effect that the holding by such Holder of
such securities does not make such holder a "controlling person" of Issuer
within the meaning of the Securities Act and is not to be construed as a
recommendation by such holder of the investment quality of the Issuer's debt or
equity securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of Issuer, or
(b) in the event that such reference to such Holder by name or otherwise is not
-
required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such Holder; provided that such
Holder shall furnish to Issuer an opinion of counsel reasonably acceptable to
Issuer to such effect.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from Issuer of the
happening of any event of the kind described in paragraph (b), such Holder will
-------------
forthwith discontinue such Holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (b) and, if so directed by Issuer, will
-------------
deliver to Issuer (at Issuer's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. In the
event Issuer shall give any such notice, the period referred to in paragraph (b)
-------------
shall be extended by a number of days equal to the number of days during the
period from and including the giving of notice pursuant to paragraph (c) and to
-------------
and including the date when each Holder of any Registrable Securities covered by
such registration statement shall receive the copies of the supplemented or
amended prospectus contemplated by paragraph (b).
-------------
4. Underwritten Offerings.
----------------------
(a) Underwritten Requested Offerings. In the case of any underwritten
--------------------------------
Public Offering being effected pursuant to a Requested Registration, the
Managing Underwriter and any other underwriter or underwriters with respect to
such offering shall be selected, after consultation with Issuer, by the Holders
of a majority of the Registrable Securities to be included in such
9
<PAGE>
underwritten offering with the consent of Issuer, which consent shall not be
unreasonably withheld. Issuer shall enter into an underwriting agreement in
customary form with such underwriter or underwriters, which shall include, among
other provisions, indemnities to the effect and to the extent provided in
Section 6. The Holders of Registrable Securities to be distributed by such
- ---------
underwriters shall be parties to such underwriting agreement and may, at their
option (if permitted by the underwriters), require that any or all of the
representations and warranties by, and the other agreements on the part of,
Issuer to and for the benefit of such underwriters also be made to and for their
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions precedent
to their obligations. No Holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with Issuer or the
underwriters other than representations, warranties or agreements regarding such
Holder and its ownership of the securities being registered on its behalf and
such Holder's intended method of distribution and any other representation
required by law. No Requesting Holder may participate in such underwritten
offering unless such Holder agrees to sell its Registrable Securities on the
basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably
required under the terms of such underwriting agreement. If any Requesting
Holder disapproves of the terms of an underwriting, such Holder may elect to
withdraw therefrom and from such registration by notice to Issuer and the
Managing Underwriter, and each of the remaining Requesting Holders shall be
entitled to increase the number of Registrable Securities being registered to
the extent of the Registrable Securities so withdrawn in the proportion which
the number of Registrable Securities being registered by such remaining
Requesting Holder bears to the total number of Registrable Securities being
registered by all such remaining Requesting Holders.
(b) Underwritten Piggyback Offerings. If Issuer at any time proposes
--------------------------------
to register any of its securities in a Piggyback Registration and such
securities are to be distributed by or through one or more underwriters, Issuer
will, subject to the provisions of Section 2(c), use its all commercially
------------
reasonable efforts to arrange for such underwriters to include the Registrable
Securities to be offered and sold by Requesting Holders among the securities to
be distributed by such underwriters, and such Holders shall be obligated to sell
their Registrable Securities in such Piggyback Registration through such
underwriters on the same terms and conditions as apply to the other Issuer
securities to be sold by such underwriters in
10
<PAGE>
connection with such Piggyback Registration. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between Issuer and such underwriter or underwriters and
may, at their option (if permitted by the underwriters), require that any or all
of the representations and warranties by, and the other agreements on the part
of, Issuer to and for the benefit of such underwriters also be made to and for
their benefit and that any or all of the conditions precedent to the obligations
of such underwriters under such underwriting agreement also be conditions
precedent to their obligations. No Requesting Holder may participate in such
underwritten offering unless such Holder agrees to sell its Registrable
Securities on the basis provided in such underwriting agreement and completes
and executes all questionnaires, powers of attorney, indemnities and other
documents reasonably required under the terms of such underwriting agreement.
If any Requesting Holder disapproves of the terms of an underwriting, such
Holder may elect to withdraw therefrom and from such registration by notice to
Issuer and the Managing Underwriter, and each of the remaining Requesting
Holders shall be entitled to increase the number of Registrable Securities being
registered to the extent of the Registrable Securities so withdrawn in the
proportion which the number of Registrable Securities being registered by such
remaining Requesting Holder bears to the total number of Registrable Securities
being registered by all such remaining Requesting Holders.
5. Holdback Agreements By Issuer and Other Securityholders and Right
-----------------------------------------------------------------
to Defer Filing.
- ---------------
(a) Holdbacks. Unless the Managing Underwriter otherwise agrees,
---------
Issuer and each Holder of Registrable Securities agrees not to effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the fourteen
(14) days prior to and the one hundred and eighty (180) days after the effective
date of the registration statement filed in connection with an underwritten
offering made pursuant to a Requested Registration (or for such shorter period
of time as is sufficient and appropriate, in the opinion of the Managing
Underwriter, in order to complete the sale and distribution of the securities
included in such registration), except as part of such underwritten registration
and except pursuant to registrations on Form S-4 or Form S-8 promulgated by the
Commission or any successor or similar forms thereto.
(b) Deferral of Filing. The Issuer may defer the filing of a
------------------
registration statement required by Section 1 hereunder
11
<PAGE>
for a period of 180 days if (i) at the time the Issuer receives a Registration
Request, the Issuer or any of its subsidiaries are engaged in confidential
negotiations or other confidential business activities, disclosure of which
would be required in such registration statement (but would not be required if
such registration statement were not filed), and the Board of Directors of the
Issuer determines in good faith that such disclosure would be materially
detrimental to the Issuer and its stockholders, or (ii) Issuer had received,
prior to receiving the Registration Request, a request to register securities of
the Issuer from a different holder thereof having priority as to registration
over the Holders of Registrable Securities (a "preferred request") and is
proceeding with reasonable diligence to comply with the preferred request, or
(iii) prior to receiving the Registration Request, the Board of Directors had
determined to effect a registered underwritten public offering of the Issuer's
equity securities for the Issuer's account and the Issuer had taken substantial
steps (including, without limitation, selecting and entering into a letter of
intent with the managing underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering. A deferral of the filing of a
registration statement pursuant to this Section 5(b) shall be lifted, and the
requested registration statement shall be filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed or terminated, or, in the case of a deferral
pursuant to clause (ii) of the preceding sentence, the preferred request is
withdrawn, or in the case of a deferral pursuant to clause (iii) of the
preceding sentence, the proposed registration for the Issuer's account is
abandoned. In order to defer the filing of a registration statement pursuant to
this Section 5(b), the Issuer shall promptly, upon determining to seek such
deferral, deliver to each Requesting Holder a certificate signed by the
President of the Issuer stating that the Issuer is deferring such filing
pursuant to this Section 5(b) and the basis therefor in reasonable detail.
Within 20 days after receiving such certificate the Holders of a majority of the
Registrable Securities held by the Requesting Holders and for which registration
was previously requested may withdraw such request by giving notice to the
Issuer. If withdrawn, the Registration Request shall be deemed not to have been
made for all purposes of this Agreement.
6. Indemnification.
---------------
(a) Indemnification by Issuer. Issuer shall, to the full extent
-------------------------
permitted by law, indemnify and hold harmless each seller of Registrable
Securities included in any registration statement filed in connection with a
Requested Registration or a
12
<PAGE>
Piggyback Registration, its directors and officers, and each other Person, if
any, who controls any such seller within the meaning of the Securities Act,
against any losses, claims, damages, expenses or liabilities, joint or several
(together, "Losses"), to which such seller or any such director or officer or
controlling Person may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, and Issuer will reimburse such seller and each such director,
officer and controlling Person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such Loss (or
action or proceeding in respect thereof); provided that Issuer shall not be
--------
liable in any such case to the extent that any such Loss (or action or
proceeding in respect thereof) arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to Issuer through an instrument duly executed
by such seller specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer
or controlling Person, and shall survive the transfer of such securities by such
seller. Issuer shall also indemnify each other Person who participates
(including as an underwriter) in the offering or sale of Registrable Securities,
their officers and directors and each other Person, if any, who controls any
such participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to sellers of Registrable Securities.
(b) Indemnification by the Sellers. Each Holder of Registrable
------------------------------
Securities which are included or are to be included in any registration
statement filed in connection with a Requested Registration or a Piggyback
Registration, as a condition to including Registrable Securities in such
registration statement, shall, to the full extent permitted by law, indemnify
and hold harmless Issuer, its directors and officers, and each other Person, if
any, who controls Issuer within the meaning of the
13
<PAGE>
Securities Act, against any Losses to which Issuer or any such director or
officer or controlling Person may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, if such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to Issuer through an instrument duly executed by such
seller specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the obligation to
-------- -------
provide indemnification pursuant to this Section 6(b) shall be several, and not
------------
joint and several, among such Indemnifying Parties and the aggregate amount
which may be recovered from any holder of Registrable Securities pursuant to the
indemnification provided for in this Section 6(b) in connection with any
------------
registration and sale of Registrable Securities shall be limited to the total
proceeds received by such holder from the sale of such Registrable Securities.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Issuer or any such director, officer or
controlling Person and shall survive the transfer of such securities by such
seller. Such holders shall also indemnify each other Person who participates
(including as an underwriter) in the offering or sale of Registrable Securities,
their officers and directors and each other Person, if any, who controls any
such participating Person within the meaning of the Securities Act to the same
extent as provided above with respect to Issuer.
(c) Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraph (a) or (b) of this Section 6, such
-------------------- ---------
Indemnified Party will, if a claim in respect thereof is to be made against an
Indemnifying Party pursuant to such paragraphs, give written notice to the
latter of the commencement of such action, provided that the failure of any
--------
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under the preceding paragraphs of this
Section 6, except to the extent that the Indemnifying Party is actually
- ---------
14
<PAGE>
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnified Party, the Indemnifying Party shall be entitled to
participate in and, unless, in the reasonable judgment of any Indemnified Party,
a conflict of interest between such Indemnified Party and any Indemnifying Party
exists with respect to such claim, to assume the defense thereof, jointly with
any other Indemnifying Party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such Indemnified Party, and after notice
from the Indemnifying Party to such Indemnified Party of its election so to
assume the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party may participate in such
--------
defense at the Indemnified Party's expense; and provided further that the
-------- -------
Indemnified Party or Indemnified Parties shall have the right to employ one
counsel to represent it or them if, in the reasonable judgment of the
Indemnified Party or Indemnified Parties, it is advisable for it or them to be
represented by separate counsel by reason of having legal defenses which are
different from or in addition to those available to the Indemnifying Party, and
in that event the reasonable fees and expenses of such one counsel shall be paid
by the Indemnifying Party. If the Indemnifying Party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for the Indemnified Parties with
respect to such claim, unless in the reasonable judgment of any Indemnified
Party a conflict of interest may exist between such Indemnified Party and any
other Indemnified Parties with respect to such claim, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of such
additional counsel for the Indemnified Parties or counsels. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) Contribution. If the indemnity and reimbursement obligation
------------
provided for in any paragraph of this Section 6 is unavailable or insufficient
---------
to hold harmless an Indemnified Party in respect of any Losses (or actions or
proceedings in respect thereof) referred to therein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such Losses (or actions or proceedings in respect
15
<PAGE>
thereof) in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and the Indemnified Party on the other
hand in connection with statements or omissions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Indemnifying
Party or the Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this paragraph were to be determined by
pro rata allocation or by any other method of allocation which does not take
- --- ----
account of the equitable considerations referred to in the first sentence of
this paragraph. The amount paid by an Indemnified Party as a result of the
Losses referred to in the first sentence of this paragraph shall be deemed to
include any legal and other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any Loss which is the
subject of this paragraph.
No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 6 (with appropriate modifications)
---------
shall be given by Issuer and each seller of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority other than the
Securities Act. The provisions of this Section 6 shall be in addition to any
---------
other rights to indemnification or contribution which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
(f) Indemnification Payments. The indemnification required by this
------------------------
Section 6 shall be made by periodic payments of the amount thereof during the
- ---------
course of the investigation or defense, as and when bills are received or Losses
are incurred.
7. Covenants Relating to Rule 144 and 144A. If at any time Issuer
---------------------------------------
is required to file reports in compliance with either Section 13 or Section
15(d) of the Exchange Act, Issuer will file
16
<PAGE>
reports in compliance with the Exchange Act, will comply with all rules and
regulations of the Commission applicable in connection with the use of Rule 144
and take such other actions and furnish such holder with such other information
as such Holder may request in order to avail itself of such rule or any other
rule or regulation of the Commission allowing such holder to sell any
Registrable Securities without registration, and will, at its expense, forthwith
upon the request of any Holder of Registrable Securities, deliver to such holder
a certificate, signed by Issuer's principal financial officer, stating (a)
Issuer's name, address and telephone number (including area code), (b) Issuer's
Internal Revenue Service identification number, (c) Issuer's Commission file
number, (d) the number of shares of each class of Stock outstanding as shown by
the most recent report or statement published by Issuer, and (e) whether Issuer
has filed the reports required to be filed under the Exchange Act for a period
of at least ninety (90) days prior to the date of such certificate and in
addition has filed the most recent annual report required to be filed
thereunder. If at any time Issuer is not required to file reports in compliance
with either Section 13 or Section 15(d) of the Exchange Act, Issuer at its
expense will, forthwith upon the written request of the holder of any
Registrable Securities, make available adequate current public information with
respect to Issuer within the meaning of paragraph (c)(2) of Rule 144.
With a view to making available to each Holder of Registrable
Securities the benefits of certain rules and regulations of the Commission which
may permit the sale of the Registrable Securities to the public without
registration, Issuer agrees that so long as a Holder owns any Registrable
Securities, each Holder of Registrable Securities and each prospective Holder of
Registrable Securities who may consider acquiring Registrable Securities in
reliance upon Rule 144A shall have the right to request from Issuer, and Issuer
will provide upon request, such information regarding Issuer and its business,
assets and properties, if any, as is at the time required to be made available
by Issuer under Rule 144A so as to enable such Holder to transfer Registrable
Securities to such prospective Holder in reliance upon Rule 144A.
8. Definitions.
-----------
(a) In addition to other terms defined elsewhere in this Agreement,
except as otherwise specifically indicated, the following terms will have the
following meanings for all purposes of this Agreement:
17
<PAGE>
"Agreement" means this Registration Rights Agreement, as the same
---------
shall be amended from time to time.
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Chicago, Illinois are authorized and required by
law to close.
"Common Stock" means the Common Stock, par value $0.10 per share, of
------------
the Issuer and any voting trust certificates representing shares of Common Stock
issued pursuant to the Voting Trust Agreement.
"Commission" means the Securities and Exchange Commission or any
----------
successor governmental agency.
"Cutback Registration" means any Requested Registration or Piggyback
--------------------
Registration to be effected as an underwritten Public Offering in which the
Managing Underwriter with respect thereto advises Issuer and the Requesting
Holders in writing that, in its opinion, the number of securities requested to
be included in such registration (including securities of Issuer which are not
Registrable Securities) exceed the number which can be sold in such offering
without a reduction in the selling price anticipated to be received for the
securities to be sold in such Public Offering.
"Effective Long-Form Registration" means a Long-Form Registration that
--------------------------------
results in an Effective Registration.
"Effective Registration" means a Requested Registration which (a) has
----------------------
been declared or ordered effective in accordance with the rules of the
Commission, (b) has been kept effective for the period of time contemplated by
Section 3(b) and (c) has resulted in the Registrable Securities requested to be
- ------------
included in such registration actually being sold (except by reason of some act
or omission on the part of the Requesting Holders); provided that a Cutback
--------
Registration shall not be an Effective Registration for purposes of this
Agreement; and provided, further, that a Requested Registration in which Issuer
-------- -------
includes securities for sale for the account of Issuer shall not be an Effective
Registration for purposes of this Agreement. Notwithstanding the foregoing, a
registration that does not become effective after it has been filed with the
Commission solely by reason of the refusal to proceed of the Requesting Holders
shall be deemed to be an Effective Registration for purposes of this Agreement.
"Effective Short-Form Registration" means a Short-Form Registration
---------------------------------
that results in an Effective Registration.
18
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Form S-1" means Form S-1 promulgated by the Commission under the
--------
Securities Act, or any successor or similar long-form registration statement.
"Form S-2" means Form S-2 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Form S-3" means Form S-3 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Holder" has the meaning ascribed to it in the preamble.
------
"Indemnified Party" means a party entitled to indemnity in accordance
-----------------
with Section 6.
---------
"Indemnifying Party" means a party obligated to provide indemnity in
------------------
accordance with Section 6.
---------
"Initial Holder" has the meaning ascribed to it in the preamble.
--------------
"Inspectors" has the meaning ascribed to it in Section 3(k).
---------- ------------
"Issuer" has the meaning ascribed to it in the preamble.
------
"Long-Form Registration" means a Requested Registration effected by
----------------------
the filing of a registration statement on Form S-1 with the Commission.
"Losses" has the meaning ascribed to it in Section 6(a).
------ ------------
"Managing Underwriter" means, with respect to any Public Offering, the
--------------------
underwriter or underwriters managing such Public Offering.
"NASD" means the National Association of Securities Dealers, Inc.
----
"Nonvoting Common Stock" means the Nonvoting Common Stock, par value
----------------------
$0.01 per share, of the Issuer and any voting
19
<PAGE>
trust certificates representing shares of Nonvoting Common Stock issued pursuant
to the Voting Trust Agreement.
"Notice of Piggyback Registration" has the meaning ascribed to it in
--------------------------------
Section 2(a).
- ------------
"Notice of Requested Registration" has the meaning ascribed to it in
--------------------------------
Section 1(a).
- ------------
"Other Registration Rights Agreement" means the Amended and Restated
-----------------------------------
Registration Rights Agreement dated of even date herewith entered into between
the Issuer and Chase Manhattan Investment Holdings, Inc., as the same may be
amended from time to time.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity of whatever nature.
"Piggyback Registration" means any registration of equity securities
----------------------
of the Issuer under the Securities Act (other than a registration in respect of
a dividend reinvestment or similar plan for stockholders of Issuer or on Form S-
4 or Form S-8 promulgated by the Commission, or any successor or similar forms
thereto, whether for sale for the account of the Issuer or for the account of
any holder of securities of Issuer (other than Registrable Securities).
"Public Offering" means any offering of Common Stock to the public,
---------------
either on behalf of Issuer or any of its securityholders, pursuant to an
effective registration statement under the Securities Act.
"Records" has the meaning ascribed to it in Section 3(k).
------- ------------
"Registrable Securities" means Common Stock held by a Holder,
----------------------
including shares of Common Stock represented by voting trust certificates, and
any other securities of Issuer held by a Holder and issued or issuable with
respect to Common Stock by way of a stock dividend or stock split or in
connection with a combination of shares or recapitalization. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (x) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (y)
20
<PAGE>
they shall have been distributed to the public pursuant to Rule 144, or (z) they
shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to Issuer' s
---------------------
performance of or compliance with its obligations under this Agreement to effect
the registration of Registrable Securities in a Requested Registration or a
Piggyback Registration, including, without limitation, all registration, filing,
securities exchange listing and NASD fees, all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for Issuer and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of a single counsel and single
firm of accountants retained by the holders of a majority of the Registrable
Securities being registered, premiums and other costs of policies of insurance
against liabilities arising out of the Public Offering of the Registrable
Securities being registered, but excluding underwriting fees, discounts and
commissions and transfer taxes, if any, in respect of Registrable Securities,
and fees and disbursements of counsel for any underwriter, which shall be
payable by each Holder thereof.
"Registration Request" has the meaning ascribed to it in Section 1(a).
-------------------- ------------
"Requesting Holders" means, with respect to any Requested Registration
------------------
or Piggyback Registration, the holders of Registrable Securities requesting to
have Registrable Securities included in such registration in accordance with
this Agreement.
"Requested Registration" means any registration of Registrable
----------------------
Securities under the Securities Act effected in accordance with Section 1.
---------
"Rule 144" means Rule 144 promulgated by the Commission under the
--------
Securities Act, and any successor provision thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Short-Form Registration" means a Requested Registration effected by
-----------------------
the filing of a registration statement on Form S-2 or Form S-3 with the
Commission.
21
<PAGE>
"Subdebt Offer" means the offer and sale by Issuer or United
-------------
Stationers Supply Co., an Illinois corporation and wholly-owned subsidiary of
the Issuer, after the date hereof of approximately $130,000,000 aggregate
principal amount of debt securities (together with shares of Common Stock or
Nonvoting Common Stock or warrants or other rights exercisable for shares of
Common Stock or Nonvoting Common Stock).
"Voting Trust Agreement" means that certain Voting Trust Agreement,
----------------------
dated as of January 31, 1992, among the Issuer and the voting trustees and
beneficiaries named therein, as amended, modified, or supplemented from time to
time.
(b) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; and (iv) the term "Section" refers to the specified
Section of this Agreement. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified.
9. Miscellaneous.
-------------
(a) Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by facsimile or by reputable express
courier service (charge prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, such notices,
demands and other communications will be sent to each party to this Agreement at
the address indicated on the signature pages hereto, or to such other address or
to the signature pages hereto, or to such other address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party.
(b) Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
(c) Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument (which may be executed in any number of
counterparts) duly executed by or on
22
<PAGE>
behalf of each of Issuer and Persons owning two-thirds or more of the
Registrable Securities; provided however, that any amendment or modification of
-------- -------
this Section 9(c) shall be duly executed by or on behalf of each of the Issuer
------------
and each holder of Registrable Securities; and further provided that no such
amendment, supplement or modification that materially and adversely affects the
rights of a party hereunder shall be enforceable against such party until such
party has consented in writing to such amendment, supplement or modification
(provided that any amendment, supplement or modification made for the purpose of
adding an additional party hereto shall not be deemed to materially or adversely
affect the rights of any party hereto).
(d) Waiver. Subject to paragraph (e) of this Section, any term or
------ -------------
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same term or condition of this Agreement on any
future occasion.
(e) Consents and Waivers by Holders of Registrable Securities. Any
---------------------------------------------------------
consent of the Holders of Registrable Securities pursuant to this Agreement, and
any waiver by such Holders of any provision of this Agreement, shall be in
writing (which may be executed in any number of counterparts) and may be given
or taken by Persons owning two-thirds or more of the Registrable Securities, and
any such consent or waiver so given or taken will be binding on all the Holders
of Registrable Securities.
(f) No Third Party Beneficiary. The terms and provisions of this
--------------------------
Agreement are intended solely for the benefit of each party hereto, their
respective successors or permitted assigns and any other holder of Registrable
Securities, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Section 6.
---------
(g) Successors and Assigns. This Agreement is binding upon, inures
----------------------
to the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
(h) Headings. The headings used in this Agreement have been inserted
--------
for convenience of reference only and do not define or limit the provisions
hereof.
23
<PAGE>
(i) Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
(j) Remedies. Except as otherwise expressly provided for herein, no
--------
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver by any such party of the right to pursue any other available remedies.
Damages in the event of breach of this Agreement by a party hereto or
any other Holder of Registrable Securities would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and Issuer and each Holder of Registrable
Securities, by its acquisition of such Registrable Securities, hereby waives any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.
(k) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
(l) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
UNITED STATIONERS INC.,
a Delaware corporation
Address: By:__________________________________________
1075 Hawthorne Drive Thomas W. Sturgess
Itasca, IL 60143 Chairman of the Board
Telecopy No.: 708-773-6491
With a copy to:
WINGATE PARTNERS, L.P.
750 N. St. Paul, Suite 1200
Dallas, TX 75201
Telecopy No.: 214-871-8799
WINGATE PARTNERS, L.P.,
a Delaware limited partnership
By: WINGATE MANAGEMENT COMPANY,
L.P., a Delaware limited
partnership, its general partner
Address:
750 North St. Paul
Suite 1200 By:_____________________________________
Dallas, TX 75201 Thomas W. Sturgess,
Telecopy No.: 214-871-8799 General Partner
CUMBERLAND CAPITAL CORPORATION, a Delaware
corporation
Address:
301 Commerce Street
Suite 3300 By:___________________________________________
Fort Worth, TX 76102 Gary G. Miller,
Telecopy No.: 817-870-2685 President
25
<PAGE>
ASI PARTNERS, L.P.,
a Delaware limited partnership
By: CUMBERLAND CAPITAL CORPORATION,
Address: a Delaware
corporation, its general partner
301 Commerce Street
Suite 3300
Fort Worth, TX 76102 By:___________________________________
Telecopy No.: 817-870-2685 Gary G. Miller,
President
GOOD CAPITAL CO., INC.,
a Delaware corporation
Address:
1211 Lake Road By:__________________________________________
Lake Forest, IL 60045 Daniel J. Good
Telecopy No.: 708-234-8663 President
BOISE CASCADE CORPORATION,
a Delaware corporation
Address:
One Jefferson Square
Boise, ID 83702 By:___________________________________________
Attn: General Counsel Name:_________________________________________
Telecopy No.: 208-384-7945 Title:________________________________________
Address:
2370 Sonnington Drive
Dublin, OH 43017 ______________________________________________
Telecopy No.: 614-87-4922 Michael D. Rowsey
Address:
20 The Landing
Atlanta, GA 30350 ______________________________________________
Telecopy No.:__________ Daniel J. Schleppe
Address:
6907 Huntfield Drive
Charlotte, NC 28270 ______________________________________________
Telecopy No.:__________ Robert W. Eberspacher
26
<PAGE>
Address:
415 Sterling Road
Kenilworth, IL 60043 ______________________________________________
Telecopy No.:_________ Lawrence E. Miller
STERLING TRUST COMPANY, TRUSTEE
f/b/o Michael D. Rowsey IRA
By:___________________________________________
STERLING TRUST COMPANY, TRUSTEE
f/b/o Daniel J. Schleppe IRA
By:___________________________________________
STERLING TRUST COMPANY, TRUSTEE
f/b/o Robert D. Eberspacher IRA
By:___________________________________________
STERLING TRUST COMPANY, TRUSTEE
f/b/o Lawrence E. Miller IRA
By:___________________________________________
27
<PAGE>
EXHIBIT 10.14
================================================================================
WARRANT AGREEMENT
Among
ASSOCIATED HOLDINGS, INC.
and
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
and, for certain purposes
ASSOCIATED STATIONERS, INC.
Dated as of January 31, 1992
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions; Accounting Terms and Determinations.......... 1
1.01 Definitions............................................... 1
1.02 Accounting Terms and Determinations....................... 20
SECTION 2. Purchase and Sale of Warrants............................. 20
2.01 Authorization and Issuance of Shares and
Warrants............................................... 20
2.02 The Purchase of the Underwriting Warrants................. 20
2.03 Right to Purchase the Tranche B Warrants.................. 21
2.04 Purchase for the Investor's Account....................... 23
2.05 Securities Act Compliance................................. 23
SECTION 3. Representations and Warranties............................ 23
3.01 Existence; Qualification.................................. 23
3.02 No Breach................................................. 24
3.03 Corporate Action.......................................... 24
3.04 Approvals................................................. 25
3.05 Investment Company Act.................................... 25
3.06 Public Utility Holding Company Act........................ 26
3.07 Capitalization............................................ 26
3.08 Private Offering.......................................... 27
3.09 No Litigation............................................. 27
3.10 Brokers................................................... 28
SECTION 4. Restrictions on Transferability........................... 28
4.01 Transfers Generally....................................... 28
4.02 Transfers of Restricted Securities Pursuant to
Registration Statements, Rule 144 and Rule
144A................................................... 28
4.03 Notice of Certain Private Transfers....................... 28
4.04 Restrictive Legends....................................... 28
4.05 Termination of Restrictions............................... 29
SECTION 5. Certain Dispositions of Securities; Regulation Y
Matters................................................ 29
5.01 Certain Dispositions of Securities........................ 29
5.02 Regulation Y Restrictions................................. 30
5.03 Cancellation and Issuance................................. 31
SECTION 6. Issuer's Right of Repurchase.............................. 31
6.01 Repurchase Right.......................................... 31
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<PAGE>
Page
----
6.02 Procedures................................................ 32
SECTION 7. Put Rights................................................ 33
7.01 Put Rights................................................ 33
7.02 Procedures................................................ 33
7.03 Guarantee of the Operating Company........................ 36
SECTION 8. Call Rights; Look Back.................................... 37
8.01 Call Rights............................................... 37
8.02 Look Back Events.......................................... 38
SECTION 9. Right to Join in Sale..................................... 42
9.01 Tag-Along Rights.......................................... 42
9.02 Procedures................................................ 43
9.03 Issuer's Covenants........................................ 43
SECTION 10. Obligation to Join in Sale................................ 44
10.01 Go-Along Obligations...................................... 44
10.02 Procedures................................................ 45
10.03 Issuer's Covenants........................................ 45
10.04 Definition of Go-Along Sale............................... 45
SECTION 11. Earn Back................................................. 47
11.01 Calculation of Earn Back.................................. 47
11.02 Payment of Earn Back...................................... 47
11.03 Applicability of Earn Back Provision...................... 48
11.04 Special Definitions....................................... 48
SECTION 12. Holders' Rights........................................... 50
12.01 Delivery Expenses......................................... 50
12.02 Taxes..................................................... 50
12.03 Replacement of Instruments................................ 50
12.04 Certain Restrictions...................................... 51
12.05 Transactions with Affiliates.............................. 51
12.06 Certain Covenants......................................... 52
12.07 Indemnification........................................... 54
12.08 Preemptive Rights......................................... 54
12.09 Board Observers........................................... 55
12.10 Financial Statements, Etc. ............................... 56
12.11 Holders' Rights in Case of Other Securities............... 58
SECTION 13. Miscellaneous............................................. 58
13.01 Home Office Payment....................................... 58
13.02 Waiver.................................................... 58
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Page
----
13.03 Notices................................................... 58
13.04 Expenses, Etc. ........................................... 60
13.05 Amendments, Etc. ......................................... 60
13.06 Successors and Assigns.................................... 60
13.07 Survival.................................................. 61
13.08 Specific Performance...................................... 61
13.09 Captions.................................................. 61
13.10 Counterparts.............................................. 61
13.11 Governing Law............................................. 61
13.12 Severability.............................................. 62
13.13 Adjustment Of Common Stock................................ 62
13.14 Covenant of Wingate and Cumberland........................ 62
SCHEDULE I - CAPITAL STOCK AND EQUITY SECURITIES
SCHEDULE II- CERTAIN TRANSFEREES
ANNEX 1 - FORM OF WARRANT
ANNEX 2 - REGISTRATION RIGHTS AGREEMENT
ANNEX 3 - FIRST LEGAL OPINION
ANNEX 4 - CERTIFICATE OF INCORPORATION OF ISSUER
ANNEX 5 - JOINDER AGREEMENT
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<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 31, 1992, among ASSOCIATED
HOLDINGS, INC., a corporation duly organized and validly existing under the laws
of the State of Delaware ("Issuer") and CHASE MANHATTAN INVESTMENT HOLDINGS,
------
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Investor"), and for purposes of Section 7 only,
-------- ---------
ASSOCIATED STATIONERS, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware (the "Operating Company").
-----------------
Issuer and certain of the Subsidiaries (as hereinafter defined),
certain banks and The Chase Manhattan Bank (National Association), as agent for
said banks, are parties to a Credit Agreement or even date herewith (as
originally executed, the "Credit Agreement"; references to the Credit Agreement
----------------
herein shall apply whether or not the Credit Agreement is then in force and
without regard to amendments thereto), providing, subject to the terms and
conditions thereof, for extensions of credit to be made by said banks thereunder
in an aggregate amount not exceeding, initially, $95,000,000 at any one time
outstanding. To induce The Chase Manhattan Bank (National Association), which is
an Affiliate of the Investor, to enter into the Credit Agreement and to make the
extensions of credit thereunder, and for other good and valuable consideration
(including the payment of $13.00 by the Investor), the receipt and sufficiency
of which are hereby acknowledged, Issuer has agreed to issue Warrants (as
hereinafter defined) to the Investor providing for the purchase of shares of
Common Stock (as hereinafter defined) of Issuer, in the manner hereinafter
provided. Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions; Accounting Terms and Determinations.
------------------------------------------------
1.01 Definitions.
-----------
"Accruing Liability" shall have the meaning assigned to such term in
------------------
Section 7.02(c).
- ---------------
"Acquisition Costs" shall have the meaning assigned to such term in
-----------------
Section 1.01 of the Credit Agreement.
"Affiliate" shall mean, as to any Person (the "Relevant Person"), any
--------- ---------------
other Person that directly or indirectly controls, or is under common control
with, or is controlled by, the Relevant Person and, if such Person is an
individual, an member
Warrant Agreement
-----------------
<PAGE>
-2-
of the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by
any such member or trust. As used in this Agreement, "control" (including,
-------
with its correlative meanings, "controlled by" and "under common control
------------- --------------------
with") shall mean possession, directly or indirectly, of the power to direct
- ----
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns or has the right
--------
to acquire directly or indirectly (including as part of a group) 5% or more of
the Voting Capital Stock in a corporation or 5% or more of a partnership or
other ownership interests of any other Person, other than as a limited partner
of such other Person, will be deemed to control such corporation or other
Person. In addition, any Person in whom an Affiliate of a Relevant Person has a
10% or greater equity interest shall also be deemed an Affiliate of such
Relevant Person. Notwithstanding the foregoing, (a) no individual shall be
deemed to be an Affiliate of a Relevant Person, solely by reason of his or her
being a director, officer or employee of such Relevant Person or any Subsidiary,
(b) none of the Subsidiaries shall be Affiliates of Issuer or any other
Subsidiary, (c) Issuer shall not be an Affiliate of any Subsidiary, (d) neither
Investor nor any bank, bank holding company or subsidiary of either shall be an
Affiliate of Issuer or any Subsidiary, and (e) Boise Cascade Office Products and
Boise Cascade shall be Affiliates of Issuer and each Subsidiary.
"Annual Management Fees" shall have the meaning assigned to such term
----------------------
in Section 12.05(e).
----------------
"Applicable Earn Back Percentage" shall have the meaning assigned to
-------------------------------
such term in Section 11.04.
-------------
"Bank Holding Company Affiliate" shall mean, with respect to any
------------------------------
Holder subject to the provisions of Regulation Y, (i) if such Holder is a bank
holding company, any company directly or indirectly controlled by such bank
holding company, and (ii) otherwise, the bank holding company that controls such
Holder and any Person (other than such Holder) directly or indirectly controlled
by such bank holding company.
"Base Rate" shall have the meaning assigned to such term in Section
---------
1.01 of the Credit Agreement.
"Board" shall mean the Board of Directors of Issuer.
-----
Warrant Agreement
-----------------
<PAGE>
-3-
"Boise Cascade" shall mean Boise Cascade Corporation, a Delaware
-------------
corporation.
"Boise Warrants" shall mean the warrants issued to Boise Cascade
--------------
covering 23,129 shares of Class A Common Stock pursuant to the Other Warrant
Agreement.
"Business Day" shall mean any day on which commercial banks are not
------------
authorized or required to close in New York City.
"Calculation Date" shall have the meaning assigned to such term in
----------------
Section 11.04.
- -------------
"Call Notice" shall have the meaning assigned to such term in
-----------
Section 8.01(b).
- ---------------
"Call Notice Data" shall mean the date on which a Call Notice shall
----------------
be received by the Holders.
"Call Right" shall mean the right of Issuer to purchase Warrants and
----------
Warrant Stock pursuant to, and in accordance with, Section 8.01.
------------
"Change in Control" shall mean the earliest to occur of: (i) the date
-----------------
on which Wingate shall have sold, transferred or otherwise disposed of full
power to vote, dispose of and receive the pecuniary benefit of, at least 53,524
shares of Common Stock other than the Employee Shares; (ii) the date on which
Wingate shall cease to have the power to vote a majority of Issuer's Voting
Capital Stock, and (iii) the date after which any two of James T. Callier, Jr.,
Thomas W. Sturgess and Frederick B. Hegi, Jr. shall have ceased to be general
partners of Wingate Management Company, L.P. or Wingate Management Company, L.P.
shall have ceased to be directly or indirectly the general partner of Wingate
Partners, L.P.
"Class A Common Stock" shall have the meaning assigned to such term
--------------------
in Section 3.07.
------------
"Class B Common Stock" shall have the meaning assigned to such term
--------------------
in Section 3.07.
------------
"Closing Date" shall have the meaning assigned to such term in
------------
Section 1.01 of the Credit Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
----------
other similar or successor agency of the
Warrant Agreement
-----------------
<PAGE>
-4-
Federal government administering the Securities Act and/or the Exchange Act.
"Commitments" shall have the meaning assigned to such term in
-----------
Section 1.01 of the Credit Agreement.
"Common Stock" shall mean Issuer's authorized Class A Common Stock
------------
and Class B Common Stock as constituted on the date of original issuance of the
Warrants and any stock into which such Common Stock may thereafter be converted
or changed, and also shall include any other stock of Issuer of any other class,
which is not preferred as to dividends or assets over any other class of any
other stock of Issuer. References herein and in the Warrants to the Common Stock
outstanding "on a fully diluted basis" at any time shall mean the number of
Common Stock then issued and outstanding, assuming full conversion, exercise and
exchange of all Convertible Securities and Options that are (or may become)
exchangeable for, or exercisable or convertible into, Common Stock, including
the Warrants, provided, that the number of shares of Common Stock deemed to be
--------
outstanding "on a fully diluted basis" shall be reduced by the number of shares
of Common Stock purchasable or issuable upon exercise, conversion or exchange of
Options or Convertible Securities at the time of calculation which are Out of
the Money.
"Company Notice Date" shall have the meaning assigned to such term in
-------------------
Section 7.01(b).
- ---------------
"Company Permitted Financing" shall have the meaning assigned to such
---------------------------
term in Section 1.01 of the Credit Agreement.
"Control" for purposes of Section 5.02 shall mean, with respect to
------- ------------
any Person, the power to exercise, directly or indirectly, a controlling
influence over the management or policies of such Person.
"Convertible Securities" shall mean evidences of indebtedness, shares
----------------------
of stock or other securities or rights which are exchangeable for or exercisable
or convertible into a specified security of Issuer either immediately or upon
the arrival of a specified date or the occurrence of a specified event.
"Credit Agreement" shall have the meaning set forth at the head of
----------------
this Agreement.
Warrant Agreement
-----------------
<PAGE>
-5-
"Cumberland" shall mean Cumberland Capital Corporation, a Delaware
----------
corporation and, so long as Cumberland is its general partner, ASI Partners,
L.P.
"Date of Issuance" shall have the meaning assigned to such term
----------------
in Section 2.03(c).
---------------
"Defaults" shall have the meaning assigned to such term in
--------
Section 7.02(b).
- ---------------
"Earn Back" shall have the meaning assigned to such term in
---------
Section 11.01.
- -------------
"EBITD" shall mean, at any date of determination, the sum, for
-----
Issuer and the Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) net profits after
taxes for the most recent 12 months, plus (b) Interest Expense for such period,
----
together with any pay-in-kind interest paid on the Exchange Notes and any
accrued but unpaid interest on the Exchange Notes and any original issue
discount to the extent deducted in calculating net profits, plus (c) income
----
taxes for such period, plus (d) extraordinary and unusual items of loss for such
----
period, plus (e) losses attributable to equity in Affiliates for such period,
----
plus (f) depreciation and amortization (to the extent deducted in computing net
- ----
profits after taxes) for such period, plus (g) management fees for such period,
----
minus (h) extraordinary and unusual items of income or gain for such period,
- -----
minus (i) gains attributable to equity in Affiliates for such period, plus (j)
- ----- ----
all Monitoring Costs for such period, plus (k) all non-cash charges related to
----
employee compensation to the extent deducted in calculating net profits.
"EBITDA" for purposes of Section 12.05, shall have the meaning
------ -------------
assigned to such term in Section 1.01 of the Credit Agreement.
"Election Notice" shall have the meaning assigned to such term in
---------------
Section 12.08.
- -------------
"Employee Shares" shall mean 56,935 shares of Common Stock owned by
---------------
Wingate and 21,725 shares of Common Stock owned by Cumberland on the date
hereof, which in their discretion may be sold to certain yet to be identified
management employees of the Operating Company.
"Equity Value" shall mean, as at any date of determination, with
------------
respect to Issuer and the Subsidiaries (determined on
Warrant Agreement
-----------------
<PAGE>
-6-
a consolidated basis without duplication in accordance with GAAP), the sum of
(i) the product of 5.0 and EBITD, minus (ii) such amount of non-convertible
-----
indebtedness of Issuer and the Subsidiaries at such date as would appear in a
balance sheet, except in the case of revolving loans, the amount which would
appear in such balance sheet shall be replaced by an amount which is equal to
the average outstanding balances for all revolving loans of Issuer and the
Subsidiaries during the preceding 12 months, minus (iii) the value of
-----
outstanding shares of Preferred Stock of Issuer as would appear in a balance
sheet, plus (iv) the amount of cash and cash equivalents (assuming receipt of
----
applicable consideration for conversion, exchange or exercise of any Convertible
Securities or Options which are convertible or exercisable into or exchangeable
for Common Stock unless they are Out of the Money) of Issuer and the
Subsidiaries outstanding at such date (including inter-company receivables).
References to "balance sheet" in (ii) through (iv) above are to balance sheets
prepared in accordance with GAAP; and amounts to be determined in (ii) through
(iv) above shall be determined in accordance with GAAP.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Exchange Notes" shall mean the Class A Exchange Notes, the Class B
--------------
Exchange Notes and the Class C Exchange Notes all as set forth in Issuer's
certificate of incorporation which is attached as Annex 4 hereto.
-------
"Executive Stock Purchase Agreements" shall mean the Associated
-----------------------------------
Holdings, Inc. Executive Stock Purchase Agreements among Issuer, Wingate,
Cumberland and each Key Executive dated January 31, 1992.
"Exercise Price" shall have the meaning assigned to such term in the
--------------
form of Warrant attached as Annex 1 hereto.
-------
"Expiration Date" shall mean the date 10 years from the Closing Date.
---------------
"Fair Market Value" shall mean, as at any Put Notice Date, Call
-----------------
Notice Date or Subsequent Asset Sale Date, as the case may be, the price for
which all the outstanding shares of Common Stock (on a fully diluted basis,
assuming receipt of applicable consideration for any conversion, exchange or
exercise of any Convertible Securities or Options which are exchangeable for or
Warrant Agreement
-----------------
<PAGE>
-7-
convertible or exercisable into Common Stock unless they are Out of the Money)
could be sold in an arm's length transaction to a third party which is not an
Affiliate within 12 months after such Put Notice Date, Call Notice Date or
Subsequent Asset Sale Date, as the case may be, treating Issuer and the
Subsidiaries as a going concern and without regard to (i) the lack of liquidity
of the Common Stock due to any restrictions or other limitations contained in
this Agreement, the Registration Rights Agreement, the Warrants or otherwise,
(ii) any discount for minority interests, (iii) the fact that some of the issued
and outstanding shares of the Common Stock may not have any voting rights or may
not have full voting rights, (iv) the fact that one or more of the holders of
the Common Stock may be unable to exercise in full any of its voting rights
due to regulatory, contractual or other restrictions, or (v) the fact that
contractual or regulatory approvals, consents, waivers, licenses, permits or
notifications may need to be obtained in connection with such sale and the
time required to obtain the same. For purposes of determining the Fair Market
Value, it shall be assumed that, in such an arm's length transaction, (A) the
seller would not be under any compulsion to sell, and (B) the purchaser would
not be under any compulsion to purchase. The Fair Market Value shall be
determined by agreement or appraisal in accordance with the procedures
described below.
If the Fair Market Value is being determined in connection with the
exercise of a Put Right, within 20 days after the applicable Company Notice
Date, Issuer and the Holders of a majority of the Warrant Stock issued or
issuable upon exercise of the Warrants who have given Put Notices in connection
with such Put Right (the "Majority Put Holders") shall each designate a
--------------------
representative and such representatives will meet and use their best efforts to
reach an agreement on the Fair Market Value. If the Fair Market Value is being
determined in connection with the exercise by Issuer of a Call Right, within 20
days after the applicable Call Notice Date, Issuer and the Majority Warrant
Stockholders shall each designate a representative and such representatives will
meet and use their best efforts to reach an agreement on the Fair Market Value.
If the Fair Market Value is being determined in connection with the occurrence
of any Subsequent Asset Sale, within 20 days after the applicable Subsequent
Asset Sale Date, Issuer and the Holders of a majority of the Warrant Stock sold
in the applicable Prior Sale, including Warrant Stock issuable upon the exercise
of Warrants sold in such Prior Sale (the "Majority Look Back Holders"), shall
--------------------------
each designate a representative and such representatives will meet and use their
best efforts to reach an agreement on the Fair Market Value. The Majority Put
Holders (in the case of the exercise of
Warrant Agreement
-----------------
<PAGE>
-8-
a Put Right), the Majority Warrant Stockholders (in the case of the exercise by
Issuer of a Call Right) and the Majority Look Back Holders (in the case of any
Subsequent Asset Sale), as the case may be, are herein called the "Relevant
--------
Majority Holders". The Company Notice Date (in the case of the exercise of a Put
- ----------------
Right), the Call Notice Date (in the case of the exercise by Issuer of a Call
Right) and the Subsequent Asset Sale Date (in the case of a Subsequent Asset
Sale) is each herein called the "Relevant Notice Date".
--------------------
If the representatives designated by Issuer and the Relevant Majority
Holders are unable to reach such agreement within 15 days after the date on
which the later of the two representatives are designated, then (A) the Relevant
Majority Holders shall immediately designate one Independent Appraiser; (B)
Issuer shall immediately designate one Independent Appraiser; (C) the two
Independent Appraisers so selected shall, within 20 days after the date on which
the later of the two Independent Appraisers are appointed, determine
independently the Fair Market Value using the parameters established in the
first paragraph of this definition; (D) if the lesser of the two appraised
values exceeds or is equal to 90% of the other appraised value, then the Fair
Market Value will be the average of the two, which average amount shall be
conclusive and binding upon all the applicable parties; (E) if the lesser of the
two appraised values is less than 90% of the other appraised value, then the two
appraisers shall, within 20 days of the date of the later of the two appraisals
appoint a third Independent Appraiser; and (F) the third Independent Appraiser
so selected shall, within 15 days of its appointment, determine independently
the Fair Market Value using the parameters established in the first paragraph of
this definition, which determination shall be conclusive and binding upon all
the applicable parties.
Issuer will provide each Independent Appraiser with all information
about Issuer and the Subsidiaries which such Independent Appraiser reasonably
deems necessary for determining the Fair Market Value. The fees and expenses of
the appraisal process (including those of the Independent Appraisers) will be
paid by Issuer, provided, however, that half of the fees and expenses of the
-------- -------
third Independent Appraiser, if any, shall be paid, in the event that Fair
Market Value is being determined for the purpose of determining a Put Price Per
Share, by the Holders of the Warrant Stock and Warrants who have given Put
Notices. Issuer may require that the Independent Appraisers keep confidential
any non-public information received as a result of this paragraph pursuant to
reasonable confidentiality arrangements.
Warrant Agreement
-----------------
<PAGE>
-9-
"Fair Price" shall have the meaning assigned to such term in Section
---------- -------
10.04.
- -----
"Financing" shall mean the borrowing of money by Issuer (including in
---------
connection with any refinancing of existing indebtedness of Issuer), the sale or
issuance of Additional Shares of Common Stock (as defined in the Warrant), a
recapitalization of Issuer, a revaluation of Issuer's assets (to the extent
permitted under Delaware corporate law and GAAP), transfers by Issuer from its
capital to its surplus accounts, effecting the sale of the Warrants and/or the
Warrant Stock required to be purchased by Issuer under Section 7 to one or more
---------
third parties or any other transaction (other than a sale of a majority of the
assets of Issuer) pursuant to which Issuer makes available funds in an amount
sufficient to satisfy in cash all its obligations under Section 7.
---------
"GAAP" shall mean generally accepted accounting principles,
----
consistently applied throughout the specified period.
"Go-Along Notice Date" shall mean the date on which the Go-Along
--------------------
Notice is given.
"Go-Along Sale" shall have the meaning assigned to such term in
-------------
Section 10.04.
- -------------
"Good Capital" shall mean Good Capital Co., Inc., a Delaware
------------
corporation.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (whether through ownership of securities or other ownership
interests, by contract or otherwise) by any of the foregoing.
"Holder" shall mean any Person who acquires Warrants or Warrant Stock
------
pursuant to the provisions of this Agreement, including any transferees of
Warrants or Warrant Stock, provided, however, that a holder of Warrant Stock
-------- -------
purchased pursuant to an effective registration statement or in an ordinary
brokerage transaction pursuant to Rule 144 shall not be deemed a Holder.
"include" and "including" shall be construed as if followed by the
------- ---------
phrase "without being limited to".
Warrant Agreement
-----------------
<PAGE>
-10-
"Indebtedness" shall have the meaning assigned to such term in
------------
Section 1.01 of the Credit Agreement.
"Independent Appraiser" shall mean an appraiser which is a recognized
---------------------
independent expert (including any Investment Banking Firm) experienced in
valuing businesses similar or related to the principal business of Issuer and
the Subsidiaries.
"Interest Expense" shall have the meaning assigned to such term in
----------------
Section 1.01 of the Credit Agreement.
"Interim Dividends" shall have the meaning assigned to such term in
-----------------
Section 8.02(a)(iii).
- --------------------
"Investment" shall have the meaning assigned to such term in Section
---------- -------
1.01 of the Credit Agreement.
- ----
"Investment Banking Firm" shall mean a nationally recognized
-----------------------
investment banking firm.
"Investor" shall have the meaning set forth at the head of this
--------
Agreement.
"IPO" shall mean the initial public offering of any equity securities
---
(including Convertible Securities and Options that are (or may become)
exchangeable for or convertible or exerciseable into equity securities) of
Issuer under an effective registration statement under the Securities Act.
"IRR" shall have the meaning assigned to such term in Section 11.04.
--- -------------
"Issuer" shall have the meaning set forth at the head of this
------
Agreement.
"Joinder Agreement" shall mean a Joinder Agreement between Issuer and
-----------------
a Stockholder, which shall be substantially in the form attached as Annex 5
-------
hereto.
"Key Executives" shall mean Michael D. Rowsey, Robert B. Eberspacher,
--------------
Daniel J. Schleppe and Lawrence E. Miller.
"Key Executive Options" shall mean the options which may be granted
---------------------
to the Key Executives under the MAnagement Stock Option Plan, which, upon
exercise will give such Key Executives the right to purchase, in the aggregate,
a maximum of 21,684 shares of Class A Common Stock.
Warrant Agreement
-----------------
<PAGE>
-11-
"Lender" shall have the meaning set forth at the head of the Credit
------
Agreement.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loans" shall have the meaning assigned to such term in Section 1.01
-----
of the Credit Agreement.
"Look Back Event" shall have the meaning assigned to such term in
---------------
Section 8.02(b).
"Look Back Holder" shall have the meaning assigned to such term in
----------------
Section 8.02(a).
"Look Back Period" shall have the meaning assigned to such term in
----------------
Section 8.02(a).
- ---------------
"Majority Look Back Holders" shall have the meaning assigned to such
--------------------------
term in the definition of Fair Market Value in this Section 1.
---------
"Majority Put Holders" shall have the meaning assigned to such term
--------------------
in the definition of Fair Market Value in this Section 1.
---------
"Majority Warrant Stockholders" shall mean the Holders of a majority
-----------------------------
of the Warrant Stock issued or issuable upon exercise of the Warrants. For
purposes of giving notices, waivers and consents hereunder, Holders of Warrants
shall be deemed holders of Common Stock issued on exercise thereof.
"Management Options" shall mean the options which may be granted to
------------------
certain managers of the Operating Company under the Management Stock Option
Plan, and which, upon exercise, will give such managers the right to purchase,
in the aggregate, a maximum of 65,051 shares of Class A Common Stock.
"Management Stock Option Plan" shall mean the Associated Holdings,
----------------------------
Inc. 1992 Management Stock Option Plan in effect on January 31, 1992.
Warrant Agreement
-----------------
<PAGE>
-12-
"Marketable Securities" shall mean any security that is listed or
---------------------
admitted to trading on a national securities exchange or quoted by NASDAQ or at
least three market makers, and can be sold by the recipient within 30 days of
receipt without incurring a significant discount from the average of the bid and
asked prices for such shares of stock or other securities at the time of
receipt.
"Monitoring Costs" shall have the meaning assigned to such term in
----------------
Section 1.01 of the Credit Agreement.
"Monthly Management Fees" shall have the meaning assigned to such
-----------------------
term in Section 12.05(e).
----------------
"NASDAQ" shall mean the National Association of Securities Dealer
------
automated quotation system.
"Net Consideration" shall have the meaning assigned to such term in
-----------------
Section 8.02(b).
- ---------------
"New Securities" shall mean any capital stock of Issuer (including
--------------
any Common Stock or Preferred Stock), all Convertible Securities or Options that
are (or may become) exchangeable for, or exerciseable or convertible into, such
capital stock, any voting security, and any Participating Security; provided,
--------
however, that New Securities shall not include the Warrants, the Warrant Stock
- -------
and the Other Equity Securities.
"Notes" shall have the meaning assigned to such term in Section 1.01
-----
of the Credit Agreement.
"Notice of Non-Acceptance" shall have the meaning assigned to such
------------------------
term in Section 2.03(e).
---------------
"Observer" shall have the meaning assigned to such term in Section
-------- -------
12.09.
- -----
"Offeree" shall have the meaning assigned to such term in Section
------- -------
12.08.
- -----
"Offer Notice" shall have the meaning assigned to such term in
------------
Section 12.08.
- -------------
"Offer Period" shall have the meaning assigned to such term in
------------
Section 12.08.
- -------------
"Operating Company" shall have the meaning set forth at the head of
-----------------
this Agreement.
Warrant Agreement
-----------------
<PAGE>
-13-
"Option" shall mean any warrant, option or other right to subscribe
------
for or purchase a specified security of Issuer.
"Other Equity Documents" shall mean the Stockholders Registration
----------------------
Rights Agreement, the Management Stock Option Plan and options thereunder, the
Other Warrant Agreement and the warrants issued thereunder, the Executive Stock
Purchase Agreement, the Stockholders Agreement, the Transition Services
Agreement, the Preferred Stock Purchase Agreements, the Securities Purchase
Agreement and the Voting Trust Agreement.
"Other Equity Securities" shall mean the Key Executive Options, the
-----------------------
Management Options, the Boise Warrants, the Employee Shares and the shares of
Common Stock purchased or purchaseable by the holders of the Other Equity
Securities upon the exercise thereof.
"Other Securities" shall mean any stock (other than Warrant Stock)
----------------
and other securities of Issuer or any other Person (corporate or otherwise)
which the holders at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants or pursuant to Section 5 thereof, in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Warrant Stock or
Other Securities received in an earlier exchange, exercise or replacement of
Warrant Stock.
"Other Warrant Agreement" shall mean the Warrant Agreement dated as
-----------------------
of January 31, 1992, between Boise Cascade and Issuer.
"Out of the Money" shall mean (a) in the case of an Option, that the
----------------
fair market value of the shares of Common Stock which the holder thereof is
entitled to purchase or subscribe for is less than the exercise price of such
Option and (b) in the case of a Convertible Security, that the quotient
resulting from dividing the fair market value of such Convertible Security by
the number of shares of Common Stock into or for which such Convertible Security
is exerciseable, convertible or exchangeable is greater than the fair market
value of a share of Common Stock.
"Participating Securities" shall mean any security the rights of the
------------------------
holders of which are not limited to a fixed sum or percentage of liquidation
preference or principal amount, a sum determined by reference to a formula based
on a published index of interest rates, an interest rate publicly announced by a
financial institution or a similar index of interest rates in
Warrant Agreement
-----------------
<PAGE>
-14-
respect of interest or dividends, and to a fixed sum or percentage of principle
amount or liquidation preference in any distribution of assets.
"Person" shall mean a corporation, an association, a partnership, a
------
joint venture, an organization, a business, an individual or a Governmental
Authority.
"Preferred Stock" shall mean, as to any Person, any capital stock of
---------------
such Person which is preferred as to dividends or assets over any other class of
any other stock of such Person.
"Preferred Stock Purchase Agreements" shall mean the Preferred Stock
-----------------------------------
Purchase Agreement dated January 31, 1992, between Issuer and Boise Cascade and
the Purchase Agreement dated January 31, 1992, between Issuer and Affiliated
Computer Services, Inc.
"Prior Amount" shall have the meaning assigned to such term in
------------
Section 8.02(a)(i).
- ------------------
"Prior Sale" shall have the meaning assigned to such term in
----------
Section 8.02(a).
- ---------------
"Proportionate Share" shall have the meaning assigned to such term in
-------------------
Section 2.03(e).
- ---------------
"Proposed Purchaser" shall have the meaning assigned to such term in
------------------
Section 9.02.
- ------------
"Proposed Sale" shall have the meaning assigned to such term in
-------------
Section 12.08.
- -------------
"Purchasing Offeree" shall have the meaning assigned to such term in
------------------
Section 12.08.
- -------------
"Put Notice" shall have the meaning assigned to such term in
----------
Section 7.01(b).
- ---------------
"Put Notice Date" shall mean, with respect to a Put Notice, the date on
---------------
which such Put Notice is given or deemed given, as the case may be, to Issuer.
"Put Postponement" shall have the meaning assigned to such term in
----------------
Section 7.02(c).
- ---------------
"Put Price Per Share" shall mean, as at any date, (i) the greater of
-------------------
Fair Market Value or Equity Value, divided by
----------
Warrant Agreement
-----------------
<PAGE>
-15-
(ii) the number of shares of Common Stock then outstanding on a fully diluted
basis.
"Put Reactivation Date" shall have the meaning assigned to such term
---------------------
in Section 7.02(c).
---------------
"Put Response Notice" shall have the meaning assigned to such term in
Section 7.02(b).
- ---------------
"Put Right" shall mean the right of a Holder to require Issuer to
---------
purchase Warrants and Warrant Stock pursuant to, and in accordance with,
Section 7.
- ---------
"Put Withdrawal Notice" shall have the meaning assigned to such term
---------------------
in Section 7.02(b).
---------------
"Qualified Public Offering" shall mean an offering or offerings of
-------------------------
Common Stock under one or more effective registration statements under the
Securities Act such that, after giving effect thereto, (i) at least 20% of the
outstanding Common Stock (on a fully diluted basis) has been sold pursuant to
such offerings, and (ii) such offerings result in aggregate cash proceeds being
received by Issuer and any selling Stockholders of at least $37,500,000
exclusive of underwriter's discounts and other expenses, as a result of which
Common Stock is listed or admitted to trading on a national securities exchange
or quoted by NASDAQ.
"Registration Rights Agreement" shall mean the Registration Rights
-----------------------------
Agreement of even date herewith, between Issuer and the Investor, relating to
the registration of the Registrable Securities (as defined therein) under and
pursuant to the Securities Act, which shall be in the form attached as Annex 2
-------
hereto, as said Registration Rights Agreement shall be modified and supplemented
and in effect from time to time.
"Regulation Y" shall mean Regulation Y promulgated by the Board of
------------
Governors of the Federal Reserve System (12 C.F.R. (S) 225) or any successor
regulation.
"Relevant Majority Holders" shall have the meaning assigned to such
-------------------------
term in the definition of Fair Market Value in this Section 1.
---------
"Repurchase Notice" shall have the meaning assigned to such term in
-----------------
Section 6.01.
- ------------
Warrant Agreement
-----------------
<PAGE>
-16-
"Repurchase Notice Date" shall mean the date on which a Repurchase
----------------------
Notice shall be received by the Holders.
"Repurchase Price" shall mean (a) prior to the day which is six months
----------------
following the Closing Date, $10.81 per Stock Unit, and (b) thereafter and until
the first anniversary of the Closing Date, $17.29 per Stock Unit.
"Repurchase Right" shall have the meaning assigned to such Term in
----------------
Section 6.01(a).
- ---------------
"Restricted Certificate" shall mean a certificate for shares of
----------------------
Warrant Stock or Warrants bearing or required to bear the restrictive legend set
forth in Section 4.04.
------------
"Restricted Securities" shall mean Restricted Stock and Restricted
---------------------
Warrants.
"Restricted Stock" shall mean Warrant Stock evidenced by a Restricted
----------------
Certificate.
"Restricted Warrants" shall mean Warrants evidenced by a Restricted
-------------------
Certificate.
"Revolving Credit Loans" shall have the meaning assigned to such term
----------------------
in Section 1.01 of the Credit Agreement.
"Rule 144" shall mean Rule 144 promulgated by the Commission under the
--------
Securities Act (or any successor or similar rule then in force).
"Rule 144A" shall mean Rule 144A promulgated by the Commission under
---------
the Securities Act (or any successor or similar rule then in force).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities Purchase
-----------------------------
Agreement dated January 31, 1992, among Wingate, Cumberland, Good Capital and
Issuer.
"Selling Stockholder" shall have the meaning assigned to such term in
Section 9.01.
Warrant Agreement
-----------------
<PAGE>
-17-
"Sponsor Management Fees" shall have the meaning assigned to such
-----------------------
term in Section 12.05(e).
----------------
"Stockholder" shall mean any Person who directly or indirectly owns
-----------
any shares of Common Stock (including any shares of Warrant Stock).
"Stockholders Agreement" shall mean the Associated Holdings, Inc.
----------------------
Stockholders Agreement dated January 31, 1992, among Wingate, Cumberland, Good
Capital and the other Persons whose names appear on the signature pages thereto.
"Stockholders Registration Rights Agreement" shall mean the
------------------------------------------
Associated Holdings, Inc. Registration Rights Agreement dated as of January
31, 1992 by and among Issuer and the Persons whose names appear on the
signature pages thereto.
"Stock Unit" shall have the meaning assigned to such term in the form
----------
of Warrant attached as Annex 1 hereto.
-------
"Subject Holder" shall have the meaning assigned to such term in
--------------
Section 11.04.
- -------------
"Subsequent Asset Sale" shall have the meaning assigned to such term
---------------------
in Section 8.02(b).
---------------
"Subsequent Asset Sale Date" shall mean the date upon which a
--------------------------
Subsequent Asset Sale shall occur.
"Subsequent Share Value" shall have the meaning assigned to such term
----------------------
in Section 8.02(b).
---------------
"Subsequent Stock Sale" shall have the meaning assigned to such term
---------------------
in Section 8.02(b).
---------------
"Subsidiary" shall mean any Person in which Issuer, directly or
----------
indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in or the Voting Capital Stock of such Person.
"Wholly-Owned Subsidiary" shall have the meaning assigned to such term under the
-----------------------
definition of "Subsidiary" in Section 1.01 of the Credit Agreement.
"Tag-Along Purchase Offer" shall have the meaning assigned to such
------------------------
term in Section 9.02.
------------
"Tag-Along Sale" shall have the meaning assigned to such term in
--------------
Section 9.01(a).
- ---------------
Warrant Agreement
-----------------
<PAGE>
-18-
"Term Loans" shall have the meaning assigned to such term in Section
----------
1.01 of the Credit Agreement.
"Third Party" shall have the meaning assigned to such term in
-----------
Section 10.04.
- -------------
"Tranche B Term Loans" shall have the meaning assigned to such term
--------------------
in Section 1.01 of the Credit Agreement.
"Tranche B Term Loan Commitment" shall have the meaning assigned to
------------------------------
such term in Section 1.01 of the Credit Agreement.
"Tranche B Term Loan Lenders" shall have the meaning assigned to such
---------------------------
term in Section 1.01 of the Credit Agreement.
"Tranche B Warrants" shall have the meaning assigned to such term in
------------------
Section 2.03(a).
- ---------------
"Tranche B Warrant Repurchase Right" shall have the meaning assigned
----------------------------------
to such term in Section 2.03(d).
---------------
"Tranche B Warrant Stock" shall mean (i) the shares of Common Stock
-----------------------
purchased or purchasable by the Holders of the Tranche B Warrants upon the
exercise thereof, including any Common Stock into which such Common Stock may
thereafter be changed or converted, and (ii) any additional shares of Common
Stock issued or distributed by way of a dividend, stock split or other
distribution in respect of the Common Stock referred to in clause (i) above, or
----------
acquired by way of any rights offering or similar offering made in respect of
the Common Stock referred to in clause (i) above. Any Tranche B Warrant Stock
----------
purchased by Issuer shall, upon such purchase, except for purposes of Section 6
---------
cease to be Tranche B Warrant Stock, cease to be outstanding and Issuer, upon
such purchase, shall not be deemed a Holder.
"Transition Services Agreement" shall mean the Transition Services
-----------------------------
Agreement among Boise Cascade, Boise Cascade Office Products Corporation, the
Operating Company and Issuer dated January 31, 1992.
"Triggering Event" shall mean the earliest to occur of: (i) the fifth
----------------
anniversary of the Closing Date; (ii) a merger, share exchange or consolidation
involving Issuer, unless Issuer is the survivor and the shares of capital stock
outstanding immediately prior to such merger, share exchange or consolidation
are not subject to purchase, redemption, exchange, cancellation or any other
change, as a result thereof; (iii) a sale, lease or
Warrant Agreement
-----------------
<PAGE>
-19-
other disposition in a single transaction or series of related transactions of
all or a majority of the assets of Issuer, including, without limitation, by or
through the sale, lease or other disposition of the capital stock or assets of,
or a merger or consolidation involving, any Subsidiary or a liquidation or
distribution, but excluding a sale/leaseback of, or the creation of a Lien on,
such assets in connection with a Company Permitted Financing; (iv) any Change in
Control; and (v) repayment in full of the Tranche B Term Loans, unless such
repayment occurs within one year of the Closing Date.
"Underwriting Warrants" shall have the meaning assigned to such term
---------------------
in Section 2.02(a).
---------------
"Undistributed Warrants" and "Undistributed Warrant Repurchase Notice"
---------------------- ---------------------------------------
shall have the respective meanings assigned to such terms in Section 2.03(d).
---------------
"Voting Capital Stock" with respect to any corporation shall mean its
--------------------
common stock and Preferred Stock entitled to vote generally for the election of
directors.
"Voting Trust Agreement" shall mean that certain Voting Trust
----------------------
Agreement, of even date herewith, among Issuer, Daniel J. Good, Gary G. Miller,
Thomas W. Sturgess, Frederick B. Hegi, Jr. and either of James A. Johnson or
James T. Callier, Jr. and the beneficial owners of shares of Common Stock whose
names are set forth on the signature pages thereto.
"Warrant Income" shall have the meaning assigned to such term in
--------------
Section 11.04.
- -------------
"Warrant Purchase Notice" shall have the meaning assigned to such term
-----------------------
in Section 2.03(b).
---------------
"Warrant Purchase Right" shall have the meaning assigned to such term
----------------------
in Section 2.03(a).
---------------
"Warrant Stock" shall mean (i) the shares of Common Stock purchased or
-------------
purchasable by the Holders of the Warrants upon the exercise thereof, including
any Common Stock into which such Common Stock may thereafter be changed or
converted, and (ii) any additional shares of Common Stock issued or distributed
by way of a dividend, stock split or other distribution in respect of the Common
Stock referred to in clause (i) above, or acquired by way of any rights offering
----------
or similar offering made in respect of the Common Stock referred to in clause
------
(i) above. Any Warrant Stock purchased by Issuer shall, upon such purchase,
- ---
Warrant Agreement
-----------------
<PAGE>
-20-
cease to be Warrant Stock, cease to be outstanding and Issuer, upon such
purchase, shall not be deemed a Holder.
"Warrants" shall have the meaning assigned to such term in Section
-------- -------
2.01.
- ----
"Wingate" shall mean Wingate Partners, L.P., and Wingate Management
-------
Company, L.P., so long as it is a general partner of Wingate Partners, L.P., and
Wingate Affiliates L.P., so long as Wingate Partners, L.P. is a general partner
thereof.
1.02 Accounting Terms and Determinations. Except as otherwise may be
-----------------------------------
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Holders hereunder and under
the Warrants shall be prepared, in accordance with GAAP. All calculations made
for the purposes of determining compliance with the terms of this Agreement and
the Warrants shall (except as otherwise may be expressly provided herein) be
made by application of GAAP.
SECTION 2. Purchase and Sale of Warrants.
-----------------------------
2.01 Authorization and Issuance of Shares and Warrants. Issuer has
-------------------------------------------------
authorized: (a) the issuance of warrant certificates covering the purchase of
Stock Units representing shares of Common Stock in the form of Annex 1 to this
-------
Agreement (such certificates, together with the rights to purchase Common Stock
provided thereby and all warrant certificates covering such stock issued upon
transfer, division or combination of, or in substitution for, any thereof,
sometimes called the "Warrants") for issuance to the Investor pursuant to this
--------
Agreement; and (b) the issuance of such number of shares of Class A and Class B
Common Stock as shall be necessary to permit Issuer to comply with its
obligations to issue Common Stock pursuant to the Warrants and Class A Common
Stock upon conversion of the Class B Common Stock.
2.02 The Purchase of the Underwriting Warrants.
-----------------------------------------
(a) On the date hereof:
(i) Issuer shall issue to the Investor Warrants
covering 34,694 Stock Units, which represents 3% of the outstanding
shares of Common Stock on a fully diluted basis (the "Underwriting
------------
Warrants") on the date of original issuance of the Underwriting
--------
Warrants;
Warrant Agreement
-----------------
<PAGE>
-21-
(ii) The Investor shall pay Issuer $3.00 for the Underwriting
Warrants;
(iii) Issuer shall deliver to the Investor a single certificate
for the Underwriting Warrants to be acquired by the Investor
hereunder, registered in the name of the Investor, except that, if
the Investor shall notify Issuer in writing prior to such issuance
that it desires certificates for Warrants to be issued in other
denominations or registered in the name or names of any Affiliate,
nominee or nominees of the Investor for its or their benefit, then the
certificates for Warrants shall be issued to the Investor in the
denominations and registered in the name or names specified in such
notice; and
(iv) Issuer shall deliver to the Investor a legal opinion from
counsel to Issuer in the form attached as Annex 3 hereto.
-------
(b) On or before the date hereof, Issuer shall have adopted a
certificate of incorporation substantially in the form of Annex 4 hereto.
-------
2.03 Right to Purchase the Tranche B Warrants.
----------------------------------------
(a) On or prior to the first anniversary of the Closing Date, the
Investor shall have the right to purchase, on one or more occasions, such number
of Warrants covering such number of Stock Units as is equal to 10% of the
outstanding shares of Common Stock on a fully diluted basis (the "Tranche B
---------
Warrants") on the Date of Issuance (the "Warrant Purchase Right").
- -------- ----------------------
(b) The Investor may exercise the Warrant Purchase Right by delivering
a notice to Issuer indicating that the Investor wishes to purchase the Tranche B
Warrants (the "Warrant Purchase Notice").
-----------------------
(c) The purchase and sale of the Tranche B Warrants pursuant to the
Warrant Purchase Right shall be consummated on a date selected by the Investor
by giving Issuer at least two days' prior written notice thereof, which date
shall be not later than 30 days after delivery of the Warrant Purchase Notice to
the Issuer (the "Date of Issuance"). On the Date of Issuance:
----------------
(i) Issuer shall deliver to the Investor a single certificate for
the Tranche B Warrants, registered in
Warrant Agreement
-----------------
<PAGE>
-22-
the name of the Investor, except that, if the Investor shall
notify Issuer in writing prior to such issuance that it desires
certificates for the Tranche B Warrants to be issued in other
denominations or registered in the name or names of any Affiliate of
the Investor, any Tranche B Lender or any Affiliate of a Tranche B
Lender or any nominee or nominees for its or their benefit, then the
certificates for the Tranche B Warrants shall be issued to the
Investor in the denominations and registered in the name or names
specified in such notice.
(ii) The Investor shall pay $10.00 in total for the Tranche B
Warrants;
(iii) Issuer will deliver to each Person that receives a
certificate for Tranche B Warrants a favorable legal opinion from
D'Ancona & Pflaum or Weil, Gotshal & Manges or other counsel to
Issuer acceptable to the Investor, covering the matters set forth in
the opinion of counsel to Issuer attached hereto as Annex 3;
-------
(iv) The Investor and each other Person that receives a
certificate for Tranche B Warrants will deliver a certificate to
Issuer affirming the representations and warranties contained in
Section 2.04 as of the Tranche B Warrant Issuance Date; and
------------
(v) Issuer will deliver a certificate to each Person that
receives a certificate for Tranche B Warrants affirming the
representations and warranties contained in Section 3 as of the Date
---------
of Issuance.
(d) In the event that any Tranche B Term Loan Lender declines to
accept its proportionate share of the Tranche B Warrants, based upon the ratio
of the dollar amount of such Tranche B Term Loan Lender's Tranche B Term Loan
Commitment to the total dollar amount of the Tranche B Term Loans
("Proportionate Share"), Issuer shall have the right ("Tranche B Warrant
------------------- -----------------
Repurchase Right") to repurchase such Tranche B Term Loan Lender's Proportionate
- ----------------
Share of the Tranche B Warrants from the Investor (the "Undistributed
-------------
Warrants"). Within 30 days after the first anniversary of the Closing Date, the
- --------
Investor shall give Issuer a written notice identifying each Tranche B Loan
Lender which has declined to accept its Proportionate Share of the Tranche B
Warrants ("Notice of Non-Acceptance"). Issuer may exercise the Tranche B Warrant
------------------------
Repurchase Right by delivering a written notice to the Investor within 30 days
after receipt of
Warrant Agreement
-----------------
<PAGE>
-23-
the Notice of Non-Acceptance indicating that Issuer wishes to repurchase the
Undistributed Warrants ("Undistributed Warrant Repurchase Notice"). The purchase
---------------------------------------
and sale of the Undistributed Warrants shall be consummated on a date selected
by Issuer by giving the Investor at least 10 days' prior written notice thereof,
which date shall be not later than 30 days after receipt of the Undistributed
Warrant Repurchase Notice by the Investor. Issuer shall purchase from the
Investor, and Investor shall sell to Issuer, the Undistributed Warrants at a
purchase price equal to $.0000865 per Stock Unit covered thereby. Payment of
the purchase price for the Undistributed Warrants so purchased by Issuer shall
be made in immediately available funds.
2.04 Purchase for the Investor's Account. The Investor represents and
-----------------------------------
warrants to Issuer as follows:
(a) The Investor is purchasing and shall purchase the Warrants for its
own account, without a view to the distribution thereof, all without prejudice,
however, to the right of the Investor at any time, in accordance with this
Agreement or the Registration Rights Agreement, lawfully to sell or otherwise to
dispose of all or any part of the Warrants or the Warrant Stock held by it.
(b) The Investor is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
2.05 Securities Act Compliance. The Investor understands that Issuer
-------------------------
has not registered the Warrants or the Warrant Stock under the Securities Act,
and the Investor agrees that neither the Warrants nor the Warrant Stock shall be
sold or transferred or offered for sale or transfer without registration under
the Securities Act or the availability of an exemption therefrom, all as more
fully provided in Section 4.
---------
SECTION 3. Representations and Warranties. Issuer represents and
------------------------------
warrants as follows:
3.01 Existence; Qualification. Each of Issuer and the Operating
------------------------
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Issuer and the Operating
Company is duly qualified, licensed or admitted to do business and is in good
standing as a foreign corporation in every jurisdiction where the failure to be
so qualified would have a material adverse effect on the business, financial
condition, operations or assets of Issuer and the Operating Company taken as a
whole and has all
Warrant Agreement
-----------------
<PAGE>
-24-
requisite corporate power and authority to transact its business in all such
jurisdictions.
3.02 No Breach. The execution, delivery and performance of this
---------
Agreement, the Warrants and the Registration Rights Agreement by Issuer and the
consummation by it of the transactions contemplated hereby and thereby and the
execution, delivery and performance of this Agreement by the Operating Company
and the consummation by it of the transactions contemplated hereby will not (a)
violate the certificate of incorporation or by-laws of Issuer or the Operating
Company, (b) violate any loan or credit agreement to which Issuer or the
Operating Company is a party or is bound, or result in a breach of or default
under any other instrument or agreement to which Issuer or the Operating Company
is a party or is bound in a way which could reasonably be expected to have a
material adverse effect on (i) the property, business, operations, financial
condition, prospects, liabilities or capitalization of Issuer and the
Subsidiaries taken as a whole, (ii) the ability of either Issuer or the
Operating Company to perform its obligations under any of this Agreement, the
Warrant and the Registration Rights Agreement to which it is a party, (iii) the
validity or enforceability of this Agreement, the Warrant and the Registration
Rights Agreement, or (iv) the rights and remedies of the Holders under any of
this Agreement, the Warrant, and the Registration Rights Agreement, (c) violate
any judgment, order, injunction, decree or award against or binding upon Issuer
or the Operating Company, (d) result in the creation of any material Lien upon
any of the properties or assets of Issuer or the Operating Company, or (e)
violate any law, rule or regulation relating to Issuer or the Operating Company.
3.03 Corporate Action. Each of Issuer and the Operating Company has
----------------
all necessary corporate power and authority to execute, deliver and perform its
respective obligations under this Agreement, the Warrants and the Registration
Rights Agreement; the execution, delivery and performance by Issuer of this
Agreement, the Warrants and the Registration Rights Agreement and by the
Operating Company and this Agreement have been duly authorized by all necessary
corporate action (including all stockholder action) on the part of Issuer and
the Operating Company, respectively; this Agreement, the Underwriting Warrant
and the Registration Rights Agreement have been duly executed and delivered by
Issuer and this Agreement has been duly executed and delivered by the Operating
Company and constitute, the legal, valid and binding obligations of Issuer and
the Operating Company, respectively, enforceable against Issuer and the
Operating Company in accordance with their respective terms, except as
enforceability
Warrant Agreement
-----------------
<PAGE>
-25-
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the rights of creditors generally as applicable to
Issuer, or in the case of the Operating Company, as applicable to it, and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); the Tranche B Warrants when
executed, issued and delivered pursuant to this Agreement will constitute the
legal, valid and binding obligations of Issuer, enforceable against Issuer in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights of creditors generally as applicable to Issuer or in the
case of the Operating Company, as applicable to it, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); the Class A Common Stock and Class B Common
Stock constituting the Warrant Stock initially covered by the Warrants have
been duly and validly authorized and reserved for issuance and shall, when
paid for, issued and delivered in accordance with the Warrants, and the Class
A Common Stock when issued on conversion of Class B Common Stock will be,
be duly and validly issued, fully paid and nonassessable and free and clear
of any Liens; and none of the Warrant Stock issued pursuant to the terms
hereof will be in violation of any preemptive rights of any Stockholder.
3.04 Approvals. Except in connection with the registration of the
---------
Warrant Stock pursuant to the Registration Rights Agreement and for the filing
of Form D with the Commission in connection with the issuance of the Warrants
pursuant to this Agreement (which Issuer will duly file), no authorizations,
approvals or consents of, and no filings or registrations with, any Governmental
Authority or any other Person are necessary for (i) the execution, delivery or
performance by Issuer of this Agreement, the Warrants or the Registration Rights
Agreement or for the validity or enforceability thereof, or (ii) the execution,
delivery or performance by the Operating Company of this Agreement. Any such
action required to be taken as a condition to the execution and delivery of this
Agreement and the Registration Rights Agreement, or the execution, issuance and
delivery of the Warrants, has been duly taken by all such Governmental
Authorities or other Persons, as the case may be.
3.05 Investment Company Act. Issuer is not an "investment company",
----------------------
or a company "controlled by" an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Warrant Agreement
-----------------
<PAGE>
-26-
3.06 Public Utility Holding Company Act. Issuer is not 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.
3.07 Capitalization.
--------------
(a) On the date hereof, the total number of shares of capital stock
which Issuer has authority to issue is 10,245,000 shares, consisting of (i)
15,000 shares of Class A Preferred Stock, par value $.01 per share; (ii) 15,000
shares of Class B Preferred Stock, par value $.01 per share; (iii) 15,000 shares
of Class C Preferred Stock, par value $.01 per share; (iv) 200,000 shares of
other Preferred Stock, par value of $.01 per share, as to which the Board shall
have the authority set forth in Article Five of the certificate of incorporation
of Issuer; and (v) 10,000,000 shares of Common Stock, of which 5,000,000 shares
shall be Class A Common Stock, par value $.01 per share ("Class A Common
--------------
Stock"), and 5,000,000 shares shall be Class B Common Stock, par value $.01 per
- -----
share ("Class B Common Stock"). Schedule I hereto correctly sets forth the
-------------------- ----------
capital stock and equity securities owned of record and the names of the owners
of record on the date hereof. Upon the issuance of the Warrants under this
Agreement, other than (A) the Warrants to be issued pursuant to this Agreement,
(B) the Boise Warrants, (C) the Key Employee Options, (D) the Management
Options, and (E) pursuant to this Agreement or the Other Equity Documents and
(F) Class B Common Stock which may be issued pursuant to this Agreement, Issuer
shall not have outstanding any Convertible Securities or Options exercisable or
convertible into or exchangeable for any shares of capital stock or
Participating Securities of Issuer, nor shall it have outstanding any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, any capital stock or
Participating Securities of Issuer or Convertible Securities exercisable or
convertible into or exchangeable for any capital stock or Participating
Securities of Issuer, or obligations of the type specified in
Section 12.06(d)(iii).
- ---------------------
(b) Other than the Other Equity Documents, there is not in effect on
the date hereof any agreement by Issuer pursuant to which any holders of
securities of Issuer have a right to cause Issuer to register such securities
under the Securities Act, other than the Registration Rights Agreement, or any
agreement to which Issuer or (to its knowledge) any of its stockholders are a
party relating to the voting, transfer or sale of such securities.
Warrant Agreement
-----------------
<PAGE>
-27-
(c) On the date hereof, none of the Subsidiaries has any equity
security, Participating Security or obligation of the type referred to in
Section 12.06(d)(iii) outstanding other than capital stock owned by Issuer.
- ---------------------
(d) As of the date hereof, all certificates representing issued and
outstanding shares of Common Stock which have been issued to Wingate, Cumberland
and Good Capital bear the legend set forth in Section 9.03 on the reverse side
------------
thereof.
3.08 Private Offering.
----------------
(a) Assuming the truth and accuracy of the Investor's representations
and warranties contained in Section 2.04, the issuance and sale of the Warrants
------------
to the Investor hereunder are exempt from the registration and prospectus
delivery requirements of the Securities Act.
(b) All stock and securities of Issuer heretofore issued and sold by
Issuer were and all securities of Issuer issued and sold by Issuer on the date
hereof are being issued and sold in accordance with, or were exempt from, the
registration and prospectus delivery requirements of the Securities Act.
(c) Issuer agrees that neither Issuer nor any Person acting on its
behalf has offered or will offer the Warrants or shares of Warrant Stock or any
part thereof or any similar securities for issue or sale to, or has solicited or
will solicit any offer to acquire any of the same from, any Person so as to
bring the issuance and sale of the Warrants or shares of Warrant Stock within
the provisions of the registration and prospectus delivery requirements of the
Securities Act.
3.09 No Litigation.
-------------
(a) There is no action, suit, proceeding or investigation pending or,
to the best of Issuer's knowledge after due inquiry, threatened against Issuer
before any Governmental Authority seeking to enjoin the transactions
contemplated by this Agreement, the Warrants or the Registration Rights
Agreement.
(b) There are no legal or arbitral proceedings or any proceedings by
or before any Governmental Authority, now pending or (to the knowledge of
Issuer) threatened against Issuer or any of the Subsidiaries which, if adversely
determined, could have a material adverse effect on Issuer's business, financial
condition, operations or assets.
Warrant Agreement
-----------------
<PAGE>
-28-
3.10 Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by Issuer directly with
Investor without the intervention of any Person on behalf of Issuer in such
manner as to give rise to any valid claim by any Person against Investor or any
Holder for a finder's fee, brokerage commission or similar payment.
SECTION 4. Restrictions on Transferability.
-------------------------------
4.01 Transfers Generally. Except as otherwise provided in Section 5,
------------------- ---------
the Restricted Securities shall be transferable only upon the conditions
specified in this Section 4 and in the Registration Rights Agreement, which
---------
conditions are intended to insure compliance with the provisions of the
Securities Act and applicable state securities laws in respect of the transfer
of any Restricted Securities.
4.02 Transfers of Restricted Securities Pursuant to Registration
-----------------------------------------------------------
Statements, Rule 144 and Rule 144A. The Restricted Securities may be offered or
- ----------------------------------
sold by the Holder thereof pursuant to (a) an effective registration statement
under the Securities Act, or (b) to the extent applicable, Rule 144 or Rule
144A.
4.03 Notice of Certain Private Transfers. If any Holder of any
-----------------------------------
Restricted Security desires to transfer such Restricted Security other than
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 or Rule 144A, then such Holder shall deliver, at such
Holder's expense, to Issuer a notice with respect to the proposed transfer,
together with an opinion of Milbank, Tweed, Hadley & McCloy, or other counsel
reasonably satisfactory to Issuer, to the effect that an exemption from
registration under the Securities Act is available.
4.04 Restrictive Legends. Until otherwise permitted by Section 4.05,
------------------- ------------
each certificate for Warrants issued under this Agreement, each certificate for
any Warrants issued to any subsequent transferee of any such certificate, each
certificate for any Warrant Stock issued upon exercise of any Warrant and each
certificate for any Warrant Stock issued to any subsequent transferee of any
such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED
AS OF JANUARY 31, 1992 (THE
Warrant Agreement
-----------------
<PAGE>
-29-
"WARRANT AGREEMENT"), BETWEEN ASSOCIATED HOLDINGS, INC., A DELAWARE
-----------------
CORPORATION ("ISSUER"), AND CHASE MANHATTAN INVESTMENT HOLDINGS, INC., A
------
DELAWARE CORPORATION, AS THE WARRANT AGREEMENT MAY BE MODIFIED AND
SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE FORM OF THE
WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE WARRANT
AGREEMENT."
4.05 Termination of Restrictions. All the restrictions imposed by this
---------------------------
Section 4 upon the transferability of the Restricted Securities shall cease and
- ---------
terminate as to any particular Restricted Security when such Restricted Security
shall have been effectively registered under the Securities Act and applicable
state securities laws and sold by the Holder thereof in accordance with such
registration or sold under and pursuant to Rule 144 or is eligible to be sold
under and pursuant to paragraph (k) of Rule 144. Whenever the restrictions
imposed by this Section 4 shall terminate as to any Restricted Security as
---------
hereinabove provided, the Holder thereof shall be entitled to receive from
Issuer, without expense, a new certificate evidencing such Restricted Security
not bearing the restrictive legend otherwise required to be borne by a
certificate evidencing such Restricted Security.
SECTION 5. Certain Dispositions of Securities; Regulation Y Matters.
--------------------------------------------------------
5.01 Certain Dispositions of Securities.
----------------------------------
(a) Notwithstanding anything in this Agreement or the Warrants to the
contrary, but subject to compliance with the Securities Act, applicable state
securities laws and the requirement as to placement of a legend on certificates
for Restricted Securities specified in Section 4.04, any Holder shall have the
------------
right to transfer any or all of its Restricted Securities:
(i) to any Person who at the time owns (directly or indirectly)
at least a majority of the Voting Capital Stock of such Holder;
(ii) to any Person at least a majority of whose Voting Capital Stock
shall at the time be owned (directly or indirectly) by such Holder or by
any Person who owns
Warrant Agreement
-----------------
<PAGE>
(directly or indirectly) at least a majority of the Voting Capital Stock of
such Holder;
(iii) to another Holder; or
(iv) in the case of any Holder which is an insurance company, pension
fund, bank, bank holding company or a subsidiary of an insurance company,
pension fund, bank or bank holding company, to a third party, if, in the
reasonable judgment of such Holder, such transfer is required to be
effected by such Holder because (A) its investment in Warrants or shares of
Warrant Stock may exceed any limitation to which it is subject, or is
otherwise not permitted, under any law, rule or regulation of any
Governmental Authority, or (B) restrictions are imposed on such Holder
under any law, rule or regulation which, in the reasonable judgment of such
Holder, make it illegal or unduly burdensome to continue to hold such
Warrants or shares of Warrant Stock or a portion thereof.
The party to which Restricted Securities are transferred pursuant to the
immediately preceding sentence shall be deemed to be a Holder of such Restricted
Securities and bound by the provisions of this Agreement applicable to Holders
so long as he, she or it continues to own any of the Restricted Securities so
transferred to such transferee.
(b) If the circumstances described in clause (iv) of Section 5.01(a)
----------- ---------------
arise, Issuer shall assist such Holder in disposing of its Warrants and Warrant
Stock in a prompt and orderly manner.
(c) In the event of any underwritten public offering of Restricted
Securities in which a Holder which is subject to the provisions of Regulation Y
is participating pursuant to the Registration Rights Agreement or otherwise,
Issuer shall use its best efforts to assist the underwriter in ensuring that any
Warrants or Warrant Stock sold by such Holder are widely disseminated.
5.02 Regulation Y Restrictions. Notwithstanding anything in this
-------------------------
Agreement or the Warrants to the contrary, no Holder subject to the provisions
of Regulation Y shall, and no such Holder shall permit any of its Bank Holding
Company Affiliates to, transfer any Warrants or shares of Warrant Stock held by
it, if, by virtue of such transfer or the right to effect such transfer, such
Holder, together with its Bank Holding Company Affiliates, would Control Issuer
(and, for purposes of
Warrant Agreement
-----------------
<PAGE>
-31-
this restriction, a reasoned opinion of counsel to such Holder based on facts
and circumstances deemed appropriate by such counsel to the effect that such
Holder does not so Control Issuer shall be conclusive).
5.03 Cancellation and Issuance. If any Holder or any of its Affiliates
-------------------------
assigns or otherwise transfers all or any of its Loans and/or Commitments
(including by selling participation therein), or assigns or otherwise transfers
any of its rights or obligations under the Credit Agreement or the Notes, to any
Person, such Holder may request (upon 10 days' prior notice to Issuer) that a
number of Warrants held by such Holder be canceled on the date of such
assignment and transfer and that a like number of Warrants be issued by Issuer
to the Person to whom such Loans and/or Commitments, or such rights or
obligations, are being assigned or otherwise transferred. Upon the date
specified in such request:
(a) Issuer shall issue, and the Holder shall surrender for
cancellation, such number of Warrants as aforesaid, provided that such
issuance shall not violate the Securities Act or any applicable state
securities laws;
(b) Issuer will deliver to each Person that receives a certificate for
Warrants a favorable legal opinion from D'Ancona & Pflaum or Weil, Gotshal
& Manges or other counsel to Issuer acceptable to such Person, covering the
matters set forth in the opinion of counsel to Issuer attached hereto as
Annex 3;
-------
(c) Each Person that receives a certificate for Warrants will deliver
a certificate to Issuer affirming the representations and warranties
contained in Section 2.04 as of such date; and
------------
(d) Issuer will deliver a certificate to each Person that receives a
certificate for Warrants affirming the representations and warranties
contained in Section 3 as of such date.
---------
SECTION 6. Issuer's Right of Repurchase.
----------------------------
6.01 Repurchase Right.
----------------
(a) At the time of a Company Permitted Financing, Issuer shall have
the right to repurchase on a pro rata basis from each holder of Tranche B
--- ----
Warrants and Tranche B Warrant Stock up to one-half (the "Buy-back Amount") of
the Tranche B ---------------
Warrant Agreement
-----------------
<PAGE>
- 32 -
Warrants and Tranche B Warrant Stock held by such holder, based on the ratio of
the number of shares of Tranche B Warrant Stock (including Tranche B Warrant
Stock issuable upon the exercise of Tranche B Warrants) owned by each such
Holder to the number of shares of Tranche B Warrant Stock (including Tranche B
Warrant Stock issuable upon the exercise of Tranche B Warrants) owned by all of
the Holders (the "Repurchase Right"), provided, however, that in the event that
---------- ----- -------- -------
the Tranche B Term Loans are not repaid in full at the time of a Company
Permitted Financing, the Buy-back Amount shall be reduced to an amount equal to
the product of (i) one minus the quotient resulting from dividing the amount of
-----
the Tranche B Term Loan which remains unpaid immediately after the Company
Permitted Financing by $10,000,000, and (ii) the Buy-back Amount.
(b) Issuer may exercise the Repurchase Right by delivering an
irrevocable notice to the Holders indicating that Issuer will purchase the
Tranche B Warrants and/or the Tranche B Warrant Stock specified in such notice
and stating that a Company Permitted Financing will occur (a "Repurchase
----------
Notice").
- ------
6.02 Procedures. The purchase and sale of the Tranche B Warrants
----------
and/or the Tranche B Warrant Stock pursuant to the Repurchase Right shall be
consummated on a date selected by Issuer by giving the Holders at least 10 days'
prior written notice thereof, which date shall be set forth in the Repurchase
Notice and which in no event shall be earlier than the date of the closing for
the Company Permitted Financing nor later than three Business Days thereafter.
Issuer shall purchase from the Holders, and each Holder shall sell to Issuer,
Tranche B Warrants and/or Tranche B Warrant Stock: (i) in the case of each
share of Tranche B Warrant Stock so purchased, at a price equal to the
Repurchase Price on such date; and (ii) in the case of a Tranche B Warrant, at
a purchase price equal to (A) the product of (1) the Repurchase Price and (2)
the number of shares of Tranche B Warrant Stock for which such Tranche B
Warrant is exercisable as of the Repurchase Notice Date, minus (B) an amount
-----
equal to the aggregate Exercise Price as of the Repurchase Notice Date for
such number of Shares of Tranche B Warrant Stock. Payment of the purchase price
for the Tranche B Warrants and/or the Tranche B Warrant Stock so purchased by
Issuer shall be made by wire transfer in immediately available funds.
Warrant Agreement
-----------------
<PAGE>
-33-
SECTION 7. Put Rights.
----------
7.01 Put Rights.
----------
(a) At any time on or after the occurrence of the Triggering Event,
but prior to the earlier to occur of (i) the Expiration Date and (ii) the
consummation of a Qualified Public Offering, each Holder will have the right to
require Issuer to purchase all of the Warrants and the Warrant Stock owned by
such Holder.
(b) A Holder may exercise a Put Right by delivering a notice to Issuer
stating that such Holder will require Issuer to purchase the Warrants or Warrant
Stock specified in such notice (a "Put Notice"). Within five days after receipt
----------
of a Put Notice by Issuer, Issuer shall give a notice to the Holders (other than
the Holder who gave such Put Notice) advising them of the receipt by Issuer of
such Put Notice, together with a copy of such Put Notice. The date upon which
Issuer shall so advise the other Holders is herein called the "Company Notice
--------------
Date". Within 15 days after the Company Notice Date, each other Holder also may
- ----
give a Put Notice to Issuer and each such Put Notice shall be deemed given as of
the date of the Put Notice given by the Holder initially exercising the Put
Right. The failure so to give a Put Notice by a Holder within such 15-day period
shall be without prejudice to the right of such Holder to give thereafter a Put
Notice pursuant to this Section 7.
---------
7.02 Procedures.
----------
(a) The purchase and sale of the Warrants and the Warrant Stock
pursuant to a Put Right shall be consummated on a date selected by Issuer upon
at least five days' prior written notice to such Holders, which date in no event
shall be earlier than the date five days, nor later than the date 10 days, after
the determination of Fair Market Value (the "Put Closing Date"). On the Put
----------------
Closing Date, Issuer shall purchase from the Holder which has given such Put
Notice, and such Holder shall sell to Issuer, the Warrants and/or the Warrant
Stock specified in such Put Notice: (i) in the case of each share of Warrant
Stock so purchased, at a purchase price equal to the Put Price Per Share as of
the Put Notice Date; and (ii) in the case of each Warrant, at a purchase price
equal to (A) the product of (1) the Put Price Per Share as of the Put Notice
Date and (2) the number of shares of Warrant Stock for which such Warrant is
exercisable as of the Put Notice Date, minus (B) an amount equal to the
-----
aggregate Exercise Price as of the Put Notice Date for such number of shares of
Warrant Stock. Payment of the purchase price for the
Warrant Agreement
-----------------
<PAGE>
-34-
Warrants and/or the Warrant Stock so purchased by Issuer shall be made by wire
transfer in immediately available funds.
(b) If Issuer is prohibited from purchasing all Warrants and Warrant
Stock put to it pursuant to a Put Notice because (i) a default is then existing
under the provisions of the Credit Agreement in respect of the Term Loans or the
Revolving Credit Loans, or (ii) such purchase would result in any default under
the Credit Agreement in respect of the Term Loans or the Revolving Credit Loans
(the defaults described in clauses (i) and (ii) being herein referred to as
"Defaults"), or (iii) Issuer does not have sufficient funds legally available
--------
therefor under Delaware corporate law, then Issuer shall give notice (a "Put
---
Response Notice") to each Holder which has delivered such Put Notice of (x) the
- ---------------
reason that it is unable to purchase all Warrants and Warrant Stock put to it
pursuant to a Put Notice, including (1) if due to a deficiency, the computation
thereof, and/or (2) if due to a Default, the nature of the covenants which have
been or would be breached and if such provisions are financial covenants, a
computation of the amounts or ratios setting forth the deficiencies with respect
to such covenants, and (y) the aggregate amount of such Warrants and Warrant
Stock, if any, which it will be able to purchase, which Put Response Notice
shall be delivered within five days of the determination of Fair Market Value
and shall be given together with the notice of the Put Closing Date, if any,
given by Issuer pursuant to the first sentence of Section 7.02(a). Each such
---------------
Holder shall have the right to withdraw its Put Notice by delivering a notice (a
"Put Withdrawal Notice") to Issuer at any time prior to the Put Closing Date or
---------------------
if none is set in the Put Response Notice, prior to the last day on which a Put
Closing could occur pursuant to the first sentence of Section 7.02(a). If any
---------------
such Holders have not timely delivered Put Withdrawal Notices, unless prohibited
by a Default which has not been waived by the Lenders, Issuer thereupon shall
purchase from such Holders the aggregate amount of Warrants and Warrant Stock,
if any, it may purchase on such date with funds legally available under Delaware
corporate law for such purpose. Such purchase shall be allocated among the
Holders which have not timely delivered Put Withdrawal Notices pro rata, based
--- ----
on the ratio of the number of shares of Warrant Stock put to Issuer (including
Warrant Stock issuable upon the exercise of Warrants put to Issuer) by each such
Holder to the number of shares of Warrant Stock put to Issuer (including Warrant
Stock issuable upon the exercise of Warrants put to Issuer) by all such Holders.
If Issuer is prohibited from purchasing any Warrants and/or Warrant
Stock upon the exercise by a Holder of a Put Right
Warrant Agreement
-----------------
<PAGE>
-35-
for any of the reasons described in the first sentence of this Section 7.02(b),
---------------
then Issuer shall use its best efforts to increase its legally available funds
under Delaware law to an amount sufficient to enable it to purchase legally all
Warrants and Warrant Stock put to it pursuant to a Put Notice and to obtain
relief from the Defaults in order to enable it to make the required payments,
including through effecting a Financing, obtaining the requisite consent of the
Lenders and/or the Agent under the Credit Agreement or otherwise, in each case,
as soon as possible.
(c) If Issuer is prohibited from purchasing some of or all Warrants
and/or Warrant Stock upon the exercise by a Holder of a Put Right for any of the
reasons described in the first sentence of Section 7.02(b) and such Holder shall
---------------
not have timely delivered a Put Withdrawal Notice, then: (i) the Put Price Per
Share for such Holder with respect to such unpurchased Warrants and/or Warrant
Stock shall become an accruing liability of Issuer with interest thereon
commencing on the date of exercise of such Put Right through the date on which
the related Warrants and/or Warrant Stock are purchased by Issuer at a rate per
annum equal to the Base Rate in effect from time to time plus 6%, compounded
----
quarterly (such liability and interest being herein called the "Accruing
--------
Liability"); and (ii) such obligation of Issuer to purchase shall otherwise be
- ---------
deemed suspended for so long as and only to the extent that Issuer is unable to
repurchase such Warrants and/or Warrant Stock after taking all the action
described in the last paragraph of Section 7.02(b) (a "Put Postponement").
---------------- ----------------
On any Put Reactivation Date, the Put Price Per Share for such Warrants and
Warrant Stock shall be deemed to be the Accruing Liability. As used herein,
"Put Reactivation Date" shall mean a date when the Put Postponement lapses in
---------------------
whole or in part and the obligation of Issuer to purchase Warrants and Warrant
Stock shall no longer be deemed suspended to the same extent pursuant to
clause (ii) of this Section 7.02(c).
- ----------- ---------------
(d) If on the Expiration Date any Holder is prevented from exercising
its rights under this Section 7 for any of the reasons described in the first
---------
sentence of Section 7.02(b), Issuer's obligation to purchase Warrants and/or
---------------
Warrant Stock shall be extended until 5:00 p.m., New York City time, on the last
day of the calendar month next following by at least 120 days the date upon
which Issuer shall notify the Holders that such reason or reasons no long exist.
(e) Each Holder agrees, for the benefit of the Lenders, that any
Accruing Liability shall be subordinated in right of payment to the prior
payment in full of all the Loans
Warrant Agreement
-----------------
<PAGE>
- 36 -
and that no payment shall be made in respect of the principal of or interest on
the Accruing Liability until the earliest to occur of: (i) the date on which
the Loans have been fully paid; (ii) the date on which the requisite consent
of the Lenders and/or the Agent under the Credit Agreement to such payment has
been given; and (iii) the first date on which such payment is permitted under
this Agreement.
(f) Notwithstanding the foregoing, at any time prior to the Put
Closing Date, the Majority Warrant Stockholders shall have the right to
countermand the Put Notices of all Holders. Issuer shall give notice as soon as
practicable to all Holders whose Put Notices were countermanded pursuant hereto.
(g) The calculations of the Put Price Per Share and Equity Value under
this Section 7, other than with respect to the determination of Fair Market
---------
Value, shall be subject to the reasonable approval of the applicable Majority
Put Holders.
7.03 Guarantee of the Operating Company.
----------------------------------
(a) The Operating Company irrevocably and unconditionally guarantees
to the Holders and their successors and permitted assigns, the full and punctual
payment, performance, satisfaction and discharge in full when due of all of the
obligations and liabilities of Issuer under and in accordance with Sections 7
----------
and 8, including without limitation all amounts payable hereunder or in
- -----
connection herewith. The Operating Company agrees that its obligations hereunder
shall be unconditional, absolute and independent, irrespective of the
value, genuineness, validity, regularity or enforceability of this Agreement,
the Warrants or any other agreement or instrument referred to herein or therein,
and, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of
this Section 7.03 that the obligations of the Operating Company hereunder shall
------------
be absolute and unconditional under any and all circumstances, and that this
guaranty may be enforced against it without first pursuing of exhausting any
remedies or claims against Issuer or any other Person.
(b) The Operating Company waives promptness, diligence, notice of
acceptance, presentment, protest and dishonor with respect to obligations and
liabilities of Issuer under and in accordance with Sections 7 and 8 and notice
----------------
thereof and any other notice with respect to this guaranty and the obligations
guaranteed hereby.
Warrant Agreement
-----------------
<PAGE>
-37-
(c) The guarantees set forth herein are continuing guarantees and
shall remain in full force and effect until all obligations of Issuer guaranteed
hereby have been paid, performed, satisfied, and discharged in full and shall
inure to the benefit of and be enforceable by the Holders or their respective
successors and permitted assigns. No failure to exercise, and no delay in
exercising, any right hereunder, shall operate as a waiver thereof. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(d) The obligations of the Operating Company under this Section 7.03
------------
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of Issuer in respect of the guaranteed obligations is
rescinded or must be otherwise restored by any Holder, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise, and the Operating
Company agrees that it will indemnify each Holder on demand for all reasonable
costs and expenses (including, without limitation, fees of counsel) incurred by
such Holder in connection with such rescission or restoration.
(e) The Operating Company hereby agrees that until the payment and
satisfaction in full of all guaranteed obligations hereunder of the Holders it
shall not exercise any right or remedy arising by reason of any performance by
it of its guarantee in Section 7.03 hereof, whether by subrogation or otherwise,
------------
against Issuer.
SECTION 8. Call Rights; Look Back.
----------------------
8.01 Call Rights.
-----------
(a) At any time or from time to time after the seventh anniversary of
the Closing Date, but prior to the earlier to occur of (i) the Expiration Date
and (ii) a Qualified Public Offering, Issuer shall have the right to purchase
all or any part of the Warrants and Warrant Stock owned by the Holders.
(b) Issuer may exercise a Call Right by delivering an irrevocable
notice to the Holders indicating that Issuer wishes to purchase the Warrants
and/or the Warrant Stock specified in such notice (a "Call Notice").
-----------
(c) The purchase and sale of the Warrants and/or the Warrant Stock
pursuant to a Call Right shall be consummated on a date selected by Issuer by
giving the Holders at least 10 days' prior written notice thereof, which date
in no event shall be
Warrant Agreement
-----------------
<PAGE>
-38-
earlier than the date five days, nor later than the date 10 days, after the
determination of the Fair Market Value pursuant to the procedure described in
the definition of such term in Section 1. Issuer shall purchase from the
---------
Holders, and each Holder shall sell to Issuer, Warrants and Warrant Stock:
(i) in the case of each share of Warrant Stock so purchased, at a price equal to
the Put Price Per Share; and (ii) in the case of a Warrant, at a purchase price
equal to (A) the product of (1) the Put Price Per Share and (2) the number of
shares of Warrant Stock for which such Warrant is exercisable as of the Call
Notice Date, minus (B) an amount equal to the aggregate Exercise Price as of the
-----
Call Notice Date for such number of shares of Warrant Stock. Payment of the
purchase price for the Warrants and the Warrant Stock so purchased by Issuer
shall be made by wire transfer in immediately available funds.
(d) In connection with an exercise of a Call Right, if Issuer elects
to purchase less than all of the Warrants and Warrant Stock then outstanding,
Issuer shall purchase Warrants and Warrant Stock from the Holders on a pro rata
--------
basis, based on the ratio of the number of shares of Warrant Stock (including
Warrant Stock issuable upon the exercise of Warrants) owned by each such Holder
to the number of shares of Warrant Stock (including Warrant Stock issuable upon
the exercise of Warrants) owned by all of the Holders.
(e) The calculations of the Put Price Per Share and Equity Value
under this Section 8.01, other than with respect to the determination of Fair
------------
Market Value, shall be subject to the reasonable approval of the Majority
Warrant Stockholders.
8.02 Look Back Events.
----------------
(a) If, within the 12-month period (a "Look Back Period") following
----------------
each date on which the Holders (each, a "Look Back Holder") shall have sold
----------------
Warrants or Warrant Stock to Issuer pursuant to Section 8.01 (the "Prior Sale"),
------------ ----------
Issuer, the Subsidiaries, or any holder of Common Stock or Options or
Convertible Securities with respect to such Common Stock shall have entered
into any contract, arrangement or understanding relating to a Look Back Event,
then upon occurrence of such Look Back Event Issuer shall forthwith pay to
each Look Back Holder, by wire transfer in immediately available funds:
(i) in the case of a Subsequent Asset Sale, an amount equal to the
excess (if any) of (A) the product of (1) the Subsequent Share Value on
the date of such Subsequent Asset Sale and (2) the number of shares of
Warrant Stock sold in
Warrant Agreement
-----------------
<PAGE>
-39-
the Prior Sale (assuming that all Warrants sold in the Prior Sale by such
Look Back Holder had been exercised immediately before the Prior Sale and
were sold in the Prior Sale as Warrant Stock), over (B) the sum of (1) the
aggregate amount received by such Look Back Holder in the Prior Sale
("Prior Amount") and (2) the product of (I) the Prior Amount (II) the Base
------------
Rate and (III) the quotient determined by dividing the number of days
lapsed from the Prior Sale through and including the date of the Look Back
Event by 360; or
--
(ii) in the case of a Subsequent Stock Sale, an amount equal to the
excess (if any) if (A) the highest aggregate amount that such Look Back
Holder would have been entitled to receive in the Subsequent Stock Sale
had the Warrants or Warrant Stock sold in the Prior Sale been held by such
Look Back Holder at the time of the Subsequent Stock Sale and sold in the
Subsequent Stock Sale (assuming that all Warrants sold in the Prior Sale
by such Look Back Holder had been exercised immediately before the Prior
Sale and were sold in the Prior Sale as Warrant Stock) plus, all other
----
consideration to which such Look Back Holder would have been entitled
in connection with the Subsequent Stock Sale, over (B) the sum of (1)
the aggregate amount received by such Look Back Holder in the Prior Sale
and (2) the product of (I) the Prior Amount, (II) the Base Rate and (III)
the quotient determined by dividing the number of days lapsed from the
Prior Sale through and including the date of the Look Back Event by 360;
and
---
(iii) an amount equal to all dividends and distributions paid on any
date after the Prior Sale and to and including the date of the Look Back
Event to which such Look Back Holder would have been entitled pursuant to
Section 5.02 of the Warrant or otherwise if such Look Back Holder had been
a Holder of Warrants and/or Warrant Stock (the "Interim Dividends"), plus,
----------------- ----
an amount equal to the product of (A) the Interim Dividends, (B) the Base
Rate and (C) the quotient determined by dividing the number of days lapsed
from the date each such dividend or distribution would have been received
through and including the date of the Look Back Event by 360.
For purposes of this Section 8.02, it shall be assumed that (x) all
------------
adjustments required by the provisions of Section 4 and Section 5 of the form of
Warrant attached as Annex 1 to this Agreement will have been made in respect of
-------
Warrants (whether or not outstanding) through and including the date of the
relevant Look Back Event, (y) appropriate adjustments will have been made
Warrant Agreement
-----------------
<PAGE>
-40-
in respect of the number of shares of Warrant Stock (and their character and
terms) through and including the date of the relevant Look Back Event by reason
of any stock dividend, subdivision, combination, consolidation, merger, sale,
lease, transfer or recapitalization, any amendment to the certificate of
incorporation of Issuer or any similar event effected on or after the Call
Notice Date; and (z) Issuer was in compliance through the Look Back Event with
the covenants set forth in Section 12. If the Issuer would have been in default
----------
of any such covenants in such a way as to adversely affect the rights of the
Look Back Holders then, in each such case, the computations and adjustments
provided for in this Section 8.02(c) shall be made as nearly as possible in the
---------------
manner so provided except that any additional adjustments required to protect
the Holders against such adverse effects in accordance with the intent and
principles of this Agreement shall be made.
(b) As used herein, the following terms shall have the following
respective meanings:
(i) "Look Back Event" shall mean the occurrence (whether in one
---------------
transaction or in a series of related transactions) of any Subsequent Asset
Sale or Subsequent Stock Sale.
(ii) "Subsequent Asset Sale" shall mean: (A) any merger, consolidation
---------------------
or share exchange of Issuer with any other Person (whether or not Issuer is
the surviving entity), and any reclassification or material change in
Issuer's capitalization, in which any Stockholder receives any distribution
in respect of his, her or its Common Stock; (B) any sale, lease or other
disposition of all or a majority of the assets of Issuer (including by or
through the issuance, sale, lease or other disposition of the capital stock
or assets of, or a merger or consolidation involving, any Subsidiary of
Issuer but excluding a sale/leaseback approved in good faith by the Board
so long as there is no distribution to the Stockholders of the proceeds
thereof) or any liquidation.
(iii) "Subsequent Share Value" shall mean, with respect to each share
----------------------
of Common Stock on any Subsequent Asset Sale Date, an amount equal to the
result obtained by dividing (A) the sum of (1) the aggregate fair market
value of all consideration received by Issuer and the Subsidiaries and
Stockholders in connection with the related Subsequent Asset Sale and all
other consideration received by Wingate, Cumberland, their respective
Affiliates or any limited
Warrant Agreement
-----------------
<PAGE>
-41-
partners of Cumberland in connection with such Subsequent Asset Sale which
is properly attributable to their ownership interests in Issuer, net of
ordinary and customary transaction expenses (including taxes) for a
transaction of such size and nature (the "Net Consideration"), plus (2) the
----------------- ----
greater of Fair Market Value or Equity Value as at such Subsequent Asset
Sale Date (after giving effect to the related Subsequent Asset Sale and
excluding the Net Consideration) by (B) the total number of shares
(determined on a fully diluted basis) of all Common Stock outstanding on
such Subsequent Asset Sale Date (after giving effect to the related
Subsequent Asset Sale).
(iv) "Subsequent Stock Sale" shall mean: (A) any repurchase,
---------------------
redemption or other direct or indirect acquisition by Issuer of any Common
Stock or Options or Convertible Securities exercisable for or convertible
or exchangeable into Common Stock which equals or exceeds 25% of the Common
Stock (on a fully diluted basis), (B) any sale, disposition or other
transfer of any equity securities of Issuer or any Subsidiary of any class
through a public offering involving the Issuer, (C) any sale, disposition
or other transfer of any outstanding Common Stock or Options or Convertible
Securities exercisable for or convertible or exchangeable into Common Stock
which equals or exceeds 25% of the Common Stock (on a fully diluted basis).
(c) Promptly following its execution (or the execution by one of its
Affiliates or a Subsidiary) of an agreement pursuant to which, if the
transaction contemplated thereby is consummated, a Look Back Event would occur,
and, if different, the date of occurrence of a Look Back Event, Issuer shall
deliver a notice to the Look Back Holders of the execution of such agreement
(describing in reasonable detail the contents thereof and the contemplated
schedule for its consummation) and of the occurrence of such Look Back Event.
(d) The calculations of Subsequent Share Value under this Section 8.02
------------
shall be subject to the reasonable approval of the Majority Warrant
Stockholders.
Warrant Agreement
-----------------
<PAGE>
-42-
SECTION 9. Right to Join in Sale.
---------------------
9.01 Tag-Along Rights.
----------------
(a) Notwithstanding anything herein to the contrary, but subject to
the provisions of Section 9.01(b), if Wingate, Cumberland, Boise Cascade, Good
---------------
Capital or any controlling stockholder of Issuer who purchases shares directly
from Issuer or any of their respective transferees (other than pursuant to an
underwritten public offering or in an ordinary brokerage transaction under
Rule 144) proposes, in a single transaction or a series of related transactions,
to sell, dispose of or otherwise transfer, directly or indirectly, any shares of
Common Stock then outstanding in any manner, other than (i) the Employee Shares,
(ii) pursuant to a registration statement filed pursuant to the Securities Act
in which the Holders may participate pursuant to the terms of the Registration
Rights Agreement, or (iii) in an ordinary brokerage transaction pursuant to
Rule 144 (each, a "Tag-Along Sale"), then Issuer shall cause such Stockholder
--------------
(the "Selling Stockholder") to refrain from effecting such transaction unless,
-------------------
prior to the consummation thereof, the Holders shall have been afforded the
opportunity to join in such transfer as provided in Section 9.02 (it being
------------
understood that such Holders shall pay their own expenses in connection
therewith).
(b) The provisions of Section 9.01(a) shall not apply in connection
---------------
with any sale, disposition or other transfer of (i) up to 25% of the shares of
Common Stock beneficially owned by Cumberland as of the date hereof to Wingate
and its majority-owned subsidiaries, (ii) any shares of Common Stock
beneficially owned (on a fully diluted basis) by Boise Cascade to Wingate and
its majority-owned subsidiaries, (iii) any shares of Common Stock beneficially
owned (on a fully diluted basis) by Good Capital to Wingate and its majority-
owned subsidiaries and (iv) any shares of Common Stock beneficially owned (on a
fully diluted basis) by Wingate to any of the Persons listed on Schedule II;
-----------
provided, however, that any further sale, disposition or transfer by such
- -------- -------
transferee shall be subject to the provisions of this Section 9.
---------
(c) On the date hereof, Issuer shall deliver to Investor a Joinder
Agreement in the form of Annex 5, executed by Wingate, Boise Cascade, Good
-------
Capital, Cumberland and Issuer.
(d) As a condition to the validity of any sale, disposition or other
transfer of any Common Stock (i) by any of the Persons who have executed and
delivered Joinder Agreements pursuant to Section 9.01(c) or this Section 9.01(d)
--------------- ---------------
to any other
Warrant Agreement
-----------------
<PAGE>
-43-
Person, or (ii) by Issuer to any Person in a transaction in which such Person
would become a controlling stockholder of Issuer, other than pursuant to an
underwritten public offering or in an ordinary brokerage transaction under
Rule 144, the transferee thereof shall execute and deliver to Issuer and each
Holder a Joinder Agreement.
9.02 Procedures. Prior to the consummation of any transaction
----------
subject to Section 9.01, the Person or group of Persons that proposes to acquire
------------
shares of Common Stock in a Tag-Along Sale (the "Proposed Purchaser") shall make
------------------
a written offer to the Holders (the "Tag-Along Purchase Offer") which offer
------------------------
shall describe in reasonable detail the Common Stock and Warrants proposed to be
purchased, the price to be paid and all other terms of the Tag-Along Sale. The
Holders shall have 15 days after the making of the Tag-Along Purchase Offer in
which to accept the Tag-Along Purchase Offer. If any Holder accepts the Tag
Along Purchase Offer ("Participating Holder"), such Participating Holder shall
--------------------
be entitled to sell in the Tag-Along Sale a number of shares of Warrant Stock
(including Warrant Stock issuable upon the exercise of Warrants) equal to the
product of (i) the quotient determined by dividing (x) the number of shares of
Warrant Stock owned by such Participating Holder (including Warrant Stock
issuable upon the exercise of Warrants) by (y) the aggregate number of shares of
Common Stock (on a fully diluted basis) owned by the Selling Stockholder and all
Participating Holders, and (ii) the aggregate number of shares of Common Stock
and Warrants proposed to be purchased by the Proposed Purchaser in the Tag-Along
Sale; provided, however, that if the Tag-Along Sale would cause a Change of
-------- -------
Control or would cause any controlling stockholder and their respective
Affiliates other than Wingate to own less than a majority of the outstanding
Common Stock or less than a majority of the Voting Capital Stock of Issuer, then
the Participating Holders shall be entitled to sell 100% of their respective
Warrants and Warrant Stock (but not exceeding the aggregate amount of shares of
Common Stock proposed to be acquired in the Tag-Along Sale). The Tag-Along
Purchase Offer shall be at the same price and on the same terms and conditions
as the offer by the Proposed Purchaser to the Selling Stockholder, except that
no Participating Holders shall be required to make representations and
warranties to or agreements with the Proposed Purchaser other than
representations, warranties and agreements regarding such Participating Holder
and its ownership of the Warrants and/or Warrant Stock to be sold in the
Tag-Along Sale.
9.03 Issuer's Covenants. Issuer will not, on or after the date
------------------
hereof, either (a) deliver to the persons specified in
Warrant Agreement
-----------------
<PAGE>
-44-
Section 9.01(a) a certificate evidencing any shares of Common Stock being sold
- ---------------
in a transaction requiring that a Tag-Along Purchase Offer be made unless the
Proposed Purchaser shall have in fact made a Tag-Along Purchase Offer in
accordance with the provisions of Section 9.02, or (b) deliver to the persons
------------
specified in Section 9.01(a) a certificate evidencing any shares of Common Stock
in connection with any other transaction without including on the reverse side
of such certificate a legend in substantially the following form:
THE SALE, DISPOSITION OR OTHER TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
PROVISIONS OF SECTIONS 9 AND 10 OF THAT CERTAIN WARRANT
AGREEMENT DATED AS OF JANUARY 31, 1992, BETWEEN ASSOCIATED
HOLDINGS, INC., A DELAWARE CORPORATION ("ISSUER"), AND
------
CHASE MANHATTAN INVESTMENT HOLDINGS, INC., A DELAWARE
CORPORATION, AS SUCH WARRANT AGREEMENT MAY BE MODIFIED AND
SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME. A COPY OF
THE FORM OF SUCH WARRANT AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF ISSUER. THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
SECTIONS 9 AND 10 OF SUCH WARRANT AGREEMENT.
SECTION 10. Obligation to Join in Sale.
--------------------------
10.01 Go-Along Obligations. In the event of a Go-Along Sale prior to
--------------------
the earliest of a Change in Control, a Qualified Public Offering and the
Expiration Date, each Holder shall be obligated to, and shall, if so requested
by Wingate, (a) sell, transfer and deliver, or cause to be sold, transferred and
delivered to the Third Party Purchaser, all (but not less than all) Warrants and
Warrant Stock owned by it at the same price per share and on the same terms and
conditions (except as expressly permitted below) as are applicable to Wingate
except that no Holders shall be required to make representations and warranties
to or agreements with the Third Party Purchaser other than representations,
warranties and agreements regarding such Holder and its ownership of the
Warrants and/or Warrant Stock to be sold in the Go-Along Sale; and (b) if
stockholder approval of the transaction is required, vote its shares of Warrant
Stock entitled to vote thereon in favor thereof (or abstain from voting, unless
such abstention would defeat the approval of such transaction) at any meeting of
Issuer's stockholders called for the purpose of voting on such transaction (it
being understood that such Holders shall not be obligated to pay their pro rata
--- ----
Warrant Agreement
-----------------
<PAGE>
-45-
portion of the transaction costs associated with the sale, transfer or
delivery), provided, that if the Majority Warrant Stockholders so request, such
--------
Go-Along Sale shall be at a Fair Price.
10.02 Procedures.
----------
(a) Wingate shall deliver a written notice ("Go-Along Notice") to
---------------
each of the Holders setting forth the consideration per share to be paid by the
Third Party Purchaser and the other terms and conditions of the Go-Along Sale.
Not later than the later of 20 days following the Go-Along Notice Date or five
days following the determination of Fair Price and the cash equivalent of
non-cash consideration, if any, each of the Holders shall deliver to Wingate
Warrant certificates and certificates representing Warrant Stock, accompanied by
duly executed stock powers. At the closing for the Go-Along Sale, Wingate shall
remit to each of the Holders the consideration to which they are entitled.
(b) If any Holder should fail to deliver its Warrants or certificates
representing Warrant Stock, Issuer shall cause the books and records of Issuer
to show that such Warrants and/or Warrant Stock are bound by the provisions of
this Section 10 and that such Warrants and/or Warrant Stock shall be transferred
----------
only to the Third Party Purchaser upon surrender for transfer by the Holder
thereof.
(c) If, within 120 days after Wingate delivers a Go-Along Notice, the
Go-Along Sale is not completed, Wingate shall return to each Holder all Warrants
and certificates representing Warrant Stock that such Holder delivered for sale
pursuant hereto.
10.03 Issuer's Covenants. Issuer will not, on or after the date
------------------
hereof, deliver a certificate evidencing any shares of Common Stock in
connection with any other transaction (other than shares of Common Stock which
are being sold, or which have previously been sold, in a Tag-Along Sale,
Go-Along Sale, a registered public offering or a sale to the public pursuant to
Rule 144) without including on the reverse side of such certificate a legend in
substantially the form set forth in Section 9.03.
------------
10.04 Definition of Go-Along Sale. As used herein the following terms
---------------------------
shall have the following respective meanings:
"Go-Along Sale" shall mean (i) the sale for cash by Wingate and its
-------------
Affiliates of 100% of the equity interests in Issuer beneficially owned by them
in a private offering, (ii) the
Warrant Agreement
-----------------
<PAGE>
-46-
sale for cash of all or substantially all of the assets of Issuer followed
immediately by the distribution to the holders of the Common Stock of the net
proceeds available for distribution, or (iii) a merger or consolidation
involving Issuer, wherein the holders of the Common Stock will receive cash for
their Common Stock, in each case in a bona fide arm's length transaction to or
with a Third Party (the "Third Party Purchaser"). Notwithstanding the foregoing,
---------------------
"Go-Along Sale" shall also include transactions of the type described above
where the consideration is other than cash, provided, that each Holder shall
--------
have the option to receive such consideration in an amount of cash equal to the
Fair Price of their respective interests in Issuer, but in any event not less
than the cash equivalent of the greatest amount of consideration paid to Wingate
or any Affiliate in respect of its shares in Issuer, as determined by the
Investment Banking Firms in the manner set forth below.
"Fair Price" shall mean that the consideration or net proceeds to be
----------
received by Issuer, if applicable, and by the holders of the Common Stock in or
immediately following a Go-Along Sale, is fair from a financial point of view,
and shall be determined as follows:
Within five days after the Go-Along Notice Date, Issuer and the
Majority Warrant Stockholders shall each designate a representative and such
representatives will meet and use their best efforts to reach an agreement on a
Fair Price. If the representatives designated by Issuer and the Majority Warrant
Stockholders are unable to reach such agreement within 15 days after the date on
which the later of the two representatives are designated, then (A) the Majority
Stockholders shall immediately designate one Investment Banking Firm; (B)
Issuer shall immediately designate one Investment Banking Firm; (C) the two
Investment Banking Firms so selected shall, within 20 days after the date on
which the later of the two Investment Banking Firms are appointed, determine
independently a Fair Price; (D) if the lesser of the two prices exceeds or is
equal to 90% of the other price, then the Fair Price will be the average of the
two, which average amount shall be conclusive and binding upon all the
applicable parties; (E) if the lesser of the two prices is less than 90% of the
other price, then the two Investment Banking Firms shall, within 20 days of the
date of determination of the later of the two prices appoint a third Investment
Banking Firm; and (F) the third Investment Banking Firm so selected shall,
within 15 days of its appointment, determine independently a Fair Price, which
Warrant Agreement
-----------------
<PAGE>
-47-
determination shall be conclusive and binding upon all the applicable
parties.
Issuer will provide each Investment Banking Firm with all information
about Issuer and the Subsidiaries which such Investment Banking Firm
reasonably deems necessary for determining a Fair Price. The fees and
expenses of the determination of Fair Price and the cash equivalent of
non-cash consideration as provided herein (including those of the
Investment Banking Firms) will be paid by Issuer. Issuer may require that
the Investment Banking Firms keep confidential any non-public information
received as a result of this paragraph pursuant to reasonable
confidentiality arrangements.
In the event that the consideration to be paid by the Third Party Purchaser
consists of anything other than cash, the cash equivalent of such non-cash
consideration shall be determined by the Investment Banking Firm pursuant to the
same procedure and at the same time as a Fair Price is determined.
"Third Party" shall mean a Person or entity not otherwise an
-----------
Affiliate of Issuer or a Subsidiary or any of Issuer's stockholders.
SECTION 11. Earn Back.
---------
11.01 Calculation of Earn Back. Following the Calculation DAte for a
------------------------
Subject Holder, such Subject Holder shall surrender or pay to Issuer at the
option of the Subject Holder (i) Tranche B Warrants to purchase a number of
Stock Units equal to the product of the Applicable Earn Back Percentage and P,
(ii) outstanding Stock Units equal to the product of the Applicable Earn Back
Percentage and P, or (iii) an amount in cash equal to the product of the
Applicable Earn Back Percentage and the Warrant Income (an "Earn Back").
---------
Notwithstanding the foregoing, Issuer will not be entitled to any Earn Back in
the event that a Company Permitted Financing has occurred.
11.02 Payment of Earn Back. If an Earn Back payment is due on the
--------------------
Calculation Date, not later than 30 days following such Calculation Date, the
Subject Holder shall deliver such Earn Back to Issuer in Warrants, certificates
representing outstanding Warrant Stock, or cash, as the case may be, accompanied
by a certificate setting forth the calculation of the Earn Back in reasonable
detail, including calculation of the Applicable Earn Back Percentage, IRR,
Warrant Income and Y. If necessary in connection therewith, Issuer shall
simultaneously execute and
Warrant Agreement
-----------------
<PAGE>
-48-
deliver to such Subject Holder a new Warrant and/or certificate evidencing
outstanding Warrant Stock covering the number of shares owed by or issuable to
(as the case may be) such Subject Holder immediately after payment of such Earn
Back.
11.03 Applicability of Earn Back Provision. (a) To the extent that
------------------------------------
the provisions of this Section 11 are applied to any transferee of Tranche B
----------
Warrants and/or Tranche B Warrant Stock, Warrant Income with respect to such
transferee and the transferred securities will be computed taking into account
all Warrant Income received by prior Holders in respect of such transferred
securities plus proceeds received on such Calculation Date, and IRR with respect
to such transferee will be computed as if such transferee had made a Tranche B
Loan at Closing in an amount proportional to the ratio of such Holder's Warrants
and Warrant Stock to all such Warrants and Warrant Stock originally issued.
(b) This Section 11 shall become inapplicable to Warrants and/or
----------
Warrant Stock immediately after the purchase of such Warrants and/or Warrant
Stock by any Person pursuant to a registered public offering, a sale pursuant to
Rule 144 or a Go-Along Sale. The purchaser of any Warrant or Warrant Stock
purchased from a Holder in the manner indicated in the preceding sentence shall
not be deemed a Subject Holder with respect thereto.
11.04 Special Definitions. For purposes of this Section 11:
------------------- ----------
"Calculation Date," with respect to each Subject Holder means the
----------------
first day on or before the seventh anniversary of the Closing Date which is the
date on which any of such Holder's Warrants or Warrant Stock are purchased by
Issuer pursuant to Sections 7 or 8, or sold pursuant to Sections 9 or 10,
---------- - ---------- --
in another sale of the entire equity interest in the Company or in an IPO in
which any of such Holder's Warrant Stock is sold or could have been sold,
provided such first day is after the repayment in full of each Tranche B Loan.
"Subject Holder" means a Holder of Tranche B Warrants and/or Tranche
--------------
B Warrant Stock which receives Warrant Income.
"Applicable Earn Back Percentage" as of any Calculation Date is the
-------------------------------
lower of the Earn Back Percentages in the table below corresponding to the
applicable IRR and Warrant Income achieved by the Subject Holder as of such
Calculation Date. If application of an Earn Back Percentage would reduce the
Subject Holder's IRR or Warrant Income to a level below the minimum for the Earn
Warrant Agreement
-----------------
<PAGE>
-49-
Back Percentage being applied, the next lower Earn Back Percentage will be
applied unless it too would result in reduction below the minimum for such lower
Earn Back Percentage, in which case the next lower Earn Back Percentage shall be
applied, and so forth. If the application of an Earn Back Percentage would
result in an IRR or Warrant Income below the lowest number in the table, the
Earn Back Percentage shall be zero.
<TABLE>
<CAPTION>
EARN BACK TABLE
---------------
Earn Back
IRR Warrant Income Percentage
--- -------------- ----------
<S> <C> <C>
25% Y x $5,000,000 10%
30% Y x $6,000,000 20%
35% Y x $7,000,000 30%
40% Y x $9,000,000 40%
</TABLE>
"Y" = P/Q
in which
"P" = the number of Stock Units the Subject Holder and its Affiliates are
entitled to purchase.
"Q" = equals the total number of Stock Units which all Holders were entitled
to purchase on the Date of Issuance.
"Warrant Income" means all cash and Marketable Securities received by
the Subject Holder and its Affiliates in respect of the Tranche B Warrants and
Tranche B Warrant Stock or any securities or Property received in exchange
therefor, including but not limited to dividends, distributions, interest or
principal (but not interest or principal on the Loans or proceeds from sale or
transfer thereof). To the extent any Subject Holder chooses to include fewer
shares of Warrant Stock in an IPO or Tag-Along Sale than could be accommodated
therein (assuming participation in such event by all Holders) without diminution
in price, such Subject Holder shall be deemed to have received Warrant Income
equal to the amount it would have received had it included the greatest number
of shares possible. The value of Marketable Securities shall be computed as the
average market price per unit during the 20-day period beginning 10 days before
and ending 10 days after the applicable Calculation Date.
Warrant Agreement
-----------------
<PAGE>
-50-
"IRR" means internal rate of return with respect to the Tranche B
---
Term Loans for the Subject Holder and its Affiliates, with investment deemed to
be pro rata for deemed portion of Tranche B Loans and taking into account
--------
Warrant Income, principal and interest on the Tranche B Loans received by the
Subject Holder and its Affiliates, computed in accordance with accepted
financial practice.
SECTION 12. Holders' Rights.
---------------
12.01 Delivery Expenses. If any Holder surrenders any certificate for
-----------------
Warrants or Warrant Stock to Issuer or a transfer agent of Issuer for exchange
for instruments of other denominations or registered in another name or names,
Issuer shall cause such new instruments to be issued and shall pay the cost of
delivering to or from the office of such Holder from or to Issuer or its
transfer agent, duly insured, the surrendered instrument and any new
instruments issued in substitution or replacement for the surrendered
instrument.
12.02 Taxes. Issuer shall pay all taxes (other than Federal, state or
-----
local income taxes) which may be payable in connection with the execution and
delivery of this Agreement or the Registration Rights Agreement or the issuance
of the Warrants and Warrant Stock hereunder or in connection with any
modification of this Agreement, the Registration Rights Agreement or the
Warrants and shall hold each Holder harmless without limitation as to time
against any and all liabilities with respect to all such taxes. The obligations
of Issuer under this Section 12.02 shall survive any redemption, repurchase or
-------------
acquisition of Warrants or Warrant Stock by Issuer, any termination of this
Agreement or the Registration Rights Agreement, and any cancellation or
termination of the Warrants.
12.03 Replacement of Instruments. Upon receipt by Issuer of evidence
--------------------------
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants or Warrant Stock, and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that, if the owner of the same is
--------
the Investor or an institutional lender or investor, its own agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender or cancellation
thereof,
Warrant Agreement
----------------
<PAGE>
-51-
Issuer, at its expense, shall execute, register and deliver, in lieu thereof, a
new certificate or instrument for (or covering the purchase of) an equal number
of Warrants or Warrant Stock.
12.04 Certain Restrictions. Issuer shall not at any time enter into
--------------------
an agreement or other instrument limiting in any manner its ability to perform
its obligations under this Agreement, the Registration Rights Agreement or the
Warrants, or making such performance or the issuance of shares of Common Stock
upon the exercise of any Warrant a default under any such agreement or
instrument other than the Credit Agreement.
12.05 Transactions with Affiliates. Except as expressly permitted
----------------------------
by this Agreement, Issuer shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly: (a) make any Investment in an Affiliate; (b)
transfer, sell, lease, assign or otherwise dispose of any assets to an
Affiliate; (c) merge into or consolidate with or purchase or acquire Property
from an Affiliate; (d) enter into any other transaction directly or indirectly
with or for the benefit of an Affiliate (including guarantees and assumptions of
obligations of an Affiliate); provided, however, that (i) any Affiliate who is
-----------------
an individual may serve as an officer or employee of Issuer or its Subsidiaries
and receive reasonable compensation for his or her services in such capacity,
and (ii) Issuer and its Subsidiaries may enter into transactions providing for
the leasing of Property, the rendering or receipt of services or the purchase or
sale of inventory and other assets in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially as
advantageous to Issuer and its Subsidiaries as the monetary or business
consideration which would obtain in a comparable transaction with a Third Party;
or (e) at any time before February 1, 1999, pay to Wingate, Cumberland or any of
their respective Affiliates any management, consultant, financial advisor,
director or similar fees ("Sponsor Management Fees"), except (i) Sponsor
-----------------------
Management Fees of not more than $25,000 in any month (the "Monthly Management
------------------
Fees") plus (ii) up to an additional $200,000 of Sponsor Management Fees for any
- ----
fiscal year (the "Annual Management Fees") if, giving effect to the payment of
all Monthly Management Fees and to the payment of such Annual Management Fee
(solely for which purpose such Annual Management Fee shall be deemed to have
been paid in such fiscal year), EBITDA for such fiscal year is not less than the
EBITDA set forth opposite such fiscal year in Schedule V of the Credit
Agreement; provided that no Annual Management Fees for any fiscal year shall be
--------
paid until each Holder has received the financial statements of Issuer for such
fiscal year required to
Warrant Agreement
-----------------
<PAGE>
-52-
be delivered to such Holder pursuant to Section 12.10(b) hereof; and provided,
---------------- --------
further, that, in any event, no Annual Management Fee shall be paid if, at the
- -------
time of such payment and after giving effect thereto, any Default (as such term
is defined in the Credit Agreement) or similar event under other agreements
relating to indebtedness shall have occurred and be continuing; and provided,
further, that any Annual Management Fees that shall not be paid because of the
occurrence and continuance of any Default (as such term is defined in the Credit
Agreement) shall continue to accrue.
12.06 Certain Covenants.
-----------------
(a) Issuer shall, at all times prior to the Expiration Date, retain a
nationally recognized independent accounting firm as its auditors.
(b) Except as otherwise specifically provided herein, Issuer shall
not effect any repurchase, recapitalization, reorganization, reclassification,
merger, consolidation, share exchange, liquidation, spin-off, stock split,
dividend, distribution or stock consolidation, subdivision or combination that
would not afford to each Stockholder and Holder the same type and amount of
consideration.
(c) At any time prior to a Qualified Public Offering, Issuer shall
afford, and shall cause its Subsidiaries to afford, any Holder of Warrants
and/or Warrant Stock or its authorized agents or any prospective purchasers of
Warrants and/or Warrant Stock, access, at reasonable times, upon reasonable
prior notice, (i) to inspect the books and records of Issuer and its
Subsidiaries, (ii) to discuss with management of Issuer and its Subsidiaries the
business and affairs of Issuer and its Subsidiaries, and (iii) to inspect the
properties of Issuer and its Subsidiaries.
(d) So long as any Warrants or Warrant Stock shall remain
outstanding, neither Issuer nor any of its Subsidiaries shall (i) issue any
Participating Security, Options for or Convertible Securities convertible into a
Participating Security, (ii) issue any class of equity other than Common Stock
as presently constituted and Preferred Stock outstanding on the date hereof,
(iii) make or agree to make payments to any Person, such as any "phantom" stock
payments, where the amount thereof is calculated with reference to fair market
or equity value of Issuer or any of the Subsidiaries, or (iv) issue any Common
Stock for less than the Exercise Price.
Warrant Agreement
-----------------
<PAGE>
-53-
(e) [Intentionally omitted].
(f) Issuer shall afford each Holder and its authorized agents the
right to attend all meetings of shareholders of Issuer and the Subsidiaries.
(g) Issuer will, and will cause each of the Subsidiaries to take such
action as will be necessary from time to time to ensure that Issuer or a
Subsidiary owns at least 80% of each class of capital stock of each Subsidiary.
(h) Issuer shall hold an annual meeting of shareholders in Texas,
Illinois or New York.
(i) To enable the ready and consistent determination of the Put Per
Share and compliance with the covenants set forth herein, neither Issuer nor any
of its Subsidiaries will change the last day of its fiscal year from December 31
of each year, or the last days of the first three fiscal quarters in each of its
fiscal years from March 31, June 30 and September 30 of each year, respectively.
(j) Except as otherwise specifically provided herein, Issuer shall
not effect any repurchase or redemption of Common Stock and shall cause its
Subsidiaries not to effect any repurchase or redemption of Common Stock from
any stockholder, other than (a) on a pro rata basis from all stockholders and
--------
Warrant Holders participating in such repurchase or redemption at the same type
and amount of consideration, or (b) from former employees of the Operating
Company for an aggregate purchase price of no more than $200,000 in any 12-month
period. Any repurchase or redemption of Common Stock shall include Warrant
Stock.
(k) Issuer shall provide each Holder with notice of the occurrence of
the Triggering Event as soon as possible, but in no event later than the third
Business Day following such Triggering Event, together with a brief description
of the event.
(l) Issuer shall not amend or consent to any modification, supplement
or waiver of any provision of any Other Equity Documents in any manner which
would have an adverse effect on the Warrant Stockholders without the prior
written consent of the Majority Warrant Stockholders. Without limiting the
generality of the foregoing, Issuer shall not amend, or consent to any
modification, supplement or waiver of any provision of any Other Equity
Documents in a way which would materially increase the benefits of the parties
thereto, increase the number of securi-
Warrant Agreement
-----------------
<PAGE>
-54-
ties which may be issued or sold thereunder, or materially modify the
requirements as to eligibility for participation therein.
12.07 Indemnification. Issuer shall indemnify and hold harmless each
---------------
of the Investor and the Holders and each of their respective directors,
officers, employees, stockholders, Affiliates and agents (each, an "indemnified
-----------
person") on demand from and against any and all losses, claims, damages,
- ------
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) and expenses that arise out of, result from, or in any way relate to,
this Agreement, the Warrants or the Registration Rights Agreement, or in
connection with the other transactions contemplated hereby and thereby (other
than the mere diminution of the Investment by Holders in the Warrants
unaccompanied by any other violation of this Agreement), and to reimburse each
indemnified person, upon its demand, for any legal or other expenses incurred in
connection with investigating, defending or participating in the defense of any
such loss, claim, damage, liability, action or other proceeding (whether or not
such indemnified person is a party to any action or proceeding out of which any
such expenses arise), other than any of the foregoing claimed by any indemnified
person to the extent incurred by reason of the gross negligence or willful
misconduct of such indemnified person. No indemnified person shall be
responsible or liable to either Issuer or any other Person for any damages which
may be alleged as a result of or relating to this Agreement, the Warrants or the
Registration Rights Agreement, or in connection with the other transactions
contemplated hereby and thereby.
12.08 Preemptive Rights. If, at any time on or after the date hereof
-----------------
and prior to a Qualified Public Offering, Issuer shall propose to sell or issue
any New Securities to any Person (other than in connection with business
combinations and certain employee stock and stock option plans which in each
case have been approved by the Majority Warrant Stockholders) (a "Proposed
--------
Sale"), then Issuer shall, at least 30 days prior to the Proposed Sale, give
- ----
each Holder (an "Offeree") a notice (the "Offer Notice") of the Proposed Sale
------- ------------
(it being understood that the Offer Notice also shall contain full particulars
of the Proposed Sale, including the identity of the proposed beneficial and
record owners of the New Securities and the purchase price per unit of the New
Security).
In the Offer Notice, Issuer shall offer to each Offeree, subject to
consummation of the Proposed Sale, for 20 Business Days (the "Offer Period")
------------
commencing on the date of receipt by such Offeree of the Offer Notice, the
opportunity to
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-----------------
<PAGE>
-55-
purchase from Issuer: (a) up to that number of units of the New Securities, at
the same purchase price per unit (and on the same terms and conditions as
offered to the proposed purchaser, under the Proposed Sale), equal to the
product of (i) the quotient determined by dividing (A) the number of shares of
Warrant Stock held by such Offeree (assuming the exercise by such Offeree of all
Warrants held by it) by (B) the number of shares of Common Stock outstanding on
a fully diluted basis, and (ii) the number of New Securities to be sold or
issued in the Proposed Sale; provided, that if the New Securities shall consist
--------
of voting Common Stock, each Offeree shall have the option to purchase, in lieu
of such voting Common Stock, up to an equal number of shares of non-voting
Common Stock otherwise identical to and convertible at Offerees option into such
voting Common Stock. In the event that an Offeree does not purchase New
Securities from Issuer in accordance with this paragraph, each Offeree which has
elected to purchase New Securities hereunder (a "Purchasing Offeree") shall be
------------------
entitled to purchase out of such unpurchased New Securities the same proportion
of the unpurchased units of such New Securities as the total number of shares of
Warrant Stock owned by such Purchasing Offeree bears to the total number of
shares of Warrant Stock owned by all Purchasing Offerees.
An Offeree may elect to accept the offer to purchase any New
Securities pursuant to this Section 12.08 by delivering a notice to Issuer (an
-------------
"Election Notice") within the Offer Period indicating the number of the New
---------------
Securities which such Offeree elects to purchase. On the date of the Proposed
Sale, each Offeree which has delivered an Election Notice shall deliver the
purchase price for its New Securities to Issuer in immediately available funds.
If (a) the number of New Securities proposed to be sold or issued in
the Proposed Sale is increased, (b) or any of the price, terms or conditions is
changed in a manner more favorable to the proposed purchaser under the Proposed
Sale after each Offeree has received the Offer Notice, or (c) the Proposed Sale
has not been consummated within 120 days of the giving of the Offer Notice,
then, whether or not such Offeree previously has accepted the offer to purchase
contained in the Offer Notice, Issuer shall notify such Offeree of any such
change. Such Offeree thereupon shall have until the later of (1) 10 Business
Days after receipt of such notice of change and (2) 20 Business Days after
receipt of the original Offer Notice within which to accept the initial offer as
so changed.
12.09 Board Observers. Issuer shall afford the Holders the opportunity
---------------
to have two representatives (each, an
Warrant Agreement
-----------------
<PAGE>
-56-
"Observer") attend as an observer at (but not participate in or vote at) each
--------
meeting of the Board and each meeting of the board of directors of each
Subsidiary of Issuer. Issuer shall give each Observer notice of all such
meetings at the same time and in the same manner as notice is given to members
of the Board and of the board of directors of each Subsidiary of Issuer. Each
Observer shall be entitled to receive all written materials and other
information given to the directors of Issuer and the directors of each
Subsidiary of Issuer in connection with such meetings at the same time and in
the same manner and form such materials and information are given to the
directors, and copies of all minutes and all resolutions adopted by the Board
and by the board of directors of each Subsidiary of Issuer (whether at meetings,
by written consent or otherwise) promptly after such adoption and (if
applicable) approval thereof (it being understood that such copies shall be
certified by the Secretary or Assistant Secretary of Issuer or the relevant
Subsidiary of Issuer, as the case may be). The Observers shall be appointed by
the affirmative vote of the Majority Warrant Stockholders. Issuer shall
reimburse each Holder for the reasonable out-of-pocket expenses incurred by such
Holder in connection with the exercise of their rights under this Section 12.09.
-------------
12.10 Financial Statements, Etc. Issuer shall deliver the information
--------------------------
specified below to each Holder of a Warrant or Warrant Stock:
(a) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of Issuer, consolidated
and consolidating statements of income, retained earnings and cash flows of
Issuer and the Subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated and consolidating balance sheets as at the end of each such
period, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the corresponding period in the
preceding fiscal year (if any), accompanied by a certificate of a senior
financial officer of Issuer, which certificate shall state that such financial
statements fairly present the financial condition and results of operations of
Issuer and the Subsidiaries, and said consolidating financial statements fairly
present the respective individual unconsolidated financial condition and results
of operations of Issuer and of the Subsidiaries, respectively, in each case in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments);
Warrant Agreement
-----------------
<PAGE>
-57-
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of Issuer, consolidated and consolidating statements
of income, retained earnings and cash flow of Issuer and the Subsidiaries,
for such fiscal year and the related consolidated and consolidating balance
sheets as at the end of such fiscal year, setting forth in each case in
comparative form the corresponding consolidated and consolidating figures
for the preceding fiscal year, and accompanied (i) in the case of said
consolidated statements and balance sheet, by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of Issuer and the Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any default under
any credit agreement to which Issuer and/or any of the Subsidiaries is a
party, and (ii) in the case of said consolidating statements and balance
sheets, by a certificate of a senior financial officer of Issuer, which
certificate shall state that said consolidating financial statements
fairly present the respective individual unconsolidated financial condition
and results of operations of Issuer and of each of the Subsidiaries, in
each case in accordance with GAAP, as at the end of, and for, such fiscal
year;
(c) as soon as available, and in any event within 30 days after the
end of each monthly accounting period in each fiscal year of Issuer, a
statement of EBITD for the 12 months ended at the end of such monthly
accounting period;
(d) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, which Issuer or any of the
Subsidiaries shall have filed with the Commission (or any Governmental
Authority substituted therefor) or any national securities exchange; and
(e) promptly upon the mailing thereof to the shareholders of Issuer or
any holder of Indebtedness of Issuer and/or the Subsidiaries generally,
copies of all financial statements, reports and proxy statements so mailed.
Warrant Agreement
-----------------
<PAGE>
-58-
12.11 Holders' Rights in Case of Other Securities. If the Holders at
-------------------------------------------
any time shall have received or shall be entitled to receive Other Securities,
appropriate provision shall be made so that the Holders receive with respect to
such Other Securities as nearly as possible the intended benefits of this
Agreement with respect thereto.
SECTION 13. Miscellaneous.
-------------
13.01 Home Office Payment. Notwithstanding anything to the contrary in
-------------------
this Agreement or the Warrants, so long as the Investor or any nominee
designated by the Investor shall be a Holder, Issuer shall punctually pay all
amounts which become due and payable with respect to any Warrant or Warrant
Stock to the Investor at the address registered on the books of Issuer
maintained for such purpose, or at such other place and in such manner as the
Investor may designate by notice to Issuer, without presentation or surrender of
such Warrant or the making of any notation thereon. The Investor agrees that
prior to the sale, transfer or other disposition of a part of any Warrant, it
will make notation thereon of the number of Stock Units covered by the part of
the Warrant sold, transferred or disposed, or surrender the same in exchange for
a Warrant covering the number of Stock Units remaining on the Warrant so
surrendered. Issuer agrees that the provisions of this section shall inure to
the benefit of any other Holder registered on the books of Issuer.
13.02 Waiver. No failure on the part of the Investor to exercise and
------
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement, the Warrants or the Registration Rights
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, the Warrant or
the Registration Rights Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
13.03 Notices.
-------
(a) All notices, requests and other communications provided for herein
and the Warrants (including any waivers or consents under, this Agreement and
the Warrants) shall be given or made in writing,
Warrant Agreement
-----------------
<PAGE>
-59-
(i) if to Issuer:
Associated Holdings, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Attention: President and Chief
Executive Officer
with a copy to:
Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Attention: Thomas W. Sturgess and
Frederick B. Hegi, Jr.
Cumberland Capital Corporation
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Attention: Gary G. Miller
(ii) if to the Investor:
Chase Manhattan Investment Holdings, Inc.
c/o The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Attn: Elliott H. Jones
Vice President
with a copy to:
Chase Manhattan Investment Holdings, Inc.
c/o The Chase Manhattan Bank
(National Association)
802 Delaware Avenue
P.O. Box 15371
Wilmington, Delaware 19850-5371
Attn: Warren Leonard
(iii) if to any other Person who is the registered Holder of any
Warrants or Warrant Stock, to the address for such Holder as it appears in
the stock or warrant ledger of Issuer;
Warrant Agreement
-----------------
<PAGE>
-60-
or, in the case of any Holder, at such other address as shall be designated by
such party in a notice to Issuer; or, in the case of Issuer, at such other
address as Issuer may designate in a notice to the Investor and all other
Holders.
(b) All such notices, requests and other communications shall be:
(i) personally delivered, sent by courier guaranteeing overnight delivery or
sent by registered or certified mail, return receipt requested, postage prepaid,
in each case given or addressed as aforesaid; and (ii) effective upon receipt.
13.04 Expenses, Etc. Issuer agrees to pay or reimburse the Investor
--------------
and the Holders for: (a) all reasonable out-of-pocket costs and expenses of the
Investor and the Holders (including the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to the Investor and other
reasonable legal fees and expenses), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the Registration
Rights Agreement and the issuance of Warrants hereunder, and (ii) any amendment,
modification or waiver of (or consents in respect of) any of the terms of this
Agreement, the Registration Rights Agreement or the Warrants; and (b) all
reasonable costs and expenses of the Investor and the Holders (including
reasonable legal fees and expenses) in connection with (i) any default by Issuer
hereunder or under the Warrants or the Registration Rights Agreement or any
enforcement proceedings resulting therefrom, and (ii) the enforcement of this
Section 13.04.
- -------------
13.05 Amendments, Etc. Except as otherwise expressly provided in this
---------------
Agreement, any provision of this Agreement may be amended or modified only by an
instrument in writing signed by (a) Issuer and (b) the holders of 51% of the
shares of Warrant Stock as a class; provided, however, that (i) the consent of
-------- -------
the holders of any such class of shares or Warrants shall not be required with
respect to any amendment or waiver which does not affect the rights or benefits
of such class under this Agreement, and (ii) no such amendment or waiver shall,
without the written consent of all holders of such shares and Warrants at the
time outstanding, amend this Section 13.05.
-------------
13.06 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Warrant Agreement
-----------------
<PAGE>
-61-
13.07 Survival.
--------
(a) All representations and warranties made by Issuer herein or in
any certificate or other instrument delivered by it or on its behalf under this
Agreement or the Registration Rights Agreement shall be considered to have been
relied upon by the Investor and shall survive the issuance of the Warrants or
the Warrant Stock regardless of any investigation made by or on behalf of the
Investor. All statements in any such certificate or other instrument so
delivered shall constitute representations and warranties by Issuer hereunder.
(b) All representations and warranties made by the Investor herein
shall be considered to have been relied upon by Issuer and shall survive the
issuance to the Investor of the Warrants or the Warrant Stock regardless of any
investigation made by Issuer or on its behalf.
13.08 Specific Performance. Damages in the event of breach of this
--------------------
Agreement by a Holder or Issuer would be difficult, if not impossible, to
ascertain, and it is therefore agreed that each Holder and Issuer, in addition
to and without limiting any other remedy or right it may have, will have the
right to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms
and provisions hereof, and each Holder and Issuer hereby waives any and all
defenses it may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief. The existence of
this right will not preclude the Holders or Issuer from pursuing any other
rights and remedies at law or in equity which the Holders or Issuer may have.
13.09 Captions. The captions and section headings appearing herein
--------
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
13.10 Counterparts. This Agreement may be executed on counterpart
------------
signature pages or in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart signature page or
counterpart.
13.11 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without giving
effect to the conflicts of law principles thereof, except to the extent that New
York conflicts of laws
Warrant Agreement
-----------------
<PAGE>
-62-
principles would apply the General Corporation Law of the State of Delaware to
matters relating to corporations incorporated thereunder.
13.12 Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
13.13 Adjustment Of Common Stock. All references to Common Stock
--------------------------
herein shall be subject to appropriate adjustment by reason of any stock
dividend, split, reverse split, combination, recapitalization or any similar
corporate transaction.
13.14 Covenant of Wingate and Cumberland. None of Wingate, Cumberland
----------------------------------
or any transferee of the Employee Shares shall transfer or sell the Employee
Shares to any Person other than a management employee of the Operating Company.
Warrant Agreement
-----------------
<PAGE>
-63-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Warrant Agreement as of the date first above written.
ASSOCIATED HOLDINGS, INC.,
By /s/
------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.,
By /s/
------------------------
Name: Elliott H. Jones
Title: Vice President
For Purposes of Section 7 Only:
---------
ASSOCIATED STATIONERS, INC.
By /s/
- ------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
Warrant Agreement
-----------------
<PAGE>
Schedule I Capital Stock and Equity Securities
<PAGE>
SCHEDULE I
HOLDER CLASS NO. OF
SHARES
- ------ ----- ------
WINGATE PARTNERS, L.P. CLASS A 592,175
COMMON
CLASS A 3,483
PREFERRED
ASI PARTNERS, L.P. CLASS A 226,345
COMMON
A PFRD. 1,332
CUMBERLAND CAPITAL CLASS A 23,129
CORPORATION COMMON
GOOD CAPITAL CO., INC. CLASS A 54,609
COMMON
CLASS A 185
PREFERRED
BOISE CASCADE CORPORATION CLASS B 5,000
PREFERRED
AFFILIATED COMPUTER SERVICES, CLASS C 7,500
INC. PREFERRED
<PAGE>
Schedule II Certain Transferees
James T. Callier, Jr.
Frederick B. Hegi, Jr.
Thomas W. Sturgess
James A. Johnson
Dennis Johnson
Sue Goddard
Wallace R. Hawley
Lee Walton
Jay I. Applebaum
Estate of Howard Beasley
Callier Buy-Out Partners, as defined in the Agreement of Limited Partnership
of Wingate Partners, L.P.
Peter J. Wodtke
Pension Plans for Benefit of the Above
<PAGE>
Annex 1 - Form of Warrant
<PAGE>
Annex 1
to
Warrant Agreement
[Form of Warrant]
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED AS OF
JANUARY 31, 1992 (THE "WARRANT AGREEMENT"), BETWEEN ASSOCIATED HOLDINGS, INC., A
-----------------
DELAWARE CORPORATION ("ISSUER"), AND CHASE MANHATTAN INVESTMENT HOLDINGS, INC.,
------
AS THE WARRANT AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM
TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF
THE FORM OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
PRINCIPAL EXECUTIVE OFFICE OF ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE
WARRANT AGREEMENT.
No. of Stock Units: Warrant No.
-------------------- ------------
WARRANT
to Purchase Common Stock of
ASSOCIATED HOLDINGS, INC.
Expiring 10 years from the date hereof
THIS IS TO CERTIFY THAT [ ], or it registered assigns, is
entitled to purchase in whole or in part from time to time from Associated
Holdings, Inc., a Delaware corporation ("Issuer"), at any time on and after the
------
date hereof, but not later than 5:00 p.m., New York time, on the date which is
10 years from the date hereof (as it may be extended pursuant to Section 6.03,
the "Expiration Date"), [ ] Stock Units (as hereinafter defined and
---------------
subject to adjustment as provided herein) at a purchase price of $.01 per Stock
Unit provided, that such purchase price shall not be less than the aggregate par
--------
value of the capital stock contained in a Stock Unit, (the "Exercise Price"),
--------------
subject to the terms and conditions hereinbelow provided. Each exercise made
hereunder must be of a minimum of the lesser of 100 Stock Units and all of the
remaining Stock Units covered by this Warrant.
Warrant
-------
<PAGE>
-2-
This Warrant is one of the [Underwriting/Tranche B] Warrants
originally issued pursuant to the Warrant Agreement dated as of January 31,
1992, between Issuer and Chase Manhattan Investment Holdings, Inc.
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning ascribed thereto (or
incorporated by reference) in the Warrant Agreement (as hereinafter defined).
(b) As used in this Warrant, unless the context otherwise requires:
"Additional Shares of Common Stock" shall mean all shares (including
---------------------------------
treasury shares) of Common Stock issued or sold by Issuer on or after the date
hereof, other than (i) the Warrant Stock and Common Stock issuable pursuant to
any warrants in an amount equal to the Tranche B Warrants and Tranche B Warrant
Stock repurchased by Issuer pursuant to Section 6 of the Warrant Agreement, (ii)
the shares of Common Stock which may be issued pursuant to the Other Equity
Securities (whether issuable immediately or upon the arrival of a specified date
or the occurrence of a specified event) on the date hereof, (iii) shares
purchased by Holder pursuant to the exercise of preemptive rights pursuant to
Section 12.08 of the Warrant Agreement, and (iv) the shares of Common Stock
described as being issued and outstanding in Section 3.07 of the Warrant
Agreement.
"Convertible Security Value" shall mean the value of a Convertible
--------------------------
Security as computed in accordance with accepted financial practice, taking into
account both its fixed income value (determined by discounting future payments
at an appropriate rate) and the value of the embedded option (determined using
an appropriate option valuation model).
"Current Market Price", per share of Common Stock, for the purposes
--------------------
of any provision of this Warrant at the date herein specified, shall be deemed
to be the fair market value per share of Common Stock, as reasonably determined
by the Board, or if there shall be a public market for the Common Stock, the
average of the daily market prices for each day during the 30 consecutive
trading days commencing 45 Business Days before such date as of which such a
price can be established in the manner set forth below. The market price for
each such Business Day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such last
sale price is not available, the average of the closing bid and asked prices as
reported in either such system, or in any other case the higher bid price quoted
for such day as reported by The Wall Street Journal and the National Quotation
Bureau pink sheets.
Warrant
-------
<PAGE>
-3-
"Current Warrant Price", for the purpose of any provision of this
---------------------
Warrant at the date herein specified, shall mean the amount per share of Common
Stock equal to the quotient resulting from dividing the Exercise Price per Stock
Unit in effect on such date by the number of shares (including any fractional
share) of Common Stock comprising a Stock Unit on such date.
"Exercise Notice" shall have the meaning set forth in Section 2.
--------------- ---------
"Exercise Price" shall have the meaning set forth at the head of this
--------------
Warrant.
"Expiration Date" shall have the meaning set forth at the head of this
---------------
Warrant as extended under Section 6.03.
------------
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by the
------- ---------
phrase ", without being limited to,".
"Issuer" shall have the meaning set forth at the head of this Warrant.
------
"Stock Unit" shall mean one share of Common Stock, as such Common
----------
Stock is constituted on the date hereof, and thereafter shall mean such number
of shares (including any fractional shares) of Common Stock and other
securities, cash or other property as shall result from the adjustments
specified in Section 4 and Section 5. At the election of Holder, the Common
--------- ---------
Stock constituting a Stock Unit may be either Class A Common Stock or Class B
Common Stock or any combination thereof.
"Warrant Agreement" shall mean the Warrant Agreement dated as of
-----------------
January 31, 1992, between Issuer and Chase Manhattan Investment Holdings, Inc.,
as such Warrant Agreement shall be modified and supplemented and in effect from
time to time.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Warrant Agreement, including any
transferees of Warrants or Warrant Stock.
"Warrants" shall mean the Warrants originally issued by Issuer
--------
pursuant to the Warrant Agreement, evidencing rights to purchase up to an
aggregate of 150,340 Stock Units, and all Warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions, except as to the
number of Stock Units for which they may be exercised. The Underwriting
Warrant
-------
<PAGE>
-4-
Warrants and the Tranche B Warrants shall at all times be dated as of their
respective dates of original issuance.
SECTION 2. Exercise of Warrant. On and after the date hereof and until
-------------------
5:00 p.m., New York time, on the Expiration Date, Holder may exercise this
Warrant, on one or more occasions, on any Business Day, in whole or in part, by
delivering to Issuer, at its office maintained for such purpose pursuant to
Section 11.01, (a) a written notice of Holder's election to exercise this
- -------------
Warrant, which notice shall specify the number of Stock Units to be purchased
(the "Exercise Notice"), (b) a certified or bank check or checks payable to
---------------
Issuer in an aggregate amount equal to the aggregate Exercise Price for the
number of Stock Units as to which this Warrant is being exercised, and (c) this
Warrant. Such Exercise Notice may be substantially in the form of Annex A
hereto. Upon receipt thereof, Issuer shall, as promptly as practicable and in
any event within five Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a stock certificate or
certificates representing the aggregate number of shares of Warrant Stock and
other securities issuable upon such exercise and any other property to which
such Holder is entitled. The Warrant Stock may be issued as Class A Common Stock
or Class B Common Stock, or any combination thereof, at the option of Holder.
The stock certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in the Exercise Notice and
shall be registered in the name of Holder or such other name or names as shall
be designated in such Exercise Notice. Such stock certificate or certificates
shall be deemed to have been issued and Holder or any other Person so designated
to be named therein shall be deemed to have become a holder of record of such
shares, including, to the extent permitted by law, the right to vote such shares
or to consent or to receive notice as a Stockholder, as of the date on which the
last of the Exercise Notice, payment of the Exercise Price and this Warrant is
received by Issuer as aforesaid, and all taxes required to be paid by Holder, if
any, pursuant to Section 9 hereof, prior to the issuance of such shares have
---------
been paid. If this Warrant shall have been exercised only in part, Issuer shall,
at the time of delivery of the certificate or certificates representing Warrant
Stock and other securities, execute and deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Stock Units called
for by this Warrant, which new Warrant shall in all other respects be identical
with this Warrant, or, at the request of Holder, appropriate notation may be
made on this Warrant and the same returned to Holder.
All shares of Common Stock issuable upon the exercise of this Warrant
shall, upon payment therefor in accordance here-
Warrant
-------
<PAGE>
-5-
with, be duly and validly issued, fully paid and nonassessable and free and
clear of any Liens.
Issuer shall not be required to issue a fractional share of Common
Stock upon exercise of this Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, Issuer shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Common Stock on the date of
exercise.
SECTION 3. Transfer, Division and Combination. Subject to Section
---------------------------------- -------
11.03, transfer of this Warrant and all rights hereunder, in whole or in part,
- -----
shall be registered on the books of Issuer to be maintained for such purpose,
upon surrender of this Warrant at the office of Issuer maintained for such
purpose pursuant to Section 11.01, together with a written assignment of this
-------------
Warrant, substantially in the form of Annex B hereto, duly executed by Holder or
its agent or attorney and payment of funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required,
such payment, Issuer shall, subject to Section 11.03 and the immediately
-------------
following sentence, (a) execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denominations specified in such
instrument of assignment, (b) issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned and (c) promptly cancel this Warrant. If
and when this Warrant is assigned in blank (in case the restrictions on
transferability referred to in Section 11.03 shall have been terminated), Issuer
-------------
may (but shall not be obliged to) treat the bearer hereof as the absolute owner
of this Warrant for all purposes and Issuer shall not be affected by any notice
to the contrary. This Warrant, if properly assigned in compliance with this
Section 3 and Section 11.03, may be exercised by an assignee for the purchase of
- --------- -------------
shares of Common Stock without having a new Warrant or Warrants issued.
Notwithstanding any provision herein to the contrary, Issuer shall not be
required to register the transfer of Warrants or Warrant Stock in the name of
any Person who acquired this Warrant (or part hereof) or any Warrant Stock
otherwise than in accordance with this Warrant and the Warrant Agreement.
Issuer shall maintain at its aforesaid office books for the
registration and transfer of the Warrants.
SECTION 4. Adjustment of Stock Unit. The number of shares of Common
------------------------
Stock comprising a Stock Unit shall be subject to adjustment from time to time
as set forth in this Section 4. Issuer shall not take any action with respect to
---------
its Common Stock of any class requiring an adjustment pursuant to any of
Sections 4.01, 4.07 or 5 without at the same time taking like action with
- ------------- ---- -
respect to its Common Stock of each other class, and Issuer shall not create any
class of Common Stock which carries any rights to
Warrant
-------
<PAGE>
-6-
dividends or assets differing in any respect from the rights of the Common Stock
on the date hereof.
4.01 Stock Dividends, Subdivisions and Combinations. If at any time
----------------------------------------------
Issuer shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, Additional Shares of Common Stock, or
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the number of shares of Common Stock comprising a Stock Unit immediately
after the occurrence of any such event shall be adjusted to equal the number of
shares of Common Stock which a record holder of the number of shares of Common
Stock comprising a Stock Unit immediately prior to the happening of such event
would own or be entitled to receive after the happening of such event.
4.02 Issuance of Additional Shares of Common Stock. If at any time
---------------------------------------------
Issuer shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price at the time the
Additional Shares of Common Stock are issued, then the number of shares of
Common Stock thereafter comprising a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock comprising a
Stock Unit immediately prior to such adjustment by a fraction (a) the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Additional Shares of Common Stock plus the number
of such Additional Shares of Common Stock so issued, and (b) the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Additional Shares of Common Stock plus the number
----
of shares of Common Stock which the aggregate consideration for the total number
of such Additional Shares of Common Stock so issued would purchase at the
Current Market Price. For purposes of this Section 4.02, the date as of which
------------
the Current Market Price shall be computed shall be the earlier of (i) the date
on which Issuer shall enter into a firm contract for the issuance of such
Additional Shares of Common Stock and (ii) the date of actual issuance of such
Additional Shares of Common Stock. Subject to Section 4.05, no further
------------
adjustment of the number of shares of Common Stock comprising a Stock Unit shall
be made under this Section 4.02 upon the issuance of any Additional Shares of
------------
Common Stock:
Warrant
-------
<PAGE>
(a) for which an adjustment is provided under Section 4.01;
------------
(b) which are issued pursuant to the exercise of any Options or the
conversion, exchange or exercise of any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such
Options or Convertible Securities (or upon the issuance of any Option
therefor) pursuant to Section 4.03 or 4.04; or
------------ ----
(c) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 5.02.
------------
Notwithstanding the foregoing, if any shares are issued pursuant to the
Transition Services Agreement, the number of shares of Common Stock comprising a
Stock Unit shall be increased by a number which is equal to the quotient
resulting from dividing (i) the product of the number of shares of Common Stock
issued pursuant to the Transition Services Agreement and .149, by (ii) 150,340.
4.03 Issuance of Options. If at any time Issuer shall issue or sell,
-------------------
or shall fix a record date for the determination of holders of any class of
securities entitled to receive, any Options for any Additional Shares of Common
Stock or any Convertible Securities, whether or not the rights to purchase
thereunder are immediately exercisable, then the number of shares of Common
Stock thereafter comprising a Stock Unit shall be adjusted as provided in
Section 4.02 on the basis that (a) the maximum number of Additional Shares of
- ------------
Common Stock issuable pursuant to all such Options or necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued as of (and, accordingly, the date as of which the Current
Market Price shall be computed shall be) the computation date specified in the
penultimate sentence of this Section 4.03, and (b) the aggregate consideration
------------
for such maximum number of Additional Shares of Common Stock shall be zero. For
purposes of this Section 4.03, the computation date for clause (a) above shall
------------ ----------
be the earlier of (i) the date on which Issuer shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive any
such Options and (ii) the date on which Issuer shall enter into a firm contract
for the issuance of such Options. No further adjustment of the number of shares
of Common Stock comprising a Stock Unit shall be made under this Section 4.03
------------
upon the issuance of any Options to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities as a distribution or a
dividend which is distributed or declared and paid in accordance with Section
-------
5.02. Notwithstanding the foregoing, any issuance of an Option which is issued
- ----
together with a debt security of Issuer, as a Unit, shall be treated for the
purpose of this Section 4 as the issuance of a Convertible Security.
---------
Warrant
-------
<PAGE>
-8-
4.04 Issuance of Convertible Securities. If at any time Issuer shall
----------------------------------
issue or sell any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the cash received by
Issuer in payment for such Convertible Securities shall be less than the
Convertible Security Value thereof, then the number of shares of Common Stock
thereafter comprising a Stock Unit shall be increased to a number of shares of
Common Stock having a value immediately following the computation date (as
established below) equal to the value of the number of shares comprising such
Stock Unit immediately before such increase. For this purpose, the value before
the increase will be the Fair Market Value of the Common Stock as reasonably
determined by the Board on the basis set forth in the first paragraph of the
definition thereof (without reference to the appraisal procedure referred to
therein) divided by the number of shares of Common Stock outstanding on a fully
diluted basis as determined under the Warrant Agreement, and the value
immediately following the computation date shall be the foregoing value, except
that the numerator shall be the Fair Market Value plus the cash amount paid to
the Company for such Convertible Securities less the Convertible Security Value
of such Convertible Securities on issuance and the denominator shall be
increased by the number of Additional Shares of Common Stock issuable on
exercise of such Convertible Securities. For purposes of this Section 4.04, the
------------
computation date for clause (a) above shall be the earliest of (i) the date on
----------
which Issuer shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any such Convertible Securities, (ii) the
date on which Issuer shall enter into a firm contract for the issuance of such
Convertible Securties,and (iii) the date of actual issuance of such Convertable
Securities. No further adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made under this Section 4.04 upon of any
------------
Convertible Securities:
(a) which are issued pursuant to the exercise of any Option
therefor, if any such adjustment shall previously have been made upon the
issuance of such Option pursuant to Section 4.03; or
------------
(b) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 5.02.
------------
4.05 Superseding Adjustment of Stock Unit. If, at any time after any
------------------------------------
adjustment of the number of shares of Common Stock comprising a Stock Unit shall
have been made pursuant to Section 4.03 or 4.04 as a result of the issuance of
------------ ----
Options or Convertible Securities, or after any new adjustment of the number of
shares of Common Stock comprising a Stock Unit shall have been made pursuant to
this Section 4.05, (a) such Options or the right of conversion, exchange or
------------
exercise of such Convertible Securities shall expire, and all or a portion of
such Options or the
Warrant
-------
<PAGE>
-9-
right of conversion, exchange or exercise with respect to all or a portion of
such Convertible Securities, as the case may be, shall not have been exercised
or treated as having been exercised or otherwise canceled or acquired by the
Company in connection with any settlement including, without limitation, any
cash settlement, of such Options or the rights of conversion, or exchange or
exercise of such Convertible Securities, or (b) there has been any change in the
number of shares issuable upon exercise, conversion or exchange of such Options
or Convertible Securities (including as a result of the operation of anti-
dilution provisions applicable thereto), or a (c) the consideration per share,
for which Additional Shares of Common Stock are issuable pursuant to such
Options or the terms of any Convertible Securities, or the maturity of any such
Convertible Security, shall be changed, then such previous adjustment shall be
rescinded and annulled and the Additional Shares of Common Stock which were
deemed to have been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation. Thereupon, a recomputation shall be made
of the effect of such Options or Convertible Securities on the basis of
(i) treating the number of Additional Shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise
of such Options or such right of conversion or exchange, as having been
issued on the date or dates of such issuance as determined for purposes of
such previous adjustment and for the consideration actually received and
receivable therefor,
(ii) treating the maximum number of Additional Shares of Common Stock
(A) issuable pursuant to all Options which then remain outstanding and (B)
necessary to effect the conversion or exchange of all Convertible
Securities which then remain outstanding, as having been issued, and
(iii) making the computations called for in Section 4.04 on the basis
------------
of the revised terms of such Convertible Securities as if newly issued at
the time of such revision,
and, if and to the extent called for by the foregoing provisions of this
Section 4 on the basis aforesaid, a new adjustment of the number of shares of
- ---------
Common Stock comprising a Stock Unit shall be made, such new adjustment shall
supersede the previous adjustment so rescinded and annulled.
4.06 Other Provisions Applicable to Adjustments Under this Section 4.
---------------------------------------------------------------
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock comprising a Stock Unit hereinbefore provided
for in this Section 4:
---------
Warrant
-------
<PAGE>
-10-
(a) Computation of Consideration. To the extent that any Additional
----------------------------
Shares of Common Stock or any Convertible Securities shall be issued for a
cash consideration, the consideration received by Issuer therefor shall be
deemed to be the amount of cash received by Issuer therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
Issuer for subscription, the subscription price, or, if such Additional
Shares of Common Stock or Convertible Securities are sold to underwriters
or dealers for public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without deduction
of any reasonable compensation, discounts or expenses paid or incurred by
Issuer for and in the underwriting of, or otherwise in connection with, the
issue thereof. To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair
market value of such consideration at the time of such issuance, as
reasonably determined by the Board. The consideration for any Additional
Shares of Common Stock issuable pursuant to any Options to subscribe for or
purchase the same shall be zero. The consideration for any Additional
Shares of Common Stock issuable pursuant to the terms of any Convertible
Securities shall be the cash consideration paid or payable to Issuer in
respect of the subscription for or purchase of such Convertible Securities.
In case of the issuance at any time of any Additional Shares of Common
Stock in payment or satisfaction of any dividend upon any class of stock
other than Common Stock, Issuer shall be deemed to have received for such
Additional Shares of Common Stock a consideration equal to the amount of
such dividend so paid or satisfied.
(b) When Adjustments to be Made. The adjustments required by this
---------------------------
Section 4 shall be made whenever and as often as any specified event
---------
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock comprising a Stock Unit that would
otherwise be required may be postponed (except in the case of a subdivision
or combination of shares of the Common Stock, as provided for in
Section
-------
4.01) up to but not beyond the date of exercise if such adjustment either
----
by itself or with other adjustments not previously made adds or subtracts
less than both (i) 1/20th of a share to or from the number of shares of
Common Stock comprising a Stock Unit immediately prior to the making of
such adjustment and (ii) 5% of the number of shares of Common Stock
comprising a Stock Unit. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) shall be carried forward and made
as soon as such adjustment, together with other adjustments required by
this Section 4 and not previously made, would result in a minimum
---------
adjustment on the date of exercise. For
Warrant
-------
<PAGE>
-11-
the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
--------------------
Section 4, fractional interests in Common Stock shall be taken into
---------
account to the nearest one-thousandth of a share.
(d) When Adjustment Not Required. If Issuer shall take a record of
----------------------------
the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution thereof to stockholders,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
4.07 Other Dilutive Events. In case any event shall occur, affecting
---------------------
Issuer, the Subsidiaries or any Person in which Issuer or any Subsidiary has a
direct or indirect Investment, as to which the provisions of Section 4 or
---------
Section 5 are not strictly applicable but the failure to make any adjustment
- ---------
would not fairly protect the purchase rights represented by this Warrant in
accordance with the essential intent and principles of such sections then, in
each such case, Issuer shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of Issuer),
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in Section 4 and
---------
5, necessary to preserve, without dilution, the purchase rights represented by
- -
this Warrant. Without limiting the generality of the foregoing, Issuer
acknowledges that issuance of any equity security by any Subsidiary or Person in
which Issuer has a direct or indirect Investment to any Person other than
Issuer or a Wholly-Owned Subsidiary or sale of existing equity securities of
Subsidiaries or investees by Issuer or any Subsidiary for a price less than the
fair value thereof, and acquisition of less than 100% of the equity interest in
a Person for a price greater than the fair market value thereof, would be such
events. Upon receipt of such opinion, Issuer will promptly mail a copy thereof
to Holder and shall make the adjustments described therein.
SECTION 5. Consolidation, Merger, Share Exchange, ect.; Distributions.
----------------------------------------------------------
5.01 Consolidation, Merger, Share Exchange, ect. In case a
------------------------------------------
consolidation, merger or share exchange of Issuer shall be effected with another
Person on or after the date hereof, or the sale, lease or transfer of all or a
majority of its assets to
Warrant
-------
<PAGE>
- 12 -
another Person shall be effected on or after the date hereof, then, as a
condition of such consolidation, merger, share exchange, sale, lease or
transfer, lawful and adequate provision shall be made whereby Holder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified herein and in lieu of each Stock Unit immediately
theretofore purchasable and receivable upon the exercise of each of the
Warrants, such shares of stock, securities, cash or other property receivable
upon such consolidation, merger, share exchange, sale, lease or transfer by the
holder of the number of shares of Common Stock comprising a Stock Unit
immediately prior to such event. In any such case, appropriate and equitable
provision also shall be made with respect to the rights and interests of Holder
to the end that the provisions hereof (including Section 4) and of the Warrant
---------
Agreement and the Registration Rights Agreement shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities, cash or
other property thereafter deliverable upon the exercise of any Warrants. Issuer
shall not effect any such consolidation, merger, share exchange, sale, lease or
transfer unless prior to or simultaneously with the consummation thereof the
successor Person (if other than Issuer) resulting from such consolidation,
merger or share exchange or the Person purchasing, leasing or otherwise
acquiring such assets shall assume, by written instrument mailed to Holder at
its last address appearing on the books of Issuer, the obligation to deliver to
Holder such shares of stock, securities, cash or other property as, in
accordance with the foregoing provisions, Holder may be entitled to purchase.
The above provisions of this Section 5.01 shall similarly apply to successive
------------
consolidations, mergers, share exchanges, sales, leases or transfers.
5.02 Distributions upon Declaration of Dividend or Other
---------------------------------------------------
Distribution. So long as any Warrants remain outstanding, Issuer shall pay,
- ------------
upon the declaration and payment of any dividend or distribution (whether such
dividend or distribution is in form of cash, debt securities, equity securities
or other property) on any class of Common Stock, to Holder the dividend or
distribution that such Holder would be otherwise entitled to receive had Holder
exercised this Warrant in full immediately prior to the taking of record of
those holders of Common Stock entitled to any such dividend or distribution. If
such dividend or distribution is in the form of a voting equity security, Holder
will be entitled to receive, at its option, in its stead non-voting equity
securities otherwise identical to and convertible at Holder's option into the
equity securities to which Holder is otherwise entitled thereunder and
continuing benefiting from antidilution provisions similar to those herein. This
provision shall not apply to stock dividends of Additional Shares of Common
stock, provided, that Issuer adjusts the number of shares of Common Stock
--------
comprising a Stock Unit pursuant to Section 4.01.
------------
Warrant
-------
<PAGE>
-13-
A reclassification or recapitalization of the Common Stock shall be
deemed a distribution by Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 5.02 and,
------------
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.01.
------------
5.03 Dilution in Case of Other Securities. In case any other
------------------------------------
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of Issuer (or any
issuer of Other Securities or any other Person referred to in Section 5.01) or
------------
to subscription, purchase or other acquisition pursuant to any rights, options,
warrants to subscribe for, purchase or otherwise acquire either Additional
Shares of Common Stock or securities directly or indirectly convertible into or
exchangeable for Additional Shares of Common Stock, issued or granted by the
Company (or any such other issuer or Person) for a consideration such as to
dilute, on a basis consistent with the standards established in the other
provisions of Section 4, the purchase rights granted by this Warrant, then, and
---------
in each such case, the computations, adjustments and readjustments provided for
in Section 4 with respect to the Stock Units shall be made as nearly as possible
---------
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants, so as
to protect the Warrant Holders against the effect of such dilution.
SECTION 6. Notice to Warrant Holders.
-------------------------
6.01 Notice of Adjustment of Stock Unit or Exercise Price. Whenever
----------------------------------------------------
the number of shares of Common Stock comprising a Stock Unit shall be adjusted
pursuant to Section 4, Issuer shall forthwith obtain a certificate signed by the
---------
chief financial officer of Issuer and reasonably acceptable to the Holders of a
majority of the Warrants, setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was calculated
(including a description of the basis on which the Board determined the fair
market value of Additional Shares of Common Stock issued or sold and, if the
consideration therefor was other than cash, a description of how such
consideration was valued), specifying the number of shares of Common Stock
comprising a Stock Unit and (if such adjustment was made pursuant to
Section 4.07 or Section 5) describing the number and kind of any other
- ------------ ---------
securities comprising a Stock Unit, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. Issuer shall
promptly, and in any case within 10 days after the making of such adjustment,
cause a signed copy of such certificate to be delivered to each Warrant Holder
in accordance with Section
-------
Warrant
-------
<PAGE>
-14-
11.02. Issuer shall keep at its office or agency, maintained for the purpose
- -----
pursuant to Section 11.01, copies of all such certificates and cause the same to
-------------
be available for inspection at said office during normal business hours by any
Warrant Holder or any prospective permitted purchaser or a Warrant designated by
a holder thereof. All adjustments set forth in such certificates shall be
subject to the reasonable approval of the Majority Warrant Stockholders.
6.02 Notice of Certain Corporate Action. In case Issuer shall propose
----------------------------------
(a) to pay any dividend to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock, or (b) to offer to the holders
of its Common Stock rights to subscribe for or to purchase any Additional Shares
of Common Stock or shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of its Common Stock (other
than a reclassification involving only the subdivision, or combination, of
outstanding shares of Common Stock), or (d) to effect any capital
reorganization, or (e) to effect any consolidation, merger, share exchange or
sale, lease, transfer or other disposition of all or a majority of its
property, assets or business (other than the creation of a Lien pursuant to a
Company Permitted Financing), or (f) to effect the liquidation, dissolution or
winding up of Issuer, then, in each such case, Issuer shall give to each
Warrant Holder, in accordance with Section 11.02, a notice of such proposed
-------------
action, which shall specify the date on which a record is to be taken for the
purposes of such stock dividend, distribution or rights, or the date on which
such reclassification, reorganization, consolidation, merger, share exchange,
sale, lease, transfer, disposition, liquidation, dissolution or winding up is to
take place and the date of participation therein by the holders of Common Stock,
if any such date is to be fixed, and shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock, if any, and the number and kind of any other shares
of stock which will comprise a Stock Unit, and the purchase price or prices
thereof, after giving effect to any adjustment, if any, which will be required
as a result of such action. Such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least 20 days prior to the record
--------- ---
date for determining holders of the Common Stock for purposes of such action,
and in the case of any other such action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
6.03 Notice of Expiration Date. Issuer shall give to each Warrant
-------------------------
Holder notice of the Expiration Date. Such notice may be given by Issuer not
less than 30 days but not more than 60 days prior to the Expiration Date;
provided, however, that if Issuer fails to give timely notice, the Expiration
- -------- -------
Date will be
Warrant
-------
<PAGE> -15-
extended to the date which is 30 days after the day on which such notice is
given.
SECTION 7. Reservation and Authorization of Common Stock. Issuer
---------------------------------------------
shall at all times reserve and keep available for issue upon the exercise or
conversion of Warrants such number of its authorized but unissued shares of
Common Stock of both classes as will be sufficient to permit the exercise in
full of all outstanding Warrants. Issuer shall not amend its certificate of
incorporation in any respect relating to the Common Stock other than to increase
or decrease the number of shares of authorized capital stock (subject to the
provisions of the preceding sentence) or to decrease the par value of any shares
of Common Stock. All shares of Common Stock which shall be so issuable, when
issued upon exercise of any Warrant and payment of the applicable Exercise Price
therefor in accordance with the terms of this Warrant, shall be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or which would cause an
adjustment reducing the Current Warrant Price per share of Common Stock below
the then par value, if any, of the shares of Common Stock issuable upon exercise
of the Warrants, Issuer shall take any corporate action which is necessary in
order that Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock free and clear of any Liens upon the exercise of all the
Warrants immediately after the taking of such action.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or in the Current
Warrant Price per share of Common Stock, Issuer shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
Issuer will list on each national securities exchange on which any
Common Stock may at any time be listed, subject to official notice of issuance
upon exercise of the Warrants, and will maintain such listing of, all shares of
Common Stock from time to time issuable upon the exercise of the Warrants.
Issuer will also so list on each national securities exchange, and will maintain
such listing of, any Other Securities if at the time any securities of the same
class shall be listed on such national securities exchange by Issuer.
SECTION 8. Taking of Record; Stock and Warrant Transfer Books. (a)
--------------------------------------------------
In the case of all dividends or other distributions by Issuer to the holders of
its Common Stock with respect to which any provision of Section 4 and Section
--------- -------
5.02 refers to the taking of a record of such holders, Issuer shall in each such
- ----
Warrant
-------
<PAGE>
-16-
case take such a record as of the close of business on a Business Day.
(b) Issuer shall not at any time, except upon complete dissolution,
liquidation or winding up, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise, conversion or
transfer of any Warrant, unless otherwise required by any applicable federal,
state or local law.
SECTION 9. Expenses, Transfer Taxes and Other Charges. Issuer shall
------------------------------------------
pay any and all expenses, transfer taxes and other charges, including all costs
associated with the preparation, issue and delivery of stock or warrant
certificates, that are incurred in respect of the issuance or delivery of shares
of Common Stock upon exercise or conversion of this Warrant pursuant to Section
-------
2, or in connection with any transfer, division or combination of Warrants
- -
pursuant to Section 3. Issuer shall not, however, be required to pay any tax
---------
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which this
Warrant is registered, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to Issuer the amount of any such
tax, or has established, to the satisfaction of Issuer, that such tax has been
paid.
SECTION 10. No Voting Rights. This Warrant shall not entitle Holder
----------------
to any voting or other rights as a stockholder of Issuer.
SECTION 11. Miscellaneous.
-------------
11.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, Issuer shall maintain an office in the continental United States of
America where the Warrants may be presented for exercise, transfer, division or
combination as in this Warrant provided. Such office shall be at Associated
Holdings, Inc., 1075 Hawthorne Drive, Itasca, IL 60143, unless and until Issuer
shall designate and maintain some other office for such purposes and give notice
thereof to all Warrant Holders.
11.02 Notices Generally. Any notices and other communications
-----------------
pursuant to the provisions hereof shall be sent in accordance with Section 13.03
of the Warrant Agreement.
11.03 Restrictions on Transferability. The Warrants and the Warrant
-------------------------------
Stock shall be transferable only upon compliance with the conditions specified
in Section 4 of the Warrant Agreement and the Registration Rights Agreement
therein referred to, which conditions are intended to ensure compliance with the
provisions of the Securities Act in respect of the transfer of any Warrant or
any Warrant Stock, and any Holder shall be bound
Warrant
-------
<PAGE>
-17-
by the provisions of (and entitled to the benefits of) said Section 4 and said
Registration Rights Agreement.
11.04 Governing Law. This Warrant shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without giving
effect to conflicts of law principles thereof, except to the extent that New
York conflicts of laws principles would apply the General Corporation Law of the
State of Delaware to matters relating to corporations incorporated thereunder.
11.05 Limitation of Liability. No provision hereof, in the absence
-----------------------
of affirmative action by Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the Exercise Price or as a stockholder of Issuer,
whether such liability is asserted by Issuer, by any creditor of Issuer or any
other Person.
11.06 Fair Market Value Determinations by the Board, Etc. Whenever
--------------------------------------------------
the Board determines fair market value, Convertible Security Value or the Fair
Market Value of the Common Stock pursuant to this Warrant, or a firm of
independent public accountants opines as to an adjustment pursuant to Section
-------
4.07, any such determination or opinion shall be subject to the reasonable
- ----
approval of the Majority Warrant Stockholders.
SECTION 12. Conversion of Warrants. On and after the date hereof
----------------------
and prior to the Expiration Date, this Warrant may be converted, in whole or in
part, at the option of Holder, into the number of shares of Common Stock, for
each Stock Unit evidenced by this Warrant which is being so converted, equal to
the product of (a) the number of shares of Common Stock comprising a Stock Unit
at the time of such conversion, and (b) the Current Market Price per share of
Common Stock at the time of such conversion minus the Exercise Price of the
Warrant at the time of such conversion, divided by (c) the Current Market Price
----------
per share of Common Stock at the time of such conversion.
SECTION 13. Certain Legal Requirements. If Holder is subject to the
--------------------------
provisions of Regulation Y, Holder shall not, and shall not permit any of its
Bank Holding Company Affiliates to, permit any of its Bank Holding Company
Affiliates to convert this Warrant into shares of Common Stock pursuant to
Section 12, or exercise this Warrant, if after giving effect to such conversion
- ----------
or exercise, (i) Holder and its Bank Holding Company Affiliates would own more
than 5% of the total issued and outstanding shares of Common Stock or (ii)
Holder would Control Issuer (and for purposes of this clause (ii), a reasoned
opinion of counsel to Holder (which is based on facts and circumstances deemed
appropriate by such counsel) to the effect that Holder does not control Issuer
shall be conclusive).
Warrant
-------
<PAGE>
-18-
IN WITNESS WHEREOF, Issuer has duly executed this Warrant.
Dated: January 31, 1992
ASSOCIATED HOLDINGS, INC.,
By
----------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
Warrant
-------
<PAGE>
FORM OF EXERCISE
----------------
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of ___________ Stock Units of Associated Holdings,
Inc., a Delaware corporation, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant, and requests
that (i) certificates and/or other instruments covering such Stock Units be
issued in accordance with the instructions given below and (ii) if such Stock
Units shall not include all of the Stock Units to which Holder is entitled under
this Warrant, that a new Warrant of like tenor and date for the unpurchased
balance of the Stock Units issuable hereunder be delivered to the undersigned.
Dated: ___________________
___________________________________
(Signature of Registered Holder)
Instructions for issuance and
registration of Stock Units:
_________________________________
Name of Registered Holder
(please print)
Social Security or Other Identifying
Number:__________________________
Please deliver certificate to
the following address:
____________________________________
Street
____________________________________
City, State and Zip Code
Warrant
-------
<PAGE>
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of Stock Units
covered thereby set forth hereinbelow unto:
Number of
Name of Assignee Address Stock Units
- ---------------- ------- -----------
Dated:
---------------
------------------------------
Signature of Registered Holder
------------------------------
Name of Registered Holder
(Please Print)
Witness:
- ------------------------------
Warrant
-------
<PAGE>
Annex 2-Registration Rights Agreement
<PAGE>
Annex 2
to
Warrant Agreement
ASSOCIATED HOLDINGS, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of January 31, 1992
<PAGE>
TABLE OF CONTENTS
-----------------
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
Page
No.
----
1. Requested Registrations.............................................. 1
(a) Registration Request........................................... 1
(b) Limitations on Requested Registrations......................... 2
(c) Registration Statement Form.................................... 3
(d) Registration Expenses.......................................... 3
(e) Priority in Cutback Registrations.............................. 3
2. Piggyback Registrations.............................................. 4
(a) Right to Include Registrable Securities........................ 4
(b) Registration Expenses.......................................... 4
(c) Priority in Cutback Registrations.............................. 4
3. Registration Procedures.............................................. 5
4. Underwritten Offerings............................................... 10
(a) Underwritten Requested Offerings............................... 10
(b) Underwritten Piggyback Offerings............................... 11
5. Holdback Agreements By Issuer and Other Securityholders.............. 11
6. Indemnification...................................................... 12
(a) Indemnification by Issuer...................................... 12
(b) Indemnification by Sellers..................................... 13
(c) Notices of Claims, etc......................................... 14
(d) Contribution................................................... 15
(e) Other Indemnification.......................................... 15
(f) Indemnification Payments....................................... 16
7. Covenants Relating to Rules 144 and 144A............................. 16
8. Other Registration Rights............................................ 17
(a) No Existing Agreements......................................... 17
(b) Future Agreements.............................................. 17
9. Definitions.......................................................... 17
10. Miscellaneous........................................................ 22
(a) Notices........................................................ 22
(b) Entire Agreement............................................... 23
(c) Amendment...................................................... 23
(d) Waiver......................................................... 23
(e) Consents and Waivers by Holders of Registrable Securities...... 24
(f) No Third Party Beneficiary..................................... 24
(g) Successors and Assigns......................................... 24
(h) Headings....................................................... 24
(i) Invalid Provisions............................................. 24
(j) Remedies....................................................... 24
(k) Governing Law.................................................. 25
(l) Counterparts................................................... 25
i
<PAGE>
ASSOCIATED HOLDINGS, INC.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT dated as of January 31, 1992 is
made and entered into by and between CHASE MANHATTAN INVESTMENT HOLDINGS, INC.,
a Delaware corporation (the "Investor"), and ASSOCIATED HOLDINGS, INC., a
--------
Delaware corporation (the "Issuer"). Capitalized terms not otherwise defined
------
herein have the meanings set forth in Section 9.
---------
WHEREAS, Issuer and the Investor are parties to a Warrant Agreement of
even date herewith (as modified and supplemented and in effect from time to
time, the "Warrant Agreement"), providing for the issuance by Issuer of
-----------------
Underwriting Warrants and Tranche B Warrants (each as defined in the Warrant
Agreement) which entitle the Investor to purchase, from and after the dates of
their respective issuance, from Issuer at any time on or prior to the date that
is ten years from the date of their respective issuance, Stock Units (as therein
defined) representing, initially, an aggregate amount equal to 13% of the issued
and outstanding shares of Common Stock of Issuer (on a fully diluted basis); and
WHEREAS, in order to induce the Investor to purchase the Warrants, and
as a condition precedent to such purchase, the Investor requires that Issuer
enter into this Agreement simultaneously with the Investor's execution of the
Warrant Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Requested Registrations. (a) Registration Requests. At any time
----------------------- ---------------------
after the earlier of (i) the date upon which Issuer shall have effected a Public
Offering and (ii) in the event that a Put Postponement occurs, the date on which
the corresponding Put Response Notice is delivered (the "Trigger Date"), upon
------------
the written request of the holders of a majority of the Registrable Securities
requesting that Issuer effect the registration under the Securities Act of all
or part of such holders' Registrable Securities and specifying the number of
Registrable Securities to be registered and the intended method of disposition
thereof (a "Registration Request"), Issuer will promptly, and in no event more
--------------------
than ten (10) Business Days after receipt of such Registration Request, give
written notice (a "Notice of Requested Registration") of such request to all
--------------------------------
other holders of Registrable Securities, and thereupon will use its best efforts
to effect the registration under the Securities Act of
Registration Rights Agreement
-----------------------------
<PAGE>
-2-
(A) the Registrable Securities which Issuer has been so requested to
register by such Majority Warrant Stockholders, and
(B) all other Registrable Securities the holders of which have made
written requests to Issuer for registration thereof within twenty (20) days
after the giving of the Notice of Requested Registration (which requests
shall specify the intended method of distribution thereof),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities so to be registered. If
requested by the holders of a majority of the Registrable Securities requested
to be included in any Requested Registration, the method of disposition of all
Registrable Securities included in such registration shall be an underwritten
offering effected in accordance with Section 4 (a). Notwithstanding the
-------------
foregoing, Issuer may postpone taking action with respect to a Requested
Registration for a reasonable period of time after receipt of the original
request (not exceeding one hundred twenty (120) days) if, in the reasonable
opinion of Issuer's Board of Directors, effecting the registration would
adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other comparable transaction or would require Issuer to make
public disclosure of information the public disclosure of which would have a
material adverse effect upon Issuer, provided that Issuer shall not delay such
--------
action pursuant to this sentence more than once in any twelve (12) month period.
Subject to paragraph (e), Issuer may include in such registration other
-------------
securities for sale for its own account or for the account of any other Person.
If any securityholders of Issuer (other than the holders of Registrable
Securities in such capacity) register securities of Issuer in a Requested
Registration in accordance with this Section, such holders shall pay the fees
and expenses of their counsel and their pro rata share, on the basis of the
--- ----
respective amounts of the securities included in such registration on behalf of
each such holder, of the Registration Expenses if the Registration Expenses for
such registration are not paid by Issuer for any reason.
(b) Limitations on Requested Registrations.
--------------------------------------
Notwithstanding anything herein to the contrary, Issuer shall not be required to
honor a request for a Requested Registration if:
(i) the Trigger Date shall not yet have occurred;
(ii) in the case of a Long-Form Registration, (A) Issuer has previously
effected two (2) Effective Long-Form Registrations, or (B) in the event
that there has been a Put Postponement and the corresponding Put
Reactivation Date has not occurred, Issuer has previously effected
three (3) Effective Long-Form Registrations;
Registration Rights Agreement
-----------------------------
<PAGE>
-3-
(iii) in the case of a Short-Form Registration, Issuer has previously
effected three (3) Effective Short-Form Registrations;
(iv) such request is received by Issuer less than three hundred (300)
days following the effective date of any previous registration statement
filed in connection with a Requested Registration, regardless of whether
any holder of Registrable Securities exercised its rights under this
Agreement with respect to such registration, unless such previous
registration constituted a Cutback Registration.
(c) Registration Statement Form. Requested Registrations shall be on
---------------------------
such appropriate registration form promulgated by the Commission as shall be
selected by Issuer, and shall be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods specified in their request for such registration,
provided, that such registration form is available under the terms of this
- --------
Agreement. Notwithstanding the forgoing, if Issuer selects a Form S-3 and the
use of such form is available under the terms of this Agreement and is permitted
by law, the holders of a majority of the Registrable Securities to which such
registration relates may notify Issuer in writing that, in the judgment of such
holders (or, if applicable, the Managing Underwriter), the inclusion of some or
all of the information required in a more detailed form specified in such notice
is of material importance to the success of the Public Offering of such
Registrable Securities, in which case Issuer shall supplement or amend the Form
S-3 to include such information.
(d) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with any Requested Registration.
(e) Priority in Cutback Registrations. If a Requested Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in any such registration to
the extent of the number which the Managing Underwriter advises Issuer can be
sold in such offering (i) first, Registrable Securities requested to be included
-----
in such registration by the Requesting Holders, pro rata on the basis of the
--- ----
number of Registrable Securities requested to be included by such holders and
(ii) second, other securities of Issuer proposed to be included in such
------
registration, allocated among the holders thereof in accordance with the
priorities then existing among Issuer and the holders of such other securities;
and any securities so excluded shall be withdrawn from and shall not be included
in such Requested Registration.
Registration Rights Agreement
-----------------------------
<PAGE>
-4-
2. Piggyback Registrations. (a) Right to Include Registrable
----------------------- ----------------------------
Securities. Notwithstanding any limitation contained in Section 1, if Issuer at
- ---------- ---------
any time proposes after the date hereof to effect a Piggyback Registration, it
will each such time give prompt written notice (a "Notice of Piggyback
-------------------
Registration") to all holders of Registrable Securities of its intention to do
- ------------
so and of such holders' rights under this Section 2, which Notice of Piggyback
---------
Registration shall include a description of the intended method of disposition
of such securities. Upon the written request of any such holder made within
fifteen (15) days after receipt of a Notice of Piggyback Registration (which
request shall specify the Registrable Securities intended to be disposed of by
such holder and the intended method of disposition thereof), Issuer will use its
best efforts to include in the registration statement relating to such Piggyback
Registration all Registrable Securities which Issuer has been so requested to
register. Notwithstanding the foregoing, if, at any time after giving a Notice
of Piggyback Registration and prior to the effective date of the registration
statement filed in connection with such registration, Issuer shall determine for
any reason not to register or to delay registration of such securities, Issuer
may, at its election, give written notice of such determination to each holder
of Registrable Securities and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any Requesting Holder entitled to do so to request
that such registration be effected as a Requested Registration under Section 1,
---------
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities for the same period as the delay
in registering such other securities. No registration effected under this
Section 2 shall relieve Issuer of its obligations to effect a Requested
- ---------
Registration under Section 1.
---------
(b) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with each Piggyback Registration.
(c) Priority in Cutback Registrations. If a Piggyback Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in such registration to the
extent of the amount of the securities which the Managing Underwriter advises
Issuer can be sold in such offering:
(i) if such registration involves a primary offering of Issuer's
securities, (x) first, the securities proposed by Issuer to be sold for its own
-----
account, and (y) second, other securities of Issuer proposed to be included in
------
such registration by any Person who is a party to a registration rights
agreement (including this Agreement) referred to in
Registration Rights Agreement
-----------------------------
<PAGE>
-5-
Section 8(a), allocated among the holders thereof, pro rata on the basis of
------------ --- ----
the number of units of such securities requested to be included by such
holders; and
(ii) if such registration does not involve a primary offering, all
securities requested to be included in such registration by any Person who
is a party to a registration rights agreement (including this Agreement)
referred to in Section 8(a), pro rata on the basis of the number of
------------ --- ----
securities requested to be included by such holders;
(iii) if there has been a Put Postponement and the corresponding Put
Reactivation Date has not occurred, and the Majority Warrant Stockholders
have requested that their respective Registrable Securities be included in
a Piggyback Registration, the priority of the Registrable Securities
requested to be included in such Piggyback Registration in the event that
it becomes a Cutback Registration shall be as set forth in Section 1(e);
------------
and
and any securities so excluded shall be withdrawn from and shall not be included
in such Piggyback Registration.
3. Registration Procedures. If and whenever Issuer is required to use
-----------------------
its best efforts to effect the registration of any Registrable Securities under
the Securities Act pursuant to Section 1 or Section 2, Issuer will use its best
--------- ---------
efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended methods of disposition thereof specified by the
Requesting Holders. Without limiting the foregoing, Issuer in each such case
will, as expeditiously as possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and use its best efforts to cause
such registration statement to become effective as soon as practicable,
provided that as far in advance as practical before filing such
--------
registration statement or any amendment or supplement thereto, Issuer will
furnish to the Requesting Holders copies of reasonably complete drafts of
all such documents proposed to be filed (including exhibits), and any such
holder shall have the opportunity to object to any information pertaining
solely to such holder and its plan of distribution that is contained
therein and Issuer will make the corrections reasonably requested by such
holder with respect to such information prior to filing any such
registration statement or amendment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement and to comply with the provisions of the
Securities Act with
Registration Rights Agreement
-----------------------------
<PAGE>
-6-
respect to the disposition of all Registrable Securities covered by such
registration statement, in accordance with the intended methods of disposition
thereof, until the earlier of (i) such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement and (ii) two hundred
and seventy (270) days after such registration statement becomes effective;
(c) promptly notify each Requesting Holder and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any post-
effective amendment thereto, when the same has become effective;
(ii) of any written request by the Commission for amendments or
supplements to such registration statement or prospectus;
(iii) of the notification to Issuer by the Commission of its initiation
of any proceeding with respect to the issuance by the Commission of, or of
the issuance by the Commission of, any stop order suspending the
effectiveness of such registration statement (and Issuer shall promptly
attempt to have such order withdrawn);
(iv) of the receipt by Issuer of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale
under the applicable securities or blue sky laws of any jurisdiction;
(d) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
holder's Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of its Registrable Securities;
(e) use its best efforts to register or qualify all Registrable Securities
covered by such registration statement under such other securities or blue sky
laws of such
Registration Rights Agreement
-----------------------------
<PAGE>
-7-
jurisdictions as each holder thereof shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such holder, except that Issuer shall not for any such purpose be required
(i) to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
paragraph (e) be obligated to be so qualified, (ii) to subject itself to
------------
taxation in any such jurisdiction or (iii) to consent to general service of
process in any jurisdiction;
(f) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
each holder thereof to consummate the disposition of such Registrable
Securities;
(g) upon the request of (a) the Managing Underwriter, or (b) those
Requesting Holders who hold at least a majority of the Registrable
Securities to be included in a Requested Registration, effect a stock split
in respect of the Common Stock by means of a stock dividend on the Common
Stock or a subdivision of the Common Stock, or a combination of the Common
Stock, such stock split or combination to be in form, scope and substance
satisfactory to the Managing Underwriter or such Requesting Holders, as the
case may be.
(h) furnish to each Requesting Holder a signed counterpart, addressed
to such holder (and the underwriters, if any), of
(i) an opinion of counsel for Issuer, dated the effective date
of such registration statement (or, if such registration includes an
underwritten Public Offering, dated the date of any closing under the
underwriting agreement), reasonably satisfactory in form and substance
to such holder, and
(ii) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under the
underwriting agreement), signed by the independent public accountants
who have certified Issuer's financial statements included in such
registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus
Registration Rights Agreement
-----------------------------
<PAGE>
-8-
included therein) and, in the case of the accountants' letter, with respect
to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in the underwritten Public Offerings
of securities and, in the case of the accountants' letter, such other
financial matters, as such holder (or the underwriters, if any) may
reasonably request;
(i) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which any prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and at the request of any such
holder promptly prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first full calendar month after
the effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder;
(k) make available for inspection by any Requesting Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and
----------
other records, pertinent corporate documents and properties of Issuer
(collectively, the "Records") as shall be reasonably necessary to enable
-------
them to exercise any due diligence responsibility, and cause Issuer's
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration
statement, and permit the Inspectors to
Registration Rights Agreement
-----------------------------
<PAGE>
-9-
participate in the preparation of such registration statement and any
prospectus contained therein and any amendment or supplement thereto.
(l) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement; and
(m) use its best efforts to cause all Registrable Securities covered
by such registration statement to be listed, upon official notice of
issuance, on any securities exchange on which any of the securities of the
same class as the Registrable Securities are then listed.
Issuer may require each holder of Registrable Securities as to which
any registration is being effected to, and each such holder, as a condition to
including Registrable Securities in such registration, shall, furnish Issuer
with such information regarding such holder and the distribution of such
securities as Issuer may from time to time reasonably request in writing in
connection with such registration; provided, however, that Issuer will not file
-------- -------
any registration statement under the Securities Act which refers to any holder
of any Registrable Securities by name or otherwise as the holder of any
securities of Issuer, unless it shall first have given to such holder the right
to require (a) the insertion therein of language, in form and substance
-
satisfactory to such holder, to the effect that the holding by such holder of
such securities does not make such holder a "controlling person" of Issuer
within the meaning of the Securities Act and is not to be construed as a
recommendation by such holder of the investment quality of the Issuer's debt or
equity securities covered thereby and that such holding does not imply that such
holder will assist in meeting any future financial requirements of Issuer, or
(b) in the event that such reference to such holder by name or otherwise is not
-
required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such holder.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from Issuer of the
happening of any event of the kind described in paragraph (i), such holder will
-------------
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (i) and, if so directed by Issuer, will
-------------
deliver to Issuer (at Issuer's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. In the
event Issuer shall give any such notice, the period referred to in
Registration Rights Agreement
-----------------------------
<PAGE>
-10-
paragraph (b) shall be extended by a number of days equal to the number of days
- ------------
during the period from and including the giving of notice pursuant to
paragraph (i) and to and including the date when each holder of any Registrable
- ------------
Securities covered by such registration statement shall receive the copies of
the supplemented or amended prospectus contemplated by paragraph (i).
------------
4. Underwritten Offerings.
----------------------
(a) Underwritten Requested Offerings. In the case of any underwritten
--------------------------------
Public Offering being effected pursuant to a Requested Registration, the
Managing Underwriter and any other underwriter or underwriters with respect to
such offering shall be selected, after consultation with Issuer, by the holders
of a majority of the Registrable Securities to be included in such underwritten
offering with the consent of Issuer, which consent shall not be unreasonably
withheld. Issuer shall enter into an underwriting agreement in customary form
with such underwriter or underwriters, which shall include, among other
provisions, indemnities to the effect and to the extent provided in Section 6
---------
and shall take all such other actions as are reasonably requested by the
Managing Underwriter in order to expedite or facilitate the registration and
disposition of the Registrable Securities. The holders of Registrable Securities
to be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
Issuer to and for the benefit of such underwriters also be made to and for their
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions precedent
to their obligations. No holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with Issuer or the
underwriters other than representations, warranties or agreements regarding such
holder and its ownership of the securities being registered on its behalf and
such holder's intended method of distribution and any other representation
required by law. No Requesting Holder may participate in such underwritten
offering unless such holder agrees to sell its Registrable Securities on the
basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably
required under the terms of such underwriting agreement. If any Requesting
Holder disapproves of the terms of an underwriting, such holder may elect to
withdraw therefrom and from such registration by notice to Issuer and the
Managing Underwriter, and each of the remaining Requesting Holders shall be
entitled to increase the number of Registrable Securities being registered to
the extent of the Registrable Securities so withdrawn in the proportion which
the number of Registrable Securities being registered by such remaining
Requesting Holder bears to the total number of
Registration Rights Agreement
-----------------------------
<PAGE>
-11-
Registrable Securities being registered by all such remaining Requesting
Holders.
(b) Underwritten Piggyback Offerings. If Issuer at any time proposes
--------------------------------
to register any of its securities in a Piggyback Registration and such
securities are to be distributed by or through one or more underwriters, Issuer
will, subject to the provisions of Section 2(c), use its best efforts to arrange
------------
for such underwriters to include the Registrable Securities to be offered and
sold by Requesting Holders among the securities to be distributed by such
underwriters, and such holders shall be obligated to sell their Registrable
Securities in such Piggyback Registration through such underwriters on the same
terms and conditions as apply to the other Issuer securities to be sold by such
underwriters in connection with such Piggyback Registration. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between Issuer and such underwriter or
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
Issuer to and for the benefit of such underwriters also be made to and for their
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions precedent
to their obligations. No holder of Registrable Securities shall be required to
make any representations or warranties to or agreements with Issuer or the
underwriters other than representations, warranties or agreements regarding such
holder and its ownership of the securities being registered on its behalf and
such holder's intended method of distribution and any other representation
required by law. No Requesting Holder may participate in such underwritten
offering unless such holder agrees to sell its Registrable Securities on the
basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably
required under the terms of such underwriting agreement. If any Requesting
Holder disapproves of the terms of an underwriting, such holder may elect to
withdraw therefrom and from such registration by notice to Issuer and the
Managing Underwriter, and each of the remaining Requesting Holders shall be
entitled to increase the number of Registrable Securities being registered to
the extent of the Registrable Securities so withdrawn in the proportion which
the number of Registrable Securities being registered by such remaining
Requesting Holder bears to the total number of Registrable Securities being
registered by all such remaining Requesting Holders.
5. Holdback Agreements By Issuer and Other Securityholders. Unless
-------------------------------------------------------
the Managing Underwriter otherwise agrees, Issuer and each holder of Registrable
Securities agrees not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the fourteen (14) days prior to and the
Registration Rights Agreement
-----------------------------
<PAGE>
-12-
one hundred and eighty (180) days after the effective date of the registration
statement filed in connection with an underwritten offering made pursuant to a
Requested Registration (or for such shorter period of time as is sufficient and
appropriate, in the opinion of the Managing Underwriter, in order to complete
the sale and distribution of the securities included in such registration),
except as part of such underwritten registration and except pursuant to
registrations on Form S-4 or Form S-8 promulgated by the Commission or any
successor or similar forms thereto. Issuer also agrees, unless the Managing
Underwriter otherwise agrees, to cause each holder of its equity securities
which is a party to a registration rights agreement with Issuer entered into on
or after the date hereof, and each holder of its equity securities, or of any
securities convertible into or exchangeable or exercisable for such securities,
in each case purchased from Issuer, and Wingate, Cumberland or their respective
Affiliates, at any time after the date of this Agreement (other than in a Public
Offering), to agree, to the extent permitted by law, not to effect any such
public sale or distribution of such securities (including a sale under Rule
144), during such period, except as part of such underwritten registration.
6. Indemnification. (a) Indemnification by Issuer. Issuer shall, to
--------------- -------------------------
the full extent permitted by law, indemnify and hold harmless each seller of
Registrable Securities included in any registration statement filed in
connection with a Requested Registration or a Piggyback Registration, its
directors and officers, and each other Person, if any, who controls any such
seller within the meaning of the Securities Act, against any losses, claims,
damages expenses or liabilities, joint or several (together, "Losses"), to which
------
such seller or any such director or officer or controlling Person may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, and
Issuer will reimburse such seller and each such director, officer and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such Loss (or action or
proceeding in respect thereof); provided that Issuer shall not be liable in any
--------
such case to the extent that any such Loss (or action or proceeding in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
Registration Rights Agreement
-----------------------------
<PAGE>
-13-
amendment or supplement in reliance upon and in conformity with written
information furnished to Issuer through an instrument duly executed by such
seller specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer or controlling
Person, and shall survive the transfer of such securities by such seller. Issuer
shall also indemnify each other Person who participates (including as an
underwriter) in the offering or sale of Registrable Securities, their officers
and directors and each other Person, if any, who controls any such participating
Person within the meaning of the Securities Act to the same extent as provided
above with respect to sellers of Registrable Securities.
(b) Indemnification by the Sellers. Each holder of Registrable
------------------------------
Securities which are included or are to be included in any registration
statement filed in connection with a Requested Registration or a Piggyback
Registration, as a condition to including Registrable Securities in such
registration statement, shall, to the full extent permitted by law, indemnify
and hold harmless Issuer, its directors and officers, and each other Person, if
any, who controls Issuer within the meaning of the Securities Act, against any
Losses to which Issuer or any such director or officer or controlling Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
Issuer through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the obligation to provide indemnification
-----------------
pursuant to this Section 6(b) shall be several, and not joint and several,
-----------
among such Indemnifying Parties and the aggregate amount which may be recovered
from any holder of Registrable Securities pursuant to the indemnification
provided for in this Section 6(b) in connection with any registration and sale
-----------
of Registrable Securities shall be limited to the total proceeds
received by such holder from the sale of such Registrable Securities. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of Issuer or any such director, officer or controlling
Person and shall survive the transfer of such securities by such seller. Such
holders shall also indemnify each
Registration Rights Agreement
-----------------------------
<PAGE>
-14-
other Person who participates (including as an underwriter) in the offering or
sale of Registrable Securities, their officers and directors and each other
Person, if any, who controls any such participating Person within the meaning of
the Securities Act to the same extent as provided above with respect to Issuer.
(c) Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraph (a) or (b) of this Section 6, such
-------------------- ---------
Indemnified Party will, if a claim in respect thereof is to be made against an
Indemnifying Party pursuant to such paragraphs, give written notice to latter of
the commencement of such action, provided that the failure of any Indemnified
--------
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under the preceding paragraphs of this Section 6, except to
---------
the extent that the Indemnifying Party is actually prejudiced by such failure to
give notice. In case any such action is brought against an Indemnified Party,
the Indemnifying Party shall be entitled to participate in and, unless, in the
reasonable judgment of any Indemnified Party, a conflict of interest between
such Indemnified Party and any Indemnifying Party exists or such Indemnified
Party has additional defenses available to it with respect to such claim, to
assume the defense thereof, jointly with any other Indemnifying Party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided that the
--------
Indemnified Party may participate in such defense at the Indemnified Party's
expense; and provided further that the Indemnified Party or Indemnified Parties
-------- -------
shall have the right to employ one counsel to represent it or them if, in the
reasonable judgment of the Indemnified Party or Indemnified Parties, it is
advisable for it or them to be represented by separate counsel by reason of
having legal defenses which are different from or in addition to those available
to the Indemnifying Party, and in that event the reasonable fees and expenses of
such one counsel shall be paid by the Indemnifying Party. If the Indemnifing
Party is not entitled to, or elects not to, assume the defense of a claim, it
will not be obligated to pay the fees and expenses of more than one counsel
(plus appropriate local counsel) for the Indemnified Parties with respect to
such claim, unless in the reasonable judgment of any Indemnified Party a
conflict of interest may exist between such Indemnified Party and any other
Indemnified Parties with respect to such claim, in which event the Indemnifying
Party shall be obligated to pay the fees and expenses of such additional counsel
for the Indemnified Parties or counsels. No Indemnifying Party shall consent to
entry of any judgment or enter into any
Registration Rights Agreement
-----------------------------
<PAGE>
-15-
settlement without the consent of the Indemnified Party which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) Contribution. If the indemnity and reimbursement obligation
------------
provided for in any paragraph of this Section 6 is unavailable or insufficient
---------
to hold harmless an Indemnified Party in respect of any Losses (or actions or
proceedings in respect thereof) referred to therein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such Losses (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other hand in connection
with statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this paragraph were to be determined by pro rata allocation or by any other
--- ----
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this paragraph. The amount paid by an
Indemnified Party as a result of the Losses referred to in the first sentence of
this paragraph shall be deemed to include any legal and other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any Loss which is the subject of this paragraph.
No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 6 (with appropriate modifications)
---------
shall be given by Issuer and each seller of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority other than the
Securities Act. The provisions of this Section 6 shall be in addition to any
---------
other rights to indemnification or
Registration Rights Agreement
-----------------------------
<PAGE>
-16-
contribution which an Indemnified Party may have pursuant to law, equity,
contract or otherwise.
(f) Indemnification Payments. The indemnification required by this
------------------------
Section 6 shall be made by periodic payments of the amount thereof during the
- ---------
course of the investigation or defense, as and when bills are received or Losses
are incurred.
7. Covenants Relating to Rules 144 and 144A. If at any time Issuer is
----------------------------------------
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, Issuer will file reports in compliance with the Exchange
Act, will comply with all rules and regulations of the Commission applicable in
connection with the use of Rule 144 and take such other actions and furnish such
holder with such other information as such holder may request in order to avail
itself of such rule or any other rule or regulation of the Commission allowing
such holder to sell any Registrable Securities without registration, and will,
at its expense, forthwith upon the request of any holder io Registrable
Securities, deliver to such holder a certificate, signed by Issuer's principal
financial officer, stating (a) Issuer's name, address and telephone number
(including area code), (b) Issuer's Internal Revenue Service identification
number, (c) Issuer's Commission file number, (d) the number of shares of each
class of Stock outstanding as shown by the most recent report or statement
published by Issuer, and (e) whether Issuer has filed the reports required to be
filed under the Exchange Act for a period of at least ninety (90) days prior to
the date of such certificate and in addition has filed the most recent annual
report required to be filed thereunder. If at any time Issuer is not required to
file reports in compliance with either Section 13 or Section 15(d) of the
Exchange Act, Issuer at its expense will, forthwith upon the written request of
the holder of any Registrable Securities, make available adequate current public
information with respect to Issuer within the meaning of paragraph (c)(2) of
Rule 144.
With a view to making available to each holder of Registrable
Securities the benefits of certain rules and regulations of the Commission which
may permit the sale of the Registrable Securities to the public without
registration. Issuer agrees that so long as a holder owns any Registrable
Securities, each holder of Registrable Securities and each prospective holder
of Registrable Securities who may consider acquiring Registrable Securities in
reliance upon Rule 144A shall have the right to request from Issuer, and Issuer
will provide upon request, such information regarding Issuer and its business,
assets and properties, if any, as is at the time required to be made available
by Issuer under Rule 144A so as to enable such holder to transfer Registrable
Securities to such prospective holder in reliance upon Rule 144A.
Registration Rights Agreement
-----------------------------
<PAGE>
-17-
Each holder of Registrable Securities agrees (on behalf of itself and
each of its affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential, in accordance with their
customary procedures for handling confidential information of this nature and in
accordance with safe and sound practices, any non-public information supplied
to it by Issuer pursuant to this Agreement which is identified by Issuer as
being confidential at the time the same is delivered to such holder of
Registrable Securities, provided, that nothing herein shall limit the disclosure
--------
of any such information (i) to the extent required by statute, rule, regulation
or judicial process, (ii) to counsel for any of the holders of Registrable
Securities, (iii) to regulatory personnel, auditors or accountants, (iv) in
connection with any litigation to which any one or more of the holders of
Registrable Securities is a party, (v) to a Subsidiary or Affiliate of such
holder of Registrable Securities as provided in clause (a) above or (vi) to any
prospective holder of Registrable Securities so long as such prospective holder
of Registrable Securities first executes and delivers to the respective holder
of Registrable Securities a Confidentiality Agreement substantially in the form
of Annex 1.
-------
8. Other Registration Rights.
-------------------------
(a) No Existing Agreements. Issuer represents and warrants to the
----------------------
Investor that there is not in effect on the date hereof any agreement by Issuer
(other than this Agreement) pursuant to which any holders of securities of
Issuer have a right to cause Issuer to register or qualify such securities under
the Securities Act or any securities or blue sky laws of any jurisdiction other
than the Stockholders Registration Rights Agreement.
(b) Future Agreements. Issuer shall not hereafter agree with or
-----------------
amend an existing agreement with the holders of any securities issued or to be
issued by Issuer to register or qualify such securities under the Securities Act
or any securities or blue sky laws of any jurisdiction unless such agreement
specifically provides that (i) such holder of such securities may not
participate in any Requested Registration except as provided in Section 1; (ii)
---------
the holder of such securities may not participate in any Piggyback Registration
except as provided in Section 2; and (iii) such securities may not be publicly
---------
offered or sold for the period specified in Section 5 under the circumstances
---------
described in such Section.
9. Definitions.
-----------
(a) Except as otherwise specifically indicated, the following terms
will have the following meanings for all purposes of this Agreement:
Registration Rights Agreement
-----------------------------
<PAGE>
-18-
"Agreement" means this Registration Rights Agreement, as the same
---------
shall be amended from time to time.
"Business Day" has the meaning ascribed to it in the Warrant
------------
Agreement.
"Common Stock" has the meaning ascribed to it in the Warrant
------------
Agreement.
"Commission" has the meaning ascribed to it in the Warrant Agreement.
----------
"Cutback Registration" means any Requested Registration or Piggyback
--------------------
Registration to be effected as an underwritten Public Offering in which the
Managing Underwriter with respect thereto advises Issuer and the Requesting
Holders in writing that, in its opinion, the number of securities requested to
be included in such registration (including securities of Issuer which are not
Registrable Securities) exceed the number which can be sold in such offering.
"Effective Long-Form Registration" means a Long-Form Registration that
--------------------------------
results in an Effective Registration.
"Effective Registration" means a Requested Registration which (a) has
----------------------
been declared or ordered effective in accordance with the rules of the
Commission, (b) has been kept effective for the period of time contemplated by
Section 3(b) and (c) has resulted in the Registrable Securities requested to be
- ------------
included in such registration actually being sold (except by reason of some act
or omission on the part of the Requesting Holders); provided that a Cutback
--------
Registration shall not be an Effective Registration for purposes of this
Agreement; and provided, further, that a Requested Registration in which Issuer
-------- -------
includes securities for sale for the account of Issuer shall not be an Effective
Registration for purposes of this Agreement. Notwithstanding the foregoing, a
registration that does not become effective after it has been filed with the
Commission solely by reason of the refusal to proceed of the Requesting Holders
shall be deemed to be an Effective Registration for purposes of this Agreement.
"Effective Short-Form Registration" means a Short-Form Registration
---------------------------------
that results in an Effective Registration.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Form S-1" means Form S-1 promulgated by the Commission under the
--------
Securities Act, or any successor or similar long-form registration statement.
Registration Rights Agreement
-----------------------------
<PAGE>
-19-
"Form S-2" means Form S-2 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Form S-3" means Form S-3 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Indemnified Party" means a party entitled to indemnity in accordance
-----------------
with Section 6.
---------
"Indemnifying Party" means a party obligated to provide indemnity in
------------------
accordance with Section 6.
---------
"Inspectors" has the meaning ascribed to it in Section 3(k).
---------- ------------
"Investor" has the meaning ascribed to it in the preamble.
--------
"Issuer" has the meaning ascribed to it in the preamble.
------
"Long-Form Registration" means a Requested Registration effected by
----------------------
the filing of a registration statement on Form S-1 with the Commission.
"Losses" has the meaning ascribed to it in Section 6(a).
------ ------------
"Majority Warrant Stockholders" has the meaning ascribed to it in the
-----------------------------
Warrant Agreement.
"Managing Underwriter" means, with respect to any Public Offering, the
--------------------
underwriter or underwriters managing such Public Offering.
"NASD" means the National Association of Securities Dealers.
----
"Notice of Piggyback Registration" has the meaning ascribed to it in
--------------------------------
Section 2(a).
- ------------
"Notice of Requested Registration" has the meaning ascribed to it in
--------------------------------
Section 1(a).
- ------------
"Person" has the meaning ascribed to it in the Warrant Agreement.
------
"Piggyback Registration" means any registration of equity securities
----------------------
of Issuer under the Securities Act (other than a registration in respect of a
dividend reinvestment or similar plan for stockholders of Issuer or on Form S-4
or Form S-8 promulgated by the Commission, or any successor or similar forms
thereto),
Registration Rights Agreement
-----------------------------
<PAGE>
-20-
whether for sale for the account of Issuer or for the account of any holder of
securities of Issuer (other than Registrable Securities).
"Public Offering" means any offering of Common Stock to the public,
---------------
either on behalf of Issuer or any of its securityholders, pursuant to an
effective registration statement under the Securities Act.
"Put Postponement" has the meaning ascribed to it in the Warrant
----------------
Agreement.
"Put Reactivation Date" has the meaning ascribed to it in the Warrant
---------------------
Agreement.
"Put Response Notice" has the meaning ascribed to it in the Warrant
-------------------
Agreement.
"Records" has the meaning ascribed to it in Section 3(k).
------- ------------
"Registrable Securities" means (i) shares of Common Stock or Other
----------------------
Securities issued or issuable upon exercise of the Warrants and (ii) any
securities issued or issuable with respect to any Common Stock or Other
Securities referred to in clause (i) by way of stock dividend, stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (x) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (y) they
shall have been distributed to the public pursuant to Rule 144, or (z) they
shall have ceased to be outstanding. Securities beneficially owned by Issuer or
any Affiliate (other than an institutional investor) shall not be deemed
Registrable Securities.
"Registration Expenses" means all expenses incident to Issuer's
---------------------
performance of or compliance with its obligations under this Agreement to effect
the registration of Registrable Securities in a Requested Registration or
Piggyback Registration, including, without limitation, all registration, filing,
securities exchange listing and NASD fees, all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for Issuer and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of a single
Registration Rights Agreement
-----------------------------
<PAGE>
-21-
counsel retained by the holders of a majority of the Registrable Securities
being registered, premiums and other costs of policies of insurance against
liabilities arising out of the Public Offering of the Registrable Securities
being registered and any fees and disbursements of underwriters customarily paid
by issuers of sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any, in respect of Registrable Securities,
which shall be payable by each holder thereof.
"Registration Request" has the meaning ascribed to it in Section 1(a).
-------------------- ------------
"Requesting Holders" means, with respect to any Requested Registration
------------------
or Piggyback Registration, the holders of Registrable Securities requesting to
have Registrable Securities included in such registration in accordance with
this Agreement.
"Requested Registration" means any registration of Registrable
----------------------
Securities under the Securities Act effected in accordance with Section 1.
---------
"Rule 144" means Rule 144 promulgated by the Commission under the
--------
Securities Act, and any successor provision thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Short-Form Registration" means a Requested Registration effected by
the filing of a registration statement on Form S-2 or Form S-3 with the
Commission.
"Trigger Date" has the meaning ascribed to it in Section 1(a).
------------ ------------
"Warrants" has the meaning ascribed to it in the Warrant Agreement.
--------
"Warrant Agreement" has the meaning ascribed to it in the preamble.
-----------------
"Warrant Stock" has the meaning ascribed to it in the Warrant
-------------
Agreement.
(b) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer
to this entire Agreement; and (iv) the term "Section" refers to the specified
Section of this Agreement. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified.
Registration Rights Agreement
-----------------------------
<PAGE>
-22-
10. Miscellaneous.
-------------
(a) Notices. All notices, requests and other communications
-------
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Investor, to:
Chase Manhattan Investment Holdings, Inc,
c/o The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Facsimile No.: (212) 552-5529
Attn: Elliott H. Jones - Vice President
with a copy to:
Chase Manhattan Investment Holdings, Inc.
c/o The Chase Manhattan Bank
(National Association)
802 Delaware Avenue
P.O. Box 15371
Wilmington, Delaware 19850-5371
Facsimile No.: (302) 429-0456
Attn: Warren Leonard
If to Issuer, to:
Associated Holdings, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Facsimile No.: (708) 773-6491
Attn: President and Chief
Executive Officer
with a copy to:
Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Facsimile No.: (214) 871-8799
Attn: Thomas W. Sturgess and
Frederick B. Hegi, Jr.
Registration Rights Agreement
-----------------------------
<PAGE>
- 23 -
Cumberland Capital Corporation
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Facsimile No.: (817) 870-2685
Attn: Gary G. Miller
With respect to any other holder of Registrable securities, such notices,
requests and other communications shall be sent to the addresses set forth in
the stock or Warrant transfer records regularly maintained by Issuer. All such
notices, requests and other communications will (i) if delivered personally to
the address as provided in this Section, be deemed given upon delivery, (ii) if
delivered by facsimile transmission to the facsimile number as provided in this
Section, be deemed given upon receipt, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be deemed
given upon receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of such
notice is to be delivered pursuant to this Section). Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other parties hereto.
(b) Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements between the parties with respect to the subject
matter hereof, and together with the Warrant and the Warrant Agreement contains
the sole and entire agreement between the parties hereto with respect to the
subject matter hereof.
(c) Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument (which may be executed in any number of
counterparts) duly executed by or on behalf of each of Issuer and Persons owning
two-thirds or more of the Registrable Securities; provided, however, that any
-------- -------
amendment or modification of this Section 10 (c) shall be duly executed by or on
--------------
behalf of each of the Issuer and each holder of Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by holders of at
least a majority in aggregate principal amount of the Registrable Securities
being sold by such holders pursuant to such Registration Statement.
(d) Waiver. Subject to paragraph (e) of this Section, any term or
------ -------------
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such
Registration Rights Agreement
-----------------------------
<PAGE>
-24-
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same term or condition of
this Agreement on any future occasion.
(e) Consents and Waivers by Holders of Registrable Securities. Any
---------------------------------------------------------
consent of the holders of Registrable Securities pursuant to this Agreement, and
any waiver by such holders of any provision of this Agreement, shall be in
writing (which may be executed in any number of counterparts) and may be given
or taken by Persons owning two-thirds or more of the Registrable Securities, and
any such consent or waiver so given or taken will be binding on all the holders
of Registrable Securities.
(f) No Third Party Beneficiary. The terms and provisions of this
--------------------------
Agreement are intended solely for the benefit of each party hereto, their
respective successors or permitted assigns and any other holder of Registrable
Securities, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Section 6.
---------
(g) Successors and Assigns. This Agreement is binding upon, inures
----------------------
to the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
(h) Headings. The headings used in this Agreement have been inserted
--------
for convenience of reference only and do not define or limit the provisions
hereof.
(i) Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
(j) Remedies. Except as otherwise expressly provided for herein, no
--------
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in
Registration Rights Agreement
-----------------------------
<PAGE>
-25-
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of any one or more
remedies by any party hereto shall not constitute a waiver by any such party of
the right to pursue any other available remedies. As between the parties to
this Agreement, in any action or proceeding brought to enforce any provision of
this Agreement, or where any provision hereof is validly asserted as a defense,
the successful party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available remedy.
Damages in the event of breach of this Agreement by a party hereto or
any other holder of Registrable Securities would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and Issuer and each holder of Registrable
Securities, by its acquisition of such Registrable Securities, hereby waives any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.
(k) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
(l) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
Registration Rights Agreement
-----------------------------
<PAGE>
-26-
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
By:
--------------------------------
Name: Elliott H. Jones
Title: Vice President
ASSOCIATED HOLDINGS, INC.
By:
--------------------------------
Name: Thomas W. Sturgess
Title: Chairman and Chief
Executive Officer
Registration Rights Agreement
-----------------------------
<PAGE>
Annex 1
-------
[Form of Confidentiality Agreement]
-----------------------------------
[Date]
CONFIDENTIALITY AGREEMENT
-------------------------
[Insert Name and
Address of Prospective
Holder of Registrable Securities]
Re: Registration Rights Agreement dated
as of January 31, 1992 between
Associated Holdings, Inc. and
Chase Manhattan Investment Holdings, Inc.
Dear ______________:
As a party to the above-referenced Registration Rights Agreement (the
"Agreement"), we have agreed with Associated Holdings, Inc. (the "Company")
pursuant to Section 7 of the Agreement to use reasonable precautions to keep
confidential, except as otherwise provided therein, all non-public information
identified by the Company as being confidential at the time the same is
delivered to us pursuant to the Agreement.
As provided in said Section 7, we are permitted to provide you, as a
prospective holder of Registrable Securities (as defined in the Agreement), with
certain of such non-public information subject to the execution and delivery by
you, prior to receiving such non-public information, of a Confidentiality
Agreement in this form. Such information will not be made available to you
until your execution and return to us of this confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf
of yourself and each of your affiliates, directors, officers, employees and
representatives) that (A) such information will not be used by you except in
connection with the proposed purchase mentioned above and (B) you shall use
reasonable precautions, in accordance with your customary procedures for
handling confidential information and in accordance with safe and sound
practices, to keep such information confidential, provided that nothing herein
shall limit the disclosure of any such information (i) to the extent required by
statute, rule,
Registration Rights Agreement
-----------------------------
<PAGE>
-2-
regulation or judicial process, (ii) to your counsel or to counsel for any of
the holders of Registrable Securities, (iii) to regulatory personnel, auditors
or accountants, (iv) in connection with any litigation to which you or any one
or more of the holders of Registrable Securities is a party; and provided that
in no event shall you be obligated to return any materials furnished to you
pursuant to this Confidentiality Agreement.
Would you please indicate your agreement to the foregoing by signing,
at the place provided below, the enclosed copy of this Confidentiality
Agreement.
Very truly yours,
[Insert Name of Holder of
Registrable Securities]
By:
---------------------------------
The foregoing is agreed to
as of the date of this letter.
[Insert Name of Prospective
Holder of Registrable Securities]
By:
----------------------------------
Registration Rights Agreement
-----------------------------
<PAGE>
Annex 3 - First Legal Opinion
<PAGE>
January 31, 1992
Chase Manhattan Investment
Holdings, Inc.
1 Chase Manhattan Plaza
New York, NY 10081
Ladies and Gentlemen:
We have acted as counsel to Associated Holdings, Inc., a Delaware
corporation (the "Issuer"), in connection with the preparation, authorization,
------
execution and delivery of, and the consummation of the transactions contemplated
by, (i) the Warrant Agreement, dated as of January 31, 1992 (the "Warrant
-------
Agreement"), among the Issuer, Chase Manhattan Investment Holdings, Inc., a
- ---------
Delaware corporation (the "Investor") and, for certain purposes, Associated
--------
Stationers, Inc. (the "Operating Company"), (ii) the warrant certificate
-----------------
registered in the name of the Investor, dated as of January 31, 1992 (the
"Underwriting Warrant Certificate"), representing the Underwriting Warrants (as
--------------------------------
defined in the Warrant Agreement), (iii) the form of warrant certificate
representing the Tranche B Warrants (as defined in the Warrant Agreement), to be
issued within 12 months of the date hereof ("Tranche B Warrant Certificates";
------------------------------
the Tranche B Warrant Certificates and the Underwriting Warrant Certificates
herein being collectively referred to as the "Warrant Certificates") and (iv)
--------------------
the Registration Rights Agreement, dated as of January 31, 1992 (the
"Registration Rights Agreement"), between the Issuer and the Investor. We also
-----------------------------
have acted as counsel to the Operating Company in connection with preparation,
authorization, execution and delivery of the Warrant Agreement. This opinion is
being furnished to you pursuant to Section 2.02(a) of the Warrant Agreement for
purposes of Section 7 thereof. Terms defined in the Warrant Agreement, in the
Warrant Certificates or in the Registration Rights Agreement and not otherwise
defined herein are used herein with the meanings as so defined.
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 2
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Warrant Agreement, the Warrant
Certificates, the Registration Rights Agreement, the Joinder Agreement between
the Issuer and Wingate Partners, L.P. ("Wingate"), dated as of January 31, 1992
-------
the "Joinder Agreement") and such corporate records, agreements, documents and
-----------------
other instruments, and such certificates or comparable documents of public
officials and of officers and representatives of the Issuer and the Operating
Company, and have made such inquiries of such officers and representatives as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. As to all questions of fact material to this opinion that have not
been independently established, we have relied upon certificates or comparable
documents of officers and representatives of the Issuer and the Operating
Company and upon the representations and warranties of the Issuer contained in
the Warrant Agreement and in the Warrant Certificates.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. Each of the Issuer and the Operating Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
2. The Issuer has all requisite corporate power and authority to
execute and deliver the Warrant Agreement, the Warrant Certificates and the
Registration Rights Agreement and to perform its obligations thereunder. The
execution, delivery and performance of the Warrant Agreement, the Warrant
Certificates and the Registration Rights Agreement by the Issuer and the
consummation by the Issuer of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of the Issuer.
Each of the Warrant Agreement, the Warrant Certificates and the Registration
Rights Agreement has been duly and validly executed and delivered by the Issuer
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 3
and (assuming the due authorization, execution and delivery thereof by the other
parties thereto and receipt of consideration for issuance of the Warrrants in
accordance with the terms of the Warrant Agreement) constitutes the legal, valid
and binding obligation of the Issuer, enforceable against the Issuer in
accordance with the terms thereof, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that rights to
indemnification and contribution thereunder may be limited by federal or state
securities laws or public policy relating thereto.
3. The Operating Company has all requisite corporate power and
authority to execute and deliver the Warrant Agreement (for purposes of Section
7 thereof) and to perform its obligations thereunder. The execution, delivery
and performance of the Warrant Agreement (for purposes of Section 7 thereof) by
the Operating Company and the consummation by the Operating Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Operating Company. The Warrant Agreement
(for purposes of Section 7 thereof) has been duly and validly executed and
delivered by the Operating Company and (assuming the due authorization,
execution an delivery thereof by the other parties thereto and receipt of
consideration for issuance of the Warrants in accordance with the terms of the
Warrant Agreement) constitutes the legal, valid and binding obligation of the
Operating Company, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and contribution thereunder may be
limited by federal or state securities laws or public policy relating thereto.
4. The execution and delivery of the Warrant Agreement (with respect
to the Issuer as to the whole Warrant
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 4
Agreement and with respect to the Operating Company for purposes of Section 7
thereof), the Warrant Certificates (with respect to the Issuer) and the
Registration Rights Agreement (with respect to the Issuer), the consummation of
the transactions contemplated thereby and compliance by each of the Issuer and
the Operating Company with any of the provisions thereof applicable to such
entity will not conflict with, constitute a default under or violate (i) any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws of either the Issuer or the Operating Company, (ii) any of the terms,
conditions or provisions of any document, agreement or other instrument to which
the Issuer or the Operating Company is a party or by which either of them is
bound of which we are aware, (iii) any New York, Delaware corporate or federal
law or regulation (other than federal and state securities or blue sky laws, as
to which we express no opinion), or (iv) any judgment, writ, injunction, decree,
order or ruling of any court or governmental authority binding on the Issuer or
the Operating Company of which we are aware.
5. No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Delaware corporate or federal
governmental authority is required in connection with the execution and delivery
by each of the Issuer and the Operating Company, as the case may be, of the
Warrant Agreement, the Warrant Certificates and the Registration Rights
Agreement or the consummation by the Issuer and the Operating Company of the
transactions contemplated thereby, except for filings and other actions required
pursuant to the Securities Act of 1933 and the rules and regulations thereunder
and federal and state securities or blue sky laws, as to which we express no
opinion, and those already obtained.
6. Except as set forth in Schedule IV to the Credit Agreement, to our
knowledge, there is no litigation, proceeding or governmental investigation
pending or overtly threatened against the Issuer or the Operating Company that
relates to any of the transactions contemplated by the Warrant Agreement, the
Warrant Certificates and the Registration Rights Agreement.
7. The authorized capital stock of the Issuer consists of 5,000,000
shares of Class A Common Stock, $0.01 par value per share, 5,000,000 of Class B
Common Stock, $0.01 par value per share, 15,000 shares of Class A Preferred
Stock, $0.01 par value per share, 15,000 shares of Class B Preferred Stock,
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 5
$0.01 par value per share, 15,000 shares of Class C Preferred
Stock, $0.01 par value per share, and 200,000 shares of
Additional Preferred Stock, $0.01 par value per share. As of the
date hereof, the Issuer has outstanding (i) 850,000 shares of
Common Stock, (ii) 5,000 shares of Class A Preferred Stock; (iii)
5,000 shares of Class B Preferred Stock; and (iv) 7,500 shares of
Class C Preferred Stock. All of such outstanding shares of
capital stock of the Issuer are duly authorized, validly issued,
and, other than with respect to 46,258 shares of Class A Common
Stock which at closing will be partly paid shares which are
assessable, under the General Corporation Law of the State of
Delaware, fully paid and nonassessable, and all shares of Warrant
Stock will be, when issued upon exercise of Warrants and upon
receipt of consideration therefor in accordance with the terms of
the Warrant Agreement, duly authorized, validly issued, fully
paid, and nonassessable. To our knowledge, there are no
outstanding securities of the Issuer convertible into or
evidencing the right to purchase or subscribe for any shares of
capital stock of the Issuer, there are no outstanding or
authorized options, warrants, calls, subscriptions, rights,
commitments or any other agreements of any character obligating
the Issuer to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase
or subscribe for any shares of such capital stock other than (i)
in accordance with the certificate of incorporation of the
Issuer; (ii) management stock option arrangements pursuant to the
Issuer's 1992 Management Stock Option Plan; (iii) Warrants issued
pursuant to the Warrant Agreement; and (iv) warrants issued
pursuant to that certain warrant agreement, dated as of the date
hereof, between the Issuer and Boise Cascade Corporation.
Schedule I attached hereto sets forth a list derived from the
Issuer's stock records of record holders of Common Stock as of
the date hereof, together with the number of shares of Common
Stock each such holder is shown to hold on the Issuer's stock
records.
8. The Issuer is not an "investment company" or a
company "controlled by an investment company", within the meaning
of the Investment Company Act of 1940, as amended.
9. The Issuer is not a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 6
10. The Joinder Agreement has been duly executed and delivered by
Wingate and constitutes a valid and legally binding obligation of each of
Wingate and the Issuer, enforceable against each of them in accordance with its
terms, except to the extent that enforcement thereof may be limited by
applicable insolvency, reorganization, moratorium and similar laws affecting the
rights of creditors generally and by general principles of equity.
We have not acted as counsel to the Company or the Guarantor in
connection with the preparation, authorization, execution and delivery of, and
the consummation of the transactions contemplated by:
(i) the Purchase and Sale Agreement, dated as of September 17,
1991, among Boise Cascade Office Products Corporation, a Delaware corporation
("BCOP"), Boise Cascade Corporation, a Delaware corporation ("Boise"), and the
Company, as amended by the Extension to Purchase and Sale Agreement dated as of
December 17, 1991, among BCOP, Boise and the Company, and as further modified
and supplemented and in effect from time to time (the "Purchase Agreement"),
(ii) the Transition Services Agreement to be entered into among
Boise, BCOP and the Company (the "Transition Agreement"), and
(iii) the Agreement for Data Processing Services to be entered into
between the Company and Affiliated Computer Services, Inc. (the "Technology
Agreement")
and any other agreements, instruments, and other documents relating thereto or
executed and delivered in connection therewith. Accordingly, we express no
opinion as to the Purchase Agreement, the Transition Agreement, the Technology
Agreement or as to such other agreements, instruments or other documents, other
than the Warrant Agreement, the Warrant Certificates, the Registration Rights
Agreement and the Joinder Agreement.
The enforceability of provisions of the Warrant Agreement and the
Registration Rights Agreement of the effect that terms may not be waived or
modified except in writing may be limited under certain circumstances. We
express no opinion as to the enforceability of provisions contained in the
Warrant Agreement and the Registration Rights Agreement to the effect that the
parties thereto waive defenses based upon the grounds of
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 7
lack of jurisdiction or competence of a court to grant an injunction or other
equitable relief.
The opinions herein are limited to the laws of the State of New York,
the corporate laws of the State of Delaware, and the federal laws of the United
States, and we express no opinion on the effect on the matters covered by this
opinion of the laws of any other jurisdiction.
This opinion is rendered solely for your benefit in connection with
the transactions described above. This opinion may not be used or relied upon
by any other person and may not be disclosed, quoted, filed with a governmental
agency or otherwise referred to without our prior written consent.
Very truly yours,
<PAGE>
Chase Manhattan Investment
Holdings, Inc.
January 31, 1992
Page 8
SCHEDULE I
----------
Record Holders of Common Stock
of Associated Holdings, Inc.
as of January 31, 1992
<TABLE>
<CAPTION>
Record Holders Shares of Common Stock Held
-------------- ---------------------------
<S> <C>
Wingate Partners, L.P. 592,175
ASI Partners, L.P. 226,345
Good Capital Co., Inc. 54,609
Cumberland Capital Corporation 23,129
-------
Total Shares 896,258
</TABLE>
<PAGE>
Annex 4 - Certificate of Incorporation of Issuer
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ASSOCIATED HOLDINGS, INC.
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as following:
ARTICLE ONE
-----------
The name of the Corporation is Associated Holdings, Inc.
ARTICLE TWO
-----------
The registered office of the Corporation is to be located at 1209
Orange Street in the City of Wilmington in the County of New Castle, in the
State of Delaware. The name of its registered agent at that address is the
Corporation Trust Company.
ARTICLE THREE
-------------
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,245,000 shares, consisting of
(a) 15,000 shares of a class designated as Class A Preferred Stock, par value
$0.01 per share (the "Class A Preferred Stock"); (b) 15,000 shares of a class
designated as Class B Preferred Stock, par value $0.01 per share (the "Class B
Preferred Stock"); (c) 15,000 shares of a class designated as Class C Preferred
Stock, par value $0.01 per share (the "Class C Preferred Stock"); (d) 200,000
shares of a class of preferred stock, par value of $0.01 per share, as to which
the Board of Directors shall have the authority set forth in Article Five (the
"Additional Preferred Stock"); (e) 5,000,000 shares of a class designated as
Class A Common Stock, par value of $0.01 per share (the "Common Stock"); and
(f) 5,000,000 shares of a class designated as Class B Common Stock, par value
$0.01 per share (the "Nonvoting Common Stock").
The following is a statement of the designations and the powers,
preferences, and rights and the qualifications, limitations, and restrictions of
the Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock,
Common Stock, and Nonvoting Common Stock:
<PAGE>
I. Terms Applicable to the Class A Preferred Stock.
-----------------------------------------------
1.1 Dividends. (a) Subject to the provisions of Sections 1.1(b),
---------
1.2(f), and 1.2(h) the holders of Class A Preferred Stock shall be entitled to
receive, as and when declared by the Board of Directors of the Corporation out
of funds legally available for such purpose, dividends on the outstanding shares
of Class A Preferred Stock at the Class A Preferred Dividend Rate, payable on
each Preferred Dividend Payment Date to holders of record as they appear on the
stock transfer books of the Corporation on such record dates, not more than 60
days nor less than 10 days preceding the payment dates for such dividends, as
are fixed by the Board of Directors (or, to the extent permitted by applicable
law, a duly authorized committee thereof). Such dividends shall be cumulative
and shall accrue with respect to each share of Class A Preferred Stock, whether
or not declared, whether or not restricted by the terms of the Debt Agreements
or otherwise pursuant to the provisions hereof, and whether or not there are
funds legally available for the payment thereof until paid. The dividends on
the Class A Preferred Stock may be declared payable in cash or in additional
shares of Class A Preferred Stock valued at $1,000 per share, in the discretion
of the Board of Directors. No other dividends may be declared or paid to the
holders of Class A Preferred Stock. All dividends declared by the Board of
Directors upon shares of Class A Preferred Stock in accordance with this Section
1.1(a) shall be declared and paid pro rata with respect to all shares of Class A
Preferred Stock then outstanding.
(b) If at any time the Corporation shall have failed to pay any
accumulated dividends on any shares of Class A Preferred Stock on any Preferred
Dividend Payment Date as provided above, or if at time the Corporation shall
have failed to redeem shares of Class A Preferred Stock as required by Section
1.2(a) for any reason, the Corporation shall not
(i) declare or pay any dividend on any Junior Shares or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any Junior Shares
or make any distribution with respect thereto, either directly or
indirectly and whether in cash or property or in obligations or shares
(other than in Junior Shares) of the Corporation or any Subsidiary,
(ii) purchase any shares of Class A Preferred Stock (except for a
consideration payable in Junior Shares) or redeem fewer than all of the
shares of Class A Preferred Stock then outstanding, or
2
<PAGE>
(iii) permit any Subsidiary to purchase any Junior Shares or permit
any Subsidiary to purchase fewer than all of the shares of Class A
Preferred Stock then outstanding,
unless, at the time of any such dividend, payment, distribution, purchase or
redemption, all accrued and unpaid dividends on shares of Class A Preferred
Stock are contemporaneously paid in full in cash or additional shares of Class A
Preferred Stock and all shares of Class A Preferred Stock which the Corporation
shall have so failed to redeem are contemporaneously redeemed.
1.2 Redemption.
----------
(a) Scheduled Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, the Corporation shall redeem all, but not less
than all, shares of Class A Preferred Stock on July 31, 1999, out of funds
legally available for such purpose, at a price per share equal to the Redemption
Price.
(b) Mandatory Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, in the event of the occurrence of a Cash-Out
Event, the Corporation agrees, at the election of any holder of then outstanding
shares of Class A Preferred Stock made as set forth in Section 1.2(i) below, to
redeem all, but not less than all, of such holder's shares of Class A Preferred
Stock then outstanding, out of funds legally available for such purpose, at a
price per share equal to the Redemption Price therefor. If pursuant to such
Cash-Out Event the holders of Common Stock of the Corporation receive cash,
Marketable Securities or a combination thereof, then, at the option of the
Corporation, the Corporation may, in lieu of the cash redemption contemplated in
the immediately preceding sentence, redeem such Class A Preferred Stock by
converting each such share into such cash, Marketable Securities or a
combination thereof, in the same proportions as the holders of Common Stock of
the Corporation so receive, the value of which shall equal the Redemption Price.
(c) Redemptions at Option of Corporation. At any time, and from time
------------------------------------
to time, the Corporation may, at its election, redeem, out of funds legally
available for such purpose, any portion or all of the Class A Preferred Stock
then outstanding at a price per share equal to the Redemption Price. Any
redemption of shares pursuant to this Section 1.2(c) will be made ratably (as
nearly as practicable) among the holders of the Class A Preferred Stock based
upon the number of shares held by each such holder.
(d) Optional Redemption through Note Exchange.
-----------------------------------------
(i) Subject to the provisions of subdivision (iv) of this Section
1.2(d), at the option of the Corporation, the
3
<PAGE>
Corporation may, at any time out of funds legally available for such purpose,
redeem all, but not less than all, shares of the Class A Preferred Stock then
outstanding in exchange for, and through the issue by the Corporation in the
manner provided in this subdivision of, Class A Exchange Notes to be issued
under the Class A Indenture. Such exchange, if any, shall be a redemption of the
Class A Preferred Stock in exchange for the Class A Exchange Notes. The Class A
Exchange Notes issued to each holder shall be in an aggregate principal amount
equal to the Liquidation Value of the shares of Class A Preferred Stock redeemed
by the Corporation in exchange therefor.
(ii) Not more than 60 nor less than 30 days prior to the exchange
date, the Corporation shall mail irrevocable written notice, by registered mail,
postage prepaid and return or certified receipt requested, to each record holder
(and, to the extent such holder is a corporation, to the attention of its Chief
Executive Officer and its Corporate Secretary), specifying the exchange date and
the time and place where certificates representing shares of Class A Preferred
Stock are to be surrendered for Class A Exchange Notes. Upon mailing such
notice, the Corporation will be obliged to redeem all shares of Class A
Preferred Stock in exchange for the Class A Exchange Notes on the exchange date
specified in such notice. Upon surrender in accordance with such notice of the
certificates evidencing any shares of Class A Preferred Stock so exchanged
(properly endorsed or signed for transfer, if the Corporation shall require and
the notice shall so state), the Corporation will cause the Class A Exchange
Notes to be authenticated and issued in exchange for such shares of Class A
Preferred Stock and to be mailed to the holder of the shares of Class A
Preferred Stock at such holder's address of record or such other address as the
holder shall specify upon such surrender of such certificates.
(iii) On the exchange date, (A) the shares of Class A Preferred Stock
subject to such exchange and redemption shall cease to be entitled to any
dividends accruing after the exchange date, (B) all rights of the respective
holders of such shares, as stockholders of the Corporation by reason of the
ownership of such shares, except the right to receive the Class A Exchange
Notes upon surrender (and endorsement, if required by the Corporation) of the
respective certificates representing such shares, shall cease, (C) such shares
shall cease to be outstanding, and (D) the person or persons entitled to receive
the Class A Exchange Notes issuable upon such exchange shall be treated for all
purposes as the registered holder or holders of Class A Exchange Notes;
provided, however, that interest shall not begin to accrue on any such Class A
- -------- -------
Exchange Note issuable
4
<PAGE>
to a holder of Class A Preferred Stock until such time as such holder
surrenders the certificate or certificates evidencing such shares of Class
A Preferred Stock.
(iv) The Corporation may redeem shares of Class A Preferred Stock in
exchange for Class A Exchange Notes only if, on the Exchange Date, (x) the
Corporation has paid all accrued dividends on all outstanding shares of
Class A Preferred Stock and (y) the Class A Indenture shall be executed and
delivered by the Corporation and the trustee thereunder.
(e) Redemption Price. For each share of Class A Preferred Stock which
----------------
is to be redeemed for cash the Corporation will be obligated on the Redemption
Date to pay to the holder thereof (upon surrender of the certificate
representing such share to the Corporation's stock transfer agent, or if none,
to the Corporation at its principal office) an amount in cash equal to the
Redemption Price. If the funds of the Corporation legally available for
redemption of shares of Class A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares to be redeemed on such date,
those funds which are legally available shall be used to redeem the maximum
possible number of shares ratably (as nearly as practicable) among the holders
of the shares to be redeemed based upon the aggregate Redemption Price of such
shares held by each such holder. As and when additional funds of the Corporation
are legally available for the redemption of shares, such funds shall as soon as
practicable be used to redeem the balance of the shares which the Corporation
has become obligated to redeem on any Redemption Date.
(f) Dividends after Redemption Date. Subject to any limitations
-------------------------------
contained elsewhere in this ARTICLE FOUR, no share of Class A Preferred Stock is
entitled to any dividends accruing after the redemption of such share. Subject
to any limitations contained elsewhere in this ARTICLE FOUR, on the date of such
redemption dividends will cease to accrue, all rights of the holder of such
share as such holder will cease, and such shares will be deemed not to be
outstanding.
(g) Redeemed or Otherwise Acquired Shares. Any shares of Class A
-------------------------------------
Preferred Stock which are redeemed or otherwise acquired by the Corporation will
be retired and cancelled and may not be reissued.
(h) Restrictions on Dividends and Redemptions. Notwithstanding
-----------------------------------------
anything in this ARTICLE FOUR to the contrary, no dividend payment or other
distribution or redemption may be made with respect to Class A Preferred Stock
if such payment or other distribution or redemption will be in contravention of
the restrictions or limitations on such payments or other
5
<PAGE>
distributions or redemptions contained in (i) this ARTICLE FOUR, (ii) the Debt
Agreements, (iii) the Subordinated Note, or (iv) any and all applicable state or
federal laws, rules, and regulations or in any and all orders of any state or
federal governmental authority.
(i) Redemption Methods.
------------------
(i) In order to effect a redemption under either Section 1.2(a) or
1.2(c) above, the Corporation shall deliver written notice, by registered
or certified mail, postage prepaid and return receipt requested, to the
holders of record (and, to the extent any such holder is a corporation, to
the attention of its Chief Executive Officer and its Corporate Secretary)
of the shares to be redeemed, addressed to such holders at their last
addresses as shown on the stock transfer books of the Corporation. Each
such notice of redemption shall specify the date fixed for redemption (to
be a date not less than 30 days from the date of such notice), the
Redemption Price, places of payment, that payment will be made upon
presentation and surrender of the certificates representing shares to be
redeemed and that on and after the date of such redemption (or such earlier
date as permitted hereunder) dividends will cease to accumulate on such
shares. Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given when mailed, and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings
for the redemption of any other shares to be redeemed on or after the date
fixed for redemption as stated in such notice. Each holder of the shares
called for redemption shall surrender its certificate or certificates
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the Redemption
Price in cash, with respect to any redemption under Sections 1.2(a) or
1.2(c). If less than all shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued evidencing the
unredeemed shares.
(ii) In order to effect a redemption under Section 1.2(b) above,
within 30 days after the date of the occurrence of a Cash-Out Event the
Corporation shall deliver notice by registered or certified mail, postage
prepaid and return receipt requested, to the holders of record (and, to the
extent such holder is a corporation, to the attention of its Chief
Executive Officer and its Corporate Secretary) of the shares to be
redeemed, addressed to such holders at their last addresses as shown on the
stock transfer books of the Corporation. Each such notice of redemption
shall specify the date fixed for redemption (to be a date not less
6
<PAGE>
than 30 days from the date of such notice), the Redemption
Price, places of payment, that payment will be made upon
presentation and surrender of the certificates representing
shares to be redeemed, a description in reasonable detail of
the applicable Cash-Out Event giving rise to the redemption,
and a description in reasonable detail of any Marketable
Securities to be included, and that on or after the date of
such redemption (or such earlier date as permitted
hereunder) dividends will cease to accumulate on such
shares. Any notice which is mailed as herein provided shall
be conclusively presumed to have been duly given when
mailed, and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of
the proceedings for the redemption of any other shares to be
redeemed on or after the date fixed for redemption as stated
in such notice. Each holder of the shares called for
redemption who elects to exercise the right of redemption
under Section 1.2(b) above must surrender its certificate or
certificates evidencing all such shares to the Corporation
on or before the date set for redemption and at the place
designated in the Corporation's notice and shall thereupon
be entitled to receive payment of the Redemption Price in
cash, Marketable Securities or a combination thereof, as
applicable. Any failure on the part of any holder notified
as provided above to surrender such certificate or
certificates on or before the date set for redemption at the
place designated for redemption as provided above, shall be
conclusively deemed to have not elected to redeem such
holder's shares under and pursuant to Section 1.2(b) above
and shall not be entitled to receive the Redemption Price as
provided above.
(iii) Notwithstanding any other provision of this
ARTICLE FOUR, if on or after the date on which any notice of
redemption is first sent to the holders of shares to be
redeemed, funds necessary for the redemption shall be
available therefor and shall have been irrevocably deposited
or set aside, then, notwithstanding that the certificates
evidencing any shares so called for redemption shall not
have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed
for redemption, the shares shall no longer be deemed
outstanding, holders thereof shall cease to be stockholders,
and all rights whatsoever with respect to the shares so
called for redemption (except the right of the holders to
receive the Redemption Price without interest upon surrender
of their certificates therefor) shall terminate.
1.3 Voting Rights. Except as set forth below and as
-------------
otherwise required by law, holders of shares of Class A Preferred
Stock shall have no voting rights. In connection with any right
7
<PAGE>
to vote, each holder of Class A Preferred Stock will have one vote for each
share held. Any shares of Class A Preferred Stock held by the Corporation or its
subsidiaries shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum. So long as the Class A Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or written
consent of the holders of at least 51% of all outstanding Class A Preferred
Stock voting separately as a class:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which affects
materially and adversely the relative rights, preferences, qualifications,
powers, limitations or restrictions of the Class A Preferred Stock;
(b) increase the authorized number of shares of Preferred Stock of the
Corporation, authorize, issue or otherwise create securities convertible into
any shares of capital stock of the Corporation other than Junior Shares.
(c) voluntarily effect any reclassification of the Class A Preferred
Stock.
Whenever dividends on the Class A Preferred Stock shall be in
arrears in an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the election of such
directors as hereinafter provided and (ii) the holders of the Class A Preferred
Stock (voting separately as a class) will have the exclusive right to vote for
and elect such one additional director of the Corporation at any meeting of the
stockholders of the Corporation at which directors are to be elected held during
the period such dividends remain in arrears. The right of the holders of the
Class A Preferred Stock to vote for such one additional director shall terminate
when all accrued and unpaid dividends on the Class A Preferred Stock have been
declared and paid in cash or in additional shares of Class A Preferred Stock or
set apart for payment. The term of office of any director so elected shall
terminate immediately upon the termination of the right of the holders of the
Class A Preferred Stock to vote for such one additional director.
The foregoing right of the holders of the Class A Preferred Stock with
respect to the election of one director may be exercised at any annual meeting
of the stockholders of the Corporation or at any special meeting of the
stockholders of the Corporation held for such purpose. If the right to elect an
additional director shall have accrued to the holders of the Class A Preferred
Stock more than 90 days preceding the date established for the next annual
meeting of stockholders, the President of the Corporation shall, within 20 days
after the
8
<PAGE>
delivery to the Corporation at its principal office of a written request for a
special meeting signed by the holders of at least 10% of the Class A Preferred
Stock then outstanding, call a special meeting of the holders of the Class A
Preferred Stock to be held within 60 days after the delivery of such request for
the purpose of electing such additional directors.
The holders of the Class A Preferred Stock voting as a class shall
have the right to remove without cause at any time and replace any director such
holders shall have elected pursuant to this Section.
1.4 Liquidation. (a) In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Class A Preferred Stock shall be entitled to receive the Class A Preferred
Liquidation Value of such shares held by them in preference to and in priority
over any distributions upon Junior Shares. Upon payment in full to the holders
of shares of Class A Preferred Stock of the Class A Preferred Liquidation Value
of such shares, the holders of shares of Class A Preferred Stock shall not be
entitled, as such holders, to any further participation in any distribution of
assets of the Corporation. If the assets of the Corporation are not sufficient
to pay in full the Class A Preferred Liquidation Value payable to the holders of
shares of Class A Preferred Stock, the holders of all such shares shall share
ratably (to the exclusion of any other holders of capital stock) in such
distribution of assets.
(b) Neither a consolidation or merger of the Corporation with or into
any other corporation, nor a sale or transfer of all or part of the
Corporation's assets for cash, securities or other property, nor a merger of any
other corporation with or into the Corporation shall be considered a
liquidation, dissolution or winding-up of the Corporation within the meaning of
this Section 1.4.
II. Terms Applicable to Class B and Class C Preferred Stock.
-------------------------------------------------------
2.1 Identical Rights. Except as otherwise provided in this ARTICLE
----------------
FOUR, all shares of Class B Preferred Stock and Class C Preferred Stock shall be
identical and shall entitle the holders thereof to the same rights and
privileges.
2.2 Dividends. (a) Subject to the provisions of Sections 2.2(b),
---------
2.3(f), and 2.3(h), the holders of Class B and Class C Preferred Stock shall be
entitled to receive, as and when declared by the Board of Directors of the
Corporation out of funds legally available for such purpose, dividends on the
outstanding shares of Class B and Class C Preferred Stock at the Class B and
Class C Preferred Dividend Rates, payable on each
9
<PAGE>
Preferred Dividend Payment Date to holders of record as they appear on the stock
transfer books of the Corporation on such record dates, not more than 60 days
nor less than 10 days preceding the payment dates for such dividends, as are
fixed by the Board of Directors (or, to the extent permitted by applicable law,
a duly authorized committee thereof). Such dividends shall be cumulative and
shall accrue with respect to each share of Class B and Class C Preferred Stock,
Whether or not declared, whether or not restricted by the terms of the Debt
Agreements or otherwise pursuant to the provisions hereof, and whether or not
there are funds legally available for the payment thereof until paid. The
dividends on the Class B and Class C Preferred Stock may be declared payable in
cash or in additional shares of the same series of Preferred Stock, in the
discretion of the Board of Directors; provided that dividends on Class C
Preferred Stock may be payable in additional shares of Class C Preferred Stock
only for Dividend Payment Dates occurring on or prior to January 31, 1999. No
other dividends may be declared or paid to the holders of Class B or Class C
Preferred Stock. All dividends declared by the Board of Directors upon shares
of Class B or Class C Preferred Stock in accordance with this Section 2.2(a)
shall be declared and paid pro rata with respect to all shares of Class B and
Class C Preferred Stock then outstanding.
(b) If at any time the Corporation shall have failed to pay any
accumulated dividends on any shares of Class B and Class C Preferred Stock on
Preferred Dividend Payment Date as provided above, or if at any time the
Corporation shall have filed to redeem shares of Class B or Class C Preferred
Stock as required by Section 2.3(a) for any reason, the Corporation shall not:
(i) declare or pay any dividend on any Junior Shares or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any Junior Shares
or make any distribution with respect thereto, either directly or
indirectly and whether in cash or property or in obligations or shares
(other than in Junior Shares) of the Corporation or any Subsidiary,
(ii) purchase any shares of Class B or Class C Preferred Stock
(except for a consideration payable in Junior Shares) or redeem fewer than
all of the shares of Class B and Class C Preferred Stock then outstanding
(except in a manner consistent with the last sentence of Section 2.3(c)),
or
(iii) permit any Subsidiary to purchase any Junior Shares or permit
any Subsidiary to purchase fewer than all of the shares of Class B and
Class C Preferred Stock then outstanding,
10
<PAGE>
unless, at the time of any such dividend payment, distribution, purchase or
redemption, all accrued and unpaid dividends on shares of Class B and Class C
Preferred Stock are contemporaneously paid in full in cash or additional shares
of Class B or Class C Preferred Stock, as applicable, and all shares of Class B
or Class C Preferred Stock which the Corporation shall have so failed to redeem
are contemporaneously redeemed.
(c) Notwithstanding any other provision in this ARTICLE FOUR, the
Corporation shall not, and shall not permit any of its Subsidiaries to, take any
of the actions specified in subsection 2.2(b)(i), (ii) or (iii) above in excess
of $1 million in the aggregate for all such actions, unless at the time such
action is taken:
(i) the Corporation has redeemed for cash all shares of Class B and
Class C Preferred Stock, if any, which have been issued to the holders of
Class B and Class C Preferred Stock, respectively, as in-kind dividends
on the Class B or Class C Preferred Stock, respectively, pursuant to
Section 2.2(a) above;
(ii) the Corporation and its wholly-owned Subsidiaries, on a
consolidated basis, have a common equity computed in accordance with
generally accepted accounting principles, after giving effect to any
purchases, redemptions, payments, distributions of disbursements under
subsection 2.2.(b)(i), (ii), or (iii) above, of at least $26 million;
(iii) if any such purchases, redemptions, payments, distributions or
disbursements specified in subsection 2.2(b)(i), (ii) or (iii) above are
to be made on or after July 31, 1999, then all shares of Class B Preferred
Stock shall have been redeemed or otherwise retired; and
(iv) if any such purchases, redemptions, payments, distributions or
disbursements specified in subsection 2.2(b)(i), (ii) or (iii) above are
to be made on or after the dates required for redemptions of shares of
Class C Preferred Stock pursuant to Section 2.3(c) below, then that
portion of such Class C Preferred Stock so required to be redeemed as of
such dates shall have been redeemed or otherwise retired;
provided, however, nothing in this subsection 2.2(c) shall limit or impair the
- -----------------
Corporation's obligation to make payments or disbursements for any amount it is
obligated to pay under or pursuant to the Warrant Agreement dated January 31,
1992 between the Corporation and Chase Manhattan Investment Holdings, Inc.; and
further provided, nothing in this subsection 2.2(c) shall limit the Corporation
- ----------------
or its Subsidiaries from re-purchasing
11
<PAGE>
Common Stock or options to purchase Common Stock of the
Corporation held by any employee of the Corporation or its
Subsidiaries in connection with the termination of such
employee's employment.
2.3 Redemption.
----------
(a) Scheduled Redemption. Subject to any limitations
--------------------
contained elsewhere in this ARTICLE FOUR, the Corporation shall
redeem all shares of Class B Preferred Stock on July 31, 1999.
The Corporation shall redeem all shares of Class C Preferred
Stock by January 31, 2002, such redemption to be made in four
equal (as nearly as practicable) quarterly installments of
principal on April 30, 2001, July 31, 2001, October 31, 2001, and
January 31, 2002. Scheduled redemptions shall be made out of
funds legally available for such purpose, at a price per share
equal to the Redemption Price.
(b) Mandatory Redemption. Subject to any limitations
--------------------
contained elsewhere in this ARTICLE FOUR, in the event of the
occurrence of a Cash-Out Event, the Corporation agrees, at the
election of any holder of then outstanding shares of Class B or
Class C Preferred Stock, as applicable, made as set forth in
Section 2.3(i) below, to redeem all, but not less than all, of
such holder's shares of Class B or Class C Preferred Stock, as
applicable, then outstanding, out of funds legally available for
such purpose, at a price per share equal to the Redemption Price
therefor. If pursuant to such Cash-Out Event the holders of
Common Stock of the Corporation received cash, Marketable
Securities or a combination thereof, then, at the option of the
Corporation, the Corporation may, in lieu of the cash redemption
contemplated in the immediately preceding sentence, redeem such
Class B or Class C Preferred Stock, as applicable, by converting
each such share into such cash, Marketable Securities or a
combination thereof, in the same proportions received by the
holders of Common Stock of the Corporation, the value of which
shall equal the Redemption Price.
(c) Redemption at Option of Corporation. At any
-----------------------------------
time, and from time to time, the Corporation may, at its
election, redeem, out of funds legally available for such
purpose, any portion or all of the Class B and Class C Preferred
Stock then outstanding at a price per share equal to the
Redemption Price. Any redemption of shares pursuant to this
Section 2.3(c) will be made ratably (as nearly as practicable)
among the holders of the Class B and Class C Preferred Stock
based upon the number of shares held by each such holder without
distinction between classes.
12
<PAGE>
(d) Optional Redemption through Note Exchange.
-----------------------------------------
(i) Subject to the provisions of subdivision (iv) of this Section
2.3(d), at the option of the Corporation, the Corporation may, at any time
out of funds legally available for such purpose, redeem all, but not less
than all shares of the Class B and Class C Preferred Stock then outstanding
in exchange for, and through the issue by the Corporation in the manner
provided in this subdivision of, Class B Exchange Notes (with respect to
exchanges of Class B Preferred Stock) and Class C Exchange Notes (with
respect to exchanges of Class C Preferred Stock). The Class B Exchange
Notes shall be issued under the Class B Indenture and the Class C Exchange
Notes shall be issued under the Class C Indenture. The Class B Exchange
Notes or Class C Exchange Notes issued to each holder shall be in an
aggregate principal amount equal to the Liquidation Value of the shares of
Class B and Class C Preferred Stock redeemed by the Corporation in exchange
thereof.
(ii) Not more than 60 nor less than 30 days prior to the exchange
date, the Corporation shall mail irrevocable written notice, by registered
or certified mail, postage prepaid and return receipt requested, to each
record holder (and, to the extent such holder is a corporation, to the
attention of its Chief Executive Officer and its Corporate Secretary),
specifying the exchange date and the time and place where certificates
representing shares of Class B and Class C Preferred Stock are to be
surrendered for Class B and Class C Exchange Notes. Upon mailing such
notice, the Corporation will be obliged to redeem all shares of Class B and
Class C Preferred Stock in exchange for the Exchange Notes on the exchange
date specified in such notice. Upon surrender in accordance with such
notice of the certificates evidencing the shares of Class B or Class C
Preferred Stock so exchanged (properly endorsed or signed for transfer, if
the Corporation shall require and the notice shall so state), the
Corporation will cause the Class B or Class C Exchange Notes, as
applicable, to be authenticated and issued in exchange for such shares of
Class B or Class C Preferred Stock and to be mailed to the holders of the
shares of Class B or Class C Preferred Stock at such holder's address of
record or such other address as the holder shall specify on such surrender
of such certificates.
(iii) On the exchange date, (A) the shares of Class B and Class C
Preferred Stock subject to such exchange and redemption shall cease to be
entitled to any dividends accruing after that date, (B) all rights of the
respective holders of such shares, as stockholders of the Corporation by
reason of the ownership of such shares, except the right to receive the
Class B and Class C Exchange Notes upon
13
<PAGE>
surrender (and endorsement, if required by the Corporation) of the
respective certificates representing such shares, shall cease, (C) such
shares shall cease to be outstanding, and (D) the person or persons
entitled to receive the Class B or Class C Exchange Notes, as applicable,
issuable upon such exchange shall be treated for all purposes as the
registered holder or holders of Class B or Class C Exchange Notes, as
applicable; provided, however, that interest shall not begin to accrue on
-------- -------
any such Class B or Class C Exchange Notes issuable to a holder of Class B
or Class C Preferred Stock, as applicable, until such time as such holder
surrenders the certificate or certificates evidencing such shares of
Class B or Class C Preferred Stock, as applicable.
(iv) The Corporation may redeem shares of Class B and Class C
Preferred Stock in exchange for Class B and Class C Exchange Notes only
if, on the Exchange Date, (x) the Corporation has redeemed any outstanding
shares of Class A Preferred Stock and, if such redemption of Class A
Preferred Stock is effected by the issuance of a Class A Exchange Note,
such Class A Exchange Notes shall be senior to any Class B or Class C
Exchange Note issued in exchange for Class B or Class C Preferred Stock,
(y) the Corporation has paid all accrued dividends on all outstanding
shares of Class B or Class C Preferred stock, as applicable, and (z) the
Class B Indenture or the Class C Indenture, as applicable, shall be
executed and delivered by the Corporation and the applicable trustee
thereunder.
(e) Redemption Price. For each share of Class B and Class C
----------------
Preferred Stock which is to be redeemed for cash, the Corporation will be
obligated on the Redemption Date to pay to the holder thereof (upon surrender
of the certificate representing such share to the Corporation's stock transfer
agent, or if none, to the Corporation at its principal office) an amount in cash
equal to the Redemption Price. If the funds of the Corporation legally
available for redemption of shares of Class B and Class C Preferred Stock on
any Redemption Date are insufficient to redeem the total number of shares to be
redeemed on such date, those funds which are legally available shall be used to
redeem the maximum possible number of shares ratably (as nearly as practicable)
among the holders of the shares to be redeemed upon the aggregate Redemption
Price of such shares held by each such holder. As and when additional funds of
the Corporation are legally available for the redemption of shares, such funds
shall as soon as practicable be used to redeem the balance of the shares which
the Corporation has become obligated to redeem on any Redemption Date.
(f) Dividends after Redemption Date. Subject to any limitations
-------------------------------
contained elsewhere in this ARTICLE FOUR, no share of Class B or Class C
Preferred Stock is entitled to any dividends
14
<PAGE>
accruing after the redemption of such share. On the date of such redemption
dividends will cease to accrue, all rights of the holder of such share as such
holder will cease, and such shares will not be deemed to be outstanding.
(g) Redeemed or Otherwise Acquired Shares. Any shares of Class B or
-------------------------------------
Class C Preferred Stock which are redeemed or otherwise acquired by the
Corporation will be retired and cancelled and may not be reissued.
(h) Restrictions on Dividends and Redemptions. Notwithstanding
-----------------------------------------
anything in this ARTICLE FOUR to the contrary, no dividend payment or other
distribution or redemption may be made with respect to Class B or Class C
Preferred Stock if such payment or other distribution or redemption will be in
contravention of the restrictions or limitations on such payments or other
distributions or redemption contained in (i) this ARTICLE FOUR, (ii) the Debt
Agreements, (iii) the Subordinated Note or (iv) any and all applicable state or
federal laws, rules, and regulations or in any and all orders of any state or
federal governmental authority.
(i) Redemption Methods. Any redemption of shares of Class B or
------------------
Class C Preferred Stock under and pursuant to Sections 2.3(a), 2.3(b), or 2.3(c)
shall be conducted in the same applicable manner as described with respect to
the Class A Preferred Stock in Section 1.2(i) above. Notwithstanding any other
provision of this ARTICLE FOUR, if on or after the date on which any notice of
redemption is first sent to the holders of shares to be redeemed, funds
necessary for the redemption shall be available therefor and shall have been
irrevocably deposited or set aside, then, notwithstanding that the certificates
evidencing the shares so called for redemption shall not have been surrendered,
the dividends with respect to the shares so called shall cease to accrue after
the date fixed for redemption, shares shall no longer be deemed outstanding,
owners thereof shall cease to be stockholders, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive the Redemption Price without interest thereon upon surrender of their
certificates therefor) shall terminate.
2.4 Voting Rights. Except as otherwise set forth below and as
-------------
otherwise required by law, holders of shares of Class B or Class C Preferred
Stock shall have no voting rights. In connection with the right to vote, each
holder of Class B Preferred Stock will have one vote for each share held and
each holder of Class C Preferred Stock shall have one vote for each share held.
Any shares of Class B or Class C Preferred Stock held by the Corporation or its
subsidiary shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum. So long as the Class B Preferred Stock or
15
<PAGE>
Class C Preferred Stock is outstanding, the Corporation shall not without the
affirmative vote or written consent of the holders of all outstanding Class B
and Class C Preferred Stock, each voting as a separate class:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which affects
adversely the relative rights, preferences, qualifications, powers, limitations
or restrictions of that series of Preferred Stock;
(b) increase the authorized number of shares of capital stock of the
Corporation, or authorize, issue or otherwise create securities convertible into
any shares of capital stock of the Corporation other than shares of Class A
(only for purposes of paying dividends in-kind on Class A Preferred Stock),
Class B or Class C Preferred Stock, Common Stock and/or Junior Shares; or
(c) voluntarily effect any reclassification of the Class B or Class
C Preferred Stock.
Whenever dividends on Class B Preferred Stock shall be in arrears in
an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of the election
of such directors as hereinafter provided and (ii) the holders of Class B
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect one additional director of the Corporation at any meeting of
the stockholders of the Corporation at which directors are to be elected held
during the period such dividends remain in arrears. The right of the holders of
Class B Preferred Stock to vote for such one additional director shall terminate
when all accrued and unpaid dividends on the Class B Preferred Stock have been
declared and paid in cash or in-kind or set apart for payment. The term of
office of any director so elected shall terminate immediately upon the
termination of the right of the holders of the Class B Preferred Stock to vote
for such one additional director.
Whenever dividends on Class C Preferred Stock shall be in arrears in
an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of the election
of such directors as hereinafter provided and (ii) the holders of Class C
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect one additional director of the Corporation at any meeting of
the stockholders of the Corporation at which directors are to be elected held
during the period such dividends remain in arrears. The right of the holders of
Class C
16
<PAGE>
Preferred Stock to vote for such one additional director shall terminate when
all accrued and unpaid dividends on the Class B Preferred Stock have been
declared and paid in cash or in-kind or set apart for payment. The term of
office of any director so elected shall terminate immediately upon the
termination of the right of the holders of the Class C Preferred Stock to vote
for such one additional director.
The foregoing right of the holders of Class B and Class C Preferred
Stock with respect to the election of one director per class may be exercised at
any annual meeting of the stockholders of the Corporation or at any special
meeting of the stockholders of the Corporation held for such purpose. If the
right to elect an additional director shall have accrued to the holders of Class
B Preferred Stock or Class C Preferred Stock more than 90 days preceding the
date established for the next annual meeting of stockholders, the President of
the Corporation shall, within 20 days after the delivery to the Corporation at
its principal office of a written request for a special meeting signed by the
holders of at least 10% of the Class B Preferred Stock or Class C Preferred
Stock, as applicable, then outstanding, call a special meeting of the holders of
the Class B or Class C Preferred Stock, as applicable, to be held within 60 days
after the delivery of such request for the purpose of electing such additional
directors. The holders of the Class B Preferred Stock voting as a class shall
have the right to remove without cause at any time and replace any director such
holder shall have elected pursuant to this section. The holders of the Class C
Preferred Stock voting as a class shall have the right to remove without cause
at any time and replace any director such holder shall have elected pursuant to
this section.
2.5 Liquidation. (a) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Class B and Class C Preferred Stock shall be entitled to receive the Class B
or Class C Preferred Liquidation Value of such shares held by them in preference
to and in priority over any distributions upon Junior shares. Upon payment in
full to the holders of shares of Class B and Class C Preferred Stock of the
Class B and Class C Preferred Liquidation Values of such shares, the holders of
shares of Class B or Class C Preferred Stock shall not be entitled, as such
holders, to any further participation in any distribution of assets of the
Corporation. If the assets of the Corporation are not sufficient to pay in full
the Class B and Class C Preferred Liquidation Value payable to the holders of
shares of Class B or Class C Preferred Stock, the holders of all such shares
shall share ratably (the exclusion of any other holders of capital stock) in
such distribution of assets.
(b) Neither a consolidation or merger of the Corporation with or
into any other corporation, nor a sale or
17
<PAGE>
transfer of all or part of the Corporation's assets for cash, securities or
other property, nor a merger of any other corporation with or into the
Corporation, shall be considered a liquidation, dissolution or winding-up of the
Corporation within the meaning of this Section 2.5.
III. Common stock and Nonvoting Common Stock
---------------------------------------
3.1 Identical Rights. Except as otherwise provided in this ARTICLE
----------------
FOUR, all shares of Common Stock and Nonvoting Common Stock shall be identical
and shall entitle the holder thereof to the same rights and privileges.
3.2 Dividends. From and after the date of issuance, the holders of
---------
outstanding shares of Common Stock and Nonvoting Common Stock shall be entitled
to receive dividends on the shares of Common Stock and Nonvoting Common Stock
when, as, and if declared by the Board of Directors, out of funds legally
available for such purpose. All holders of shares of Common Stock and Nonvoting
Common Stock shall share ratably, in accordance with the numbers of shares held
by each such holder, in all dividends or distributions on shares of Common Stock
payable in cash, in property or in securities of the Corporation (other than
shares of Common Stock). All dividends or distributions declared on shares of
Common Stock and Nonvoting Common Stock which are payable in shares of Common
Stock or Nonvoting Common Stock shall be declared on both classes of shares at
the same rate, provided that any such dividend or distribution shall be payable
in shares of the class of Common Stock or Nonvoting Common Stock held by the
stockholder to whom the dividend or distribution is payable.
3.3 Stock Splits, Etc. The Corporation shall not in any manner
-----------------
subdivide (by stock split, stock dividend or otherwise), or combine (by reverse
stock split, or otherwise) the outstanding shares of Common Stock or Nonvoting
Common Stock unless the outstanding shares of the other class shall be
proportionately subdivided or combined. No reclassification or any other
adjustment or modification of the rights or preferences shall be effected
(including without limitation pursuant to a merger, consolidation or liquidation
involving the Corporation) with respect to either the Common Stock or the
Nonvoting Common Stock unless both the Common Stock and Nonvoting Common Stock
are reclassified or the rights or preferences are adjusted or modified in
exactly the same manner and at the same time. In this regard, and without
limiting the generality of the foregoing, in the case of any consolidation or
merger of the Corporation with or into any other entity (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all
or substantially all the assets of the
18
<PAGE>
Corporation, or the reclassification of the Common Stock into any other form of
capital stock of the Corporation, whether in whole or in part, the holder of
each share of Nonvoting Common Stock shall, after such consolidation, merger,
sale or transfer or reclassification, have the right to convert such share of
Nonvoting Common Stock into the kind and amount of shares of stock and other
securities and property which such holder would have been entitled to receive
upon such consolidation, merger, sale or transfer or reclassification if such
holder had held such Common Stock issuable upon the conversion of such share of
Nonvoting Common Stock immediately prior to such consolidation, merger, sale or
transfer or reclassification.
3.4 Liquidation. In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of Common Stock and Nonvoting Common Stock shall be entitled
to share ratably, in accordance with the number of shares held by each such
holder, in all of the assets of the Corporation available for distribution to
the holders of shares of Common Stock.
3.5 Voting Rights. Except as otherwise provided herein or by law,
-------------
the entire voting power of the Corporation shall be vested in the holders of
shares of Common Stock and each holder of shares of Common Stock shall be
entitled to one vote for each share of Common Stock held of record by such
holder; provided that, without the consent of the holders of record of at
--------
least 51% of Nonvoting Common Stock at the time outstanding (assuming, for the
purpose of this provision, that the holders of rights to acquire shares of
Nonvoting Common Stock shall be deemed to be the holders of the shares of
Nonvoting Common Stock which are at the time issuable upon the full exercise
thereof whether or not such holders are then entitled to exercise such rights
pursuant to the terms thereof), given in writing or by the vote at any regular
or special meeting of stockholders of the Corporation, the Corporation shall
not:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which
adversely affects the relative rights, preferences, qualifications,
powers, limitations or restrictions of the Nonvoting Common Stock, or
amend, alter, modify or repeal this Section 3.5;
(b) increase or decrease the authorized number of shares of any class
of capital stock of the Corporation or authorize, issue or otherwise create
securities convertible into or exercisable for any shares of capital stock of
the Corporation other than the shares of Class A, Class B, and Class C Preferred
Stock and the Common Stock, and the Nonvoting Common Stock authorized hereunder;
19
<PAGE>
(c) voluntarily effect an exchange or reclassification of shares of
Nonvoting Common Stock into shares of another class of capital stock of
the Corporation; or
(d) effect a merger or consolidation of the Corporation with another
corporation, unless the certificate or articles of incorporation of the
surviving corporation shall provide that the shares of the capital stock
of such surviving corporation into which the shares of Nonvoting Stock
hereunder shall be converted shall have the identical rights and
privileges as the shares of capital stock of such surviving corporation
into which the shares of Common Stock hereunder shall be converted, other
than the voting rights in this Section 3.5 and the conversion and other
rights in Section 3.6 below which shall not be adversely affected by such
merger or consolidation.
3.6 Conversion
----------
(a) Right to Conversion. Subject to and upon compliance with the
-------------------
provisions of this Section 6, any holder of shares of Nonvoting Common Stock
shall be entitled at any time and from time to time to convert each share of
Nonvoting Common Stock held by such holder into a share of Common Stock at the
conversion rate of one share of Common Stock for one share of Nonvoting Common
Stock.
(b) Procedure. The conversion of any shares of Nonvoting Common Stock
---------
into shares of Common Stock, shall be effected by the holder of the shares of
Nonvoting Common Stock to be converted surrendering the certificate therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
shares of Common Stock or at such other place as the Corporation is willing to
accept such surrender accompanied by written notice to the Corporation at such
office or other place that it elects to so convert and stating the number of
shares of Nonvoting Common Stock being converted. Thereupon the Corporation
shall promptly issue and deliver at such office or other place to such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled, registered in the name of such holder or a designee of
such holder as specified in such notice. Such conversion shall be deemed to have
been made at the close of business on the date of such surrender of the shares
to be converted in accordance with the procedure set forth in the first sentence
of this Section 3(b), and the Person entitled to receive the share issuable upon
such conversion shall be treated for all purposes as having become the record
holder of such shares at such time. In the event of the conversion of less than
all of the shares of Nonvoting Common Stock into shares of Common Stock
evidenced by the certificate so surrendered, the Corporation shall execute and
deliver to or upon the written order of such holder, without
20
<PAGE>
charge to such holder, a new certificate evidencing the shares of Nonvoting
Common Stock not converted.
(c) Reservation. The Corporation shall at all times reserve and keep
-----------
available out of its authorized but unissued shares of Common Stock, or any
shares of Common Stock held in its treasury, solely for the purpose of issue
upon conversion of the share of Nonvoting Common Stock as provided herein, such
number of shares of Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Nonvoting Common Stock. The shares of Common Stock
so issuable shall when so issued be duly and validly issued, fully paid and
nonassessable.
(d) Certain Legal Requirements. No person subject to the provisions
--------------------------
of Regulation Y shall, and no such Person shall permit any of its Bank Holding
Company Affiliates to, convert any shares of Nonvoting Common Stock held by it
into shares of Common Stock, if after giving effect to such conversion, (i)
such Person and its Bank Holding Company Affiliates would own more than 5% of
the total issued and outstanding shares of Common Stock or (ii) such Person
would Control the Corporation (and, for purposes of this clause (ii), a reasoned
opinion of counsel to such Person (which is based on facts and circumstances
deemed appropriate by such counsel) to the effect that such Person does not
control the Corporation shall be conclusive).
IV. Definitions.
-----------
As used in this ARTICLE FOUR, the terms indicated below shall have
the following respective meanings:
"Affiliate", with respect to any Person, means any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, by contract or otherwise. Additionally, with respect to Wingate
Partners,L.P. the term "Affiliate" for purposes of the definition of Change of
Control shall be deemed to include James T. Callier, Jr., Frederick B. Hegi,
Jr., Thomas W. Sturgess, James A.Johnson, Dennis J. Johnson, Sue Goddard,
Wallace R. Hawley, Lee Walton, Bud Applebaum, Estate of Howard Beasley, Callier
Buy-Out Partners, as defined in the Agreement of Limited Partnership of Wingate
Partners, L.P., Peter J. Wodtke, and pension plans for the benefit of such
individuals or entities.
"Associated" means Associated Stationers, Inc., a Delaware
----------
corporation.
"Bank Holding Company Affiliate" shall mean, with respect to any
------------------------------
Person subject to the provisions of Regulation Y,
21
<PAGE>
(i) if such Person is a bank holding company, any company directly or indirectly
controlled by such bank holding company, and (ii) otherwise, the bank holding
company that controls such Person and any company (other than such Person)
directly or indirectly controlled by such bank holding company.
"Business Sale" means a transaction or a series of transactions,
-------------
whether effected by sale or exchange of securities or assets, merger or
consolidation, or otherwise, that results in the sale of the Corporation or its
business to an Independent Third Party or group of Independent Third Parties,
pursuant to which such Independent Third Party or group of Independent Third
Parties would acquire (a) capital stock of the Corporation possessing the voting
power under normal circumstances to elect a majority of the Board or (b) all or
substantially all of the Corporation's assets determined on a consolidated
basis.
"Cash-Out Event" means the occurrence of a Business Sale, a Change in
--------------
Control, a Qualified Public Offering or a Recapitalization. In the case of Class
C Preferred Stock, "Cash-Out Event" shall also include the expiration of the
--------------
agreement between Associated and Affiliated Computer Services, Inc. providing
for the furnishing of information systems services for Associated, or the early
termination of such agreement for any reason other than termination of such
agreement by Affiliated Computer Services, Inc.
"Change in Control" means an occurrence by which Wingate Partners and
----------------
its Affiliates and Cumberland Capital Corporation and its Affiliates shall have
collectively sold or otherwise disposed of and received the pecuniary benefit of
33-1/3% of the Common Stock legally or beneficially owned by them collectively
as of January 31, 1992, subject to appropriate adjustment in the event of a
stock split, reverse stock split or similar transaction and excluding any sales
or other dispositions made by any of them to employees of the Corporation or of
any of its Subsidiaries of up to 10% of such holdings.
"Class A Exchange Notes" means the Class A Subordinated Exchange
----------------------
Notes which may be issued by the Corporation to the holders of the Class A
Preferred Stock upon a redemption pursuant to Section 1.2(d). Such Class A
Exchange Notes shall have a maturity date of July 31, 1999 and shall bear
interest at the rate of 10% for interest paid in cash and 13% for interest paid
in-kind in additional Class A Exchange Notes. Such interest shall be payable
quarterly in arrears, either in cash or in-kind on the Preferred Dividend
Payment Dates. Such Class A Exchange Notes will permit a required prepayment to
the same amounts on the same dates as would have applied to an optional or
mandatory redemption of the Class A Preferred Stock (assuming that the exchange
pursuant to Section 1.2(d) had not occurred), shall not contain any financial
covenants by, or other restrictive
22
<PAGE>
covenants (other than limitations imposed by senior debt and applicable law) on,
the Corporation, and shall provide for an event of default only upon the
Corporation's failure to make payments in accordance with its terms or upon a
bankruptcy filing by or against the Corporation which filing is not dismissed
within 60 days after filing. The payment of principal, interest, and premium (if
any) will be subordinated to senior debt (to be defined as any obligation of the
Corporation or its subsidiaries for borrowed money including the obligations
under the Subordinated Note).
"Class A Indenture" means an indenture for the Class A Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class A Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Class B and Class C Exchange Notes" means the Class B Subordinated
----------------------------------
Exchange Notes and the Class C Subordinated Exchange Notes which may be issued
by the Corporation to the holders of the Class B or Class C Preferred Stock, as
applicable, upon a redemption pursuant to Section 2.3(d). Class B Exchange Notes
shall have a maturity date of July 31, 1999. The Class C Exchange Notes shall
have a maturity date of January 31, 2002, with payments to be made thereon in
four equal (as nearly as practicable) installments of principal on April 30,
2001, July 31, 2001, October 31, 2001, and January 31, 2002. Both Class B and
Class C Exchange Notes shall bear interest at the rate of 11% for interest paid
in cash and 12% for interest paid in-kind in additional Class B or Class C
Exchange Notes, as applicable. Such interest shall be payable quarterly in
arrears, either in cash or in-kind as would have applied to the Class B and
Class C Preferred Stock Dividend on the Preferred Dividend Payment Dates. Such
Notes will permit or require prepayments in the same amounts and at the same
dates as would have applied to an optional or mandatory redemption of the Class
B and Class C Preferred Stock (assuming that the exchange pursuant to Section
2.3(d) had not occurred), shall not contain any financial covenants by, or other
restrictive covenants (other than limitations imposed by senior debt and
applicable law) on, the Corporation, and shall provide for an event of default
only upon the Corporation's failure to make payments in accordance with its
terms or upon a bankruptcy filing by or against the Corporation, which filing is
not dismissed within 60 days after filing. The payment of principal, interest,
and premium (if any) will be subordinated to senior debt (to be defined as any
obligation of the Corporation for borrowed money including the obligations under
the Subordinated Note) and payments in respect of Class A Exchange Notes.
23
<PAGE>
"Class B Indenture" means an indenture for the Class B Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class B Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Class A Preferred Dividend Rate" means a rate of 10% per annum,
-------------------------------
computed on the basis of a 360-day year and twelve 30-day months, to be applied
to the Dividend Base for the Class A Preferred Stock as from time to time
adjusted; provided that in the event of and during continuance of a failure by
the Corporation to pay in cash a dividend on the Class A Preferred Stock on any
Preferred Dividend Payment Date or to make any redemption payment when due, the
dividend rate shall be increased to 13% per annum, and shall remain at said rate
until such failure is cured, such increase to be effective retroactive to the
first day of the accrual period for which the dividend was not paid.
"Class A, Class B, and Class C Preferred Liquidation Value" of any
---------------------------------------------------------
share of Class A, Class B or Class C Preferred Stock means as of any particular
date an amount equal to the sum of $1,000 plus the aggregate of accrued
and unpaid dividends on such share to such date, subject to appropriate
adjustment in the event of a stock split, reverse stock split or similar
transaction.
"Class B or Class C Preferred Dividend Rate" means a rate of 9% per
------------------------------------------
annum computed on the basis of a 360-day year and twelve 30-day months, to be
applied to the Dividend Base for the Class B or Class C Preferred Stock as from
time to time adjusted; provided that in the event of and during continuance of a
failure by the Corporation to pay in cash a dividend on the Class B or Class C
Preferred Stock on any Preferred Dividend Payment Date or to make any redemption
payment when due, the dividend rate shall be increased to 10% per annum, and
shall remain at said rate until such failure is cured, such increase to be
effective retroactive to the first day of the accrual period for which the
dividend was not paid.
"Class C Indenture" means an indenture for the Class C Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class C Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Control" (including, with its correlative meanings, "controlled by"
------- -------------
and "under common control with") shall mean, with
-------------------------
24
<PAGE>
respect to any Person, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Debt Agreements" means the Credit Agreement dated as of January 31,
---------------
1992 among Associated, the Corporation, The Chase Manhattan Bank (National
Association), as Agent, and the lenders which become parties thereto, and the
notes and other documents and instruments executed and delivered in
connection therewith, as said agreement and notes and other documents and
instruments may from time to time be amended or supplemented, and any agreements
evidencing any renewal, extension, refinancing, refunding or replacement
thereof.
"Dividend Base" of any share of Class A, Class B or Class C Preferred
-------------
Stock means $1,000, subject to appropriate adjustment in the event of a stock
split, reverse stock split or similar transaction.
"Independent Third Party" means any person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully diluted and converted basis (a "5% Owner"), who is not controlling,
--------
controlled by or under common control with the Corporation or any such 5% Owner
and who is not the spouse or descendant (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons.
"Junior Shares" means with respect to the priority of any class or
-------------
series of Preferred Stock, shares of Common Stock or shares of any other series
or class of Preferred Stock of the Corporation which are designated as junior to
such series in this Certificate of Incorporation or any amendment thereto, or in
the resolution designating the class or series of such Preferred Stock and any
warrants, options or other rights to acquire or purchase such securities. The
shares of Class B and Class C Preferred Stock are Junior Shares in relation to
the Class A Preferred Stock. Any shares of Additional Preferred Stock,
regardless of designation, shall be deemed Junior Shares in relation to the
Class A, Class B and Class C Preferred Stock.
"Liquidation Date" means as to any series of Preferred Stock, the
----------------
first date on which the assets of the Corporation are distributed to the
holders of such series of Preferred Stock in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation.
"Marketable Securities" shall mean Common Stock or common stock or
---------------------
other securities of any corporation that is the successor to substantially all
of the business or assets of the Corporation or the ultimate parent of such
successor which is (or
25
<PAGE>
will, upon distribution thereof, be) listed in the New York Stock Exchange, the
American Stock Exchange or approved for quotation on the NASDAQ National Market
System.
"Person" means an individual, partnership, association, joint
------
venture, corporation, business, trust, estate, unincorporated organization or
government or any department, agency or subdivision thereof.
"Preferred Dividend Payment Date" shall mean each April 30, July 31,
-------------------------------
October 31 and January 31, or the next business day following each such date of
any year commencing with the initial payment date of April 30, 1992.
"Qualified Public Offering" means a sale in a public offering or
-------------------------
series of public offerings, registered under the Securities Act of Common
Stock; provided, however, that such offering or series of offerings shall not be
--------
deemed to be a Qualified Public Offering unless such offering or offerings shall
------
have resulted in (A)(i) public ownership of not less than 20% of the Common
Stock of the Corporation on a fully-diluted basis (which such shares of Common
Stock are listed upon the New York Stock Exchange, the American Stock Exchange
or are approved for quotation on the NASDAQ National Market System), and (ii)
such offering or offerings shall have resulted in receipt by the Corporation of
aggregate cash proceeds (after deduction of underwriter discounts and the costs
associated with such offering or offerings) of at least $37.5 million, or (B)
the holders of Common Stock of the Corporation receive, as a result of such
offering or offerings, cash, Marketable Securities or a combination thereof
valued at not less than $1 million.
"Recapitalization" means a recapitalization of the Corporation
----------------
pursuant to which the holders of Common Stock of the Corporation receive cash,
securities (other than shares junior to the Class B or Class C Preferred Stock),
property or other assets and such consideration is valued at not less than $1
million.
"Redemption Date" as to any share of Class A, Class B or Class C
---------------
Preferred Stock means the date specified in the notice of any redemption at
the Corporation's option or the applicable date specified herein in the case
of any other redemption; provided that no such date will be a Redemption Date
--------
unless the applicable Redemption Price is actually paid or has been set aside
for payment to such stockholder in full as of such date, and if not so paid
or set aside for payment to such stockholder in full, the Redemption Date will
be the date on which such Redemption Price is fully paid.
"Redemption Price" of any share of Class A, Class B or Class C
----------------
Preferred Stock means as of the Redemption Date an amount equal to the sum of
$1000 plus the aggregate of accrued and
26
<PAGE>
unpaid dividends on such share to such date, subject to appropriate adjustment
in the event of a stock split, reverse stock split or similar transaction.
"Regulation Y" shall mean Regulation 7 promulgated by the Board of
------------
Governors of the Federal Reserve system (12 C.F.R. (S) 225) or any successor
regulation.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Subordinated Note" means, until January 31, 1994, the form of the
-----------------
Junior Subordinated Note attached as an Exhibit to the Transition Services
Agreement which may be issued to Boise Cascade Corporation by Associated
pursuant thereto, and thereafter such Junior Subordinated Note as and to the
extent so issued.
"Subsidiary" means any corporation, a majority (by number of votes) of
----------
the voting securities of which shall, at the time as of which any determination
is being made, be owned by the Corporation, directly or indirectly through one
or more Subsidiaries.
"Transition Services Agreement" means the Transition Services
-----------------------------
Agreement dated as of January 31, 1992, among the Corporation, Associated, Boise
Cascade Office Products Corporation, and Boise Cascade Corporation, as such
agreement may from time to time be amended.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended, the rules and regulations promulgated thereunder, and any successor
legislation thereto.
ARTICLE FIVE
------------
The Board of Directors of the Corporation is hereby expressly authorized to
the full extent now or hereafter permitted by the laws of the State of Delaware,
at any time and from time to time to provide for the issuance of some or all of
the Additional Preferred Stock in one or more classes or series of a class, with
such voting powers, full or limited, or without voting powers, and with such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors. Before the Corporation shall issue
any Additional Preferred Stock of any classes or series of a class, the Board of
Directors shall adopt
27
<PAGE>
a resolution or resolutions fixing the voting powers, designations, preferences
and rights of such series, and the qualifications, limitations or restrictions
thereof, and the number of shares of Additional Preferred Stock of such series,
and appropriate documents shall be executed and filed as required by law.
ARTICLE SIX
-----------
The name and address of the Incorporator are as follows:
Name Address
---- -------
Suzanne L. Saxman c/o D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, IL 60602
ARTICLE SEVEN
-------------
The Corporation shall indemnify any person who was, is, or is threatened to
be made a party to a proceeding (as hereinafter defined) by reason of the fact
that he or she (i) is or was a director or officer of the Corporation or (ii)
while a director or officer of the Corporation, is or was serving at the request
of the Corporation as a director, officer , partner, venturer, proprietor,
trustee (including voting trustee), employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust (including voting trust), employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such right
shall be a contract right and as such shall run to the benefit of any director
or officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this ARTICLE SEVEN is in effect. Any repeal or amendment of
this ARTICLE SEVEN shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
ARTICLE SEVEN. Such right shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
28
<PAGE>
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
Delaware General Corporation Law, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In the
event of the death of any person having a right of indemnification under the
foregoing provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any stature, by-law, resolution of stockholders or
directors, agreement, or otherwise,
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit or proceeding.
ARTICLE EIGHT
-------------
A director of the Corporation shall not be personally 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 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
personal benefit. Any repeal or amendment of this ARTICLE EIGHT by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act of omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of the
Corporation is not
29
<PAGE>
personally liable as set forth in the foregoing provisions of this ARTICLE
EIGHT, a director shall not be liable to the Corporation or its stockholders to
such further extent as permitted by any law applicable to the Corporation
hereafter enacted, including without limitation any subsequent amendment to the
Delaware General Corporation Law.
ARTICLE NINE
------------
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders.
(1) The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in, the bylaws.
Election of directors need not be by ballot unless the bylaws so provide.
(2) The Board of Directors shall have power, subject to the other
provisions of this Certificate, without the assent or vote of the stockholders
to make, alter, amend, change, add to or repeal the bylaws of the Corporation;
to fix and vary the amount to be reserved for any proper purpose; to authorize
and cause to be executed mortgages and liens and all or any part of the property
of the Corporation; to determine the use and disposition of any surplus or net
profits; and to fix the times for the declaration and payment of dividends.
(3) No contract or transaction between the Corporation and one or
more of its directors, officers, or stockholders or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is
30
<PAGE>
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this Certificate, and to any bylaws from time to time
made by the stockholders; provided, however, that no bylaws so made shall
invalidate any prior act of the directors which would have been valid if such
bylaw had not been made.
ARTICLE TEN
-----------
The Corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of Delaware.
ARTICLE ELEVEN
--------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of January,
1992.
-----------------------------
Suzanne L. Saxman
31
<PAGE>
Annex 5 - Joinder Agreement
<PAGE>
Annex 5
to
Warrant Agreement
JOINDER AGREEMENT
JOINDER AGREEMENT, dated the date set forth below, between ASSOCIATED
HOLDINGS, INC., a Delaware corporation ("Issuer") and the undersigned
------
stockholders of Issuer.
A. Reference is made to that certain Warrant Agreement dated as of
January 31, 1992 (as modified and supplemented and in effect from time to time,
the "Warrant Agreement"), among Issuer and Chase Manhattan Investment Holdings,
-----------------
Inc. a Delaware corporation and, for certain purposes, Associated Stationers,
Inc. Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Warrant Agreement.
[B. Section 9.01(c) of the Warrant Agreement requires that Wingate
Partners, L.P., ASI Partners, L.P., Cumberland Capital Corporation, Good Capital
Co., Inc. and Boise Cascade Corporation execute and deliver to Issuer and each
Holder this Joinder Agreement.]
[B. Section 9.01(d) of the Warrant Agreement requires that certain
transferees of shares of Common Stock execute and deliver to Issuer and each
Holder this Joinder Agreement.]
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby agrees that:
1. The undersigned [: (a) is delivering this Joinder Agreement
pursuant to Section 9.01(c) of the Warrant Agreement]; and (b) acknowledges
---------------
receipt of a copy of the Warrant Agreement.
2. The undersigned hereby agrees: (a) to be bound by the provisions of
Sections 9 and 10 of the Warrant Agreement and of Section 5 of Registration
Rights Agreement; (b) to be bound by the covenants in the Warrant Agreement
applicable to it; and (c) to be treated as a Stockholder for all purposes
thereof.
[3. In the case of the Persons delivering this Joinder Agreement
pursuant to Section 9.01(c): The undersigned hereby agree to be bound by the
provisions of Section 12.06 of the Warrant Agreement.]
Joinder Agreement
-----------------
<PAGE>
2
IN WITNESS WHEREOF, the undersigned has signed this Joinder Agreement
on the date set forth below.
Date:
---------------------------- -----------------------------------
[Description of transferred
securities, name of
transferor,
and date of transfer:
-----------------------------------
-----------------------------------
-----------------------------------
----------------------------------]
Acknowledged and Agreed to
as of the date written
above:
ASSOCIATED HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
Joinder Agreement
-----------------
<PAGE>
EXHIBIT 10.15
[EXECUTION COUNTERPART]
AMENDMENT NO. 1 TO WARRANT AGREEMENT dated as of October 27, 1992 among
Associated Holdings, Inc., a Delaware corporation (the "Issuer"), Chase
------
Manhattan Investment Holdings, Inc., Whirlpool Financial Corporation, The
Long-Term Credit Bank of Japan, Ltd., Chicago Branch, The Provident Bank, and
Arab Banking Corporation (B.S.C.) (collectively, the "Holders"), and Associated
-------
Stationers, Inc., a Delaware corporation (the "Operating Company").
-----------------
WHEREAS, The Chase Manhattan Bank (National Association), Whirlpool
Financial Corporation, The Long-Term Credit Bank of Japan, Ltd., Chicago Branch,
The Provident Bank, and Arab Banking Corporation (B.S.C.) (collectively, the
"Lenders"), The Chase Manhattan Bank (National Association) as Agent, the
-------
Operating Company, and the Issuer entered into an Amended and Restated Credit
Agreement dated as of January 31, 1992 (the "Credit Agreement");
----------------
WHEREAS, LE Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Operating Company (whose name is being changed to
"Lynn-Edwards Corp.", the "Subsidiary Borrower"), has agreed to purchase all of
-------------------
the capital stock of Lynn-Edwards Corp., a California corporation (the "Stock
-----
Purchase");
- --------
WHEREAS, to enable the Subsidiary Borrower to consummate the Stock
Purchase and thereafter to borrow revolving credit loans from the Lenders from
time to time, the Lenders, The Chase Manhattan Bank (National Association) as
Agent, the Operating Company, the Issuer, and the Subsidiary Borrower are
amending the Credit Agreement by entering into a Second Amended and Restated
Credit Agreement, dated as the date hereof (the "Second Amended Credit
---------------------
Agreement");
- ---------
WHEREAS, to induce the Lenders to enter into the Second Amended Credit
Agreement, the Issuer has agreed to issue certain additional warrants to the
Holders, all on the terms and conditions hereinafter provided;
WHEREAS, to enable the Issuer to issue said warrants, the Issuer and the
Operating Company have requested, and the Holders are willing, to amend the
Warrant Agreement dated as of January 31, 1992 among the Issuer, the Holders,
and the Operating Company (the "Warrant Agreement");
-----------------
NOW THEREFORE, in consideration of the premises and the mutual agreements
contained herein, and for other good and
Amendment No. 1
---------------
<PAGE>
-2-
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. As used herein, "Amendment Date" shall mean the
-----------
first date on which each of the conditions to effectiveness set forth in
Section 7 hereof shall have been satisfied. Terms used but not defined herein
- ---------
shall have the respective meanings assigned to such terms in the Warrant
Agreement as amended hereby.
Section 2. Amendments. Subject to the satisfaction of the conditions to
----------
effectiveness specified in Section 7 hereof, the Warrant Agreement shall be
amended as follows: ---------
(a) Section 1.01 of the Warrant Agreement shall be amended by adding the
following definition in their appropriate alphabetic locations:
"'Additional Tranche B Warrants' shall have the meaning assigned to
-----------------------------
such term in Section 2.06.
------------
'Additional Tranche B Warrant Stock' shall mean (i) the shares of
----------------------------------
Common Stock purchased or purchasable by the Holders of the Additional
Tranche B Warrants upon the exercise thereof, including any Common Stock
into which such Common Stock may thereafter be changed or converted, and
(ii) any additional shares of Common Stock issued or distributed by way of
a dividend, stock split, or other distribution in respect of the Common
Stock referred to in clause (i) above, or acquired by way of any rights
----------
offering or similar offering made in respect of the Common Stock referred
to in clause (i) above. Any Additional Tranche B Warrant Stock purchased
----------
by the Issuer shall cease to be Additional Tranche B Warrant Stock and
shall cease to be outstanding, and the Issuer, upon such purchase, shall
not be deemed a Holder.
'Amendment Date' shall have the meaning assigned to such term in
--------------
Amendment No. 1.
'Amendment No. 1' shall mean Amendment No. 1 to Warrant Agreement
---------------
dated as of October 27, 1992 among the Issuer, the Holders, and the
Operating Company.
(b) The definition of "Warrants" in Section 1.01 of the Warrant
Agreement shall be amended by adding the following clause directly after
"Section 2.01":
----
", including the Additional Tranche B Warrants described in
Section 2.06".
------------
Amendment No. 1
---------------
<PAGE>
-3-
(c) The definition of "Tranche B Warrants" in Section 1.01 of the Warrant
Agreement shall be amended by adding the following clause directly after
"Section 2.03(a)":
---------------
", including the Additional Tranche B Warrants described in
Section 2.06".
------------
(d) The following subsection shall be added at the end of Section 2 of
the Warrant Agreement:
"2.06 Authorization and Issuance of Additional Tranche B Shares and
-------------------------------------------------------------
Warrants. The Issuer has authorized: (a) the issuance of additional
--------
warrant certificates, substantially in the form of Annex 1 to this
-------
Agreement, covering the purchase of Stock Units representing shares of
Common Stock equal, on the Amendment Date, to 3.3% of the shares of Common
Stock (such certificates, together with the rights to purchase Common
Stock provided thereby and all warrant certificates covering such stock
issued upon transfer, division, or combination of, or in substitution for,
any thereof, sometimes called the "Additional Tranche B Warrants") for
-----------------------------
issuance to the Holders or their affiliates pursuant to the terms of this
Agreement, provided, however, that said warrant certificates shall be
-----------------
dated as of the Amendment Date; and (b) the issuance of such number of
shares of Class A and Class B Common Stock as shall be necessary to permit
the Issuer to comply with its obligations to issue Common Stock pursuant
to the Additional Tranche B Warrant and Class A Common Stock upon
conversion of the Class B Common Stock. The Issuer shall deliver to the
Holders or their affiliates certificates for the Additional Tranche B
Warrants issued in the denominations and registered in the names specified
in Schedule 1 to Amendment No. 1."
----------
(e) The Earn Back Table in Section 11.04 of the Warrant Agreement shall
be amended by replacing "$5,000,000" with "$6,500,000", "$6,000,000" with
"$7,000,000", "$7,000,000" with "$9,100,000", and "$9,000,000" with
"$11,700,000".
(f) Section 11.04 of the Warrant Agreement shall be amended by deleting
the definition of "IRR" and inserting the following therefor:
---
"'IRR' means internal rate of return with respect to the Tranche B
---
Term Loans for the Subject Holder and its Affiliates, with investment
deemed to be pro rata for the deemed portion of (a) Tranche B Loans from
the --------
Amendment No. 1
---------------
<PAGE>
-4-
Closing Date and (b) $3,500,000 of the Revolving Credit Loans from the
Amendment Date, and taking into account Warrant Income plus (a) principal
and interest on the Tranche B Loans received by the Subject Holder and its
Affiliates and (b) principal and interest (at the borrowing rate for the
Revolving Credit Loans in effect from time to time) on $3,500,000 of the
Revolving Credit Loans received by the Subject Holder and its Affiliates,
whether or not outstanding or accrued, such principal being deemed to be
received upon cancellation of the Revolving Credit Commitment and such
interest being deemed to be received at the times provided for payment
under the Second Amended Credit Agreement, except that principal and
interest with respect to amounts of Revolving Credit Loans actually
borrowed will not be deemed to be received until such later time as they
are actually received, computed in accordance with accepted financial
practice."
Section 3. Representations and Warranties of Holders. Each of the
-----------------------------------------
Holders represents and warrants to the Issuer as follows:
(a) Each of the Holders is purchasing the Additional Tranche B Warrants
for its own account, without a view to the distribution thereof, all without
prejudice, however, to the right of the Holders at any time, in accordance with
the Warrant Agreement or the Registration Rights Agreement, both as amended
hereby, lawfully to sell or otherwise to dispose of all or any part of the
Additional Tranche B Warrants or the Additional Tranche B Warrant Stock held by
it.
(b) Each of the Holders is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
(c) Each of the Holders understands that the Issuer has not registered
the Additional Tranche B Warrants or the Additional Tranche B Warrant Stock
under the Securities Act, and each of the Holders agrees that neither the
Additional Tranche B Warrants nor the Additional Tranche B Warrant Stock shall
be sold or transferred or offered for sale or transfer without registration
under the Securities Act, or the availability of an exemption therefrom, all as
more fully provided in Section 4 of the Warrant Agreement.
Section 4. Representation and Warranties of Issuer. The Issuer
---------------------------------------
represents and warrants as follows:
(a) No Branch. The execution, delivery and performance of this Amendment
---------
by the Issuer and the Operating Company and the consummation by the Issuer and
the Operating
Amendment No. 1
---------------
<PAGE>
-5-
Company of the transactions contemplated hereby will not (a) violate the
certificate of incorporation or by-laws of the Issuer or the Operating Company,
(b) violate any loan or credit agreement to which the Issuer or the Operating
Company is a party or is bound, or result in a breach of or default under any
other instrument or agreement to which the Issuer or the Operating Company is a
party or is bound in a way which could reasonably be expected to have a material
adverse effect on (i) the property, business, operations, financial condition,
prospects, liabilities, or capitalization of the Issuer and the Subsidiaries
taken as a whole, (ii) the ability of either the Issuer or the Operating Company
to perform its obligations under this Amendment, the Warrant Agreement, the
Warrant, or the Registration Rights Agreement, or (iii) the validity or
enforceability of this Amendment, the Warrant Agreement, the Warrant, or the
Registration Rights Agreement, or (iv) the rights and remedies of the Holders
under the Warrant Agreement, the Warrant, or the Registration Rights Agreement,
(c) violate any judgment, order, injunction, decree, or award against or binding
upon the Issuer or the Operating Company, (d) result in the creation of any
material lien upon any of the properties or assets of the Issuer or the
Operating Company, or (e) violate any law, rule or regulation relating to the
Issuer or the Operating Company.
(b) Corporate Action. Each of the Issuer and the Operating Company has
----------------
all necessary corporate power and authority to execute, deliver, and perform its
respective obligations under this Amendment; the execution, delivery and
performance by the Issuer and the Operating Company of this Amendment have been
duly authorized by all necessary corporate action (including all stockholder
action) on the part of the Issuer and the Operating Company, respectively; this
Amendment has been duly executed and delivered by the Issuer and the Operating
Company and constitutes the legal, valid, and binding obligations of the Issuer
and the Operating Company, enforceable against the Issuer and the Operating
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting the rights of creditors generally as applicable to the Issuer, or in
the case of the Operating Company, as applicable to it, and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); the Additional Tranche B Warrants when
executed, issued, and delivered pursuant to this Amendment will constitute the
legal, valid, and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting the rights of creditors generally as applicable to the Issuer or
in the case of the Operating Company, as applicable to
Amendment No. 1
---------------
<PAGE>
-6-
it, and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law); the Class A
Common Stock and Class B Common Stock constituting the Additional Tranche B
Warrant Stock covered by the Additional Tranche B Warrants have been duly and
validly authorized and reserved for issuance and shall be issued and delivered
in accordance with the Additional Tranche B Warrants and, upon issuance and
payment therefor in accordance with the provisions of the Additional Tranche B
Warrants, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any Liens, and the Class A Common Stock when issued on
conversion of Class B Common Stock shall be duly and validly issued, fully paid
and nonassessable and free and clear of any Liens; and none of the Warrant Stock
issued pursuant to the terms hereof will be in violation of any preemptive
rights of any Stockholder.
(c) Capitalization. The representations in Section 8.14 of the Second
--------------
Amended Credit Agreement are complete and correct.
(d) Prior Representations and Warranties. After giving effect to this
------------------------------------
Amendment, (i) each of the Issuer and the Operating Company is in compliance
with its respective obligations under the Warrant Agreement and the Registration
Rights Agreement and (ii) except for the representations made by the Issuer in
Section 3.07 of the Warrant Agreement, all representations and warranties made
by the Issuer in Section 3 of the Warrant Agreement will be true and correct on
and as of the Amendment Date with the same force and effect as if made on and as
of such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
(e) Preemptive Rights. Schedule 2 contains a true and complete list of
----------------- ----------
all parties that have or may have preemptive or similar rights with respect to
the issuance of the Additional Tranche B Warrants and the Additional Tranche B
Warrant Stock.
Section 5. No Adjustments. The Issuer represents and warrants that,
--------------
except as may be provided in the Warrant Agreement, the Boise Warrants, the
Transition Services Agreement or the Issuer's 1992 Stock Option Plan (including
stock options thereunder), no anti-dilution adjustments with respect to any
securities issued by the Issuer are required or will be made as a result of the
issuance of the Additional Tranche B Warrants or the Additional Tranche B
Warrant Stock.
Section 6. Agreement of Operating Company. The Operating Company hereby
------------------------------
ratifies and confirms all of its obligations under, and remakes as of the
Amendment Date all guaranties and waivers contained in, Section 7.03 of the
Warrant Agreement.
Amendment No. 1
---------------
<PAGE>
-7-
Section 7. Conditions To Effectiveness. The amendments to the Warrant
---------------------------
Agreement and the Registration Rights Agreement set forth in Section 2 hereof
---------
shall become effective upon the satisfaction of all conditions to the
effectiveness of the Second Amended Credit Agreement, as set forth therein, and
each of the following conditions to effectiveness (including, without
limitation, that each document to be received by the Holders shall be in form
and substance satisfactory to the Holders):
(a) Amendment No. 1. The Holders shall have received this Amendment,
---------------
duly executed and delivered by the Issuer and the Operating Company.
(b) Corporate Action. The Holders shall have received certified copies
----------------
of the charter and by-laws (or equivalent documents) of the Issuer and all
corporate action taken by the Issuer (including, without limitation,
resolutions of the Board of Directors of the Issuer) authorizing the
execution, delivery and performance of this Amendment.
(c) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Issuer in Sections 4 and 5 hereof shall be true and
---------- -
correct on and as of the Amendment Date with the same force and effect as if
made on and as of the Amendment Date, and the Holders shall have received a
certificate of a senior officer of the Issuer to that effect, dated the
Amendment Date, in substantially the form of Annex A hereto.
(d) Warrant Certificates. The Holders shall have received the warrant
--------------------
certificates as required by Section 2.06 of the Warrant Agreement, as
amended hereby.
(e) Waivers. The Holders shall have received waivers of preemptive and
-------
similar rights, in substantially the form of Annex B hereto, from all
-------
parties (other than Boise Cascade) listed on Schedule 2.
----------
(f) Opinion of Counsel to the Issuer. The Holders shall have received an
--------------------------------
opinion of counsel to the Issuer, dated the Amendment Date, in substantially
the form of Annex C-1 hereto.
---------
(g) Opinion of Counsel to the Holder. The Holders shall have received an
--------------------------------
opinion of counsel to the Holders, dated the Amendment Date, in substantially
the form of Annex C-2 hereto.
---------
Amendment No. 1
---------------
<PAGE>
-8-
(h) Other Documents. The Holders shall have received such other
---------------
documents as the Holders or special New York counsel to the Holders may
reasonably request.
Section 8. Documents Otherwise Unchanged. Except as herein provided, the
-----------------------------
Warrant Agreement and the Registration Rights Agreement shall remain unchanged
and in full force and effect, and each reference to the "Warrant Agreement" and
"Registration Rights Agreement" and words of similar import in the Warrant
Agreement and the Registration Rights Agreement, both as amended hereby, and the
Second Amended Credit Agreement shall be a reference to the Warrant Agreement
and the Registration Rights Agreement, both as amended hereby, and as the same
may be further amended, supplemented, and otherwise modified and in effect from
time to time.
Section 9. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
Section 10. Expenses. Without limiting its obligations under Section
--------
13.04 of the Warrant Agreement, the Issuer agrees to pay, on demand, all
reasonable out-of-pocket costs and expenses of the Holders (including the fees
and disbursements of Milbank, Tweed, Hadley & McCloy, special New York counsel
to Holders) incurred in connection with the negotiation, preparation, execution
and delivery of this Amendment.
Section 11. Binding Effect. This Amendment shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 12. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of New York.
Amendment No. 1
---------------
<PAGE>
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
ASSOCIATED HOLDINGS, INC. CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By /s/ Michael D. Ramsey By
------------------------------ ------------------------------
Name: Michael D. Ramsey Name:
Title: President Title:
THE LONG-TERM CREDIT BANK OF WHIRLPOOL FINANCIAL CORPORATION
JAPAN, LTD., CHICAGO BRANCH
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
ARAB BANKING CORPORATION (B.S.C.) THE PROVIDENT BANK
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
For purposes of Section 6 only:
---------
ASSOCIATED STATIONERS, INC.
By /s/ Michael D. Ramsey
------------------------------
Name: Michael D. Ramsey
Title: President
Amendment No. 1
---------------
<PAGE>
ANNEX A
CERTIFICATE
ASSOCIATED HOLDINGS, INC.
I, ____________________________, the duly authorized _________________ of
Associated Holdings, Inc., a Delaware corporation (the "Issuer"), hereby certify
------
that the representations and warranties made by the Issuer in Sections 4 and 5
---------- -
of Amendment No. 1 to Warrant Agreement dated as of October 27, 1992 among the
Issuer, Chase Manhattan Investment Holdings, Inc., Whirlpool Financial
Corporation, The Long-Term Credit Bank of Japan, Ltd., Chicago Branch, The
Provident Bank, Arab Banking Corporation (B.S.C), and Associated Stationers,
Inc. are true and correct in all material respects with the same force and
effect as if such representations and warranties were made on and as of the date
of this Certificate.
IN WITNESS WHEREOF, I have caused this Certificate to be executed this
_____ day of October, 1992.
______________________________
Printed Name:
Amendment No. 1
---------------
<PAGE>
ANNEX B
WAIVER
The undersigned hereby waives, and surrenders all claims relating to, any
preemptive or similar rights that it has or will have with respect to the
issuance of the Additional Tranche B Warrants and the Additional Tranche B
Warrant Stock pursuant to Amendment No. 1 to Warrant Agreement dated as of
October 27, 1992 among the Associated Holdings, Inc., Chase Manhattan Investment
Holdings, Inc., Whirlpool Financial Corporation, The Long-Term Credit Bank of
Japan, Ltd., Chicago Branch, The Provident Bank, Arab Banking Corporation
(B.S.C.), and Associated Stationers, Inc.
IN WITNESS WHEREOF, the undersigned has caused this Waiver to be executed
this _____ day of October, 1992.
___________________________________
Name of Holder of Preemptive Rights
By ________________________________
Name:
Title:
Amendment No. 1
---------------
<PAGE>
ANNEX C-1
[LETTERHEAD OF ISSUER'S COUNSEL]
October 27, 1992
Chase Manhattan Investment Holdings, Inc.
Whirlpool Financial Corporation
The Long-Term Credit Bank of Japan, Ltd., Chicago Branch
The Provident Bank
Arab Banking Corporation (B.S.C.)
c/o The Chase Manhattan Bank (National Association)
1 Chase Manhattan Plaza
New York, NY 10005
Ladies and Gentlemen:
We have acted as counsel to Associated Holdings, Inc., a Delaware
corporation (the "Issuer"), in connection with the preparation, authorization,
------
execution and delivery of, and the consummation of the transactions contemplated
by, Amendment No. 1 to Warrant Agreement ("Amendment No. 1"), dated as of
---------------
October 27, 1992, among the Issuer, Chase Manhattan Investment Holdings, Inc.,
Whirlpool Financial Corporation, The Long-Term Credit Bank of Japan, Ltd.,
Chicago Branch, The Provident Bank, and Arab Banking Corporation (B.S.C.)
(collectively, the "Holders"), and, for certain purposes, Associated Stationers,
-------
Inc. (the "Operating Company"). We also have acted as counsel to the Operating
-----------------
Company in connection with preparation, authorization, execution and delivery of
Amendment No. 1. This opinion is being furnished to you pursuant to paragraph
(f) of Section 7 of Amendment No. 1. As used herein, the "Warrant Agreement"
-----------------
shall mean (i) the Warrant Agreement dated as of January 31, 1992 among the
Issuer, the Holders, and the Operating Company, as amended by Amendment No. 1,
and (ii) Amendment No. 1. Terms defined in the Warrant Agreement and not
otherwise defined herein are used herein with the meanings as so defined.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Warrant Agreement and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
the Issuer and the Operating Company, and have made such inquiries of such
officers and representatives as we have deemed relevant and necessary as a basis
for the opinions hereinafter set forth.
Amendment No. 1
---------------
<PAGE>
2
In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of the Issuer and the Operating Company and upon
the representations and warranties of the Issuer contained in the Warrant
Agreement.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. The Issuer has all requisite corporate power and authority to execute
and deliver the Warrant Agreement, and to perform its obligations thereunder.
The execution, delivery and performance of the Warrant Agreement by the Issuer
and the consummation by the Issuer of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of the
Issuer. The Warrant Agreement has been duly executed and delivered by the
Issuer.
2. The Operating Company has all requisite corporate power and authority
to execute and deliver the Warrant Agreement and to perform its obligations
thereunder. The execution, delivery and performance of the Warrant Agreement by
the Operating Company and the consummation by the Operating Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Operating Company. The Warrant Agreement has
been duly executed and delivered by the Operating Company.
3. The Additional Tranche B Warrants have been duly executed, issued, and
delivered by the Issuer. The Class A Common Stock and Class B Common Stock
issuable upon exercise of the Additional Tranche B Warrants have been duly and
validly authorized and reserved for issuance and, upon issuance and payment
therefore in accordance with the provisions of the Additional Tranche B
Warrants, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any Liens, and the Class A Common Stock when issued on
conversion of Class B Common Stock shall be duly and validly issued, fully paid
and nonassessable and free and clear of any Liens. None of the Warrant Stock
issued pursuant to the terms of the Additional Tranche B Warrants will be in
violation of any preemptive rights of any Stockholder.
4. On the date hereof the authorized capital stock of the Issuer consists
of an aggregate of 10,245,000 shares consisting of (i) 5,000,000 shares of Class
A Common Stock, par value $0.01 per share, and 5,000,000 shares of Class B
Common Stock, par value $0.01 per share and (ii) 15,000 shares of
Amendment No. 1
---------------
<PAGE>
3
Class A Preferred Stock, 15,000 shares of Class B Preferred Stock and 15,000
shares of Class C Preferred Stock. Schedule VII to the Second Amended Credit
Agreement correctly sets forth a list derived from the Issuer's stock records of
the capital stock and equity securities of the Issuer owned of record and the
names of the owners of record, in each case as of the date hereof. All of the
issued and outstanding shares of Class A Common Stock on the date hereof are
duly and validly issued, fully paid and nonassessable, other than with respect
to 46,258 shares of Class A Common Stock (23,129 of which have been issued to
Cumberland Capital Corporation and 23,129 of which have been issued to Good
Capital Co., Inc.) which on the date hereof are partly-paid shares which are
assessable under the General Corporation Law of the State of Delaware. To our
knowledge, on the date hereof, (x) except for (1) the Warrants (including the
Additional Tranche B Warrants) and rights under the Warrant Documents, (2) the
Warrants issued to Boise pursuant to the Warrant Agreement among the Operating
Company, the Issuer and Boise, (3) options for 21,684 shares of Class A Common
Stock issued to the Management Shareholders, (4) options for 86,735 shares of
Common Stock which may be issued pursuant to the Issuer's 1992 Management Stock
Option Plan, and (5) the rights under the Registration Rights Agreement, there
are no outstanding Equity Rights with respect to the Issuer and (y) except for
the Warrants and redemption and exchange rights in respect of the Class A
Preferred Stock, Class B Preferred Stock and Class C Preferred Stock, there are
no outstanding obligations of the Operating Company or the Issuer or any of
their Subsidiaries to repurchase, redeem, or otherwise acquire any shares of
capital stock of the Issuer nor are there any outstanding obligations of the
Issuer or any of its Subsidiaries (including, without limitation, the Operating
Company) to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Issuer or any of its Subsidiaries (including, without
limitation, the Operating Company).
5. The execution and delivery of the Warrant Agreement, the consummation
of the transactions contemplated thereby and compliance by each of the Issuer
and the Operating Company with any of the provisions thereof applicable to such
entity will not conflict with, constitute a default under or violate (i) any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws of either the Issuer or the Operating Company, (ii) any of the terms,
conditions or provisions of any document, agreement or other instrument to which
the Issuer or the Operating Company is a party or by which either of them is
bound of which we are aware, (iii) any Delaware corporate or Federal law or
regulation (other than Federal and state securities or blue sky laws, as to
which we express no opinion), or (iv) any judgment, writ, injunction, decree,
order or ruling of any court or governmental authority binding on the Issuer or
the Operating Company of which we are aware.
Amendment No. 1
---------------
<PAGE>
4
6. To our knowledge, Schedule 2 to Amendment No. 1 contains a true and
complete list of all parties that have or may have preemptive rights with
respect to the issuance of the Additional Tranche B Warrants and the Additional
Tranche B Warrant Stock.
7. No anti-dilution adjustments with respect to any securities issued by
the Issuers are required as a result of the issuance of the Additional Tranche
B Warrants or the Additional Tranche B Warrant Stock, except as may be provided
in the Warrant Agreement, the Boise Warrants, the Transition Services Agreement
or the Issuer's 1992 Stock Option Plan (including stock options thereunder).
8. Based, as to factual matters, on the representations, warranties and
agreements contained in the Warrant Agreement and in the Additional Tranche B
Warrants, it is not necessary in connection with the issue and sale of the
Additional Tranche B Warrants under the Warrant Agreement to register or qualify
such Additional Tranche B Warrants or the Warrant Stock issuable thereunder
under the Securities Act.
The opinions herein are limited to the General Corporate Laws of the State
of Delaware and the Federal laws of the United States of America, and we express
no opinion on the effect on the matters covered by this opinion of the laws of
any other jurisdiction.
This opinion is rendered solely for your benefit in connection with the
transactions described above. This opinion may not be used or relied upon by any
other person and may not be disclosed, quoted, filed with a governmental agency
or otherwise referred to without our prior written consent.
Very truly yours,
Amendment No. 1
---------------
<PAGE>
ANNEX C-2
[LETTERHEAD OF HOLDER'S COUNSEL APPEARS HERE]
October 27, 1992
Chase Manhattan Investment Holdings, Inc.
Whirlpool Financial Corporation
The Long-Term Credit Bank of Japan, Ltd.,
Chicago Branch
The Provident Bank
Arab Banking Corporation (B.S.C.)
c/o The Chase Manhattan Bank (National Association)
1 Chase Manhattan Plaza
New York, NY 10005
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by Amendment No. 1 to Warrant Agreement
("Amendment No. 1"), dated as of October 27, 1992, among Associated Holdings,
---------------
Inc. (the "Issuer"), Chase Manhattan Investment Holdings, Inc., Whirlpool
------
Financial Corporation, The Long-Term Credit Bank of Japan, Ltd., Chicago
Branch, The Provident Bank, and Arab Banking Corporation (B.S.C.)
(collectively, the "Holders"), and Associated Stationers, Inc. (the "Operating
---------
Company"). This opinion is being furnished to you pursuant to paragraph (g) of
- -------
section 7 of Amendment No. 1. As used herein, the "Warrant Agreement" shall
-----------------
mean (i) the Warrant Agreement dated as of January 31, 1992 among the Issuer,
the Holders, and the Operating Company, as amended by Amendment No. 1, and (ii)
Amendment No. 1. Terms defined in the Warrant Agreement and not otherwise
defined herein are used herein with the meanings as so defined.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Warrant Agreement and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
the Issuer and the Operating Company, and have made such inquiries of such
officers and representatives as we have deemed relevant and necessary as a basis
for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us
Amendment No. 1
---------------
<PAGE>
2
as originals, the conformity to original documents of documents submitted to us
as certified or photostatic copies and the authenticity of the originals of such
latter documents. As to all questions of fact material to this opinion that
have not been independently established, we have relied upon certificates or
comparable documents of officers and representatives of the Issuer and the
Operating Company and upon the representations and warranties of the Issuer
contained in Amendment No. 1.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except, to the extent set forth in the
opinions expressed below, as to the Issuer and the Operating Company)
constitute legal, valid, binding and enforceable obligations of, all of the
parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other) to
execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Warrant Agreement and the Additional Tranche B Warrants
constitute the legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with the terms thereof,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to the application
of general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity), including without limitation
(a) the possible unavailability of specific performance, injunctive relief
or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
2. The Warrant Agreement (for purposes of Section 6 thereof)
constitutes the legal, valid and binding obligation of the Operating
Company, enforceable against it in accordance with the terms thereof,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
Amendment No. 1
--------------
<PAGE>
3
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to the application
of general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity), including without limitation
(a) the possible unavailability of specific performance, injunctive relief
or any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(a) The foregoing opinions are limited to matters involving the laws
of the State of New York and we express no opinion as to the laws of any other
jurisdiction.
(b) The enforceability of provisions in the Warrant Agreement and the
Additional Tranche B Warrants to the effect that terms may not be waived or
modified except in writing may be limited under certain circumstances.
This opinion is provided to you by us pursuant to Section 7(g) of
Amendment No. 1 and may not be used or relied upon by any other person and may
not be disclosed, quoted, filed with a governmental agency or otherwise referred
to without our prior written consent.
Very truly yours,
MLW/CDP
Amendment No. 1
---------------
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
NO. OF
HOLDERS CLASS STOCK UNITS
- ------- ----- -----------
<S> <C> <C>
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC. Class B Common Stock 8,395.38
WHIRLPOOL FINANCIAL CORPORATION Class B Common Stock 16,790.74
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD, CHICAGO BRANCH Class B Common Stock 6,296.52
THE PROVIDENT BANK Class B Common Stock 4,197.68
ARAB BANKING CORPORATION
(B.S.C.) Class B Common Stock 4,197.68
</TABLE>
Amendment No. 1
---------------
<PAGE>
SCHEDULE 2
HOLDERS OF PREEMPTIVE RIGHTS
1. Wingate Partners, L.P.
2. Cumberland Capital Corporation
3. ASI Partners, L.P.
4. Good Capital Co., Inc.
Amendment No. 1
---------------
<PAGE>
EXHIBIT 10.16
AMENDMENT NO. 2 TO WARRANT AGREEMENT dated as of March 30, 1995 among
Associated Holdings, Inc., a Delaware corporation (the "Issuer"), Chase
------
Manhattan Investment Holdings, Inc., Whirlpool Financial Corporation, The
Long-Term Credit Bank of Japan, Ltd., Chicago Branch, The Provident Bank and
Arab Banking Corporation (B.S.C.) (collectively, the "Holders"), and Associated
-------
Stationers, Inc., a Delaware corporation (the "Operating Company").
-----------------
WHEREAS, the Issuer has made a tender offer for the shares of, and has
agreed following consummation of the tender offer to merge into, United
Stationers Inc. (the "Merger"), and the Operating Company has agreed to merge
------
into a wholly-owned subsidiary of United Stationers Inc.;
WHEREAS, in connection therewith the Loans (as defined in the Warrant
Agreement referred to below) will be refinanced by loans under other credit
agreements;
WHEREAS, in connection with the foregoing, the Issuer and the
Operating Company have requested, and the Holders are willing, to amend the
Warrant Agreement dated as of January 31, 1992 among the Issuer, the Holders,
and the Operating Company (as heretofore amended, the "Warrant Agreement");
-----------------
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions. Terms used but not defined herein shall have
-----------
the respective meanings assigned to such terms in the Warrant Agreement as
amended herby.
Section 2. Amendments. The Warrant Agreement shall be amended as
----------
follows:
2.00. The preamble to the Warrant Agreement shall be amended by
deleting therefrom the parenthetical language beginning in the fourth line
thereof.
2.01. The definitions in Section 1 of the Warrant Agreement shall be
amended as follows:
(a) The definitions of "Annual Management Fees", "Monitoring Costs",
"Monthly Management Fees" and "Sponsor Management Fees" shall be deleted.
(b) The following definitions shall be added in their appropriate
places:
<PAGE>
2
"Change of Control" shall have the meaning set forth in the Credit
-----------------
Agreement.
"Class A Common Stock" shall have the meaning assigned to such term in
--------------------
Section 3.07 and shall include the Common Stock, $.10 par value, of United.
"Class B Common Stock" shall have the meaning assigned to such term in
--------------------
Section 3.07 and shall include the Nonvoting Common Stock, $.01 par value, of
United.
"Credit Agreement" shall mean the Credit Agreement dated as of
----------------
March 30, 1995 among the Operating Company, the Issuer, the lenders signatory
thereto and The Chase Manhattan Bank (National Association) as Agent, together
with any amendments, modifications or supplements thereto or replacements or
refinancings thereof except as otherwise indicated.
"Senior Subordinated Credit Agreement" shall have the meaning set
------------------------------------
forth in the Credit Agreement.
"Senior Subordinated Lenders" shall have the meaning set forth in the
---------------------------
Credit Agreement.
"United" shall mean United Stationers Inc.
------
(c) The following definitions shall be amended as follows:
The phrase "but shall not include Options" shall be added at the end
of the definitions of "Convertible Securities".
The phrase "and following the merger shall include United Stationers
Supply Co." shall be added at the end of the definition of "Operating Company".
The phrase "including the Common Stock, $.10 par value, and the
Nonvoting Common Stock, $.01 par value, of United" shall be added at the end of
the first sentence of the definition of "Common Stock".
The phrase "and following the Merger shall include United" shall be
added at the end of the definition of "Issuer".
The phrase "after March 29, 1995" shall be added after the words
"Common Stock" on the second line of the definition of "Qualified Public
Offering".
<PAGE>
3
The phrase "under the definition of 'Subsidiary'" is deleted from the
fifth and sixth lines of the definition of "Subsidiary".
2.02. Section 7.02(b) of the Warrant Agreement is amended to read in
its entirety as follows:
"(b) If Issuer is prohibited from purchasing all Warrants and Warrant
Stock put to it pursuant to a Put Notice because (i) a default is then existing
under the provisions of the Credit Agreement or the Senior Subordinated Credit
Agreement, or (ii) such purchase would result in any default under the Credit
Agreement or the Senior Subordinated Credit Agreement (the defaults described
in clauses (i) and (ii) being herein referred to as "Defaults"), or (iii)
--------
neither the Operating Company nor Issuer has sufficient funds legally available
therefor under Delaware corporate law, then Issuer shall give notice (a "Put
---
Response Notice") to each Holder which has delivered such Put Notice of (x) the
- ---------------
reason that it is unable to purchase all Warrants and Warrant Stock put to it
pursuant to a Put Notice, including (1) if due to a deficiency, the computation
thereof, and/or (2) if due to a Default, the nature of the covenants which have
been or would be breached and if such provisions are financial covenants, a
computation of the amounts or ratios setting forth the deficiencies with respect
to such covenants, and (y) the aggregate amount of such Warrants and Warrant
Stock, if any, which it will be able to purchase, which Put Response Notice
shall be delivered within five days of the determination of Fair Market Value
and shall be given together with the notice of the Put Closing Date, if any,
given by Issuer pursuant to the first sentence of Section 7.02(a). Each such
---------------
Holder shall have the right to withdraw its Put Notice by delivering a notice (a
"Put Withdrawal Notice") to Issuer at any time prior to the Put Closing Date or
---------------------
if none is set in the Put Response Notice, prior to the last day on which a Put
Closing could occur pursuant to the first sentence of Section 7.02(a). If any
---------------
such Holders have not timely delivered Put Withdrawal Notices, unless prohibited
by a Default which has not been waived, Issuer thereupon shall purchase from
such Holders the aggregate amount of Warrants and Warrant Stock, if any, it may
purchase on such date with funds legally available under Delaware corporate law
for such purpose. Such purchase shall be allocated among the Holders which have
not timely delivered Put Withdrawal Notices pro rata, based on the ratio of the
--- ----
number of shares of Warrant Stock put to Issuer (including Warrant Stock
issuable upon the exercise of Warrants put to Issuer) by each such Holder to the
number of shares of Warrant Stock
<PAGE>
4
put to Issuer (including Warrant Stock issuable upon the exercise of
Warrants put to Issuer) by all such Holders.
If Issuer is prohibited from purchasing any Warrants and/or Warrant
Stock upon the exercise by a Holder of a Put Right for any of the reasons
described in the first sentence of this Section 7.02(b), then Issuer shall
---------------
use its best efforts to increase its legally available funds under Delaware
law to an amount sufficient to enable it to purchase legally all Warrants
and Warrant Stock put to it pursuant to a Put Notice and to obtain relief
from the Defaults in order to enable it to make the required payments,
including through effecting a Financing, obtaining the requisite consent
under the Credit Agreement or the Senior Subordinated Credit Agreement or
otherwise, in each case, as soon as possible."
2.03. Section 7.02(e) of the Warrant Agreement is amended to read
in its entirety as follows:
"(e) Each Holder agrees, for the benefit of the Lenders and the Senior
Subordinated Lenders, that any Accruing Liability shall be subordinated in
right of payment to the prior payment in full of all the Loans and the
Subordinated Loans (as defined in the Credit Agreement) and that no payment
shall be made in respect of the principal of or interest on the Accruing
Liability until the earliest to occur of: (i) the date on which the Loans
and the Subordinated Loans have been fully paid; (ii) the date on which the
requisite consent of the Lenders and the Senior Subordinated Lenders and/or
the respective Agents under the Credit Agreement and the Senior
Subordinated Credit Agreement to such payment has been given; and (iii) the
first date on which such payment is permitted under this Agreement."
2.04. Paragraph (a) of Section 8.02 of the Warrant Agreement is
amended to read in its entirety as follows:
"8.02 Look Back Events.
----------------
(a) If, within the 12-month period (a "Look-Back Period") following
----------------
each date on which the Holders (each, a "Look-Back Holder") shall have sold
----------------
Warrants or Warrant Stock to Issuer pursuant to Section 8.01 (the "Prior
------------ -----
Sale"), Issuer, the Subsidiaries, or Wingate, Cumberland or Good or their
----
Subsidiaries, Affiliates (but excluding any limited partners of Wingate as
such) or associates (as defined in the Exchange Act) shall have entered
into any contract, arrangement or understanding relating to a Look Back
Event,
<PAGE>
5
then upon occurrence of such Look Back Event Issuer shall forthwith pay to
each Look Back Holder, by wire transfer in immediately available funds:"
2.05. Clause (i) of paragraph (a) of Section 8.02 of the Warrant
Agreement is amended by adding the words "by such Look Back Holder" after the
word "Sale" in the fifth line thereof.
2.06. Clause (iii) of paragraph (b) of Section 8.02 of the
Warrant Agreement is amended by adding the words "without duplication" after the
"sum" in the fourth line thereof.
2.07. Clause (iv) of paragraph (b) of Section 8.02 of the Warrant
Agreement is amended by adding the words "but not the expiration or termination
of options or warrants in accordance with their respective terms" at the end of
subclause (A) and by adding the words "other than as a result of the exercise of
registration rights" at the end of subclause (B) thereof.
2.08. Sections 9.01(a) and 9.01(d) of the Warrant Agreement are
amended to read in their entirety as follows:
"(a) Notwithstanding anything herein to the contrary, but subject
to the provisions of Section 9.01(b), if Wingate, Cumberland, Boise
---------------
Cascade, Good Capital or any of their subsidiaries, Affiliates (but
excluding any limited partners of Wingate as such) or associates (as
defined under the Exchange Act) (other than pursuant to an underwritten
public offering or in an ordinary brokerage transaction under Rule 144)
proposes, in a single transaction or a series of related transactions, to
sell, dispose of or otherwise transfer, directly or indirectly, any shares
of Common Stock then outstanding in any manner, other than (i) the Employee
Shares, (ii) pursuant to a registration statement filed pursuant to the
Securities Act in which the Holders may participate pursuant to the terms
of the Registration Rights Agreement, or (iii) in an ordinary brokerage
transaction pursuant to Rule 144 (each, a "Tag-Along Sale"), then Issuer
--------------
shall cause such Stockholder (the "Selling Stockholder") to refrain from
-------------------
effecting such transaction unless, prior to the consummation thereof, the
Holders shall have been afforded the opportunity to join in such transfer
as provided in Section 9.02 (it being understood that such Holders shall
------------
pay their own expenses in connection therewith)."
"(d) As a condition to the validity of any sale, disposition or
other transfer of any Common Stock by any of the Persons who have executed
and delivered Joinder
<PAGE>
6
Agreements pursuant to Section 9.01(c) or this Section 9.01(d) to any
--------------- ---------------
subsidiary, Affiliate or associate other than pursuant to an underwritten
public offering or in an ordinary brokerage transaction under Rule 144, the
transferee thereof shall execute and deliver to Issuer and each Holder a
Joinder Agreement."
2.10. Section 12.04 is amended by adding at the end thereof the words
"and the Senior Subordinated Credit Agreement".
2.11. Section 12.05 is amended to read in its entirety as follows:
"12.05 Transactions with Affiliates. Except as expressly permitted by
----------------------------
this Agreement, Issuer shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
assets to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including
guarantees and assumptions of obligations of an Affiliate); provided,
--------
however, that (i) any Affiliate who is an individual may serve as an
-------
officer or employee of Issuer or its Subsidiaries and receive reasonable
compensation for his or her services in such capacity, and (ii) Issuer and
its Subsidiaries may enter into transaction providing for the leasing of
Property, the rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially
as advantageous to Issuer and its Subsidiaries as the monetary or business
consideration which would obtain in a comparable transaction with a Third
Party; or (e) pay to Wingate, Cumberland or any of their respective
Affiliates any management, consultant, financial advisor, director or
similar fees ("Sponsor Management Fees"), except as permitted under the
-----------------------
Credit Agreement as in effect on the date hereof without giving effect to
any modifications or supplements thereto, or termination thereof, after the
date hereof."
2.12. Section 12.06(b) is amended by deleting the word "repurchase" in
the second line thereof.
2.13. Section 12.06(g) is amended by adding the words "except that
Issuer and each Subsidiary may own a percentage of the stock of any Subsidiary
not lower than the percentage owned at the effective time of the Merger" at the
end thereof.
<PAGE>
7
2.14. Section 12.06(i) is amended by adding the words "it being
recognized that the last day of the fiscal year of United following the Merger
need not be changed to December 31 before December 31, 1995".
2.15. Section 12.08 is amended by adding at the end of the first
paragraph the sentence "This Section shall not apply at the time when the Issuer
has securities registered under Section 12(b) or 12(g), or is required to file
reports under Section 15(d), of the Exchange Act."
2.16. Section 12.09 is amended by adding at the end thereof the
sentence "This Section shall not apply at any time when the Issuer has
securities registered under Section 12(b) or 12(g), or is required to file
reports under Section 15(d), of the Exchange Act."
Section 3. Representation and Warranties of Issuer. The Issuer
---------------------------------------
represents and warrants as follows:
(a) No Breach. The execution, delivery and performance of this
---------
Amendment by the Issuer and the Operating Company and the consummation by the
Issuer and the Operating Company of the transactions contemplated hereby will
not (a) violate the certificate of incorporation or by-laws of the Issuer or the
Operating Company, (b) violate any loan or credit agreement to which the Issuer
or the Operating Company is a party or is bound, or result in a breach of or
default under any other instrument or agreement to which the Issuer or the
Operating Company is a party or is bound in a way which could reasonably be
expected to have a material adverse effect on (i) the property, business,
operations, financial condition, prospects, liabilities, or capitalization of
the Issuer and the Subsidiaries taken as a whole, (ii) the ability of either the
Issuer or the Operating Company to perform its obligations under this Amendment,
the Warrant Agreement, the Warrants, or the Registration Rights Agreement, or
(iii) the validity or enforceability of this Amendment, the Warrant Agreement,
the Warrants, or the Registration Rights Agreement, or (iv) the rights and
remedies of the Holders under the Warrant Agreement, the Warrants, or the
Registration Rights Agreement, (c) violate any judgment, order, injunction,
decree, or award against or binding upon the Issuer or the Operating Company,
(d) result in the creation of any material lien upon any of the properties or
assets of the Issuer or the Operating Company, or (e) violate any law, rule or
regulation relating to the Issuer or the Operating Company.
(b) Corporate Action. Each of the Issuer and the Operating Company has
----------------
all necessary corporate power and authority
<PAGE>
8
to execute, deliver, and perform its respective obligations under this
Amendment; the execution, delivery and performance by the Issuer and the
Operating Company of this Amendment have been duly authorized by all necessary
corporate action (including all stockholder action) on the part of the Issuer
and the Operating Company, respectively; and this Amendment has been duly
executed and delivered by the Issuer and the Operating Company and constitutes
the legal, valid, and binding obligations of the Issuer and the Operating
Company, enforceable against the Issuer and the Operating Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
the rights of creditors generally as applicable to the Issuer, or in the case of
the Operating Company, as applicable to it, and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) Capitalization. The representations in Section 8.14 of the Credit
--------------
Agreement are complete and correct.
(d) Prior Representations and Warranties. After giving effect to this
------------------------------------
Amendment, (i) each of the Issuer and the Operating Company is in compliance
with its respective obligations under the Warrant Agreement and the Registration
Rights Agreement and (ii) except for the representations made by the Issuer in
Section 3.07 of the Warrant Agreement, all representations and warranties made
by the Issuer in Section 3 of the Warrant Agreement are true and correct on and
as of the date hereof with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
Section 4. Agreement of Operating Company. The Operating Company hereby
------------------------------
ratifies and confirms all of its obligations under, and remakes as of the date
hereof all guaranties and waivers contained in, Section 7.03 of the Warrant
Agreement.
Section 5. Documents Otherwise Unchanged. Except as herein provided, the
-----------------------------
Warrant Agreement shall remain unchanged and in full force and effect, and each
reference to the "Warrant Agreement" and words of similar import in the Warrant
Agreement, both as amended hereby, shall be a reference to the Warrant
Agreement, as amended hereby, and as the same may be further amended,
supplemented, and otherwise modified and in effect from time to time.
<PAGE>
9
Section 6. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
Section 7. Expenses. Without limiting its obligations under Section
--------
13.04 of the Warrant Agreement, the Issuer agrees to pay, on demand, all
reasonable out-of-pocket costs and expenses of the Holders (including the
reasonable fees and disbursements of Milbank, Tweed, Hadley & McCloy, special
New York counsel to the Investor) incurred in connection with the negotiation,
preparation, execution and delivery of this Amendment.
Section 8. Binding Effect. This Amendment shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 9. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of New York.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
ASSOCIATED HOLDINGS, INC. CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By /s/ Daniel H. Bushell By
------------------------------ ------------------------------
Name: Daniel H. Bushell, Name:
Title: Chief Financial Officer Title:
THE LONG-TERM CREDIT BANK OF WHIRLPOOL FINANCIAL CORPORATION
JAPAN, LTD., CHICAGO BRANCH
By By /s/ David ^??????^
------------------------------ ------------------------------
Name: Name: David ??????
Title: Title: VP & Managing Director
ARAB BANKING CORPORATION (B.S.C.) THE PROVIDENT BANK
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
For purposes of Section 4 only:
---------
ASSOCIATED STATIONERS, INC.
By /s/ Daniel H. Bushell
------------------------------
Name: Daniel H. Bushell,
Title: Chief Financial Officer
<PAGE>
11
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
ASSOCIATED HOLDINGS, INC. CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By By /s/ Elliott H. Jones
------------------------------ ------------------------------
Name: Thomas W. Sturgess Name: Elliott H. Jones
Title: Chairman of the Board Title: Managing Director
THE LONG-TERM CREDIT BANK OF WHIRLPOOL FINANCIAL CORPORATION
JAPAN, LTD., CHICAGO BRANCH
By /s/ Brady S. Sadek By
------------------------------ ------------------------------
Name: Brady S. Sadek Name:
Title: Vice President & Deputy Title:
General Manager
ARAB BANKING CORPORATION (B.S.C.) THE PROVIDENT BANK
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
For purposes of Section 4 only:
---------
ASSOCIATED STATIONERS, INC.
By
------------------------------
Name: Thomas W. Sturgess
Title: Chairman of the Board
<PAGE>
EXHIBIT 10.17
===============================================================================
WARRANT AGREEMENT
Between
ASSOCIATED HOLDINGS, INC.
and
BOISE CASCADE CORPORATION
Dated as of January 31, 1992
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions; Accounting Terms and
Determinations............................................ 1
1.01 Definitions................................................ 1
1.02 Accounting Terms and Determinations........................ 10
SECTION 2. Issuance of Investor Warrants............................. 11
2.01 Authorization.............................................. 11
2.02 The Purchase of Investor Warrants.......................... 11
2.03 Purchase for the Investor's Account........................ 12
2.04 Securities Act Compliance.................................. 12
SECTION 3. Representations and Warranties............................ 12
3.01 Existence; Qualification................................... 12
3.02 No Breach.................................................. 12
3.03 Corporate Action........................................... 13
3.04 Approvals.................................................. 14
3.05 Investment Company Act..................................... 14
3.06 Public Utility Holding Company Act......................... 14
3.07 Capitalization............................................. 14
3.08 Private Offering........................................... 15
3.09 No Litigation.............................................. 16
3.10 Brokers.................................................... 16
SECTION 4. Restrictions on Transferability........................... 16
4.01 Transfers Generally........................................ 16
4.02 Transfers of Restricted Securities Pursuant to
Registration Statements, Rule 144 and Rule 144A............ 17
4.03 Notice of Certain Private Transfers........................ 17
4.04 Restrictive Legends........................................ 17
4.05 Termination of Restrictions................................ 17
SECTION 5. Certain Dispositions of Securities........................ 18
5.01 Certain Dispositions of Securities......................... 18
SECTION 6. Call Rights............................................... 19
6.01 Call Rights................................................ 19
-i-
<PAGE>
Page
----
SECTION 7. Right to Join in Sale..................................... 20
7.01 Tag-Along Rights........................................... 20
7.02 Procedures................................................. 20
7.03 Issuer's Covenants......................................... 21
SECTION 8. Obligation to Join in Sale................................ 22
8.01 Go-Along Obligations....................................... 22
8.02 Procedures................................................. 23
8.03 Issuer's Covenants......................................... 23
8.04 Definition of Go-Along Sale................................ 23
SECTION 9. Holder's Rights........................................... 25
9.01 Delivery Expenses.......................................... 25
9.02 Taxes...................................................... 25
9.03 Replacement of Instruments................................. 25
9.04 Certain Restrictions....................................... 26
9.05 Transactions with Affiliates............................... 26
9.06 Certain Covenants.......................................... 27
9.07 Indemnification............................................ 28
9.08 Preemptive Rights.......................................... 29
9.09 Board Observers............................................ 30
9.10 Financial Statements, Etc. ................................ 31
9.11 Holders' Rights in Case of Other Securities................ 32
SECTION 10. Miscellaneous............................................. 33
10.01 Waiver..................................................... 33
10.02 Notices.................................................... 33
10.03 Expenses, Etc. ............................................ 34
10.04 Amendments, Etc. .......................................... 35
10.05 Successors and Assigns..................................... 35
10.06 Survival................................................... 35
10.07 Specific Performance....................................... 35
10.08 Captions................................................... 36
10.09 Counterparts............................................... 36
10.10 Governing Law.............................................. 36
10.11 Severability............................................... 36
10.12 Adjustment of Common Stock................................. 36
-ii-
<PAGE>
Page
----
SCHEDULE I - CAPITAL STOCK AND WARRANTS
SCHEDULE II - GENERAL PARTNERS OF WINGATE
ANNEX 1 - FORM OF WARRANT
ANNEX 2 - REGISTRATION RIGHTS AGREEMENT
ANNEX 3 - LEGAL OPINION
ANNEX 4 - CERTIFICATE OF INCORPORATION
ANNEX 5 - FORM OF JOINDER AGREEMENT
-iii-
<PAGE>
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 31, 1992, between ASSOCIATED
HOLDINGS, INC., a Delaware corporation ("Issuer"), and Boise Cascade
------
Corporation, a Delaware corporation ("Boise Cascade" or the Investor").
------------- --------
In connection with the organization of the Issuer and in
consideration of the actions taken by the Investor, Issuer has agreed to issue
Warrants (as hereinafter defined) to the Investor providing for the purchase of
shares of Class A Common Stock (as hereinafter defined) of Issuer, in the manner
hereinafter provided. Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions: Accounting Terms and Determinations.
-------------------------------------------------
1.01 Definitions.
-----------
"Affiliate" shall mean, as to any Person (the "Relevant Person"), any
--------- ---------------
other Person that directly or indirectly controls, or is under common control
with, or is controlled by, the Relevant Person and, if such Person is an
individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. As used in this Agreement, "control"
-------
(including, with its correlative meanings, "controlled by" and "under common
------------- ------------
control with") shall mean possession, directly or indirectly, of the power to
- ------------
direct or cause the direction of management or policies of a Person (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise). Notwithstanding the foregoing, (a) no individual shall
be deemed to be an Affiliated of a Relevant Person, solely by reason of his or
her being a director, officer or employee of such Relevant Person or any
Subsidiary, (b) none of the Subsidiaries shall be Affiliates of Issuer or any
other Subsidiary, (c) Issuer shall not be an Affiliate of any Subsidiary, (d)
BCOP and Boise Cascade shall be Affiliates of Issuer and each Subsidiary.
"Annual Management Fees" shall have the meaning assigned to such
----------------------
term in Section 9.05(e).
"Board" shall mean the Board of Directors of Issuer.
-----
Warrant Agreement
-----------------
<PAGE>
-2-
"BCOP" shall mean Boise Cascade Office Products Corporation, a
----
Delaware corporation.
"Business Day" shall mean any day on which commercial banks are not
------------
authorized or required to close in Chicago, Illinois.
"Call Notice" shall have the meaning assigned to such term in
-----------
Section 6.01(a).
- ---------------
"Call Notice Date" shall meant the date on which a Call Notice shall
----------------
be received by the Holders.
"Call Price" shall mean the price payable for a redemption of the
----------
Investors Warrants under Section 6.01.
------------
"Call Right" shall mean the right of Issuer to purchase Warrants
----------
pursuant to, and in accordance with, Section 6.01.
------------
"Change in Control" shall mean the earliest to occur of: (i) the date
-----------------
on which Wingate shall have sold, transferred or otherwise disposed of full
power to vote, dispose of and receive the pecuniary benefit of, at least 53,524
shares of Common Stock other than the Employee Shares; (ii) the date on which
Wingate shall cease to have the power to vote a majority of Issuer's Voting
Capital Stock, and (iii) the date after which any two of James T. Callier, Jr.,
Thomas W. Sturgess and Frederick B. Hegi, Jr. shall have ceased to be, directly
or indirectly, general partners of Wingate Management Company, L.P. or Wingate
Management Company, L.P. shall have ceased to be, directly or indirectly, the
general partners of Wingate Partners, L.P.
"Chase" shall mean Chase Manhattan Investment Holdings, Inc., a
-----
Delaware corporation and its successors and assigns.
"Chase Registration Rights Agreement" shall mean the Registration
-----------------------------------
Rights Agreement dated as of January 31, 1992 between Issuer and Chase.
"Chase Warrants" shall mean the Warrants issued to Chase covering
--------------
150,340 shares of Class B Common Stock pursuant to the Chase Warrant Agreement.
"Chase Warrant Agreement" shall mean the Warrant Agreement dated as
-----------------------
of January 31, 1992 between Issuer and Chase and for certain purposes, the
Operation Company.
Warrant Agreement
-----------------
<PAGE>
-3-
"Class A Common Stock" shall have the meaning assigned to such term
--------------------
in Section 3.07.
------------
"Class B Common Stock" shall have the meaning assigned to such term
--------------------
in Section 3.07.
------------
"Closing Date" shall have the meaning assigned to such term in
------------
Section 1.01 of the Credit Agreement.
"Commission" shall mean the Securities and Exchange Commission or
----------
any other similar or successor agency of the Federal government administering
the Securities Act and/or the Exchange Act.
"Common Stock" shall mean Issuer's authorized Class A Common Stock
------------
and Class B Common Stock as constituted on the date of original issuance of the
Investor Warrants and any stock into which such Common Stock may thereafter be
converted or changed, and also shall include any other stock of Issuer of any
other class, which is not preferred as to dividends or assets over any other
class of any other stock of Issuer. References herein and in the Warrants to the
Common Stock outstanding "on a fully diluted basis" at any time shall mean the
number of shares of Common Stock then issued and outstanding, assuming full
conversion, exercise and exchange of all Convertible Securities and Options that
are (or may become) exchangeable for, or exercisable or convertible into Common
Stock, including the Warrants; provided, that the number of shares of Common
--------
Stock deemed to be outstanding "on a fully diluted basis" shall be reduced by
the number of shares of Common Stock purchasable or issuable upon exercise,
conversion or exchange of Options or convertible Securities at the time of
calculation which are Out of the Money.
"Company Permitted Financing" shall have the meaning assigned to such
---------------------------
term in Section 1.01 of the Credit Agreement.
"Convertible Securities" shall mean evidences of Indebtedness,
----------------------
shares of stock or Other Securities or rights which are exchangeable for or
exercisable or convertible into a specified security of Issuer either
immediately or upon the arrival of a specified date or the occurrence of a
specified event.
"Credit Agreement" shall mean the Credit Agreement dated as of
----------------
January 31, 1992 among Operation Company, Issuer, the Lenders named therein and
The Chase Manhattan Bank (National Association) as agent.
Warrant Agreement
-----------------
<PAGE>
-4-
"Cumberland" shall mean Cumberland Capital Corporation, a Delaware
----------
corporation, and, so long as Cumberland is a general partner, ASI Partners,
L.P., a Delaware limited partnership.
"EBITD" shall have the meaning assigned to such term in Section 1.01
-----
of the Credit Agreement.
"Election Notice" shall have the meaning assigned to such term in
---------------
Section 9.08.
- ------------
"Employee Shares" shall mean 56,935 shares of Class A Common Stock
---------------
owned by Wingate and 21,725 shares of Class A Common Stock owned by Cumberland
on the date hereof which in their discretion any be sold to certain yet to be
identified management executives of the Operating Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Exchange Notes" shall mean the Class A Exchange Notes, the Class B
--------------
Exchange Notes and the Class C Exchange Notes issuable upon redemption of the
Class A Preferred Stock, the Class B Preferred Stock and the Class C Preferred
Stock, respectively, authorized in the issuer's Certificate of Incorporation.
"Executive Stock Purchase Agreements" shall mean the Associated
---------
Holdings, Inc. Executive Stock Purchase Agreements among Issuer, Wingate,
Cumberland and each Key Executive dated as of January 31, 1992.
"Exercise Price" shall have the meaning assigned to such term in the
--------------
form of Warrant attached as Annex 1 hereto.
-------
"Expiration Date" shall mean the date 10 years from the Closing Date.
---------------
"Fair Price" shall have the meaning assigned to such term in
----------
Section 8.04.
- ------------
"GAAP" shall mean generally accepted accounting principles,
----
consistently applied throughout the specified period.
"Go-Along Notice Date" shall mean the date on which the Go-Along
--------------------
Notice is given.
Warrant Agreement
-----------------
<PAGE>
-5-
"Go-Along Sale" shall have the meaning assigned to such term in
-------------
Section 8.04.
- ------------
"Good" shall mean Good Capital Co., Inc., a Delaware corporation.
----
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (whether through ownership of securities or other ownership
interests, by contract or otherwise) by any of the foregoing.
"Holder" shall mean any Person who acquires Investor Warrants or
------
Warrant Stock pursuant to the provisions of this Agreement, including any
transferees of Investor Warrants or Warrant Stock; provided, however, that a
-------- -------
holder of Warrant Stock purchased pursuant to an effective registration
statement or in an ordinary brokerage transaction pursuant to Rule 144 shall not
be deemed a Holder.
"include" and "including" shall be construed as if followed by the
------- ---------
phrase "without being limited to".
"Indebtedness" shall have the meaning assigned to such term in
------------
Section 1.01 of the Credit Agreement.
"Interest Expense" shall have the meaning assigned to such term in
----------------
Section 1.01 of the Credit Agreement.
"Investment" shall have the meaning assigned to such term in Section
---------- -------
1.01 of the Credit Agreement.
- ----
"Investment Banking Firm" shall mean a nationally recognized
-----------------------
investment banking firm.
"Investor" shall mean Boise Cascade Corporation, a Delaware
--------
corporation.
"Investor Registration Rights Agreement" shall mean the Registration
--------------------------------------
Rights Agreement dated as of January 31, 1992 between Issuer and Investor and
other security holders executing said agreement, which shall be in the form
attached as Annex 2 hereto, as said Registration Rights Agreement shall be
-------
modified and supplemented and in effect from time to time.
Warrant Agreement
-----------------
<PAGE>
-6-
"Investor Warrants" shall mean the Warrants being issued hereunder to
-----------------
Investor covering 23,129 shares of Class A Common Stock.
"Issuer" shall have the meaning set forth at the head of this
------
Agreement.
"Joinder Agreement" shall mean a Joinder Agreement between Issuer and
-----------------
a Stockholder, which shall be substantially in the form attached as Annex 5
hereto.
"Key Executives" shall mean Michael D. Rowsey, Robert B. Eberspacher,
--------------
Daniel J. Schleppe and Lawrence E. Miller.
"Key Executive Options" shall mean the options for the purchase of an
---------------------
aggregate of up to 21,684 shares of Class A Common Stock granted to the Key
Executives pursuant to the Issuer's 1992 Management Stock Option Plan.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Management Options" shall mean the Options which may be issued to
------------------
certain managers of the Operating Company pursuant to the Issuer's 1992
Management Stock Option Plan. The total number of shares issuable under said
plan, including the Key Executives Options, other options which may be granted
to Key Executives or options which may be granted to the managers amounts to
86,735 shares of Class A Common Stock.
"Monthly Management Fees" shall have the meaning assigned to such term
-----------------------
in Section 9.05(e).
---------------
"NASDAQ" shall mean the National Association of Securities Dealers
------
automated quotation system.
"New Securities" shall mean any capital stock of Issuer (including any
--------------
Common Stock or Preferred Stock), all Convertible Securities or Options that are
(or may become) exchangeable for, or exercisable or convertible into, such
capital stock, any voting security, and any Participating Security; provided,
--------
however, that New Securities shall not include the Warrants, the Warrant Stock
- -------
and the Other Equity Securities.
Warrant Agreement
-----------------
<PAGE>
-7-
"Observer" shall have the meaning assigned to such term in
--------
Section 9.09.
- ------------
"Offeree" shall have the meaning assigned to such term in
-------
Section 9.08.
- ------------
"Offer Notice" shall have the meaning assigned to such term in
------------
Section 9.08.
- ------------
"Offer Period" shall have the meaning assigned to such term in
------------
Section 9.08.
- ------------
"Operating Company" shall mean Associated Stationers, Inc. a Delaware
-----------------
Corporation.
"Option" shall mean any warrant, option or other right to subscribe
------
for or purchase a specified security of Issuer.
"Other Equity Documents" shall mean the Investor Registration Rights
----------------------
Agreement, Chase Warrant Agreement, Chase Warrants, Chase Registration Rights
Agreement, the Voting Trust Agreement, the Stockholders' Agreement, the Issuers'
1992 Management Stock Option Plan, the Executive Stock Purchase Agreements, the
Class A Common Stock and Class A Preferred Stock Purchase Agreement, the Class B
Preferred Stock Purchase Agreement and the Transition Services Agreement.
"Other Equity Securities" shall mean the Key Executive Options, the
-----------------------
Management Options, the Investor Warrants, the Chase Warrants and the shares of
Common Stock purchased or purchasable by the holders of such Other Equity
Securities upon the exercise thereof.
"Other Securities" shall mean any stock (other than Warrant Stock) and
----------------
other securities of Issuer or any other Person (corporate or otherwise) which
the Holders at any time shall be entitled to receive, or shall have received,
upon the exercise of the Warrants or pursuant to Section 5 thereof, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Warrant Stock or Other
Securities received in an earlier exchange, exercise or replacement of Warrant
Stock.
"Out of the Money" shall mean (a) in the case of an Option, that the
----------------
Fair Market Value of the shares of Common Stock which the holder thereof is
entitled to purchase or subscribe for is less than the Exercise Price of such
Option and (b) in the case of a Convertible Security, that the quotient
resulting from
Warrant Agreement
-----------------
<PAGE>
-8-
dividing the Fair Market Value of such Convertible Security by the number of
shares of Common Stock into or for which such Convertible Security is
exercisable, convertible or exchangeable is greater than the Fair Market Value
of a share of Common Stock.
"Participating Securities" shall mean any security the rights of the
------------------------
holders of which are not limited to a fixed sum or percentage of liquidation
preference or principal amount, a sum determined by reference to a formula based
on a published index of interest rates, an interest rate publicly announced by a
financial institution or a similar index of interest rates in respect of
interest or dividends, and to a fixed sum or percentage of principal amount or
liquidation preference in any distribution of assets.
"Person" shall mean a corporation, an association, a partnership, a
------
joint venture, an organization, a business, an individual or a Governmental
Authority.
"Preferred Stock" shall mean, as to any Person, any capital stock of
---------------
such Person which is preferred as to dividends or assets over any other class of
any other stock of such Person.
"Proposed Purchaser" shall have the meaning assigned to such term in
------------------
Section 7.02.
- ------------
"Proposed Sale" shall have the meaning assigned to such term in
-------------
Section 9.08.
- ------------
"Purchasing Offeree" shall have the meaning assigned to such term in
------------------
Section 9.08.
- ------------
"Qualified Public Offering" shall mean an offering or offerings of
-------------------------
Common Stock under one or more effective registration statements under the
Securities Act such that, after giving effect thereto, (i) at least 20% of the
outstanding Common Stock (on a fully diluted basis) has been sold pursuant to
such offerings, and (ii) such offerings result in aggregate cash proceeds being
received by Issuer of at least $25,000,000 exclusive of underwriter's discounts
and other expenses, as a result of which Common Stock is listed or admitted to
trading on a national securities exchange or quoted by NASDAQ.
"Restricted Certificate" shall mean a certificate for shares of
----------------------
Warrant Stock or Warrants bearing or required to bear the restrictive legend set
forth in Section 4.04.
------------
Warrant Agreement
-----------------
<PAGE>
-9-
"Restricted Securities" shall mean Restricted Stock and Restricted
---------------------
Warrants.
"Restricted Stock" shall mean Warrant Stock evidenced by a Restricted
----------------
Certificate.
"Restricted Warrants" shall mean Warrants evidenced by a Restricted
-------------------
Certificate.
"Rule 144" shall mean Rule 144 promulgated by the Commission under the
--------
Securities Act (or any successor or similar rule then in force).
"Rule 144A" shall mean Rule 144A promulgated by the Commission under
---------
the Securities Act (or any successor or similar rule then in force).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Stockholder" shall have the meaning assigned to such term in
-------------------
Section 7.01.
- ------------
"Sponsor Management Fees" shall have the meaning assigned to such term
-----------------------
in Section 9.05(e).
---------------
"Stockholder" shall mean any Person who directly or indirectly owns
-----------
any shares of Common Stock (including any shares of Warrant Stock).
"Stockholders Agreement" shall mean the Stockholders Agreement dated
----------------------
as of January 31, 1992 among Issuer, Wingate, Cumberland, Good, Boise Cascade
and the other Persons named therein.
"Subsidiary" shall mean any Person in which Issuer, directly or
----------
indirectly through Subsidiaries or otherwise, beneficially owns more than 50% of
either the equity interests in or the Voting Capital Stock of such Person.
"Wholly-Owned Subsidiary" shall have the meaning assigned to such term under the
-----------------------
definition of the "Subsidiary" in Section 1.01 of the Credit Agreement.
"Tag-Along Purchase Offer" shall have the meaning assigned to such
------------------------
term in Section 7.02.
------------
Warrant Agreement
-----------------
<PAGE>
-10-
"Tag-Along Sale" shall have the meaning assigned to such term in
--------------
Section 7.01(a).
- ---------------
"Third Party" shall have the meaning assigned to such term in Section
----------- -------
8.04.
- ----
"Third Party Purchaser" shall have the meaning assigned to such term
---------------------
in Section 8.04.
------------
"Voting Capital Stock" with respect to any corporation shall mean its
--------------------
common stock and Preferred Stock entitled to vote generally for the election of
directors.
"Voting Trust Agreement" shall mean that certain Voting Trust
----------------------
Agreement dated as of January 31, 1992 among Issuer, the Beneficiaries named
therein and Gary G. Miller, Daniel J. Good, Thomas W. Sturgess, Frederick B.
Hegi, Jr. and either of James A. Johnson or James T. Callier, Jr. as Voting
Trustees.
"Warrant Stock" shall mean (i) the shares of Common Stock purchased or
-------------
purchasable by the Holders of the Warrants upon the exercise thereof, including
any Common Stock into which such Common Stock may thereafter be changed or
converted, and (ii) any additional shares of Common Stock issued or distributed
by way of a dividend, stock split or other distribution in respect of the Common
Stock referred to in clause (i) above, or acquired by way of any rights offering
----------
or similar offering made in respect of the Common Stock referred to in clause
------
(i) above. Any Warrant Stock purchased by Issuer shall, upon such purchase,
- ---
cease to be Warrant Stock, cease to be outstanding and Issuer, upon such
purchase, shall not be deemed a Holder. Such Warrant Stock shall be either
"Investor Warrant Stock" or "Chase Warrant Stock," depending upon whether the
Warrant pursuant to which the Warrant Stock was issued was a Chase Warrant or an
Investor Warrant.
"Warrants" shall mean the Investor Warrants and the Chase Warrants.
--------
"Wingate" shall mean Wingate Partners, L.P., a Delaware limited
-------
partnership, and Wingate Management Company, L.P., so long as it is a general
partner of Wingate Partners, L.P., and Wingate Affiliates L.P., so long as
Wingate Partners, L.P. is a general partner thereof.
1.02 Accounting Terms and Determinations. Except as other wise may be
-----------------------------------
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements
Warrant Agreement
-----------------
<PAGE>
-11-
and certificates and reports as to financial matters required to be delivered to
the Holders hereunder and under the Warrants shall be prepared, in accordance
with GAAP. All calculations made for the purposes of determining compliance with
the terms of this Agreement and the Warrants shall (except as otherwise may be
expressly provided herein) be made by application of GAAP.
SECTION 2. Issuance of Investor Warrants.
-----------------------------
2.01 Authorization. Issuer has authorized: (a) the issuance of warrant
-------------
certificates covering the purchase of shares of Common Stock in the form of
Annex 1 to this Agreement (such certificates, together with the rights to
- -------
purchase Common Stock provided thereby and all warrant certificates covering
such stock issued upon transfer, division or combination of, or in substitution
for, any thereof, sometimes called the "Investor Warrants") for issuance to the
--------
Investor pursuant to this Agreement; and (b) the issuance of such number of
shares of Class A Common Stock as shall be necessary to permit Issuer to comply
with its obligations to issue Class A Common Stock pursuant to the Warrants.
2.02 The Purchase of Investor Warrants.
---------------------------------
(a) On the date hereof:
(i) Issuer shall issue to the Investor Investor Warrants covering
23,129 shares of Class A Common Stock, representing 2% of the
outstanding shares of Common Stock on a fully diluted basis;
(ii) The Investor shall pay the Issuer $2 for the Investor
Warrants received by the Investor;
(iii) Issuer shall deliver to Investor a single certificate for
the Investor Warrants to be acquired by the Investor hereunder,
registered in the name of the Investor, except that, if the Investor
shall notify Issuer in writing prior to such issuance that it desires
certificates for Warrants to be issued in other denominations or
registered in the name or names of any Affiliate, nominee or nominees
of the Investor for its or their benefit, then the certificates for
Warrants shall be issued to the Investor in the denominations and
registered in the name or names specified in such notice; and
Warrant Agreement
-----------------
<PAGE>
-12-
(iv) Issuer shall deliver to the Investor a legal opinion from
counsel to Issuer in the form attached as Annex 3 hereto.
-------
(b) On or before the date hereof, Issuer shall have adopted a
certificate of incorporation substantially in the form of Annex 4.
-------
2.03 Purchase for the Investor's Account. The Investor represents and
-----------------------------------
warrants to Issuer as follows:
(a) The Investor is acquiring and shall acquire the Investor Warrants
for its own account, without a view to the distribution thereof, all without
prejudice, however, to the right of the Investor at any time, in accordance with
this Agreement or the Investor Registration Rights Agreement, lawfully to sell
or otherwise to dispose of all or any part of the Investors' Warrants or the
Warrant Stock held by it.
(b) The Investor is an ``accredited investor'' within the meaning of
Regulation D under the Securities Act.
2.04 Securities Act Compliance. The Investor understands that Issuer
-------------------------
has not registered the Investor Warrants or the Warrant Stock under the
Securities Act, and the Investor agrees that neither the Warrants nor the
Warrant Stock shall be sold or transferred or offered for sale or transfer
without registration under the Securities Act or the availability of an
exemption therefrom, all as more fully provided in Section 4.
---------
SECTION 3. Representations and Warranties. Issuer represents and
------------------------------
warrants as follows:
3.01 Existence; Qualification. Each of Issuer and the Operating
------------------------
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Issuer and the Operating
Company is duly qualified, licensed or admitted to do business and is in good
standing as a foreign corporation in every jurisdiction where the failure to be
so qualified would have a material adverse effect on its business, financial
condition, operations or assets of Issuer and the Operating Company taken as a
whole and has all requisite corporate power and authority to transact its
business in all such jurisdictions.
3.02 No Breach. The execution, delivery and performance of this
---------
Agreement, the Warrants and the Registration Rights Agreement by Issuer and the
consummation by it of the
Warrant Agreement
-----------------
<PAGE>
-13-
transactions contemplated hereby and thereby, will not (a) violate the
certificate of incorporation or by-laws of Issuer or the Operating Company, (b)
violate any loan or credit agreement to which Issuer or the Operating Company is
a party or is bound, or result in a breach of or default under any other
instrument or agreement to which Issuer or the Operating Company is a party or
is bound in a way which could reasonably be expected to have a material adverse
effect on (i) the property, business, operations, financial condition,
prospects, liabilities or capitalization of issuer and the Subsidiaries taken
as a whole, (ii) the ability of either Issuer or the Operating Company to
perform its obligations under any of this Agreement, the Warrant and the
Registration Rights Agreement to which it is a party, (iii) the validity or
enforceability of this Agreement, the Investor Warrants and the Registration
Rights Agreement, or (iv) the rights and remedies of the Holders under any of
this Agreement, the Warrant, and the Investor Registration Rights Agreement, (c)
violate any judgement, order, injunction, decree or award against or binding
upon Issuer or the Operating Company, (d) result in the creation of any material
Lien upon any of the properties or assets of Issuer or the Operating Company, or
(e) violate any law, rule or regulation relating to Issuer or the Operating
Company.
3.03 Corporate Action. The Issuer has all necessary corporate power
----------------
and authority to execute, deliver and perform its obligations under this
Agreement, the Investor Warrants and the Investor Registration Rights Agreement;
the execution, delivery and performance by Issuer of this Agreement, the
Investor Warrants and the Investor Registration Rights Agreement have been duly
authorized by all necessary corporate action (including all stockholder action)
on the part of Issuer; this Agreement, the Investor Warrants and the Investor
Registration Rights Agreement have been duly executed and delivered by Issuer
and constitute, the legal, valid and binding obligations of Issuer, enforceable
against Issuer in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights of creditors
generally as applicable to Issuer and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); the Warrants when executed, issued and delivered pursuant to
this Agreement will constitute the legal, valid and binding obligations of
Issuer, enforceable against Issuer in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights of creditors
generally as applicable to Issuer and by general equitable principles
Warrant Agreement
-----------------
<PAGE>
-14-
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); the shares of Class A Common Stock constituting the Warrant
Stock initially covered by the Investor Warrants have been duly and validly
authorized and reserved for issuance and shall, when paid for, issued and
delivered in accordance with the Investor Warrants, will be, be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens; and none
of the Warrant Stock issued pursuant to the terms hereof will be in violation of
any preemptive rights of any Stockholder.
3.04 Approvals. Except in connection with the registration of the
---------
Warrant Stock pursuant to the Investor Registration Rights Agreement and for the
filing of Form D with the Commission in connection with the issuance of the
Investor Warrants pursuant to this Agreement (which Issuer will duly file), no
authorizations, approvals or consents of, and no filings or registrations with,
any Governmental Authority or any other Person are necessary for the execution,
delivery or performance by Issuer of this Agreement, the Investor Warrants or
the Investor Registration Rights Agreement or the validity or enforceability
thereof. Any such action required to be taken as a condition to the execution
and delivery of this Agreement and the Investor Registration Rights Agreement,
or the execution, issuance and delivery of the Investor Warrants, has been duly
taken by all such Governmental Authorities or other Persons, as the case may be.
3.05 Investment Company Act. Issuer is not an "investment company", or
----------------------
a company "controlled by" an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
3.06 Public Utility Holding Company Act. Issuer is not 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.
3.07 Capitalization.
--------------
(a) On the date hereof, the total number of shares of capital stock
which Issuer has authority to issue is 10,245,000 shares, consisting of (i)
15,000 shares of Class A Preferred Stock, par value $.01 per share; (ii) 15,000
shares of Class B Preferred Stock, par value $.01 per share; (iii) 15,000 shares
of Class C Preferred Stock, par value $.01 per share; (iv) 200,000 shares of
other Preferred Stock, par value of $.01 per share, as
Warrant Agreement
-----------------
<PAGE>
-15-
to which the Board shall have the authority set forth in Article Five of the
Certificate of Incorporation of Issuer; and (v) 10,000,000 shares of Common
Stock, of which 5,000,000 shares shall be Class A Common Stock, par value $.01
per share ("Class A Common Stock"), and 5,000,000 shares shall be Class B Common
--------------------
Stock, par value $.01 per share ("Class B Common Stock"). Schedule I hereto
-------------------- ----------
correctly sets forth the capital stock and Warrants owned of record and the
names of the owners of record on the date hereof. Upon the issuance of the
Warrants under this Agreement, Issuer shall not (except for the Warrants) have
outstanding any Convertible Securities or Options exercisable or convertible
into or exchangeable for any shares of capital stock or Participating
Securities of Issuer, nor shall it have outstanding any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, any capital stock or Participating Securities of
Issuer or Convertible Securities exercisable or convertible into or exchangeable
for any capital stock or Participating Securities of Issuer of obligations or
the type specified in Section 9.06(d)(iii) other than (A) the Investor Warrants
------------
to be issued pursuant to this Agreement, (B) the Chase Warrants, (C) the Key
Employee Options, (D) the Management Options, and (E) other securities which may
be issued pursuant to this Agreement or the Equity Documents.
(b) Except for the Other Equity Documents, there is not in effect on the
date hereof any agreement by Issuer pursuant to which any holders of securities
of Issuer have a right to cause Issuer to register such securities under the
Securities Act.
(c) On the date hereof, none of the Subsidiaries has any equity security,
Participating Security or obligation of the type referred to in Section
-------
9.06(d)(iii) outstanding other than capital stock owned by Issuer.
- ------------
(d) As of the date hereof, all certificates representing issued and
outstanding shares of Common Stock bear the legend set forth the in Section 7.03
------------
on the reverse side of such certificates.
3.08 Private Offering.
----------------
(a) Assuming the truth and accuracy of the Investor's representations and
warranties contained in Section 2.03, the issuance and sale of the Investor
------------
Warrants to the Investor hereunder are exempt from the registration and
prospectus delivery requirements of the Securities Act.
Warrant Agreement
-----------------
<PAGE>
-16-
(b) All stock and securities of Issuer heretofore issued and sold by
Issuer were and all securities of Issuer issued and sold by Issuer on the date
hereof are being issued and sold in accordance with, or were exempt from, the
registration and prospectus delivery requirements of the Securities Act.
(c) Issuer agrees that neither Issuer nor any Person acting on its
behalf has offered or will offer any Warrants or shares of Warrant Stock or any
part thereof or any similar securities for issue or sale to, or has solicited or
will solicit any offer to acquire any of the same from, any Person so as
to bring the issuance and sale of the Warrants or shares of Warrant Stock within
the provisions of the registration and prospectus delivery requirements of the
Securities Act.
3.09 No Litigation.
-------------
(a) There is no action, suit, proceeding or investigation pending or,
to the best of Issuer's knowledge after due inquiry, threatened against Issuer
before any Governmental Authority seeking to enjoin the transactions
contemplated by this Agreement, the Investor Warrants or the Investor
Registration Rights Agreement.
(b) There are no legal or arbitral proceedings or any proceedings by
or before any Governmental Authority, now pending or (to the knowledge of
Issuer) threatened against Issuer or any of the Subsidiaries which, if adversely
determined, could have a material adverse effect on Issuer's business, financial
condition, operations or assets.
3.10 Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby have been carried out by Issuer directly with
Investor without the intervention of any Person on behalf of Issuer in such
manner as to give rise to any valid claim by any Person against Investor or any
Holder for a finder's fee, brokerage commission or similar payment.
3.11 Joinder Agreement. Upon execution of this Agreement, Issuer shall
-----------------
cause each Stockholder to execute and deliver the Joinder Agreement.
SECTION 4. Restrictions on Transferability.
-------------------------------
4.01 Transfers Generally. Except as otherwise provided in Section 5,
------------------- ---------
the Restricted Securities shall be transferable only upon the conditions
specified in this Section 4
---------
Warrant Agreement
-----------------
<PAGE>
-17-
and in the Investors Registration Rights Agreement, which conditions are
intended to insure compliance with the provisions of the Securities Act and
applicable state securities laws in respect of the transfer of any Restricted
Securities.
4.02 Transfers of Restricted Securities Pursuant to Registration
Statements, Rule 144 and Rule 144A. The Restricted Securities may be offered or
sold by the Holder thereof pursuant to (a) an effective registration statement
under the Securities Act, or (b) to the extent applicable, Rule 144 or Rule
144A.
4.03 Notice of Certain Private Transfers. If any Holder of any
Restricted Security desires to transfer such Restricted Security other than
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 or Rule 144A, then such Holder shall deliver, at such
Holder's expense, to Issuer a notice with respect to the proposed transfer,
together with an opinion of counsel reasonably satisfactory to Issuer, to the
effect that an exemption from registration under the Securities Act is
available.
4.04 Restrictive Legends. Until otherwise permitted by Section 4.05,
each certificate for Warrants issued under this Agreement, each certificate for
any Warrants issued to any subsequent transferee of any such certificate, each
certificate for any Warrant Stock issued upon exercise of any Investor Warrant
and each certificate for any Warrant Stock issued to any subsequent transferee
of any such certificate, shall be stamped or otherwise imprinted with a legend
in substantially the following form:
``THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT
DATED AS OF JANUARY 31, 1992 (THE ``WARRANT AGREEMENT''), BETWEEN
ASSOCIATED HOLDINGS, INC., A DELAWARE CORPORATION (``ISSUER''), AND BOISE
CASCADE CORPORATION, AS THE WARRANT AGREEMENT MAY BE MODIFIED AND
SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE WARRANT AGREEMENT
IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF
ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY THE PROVISIONS OF THE WARRANT AGREEMENT.''
4.05 Termination of Restrictions. All the restrictions imposed by
this Section 4 upon the transferability of the
Warrant Agreement
<PAGE>
- 18 -
Restricted Securities shall cease and terminate as to any particular Restricted
Security when such Restricted Security shall have been effectively registered
under the Securities Act and applicable state securities laws and sold by the
Holder thereof in accordance with such registration or sold under and pursuant
to Rule 144 or is eligible to be sold under and pursuant to paragraph (k) of
Rule 144. Whenever the restrictions imposed by this Section 4 shall terminate
---------
as to any Restricted Security as hereinabove provided, the Holder thereof shall
be entitled to receive from Issuer, without expense, a new certificate
evidencing such Restricted Security not bearing the restrictive legend otherwise
required to be borne by a certificate evidencing such Restricted Security.
SECTION 5. Certain Dispositions of Securities.
----------------------------------
5.01 Certain Dispositions of Securities.
----------------------------------
Notwithstanding anything in this Agreement or the Warrants to the
contrary, but subject to compliance with the Securities Act, applicable state
securities laws, the requirement as to placement of a legend on certificates for
Restricted Securities specified in Section 4.04, and the delivery of an opinion
------------
of counsel satisfactory to Issuer, any Holder shall have the right to transfer
any or all of its Restricted Securities:
(i) to any Person who at the time owns (directly or indirectly) at least
a majority of the Voting Capital Stock of such Holder;
(ii) to any Person at least a majority of whose Voting Capital Stock shall
at the time be owned (directly or indirectly) by such Holder or by any Person
who owns (directly or indirectly) at least a majority of the Voting Capital
Stock of such Holder;
(iii) to another Holder; or
(iv) To any Person subject to Investor's prior consent, which it shall not
unreasonably withhold, and subject to a right of first refusal by Issuer and
other Stockholders, following the same procedures as would apply to a
transfer of Class A Common Stock under the Stockholders Agreement.
The party to which Restricted Securities are transferred pursuant to the
immediately preceding sentence shall be deemed to be a Holder of such Restricted
Securities and bound by the provisions of this Agreement applicable to Holders
so long as he, she or it
Warrant Agreement
-----------------
<PAGE>
- 19 -
continues to own any of the Restricted Securities so transferred to such
transferee.
SECTION 6. Call Rights.
-----------
6.01 Call Rights.
-----------
(a) The Issuer shall have the right (a "Call Right") to purchase or
redeem all or part of the Investor Warrants at any time or from time to time
after or concurrently with the purchase or redemption by Issuer of all of the
outstanding shares of Class B Preferred Stock of Issuer, and any Class B
Exchange Notes issued in exchange for shares of such Class B Preferred Stock,
and the payment of all accrued dividends or interest thereon, but prior to the
issuance of stock upon exercise of the Investor Warrants. The exercise of "Call
Right" as all or part of the Investor Warrants shall be at the following price,
and upon the following terms and conditions:
(i) The price (the "Call Price") payable for the purchase and
----------
redemption of the Warrants shall be in an amount which provides the holder
of the Class B Preferred Stock with a yield equal to 15% per annum on the
aggregate amount of its investment in the Class B Preferred Stock, taking
into account any dividends received on the Class B Preferred Stock and any
interest received on any Class B Exchange Notes.
(ii) Issuer may exercise the Call Right by delivering a written
notice to the Holders of the Investor Warrants stating that Issuer has
elected to purchase the Investor Warrants specified in such notice (a
"Call Notice").
-----------
(iii) The purchase and sale of the Warrants pursuant to exercise of a
Call Right shall be consummated on a date selected by Issuer by giving the
Holders at least 10 days' prior written notice thereof, which date in no
event shall be later than the date 20 days after the date the Call Notice
is given .
(iv) Issuer shall pay the Call Price of the Warrants redeemed
hereunder, to the account designated by Investor by wire transfer in
immediately available funds.
(v) In connection with an exercise of a Call Right, if Issuer elects
to purchase less than all of the Investor Warrants then outstanding,
Issuer shall purchase such Warrants from the Holders of a pro rata basis,
--- ----
based on the
Warrant Agreement
-----------------
<PAGE>
- 20 -
ratio of the number of shares of Warrant Stock purchasable upon the
exercise of Warrants owned by each such Holder to the number of shares of
Warrant Stock purchasable upon the exercise of the Investor Warrants
owned by all of the Holders.
SECTION 7. Right to Join in Sale.
---------------------
7.01 Tag-Along Rights.
----------------
(a) Notwithstanding anything herein to the contrary, but subject to
the provisions of Section 7.01(b), if Wingate, Cumberland, Good, or any
---------------
controlling stockholder of Issuer who purchases shares directly from Issuer or
any of their respective Affiliates or transferees (other than pursuant to an
underwritten public offering or in an ordinary broker's transaction under Rule
144), proposes, in a single transaction or a series of related transactions, to
sell, dispose of or otherwise transfer, directly or indirectly, any shares of
Common Stock then outstanding in any manner, other than (i) the Employee Shares,
(ii) pursuant to a registration statement filed pursuant to the Securities Act
in which the Holders may participate pursuant to the terms of the
Registration Rights Agreement, or (iii) in an ordinary brokerage transaction
pursuant to Rule 144 (each, a "Tag-Along Sale"), then Issuer shall cause such
--------------
Stockholder (the "Selling Stockholder") to refrain from effecting such
-------------------
transaction unless, prior to the consummation thereof, the Holder shall have
been afforded the opportunity to join in such transfer as provided in Section
-------
7.02 (it being understood that such Holder shall pay their own expenses in
- ----
connection therewith.
(b) The provisions of Section 7.01(a) shall not apply in connection
---------------
with any sale, disposition or other transfer of (i) up to 25% of the shares of
Common Stock beneficially owned by Cumberland as of the date hereof to Wingate
and its majority-owned subsidiaries, (ii) any shares of Common Stock
beneficially owned (on a fully diluted basis) by Boise Cascade to Wingate and
its majority-owned subsidiaries, (iii) any shares of Common Stock beneficially
owned (on a fully diluted basis) by Good to Wingate and its majority-owned
subsidiaries and (iv) any shares of Common Stock beneficially owned (on a fully
diluted basis) by Wingate to any of the Persons listed on Schedule II; provided,
----------- --------
however, that any further sale, disposition or transfer by such transferee shall
- -------
be subject to the provisions of this Section 7.
---------
7.02. Procedures. Prior to the consummation of any transaction subject to
----------
Section 7.01, the Person or group of
- ------------
Warrant Agreement
-----------------
<PAGE>
-21-
Persons that proposes to acquire shares of Common Stock in a Tag-Along Sale (the
"Proposed Purchaser") shall make a written offer to the Holder (the "Tag-Along
------------------ ---------
Purchase Offer"), which offer shall describe in reasonable detail the Common
- --------------
Stock and Warrants proposed to be purchased, the price to be paid and all other
terms of the Tag-Along Sale. The Holder shall have 15 days after the making of
the Tag-Along Purchase Offer in which to accept the Tag-Along Purchase Offer. If
any Holder accepts the Tag Along Purchase Offer ("Participating Holder"), such
--------------------
Participating Holder shall be entitled to sell in the Tag-Along Sale a number of
shares of Warrant Stock (including Warrant Stock issuable upon the exercise of
Warrants) equal to the product of (i) the quotient determined by dividing (x)
the number of shares of Warrant Stock owned by such Participating Holder
(including Warrant Stock issuable upon the exercise of Warrants) by (y) the
aggregate number of shares of Common Stock (on a fully dilute basis) owned by
the Selling Stockholder and all Participating Holders, and (ii) the aggregate
number of shares of Common Stock and Warrants proposed to be purchased by the
Proposed Purchaser in the Tag-Along Sale; provided, however, that if the
-------- -------
Tag-Along Sale would cause a Change of Control or would cause any controlling
stockholder and their respective Affiliates other than Wingate to own less than
a majority of the outstanding Common Stock or less than a majority of the Voting
Capital Stock of Issuer, then the Participating Holders shall be entitled to
sell 100% of their respective Warrants and Warrant Stock (but not exceeding the
aggregate amount of shares of Common Stock proposed to be acquired in the
Tag-Along Sale). The Tag-Along Purchase Offer shall be at the same price and on
the same terms and conditions as the offer by the Proposed Purchaser to the
Selling Stockholder, except that no Participating Holders shall be required to
make representations and warranties to or agreements with the Proposed Purchaser
other than representations, warranties and agreements regarding such
Participating Holder and its ownership of the Warrants and/or Warrant Stock to
be sold in the Tag-Along Sale.
7.03 Issuer's Covenants. Issuer will not, on or after the date hereof,
------------------
either (a) deliver to the Persons specified in Section 7.01(a) a certificate
---------------
evidencing any shares of Common Stock being sold in a transaction requiring that
a Tag-Along Purchase Offer be made unless the Proposed Purchaser shall have in
fact made a Tag-Along Purchase Offer in accordance with the provisions of
Section 7.02, or (b) deliver to the Persons specified in Section 7.01(a) a
- ------------ ---------------
certificate evidencing any shares of Common Stock in connection with any other
transaction (other than shares of Common Stock which are being sold, or which
have previously been sold, in a Tag-Along Sale, Go-Along Sale, a
Warrant Agreement
-----------------
<PAGE>
-22-
registered public offering or a sale in an ordinary brokerage transaction
pursuant to Rule 144) without including on the reverse side of such certificate
a legend in substantially the following form:
THE SALE, DISPOSITION OR OTHER TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS
OF SECTIONS 7 AND 8 OF THAT CERTAIN WARRANT AGREEMENT DATED
AS OF JANUARY 31, 1992, BETWEEN ASSOCIATED HOLDINGS, INC., A
DELAWARE CORPORATION ("ISSUER"), AND BOISE CASCADE CORPORATION,
------
AS SUCH WARRANT AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED
AND IN EFFECT FROM TIME TO TIME. A COPY OF SUCH WARRANT
AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF ISSUER. THE HOLDER OF THIS CERTIFICATE,
BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF SECTIONS 7 AND 8 OF SUCH WARRANT AGREEMENT.
SECTION 8. Obligation to Join in Sale.
--------------------------
8.01 Go-Along Obligations. In the event of a Go-Along Sale prior to the
--------------------
earliest of a Change in Control, a Qualified Public Offering and the Expiration
Date, each Holder shall be obligated to, and shall, if so requested by Wingate,
(a) sell, transfer and deliver, or cause to be sold, transferred and delivered
to the Third Party Purchaser, all (but not less than all) Warrants and Warrant
Stock owned by it at the same price per share and on the same terms and
conditions (except as expressly permitted below) as are applicable to Wingate
except that no Holders shall be required to make representations and warranties
to or agreements with the Third Party Purchaser other than representations,
warranties and agreements regarding such Holder and its ownership of the
Warrants and/or Warrant Stock to be sold in the Go-Along Sale; and (b) if
Stockholder approval of the transaction is required, vote its shares of Warrant
Stock entitled to vote thereon in favor thereof (or abstain from voting, unless
such abstention would defeat the approval of such transaction) at any meeting of
Issuer's Stockholders called for the purpose of voting on such transaction (it
being understood that such Holders shall not be obligated to pay their pro rata
--------
portion of the transaction costs associated with the sale, transfer or
delivery), provided, that if the Majority Warrant Stockholders so request, such
--------
Go-Along Sale shall be at a Fair Price.
Warrant Agreement
-----------------
<PAGE>
-23-
8.02 Procedures.
----------
(a) Wingate shall deliver a written notice ("Go-Along Notice") to the
---------------
Holder setting forth the consideration per share to be paid by the Third Party
Purchaser and the other terms and conditions of the Go-Along Sale. Not later
than the later of 20 days following the Go-Along Sale. Not later than the later
of 20 days following the Go-Along Notice Date or five days following the
determination of Fair Price, and the cash equivalent of non-cash considerations,
if any, each of the Holders shall deliver to Wingate Warrant certificates and
certificates representing Warrant Stock, accompanied by duly executed stock
powers. At the closing for the Go-Along Sale, Wingate shall remit to each of the
Holders the consideration to which they are entitled.
(b) If any Holder should fail to deliver its Warrants or certificates
representing Warrant Stock, Issuer shall cause the books and records of Issuer
to show that such Warrants and/or Warrant Stock are bound by the provisions of
this Section 8 and that such Warrants and/or Warrant Stock shall be transferred
---------
only to the Third Party Purchaser upon surrender for transfer by the Holder
thereof.
(c) If, within 120 days after Wingate delivers a Go-Along Notice, the
Go-Along Sale is not completed, Wingate shall return to each Holder all Warrants
and certificates representing Warrant Stock that such Holder delivered for sale
pursuant hereto.
8.03 Issuer's Covenants. Issuer will not, on or after the date hereof,
------------------
deliver a certificate evidencing any shares of Common Stock in connection with
any other transaction (other than shares of Common Stock which are being sold,
or which have previously been sold, in a Tag-Along Sale, Go-Along Sale, a
registered public offering or a sale to the public pursuant to Rule 144) without
including on the reverse side of such certificate a legend in substantially the
form set forth in Section 7.03.
------------
8.04 Definition of Go-Along Sale. As used herein the following terms
---------------------------
shall have the following respective meanings:
"Go-Along Sale" shall mean (i) the sale for cash by Wingate and its
-------------
Affiliates of 100% of the equity interest in Issuer beneficially owned by
them in a private offering, (ii) the sale for cash of all or substantially all
of the assets of Issuer followed immediately by the distribution to the
holders of the Common Stock of the net proceeds available for distribution, or
(iii) a merger or consolidation involving Issuer, wherein the
Warrant Agreement
-----------------
<PAGE>
-24-
holders of the Common Stock will receive cash for their Common Stock, in each
case in a bona fide arm's length transaction to or with a Third Party (the
"Third Party Purchaser"). Notwithstanding the foregoing, "Go-Along Sale" shall
---------------------
also include transactions of the type described above where the consideration is
other than cash, provided, that Holder shall have the option to receive such
--------
consideration in an amount of cash equal to the Fair Price of its respective
interests in Issuer, but in any even not less than the cash equivalent of the
greatest amount of consideration paid to Wingate or any Affiliate in respect of
its shares in Issuer as determined by the Investment Banking Firms in the manner
set forth below.
"Fair Price" shall mean that the consideration or net proceeds to be
----------
received by Issuer, if applicable, and by the holders of the Common Stock in or
immediately following a Go-Along Sale, is fair from a financial point of view,
and shall be determined as follows:
Within five days after the Go-Along Notice Date, Issuer and the Holder
shall each designate a representative and such representatives will meet
and use their best efforts to reach an agreement on a Fair Price. If the
representatives designated by Issuer and the Holders are unable to reach
such agreement within 15 days after the date on which the later of the two
representatives are designated, then (A) the Holders shall immediately
designate one Investment Banking Firms; (B) Issuer shall immediately
designate one Investment Banking Firm; (C) the two Investment Banking Firms
so selected shall, within 20 days after the date on which the later of the
two Investment Banking Firms are appointed, determine independently a Fair
Price; (D) if the lesser of the two prices exceeds or is equal to 90% of
the other price, then the Fair Price will be the average of the two, which
average amount shall be conclusive and binding upon all the parties; (E) if
the lesser of the two prices is less than 90% of the other price, then the
two Investment Banking Firms shall, within 20 days of the date of
determination of the later of the two prices appoint a third Investment
Banking Firm; and (F) the third Investment Banking Firm so selected shall,
within 15 days of its appointment, determine independently a Fair Price,
which determination shall be conclusive and binding upon all the parties.
Issuer will provide each Investment Banking Firm with all information
about Issuer and the Subsidiaries which such Investment Banking Firm
reasonably deems necessary for
Warrant Agreement
-----------------
<PAGE>
-25-
determining a Fair Price. The fees and expenses of the determination of
Fair Price and the cash equivalent of non-cash consideration as provided
herein (including those of the Investment Banking Firms) will be paid by
Issuer. Issuer may require that the Investment Banking Firms keep
confidential any non-public information received as a result of this
paragraph pursuant to reasonable confidentiality arrangements.
In the event that the consideration to be paid by the Third Party Purchaser
consists or anything other than cash, the cash equivalent of such non-cash
consideration shall be determined by the Investment Banking Firm pursuant to the
same procedure and at the same time as a Fair Price is determined.
"Third Party" shall mean a Person or entity not otherwise an Affiliate
-----------
of Issuer or a Subsidiary or any of Issuer's Stockholders.
SECTION 9. Holders' Rights.
---------------
9.01 Delivery Expenses. If the Holder surrenders any certificate for
-----------------
Warrants or Warrant Stock to Issuer or a transfer agent of Issuer for exchange
for instruments of other denominations or registered in another name or names,
Issuer shall cause such new instruments to be issued and shall pay the cost of
delivering to or from the office of the Holder from or to Issuer or its transfer
agent, duly insured, the surrendered instrument and any new instruments issued
in substitution or replacement for the surrendered instrument.
9.02 Taxes. Issuer shall pay all taxes (other than Federal, state or
-----
local income taxes) which may be payable in connection with the execution and
delivery of this Agreement or the Registration Rights Agreement or the issuance
of the Warrants and Warrant Stock hereunder or in connection with any
modification of this Agreement, the Registration Rights Agreement or the
Warrants and shall hold each Holder harmless without limitation as to time
against any and all liabilities with respect to all such taxes. The obligations
of Issuer under this Section 9.02 shall survive any redemption, repurchase or
------------
acquisition of Warrants or Warrant Stock by Issuer, any termination of this
Agreement or the Registration Rights Agreement, and any cancellation or
termination of the Warrants.
9.03 Replacement of Instruments. Upon receipt by Issuer of evidence
--------------------------
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any
Warrant Agreement
-----------------
<PAGE>
-26-
Certificate or instrument evidencing any Investor Warrants or Warrant Stock, and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that, if the owner of the same is the Investor or
--------
an institutional lender or investor, its own agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender or cancellation thereof,
Issuer, at its expense, shall execute, register and deliver, in lieu thereof, a
new certificate or instrument for (or covering the purchase of) an equal number
of Investor Warrants or Warrant Stock.
9.04 Certain Restrictions. Issuer shall not at any time enter into an
--------------------
agreement or other instrument limiting in any manner its ability to perform its
obligations under this Agreement, the Investor Registration Rights Agreement or
the Investor Warrants, or making such performance or the issuance of shares of
Common Stock upon the exercise of an Investor Warrant a default under any such
agreement or instrument other than the Credit Agreement.
9.05 Transactions with Affiliates. Except as expressly permitted by
----------------------------
this Agreement, Issuer shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly: (a) make any Investment in an Affiliate; (b)
transfer, sell, lease, assign or otherwise dispose of any assets to an
Affiliate; (c) merge into or consolidate with or purchase or acquire Property
from an Affiliate; (d) enter into any other transaction directly or indirectly
with or for the benefit of an Affiliate (including guarantees and assumptions of
obligations of an Affiliate); provided, however, that (i) any Affiliate who is
-------- -------
an individual may serve as an officer or employee of Issuer or its Subsidiaries
and receive reasonable compensation for his or her services in such capacity,
and (ii) Issuer and its Subsidiaries may enter into transactions providing for
the leasing of Property, the rendering or receipt of services or the purchase or
sale of inventory and other assets in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially as
advantageous to Issuer and its Subsidiaries as the monetary or business
consideration which would obtain in a comparable transaction with a Third Party;
or (e) at any time before February 1, 1999, pay to Wingate, Cumberland, Good or
any of their respective Affiliates any
Warrant Agreement
-----------------
<PAGE>
-27-
management, consultant, financial advisor, director or similar fees ("Sponsor
-------
Management Fees"), except (1) Sponsor Management Fees of not more than $25,000
- ---------------
in any month (the "Monthly Management Fees") plus (2) up to an additional
-----------------------
$200,000 of Sponsor Management Fees for any fiscal year (the "Annual Management
-----------------
Fees") if, giving effect to the payment of all Monthly Management Fees and to
- ----
the payment of such Annual Management Fee (solely for which purpose such Annual
Management Fee shall be deemed to have been paid in such fiscal year), the
EBITDA for such fiscal year is not less than the EBITDA set forth opposite such
fiscal year in Schedule V of the Credit Agreement; provided that no Annual
--------
Management Fees for any fiscal year shall be paid until the Holder has received
the financial statements of Issuer for such fiscal year required to be delivered
to such Holder pursuant to Section 9.10(b) hereof; and provided, further, that,
--------------- -------- -------
in any event, no Sponsor Management Fee shall be paid if, at the time of such
payment and after giving effect thereto, any Default (as such term is defined in
the Credit Agreement) or similar event under other agreements relating to
Indebtedness shall have occurred and be continuing, and provided, further, that
any Annual Management Fees that shall not be paid because of the occurrence and
continuance of any Default is such term is defined in the Credit Agreement)
shall continue to accrue.
9.06 Certain Covenants.
-----------------
(a) Issuer shall, at all times prior to the Expiration Date, retain a
nationally recognized independent accounting firm as its auditors.
(b) Except as otherwise specifically provided herein, Issuer shall not
effect any repurchase, recapitalization, reorganization, reclassification,
merger, consolidation, share exchange, liquidation, spin-off, stock split,
dividend, distribution or stock consolidation, subdivision or combination that
would not afford to each Stockholder and Holder the same type and amount of
consideration.
(c) At any time prior to a Qualified Public Offering, Issuer shall afford,
and shall cause its Subsidiaries to afford, the Holder of Warrants and/or
Warrant Stock or its authorized agents or any prospective purchasers of Warrants
and/or Warrant Stock, access, at reasonable times, upon reasonable prior notice,
(i) to inspect the books and records of Issuer and its Subsidiaries, (ii) to
discuss with management of Issuer and its Subsidiaries the business and affairs
of Issuer and its Subsidiaries, and (iii) to inspect the properties of Issuer
and its Subsidiaries.
Warrant Agreement
-----------------
<PAGE>
- 28 -
(d) Issuer shall afford the Holder and its authorized agents the
right to attend all meetings of shareholders of Issuer and the Subsidiaries.
(e) Issuer will, and will cause each of the Subsidiaries to take such
action as will be necessary from time to time to ensure that Issuer or a
Subsidiary owns at least 80% of each class of capital stock of each Subsidiary.
(f) Issuer shall hold an annual meeting of shareholders each year in
Texas, Illinois or New York.
(g) To enable the ready and consistent determination of the Call
Price Per Share and compliance with the covenants set forth herein, neither
Issuer nor any of its Subsidiaries will change the last day of its fiscal year
from December 31 of each year, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 31 of
each year, respectively.
(h) Except as otherwise specifically provided herein, Issuer shall
not effect any repurchase or redemption of Common Stock and shall cause its
Subsidiaries not to effect any repurchase or redemption of Common Stock from any
Stockholder, other than (a) on a pro rata basis from all Stockholders and
--- ----
Warrant Holders participating in such repurchase or redemption at the same type
and amount of consideration, or (b) from former employees of the Operating
Company for an aggregate purchase price of no more than $200,000 in any 12-month
period. Any repurchase or redemption of Common Stock shall include Warrant
Stock.
(i) Issuer shall not amend or consent to any modification, supplement
or waiver of any provision of any Other Equity Documents in any manner which
would have an adverse effect on the Holder. Without limiting the generality of
the foregoing, Issuer shall not amend, or consent to any modification,
supplement or waiver of any provision of any Other Equity Documents in a way
which would materially increase the benefits of the parties thereto, increase
the number of securities which may be issued or sold thereunder, or materially
modify the requirements as to eligibility for participation therein.
9.07 Indemnification. Issuer shall indemnify and hold harmless the
---------------
Investor and the Holder and each of their respective directors, officers,
employees, Stockholders, Affiliates and agents (each, an "indemnified person")
------------------
on demand from and against any and all losses, claims, damages, liabilities (or
actions or
Warrant Agreement
-----------------
<PAGE>
-29-
other proceedings commenced or threatened in respect thereof) and expenses that
arise out of, result from, or in any way relate to, this Agreement, the Investor
Warrants or the Investor Registrations Rights Agreement, or in connection with
the other transactions contemplated hereby and thereby (other than the mere
diminution of the Investment by Holders in the Warrants unaccompanied by any
other violation of this Agreement), and to reimburse each indemnified person,
upon its demand, for any legal or other expenses incurred in connection with
investigating, defending or participating in the defense of any such loss,
claim, damage, liability, action or other proceeding (whether or not such
indemnified person is a party to any action or proceeding out of which any such
expenses arise), other than any of the foregoing claimed by any indemnified
person to the extent incurred by reason of the gross negligence or willful
misconduct of such indemnified person. No indemnified person shall be
responsible or liable to either Issuer or any other Person for any damages which
may be alleged as a result of or relating to this Agreement, the Investor
Warrants or the Investor Registration Rights Agreement, or in connection with
the other transactions contemplated hereby and thereby.
9.08 Preemptive Rights. If, at any time on or after the date hereof and
-----------------
prior to a Qualified Public Offering, Issuer shall propose to sell or issue any
New Securities to any Person (other than in connection with business
combinations and certain employee stock and stock option plans which in each
case have been approved by the Holder) (a "Proposed Sale"), then Issuer shall,
-------------
at least 30 days prior to the Proposed Sale, give each Holder (an "Offeree") a
-------
notice (the "Offer Notice") of the Proposed Sale (it being understood that the
------------
Offer Notice also shall contain full particulars of the Proposed Sale, including
the identity of the proposed beneficial and record owners of the New Securities
and the purchase price per unit of the New Security).
In the Offer Notice, Issuer shall offer to each Offeree, subject to
consummation of the Proposed Sale, for 20 Business Days (the "Offer Period")
------------
commencing on the date of receipt by such Offeree of the Offer Notice, the
opportunity to purchase from Issuer: (a) up to that number of units of the New
Securities, at the same purchase price per unit (and on the same terms and
conditions as offered to the Proposed Purchaser under the Proposed Sale), equal
to the product of (i) the quotient determined by dividing (A) the number of
shares of Warrant Stock held by such Offeree (assuming the exercise by such
Offeree of all Warrants held by it) by (B) the number of shares of Common Stock
outstanding on a fully diluted basis, and (ii) the number
Warrant Agreement
-----------------
<PAGE>
-30-
of New Securities to be sold or issued in the Proposed Sale; provided, that if
--------
the New Securities shall consist of voting Common Stock, each Offeree shall have
the option to purchase, in lieu of such voting Common Stock, up to an equal
number of shares of non-voting Common Stock otherwise identical to such voting
Common Stock. In the event that an Offeree does not purchase New Securities from
Issuer in accordance with this paragraph, each Offeree which has elected to
purchase New Securities hereunder (a "Purchasing Offeree") shall be entitled to
------------------
purchase out of such unpurchased New Securities the same proportion of the
unpurchased units of such New Securities as the total number of shares of
Warrant Stock owned by such Purchasing Offeree bears to the total number of
shares of Warrant Stock owned by all Purchasing Offerees.
An Offeree may elect to accept the offer to purchase any New
Securities pursuant to this Section 9.08 by delivering a notice to Issuer (an
------------
"Election Notice") within the Offer Period indicating the number of the New
---------------
Securities which such Offeree elects to purchase. On the date of the Proposed
Sale, each Offeree which has delivered an Election Notice shall deliver the
purchase price for its New Securities to Issuer in immediately available funds.
If (a) the number of New Securities proposed to be sold or issued in
the Proposed Sale is increased, (b) or any of the price, terms or conditions is
changed in a manner more favorable to the Proposed Purchaser under the Proposed
Sale after each Offeree has received the Offer Notice, or (c) the Proposed Sale
has not been consummated within 120 days of the giving of the Offer Notice,
then, whether or not such Offeree previously has accepted the offer to purchase
contained in the Offer Notice, Issuer shall notify such Offeree or any such
change. Such Offeree thereupon shall have until the later or (1) 10 Business
Days after receipt of such notice of change and (2) 20 Business Days after
receipt of the original Offer Notice within which to accept the initial offer as
so changed.
9.09 Board Observers. Issuer shall afford the Investor the opportunity
---------------
to appoint by notice to Issuer a representative (an "Observer") to attend as an
--------
observer (but not participate in or vote at) each meeting of the Board and each
meeting of the board of directors of each Subsidiary of Issuer. Issuer shall
give such Observer notice of all such meetings at the same time and in the same
manner as notice is given to members of the Board and of the board of directors
of each Subsidiary of Issuer. The Observer shall be entitled to receive all
written materials and other information given to the
Warrant Agreement
-----------------
<PAGE>
-31-
directors of Issuer and the directors of each Subsidiary of Issuer in connection
with such meetings at the same time and in the same manner and form such
materials and information are given to the directors, and copies of all minutes
and all resolutions adopted by the Board and by the board of directors of each
Subsidiary of Issuer (whether at meetings, by written consent or otherwise)
promptly after such adoption and (if applicable) approval thereof (it being
understood that such copies shall be certified by the Secretary or Assistant
Secretary of Issuer or the relevant Subsidiary of Issuer, as the case may be).
Issuer shall reimburse each Holder for the reasonable out-of-pocket expenses
incurred by such Holder in connection with the exercise of their rights under
this Section 9.09.
------------
9.10 Financial Statements, Etc. Issuer shall deliver the information
-------------------------
specified below to each Holder of an Investor Warrant or Warrant Stock:
(a) as soon as available and in any event within 45 days after the end
of each quarterly fiscal period of each fiscal year of Issuer, consolidated
and consolidating statements of income, retained earnings and cash flows of
Issuer and the Subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated and consolidating balance sheets as at the end of each
such period, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the corresponding
period in the preceding fiscal year (if any), accompanied by a certificate
of a senior financial officer of Issuer, which certificate shall state that
such financial statements fairly present the financial condition and
results of operations of Issuer and the Subsidiaries, and said
consolidating financial statements fairly presenting the respective
individual, unconsolidated financial condition and results of operations of
Issuer of Subsidiaries, respectively, in each case in accordance with GAAP,
as at the end of, and for such present the unconsolidated financial
conditions and results of operations of Issuer and of each of its
Subsidiaries, in accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments).
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of Issuer, consolidated and consolidating statements of
income, retained earnings and cash flow of Issuer and its Subsidiaries for
such fiscal year and the related
Warrant Agreement
-----------------
<PAGE>
-32-
consolidated and consolidating balance sheets as at the end of such fiscal
year setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the preceding fiscal year, and
accompanied (i) in the case of said consolidated statements and balance
sheet, by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of Issuer and the Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP, and a
certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any default under any credit agreement to which
Issuer and/or any of its Subsidiaries is a party, and (ii) in the case of
said consolidating statements and balance sheets, by a certificate of a
senior financial officer of Issuer, which certificate shall state that said
consolidating financial statements fairly present the respective individual
unconsolidated financial condition and results of operations of Issuer and
of each of the Subsidiaries in accordance with GAAP, as at the end of, and
for, such fiscal year;
(c) as soon as available, and in any event within 30 days after the
end of each monthly accounting period in each fiscal year of Issuer, a
statement of EBITD for the 12 months ended at the end of such monthly
accounting period;
(d) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, which Issuer or any of its
Subsidiaries shall have filed with the Commission (or any Governmental
Authority substituted therefor) or any national securities exchange; and
(e) promptly upon the mailing thereof to the shareholders of Issuer or
any holder of Indebtedness of Issuer and/or its Subsidiaries generally,
copies of all financial statements, reports and proxy statements so mailed.
9.11 Holders' Rights in Case of Other Securities. If the Holders at
-------------------------------------------
any time shall have received or shall be entitled to receive Other Securities,
appropriate provision shall be made so that the Holders receive with respect to
such Other Securities
Warrant Agreement
-----------------
<PAGE>
-33-
as nearly as possible the intended benefits of this Agreement with respect
thereto.
SECTION 10. Miscellaneous.
-------------
10.01 Waiver. No failure on the part of the Investor to exercise and
------
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement, the Warrants or the Registration Rights
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, the Warrant or
the Registration Rights Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
10.02 Notices.
-------
(a) All notices, requests and other communications provided for herein
and the Warrants (including any waivers or consents under, this Agreement and
the Warrants) shall be given or made in writing,
(i) if to Issuer:
Associated Holdings, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Attn: President and Chief Executive Officer
Fax: (708) 773-6491
with copies to:
Wingate Partners, L.P.
750 North St. Paul, Suite 1200
Dallas, Texas 75201
Attn: Thomas W. Sturgess
Fax: (214) 871-8799
Cumberland Capital Corporation
5949 Sherry Lane, Suite 1550
Dallas, TX 75225
Attn: Gary G. Miller
Fax: (214) 696-5957
Warrant Agreement
-----------------
<PAGE>
-34-
D'Ancona & Pflaum
30 N. LaSalle Street, Suite 2900
Chicago, Illinois 60602
Attn: Edwin H. Goldberger and
Suzanne L. Saxman
Fax: (708) 580-0923
(ii) if to the Investor:
Boise Cascade Corporation
One Jefferson Square
Boise, ID 83702
Attn: Treasurer
Fax: (208) 384-4934
and with a copy to:
Attn: General Counsel
Fax: (208) 384-7945
(iii) if to any other Person who is the registered Holder of any
Warrants or Warrant Stock, to the address for such Holder as it appears in
the stock or warrant ledger of Issuer;
or, in the case of any Holder, at such other address as shall be designated by
such party in a notice to Issuer; or, in the case of Issuer, at such other
address as Issuer may designate in a notice to the Investor and all other
Holders.
(b) All such notices, requests and other communications shall be: (i)
personally delivered, sent by courier guaranteeing overnight delivery or sent by
registered or certified mail, return receipt requested, postage prepaid, in each
case given or addressed as aforesaid; and (ii) effective upon receipt.
10.03 Expenses, Etc. Issuer agrees to pay or reimburse the Investor
--------------
and the Holders for: (a) all reasonable out-of-pocket costs and expenses of the
Investor and the Holders (including reasonable legal fees and expenses), in
connection with (i) the negotiation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreement and the issuance of Warrants
hereunder, and (ii) any amendment, modification or waiver of (or consents in
respect of) any of the terms of this Agreement, the Investor Registration Rights
Agreement or the Investor Warrants; and (b) all reasonable costs and expenses
of the Investor and the Holders (including reasonable legal fees and expenses)
in connection with (i) any
Warrant Agreement
-----------------
<PAGE>
-35-
default by Issuer hereunder or under the Investor Warrants or the Investor
Registration Rights Agreement or any enforcement proceedings resulting
therefrom, and (ii) the enforcement of this Section 10.03.
-------------
10.04 Amendments, Etc. Except as otherwise expressly provided in this
---------------
Agreement, any provision of this Agreement may be amended or modified only by an
instrument in writing signed by Issuer and the Holder.
10.05 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
10.06 Survival.
--------
(a) All representations and warranties made by Issuer herein or in any
certificate or other instrument delivered by it or on its behalf under this
Agreement or the Investor Registration Rights Agreement shall be considered to
have been relied upon by the Investor and shall survive the issuance of the
Investor Warrants or the Warrant Stock regardless of any investigation made by
or on behalf of the Investor. All statements in any such certificate or other
instrument so delivered shall constitute representations and warranties by
Issuer hereunder.
(b) All representations and warranties made by the Investor herein
shall be considered to have been relied upon by Issuer and shall survive the
issuance to the Investor of the Warrants or the Warrant Stock regardless of any
investigation made by Issuer or on its behalf.
10.07 Specific Performance. Damages in the event of breach of this
--------------------
Agreement by a Holder or Issuer would be difficult, if not impossible, to
ascertain, and it is therefore agreed that each Holder and Issuer, in addition
to and without limiting any other remedy or right it may have, will have the
right to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms
and provisions hereof, and each Holder and Issuer hereby waives any and all
defenses it may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief. The existence of
this right will not preclude the Holders or Issuer from pursuing any other
rights and remedies at law or in equity which the Holders or Issuer may have.
Warrant Agreement
-----------------
<PAGE>
-36-
10.08 Captions. The captions and section headings appearing herein are
--------
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
10.09 Counterparts. This Agreement may be executed on counterpart
------------
signature pages or in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart signature page or
counterpart.
10.10 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of Illinois without giving
effect to the conflicts of law principles thereof, except to the extent that
Illinios conflicts of laws principles would apply the General Corporation Law of
the State of Delaware to matters relating to corporations incorporated
thereunder.
10.11 Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
10.12 Adjustment of Common Stock. All references to Common Stock
--------------------------
herein shall be subject to appropriate adjustment by reason of any stock
dividend, split, reverse split, combination, recapitalization or any similar
corporate transaction.
Warrant Agreement
-----------------
<PAGE>
-37-
IN WITNESS WHEREOF, the parties hereto have duly executed this Warrant
Agreement as of the date first above written.
ASSOCIATED HOLDINGS, INC.,
By /s/ Suzanne L. Sarman
--------------------------
Name: Suzanne L. Sarman
Title: Assistant Secretary
BOISE CASCADE CORPORATION
By /s/ Carol Moerdyn
--------------------------
Name: Carol B Moerdyn
Title: Vice President
Warrant Agreement
-----------------
<PAGE>
Schedule I Capital Stock and Warrants
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
CAPITAL STOCK AND WARRANTS
Warrants
to Purchase
Common Stock Preferred Stock Common Stock
----------------- -------------------------- -----------------
Name Class A Class B Class A Class B Class C Class A Class B
- ---- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Wingate Partners, L.P. 592,175 3,483
Cumberland Capital
Corporation
& ASI Partners L.P. 249,474 1,332
Good Capital
Co., Inc. 54,609 135
Boise Cascade
Corporation 5,000 23,129
Affiliated Computer
Systems, Inc. 7,500
Chase Manhattan
Investment Holdings,
Inc. 150,340
------- ------- ------- ------- ------- ------- -------
896,258 0 5,000 5,000 7,500 23,129 150,340
======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
Schedule II General Partners of Wingate
James T. Callier, Jr.
Frederick B. Hegi, Jr.
Thomas W. Sturgess
James Johnson
Dennis Johnson
Sue Goddard
Wallace R. Hawley
Lee Walton
Bud Applebaum
Estate of Howard Beasley
Callier Buy-Out Partners, as defined in the Agreement of Limited Partnership
of Wingate Partners, L.P.
Peter J. Wodtke
Pension Plans for Benefit of the Above
<PAGE>
Annex 1 - Form of Investor Warrant
<PAGE>
Annex 2 - Investor Registration Rights Agreement
<PAGE>
Annex 3 - Legal Opinion
<PAGE>
Annex 4 - Certificate of Incorporation of Issuer
<PAGE>
ANNEX 1
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED AS OF
JANUARY 31, 1992 (THE "WARRANT AGREEMENT"), BETWEEN ASSOCIATED HOLDINGS, INC., A
-----------------
DELAWARE CORPORATION ("ISSUER"), AND BOISE CASCADE CORPORATION AS THE WARRANT
------
AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND
NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE WARRANT
AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF
ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY THE PROVISIONS OF THE WARRANT AGREEMENT.
For the Purchase of 23,129 shares
of Class A Common Stock. Warrant No. 3
--------------------
WARRANT
to Purchase Class A Common Stock of
ASSOCIATED HOLDINGS, INC.
Expiring 10 years from the date hereof
THIS IS TO CERTIFY THAT BOISE CASCADE CORPORATION, or its registered
assigns, is entitled to purchase in whole or in part from time to time from
Associated Holdings, Inc., a Delaware corporation ("Issuer"), at any time on and
------
after January 31, 1992, but not later than 5:00 p.m., Chicago time, on January
31, 2002 (or such later date to which this Warrant may be extended pursuant to
Section 6.03, the "Expiration Date"), 23,129 shares of Class A Common Stock
---------------
(subject to adjustment as provided herein) at a purchase price of $1.00 per
share of Common Stock, provided that such price shall not be less than the
aggregate par value of the Class A Common Stock and other shares purchased or
being purchased (the "Exercise Price"), subject to the terms and conditions
--------------
hereinbelow provided. Each exercise made hereunder must be of a minimum of the
lesser of 100 shares of Class A Common Stock and all of the remaining Stock
covered by this Warrant.
This Warrant is one of the Warrants originally issued pursuant to the
Warrant Agreement dated as of January 31, 1992, between Issuer and Boise Cascade
Corporation.
Warrant
-------
<PAGE>
-2-
SECTION 1. Certain Definitions. (a) Each capitalized term used
-------------------
herein without definition shall have the meaning ascribed thereto (or
incorporated by reference) in the Warrant Agreement (as hereinafter defined).
(b) As used in this Warrant, unless the context otherwise requires:
"Additional Shares of Common Stock" shall mean all shares (including
---------------------------------
treasury shares) of Common Stock issued or sold by Issuer on or after the date
hereof, other than (i) the Warrant Stock and Common Stock issuable pursuant to
any warrants repurchased by Issuer pursuant to Section 6 of the Warrant
Agreement, (ii) the shares of Common Stock which may be issued pursuant to the
Other Equity Securities (whether issuable immediately or upon the arrival of a
specified date or the occurrence of a specified event), (iii) shares purchased
by Holder pursuant to the exercise of preemptive rights pursuant to Section 9.08
of the Warrant Agreement, (iv) shares purchased by Holder upon the exercise of
preemptive rights pursuant to Section 9.08 of the Warrant Agreement, and (v) the
shares of Common stock described as being issued and outstanding in Section 3.07
of the Warrant Agreement.
"Current Market Price", per share of Common Stock, for the purposes of
--------------------
any provision of this Warrant at the date herein specified, shall be deemed to
be the Fair Market Value per share of Common Stock, as reasonably determined by
the Board, or if there shall be a public market for the Common Stock, the
average of the daily market prices for each day during the 30 consecutive
trading days commencing 45 trading days before such date as of which such a
price can be established in the manner set forth below. The market price for
each such trading day shall be the last sale price on such day as reported in
the Consolidated Last Sale Reporting System or as quoted in the National
Association of Securities Dealers Automated Quotation System, or if such last
sale price is not available, the average of the closing bid and asked prices as
reported in either such system, or in any other case the higher bid price quoted
for such day as reported by The Wall Street Journal and the National Quotation
Bureau pink sheets.
"Current Warrant Price", for the purpose of any provision of this
---------------------
Warrant, shall mean the amount payable per share of Common Stock equal to the
quotient resulting from dividing the total Exercise Price in effect on such date
required to be paid upon exercise of the Warrant in full by the total number of
shares (including any fractional share) of Common Stock on such date.
Warrant
-------
<PAGE>
-3-
"Exercise Notice" shall have the meaning set forth in Section 2.
--------------- ---------
"Exercise Price" shall have the meaning set forth at the head of this
--------------
Warrant.
"Expiration Date" shall have the meaning set forth at the head of this
---------------
Warrant, as extended under Section 6.03.
------------
"Holder" shall mean the registered holder of this Warrant.
------
"include" and "including" shall be construed as if followed by the
------- ---------
phrase ", without being limited to,".
"Issuer" shall have the meaning set forth at the head of this Warrant.
------
"Warrant Agreement" shall mean the Warrant Agreement dated as of
------- ---------
January 31, 1992, between Issuer and Boise Cascade Corporation, as such Warrant
Agreement shall be modified and supplemented and in effect from time to time.
"Warrants" shall mean the Warrants originally issued by Issuer
--------
pursuant to the Warrant Agreement, evidencing rights to purchase up to an
aggregate of 23,129 shares of Class A Common Stock, and all Warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions, except
as to the number of shares of Common Stock for which they may be exercised. The
Warrants shall at all times be dated as of their respective dates of original
issuance.
"Warrant Holder" shall mean any Person who acquires Warrants or
--------------
Warrant Stock pursuant to the provisions of the Warrant Agreement, including any
transferees of Warrants or Warrant Stock.
SECTION 2. Exercise of Warrant. On and after January 31, 1993, and
-------------------
until 5:00 p.m., Chicago time, on the Expiration Date, Holder may exercise this
Warrant, on one or more occasions, on any Business Day, in whole or in part, by
delivering to Issuer, at its office maintained for such purpose pursuant to
Section 11.01, (a) a written notice of Holder's election to exercise this
- -------------
Warrant, which notice shall specify the number of shares of Common Stock to be
purchased (the "Exercise Notice"), (b) this Warrant, and (c) a certified or bank
---------------
check or checks payable to Issuer in an aggregate amount equal to the aggregate
Exercise Price for the number of shares of Common Stock as to which this Warrant
is being
Warrant
-------
<PAGE>
-4-
exercised (or a wire transfer of funds in that amount into a bank account
designated by Issuer). Such Exercise Notice may be substantially in the form of
Annex A hereto. Upon receipt thereof, Issuer shall, as promptly as practicable
and in any event within 10 Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to Holder a stock certificate or
certificates representing the aggregate number of shares of Warrant Stock and
other securities issuable upon such exercise and any other property to which
such Holder is entitled. Notwithstanding the foregoing, an exercise of this
Warrant may be deferred for such period of time as may be needed to effect a
redemption by Issuer of any outstanding Class B Preferred Stock of Issuer and a
redemption of said Warrant in accordance with Section 6 of this Warrant. To
---------
defer a Warrant exercise, Issuer shall notify Holder in writing, within 10
Business Days after receipt of the Exercise Notice, of the Issuer's election to
effect said redemption of outstanding Class B Preferred Stock and the redemption
of said Warrant shall be completed within 20 days after receipt of said Exercise
Notice.
The stock certificate or certificates for Warrant Stock delivered upon
exercise of this Warrant shall be in such denominations as may be specified in
the Exercise Notice and shall be registered in the name of Holder or such other
name or names as shall be designated in such Exercise Notice. Such stock
certificate or certificates shall be deemed to have been issued and Holder or
any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares, including, to the extent permitted by
law, the right to vote such shares or to consent or to receive notice as a
Stockholder, as of the date on which the last to occur of the delivery of the
Exercise Notice, payment of the Exercise Price and surrender of this Warrant and
all taxes required to be paid by Holder, if any, pursuant to Section 9 hereof,
---------
prior to the issuance of such shares have been paid; providing that the Warrant
is not redeemed as provided for in this Section 2. If this Warrant shall have
---------
been exercised only in part, Issuer shall, at the time of delivery of the
certificate or certificates representing Warrant Stock and other securities,
execute and deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Common Stock called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at the
request of Holder, appropriate notation may be made on this Warrant and the same
returned to Holder.
All shares of Common Stock issuable upon the exercises of this Warrant
shall, upon payment therefore in accordance herewith, be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
Warrant
-------
<PAGE>
-5-
Issuer shall not be required to issue a fractional share of Common
Stock upon exercise of this Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, Issuer shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price per share of Common Stock on the date of
exercise.
SECTION 3. Transfer, Division and Combination. Subject to
----------------------------------
Section 11.03, transfer of this Warrant and all rights hereunder, in whole or in
- -------------
part, shall be registered on the books of Issuer to be maintained for such
purpose, upon surrender of this Warrant at the office of Issuer maintained for
such purpose pursuant to Section 11.01, together with a written assignment of
-------------
this Warrant, substantially in the form of Annex B hereto, duly executed by
Holder or its agent or attorney and payment of funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, Issuer shall, subject to Section 11.03 and the
-------------
immediately following sentence, (a) execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, (b) issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned and (c) promptly
cancel this Warrant. If and when this Warrant is assigned in blank (in case the
restrictions on transferability referred to in Section 11.03 shall have been
-------------
terminated), Issuer may (but shall not be obliged to) treat the bearer hereof as
the absolute owner of this Warrant for all purposes and Issuer shall not be
affected by any notice to the contrary. This Warrant, if properly assigned in
compliance with this Section 3 and Section 11.03, may be exercised by an
--------- -------------
assignee for the purchase of shares of Common Stock without having a new Warrant
or Warrants issued. Notwithstanding any provision herein to the contrary, Issuer
shall not be required to register the transfer of Warrants or Warrant Stock in
the name of any Person who acquired this Warrant (or part hereof) or any Warrant
Stock otherwise than in accordance with this Warrant and the Warrant Agreement.
Issuer shall maintain at its aforesaid office books for the
registration and transfer of the Warrants.
SECTION 4. Adjustment of Stock. The number of shares of Common Stock
-------------------
which may be purchased upon exercise of this Warrant shall be subject to
adjustment from time to time as set forth in this Section 4. Issuer shall not
---------
take any action with respect to its Common Stock of any class requiring an
adjustment pursuant to any of Sections 4.01, 4.07 or 5 without at the same time
------------- ---- -
taking
Warrant
-------
<PAGE>
-6-
like action with respect to its Common Stock of each other class, and Issuer
shall not create any class of Common Stock which carries any rights to dividends
or assets differing in any respect from the rights of the Common Stock on the
date hereof. Any adjustment required hereunder shall be made simultaneously with
adjustments required under the Chase Warrant. The total price payable for the
purchase of the increased or decreased number of shares purchasable shall remain
the same, and the per share price shall be proportionately decreased or
increased.
4.01 Stock Dividends, Subdivisions and Combinations. If at any time
----------------------------------------------
Issuer shall:
(a) take a record of the holders of its Common stock for the purpose
of entitling them to receive a dividend payable in, or other distribution of,
Additional Shares of Common Stock, or
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the shares of Common Stock purchasable hereunder immediately after the
occurrence of any such event shall be adjusted to equal the number of shares of
Common Stock which a record holder of the number of shares of Common Stock
purchasable hereunder immediately prior to the happening of such even would own
or be entitled to receive after the happening of such event.
4.02 Issuance of Additional Shares of Common stock. If at any time
---------------------------------------------
Issuer shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price at the time the
Additional Shares of Common Stock are issued, then the number of shares of
Common Stock thereafter shall be adjusted to that number determined by
multiplying the number of shares of Common Stock immediately prior to such
adjustment by a fraction (a) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of such Additional Shares of
----
Common Stock so issued, and (b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of shares of Common Stock
which the aggregate consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at the Current Market Price. For
purposes of
Warrant
-------
<PAGE>
-7-
this Section 4.02, the date as of which the Current Market Price shall be
------------
computed shall be the earlier of (i) the date on which Issuer shall enter into a
firm contract for the issuance of such Additional Shares of Common Stock and
(ii) the date of actual issuance of such Additional Shares of Common Stock.
Subject to Section 4.05, no further adjustment of the number of shares of Common
------------
Stock purchasable hereunder shall be made under this Section 4.02 upon the
------------
issuance of any Additional Shares of Common Stock:
(a) for which an adjustment is provided under Section 4.01;
------------
(b) which are issued pursuant to the exercise of any Options or the
conversion, exchange or exercise of any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such Options or
Convertible Securities (or upon the issuance of any Option therefor) pursuant
to Section 4.03 or 4.04; or
------------ ----
(c) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 5.02.
------------
(d) pursuant to the Transition Services Agreement dated as of January
31, 1992 among Boise Cascade Corporation ("Boise Cascade"), Boise Cascade Office
Products Corporation ("BCOP"), Associated Stationers, Inc. ("Stationers") and
Issuer, providing among other things for the possible issuance of Common Stock
of Issuer to Boise Cascade in consideration of the deferment of liabilities and
making of cash flow support payments to Stationers under the Transition Services
Agreement; or
(e) which are deemed to be issued as the result of an anti-dilution
adjustment with respect to any Option or Convertible Security or the adjustment
made to the Chase Warrants pursuant to the last sentence of Section 4.02 of the
Chase Warrant.
4.03 Issuance of Options. If at any time Issuer shall issue or sell,
-------------------
or shall fix a record date for the determination of holders of any class of
securities entitled to receive, any Options for any Additional Shares of Common
Stock or any Convertible Securities, whether or not the rights to purchase
thereunder are immediately exercisable, then the number of shares of Common
Stock purchasable hereunder shall be adjusted as provided in Section 4.01 on the
------------
basis that (a) the maximum number of Additional Shares of Common Stock issuable
pursuant to all such Options or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued as of
(and, accordingly, the date as of which the Current Market Price shall be
Warrant
-------
<PAGE>
-8-
computed shall be) the computation date specified in the penultimate sentence of
this Section 4.03, and (b) the aggregate consideration for such maximum number
------------
of Additional Shares of Common Stock shall be zero. For purposes of this
Section 4.03, the computation date of for clause (a) above shall be the earlier
- ------------ ----------
of (i) the date on which issuer shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive any such Options and (ii) the
date on which Issuer shall enter into a firm contract for the issuance of such
Options. No further adjustment of the share of Common Stock purchasable
hereunder shall be made under this Section 4.03 upon the issuance of any Options
------------
to subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities as a distribution or a dividend which is distributed or
declared and paid in accordance with Section 5.02. Notwithstanding the
------------
foregoing, any issuance of an Option which is issued together with a debt
security of Issuer, as a Unit, shall be treated for the purpose of this
Section 4 as the issuance of a Convertible Security.
- ---------
4.04 Issuance of Convertible Securities. If at any time Issuer shall
----------------------------------
issue or sell any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the cash received by
Issuer in payment for such Convertible Securities shall be less than the
Convertible Security Value thereof, then the shares of Common Stock thereafter
purchasable hereunder shall be increased to a number of shares of Common Stock
having a value immediately following the computation date (as established below)
equal to the value of the shares purchasable hereunder immediately before such
increase. For this purpose, the value before the increase will be the Fair
Market Value of the Common Stock as reasonably determined by the Board on the
basis set forth in the first paragraph of the definition thereof (without
reference to the appraisal procedure referred to therein) divided by the number
of shares of Common Stock outstanding on a fully diluted basis as determined
under the Warrant Agreement, and the value immediately following the computation
date shall be the foregoing value, except that the numerator shall be the Fair
Market Value plus the cash amount paid to the Issuer for such Convertible
Securities, less the Convertible Security Value of such Convertible Securities
on issuance. For purposes of this Section 4.04, the computation date for
------------
clause (a) above shall be the earliest of (i) the date on which Issuer shall
- ----------
take a record of the holders of its Common Stock for the purpose of entitling
them to receive any such Convertible Securities, (ii) the date on which Issuer
shall enter into a firm contract for the issuance of such Convertible
Securities, and (iii) the date of actual issuance of such Convertible
Securities. No further adjustment of the shares of Common stock purchasable
hereunder
Warrant
-------
<PAGE>
-9-
shall be made under this Section 4.04 upon the issuance of any Convertible
------------
Securities:
(a) which are issued pursuant to the exercise of any Option therefor,
if any such adjustment shall previously have been made upon the issuance of
such Option pursuant to Section 4.03; or
------------
(b) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 5.02.
------------
4.05 Superseding Adjustment. If, at any time after any adjustment of
----------------------
the shares of Common Stock shall have been made pursuant to Section 4.03 or 4.04
------------ ----
as a result of the issuance of Options or Convertible Securities, or after any
new adjustment of the shares of Common Stock purchasable hereunder shall have
been made pursuant to this Section 4.05, (a) such Options or the right of
------------
conversion, exchange or exercise of such Convertible Securities shall expire,
and all or a portion of such Options or the right of conversion, exchange or
exercise with respect to all or a portion of such Convertible Securities, as the
case may be, shall not have been exercised or treated as having been exercised
or otherwise cancelled or acquired by the Issuer in connection with any
settlement including, without limitation, any cash settlement, of such Options
or the rights of conversion, or exchange or exercise of such Convertible
Securities, or (b) there has been any change in the number of shares issuable
upon exercise, conversion or exchange of such Options or Convertible Securities
(including as a result of the operation of anti-dilution provisions applicable
thereto), or a (c) the consideration per share, for which Additional Shares of
Common Stock are issuable pursuant to such Options or the terms of any
Convertible Securities, or the maturity of any such Convertible Security, shall
be changed, then such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
Options or Convertible Securities on the basis of
(i) treating the number of Additional Shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise
of such Options or such right of conversion or exchange, as having been
issued on the date or dates of such issuance as determined for the purposes
of such previous adjustment and for the consideration actually received and
receivable therefor,
Warrant
-------
<PAGE>
-10-
(ii) treating the maximum number of Additional Shares of Common Stock
(A) issuable pursuant to all Options which then remain outstanding and (B)
necessary to effect the conversion or exchange of all Convertible
Securities which then remain outstanding, as having been issued, and
(iii) making the computations called for in Section 4.04 on the basis
------------
of the revised terms of such Convertible Securities as if newly issued at
the time of such revision,
and, if and to the extent called for by the foregoing provisions of this
Section 4 on the basis aforesaid, a new adjustment of the number of shares of
- ---------
Common Stock purchasable hereunder shall be made, and such new adjustment shall
supersede the previous adjustment so rescinded and annulled.
4.06 Other Provisions Applicable to Adjustments Under this Section 4.
---------------------------------------------------------------
The following provisions shall be applicable to the making of adjustments of
Common Stock purchasable hereunder hereinbefore provided for in this Section 4:
---------
(a) Computation of Consideration. To the extent that any Additional
----------------------------
Shares of Common Stock or any Convertible Securities shall be issued for a
cash consideration, the consideration received by Issuer therefor shall be
deemed to be the amount of cash received by Issuer therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
issuer for subscription, the subscription price, or, if such Additional
Shares of Common Stock or Convertible Securities are sold to underwriters
or dealers for public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without deduction
of any reasonable compensation, discounts or expenses paid for incurred by
Issuer for and in the underwriting of, or other-incurred by Issuer for and
in the underwriting of, or otherwise in connection with, the issue thereof.
To the extent that such issuance shall be forma consideration other than
cash, then, except as herein otherwise expressly provided, the amount of
such consideration at the time of such issuance, as reasonably determined
by the Board. The consideration for any Additional Shares of Common Stock
issuable pursuant to any Options to subscribe for or purchase the same
shall be zero. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities shall be the
cash consideration paid or payable to Issuer in respect of the subscription
for or purchase of such Convertible Securities.
Warrant
-------
<PAGE>
-11-
In case of the issuance at any time of any Additional Shares of Common
Stock in payment or satisfaction of any dividend upon any class of stock
other than Common Stock, Issuer shall be deemed to have received for such
Additional Shares of Common Stock a consideration equal to the amount of
such dividend so paid or satisfied.
(b) When Adjustments to be Made. The adjustments required by this
---------------------------
Section 4 shall be made whenever and as often as any specified event
---------
requiring an adjustment shall occur, except that any adjustment of the
shares of Common Stock purchasable hereunder that would otherwise be
required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4.01)
------------
up to but not beyond the date of exercise if such adjustment either by
itself or with other adjustments not previously made adds or subtracts less
than both (i) 1/20th of a share to or from the shares of Common Stock
purchasable hereunder immediately prior to the making of such adjustment
and (ii) 5% of the number of shares of Common Stock. Any adjustment
representing a change of less than such minimum amount (except as
aforesaid) shall be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 4 and not
---------
previously made, would result in a minimum adjustment on the date of
exercise. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its
occurrence.
(c) Fractional Interests. In computing adjustments under this
--------------------
Section 4, fractional interests in Common Stock shall be taken into account
---------
to the nearest one-thousandth of a share.
(d) When Adjustment Not Required. If Issuer shall take a record of the
----------------------------
holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution thereof to stockholders, legally
abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
4.07 Other Dilutive Events. In case any event shall occur, affecting
---------------------
Section the Subsidiaries or any Person in which Issuer or any Subsidiary has a
direct or indirect Investment, as to which the
Warrant
-------
<PAGE>
-12-
provisions of Section 4 or Section 5 are not strictly applicable but the failure
--------- ---------
to make any adjustment would not fairly protect the purchase rights represented
by this Warrant in accordance with the essential intent and principles of such
sections then, in each such case, Issuer shall appoint a firm of independent
public accountants of recognized national standing (which may be the regular
auditors of Issuer), which shall give their opinion upon the adjustment, if any,
on a basis consistent with the essential intent and principles established in
Section 4 and 5, necessary to preserve, without dilution, the purchase rights
- --------- -
represented by this Warrant. Without limiting the generality of the foregoing,
Issuer acknowledges that issuance of any equity security by any Subsidiary or
Person in which Issuer has a direct or indirect Investment to any Person other
than Issuer or a Wholly-Owned Subsidiary or sale of existing equity securities
or Subsidiaries or investees by Issuer or any Subsidiary for a price less than
the fair value thereof, and acquisition of less than 100% of the equity interest
in a Person for a price greater than the Fair Market Value thereof, would be
such events. Upon receipt of such opinion, Issuer will promptly mail a copy
thereof to Holder and shall make the adjustments described therein.
SECTION 5. Consolidation, Merger, Share Exchange, etc.; Distributions.
----------------------------------------------------------
5.01 Consolidation, Merger, Share Exchange, etc. In case a
------------------------------------------
consolidation, merger or share exchange of Issuer shall be effected with another
Person on or after the date hereof, or the sale, lease or transfer of all or a
majority of its assets to another Person shall be effected on or after the date
hereof, then, as a condition of such consolidation, merger, share exchange,
sale, lease or transfer, lawful and adequate provision shall be made whereby
Holder shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore purchasable and receivable upon the
exercise of each of the Warrants, such shares of stock, securities, cash or
other property receivable upon the exercise of each of the Warrants, such shares
of stock, securities, cash or other property receivable upon such consolidation,
merger, share exchange, sale, lease or transfer by the holder of the shares of
Common Stock purchasable hereunder immediately prior to such event. In any such
case, appropriate and equitable provision also shall be made with respect to the
rights and interests of Holder to the end that the provisions hereof (including
Section 4) and of the warrant Agreement and the Registration Rights Agreement
- ---------
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities, cash or other property thereafter deliverable upon the
exercise of
Warrant
-------
<PAGE>
-13-
any Warrants. Issuer shall not effect any such consolidation, merger, shares
exchange, sale, lease or transfer unless prior to or simultaneously with the
consummation thereof the successor Person (if other than Issuer) resulting from
such consolidation, merger or share exchange or the Person purchasing, leasing
or otherwise acquiring such assets shall assume, by written instrument mailed to
Holder at its last address appearing on the books of Issuer, the obligation to
deliver to Holder such shares of stock, securities, cash or other property as,
in accordance with the foregoing provisions, Holder may be entitled to purchase.
The above provisions of this Section 5.01 shall similarly apply to successive
------------
consolidations, mergers, share exchanges, sales, leases, leases or transfers.
5.02 Distributions upon Declaration of Dividend or Other Distribution.
-----------------------------------------------------------------
So long as any Warrants remain outstanding, Issuer shall pay, upon the
declaration and payment of any dividend or distribution (whether such dividend
or distribution is in the form of cash, debt securities, equity securities or
other property) on any class of Common Stock, to Holder the dividend or
distribution that such Holder would be otherwise entitled to receive had Holder
exercised this Warrant in full immediately prior to the taking of record of
those holders of Common Stock entitled to any such dividend or distribution. If
such dividend or distribution is in the form of an equity security, Holder will
be entitled to receive, at its option, in its stead non-voting equity securities
otherwise identical to the equity securities to which Holder is otherwise
entitled thereunder. This provision shall not apply to stock dividends of
Additional Shares of Common Stock provided, that Issuer adjusts the number of
--------
shares of Common Stock purchasable hereunder pursuant to Section 4.01.
------------
A reclassification or recapitalization of the Common Stock shall be
deemed a distribution by Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 5.02 and,
------------
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.01.
------------
5.03 Dilution in Case of Other Securities. In case any Other
------------------------------------
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of Issuer (or any
issuer of Other Securities or any other Person referred to in Section 5.01) or
------------
to subscription purchase or other acquisition pursuant to any rights, options,
Warrant
-------
<PAGE>
-14-
warrants to subscribe for, purchase or otherwise acquire either Additional
Shares of Common Stock or securities directly or indirectly convertible into or
exchangeable for Additional Shares of Common Stock, issued or granted by the
Company (or any such other issuer or Person) for a consideration such as to
dilute, on a basis consistent with the standards established in the other
provisions of Section 4, the purchase rights granted by this Warrant, then, and
---------
in each such case, the computations, adjustments and readjustments provided for
in Section 4 with respect to the Stock purchasable hereunder shall be made as
---------
nearly as possible in the manner so provided and applied to determine the amount
of Other Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the Warrant Holders against the effect of such
dilution.
SECTION 6. Notice to Warrant Holders.
-------------------------
6.01 Notice of Adjustment of Stock or Exercise Price. Whenever the
-----------------------------------------------
shares of Common Stock purchasable hereunder shall be adjusted pursuant to
Section 4, Issuer shall forthwith obtain a certificate signed by the chief
- ---------
financial officer of Issuer and reasonably acceptable to the Holders of a
majority of the Warrants, setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was calculated
(including a description of the basis on which the Board determined the Fair
Market Value of Additional Shares of Common Stock issued or sold and, if the
consideration therefor was other than cash, a description of how such
consideration was valued), specifying the number of shares of Common Stock
thereafter purchasable hereunder and (if such adjustment was made pursuant to
Section 4.07 or Section 5) describing the number and kind of any other
- ------------ ---------
securities purchasable hereunder, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change. Issuer shall
promptly, and in any case within 10 days after the making of such adjustment,
cause a signed copy of such certificate to be delivered to each Warrant Holder
in accordance with Section 11.02. Issuer shall keep at its office or agency,
-------------
maintained for the purpose pursuant to Section 11.01, copies of all such
-------------
certificates and cause the same to be available for inspection at said office
during normal business hours by any Warrant Holder or any prospective permitted
purchaser of a Warrant designated by a Holder thereof. All adjustments set forth
in such certificates shall be subject to the reasonable approval of the Majority
Warrant Holders.
6.02 Notice of Certain Corporate Action. In case Issuer shall propose
----------------------------------
(a) to pay any dividend to the holders of its Common Stock or to make any other
distribution to the holders of its
Warrant
-------
<PAGE>
-15-
Common Stock, or (b) to offer to the holders of its Common Stock rights to
subscribe for or to purchase any Additional Shares of Common Stock or shares of
stock of any class or any other securities, rights or options, or (c) to effect
any reclassification of its Common Stock (other than a reclassification
involving only the subdivision, or combination, of outstanding shares of Common
stock), or (d) to effect any capital reorganization, or (e) to effect any
consolidation, merger, share exchange or sale, lease, transfer or other
disposition of all or a major part of its property, assets or business (other
than the creation of a Lien pursuant to a Company Permitted Financing), or (f)
to effect the liquidation, dissolution or winding up of Issuer, then, in each
such case, Issuer shall give to each Warrant Holder, in accordance with Section
-------
11.02, a notice of such proposed action, which shall specify the date on which a
- -----
record is to be taken for the purposes of such stock dividend, distribution or
rights, or the date on which such reclassification, reorganization,
consolidation, merger, share exchange, sale, lease, transfer, disposition,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the Common Stock,
if any, and the number and kind of any other shares of stock which will
thereafter be purchasable hereunder, and the purchase price or prices thereof,
after giving effect to the adjustment, if any, which will be required as a
result of such action. Such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least 20 days prior to the record date
---------- ---
for determining holders of the Common Stock for purposes of such action, and in
the case of any other such action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
6.03 Notice of Expiration Date. Issuer shall give to each Warrant
-------------------------
Holder notice of the Expiration Date. Such notice may be given by Issuer not
less than 30 days but not more than 60 days prior to the Expiration Date;
provided, however, that if Issuer fails to give timely notice, the Expiration
- -------- -------
Date will be extended to the date which is 30 days after the day on which such
notice is given.
SECTION 7. Reservation and Authorization of Common Stock. Issuer shall
---------------------------------------------
at all times reserve and keep available for issue upon the exercise or
conversion of Warrants such number of its authorized but unissued shares of
Common Stock of both classes as will be sufficient to permit the exercise in
full of all outstanding Warrants. Issuer shall not amend its certificate of
Warrant
-------
<PAGE>
-16-
incorporation in any respect relating to the Common Stock other than to increase
or decrease the number of shares of authorized capital stock (subject to the
provisions of the preceding sentence) or to decrease the par value of any shares
of Common Stock. All shares of Common Stock which shall be so issuable, when
issued upon exercise of any Warrant and payment of the applicable Exercise Price
therefor in accordance with the terms of this Warrant, shall be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
Before taking any action which would result in an adjustment in the
shares of Common Stock purchasable hereunder or which would cause an adjustment
reducing the Current Warrant Price per share of Common Stock below the then par
value, if any, of the shares of Common Stock issuable upon exercise of the
Warrants, Issuer shall take any corporate action which is necessary in order
that Issuer may validly and legally issue fully paid and nonassessable shares of
Common Stock free and clear of any Liens upon the exercise of all the Warrants
immediately after the taking of such action.
Before taking any action which would result in an adjustment in the
shares of Common Stock purchasable hereunder or in the Current Warrant Price per
share of Common Stock, Issuer shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
Issuer will list on each national securities exchange on which any
Common Stock may at any time be listed, subject to official notice of issuance
upon exercise of the Warrants, and will maintain such listing of, all shares of
Common Stock from time to time issuable upon the exercise of the Warrants.
Issuer will also so list on each national securities exchange, and will maintain
such listing of, any Other Securities if at the time any securities of the same
class shall be listed on such national securities exchange by Issuer.
SECTION 8. Taking of Record; Stock and Warrant Transfer Books. (a) In
---------------------------------------------------
the case of all dividends or other distributions by Issuer to the holders of its
Common Stock with respect to which any provision of Section 4 and Section 5.02
--------- ------------
refers to the taking of a record of such holders, Issuer shall in each such case
take such a record as of the close of business on a Business Day.
(b) Issuer shall not at any time, except upon complete dissolution,
liquidation or winding up, close its stock transfer books or Warrant transfer
books so as to result in preventing or
Warant
------
<PAGE>
-17-
delaying the exercise, conversion or transfer of any Warrant, unless otherwise
required by any applicable federal, state or local law.
SECTION 9. Expenses, Transfer Taxes and Other Charges. Issuer shall pay any
------------------------------------------
and all expenses, transfer taxes and other charges, including all costs
associated with the preparation, issue and delivery of stock or warrant
certificates, that are incurred in respect of the issuance or delivery of shares
of Common Stock upon exercise or conversion of this Warrant pursuant to Section
-------
2, or in connection with any transfer, division or combination of Warrants
- -
pursuant to Section 3. Issuer shall not, however, be required to pay any tax
---------
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which this
Warrant is registered, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to Issuer the amount of any such
tax, or has established, to the satisfaction of Issuer, that such tax has been
paid.
SECTION 10. No Voting Rights. This Warrant shall not entitle Holder to any
----------------
voting or other rights as a stockholder of Issuer.
SECTION 11. Miscellaneous.
-------------
11.01 Office of Issuer. So long as any of the Warrants remains
----------------
outstanding, Issuer shall maintain an office in the continental United States of
America where the Warrants may be presented for exercise, transfer, division or
combination as in this Warrant provided. Such office shall be at Associated
Holdings, Inc., 1075 Hawthorne Drive, Itasca, IL 60143, unless and until Issuer
shall designate and maintain some other office for such purposes and give notice
thereof to all Warrant Holders.
11.02 Notices Generally. Any notices and other communications pursuant to
-----------------
the provisions hereof shall be sent in accordance with Section 10.02 of the
Warrant Agreement.
11.03 Restrictions on Transferability. The Warrants and the Warrant Stock
-------------------------------
shall be transferable only upon compliance with the conditions specified in
Section 4 of the Warrant Agreement and the Registration Rights Agreement therein
referred to, which conditions are intended to ensure compliance with the
provisions of the Securities Act in respect of the transfer of any Warrant or
any Warrant Stock, and any Holder shall be bound by the provisions of
Warrant
-------
<PAGE>
-18-
(and entitled to the benefits of) said Section 4 and said Registration Rights
Agreement.
11.04 Governing Law. This Warrant shall be governed by, and construed in
-------------
accordance with, the law of the State of Illinois without giving effect to
conflicts of law principles thereof, except to the extent that Illinois
conflicts of laws principles would apply the General Corporation Law of the
State of Delaware to matters relating to corporations incorporated thereunder.
11.05 Limitation of Liability. No provision hereof, in the absence of
-----------------------
affirmative action by Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the Exercise Price or as a stockholder of Issuer,
whether such liability is asserted by Issuer, by any creditor of Issuer or any
other Person.
11.06 Fair Market Value Determinations by the Board. Whenever the Board
---------------------------------------------
determines fair market value or Convertible Security Value, or a firm of
independent public accounts opines as to an adjustment pursuant to Section 4.07,
------------
any such determination or opinion shall be subject to the reasonable approval of
the Majority Warrant Holders.
SECTION 12. Conversion of Warrants. On and after the date hereof and
----------------------
prior to the Expiration Date, this Warrant may be converted, in whole or in
part, at the option of the Hoder, into the number of shares of Common Stock
equal to the product of (a) the number of shares of Common Stock purchasable
hereunder at the time of such conversion, times (b) the Current Market Price per
share of Common Stock at the time of such conversion minus the Exercise Price of
-----
the Warrant at the time of such conversion, divided by (c) the Current Market
----------
Price per share of Common Stock at the time of such conversion.
IN WITNESS WHEREOF, Issuer has duly executed this Warrant.
Dated: January 31, 1992
ASSOCIATED HOLDINGS, INC.,
By
-----------------------------------------
Name:
Title:
Warrant
-------
<PAGE>
-19-
FORM OF EXERSISE
----------------
(To be executed by the registered Holder hereof)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ____ shares of Common Stock of
Associated Holdings, Inc., a Delaware corporation, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant, and requests that (i) certificates and/or other instruments covering
such stock be issued in accordance with the instructions given below and (ii) if
such stock shall not include all of the stock to which Holder is entitled under
this Warrant, that a new Warrant of like tenor and date for the unpurchased
balance of the stock issuable hereunder be delivered to the undersigned.
Dated: _______________
________________________________
(Signature of Registered Holder)
Instructions for issuance and
registration of Common Stock:
____________________________
Name of Registered Holder
(please print)
Social Security or Other Identifying
Number: ___________________________
Please deliver certificate to
the following address:
___________________________________
Street
___________________________________
City, State and Zip Code
Warrant
-------
<PAGE>
-20-
FORM OF ASSIGNMENT
------------------
(To be executed by the registered Holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of shares of
Common Stock covered thereby set forth hereinbelow unto:
Number of Shares
Name of Assignee Address of Common Stock
- ---------------- ------- ----------------
Dated: _________________
______________________________
Signature of Registered Holder
______________________________
Name of Registered Holder
(Please Print)
Witness:
__________________________
Warrant
-------
<PAGE>
ASSOCIATED HOLDINGS
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 31, 1992 is made and entered into by and among ASSOCIATED HOLDINGS,
INC., a Delaware corporation (the "Issuer"), each party hereto whose name
appears on the signature pages hereto (each an "Initial Holder" and collectively
the "Initial Holders"), and each other person or entity who may execute this
Agreement in the future or who may execute a separate agreement to be bound by
the terms hereof (each Initial Holder and each such other person or entity a
"Holder", and collectively the "Holders"). Capitalized terms not otherwise
defined herein have the meanings set forth in Section 8.
---------
WHEREAS, this Agreement is being executed and delivered by the parties
hereto in connection with their purchase of Registrable Securities; and
WHEREAS, in order to induce each such party to purchase Registrable
Securities, and as a condition precedent to such purchase, Issuer has agreed
to provide the registration rights with respect thereto as set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Requested Registrations.
-----------------------
(a) Registration Requests. From and after the date upon which Issuer
---------------------
shall have effected its initial Public Offering, upon the written request of a
Holder of at least 20% of the Registrable Securities requesting that Issuer
effect a registration under the Securities Act of all or part of such Holder's
Registrable Securities and specifying the number of Registrable Securities to be
registered and the intended method of disposition thereof (a "Registration
Request"), Issuer will promptly, and in no event more than ten (10) Business
Days after receipt of such Registration Request, give written notice (a "Notice
of Requested Registration") of such request to all other Holders of Registrable
Securities, and thereupon will use all commercially reasonable efforts to effect
the registration under the Securities Act of:
(A) the Registrable Securities which Issuer has been so requested to
register by such Requesting Holder, and
<PAGE>
(B) all other Registrable Securities the Holders of which have made
written requests to Issuer for registration thereof within twenty (20) days
after the giving of the Notice of Requested Registration (which requests shall
specify the intended method of disposition thereof),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities so to be registered. If
requested by the Holders of a majority of the Registrable Securities requested
to be included in any Requested Registration, the method of disposition of all
Registrable Securities included in such registration shall be an underwritten
offering effected in accordance with Section 4(a). Subject to subsection (e)
------------
below, Issuer may include in such registration other securities for sale for its
own account or for the account of any other Person.
(b) Limitations on Requested Registrations.
--------------------------------------
Notwithstanding anything herein to the contrary, Issuer shall not be required to
honor a request for a Requested Registration if:
(i) the consummation of an initial Qualified Public Offering by the
Issuer has not yet occurred;
(ii) in the case of a Long-Form Registration, Issuer has previously
effected two (2) Effective Long-Form Registrations;
(iii) in the case of a Short-Form Registration, Issuer has previously
effected three (3) Effective Short-Form Registrations;
(iv) such request is received by Issuer less than three hundred (300)
days following the effective date of any previous registration statement filed
in connection with a Requested Registration, regardless of whether any Holder of
Registrable Securities exercised its rights under this Agreement with respect to
such registration, unless such previous registration constituted a Cutback
Registration.
(c) Registration Statement Form. Requested Registrations shall be on
---------------------------
such appropriate registration form promulgated by the Commission as shall be
selected by Issuer, and shall be reasonably acceptable to the Holders of a
majority of the Registrable Securities to which such registration relates, and
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods specified in their request for such
registration, provided, that such registration form is available under the terms
--------
of this Agreement. Notwithstanding the foregoing, if Issuer selects a Form S-3
and the use of such form is available under the terms of this Agreement and is
permitted by law, the Holders of a majority of the Registrable Securities to
which such registration relates may notify Issuer in writing that, in the
judgment of such holders
2
<PAGE>
(or, if applicable, the Managing Underwriter), the inclusion of some or all of
the information required in a more detailed form specified in such notice is of
material importance to the success of the Public Offering of such Registrable
Securities, in which case Issuer shall supplement or amend the Form S-3 to
include such information.
(d) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with any Requested Registration.
(e) Priority in Cutback Registrations. If a Requested Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in any such registration, to
the extent of the number which the Managing Underwriter advises Issuer can be
sold in such offering, (i) first, the securities of Issuer proposed to be
-----
included in such registration in accordance with the priorities then existing
among Issuer and the holders of such securities pursuant to any agreement
between such holders and Issuer, including the Other Registration Rights
Agreement, (ii) second, any other securities of Issuer, including Registrable
------
Securities, proposed to be included in such registration pro rata among the
--- ----
holders thereof, including the Holders. Any securities excluded from such
registration shall be withdrawn from and shall not be included in such Requested
Registration.
2. Piggyback Registrations.
-----------------------
(a) Right to Include Registrable Securities. Notwithstanding any
---------------------------------------
limitation contained in Section 1, if Issuer at any time proposes after the date
---------
hereof to effect a Piggyback Registration, it will each such time give prompt
written notice (a "Notice of Piggyback Registration") to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 2, which Notice of Piggyback Registration shall include a
---------
description of the intended method of disposition of such securities. Upon the
written request of any such Holder made within fifteen (15) days after receipt
of a Notice of Piggyback Registration (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), Issuer will use all commercially
reasonable efforts to include in the registration statement relating to such
Piggyback Registration all Registrable Securities which Issuer has been so
requested to register. Notwithstanding the foregoing, if, at any time after
giving a Notice of Piggyback Registration and prior to the effective date of the
registration statement filed in connection with such registration, Issuer shall
determine for any reason not to register or to delay registration of such
securities, Issuer may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the
3
<PAGE>
Registration Expenses in connection therewith), without prejudice, however, to
the rights of any Requesting Holder entitled to do so to request that such
registration be effected as a Requested Registration under Section 1, and (ii)
---------
in the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities for the same period as the delay in
registering such other securities. No registration effected under this Section 2
---------
shall relieve Issuer of its obligations to effect a Requested Registration under
Section 1.
- ---------
(b) Registration Expenses. Issuer will pay all Registration Expenses
---------------------
incurred in connection with each Piggyback Registration.
(c) Priority in Cutback Registrations. If a Piggyback Registration
---------------------------------
becomes a Cutback Registration, Issuer will include in such registration to the
extent of the amount of the securities which the Managing Underwriter advises
Issuer can be sold in such offering:
(i) if such registration involves a primary offering of Issuer's
securities, (x) first, the securities proposed by Issuer to be sold for its own
-----
account, and (y) second any other securities of Issuer, including Registrable
------
Securities, proposed to be included in such registration pro rata among the
--- ----
holders thereof, including the Holders; and
(ii) if such registration does not involve a primary offering, (X)
first, any securities of Issuer proposed to be included in such registration in
- -----
accordance with the priorities then existing among Issuer and such holders
thereof pursuant to any agreement between such holders and Issuer, including
securities under the Other Registration Rights Agreement, and (y) second, any
------
other securities of Issuer to be included in such registration shall be
allocated among the holders thereof pro rata on the basis of the number of
--- ----
securities, including Registrable Securities, requested to be included by such
holders, including the Holders.
Any securities excluded from such registration shall be withdrawn from and shall
not be included in such Piggyback Registration.
3. Registration Procedures. If and whenever Issuer is required to use
-----------------------
all commercially reasonable efforts to effect the registration of any
Registrable Securities under the Securities Act pursuant to Section 1 or Section
-------- -------
2, Issuer will use all commercially reasonable efforts to effect the
- -
registration and sale of such Registrable Securities in accordance with the
intended methods of disposition thereof specified by the Requesting Holders.
Without limiting the foregoing, Issuer in each such case will, as expeditiously
as possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and use
4
<PAGE>
commercially reasonable efforts to cause such registration statement to become
effective as soon as practicable, provided that as far in advance as practical
--------
before filing such registration statement or any amendment or supplement
thereto, Issuer will furnish to the Requesting Holders copies of reasonably
complete drafts of all such documents proposed to be filed (including exhibits);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such registration
statement and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such registration
statement, in accordance with the intended methods of disposition thereof, until
the earlier of (i) such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement and (ii) two hundred and
seventy (270) days after such registration statement becomes effective;
(c) promptly notify each Requesting Holder and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any post
effective amendment thereto, when the same has become effective;
(ii) of any written request by the Commission for amendments or
supplements to such registration statement or prospectus;
(iii) of the notification to Issuer by the Commission of its
initiation of any proceeding with respect to the issuance by the Commission
of, or of the issuance by the Commission of, any stop order suspending the
effectiveness of such registration statement; and
(iv) of the receipt by Issuer of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale
under the applicable securities or blue sky laws of any jurisdiction;
(d) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the
5
<PAGE>
Securities Act relating to such holder's Registrable Securities, and such other
documents, as such seller may reasonably request to facilitate the disposition
of its Registrable Securities;
(e) use all commercially reasonable efforts to register or qualify all
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each holder thereof shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions, of the Registrable Securities
owned by such Holder, except that Issuer shall not for any such purpose be
required (i) to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this paragraph (e)
-------------
be obligated to be so qualified, (ii) to subject itself to taxation in any such
jurisdiction or (iii) to consent to general service of process in any
jurisdiction;
(f) use all commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable each Holder thereof to consummate the disposition of such Registrable
Securities;
(g) upon the request of (a) the Managing Underwriter, or (b) those
Requesting Holders who hold at least a majority of the Registrable Securities to
be included in a Requested Registration, effect a stock split in respect of the
Common Stock by means of a stock dividend on the Common Stock or a subdivision
of the Common Stock, or a combination of the Common Stock, such stock split or
combination to be in form, scope and substance satisfactory to the Managing
Underwriter or such Requesting Holders, as the case may be;
(h) use all commercially reasonable efforts to obtain a comfort letter
or comfort letters from the Issuer's independent public accountants in customary
form and covering such maters of the type customarily covered by comfort letters
as the Requesting Holders who hold at least a majority of the Registrable
Securities to be included in a Requesting Registration or the Managing
Underwriter reasonably request;
(i) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which any prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and at
6
<PAGE>
the request of any such holder promptly prepare and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading:
(j) otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, but not more than eighteen
(18) months, beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(k) make available for inspection by any Requesting Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of Issuer (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise any
due diligence responsibility, and cause Issuer's officers, directors and
employees to supply all information reasonably requested by any such Inspector
in connection with such registration statement, and permit the Inspectors to
participate in the preparation of such registration statement and any prospectus
contained herein and any amendment or supplement thereto.
(l) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement; and
(m) use all commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be listed, upon official
notice of issuance, on any securities exchange on which any of the securities of
the same class as the Registrable Securities are then listed.
Issuer may require each Holder of Registrable Securities as to which
any registration is being effected to, and each such Holder, as a condition to
including Registrable Securities in such registration, shall, furnish Issuer
with such information and affidavits regarding such Holder and the distribution
of such securities as Issuer may from time to time reasonably request in writing
in connection with such registration; provided, however, that Issuer will not
-----------------
file any registration statement under the Securities Act which refers to any
Holder of any Registrable Securities by name or otherwise as the Holder of any
securities of
7
<PAGE>
Issuer, unless it shall first have given to such Holder the right to require (a
---
the insertion therein of language, in form and substance satisfactory to such
Holder, to the effect that the holding by such Holder of such securities does
not make such holder a "controlling person" of Issuer within the meaning of the
Securities Act and is not to be construed as a recommendation by such holder of
the investment quality of the Issuer's debt or equity securities covered thereby
and that such holding does not imply that such Holder will assist in meeting any
future financial requirements of Issuer, or (b) in the event that such reference
---
to such Holder by name or otherwise is not required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference to
such Holder; provided that such Holder shall furnish to Issuer an opinion of
counsel reasonably acceptable to Issuer to such effect.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from Issuer of the
happening of any event of the kind described in paragraph (b), such Holder will
------------
forthwith discontinue such Holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (b) and, if so directed by Issuer, will
------------
deliver to Issuer (at Issuer's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. In the
event Issuer shall give any such notice, the period referred to in paragraph (b)
-------------
shall be extended by a number of days equal to the number of days during the
period from and including the giving of notice pursuant to paragraph (c) and to
-------------
and including the date when each Holder of any Registrable Securities covered by
such registration statement shall receive the copies of the supplemented or
amended prospectus contemplated by paragraph (b).
-------------
4. Underwritten Offerings.
----------------------
(a) Underwritten Requested Offerings. In the case of any
--------------------------------
underwritten Public Offering being effected pursuant to a Requested
Registration, the Managing Underwriter and any other underwriter or underwriters
with respect to such offering shall be selected, after consultation with Issuer,
by the Holders of a majority of the Registrable Securities to be included in
such underwritten offering with the consent of Issuer, which consent shall not
be unreasonably withheld. Issuer shall enter into an underwriting agreement in
customary form with such underwriter or underwriters, which shall include, among
other provisions, indemnities to the effect and to the extent provided in
Section 6. The Holders of Registrable Securities to be distributed by such
- ---------
underwriters shall be parties to such underwriting agreement and may, at their
option (if permitted by the underwriters), require that any or all of the
representations and warranties by, and the other agreements on the part of,
Issuer to and for the benefit of
8
<PAGE>
such underwriters also be made to and for their benefit and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement also be conditions precedent to their obligations. No
Holder of Registrable Securities shall be required to make any representations
or warranties to or agreements with Issuer or the underwriters other than
representations, warranties or agreements regarding such Holder and its
ownership of the securities being registered on its behalf and such Holder's
intended method of distribution and any other representation required by law. No
Requesting Holder may participate in such underwritten offering unless such
Holder agrees to sell its Registrable Securities on the basis provided in such
underwriting agreement and completes and executes all questionnaires, powers of
attorney, indemnities and other documents reasonably required under the terms of
such underwriting agreement. If any Requesting Holder disapproves of the terms
of an underwriting, such Holder may elect to withdraw therefrom and from such
registration by notice to Issuer and the Managing Underwriter, and each of the
remaining Requesting Holders shall be entitled to increase the number of
Registrable Securities being registered to the extent of the Registrable
Securities so withdrawn in the proportion which the number of Registrable
Securities being registered by such remaining Requesting Holder bears to the
total number of Registrable Securities being registered by all such remaining
Requesting Holders.
(b) Underwritten Piggyback Offerings. If Issuer at any time proposes
--------------------------------
to register any of its securities in a Piggyback Registration and such
securities are to be distributed by or through one or more underwriters, Issuer
will, subject to the provisions of Section 2(c), use its all commercially
------------
reasonable efforts to arrange for such underwriters to include the Registrable
Securities to be offered and sold by Requesting Holders among the securities to
be distributed by such underwriters, and such Holders shall be obligated to sell
their Registrable Securities in such Piggyback Registration through such
underwriters on the same terms and conditions as apply to the other Issuer
securities to be sold by such underwriters in connection with such Piggyback
Registration. The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between Issuer and
such underwriter or underwriters and may, at their option (if permitted by the
underwriters), require that any or all of the representations and warranties by,
and the other agreements on the part of, Issuer to and for the benefit of such
underwriters also be made to and for their benefit and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement also be conditions precedent to their obligations. No
Requesting Holder may participate in such underwritten offering unless such
Holder agrees to sell its Registrable Securities on the basis provided in such
underwriting agreement and completes and executes all questionnaires, powers of
attorney, indemnities and other documents reasonably required under the terms of
such underwriting agreement. If any Requesting
9
<PAGE>
Holder disapproves of the terms of an underwriting, such Holder may elect to
withdraw therefrom and from such registration by notice to Issuer and the
Managing Underwriter, and each of the remaining Requesting Holders shall be
entitled to increase the number of Registrable Securities being registered to
the extent of the Registrable Securities so withdrawn in the proportion which
the number of Registrable Securities being registered by such remaining
Requesting Holder bears to the total number of Registrable Securities being
registered by all such remaining Requesting Holders.
5. Holdback Agreements By Issuer and Other Securityholders and
-----------------------------------------------------------
Right to Defer Filing.
- ---------------------
(a) Holdbacks. Unless the Managing Underwriter otherwise agrees,
---------
Issuer and each Holder of Registrable Securities agrees not to effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the fourteen
(14) days prior to and the one hundred and eighty (180) days after the effective
date of the registration statement filed in connection with an underwritten
offering made pursuant to a Requested Registration (or for such shorter period
of time as is sufficient and appropriate, in the opinion of the Managing
Underwriter, in order to complete the sale and distribution of the securities
included in such registration), except as part of such underwritten registration
and except pursuant to registrations on Form S-4 or Form S-8 promulgated by the
Commission or any successor or similar forms thereto.
(b) Deferral of Filing. The Issuer may defer the filing of a
------------------
registration statement required by Section 1 hereunder for a period of 180 days
if (i) at the time the Issuer receives a Registration Request, the Issuer or any
of its subsidiaries are engaged in confidential negotiations or other
confidential business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration statement
were not filed), and the Board of Directors of the Issuer determines in good
faith that such disclosure would be materially detrimental to the Issuer and its
stockholders, or (ii) Issuer had received, prior to receiving the Registration
Request, a request to register securities of the Issuer from a different holder
thereof having priority as to registration over the Holders of Registrable
Securities (a "preferred request") and is proceeding with reasonable diligence
to comply with the preferred request, or (iii) prior to receiving the
Registration Request, the Board of Directors had determined to effect a
registered underwritten public offering of the Issuer's equity securities for
the Issuer's account and the Issuer had taken substantial steps (including,
without limitation, selecting and entering into a letter of intent with the
managing underwriter for such offering) and is proceeding with reasonable
diligence to effect such offering. A deferral of the filing of a registration
statement pursuant to this Section 5(b) shall be lifted, and the
10
<PAGE>
requested registration statement shall be filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed or terminated, or, in the case of a deferral
pursuant to clause (ii) of the preceding sentence, the preferred request is
withdrawn, or in the case of a deferral pursuant to clause (iii) of the
preceding sentence, the proposed registration for the Issuer's account is
abandoned. In order to defer the filing of a registration statement pursuant to
this Section 5(b), the Issuer shall promptly, upon determining to seek such
deferral, deliver to each Requesting Holder a certificate signed by the
President of the Issuer stating that the Issuer is deferring such filing
pursuant to this Section 5(b) and the basis therefor in reasonable detail.
Within 20 days after receiving such certificate the Holders of a majority of the
Registrable Securities held by the Requesting Holders and for which registration
was previously requested may withdraw such request by giving notice to the
Issuer. If withdrawn, the Registration Request shall be deemed not to have been
made for all purposes of this Agreement.
6. Indemnification.
---------------
(a) Indemnification by Issuer. Issuer shall, to the full extent
-------------------------
permitted by law, indemnify and hold harmless each seller of Registrable
Securities included in any registration statement filed in connection with a
Requested Registration or a Piggyback Registration, its directors and officers,
and each other Person, if any, who controls any such seller within the meaning
of the Securities Act, against any losses, claims, damages, expenses or
liabilities, joint or several (together, "Losses"), to which such seller or any
such director or officer or controlling Person may become subject under the
Securities Act or otherwise, insofar as such Losses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, and Issuer will reimburse such seller and
each such director, officer and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such Loss (or action or proceeding in respect thereof); provided
--------
that Issuer shall not be liable in any such case to the extent that any such
Loss (or action or proceeding in respect thereof) arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in any such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to Issuer through an instrument
duly executed by such seller specifically stating that
11
<PAGE>
it is for use in the preparation thereof. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
seller or any such director, officer or controlling Person, and shall survive
the transfer of such securities by such seller. Issuer shall also indemnify
each other Person who participates (including as an underwriter) in the offering
or sale of Registrable Securities, their officers and directors and each other
Person, if any, who controls any such participating Person within the meaning of
the Securities Act to the same extent as provided above with respect to sellers
of Registrable Securities.
(b) Indemnification by the Sellers. Each Holder of Registrable
------------------------------
Securities which are included or are to be included in any registration
statement filed in connection with a Requested Registration or a Piggyback
Registration, as a condition to including Registrable Securities in such
registration statement, shall, to the full extent permitted by law, indemnify
and hold harmless Issuer, its directors and officers, and each other Person, if
any, who controls Issuer within the meaning of the Securities Act, against any
Losses to which Issuer or any such director or officer or controlling Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
Issuer through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided however, that the obligation to provide indemnification
-------- -------
pursuant to this Section 6(b) shall be several, and not joint and several, among
------------
such Indemnifying Parties and the aggregate amount which may be recovered from
any holder of Registrable Securities pursuant to the indemnification provided
for in this Section 6(b) in connection with any registration and sale of
------------
Registrable Securities shall be limited to the total proceeds received by such
holder from the sale of such Registrable Securities. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of Issuer or any such director, officer or controlling Person and shall
survive the transfer of such securities by such seller. Such holders shall also
indemnify each other Person who participates (including as an underwriter) in
the offering or sale of Registrable Securities, their officers and directors and
each other Person, if any, who controls any such
12
<PAGE>
participating Person within the meaning of the Securities Act to the same extent
as provided above with respect to Issuer.
(c) Notices of Claims, etc. Promptly after receipt by an Indemnified
-----------------------
Party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraph (a) or (b) of this Section 6, such
-------------------- ---------
Indemnified Party will, if a claim in respect thereof is to be made against an
Indemnifying Party pursuant to such paragraphs, give written notice to the
latter of the commencement of such action, provided that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying of its obligations under the preceding paragraphs of this Section
-------
6, except to the extent that the Indemnifying Party is actually prejudiced by
- -
such failure to give notice. In case any such action is brought against an
Indemnified Party, the Indemnifying Party shall be entitled to participate in
and, unless, in the reasonable judgment of any Indemnified Party, a conflict of
interest between such Indemnified Party and any Indemnifying Party exists with
respect to such claim, to assume the defense thereof, jointly with any other
Indemnifying Party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the Indemnifying Party to such Indemnified Party of its election so to assume
the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party may participate in such
--------
defense at the Indemnified Party's expense; and provided further that the
-------- -------
Indemnified Party or Indemnified Parties shall have the right to employ one
counsel to represent it or them if, in the reasonable judgment of the
Indemnified Party or Indemnified Parties, it is advisable for it or them to be
represented by separate counsel by reason of having legal defenses which are
different from or in addition to those available to the Indemnifying Party, and
in that event the reasonable fees and expenses of such one counsel shall be paid
by the indemnifying Party. If the Indemnifying Party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for the Indemnified Parties with
respect to such claim, unless in the reasonable judgment of any Indemnified
Party a conflict of interest may exist between such Indemnified Party and any
other Indemnified Parties with respect to such claim, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of such
additional counsel for the Indemnified Parties or counsels. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
13
<PAGE>
(d) Contribution. If the indemnity and reimbursement obligation
------------
provided for in any paragraph of this Section 6 is unavailable or insufficient
---------
to hold harmless an Indemnified Party in respect of any Losses (or actions or
proceedings in respect thereof) referred to therein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such Losses (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other hand in connection
with statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this paragraph were to be determined by pro rata allocation or by any
--- ----
other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this paragraph. The amount
paid by an Indemnified Party as a result of the Losses referred to in the first
sentence of this paragraph shall be deemed to include any legal and other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any Loss which is the subject of this paragraph.
No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding paragraphs of this Section 6 (with appropriate modifications)
---------
shall be given by Issuer and each seller of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority other than the
Securities Act. The provisions of this Section 6 shall be in addition to any
---------
other rights to indemnification or contribution which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
(f) Indemnification Payments. The indemnification required by this
------------------------
Section 6 shall be made by periodic payments of the amount thereof during the
- ---------
course of the investigation or defense, as and when bills are received or Losses
are incurred.
7. Covenants Relating to Rule 144 and 144A. If at any time Issuer
---------------------------------------
is required to file reports in compliance with either
14
<PAGE>
Section 13 or Section 15(d) of the Exchange Act, Issuer will file reports in
compliance with the Exchange Act, will comply with all rules and regulations of
the Commission applicable in connection with the use of Rule 144 and
take such other actions and furnish such holder with such other information as
such Holder may request in order to avail itself of such rule or any other rule
or regulation of the Commission allowing such holder to sell any Registrable
Securities without registration, and will, at its expense, forthwith upon the
request of any Holder of Registrable Securities, deliver to such holder a
certificate, signed by Issuer's principal financial officer, stating (a)
Issuer's name, address and telephone number (including area code), (b) Issuer's
Internal Revenue Service identification number, (c) Issuer's Commission file
number, (d) the number of shares of each class of Stock outstanding as shown by
the most recent report or statement published by Issuer, and (e) whether Issuer
has filed the reports required to be filed under the Exchange Act for a period
of at least ninety (90) days prior to the date of such certificate and in
addition has filed the most recent annual report required to be filed
thereunder. If at any time Issuer is not required to file reports in compliance
with either Section 13 or Section 15(d) of the Exchange Act, Issuer at its
expense will, forthwith upon the written request of the holder of any
Registrable Securities, make available adequate current public information with
respect to Issuer within the meaning of paragraph (c)(2) of Rule 144.
With a view to making available to each Holder of Registrable
Securities the benefits of certain rules and regulations of the Commission
which may permit the sale of the Registrable Securities to the public without
registration, Issuer agrees that so long as a Holder owns any Registrable
Securities, each Holder of Registrable Securities and each prospective Holder of
Registrable Securities who may consider acquiring Registrable Securities in
reliance upon Rule 144A shall have the right to request from Issuer, and Issuer
will provide upon request, such information regarding Issuer and its business,
assets and properties, if any, as is at the time required to be made available
by Issuer under Rule 144A so as to enable such Holder to transfer Registrable
Securities to such prospective Holder in reliance upon Rule 144A.
8. Definitions.
-----------
(a) In addition to other terms defined elsewhere in this Agreement,
except as otherwise specifically indicated, the following terms will have the
following meanings for all purposes of this Agreement:
"Agreement" means this Registration Rights Agreement, as the same
---------
shall be amended from time to time.
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Chicago, Illinois are authorized and required by
law to close.
15
<PAGE>
"Common Stock" means the Class A Common Stock of the Issuer, par value
------------
$0.01 per share, and any voting trust certificates representing shares of Class
A Common Stock issued pursuant to that certain Voting Trust Agreement of even
date herewith among the Issuer, and the voting trustees and beneficiaries named
therein, as amended, modified, or supplemented from time to time.
"Commission" means the Securities and Exchange Commission or any
----------
successor governmental agency.
"Cutback Registration" means any Requested Registration or Piggyback
--------------------
Registration to be effected as an underwritten Public Offering in which the
Managing Underwriter with respect thereto advises Issuer and the Requesting
Holders in writing that, in its opinion, the number of Securities requested to
be included in such registration (including securities of Issuer which are not
Registrable Securities) exceed the number which can be sold in such offering
without a reduction in the selling price anticipated to be received for the
securities to be sold in such Public Offering.
"Effective Long-Form Registration" means a Long-Form Registration
--------------------------------
that results in an Effective Registration.
"Effective Registration" means a Requested Registration which (a) has
----------------------
been declared or ordered effective in accordance with the rules of the
Commission, (b) has been kept effective for the period of time contemplated by
Section 3 (b) and (c) has resulted in the Registrable Securities requested to be
- ------------
included in such registration actually being sold (except by reason of some act
or omission on the part of the Requesting Holders); provided that a Cutback
--------
Registration shall not be an Effective Registration for purposes of this
Agreement; and provided, further, that a Requested Registration in which Issuer
includes
- -----------------
securities for sale for the account of Issuer shall not be an Effective
Registration for purposes of this Agreement. Notwithstanding the foregoing, a
registration that does not become effective after it has been filed with the
Commission solely by reason of the refusal to proceed of the Requesting Holders
shall be deemed to be an Effective Registration for purposes of this Agreement.
"Effective Short-Form Registration" means a Short-Form Registration
---------------------------------
that results in an Effective Registration.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Form S-1" means Form S-1 promulgated by the Commission under the
--------
Securities Act, or any successor or similar long-form registration statement.
16
<PAGE>
"Form S-2" means Form S-2 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Form S-3" means Form S-3 promulgated by the Commission under the
--------
Securities Act, or any successor or similar short-form registration statement.
"Holder" has the meaning ascribed to it in the preamble.
------
"Indemnified Party" means a party entitled to indemnity in accordance
-----------------
with Section 6.
---------
"Indemnifying Party" means a party obligated to provide indemnity in
------------------
accordance with Section 6.
---------
"Initial Holder" has the meaning ascribed to it in the preamble.
--------------
"Inspectors" has the meaning ascribed to it in Section 3(k).
---------- ------------
"Issuer" has the meaning ascribed to it in the preamble.
------
"Long-Form Registration" means a Requested Registration effected by
----------------------
the filing of a registration statement on Form S-1 with the Commission.
"Losses" has the meaning ascribed to it in Section 6(a).
------ ------------
"Managing Underwriter" means, with respect to any Public Offering, the
--------------------
underwriter or underwriters managing such Public Offering.
"NASD" means the National Association of Securities Dealers.
----
"Notice of Piggyback Registration" has the meaning ascribed to it
--------------------------------
in Section 2(a).
------------
"Notice of Requested Registration" has the meaning ascribed to it
--------------------------------
in Section 1(a).
------------
"Other Registration Rights Agreement" means the Registration Rights
-----------------------------------
Agreement dated of even date herewith entered into between the Issuer, and Chase
Manhattan Investment Holdings, Inc., as the same may be amended from time to
time.
"Person" means an individual, partnership, limited partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity of whatever nature.
17
<PAGE>
"Piggyback Registration" means any registration of equity securities
----------------------
of Issuer under the Securities Act (other than a registration in respect of a
dividend reinvestment or similar plan for stockholders of Issuer or on Form S-4
or Form S-8 promulgated by the Commission, or any successor or similar forms
thereto), whether for sale for the account of Issuer or for the account of any
holder of securities of Issuer (other than Registrable Securities).
"Public Offering" means any offering of Common Stock to the public,
---------------
either on behalf of Issuer or any of its securityholders, pursuant to an
effective registration statement under the Securities Act.
"Records" has the meaning ascribed to it in Section (3)k.
------- ------------
"Registrable Securities" means Common Stock held by a Holder,
----------------------
including shares of Common Stock represented by voting trust certificates, and
any other securities of Issuer held by a Holder and issued or issuable with
respect to Common Stock by way of a stock dividend or stock split or in
connection with a combination of shares or recapitalization. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (x) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (y) they shall have been distributed to the public pursuant to Rule
144, or (z) they shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to Issuer's
---------------------
performance of or compliance with its obligations under this Agreement to effect
the registration of Registrable Securities in a Requested Registration or a
Piggyback Registration, including, without limitation, all registration, filing,
securities exchange listing and NASD fees, all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for Issuer and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of a single counsel and single
firm of accountants retained by the holders of a majority of the Registrable
Securities being registered, premiums and other costs of policies of insurance
against liabilities arising out of the Public Offering of the Registrable
Securities being registered, but excluding underwriting fees, discounts and
commissions and transfer taxes, if any, in respect of Registrable Securities,
and fees and disbursements of counsel for any underwriter, which shall be
payable by each Holder thereof.
18
<PAGE>
"Registration Request" has the meaning ascribed to it in Section 1(a).
-------------------- ------------
"Requesting Holders" means, with respect to any Requested Registration
------------------
or Piggyback Registration, the holders of Registrable Securities requesting to
have Registrable Securities included in such registration in accordance with
this Agreement.
"Requested Registration" means any registration of Registrable
----------------------
Securities under the Securities Act effected in accordance with Section 1.
---------
"Rule 144" means Rule 144 promulgated by the Commission under the
--------
Securities Act, and any successor provision thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Short-Form Registration" means a Requested Registration effected by
-----------------------
the filing of a registration statement on Form S-2 or Form S-3 with the
Commission.
(b) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer
to this entire Agreement; and (iv) the term "Section" refers to the specified
Section of this Agreement. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified.
9. Miscellaneous.
-------------
(a) Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by facsimile or by reputable express
courier service (charge prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, such notices,
demands and other communications will be sent to each party to this Agreement at
the address indicated on the signature pages hereto, or to such other address or
to the signature pages hereto, or to such other address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party.
(b) Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
19
<PAGE>
(c) Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument (which may be executed in any number of
counterparts) duly executed by or on behalf of each of Issuer and Persons owning
two-thirds or more of the Registrable Securities; provided however, that any
-------- -------
amendment or modification of this Section 9(c) shall be duly executed by or on
------------
behalf of each of the Issuer and each holder of Registrable Securities; and
further provided that no such amendment, supplement or modification that
materially and adversely affects the rights of a party hereunder shall be
enforceable against such party until such party has consented in writing to
such amendment, supplement or modification (provided that any amendment,
supplement or modification made for the purpose of adding an additional party
hereto shall not be deemed to materially or adversely affect the rights of any
party hereto).
(d) Waiver. Subject to paragraph (e) of this Section, any term or
------ -------------
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same term or condition of this Agreement on any
future occasion.
(e) Consents and Waivers by Holders of Registrable Securities. Any
---------------------------------------------------------
consent of the Holders of Registrable Securities pursuant to this Agreement, and
any waiver by such Holders of any provision of this Agreement, shall be in
writing (which may be executed in any number of counterparts) and may be given
or taken by Persons owning two-thirds or more of the Registrable Securities, and
any such consent or waiver so given or taken will be binding on all the Holders
of Registrable Securities.
(f) No Third Party Beneficiary. The terms and provisions of this
--------------------------
Agreement are intended solely for the benefit of each party hereto, their
respective successors or permitted assigns and any other holder of Registrable
Securities, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Section 6.
---------
(g) Successors and Assigns. This Agreement is binding upon, inures
----------------------
to the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
(h) Headings. The headings used in this Agreement have been inserted
--------
for convenience of reference only and do not define or limit the provisions
hereof.
(i) Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any
20
<PAGE>
party hereto under this Agreement will not be materially and adversely affected
thereby, (i) such provision will be fully severable, (ii) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, and (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
(j) Remedies. Except as otherwise expressly provided for herein, no
--------
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver by any such party of the right to pursue any other available remedies.
Damages in the event of breach of this Agreement by a party hereto or
any other Holder of Registrable Securities would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and Issuer and each Holder of Registrable
Securities, by its acquisition of such Registrable Securities, hereby waives any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.
(k) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
(l) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
ASSOCIATED HOLDINGS, INC., a
Delaware corporation
By:
--------------------------------------
Name: Thomas W. Sturgess
Title: Chairman of the Board and
Chief Executive Officer
Address:
1075 Hawthorne Drive
Itasca, IL 60143
Telecopy No.: 708-773-6491
with a copy to:
WINGATE PARTNERS, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Telecopy No.: 214-871-8799
WINGATE PARTNERS, L.P., a Delaware
limited partnership
By: Wingate Management Company,
L.P., a Delaware limited
partnership, its general partner
By:
--------------------------------------
Thomas W. Sturgess,
General Partner
Address:
750 North St. Paul
Suite 1200
Dallas, TX 75201
Telecopy No.: 214-871-8799
22
<PAGE>
CUMBERLAND CAPITAL CORPORATION,
a Delaware corporation
By:
--------------------------------------
Gary G. Miller,
President
Address:
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
Telecopy No.: 817-870-2685
ASI Partners, L.P., a Delaware
limited partnership
By: CUMBERLAND CAPITAL CORPORATION,
a Delaware corporation,
its general partner
By:
--------------------------------------
Name: Gary G. Miller
Title: President
Address:
301 Commerce Street
Suite 3300
Fort Worth, TX 76102
Telecopy No.: 817-870-2685
GOOD CAPITAL CO., INC., a Delaware
corporation
By:
--------------------------------------
Name: Daniel J. Good
Title: President
Address:
1211 Lake Road
Lake Forest, IL 60045
Telecopy No.: 708-234-8663
23
<PAGE>
BOISE CASCADE CORPORATION, a
Delaware corporation
By:
--------------------------------------
Carol Moerdyk,
Vice President
Address:
One Jefferson Square
Boise, Idaho 83702
ATTN: General Counsel
Telecopy No.: 208-384-7945
-----------------------------------------
Michael D. Rowsey
Address:
2370 Sonnington Drive
Dublin, OH 43017
Telecopy No.: 614-876-4922
-----------------------------------------
Daniel J. Schleppe
Address:
20 The Landing
Atlanta, GA 30350
Telecopy No.:
--------------
-----------------------------------------
Robert W. Eberspacher
Address:
6907 Huntfield Drive
Charlotte, NC 28270
Telecopy No.:
--------------
-----------------------------------------
Lawrence E. Miller
Address:
415 Sterling Road
Kenilworth, IL 60043
Telecopy No.:
--------------
24
<PAGE>
ANNEX 3
January 31, 1992
The Parties to the Investor Warrant Agreement
dated as of January 31, 1992.
Gentlemen:
We have acted as counsel to Associated Holdings, Inc., a Delaware
corporation ("Holdings"), in connection with the authorization, execution and
delivery of the Investor Warrant Agreement dated as of January 31, 1992 (the
"Warrant Agreement") between Holdings and Boise Cascade Corporation ("Boise
Cascade") and the other parties named therein. All capitalized terms used but
not defined herein have the respective meanings given to such terms in the
Warrant Agreement.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Warrant Agreement and such corporate
records, agreements, documents, and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
Holdings, and have made such inquiries of such officers and representatives as
we have deemed relevant and necessary as a basis for the opinion hereinafter
set forth.
In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of Holdings, and upon the representations and
warranties of Holdings contained in the Agreement.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. Holdings is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
2. Holdings has all requisite corporate power and authority to execute
<PAGE>
2
January 31, 1992
and deliver the Warrant Agreement, the Investor Warrants for 23,129 shares of
Class A Common Stock of Holdings (the "Warrant") issued to Boise Cascade (the
"Warrants") and the Investor Registration Rights Agreement, dated as of January
31, 1992 between Holdings and Boise Cascade (the "Registration Agreement"), and
to perform its obligations thereunder. The execution, delivery and performance
by Holdings of the Warrant Agreement, the Warrants and the Registration
Agreement, and the consummation by Holdings of the transactions contemplated
thereby, have been duly authorized by all necessary corporate action on the part
of Holdings. The Warrant Agreement, the Warrants and the Registration Agreement
have been duly and validly executed and delivered by Holdings and (assuming the
due authorization, execution and delivery thereof by the other parties thereto)
constitute legal, valid, and binding obligations of Holding, enforceable against
it in accordance with their respective terms subject to (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws generally affecting creditors' rights and remedies; (ii) general
principles of equity, including principles of commercial reasonableness, good
faith, and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity); (iii) the availability or efficacy of specific
performance, injunctive relief or any other equitable remedies; and (iv) except
to the extent that rights to indemnification thereunder may be limited by
federal or state securities laws or public policy relating thereto.
3. The authorized capital stock of Holdings consists of 5,000,000 share of
Class A Common Stock, $0.01 par value per share, 5,000,000 of Class B Common
Stock, $0.01 par value per share, 15,000 shares of Class A Preferred Stock,
$0.01 par value per share, 15,000 shares of Class B Preferred Stock, $0.01 par
value per share, 15,000 shares of Class C Preferred Stock $0.01 par value per
share, and 200,000 shares of Additional Preferred Stock, $0.01 par value per
share. As of the date hereof, Holdings has outstanding (i) 896,258 shares of
Class A Common Stock; (ii) 5,000 shares of Class A Preferred Stock; (iii) 5,000
shares of Class B Preferred Stock; and (iv) 7,500 shares of Class C Preferred
Stock. All such shares of capital stock of Holdings outstanding as of the
Closing are duly authorized, validly issued, fully paid and nonassessable,
provided that we do not express any opinion as to whether the 46,258 shares of
- --------
Common Stock issued to Good Capital Co., Inc. and Cumberland Capital
Corporation, collectively, pursuant to Investment Banking Fee and Management
Agreements with such parties are validly issued, fully paid and non-assessable.
Our opinions expressed above are limited to the laws of the State of
Illinois, the General Corporation Law of the State of Delaware and the Federal
laws of the United States of America. Partner of this Firm are members of the
Bar of the State of Illinois, and we do not hold ourselves out as being
conversant with, and do not express any opinion as to, laws of any jurisdiction
other than those of the United States of America, the State of Illinois and the
General Corporation Law of the State of Delaware. Our opinions are rendered only
with respect to the laws, and the rules, regulations and orders thereunder,
which currently are in effect.
<PAGE>
3
January 31, 1992
This opinion is provided to you and rendered solely for your benefit in
connection with entering into the Agreement. This opinion may not be used or
relied upon by any other person or for any other purpose and may not be
disclosed, quoted, filed with a governmental agency or otherwise referred to
without our prior written consent.
Very truly yours,
D'ANCONA & PFLAUM
By:
---------------------------
Suzanne L. Saxman
cc: Associated Holdings, Inc.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ASSOCIATED HOLDINGS, INC.
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as following:
ARTICLE ONE
-----------
The name of the Corporation is Associated Holdings, Inc.
ARTICLE TWO
-----------
The registered office of the Corporation is to be located at 1209
Orange Street in the City of Wilmington in the County of New Castle, in the
State of Delaware. The name of its registered agent at that address is the
Corporation Trust Company.
ARTICLE THREE
-------------
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,245,000 shares, consisting of
(a) 15,000 shares of a class designated as Class A Preferred Stock, par value
$0.01 per share (the "Class A Preferred Stock"); (b) 15,000 shares of a class
designated as Class B Preferred Stock, par value $0.01 per share (the "Class B
Preferred Stock"); (c) 15,000 shares of a class designated as Class C Preferred
Stock, par value $0.01 (the "Class C Preferred Stock"); (d) 200,000 shares of a
class of preferred stock, par value of $0.01 per share, as to which the Board of
Directors shall have the authority set forth in Article Five (the "Additional
Preferred Stock"); (e) 5,000,000 shares of a class designated as Class A Common
Stock, par value of $0.01 per share (the "Common Stock"); and (f) 5,000,000
shares of a class designated as Class B Common Stock, par value $0.01 per share
(the "Nonvoting Common Stock").
The following is a statement of the designations and the powers,
preferences, and rights and the qualifications, limitations, and restrictions of
the Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock,
Common Stock, and Nonvoting Common Stock:
<PAGE>
I. Terms Applicable to the Class A Preferred Stock.
-----------------------------------------------
1.1 Dividends. (a) Subject to the provisions of Sections 1.1(b),
---------
1.2(f), and 1.2(h) the holders of Class A Preferred Stock shall be entitled to
receive, as and when declared by the Board of Directors of the Corporation out
of funds legally available for such purpose, dividends on the outstanding shares
of Class A Preferred Stock at the Class A Preferred Dividend Rate, payable on
each Preferred Dividend Payment Date to holders of record as they appear on the
stock transfer books of the Corporation on such record dates, not more than 60
days nor less than 10 days preceding the payment dates for such dividends, as
are fixed by the Board of Directors (or, to the extent permitted by applicable
law, a duly authorized committee thereof). Such dividends shall be cumulative
and shall accrue with respect to each share of Class A Preferred Stock, whether
or not declared, whether or not restricted by the terms of the Debt Agreements
or otherwise pursuant to the provisions hereof, and whether or not there are
funds legally available for the payment thereof until paid. The dividends on the
Class A Preferred Stock may be declared payable in cash or in additional shares
of Class A Preferred Stock valued at $1,000 per share, in the discretion of the
Board of Directors. No other dividends may be declared or paid to the holders of
Class A Preferred Stock. All dividends declared by the Board of Directors upon
shares of Class A Preferred Stock in accordance with this Section 1.1(a) shall
be declared and paid pro rata with respect to all shares of Class A Preferred
Stock then outstanding.
(b) If at any time the Corporation shall have failed to pay any
accumulated dividends on any shares of Class A Preferred Stock on any Preferred
Dividend Payment Date as provided above, or if at any time the Corporation shall
have failed to redeem shares of Class A Preferred Stock as required by Section
1.2(a) for any reason, the Corporation shall not
(i) declare or pay any dividend on any Junior Shares or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any Junior Shares
or make any distribution with respect thereto, either directly or
indirectly and whether in cash or property or in obligations or shares
(other than in Junior Shares) of the Corporation or any Subsidiary,
(ii) purchase any shares of Class A Preferred Stock (except for a
consideration payable in Junior Shares) or redeem fewer than all of the
shares of Class A Preferred Stock then outstanding, or
2
<PAGE>
(iii) permit any Subsidiary to purchase any Junior Shares or permit
any Subsidiary to purchase fewer than all of the shares of Class A
Preferred Stock then outstanding,
unless, at the time of any such dividend, payment, distribution, purchase or
redemption, all accrued and unpaid dividends on shares of Class A Preferred
Stock are contemporaneously paid in full in cash or additional shares of Class A
Preferred Stock and all shares of Class A Preferred Stock which the Corporation
shall have so failed to redeem are contemporaneously redeemed.
1.2 Redemption.
----------
(a) Scheduled Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, the Corporation shall redeem all, but not less
than all, shares of Class A Preferred Stock on July 31, 1999, out of funds
legally available for such purpose, at a price per share equal to the Redemption
Price.
(b) Mandatory Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, in the event of the occurrence of a Cash-Out
Event, the Corporation agrees, at the election of any holder of then outstanding
shares of Class A Preferred Stock made as set forth in Section 1.2(i) below, to
redeem all, but not less than all, of such holder's shares of Class A Preferred
Stock then outstanding, out of funds legally available for such purpose, at a
price per share equal to the Redemption Price therefor. If pursuant to such
Cash-Out Event the holders of Common Stock of the Corporation receive cash,
Marketable Securities or a combination thereof, then, at the option of the
Corporation, the Corporation may, in lieu of the cash redemption contemplated in
the immediately preceding sentence, redeem such Class A Preferred Stock by
converting each such share into such cash, Marketable Securities or a
combination thereof, in the same proportions as the holders of Common Stock of
the Corporation so receive, the value of which shall equal the Redemption Price.
(c) Redemptions at Option of Corporation. At any time, and from time
------------------------------------
to time, the Corporation may, at its election, redeem, out of funds legally
available for such purpose, any portion or all of the Class A Preferred Stock
then outstanding at a price per share equal to the Redemption Price. Any
redemption of shares pursuant to this Section 1.2(c) will be made ratably (as
nearly as practicable) among the holders of the Class A Preferred Stock based
upon the number of shares held by each such holder.
(d) Optional Redemption through Note Exchange.
-----------------------------------------
(i) Subject to the provisions of subdivision (iv) of this Section
1.2(d), at the option of the Corporation, the
3
<PAGE>
Corporation may, at any time out of funds legally available for such
purpose, redeem all, but not less than all, shares of the Class A Preferred
Stock then outstanding in exchange for, and through the issue by the
Corporation in the manner provided in this subdivision of, Class A Exchange
Notes to be issued under the Class A Indenture. Such exchange, if any,
shall be a redemption of the Class A Preferred Stock in exchange for the
Class A Exchange Notes. The Class A Exchange Notes issued to each holder
shall be in an aggregate principal amount equal to the Liquidation Value of
the shares of Class A Preferred Stock redeemed by the Corporation in
exchange therefor.
(ii) Not more than 60 nor less than 30 days prior to the exchange
date, the Corporation shall mail irrevocable written notice, by registered
or certified mail, postage prepaid and return receipt requested, to each
record holder (and, to the extent such holder is a corporation, to the
attention of its Chief Executive Officer and its Corporate Secretary),
specifying the exchange date and the time and place where certificates
representing shares of Class A Preferred Stock are to be surrendered for
Class A Exchange Notes. Upon mailing such notice, the Corporation will be
obliged to redeem all shares of Class A Preferred Stock in exchange for the
Class A Exchange Notes on the exchange date specified in such notice. Upon
surrender in accordance with such notice of the certificates evidencing any
shares of Class A Preferred Stock so exchanged (properly endorsed or signed
for transfer, if the Corporation shall require and the notice shall so
state), the Corporation will cause the Class A Exchange Notes to be
authenticated and issued in exchange for such shares of Class A Preferred
Stock and to be mailed to the holder of the shares of Class A Preferred
Stock at such holder's address of record or such other address as the
holder shall specify upon such surrender of such certificates.
(iii) On the exchange date, (A) the shares of Class A Preferred Stock
subject to such exchange and redemption shall cease to be entitled to any
dividends accruing after the exchange date, (B) all rights of the
respective holders of such shares, as stockholders of the Corporation by
reason of the ownership of such shares, except the right to receive the
Class A Exchange Notes upon surrender (and endorsement, if required by the
Corporation) of the respective certificates representing such shares, shall
cease, (C) such shares shall cease to be outstanding, and (D) the person or
persons entitled to receive the Class A Exchange Notes issuable upon such
exchange shall be treated for all purposes as the registered holder or
holders of Class A Exchange Notes: provided, however, that interest shall
-----------------
not begin to accrue on any such Class A Exchange Note issuable
4
<PAGE>
to a holder of Class A Preferred Stock until such time as such holder
surrenders the certificate or certificates evidencing such shares of Class
A Preferred Stock.
(iv) The Corporation may redeem shares of Class A Preferred Stock in
exchange for Class A Exchange Notes only if, on the Exchange Date, (x) the
Corporation has paid all accrued dividends on all outstanding shares of
Class A Preferred Stock and (y) the Class A Indenture shall be executed and
delivered by the Corporation and the trustee thereunder.
(e) Redemption Price. For each share of Class A Preferred Stock which
----------------
is to be redeemed for cash the Corporation will be obligated on the Redemption
Date to pay to the holder thereof (upon surrender of the certificate
representing such share to the Corporation's stock transfer agent, or if none,
to the Corporation at its principal office) an amount in cash equal to the
Redemption Price. If the funds of the Corporation legally available for
redemption of shares of Class A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares to be redeemed on such date,
those funds which are legally available shall be used to redeem the maximum
possible number of shares ratably (as nearly as practicable) among the holders
of the shares to be redeemed based upon the aggregate Redemption Price of such
shares held by each such holder. As and when additional funds of the Corporation
are legally available for the redemption of shares, such funds shall as soon as
practicable be used to redeem the balance of the shares which the Corporation
has become obligated to redeem on any Redemption Date.
(f) Dividends after Redemption Date. Subject to any limitations
-------------------------------
contained elsewhere in this ARTICLE FOUR, no share of Class A Preferred Stock is
entitled to any dividends accruing after the redemption of such share. Subject
to any limitations contained elsewhere in this ARTICLE FOUR, on the date of such
redemption dividends will cease to accrue, all rights of the holder of such
share as such holder will cease, and such shares will be deemed not to be
outstanding.
(g) Redeemed or Otherwise Acquired Shares. Any shares of Class A
-------------------------------------
Preferred Stock which are redeemed or otherwise acquired by the Corporation will
be retired and cancelled and may not be reissued.
(h) Restrictions on Dividends and Redemptions. Notwithstanding
-----------------------------------------
anything in this ARTICLE FOUR to the contrary, no dividend payment or other
distribution or redemption may be made with respect to Class A Preferred Stock
if such payment or other distribution or redemption will be in contravention of
the restrictions or limitations on such payments or other
5
<PAGE>
distributions or redemptions contained in (i) this ARTICLE FOUR, (ii) the Debt
Agreements, (iii) the Subordinated Note, or (iv) any and all applicable state or
federal laws, rules, and regulations or in any and all orders of any state or
federal governmental authority.
(i) Redemption Methods.
------------------
(i) In order to effect a redemption under either Section 1.2(a) or
1.2(c) above, the Corporation shall deliver written notice, by registered
or certified mail, postage prepaid and return receipt requested, to the
holders of record (and, to the extent any such holder is a corporation, to
the attention of its Chief Executive Officer and its Corporate Secretary)
of the shares to be redeemed, addressed to such holders at their last
addresses as shown on the stock transfer books of the Corporation. Each
such notice of redemption shall specify the date fixed for redemption (to
be a date not less than 30 days from the date of such notice), the
Redemption Price, places of payment, that payment will be made upon
presentation and surrender of the certificates representing shares to be
redeemed and that on and after the date of such redemption (or such earlier
date as permitted hereunder) dividends will cease to accumulate on such
shares. Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given when mailed, and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings
for the redemption of any other shares to be redeemed on or after the date
fixed for redemption as stated in such notice. Each holder of the shares
called for redemption shall surrender its certificate or certificates
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the Redemption
Price in cash, with respect to any redemption under Sections 1.2(a) or
1.2(c). If less than all shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued evidencing the
unredeemed shares.
(ii) In order to effect a redemption under Section 1.2(b) above,
within 30 days after the date of the occurrence of a Cash-Out Event the
Corporation shall deliver notice by registered or certified mail, postage
prepaid and return receipt requested, to the holders of record (and, to the
extent such holder is a corporation, to the attention of its Chief
Executive Officer and its Corporate Secretary) of the shares to be
redeemed, addressed to such holders at their last addresses as shown on the
stock transfer books of the Corporation. Each such notice of redemption
shall specify the date fixed for redemption (to be a date not less
6
<PAGE>
than 30 days from the date of such notice), the Redemption Price, places of
payment, that payment will be made upon presentation and surrender of the
certificates representing shares to be redeemed, a description in
reasonable detail of the applicable Cash-Out Event giving rise to the
redemption, and a description in reasonable detail of any Marketable
Securities to be included, and that on or after the date of such redemption
(or such earlier date as permitted hereunder) dividends will cease to
accumulate on such shares. Any notice which is mailed as herein provided
shall be conclusively presumed to have been duly given when mailed, and
failure to give such notice by mail, or any defect in such notice, to the
holders of any shares designated for redemption shall not affect the
validity of the proceedings for the redemption of any other shares to be
redeemed on or after the date fixed for redemption as stated in such
notice. Each holder of the shares called for redemption who elects to
exercise the right of redemption under Section 1.2(b) above must surrender
its certificate or certificates evidencing all such shares to the
Corporation on or before the date set for redemption and at the place
designated in the Corporation's notice and shall thereupon be entitled to
receive payment of the Redemption Price in cash, Marketable Securities or a
combination thereof, as applicable. Any failure on the part of any holder
notified as provided above to surrender such certificate or certificates on
or before the date set for redemption at the place designated for
redemption as provided above, shall be conclusively deemed to have not
elected to redeem such holder's shares under and pursuant to Section 1.2(b)
above and shall not be entitled to receive the Redemption Price as provided
above.
(iii) Notwithstanding any other provision of this ARTICLE FOUR, if on
or after the date on which any notice of redemption is first sent to the
holders of shares to be redeemed, funds necessary for the redemption shall
be available therefor and shall have been irrevocably deposited or set
aside, then, notwithstanding that the certificates evidencing any shares so
called for redemption shall not have been surrendered, the dividends with
respect to the shares so called shall cease to accrue after the date fixed
for redemption, the shares shall no longer be deemed outstanding, holders
thereof shall cease to be stockholders, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the
holders to receive the Redemption Price without interest upon surrender of
their certificates therefor) shall terminate.
1.3 Voting Rights. Except as set forth below and as otherwise required
-------------
by law, holders of shares of Class A Preferred Stock shall have no voting
rights. In connection with any right
7
<PAGE>
to vote, each holder of Class A Preferred Stock will have one vote for each
share held. Any shares of Class A Preferred Stock held by the Corporation or its
subsidiaries shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum. So long as the Class A Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or written
consent of the holders of at least 51% of all outstanding Class A Preferred
Stock voting separately as a class:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which affects
materially and adversely the relative rights, preferences, qualifications,
powers, limitations or restrictions of the Class A Preferred Stock;
(b) increase the authorized number of shares of Preferred Stock of the
Corporation, authorize, issue or otherwise create securities convertible into
any shares of capital stock of the Corporation other than Junior Shares.
(c) voluntarily effect any reclassification of the Class A Preferred
Stock.
Whenever dividends on the Class A Preferred Stock shall be in arrears
in an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of election of
such directors as hereinafter provided and (ii) the holders of the Class A
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect such one additional director of the Corporation at any
meeting of the stockholders of the Corporation at which directors are to be
elected held during the period such dividends remain in arrears. The right of
the holders of the Class A Preferred Stock to vote for such one additional
director shall terminate when all accrued and unpaid dividends on the Class A
Preferred Stock have been declared and paid in cash or in additional shares of
Class A Preferred Stock or set apart for payment. The term of office of any
director so elected shall terminate immediately upon the termination of the
right of the holders of the Class A Preferred Stock to vote for such one
additional director.
The foregoing right of the holders of the Class A Preferred Stock with
respect to the election of one director may be exercised at any annual meeting
of the stockholders of the Corporation or at any special meeting of the
stockholders of the Corporation held for such purpose. If the right to elect an
additional director shall have accrued to the holders of the Class A Preferred
Stock more than 90 days preceding the date established for the next annual
meeting of stockholders, the President of the Corporation shall, within 20 days
after the
8
<PAGE>
delivery to the Corporation at its principal office of a written request for a
special meeting signed by the holders of at least 10% of the Class A Preferred
Stock then outstanding, call a special meeting of the holders of the Class A
Preferred Stock to be held within 60 days after the delivery of such request for
the purpose of electing such additional directors.
The holders of the Class A Preferred Stock voting as a class shall
have the right to remove without cause at any time and replace any director such
holders shall have elected pursuant to this Section.
1.4 Liquidation. (a) In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Class A Preferred Stock shall be entitled to receive the Class A Preferred
Liquidation Value of such shares held by them in preference to and in priority
over any distributions upon Junior Shares. Upon payment in full to the holders
of shares of Class A Preferred Stock of the Class A Preferred Liquidation Value
of such shares, the holders of shares of Class A Preferred Stock shall not be
entitled, as such holders, to any further participation in any distribution of
assets of the Corporation. If the assets of the Corporation are not sufficient
to pay in full the Class A Preferred Liquidation Value payable to the holders of
shares of Class A Preferred Stock, the holders of all such shares shall share
ratably (to the exclusion of any other holders of capital stock) in such
distribution of assets.
(b) Neither a consolidation or merger of the Corporation with or into
any other corporation, nor a sale or transfer of all or part of the
Corporation's assets for cash, securities or other property, nor a merger of any
other corporation with or into the Corporation shall be considered a
liquidation, dissolution or winding-up of the Corporation within the meaning of
this Section 1.4.
II. Terms Applicable to Class B and Class C Preferred Stock.
-------------------------------------------------------
2.1 Identical Rights. Except as otherwise provided in this ARTICLE
----------------
FOUR, all shares of Class B Preferred Stock and Class C Preferred Stock shall be
identical and shall entitle the holders thereof to the same rights and
privileges.
2.2 Dividends. (a) Subject to the provisions of Sections 2.2(b),
---------
2.3(f), and 2.3(h), the holders of Class B and Class C Preferred Stock shall be
entitled to receive, as and when declared by the Board of Directors of the
Corporation out of funds legally available for such purpose, dividends on the
outstanding shares of Class B and Class C Preferred Stock at the Class B and
Class C Preferred Dividend Rates, payable on each
9
<PAGE>
Preferred Dividend Payment Date to holders of record as they appear on the stock
transfer books of the Corporation on such record dates, not more than 60 days
nor less than 10 days preceding the payment dates for such dividends, as are
fixed by the Board of Directors (or, to the extent permitted by applicable law,
a duly authorized committee thereof). Such dividends shall be cumulative and
shall accrue with respect to each share of Class B and Class C Preferred Stock,
whether or not declared, whether or not restricted by the terms of the Debt
Agreements or otherwise pursuant to the provisions hereof, and whether or not
there are funds legally available for the payment thereof until paid. The
dividends on the Class B and Class C Preferred Stock may be declared payable in
cash or in additional shares of the same series of Preferred Stock, in the
discretion of the Board of Directors; provided that dividends on Class C
Preferred Stock may be payable in additional shares of Class C Preferred Stock
only for Dividend Payment Dates occurring on or prior to January 31, 1999. No
other dividends may be declared or paid to the holders of Class B or Class C
Preferred Stock. All dividends declared by the Board of Directors upon shares of
Class B or Class C Preferred Stock in accordance with this Section 2.2(a) shall
be declared and paid pro rata with respect to all shares of Class B and Class C
Preferred Stock then outstanding.
(b) If at any time the Corporation shall have failed to pay any
accumulated dividends on any shares of Class B and Class C Preferred Stock on
any Preferred Dividend Payment Date as provided above, or if at any time the
Corporation shall have failed to redeem shares of Class B or Class C Preferred
Stock as required by Section 2.3(a) for any reason, the Corporation shall not:
(i) declare or pay any dividend on any Junior Shares or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any Junior Shares
or make any distribution with respect thereto, either directly or
indirectly and whether in cash or property or in obligations or shares
(other than in Junior Shares) of the Corporation or any Subsidiary,
(ii) purchase any shares of Class B or Class C Preferred Stock (except
for a consideration payable in Junior Shares) or redeem fewer than all of
the shares of Class B and Class C Preferred Stock then outstanding (except
in a manner consistent with the last sentence of Section 2.3(c)), or
(iii) permit any Subsidiary to purchase any Junior Shares or permit any
Subsidiary to purchase fewer than all of the shares of Class B and Class C
Preferred Stock then outstanding,
10
<PAGE>
unless, at the time of any such dividend payment, distribution, purchase or
redemption, all accrued and unpaid dividends on shares of Class B and Class C
Preferred Stock are contemporaneously paid in full in cash or additional shares
of Class B or Class C Preferred Stock, as applicable, and all shares of Class B
or Class C Preferred Stock which the Corporation shall have so failed to redeem
are contemporaneously redeemed.
(c) Notwithstanding any other provision in this ARTICLE FOUR, the
Corporation shall not, and shall not permit any of its Subsidiaries to, take any
of the actions specified in subsection 2.2(b)(i), (ii) or (iii) above in excess
of $1 million in the aggregate for all such actions, unless at the time such
action is taken:
(i) the Corporation has redeemed for cash all shares of Class B and
Class C Preferred Stock, if any, which have been issued to the holders of
Class B and Class C Preferred Stock, respectively, as in-kind dividends on
the Class B or Class C Preferred Stock, respectively, pursuant to Section
2.2(a) above;
(ii) the Corporation and its wholly-owned Subsidiaries, on a
consolidated basis, have common equity computed in accordance with
generally accepted accounting principles, after giving effect to any
purchases, redemptions, payments, distributions or disbursements under
subsection 2.2(b)(i), (ii), or (iii) above, of at least $26 million;
(iii) if any such purchases, redemptions, payments, distributions or
disbursements specified in subsection 2.2(b)(i), (ii) or (iii) above are to
be made on or after July 31, 1999, then all shares of Class B Preferred
Stock shall have been redeemed or otherwise retired; and
(iv) if any such purchases, redemptions, payments, distributions or
disbursements specified in subsection 2.2(b)(i), (ii) or (iii) above are to
be made on or after the dates required for redemptions of shares of Class C
Preferred Stock pursuant to Section 2.3(c) below, then that portion of such
Class C Preferred Stock so required to be redeemed as of such dates shall
have been redeemed or otherwise retired;
provided, however, nothing in this subsection 2.2(c) shall limit or impair the
- -----------------
Corporation's obligation to make payments or disbursements for any amount it is
obligated to pay under or pursuant to the Warrant Agreement dated January 31,
1992 between the Corporation and Chase Manhattan Investment Holdings, Inc.;
and further provided, nothing in this subsection 2.2(c) shall limit the
----------------
Corporation or its Subsidiaries from re-purchasing
11
<PAGE>
Common Stock or options to purchase Common Stock of the Corporation held by any
employee of the Corporation or its Subsidiaries in connection with the
termination of such employee's employment.
2.3 Redemption.
----------
(a) Scheduled Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, the Corporation shall redeem all shares of Class
B Preferred Stock on July 31, 1999. The Corporation shall redeem all shares of
Class C Preferred Stock by January 31, 2002, such redemption to be made in four
equal (as nearly as practicable) quarterly installments of principal on April
30, 2001, July 31, 2001, October 31, 2001, and January 31, 2002. Scheduled
redemptions shall be made out of funds legally available for such purpose, at a
price per share equal to the Redemption Price.
(b) Mandatory Redemption. Subject to any limitations contained
--------------------
elsewhere in this ARTICLE FOUR, in the event of the occurrence of a Cash-Out
Event, the Corporation agrees, at the election of any holder of then outstanding
shares of Class B or Class C Preferred Stock, as applicable, made as set forth
in Section 2.3(i) below, to redeem all, but not less than all, of such holder's
shares of Class B or Class C Preferred Stock, as applicable, then outstanding,
out of funds legally available for such purpose, at a price per share equal to
the Redemption Price therefor. If pursuant to such Cash-Out Event the holders of
Common Stock of the Corporation received cash, Marketable Securities or a
combination thereof, then, at the option of the Corporation, the Corporation
may, in lieu of the cash redemption contemplated in the immediately preceding
sentence, redeem such Class B or Class C Preferred Stock, as applicable, by
converting each such share into such cash, Marketable Securities or a
combination thereof, in the same proportions received by the holders of Common
Stock of the Corporation, the value of which shall equal the Redemption Price.
(c) Redemptions at Option of Corporation. At any time, and from time
------------------------------------
to time, the Corporation may, at its election, redeem, out of funds legally
available for such purpose, any portion or all of the Class B and Class C
Preferred Stock then outstanding at a price per share equal to the Redemption
Price. Any redemption of shares pursuant to this Section 2.3(c) will be made
ratably (as nearly as practicable) among the holders of the Class B and Class C
Preferred Stock based upon the number of shares held by each such holder without
distinction between classes.
12
<PAGE>
(d) Optional Redemption through Note Exchange.
-----------------------------------------
(i) Subject to the provisions of subdivision (iv) of this Section
2.3(d), at the option of the Corporation, the Corporation may, at any time
out of funds legally available for such purpose, redeem all, but not less
than all shares of the Class B and Class C Preferred Stock then outstanding
in exchange for, and through the issue by the Corporation in the manner
provided in this subdivision of, Class B Exchange Notes (with respect to
exchanges of Class B Preferred Stock) and Class C Exchange Notes (with
respect to exchanges of Class C Preferred Stock). The Class B Exchange
Notes shall be issued under the Class B Indenture and the Class C Exchange
Notes shall be issued under the Class C Indenture. The Class B Exchange
Notes or Class C Exchange Notes issued to each holder shall be in an
aggregate principal amount equal to the Liquidation Value of the shares of
Class B and Class C Preferred Stock redeemed by the Corporation in
exchange thereof.
(ii) Not more than 60 nor less than 30 days prior to the exchange date,
the Corporation shall mail irrevocable written notice, by registered or
certified mail, postage prepaid and return receipt requested, to each
record holder (and, to the extent such holder is a corporation, to the
attention of its Chief Executive Officer and its Corporate Secretary),
specifying the exchange date and the time and place where certificates
representing shares of Class B and Class C Preferred Stock are to be
surrendered for Class B and Class C Exchange Notes. Upon mailing such
notice, the Corporation will be obliged to redeem all shares of Class B and
Class C Preferred Stock in exchange for the Exchange Notes on the exchange
date specified in such notice. Upon surrender in accordance with such
notice of the certificates evidencing the shares of Class B or Class C
Preferred Stock so exchanged (properly endorsed or signed for transfer, if
the Corporation shall require and the notice shall so state), the
Corporation will cause the Class B or Class C Exchange Notes, as
applicable, to be authenticated and issued in exchange for such shares of
Class B or Class C Preferred Stock and to be mailed to the holders of the
shares of Class B or Class C Preferred Stock at such holder's address of
record or such other address as the holder shall specify on such surrender
of such certificates.
(iii) On the exchange date, (A) the shares of Class B and Class C
Preferred Stock subject to such exchange and redemption shall cease to be
entitled to any dividends accruing after that date, (B) all rights of the
respective holders of such shares, as stockholders of the Corporation by
reason of the ownership of such shares, except the right to receive the
Class B and Class C Exchange Notes upon
13
<PAGE>
surrender (and endorsement, if required by the Corporation) or the
respective certificates representing such shares, shall cease, (C) such
shares shall cease to be outstanding, and (D) the person or persons
entitled to receive the Class B or Class C Exchange Notes, as applicable,
issuable upon such exchange shall be treated for all purposes as the
registered holder or holders of Class B or Class C Exchange Notes, as
applicable; provided, however, that interest shall not begin to accrue on
-------- -------
any such Class B or Class C Exchange Notes issuable to a holder of Class B
or Class C Preferred Stock, as applicable, until such time as such holder
surrenders the certificate or certificates evidencing such shares of Class
B or Class C Preferred Stock, as applicable.
(iv) The Corporation may redeem shares of Class B and Class C
Preferred Stock in exchange for Class B and Class C Exchange Notes only if,
on the Exchange Date, (x) the Corporation has redeemed any outstanding
shares of Class A Preferred Stock and, if such redemption of Class A
Preferred Stock is effected by the issuance of a Class A Exchange Note,
such Class A Exchange Notes shall be senior to any Class B or Class C
Exchange Note issued in exchange for Class B or Class C Preferred Stock,
(y) the Corporation has paid all accrued dividends on all outstanding
shares of Class B or Class C Preferred Stock, as applicable, and (z) the
Class B indenture or the Class C Indenture, as applicable, shall be
executed and delivered by the Corporation and the applicable trustee
thereunder.
(e) Redemption Price. For each share of Class B and Class C Preferred
----------------
Stock which is to be redeemed for cash, the Corporation will be obligated on the
Redemption Date to pay to the holder thereof (upon surrender of the certificate
representing such share to the Corporation's stock transfer agent, or if none,
to the Corporation at its principal office) an amount in cash equal to the
Redemption Price. If the funds of the Corporation legally available for
redemption of shares of Class B and Class C Preferred Stock on any Redemption
Date are insufficient to redeem the total number of shares to be redeemed on
such date, those funds which are legally available shall be used to redeem the
maximum possible number of shares ratably (as nearly as practicable) among the
holders of the shares to be redeemed based upon the aggregate Redemption Price
of such shares held by each such holder. As and when additional funds of the
Corporation are legally available for the redemption of shares, such funds shall
as soon as practicable be used to redeem the balance of the shares which the
Corporation has become obligated to redeem on any Redemption Date.
(f) Dividends after Redemption Date. Subject to any limitations
-------------------------------
contained elsewhere in this ARTICLE FOUR, no share of Class B or Class C
Preferred Stock is entitled to any dividends
14
<PAGE>
accruing after the redemption of such share. On the date of such redemption
dividends will cease to accrue, all rights of the holder of such share as such
holder will cease, and such shares will not be deemed to be outstanding.
(g) Redeemed or Otherwise Acquired Shares. Any shares of Class B or
-------------------------------------
Class C Preferred Stock which are redeemed or otherwise acquired by the
Corporation will be retired and cancelled and may not be reissued.
(h) Restrictions on Dividends and Redemptions. Notwithstanding
-----------------------------------------
anything in this ARTICLE FOUR to the contrary, no dividend payment or other
distribution or redemption may be made with respect to Class B or Class C
Preferred Stock if such payment or other distribution or redemption will be in
contravention of the restrictions or limitations on such payments or other
distributions or redemption contained in (i) this ARTICLE FOUR, (ii) the Debt
Agreements, (iii) the Subordinated Note or (iv) any and all applicable state or
federal laws, rules, and regulations or in any and all orders of any state or
federal governmental authority.
(i) Redemption Methods. Any redemption of shares of Class B or Class C
------------------
Preferred Stock under and pursuant to Sections 2.3(a), 2.3(b), or 2.3(c) shall
be conducted in the same applicable manner as described with respect to the
Class A Preferred Stock in Section 1.2(i) above. Notwithstanding any other
provision of this ARTICLE FOUR, if on or after the date on which any notice of
redemption is first sent to the holders of shares to be redeemed, funds
necessary for the redemption shall be available therefor and shall have been
irrevocably deposited or set aside, then, notwithstanding that the certificates
evidencing the shares so called for redemption shall not have been surrendered,
the dividends with respect to the shares so called shall cease to accrue after
the date fixed for redemption, shares shall no longer be deemed outstanding,
owners thereof shall cease to be stockholders, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive the Redemption Price without interest thereon upon surrender of their
certificates therefor) shall terminate.
2.4 Voting Rights. Except as otherwise set forth below and as
-------------
otherwise required by law, holders of shares of Class B or Class C Preferred
Stock shall have no voting rights. In connection with the right to vote, each
holder of Class B Preferred Stock will have one vote for each share held and
each holder of Class C Preferred Stock shall have one vote for each share held.
Any shares of Class B or Class C Preferred Stock held by the Corporation or its
subsidiary shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum. So long as the Class B Preferred Stock or
15
<PAGE>
Class C Preferred Stock is outstanding, the Corporation shall not without the
affirmative vote or written consent of the holders of all outstanding Class B
and Class C Preferred Stock, each voting as a separate class:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which affects
adversely the relative rights, preferences, qualifications, powers, limitations
or restrictions of that series of Preferred Stock;
(b) increase the authorized number of shares of capital stock of the
Corporation, or authorize, issue or otherwise create securities convertible into
any shares of capital stock of the Corporation other than shares of Class A
(only for purposes of paying dividends in-kind on Class A Preferred Stock),
Class B or Class C Preferred Stock, Common Stock and/or Junior Shares; or
(c) voluntarily effect any reclassification of the Class B or Class
C Preferred Stock.
Whenever dividends on Class B Preferred Stock shall be in arrears in
an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of the election
of such directors as hereinafter provided and (ii) the holders of Class B
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect one additional director of the Corporation at any meeting of
the stockholders of the Corporation at which directors are to be elected held
during the period such dividends remain in arrears. The right of the holders of
Class B Preferred Stock to vote for such one additional director shall terminate
when all accrued and unpaid dividends on the Class B Preferred Stock have been
declared and paid in cash or in-kind or set apart for payment. The term of
office of any director so elected shall terminate immediately upon the
termination of the right of the holders of the Class B Preferred Stock to vote
for such one additional director.
Whenever dividends on Class C Preferred Stock shall be in arrears in
an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the
Corporation shall be increased by one, effective as of the time of the election
of such directors as hereinafter provided and (ii) the holders of Class C
Preferred Stock (voting separately as a class) will have the exclusive right to
vote for and elect one additional director of the Corporation at any meeting of
the stockholders of the Corporation at which directors are to be elected held
during the period such dividends remain in arrears. The right of the holders of
Class C
16
<PAGE>
Preferred Stock to vote for such one additional director shall terminate when
all accrued and unpaid dividends on the Class B Preferred Stock have been
declared and paid in cash or in-kind or set apart for payment. The term of
office of any director so elected shall terminate immediately upon the
termination of the right of the holders of the Class C Preferred Stock to vote
for such one additional director.
The foregoing right of the holders of Class B and Class C Preferred
Stock with respect to the election of one director per class may be exercised at
any annual meeting of the stockholders of the Corporation or at any special
meeting of the stockholders of the Corporation held for such purpose. If the
right to elect an additional director shall have accrued to the holders of Class
B Preferred Stock or Class C Preferred Stock more than 90 days preceding the
date established for the next annual meeting of stockholders, the President of
the Corporation shall, within 20 days after the delivery to the Corporation at
its principal office of a written request for a special meeting signed by the
holders of at least 10% of the Class B Preferred Stock or Class C Preferred
Stock, as applicable, then outstanding, call a special meeting of the holders of
the Class B or Class C Preferred Stock, as applicable, to be held within 60 days
after the delivery of such request for the purpose of electing such additional
directors. The holders of the Class B Preferred Stock voting as a class shall
have the right to remove without cause at any time and replace any director such
holder shall have elected pursuant to this section. The holders of the Class C
Preferred Stock voting as a class shall have the right to remove without cause
at any time and replace any director such holder shall have elected pursuant to
this section.
2.5 Liquidation. (a) In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding-up of the Corporation, the holders of shares
of Class B and Class C Preferred Stock shall be entitled to receive the Class B
or Class C Preferred Liquidation Value of such shares held by them in preference
to and in priority over any distributions upon Junior Shares. Upon payment in
full to the holders of shares of Class B and Class C Preferred Stock of the
Class B and Class C Preferred Liquidation Values of such shares, the holders of
shares of Class B or Class C Preferred Stock shall not be entitled, as such
holders, to any further participation in any distribution of assets of the
Corporation. If the assets of the Corporation are not sufficient to pay in full
the Class B and Class C Preferred Liquidation Value payable to the holders of
shares of Class B or Class C Preferred Stock, the holders of all such shares
shall share ratably (the exclusion of any other holders of capital stock) in
such distribution of assets.
(b) Neither a consolidation or merger of the Corporation with or into
any other corporation, nor a sale or
17
<PAGE>
transfer of all or part of the Corporation's assets for cash, securities or
other property, nor a merger of any other corporation with or into the
Corporation, shall be considered a liquidation, dissolution or winding-up of the
Corporation within the meaning of this Section 2.5.
III. Common Stock and Nonvoting Common Stock
---------------------------------------
3.1 Identical Rights. Except as otherwise provided in this ARTICLE
----------------
FOUR, all shares of Common Stock and Nonvoting Common Stock shall be identical
and shall entitle the holder thereof to the same rights and privileges.
3.2 Dividends. From and after the date of issuance, the holders of
---------
outstanding shares of Common Stock and Nonvoting Common Stock shall be entitled
to receive dividends on the shares of Common Stock and Nonvoting Common Stock
when, as, and if declared by the Board of Directors, out of funds legally
available for such purpose. All holders of shares of Common Stock and Nonvoting
Common Stock shall share ratably, in accordance with the numbers of shares held
by each such holder, in all dividends or distributions on shares of Common Stock
payable in cash, in property or in securities of the Corporation (other than
shares of Common Stock). All dividends or distributions declared on shares of
Common Stock and Nonvoting Common Stock which are payable in shares of Common
Stock or Nonvoting Common Stock shall be declared on both classes of shares at
the same rate, provided that any such dividend or distribution shall be payable
in shares of the class of Common Stock or Nonvoting Common Stock held by the
stockholder to whom the dividend or distribution is payable.
3.3. Stock Splits, Etc. The Corporation shall not in any manner
-----------------
subdivide (by stock split, stock dividend or otherwise), or combine (by reverse
stock split, or otherwise) the outstanding shares of Common Stock or Nonvoting
Common Stock unless the outstanding shares of the other class shall be
proportionately subdivided or combined. No reclassification or any other
adjustment or modification of the rights or preferences shall be effected
(including without limitation pursuant to a merger, consolidation or liquidation
involving the Corporation) with respect to either the Common Stock or the
Nonvoting Common Stock unless both the Common Stock and Nonvoting Common Stock
are reclassified or the rights or preferences are adjusted or modified in
exactly the same manner and at the same time. In this regard, and without
limiting the generality of the foregoing, in the case of any consolidation or
merger of the Corporation with or into any other entity (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all or
substantially all the assets of the
18
<PAGE>
Corporation, or the reclassification of the Common Stock into any other form of
capital stock of the Corporation, whether in whole or in part, the holder of
each share of Nonvoting Common Stock shall, after such consolidation, merger,
sale or transfer or reclassification, have the right to convert such share of
Nonvoting Common Stock into the kind and amount of shares of stock and other
securities and property which such holder would have been entitled to receive
upon such consolidation, merger, sale or transfer or reclassification if such
holder had held such Common Stock issuable upon the conversion of such share of
Nonvoting Common Stock immediately prior to such consolidation, merger, sale or
transfer or reclassification.
3.4 Liquidation. In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of Common Stock and Nonvoting Common Stock shall be entitled
to share ratably, in accordance with the number of shares held by each such
holder, in all of the assets of the Corporation available for distribution to
the holders of shares of Common Stock.
3.5 Voting Rights. Except as otherwise provided herein or by law, the
-------------
entire voting power of the Corporation shall be vested in the holders of shares
of Common stock and each holder of shares of Common Stock shall be entitled to
one vote for each share of Common Stock held of record by such holder; provided
--------
that, without the consent of the holders of record of at least 51% of Nonvoting
Common Stock at the time outstanding (assuming, for the purposes of this
provision, that the holders of rights to acquire shares of Nonvoting Common
Stock shall be deemed to be the holders of the shares of Nonvoting Common Stock
which are at the time issuable upon the full exercise thereof whether or not
such holders are then entitled to exercise such rights pursuant to the terms
thereof), given in writing or by the vote at any regular or special meeting of
stockholders of the Corporation, the Corporation shall not:
(a) amend, alter, modify or repeal any provision of this Certificate
of Incorporation or the By-Laws of the Corporation in any manner which
adversely affects the relative rights, preferences, qualifications, powers,
limitations or restrictions of the Nonvoting Common Stock, or amend, alter,
modify or repeal this Section 3.5;
(b) increase or decrease the authorized number of shares of any class
of capital stock of the Corporation or authorize, issue or otherwise create
securities convertible into or exercisable for any shares of capital stock
of the Corporation other than the shares of Class A, Class B, and Class C
Preferred Stock and the Common Stock, and the Nonvoting Common Stock
authorized hereunder;
19
<PAGE>
(c) voluntarily effect an exchange or reclassification of shares of
Nonvoting Common Stock into shares of another class of capital stock of the
Corporation; or
(d) effect a merger or consolidation of the Corporation with another
corporation, unless the certificate or articles of incorporation of the
surviving corporation shall provide that the shares of the capital stock of
such surviving corporation into which the shares of Nonvoting Stock
hereunder shall be converted shall have the identical rights and privileges
as the shares of capital stock of such surviving corporation into which the
shares of Common Stock hereunder shall be converted, other than the voting
rights in this Section 3.5 and the conversion and other rights in Section
3.6 below which shall not be adversely affected by such merger or
consolidation.
3.6 Conversion.
----------
(a) Right to Conversion. Subject to and upon compliance with the
-------------------
provisions of this Section 6, any holder of shares of Nonvoting Common Stock
shall be entitled at any time and from time to time to convert each share of
Nonvoting Common Stock held by such holder into a share of Common Stock at the
conversion rate of one share of Common Stock for one share of Nonvoting Common
Stock.
(b) Procedure. The conversion of any shares of Nonvoting Common
---------
Stock into shares of Common Stock, shall be effected by the holder of the shares
of Nonvoting Common Stock to be converted surrendering the certificate therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
shares of Common Stock or at such other place as the Corporation is willing to
accept such surrender accompanied by written notice to the Corporation at such
office or other place that it elects to so convert and stating the number of
shares of Nonvoting Common Stock being converted. Thereupon the Corporation
shall promptly issue and deliver at such office or other place to such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled, registered in the name of such holder or a designee of
such holder as specified in such notice. Such conversion shall be deemed to have
been made at the close of business on the date of such surrender of the shares
to be converted in accordance with the procedure set forth in the first sentence
of this Section 3(b), and the Person entitled to receive the shares issuable
upon such conversion shall be treated for all purposes as having become the
record holder of such shares at such time. In the event of the conversion of
less than all of the shares of Nonvoting Common Stock into shares of Common
Stock evidenced by the certificate so surrendered, the Corporation shall execute
and deliver to or upon the written order of such holder, without
20
<PAGE>
charge to such holder, a new certificate evidencing the shares of Nonvoting
Common Stock not converted.
(c) Reservation. The Corporation shall at all times reserve and keep
-----------
available out of its authorized but unissued shares of Common Stock, or any
shares of Common Stock held in its treasury, solely for the purpose of issue
upon conversion of the shares of Nonvoting Common Stock as provided herein, such
number of shares of Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Nonvoting Common Stock. The shares of Common Stock
so issuable shall when so issued be duly and validly issued, fully paid and
nonassessable.
(d) Certain Legal Requirements. No person subject to the provisions
--------------------------
of Regulation Y shall, and no such Person shall permit any of its Bank Holding
Company Affiliates to, convert any shares of Nonvoting Common Stock held by it
into shares of Common Stock, if after giving effect to such conversion, (i) such
Person and its Bank Holding Company Affiliates would own more than 5% of the
total issued and outstanding shares of Common Stock or (ii) such Person would
Control the Corporation (and, for purposes of this clause (ii), a reasoned
opinion of counsel to such Person (which is based on facts and circumstances
deemed appropriate by such counsel) to the effect that such Person does not
control the Corporation shall be conclusive).
IV. Definitions.
-----------
As used in this ARTICLE FOUR, the terms indicated below shall have the
following respective meanings:
"Affiliate", with respect to any Person, means any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, by contract or otherwise. Additionally, with respect to Wingate
Partners, L.P. the term "Affiliate" for purposes of the definition of Change of
Control shall be deemed to include James T. Callier, Jr., Frederick B. Hegi,
Jr., Thomas W. Sturgess, James A. Johnson, Dennis J. Johnson, Sue Goddard,
Wallace R. Hawley, Lee Walton, Bud Applebaum, Estate of Howard Beasley, Callier
Buy-Out Partners, as defined in the Agreement of Limited Partnership of Wingate
Partners, L.P., Peter J. Wodtke, and pension plans for the benefit of such
individuals or entities.
"Associated" means Associated Stationers, Inc., a Delaware
----------
corporation.
"Bank Holding Company Affiliate" shall mean, with respect to any
------------------------------
Person subject to the provisions of Regulation Y,
21
<PAGE>
(i) if such Person is a bank holding company, any company directly or indirectly
controlled by such bank holding company, and (ii) otherwise, the bank holding
company that controls such Person and any company (other than such Person)
directly or indirectly controlled by such bank holding company.
"Business Sale" means a transaction or a series of transactions,
-------------
whether effected by sale or exchange of securities or assets, merger or
consolidation, or otherwise, that results in the sale of the Corporation or its
business to an Independent Third Party or group of Independent Third Parties,
pursuant to which such Independent Third Party or group of Independent Third
Parties would acquire (a) capital stock of the Corporation possessing the voting
power under normal circumstances to elect a majority of the Board or (b) all or
substantially all of the Corporation's assets determined on a consolidated
basis.
"Cash-Out Event" means the occurrence of a Business Sale, a Change in
--------------
Control, a Qualified Public Offering or a Recapitalization. In the case of the
Class C Preferred Stock, "Cash-Out Event" shall also include the expiration of
--------------
the agreement between Associated and Affiliated Computer Services, Inc.
providing for the furnishing of information systems services for Associated,
or the early termination of such agreement for any reason other than termination
of such agreement by Affiliated Computer Services, Inc.
"Change in Control" means an occurrence by which Wingate Partners and
-----------------
its Affiliates and Cumberland Capital Corporation and its Affiliates shall have
collectively sold or otherwise disposed of and received the pecuniary benefit of
33-1/3% of the Common Stock legally or beneficially owned by them collectively
as of January 31, 1992, subject to appropriate adjustment in the event of a
stock split, reverse stock split or similar transaction and excluding any sales
or other dispositions made by any of them to employees of the Corporation or of
any of its Subsidiaries of up to 10% of such holdings.
"Class A Exchange Notes" means the Class A Subordinated Exchange Notes
----------------------
which may be issued by the Corporation to the holders of the Class A Preferred
Stock upon a redemption pursuant to Section 1.2(d). Such Class A Exchange Notes
shall have a maturity date of July 31, 1999 and shall bear interest at the rate
of 10% for interest paid in cash and 13% for interest paid in-kind in additional
Class A Exchange Notes. Such interest shall be payable quarterly in arrears,
either in cash or in-kind on the Preferred Dividend Payment Dates. Such Class A
Exchange Notes will permit a required prepayment to the same amounts on the same
dates as would have applied to an optional or mandatory redemption of the Class
A Preferred Stock (assuming that the exchange pursuant to Section 1.2(d) had not
occurred), shall not contain any financial covenants by, or other restrictive
22
<PAGE>
covenants (other than limitations imposed by senior debt and applicable law) on,
the Corporation, and shall provide for an event of default only upon the
Corporation's failure to make payments in accordance with its terms or upon a
bankruptcy filing by or against the Corporation which filing is not dismissed
within 60 days after filing. The payment of principal, interest, and premium (if
any) will be subordinated to senior debt (to be defined as any obligation of the
Corporation or its subsidiaries for borrowed money including the obligations
under the Subordinated Note).
"Class A Indenture" means an indenture for the Class A Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class A Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Class B and Class C Exchange Notes" means the Class B Subordinated
----------------------------------
Exchange Notes and the Class C Subordinated Exchange Notes which may be issued
by the Corporation to the holders of the Class B or Class C Preferred Stock, as
applicable, upon a redemption pursuant to Section 2.3(d). Class B Exchange Notes
shall have a maturity date of July 31, 1999. The Class C Exchange Notes shall
have a maturity date of January 31, 2002, with payments to be made thereon in
four equal (as nearly as practicable) installments of principal on April 30,
2001, July 31, 2001, October 31, 2001, and January 31, 2002. Both Class B and
Class C Exchange Notes shall bear interest at the rate of 11% for interest paid
in cash and 12% for interest paid in-kind in additional Class B or Class C
Exchange Notes, as applicable. Such interest shall be payable quarterly in
arrears, either in cash or in-kind as would have applied to the Class B and
Class C Preferred Stock Dividend on the Preferred Dividend Payment Dates. Such
Notes will permit or require prepayments in the same amounts and at the same
dates as would have applied to an optional or mandatory redemption of the Class
B and Class C Preferred Stock (assuming that the exchange pursuant to Section
2.3(d) had not occurred), shall not contain any financial covenants by, or other
restrictive covenants (other than limitations imposed by senior debt and
applicable law) on, the Corporation, and shall provide for an event of default
only upon the Corporation's failure to make payments in accordance with its
terms or upon a bankruptcy filing by or against the Corporation, which filing is
not dismissed within 60 days after filing. The payment of principal, interest,
and premium (if any) will be subordinated to senior debt (to be defined as any
obligation of the Corporation for borrowed money including the obligations under
the Subordinated Note) and payments in respect of Class A Exchange Notes.
23
<PAGE>
"Class B Indenture" means an indenture for the Class B Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class B Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Class A Preferred Dividend Rate" means a rate of 10% per annum,
-------------------------------
computed on the basis of a 360-Day year and twelve 30-day months, to be applied
to the Dividend Base for the Class A Preferred Stock as form time to time
adjusted: provided that in the event of and during continuance of a failure by
the Corporation to pay in cash a dividend on the Class A Preferred Stock on any
Preferred Stock on any Preferred Dividend Payment Date or to make any redemption
payment when due, the dividend rate shall be increased to 13% per annum, and
shall remain at said rate until such failure is cured, such increase to be
effective retroactive to the first day of the accrual period for which the
dividend was not paid.
"Class A, Class B, and Class C Preferred Liquidation Value" of any
---------------------------------------------------------
share of Class A, Class B or Class C Preferred Stock means as of any particular
date an amount equal to the sum of $1,000 plus the aggregate of accrued and
unpaid dividends on such share to such date, subject to appropriate adjustment
in the event of a stock split, reverse stock split or similar transaction.
"Class B or Class C Preferred Dividend Rate" means a rate of 9% per
------------------------------------------
annum computed on the basis of a 360-day year and twelve 30-day months, to be
applied to the Dividend Base for the Class B or Class C Preferred Stock as from
time to time adjusted; provided that in the event of and during continuance of a
failure by the Corporation to pay in cash a dividend on the Class B or Class C
Preferred Stock on Preferred Dividend Payment Date or to make any redemption
payment when due, the dividend rate shall be increased to 10% per annum, and
shall remain at said rate until such failure is cured, such increase to be
effective retroactive to the first day of the accrual period for which the
dividend was not paid.
"Class C Indenture" means an indenture for the Class C Exchange Notes
-----------------
that qualifies under and is in compliance with the Trust Indenture Act to be
entered into between the Corporation and a trustee acceptable to the Corporation
and a majority of the holders of Class C Exchange Notes and containing such
terms and provisions as are approved by the Board of Directors of the
Corporation.
"Control" (including, with its correlative meanings, "controlled by"
------- -------------
and "under common control with") shall mean, with
-------------------------
24
<PAGE>
respect to any Person, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Debt Agreements" means the Credit Agreement dated as of January 31,
---------------
1992 among Associated, the Corporation, The Chase Manhattan Bank (National
Association), as Agent, and the lenders which become parties thereto, and the
notes and other documents and instruments executed and delivered in connection
therewith, as said agreement and notes and other documents and instruments may
from time to time be amended or supplemented, and any agreements evidencing any
renewal, extension, refinancing, refunding or replacement thereof.
"Dividend Base" of any share of Class A, Class B or Class C Preferred
-------------
Stock means $1,000, subject to appropriate adjustment in the event of a stock
split, reverse stock split or similar transaction.
"Independent Third Party" means any person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the Common Stock
on a fully diluted and converted basis (a "5% Owner"), who is not controlling,
--------
controlled by or under common control with the Corporation or any such 5% Owner
and who is not the spouse or descendant (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons.
"Junior Shares" means with respect to the priority of any class or
-------------
series of Preferred Stock, shares of Common Stock or shares of any other series
or class of Preferred Stock of the Corporation which are designated as junior
to such series in this Certificate of Incorporation or any amendment thereto, or
in the resolution designating the class or series of such Preferred Stock and
any warrants, options or other rights to acquire or purchase such securities.
The shares of Class B and Class C Preferred Stock are Junior Shares in relation
to the Class A Preferred Stock. Any shares of Additional Preferred Stock,
regardless of designation, shall be deemed Junior Shares in relation to the
Class A, Class B and Class C Preferred Stock.
"Liquidation Date" means as to any series of Preferred Stock, the
----------------
first date on which the assets of the Corporation are distributed to the holders
of such series of Preferred Stock in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation.
"Marketable Securities" shall mean Common Stock or common stock or
---------------------
other securities of any corporation that is the successor to substantially all
of the business or assets of the Corporation or the ultimate parent of such
successor which is (or
25
<PAGE>
will, upon distribution thereof, be) listed on the New York Stock Exchange,
the American Stock Exchange or approved for quotation on the NASDAQ National
Market System.
"Person" means an individual, partnership, association, joint
------
venture, corporation, business, trust, estate, unincorporated organization or
government or any department, agency or subdivision thereof.
"Preferred Dividend Payment Date" shall mean each April 30, July 31,
-------------------------------
October 31 and January 31, or the next business day following each such date of
any year commencing with the initial payment date of April 30, 1992.
"Qualified Public Offering" means a sale in a public offering or
-------------------------
series of public offerings, registered under the Securities Act of Common Stock;
provided, however, that such offering or series of offerings shall not be deemed
- --------
to be a Qualified Public Offering unless such offering or offerings shall have
------
resulted in (A) (i) public ownership of not less than 20% of the Common Stock of
the Corporation on a fully-diluted basis (which such shares of Common Stock are
listed upon the New York Stock Exchange, the American Stock Exchange or are
approved for quotation on the NASDAQ National Market System), and (ii) such
offering or offerings shall have resulted in receipt by the Corporation of
aggregate cash proceeds (after deduction of underwriter discounts and the costs
associated with such offering or offerings) of at least $37.5 million, or (B)
the holders of Common Stock of the Corporation receive, as a result of such
offering or offerings, cash, Marketable Securities or a combination thereof
valued at not less than $1 million.
"Recapitalization" means a recapitalization of the Corporation
----------------
pursuant to which the holders of Common Stock of the Corporation receive cash,
securities (other than shares junior to the Class B or Class C Preferred
Stock), property or other assets and such consideration is valued at not less
than $1 million.
"Redemption Date" as to any share of Class A, Class B or Class C
---------------
Preferred Stock means the date specified in the notice of any redemption at the
Corporation's option or the applicable date specified herein in the case of any
other redemption; provided that no such date will be a Redemption Date unless
--------
the applicable Redemption Price is actually paid or has been set aside for
payment to such stockholder in full as of such date, and if not so paid or set
aside for payment to such stockholder in full, the Redemption Date will be the
date on which such Redemption Price is fully paid.
"Redemption Price" of any share of Class A, Class B or Class C
----------------
Preferred Stock means as of the Redemption Date an amount equal to the sum of
$1,000 plus the aggregate of accrued and
26
<PAGE>
unpaid dividends on such share to such date, subject to appropriate adjustment
in the event of a stock split, reverse stock split or similar transaction.
"Regulation Y" shall mean Regulation Y promulgated by the Board of
------------
Governors of the Federal Reserve System (12 C.F.R. (S) 225) or any successor
regulation.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Subordinated Note" means, until January 31, 1994, the form of the
-----------------
Junior Subordinated Note attached as an Exhibit to the Transition Services
Agreement which may be issued to Boise Cascade Corporation by Associated
pursuant thereto, and thereafter such Junior Subordinated Note as and to the
extent so issued.
"Subsidiary" means any corporation, a majority (by number of votes) of
----------
the voting securities of which shall, at the time as of which any determination
is being made, be owned by the Corporation, directly or indirectly through one
or more Subsidiaries.
"Transition Services Agreement" means the Transition Services
-----------------------------
Agreement dated as of January 31, 1992, among the Corporation, Associated, Boise
Cascade Office Products Corporation, and Boise Cascade Corporation, as such
agreement may from time to time be amended.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended, the rules and regulations promulgated thereunder, and any successor
legislation thereto.
ARTICLE FIVE
------------
The Board of Directors of the Corporation is hereby expressly authorized to
the full extent now or hereafter permitted by the laws of the State of Delaware,
at any time and from time to time to provide for the issuance of some or all of
the Additional Preferred Stock in one or more classes or series of a class, with
such voting powers, full or limited, or without voting powers, and with such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions providing for the issue
thereof adopted by the Board of Directors. Before the Corporation shall issue
any Additional Preferred Stock of any classes or series of a class, the Board of
Directors shall adopt
27
<PAGE>
a resolution or resolutions fixing the voting powers, designations, preferences
and rights of such series, and the qualifications, limitations or restrictions
thereof, and the number of shares of Additional Preferred Stock of such series,
and appropriate documents shall be executed and filed as required by law.
ARTICLE SIX
-----------
The name and address of the Incorporator are as follows:
Name Address
---- -------
Suzanne L. Saxman c/o D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, IL 60602
ARTICLE SEVEN
-------------
The Corporation shall indemnify any person who was, is, or is threatened to
be made a party to a proceeding (as hereinafter defined) by reason of the fact
that he or she (i) is or was a director or officer of the Corporation or (ii)
while a director or officer of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, venturer, proprietor,
trustee (including voting trustee), employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust (including voting trust), employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such right
shall be a contract right and as such shall run to the benefit of any director
or officer who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this ARTICLE SEVEN is in effect. Any repeal or amendment of
this ARTICLE SEVEN shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
ARTICLE SEVEN. Such right shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
28
<PAGE>
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
Delaware General Corporation Law, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of, or advancement of costs of defense to, the
claimant is permissible in the circumstances nor an actual determination by the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement is not permissible. In the
event of the death of any person having a right of indemnification under the
foregoing provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, by-law, resolution of stockholders or
directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
ARTICLE EIGHT
-------------
A director of the Corporation shall not be personally 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 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
personal benefit. Any repeal or amendment of this ARTICLE EIGHT by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation arising from an act or omission occurring prior to the time of such
repeal or amendment. In addition to the circumstances in which a director of the
Corporation is not
29
<PAGE>
personally liable as set forth in the foregoing provisions of this ARTICLE
EIGHT, a director shall not be liable to the Corporation or its stockholders to
such further extent as permitted by any law applicable to the Corporation
hereafter enacted, including without limitation any subsequent amendment to the
Delaware General Corporation Law.
ARTICLE NINE
------------
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders.
(1) The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in, the bylaws.
Election of directors need not be by ballot unless the bylaws so provide.
(2) The Board of Directors shall have power, subject to the other
provisions of this Certificate, without the assent or vote of the stockholders
to make, alter, amend, change, add to or repeal the bylaws of the Corporation;
to fix and vary the amount to be reserved for any proper purpose; to authorize
and cause to be executed mortgages and liens and all or any part of the
property of the Corporation; to determine the use and disposition of any surplus
or net profits; and to fix the times for the declaration and payment of
dividends.
(3) No contract or transaction between the Corporation and one or
more of its directors, officers, or stockholders or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is
30
<PAGE>
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this Certificate, and to any bylaws from time to time
made by the stockholders; provided, however, that no bylaws so made shall
invalidate any prior act of the directors which would have been valid if such
bylaw had not been made.
ARTICLE TEN
-----------
The Corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of Delaware.
ARTICLE ELEVEN
--------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of January,
1992.
-------------------------------
Suzanne L. Saxman
31
<PAGE>
Annex 5 to
Warrant Agreement
JOINDER AGREEMENT
JOINDER AGREEMENT, dated the date set forth below, between ASSOCIATED
HOLDINGS, INC., a Delaware corporation ("Issuer") and the undersigned
------
stockholders of Issuer.
A. Reference is made to that certain Warrant Agreement dated as of
January 31, 1992 (as modified and supplemented and in effect form time to time,
the "Investor Warrant Agreement"), between Issuer and Boise Cascade Corporation.
--------------------------
Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Investor Warrant Agreement.
B. Section 3.11 of the Investor Warrant Agreement requires that
Issuer cause each Stockholder to execute and deliver this Joinder Agreement.)
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned herby agrees that:
1. The undersigned acknowledges receipt of a copy of the Investor
Warrant Agreement.
2. The undersigned hereby agrees: (a) to be bound by the provisions
of Sections 7 and 8 of the Investor Warrant Agreement and Section 5 of the
Investor Registration Rights Agreement; (b) to be bound by the covenants in the
Investor Warrant Agreement applicable to it; and (c) to be treated as a
Stockholder for all purposes thereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Joinder
Agreement on the date set forth below.
Date: January 31, 1992 WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT COMPANY, L.P.
its general partner,
-------------------------------------
By:
Title:
CUMBERLAND CAPITAL CORPORATION
-------------------------------------
By:
Title:
ASI PARTNERS, L.P.
By: Cumberland Capital Corporation,
its general partner,
-------------------------------------
By: Gary G. Miller
Title:
GOOD CAPITAL CO., INC.
-------------------------------------
By:
Title:
Acknowledged and Agreed to
as of the date written
above:
ASSOCIATED HOLDINGS, INC.
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.18
AMENDMENT NO. 1 TO WARRANT AGREEMENT
AMENDMENT NO. 1 TO WARRANT AGREEMENT dated as of March 30, 1995 between
--
Associated Holdings, Inc., a Delaware corporation (the "Issuer"), and Boise
------
Cascade Corporation, a Delaware corporation (the "Holder").
------
WHEREAS, the Issuer has made a tender offer for the shares of, and has
agreed following consummation of the tender offer to merge into, United
Stationers Inc. (the "Merger"), and Associated Stationers, Inc., a Delaware
------
corporation ("Operating Company"), has agreed to merge into a wholly-owned
-----------------
subsidiary of United Stationers Inc.;
WHEREAS, in connection therewith the Loans (as defined in the Warrant
Agreement referred to below) will be refinanced by loans under other credit
agreements;
WHEREAS, in connection with the foregoing, the Issuer has requested, and
the Holder is willing, to amend the Warrant Agreement dated as of January 31,
1992 between the Issuer and the Holder (as heretofore amended, the "Warrant
-------
Agreement");
- ----------
NOW THEREFORE, in consideration of the premises and the mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. Terms used but not defined herein shall have the
-----------
respective meanings assigned to such terms in the Warrant Agreement as amended
hereby.
Section 2. Amendments. The Warrant Agreement shall be amended as follows:
----------
2.1 The definitions in Section 1 of the Warrant Agreement shall be amended
as follows:
(a) The definitions of "Annual Management Fees" and "Monthly Management
Fees" shall be deleted.
(b) The following definitions shall be added in their appropriate places.
"Senior Subordinated Credit Agreement" shall have the meaning set
------------------------------------
forth in the Credit Agreement.
<PAGE>
"Senior Subordinated Lenders" shall have the meaning set forth in the
---------------------------
Credit Agreement.
"United" means United Stationers Inc., a Delaware corporation, as the
------
successor-in-interest to Associated Holdings, Inc.
(c) The following definitions shall be amended as follows:
"Change in Control" shall have the meaning set forth in the Credit
-----------------
Agreement.
"Class A Common Stock" shall have the meaning assigned to such term in
--------------------
Section 3.07 and shall include the Common Stock, $.10 par value, of United.
"Class B Common Stock" shall have the meaning assigned to such term in
--------------------
Section 3.07 and shall include the Nonvoting Common Stock, $.01 par value,
of United.
"Credit Agreement" shall mean the Credit Agreement dated as of
----------------
March __, 1995 among the Operating Company, the Issuer, the lenders
signatory thereto and The Chase Manhattan Bank (National Association) as
Agent, together with any amendments, modifications or supplements thereto
or replacements or refinancings thereof except as otherwise indicated.
The phrase "but shall not include Options" shall be added at the end
of the definitions of "Convertible Securities".
The phrase "and following the Merger shall include United Stationers
Supply Co." shall be added at the end of the definition of "Operating Company".
The phrase "including the Common Stock, $.10 par value, and the
Nonvoting Common Stock, $.01 par value, of United" shall be added at the end of
the first sentence of the definition of "Common Stock".
The phrase "and following the Merger shall include United" shall be
added at the end of the definition of "Issuer".
The phrase "after March 29, 1995" shall be added after the words
"Common Stock" on the fourth line of the definition of "Qualified Public
Offering".
2
<PAGE>
The phrase "other than Common Stock" shall be added after the word
"security" in the first line of the definition of "Participating Securities".
The phrase "under the definition of 'Subsidiary'" is deleted from the
fifth and sixth lines of the definition of "Subsidiary".
2.2 Section 7.01(a) of the Warrant Agreement is amended to read in its
entirety as follows:
"(a) Notwithstanding anything herein to the contrary, but subject to
the provisions of Section 7.01(b), if Wingate, Cumberland, Good Capital or any
--------------
of their subsidiaries, Affiliates (but excluding any limited partners of Wingate
as such) or associates (as defined under the Exchange Act) (other than pursuant
to an underwritten public offering or in an ordinary brokerage transaction under
Rule 144) proposes, in a single transaction or a series of related
transactions, to sell, dispose of or otherwise transfer, directly or indirectly,
any shares of Common Stock then-outstanding in any manner, other than (i) the
Employee Shares, (ii) pursuant to a registration statement filed pursuant to the
Securities Act in which the Holders may participant pursuant to the terms of the
Registration Rights Agreement, or (iii) in an ordinary brokerage transaction
pursuant to Rule 144 (each, a "Tag-Along Sale"), then Issuer shall cause such
--------------
Stockholder (the "Selling Stockholder") to refrain from effecting such
-------------------
transaction unless, prior to the consummation thereof, the Holders shall have
been afforded the opportunity to join in such transfer as provided in Section
-------
7.02 (it being understood that such Holders shall pay their own expenses in
- ----
connection therewith)."
2.3 Section 9.04 is amended by adding at the end thereof the words
"and the Senior Subordinated Credit Agreement".
2.4 Section 9.05 is amended to read in its entirety as follows:
"9.05 Transactions with Affiliates. Except as expressly permitted by
----------------------------
this Agreement, Issuer shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
assets to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; (d) enter into any other transaction
directly or indirectly with or
3
<PAGE>
for the benefit of an Affiliate (including guarantees and assumptions of
obligations of an Affiliate); provided, however, that (i) any Affiliate who
-------- -------
is an individual may serve as an officer or employee of Issuer or its
Subsidiaries and receive reasonable compensation for his or her services in
such capacity, and (ii) Issuer and its Subsidiaries may enter into
transactions providing for the leasing of Property, the rendering or
receipt of services or the purchase or sale of inventory and other assets
in the ordinary course of business if the monetary or business
consideration arising therefrom would be substantially as advantageous to
Issuer and its Subsidiaries as the monetary or business consideration which
would obtain in a comparable transaction with a Third Party; or (e) pay to
Wingate, Cumberland or any of their respective Affiliates any management,
consultant, financial advisor, director or similar fees ("Sponsor
-------
Management Fees"), except as permitted under the Credit Agreement as in
---------------
effect on the date hereof without giving effect to any modifications or
supplements thereto, or termination thereof, after the date hereof."
2.5 Section 9.06(b) is amended by deleting the word "repurchase" in
the second line thereof.
2.6 Section 9.06(e) is amended by adding the words "except that
Issuer and each Subsidiary may own a percentage of the stock of any Subsidiary
not lower than the percentage owned at the effective time of the Merger" at the
end thereof.
2.7 Section 9.06(g) is amended by adding the words "it being
recognized that the last day of the fiscal year of United following the Merger
need not be changed to December 31 before December 31, 1995".
2.8 Section 9.08 is amended by adding at the end of the first
paragraph the sentence "This Section shall not apply at the time when the Issuer
has securities registered under Section 12(b) or 12(g), or is required to file
reports under Section 15(d), of the Exchange Act."
2.9 Section 9.09 is amended by adding at the end thereof the sentence
"This Section shall not apply at any time when the Issuer has securities
registered under Section 12(b) or 12(g), or is required to file reports under
Section 15(d), of the Exchange Act."
4
<PAGE>
2.10 Representation and Warranties of Issuer. The Issuer represents
----------------------------------------
and warrants as follows:
(a) No Breach. The execution, delivery and performance of this
----------
Amendment by the Issuer and the consummation by the Issuer of the transactions
contemplated hereby will not (a) violate the certificate of incorporation or
by-laws of the Issuer, (b) violate any loan or credit agreement to which the
Issuer is a party or is bound, or result in a breach of or default under any
other instrument or agreement to which the Issuer is a party or is bound in a
way which could reasonably be expected to have a material adverse effect on
(i) the property, business, operations, financial condition, prospects,
liabilities, or capitalization of the Issuer and the Subsidiaries taken as a
whole, (ii) the ability of the Issuer to perform its obligations under this
Amendment, the Warrant Agreement, the Warrant, or the Registration Rights
Agreement, or (iii) the validity or enforceability of this Amendment, the
Warrant Agreement, the Warrant, or the Registration Rights Agreement, or
(iv) the rights and remedies of the Holder under the Warrant Agreement, the
Warrant, or the Registration Rights Agreement, (c) violate any judgment, order,
injunction, decree, or award against or binding upon the Issuer, (d) result in
the creation of any material lien upon any of the properties or assets of the
Issuer, or (e) violate any law, rule or regulation relating to the Issuer.
(b) Corporate Action. The Issuer has all necessary corporate power and
-----------------
authority to execute, deliver, and perform its respective obligations under this
Amendment; the execution, delivery and performance by the Issuer of this
Amendment have been duly authorized by all necessary corporate action (including
all stockholder action) on the part of the Issuer; and this Amendment has been
duly executed and delivered by the Issuer and constitutes the legal, valid, and
binding obligation of the Issuer, enforceable against the Issuer in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws effecting
the rights of creditors generally as applicable to the Issuer, and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) Capitalization. The representations in Section 8.14 of the Credit
---------------
Agreement are complete and correct.
(d) Prior Representations and Warranties. After giving effect to this
-------------------------------------
Amendment, (i) the Issuer is in compliance
5
<PAGE>
with its obligations under the Warrant Agreement and the Registration Rights
Agreement and (ii) except for the representations made by the Issuer in
Section 3.07 of the Warrant Agreement, all representations and warranties made
by the Issuer in Section 3 of the Warrant Agreement are true and correct on and
as of the date hereof with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
Section 3. Documents Otherwise Unchanged. Except as herein provided,
-----------------------------
the Warrant Agreement shall remain unchanged and in full force and effect, and
each reference to the "Warrant Agreement" and words of similar import in the
Warrant Agreement, both as amended hereby, shall be a reference to the Warrant
Agreement, as amended hereby, and as the same may be further amended,
supplemented, and otherwise modified and in effect from time to time.
Section 4. Counterparts. This Amendment may be executed in any
------------
number of counterparts, each of which shall be identical and all of which, when
taken together, shall constitute one and the same instrument, and any of the
parties hereto may execute this Amendment by signing any such counterpart.
Section 5. Binding Effect. This Amendment shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 6. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of Illinois.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
ASSOCIATED HOLDINGS, INC.
By: /s/DANIEL H. BUSHELL
------------------------------
Name: Daniel H. Bushell
Title: Chief Financial Officer
BOISE CASCADE CORPORATION
By: /s/J. W. HOLLEREN
-----------------------------
Name: J. W. Holleren
Title: Vice President
7
<PAGE>
EXHIBIT 10.19
INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT
-----------------------------------------------
This INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT (the "Agreement") is
made and entered into as of January 31, 1992, among Associated Holdings, Inc., a
Delaware corporation (together with its successors and assigns, "Holdings"),
Associated Stationers, Inc., a Delaware corporation (together with its
successors and assigns, "Stationers"), and Cumberland Capital Corporation, a
Delaware corporation (together with its successors and assigns, "Cumberland").
WHEREAS, Holdings is the owner of all of the issued and outstanding capital
stock of Stationers;
WHEREAS, Stationers is a newly-formed corporation organized for the purpose
of acquiring certain assets of Boise Cascade Office Products Corporation related
to its wholesale office products division (the "Transaction");
WHEREAS, Holdings and Stationers have requested that Cumberland render
financial advisory services to Holdings and Stationers in connection with the
negotiation, structure and financing of the Transaction and certain continuing
financial advisory services thereafter;
WHEREAS, Stationers has, of even date herewith, entered into an Investment
Banking Fee and Management Agreement (collectively, the "Sponsor Agreements")
with each of Wingate Partners, L.P., a Delaware limited partnership ("Wingate"),
and Good Capital Co., Inc., a Delaware corporation ("Good");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Retention.
---------
(a) Holdings and Stationers hereby acknowledge that they have retained
Cumberland, and Cumberland acknowledges that it has acted, as financial advisor
to Holdings and Stationers in connection with the Transaction.
(b) Following consummation of the Transaction, subject to reasonable
advance notice in order to accommodate scheduling, Cumberland will provide
oversight and monitoring services to Holdings and Stationers and their
subsidiaries, on a non-exclusive basis, as requested by the chief executive
officer or the board of directors of each of Holdings and Stationers during the
term of this Agreement. In connection therewith, Cumberland agrees to make
available a sufficient number of designees to serve on the board of directors of
each of Holdings and Stationers. The services of Cumberland to be provided
hereunder shall not include services
<PAGE>
relating to the day-to-day management and activities of Holdings or Stationers
(including, but not limited to, keeping of books and records, financial
management, clerical services, administrative support services, receipt and
disbursement of cash and tax return preparation).
2. Right of First Refusal. Holdings and Stationers hereby agree that in
----------------------
the event that financial advisory or consulting services are required by
Holdings or Stationers during the term of this Agreement in connection with any
transaction other than the Transaction, or which are otherwise in addition to
the oversight and monitoring services contemplated under Section 1(b) above,
Holdings or Stationers, as the case may be, shall offer to retain Cumberland to
provide such financial advisory and/or consulting services, all on such terms as
shall be mutually agreed upon by the parties, including compensation which shall
not be less than the then-prevailing fees for like services rendered by
independent third parties. Notwithstanding the prior sentence, each party
hereto acknowledges that, during the respective terms thereof, the Sponsor
Agreements may require that similar services be performed by Wingate and Good,
and any agreement entered into during the terms of the respective Sponsor
Agreements by and between Stationers and/or Holdings and Wingate or Good,
respectively, in respect of such similar services shall not be in violation of
this provision.
3. Term. This Agreement is noncancellable and shall continue for a term
----
of ten years from the date hereof (the "Primary Term"), and shall continue on a
year-to-year basis thereafter unless terminated by either Holdings and
Stationers, on the one hand, or Cumberland, on the other hand, by written notice
delivered to the other party(ies) on or before the 180th day prior to the
expiration of the Primary Term or prior to the expiration of any subsequent
yearly term.
4. Compensation.
------------
(a) As compensation for Cumberland's services as financial advisor to
Holdings and Stationers in connection with the Transaction, Stationers hereby
irrevocably agrees to pay to Cumberland in cash at the closing of the
Transaction (i) a cash fee of $500,000 and (ii) an amount equal to all out-of-
pocket expenses incurred by Cumberland in respect of the Transaction, including,
without limitation, all Cumberland's legal fees related thereto.
(b) As compensation for Cumberland's oversight and monitoring services
pursuant to Section 1(b),
(i) Stationers shall pay Cumberland an annual fee of $75,000
(subject to adjustment as provided in Section 4(c) hereof, the
"Monitoring Fee"), such payments to be made in cash monthly on the
last business day of each month; provided, that for so long as that
--------
Credit Agreement dated of even date herewith by and among Holdings,
<PAGE>
Stationers, the Lenders (as defined therein) and The Chase Manhattan
Bank (National Association), as Agent (as hereafter amended or
modified, the "Credit Agreement"), remains in effect, the annual
Monitoring Fee shall be paid in accordance with the terms of the Credit
Agreement. Any amounts due pursuant to this Section 4(b) shall accrue
interest at a rate of 10% per annum, compounded monthly, from and
including the due date to the date such amounts, including all accrued
and unpaid interest thereon, are paid in full, calculated on the basis
of a 360-day year; and
(ii) Holdings shall issue to Cumberland 23,129 shares of its
Common Stock, $.01 par value, upon receipt of the $231.29 aggregate par
value thereof, the receipt of which hereby is acknowledged, and
Cumberland's agreement to perform its obligations under Section 1(b)
hereof. The issuance of such shares of Common Stock (the "Monitoring
Stock") shall be subject to rescission if this Agreement shall
terminate at any time prior to the tenth anniversary date hereof,
unless: (A) Holdings and Stationers engage in a transaction of the sort
contemplated in Section 2 hereof and fail to retain Cumberland to
provide financial and/or consulting services in connection therewith;
(B) this Agreement is terminated without the written consent of
Cumberland; (C) Holdings and/or Stationers is in material noncompliance
with any of the terms of this Agreement; (D) a tender offer or exchange
offer has been made for shares of Common Stock, provided that the
corporation, person or other entity making such offer purchases or
otherwise acquires shares of Common Stock pursuant to such offer; (E)
the stock holders of Holdings shall have approved a definitive
agreement to merge or consolidate with or into another corporation or
other entity pursuant to which Holdings will not survive or will
survive only as a subsidiary of another corporation or other entity, or
to sell or otherwise dispose of all or substantially all of its assets;
(F) any person or group (as such terms are defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "Act")) that
will hold less than five percent (5%) of the Common Stock of Holdings
immediately upon consummation of the Transaction shall become the
holder of 50% or more of the outstanding shares of Common Stock of
Holdings; or (G) a Cash Out Event, as defined in the Certificate of
Incorporation of Holdings, shall have occurred. In any case set forth
in clauses (A)-(G) above, so long as Cumberland confirms in writing
upon request of Stationers or Holdings or their respective successors
or assigns, as the case may be, that it is prepared to continue to
provide the services to be performed by Cumberland pursuant to this
Agreement, then the issuance of the Monitoring Stock shall not be
subject to rescission pursuant hereto.
<PAGE>
(c) On each December 31st during the term hereof, the annual
Monitoring Fee shall be increased automatically in an amount to be determined by
the boards of directors of Holdings and Stationers.
5. Reimbursement of Expenses. In addition to the compensation to be paid
-------------------------
pursuant to Section 4 hereof, Stationers agrees to reimburse Cumberland,
promptly following demand therefor, together with invoices or reasonably
detailed descriptions thereof, for all reasonable disbursements and out-of-
pocket expenses (including fees and disbursements of counsel) incurred by
Cumberland, its principals, officers, employees, representatives or agents in
connection with the performance by it of the services contemplated by Section
1(b) hereof. Any amounts due pursuant to this Section 5 shall accrue interest
at a rate of 10% per annum, compounded quarterly, until such amounts, including
all accrued and unpaid interest, are paid in full.
6. Indemnification. Stationers hereby agrees to indemnify Cumberland and
---------------
its affiliates as provided in Exhibit A attached hereto and incorporated herein.
---------
The indemnity provisions contained in Exhibit A shall remain operative and in
---------
full force and effect notwithstanding termination of this Agreement.
7. Confidential Information. In connection with its providing of
------------------------
services hereunder, Cumberland agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by Stationers or
Holdings or any of their subsidiaries or other affiliates to Cumberland solely
in its capacity as financial advisor, unless such information, secret processes,
or trade secrets are publicly available or otherwise available without
restriction or breach of any confidentiality agreement.
8. Governing Law. This Agreement shall be construed, interpreted, and
-------------
enforced in accordance with the substantive laws of the State of Illinois,
excluding any conflict-of-law provisions thereof.
9. Assignment. This Agreement and all provisions contained herein shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither Associated nor
-------- -------
Stationers shall be permitted to assign this Agreement or any of their rights,
interests or obligations hereunder without the prior written consent of
Cumberland.
10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
<PAGE>
11. Other Understandings. All discussions, understandings, and agreements
--------------------
theretofore made among any of the parties hereto with respect to the subject
matter hereof are merged in this Agreement, which alone fully and completely
expresses the Agreement of the parties hereto.
12. Time Devoted to Stationers; Conflicts. Stationers and Holdings
-------------------------------------
acknowledge that Cumberland has other business activities and no principal or
employee of Cumberland shall be required or expected to devote his or her full
time and attention to the services to be performed under this Agreement.
Stationers and Holdings further acknowledge that possibilities for a conflict of
interest may arise due to Cumberland, its principals, employees or agents
pursuing business activities similar to the business of Stationers. In no event
shall the existence of such conflicts of interest constitute a breach of this
Agreement or a default hereunder, provided that Cumberland performs the duties
to Stationers and Holdings set forth herein. Nothing in this Agreement shall
preclude any of Cumberland's directors, officers, principals, representatives,
agents or employees from becoming employees of Stationers or Holdings on a full-
time basis and being compensated as employees by Stationers and/or Holdings over
and above the fees paid to Cumberland pursuant hereto.
13. Independent Contractor. Cumberland shall perform services hereunder
----------------------
as an independent contractor, retaining control over and responsibility for its
own operations and personnel. Neither Cumberland nor its principals, officers or
employees shall be considered employees or agents of Stationers or Holdings nor
shall any of them have the authority to contract in the name of or bind
Stationers or Holdings, except as expressly agreed to in writing by Stationers
or Holdings, respectively, or unless any such individual is then serving as an
officer of Stationers or Holdings.
14. Coordination of Services. Cumberland acknowledges that each of
------------------------
Wingate and Good has entered into a Sponsor Agreement and it is the intention of
Wingate, Good and Cumberland to cooperate in the provision of services
thereunder and hereunder to further the interests of Stationers and Holdings.
It is intended that Wingate, Good and Cumberland will review these services not
less than annually to make joint recommendations to each other and/or to
Stationers and Holdings as to how best to coordinate such services.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CUMBERLAND CAPITAL CORPORATION
By: _______________________________
Name:
Title:
ASSOCIATED HOLDINGS, INC.
By: _____________________________
ASSOCIATED STATIONERS, INC.
By: ______________________________
<PAGE>
EXHIBIT A
---------
Stationers, Holdings and each of their successors (collectively, the
"Indemnitor") hereby agree to indemnify and hold harmless Cumberland, its
principals, general partners, limited partners and affiliates, and their
respective directors, officers, agents, employees and affiliates (collectively,
the "Cumberland Group") from and against any claims, actions, proceedings,
demands, liabilities, damages, judgments, assessments, losses and costs,
including fees and expenses, arising out of or in connection with the services
rendered by Cumberland or any member of the Cumberland Group under the attached
Agreement, and will reimburse the Cumberland Group for all such fees and
expenses including the reasonable fees of counsel as they are incurred by the
Cumberland Group in connection with investigating, preparing or defending any
such claims, actions, proceedings, demands, or assessments, whether or not in
connection with any pending or threatened investigation, litigation or other
proceeding to which the Cumberland Group, or any member thereof, is a party.
The Indemnitor will not, however, be responsible for any claims, liabilities,
losses, damages or expenses that are determined by final judgment of a court of
competent jurisdiction, from which no further appear may be taken, to result
primarily from the Cumberland Group's gross negligence, bad faith or willful
breach of its obligations under the Agreement. The Indemnitor also agrees that
the Cumberland Group shall have no liability for claims, liabilities, damages,
losses or expenses, including legal fees, incurred by the Indemnitor unless they
are determined by final judgment of a court of competent jurisdiction, from
which no further appeal may be taken, to result primarily from the Cumberland
Group's gross negligence, bad faith or willful breach of its obligations under
the Agreement.
In case any action shall be brought against the Cumberland Group with
respect to which indemnity may be sought against the Indemnitor under the
Agreement, the Cumberland Group shall promptly notify the Indemnitor in writing
and the Indemnitor shall, if requested by Cumberland, assume the defense
thereof, including the employment of counsel and payment of all fees and
expenses. The Cumberland Group shall have the right to employ separate counsel
in such action and participate in the defense thereof, but the fees and expenses
of such separate counsel shall be at the expense of the Cumberland Group, unless
(i) the Indemnitor has failed to
<PAGE>
assume the defense and employ counsel or (ii) the named parties to any such
action (including any impleaded parties) include the Cumberland Group and the
Indemnitor, and the Cumberland Group shall have been advised by such separate
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnitor; provided,
however, that the Indemnitor shall not in such event be responsible hereunder
for the fees and expenses of more than one such firm of separate counsel, in
addition to any local counsel. The Indemnitor shall not be liable for any
settlement of any such action effected without the written consent of the
Indemnitor (which shall not be unreasonably withheld) and, except as provided
above, the Indemnitor agrees to indemnify and hold harmless the Cumberland Group
from and against any loss or liability by reason of settlement of any action
effected with the consent of the Indemnitor.
2
<PAGE>
INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT
-----------------------------------------------
This INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT (the "Agreement") is
made and entered into as of January 31, 1992, among Associated Holdings, Inc., a
Delaware corporation (together with its successors and assigns, "Holdings"),
Associated Stationers, Inc., a Delaware corporation (together with its
successors and assigns, "Stationers"), and Good Capital Co., Inc., a Delaware
corporation (together with its successors and assigns, "Good").
WHEREAS, Holdings is the owner of all of the issued and outstanding capital
stock of Stationers;
WHEREAS, Stationers is a newly-formed corporation organized for the purpose
of acquiring certain assets of Boise Cascade Office Products Corporation related
to its wholesale office products division (the "Transaction");
WHEREAS, Holdings and Stationers have requested that Good render financial
advisory services to Holdings and Stationers in connection with the negotiation,
structure and financing of the Transaction and certain continuing financial
advisory services thereafter;
WHEREAS, Stationers has, of even date herewith, entered into an Investment
Banking Fee and Management Agreement (collectively, the "Sponsor Agreements")
with each of Wingate Partners, L.P., a Delaware limited partnership (Wingate")
and Cumberland Capital Corporation, a Delaware corporation ("Cumberland");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Retention.
---------
(a) Holdings and Stationers hereby acknowledge that they have retained
Good, and Good acknowledges that it has acted, as financial advisor to Holdings
and Stationers in connection with the Transaction.
(b) Following consummation of the Transaction, subject to reasonable
advance notice in order to accommodate scheduling, Good will provide oversight
and monitoring services to Holdings and Stationers and their subsidiaries, on a
non-exclusive basis, as requested by the chief executive officer or the board of
directors of each of Holdings and Stationers during the term of this Agreement.
In connection therewith, Good agrees to make available a sufficient number of
designees to serve on the board of directors of each of Holdings and Stationers.
The services of Good to be provided hereunder shall not include services
relating to the day-to-day management and activities of Holdings or Stationers
(including, but not limited to, keeping of books and
<PAGE>
records, financial management, clerical services, administrative support
services, receipt and disbursement of cash and tax return preparation).
2. Right of First Refusal. Holdings and Stationers hereby agree that in
----------------------
the event that financial advisory or consulting services are required by
Holdings or Stationers during the term of this Agreement in connection with any
transaction other than the Transaction, or which are otherwise in addition to
the oversight and monitoring services contemplated under Section 1(b) above,
Holdings or Stationers, as the case may be, shall offer to retain Good to
provide such financial advisory and/or consulting services, all on such terms as
shall be mutually agreed upon by the parties, including compensation which shall
not be less than the then-prevailing fees for like services rendered by
independent third parties. Notwithstanding the prior sentence, each party
hereto acknowledges that, during the respective terms thereof, the Sponsor
Agreements may require that similar services be performed by Wingate and
Cumberland, and any agreement entered into during the terms of the respective
Sponsor Agreements by and between Stationers and/or Holdings and Wingate or
Cumberland, respectively, in respect of such similar services shall not be in
violation of this provision.
3. Term. This Agreement is noncancellable and shall continue for a term
----
of ten years from the date hereof (the "Primary Term"), and shall continue on a
year-to-year basis thereafter unless terminated by either Holdings and
Stationers, on the one hand, or Good, on the other hand, by written notice
delivered to the other party(ies) on or before the 180th day prior to the
expiration of the Primary Term or prior to the expiration of any subsequent
yearly term.
4. Compensation.
------------
(a) As compensation for Good's services as financial advisor to
Holdings and Stationers in connection with the Transaction, Stationers hereby
irrevocably agrees to compensate Good at the closing of the Transaction as
follows:
(i) Holdings shall issue to Good 31,480 shares of its Common
Stock, $.01 par value, and 185 shares of its Class A Preferred Stock,
$1,000 par value; such shares of Common Stock and Class A Preferred
Stock shall be subject to rescission if this Agreement shall terminate
at any time prior to the fifth anniversary date hereof, unless: (A)
Holdings and Stationers engage in a transaction of the sort
contemplated in Section 2 hereof and fail to retain Good to provide
financial and/or consulting services in connection therewith; (B) this
Agreement is terminated without the written consent of Good; (C)
Holdings and/or Stationers is in material
2
<PAGE>
noncompliance with any of the terms of this Agreement; (D) a tender
offer or exchange offer has been made for shares of Common Stock,
provided that the corporation, person or other entity making such offer
purchases or otherwise acquires shares of Common Stock pursuant to such
offer; (E) the stockholders of Holdings shall have approved a
definitive agreement to merge or consolidate with or into another
corporation or other entity pursuant to which Holdings will not survive
or will survive only as a subsidiary of another corporation or other
entity, or to sell or otherwise dispose of all or substantially all of
its assets; (F) any person or group (as such terms are defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act")) that will hold less than five percent (5%) of the Common
Stock of Holdings immediately upon consummation of the Transaction
shall become the holder of 50% or more of the outstanding shares of
Common Stock of Holdings; or (G) a Cash-Out Event, as defined in the
Certificate of Incorporation of Holdings, shall have occurred. In any
case set forth in clauses (A)-(G) above, so long as Good confirms in
writing upon request of Stationers or Holdings or their respective
successors or assigns, as the case may be, that it is prepared to
continue to provide the services to be performed by Good pursuant to
this Agreement, then the issuance of said Common Stock and Class A
Preferred Stock shall not be subject to rescission pursuant hereto; and
(ii) Stationers shall pay in cash an amount equal to all out-of-
pocket expenses incurred by Good in respect of the Transaction,
including, without limitation, all of Good's legal fees related
thereto.
(b) As compensation for Good's oversight and monitoring services
pursuant to Section 1(b),
(i) Stationers shall pay Good an annual fee of $75,000 (subject
to adjustment as provided in Section 4(c) hereof, the "Monitoring
Fee"), such payments to be made in cash monthly on the last business
day of each month; provided, that for so long as that Credit Agreement
--------
dated of even date herewith by and among Holdings, Stationers, the
Lenders (as defined therein) and The Chase Manhattan Bank (National
Association), as Agent (as hereafter amended or modified, the "Credit
Agreement"), remains in effect, the annual Monitoring Fee shall be paid
in accordance with the terms of the Credit Agreement. Any amounts due
pursuant to this Section 4(b) shall accrue interest at a rate of 10%
per annum, compounded monthly, from and including the due date to the
date such amounts, including all accrued and
3
<PAGE>
unpaid interest thereon, are paid in full, calculated on the basis of
a 360-day year; and
(ii) Holdings shall issue to Good 23,129 shares of its Common
Stock, $.01 par value, upon receipt of the $231.29 aggregate par value
thereof, the receipt of which hereby is acknowledged, and Good's
agreement to perform its obligations under Section 1(b) hereof. The
issuance of such shares of Common Stock (the "Monitoring Stock") shall
be subject to rescission if this Agreement shall terminate at any time
prior to the tenth anniversary date hereof, unless: (A) Holdings and
Stationers engage in a transaction of the sort contemplated in Section
2 hereof and fail to retain Good to provide financial and/or consulting
services in connection therewith; (B) this Agreement is terminated
without the written consent of Good; (C) Holdings and/or Stationers is
in material noncompliance with any of the terms of this Agreement; (D)
a tender offer or exchange offer has been made for shares of Common
Stock, provided that the corporation, person or other entity making
such offer purchases or otherwise acquires shares of Common Stock
pursuant to such offer; (E) the stockholders of Holdings shall have
approved a definitive agreement to merge or consolidate with or into
another corporation or other entity pursuant to which Holdings will not
survive or will survive only as a subsidiary of another corporation or
other entity, or to sell or otherwise dispose of all or substantially
all of its assets; (F) any person or group (as such terms are defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act")) that will hold less than five percent (5%) of the Common
Stock of Holdings immediately upon consummation of the Transaction
shall become the holder of 50% or more of the outstanding shares of
Common Stock of Holdings; or (G) a Cash-Out Event, as defined in the
Certificate of Incorporation of Holdings, shall have occurred. In any
case set forth in clauses (A)-(G) above, so long as Good confirms in
writing upon request of Stationers or Holdings or their respective
successors or assigns, as the case may be, that it is prepared to
continue to provide the services to be performed by Good pursuant to
this Agreement, then the issuance of the Monitoring Stock shall not be
subject to rescission pursuant hereto.
(c) On each December 31st during the term hereof, the annual
Monitoring Fee shall be increased automatically in an amount to be determined by
the boards of directors of Holdings and Stationers.
4
<PAGE>
5. Reimbursement of Expenses. In addition to the compensation to be paid
-------------------------
pursuant to Section 4 hereof, Stationers agrees to reimburse Good, promptly
following demand therefor, together with invoices or reasonably detailed
descriptions thereof, for all reasonable disbursements and out-of-pocket
expenses (including fees and disbursements of counsel) incurred by Good, its
principals, officers, employees, representatives or agents in connection with
the performance by it of the services contemplated by Section 1(b) hereof. Any
amounts due pursuant to this Section 5 shall accrue interest at a rate of 10%
per annum, compounded quarterly, until such amounts, including all accrued and
unpaid interest, are paid in full.
6. Indemnification. Stationers hereby agrees to indemnify Good and its
---------------
affiliates as provided in Exhibit A attached hereto and incorporated herein.
---------
The indemnity provisions contained in Exhibit A shall remain operative and in
---------
full force and effect notwithstanding termination of this Agreement.
7. Confidential Information. In connection with its providing of
------------------------
services hereunder, Good agrees not to divulge any confidential information,
secret processes or trade secrets disclosed by Stationers or Holdings or any of
their subsidiaries or other affiliates to Good solely in its capacity as
financial advisor, unless such information, secret processes, or trade secrets
are publicly available or otherwise available without restriction or breach of
any confidentiality agreement.
8. Governing Law. This Agreement shall be construed, interpreted, and
-------------
enforced in accordance with the substantive laws of the State of Illinois,
excluding any conflict-of-law provisions thereof.
9. Assignment. This Agreement and all provisions contained herein shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither Associated nor
-------- -------
Stationers shall be permitted to assign this Agreement or any of their rights,
interests or obligations hereunder without the prior written consent of Good.
10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
11. Other Understandings. All discussions, understandings, and agreements
--------------------
theretofore made among any of the parties hereto with respect to the subject
matter hereof are merged in this
5
<PAGE>
Agreement, which alone fully and completely expresses the Agreement of the
parties hereto.
12. Time Devoted to Stationers; Conflicts. Stationers and Holdings
-------------------------------------
acknowledge that Good has other business activities and no principal or employee
of Good shall be required or expected to devote his or her full time and
attention to the services to be performed under this Agreement. Stationers and
Holdings further acknowledge that possibilities for a conflict of interest may
arise due to Good, its principals, employees or agents pursuing business
activities similar to the business of Stationers. In no event shall the
existence of such conflicts of interest constitute a breach of this Agreement or
a default hereunder, provided that Good performs the duties to Stationers and
Holdings set forth herein. Nothing in this Agreement shall preclude any of
Good's directors, officers, principals, representatives, agents or employees
from becoming employees of Stationers or Holdings on a full-time basis and being
compensated as employees by Stationers and/or Holdings over and above the fees
paid to Good pursuant hereto.
13. Independent Contractor. Good shall perform services hereunder as an
----------------------
independent contractor, retaining control over and responsibility for its own
operations and personnel. Neither Good nor its principals, officers or
employees shall be considered employees or agents of Stationers or Holdings nor
shall any of them have the authority to contract in the name of or bind
Stationers or Holdings, except as expressly agreed to in writing by Stationers
or Holdings, respectively, or unless any such individual is then serving as an
officer of Stationers or Holdings.
14. Coordination of Services. Good acknowledges that each of Wingate and
------------------------
Cumberland has entered into a Sponsor Agreement and it is the intention of
Wingate, Good and Cumberland to cooperate in the provision of services
thereunder and hereunder to further the interests of Stationers and Holdings.
It is intended that Wingate, Good and Cumberland will review these services not
less than annually to make joint recommendations to each other and/or to
Stationers and Holdings as to how best to coordinate such services.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
GOOD CAPITAL CO., INC.
By: _______________________________
Name:
Title:
ASSOCIATED HOLDINGS, INC.
By: _____________________________
Thomas W. Sturgess,
Chairman of the Board
ASSOCIATED STATIONERS, INC.
By: ______________________________
Thomas W. Sturgess,
Chairman of the Board
7
<PAGE>
EXHIBIT A
---------
Stationers, Holdings and each of their successors (collectively, the
"Indemnitor") hereby agree to indemnify and hold harmless Good, its principals,
general partners, limited partners and affiliates, and their respective
directors, officers, agents, employees and affiliates (collectively, the "Good
Group") from and against any claims, actions, proceedings, demands, liabilities,
damages, judgments, assessments, losses and costs, including fees and expenses,
arising out of or in connection with the services rendered by Good or any member
of the Good Group under the attached Agreement, and will reimburse the Good
Group for all such fees and expenses including the reasonable fees of counsel as
they are incurred by the Good Group in connection with investigating, preparing
or defending any such claims, actions, proceedings, demands, or assessments,
whether or not in connection with any pending or threatened investigation,
litigation or other proceeding to which the Good Group, or any member thereof,
is a party. The Indemnitor will not, however, be responsible for any claims,
liabilities, losses, damages or expenses that are determined by final judgment
of a court of competent jurisdiction, from which no further appear may be taken,
to result primarily from the Good Group's gross negligence, bad faith or willful
breach of its obligations under the Agreement. The Indemnitor also agrees that
the Good Group shall have no liability for claims, liabilities, damages, losses
or expenses, including legal fees, incurred by the Indemnitor unless they are
determined by final judgment of a court of competent jurisdiction, from which no
further appeal may be taken, to result primarily from the Good Group's gross
negligence, bad faith or willful breach of its obligations under the Agreement.
In case any action shall be brought against the Good Group with respect to
which indemnity may be sought against the Indemnitor under the Agreement, the
Good Group shall promptly notify the Indemnitor in writing and the Indemnitor
shall, if requested by Good, assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. The Good Group
shall have the right to employ separate counsel in such action and participate
in the defense thereof, but the fees and expenses of such separate counsel shall
be at the expense of the Good Group, unless (i) the Indemnitor has failed to
assume the defense and employ counsel or (ii) the named parties to any such
action (including any impleaded parties) include the Good Group and the
Indemnitor, and the Good Group shall have been advised by such separate counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnitor; provided, however, that
the Indemnitor shall not in such event be responsible hereunder for the fees and
expenses of more than one such firm of separate counsel, in addition to any
local counsel. The Indemnitor shall not be liable for any settlement of any
such action effected without the written consent of the Indemnitor (which shall
not be
<PAGE>
unreasonably withheld) and, except as provided above, the Indemnitor agrees to
indemnify and hold harmless the Good Group from and against any loss or
liability by reason of settlement of any action effected with the consent of the
Indemnitor.
2
<PAGE>
INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT
-----------------------------------------------
This INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT (the "Agreement") is
made and entered into as of January 31, 1992, among Associated Holdings, Inc., a
Delaware corporation (together with its successors and assigns, "Holdings"),
Associated Stationers, Inc., a Delaware corporation (together with its
successors and assigns, "Stationers"), and Wingate Partners, L.P. a Delaware
limited partnership (together with its successors and assigns, "Wingate").
WHEREAS, Holdings is the owner of all of the issued and outstanding capital
stock of Stationers;
WHEREAS, Stationers is a newly-formed corporation organized for the purpose
of acquiring certain assets of Boise Cascade Office Products Corporation related
to its wholesale office products division (the "Transaction");
WHEREAS, Holdings and Stationers have requested that Wingate render
financial advisory services to Holdings and Stationers in connection with the
negotiation, structure and financing of the Transaction and certain continuing
financial advisory services thereafter;
WHEREAS, Stationers has, of even date herewith, entered into an Investment
Banking Fee and Management Agreement (collectively, the "Sponsor Agreements")
with each of Cumberland Capital Corporation, a Delaware corporation
("Cumberland"), and Good Capital Co., Inc., a Delaware corporation ("Good");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Retention.
---------
(a) Holdings and Stationers hereby acknowledge that they have retained
Wingate, and Wingate acknowledges that it has acted, as financial advisor to
Holdings and Stationers in connection with the Transaction.
(b) Following consummation of the Transaction, subject to reasonable
advance notice in order to accommodate scheduling, Wingate will provide
oversight and monitoring services to Holdings and Stationers and their
subsidiaries, on a non-exclusive basis, as requested by the chief executive
officer or the board of
1
<PAGE>
directors of each of Holdings and Stationers during the term of this Agreement.
In connection therewith, Wingate agrees to make available a sufficient number of
designees to serve on the board of directors of each of Holdings and Stationers.
The services of Wingate to be provided hereunder shall not include services
relating to the day-to-day management and activities of Holdings or Stationers
(including, but not limited to, keeping of books and records, financial
management, clerical services, administrative support services, receipt and
disbursement of cash and tax return preparation).
2. Right of First Refusal. Holdings and Stationers hereby agree that in
----------------------
the event that financial advisory or consulting services are required by
Holdings or Stationers during the term of this Agreement in connection with any
transaction other than the Transaction, or which are otherwise in addition to
the oversight and monitoring services contemplated under Section 1(b) above,
Holdings or Stationers, as the case may be, shall offer to retain Wingate to
provide such financial advisory and/or consulting services, all on such terms as
shall be mutually agreed upon by the parties, including compensation which shall
not be less than the then-prevailing fees for like services rendered by
independent third parties. Notwithstanding the prior sentence, each party
hereto acknowledges that, during the respective terms thereof, the Sponsor
Agreements may require that similar services be performed by Cumberland and
Good, and any agreement entered into during the terms of the respective Sponsor
Agreements by and between Stationers and/or Holdings and Cumberland or Good,
respectively, in respect of such similar services shall not be in violation of
this provision.
3. Term. This Agreement is noncancellable and shall continue for a term
----
of ten years from the date hereof (the "Primary Term"), and shall continue on a
year-to-year basis thereafter unless terminated by either Holdings and
Stationers, on the one hand, or Wingate, on the other hand, by written notice
delivered to the other party(ies) on or before the 180th day prior to the
expiration of the Primary Term or prior to the expiration of any subsequent
yearly term.
4. Compensation.
------------
(a) As compensation for Wingate's services as financial advisor to
Holdings and Stationers in connection with the Transaction, Stationers hereby
irrevocably agrees to pay to Wingate in cash at the closing of the Transaction
(i) a cash fee of $500,000 and (ii) an amount equal to all out-of-pocket
expenses
2
<PAGE>
incurred by Wingate in respect of the Transaction, including, without
limitation, all of Wingate's legal fees related thereto.
(b) As compensation for Wingate's oversight and monitoring services
pursuant to Section 1(b), Stationers shall pay Wingate an annual fee of $350,000
(subject to adjustment as provided in Section 4(c) hereof, the "Monitoring
Fee"), such payments to be made in cash monthly on the last business day of each
month; provided, that for so long as that Credit Agreement dated of even date
--------
herewith by and among Holdings, Stationers, the Lenders (as defined therein) and
The Chase Manhattan Bank (National Association), as Agent (as hereafter amended
or modified, the "Credit Agreement"), remains in effect, the annual Monitoring
Fee shall be paid in accordance with the terms of the Credit Agreement. Any
amounts due pursuant to this Section 4(b) shall accrue interest at a rate of 10%
per annum, compounded monthly, from and including the due date to the date such
amounts, including all accrued and unpaid interest thereon, are paid in full,
calculated on the basis of a 360-day year.
(c) On each December 31st during the term hereof, the annual
Monitoring Fee shall be increased automatically in an amount to be determined by
the boards of directors of Holdings and Stationers.
5. Reimbursement of Expenses. In addition to the compensation to be paid
-------------------------
pursuant to Section 4 hereof, Stationers agrees to reimburse Wingate, promptly
following demand therefor, together with invoices or reasonably detailed
descriptions thereof, for all reasonable disbursements and out-of-pocket
expenses (including fees and disbursements of counsel) incurred by Wingate, its
principals, officers, employees, representatives or agents in connection with
the performance by it of the services contemplated by Section 1(b) hereof. Any
amounts due pursuant to this Section 5 shall accrue interest at a rate of 10%
per annum, compounded quarterly, until such amounts, including all accrued and
unpaid interest, are paid in full.
6. Indemnification. Stationers hereby agrees to indemnify Wingate and its
---------------
affiliates as provided in Exhibit A attached hereto and incorporated herein.
---------
The indemnity provisions contained in Exhibit A shall remain operative and in
---------
full force and effect notwithstanding termination of this Agreement.
7. Confidential Information. In connection with its providing of services
------------------------
hereunder, Wingate agrees not to divulge any confidential information, secret
processes or trade secrets disclosed by Stationers or Holdings or any of their
subsidiaries or other affiliates to Wingate solely in its capacity as financial
3
<PAGE>
advisor, unless such information, secret processes, or trade secrets are
publicly available or otherwise available without restriction or breach of any
confidentiality agreement.
8. Governing Law. This Agreement shall be construed, interpreted, and
-------------
enforced in accordance with the substantive laws of the State of Illinois,
excluding any conflict-of-law provisions thereof.
9. Assignment. This Agreement and all provisions contained herein shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither Associated nor
-------- -------
Stationers shall be permitted to assign this Agreement or any of their rights,
interests or obligations hereunder without the prior written consent of Wingate.
10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
11. Other Understandings. All discussions, understandings, and agreements
--------------------
theretofore made among any of the parties hereto with respect to the subject
matter hereof are merged in this Agreement, which alone fully and completely
expresses the Agreement of the parties hereto.
12. Time Devoted to Stationers; Conflicts. Stationers and Holdings
-------------------------------------
acknowledge that Wingate has other business activities and no principal or
employee of Wingate shall be required or expected to devote his or her full time
and attention to the services to be performed under this Agreement. Stationers
and Holdings further acknowledge that possibilities for a conflict of interest
may arise due to Wingate, its principals, employees or agents pursuing business
activities similar to the business of Stationers. In no event shall the
existence of such conflicts of interest constitute a breach of this Agreement or
a default hereunder, provided that Wingate performs the duties to Stationers and
Holdings set forth herein. Nothing in this Agreement shall preclude any of
Wingate's directors, officers, principals, representatives, agents or employees
from becoming employees of Stationers or Holdings on a full-time basis and being
compensated as employees by Stationers and/or Holdings over and above the fees
paid to Wingate pursuant hereto.
4
<PAGE>
13. Independent Contractor. Wingate shall perform services hereunder as
----------------------
an independent contractor, retaining control over and responsibility for its own
operations and personnel. Neither Wingate nor its principals, officers or
employees shall be considered employees or agents of Stationers or Holdings nor
shall any of them have the authority to contract in the name of or bind
Stationers or Holdings, except as expressly agreed to in writing by Stationers
or Holdings, respectively, or unless any such individual is then serving as an
officer of Stationers or Holdings.
14. Coordination of Services. Wingate acknowledges that each of Good and
------------------------
Cumberland has entered into a Sponsor Agreement and it is the intention of
Wingate, Good and Cumberland to cooperate in the provision of services
thereunder and hereunder to further the interests of Stationers and Holdings.
It is intended that Wingate, Good and Cumberland will review these services not
less than annually to make joint recommendations to each other and/or to
Stationers and Holdings as to how best to coordinate such services.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
WINGATE PARTNERS, L.P.,
BY: WINGATE MANAGEMENT COMPANY, L.P.,
GENERAL PARTNER
By: ______________________________
ASSOCIATED HOLDINGS, INC.
By: _____________________________
ASSOCIATED STATIONERS, INC.
By: ______________________________
<PAGE>
EXHIBIT A
---------
Stationers, Holdings and each of their successors (collectively, the
"Indemnitor") hereby agree to indemnify and hold harmless Wingate, its
principals, general partners, limited partners and affiliates, and their
respective directors, officers, agents, employees and affiliates (collectively,
the "Wingate Group") from and against any claims, actions, proceedings, demands,
liabilities, damages, judgments, assessments, losses and costs, including fees
and expenses, arising out of or in connection with the services rendered by
Wingate or any member of the Wingate Group under the attached Agreement, and
will reimburse the Wingate Group for all such fees and expenses including the
reasonable fees of counsel as they are incurred by the Wingate Group in
connection with investigating, preparing or defending any such claims, actions,
proceedings, demands, or assessments, whether or not in connection with any
pending or threatened investigation, litigation or other proceeding to which the
Wingate Group, or any member thereof, is a party. The Indemnitor will not,
however, be responsible for any claims, liabilities, losses, damages or expenses
that are determined by final judgment of a court of competent jurisdiction, from
which no further appear may be taken, to result primarily from the Wingate
Group's gross negligence, bad faith or willful breach of its obligations under
the Agreement. The Indemnitor also agrees that the Wingate Group shall have no
liability for claims, liabilities, damages, losses or expenses, including legal
fees, incurred by the Indemnitor unless they are determined by final judgment of
a court of competent jurisdiction, from which no further appeal may be taken, to
result primarily from the Wingate Group's gross negligence, bad faith or willful
breach of its obligations under the Agreement.
In case any action shall be brought against the Wingate Group with respect
to which indemnity may be sought against the Indemnitor under the Agreement, the
Wingate Group shall promptly notify the Indemnitor in writing and the Indemnitor
shall, if requested by Wingate, assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. The Wingate Group
shall have the right to employ separate counsel in such action and participate
in the defense thereof, but the fees and expenses of such separate counsel shall
be at the expense of the Wingate Group, unless (i) the Indemnitor has failed to
assume the defense and employ counsel or (ii) the named parties to any such
action (including any impleaded parties) include the Wingate Group and the
Indemnitor, and the Wingate Group shall have been advised by such separate
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnitor; provided,
however, that the Indemnitor shall not in such event be responsible hereunder
for the fees and expenses of more than one such firm of separate counsel, in
addition to any local counsel. The Indemnitor shall not be liable for any
settlement of any such
<PAGE>
action effected without the written consent of the Indemnitor (which shall not
be unreasonably withheld) and, except as provided above, the Indemnitor agrees
to indemnify and hold harmless the Wingate Group from and against any loss or
liability by reason of settlement of any action effected with the consent of the
Indemnitor.
2
<PAGE>
EXHIBIT 10.20
AMENDMENT NO. 1 TO
INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT
This Amendment No. 1 to Investment Banking Fee and Management
Agreement (the "Amendment"), dated as of March __, 1995, among United Stationers
---------
Inc., a Delaware corporation and successor-in-interest to Associated (As
hereinafter defined) (the "Company"), United Stationers Supply Co., an Illinois
-------
corporation and successor-in-interest to ASI (as hereinafter defined) ("USSC"),
----
and Good Capital Co., Inc., a Delaware corporation ("Good"), amends the
----
Investment Banking Fee and Management Agreement, dated as of January 31, 1992
(the "Management Agreement"), among Associated Holdings, Inc., a Delaware
--------------------
corporation ("Associated"), Associated Stationers, Inc., a Delaware corporation
----------
("ASI"), and Good. Unless otherwise defined herein, capitalized terms used
---
herein shall have the meanings given them in the Management Agreement.
RECITALS
--------
WHEREAS, as of the date hereof, Associated has merged (the "Merger")
------
with and into the Company, with the Company surviving, and ASI merged with and
into USSC, with USSC surviving; and
WHEREAS, in connection with the Merger, the parties to the Management
Agreement deem it desirable to amend the Management Agreement, effective as of
the effective time of the Merger (the "Effective Time"), as set forth herein;
--------------
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 4.
----------------------
(a) Section 4(b)(i) of the Management Agreement is hereby amended as
of the Effective Time to read in its entirety as follows:
(i) Stationers shall pay Good, effective as of the Effective
Time, an annual fee of $137,500 (subject to adjustment as
provided in Section 4(c) hereof, the "Monitoring Fee"), such
payments to be made in cash monthly on the last business day of
<PAGE>
each month; provided, that for so long as that Credit Agreement
--------
dated as of March __, 1995 by and among Holdings, Stationers, the
Lenders (as defined therein) and The Chase Manhattan Bank
(National Association), as Agent (as hereafter amended or
modified, the "Credit Agreement"), remains in effect, the annual
Monitoring Fee shall be paid in accordance with the terms of the
Credit Agreement; provided, further, that any amounts otherwise
-------- -------
due hereunder that are not paid when due because of the terms and
provisions of the Credit Agreement shall continue to be due and
owing from Stationers to Good. Any amounts due pursuant to this
Section 4(b) shall accrue interest at a rate of 10% per annum,
compounded monthly, from and including the due date to the date
such amounts, including all accrued and unpaid interest thereon,
are paid in full, calculated on the basis of a 360-day year.
(b) Section 4 of the Management Agreement is hereby further amended
as of the Effective Time by adding the following subsection (d) thereto:
(d) As compensation for Good's services as financial advisor to
Associated Holdings, Inc. ("AHI") and Associated Stationers, Inc.
in connection with the acquisition by AHI of Holdings (the
"United Transaction"), Stationers hereby irrevocably agrees to
pay to Good in cash at the closing of the United Transaction (i)
a cash fee of $100,000 and (ii) an amount equal to all out-of-
pocket expenses incurred by Good in respect of the United
Transaction, including, without limitation, all of Good's legal
fees related thereto.
2. Effect of the Merger. Good, the Company and USSC hereby
--------------------
acknowledge and agree that the rights and obligations of the Management
Agreement shall be binding upon and inure to the benefit of the Company, as
successor-in-interest to Associated, and to USSC, as successor-in-interest to
ASI.
2
<PAGE>
3. Effect on the Management Agreement. All references in the
----------------------------------
Management Agreement to "Stationers" shall mean USSC, as successor-in-interest
to ASI. All references in the Management Agreement to "Holdings" shall mean the
Company, as successor-in-interest to Associated. All references in the
Management Agreement to "this Agreement" and the "Agreement" and all phrases of
like import shall refer to the Management Agreement as amended by this
Amendment. The terms "hereof," "herein," "hereby" and phrases of like import,
as used in the Management Agreement, shall refer to the Management Agreement as
amended by this Amendment. Except as amended hereby, the Management Agreement
shall remain in full force and effect.
3. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
4. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
5. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:________________________________________
Thomas W. Sturgess,
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:________________________________________
Thomas W. Sturgess,
Chairman of the Board
GOOD CAPITAL CO., INC.
By:________________________________________
Name:______________________________________
Title:_____________________________________
4
<PAGE>
EX 10.20
AMENDMENT NO. 1 TO
INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT
This Amendment No. 1 to Investment Banking Fee and Management
Agreement (the "Amendment"), dated as of March __, 1995, among United Stationers
---------
Inc., a Delaware corporation and successor-in-interest to Associated (As
hereinafter defined) (the "Company"), United Stationers Supply Co., an Illinois
-------
corporation and successor-in-interest to ASI (as hereinafter defined) ("USSC"),
----
and Cumberland Capital Corporation, a Delaware corporation ("Cumberland"),
----------
amends the Investment Banking Fee and Management Agreement, dated as of January
31, 1992 (the "Management Agreement"), among Associated Holdings, Inc., a
--------------------
Delaware corporation ("Associated"), Associated Stationers, Inc., a Delaware
----------
corporation ("ASI"), and Cumberland. Unless otherwise defined herein,
---
capitalized terms used herein shall have the meanings given them in the
Management Agreement.
RECITALS
--------
WHEREAS, as of the date hereof, Associated has merged (the "Merger")
------
with and into the Company, with the Company surviving, and ASI merged with and
into USSC, with USSC surviving; and
WHEREAS, in connection with the Merger, the parties to the Management
Agreement deem it desirable to amend the Management Agreement, effective as of
the effective time of the Merger (the "Effective Time"), as set forth herein;
--------------
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 4.
----------------------
(a) Section 4(b)(i) of the Management Agreement is hereby amended as
of the Effective Time to read in its entirety as follows:
(i) Stationers shall pay Cumberland, effective as of the
Effective Time, an annual fee of $137,500 (subject to adjustment
as provided in Section 4(c) hereof, the "Monitoring Fee"), such
payments to be made in cash monthly on the last business day of
<PAGE>
each month; provided, that for so long as that Credit Agreement
--------
dated as of March __, 1995 by and among Holdings, Stationers, the
Lenders (as defined therein) and The Chase Manhattan Bank
(National Association), as Agent (as hereafter amended or
modified, the "Credit Agreement"), remains in effect, the annual
Monitoring Fee shall be paid in accordance with the terms of the
Credit Agreement; provided, further, that any amounts otherwise
-------- -------
due hereunder that are not paid when due because of the terms and
provisions of the Credit Agreement shall continue to be due and
owing from Stationers to Cumberland. Any amounts due pursuant to
this Section 4(b) shall accrue interest at a rate of 10% per
annum, compounded monthly, from and including the due date to the
date such amounts, including all accrued and unpaid interest
thereon, are paid in full, calculated on the basis of a 360-day
year.
(b) Section 4 of the Management Agreement is hereby further amended
as of the Effective Time by adding the following subsection (d) thereto:
(d) As compensation for Cumberland's services as financial
advisor to Associated Holdings, Inc. ("AHI") and Associated
Stationers, Inc. in connection with the acquisition by AHI of
Holdings (the "United Transaction"), Stationers hereby
irrevocably agrees to pay to Cumberland in cash at the closing of
the United Transaction (i) a cash fee of $100,000 and (ii) an
amount equal to all out-of-pocket expenses incurred by Cumberland
in respect of the United Transaction, including, without
limitation, all of Cumberland's legal fees related thereto.
2. Effect of the Merger. Cumberland, the Company and USSC hereby
--------------------
acknowledge and agree that the rights and obligations of the Management
Agreement shall be binding upon and inure to the benefit of the Company, as
successor-in-interest to Associated, and to USSC, as successor-in-interest to
ASI.
2
<PAGE>
3. Effect on the Management Agreement. All references in the
----------------------------------
Management Agreement to "Stationers" shall mean USSC, as successor-in-interest
to ASI. All references in the Management Agreement to "Holdings" shall mean the
Company, as successor-in-interest to Associated. All references in the
Management Agreement to "this Agreement" and the "Agreement" and all phrases of
like import shall refer to the Management Agreement as amended by this
Amendment. The terms "hereof," "herein," "hereby" and phrases of like import,
as used in the Management Agreement, shall refer to the Management Agreement as
amended by this Amendment. Except as amended hereby, the Management Agreement
shall remain in full force and effect.
4. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
4. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
5. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:___________________________________
Thomas W. Sturgess,
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:___________________________________
Thomas W. Sturgess,
Chairman of the Board
CUMBERLAND CAPITAL CORPORATION
By:___________________________________
Name:_________________________________
Title:________________________________
4
<PAGE>
AMENDMENT NO. 1 TO
INVESTMENT BANKING FEE AND MANAGEMENT AGREEMENT
This Amendment No. 1 to Investment Banking Fee and Management
Agreement (the "Amendment"), dated as of March __, 1995, among United Stationers
---------
Inc., a Delaware corporation and successor-in-interest to Associated (As
hereinafter defined) (the "Company"), United Stationers Supply Co., an Illinois
-------
corporation and successor-in-interest to ASI (as hereinafter defined) ("USSC"),
----
and Wingate Partners, L.P., a Delaware limited partnership ("Wingate"), amends
-------
the Investment Banking Fee and Management Agreement, dated as of January 31,
1992 (the "Management Agreement"), among Associated Holdings, Inc., a Delaware
--------------------
corporation ("Associated"), Associated Stationers, Inc., a Delaware corporation
----------
("ASI"), and Wingate. Unless otherwise defined herein, capitalized terms used
---
herein shall have the meanings given them in the Management Agreement.
RECITALS
--------
WHEREAS, as of the date hereof, Associated has merged (the "Merger")
------
with and into the Company, with the Company surviving, and ASI merged with and
into USSC, with USSC surviving; and
WHEREAS, in connection with the Merger, the parties to the Management
Agreement deem it desirable to amend the Management Agreement, effective as of
the effective time of the Merger (the "Effective Time"), as set forth herein;
--------------
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 4.
----------------------
(a) Section 4(b) of the Management Agreement is hereby amended as of
the Effective Time to read in its entirety as follows:
(b) As compensation for Wingate's oversight and monitoring
services pursuant to Section 1(b), Stationers shall pay Wingate
an annual fee of $725,000 (subject to adjustment as provided in
Section 4(c) hereof, the "Monitoring Fee"), such
<PAGE>
payments to be made in cash monthly on the last business day of
each month; provided, that for so long as that Credit Agreement
--------
dated as of March __, 1995 by and among Holdings, Stationers, the
Lenders (as defined therein) and The Chase Manhattan Bank
(National Association), as Agent (as hereafter amended or
modified, the "Credit Agreement"), remains in effect, the annual
Monitoring Fee shall be paid in accordance with the terms of the
Credit Agreement; provided, further, that any amounts otherwise
-------- -------
due hereunder that are not paid when due because of the terms and
provisions of the Credit Agreement shall continue to be due and
owing from Stationers to Wingate. Any amounts due pursuant to
this Section 4(b) shall accrue interest at a rate of 10% per
annum, compounded monthly, from and including the due date to the
date such amounts, including all accrued and unpaid interest
thereon, are paid in full, calculated on the basis of a 360-day
year.
(b) Section 4 of the Management Agreement is hereby further amended
as of the Effective Time by adding the following subsection (d) thereto:
(d) As compensation for Wingate's services as financial advisor
to Associated Holdings, Inc. ("AHI") and Associated Stationers,
Inc. in connection with the acquisition by AHI of Holdings (the
"United Transaction"), Stationers hereby irrevocably agrees to
pay to Wingate in cash at the closing of the United Transaction
(i) a cash fee of $2,300,000 and (ii) an amount equal to all out-
of-pocket expenses incurred by Wingate in respect of the United
Transaction, including, without limitation, all of Wingate's
legal fees related thereto.
2. Effect of the Merger. Wingate, the Company and USSC hereby
--------------------
acknowledge and agree that the rights and obligations of the Management
Agreement shall be binding upon and inure to the benefit of the Company, as
successor-in-interest to Associated, and to USSC, as successor-in-interest to
ASI.
2
<PAGE>
3. Effect on the Management Agreement. All references in the
----------------------------------
Management Agreement to "Stationers" shall mean USSC, as successor-in-interest
to ASI. All references in the Management Agreement to "Holdings" shall mean the
Company, as successor-in-interest to Associated. All references in the
Management Agreement to "this Agreement" and the "Agreement" and all phrases of
like import shall refer to the Management Agreement as amended by this
Amendment. The terms "hereof," "herein," "hereby" and phrases of like import,
as used in the Management Agreement, shall refer to the Management Agreement as
amended by this Amendment. Except as amended hereby, the Management Agreement
shall remain in full force and effect.
4. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
5. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
6. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:______________________________________
Thomas W. Sturgess,
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:______________________________________
Thomas W. Sturgess,
Chairman of the Board
WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT COMPANY L.P., its
General Partner
By:________________________________
Thomas W. Sturgess,
General Partner
4
<PAGE>
EXHIBIT 10.21
DANIEL J. SCHLEPPE
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
January 31, 1992 by and between Associated Stationers, Inc., a Delaware
corporation (the "Company"), and Daniel J. Schleppe ("Schleppe"). Certain
------- --------
capitalized terms used herein are defined in paragraph 10 of this Agreement.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company hereby employs Schleppe and Schleppe hereby
----------
accepts employment with the Company on the terms and conditions set forth in
this Agreement.
2. Positions and Duties.
--------------------
a. Executive Vice President. For the term set forth in paragraph 3 of
------------------------
this Agreement, Schleppe shall act as Executive Vice President of the Company
and shall render such administrative, sales, marketing and other services to the
Company as the Company's board of directors (the "Board") and its President
-----
and Chief Executive Officer may from time to time direct and shall be available
at any reasonable time for consultation with the Board on matters being
considered by the Board or otherwise relating to the Company's or its
Subsidiaries' business.
b. Subsidiaries and Affiliates. Schleppe shall serve in one or more
---------------------------
executive offices of any of the Company's Subsidiaries or other affiliates,
including Associated Holdings, Inc., a Delaware corporation and the parent
corporation of the Company, if elected or otherwise appointed thereto by the
board of directors of any of such Subsidiaries or other affiliates.
c. Time Required. During the term of his employment hereunder,
-------------
Schleppe shall devote his best efforts and his full and exclusive business time
and attention (except for reasonable periods of illness or other incapacity) to
the business and affairs of the Company, its Subsidiaries and its other
affiliates, if any.
d. Location. As Executive Vice President, Schleppe shall be employed
--------
at the executive office of the Company in the Atlanta metropolitan area.
Schleppe shall not be required to move his residence or principal business base
of operations from the Atlanta metropolitan area without his prior written
consent.
<PAGE>
3. Term. Unless earlier terminated pursuant to the provisions of this
----
paragraph or paragraph 6 of this Agreement, the term of Schleppe's employment as
Executive Vice President shall commence as of the date of this Agreement, and
shall continue until January 31, 1995 and shall continue automatically from
year to year thereafter, unless written notice is given by either party to the
other at least sixty (60) days prior to the end of such term, or before the
end of any additional one-year term.
4. Compensation.
------------
a. Base Salary. Schleppe's compensation for his services hereunder
-----------
shall be as follows:
(1) Initial Salary. Schleppe shall receive a base salary of no
--------------
less than $175,000 per year, payable in accordance with the Company's
normal payment schedule for its senior management employees (the "Base
----
Salary").
------
(2) Adjustment. The Base Salary shall be reviewed annually by
----------
the Board and may be, in the Board's discretion, increased when deemed
appropriate to reflect adequately the scope and success of the Company's
operations and Schleppe's contribution to such success.
b. Bonus. In addition to the Base Salary, the Company shall pay to
-----
Schleppe, as bonus compensation based upon the performance of the Company and
his performance (the "Bonus"), such amount as is determined in good faith by
-----
the Board.
c. Withholdings. The Company shall have the right to deduct from
------------
any compensation paid to Schleppe hereunder all taxes and other amounts which
may be required to be deducted or withheld by law (including, without
limitation, income tax withholding and Social Security payments), whether such
laws are now in effect or become effective after the date of this Agreement.
5. Benefits. In addition to the Base Salary and any Bonus, Schleppe
--------
shall be entitled to health insurance, and disability insurance, and to
participate in other employee benefit programs as shall be approved by the Board
("Benefits"), with such coverage and in such amounts as shall be not less than
those provided to other key executives of the Company.
6. Early Termination. The Employment Period may be terminated by either
-----------------
party during the base three-year term of this Agreement or during any renewal
period by either party; provided, however, that if such termination is by the
--------
Company for Cause or due to Schleppe's resignation without Board approval, then
Schleppe shall not be entitled to receive any Base Salary, Bonus or other
compensation after the date of such termination.
2
<PAGE>
If the Employment Period is terminated for any reason (including, without
limitation, Schleppe's death or Disability (as defined below)) other than by the
Company for Cause or Schleppe's resignation without Board approval, then
Schleppe shall be entitled to receive his Base Salary (exclusive of Bonus) and
the continuation of Benefits for a period of one year from and after the date of
termination. Such severance benefits shall be exclusive and in lieu of any
other severance benefit programs of the Company and its Subsidiaries and
affiliates in effect at the time of such termination.
7. Confidential Information. Schleppe acknowledges that the information,
------------------------
observations and data obtained by him during the course of his performance of
his duties under this Agreement concerning the business or affairs of the
Company and its affiliates are and will be the property of the Company.
Therefore, Schleppe agrees that he will not disclose to any unauthorized persons
or use for his own account or for the benefit of any third party (other than the
Company or its Subsidiaries or other affiliates, if any) any of such
information, observations or data without the Board's written consent, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Schleppe's acts or
omissions to act. Schleppe agrees to deliver to the Company at the termination
of his employment hereunder or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documentation (and copies
thereof) relating to the business of the Company and its affiliates which he may
then possess or have under his control.
8. Inventions and Patents.
----------------------
a. Schleppe agrees that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports, and all similar or
related information which relates to the Company's or any of its Subsidiaries'
actual or anticipated business, research and development of existing or future
products or services (including new contributions, improvements, ideas and
discoveries, whether patentable or not) and which are conceived, developed or
made by Schleppe while employed by the Company or its predecessor ("Work
----
Product") belong to the Company or such Subsidiary. Schleppe will promptly
- -------
disclose such Work Product to the Board and perform all actions reasonably
requested by the Board to establish and confirm such ownership.
b. In accordance with Section 2 of the Illinois Employee Patent Act,
Ill. Rev. Stat. Chap. 140, (S)301 et seq. (1983), Schleppe is hereby advised
that paragraph 8.a. of this Agreement does not apply to any invention for which
no equipment, supplies, facilities or trade secret information of the Company
was used and which was developed entirely on Schleppe's own time, unless (i) the
invention relates to the business of the Company
3
<PAGE>
or to the Company's actual or demonstrably anticipated research or development
or (ii) the invention results from any work performed by Schleppe for the
Company.
9. Non-Compete and Related Agreements.
----------------------------------
a. In further consideration of the compensation to be paid to
Schleppe hereunder, Schleppe agrees that during the period commencing as of the
date hereof and ending on the first anniversary of the date of termination of
his employment hereunder (the "Noncompetition Period"), he will not directly or
---------------------
indirectly engage in, represent, furnish consultant services to, be employed by,
grant permission for his name or likeness to be used by, or have any interest in
(whether as owner, principal, director, officer, stockholder, agent, consultant,
partner or otherwise) the Business (as defined below), within the United States;
provided, however, that nothing herein will prevent Schleppe from owning 1% or
- --------
less of the outstanding stock of any class of a corporation which is publicly
traded, so long as Schleppe does not have any participation in the conduct of
business of such corporation; and provided, further, however, that this
-----------------
paragraph shall not apply if Schleppe's employment has been terminated by the
Company without Cause (as defined herein).
b. For purposes of this paragraph 9, the term "Business" shall mean
--------
marketing and distributing of office products for resale through the wholesale
channel and any other business that the Company or any of its Subsidiaries or
other affiliates is engaged in or has proposed to be conducted (as defined
below) at the time of the termination of his employment hereunder. For purposes
of this paragraph 9, a business shall be considered as "proposed to be
--------------
conducted" if the Company or any of its Subsidiaries or other affiliates has
- ---------
made reasonably substantial expenditures in connection with such proposed
business.
c. During the Noncompetition Period, Schleppe shall not (i) induce
or attempt to induce any employee of the Company or any of its Subsidiaries or
other affiliates to leave the employ of the Company or any of its Subsidiaries
or other affiliates, or in any way interfere with the relationship between the
Company and any of its Subsidiaries or other affiliates and any employee of the
Company, or (ii) induce or attempt to induce any customer, supplier,
distributor, broker or other business relation of the Company or any of its
Subsidiaries or other affiliates to cease, diminish or alter, to the detriment
of the Company and any of its Subsidiaries or other affiliates, doing business
with the Company or any of its Subsidiaries or other affiliates, or in any way
interfere with the relationship between any customer, supplier, distributor,
broker or other business relation and the Company or any of its Subsidiaries or
other affiliates.
4
<PAGE>
d. Schleppe agrees that the covenants made in this paragraph 9 shall
be construed as an agreement independent of any other provision of this
Agreement, and shall survive the termination of this Agreement. Moreover, the
existence of any claim or cause of action of Schleppe against the Company or any
of its Subsidiaries or other affiliates, whether or not predicated upon the
terms of this Agreement, shall not constitute a defense to the enforcement of
this covenant.
e. In the event of the breach by Schleppe of any of the provisions
of this paragraph 9, the Company, in addition and supplementary to other rights
and remedies existing in its favor, including specific performance as described
in paragraph 11, shall be empowered to terminate any Base Salary, Bonus and
other benefits due to Schleppe under this Agreement.
f. If, at the time of enforcement of any of the provisions of this
paragraph 9, a court finds that any restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
10. Definitions.
-----------
"Cause" shall mean (i) Schleppe's theft or embezzlement, or attempted theft
-----
or embezzlement, of money or tangible or intangible assets or property of the
Company or any of its Subsidiaries or other affiliates, (ii) any act or acts of
moral turpitude by Schleppe, (iii) other than as a result of a Disability,
Schleppe's failure to devote adequate time to the Company's and its Subsidiaries
or other affiliates' business, as determined in the reasonable judgment of the
Board, after having given Schleppe not less than ten (10) days' advance written
notice of the asserted problem and a reasonable opportunity to cure, (iv) any
intentional acts by Schleppe which establish Schleppe's loyalty to a business
entity or person other than the Company, (v) gross negligence or willful
misconduct in the performance of Schleppe's duties, (vi) conviction of a felony,
(vii) conviction of a crime, the conviction of which results in a material
injury to the Company, or (viii) a willful material breach of this Agreement.
"Disability" means Schleppe's inability, due to illness, accident, injury,
----------
physical or mental incapacity or other disability, effectively to carry out his
duties and obligations hereunder or to participate effectively and actively in
the management of the Company for 90 consecutive days or shorter periods
aggregating at least 180 days (whether or not consecutive) during any twelve-
month period.
"Subsidiaries" means any corporation or other entity, if any, of which the
------------
securities or other interests having a majority
5
<PAGE>
of the voting power in electing directors or similar persons are, at the time of
determination, owned by the Company, directly or through one of more
subsidiaries.
11. Specific Performance. The parties hereto shall be entitled to enforce
--------------------
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto may, at such party's sole discretion, apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.
12. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term or condition.
13. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the following addresses (or at such address as the recipient party
has specified by prior written notice to the sending party):
If to the Company:
Associated Holdings, Inc.
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
ATTN: Chairman of the Board
6
<PAGE>
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attn: Edwin H. Goldberger and
Suzanne L. Saxman
If to Schleppe:
Daniel J. Schleppe
20 The Landing
Atlanta, Georgia 30350
with a copy to:
Douglas H. Walter
Jones, Day, Reavis & Pogue
225 W. Washington, 26th Floor
Chicago, Illinois 60606
Notices will be deemed to have been given hereunder when delivered personally,
three days after deposit in the U.S. mail, on the date of delivery by facsimile,
and one day after deposit with a reputable overnight courier service.
14. Severability. In the event that any provision or provisions hereof
------------
shall be held to be invalid or unenforceable for any reason whatsoever, it is
agreed that such invalidity or unenforceability shall not affect any other
provision of this Agreement, and the remaining covenants, restrictions and
provisions hereof shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provision or provisions
as to make it valid, reasonable and enforceable.
15. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
16. Governing Law. This Agreement shall be governed by the internal law,
-------------
and not the law of conflicts, of the State of Illinois.
17. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties relating to Schleppe's employment,
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
7
<PAGE>
18. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
19. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Schleppe's
heirs, beneficiaries and legal representatives. It is agreed that the rights
and obligations of Schleppe are personal in nature to the Company and may not be
delegated or assigned except as specifically set forth in this Agreement. In
the event of a sale of all or substantially all of the Company's capital stock
or all or substantially all of the Company's assets, or consolidation or merger
of the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest, and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder;
provided, however, that if the Company does not make such assignment, the
- --------
Employment Period shall continue until terminated in accordance with paragraph 6
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ASSOCIATED STATIONERS, INC.
By: _________________________
Name: __________________
Title: __________________
______________________________
DANIEL J. SCHLEPPE
8
<PAGE>
MICHAEL D. ROWSEY
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
January 31, 1992 by and between Associated Stationers, Inc., a Delaware
corporation (the "Company"), and Michael D. Rowsey ("Rowsey"). Certain
------- ------
capitalized terms used herein are defined in paragraph 10 of this Agreement.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company hereby employs Rowsey and Rowsey hereby
----------
accepts employment with the Company on the terms and conditions set forth in
this Agreement.
2. Positions and Duties.
--------------------
a. President and Chief Operating Officer. For the term set forth in
-------------------------------------
paragraph 3 of this Agreement, Rowsey shall act as President and Chief Operating
Officer of the Company and shall render such administrative, sales, marketing
and other services to the Company as the Company's board of directors (the
"Board") may from time to time direct and shall be available at any reasonable
-----
time for consultation with the Board on matters being considered by the Board or
otherwise relating to the Company's or its Subsidiaries' business.
b. Board Membership. Rowsey agrees that, in accordance with a
----------------
separate agreement executed on this date, he shall serve as a member of the
Board, the board of directors of Associated Holdings, Inc., a Delaware
corporation and the parent corporation of the Company ("Holdings"), and any
committees of the Board.
c. Subsidiaries and Affiliates. Rowsey shall serve in one or more
---------------------------
executive offices of any of the Company's Subsidiaries or other affiliates,
including Holdings, if elected or otherwise appointed thereto by the board of
directors of any of such Subsidiaries or other affiliates.
d. Time Required. During the term of his employment hereunder, Rowsey
-------------
shall devote his best efforts and his full and exclusive business time and
attention (except for reasonable periods of illness or other incapacity) to the
business and affairs of the Company, its Subsidiaries and its other affiliates,
if any.
e. Location. As President and Chief Operating Officer Rowsey shall be
--------
employed at the principal executive
<PAGE>
office of the Company in the Chicago metropolitan area. Rowsey shall not be
required to move his residence or principal business base of operations from the
Chicago metropolitan area without his prior written consent.
3. Term. Unless earlier terminated pursuant to the provisions of this
----
paragraph or paragraph 6 of this Agreement, the term of Rowsey's employment as
President and Chief Operating Officer shall commence as of the date of this
Agreement, and shall continue until January 31, 1995 and shall continue
automatically from year to year thereafter, unless written notice is given by
either party to the other at least sixty (60) days prior to the end of such
term, or before the end of any additional one-year term.
4. Compensation.
------------
a. Base Salary. Rowsey's compensation for his services hereunder
-----------
shall be as follows:
(1) Initial Salary. Rowsey shall receive a base salary of no
--------------
less than $200,000 per year, payable in accordance with the Company's
normal payment schedule for its senior management employees (the "Base
----
Salary").
------
(2) Adjustment. The Base Salary shall be reviewed annually by
----------
the Board and may be, in the Board's discretion, increased when deemed
appropriate to reflect adequately the scope and success of the Company's
operations and Rowsey's contribution to such success.
b. Bonus. In addition to the Base Salary, the Company shall pay to
-----
Rowsey, as bonus compensation based upon the performance of the Company and his
performance (the "Bonus"), such amount as is determined in good faith by the
-----
Board.
c. Withholdings. The Company shall have the right to deduct from
------------
any compensation paid to Rowsey hereunder all taxes and other amounts which may
be required to be deducted or withheld by law (including, without limitation,
income tax withholding and Social Security payments), whether such laws are now
in effect or become effective after the date of this Agreement.
5. Benefits. In addition to the Base Salary and any Bonus, Rowsey shall
--------
be entitled to health insurance, and disability insurance, and to participate in
other employee benefit programs as shall be approved by the Board ("Benefits"),
with such coverage and in such amounts as shall be not less than those provided
to other key executives of the Company.
6. Early Termination. The Employment Period may be terminated by either
-----------------
party during the base three-year term of
2
<PAGE>
this Agreement or during any renewal period by either party; provided, however,
--------
that if such termination is by the Company for Cause or due to Rowsey's
resignation without Board approval, then Rowsey shall not be entitled to receive
any Base Salary, Bonus or other compensation after the date of such termination.
If the Employment Period is terminated for any reason (including, without
limitation, Rowsey's death or Disability (as defined below)) other than by the
Company for Cause or Rowsey's resignation without Board approval, then Rowsey
shall be entitled to receive his Base Salary (exclusive of Bonus) and the
continuation of Benefits for a period of one year from and after the date of
termination. Such severance benefits shall be exclusive and in lieu of any
other severance benefit programs of the Company and its Subsidiaries and
affiliates in effect at the time of such termination.
7. Confidential Information. Rowsey acknowledges that the information,
------------------------
observations and data obtained by him during the course of his performance of
his duties under this Agreement concerning the business or affairs of the
Company and its affiliates are and will be the property of the Company.
Therefore, Rowsey agrees that he will not disclose to any unauthorized persons
or use for his own account or for the benefit of any third party (other than the
Company or its Subsidiaries or other affiliates, if any) any of such
information, observations or data without the Board's written consent, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Rowsey's acts or
omissions to act. Rowsey agrees to deliver to the Company at the termination of
his employment hereunder or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documentation (and copies
thereof) relating to the business of the Company and its affiliates which he may
then possess or have under his control.
8. Inventions and Patents.
----------------------
a. Rowsey agrees that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports, and all similar or
related information which relates to the Company's or any of its Subsidiaries'
actual or anticipated business, research and development of existing or future
products or services (including new contributions, improvements, ideas and
discoveries, whether patentable or not) and which are conceived, developed or
made by Rowsey while employed by the Company or its predecessor ("Work Product")
------------
belong to the Company or such Subsidiary. Rowsey will promptly disclose such
Work Product to the Board and perform all actions reasonably requested by the
Board to establish and confirm such ownership.
b. In accordance with Section 2 of the Illinois Employee Patent Act,
Ill. Rev. Stat. Chap. 140, (S)301 et seq.
3
<PAGE>
(1983), Rowsey is hereby advised that paragraph 8.a. of this Agreement does not
apply to any invention for which no equipment, supplies, facilities or trade
secret information of the Company was used and which was developed entirely on
Rowsey's own time, unless (i) the invention relates to the business of the
Company or to the Company's actual or demonstrably anticipated research or
development or (ii) the invention results from any work performed by Rowsey for
the Company.
9. Non-Compete and Related Agreements.
----------------------------------
a. In further consideration of the compensation to be paid to Rowsey
hereunder, Rowsey agrees that during the period commencing as of the date hereof
and ending on the first anniversary of the date of termination of his employment
hereunder (the "Noncompetition Period"), he will not directly or indirectly
---------------------
engage in, represent, furnish consultant services to, be employed by, grant
permission for his name or likeness to be used by, or have any interest in
(whether as owner, principal, director, officer, stockholder, agent, consultant,
partner or otherwise) the Business (as defined below), within the United States;
provided, however, that nothing herein will prevent Rowsey from owning 1% or
- --------
less of the outstanding stock of any class of a corporation which is publicly
traded, so long as Rowsey does not have any participation in the conduct of
business of such corporation; and provided, further, however, that this
-----------------
paragraph shall not apply if Rowsey's employment has been terminated by the
Company without Cause (as defined herein).
b. For purposes of this paragraph 9, the term "Business" shall mean
--------
marketing and distributing of office products for resale through the wholesale
channel and any other business that the Company or any of its Subsidiaries or
other affiliates is engaged in or has proposed to be conducted (as defined
below) at the time of the termination of his employment hereunder. For purposes
of this paragraph 9, a business shall be considered as "proposed to be
--------------
conducted" if the Company or any of its Subsidiaries or other affiliates has
- ---------
made reasonably substantial expenditures in connection with such proposed
business.
c. During the Noncompetition Period, Rowsey shall not (i) induce or
attempt to induce any employee of the Company or any of its Subsidiaries or
other affiliates to leave the employ of the Company or any of its Subsidiaries
or other affiliates, or in any way interfere with the relationship between the
Company and any of its Subsidiaries or other affiliates and any employee of the
Company, or (ii) induce or attempt to induce any customer, supplier,
distributor, broker or other business relation of the Company or any of its
Subsidiaries or other affiliates to cease, diminish or alter, to the detriment
of the Company and any of its Subsidiaries or other affiliates, doing business
with the Company
4
<PAGE>
or any of its Subsidiaries or other affiliates, or in any way interfere with the
relationship between any customer, supplier, distributor, broker or other
business relation and the Company or any of its Subsidiaries or other
affiliates.
d. Rowsey agrees that the covenants made in this paragraph 9 shall
be construed as an agreement independent of any other provision of this
Agreement, and shall survive the termination of this Agreement. Moreover, the
existence of any claim or cause of action of Rowsey against the Company or any
of its Subsidiaries or other affiliates, whether or not predicated upon the
terms of this Agreement, shall not constitute a defense to the enforcement of
this covenant.
e. In the event of the breach by Rowsey of any of the provisions of
this paragraph 9, the Company, in addition and supplementary to other rights and
remedies existing in its favor, including specific performance as described in
paragraph 11, shall be empowered to terminate any Base Salary, Bonus and other
benefits due to Rowsey under this Agreement.
f. If, at the time of enforcement of any of the provisions of this
paragraph 9, a court finds that any restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
10. Definitions.
-----------
"Cause" shall mean (i) Rowsey's theft or embezzlement, or attempted theft
-----
or embezzlement, of money or tangible or intangible assets or property of the
Company or any of its Subsidiaries or other affiliates, (ii) any act or acts of
moral turpitude by Rowsey, (iii) other than as a result of a Disability,
Rowsey's failure to devote adequate time to the Company's and its Subsidiaries
or other affiliates' business, as determined in the reasonable judgment of the
Board, after having given Rowsey not less than ten (10) days' advance written
notice of the asserted problem and a reasonable opportunity to cure, (iv) any
intentional acts by Rowsey which establish Rowsey's loyalty to a business entity
or person other than the Company, (v) gross negligence or willful misconduct in
the performance of Rowsey's duties, (vi) conviction of a felony, (vii)
conviction of a crime, the conviction of which results in a material injury to
the Company, or (viii) a willful material breach of this Agreement.
"Disability" means Rowsey's inability, due to illness, accident, injury,
----------
physical or mental incapacity or other disability, effectively to carry out his
duties and obligations hereunder or to participate effectively and actively in
the management of the Company for 90 consecutive days or shorter
5
<PAGE>
periods aggregating at least 180 days (whether or not consecutive) during any
twelve-month period.
"Subsidiaries" means any corporation or other entity, if any, of which the
------------
securities or other interests having a majority of the voting power in electing
directors or similar persons are, at the time of determination, owned by the
Company, directly or through one of more subsidiaries.
11. Specific Performance. The parties hereto shall be entitled to enforce
--------------------
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto may, at such party's sole discretion, apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.
12. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term or condition.
13. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the following addresses (or at such address as the recipient party
has specified by prior written notice to the sending party):
If to the Company:
Associated Holdings, Inc.
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
ATTN: Chairman of the Board
6
<PAGE>
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attn: Edwin H. Goldberger and
Suzanne L. Saxman
If to Rowsey:
Michael D. Rowsey
2370 Sonnington Drive
Dublin, Ohio 43017
with a copy to:
Douglas H. Walter
Jones, Day, Reavis & Pogue
225 W. Washington, 26th Floor
Chicago, Illinois 60606
Notices will be deemed to have been given hereunder when delivered personally,
three days after deposit in the U.S. mail, on the date of delivery by facsimile,
and one day after deposit with a reputable overnight courier service.
14. Severability. In the event that any provision or provisions hereof
------------
shall be held to be invalid or unenforceable for any reason whatsoever, it is
agreed that such invalidity or unenforceability shall not affect any other
provision of this Agreement, and the remaining covenants, restrictions and
provisions hereof shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provision or provisions
as to make it valid, reasonable and enforceable.
15. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
16. Governing Law. This Agreement shall be governed by the internal law,
-------------
and not the law of conflicts, of the State of Illinois.
17. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties relating to Rowsey's employment,
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
7
<PAGE>
18. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
19. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Rowsey's heirs,
beneficiaries and legal representatives. It is agreed that the rights and
obligations of Rowsey are personal in nature to the Company and may not be
delegated or assigned except as specifically set forth in this Agreement. In
the event of a sale of all or substantially all of the Company's capital stock
or all or substantially all of the Company's assets, or consolidation or merger
of the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest, and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder;
provided, however, that if the Company does not make such assignment, the
- --------
Employment Period shall continue until terminated in accordance with paragraph 6
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ASSOCIATED STATIONERS, INC.
By: _________________________
Name: __________________
Title: __________________
______________________________
MICHAEL D. ROWSEY
8
<PAGE>
LAWRENCE E. MILLER
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
January 31, 1992 by and between Associated Stationers, Inc., a Delaware
corporation (the "Company"), and Lawrence E. Miller ("Miller"). Certain
------- ------
capitalized terms used herein are defined in paragraph 10 of this Agreement.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company hereby employs Miller and Miller hereby
----------
accepts employment with the Company on the terms and conditions set forth in
this Agreement.
2. Positions and Duties.
--------------------
a. Vice President of Marketing. For the term set forth in paragraph 3
---------------------------
of this Agreement, Miller shall act as Vice President of Marketing of the
Company and shall render such administrative, sales, marketing and other
services to the Company as the Company's board of directors (the "Board") and
-----
its President and Chief Executive Officer may from time to time direct and shall
be available at any reasonable time for consultation with the Board on matters
being considered by the Board or otherwise relating to the Company's or its
Subsidiaries' business.
b. Subsidiaries and Affiliates. Miller shall serve in one or more
---------------------------
executive offices of any of the Company's Subsidiaries or other affiliates,
including Associated Holdings, Inc., a Delaware corporation and the parent
corporation of the Company, if elected or otherwise appointed thereto by the
board of directors of any of such Subsidiaries or other affiliates.
c. Time Required. During the term of his employment hereunder, Miller
-------------
shall devote his best efforts and his full and exclusive business time and
attention (except for reasonable periods of illness or other incapacity) to the
business and affairs of the Company, its Subsidiaries and its other affiliates,
if any.
d. Location. As Vice President of Marketing, Miller shall be employed
--------
at the principal executive office of the Company in the Chicago metropolitan
area. Miller shall not be required to move his residence or principal business
base of operations from the Chicago metropolitan area without his prior written
consent.
<PAGE>
3. Term. Unless earlier terminated pursuant to the provisions of this
----
paragraph or paragraph 6 of this Agreement, the term of Miller's employment as
Vice President of Marketing shall commence as of the date of this Agreement, and
shall continue until January 31, 1995 and shall continue automatically from
year to year thereafter, unless written notice is given by either party to the
other at least sixty (60) days prior to the end of such term, or before the
end of any additional one-year term.
4. Compensation.
------------
a. Base Salary. Miller's compensation for his services hereunder shall
-----------
be as follows:
(1) Initial Salary. Miller shall receive a base salary of no
--------------
less than $125,000 per year, payable in accordance with the Company's
normal payment schedule for its senior management employees (the "Base
----
Salary").
------
(2) Adjustment. The Base Salary shall be reviewed annually by
----------
the Board and may be, in the Board's discretion, increased when deemed
appropriate to reflect adequately the scope and success of the Company's
operations and Miller's contribution to such success.
b. Bonus. In addition to the Base Salary, the Company shall pay to
-----
Miller, as bonus compensation based upon the performance of the Company and his
performance (the "Bonus"), such amount as is determined in good faith by the
-----
Board.
c. Withholdings. The Company shall have the right to deduct from
------------
any compensation paid to Miller hereunder all taxes and other amounts which may
be required to be deducted or withheld by law (including, without limitation,
income tax withholding and Social Security payments), whether such laws are now
in effect or become effective after the date of this Agreement.
5. Benefits. In addition to the Base Salary and any Bonus, Miller shall
--------
be entitled to health insurance, and disability insurance, and to participate in
other employee benefit programs as shall be approved by the Board ("Benefits"),
with such coverage and in such amounts as shall be not less than those provided
to other key executives of the Company.
6. Early Termination. The Employment Period may be terminated by either
-----------------
party during the base three-year term of this Agreement or during any renewal
period by either party; provided, however, that if such termination is by the
---------
Company for Cause or due to Miller's resignation without Board approval, then
Miller shall not be entitled to receive any Base Salary, Bonus or other
compensation after the date of such termination. If the
2
<PAGE>
Employment Period is terminated for any reason (including, without limitation,
Miller's death or Disability (as defined below)) other than by the Company for
Cause or Miller's resignation without Board approval, then Miller shall be
entitled to receive his Base Salary (exclusive of Bonus) and the continuation of
Benefits for a period of one year from and after the date of termination. Such
severance benefits shall be exclusive and in lieu of any other severance benefit
programs of the Company and its Subsidiaries and affiliates in effect at the
time of such termination.
7. Confidential Information. Miller acknowledges that the information,
------------------------
observations and data obtained by him during the course of his performance of
his duties under this Agreement concerning the business or affairs of the
Company and its affiliates are and will be the property of the Company.
Therefore, Miller agrees that he will not disclose to any unauthorized persons
or use for his own account or for the benefit of any third party (other than the
Company or its Subsidiaries or other affiliates, if any) any of such
information, observations or data without the Board's written consent, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Miller's acts or
omissions to act. Miller agrees to deliver to the Company at the termination of
his employment hereunder or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documentation (and copies
thereof) relating to the business of the Company and its affiliates which he may
then possess or have under his control.
8. Inventions and Patents.
----------------------
a. Miller agrees that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports, and all similar or
related information which relates to the Company's or any of its Subsidiaries'
actual or anticipated business, research and development of existing or future
products or services (including new contributions, improvements, ideas and
discoveries, whether patentable or not) and which are conceived, developed or
made by Miller while employed by the Company or its predecessor ("Work Product")
------------
belong to the Company or such Subsidiary. Miller will promptly disclose such
Work Product to the Board and perform all actions reasonably requested by the
Board to establish and confirm such ownership.
b. In accordance with Section 2 of the Illinois Employee Patent Act,
Ill. Rev. Stat. Chap. 140, (S)301 et seq. (1983), Miller is hereby advised that
paragraph 8.a. of this Agreement does not apply to any invention for which no
equipment, supplies, facilities or trade secret information of the Company was
used and which was developed entirely on Miller's own time, unless (i) the
invention relates to the business of the Company
3
<PAGE>
or to the Company's actual or demonstrably anticipated research or development
or (ii) the invention results from any work performed by Miller for the Company.
9. Non-Compete and Related Agreements.
----------------------------------
a. In further consideration of the compensation to be paid to Miller
hereunder, Miller agrees that during the period commencing as of the date hereof
and ending on the first anniversary of the date of termination of his employment
hereunder (the "Noncompetition Period"), he will not directly or indirectly
---------------------
engage in, represent, furnish consultant services to, be employed by, grant
permission for his name or likeness to be used by, or have any interest in
(whether as owner, principal, director, officer, stockholder, agent, consultant,
partner or otherwise) the Business (as defined below), within the United States;
provided, however, that nothing herein will prevent Miller from owning 1% or
- --------
less of the outstanding stock of any class of a corporation which is publicly
traded, so long as Miller does not have any participation in the conduct of
business of such corporation; and provided, further, however, that this
------------------
paragraph shall not apply if Miller's employment has been terminated by the
Company without Cause (as defined herein).
b. For purposes of this paragraph 9, the term "Business" shall mean
--------
marketing and distributing of office products for resale through the wholesale
channel and any other business that the Company or any of its Subsidiaries or
other affiliates is engaged in or has proposed to be conducted (as defined
below) at the time of the termination of his employment hereunder. For purposes
of this paragraph 9, a business shall be considered as "proposed to be
--------------
conducted" if the Company or any of its Subsidiaries or other affiliates has
- ---------
made reasonably substantial expenditures in connection with such proposed
business.
c. During the Noncompetition Period, Miller shall not (i) induce or
attempt to induce any employee of the Company or any of its Subsidiaries or
other affiliates to leave the employ of the Company or any of its Subsidiaries
or other affiliates, or in any way interfere with the relationship between the
Company and any of its Subsidiaries or other affiliates and any employee of the
Company, or (ii) induce or attempt to induce any customer, supplier,
distributor, broker or other business relation of the Company or any of its
Subsidiaries or other affiliates to cease, diminish or alter, to the detriment
of the Company and any of its Subsidiaries or other affiliates, doing business
with the Company or any of its Subsidiaries or other affiliates, or in any way
interfere with the relationship between any customer, supplier, distributor,
broker or other business relation and the Company or any of its Subsidiaries or
other affiliates.
4
<PAGE>
d. Miller agrees that the covenants made in this paragraph 9 shall be
construed as an agreement independent of any other provision of this Agreement,
and shall survive the termination of this Agreement. Moreover, the existence of
any claim or cause of action of Miller against the Company or any of its
Subsidiaries or other affiliates, whether or not predicated upon the terms of
this Agreement, shall not constitute a defense to the enforcement of this
covenant.
e. In the event of the breach by Miller of any of the provisions of
this paragraph 9, the Company, in addition and supplementary to other rights and
remedies existing in its favor, including specific performance as described in
paragraph 11, shall be empowered to terminate any Base Salary, Bonus and other
benefits due to Miller under this Agreement.
f. If, at the time of enforcement of any of the provisions of this
paragraph 9, a court finds that any restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
10. Definitions.
-----------
"Cause" shall mean (i) Miller's theft or embezzlement, or attempted theft
-----
or embezzlement, of money or tangible or intangible assets or property of the
Company or any of its Subsidiaries or other affiliates, (ii) any act or acts of
moral turpitude by Miller, (iii) other than as a result of a Disability,
Miller's failure to devote adequate time to the Company's and its Subsidiaries
or other affiliates' business, as determined in the reasonable judgment of the
Board, after having given Miller not less than ten (10) days' advance written
notice of the asserted problem and a reasonable opportunity to cure, (iv) any
intentional acts by Miller which establish Miller's loyalty to a business entity
or person other than the Company, (v) gross negligence or willful misconduct in
the performance of Miller's duties, (vi) conviction of a felony, (vii)
conviction of a crime, the conviction of which results in a material injury to
the Company, or (viii) a willful material breach of this Agreement.
"Disability" means Miller's inability, due to illness, accident, injury,
----------
physical or mental incapacity or other disability, effectively to carry out his
duties and obligations hereunder or to participate effectively and actively in
the management of the Company for 90 consecutive days or shorter periods
aggregating at least 180 days (whether or not consecutive) during any twelve-
month period.
5
<PAGE>
"Subsidiaries" means any corporation or other entity, if any, of which the
------------
securities or other interests having a majority of the voting power in electing
directors or similar persons are, at the time of determination, owned by the
Company, directly or through one of more subsidiaries.
11. Specific Performance. The parties hereto shall be entitled to enforce
--------------------
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto may, at such party's sole discretion, apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.
12. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term or condition.
13. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the following addresses (or at such address as the recipient party
has specified by prior written notice to the sending party):
If to the Company:
Associated Holdings, Inc.
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
ATTN: Chairman of the Board
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attn: Edwin H. Goldberger and
Suzanne L. Saxman
6
<PAGE>
If to Miller:
Lawrence E. Miller
415 Sterling Road
Kenilworth, Illinois 60043
with a copy to:
Douglas H. Walter
Jones, Day, Reavis & Pogue
225 W. Washington, 26th Floor
Chicago, Illinois 60606
Notices will be deemed to have been given hereunder when delivered personally,
three days after deposit in the U.S. mail, on the date of delivery by facsimile,
and one day after deposit with a reputable overnight courier service.
14. Severability. In the event that any provision or provisions hereof
------------
shall be held to be invalid or unenforceable for any reason whatsoever, it is
agreed that such invalidity or unenforceability shall not affect any other
provision of this Agreement, and the remaining covenants, restrictions and
provisions hereof shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provision or provisions
as to make it valid, reasonable and enforceable.
15. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
16. Governing Law. This Agreement shall be governed by the internal law,
-------------
and not the law of conflicts, of the State of Illinois.
17. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties relating to Miller's employment,
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
18. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
19. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Miller's heirs,
beneficiaries and legal representatives. It is agreed that the rights and
obligations of Miller
7
<PAGE>
are personal in nature to the Company and may not be delegated or assigned
except as specifically set forth in this Agreement. In the event of a sale of
all or substantially all of the Company's capital stock or all or substantially
all of the Company's assets, or consolidation or merger of the Company with or
into another corporation or entity or individual, the Company may assign its
rights and obligations under this Agreement to its successor-in-interest, and
such successor-in-interest shall be deemed to have acquired all rights and
assumed all obligations of the Company hereunder; provided, however, that if
--------
the Company does not make such assignment, the Employment Period shall continue
until terminated in accordance with paragraph 6 of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ASSOCIATED STATIONERS, INC.
By: _________________________
Name: __________________
Title: __________________
______________________________
LAWRENCE E. MILLER
8
<PAGE>
ROBERT W. EBERSPACHER
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
January 31, 1992 by and between Associated Stationers, Inc., a Delaware
corporation (the " Company"), and Robert W. Eberspacher ("Eberspacher").
-------- -----------
Certain capitalized terms used herein are defined in paragraph 10 of this
Agreement.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company hereby employs Eberspacher and Eberspacher
----------
hereby accepts employment with the Company on the terms and conditions set forth
in this Agreement.
2. Positions and Duties.
--------------------
a. Vice President - Northern Operations. For the term set forth in
------------------------------------
paragraph 3 of this Agreement, Eberspacher shall act as Vice President -
Northern Operations of the Company and shall render such administrative, sales,
marketing and other services to the Company as the Company's board of directors
(the "Board") and its President and Chief Executive Officer may from time to
-----
time direct and shall be available at any reasonable time for consultation with
the Board on matters being considered by the Board or otherwise relating to the
Company's or its Subsidiaries' business.
b. Subsidiaries and Affiliates. Eberspacher shall serve in one or
---------------------------
more executive offices of any of the Company's Subsidiaries or other affiliates,
including Associated Holdings, Inc., a Delaware corporation and the parent
corporation of the Company, if elected or otherwise appointed thereto by the
board of directors of any of such Subsidiaries or other affiliates.
c. Time Required. During the term of his employment hereunder,
-------------
Eberspacher shall devote his best efforts and his full and exclusive business
time and attention (except for reasonable periods of illness or other
incapacity) to the business and affairs of the Company, its Subsidiaries and its
other affiliates, if any.
d. Location. As Vice President - Northern Operations, Eberspacher
--------
shall be employed at the principal executive office of the Company in the
Chicago metropolitan area. Eberspacher shall not be required to move his
residence or principal business base of operations from the Chicago metropolitan
area without his prior written consent.
<PAGE>
3. Term. Unless earlier terminated pursuant to the provisions of this
----
paragraph or paragraph 6 of this Agreement, the term of Eberspacher's employment
as Vice President - Northern Operations shall commence as of the date of this
Agreement, and shall continue until January 31, 1995 and shall continue
automatically from year to year thereafter, unless written notice is given by
either party to the other at least sixty (60) days prior to the end of such
term, or before the end of any additional one-year term.
4. Compensation.
------------
a. Base Salary. Eberspacher's compensation for his services hereunder
-----------
shall be as follows:
(1) Initial Salary. Eberspacher shall receive a base salary of
--------------
no less than $155,000 per year, payable in accordance with the Company's
normal payment schedule for its senior management employees (the "Base
----
Salary").
------
(2) Adjustment. The Base Salary shall be reviewed annually by
----------
the Board and may be, in the Board's discretion, increased when deemed
appropriate to reflect adequately the scope and success of the Company's
operations and Eberspacher's contribution to such success.
b. Bonus. In addition to the Base Salary, the Company shall pay to
-----
Eberspacher, as bonus compensation based upon the performance of the Company and
his performance (the "Bonus"), such amount as is determined in good faith by
-----
the Board.
c. Withholdings. The Company shall have the right to deduct from
------------
any compensation paid to Eberspacher hereunder all taxes and other amounts which
may be required to be deducted or withheld by law (including, without
limitation, income tax withholding and Social Security payments), whether such
laws are now in effect or become effective after the date of this Agreement.
5. Benefits. In addition to the Base Salary and any Bonus, Eberspacher
--------
shall be entitled to health insurance, and disability insurance, and to
participate in other employee benefit programs as shall be approved by the Board
("Benefits"), with such coverage and in such amounts as shall be not less than
those provided to other key executives of the Company.
6. Early Termination. The Employment Period may be terminated by either
-----------------
party during the base three-year term of this Agreement or during any renewal
period by either party; provided, however, that if such termination is by the
---------
Company for Cause or due to Eberspacher's resignation without Board approval,
2
<PAGE>
then Eberspacher shall not be entitled to receive any Base Salary, Bonus or
other compensation after the date of such termination. If the Employment Period
is terminated for any reason (including, without limitation, Eberspacher's death
or Disability (as defined below)) other than by the Company for Cause or
Eberspacher's resignation without Board approval, then Eberspacher shall be
entitled to receive his Base Salary (exclusive of Bonus) and the continuation of
Benefits for a period of one year from and after the date of termination. Such
severance benefits shall be exclusive and in lieu of any other severance benefit
programs of the Company and its Subsidiaries and affiliates in effect at the
time of such termination.
7. Confidential Information. Eberspacher acknowledges that the
------------------------
information, observations and data obtained by him during the course of his
performance of his duties under this Agreement concerning the business or
affairs of the Company and its affiliates are and will be the property of the
Company. Therefore, Eberspacher agrees that he will not disclose to any
unauthorized persons or use for his own account or for the benefit of any third
party (other than the Company or its Subsidiaries or other affiliates, if any)
any of such information, observations or data without the Board's written
consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Eberspacher's acts or omissions to act. Eberspacher agrees to deliver to the
Company at the termination of his employment hereunder or at any other time the
Company may request, all memoranda, notes, plans, records, reports and other
documentation (and copies thereof) relating to the business of the Company and
its affiliates which he may then possess or have under his control.
8. Inventions and Patents.
----------------------
a. Eberspacher agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports, and
all similar or related information which relates to the Company's or any of its
Subsidiaries' actual or anticipated business, research and development of
existing or future products or services (including new contributions,
improvements, ideas and discoveries, whether patentable or not) and which are
conceived, developed or made by Eberspacher while employed by the Company or its
predecessor ("Work Product") belong to the Company or such Subsidiary.
------------
Eberspacher will promptly disclose such Work Product to the Board and perform
all actions reasonably requested by the Board to establish and confirm such
ownership.
b. In accordance with Section 2 of the Illinois Employee Patent Act,
Ill. Rev. Stat. Chap. 140, (S)301 et seq. (1983), Eberspacher is hereby advised
that paragraph 8.a. of this
3
<PAGE>
Agreement does not apply to any invention for which no equipment, supplies,
facilities or trade secret information of the Company was used and which was
developed entirely on Eberspacher's own time, unless (i) the invention relates
to the business of the Company or to the Company's actual or demonstrably
anticipated research or development or (ii) the invention results from any work
performed by Eberspacher for the Company.
9. Non-Compete and Related Agreements.
----------------------------------
a. In further consideration of the compensation to be paid to
Eberspacher hereunder, Eberspacher agrees that during the period commencing as
of the date hereof and ending on the first anniversary of the date of
termination of his employment hereunder (the "Noncompetition Period"), he will
---------------------
not directly or indirectly engage in, represent, furnish consultant services to,
be employed by, grant permission for his name or likeness to be used by, or have
any interest in (whether as owner, principal, director, officer, stockholder,
agent, consultant, partner or otherwise) the Business (as defined below), within
the United States; provided, however, that nothing herein will prevent
--------
Eberspacher from owning 1% or less of the outstanding stock of any class of a
corporation which is publicly traded, so long as Eberspacher does not have any
participation in the conduct of business of such corporation; and provided,
--------
further, however, that this paragraph shall not apply if Eberspacher's
- -------
employment has been terminated by the Company without Cause (as defined herein).
b. For purposes of this paragraph 9, the term "Business" shall mean
--------
marketing and distributing of office products for resale through the wholesale
channel and any other business that the Company or any of its Subsidiaries or
other affiliates is engaged in or has proposed to be conducted (as defined
below) at the time of the termination of his employment hereunder. For purposes
of this paragraph 9, a business shall be considered as "proposed to be
--------------
conducted" if the Company or any of its Subsidiaries or other affiliates has
- ---------
made reasonably substantial expenditures in connection with such proposed
business.
c. During the Noncompetition Period, Eberspacher shall not (i)
induce or attempt to induce any employee of the Company or any of its
Subsidiaries or other affiliates to leave the employ of the Company or any of
its Subsidiaries or other affiliates, or in any way interfere with the
relationship between the Company and any of its Subsidiaries or other affiliates
and any employee of the Company, or (ii) induce or attempt to induce any
customer, supplier, distributor, broker or other business relation of the
Company or any of its Subsidiaries or other affiliates to cease, diminish or
alter, to the detriment of the Company and any of its Subsidiaries or other
affiliates, doing
4
<PAGE>
business with the Company or any of its Subsidiaries or other affiliates, or in
any way interfere with the relationship between any customer, supplier,
distributor, broker or other business relation and the Company or any of its
Subsidiaries or other affiliates.
d. Eberspacher agrees that the covenants made in this paragraph 9
shall be construed as an agreement independent of any other provision of this
Agreement, and shall survive the termination of this Agreement. Moreover, the
existence of any claim or cause of action of Eberspacher against the Company or
any of its Subsidiaries or other affiliates, whether or not predicated upon the
terms of this Agreement, shall not constitute a defense to the enforcement of
this covenant.
e. In the event of the breach by Eberspacher of any of the
provisions of this paragraph 9, the Company, in addition and supplementary to
other rights and remedies existing in its favor, including specific performance
as described in paragraph 11, shall be empowered to terminate any Base Salary,
Bonus and other benefits due to Eberspacher under this Agreement.
f. If, at the time of enforcement of any of the provisions of this
paragraph 9, a court finds that any restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area.
10. Definitions.
-----------
"Cause" shall mean (i) Eberspacher's theft or embezzlement, or attempted
-----
theft or embezzlement, of money or tangible or intangible assets or property of
the Company or any of its Subsidiaries or other affiliates, (ii) any act or acts
of moral turpitude by Eberspacher, (iii) other than as a result of a Disability,
Eberspacher's failure to devote adequate time to the Company's and its
Subsidiaries or other affiliates' business, as determined in the reasonable
judgment of the Board, after having given Eberspacher not less than ten (10)
days' advance written notice of the asserted problem and a reasonable
opportunity to cure, (iv) any intentional acts by Eberspacher which establish
Eberspacher's loyalty to a business entity or person other than the Company, (v)
gross negligence or willful misconduct in the performance of Eberspacher's
duties, (vi) conviction of a felony, (vii) conviction of a crime, the conviction
of which results in a material injury to the Company, or (viii) a willful
material breach of this Agreement.
"Disability" means Eberspacher's inability, due to illness, accident,
----------
injury, physical or mental incapacity or other disability, effectively to carry
out his duties and obligations
5
<PAGE>
hereunder or to participate effectively and actively in the management of the
Company for 90 consecutive days or shorter periods aggregating at least 180 days
(whether or not consecutive) during any twelve-month period.
"Subsidiaries" means any corporation or other entity, if any, of which the
------------
securities or other interests having a majority of the voting power in electing
directors or similar persons are, at the time of determination, owned by the
Company, directly or through one of more subsidiaries.
11. Specific Performance. The parties hereto shall be entitled to enforce
--------------------
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto may, at such party's sole discretion, apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief (without posting a bond or other security) in order to
enforce or prevent any violation of the provisions of this Agreement.
12. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term or condition.
13. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the following addresses (or at such address as the recipient party
has specified by prior written notice to the sending party):
If to the Company:
Associated Holdings, Inc.
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
ATTN: Chairman of the Board
6
<PAGE>
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attn: Edwin H. Goldberger and
Suzanne L. Saxman
If to Eberspacher:
Robert W. Eberspacher
6907 Huntsfield Drive
Charlotte, North Carolina 28270
with a copy to:
Douglas H. Walter
Jones, Day, Reavis & Pogue
225 W. Washington, 26th Floor
Chicago, Illinois 60606
Notices will be deemed to have been given hereunder when delivered personally,
three days after deposit in the U.S. mail, on the date of delivery by facsimile,
and one day after deposit with a reputable overnight courier service.
14. Severability. In the event that any provision or provisions hereof
------------
shall be held to be invalid or unenforceable for any reason whatsoever, it is
agreed that such invalidity or unenforceability shall not affect any other
provision of this Agreement, and the remaining covenants, restrictions and
provisions hereof shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provision or provisions
as to make it valid, reasonable and enforceable.
15. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
16. Governing Law. This Agreement shall be governed by the internal law,
-------------
and not the law of conflicts, of the State of Illinois.
17. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties relating to Eberspacher's
employment, and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
7
<PAGE>
18. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
19. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Eberspacher's
heirs, beneficiaries and legal representatives. It is agreed that the rights
and obligations of Eberspacher are personal in nature to the Company and may not
be delegated or assigned except as specifically set forth in this Agreement. In
the event of a sale of all or substantially all of the Company's capital stock
or all or substantially all of the Company's assets, or consolidation or merger
of the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest, and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder;
provided, however, that if the Company does not make such assignment, the
- --------
Employment Period shall continue until terminated in accordance with paragraph 6
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ASSOCIATED STATIONERS, INC.
By: _________________________
Name: __________________
Title: __________________
______________________________
ROBERT W. EBERSPACHER
8
<PAGE>
EXHIBIT 10.22
-------------
ASSOCIATED HOLDINGS, INC.
1992 Management Stock Option Plan
1. Purpose
-------
Associated Holdings, Inc., a Delaware corporation (the "Company"), by means
of this 1992 Management Stock Option Plan (the "Plan"), desires to afford
certain of its directors, key employees and the key employees of any parent
corporation or subsidiary corporation thereof now existing or hereafter formed
or acquired who are responsible for the continued growth of the Company an
opportunity to acquire a proprietary interest in the Company, and thus to create
in such persons an increased interest in and a greater concern for the welfare
of the Company and any parent corporation or subsidiary corporation thereof. As
used in the Plan, the terms "parent corporation" and "subsidiary corporation"
shall mean, respectively, a corporation within the definition of such terms
contained in Sections 424(e) and 424(f), respectively, of the Internal Revenue
Code of 1986, as amended (the "Code").
The stock options described in Section 6 (the "Options"), and the shares of
common stock of the Company acquired pursuant to the exercise of such Options
are a matter of separate inducement and are not in lieu of any salary or other
compensation for services.
1
<PAGE>
2. Administration
--------------
The Plan shall be administered by the Option Committee, or any successor
thereto, of the Board of Directors of the Company or by such other committee, as
determined by the Board (the "Committee"). The Committee shall consist of not
less than two members of the Board of Directors of the Company, each of whom
shall qualify as a "disinterested person" to administer the Plan within the
meaning of Rule 16b-3, as amended, or other applicable rules under Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee shall administer the Plan so as to comply at all times with the
Exchange Act. A majority of the Committee shall constitute a quorum, and
subject to the provisions of Section 5, the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by a majority of the Committee, shall be the acts of the Committee.
3. Shares Available
----------------
Subject to the adjustments provided in Section 7, the maximum aggregate
number of shares of common stock of the Company which may be granted for all
purposes under the Plan shall be 86,735 shares. If, for any reason, any shares
as to which Options have been granted cease to be subject to purchase
thereunder, including, without limitation, the expiration of such Option, the
termination of such Option prior to exercise or the forfeiture of such Option,
such
2
<PAGE>
shares shall thereafter be available for grants to such individual or other
individuals under the Plan. Options granted under the Plan may be fulfilled in
accordance with the terms of the Plan with either authorized and unissued shares
of the common stock of the Company or issued shares of such common stock held in
the Company's treasury.
4. Eligibility and Bases of Participation
--------------------------------------
Grants under the Plan (i) may be made, pursuant to Section 6, to key
employees, officers and directors (but not to any officer and director who is
not also an employee) of the Company, or any parent corporation or subsidiary
corporation thereof, who are regularly employed on a salaried basis and who are
so employed on the date of such grant (the "Officer and Key Employee
Participants").
5. Authority of Committee
----------------------
Subject to and not inconsistent with the express provisions of the Plan and
the Code, the Committee shall have plenary authority, in its sole discretion,
to:
a. determine the persons to whom Options shall be granted, the time when
such Options shall be granted, the number of Options, the purchase
price or exercise price of each Option, the period(s) during which
such Option shall be exercisable (whether in whole or in part), the
restrictions to be applicable to Options and the other terms and
provisions thereof (which need not be identical);
3
<PAGE>
b. require, as a condition to the granting of any Option, that the person
receiving such Option agree not to sell or otherwise dispose of such
Option, any common stock acquired pursuant to such Option or any other
"derivative security" (as defined by Rule 16a-1(c) under the Exchange
Act) for a period of six (6) months following the later of (i) the
date of the grant of such Option or (ii) the date when the exercise
price of such Option is fixed if such exercise price is not fixed at
the date of grant of such Option;
c. provide an arrangement through registered broker-dealers whereby
temporary financing may be made available to an optionee by the
broker-dealer, under the rules and regulations of the Federal Reserve
Board, for the purpose of assisting the optionee in the exercise of an
Option, such authority to include the payment by the Company of the
commissions of the broker-dealer;
d. provide the establishment of procedures for an optionee (1) to have
withheld from the total number of shares to be acquired upon the
exercise of an Option that number of shares having a Fair Market Value
(as defined in Section 9) which, together with such cash as shall be
paid in respect of fractional shares, shall equal the
4
<PAGE>
Option exercise price, and (2) to exercise a portion of an Option by
delivering that number of shares already owned by such optionee having
a Fair Market Value which shall equal the partial Option exercise
price and to deliver the shares thus acquired by such optionee in
payment of shares to be received pursuant to the exercise of
additional portions of such Option, the effect of which shall be that
such optionee can in sequence utilize such newly acquired shares in
payment of the exercise price of the entire Option, together with such
cash as shall be paid in respect of fractional shares;
e. provide the establishment of a procedure whereby a number of shares of
common stock or other securities may be withheld from the total number
of shares of common stock or other securities to be issued upon
exercise of an Option to meet the obligation of withholding for taxes
incurred by an optionee upon such exercise;
f. prescribe, amend, modify and rescind rules and regulations relating to
the Plan;
g. make all determinations specified in or permitted by the Plan or
deemed necessary or desirable for its administration or for the
conduct of the Committee's business; and
5
<PAGE>
h. establish any procedures determined to be appropriate in discharging
its responsibilities under the Plan.
The Committee may delegate to one or more of its members, or to one or more
agents, such administrative duties as it may deem advisable, and the Committee
or any person to whom it has delegated duties as aforesaid may employ one or
more persons to render advice with respect to any responsibility the Committee
or such person may have under the Plan; provided, however, that the Committee
-------- -------
may not delegate any duties to a member of the Board of Directors of the Company
who, if elected to serve on the Committee, would not qualify as a "disinterested
person" to administer the Plan as contemplated by Rule 16b-3, as amended, or
other applicable rules under the Exchange Act. The Committee may employ
attorneys, consultants, accountants, or other persons and the Committee, the
Company, and its officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all persons who have received grants under the Plan, the
Company and all other interested persons. No member or agent of the Committee
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan and all members and agents of the
6
<PAGE>
Committee shall be fully protected by the Company in respect of any such action,
determination or interpretation.
6. Stock Options for Officers and Key Employee Participants
--------------------------------------------------------
The Committee shall have the authority, in its sole discretion, to grant
incentive stock options ("Incentive Options") pursuant to Section 422 of
the Code, or to grant non-qualified stock options ("Non-Qualified Options")
(options which do not qualify under Section 422 of the Code) or to grant
both types of Options. No Option shall be granted for a term of more than
ten (10) years. Notwithstanding anything contained herein to the contrary,
an Incentive Option may be granted only to Officer and Key Employee
Participants. The terms and conditions of the Options shall be determined
from time to time by the Committee; provided, however, that the Options
-------- -------
granted under the Plan shall be subject to the following:
a. Option Price. The Committee shall establish the option price at the
------------
time any Option is granted at such amount as the Committee shall
determine. The option price for each share purchasable under any
Incentive Option granted hereunder shall be such amount as the
Committee shall, in its best judgment, determine to be not less than
one hundred percent (100%) of the Fair Market Value
7
<PAGE>
per share at the date the Option is granted; provided, however, that
-------- -------
in the case of an Incentive Option granted to a person who, at the
time such Incentive Option is granted, owns shares of the Company, or
any parent corporation or subsidiary corporation thereof, which
possess more than ten percent (10%) of the total combined voting power
of all classes of shares of the Company or of any subsidiary
corporation or parent corporation of the Company, the purchase price
for each share shall be such amount as the Committee, in its best
judgment, shall determine to be not less than one hundred ten percent
(110%) of the Fair Market Value per share at the date the Option is
granted. The Option price will be subject to adjustment in accordance
with the provisions of Section 7 of the Plan.
b. Payment. The price per share of common stock of the Company with
-------
respect to each Option shall be payable at the time the Option is
exercised. Such price shall be payable in cash, which may be paid by
wire transfer in immediately available funds, by check or by any other
instrument acceptable to the Company or, in the discretion of the
Committee, by delivery to the Company of shares of common stock of the
Company owned by the
8
<PAGE>
optionee or by the Company withholding from the total number of shares
to be acquired pursuant to the Option a portion of such shares.
Shares delivered to or withheld by the Company in payment of the
option price shall be valued at the Fair Market Value of the common
stock of the Company on the day preceding the date of the exercise of
the Option.
c. Continuation of Employment. Notwithstanding anything else contained
--------------------------
herein, each Option by its terms shall require the optionee to remain
in the continuous employ of the Company, or any parent corporation or
subsidiary corporation thereof, for at least six (6) months (or three
(3) months in the case of an Incentive Option) from the date of grant
of the Option before the right to exercise any part of the Option will
accrue.
d. Exercisability of Stock Option. Each Option shall be exercisable in
------------------------------
such installments as may be determined by the Committee at the time of
the grant. The right to purchase shares shall be cumulative so that
when the right to purchase any shares has accrued such shares or any
part thereof may be purchased at any time thereafter until the
expiration or termination of the Option. No Option by its terms shall
be exercisable after the
9
<PAGE>
expiration of ten (10) years from the date of grant of the Option;
provided, however, in the case of an Incentive Option granted to a
-------- -------
person who, at the time such Option is granted, owns stock of the
Company, or any parent corporation or subsidiary corporation thereof,
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, or any corporation or
subsidiary corporation thereof, such Option shall not be exercisable
after the expiration of five (5) years from the date such Option is
granted.
e. Death. In the event of the death of any optionee, the estate of such
-----
optionee shall have the right, within six (6) months after the date of
death (but not after the expiration date of the Option), to exercise
such optionee's Option with respect to all or any part of the shares
of stock which such optionee was entitled to purchase immediately
prior to the time of his death.
f. Disability. If the employment of any optionee is terminated because
----------
of Disability (as defined in Section 9), such optionee shall have the
right within six (6) months after the date of termination (or within
one (1) year after the date of such termination in the case of an
Incentive
10
<PAGE>
Option) (but in no case after the expiration of the Option), to
exercise the Option with respect to all or any part of the shares of
stock which such optionee was entitled to purchase immediately prior
to the time of such termination.
g. Other Termination or For Cause. If the employment of an optionee is
------------------------------
terminated for any reason other than those specified in subsections
6(e) and (f) above, such optionee shall have the right, within thirty
(30) days (or three (3) months in the case of an Incentive Option)
after the date of such termination (but not after the expiration date
of the Option), to exercise his Option with respect to all or any part
of the shares of stock which such optionee was entitled to purchase
immediately prior to the time of such termination, except that, if
such optionee's employment was terminated by the Company, or any
parent corporation or subsidiary corporation thereof, for good cause,
or if the optionee voluntarily terminates employment without the
consent of the Company, or any parent corporation or subsidiary
corporation thereof (of which fact the Committee shall be the sole
judge), such optionee shall immediately forfeit all rights under his
Option except as to the shares of stock already purchased.
Termination for "good cause"
11
<PAGE>
shall mean (unless another definition is agreed to in writing by the
Company and the optionee) termination by action of the Board of
Directors because of: (A) the optionee's theft or embezzlement, or
attempted theft or embezzlement, of money or tangible or intangible
assets or property of the Company or any parent corporation or
subsidiary corporation thereof, (B) any act or acts of moral turpitude
by optionee, (C) other than as a result of a Disability, optionee's
failure to devote adequate time to the Company's or such parent
corporation's or such subsidiary corporation's business as determined
in the reasonable judgment of the Board of Directors, after having
given optionee not less than 10 days advance written notice of the
asserted problem and a reasonable opportunity to cure, (D) any
intentional acts by optionee which establish optionee's loyalty to a
business entity or person other than the Company, (E) gross negligence
or willful misconduct in the performance of optionee's duties, (F)
conviction of a felony, (G) conviction of a crime, the conviction of
which results in a material injury to the Company or any parent
corporation or subsidiary corporation thereof, or (H) a willful
material breach of any
12
<PAGE>
employment agreement entered into between optionee and the Company or
any parent corporation or subsidiary corporation thereof. The
determination that there exists "good cause" for termination shall be
made by the Option Committee (unless otherwise agreed to in writing by
the Company and the optionee) and such determination shall be
conclusive.
h. Maximum Exercise. The aggregate Fair Market Value of stock
----------------
(determined at the time of the grant of the Option) with respect to
which Incentive Options are exercisable for the first time by an
optionee during any calendar year under all plans of the Company, or
any parent corporation or subsidiary corporation thereof, shall not
exceed $100,000.
7. Adjustment of Shares
--------------------
In the event there is any change in the common stock of the Company by
reason of any consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in capital
structure of the Company, the number or kind of shares or interests subject to
an Option and the per share price or value thereof shall be appropriately
adjusted by the Committee at the time of such event, provided that
13
<PAGE>
each optionee's position with respect to the Option and the per share price or
value thereof shall not, as a result of such adjustment, be worse than it had
been immediately prior to such event. Any fractional shares or interests
resulting from such adjustment shall be eliminated. Notwithstanding the
foregoing, (i) each such adjustment with respect to an Incentive Option shall
comply with the rules of Section 424(a) of the Code, and (ii) in no event shall
any adjustment be made which would render any Incentive Option granted hereunder
other than an "incentive stock option" for purposes of Section 422 of the Code.
In the event of a Change of Control or a merger between the Company and
another corporation in which the Company is not the surviving entity and where
any optionee holds Options issued pursuant to this Plan which have not been
exercised, such Options shall be cancelled and replacement Options shall be
issued by the surviving entity in accordance with Rule 16b-3(f)(1) under the
Exchange Act.
8. Miscellaneous Provisions
------------------------
a. Assignment or Transfer. No grant of any "derivative security" (as
----------------------
defined by Rule 16a-1(c) under the Exchange Act) made under the Plan
or any rights or interests therein shall be assignable or transferable
by an optionee except by will or the laws of descent and distribution.
During the
14
<PAGE>
lifetime of an optionee, Options granted hereunder shall be
exercisable only by the optionee.
b. Investment Representation. If a registration statement under the
-------------------------
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the common stock issuable upon exercise of an Option, is
not in effect at the time such Option is exercised, the Company may
require, for the sole purpose of complying with the Securities Act,
that prior to delivering such common stock to the exercising optionee,
such optionee must deliver to the Secretary of the Company a written
statement (i) representing and warranting that such common stock is
being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledging and confirming that such
common stock may not be sold unless registered for sale under the
Securities Act or pursuant to an exemption from such registration and
(iii) agreeing that the certificates representing such common stock
shall bear a legend to the effect of the foregoing.
If, subsequent to the delivery by an optionee of the written statement
described in the preceding paragraph, the common stock issuable upon
exercise of an Option is registered under the Securities
15
<PAGE>
Act, the Company may release such optionee from such written statement
without effecting a "modification" of the Plan within the meaning of
Section 424(h)(3) of the Code.
c. Withholding Taxes. In the case of distributions of common stock or
-----------------
other securities hereunder, the Company, as a condition of such
distribution, may require the payment (through withholding from the
optionee's salary, reduction of the number of shares of common stock
or other securities to be issued, or otherwise) of any federal, state,
local or foreign taxes required by law to be withheld with respect to
such distribution.
d. Costs and Expenses. The costs and expenses of administering the Plan
------------------
shall be borne by the Company and shall not be charged against any
Option nor to any employee receiving an Option.
e. Funding of Plan. The Plan shall be unfunded. The Company shall not
---------------
be required to make any segregation of assets to assure the payment of
any Option under the Plan.
f. Other Incentive Plans. The adoption of the Plan does not preclude the
---------------------
adoption by appropriate means of any other incentive plan for
employees.
g. Effect on Employment. Nothing contained in the Plan or any agreement
--------------------
related hereto or referred
16
<PAGE>
to herein shall affect, or be construed as affecting, the terms of
employment of any Officer and Key Employee Participants except to the
extent specifically provided herein or therein. Nothing contained in
the Plan or any agreement related hereto or referred to herein shall
impose, or be construed as imposing, an obligation on (i) the Company,
or any parent corporation or subsidiary corporation thereof, to
continue the employment of any Officer and Key Employee Participant,
and (ii) any Officer and Key Employee Participant to remain in the
employ of the Company, or any parent corporation or subsidiary
corporation thereof.
9. Definitions
-----------
a. "Fair Market Value" shall, as it relates to the common stock of the
Company, mean the average of the high and low prices of such common
stock as reported on a national stock exchange or as listed for
quotation on the NASDAQ National Market System on the date specified
herein, or if there were no sales on such date, on the next preceding
day on which there were sales, or if such common stock is not listed
on a national stock exchange or is not listed for quotation on the
NASDAQ National Market System, the value of such common stock on such
17
<PAGE>
date as determined by the Board of Directors of the Company in good
faith.
b. "Disability" means optionee's inability, due to illness, accident,
injury, physical or mental incapacity or other disability, effectively
to carry out his duties and obligations as an employee of the Company
or to participate effectively and actively as an employee of the
Company for 90 consecutive days or shorter periods aggregating at
least 180 days (whether or not consecutive) during any twelve-month
period.
10. Amendment of Plan
-----------------
The Board of Directors of the Company shall have the right to amend,
modify, suspend or terminate the Plan at any time, provided that no amendment
shall be made which shall increase the total number of shares of the common
stock of the Company which may be issued and sold pursuant to Options granted
under the Plan or decrease the minimum option price in the case of an Incentive
Option, or modify the provisions of the Plan relating to eligibility with
respect to Incentive Options unless such amendment is made by or with the
approval of the stockholders. The Board of Directors shall be authorized to
amend the Plan and the Options granted thereunder (i) to qualify as "incentive
stock options" within the meaning of Section 422 of the Code or (ii) to comply
with Rule 16b-3 (or any successor rule) under
18
<PAGE>
the Exchange Act. No amendment, modification, suspension or termination of the
Plan shall alter or impair any Options previously granted under the Plan,
without the consent of the holder thereof.
11. Effective Date
--------------
The Plan shall become effective January 31, 1992, the date as of which the
Plan was adopted by the Board of Directors (the "Effective Date"); provided,
--------
however, that if the Plan is not approved by a vote of the stockholders of the
- -------
Company at an annual meeting or by written consent within twelve (12) months
before or after the Effective Date, the Plan and any Options granted thereunder
shall terminate.
19
<PAGE>
AMENDMENT NO. 1 TO
ASSOCIATED HOLDINGS, INC.
1992 MANAGEMENT STOCK OPTION PLAN
This Amendment No. 1 to Associated Holdings, Inc. 1992 Management
Stock Option Plan (the "Amendment"), dated as of March __, 1995, amends the
---------
Associated Holdings, Inc. 1992 Management Stock Option Plan, dated as of January
31, 1992 (the "Plan"). Unless otherwise defined herein, capitalized terms used
----
herein shall have the meanings given them in the Plan.
RECITALS
--------
WHEREAS, Associated Holdings, Inc., a Delaware corporation
("Associated"), created and adopted the Plan effective as of January 31, 1992;
----------
WHEREAS, on the date hereof, Associated has merged (the "Merger") with
------
and into United Stationers Inc., a Delaware corporation and majority owned
subsidiary of Associated (the "Company"), with the Company surviving; and
-------
WHEREAS, the Company, as successor-in-interest to Associated, deems it
desirable to amend the Plan, effective as of the effective time of the Merger
(the "Effective Time"), pursuant to Section 10 thereof as set forth herein;
--------------
NOW, THEREFORE, the Plan is amended as of the Effective Time as
follows:
1. Amendment of Name of Plan.
-------------------------
(a) The name of the Plan shall be "United Stationers Inc. Management
Stock Option Plan".
2. Amendment of Section 1.
----------------------
(a) The first sentence of Section 1 of the Plan shall be amended to
read in its entirety as follows:
United Stationers Inc., a Delaware corporation (the "Company"),
by means of this Management Stock Option Plan (the "Plan"), desires to
afford certain of its directors, key employees and the key employees
of any parent corporation or subsidiary corporation thereof now
existing or hereafter formed or acquired who are responsible for the
continued growth of the
<PAGE>
Company an opportuity to acquire a proprietary interest in the
Company, and thus to create in such persons an increased interest in
and and a greater concern for the welfare of the Company and any
parent corporation or subsidiary corporation thereof.
3. Amendment of Section 3.
----------------------
(a) The first sentence of Section 3 of the Plan shall be amended to
read in its entirety as follows:
Subject to the adjustments provided in Section 7, the maximum
aggregate number of shares of common stock of the Company which may be
granted for all purposes under the Plan shall be 202,962.14 shares.
4. Adoption of the Plan. The Company hereby expressly adopts and
--------------------
assumes all of the rights, liabilities and obligations of Associated under the
Plan.
5. Effect on the Plan. All references in the Plan to "this Plan"
------------------
and the "Plan" and all phrases of like import shall refer to the Plan as amended
by this Amendment. The terms "hereof," "herein," "hereby" and phrases of like
import, as used in the Plan, shall refer to the Plan as amended by this
Amendment. Except as amended hereby, the Plan shall remain in full force and
effect.
[The remainder of this page is intentionally left blank.]
2
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of
the date first above written.
UNITED STATIONERS INC.
By:_______________________________________
Thomas W. Sturgess,
Chairman of the Board
<PAGE>
EXHIBIT 10.24
-------------
January 31, 1992
Mr. Daniel J. Schleppe
20 The Landing
Atlanta, Georgia 30350
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Schleppe:
On January 31, 1992, the Board of Directors of Associated Holdings, Inc.
(the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992 (the
"Grant Date"), as a matter of separate inducement and not in lieu of any salary
or other compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth in the Plan and
this agreement, an aggregate of 5,681 shares of Class A Common Stock ("common
stock") of the Company, par value $0.01 per share (the "Option Shares"), at a
price of $10.00 per share (the "Exercise Price") subject to the limitations set
forth herein and in the Plan. The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
<PAGE>
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares
reserved for issuance under the Option shall become Vested Shares without
further action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed to
the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
<PAGE>
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in a
transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger,
consolidation or like business combination or reorganization,
which results in an occurrence or has the effect of any event
described in clause (i) or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
<PAGE>
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
<PAGE>
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
<PAGE>
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean, collectively,
Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
<PAGE>
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
<PAGE>
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
_______________________________
DANIEL J. SCHLEPPE
Date: January 31, 1992
<PAGE>
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
<PAGE>
January 31, 1992
Page 10
EXHIBIT B
---------
<TABLE>
<CAPTION>
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
- ------------------------------ ----------
<S> <C>
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
</TABLE>
<PAGE>
January 31, 1992
Michael D. Rowsey
2370 Sonnington Drive
Dublin, OH 43017
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Rowsey:
On January 31, 1992, the Board of Directors of Associated Holdings,
Inc. (the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992 (the
"Grant Date"), as a matter of separate inducement and not in lieu of any salary
or other compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth in the Plan and
this agreement, an aggregate of 6,679 shares of Class A Common Stock ("common
stock") of the Company, par value $0.01 per share (the "Option Shares"), at a
price of $10.00 per share (the "Exercise Price") subject to the limitations set
forth herein and in the Plan. The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
<PAGE>
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares reserved
for issuance under the Option shall become Vested Shares without further
action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed
to the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
<PAGE>
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in
a transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger, consolidation
or like business combination or reorganization, which results in
an occurrence or has the effect of any event described in clause
(i) or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
<PAGE>
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
<PAGE>
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
<PAGE>
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean,
collectively, Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
<PAGE>
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
<PAGE>
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
-----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
- -------------------------------
MICHAEL D. ROWSEY
Date: January 31, 1992
<PAGE>
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
<PAGE>
January 31, 1992
Page 10
EXHIBIT B
---------
<TABLE>
<CAPTION>
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
------------------------------ ----------
<S> <C>
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
</TABLE>
<PAGE>
January 31, 1992
Mr. Lawrence E. Miller
415 Sterling Road
Kenilworth, IL 60043
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Miller:
On January 31, 1992, the Board of Directors of Associated Holdings,
Inc. (the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992 (the
"Grant Date"), as a matter of separate inducement and not in lieu of any salary
or other compensation for your services, the right and option to purchase (the
"Option"), in accordance with the terms and conditions set forth in the Plan and
this agreement, an aggregate of 4,163 shares of Class A Common Stock ("common
stock") of the Company, par value $0.01 per share (the "Option Shares"), at a
price of $10.00 per share (the "Exercise Price") subject to the limitations set
forth herein and in the Plan. The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
<PAGE>
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares
reserved for issuance under the Option shall become Vested Shares without
further action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the
Option Shares reserved for issuance under the Option shall become Vested
Shares without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed to
the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
<PAGE>
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in a
transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger,
consolidation or like business combination or reorganization,
which results in an occurrence or has the effect of any event
described in clause (i) or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
<PAGE>
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
<PAGE>
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
<PAGE>
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean, collectively,
Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
<PAGE>
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
<PAGE>
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
- -------------------------------
LAWRENCE E. MILLER
Date: January 31, 1992
<PAGE>
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
<PAGE>
January 31, 1992
Page 10
EXHIBIT B
---------
<TABLE>
<CAPTION>
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
------------------------------ ----------
<S> <C>
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
</TABLE>
<PAGE>
January 31, 1992
Mr. Robert W. Eberspacher
6907 Huntfield Drive
Charlotte, North Carolina 28270
Re: Grant of Non-Qualified Stock Option
-----------------------------------
Dear Mr. Eberspacher:
On January 31, 1992, the Board of Directors of Associated Holdings,
Inc. (the "Company") adopted, and the stockholders of the Company approved, the
Company's 1992 Management Stock Option Plan (the "Plan") for certain directors,
officers and employees of the Company and any parent corporation or subsidiary
corporation of the Company. A copy of the Plan is annexed to this Option
Agreement as Exhibit A hereto and shall be deemed a part of this Option
---------
Agreement as if fully set forth herein. Unless the context otherwise requires,
all terms defined in the Plan shall have the same meaning when used herein.
1. The Grant
---------
The Company hereby grants to you, effective as of January 31, 1992
(the "Grant Date"), as a matter of separate inducement and not in lieu of any
salary or other compensation for your services, the right and option to purchase
(the "Option"), in accordance with the terms and conditions set forth in the
Plan and this agreement, an aggregate of 5,161 shares of Class A Common Stock
("common stock") of the Company, par value $0.01 per share (the "Option
Shares"), at a price of $10.00 per share (the "Exercise Price") subject to the
limitations set forth herein and in the Plan. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Vesting and Exercise
--------------------
Subject to the provisions and limitations of Section 6 of the Plan and
other relevant provisions thereof and this Option Agreement you may exercise the
Option to purchase some or all of the Option Shares which are Vested Shares (as
hereinafter defined) as follows:
(a) For purposes of this agreement, the Option Shares shall be deemed
"Nonvested Shares" unless they have become
<PAGE>
January 31, 1992
Page 2
"Vested Shares" pursuant to the following provisions. The Option Shares shall
become Vested Shares as follows:
(i) On January 31, 1993, one-fourth of the Option Shares reserved
for issuance under the Option shall become Vested Shares without further
action by the Board of Directors.
(ii) On January 31, 1994, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iii) On January 31, 1995, an additional one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(iv) On January 31, 1996, the remaining one-fourth of the Option
Shares reserved for issuance under the Option shall become Vested Shares
without further action by the Board of Directors.
(b) In addition, the Board of Directors may, in its sole discretion,
accelerate the vesting schedule set forth in paragraph (a) above.
(c) Subject to the relevant provisions and limitations contained
herein, you may exercise the Option to purchase some or all of the Vested Shares
at any time after the vesting thereof. In no event shall you be entitled to
exercise the Option for Nonvested Shares or for a fraction of a Vested Share.
(d) The unexercised portion of the Option, if any, will automatically
and without notice terminate and become null and void at 5:00 p.m., Central Time
on the date three years after the full vesting of all Option Shares reserved for
issuance under the Option (the "Option Term"). If, however, your employment
with the Company or any subsidiary or parent corporation of the Company
terminates before such termination date, this Option will terminate on the
applicable date as described in paragraph 3 below.
(e) Any exercise by you of the Option shall be in writing addressed to
the Corporate Secretary of the Company at its principal place of business and
shall be accompanied by the full amount of the Exercise Price of the shares so
purchased. Upon proper exercise and payment of the full Exercise Price therefor
(either in cash or, at your option, in shares of common stock pursuant to and in
the manner provided in Section 5a of the
<PAGE>
January 31, 1992
Page 3
Plan), a certificate evidencing the number of shares of common stock purchased
by you pursuant to such exercise shall be delivered by the Company to you, which
certificate shall be registered in your name. Notwithstanding the foregoing, to
the extent any voting trust agreement is then in effect pursuant to which such
shares are required to be deposited in trust, then the Company may, at its
option, deliver to the applicable voting trustee or trustees thereunder such
certificate for deposit in such voting trust and you shall receive such voting
trust certificate or certificates as are contemplated under the terms and
provisions of such voting trust agreement.
(f) Upon the occurrence of a Major Transaction (as hereinafter
defined) all outstanding Option Shares, whether such Option Shares are Vested
Shares or Unvested Shares, shall be treated solely for the purposes of this
paragraph (f) as if they had been exercised in full immediately prior to such
Major Transaction. Accordingly, you shall receive your pro rata share of any
distribution of cash or property distributed to the holders of common stock. As
used herein the term "Major Transaction" shall be deemed to have occurred if:
(i) the Company shall consummate any recapitalization or
refinancing that results in a distribution of cash or property to
the holders of common stock of the Company;
(ii) the Company shall consummate any sale or exchange in a
transaction or series of transactions by the Company of all or
substantially all of its assets; or
(iii) the Company shall consummate a merger, consolidation or
like business combination or reorganization, which results in an
occurrence or has the effect of any event described in clause (i)
or clause (ii) above.
3. Termination of Employment
-------------------------
Upon the termination of your employment with the Company and any
parent corporation or subsidiary corporation of the Company, the Option shall,
to the extent not previously exercised, automatically terminate and become null
and void, provided that:
(1) if you shall die while in the employ of the Company or any
parent corporation or subsidiary corporation of the Company, your estate may,
until the earlier of (x) six (6) months after the date of death or (y) the
expiration of the
<PAGE>
January 31, 1992
Page 4
Option Term, exercise the Option with respect to all or any part of the Option
Shares which you were entitled to purchase immediately prior to the time of your
death;
(2) in the case of termination of your employment due to
Disability, you may, until the earlier of (x) six (6) months after the date your
employment terminates or (y) the expiration of the Option Term, exercise the
Option with respect to all or any part of the Option Shares which you were
entitled to purchase immediately prior to the time of such termination; and
(3) in the case of termination for any reason other than those
specified in (1) or (2) above, you may, until the earlier of (x) thirty (30)
days after the date of such termination or (y) the expiration of the Option
Term, exercise your Option with respect to all or any part of the Option Shares
which you were entitled to purchase immediately prior to such termination,
except that, if you are terminated for good cause (as defined in the Plan and as
determined by the Committee) or if you voluntarily terminate your employment
with the Company or any parent corporation or subsidiary corporation of the
Company without the consent of the Company or any such parent corporation or
subsidiary corporation of the Company, then you shall forfeit your rights under
the Option except as to those Option Shares already purchased.
4. Transferability
---------------
The Option is not transferable by you otherwise than by will or the
laws of descent and distribution and is exercisable, during your lifetime, only
by you. The Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof or of the Plan, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
By your acceptance of this Option Agreement, you agree that you will
not sell or otherwise dispose of the Option, any common stock acquired pursuant
to the Option or any other "derivative security" (as defined by Rule 16a-1(c)
under the Securities Exchange Act of 1934, as amended) during the period ending
six months from the date hereof, and you further agree that any such common
stock or any other derivative security shall be subject to the restrictions and
limitations on transfer contained in any stockholders agreement or similar
agreement to
<PAGE>
January 31, 1992
Page 5
which you may be a party at the time you acquire such common stock or such
derivative security pursuant to the exercise of the Option.
5. Reduction in Option Shares Based on IRR Achieved
------------------------------------------------
(a) The number of Option Shares purchasable or purchased by you upon
the exercise of the Option granted hereunder shall be reduced automatically to
the extent that the IRR (as defined below) achieved by the Sponsor Holders (as
defined below) is less than 60%. Such reduction in Option Shares shall be based
on the table set forth on Exhibit B hereto. No reduction in the number of such
---------
Option Shares shall occur if the IRR so achieved by the Sponsor Holders is 60%
or greater. If the IRR so achieved is less than 35%, the Option granted
hereunder shall terminate and any and all Option Shares previously purchased
pursuant to any exercise of the Option shall automatically be cancelled and the
certificates representing such Option Shares returned to the Company. You
hereby grant to the Company your power of attorney to effect any and all
reductions and cancellations permitted hereunder and to execute, acknowledge,
and deliver any and all documents and instruments on your behalf deemed
necessary by the Company to effect such reductions and cancellations. In the
event of a reduction of the number of Option Shares, the reduction will be
applied first to any Unvested Shares, second to any unexercised portion of
Vested Shares subject to the Option in the inverse order of exerciseability
until the unissued Option Shares are exhausted, and then to any issued Option
Shares.
(b) Upon each date Liquid Proceeds (as defined below) are received or
first held by the Sponsor Holders, the IRR to that date shall be determined by
the Board of Directors of the Company taking account of the dates and amounts
used in prior calculations and the properties that have become Liquid Proceeds
on such date. The reduction, if any, under this Section 5 shall be computed by
using the highest IRR computed on any such date or the final calculation date
under paragraph (d) below.
(c) If Option Shares have been purchased under the Option and are
thereafter cancelled, the Company shall return the amount of the Exercise Price
paid with respect thereto, together with interest from the date of exercise to
the date of return at the applicable federal long-term rate plus 100 basis
points.
(d) As used herein, the term "IRR" shall mean the annual rate of
return to the Sponsor Holders on their Common Stock Investment (as defined
below), compounded annually, from January 31, 1992 to the date of calculation.
A final calculation shall be made on the earliest of (i) January 31, 2000; (ii)
the
<PAGE>
January 31, 1992
Page 6
date the Sponsor Holders collectively have disposed of all of their shares of
common stock and hold no other property received with respect to such shares of
common stock that is not Liquid Proceeds; and (iii) the first date that the
Sponsor Holders own only Liquid Proceeds with respect to their shares of common
stock. For purposes of computing IRR at any time (i) only Liquid Proceeds
received or held by the Sponsor Holders in respect of their Common Stock
Investment shall be included as a payment or distribution in respect thereof and
(ii) all fee income and warrants or other rights to acquire common stock or
other capital stock of the Company shall be disregarded.
(e) As used herein, the term "Sponsor Holders" shall mean,
collectively, Wingate Partners, L.P. and its affiliates.
(f) As used herein, the term "Common Stock Investment" shall mean the
purchase price for the shares of common stock, par value $0.01 per share, of the
Company purchased by the Sponsor Holders at the closing of the acquisition of
the wholesale division of Boise Cascade Office Products Corporation by
Associated Stationers, Inc., a wholly-owned subsidiary of the Company, but
excluding any shares of common stock sold or otherwise transferred by any
Sponsor Holder to any officer, director or employee of the Company or any of its
subsidiaries.
(g) As used herein, the term "Liquid Proceeds" shall mean (i) shares
of stock or other securities that (A) are registered under the Securities Act of
1933, as amended (the "Securities Act"), (B) are traded on the New York Stock
Exchange, the American Stock Exchange or one approved for quotation on the
NASDAQ National Market System at the time of calculation of the IRR, and (C) can
be sold on such market by the holder without incurring a significant discount
from the average of the bid and asked prices for such shares of stock or other
securities at such time; (ii) currency of the United States of America; (iii)
negotiable instruments drawn on a bank with at least $10 billion in assets and
payable in currency of the United States of America; (iv) obligations issued or
assumed by the United States of America or any agency or instrumentality
thereof; and (v) on January 31, 2000 any shares of common stock of the Company
or any other property received upon or with respect to shares of common stock of
the Company then held by the Sponsor Holders, which was not previously treated
as Liquid Proceeds shall be deemed to have been sold for an amount of cash equal
to its then fair market value as determined in good faith by the Board of
Directors of the Company and treated as Liquid Proceeds.
(h) any certificate or certificates (including without limitation,
any voting trust certificates) representing any Option Shares purchased by you
hereunder shall bear such legends
<PAGE>
January 31, 1992
Page 7
as the Company deems reasonably necessary to protect the parties hereto
including, without limitation, a legend evidencing the reduction and
cancellation rights of the Company pursuant to this Section 5.
6. Registration
------------
Unless there is in effect a registration statement under the
Securities Act with respect to the issuance of the Option Shares (and, if
required, there is available for delivery a prospectus meeting the requirements
of Section 10(a)(3) of the Securities Act), you will, upon the exercise of the
Option (i) represent and warrant in writing to the Corporate Secretary of the
Company that the Option Shares then being purchased by you pursuant to the
Option are being acquired for investment only and not with a view to the resale
or distribution thereof, (ii) acknowledge and confirm that the Option Shares
purchased may not be sold unless registered for sale under the Securities Act or
pursuant to an exemption from such registration and (iii) agree that the
certificates evidencing such Option Shares shall bear a legend to the effect of
the foregoing.
7. Withholding Taxes
-----------------
By your acceptance hereof, and in accordance with Section 8(c) of the
Plan, you agree that (i) in the case of issuance of common stock or other
securities hereunder, the Company, as a condition of such issuance may require
the payment (through withholding from any payment otherwise due you from the
Company or any parent corporation or subsidiary corporation of the Company or,
at your option, a reduction in the number of shares of common stock of the
Company to be received, determined by the fair market value of such shares) of
any federal, state, local or foreign taxes required by law to be withheld with
respect to such issuance, and (ii) the Company shall have the right to establish
such other procedures as it may determine in its sole discretion with respect to
such issuances.
8. Miscellaneous
-------------
(a) This Option Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan. In the event of any
conflict or inconsistency between the terms hereof and the terms of the Plan,
the terms of the Plan shall be controlling.
(b) This Option Agreement is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing
<PAGE>
January 31, 1992
Page 8
herein shall be construed to impose any obligation on the Company or on any
parent corporation or subsidiary corporation of the Company to continue your
employment, and it shall not impose any obligation on your part to remain in the
employ of the Company or of any parent corporation or subsidiary corporation of
the Company.
Please indicate your acceptance of all the terms and conditions of the
Option and the Plan by signing and returning a copy of this Option Agreement.
Very truly yours,
ASSOCIATED HOLDINGS, INC.
By:
----------------------------
Thomas W. Sturgess,
Chairman of the Board and
Chief Executive Officer
ACCEPTED
- -------------------------------
ROBERT W. EBERSPACHER
Date: January 31, 1992
<PAGE>
January 31, 1992
Page 9
EXHIBIT A
---------
1992 Management Stock Option Plan
<PAGE>
January 31, 1992
Page 10
EXHIBIT B
---------
<TABLE>
<CAPTION>
Percentage of Option Shares IRR
to be Retained by the Optionee Achieved %
------------------------------ ----------
<S> <C>
100.000% 60 or more
98.333 59
96.667 58
95.000 57
93.333 56
91.667 55
90.000 54
88.333 53
86.667 52
85.000 51
83.333 50
81.667 49
80.000 48
78.333 47
76.667 46
75.000 45
73.333 44
71.667 43
70.000 42
68.333 41
66.667 40
60.000 39
53.333 38
46.667 37
40.000 36
33.333 35
0 less than 35
</TABLE>
<PAGE>
EXHIBIT 10.25
AMENDMENT TO STOCK OPTION GRANT
This Amendment to Stock Option Grant (this "Amendment"), dated as of March
__, 1995, amends that certain letter agreement, dated January 31, 1992 (the
"Option Grant"), between the undersigned optionee ("Optionee") and United
Stationers Inc., a Delaware corporation and successor-in-interest to Associated
(as hereinafter defined) (the "Company").
R E C I T A L S
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc., a
Delaware corporation ("Associated"), and the Company, Associated merged as of
the date hereof with and into the Company, with the Company surviving (the
"Merger");
WHEREAS, pursuant to the Option Grant, on January 31, 1992 Associated
granted to Optionee the option (the "Option") to purchase up to the aggregate
number of shares of common stock, par value $0.01 per share, of Associated
("Associated Common Stock") indicated on the signature page hereto at an
exercise price of $10.00 per share;
WHEREAS, pursuant to the Merger Agreement, each share of Associated
Common Stock has been converted into approximately 3.4 shares of common stock,
par value $0.10 per share, of the Company ("Company Common Stock");
WHEREAS, the parties to the Option Grant deem it desirable to amend
the Option Grant, effective as of the effective time of the Merger (the
"Effective Time"), as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 1. Section 1 of the Option Grant is hereby
----------------------
amended as of the Effective Time to read in its entirety as follows:
<PAGE>
1. The Grant
---------
The Company hereby grants to you, effective as of January
31, 1992 (the "Grant Date"), as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, the
right and option to purchase (the "Option"), in accordance with the
terms and conditions set forth in the Plan and this agreement, an
aggregate of 16,375.45 shares of Common Stock, par value $0.10 per
share, of the Company (the "Option Shares"), at a price of $2.90 per
share (the "Exercise Price") subject to the limitations set forth
herein and in the Plan; provided, however, that as of the Termination
-------- -------
Date (as defined in the Escrow Agreement, dated as of March __, 1995,
among Chase Securities, Inc., The Roebling Fund, the Escrow Agent (as
defined therein), and the stockholders party thereto (the "Escrow
Agreement")), the number of Option Shares into which the Option may be
exercised shall be increased by a portion of the Additional Option
Amount (as hereinafter defined) equal to the percentage of shares of
common stock returned to the Stockholders (as defined in the Escrow
Agreement) on the Termination Date. The "Additional Option Amount"
shall mean 3,202.90 Option Shares. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the
Internal revenue Code of 1986, as amended (the "Code").
2. Amendment of Section 2(f). Section 2(f) of the Option Grant is
-------------------------
hereby deleted in its entirety as of the Effective Time.
3. The Company as Successor-in-Interest to Associated. The Optionee
--------------------------------------------------
and the Company hereby acknowledge and agree that the rights and obligations of
the Option Grant shall be binding upon and inure to the benefit of the Company,
as successor-in-interest to Associated.
4. Effect on the Option Grant. All references in the Option Grant
--------------------------
to "the Company" shall refer to the Company. All references in the Option Grant
to "this Agreement" and the "Agreement" and all phrases of like import shall
refer to the Option Grant as amended by this Amendment. The terms "hereof,"
"herein," "hereby" and phrases of like import, as used in the Option Grant,
shall refer to the Option Grant as amended by this Amendment. Except as amended
hereby, the Option Grant shall remain in full force and effect.
2
<PAGE>
5. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
6. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:_______________________________________
Thomas W. Sturgess,
Chairman of the Board
__________________________________________
Daniel H. Bushell
Shares of Associated Common Stock into
which the Option was exercisable
immediately prior to the Merger: 5,681.00
4
<PAGE>
AMENDMENT TO STOCK OPTION GRANT
This Amendment to Stock Option Grant (this "Amendment"), dated as of
March __, 1995, amends that certain letter agreement, dated January 31, 1992
(the "Option Grant"), between the undersigned optionee ("Optionee") and United
Stationers Inc., a Delaware corporation and successor-in-interest to Associated
(as hereinafter defined) (the "Company").
R E C I T A L S
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc., a
Delaware corporation ("Associated"), and the Company, Associated merged as of
the date hereof with and into the Company, with the Company surviving (the
"Merger");
WHEREAS, pursuant to the Option Grant, on January 31, 1992 Associated
granted to Optionee the option (the "Option") to purchase up to the aggregate
number of shares of common stock, par value $0.01 per share, of Associated
("Associated Common Stock") indicated on the signature page hereto at an
exercise price of $10.00 per share;
WHEREAS, pursuant to the Merger Agreement, each share of Associated
Common Stock has been converted into approximately 3.4 shares of common stock,
par value $0.10 per share, of the Company ("Company Common Stock");
WHEREAS, the parties to the Option Grant deem it desirable to amend
the Option Grant, effective as of the effective time of the Merger (the
"Effective Time"), as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 1. Section 1 of the Option Grant is hereby
----------------------
amended as of the Effective Time to read in its entirety as follows:
<PAGE>
1. The Grant
---------
The Company hereby grants to you, effective as of January
31, 1992 (the "Grant Date"), as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, the
right and option to purchase (the "Option"), in accordance with the
terms and conditions set forth in the Plan and this agreement, an
aggregate of 13,050.55 shares of Common Stock, par value $0.10 per
share, of the Company (the "Option Shares"), at a price of $2.90 per
share (the "Exercise Price") subject to the limitations set forth
herein and in the Plan; provided, however, that as of the Termination
-------- -------
Date (as defined in the Escrow Agreement, dated as of March __, 1995,
among Chase Securities, Inc., The Roebling Fund, the Escrow Agent (as
defined therein), and the stockholders party thereto (the "Escrow
Agreement")), the number of Option Shares into which the Option may be
exercised shall be increased by a portion of the Additional Option
Amount (as hereinafter defined) equal to the percentage of shares of
common stock returned to the Stockholders (as defined in the Escrow
Agreement) on the Termination Date. The "Additional Option Amount"
shall mean 4,735.74 Option Shares. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the
Internal revenue Code of 1986, as amended (the "Code").
2. Amendment of Section 2(f). Section 2(f) of the Option Grant is
-------------------------
hereby deleted in its entirety as of the Effective Time.
3. The Company as Successor-in-Interest to Associated. The Optionee
--------------------------------------------------
and the Company hereby acknowledge and agree that the rights and obligations of
the Option Grant shall be binding upon and inure to the benefit of the Company,
as successor-in-interest to Associated.
4. Effect on the Option Grant. All references in the Option Grant
--------------------------
to "the Company" shall refer to the Company. All references in the Option Grant
to "this Agreement" and the "Agreement" and all phrases of like import shall
refer to the Option Grant as amended by this Amendment. The terms "hereof,"
"herein," "hereby" and phrases of like import, as used in the Option Grant,
shall refer to the Option Grant as amended by this Amendment. Except as amended
hereby, the Option Grant shall remain in full force and effect.
2
<PAGE>
5. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
6. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:_____________________________________
Thomas W. Sturgess,
Chairman of the Board
________________________________________
Robert W. Eberspacher
Shares of Associated Common Stock into
which the Option was exercisable
immediately prior to the Merger:
5,161.00
4
<PAGE>
AMENDMENT TO STOCK OPTION GRANT
This Amendment to Stock Option Grant (this "Amendment"), dated as of
March __, 1995, amends that certain letter agreement, dated January 31, 1992
(the "Option Grant"), between the undersigned optionee ("Optionee") and United
Stationers Inc., a Delaware corporation and successor-in-interest to Associated
(as hereinafter defined) (the "Company").
R E C I T A L S
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc., a
Delaware corporation ("Associated"), and the Company, Associated merged as of
the date hereof with and into the Company, with the Company surviving (the
"Merger");
WHEREAS, pursuant to the Option Grant, on January 31, 1992 Associated
granted to Optionee the option (the "Option") to purchase up to the aggregate
number of shares of common stock, par value $0.01 per share, of Associated
("Associated Common Stock") indicated on the signature page hereto at an
exercise price of $10.00 per share;
WHEREAS, pursuant to the Merger Agreement, each share of Associated
Common Stock has been converted into approximately 3.4 shares of common stock,
par value $0.10 per share, of the Company ("Company Common Stock");
WHEREAS, the parties to the Option Grant deem it desirable to amend
the Option Grant, effective as of the effective time of the Merger (the
"Effective Time"), as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 1. Section 1 of the Option Grant is hereby
----------------------
amended as of the Effective Time to read in its entirety as follows:
<PAGE>
1. The Grant
---------
The Company hereby grants to you, effective as of January
31, 1992 (the "Grant Date"), as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, the
right and option to purchase (the "Option"), in accordance with the
terms and conditions set forth in the Plan and this agreement, an
aggregate of 0.00 shares of Common Stock, par value $0.10 per share,
of the Company (the "Option Shares"), at a price of $10.24 per share
(the "Exercise Price") subject to the limitations set forth herein and
in the Plan; provided, however, that as of the Termination Date (as
-------- -------
defined in the Escrow Agreement, dated as of March __, 1995, among
Chase Securities, Inc., The Roebling Fund, the Escrow Agent (as
defined therein), and the stockholders party thereto (the "Escrow
Agreement")), the number of Option Shares into which the Option may be
exercised shall be increased by a portion of the Additional Option
Amount (as hereinafter defined) equal to the percentage of shares of
common stock returned to the Stockholders (as defined in the Escrow
Agreement) on the Termination Date. The "Additional Option Amount"
shall mean 0.00 Option Shares. The Option is not intended to be an
incentive stock option within the meaning of Section 422 of the
Internal revenue Code of 1986, as amended (the "Code").
2. Amendment of Section 2(f). Section 2(f) of the Option Grant is
-------------------------
hereby deleted in its entirety as of the Effective Time.
3. The Company as Successor-in-Interest to Associated. The Optionee
--------------------------------------------------
and the Company hereby acknowledge and agree that the rights and obligations of
the Option Grant shall be binding upon and inure to the benefit of the Company,
as successor-in-interest to Associated.
4. Effect on the Option Grant. All references in the Option Grant
--------------------------
to "the Company" shall refer to the Company. All references in the Option Grant
to "this Agreement" and the "Agreement" and all phrases of like import shall
refer to the Option Grant as amended by this Amendment. The terms "hereof,"
"herein," "hereby" and phrases of like import, as used in the Option Grant,
shall refer to the Option Grant as amended by this Amendment. Except as amended
hereby, the Option Grant shall remain in full force and effect.
2
<PAGE>
5. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
6. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:________________________________________
Thomas W. Sturgess,
Chairman of the Board
___________________________________________
John D. Kennedy
Shares of Associated Common Stock into
which the Option was exercisable
immediately prior to the Merger: 0.00
4
<PAGE>
AMENDMENT TO STOCK OPTION GRANT
This Amendment to Stock Option Grant (this "Amendment"), dated as of
March __, 1995, amends that certain letter agreement, dated January 31, 1992
(the "Option Grant"), between the undersigned optionee ("Optionee") and United
Stationers Inc., a Delaware corporation and successor-in-interest to Associated
(as hereinafter defined) (the "Company").
R E C I T A L S
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc., a
Delaware corporation ("Associated"), and the Company, Associated merged as of
the date hereof with and into the Company, with the Company surviving (the
"Merger");
WHEREAS, pursuant to the Option Grant, on January 31, 1992 Associated
granted to Optionee the option (the "Option") to purchase up to the aggregate
number of shares of common stock, par value $0.01 per share, of Associated
("Associated Common Stock") indicated on the signature page hereto at an
exercise price of $10.00 per share;
WHEREAS, pursuant to the Merger Agreement, each share of Associated
Common Stock has been converted into approximately 3.4 shares of common stock,
par value $0.10 per share, of the Company ("Company Common Stock");
WHEREAS, the parties to the Option Grant deem it desirable to amend
the Option Grant, effective as of the effective time of the Merger (the
"Effective Time"), as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 1. Section 1 of the Option Grant is hereby
----------------------
amended as of the Effective Time to read in its entirety as follows:
<PAGE>
1. The Grant
---------
The Company hereby grants to you, effective as of January
31, 1992 (the "Grant Date"), as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, the
right and option to purchase (the "Option"), in accordance with the
terms and conditions set forth in the Plan and this agreement, an
aggregate of 11,726.97 shares of Common Stock, par value $0.10 per
share, of the Company (the "Option Shares"), at a price of $2.90 per
share (the "Exercise Price") subject to the limitations set forth
herein and in the Plan; provided, however, that as of the Termination
-------- -------
Date (as defined in the Escrow Agreement, dated as of March __, 1995,
among Chase Securities, Inc., The Roebling Fund, the Escrow Agent (as
defined therein), and the stockholders party thereto (the "Escrow
Agreement")), the number of Option Shares into which the Option may be
exercised shall be increased by a portion of the Additional Option
Amount (as hereinafter defined) equal to the percentage of shares of
common stock returned to the Stockholders (as defined in the Escrow
Agreement) on the Termination Date. The "Additional Option Amount"
shall mean 2,619.92 Option Shares. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the
Internal revenue Code of 1986, as amended (the "Code").
2. Amendment of Section 2(f). Section 2(f) of the Option Grant is
-------------------------
hereby deleted in its entirety as of the Effective Time.
3. The Company as Successor-in-Interest to Associated. The Optionee
--------------------------------------------------
and the Company hereby acknowledge and agree that the rights and obligations of
the Option Grant shall be binding upon and inure to the benefit of the Company,
as successor-in-interest to Associated.
4. Effect on the Option Grant. All references in the Option Grant
--------------------------
to "the Company" shall refer to the Company. All references in the Option Grant
to "this Agreement" and the "Agreement" and all phrases of like import shall
refer to the Option Grant as amended by this Amendment. The terms "hereof,"
"herein," "hereby" and phrases of like import, as used in the Option Grant,
shall refer to the Option Grant as amended by this Amendment. Except as amended
hereby, the Option Grant shall remain in full force and effect.
2
<PAGE>
5. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
6. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:___________________________________
Thomas W. Sturgess,
Chairman of the Board
______________________________________
Duane J. Ratay
Shares of Associated Common Stock into
which the Option was exercisable
immediately prior to the Merger:
4,163.00
4
<PAGE>
AMENDMENT TO STOCK OPTION GRANT
This Amendment to Stock Option Grant (this "Amendment"), dated as of
March __, 1995, amends that certain letter agreement, dated January 31, 1992
(the "Option Grant"), between the undersigned optionee ("Optionee") and United
Stationers Inc., a Delaware corporation and successor-in-interest to Associated
(as hereinafter defined) (the "Company").
R E C I T A L S
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc., a
Delaware corporation ("Associated"), and the Company, Associated merged as of
the date hereof with and into the Company, with the Company surviving (the
"Merger");
WHEREAS, pursuant to the Option Grant, on January 31, 1992 Associated
granted to Optionee the option (the "Option") to purchase up to the aggregate
number of shares of common stock, par value $0.01 per share, of Associated
("Associated Common Stock") indicated on the signature page hereto at an
exercise price of $10.00 per share;
WHEREAS, pursuant to the Merger Agreement, each share of Associated
Common Stock has been converted into approximately 3.4 shares of common stock,
par value $0.10 per share, of the Company ("Company Common Stock");
WHEREAS, the parties to the Option Grant deem it desirable to amend
the Option Grant, effective as of the effective time of the Merger (the
"Effective Time"), as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 1. Section 1 of the Option Grant is hereby
----------------------
amended as of the Effective Time to read in its entirety as follows:
<PAGE>
1. The Grant
---------
The Company hereby grants to you, effective as of January
31, 1992 (the "Grant Date"), as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, the
right and option to purchase (the "Option"), in accordance with the
terms and conditions set forth in the Plan and this agreement, an
aggregate of 16,779.14 shares of Common Stock, par value $0.10 per
share, of the Company (the "Option Shares"), at a price of $2.90 per
share (the "Exercise Price") subject to the limitations set forth
herein and in the Plan; provided, however, that as of the Termination
-------- -------
Date (as defined in the Escrow Agreement, dated as of March __, 1995,
among Chase Securities, Inc., The Roebling Fund, the Escrow Agent (as
defined therein), and the stockholders party thereto (the "Escrow
Agreement")), the number of Option Shares into which the Option may be
exercised shall be increased by a portion of the Additional Option
Amount (as hereinafter defined) equal to the percentage of shares of
common stock returned to the Stockholders (as defined in the Escrow
Agreement) on the Termination Date. The "Additional Option Amount"
shall mean 6,238.14 Option Shares. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the
Internal revenue Code of 1986, as amended (the "Code").
2. Amendment of Section 2(f). Section 2(f) of the Option Grant is
-------------------------
hereby deleted in its entirety as of the Effective Time.
3. The Company as Successor-in-Interest to Associated. The Optionee
--------------------------------------------------
and the Company hereby acknowledge and agree that the rights and obligations of
the Option Grant shall be binding upon and inure to the benefit of the Company,
as successor-in-interest to Associated.
4. Effect on the Option Grant. All references in the Option Grant
--------------------------
to "the Company" shall refer to the Company. All references in the Option Grant
to "this Agreement" and the "Agreement" and all phrases of like import shall
refer to the Option Grant as amended by this Amendment. The terms "hereof,"
"herein," "hereby" and phrases of like import, as used in the Option Grant,
shall refer to the Option Grant as amended by this Amendment. Except as amended
hereby, the Option Grant shall remain in full force and effect.
2
<PAGE>
5. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
6. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:____________________________________
Thomas W. Sturgess,
Chairman of the Board
_______________________________________
Michael D. Rowsey
Shares of Associated Common Stock into
which the Option was exercisable
immediately prior to the Merger:
6,679.00
4
<PAGE>
AMENDMENT TO STOCK OPTION GRANT
This Amendment to Stock Option Grant (this "Amendment"), dated as of
March __, 1995, amends that certain letter agreement, dated January 31, 1992
(the "Option Grant"), between the undersigned optionee ("Optionee") and United
Stationers Inc., a Delaware corporation and successor-in-interest to Associated
(as hereinafter defined) (the "Company").
R E C I T A L S
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
February 13, 1995 (the "Merger Agreement"), between Associated Holdings, Inc., a
Delaware corporation ("Associated"), and the Company, Associated merged as of
the date hereof with and into the Company, with the Company surviving (the
"Merger");
WHEREAS, pursuant to the Option Grant, on January 31, 1992 Associated
granted to Optionee the option (the "Option") to purchase up to the aggregate
number of shares of common stock, par value $0.01 per share, of Associated
("Associated Common Stock") indicated on the signature page hereto at an
exercise price of $10.00 per share;
WHEREAS, pursuant to the Merger Agreement, each share of Associated
Common Stock has been converted into approximately 3.4 shares of common stock,
par value $0.10 per share, of the Company ("Company Common Stock");
WHEREAS, the parties to the Option Grant deem it desirable to amend
the Option Grant, effective as of the effective time of the Merger (the
"Effective Time"), as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Amendment of Section 1. Section 1 of the Option Grant is hereby
----------------------
amended as of the Effective Time to read in its entirety as follows:
<PAGE>
1. The Grant
---------
The Company hereby grants to you, effective as of January
31, 1992 (the "Grant Date"), as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, the
right and option to purchase (the "Option"), in accordance with the
terms and conditions set forth in the Plan and this agreement, an
aggregate of 14,331.67 shares of Common Stock, par value $0.10 per
share, of the Company (the "Option Shares"), at a price of $2.90 per
share (the "Exercise Price") subject to the limitations set forth
herein and in the Plan; provided, however, that as of the Termination
-------- -------
Date (as defined in the Escrow Agreement, dated as of March __, 1995,
among Chase Securities, Inc., The Roebling Fund, the Escrow Agent (as
defined therein), and the stockholders party thereto (the "Escrow
Agreement")), the number of Option Shares into which the Option may be
exercised shall be increased by a portion of the Additional Option
Amount (as hereinafter defined) equal to the percentage of shares of
common stock returned to the Stockholders (as defined in the Escrow
Agreement) on the Termination Date. The "Additional Option Amount"
shall mean 5,246.68 Option Shares. The Option is not intended to be
an incentive stock option within the meaning of Section 422 of the
Internal revenue Code of 1986, as amended (the "Code").
2. Amendment of Section 2(f). Section 2(f) of the Option Grant is
-------------------------
hereby deleted in its entirety as of the Effective Time.
3. The Company as Successor-in-Interest to Associated. The Optionee
--------------------------------------------------
and the Company hereby acknowledge and agree that the rights and obligations of
the Option Grant shall be binding upon and inure to the benefit of the Company,
as successor-in-interest to Associated.
4. Effect on the Option Grant. All references in the Option Grant
--------------------------
to "the Company" shall refer to the Company. All references in the Option Grant
to "this Agreement" and the "Agreement" and all phrases of like import shall
refer to the Option Grant as amended by this Amendment. The terms "hereof,"
"herein," "hereby" and phrases of like import, as used in the Option Grant,
shall refer to the Option Grant as amended by this Amendment. Except as amended
hereby, the Option Grant shall remain in full force and effect.
2
<PAGE>
5. Final Agreement. This Amendment constitutes the final agreement
---------------
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
6. Governing Law. This Amendment shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
[The remainder of this page is intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this Amendment the
date first above written.
UNITED STATIONERS INC.
By:_________________________________
Thomas W. Sturgess,
Chairman of the Board
____________________________________
Daniel J. Schleppe
Shares of Associated Common Stock
into which the Option was
exercisable immediately prior to the
Merger: 5,681.00
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<PAGE>
EXHIBIT 10.26
ASSOCIATED HOLDINGS, INC.
EXECUTIVE STOCK PURCHASE AGREEMENT
----------------------------------
This EXECUTIVE STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 31, 1992, and is by and among WINGATE PARTNERS, L.P.,
a Delaware limited partnership ("Wingate"), ASI PARTNERS, L.P., a Delaware
limited partnership ("ASI"), ASSOCIATED HOLDINGS, INC., a Delaware corporation
(the "Company"), and Daniel J. Schleppe ("Executive").
Executive desires to purchase, and Wingate and ASI desire to sell,
shares of Class A Common Stock, par value $0.01 per share ("Common Stock"), and
Class A Preferred Stock, par value $0.01 per share ("Preferred Stock"), of the
Company upon the terms and subject to the conditions contained herein.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set forth
-----------------
herein, each of Wingate and ASI severally agrees to sell, and the Executive
agrees to purchase, the number of shares of Common Stock and the number of
shares of Preferred Stock set forth below the Executive's name on the signature
page hereto for the respective purchase prices also set forth below the
Executive's name on the signature page hereto. The number of shares of Common
Stock and Preferred Stock to be sold by Wingate is herein called the "Wingate
Portion" and the number of shares of Common Stock and Preferred Stock to be sold
by ASI is herein called the "ASI Portion." Executive acknowledges and
understands that each of Wingate and ASI have borrowed funds (the "Loans") in
order to purchase the Wingate Portion and ASI Portion at the closing of the
acquisition by the Company and its wholly-owned subsidiary, Associated
Stationers, Inc. ("Stationers"), of the business and assets of the wholesale
division of Boise Cascade Office Products Corporation (the "Acquisition
Closing"). Accordingly, at the Closing (as defined below), in addition to the
payment of the purchase price paid by Executive for the Wingate Portion and the
ASI Portion, the Executive shall reimburse each of Wingate and ASI for the
interest costs of the Loans incurred by them from the date of the Loans until
the Closing (the "Borrowing Costs"). Additionally, the Executive may allocate
all or a portion of the Common Stock and/or Preferred Stock to be purchased
hereunder to one or more individual retirement account or accounts of the
Executive (collectively, the "IRA"). For purposes of this Agreement, all
references to Executive herein shall include reference to his IRA to the extent
appropriate.
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2. Closing.
-------
(a) The purchase and sale of the shares of Common Stock and
Preferred Stock contemplated above will take place at a closing (the "Closing")
at a place or places mutually acceptable to the Executive, Wingate, and ASI and
shall occur on a date not later than June 1, 1992; provided the Executive shall
have the right to extend the Closing two times for a period of not greater than
30 days each time by giving written notice of such requested extension to each
of Wingate and ASI at their respective addresses set forth on the signature
pages hereto at least two days prior to the then scheduled date for Closing, but
in no event shall the Closing take place later than July 31, 1992. If any and
all conditions to the Executive's obligation to purchase, and Wingate's and
ASI's obligation to sell, hereunder have been satisfied or waived as of the date
set for Closing, if and as extended as provided above, then any rights of the
Executive to purchase all or any amount of the Wingate Portion and/or the ASI
Portion shall terminate and be of no further force or effect if the Executive
fails to purchase the Wingate Portion and the ASI portion on the date set for
Closing, if and as extended as provided above.
(b) The Executive shall, at the Closing, deliver by wire transfer
to an account or accounts designated by Wingate and ASI same day federal funds
in an amount equal to the purchase price of the Wingate Portion and the ASI
Portion, respectively, purchased by the Executive pursuant to this Agreement.
(c) Upon such purchase, Wingate and ASI shall cause the Company to
deliver to the Executive, against payment of the purchase price therefor, a
certificate representing the shares of Common Stock and a certificate
representing the shares of Preferred Stock purchased by the Executive hereunder.
Such certificates shall be registered in the name of the Executive. The
Executive shall deposit the certificate or certificates representing such shares
of Common Stock in trust pursuant to the Voting Trust Agreement (as hereinafter
defined) and voting trust certificates shall be issued in respect thereof in
accordance with the terms and provisions of the Voting Trust Agreement.
(d) Any tax imposed on the issuance of the shares of Common Stock or
the shares of Preferred Stock purchased by the Executive hereunder will be paid
by the Company at Closing.
3. Representations, Warranties, and Certain Agreements of the
----------------------------------------------------------
Executive. The Executive understands and agrees with the Company, Wingate, and
- ---------
ASI that the offering and sale of the Common Stock and Preferred Stock to the
Executive hereunder is intended to be exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") by virtue of the
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<PAGE>
provisions of Section 4(2) of the Securities Act and Rule 506 of Regulation D
thereunder, and that there is no existing public or other market for the Common
Stock or the Preferred Stock and there can be no assurance that the Executive
will be able to sell or otherwise dispose of all or any portion of the Common
Stock or the Preferred Stock. In that regard, the Executive hereby represents
and warrants to, and agrees with, the Company, Wingate, and ASI that:
(a) Executive is an "accredited investor" as such term is defined
in Rule 501 of Regulation D under the Securities Act.
(b) Executive has such knowledge and experience in financial and
business matters that Executive is capable of evaluating the merits and risks of
an investment in the Common Stock and Preferred Stock; has all information
deemed by Executive to be necessary or appropriate to evaluate the risks and
merits of an investment in the Common Stock and Preferred Stock; has had the
opportunity to ask questions of and receive answers from representatives of the
Company concerning the Company and the terms and conditions of the sale of the
Common Stock and Preferred Stock; has a financial condition such that Executive
is under no present need to dispose of any portion of the Common Stock and
Preferred Stock to satisfy any existing or contemplated undertaking or
indebtedness; and is able to bear the economic risk of an investment in the
Common Stock and Preferred Stock, including, without limiting the generality of
the foregoing, the risk of losing part or all of Executive's investment and the
possible inability to sell or transfer the Common Stock and Preferred Stock for
an indefinite period of time.
(c) Executive is acquiring the Common Stock and Preferred Stock for
Executive's own account for investment, and not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities
Act.
(d) Executive understands that the Common Stock and Preferred Stock
have not been registered under the Securities Act or any blue sky or other state
securities law or regulation (hereinafter collectively referred to as "blue sky
laws") in reliance, in part, upon the representations, warranties, and covenants
contained herein. Executive also understands that Executive cannot offer for
sale, sell, or transfer any of the Common Stock and Preferred Stock unless such
offer, sale, or transfer has been registered under the Securities Act and under
any applicable blue sky laws or unless an exemption from such registration is
available with respect to any such proposed offer, sale, or transfer. Executive
further understands that the Company is under no obligation to register the
Common Stock and Preferred Stock in the future.
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<PAGE>
(e) Executive agrees and acknowledges that a restrictive legend may be
placed on certificates representing any or all of the Common Stock and Preferred
Stock and that transfer of any or all of such Common Stock and Preferred Stock
may be refused by the Company or its transfer agent, if any, unless such Common
Stock and Preferred Stock for which transfer is sought is registered under the
Securities Act and all other applicable federal securities or blue sky laws and
such laws are complied with or unless Executive provides information
satisfactory to the Company that such registration is not required.
(f) Executive agrees to indemnify and hold the Company, Wingate, and
ASI harmless from and against all losses, costs, liabilities, and expenses
suffered or incurred by the Company, Wingate, or ASI and arising out of or
related to the resale or distribution by the Executive of any Common Stock and
Preferred Stock in violation of the Securities Act or any other applicable
federal securities laws or blue sky laws.
4. Securities Subject to Agreement. (a) In addition to any Common
-------------------------------
Stock and Preferred Stock purchased by the Executive hereunder, the Company has
granted and may hereafter grant to the Executive, options under the Company's
1992 Management Stock Option Plan, a copy of which is attached hereto as Exhibit
-------
A (the "Plan") entitling the Executive to purchase additional shares of Common
- -
Stock at the price of $10.00 per share (the "Options") and subject to the terms
and conditions set forth in the Option Agreement attached hereto as Exhibit B
---------
(the "Option Agreement"). This Agreement, and the restrictions and limitations
contained herein, applies to all Common Stock and Preferred Stock now owned or
hereafter acquired by the Executive (through purchase hereunder or exercise of
all or any portion of the Options), any voting trust certificates issued or
issuable to Executive pursuant to the Voting Trust Agreement (the "Voting Trust
Agreement") dated as of January 31, 1992 among the Company, the Voting Trustees
named therein, and certain beneficial owners of Common Stock of the Company
identified therein and who may become parties thereto, and any shares of Common
Stock or Preferred Stock otherwise acquired by Executive, including any Common
Stock issued with respect to Common Stock owned by Executive by way of a stock
split, stock dividend, recapitalization or otherwise. All such Common Stock,
Preferred Stock, and voting trust certificates to which this Agreement applies
are herein collectively called the "Executive Securities." Executive Securities
will continue to be Executive Securities in the hands of any other holder
(except for the Company, any subsidiary of the Company, any Sponsor Holder [as
defined below] or transferees in a public sale) and each such other holder of
Executive Securities will succeed to all of the rights and obligations of the
Executive pursuant to Section 5 hereof. As used herein, the term "Sponsor
Holder" shall mean each of Wingate and its affiliates and ASI and its
affiliates.
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(b) As of the date hereof the Company shall, pursuant to Option
Agreements, grant to the Key Executives (as defined below) Options to purchase
an aggregate number of shares of Common Stock equal to 21,684 and allocated as
set forth on Exhibit C hereto (the "First Options"). The Company agrees that
---------
within four years from the date hereof it shall grant to the Key Executives or
any successor officers to the Key Executives an Option or Options to purchase an
additional aggregate number of shares of Common Stock equal to 21,684 (subject
to the anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The exercise price
for the Common Stock subject to the Second Options shall be $10.00 per share for
each Key Executive, but, unless otherwise determined by the Board, shall be the
fair market value of each such share for any successor officer to a Key
Executive. As used herein, the term "Key Executives" shall collectively mean
Michael D. Rowsey, Daniel J. Schleppe, Robert W. Eberspacher, and Lawrence E.
Miller.
(c) The Second Options shall be granted under the same form of option
agreement as the Option Agreement, except for the number of shares and except
that vesting shall be in increments of 25% on the four succeeding anniversaries
of the date of grant. If the Second Options have not been granted in full at
the time of a Major Transaction (as defined in the Option Agreements), any
ungranted Second Options shall be treated as having been granted to the Key
Executives in proportion to the number of shares originally covered by the First
Options and the Key Executives shall receive the special distributions
contemplated by Section 2 of the Option Agreement.
5. Repurchase Right of the Company.
-------------------------------
(a) In the event the Executive dies, retires, becomes Disabled (as
defined below) or ceases to be employed or retained by the Company or one of its
subsidiaries or other affiliates, for any reason (a "Termination"), the
Executive Securities (whether held by Executive or one or more of Executive's
transferees) will be subject to repurchase by the Company, and, if applicable,
one or more of the Sponsor Holders (as determined by subparagraph (f), below)
pursuant to the terms and conditions set forth in this Section 5 (the
"Repurchase Right"). As used herein, the term "Disabled" shall mean the
Executive's inability, due to illness, accident, injury, physical or mental
incapacity or other disability, effectively to carry out his duties and
obligations to the Company as an employee thereof or to participate effectively
and actively in the management of the Company for 90 consecutive days or shorter
periods aggregating at least 180 days (whether or not consecutive) during any
twelve-month period.
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<PAGE>
(b) The purchase price for each share of Common Stock included in the
Executive Securities will be the net book value thereof at the date of such
Termination; provided, however, that if the Repurchase Right is triggered by a
Termination constituting a Special Termination Event (as defined below) then the
purchase price for each such share of Common Stock will be the fair market value
thereof (as determined in good faith by the Board of Directors of the Company)
as of the date of such Special Termination Event. As used herein, the term
"Special Termination Event" shall mean (i) the death of the Executive, (ii) the
retirement by the Executive at or after age 59, (iii) a termination by
Stationers of the Executive's employment under the Employment Agreement dated as
of the date hereof between Stationers and the Executive without Cause (as such
term is defined in such Employment Agreement), (iv) a termination of employment
due to the Executive becoming Disabled, or (v) a termination of employment
(other than for Cause) at a time that there is a public market for shares of
Common Stock of the Company.
(c) The purchase price for each share of Preferred Stock included in
the Executive Securities with respect to the Company's exercise of the
Repurchase Right in connection with any Termination shall be the redemption
value of $1,000 per share plus any accrued but unpaid dividends thereon, subject
to appropriate adjustment in the event of a stock split, reverse stock split or
similar transaction (the "Preferred Stock Price").
(d) The purchase price for any vested share of Common Stock covered by
an Option ("Option Share") included in the Executive Securities with respect to
the Company's exercise of the Repurchase Right shall be equal to the product of
(i) the price which would apply to a share of Common Stock (determined by the
method set forth in subparagraph (b) above) minus the exercise price therefor
and (ii) the number of Option Shares which may be acquired at the time of such
purchase, according to the vesting and exercise schedule in the Option Agreement
or other option agreement entered into by the Executive (the "Option Share
Price").
(e) The Company shall have a first option to acquire the Executive
Securities pursuant to the Repurchase Right and may elect to purchase all or any
portion of the Executive Securities included therein by delivering written
notice (the "Repurchase Notice") to the holder or holders of the Executive
Securities within 30 days after the Termination or, in case of the death of the
Executive, within 30 days after the Company first becomes aware of the
Executive's death. The Repurchase Notice shall set forth the amount and price
of the Executive Securities to be acquired from such holder or holders, the
aggregate consideration to be paid for such Executive Securities and the time
and place for the closing of the transaction. The
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<PAGE>
Executive Securities to be repurchased by the Company first shall be satisfied
to the extent possible from the Executive Securities held by the Executive (or
the Executive's estate) at the time of delivery of the Repurchase Notice. If
the Executive Securities then held by the Executive (or the Executive's estate)
are less than the Executive Securities the Company has elected to purchase, the
Company shall purchase the remaining Executive Securities from the transferee
holder(s) of the Executive Securities pro rata according to the amount held by
such transferee holder(s) at the time of delivery of such Repurchase Notice
(determined as nearly as practicable to the nearest full share).
(f) If for any reason the Company does not elect to purchase all of
the Executive Securities pursuant to the Repurchase Right, the Sponsor Holders
who qualify as "accredited investors" under Regulation D of the Securities Act
(the "Accredited Holders") may exercise the Repurchase Right for the Executive
Securities the Company has not elected to purchase (the "Available Securities").
As soon as practicable after the Company has determined that there will be
Available Securities, the Company shall give written notice (the "Company
Notice") to the Accredited Holders, setting forth the amount and nature of
Available Securities and the purchase price for the Available Securities. Each
of the Accredited Holders may select the amount and type of the Available
Securities (if any) that such Accredited Holder elects to purchase by giving
written notice thereof to the Company within 20 days after the Company Notice
has been given to such Accredited Holder by the Company. If the Accredited
Holders collectively select a number of shares of Available Securities greater
than the amount of Available Securities available, then all Available Securities
shall be allocated pro rata among the Accredited Holders electing to
participate, based upon the number of shares of each type of Executive
Securities subscribed for by each such Accredited Holder. As soon as
practicable, and in any event within 5 days after the expiration of the 20-day
period set forth above, the Company shall notify each proposed transferor of
Executive Securities as to the number of shares of Executive Securities being
purchased from such transferor by the Company and each Accredited Holder (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice, the Company also shall deliver written notice to
the Accredited Holders electing to participate, setting forth the type and
number of shares of Executive Securities the Accredited Holders electing to
participate are entitled to purchase, the aggregate purchase price and the time
and place of the closing of the transaction.
(g) The closing of the purchase of the Executive Securities pursuant
to any exercise of the Repurchase Right shall take place on the latest date
designated by the Company in the
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<PAGE>
Repurchase Notice or Supplemental Repurchase notice, which date shall not be
more than 30 days nor less than 10 days after the delivery of the later of
either such notice to be delivered. The Company and/or the Accredited Holders
electing to participate shall pay for the Executive Securities to be purchased
pursuant to the Repurchase Right in cash by a bank cashier's check, certified
check or by wire transfer. If at the time of consummation of any exercise of a
Repurchase Right by the Company, the terms and provisions of the credit
facilities of the Company or of its subsidiary, Associated Stationers, Inc.
("Stationers"), effectively prevent the Company from paying the purchase price
for the Executive Securities to be purchased in cash, then the portion of such
purchase price in excess of the amount the Company is so permitted to pay in
cash, if any (the "Excess Amount"), may be paid by the Company by delivery of
the Company's subordinated promissory note or notes, which note or notes in the
aggregate shall (i) be payable in seven equal annual installments of principal
payable on each of the first seven anniversaries of such purchase, (ii) be
prepayable at any time in the inverse order of maturity without any penalty,
(iii) bear interest at the applicable long-term federal rate in effect at the
time of the issuance of the note or notes (plus 100 basis points), and (iv) be
subordinated in right of payment and upon liquidation to any senior indebtedness
of the Company and/or Stationers. Accrued interest on the note or notes will be
payable on the dates that the installments of principal are payable.
Notwithstanding anything in this subsection to the contrary, any payments under
the subordinated notes described above shall be subject to any restrictions or
limitations on such payments contained in (i) the Debt Agreements (as defined
below) and (ii) any and all applicable state and federal laws, rules, and
regulations or in any and all orders of any state or federal governmental
authority. As used herein the term "Debt Agreements" shall mean the Credit
Agreement dated as of January 31, 1992 among the Company, Associated Stationers,
Inc., The Chase Manhattan Bank (National Association), as agent, and the lenders
which become parties thereto and the notes and other documents and instruments
executed and delivered in connection therewith, as such Credit Agreement and
notes and other documents and instruments may from time to time be amended or
supplemented, and any agreements evidencing any renewal, extension, refinancing,
refunding or replacement thereof.
(h) In the event of the termination of a marital relationship of the
Executive and his spouse by divorce or annulment and the Executive does not
acquire all Executive Securities or interests therein ("Divorce Securities")
awarded to his spouse (the "Divorced Spouse") within 30 days from the date such
Divorce Securities are so awarded (the "Divorce Securities Determination Date"),
then the Executive shall give the Company written notice of such Divorce
Securities Determination Date within 20 days thereof (the "Divorce Notice"),
which notice shall
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<PAGE>
describe the Divorce Securities passing to the Divorced Spouse in connection
therewith. Upon receipt of the Divorce Notice, the Company shall have the
option to purchase any and all Divorce Securities awarded to the Divorced Spouse
(the "Divorce Call Right").
(i) The purchase price for each share of Common Stock included
in the Divorce Securities to be repurchased by the Company pursuant to any
exercise of the Divorce Call Right at any time shall be the net book value
thereof at the date of the exercise of the Divorce Call Right by the
Company.
(ii) The purchase price for each share of Preferred Stock
included in the Divorce Securities with respect to the Company's exercise
of the Divorce Call Right at any time shall be equal to the Preferred Stock
Price.
(iii) The purchase price for any vested Option Share included in
the Divorce Securities with respect to the Company's exercise of the
Divorce Call Right at any time shall be equal to the Option Share Price.
(iv) Within 30 days after the date the Company receives the
Divorce Notice, the Company shall notify the Divorced Spouse in writing
(the "Company Divorce Election Notice") of the number of Divorce Securities
that the Company desires to purchase and the date for the closing of such
purchase which shall not be more than 60 days nor less than 10 days after
the date the Divorced Spouse receives the Company Divorce Election Notice.
(v) At the closing of the purchase by the Company of any Divorce
Securities hereunder, the Company shall pay the applicable purchase price
therefor in the same manner and on the same terms and conditions as set
forth in Section 5(a) hereof.
6. Executive Put Rights.
--------------------
(a) In the event the Executive dies, retires at or after age 59,
or becomes Disabled (each a "Put Termination Event"), the Executive or his
estate, as applicable (for purposes of this Section 6 all references to the
"Executive" shall include reference to his estate if applicable), may require
the Company to repurchase any or all of the Executive Securities then held by
the Executive (the "Executive Put Right").
(b) The purchase price for each share of Common Stock included in
the Executive Securities to be put to the Company pursuant to any exercise of
the Executive Put Right at any time will be the fair market value thereof (as
determined in
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good faith by the Board of Directors of the Company) as of date of such Put
Termination Event.
(c) The purchase price for each share of Preferred Stock included in
the Executive Securities with respect to the Executive's exercise of the
Executive Put Right in connection with any Put Termination Event shall be equal
to the Preferred Stock Price.
(d) The purchase price for any vested Option Share included in the
Executive Securities with respect to the Executive's exercise of the Executive
Put Right at any time shall be equal to the Option Share Price.
(e) To effectively exercise an Executive Put Right hereunder, the
Executive shall give the Company written notice (the "Executive Put Notice") to
the Company within 90 days after a Put Termination Event. The Executive Put
Notice shall set forth the amount and price of the Executive Securities to be
put to the Company. Within 60 days after the receipt by the Company of the
Executive Put Notice, the Company shall notify the Executive of the
determination by the Board of Directors of the Company of the fair market value
of any Common Stock included in the Executive Securities (the "Company Put
Response"). Within 20 days after the receipt by the Executive of the Company
Put Response, the Executive shall notify the Company in writing (the
"Supplemental Executive Put Notice") of his election to either (i) consummate
the proposed Executive Put Right based on the fair market value of the Common
Stock included in the proposed Executive Securities as determined by the Board
of Directors of the Company; (ii) withdraw the Common Stock included in the
Executive Securities from the exercise of the proposed Executive Put Right and
continue to put Executive Securities, other than Common Stock, to the Company
pursuant to the proposed exercise of the Executive Put Right; or (iii) withdraw
all Executive Securities proposed to put to the Company pursuant to the proposed
exercise of the Executive Put Right. The Supplemental Executive Put Notice
shall also set forth the closing date for the consummation of any such exercise
of the Executive Put Right. The closing of the purchase of the Executive
Securities pursuant to an exercise of the Executive Put Right shall take place
on the date designated in the Supplemental Executive Put Notice, which date
shall not be more than 60 days nor less than 10 days after the delivery thereof
to the Company. The Company shall be obligated to pay for the Executive
Securities described in the Supplemental Executive Put Notice on the same terms
and conditions as set forth in Section 5(g) hereof.
(f) The Executive Put Right described in this Section 6 shall be
considered personal to the Executive and shall not be transferrable to any
purchaser or other holder of any
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Executive Securities other than the Executive's estate and the personal
representative or administrator thereof.
7. Ancillary Agreements. At Closing, the Executive agrees to
--------------------
execute and deliver to and for the benefit of the Company, Stationers, and/or
the other parties thereto, the Option Agreement attached hereto as Exhibit B,
---------
the Registration Rights Agreement attached hereto as Exhibit D, the Voting Trust
---------
Agreement attached hereto as Exhibit E, and the Stockholders Agreement attached
---------
hereto as Exhibit F (such agreements being collectively referred to herein as
---------
the "Ancillary Agreements" and individually as an "Ancillary Agreement").
8. Additional Covenants of the Company. In addition to the other
-----------------------------------
covenants and agreements of the Company contained herein the Company agrees, and
agrees to cause Stationers, if applicable, to comply with the following
agreements.
(a) The Company understands that the Key Executives as a group have
engaged the law firm of Jones, Day, Reavis & Pogue as legal counsel to the Key
Executives. The Company has been advised that Boise Cascade Corporation or one
or more of its affiliates (collectively, "Boise") has agreed to reimburse the
Key Executives, as a group, for the first $15,000 of the legal fees and the
costs and expenses associated therewith incurred by the Key Executives in
connection with the Key Executives' participation in the acquisition by the
Company and Stationers of the properties, assets, and business of Boise Cascade
Office Products Corporation associated with or otherwise relating to its
wholesale division and the equity and debt financing transactions associated
therewith (collectively, the "Acquisition"). The Company hereby agrees to
reimburse, or cause Stationers to reimburse, the Key Executives, as a group, for
all legal fees, costs, and expenses of Jones, Day, Reavis & Pogue incurred by
the Key Executives, as a group, in connection with their participation in the
Acquisition which are in excess of the first $15,000 so incurred and up to an
additional $15,000 in the aggregate, subject to verification and approval by the
Company. Any portion of such legal fees, costs, and expenses in excess of
$30,000 or for which the Key Executives do not receive reimbursement from Boise
as contemplated shall not be the responsibility of the Company or Stationers.
(b) The initial chief financial officer of Stationers hired by the
board of directors of Stationers shall be given the opportunity to purchase
shares of Common Stock and Preferred Stock of the Company in the same ratio as
the Executive and for the purchase price of not less than the fair market value
of such shares at the time of purchase, as determined in good faith by the board
of directors of the Company. The maximum dollar amount of the shares of Common
Stock and Preferred Stock to be reserved for purchase by such initial chief
financial
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officer shall be no more than $147,500. Any purchase of shares of Common Stock
and Preferred Stock of the Company by such initial chief financial officer shall
dilute all holders of Common Stock and Preferred Stock on a ratable basis.
(c) The Company and/or Stationers shall pay all closing fees payable
to the senior lenders to Stationers and the Company and shall pay closing fees
aggregating not more than $1,500,000 to the Sponsor Holders and Good Capital
Co., Inc. After the Closing, the total amount of all management, directors, and
other recurrent fees payable by the Company or Stationers to the Sponsor Holders
and Good Capital Co., Inc. will not exceed $350,000 to Wingate Partners, L.P.
and a total of $150,000 to Cumberland Capital Corporation and Good Capital Co.,
Inc., unless escalated in good faith by the board of directors of the Company.
If there is an extraordinary transaction affecting the Company, such as a
recapitalization, refinancing or sale, the board of directors of the Company may
retain the services of one or more of such parties in connection therewith if it
determines that the services and fee structure therefor will be fair to the
Company.
(d) The Company will, at Closing, provide to Michael D. Rowsey, as the
representative of each Key Executive, complete information and documentation
concerning the following matters and all other matters material to the Key
Executives' investment in the Company and employment with Stationers:
(i) the various classes of Common Stock and Preferred Stock and
warrants to be issued in respect thereof, including the purchase price for
such Common Stock and Preferred Stock and the exercise prices in respect of
the warrants;
(ii) all fees and expenses arising in respect of the Acquisition
and any subsequent management or other fees including those to be paid to
the Sponsor Holders or their affiliates;
(iii) loan agreements and other financing documents;
(iv) any other material agreements to be executed or commitments
made as a part of the transaction; and
(v) available business plans and projections.
9. Conditions Precedent to Obligation of the Executive. The
---------------------------------------------------
obligation of the Executive to purchase the Common Stock and Preferred Stock to
be purchased by the Executive
12
<PAGE>
hereunder is subject, at the Closing, to the satisfaction or waiver by Executive
of the following conditions:
(a) The Company shall have performed and complied with the covenants
and agreements contained in this Agreement required to be performed with and
complied with by the Company prior to or at the Closing.
(b) The Executive shall have received a counterpart of this Agreement
and each Ancillary Agreement, duly executed and delivered by Holdings and/or
Stationers, as applicable.
10. Conditions Precedent to Obligation of Wingate and ASI. The
-----------------------------------------------------
obligations of Wingate and ASI, to sell the Wingate Portion and the ASI Portion
to be sold to the Executive hereunder is subject, at the Closing, to the
satisfaction or waiver by the Company of the following conditions:
(a) All representations and warranties made by the Executive herein
shall be true and correct as of the Closing with the same effect as if such
representations and warranties had been made as of the Closing.
(b) The Executive shall have performed and complied with the covenants
and agreements contained herein required to be performed with and complied with
by the Executive prior to or at the Closing.
(c) The Acquisition and all transactions contemplated thereby shall
have been consummated as of the Acquisition Closing.
(d) The Company, Wingate, and ASI shall have received the opinion of
counsel described in Section 8(a) above in form and substance satisfactory to
the Company, Wingate, and ASI to the effect that any IRA purchaser hereunder is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
under the Securities Act and covering such other matters as are reasonably
requested by the Company.
11. Termination. The rights and obligations of the Company, the
-----------
Sponsor Holders, and/or the Executive relating to repurchases of Executive
Securities pursuant to the provisions of Sections 5 and 6 hereof shall terminate
(i) upon the consummation of a Qualified Public Offering (as defined below);
(ii) upon the written consent of the Company and the holders of 66-2/3% or more
of the Executive Securities; or (iii) in any event, the earlier of 10 years from
the date hereof or the dissolution of the Company. As used herein, the term
"Qualified Public Offering" shall mean the sale in an underwritten public
offering or a series of public offerings, registered under the Securities Act,
13
<PAGE>
of Common Stock which results in the public ownership of not less than 20% of
the Common Stock of the Company on a fully-diluted basis, which shares of Common
Stock are listed upon the New York Exchange, the American Stock Exchange or are
approved for quotation on the NASDAQ National Market System and which offering
shall have resulted in the receipt by the Company and any selling stockholders
of aggregate cash proceeds (after deduction of underwriter discounts and the
costs associated with the offerings) of at least $37.5 million.
12. Specific Performance. In the event of any controversy concerning
--------------------
the rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be cumulative and nonexclusive and shall be in addition
to any other remedy to which the parties may be entitled.
13. Waiver. The failure of either party to insist, in any one or
------
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
14. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed by registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the address indicated by the stock records of the Company, or at
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally, three days
after deposit in the U.S. mail, on the date of delivery by facsimile, and one
day after deposit with a reputable overnight courier service.
15. Severability. In the event that any provision shall be held to
------------
be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable, and
enforceable.
16. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
17. Governing Law. The corporate law of the State of Delaware shall
-------------
govern all issues concerning the relative rights
14
<PAGE>
of the Company, Executive, and the Sponsor Holders related to the Executive
Securities. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Illinois.
18. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
19. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
20. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Executive's
heirs, beneficiaries, and legal representatives. It is agreed that the rights
and obligations of Executive may not be delegated or assigned except as
specifically set forth in this Agreement. In the event of a sale of all or
substantially all the Company's stock or assets, or consolidation or merger of
the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder.
21. Limitation as to Partial Purchase. Notwithstanding the
---------------------------------
provisions of Sections 5 and 6 hereof, if less than all of the Executive
Securities will be purchased under Sections 5 or 6, at the request of either the
purchaser or purchasers or the Executive, the aggregate consideration to be paid
shall be applied as follows: 63% of the consideration shall be used to purchase
shares of Common Stock and 37% shall be used to purchase shares of Preferred
Stock.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date set forth above.
WINGATE PARTNERS, L.P.,
By: Wingate Management Company, L.P., its
general partner
By:___________________________
Thomas W. Sturgess,
general partner
ASI PARTNERS, L.P.,
By: Cumberland Capital Corporation, its
general partner
By:___________________________
Gary G. Miller,
President
ASSOCIATED HOLDINGS, INC.
By:___________________________
Thomas W. Sturgess,
Chairman and Chief
Executive Officer
Address:
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Attn: Chairman of the Board
Telecopy: 214-871-8799
16
<PAGE>
------------------------------------
Daniel J. Schleppe
Address:
20 The Landing
Atlanta, Georgia 30350
<TABLE>
<CAPTION>
Number Purchase Price
------ --------------
<S> <C> <C>
Common Shares (Wingate Portion) 6,688 $ 66,880
Preferred Shares (Wingate Portion) 40 $ 40,000
Common Shares (ASI Portion) 2,600 $ 26,000
Preferred Shares (ASI Portion) 14.5 $ 14,500
Totals ------ --------
(Common) 9,288 $147,380
(Preferred) 54.5
</TABLE>
17
<PAGE>
The undersigned, being the spouse of the Executive as of the date
hereof, executes and delivers this Agreement to evidence her understanding of
and intent to be bound by the provisions of this Agreement to the extent
applicable to her and her rights and obligations.
______________________________
[Spouse of Executive]
18
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A - 1992 Management Stock Option Plan
- ---------
Exhibit B - Option Agreement
- ---------
Exhibit C - Allocation of Options
- ---------
Exhibit D - Registration Rights Agreement
- ---------
Exhibit E - Voting Trust Agreement
- ---------
Exhibit F - Stockholders Agreement
- ---------
19
<PAGE>
EXHIBIT C
---------
Allocation of Options
---------------------
<TABLE>
<CAPTION>
Percentage
-----------
<S> <C>
Michael D. Rowsey 30.8
Daniel J. Schleppe 26.2
Robert D. Eberspacher 23.8
Lawrence E. Miller 19.2
-----
100.0%
</TABLE>
20
<PAGE>
ASSOCIATED HOLDINGS, INC.
EXECUTIVE STOCK PURCHASE AGREEMENT
----------------------------------
This EXECUTIVE STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 31, 1992, and is by and among WINGATE PARTNERS, L.P.,
a Delaware limited partnership ("Wingate"), ASI PARTNERS, L.P., a Delaware
limited partnership ("ASI"), ASSOCIATED HOLDINGS, INC., a Delaware corporation
(the "Company"), and Michael D. Rowsey ("Executive").
Executive desires to purchase, and Wingate and ASI desire to sell,
shares of Class A Common Stock, par value $0.01 per share ("Common Stock"), and
Class A Preferred Stock, par value $0.01 per share ("Preferred Stock"), of the
Company upon the terms and subject to the conditions contained herein.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set forth
-----------------
herein, each of Wingate and ASI severally agrees to sell, and the Executive
agrees to purchase, the number of shares of Common Stock and the number of
shares of Preferred Stock set forth below the Executive's name on the signature
page hereto for the respective purchase prices also set forth below the
Executive's name on the signature page hereto. The number of shares of Common
Stock and Preferred Stock to be sold by Wingate is herein called the "Wingate
Portion" and the number of shares of Common Stock and Preferred Stock to be sold
by ASI is herein called the "ASI Portion." Executive acknowledges and
understands that each of Wingate and ASI have borrowed funds (the "Loans") in
order to purchase the Wingate Portion and ASI Portion at the closing of the
acquisition by the Company and its wholly-owned subsidiary, Associated
Stationers, Inc. ("Stationers"), of the business and assets of the wholesale
division of Boise Cascade Office Products Corporation (the "Acquisition
Closing"). Accordingly, at the Closing (as defined below), in addition to the
payment of the purchase price paid by Executive for the Wingate Portion and the
ASI Portion, the Executive shall reimburse each of Wingate and ASI for the
interest costs of the Loans incurred by them from the date of the Loans until
the Closing (the "Borrowing Costs"). Additionally, the Executive may allocate
all or a portion of the Common Stock and/or Preferred Stock to be purchased
hereunder to one or more individual retirement account or accounts of the
Executive (collectively, the "IRA"). For purposes of this Agreement, all
references to Executive herein shall include reference to his IRA to the extent
appropriate.
1
<PAGE>
2. Closing.
-------
(a) The purchase and sale of the shares of Common Stock and
Preferred Stock contemplated above will take place at a closing (the "Closing")
at a place or places mutually acceptable to the Executive, Wingate, and ASI and
shall occur on a date not later than June 1, 1992; provided the Executive shall
have the right to extend the Closing two times for a period of not greater than
30 days each time by giving written notice of such requested extension to each
of Wingate and ASI at their respective addresses set forth on the signature
pages hereto at least two days prior to the then scheduled date for Closing, but
in no event shall the Closing take place later than July 31, 1992. If any and
all conditions to the Executive's obligation to purchase, and Wingate's and
ASI's obligation to sell, hereunder have been satisfied or waived as of the date
set for Closing, if and as extended as provided above, then any rights of the
Executive to purchase all or any amount of the Wingate Portion and/or the ASI
Portion shall terminate and be of no further force or effect if the Executive
fails to purchase the Wingate Portion and the ASI portion on the date set for
Closing, if and as extended as provided above.
(b) The Executive shall, at the Closing, deliver by wire transfer
to an account or accounts designated by Wingate and ASI same day federal funds
in an amount equal to the purchase price of the Wingate Portion and the ASI
Portion, respectively, purchased by the Executive pursuant to this Agreement.
(c) Upon such purchase, Wingate and ASI shall cause the Company
to deliver to the Executive, against payment of the purchase price therefor, a
certificate representing the shares of Common Stock and a certificate
representing the shares of Preferred Stock purchased by the Executive hereunder.
Such certificates shall be registered in the name of the Executive. The
Executive shall deposit the certificate or certificates representing such shares
of Common Stock in trust pursuant to the Voting Trust Agreement (as hereinafter
defined) and voting trust certificates shall be issued in respect thereof in
accordance with the terms and provisions of the Voting Trust Agreement.
(d) Any tax imposed on the issuance of the shares of Common Stock
or the shares of Preferred Stock purchased by the Executive hereunder will be
paid by the Company at Closing.
3. Representations, Warranties, and Certain Agreements of the
----------------------------------------------------------
Executive. The Executive understands and agrees with the Company, Wingate, and
- ---------
ASI that the offering and sale of the Common Stock and Preferred Stock to the
Executive hereunder is intended to be exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") by virtue of the
2
<PAGE>
provisions of Section 4(2) of the Securities Act and Rule 506 of Regulation D
thereunder, and that there is no existing public or other market for the Common
Stock or the Preferred Stock and there can be no assurance that the Executive
will be able to sell or otherwise dispose of all or any portion of the Common
Stock or the Preferred Stock. In that regard, the Executive hereby represents
and warrants to, and agrees with, the Company, Wingate, and ASI that:
(a) Executive is an "accredited investor" as such term is defined
in Rule 501 of Regulation D under the Securities Act.
(b) Executive has such knowledge and experience in financial and
business matters that Executive is capable of evaluating the merits and risks of
an investment in the Common Stock and Preferred Stock; has all information
deemed by Executive to be necessary or appropriate to evaluate the risks and
merits of an investment in the Common Stock and Preferred Stock; has had the
opportunity to ask questions of and receive answers from representatives of the
Company concerning the Company and the terms and conditions of the sale of the
Common Stock and Preferred Stock; has a financial condition such that Executive
is under no present need to dispose of any portion of the Common Stock and
Preferred Stock to satisfy any existing or contemplated undertaking or
indebtedness; and is able to bear the economic risk of an investment in the
Common Stock and Preferred Stock, including, without limiting the generality of
the foregoing, the risk of losing part or all of Executive's investment and the
possible inability to sell or transfer the Common Stock and Preferred Stock for
an indefinite period of time.
(c) Executive is acquiring the Common Stock and Preferred Stock
for Executive's own account for investment, and not with a view to, or for
resale in connection with, any distribution thereof within the meaning of the
Securities Act.
(d) Executive understands that the Common Stock and Preferred
Stock have not been registered under the Securities Act or any blue sky or other
state securities law or regulation (hereinafter collectively referred to as
"blue sky laws") in reliance, in part, upon the representations, warranties, and
covenants contained herein. Executive also understands that Executive cannot
offer for sale, sell, or transfer any of the Common Stock and Preferred Stock
unless such offer, sale, or transfer has been registered under the Securities
Act and under any applicable blue sky laws or unless an exemption from such
registration is available with respect to any such proposed offer, sale, or
transfer. Executive further understands that the Company is under no obligation
to register the Common Stock and Preferred Stock in the future .
3
<PAGE>
(e) Executive agrees and acknowledges that a restrictive legend
may be placed on certificates representing any or all of the Common Stock and
Preferred Stock and that transfer of any or all of such Common Stock and
Preferred Stock may be refused by the Company or its transfer agent, if any,
unless such Common Stock and Preferred Stock for which transfer is sought is
registered under the Securities Act and all other applicable federal securities
or blue sky laws and such laws are complied with or unless Executive provides
information satisfactory to the Company that such registration is not required.
(f) Executive agrees to indemnify and hold the Company, Wingate,
and ASI harmless from and against all losses, costs, liabilities, and expenses
suffered or incurred by the Company, Wingate, or ASI and arising out of or
related to the resale or distribution by the Executive of any Common Stock and
Preferred Stock in violation of the Securities Act or any other applicable
federal securities laws or blue sky laws.
4. Securities Subject to Agreement. (a) In addition to any Common
-------------------------------
Stock and Preferred Stock purchased by the Executive hereunder, the Company has
granted and may hereafter grant to the Executive, options under the Company's
1992 Management Stock Option Plan, a copy of which is attached hereto as
Exhibit A (the "Plan") entitling the Executive to purchase additional shares of
- ---------
Common Stock at the price of $10.00 per share (the "Options") and subject to the
terms and conditions set forth in the Option Agreement attached hereto as
Exhibit B (the "Option Agreement"). This Agreement, and the restrictions and
- ---------
limitations contained herein, applies to all Common Stock and Preferred Stock
now owned or hereafter acquired by the Executive (through purchase hereunder or
exercise of all or any portion of the Options), any voting trust certificates
issued or issuable to Executive pursuant to the Voting Trust Agreement (the
"Voting Trust Agreement") dated as of January 31, 1992 among the Company, the
Voting Trustees named therein, and certain beneficial owners of Common Stock of
the Company identified therein and who may become parties thereto, and any
shares of Common Stock or Preferred Stock otherwise acquired by Executive,
including any Common Stock issued with respect to Common Stock owned by
Executive by way of a stock split, stock dividend, recapitalization or
otherwise. All such Common Stock, Preferred Stock, and voting trust certificates
to which this Agreement applies are herein collectively called the "Executive
Securities." Executive Securities will continue to be Executive Securities in
the hands of any other holder (except for the Company, any subsidiary of the
Company, any Sponsor Holder [as defined below] or transferees in a public sale)
and each such other holder of Executive Securities will succeed to all of the
rights and obligations of the Executive pursuant to Section 5 hereof. As used
herein, the term "Sponsor Holder" shall mean each of Wingate and its affiliates
and ASI and its affiliates.
4
<PAGE>
(b) As of the date hereof the Company shall, pursuant to Option
Agreements, grant to the Key Executives (as defined below) Options to purchase
an aggregate number of shares of Common Stock equal to 21,684 and allocated as
set forth on Exhibit C hereto (the "First Options"). The Company agrees that
---------
within four years from the date hereof it shall grant to the Key Executives or
any successor officers to the Key Executives an Option or Options to purchase an
additional aggregate number of shares of Common Stock equal to 21,684 (subject
to the anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The exercise price
for the Common Stock subject to the Second Options shall be $10.00 per share for
each Key Executive, but, unless otherwise determined by the Board, shall be the
fair market value of each such share for any successor officer to a Key
Executive. As used herein, the term "Key Executives" shall collectively mean
Michael D. Rowsey, Daniel J. Schleppe, Robert W. Eberspacher, and Lawrence E.
Miller.
(c) The Second Options shall be granted under the same form of
option agreement as the Option Agreement, except for the number of shares and
except that vesting shall be in increments of 25% on the four succeeding
anniversaries of the date of grant. If the Second Options have not been granted
in full at the time of a Major Transaction (as defined in the Option
Agreements), any ungranted Second Options shall be treated as having been
granted to the Key Executives in proportion to the number of shares originally
covered by the First Options and the Key Executives shall receive the special
distributions contemplated by Section 2 of the Option Agreement.
5. Repurchase Right of the Company.
-------------------------------
(a) In the event the Executive dies, retires, becomes Disabled
(as defined below) or ceases to be employed or retained by the Company or one of
its subsidiaries or other affiliates, for any reason (a "Termination"), the
Executive Securities (whether held by Executive or one or more of Executive's
transferees) will be subject to repurchase by the Company, and, if applicable,
one or more of the Sponsor Holders (as determined by subparagraph (f), below)
pursuant to the terms and conditions set forth in this Section 5 (the
"Repurchase Right"). As used herein, the term "Disabled" shall mean the
Executive's inability, due to illness, accident, injury, physical or mental
incapacity or other disability, effectively to carry out his duties and
obligations to the Company as an employee thereof or to participate effectively
and actively in the management of the Company for 90 consecutive days or shorter
periods aggregating at least 180 days (whether or not consecutive) during any
twelve-month period.
5
<PAGE>
(b) The purchase price for each share of Common Stock included in
the Executive Securities will be the net book value thereof at the date of such
Termination; provided, however, that if the Repurchase Right is triggered by a
Termination constituting a Special Termination Event (as defined below) then the
purchase price for each such share of Common Stock will be the fair market value
thereof (as determined in good faith by the Board of Directors of the Company)
as of the date of such Special Termination Event. As used herein, the term
"Special Termination Event" shall mean (i) the death of the Executive, (ii) the
retirement by the Executive at or after age 59, (iii) a termination by
Stationers of the Executive's employment under the Employment Agreement dated as
of the date hereof between Stationers and the Executive without Cause (as such
term is defined in such Employment Agreement), (iv) a termination of employment
due to the Executive becoming Disabled, or (v) a termination of employment
(other than for Cause) at a time that there is a public market for shares of
Common Stock of the Company.
(c) The purchase price for each share of Preferred Stock included
in the Executive Securities with respect to the Company's exercise of the
Repurchase Right in connection with any Termination shall be the redemption
value of $1,000 per share plus any accrued but unpaid dividends thereon, subject
to appropriate adjustment in the event of a stock split, reverse stock split or
similar transaction (the "Preferred Stock Price").
(d) The purchase price for any vested share of Common Stock
covered by an Option ("Option Share") included in the Executive Securities with
respect to the Company's exercise of the Repurchase Right shall be equal to the
product of (i) the price which would apply to a share of Common Stock
(determined by the method set forth in subparagraph (b) above) minus the
exercise price therefor and (ii) the number of Option Shares which may be
acquired at the time of such purchase, according to the vesting and exercise
schedule in the Option Agreement or other option agreement entered into by the
Executive (the "Option Share Price").
(e) The Company shall have a first option to acquire the
Executive Securities pursuant to the Repurchase Right and may elect to purchase
all or any portion of the Executive Securities included therein by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Securities within 30 days after the Termination or, in case of the
death of the Executive, within 30 days after the Company first becomes aware of
the Executive's death. The Repurchase Notice shall set forth the amount and
price of the Executive Securities to be acquired from such holder or holders,
the aggregate consideration to be paid for such Executive Securities and the
time and place for the closing of the transaction. The
6
<PAGE>
Executive Securities to be repurchased by the Company first shall be satisfied
to the extent possible from the Executive Securities held by the Executive (or
the Executive's estate) at the time of delivery of the Repurchase Notice. If
the Executive Securities then held by the Executive (or the Executive's estate)
are less than the Executive Securities the Company has elected to purchase, the
Company shall purchase the remaining Executive Securities from the transferee
holder(s) of the Executive Securities pro rata according to the amount held by
such transferee holder(s) at the time of delivery of such Repurchase Notice
(determined as nearly as practicable to the nearest full share).
(f) If for any reason the Company does not elect to purchase all
of the Executive Securities pursuant to the Repurchase Right, the Sponsor
Holders who qualify as "accredited investors" under Regulation D of the
Securities Act (the "Accredited Holders") may exercise the Repurchase Right for
the Executive Securities the Company has not elected to purchase (the "Available
Securities"). As soon as practicable after the Company has determined that there
will be Available Securities, the Company shall give written notice (the
"Company Notice") to the Accredited Holders, setting forth the amount and nature
of Available Securities and the purchase price for the Available Securities.
Each of the Accredited Holders may select the amount and type of the Available
Securities (if any) that such Accredited Holder elects to purchase by giving
written notice thereof to the Company within 20 days after the Company Notice
has been given to such Accredited Holder by the Company. If the Accredited
Holders collectively select a number of shares of Available Securities greater
than the amount of Available Securities available, then all Available Securities
shall be allocated pro rata among the Accredited Holders electing to
participate, based upon the number of shares of each type of Executive
Securities subscribed for by each such Accredited Holder. As soon as
practicable, and in any event within 5 days after the expiration of the 20-day
period set forth above, the Company shall notify each proposed transferor of
Executive Securities as to the number of shares of Executive Securities being
purchased from such transferor by the Company and each Accredited Holder (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice, the Company also shall deliver written notice to
the Accredited Holders electing to participate, setting forth the type and
number of shares of Executive Securities the Accredited Holders electing to
participate are entitled to purchase, the aggregate purchase price and the time
and place of the closing of the transaction.
(g) The closing of the purchase of the Executive Securities
pursuant to any exercise of the Repurchase Right shall take place on the latest
date designated by the Company in the
7
<PAGE>
Repurchase Notice or Supplemental Repurchase notice, which date shall not be
more than 30 days nor less than 10 days after the delivery of the later of
either such notice to be delivered. The Company and/or the Accredited Holders
electing to participate shall pay for the Executive Securities to be purchased
pursuant to the Repurchase Right in cash by a bank cashier's check, certified
check or by wire transfer. If at the time of consummation of any exercise of a
Repurchase Right by the Company, the terms and provisions of the credit
facilities of the Company or of its subsidiary, Associated Stationers, Inc.
("Stationers"), effectively prevent the Company from paying the purchase price
for the Executive Securities to be purchased in cash, then the portion of such
purchase price in excess of the amount the Company is so permitted to pay in
cash, if any (the "Excess Amount"), may be paid by the Company by delivery of
the Company's subordinated promissory note or notes, which note or notes in the
aggregate shall (i) be payable in seven equal annual installments of principal
payable on each of the first seven anniversaries of such purchase, (ii) be
prepayable at any time in the inverse order of maturity without any penalty,
(iii) bear interest at the applicable long-term federal rate in effect at the
time of the issuance of the note or notes (plus 100 basis points), and (iv) be
subordinated in right of payment and upon liquidation to any senior indebtedness
of the Company and/or Stationers. Accrued interest on the note or notes will be
payable on the dates that the installments of principal are payable.
Notwithstanding anything in this subsection to the contrary, any payments under
the subordinated notes described above shall be subject to any restrictions or
limitations on such payments contained in (i) the Debt Agreements (as defined
below) and (ii) any and all applicable state and federal laws, rules, and
regulations or in any and all orders of any state or federal governmental
authority. As used herein the term "Debt Agreements" shall mean the Credit
Agreement dated as of January 31, 1992 among the Company, Associated Stationers,
Inc., The Chase Manhattan Bank (National Association), as agent, and the lenders
which become parties thereto and the notes and other documents and instruments
executed and delivered in connection therewith, as such Credit Agreement and
notes and other documents and instruments may from time to time be amended or
supplemented, and any agreements evidencing any renewal, extension, refinancing,
refunding or replacement thereof.
(h) In the event of the termination of a marital relationship of
the Executive and his spouse by divorce or annulment and the Executive does not
acquire all Executive Securities or interests therein ("Divorce Securities")
awarded to his spouse (the "Divorced Spouse") within 30 days from the date such
Divorce Securities are so awarded (the "Divorce Securities Determination Date"),
then the Executive shall give the Company written notice of such Divorce
Securities Determination Date within 20 days thereof (the "Divorce Notice"),
which notice shall
8
<PAGE>
describe the Divorce Securities passing to the Divorced Spouse in connection
therewith. Upon receipt of the Divorce Notice, the Company shall have the
option to purchase any and all Divorce Securities awarded to the Divorced Spouse
(the "Divorce Call Right").
(i) The purchase price for each share of Common Stock included
in the Divorce Securities to be repurchased by the Company pursuant to any
exercise of the Divorce Call Right at any time shall be the net book value
thereof at the date of the exercise of the Divorce Call Right by the
Company.
(ii) The purchase price for each share of Preferred Stock
included in the Divorce Securities with respect to the Company's exercise
of the Divorce Call Right at any time shall be equal to the Preferred Stock
Price.
(iii) The purchase price for any vested Option Share included in
the Divorce Securities with respect to the Company's exercise of the
Divorce Call Right at any time shall be equal to the Option Share Price.
(iv) Within 30 days after the date the Company receives the
Divorce Notice, the Company shall notify the Divorced Spouse in writing
(the "Company Divorce Election Notice") of the number of Divorce Securities
that the Company desires to purchase and the date for the closing of such
purchase which shall not be more than 60 days nor less than 10 days after
the date the Divorced Spouse receives the Company Divorce Election Notice.
(v) At the closing of the purchase by the Company of any Divorce
Securities hereunder, the Company shall pay the applicable purchase price
therefor in the same manner and on the same terms and conditions as set
forth in Section 5(a) hereof.
6. Executive Put Rights.
--------------------
(a) In the event the Executive dies, retires at or after age 59,
or becomes Disabled (each a "Put Termination Event"), the Executive or his
estate, as applicable (for purposes of this Section 6 all references to the
"Executive" shall include reference to his estate if applicable), may require
the Company to repurchase any or all of the Executive Securities then held by
the Executive (the "Executive Put Right").
(b) The purchase price for each share of Common Stock included in
the Executive Securities to be put to the Company pursuant to any exercise of
the Executive Put Right at any time will be the fair market value thereof (as
determined in
9
<PAGE>
good faith by the Board of Directors of the Company) as of date of such Put
Termination Event.
(c) The purchase price for each share of Preferred Stock included
in the Executive Securities with respect to the Executive's exercise of the
Executive Put Right in connection with any Put Termination Event shall be equal
to the Preferred Stock Price.
(d) The purchase price for any vested Option Share included in
the Executive Securities with respect to the Executive's exercise of the
Executive Put Right at any time shall be equal to the Option Share Price.
(e) To effectively exercise an Executive Put Right hereunder, the
Executive shall give the Company written notice (the "Executive Put Notice") to
the Company within 90 days after a Put Termination Event. The Executive Put
Notice shall set forth the amount and price of the Executive Securities to be
put to the Company. Within 60 days after the receipt by the Company of the
Executive Put Notice, the Company shall notify the Executive of the
determination by the Board of Directors of the Company of the fair market value
of any Common Stock included in the Executive Securities (the "Company Put
Response"). Within 20 days after the receipt by the Executive of the Company
Put Response, the Executive shall notify the Company in writing (the
"Supplemental Executive Put Notice") of his election to either (i) consummate
the proposed Executive Put Right based on the fair market value of the Common
Stock included in the proposed Executive Securities as determined by the Board
of Directors of the Company; (ii) withdraw the Common Stock included in the
Executive Securities from the exercise of the proposed Executive Put Right and
continue to put Executive Securities, other than Common Stock, to the Company
pursuant to the proposed exercise of the Executive Put Right; or (iii) withdraw
all Executive Securities proposed to put to the Company pursuant to the proposed
exercise of the Executive Put Right. The Supplemental Executive Put Notice
shall also set forth the closing date for the consummation of any such exercise
of the Executive Put Right. The closing of the purchase of the Executive
Securities pursuant to an exercise of the Executive Put Right shall take place
on the date designated in the Supplemental Executive Put Notice, which date
shall not be more than 60 days nor less than 10 days after the delivery thereof
to the Company. The Company shall be obligated to pay for the Executive
Securities described in the Supplemental Executive Put Notice on the same terms
and conditions as set forth in Section 5(g) hereof.
(f) The Executive Put Right described in this Section 6 shall be
considered personal to the Executive and shall not be transferrable to any
purchaser or other holder of any
10
<PAGE>
Executive Securities other than the Executive's estate and the personal
representative or administrator thereof.
7. Ancillary Agreements. At Closing, the Executive agrees to
--------------------
execute and deliver to and for the benefit of the Company, Stationers, and/or
the other parties thereto, the Option Agreement attached hereto as Exhibit B,
---------
the Registration Rights Agreement attached hereto as Exhibit D, the Voting Trust
---------
Agreement attached hereto as Exhibit E, and the Stockholders Agreement attached
---------
hereto as Exhibit F (such agreements being collectively referred to herein as
---------
the "Ancillary Agreements" and individually as an "Ancillary Agreement").
8. Additional Covenants of the Company. In addition to the other
-----------------------------------
covenants and agreements of the Company contained herein the Company agrees, and
agrees to cause Stationers, if applicable, to comply with the following
agreements.
(a) The Company understands that the Key Executives as a group
have engaged the law firm of Jones, Day, Reavis & Pogue as legal counsel to the
Key Executives. The Company has been advised that Boise Cascade Corporation or
one or more of its affiliates (collectively, "Boise") has agreed to reimburse
the Key Executives, as a group, for the first $15,000 of the legal fees and the
costs and expenses associated therewith incurred by the Key Executives in
connection with the Key Executives' participation in the acquisition by the
Company and Stationers of the properties, assets, and business of Boise Cascade
Office Products Corporation associated with or otherwise relating to its
wholesale division and the equity and debt financing transactions associated
therewith (collectively, the "Acquisition"). The Company hereby agrees to
reimburse, or cause Stationers to reimburse, the Key Executives, as a group, for
all legal fees, costs, and expenses of Jones, Day, Reavis & Pogue incurred by
the Key Executives, as a group, in connection with their participation in the
Acquisition which are in excess of the first $15,000 so incurred and up to an
additional $15,000 in the aggregate, subject to verification and approval by the
Company. Any portion of such legal fees, costs, and expenses in excess of
$30,000 or for which the Key Executives do not receive reimbursement from Boise
as contemplated shall not be the responsibility of the Company or Stationers.
(b) The initial chief financial officer of Stationers hired by
the board of directors of Stationers shall be given the opportunity to purchase
shares of Common Stock and Preferred Stock of the Company in the same ratio as
the Executive and for the purchase price of not less than the fair market value
of such shares at the time of purchase, as determined in good faith by the board
of directors of the Company. The maximum dollar amount of the shares of Common
Stock and Preferred Stock to be reserved for purchase by such initial chief
financial
11
<PAGE>
officer shall be no more than $147,500. Any purchase of shares of Common Stock
and Preferred Stock of the Company by such initial chief financial officer shall
dilute all holders of Common Stock and Preferred Stock on a ratable basis.
(c) The Company and/or Stationers shall pay all closing fees
payable to the senior lenders to Stationers and the Company and shall pay
closing fees aggregating not more than $1,500,000 to the Sponsor Holders and
Good Capital Co., Inc. After the Closing, the total amount of all management,
directors, and other recurrent fees payable by the Company or Stationers to the
Sponsor Holders and Good Capital Co., Inc. will not exceed $350,000 to Wingate
Partners, L.P. and a total of $150,000 to Cumberland Capital Corporation and
Good Capital Co., Inc., unless escalated in good faith by the board of directors
of the Company. If there is an extraordinary transaction affecting the Company,
such as a recapitalization, refinancing or sale, the board of directors of the
Company may retain the services of one or more of such parties in connection
therewith if it determines that the services and fee structure therefor will be
fair to the Company.
(d) The Company will, at Closing, provide to Michael D. Rowsey,
as the representative of each Key Executive, complete information and
documentation concerning the following matters and all other matters material to
the Key Executives' investment in the Company and employment with Stationers:
(i) the various classes of Common Stock and Preferred Stock
and warrants to be issued in respect thereof, including the purchase price
for such Common Stock and Preferred Stock and the exercise prices in
respect of the warrants;
(ii) all fees and expenses arising in respect of the
Acquisition and any subsequent management or other fees including those to
be paid to the Sponsor Holders or their affiliates;
(iii) loan agreements and other financing documents;
(iv) any other material agreements to be executed or
commitments made as a part of the transaction; and
(v) available business plans and projections.
9. Conditions Precedent to Obligation of the Executive. The
---------------------------------------------------
obligation of the Executive to purchase the Common Stock and Preferred Stock to
be purchased by the Executive
12
<PAGE>
hereunder is subject, at the Closing, to the satisfaction or waiver by Executive
of the following conditions:
(a) The Company shall have performed and complied with the
covenants and agreements contained in this Agreement required to be performed
with and complied with by the Company prior to or at the Closing.
(b) The Executive shall have received a counterpart of this
Agreement and each Ancillary Agreement, duly executed and delivered by Holdings
and/or Stationers, as applicable.
10. Conditions Precedent to Obligation of Wingate and ASI. The
-----------------------------------------------------
obligations of Wingate and ASI, to sell the Wingate Portion and the ASI Portion
to be sold to the Executive hereunder is subject, at the Closing, to the
satisfaction or waiver by the Company of the following conditions:
(a) All representations and warranties made by the Executive
herein shall be true and correct as of the Closing with the same effect as if
such representations and warranties had been made as of the Closing.
(b) The Executive shall have performed and complied with the
covenants and agreements contained herein required to be performed with and
complied with by the Executive prior to or at the Closing.
(c) The Acquisition and all transactions contemplated thereby
shall have been consummated as of the Acquisition Closing.
(d) The Company, Wingate, and ASI shall have received the opinion
of counsel described in Section 8(a) above in form and substance satisfactory to
the Company, Wingate, and ASI to the effect that any IRA purchaser hereunder is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
under the Securities Act and covering such other matters as are reasonably
requested by the Company.
11. Termination. The rights and obligations of the Company, the
-----------
Sponsor Holders, and/or the Executive relating to repurchases of Executive
Securities pursuant to the provisions of Sections 5 and 6 hereof shall terminate
(i) upon the consummation of a Qualified Public Offering (as defined below);
(ii) upon the written consent of the Company and the holders of 66-2/3% or more
of the Executive Securities; or (iii) in any event, the earlier of 10 years from
the date hereof or the dissolution of the Company. As used herein, the term
"Qualified Public Offering" shall mean the sale in an underwritten public
offering or a series of public offerings, registered under the Securities Act,
13
<PAGE>
of Common Stock which results in the public ownership of not less than 20% of
the Common Stock of the Company on a fully-diluted basis, which shares of Common
Stock are listed upon the New York Exchange, the American Stock Exchange or are
approved for quotation on the NASDAQ National Market System and which offering
shall have resulted in the receipt by the Company and any selling stockholders
of aggregate cash proceeds (after deduction of underwriter discounts and the
costs associated with the offerings) of at least $37.5 million.
12. Specific Performance. In the event of any controversy concerning
--------------------
the rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be cumulative and nonexclusive and shall be in addition
to any other remedy to which the parties may be entitled.
13. Waiver. The failure of either party to insist, in any one or
------
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
14. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed by registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the address indicated by the stock records of the Company, or at
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally, three days
after deposit in the U.S. mail, on the date of delivery by facsimile, and one
day after deposit with a reputable overnight courier service.
15. Severability. In the event that any provision shall be held to
------------
be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable, and
enforceable.
16. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
17. Governing Law. The corporate law of the State of Delaware shall
-------------
govern all issues concerning the relative rights
14
<PAGE>
of the Company, Executive, and the Sponsor Holders related to the Executive
Securities. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Illinois.
18. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
19. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
20. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Executive's
heirs, beneficiaries, and legal representatives. It is agreed that the rights
and obligations of Executive may not be delegated or assigned except as
specifically set forth in this Agreement. In the event of a sale of all or
substantially all the Company's stock or assets, or consolidation or merger of
the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder.
21. Limitation as to Partial Purchase. Notwithstanding the
---------------------------------
provisions of Sections 5 and 6 hereof, if less than all of the Executive
Securities will be purchased under Sections 5 or 6, at the request of either the
purchaser or purchasers or the Executive, the aggregate consideration to be paid
shall be applied as follows: 63% of the consideration shall be used to purchase
shares of Common Stock and 37% shall be used to purchase shares of Preferred
Stock.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date set forth above.
WINGATE PARTNERS, L.P.,
By: Wingate Management Company, L.P., its
general partner
By:___________________________
Thomas W. Sturgess,
general partner
ASI PARTNERS, L.P.,
By: Cumberland Capital Corporation, its
general partner
By:___________________________
Gary G. Miller,
President
ASSOCIATED HOLDINGS, INC.
By:___________________________
Thomas W. Sturgess,
Chairman and Chief
Executive Officer
Address:
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Attn: Chairman of the Board
Telecopy: 214-871-8799
16
<PAGE>
------------------------
Michael D. Rowsey
Address:
2370 Sonnington Drive
Dublin, Ohio 43017
<TABLE>
<CAPTION>
Number Purchase Price
------ --------------
<S> <C> <C>
Common Shares (Wingate Portion) 6,688 $ 66,880
Preferred Shares (Wingate Portion) 40 $ 40,000
Common Shares (ASI Portion) 2,600 $ 26,000
Preferred Shares (ASI Portion) 14.5 $ 14,500
Totals _________ ___________
(Common) 9,288 $147,380
(Preferred) 54.5
</TABLE>
17
<PAGE>
The undersigned, being the spouse of the Executive as of the date
hereof, executes and delivers this Agreement to evidence her understanding of
and intent to be bound by the provisions of this Agreement to the extent
applicable to her and her rights and obligations.
______________________________
[Spouse of Executive]
18
<PAGE>
LIST OF EXHIBITS
----------------
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- 1992 Management Stock Option Plan
- -----------
Exhibit B -- Option Agreement
- -----------
Exhibit C -- Allocation of Options
- -----------
Exhibit D -- Registration Rights Agreement
- -----------
Exhibit E -- Voting Trust Agreement
- -----------
Exhibit F -- Stockholders Agreement
- -----------
</TABLE>
19
<PAGE>
EXHIBIT C
---------
Allocation of Options
---------------------
<TABLE>
<CAPTION>
Percentage
----------
<S> <C>
Michael D. Rowsey 30.8
Daniel J. Schleppe 26.2
Robert D. Eberspacher 23.8
Lawrence E. Miller 19.2
-----
100.0%
</TABLE>
20
<PAGE>
ASSOCIATED HOLDINGS, INC.
EXECUTIVE STOCK PURCHASE AGREEMENT
----------------------------------
This EXECUTIVE STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 31, 1992, and is by and among WINGATE PARTNERS, L.P.,
a Delaware limited partnership ("Wingate"), ASI PARTNERS, L.P., a Delaware
limited partnership ("ASI"), ASSOCIATED HOLDINGS, INC., a Delaware corporation
(the "Company"), and Lawrence E. Miller ("Executive").
Executive desires to purchase, and Wingate and ASI desire to sell,
shares of Class A Common Stock, par value $0.01 per share ("Common Stock"), and
Class A Preferred Stock, par value $0.01 per share ("Preferred Stock"), of the
Company upon the terms and subject to the conditions contained herein.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set forth
-----------------
herein, each of Wingate and ASI severally agrees to sell, and the Executive
agrees to purchase, the number of shares of Common Stock and the number of
shares of Preferred Stock set forth below the Executive's name on the signature
page hereto for the respective purchase prices also set forth below the
Executive's name on the signature page hereto. The number of shares of Common
Stock and Preferred Stock to be sold by Wingate is herein called the "Wingate
Portion" and the number of shares of Common Stock and Preferred Stock to be sold
by ASI is herein called the "ASI Portion." Executive acknowledges and
understands that each of Wingate and ASI have borrowed funds (the "Loans") in
order to purchase the Wingate Portion and ASI Portion at the closing of the
acquisition by the Company and its wholly-owned subsidiary, Associated
Stationers, Inc. ("Stationers"), of the business and assets of the wholesale
division of Boise Cascade Office Products Corporation (the "Acquisition
Closing"). Accordingly, at the Closing (as defined below), in addition to the
payment of the purchase price paid by Executive for the Wingate Portion and the
ASI Portion, the Executive shall reimburse each of Wingate and ASI for the
interest costs of the Loans incurred by them from the date of the Loans until
the Closing (the "Borrowing Costs"). Additionally, the Executive may allocate
all or a portion of the Common Stock and/or Preferred Stock to be purchased
hereunder to one or more individual retirement account or accounts of the
Executive (collectively, the "IRA"). For purposes of this Agreement, all
references to Executive herein shall include reference to his IRA to the extent
appropriate.
1
<PAGE>
2. Closing.
-------
(a) The purchase and sale of the shares of Common Stock and
Preferred Stock contemplated above will take place at a closing (the "Closing")
at a place or places mutually acceptable to the Executive, Wingate, and ASI and
shall occur on a date not later than June 1, 1992; provided the Executive shall
have the right to extend the Closing two times for a period of not greater than
30 days each time by giving written notice of such requested extension to each
of Wingate and ASI at their respective addresses set forth on the signature
pages hereto at least two days prior to the then scheduled date for Closing, but
in no event shall the Closing take place later than July 31, 1992. If any and
all conditions to the Executive's obligation to purchase, and Wingate's and
ASI's obligation to sell, hereunder have been satisfied or waived as of the date
set for Closing, if and as extended as provided above, then any rights of the
Executive to purchase all or any amount of the Wingate Portion and/or the ASI
Portion shall terminate and be of no further force or effect if the Executive
fails to purchase the Wingate Portion and the ASI portion on the date set for
Closing, if and as extended as provided above.
(b) The Executive shall, at the Closing, deliver by wire transfer
to an account or accounts designated by Wingate and ASI same day federal funds
in an amount equal to the purchase price of the Wingate Portion and the ASI
Portion, respectively, purchased by the Executive pursuant to this Agreement.
(c) Upon such purchase, Wingate and ASI shall cause the Company
to deliver to the Executive, against payment of the purchase price therefor, a
certificate representing the shares of Common Stock and a certificate
representing the shares of Preferred Stock purchased by the Executive hereunder.
Such certificates shall be registered in the name of the Executive. The
Executive shall deposit the certificate or certificates representing such shares
of Common Stock in trust pursuant to the Voting Trust Agreement (as hereinafter
defined) and voting trust certificates shall be issued in respect thereof in
accordance with the terms and provisions of the Voting Trust Agreement.
(d) Any tax imposed on the issuance of the shares of Common Stock
or the shares of Preferred Stock purchased by the Executive hereunder will be
paid by the Company at Closing.
3. Representations, Warranties, and Certain Agreements of the
----------------------------------------------------------
Executive. The Executive understands and agrees with the Company, Wingate, and
- ---------
ASI that the offering and sale of the Common Stock and Preferred Stock to the
Executive hereunder is intended to be exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") by virtue of the
2
<PAGE>
provisions of Section 4(2) of the Securities Act and Rule 506 of Regulation D
thereunder, and that there is no existing public or other market for the Common
Stock or the Preferred Stock and there can be no assurance that the Executive
will be able to sell or otherwise dispose of all or any portion of the Common
Stock or the Preferred Stock. In that regard, the Executive hereby represents
and warrants to, and agrees with, the Company, Wingate, and ASI that:
(a) Executive is an "accredited investor" as such term is defined
in Rule 501 of Regulation D under the Securities Act.
(b) Executive has such knowledge and experience in financial and
business matters that Executive is capable of evaluating the merits and risks of
an investment in the Common Stock and Preferred Stock; has all information
deemed by Executive to be necessary or appropriate to evaluate the risks and
merits of an investment in the Common Stock and Preferred Stock; has had the
opportunity to ask questions of and receive answers from representatives of the
Company concerning the Company and the terms and conditions of the sale of the
Common Stock and Preferred Stock; has a financial condition such that Executive
is under no present need to dispose of any portion of the Common Stock and
Preferred Stock to satisfy any existing or contemplated undertaking or
indebtedness; and is able to bear the economic risk of an investment in the
Common Stock and Preferred Stock, including, without limiting the generality of
the foregoing, the risk of losing part or all of Executive's investment and the
possible inability to sell or transfer the Common Stock and Preferred Stock for
an indefinite period of time.
(c) Executive is acquiring the Common Stock and Preferred Stock
for Executive's own account for investment, and not with a view to, or for
resale in connection with, any distribution thereof within the meaning of the
Securities Act.
(d) Executive understands that the Common Stock and Preferred
Stock have not been registered under the Securities Act or any blue sky or other
state securities law or regulation (hereinafter collectively referred to as
"blue sky laws") in reliance, in part, upon the representations, warranties, and
covenants contained herein. Executive also understands that Executive cannot
offer for sale, sell, or transfer any of the Common Stock and Preferred Stock
unless such offer, sale, or transfer has been registered under the Securities
Act and under any applicable blue sky laws or unless an exemption from such
registration is available with respect to any such proposed offer, sale, or
transfer. Executive further understands that the Company is under no obligation
to register the Common Stock and Preferred Stock in the future.
3
<PAGE>
(e) Executive agrees and acknowledges that a restrictive legend
may be placed on certificates representing any or all of the Common Stock and
Preferred Stock and that transfer of any or all of such Common Stock and
Preferred Stock may be refused by the Company or its transfer agent, if any,
unless such Common Stock and Preferred Stock for which transfer is sought is
registered under the Securities Act and all other applicable federal securities
or blue sky laws and such laws are complied with or unless Executive provides
information satisfactory to the Company that such registration is not required.
(f) Executive agrees to indemnify and hold the Company, Wingate,
and ASI harmless from and against all losses, costs, liabilities, and expenses
suffered or incurred by the Company, Wingate, or ASI and arising out of or
related to the resale or distribution by the Executive of any Common Stock and
Preferred Stock in violation of the Securities Act or any other applicable
federal securities laws or blue sky laws.
4. Securities Subject to Agreement. (a) In addition to any Common
-------------------------------
Stock and Preferred Stock purchased by the Executive hereunder, the Company has
granted and may hereafter grant to the Executive, options under the Company's
1992 Management Stock Option Plan, a copy of which is attached hereto as Exhibit
-------
A (the "Plan") entitling the Executive to purchase additional shares of Common
- -
Stock at the price of $10.00 per share (the "Options") and subject to the terms
and conditions set forth in the Option Agreement attached hereto as Exhibit B
---------
(the "Option Agreement"). This Agreement, and the restrictions and limitations
contained herein, applies to all Common Stock and Preferred Stock now owned or
hereafter acquired by the Executive (through purchase hereunder or exercise of
all or any portion of the Options), any voting trust certificates issued or
issuable to Executive pursuant to the Voting Trust Agreement (the "Voting Trust
Agreement") dated as of January 31, 1992 among the Company, the Voting Trustees
named therein, and certain beneficial owners of Common Stock of the Company
identified therein and who may become parties thereto, and any shares of Common
Stock or Preferred Stock otherwise acquired by Executive, including any Common
Stock issued with respect to Common Stock owned by Executive by way of a stock
split, stock dividend, recapitalization or otherwise. All such Common Stock,
Preferred Stock, and voting trust certificates to which this Agreement applies
are herein collectively called the "Executive Securities." Executive Securities
will continue to be Executive Securities in the hands of any other holder
(except for the Company, any subsidiary of the Company, any Sponsor Holder [as
defined below] or transferees in a public sale) and each such other holder of
Executive Securities will succeed to all of the rights and obligations of the
Executive pursuant to Section 5 hereof. As used herein, the term "Sponsor
Holder" shall mean each of Wingate and its affiliates and ASI and its
affiliates.
4
<PAGE>
(b) As of the date hereof the Company shall, pursuant to Option
Agreements, grant to the Key Executives (as defined below) Options to purchase
an aggregate number of shares of Common Stock equal to 21,684 and allocated as
set forth on Exhibit C hereto (the "First Options"). The Company agrees that
---------
within four years from the date hereof it shall grant to the Key Executives or
any successor officers to the Key Executives an Option or Options to purchase an
additional aggregate number of shares of Common Stock equal to 21,684 (subject
to the anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The exercise price
for the Common Stock subject to the Second Options shall be $10.00 per share for
each Key Executive, but, unless otherwise determined by the Board, shall be the
fair market value of each such share for any successor officer to a Key
Executive. As used herein, the term "Key Executives" shall collectively mean
Michael D. Rowsey, Daniel J. Schleppe, Robert W. Eberspacher, and Lawrence E.
Miller.
(c) The Second Options shall be granted under the same form of
option agreement as the Option Agreement, except for the number of shares and
except that vesting shall be in increments of 25% on the four succeeding
anniversaries of the date of grant. If the Second Options have not been granted
in full at the time of a Major Transaction (as defined in the Option
Agreements), any ungranted Second Options shall be treated as having been
granted to the Key Executives in proportion to the number of shares originally
covered by the First Options and the Key Executives shall receive the special
distributions contemplated by Section 2 of the Option Agreement.
5. Repurchase Right of the Company.
-------------------------------
(a) In the event the Executive dies, retires, becomes Disabled
(as defined below) or ceases to be employed or retained by the Company or one of
its subsidiaries or other affiliates, for any reason (a "Termination"), the
Executive Securities (whether held by Executive or one or more of Executive's
transferees) will be subject to repurchase by the Company, and, if applicable,
one or more of the Sponsor Holders (as determined by subparagraph (f), below)
pursuant to the terms and conditions set forth in this Section 5 (the
"Repurchase Right"). As used herein, the term "Disabled" shall mean the
Executive's inability, due to illness, accident, injury, physical or mental
incapacity or other disability, effectively to carry out his duties and
obligations to the Company as an employee thereof or to participate effectively
and actively in the management of the Company for 90 consecutive days or shorter
periods aggregating at least 180 days (whether or not consecutive) during any
twelve-month period.
5
<PAGE>
(b) The purchase price for each share of Common Stock included in
the Executive Securities will be the net book value thereof at the date of such
Termination; provided, however, that if the Repurchase Right is triggered by a
Termination constituting a Special Termination Event (as defined below) then the
purchase price for each such share of Common Stock will be the fair market value
thereof (as determined in good faith by the Board of Directors of the Company)
as of the date of such Special Termination Event. As used herein, the term
"Special Termination Event" shall mean (i) the death of the Executive, (ii) the
retirement by the Executive at or after age 59, (iii) a termination by
Stationers of the Executive's employment under the Employment Agreement dated as
of the date hereof between Stationers and the Executive without Cause (as such
term is defined in such Employment Agreement), (iv) a termination of employment
due to the Executive becoming Disabled, or (v) a termination of employment
(other than for Cause) at a time that there is a public market for shares of
Common Stock of the Company.
(c) The purchase price for each share of Preferred Stock included
in the Executive Securities with respect to the Company's exercise of the
Repurchase Right in connection with any Termination shall be the redemption
value of $1,000 per share plus any accrued but unpaid dividends thereon, subject
to appropriate adjustment in the event of a stock split, reverse stock split or
similar transaction (the "Preferred Stock Price").
(d) The purchase price for any vested share of Common Stock
covered by an Option ("Option Share") included in the Executive Securities with
respect to the Company's exercise of the Repurchase Right shall be equal to the
product of (i) the price which would apply to a share of Common Stock
(determined by the method set forth in subparagraph (b) above) minus the
exercise price therefor and (ii) the number of Option Shares which may be
acquired at the time of such purchase, according to the vesting and exercise
schedule in the Option Agreement or other option agreement entered into by the
Executive (the "Option Share Price").
(e) The Company shall have a first option to acquire the
Executive Securities pursuant to the Repurchase Right and may elect to purchase
all or any portion of the Executive Securities included therein by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Securities within 30 days after the Termination or, in case of the
death of the Executive, within 30 days after the Company first becomes aware of
the Executive's death. The Repurchase Notice shall set forth the amount and
price of the Executive Securities to be acquired from such holder or holders,
the aggregate consideration to be paid for such Executive Securities and the
time and place for the closing of the transaction. The
6
<PAGE>
Executive Securities to be repurchased by the Company first shall be satisfied
to the extent possible from the Executive Securities held by the Executive (or
the Executive's estate) at the time of delivery of the Repurchase Notice. If
the Executive Securities then held by the Executive (or the Executive's estate)
are less than the Executive Securities the Company has elected to purchase, the
Company shall purchase the remaining Executive Securities from the transferee
holder(s) of the Executive Securities pro rata according to the amount held by
such transferee holder(s) at the time of delivery of such Repurchase Notice
(determined as nearly as practicable to the nearest full share).
(f) If for any reason the Company does not elect to purchase all
of the Executive Securities pursuant to the Repurchase Right, the Sponsor
Holders who qualify as "accredited investors" under Regulation D of the
Securities Act (the "Accredited Holders") may exercise the Repurchase Right for
the Executive Securities the Company has not elected to purchase (the "Available
Securities"). As soon as practicable after the Company has determined that there
will be Available Securities, the Company shall give written notice (the
"Company Notice") to the Accredited Holders, setting forth the amount and nature
of Available Securities and the purchase price for the Available Securities.
Each of the Accredited Holders may select the amount and type of the Available
Securities (if any) that such Accredited Holder elects to purchase by giving
written notice thereof to the Company within 20 days after the Company Notice
has been given to such Accredited Holder by the Company. If the Accredited
Holders collectively select a number of shares of Available Securities greater
than the amount of Available Securities available, then all Available Securities
shall be allocated pro rata among the Accredited Holders electing to
participate, based upon the number of shares of each type of Executive
Securities subscribed for by each such Accredited Holder. As soon as
practicable, and in any event within 5 days after the expiration of the 20-day
period set forth above, the Company shall notify each proposed transferor of
Executive Securities as to the number of shares of Executive Securities being
purchased from such transferor by the Company and each Accredited Holder (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice, the Company also shall deliver written notice to
the Accredited Holders electing to participate, setting forth the type and
number of shares of Executive Securities the Accredited Holders electing to
participate are entitled to purchase, the aggregate purchase price and the time
and place of the closing of the transaction.
(g) The closing of the purchase of the Executive Securities
pursuant to any exercise of the Repurchase Right shall take place on the latest
date designated by the Company in the
7
<PAGE>
Repurchase Notice or Supplemental Repurchase notice, which date shall not be
more than 30 days nor less than 10 days after the delivery of the later of
either such notice to be delivered. The Company and/or the Accredited Holders
electing to participate shall pay for the Executive Securities to be purchased
pursuant to the Repurchase Right in cash by a bank cashier's check, certified
check or by wire transfer. If at the time of consummation of any exercise of a
Repurchase Right by the Company, the terms and provisions of the credit
facilities of the Company or of its subsidiary, Associated Stationers, Inc.
("Stationers"), effectively prevent the Company from paying the purchase price
for the Executive Securities to be purchased in cash, then the portion of such
purchase price in excess of the amount the Company is so permitted to pay in
cash, if any (the "Excess Amount"), may be paid by the Company by delivery of
the Company's subordinated promissory note or notes, which note or notes in the
aggregate shall (i) be payable in seven equal annual installments of principal
payable on each of the first seven anniversaries of such purchase, (ii) be
prepayable at any time in the inverse order of maturity without any penalty,
(iii) bear interest at the applicable long-term federal rate in effect at the
time of the issuance of the note or notes (plus 100 basis points), and (iv) be
subordinated in right of payment and upon liquidation to any senior indebtedness
of the Company and/or Stationers. Accrued interest on the note or notes will be
payable on the dates that the installments of principal are payable.
Notwithstanding anything in this subsection to the contrary, any payments under
the subordinated notes described above shall be subject to any restrictions or
limitations on such payments contained in (i) the Debt Agreements (as defined
below) and (ii) any and all applicable state and federal laws, rules, and
regulations or in any and all orders of any state or federal governmental
authority. As used herein the term "Debt Agreements" shall mean the Credit
Agreement dated as of January 31, 1992 among the Company, Associated Stationers,
Inc., The Chase Manhattan Bank (National Association), as agent, and the lenders
which become parties thereto and the notes and other documents and instruments
executed and delivered in connection therewith, as such Credit Agreement and
notes and other documents and instruments may from time to time be amended or
supplemented, and any agreements evidencing any renewal, extension, refinancing,
refunding or replacement thereof.
(h) In the event of the termination of a marital relationship of
the Executive and his spouse by divorce or annulment and the Executive does not
acquire all Executive Securities or interests therein ("Divorce Securities")
awarded to his spouse (the "Divorced Spouse") within 30 days from the date such
Divorce Securities are so awarded (the "Divorce Securities Determination Date"),
then the Executive shall give the Company written notice of such Divorce
Securities Determination Date within 20 days thereof (the "Divorce Notice"),
which notice shall
8
<PAGE>
describe the Divorce Securities passing to the Divorced Spouse in connection
therewith. Upon receipt of the Divorce Notice, the Company shall have the
option to purchase any and all Divorce Securities awarded to the Divorced Spouse
(the "Divorce Call Right").
(i) The purchase price for each share of Common Stock included
in the Divorce Securities to be repurchased by the Company pursuant to any
exercise of the Divorce Call Right at any time shall be the net book value
thereof at the date of the exercise of the Divorce Call Right by the
Company.
(ii) The purchase price for each share of Preferred Stock
included in the Divorce Securities with respect to the Company's exercise
of the Divorce Call Right at any time shall be equal to the Preferred Stock
Price.
(iii) The purchase price for any vested Option Share included in
the Divorce Securities with respect to the Company's exercise of the
Divorce Call Right at any time shall be equal to the Option Share Price.
(iv) Within 30 days after the date the Company receives the
Divorce Notice, the Company shall notify the Divorced Spouse in writing
(the "Company Divorce Election Notice") of the number of Divorce Securities
that the Company desires to purchase and the date for the closing of such
purchase which shall not be more than 60 days nor less than 10 days after
the date the Divorced Spouse receives the Company Divorce Election Notice.
(v) At the closing of the purchase by the Company of any
Divorce Securities hereunder, the Company shall pay the applicable purchase
price therefor in the same manner and on the same terms and conditions as
set forth in Section 5(a) hereof.
6. Executive Put Rights.
--------------------
(a) In the event the Executive dies, retires at or after age 59,
or becomes Disabled (each a "Put Termination Event"), the Executive or his
estate, as applicable (for purposes of this Section 6 all references to the
"Executive" shall include reference to his estate if applicable), may require
the Company to repurchase any or all of the Executive Securities then held by
the Executive (the "Executive Put Right").
(b) The purchase price for each share of Common Stock included in
the Executive Securities to be put to the Company pursuant to any exercise of
the Executive Put Right at any time will be the fair market value thereof (as
determined in
9
<PAGE>
good faith by the Board of Directors of the Company) as of date of such Put
Termination Event.
(c) The purchase price for each share of Preferred Stock included
in the Executive Securities with respect to the Executive's exercise of the
Executive Put Right in connection with any Put Termination Event shall be equal
to the Preferred Stock Price.
(d) The purchase price for any vested Option Share included in
the Executive Securities with respect to the Executive's exercise of the
Executive Put Right at any time shall be equal to the Option Share Price.
(e) To effectively exercise an Executive Put Right hereunder, the
Executive shall give the Company written notice (the "Executive Put Notice") to
the Company within 90 days after a Put Termination Event. The Executive Put
Notice shall set forth the amount and price of the Executive Securities to be
put to the Company. Within 60 days after the receipt by the Company of the
Executive Put Notice, the Company shall notify the Executive of the
determination by the Board of Directors of the Company of the fair market value
of any Common Stock included in the Executive Securities (the "Company Put
Response"). Within 20 days after the receipt by the Executive of the Company
Put Response, the Executive shall notify the Company in writing (the
"Supplemental Executive Put Notice") of his election to either (i) consummate
the proposed Executive Put Right based on the fair market value of the Common
Stock included in the proposed Executive Securities as determined by the Board
of Directors of the Company; (ii) withdraw the Common Stock included in the
Executive Securities from the exercise of the proposed Executive Put Right and
continue to put Executive Securities, other than Common Stock, to the Company
pursuant to the proposed exercise of the Executive Put Right; or (iii) withdraw
all Executive Securities proposed to put to the Company pursuant to the proposed
exercise of the Executive Put Right. The Supplemental Executive Put Notice
shall also set forth the closing date for the consummation of any such exercise
of the Executive Put Right. The closing of the purchase of the Executive
Securities pursuant to an exercise of the Executive Put Right shall take place
on the date designated in the Supplemental Executive Put Notice, which date
shall not be more than 60 days nor less than 10 days after the delivery thereof
to the Company. The Company shall be obligated to pay for the Executive
Securities described in the Supplemental Executive Put Notice on the same terms
and conditions as set forth in Section 5(g) hereof.
(f) The Executive Put Right described in this Section 6 shall be
considered personal to the Executive and shall not be transferrable to any
purchaser or other holder of any
10
<PAGE>
Executive Securities other than the Executive's estate and the personal
representative or administrator thereof.
7. Ancillary Agreements. At Closing, the Executive agrees to
--------------------
execute and deliver to and for the benefit of the Company, Stationers, and/or
the other parties thereto, the Option Agreement attached hereto as Exhibit B,
---------
the Registration Rights Agreement attached hereto as Exhibit D, the Voting Trust
---------
Agreement attached hereto as Exhibit E, and the Stockholders Agreement attached
---------
hereto as Exhibit F (such agreements being collectively referred to herein as
---------
the "Ancillary Agreements" and individually as an "Ancillary Agreement").
8. Additional Covenants of the Company. In addition to the other
-----------------------------------
covenants and agreements of the Company contained herein the Company agrees, and
agrees to cause Stationers, if applicable, to comply with the following
agreements.
(a) The Company understands that the Key Executives as a group
have engaged the law firm of Jones, Day, Reavis & Pogue as legal counsel to the
Key Executives. The Company has been advised that Boise Cascade Corporation or
one or more of its affiliates (collectively, "Boise") has agreed to reimburse
the Key Executives, as a group, for the first $15,000 of the legal fees and the
costs and expenses associated therewith incurred by the Key Executives in
connection with the Key Executives' participation in the acquisition by the
Company and Stationers of the properties, assets, and business of Boise Cascade
Office Products Corporation associated with or otherwise relating to its
wholesale division and the equity and debt financing transactions associated
therewith (collectively, the "Acquisition"). The Company hereby agrees to
reimburse, or cause Stationers to reimburse, the Key Executives, as a group, for
all legal fees, costs, and expenses of Jones, Day, Reavis & Pogue incurred by
the Key Executives, as a group, in connection with their participation in the
Acquisition which are in excess of the first $15,000 so incurred and up to an
additional $15,000 in the aggregate, subject to verification and approval by the
Company. Any portion of such legal fees, costs, and expenses in excess of
$30,000 or for which the Key Executives do not receive reimbursement from Boise
as contemplated shall not be the responsibility of the Company or Stationers.
(b) The initial chief financial officer of Stationers hired by
the board of directors of Stationers shall be given the opportunity to purchase
shares of Common Stock and Preferred Stock of the Company in the same ratio as
the Executive and for the purchase price of not less than the fair market value
of such shares at the time of purchase, as determined in good faith by the board
of directors of the Company. The maximum dollar amount of the shares of Common
Stock and Preferred Stock to be reserved for purchase by such initial chief
financial
11
<PAGE>
officer shall be no more than $147,500. Any purchase of shares of Common Stock
and Preferred Stock of the Company by such initial chief financial officer shall
dilute all holders of Common Stock and Preferred Stock on a ratable basis.
(c) The Company and/or Stationers shall pay all closing fees
payable to the senior lenders to Stationers and the Company and shall pay
closing fees aggregating not more than $1,500,000 to the Sponsor Holders and
Good Capital Co., Inc. After the Closing, the total amount of all management,
directors, and other recurrent fees payable by the Company or Stationers to the
Sponsor Holders and Good Capital Co., Inc. will not exceed $350,000 to Wingate
Partners, L.P. and a total of $150,000 to Cumberland Capital Corporation and
Good Capital Co., Inc., unless escalated in good faith by the board of directors
of the Company. If there is an extraordinary transaction affecting the Company,
such as a recapitalization, refinancing or sale, the board of directors of the
Company may retain the services of one or more of such parties in connection
therewith if it determines that the services and fee structure therefor will be
fair to the Company.
(d) The Company will, at Closing, provide to Michael D. Rowsey,
as the representative of each Key Executive, complete information and
documentation concerning the following matters and all other matters material to
the Key Executives' investment in the Company and employment with Stationers:
(i) the various classes of Common Stock and Preferred
Stock and warrants to be issued in respect thereof, including the purchase
price for such Common Stock and Preferred Stock and the exercise prices in
respect of the warrants;
(ii) all fees and expenses arising in respect of the
Acquisition and any subsequent management or other fees including those to
be paid to the Sponsor Holders or their affiliates;
(iii) loan agreements and other financing documents;
(iv) any other material agreements to be executed or
commitments made as a part of the transaction; and
(v) available business plans and projections.
9. Conditions Precedent to Obligation of the Executive. The
---------------------------------------------------
obligation of the Executive to purchase the Common Stock and Preferred Stock to
be purchased by the Executive
12
<PAGE>
hereunder is subject, at the Closing, to the satisfaction or waiver by Executive
of the following conditions:
(a) The Company shall have performed and complied with the
covenants and agreements contained in this Agreement required to be performed
with and complied with by the Company prior to or at the Closing.
(b) The Executive shall have received a counterpart of this
Agreement and each Ancillary Agreement, duly executed and delivered by Holdings
and/or Stationers, as applicable.
10. Conditions Precedent to Obligation of Wingate and ASI. The
-----------------------------------------------------
obligations of Wingate and ASI, to sell the Wingate Portion and the ASI Portion
to be sold to the Executive hereunder is subject, at the Closing, to the
satisfaction or waiver by the Company of the following conditions:
(a) All representations and warranties made by the Executive
herein shall be true and correct as of the Closing with the same effect as if
such representations and warranties had been made as of the Closing.
(b) The Executive shall have performed and complied with the
covenants and agreements contained herein required to be performed with and
complied with by the Executive prior to or at the Closing.
(c) The Acquisition and all transactions contemplated thereby
shall have been consummated as of the Acquisition Closing.
(d) The Company, Wingate, and ASI shall have received the opinion
of counsel described in Section 8(a) above in form and substance satisfactory to
the Company, Wingate, and ASI to the effect that any IRA purchaser hereunder is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
under the Securities Act and covering such other matters as are reasonably
requested by the Company.
11. Termination. The rights and obligations of the Company, the
-----------
Sponsor Holders, and/or the Executive relating to repurchases of Executive
Securities pursuant to the provisions of Sections 5 and 6 hereof shall terminate
(i) upon the consummation of a Qualified Public Offering (as defined below);
(ii) upon the written consent of the Company and the holders of 66-2/3% or more
of the Executive Securities; or (iii) in any event, the earlier of 10 years from
the date hereof or the dissolution of the Company. As used herein, the term
"Qualified Public Offering" shall mean the sale in an underwritten public
offering or a series of public offerings, registered under the Securities Act,
13
<PAGE>
of Common Stock which results in the public ownership of not less than 20% of
the Common Stock of the Company on a fully-diluted basis, which shares of Common
Stock are listed upon the New York Exchange, the American Stock Exchange or are
approved for quotation on the NASDAQ National Market System and which offering
shall have resulted in the receipt by the Company and any selling stockholders
of aggregate cash proceeds (after deduction of underwriter discounts and the
costs associated with the offerings) of at least $37.5 million.
12. Specific Performance. In the event of any controversy concerning
--------------------
the rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be cumulative and nonexclusive and shall be in addition
to any other remedy to which the parties may be entitled.
13. Waiver. The failure of either party to insist, in any one or
------
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
14. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed by registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the address indicated by the stock records of the Company, or at
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally, three days
after deposit in the U.S. mail, on the date of delivery by facsimile, and one
day after deposit with a reputable overnight courier service.
15. Severability. In the event that any provision shall be held to
------------
be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable, and
enforceable.
16. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
17. Governing Law. The corporate law of the State of Delaware shall
-------------
govern all issues concerning the relative rights
14
<PAGE>
of the Company, Executive, and the Sponsor Holders related to the Executive
Securities. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Illinois.
18. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
19. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
20. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Executive's
heirs, beneficiaries, and legal representatives. It is agreed that the rights
and obligations of Executive may not be delegated or assigned except as
specifically set forth in this Agreement. In the event of a sale of all or
substantially all the Company's stock or assets, or consolidation or merger of
the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder.
21. Limitation as to Partial Purchase. Notwithstanding the
---------------------------------
provisions of Sections 5 and 6 hereof, if less than all of the Executive
Securities will be purchased under Sections 5 or 6, at the request of either the
purchaser or purchasers or the Executive, the aggregate consideration to be paid
shall be applied as follows: 63% of the consideration shall be used to purchase
shares of Common Stock and 37% shall be used to purchase shares of Preferred
Stock.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date set forth above.
WINGATE PARTNERS, L.P.,
By: Wingate Management
Company, L.P., its
general partner
By:
---------------------------
Thomas W. Sturgess,
general partner
ASI PARTNERS, L.P.,
By: Cumberland Capital
Corporation, its
general partner
By:
---------------------------
Gary G. Miller,
President
ASSOCIATED HOLDINGS, INC.
By:
---------------------------
Thomas W. Sturgess,
Chairman and Chief
Executive Officer
Address:
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Attn: Chairman of the Board
Telecopy: 214-871-8799
16
<PAGE>
---------------------------
Lawrence E. Miller
Address:
415 Sterling Road
Kenilworth, Illinois 60043
<TABLE>
<CAPTION>
Number Purchase Price
------ --------------
<S> <C> <C>
Common Shares (Wingate Portion) 6,688 $ 66,880
Preferred Shares (Wingate Portion) 40 $ 40,000
Common Shares (ASI Portion) 2,600 $ 26,000
Preferred Shares (ASI Portion) 14.5 $ 14,500
Totals -------- ------------
(Common) 9,288 $147,380
(Preferred) 54.5
</TABLE>
17
<PAGE>
The undersigned, being the spouse of the Executive as of the date
hereof, executes and delivers this Agreement to evidence her understanding of
and intent to be bound by the provisions of this Agreement to the extent
applicable to her and her rights and obligations.
______________________________
[Spouse of Executive]
18
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A -- 1992 Management Stock Option Plan
- -----------
Exhibit B -- Option Agreement
- -----------
Exhibit C -- Allocation of Options
- -----------
Exhibit D -- Registration Rights Agreement
- -----------
Exhibit E -- Voting Trust Agreement
- -----------
Exhibit F -- Stockholders Agreement
- -----------
19
<PAGE>
EXHIBIT C
---------
Allocation of Options
---------------------
<TABLE>
Percentage
-----------
<S> <C>
Michael D. Rowsey 30.8
Daniel J. Schleppe 26.2
Robert D. Eberspacher 23.8
Lawrence E. Miller 19.2
-----
100.0%
</TABLE>
20
<PAGE>
ASSOCIATED HOLDINGS, INC.
EXECUTIVE STOCK PURCHASE AGREEMENT
----------------------------------
This EXECUTIVE STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 31, 1992, and is by and among WINGATE PARTNERS, L.P.,
a Delaware limited partnership ("Wingate"), ASI PARTNERS, L.P., a Delaware
limited partnership ("ASI"), ASSOCIATED HOLDINGS, INC., a Delaware corporation
(the "Company"), and Robert W. Eberspacher ("Executive").
Executive desires to purchase, and Wingate and ASI desire to sell,
shares of Class A Common Stock, par value $0.01 per share ("Common Stock"), and
Class A Preferred Stock, par value $0.01 per share ("Preferred Stock"), of the
Company upon the terms and subject to the conditions contained herein.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set forth
-----------------
herein, each of Wingate and ASI severally agrees to sell, and the Executive
agrees to purchase, the number of shares of Common Stock and the number of
shares of Preferred Stock set forth below the Executive's name on the signature
page hereto for the respective purchase prices also set forth below the
Executive's name on the signature page hereto. The number of shares of Common
Stock and Preferred Stock to be sold by Wingate is herein called the "Wingate
Portion" and the number of shares of Common Stock and Preferred Stock to be sold
by ASI is herein called the "ASI Portion." Executive acknowledges and
understands that each of Wingate and ASI have borrowed funds (the "Loans") in
order to purchase the Wingate Portion and ASI Portion at the closing of the
acquisition by the Company and its wholly-owned subsidiary, Associated
Stationers, Inc. ("Stationers"), of the business and assets of the wholesale
division of Boise Cascade Office Products Corporation (the "Acquisition
Closing"). Accordingly, at the Closing (as defined below), in addition to the
payment of the purchase price paid by Executive for the Wingate Portion and the
ASI Portion, the Executive shall reimburse each of Wingate and ASI for the
interest costs of the Loans incurred by them from the date of the Loans until
the Closing (the "Borrowing Costs"). Additionally, the Executive may allocate
all or a portion of the Common Stock and/or Preferred Stock to be purchased
hereunder to one or more individual retirement account or accounts of the
Executive (collectively, the "IRA"). For purposes of this Agreement, all
references to Executive herein shall include reference to his IRA to the extent
appropriate.
1
<PAGE>
2. Closing.
-------
(a) The purchase and sale of the shares of Common Stock and
Preferred Stock contemplated above will take place at a closing (the "Closing")
at a place or places mutually acceptable to the Executive, Wingate, and ASI and
shall occur on a date not later than June 1, 1992; provided the Executive shall
have the right to extend the Closing two times for a period of not greater than
30 days each time by giving written notice of such requested extension to each
of Wingate and ASI at their respective addresses set forth on the signature
pages hereto at least two days prior to the then scheduled date for Closing, but
in no event shall the Closing take place later than July 31, 1992. If any and
all conditions to the Executive's obligation to purchase, and Wingate's and
ASI's obligation to sell, hereunder have been satisfied or waived as of the date
set for Closing, if and as extended as provided above, then any rights of the
Executive to purchase all or any amount of the Wingate Portion and/or the ASI
Portion shall terminate and be of no further force or effect if the Executive
fails to purchase the Wingate Portion and the ASI portion on the date set for
Closing, if and as extended as provided above.
(b) The Executive shall, at the Closing, deliver by wire
transfer to an account or accounts designated by Wingate and ASI same day
federal funds in an amount equal to the purchase price of the Wingate Portion
and the ASI Portion, respectively, purchased by the Executive pursuant to this
Agreement.
(c) Upon such purchase, Wingate and ASI shall cause the Company
to deliver to the Executive, against payment of the purchase price therefor, a
certificate representing the shares of Common Stock and a certificate
representing the shares of Preferred Stock purchased by the Executive hereunder.
Such certificates shall be registered in the name of the Executive. The
Executive shall deposit the certificate or certificates representing such shares
of Common Stock in trust pursuant to the Voting Trust Agreement (as hereinafter
defined) and voting trust certificates shall be issued in respect thereof in
accordance with the terms and provisions of the Voting Trust Agreement.
(d) Any tax imposed on the issuance of the shares of Common
Stock or the shares of Preferred Stock purchased by the Executive hereunder will
be paid by the Company at Closing.
3. Representations, Warranties, and Certain Agreements of the
----------------------------------------------------------
Executive. The Executive understands and agrees with the Company, Wingate, and
- ---------
ASI that the offering and sale of the Common Stock and Preferred Stock to the
Executive hereunder is intended to be exempt from registration under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") by virtue of the
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provisions of Section 4(2) of the Securities Act and Rule 506 of Regulation D
thereunder, and that there is no existing public or other market for the Common
Stock or the Preferred Stock and there can be no assurance that the Executive
will be able to sell or otherwise dispose of all or any portion of the Common
Stock or the Preferred Stock. In that regard, the Executive hereby represents
and warrants to, and agrees with, the Company, Wingate, and ASI that:
(a) Executive is an "accredited investor" as such term is defined
in Rule 501 of Regulation D under the Securities Act.
(b) Executive has such knowledge and experience in financial and
business matters that Executive is capable of evaluating the merits and risks of
an investment in the Common Stock and Preferred Stock; has all information
deemed by Executive to be necessary or appropriate to evaluate the risks and
merits of an investment in the Common Stock and Preferred Stock; has had the
opportunity to ask questions of and receive answers from representatives of the
Company concerning the Company and the terms and conditions of the sale of the
Common Stock and Preferred Stock; has a financial condition such that Executive
is under no present need to dispose of any portion of the Common Stock and
Preferred Stock to satisfy any existing or contemplated undertaking or
indebtedness; and is able to bear the economic risk of an investment in the
Common Stock and Preferred Stock, including, without limiting the generality of
the foregoing, the risk of losing part or all of Executive's investment and the
possible inability to sell or transfer the Common Stock and Preferred Stock for
an indefinite period of time.
(c) Executive is acquiring the Common Stock and Preferred Stock
for Executive's own account for investment, and not with a view to, or for
resale in connection with, any distribution thereof within the meaning of the
Securities Act.
(d) Executive understands that the Common Stock and Preferred
Stock have not been registered under the Securities Act or any blue sky or other
state securities law or regulation (hereinafter collectively referred to as
"blue sky laws") in reliance, in part, upon the representations, warranties, and
covenants contained herein. Executive also understands that Executive cannot
offer for sale, sell, or transfer any of the Common Stock and Preferred Stock
unless such offer, sale, or transfer has been registered under the Securities
Act and under any applicable blue sky laws or unless an exemption from such
registration is available with respect to any such proposed offer, sale, or
transfer. Executive further understands that the Company is under no obligation
to register the Common Stock and Preferred Stock in the future.
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(e) Executive agrees and acknowledges that a restrictive legend
may be placed on certificates representing any or all of the Common Stock and
Preferred Stock and that transfer of any or all of such Common Stock and
Preferred Stock may be refused by the Company or its transfer agent, if any,
unless such Common Stock and Preferred Stock for which transfer is sought is
registered under the Securities Act and all other applicable federal securities
or blue sky laws and such laws are complied with or unless Executive provides
information satisfactory to the Company that such registration is not required.
(f) Executive agrees to indemnify and hold the Company, Wingate,
and ASI harmless from and against all losses, costs, liabilities, and expenses
suffered or incurred by the Company, Wingate, or ASI and arising out of or
related to the resale or distribution by the Executive of any Common Stock and
Preferred Stock in violation of the Securities Act or any other applicable
federal securities laws or blue sky laws.
4. Securities Subject to Agreement. (a) In addition to any Common
-------------------------------
Stock and Preferred Stock purchased by the Executive hereunder, the Company has
granted and may hereafter grant to the Executive, options under the Company's
1992 Management Stock Option Plan, a copy of which is attached hereto as Exhibit
-------
A (the "Plan") entitling the Executive to purchase additional shares of Common
- -
Stock at the price of $10.00 per share (the "Options") and subject to the terms
and conditions set forth in the Option Agreement attached hereto as Exhibit B
---------
(the "Option Agreement"). This Agreement, and the restrictions and limitations
contained herein, applies to all Common Stock and Preferred Stock now owned or
hereafter acquired by the Executive (through purchase hereunder or exercise of
all or any portion of the Options), any voting trust certificates issued or
issuable to Executive pursuant to the Voting Trust Agreement (the "Voting Trust
Agreement") dated as of January 31, 1992 among the Company, the Voting Trustees
named therein, and certain beneficial owners of Common Stock of the Company
identified therein and who may become parties thereto, and any shares of Common
Stock or Preferred Stock otherwise acquired by Executive, including any Common
Stock issued with respect to Common Stock owned by Executive by way of a stock
split, stock dividend, recapitalization or otherwise. All such Common Stock,
Preferred Stock, and voting trust certificates to which this Agreement applies
are herein collectively called the "Executive Securities." Executive Securities
will continue to be Executive Securities in the hands of any other holder
(except for the Company, any subsidiary of the Company, any Sponsor Holder [as
defined below] or transferees in a public sale) and each such other holder of
Executive Securities will succeed to all of the rights and obligations of the
Executive pursuant to Section 5 hereof. As used herein, the term "Sponsor
Holder" shall mean each of Wingate and its affiliates and ASI and its
affiliates.
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(b) As of the date hereof the Company shall, pursuant to Option
Agreements, grant to the Key Executives (as defined below) Options to purchase
an aggregate number of shares of Common Stock equal to 21,684 and allocated as
set forth on Exhibit C hereto (the "First Options"). The Company agrees that
---------
within four years from the date hereof it shall grant to the Key Executives or
any successor officers to the Key Executives an Option or Options to purchase an
additional aggregate number of shares of Common Stock equal to 21,684 (subject
to the anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The exercise price
for the Common Stock subject to the Second Options shall be $10.00 per share for
each Key Executive, but, unless otherwise determined by the Board, shall be the
fair market value of each such share for any successor officer to a Key
Executive. As used herein, the term "Key Executives" shall collectively mean
Michael D. Rowsey, Daniel J. Schleppe, Robert W. Eberspacher, and Lawrence E.
Miller.
(c) The Second Options shall be granted under the same form of
option agreement as the Option Agreement, except for the number of shares and
except that vesting shall be in increments of 25% on the four succeeding
anniversaries of the date of grant. If the Second Options have not been granted
in full at the time of a Major Transaction (as defined in the Option
Agreements), any ungranted Second Options shall be treated as having been
granted to the Key Executives in proportion to the number of shares originally
covered by the First Options and the Key Executives shall receive the special
distributions contemplated by Section 2 of the Option Agreement.
5. Repurchase Right of the Company.
-------------------------------
(a) In the event the Executive dies, retires, becomes Disabled
(as defined below) or ceases to be employed or retained by the Company or one of
its subsidiaries or other affiliates, for any reason (a "Termination"), the
Executive Securities (whether held by Executive or one or more of Executive's
transferees) will be subject to repurchase by the Company, and, if applicable,
one or more of the Sponsor Holders (as determined by subparagraph (f), below)
pursuant to the terms and conditions set forth in this Section 5 (the
"Repurchase Right"). As used herein, the term "Disabled" shall mean the
Executive's inability, due to illness, accident, injury, physical or mental
incapacity or other disability, effectively to carry out his duties and
obligations to the Company as an employee thereof or to participate effectively
and actively in the management of the Company for 90 consecutive days or shorter
periods aggregating at least 180 days (whether or not consecutive) during any
twelve-month period.
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<PAGE>
(b) The purchase price for each share of Common Stock included in
the Executive Securities will be the net book value thereof at the date of such
Termination; provided, however, that if the Repurchase Right is triggered by a
Termination constituting a Special Termination Event (as defined below) then the
purchase price for each such share of Common Stock will be the fair market value
thereof (as determined in good faith by the Board of Directors of the Company)
as of the date of such Special Termination Event. As used herein, the term
"Special Termination Event" shall mean (i) the death of the Executive, (ii) the
retirement by the Executive at or after age 59, (iii) a termination by
Stationers of the Executive's employment under the Employment Agreement dated as
of the date hereof between Stationers and the Executive without Cause (as such
term is defined in such Employment Agreement), (iv) a termination of employment
due to the Executive becoming Disabled, or (v) a termination of employment
(other than for Cause) at a time that there is a public market for shares of
Common Stock of the Company.
(c) The purchase price for each share of Preferred Stock included
in the Executive Securities with respect to the Company's exercise of the
Repurchase Right in connection with any Termination shall be the redemption
value of $1,000 per share plus any accrued but unpaid dividends thereon, subject
to appropriate adjustment in the event of a stock split, reverse stock split or
similar transaction (the "Preferred Stock Price").
(d) The purchase price for any vested share of Common Stock
covered by an Option ("Option Share") included in the Executive Securities with
respect to the Company's exercise of the Repurchase Right shall be equal to the
product of (i) the price which would apply to a share of Common Stock
(determined by the method set forth in subparagraph (b) above) minus the
exercise price therefor and (ii) the number of Option Shares which may be
acquired at the time of such purchase, according to the vesting and exercise
schedule in the Option Agreement or other option agreement entered into by the
Executive (the "Option Share Price").
(e) The Company shall have a first option to acquire the
Executive Securities pursuant to the Repurchase Right and may elect to purchase
all or any portion of the Executive Securities included therein by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Securities within 30 days after the Termination or, in case of the
death of the Executive, within 30 days after the Company first becomes aware of
the Executive's death. The Repurchase Notice shall set forth the amount and
price of the Executive Securities to be acquired from such holder or holders,
the aggregate consideration to be paid for such Executive Securities and the
time and place for the closing of the transaction. The
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<PAGE>
Executive Securities to be repurchased by the Company first shall be satisfied
to the extent possible from the Executive Securities held by the Executive (or
the Executive's estate) at the time of delivery of the Repurchase Notice. If
the Executive Securities then held by the Executive (or the Executive's estate)
are less than the Executive Securities the Company has elected to purchase, the
Company shall purchase the remaining Executive Securities from the transferee
holder(s) of the Executive Securities pro rata according to the amount held by
such transferee holder(s) at the time of delivery of such Repurchase Notice
(determined as nearly as practicable to the nearest full share).
(f) If for any reason the Company does not elect to purchase all
of the Executive Securities pursuant to the Repurchase Right, the Sponsor
Holders who qualify as "accredited investors" under Regulation D of the
Securities Act (the "Accredited Holders") may exercise the Repurchase Right for
the Executive Securities the Company has not elected to purchase (the "Available
Securities"). As soon as practicable after the Company has determined that there
will be Available Securities, the Company shall give written notice (the
"Company Notice") to the Accredited Holders, setting forth the amount and nature
of Available Securities and the purchase price for the Available Securities.
Each of the Accredited Holders may select the amount and type of the Available
Securities (if any) that such Accredited Holder elects to purchase by giving
written notice thereof to the Company within 20 days after the Company Notice
has been given to such Accredited Holder by the Company. If the Accredited
Holders collectively select a number of shares of Available Securities greater
than the amount of Available Securities available, then all Available Securities
shall be allocated pro rata among the Accredited Holders electing to
participate, based upon the number of shares of each type of Executive
Securities subscribed for by each such Accredited Holder. As soon as
practicable, and in any event within 5 days after the expiration of the 20-day
period set forth above, the Company shall notify each proposed transferor of
Executive Securities as to the number of shares of Executive Securities being
purchased from such transferor by the Company and each Accredited Holder (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice, the Company also shall deliver written notice to
the Accredited Holders electing to participate, setting forth the type and
number of shares of Executive Securities the Accredited Holders electing to
participate are entitled to purchase, the aggregate purchase price and the time
and place of the closing of the transaction.
(g) The closing of the purchase of the Executive Securities
pursuant to any exercise of the Repurchase Right shall take place on the latest
date designated by the Company in the
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<PAGE>
Repurchase Notice or Supplemental Repurchase notice, which date shall not be
more than 30 days nor less than 10 days after the delivery of the later of
either such notice to be delivered. The Company and/or the Accredited Holders
electing to participate shall pay for the Executive Securities to be purchased
pursuant to the Repurchase Right in cash by a bank cashier's check, certified
check or by wire transfer. If at the time of consummation of any exercise of a
Repurchase Right by the Company, the terms and provisions of the credit
facilities of the Company or of its subsidiary, Associated Stationers, Inc.
("Stationers"), effectively prevent the Company from paying the purchase price
for the Executive Securities to be purchased in cash, then the portion of such
purchase price in excess of the amount the Company is so permitted to pay in
cash, if any (the "Excess Amount"), may be paid by the Company by delivery of
the Company's subordinated promissory note or notes, which note or notes in the
aggregate shall (i) be payable in seven equal annual installments of principal
payable on each of the first seven anniversaries of such purchase, (ii) be
prepayable at any time in the inverse order of maturity without any penalty,
(iii) bear interest at the applicable long-term federal rate in effect at the
time of the issuance of the note or notes (plus 100 basis points), and (iv) be
subordinated in right of payment and upon liquidation to any senior indebtedness
of the Company and/or Stationers. Accrued interest on the note or notes will be
payable on the dates that the installments of principal are payable.
Notwithstanding anything in this subsection to the contrary, any payments under
the subordinated notes described above shall be subject to any restrictions or
limitations on such payments contained in (i) the Debt Agreements (as defined
below) and (ii) any and all applicable state and federal laws, rules, and
regulations or in any and all orders of any state or federal governmental
authority. As used herein the term "Debt Agreements" shall mean the Credit
Agreement dated as of January 31, 1992 among the Company, Associated Stationers,
Inc., The Chase Manhattan Bank (National Association), as agent, and the lenders
which become parties thereto and the notes and other documents and instruments
executed and delivered in connection therewith, as such Credit Agreement and
notes and other documents and instruments may from time to time be amended or
supplemented, and any agreements evidencing any renewal, extension, refinancing,
refunding or replacement thereof.
(h) In the event of the termination of a marital relationship of
the Executive and his spouse by divorce or annulment and the Executive does not
acquire all Executive Securities or interests therein ("Divorce Securities")
awarded to his spouse (the "Divorced Spouse") within 30 days from the date such
Divorce Securities are so awarded (the "Divorce Securities Determination Date"),
then the Executive shall give the Company written notice of such Divorce
Securities Determination Date within 20 days thereof (the "Divorce Notice"),
which notice shall
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<PAGE>
describe the Divorce Securities passing to the Divorced Spouse in connection
therewith. Upon receipt of the Divorce Notice, the Company shall have the
option to purchase any and all Divorce Securities awarded to the Divorced Spouse
(the "Divorce Call Right").
(i) The purchase price for each share of Common Stock included
in the Divorce Securities to be repurchased by the Company pursuant to any
exercise of the Divorce Call Right at any time shall be the net book value
thereof at the date of the exercise of the Divorce Call Right by the
Company.
(ii) The purchase price for each share of Preferred Stock
included in the Divorce Securities with respect to the Company's exercise
of the Divorce Call Right at any time shall be equal to the Preferred Stock
Price.
(iii) The purchase price for any vested Option Share included in
the Divorce Securities with respect to the Company's exercise of the
Divorce Call Right at any time shall be equal to the Option Share Price.
(iv) Within 30 days after the date the Company receives the
Divorce Notice, the Company shall notify the Divorced Spouse in writing
(the "Company Divorce Election Notice") of the number of Divorce Securities
that the Company desires to purchase and the date for the closing of such
purchase which shall not be more than 60 days nor less than 10 days after
the date the Divorced Spouse receives the Company Divorce Election Notice.
(v) At the closing of the purchase by the Company of any Divorce
Securities hereunder, the Company shall pay the applicable purchase price
therefor in the same manner and on the same terms and conditions as set
forth in Section 5(a) hereof.
6. Executive Put Rights.
--------------------
(a) In the event the Executive dies, retires at or after age 59,
or becomes Disabled (each a "Put Termination Event"), the Executive or his
estate, as applicable (for purposes of this Section 6 all references to the
"Executive" shall include reference to his estate if applicable), may require
the Company to repurchase any or all of the Executive Securities then held by
the Executive (the "Executive Put Right").
(b) The purchase price for each share of Common Stock included in
the Executive Securities to be put to the Company pursuant to any exercise of
the Executive Put Right at any time will be the fair market value thereof (as
determined in
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<PAGE>
good faith by the Board of Directors of the Company) as of date of such Put
Termination Event.
(c) The purchase price for each share of Preferred Stock included
in the Executive Securities with respect to the Executive's exercise of the
Executive Put Right in connection with any Put Termination Event shall be equal
to the Preferred Stock Price.
(d) The purchase price for any vested Option Share included in
the Executive Securities with respect to the Executive's exercise of the
Executive Put Right at any time shall be equal to the Option Share Price.
(e) To effectively exercise an Executive Put Right hereunder, the
Executive shall give the Company written notice (the "Executive Put Notice") to
the Company within 90 days after a Put Termination Event. The Executive Put
Notice shall set forth the amount and price of the Executive Securities to be
put to the Company. Within 60 days after the receipt by the Company of the
Executive Put Notice, the Company shall notify the Executive of the
determination by the Board of Directors of the Company of the fair market value
of any Common Stock included in the Executive Securities (the "Company Put
Response"). Within 20 days after the receipt by the Executive of the Company
Put Response, the Executive shall notify the Company in writing (the
"Supplemental Executive Put Notice") of his election to either (i) consummate
the proposed Executive Put Right based on the fair market value of the Common
Stock included in the proposed Executive Securities as determined by the Board
of Directors of the Company; (ii) withdraw the Common Stock included in the
Executive Securities from the exercise of the proposed Executive Put Right and
continue to put Executive Securities, other than Common Stock, to the Company
pursuant to the proposed exercise of the Executive Put Right; or (iii) withdraw
all Executive Securities proposed to put to the Company pursuant to the proposed
exercise of the Executive Put Right. The Supplemental Executive Put Notice
shall also set forth the closing date for the consummation of any such exercise
of the Executive Put Right. The closing of the purchase of the Executive
Securities pursuant to an exercise of the Executive Put Right shall take place
on the date designated in the Supplemental Executive Put Notice, which date
shall not be more than 60 days nor less than 10 days after the delivery thereof
to the Company. The Company shall be obligated to pay for the Executive
Securities described in the Supplemental Executive Put Notice on the same terms
and conditions as set forth in Section 5(g) hereof.
(f) The Executive Put Right described in this Section 6 shall be
considered personal to the Executive and shall not be transferrable to any
purchaser or other holder of any
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<PAGE>
Executive Securities other than the Executive's estate and the personal
representative or administrator thereof.
7. Ancillary Agreements. At Closing, the Executive agrees to
--------------------
execute and deliver to and for the benefit of the Company, Stationers, and/or
the other parties thereto, the Option Agreement attached hereto as Exhibit B,
---------
the Registration Rights Agreement attached hereto as Exhibit D, the Voting Trust
---------
Agreement attached hereto as Exhibit E, and the Stockholders Agreement attached
---------
hereto as Exhibit F (such agreements being collectively referred to herein as
---------
the "Ancillary Agreements" and individually as an "Ancillary Agreement").
8. Additional Covenants of the Company. In addition to the other
-----------------------------------
covenants and agreements of the Company contained herein the Company agrees, and
agrees to cause Stationers, if applicable, to comply with the following
agreements.
(a) The Company understands that the Key Executives as a group
have engaged the law firm of Jones, Day, Reavis & Pogue as legal counsel to the
Key Executives. The Company has been advised that Boise Cascade Corporation or
one or more of its affiliates (collectively, "Boise") has agreed to reimburse
the Key Executives, as a group, for the first $15,000 of the legal fees and the
costs and expenses associated therewith incurred by the Key Executives in
connection with the Key Executives' participation in the acquisition by the
Company and Stationers of the properties, assets, and business of Boise Cascade
Office Products Corporation associated with or otherwise relating to its
wholesale division and the equity and debt financing transactions associated
therewith (collectively, the "Acquisition"). The Company hereby agrees to
reimburse, or cause Stationers to reimburse, the Key Executives, as a group, for
all legal fees, costs, and expenses of Jones, Day, Reavis & Pogue incurred by
the Key Executives, as a group, in connection with their participation in the
Acquisition which are in excess of the first $15,000 so incurred and up to an
additional $15,000 in the aggregate, subject to verification and approval by the
Company. Any portion of such legal fees, costs, and expenses in excess of
$30,000 or for which the Key Executives do not receive reimbursement from Boise
as contemplated shall not be the responsibility of the Company or Stationers.
(b) The initial chief financial officer of Stationers hired by
the board of directors of Stationers shall be given the opportunity to purchase
shares of Common Stock and Preferred Stock of the Company in the same ratio as
the Executive and for the purchase price of not less than the fair market value
of such shares at the time of purchase, as determined in good faith by the board
of directors of the Company. The maximum dollar amount of the shares of Common
Stock and Preferred Stock to be reserved for purchase by such initial chief
financial
11
<PAGE>
officer shall be no more than $147,500. Any purchase of shares of Common Stock
and Preferred Stock of the Company by such initial chief financial officer shall
dilute all holders of Common Stock and Preferred Stock on a ratable basis.
(c) The Company and/or Stationers shall pay all closing fees
payable to the senior lenders to Stationers and the Company and shall pay
closing fees aggregating not more than $1,500,000 to the Sponsor Holders and
Good Capital Co., Inc. After the Closing, the total amount of all management,
directors, and other recurrent fees payable by the Company or Stationers to the
Sponsor Holders and Good Capital Co., Inc. will not exceed $350,000 to Wingate
Partners, L.P. and a total of $150,000 to Cumberland Capital Corporation and
Good Capital Co., Inc., unless escalated in good faith by the board of directors
of the Company. If there is an extraordinary transaction affecting the Company,
such as a recapitalization, refinancing or sale, the board of directors of the
Company may retain the services of one or more of such parties in connection
therewith if it determines that the services and fee structure therefor will be
fair to the Company.
(d) The Company will, at Closing, provide to Michael D. Rowsey,
as the representative of each Key Executive, complete information and
documentation concerning the following matters and all other matters material to
the Key Executives' investment in the Company and employment with Stationers:
(i) the various classes of Common Stock and Preferred Stock
and warrants to be issued in respect thereof, including the purchase price
for such Common Stock and Preferred Stock and the exercise prices in
respect of the warrants;
(ii) all fees and expenses arising in respect of the
Acquisition and any subsequent management or other fees including those to
be paid to the Sponsor Holders or their affiliates;
(iii) loan agreements and other financing documents;
(iv) any other material agreements to be executed or
commitments made as a part of the transaction; and
(v) available business plans and projections.
9. Conditions Precedent to Obligation of the Executive. The
---------------------------------------------------
obligation of the Executive to purchase the Common Stock and Preferred Stock to
be purchased by the Executive
12
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hereunder is subject, at the Closing, to the satisfaction or waiver by Executive
of the following conditions:
(a) The Company shall have performed and complied with the
covenants and agreements contained in this Agreement required to be performed
with and complied with by the Company prior to or at the Closing.
(b) The Executive shall have received a counterpart of this
Agreement and each Ancillary Agreement, duly executed and delivered by Holdings
and/or Stationers, as applicable.
10. Conditions Precedent to Obligation of Wingate and ASI. The
-----------------------------------------------------
obligations of Wingate and ASI, to sell the Wingate Portion and the ASI Portion
to be sold to the Executive hereunder is subject, at the Closing, to the
satisfaction or waiver by the Company of the following conditions:
(a) All representations and warranties made by the Executive
herein shall be true and correct as of the Closing with the same effect as if
such representations and warranties had been made as of the Closing.
(b) The Executive shall have performed and complied with the
covenants and agreements contained herein required to be performed with and
complied with by the Executive prior to or at the Closing.
(c) The Acquisition and all transactions contemplated thereby
shall have been consummated as of the Acquisition Closing.
(d) The Company, Wingate, and ASI shall have received the opinion
of counsel described in Section 8(a) above in form and substance satisfactory to
the Company, Wingate, and ASI to the effect that any IRA purchaser hereunder is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
under the Securities Act and covering such other matters as are reasonably
requested by the Company.
11. Termination. The rights and obligations of the Company, the
-----------
Sponsor Holders, and/or the Executive relating to repurchases of Executive
Securities pursuant to the provisions of Sections 5 and 6 hereof shall terminate
(i) upon the consummation of a Qualified Public Offering (as defined below);
(ii) upon the written consent of the Company and the holders of 66-2/3% or more
of the Executive Securities; or (iii) in any event, the earlier of 10 years from
the date hereof or the dissolution of the Company. As used herein, the term
"Qualified Public Offering" shall mean the sale in an underwritten public
offering or a series of public offerings, registered under the Securities Act,
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<PAGE>
of Common Stock which results in the public ownership of not less than 20% of
the Common Stock of the Company on a fully-diluted basis, which shares of Common
Stock are listed upon the New York Exchange, the American Stock Exchange or are
approved for quotation on the NASDAQ National Market System and which offering
shall have resulted in the receipt by the Company and any selling stockholders
of aggregate cash proceeds (after deduction of underwriter discounts and the
costs associated with the offerings) of at least $37.5 million.
12. Specific Performance. In the event of any controversy concerning
--------------------
the rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be cumulative and nonexclusive and shall be in addition
to any other remedy to which the parties may be entitled.
13. Waiver. The failure of either party to insist, in any one or
------
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
14. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed by registered or
certified mail (postage and registration or certification fees prepaid) or sent
by facsimile or reputable overnight courier service (charges prepaid) to the
recipient at the address indicated by the stock records of the Company, or at
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally, three days
after deposit in the U.S. mail, on the date of delivery by facsimile, and one
day after deposit with a reputable overnight courier service.
15. Severability. In the event that any provision shall be held to
------------
be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable, and
enforceable.
16. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
17. Governing Law. The corporate law of the State of Delaware shall
-------------
govern all issues concerning the relative rights
14
<PAGE>
of the Company, Executive, and the Sponsor Holders related to the Executive
Securities. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of Illinois.
18. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
19. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
20. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of and shall be enforceable by and against Executive's
heirs, beneficiaries, and legal representatives. It is agreed that the rights
and obligations of Executive may not be delegated or assigned except as
specifically set forth in this Agreement. In the event of a sale of all or
substantially all the Company's stock or assets, or consolidation or merger of
the Company with or into another corporation or entity or individual, the
Company may assign its rights and obligations under this Agreement to its
successor-in-interest and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company hereunder.
21. Limitation as to Partial Purchase. Notwithstanding the
---------------------------------
provisions of Sections 5 and 6 hereof, if less than all of the Executive
Securities will be purchased under Sections 5 or 6, at the request of either the
purchaser or purchasers or the Executive, the aggregate consideration to be paid
shall be applied as follows: 63% of the consideration shall be used to purchase
shares of Common Stock and 37% shall be used to purchase shares of Preferred
Stock.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date set forth above.
WINGATE PARTNERS, L.P.,
By: Wingate Management Company, L.P., its
general partner
By:___________________________
Thomas W. Sturgess,
general partner
ASI PARTNERS, L.P.,
By: Cumberland Capital Corporation, its
general partner
By:___________________________
Gary G. Miller,
President
ASSOCIATED HOLDINGS, INC.
By:___________________________
Thomas W. Sturgess,
Chairman and Chief
Executive Officer
Address:
c/o Wingate Partners, L.P.
750 North St. Paul
Suite 1200
Dallas, Texas 75201
Attn: Chairman of the Board
Telecopy: 214-871-8799
16
<PAGE>
_________________________________
Robert W. Eberspacher
Address:
6907 Huntfield Drive
Charlotte, North Carolina 28226
<TABLE>
<CAPTION>
Number Purchase Price
------ --------------
<S> <C> <C>
Common Shares (Wingate Portion) 6,688 $ 66,880
Preferred Shares (Wingate Portion) 40 $ 40,000
Common Shares (ASI Portion) 2,600 $ 26,000
Preferred Shares (ASI Portion) 14.5 $ 14,500
Totals ________ ___________
(Common) 9,288 $147,380
(Preferred) 54.5
</TABLE>
17
<PAGE>
The undersigned, being the spouse of the Executive as of the date
hereof, executes and delivers this Agreement to evidence her understanding of
and intent to be bound by the provisions of this Agreement to the extent
applicable to her and her rights and obligations.
_______________________________
[Spouse of Executive]
18
<PAGE>
LIST OF EXHIBITS
----------------
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- 1992 Management Stock Option Plan
- -----------
Exhibit B -- Option Agreement
- -----------
Exhibit C -- Allocation of Options
- -----------
Exhibit D -- Registration Rights Agreement
- -----------
Exhibit E -- Voting Trust Agreement
- -----------
Exhibit F -- Stockholders Agreement
- -----------
</TABLE>
19
<PAGE>
EXHIBIT C
---------
Allocation of Options
---------------------
<TABLE>
<CAPTION>
Percentage
-----------
<S> <C>
Michael D. Rowsey 30.8
Daniel J. Schleppe 26.2
Robert D. Eberspacher 23.8
Lawrence E. Miller 19.2
-----
100.0%
</TABLE>
20
<PAGE>
EXHIBIT 10.27
FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT
-----------------------------------------------------
This FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT (this "Amendment
---------
Agreement") is made and entered into as of the Effective Time (hereinafter
- ---------
defined), by and among United Stationers Inc., a Delaware corporation and
successor-in-interest to AHI (as hereinafter defined) (the "Surviving
---------
Corporation"), Wingate Partners, L.P., a Delaware limited partnership
- -----------
("Wingate"), ASI Partners, L.P., a Delaware limited partnership ("ASI
------- ---
Partners"), and the undersigned officer of the Surviving Corporation (the
"Executive").
---------
RECITALS
A. Associated Holdings, Inc., a Delaware corporation ("AHI"), Wingate,
ASI Partners and the Executive are parties to that certain Executive Stock
Purchase Agreement dated as of January 31, 1992 (the "Executive Purchase
------------------
Agreement");
- ---------
B. Pursuant to that certain Agreement and Plan of Merger (the "Merger
------
Agreement"), dated as of February 13, 1995, between AHI and the Surviving
- ---------
Corporation, AHI was merged with and into the Surviving Corporation (the
"Merger"), with the Surviving Corporation surviving the Merger (the time upon
------
which the Merger became effective pursuant to the terms and conditions of the
Merger Agreement and as defined therein, is referred to herein as the "Effective
---------
Time"); and
- ----
C. In connection with the Merger, the parties to the Executive Purchase
Agreement desire to amend the Executive Purchase Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Surviving Corporation, Wingate, ASI Partners and the Executive
hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
-----------
shall have the respective meanings assigned to such terms in the Executive
Purchase Agreement.
<PAGE>
2. Amendments. The Executive Purchase Agreement is hereby amended as
----------
follows:
(a) The second and third sentences of Section 4(b) of the Executive
Purchase Agreement shall be amended and restated in their entirety as
follows:
"The Company agrees that within four years from the date hereof it
shall grant to the Key Executives or any successor officers to the Key
Executives an Option or Options to purchase an additional aggregate
number of shares of Common Stock equal to 50,303.95 (subject to the
anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The
exercise price for the Common Stock subject to the Second Options
shall be $2.90 per share for each Key Executive, but, unless otherwise
determined by the Board, shall be the fair market value of each such
share for any successor officer to a Key Executive; provided, however,
-------- -------
that as of the Termination Date (as defined in the Escrow Agreement,
dated as of March __, 1995, among Chase Securities, Inc., The Roebling
Fund, the Escrow Agent (as defined therein), and the stockholders
party thereto (the "Escrow Agreement")), the number of shares of
Common Stock into which the Second Options may be exercised shall be
increased by a portion of the Second Option Additional Amount (as
hereinafter defined) equal to the percentage of shares of Common Stock
returned to the Stockholders as defined in the Escrow Agreement) on
the Termination Date. The "Second Option Additional Amount" shall
mean 24,425.32 shares of Common Stock."
(b) Section 4(c) of the Executive Purchase Agreement shall be
amended by deleting the second sentence thereof in its entirety.
3. Surviving Corporation as Successor-in-Interest to AHI. The Executive
-----------------------------------------------------
and the Surviving Corporation hereby acknowledge that all references to
"Executive Securities" and "Common Stock" shall mean the securities of the
Surviving Corporation into which such Executive Securities or shares of Common
Stock, respectively, were converted in the Merger pursuant to the formulas set
forth in the Merger Agreement. The Executive and the Surviving Corporation
further acknowledge that the rights and obligations of the Executive Purchase
Agreement, including without limitation, the rights and obligations contained in
Sections 3, 4, 5 and 6 thereof, shall be binding upon and inure to the benefit
of the Surviving Corporation, as successor-in-interest to AHI.
2
<PAGE>
4. Executive Purchase Agreement Otherwise Unchanged. Except as expressly
------------------------------------------------
amended hereby, the Executive Purchase Agreement shall remain unchanged and in
full force and effect.
5. Counterparts. This Amendment Agreement may be executed in any number
------------
of counterparts, each of which shall constitute one and the same instrument.
6. Successors and Assigns. The rights and obligations of the parties
----------------------
hereunder shall be binding upon and inure to the benefit of the Surviving
Corporation, Wingate, ASI Partners and the Executive and each of their
respective successors and assigns.
7. Headings. The headings of the sections of this Amendment Agreement
--------
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
8. Governing Law. This Amendment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Illinois, without giving
effect to conflict of law principles.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement on the day and year first above written.
UNITED STATIONERS INC.
By:_______________________________________
Thomas W. Sturgess,
Chairman of the Board
WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT
COMPANY, L.P., its general
partner
By:_________________________________
Thomas W. Sturgess,
General Partner
ASI PARTNERS, L.P.
By: CUMBERLAND CAPITAL
CORPORATION, its general
partner
By:_________________________________
Gary G. Miller,
President
__________________________________________
Robert W. Eberspacher
4
<PAGE>
FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT
-----------------------------------------------------
This FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT (this "Amendment
---------
Agreement") is made and entered into as of the Effective Time (hereinafter
- ---------
defined), by and among United Stationers Inc., a Delaware corporation and
successor-in-interest to AHI (as hereinafter defined) (the "Surviving
---------
Corporation"), Wingate Partners, L.P., a Delaware limited partnership
- -----------
("Wingate"), ASI Partners, L.P., a Delaware limited partnership ("ASI
------- ---
Partners"), and the undersigned officer of the Surviving Corporation (the
"Executive").
---------
RECITALS
A. Associated Holdings, Inc., a Delaware corporation ("AHI"), Wingate,
ASI Partners and the Executive are parties to that certain Executive Stock
Purchase Agreement dated as of January 31, 1992 (the "Executive Purchase
------------------
Agreement");
- ---------
B. Pursuant to that certain Agreement and Plan of Merger (the "Merger
------
Agreement"), dated as of February 13, 1995, between AHI and the Surviving
- ---------
Corporation, AHI was merged with and into the Surviving Corporation (the
"Merger"), with the Surviving Corporation surviving the Merger (the time upon
------
which the Merger became effective pursuant to the terms and conditions of the
Merger Agreement and as defined therein, is referred to herein as the "Effective
---------
Time"); and
- ----
C. In connection with the Merger, the parties to the Executive Purchase
Agreement desire to amend the Executive Purchase Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Surviving Corporation, Wingate, ASI Partners and the Executive
hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
-----------
shall have the respective meanings assigned to such terms in the Executive
Purchase Agreement.
<PAGE>
2. Amendments. The Executive Purchase Agreement is hereby amended as
----------
follows:
(a) The second and third sentences of Section 4(b) of the Executive
Purchase Agreement shall be amended and restated in their entirety as
follows:
"The Company agrees that within four years from the date hereof it
shall grant to the Key Executives or any successor officers to the Key
Executives an Option or Options to purchase an additional aggregate
number of shares of Common Stock equal to 50,303.95 (subject to the
anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The
exercise price for the Common Stock subject to the Second Options
shall be $2.90 per share for each Key Executive, but, unless otherwise
determined by the Board, shall be the fair market value of each such
share for any successor officer to a Key Executive; provided, however,
-------- -------
that as of the Termination Date (as defined in the Escrow Agreement,
dated as of March __, 1995, among Chase Securities, Inc., The Roebling
Fund, the Escrow Agent (as defined therein), and the stockholders
party thereto (the "Escrow Agreement")), the number of shares of
Common Stock into which the Second Options may be exercised shall be
increased by a portion of the Second Option Additional Amount (as
hereinafter defined) equal to the percentage of shares of Common Stock
returned to the Stockholders as defined in the Escrow Agreement) on
the Termination Date. The "Second Option Additional Amount" shall
mean 24,425.32 shares of Common Stock."
(b) Section 4(c) of the Executive Purchase Agreement shall be
amended by deleting the second sentence thereof in its entirety.
3. Surviving Corporation as Successor-in-Interest to AHI. The Executive
-----------------------------------------------------
and the Surviving Corporation hereby acknowledge that all references to
"Executive Securities" and "Common Stock" shall mean the securities of the
Surviving Corporation into which such Executive Securities or shares of Common
Stock, respectively, were converted in the Merger pursuant to the formulas set
forth in the Merger Agreement. The Executive and the Surviving Corporation
further acknowledge that the rights and obligations of the Executive Purchase
Agreement, including without limitation, the rights and obligations contained in
Sections 3, 4, 5 and 6 thereof, shall be binding upon and inure to the benefit
of the Surviving Corporation, as successor-in-interest to AHI.
2
<PAGE>
4. Executive Purchase Agreement Otherwise Unchanged. Except as expressly
------------------------------------------------
amended hereby, the Executive Purchase Agreement shall remain unchanged and in
full force and effect.
5. Counterparts. This Amendment Agreement may be executed in any number
------------
of counterparts, each of which shall constitute one and the same instrument.
6. Successors and Assigns. The rights and obligations of the parties
----------------------
hereunder shall be binding upon and inure to the benefit of the Surviving
Corporation, Wingate, ASI Partners and the Executive and each of their
respective successors and assigns.
7. Headings. The headings of the sections of this Amendment Agreement
--------
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
8. Governing Law. This Amendment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Illinois, without giving
effect to conflict of law principles.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement on the day and year first above written.
UNITED STATIONERS INC.
By:________________________________________
Thomas W. Sturgess,
Chairman of the Board
WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT
COMPANY, L.P., its general
partner
By:__________________________________
Thomas W. Sturgess,
General Partner
ASI PARTNERS, L.P.
By: CUMBERLAND CAPITAL
CORPORATION, its general
partner
By:__________________________________
Gary G. Miller,
President
___________________________________________
Lawrence E. Miller
4
<PAGE>
FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT
-----------------------------------------------------
This FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT (this "Amendment
---------
Agreement") is made and entered into as of the Effective Time (hereinafter
- ---------
defined), by and among United Stationers Inc., a Delaware corporation and
successor-in-interest to AHI (as hereinafter defined) (the "Surviving
---------
Corporation"), Wingate Partners, L.P., a Delaware limited partnership
- -----------
("Wingate"), ASI Partners, L.P., a Delaware limited partnership ("ASI
------- ---
Partners"), and the undersigned officer of the Surviving Corporation (the
"Executive").
---------
RECITALS
A. Associated Holdings, Inc., a Delaware corporation ("AHI"), Wingate,
ASI Partners and the Executive are parties to that certain Executive Stock
Purchase Agreement dated as of January 31, 1992 (the "Executive Purchase
------------------
Agreement");
- ---------
B. Pursuant to that certain Agreement and Plan of Merger (the "Merger
------
Agreement"), dated as of February 13, 1995, between AHI and the Surviving
- ---------
Corporation, AHI was merged with and into the Surviving Corporation (the
"Merger"), with the Surviving Corporation surviving the Merger (the time upon
------
which the Merger became effective pursuant to the terms and conditions of the
Merger Agreement and as defined therein, is referred to herein as the "Effective
---------
Time"); and
- ----
C. In connection with the Merger, the parties to the Executive Purchase
Agreement desire to amend the Executive Purchase Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Surviving Corporation, Wingate, ASI Partners and the Executive
hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
-----------
shall have the respective meanings assigned to such terms in the Executive
Purchase Agreement.
<PAGE>
2. Amendments. The Executive Purchase Agreement is hereby amended as
----------
follows:
(a) The second and third sentences of Section 4(b) of the Executive
Purchase Agreement shall be amended and restated in their entirety as
follows:
"The Company agrees that within four years from the date hereof it
shall grant to the Key Executives or any successor officers to the Key
Executives an Option or Options to purchase an additional aggregate
number of shares of Common Stock equal to 50,303.95 (subject to the
anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The
exercise price for the Common Stock subject to the Second Options
shall be $2.90 per share for each Key Executive, but, unless otherwise
determined by the Board, shall be the fair market value of each such
share for any successor officer to a Key Executive; provided, however,
-------- -------
that as of the Termination Date (as defined in the Escrow Agreement,
dated as of March __, 1995, among Chase Securities, Inc., The Roebling
Fund, the Escrow Agent (as defined therein), and the stockholders
party thereto (the "Escrow Agreement")), the number of shares of
Common Stock into which the Second Options may be exercised shall be
increased by a portion of the Second Option Additional Amount (as
hereinafter defined) equal to the percentage of shares of Common Stock
returned to the Stockholders as defined in the Escrow Agreement) on
the Termination Date. The "Second Option Additional Amount" shall
mean 24,425.32 shares of Common Stock."
(b) Section 4(c) of the Executive Purchase Agreement shall be
amended by deleting the second sentence thereof in its entirety.
3. Surviving Corporation as Successor-in-Interest to AHI. The Executive
-----------------------------------------------------
and the Surviving Corporation hereby acknowledge that all references to
"Executive Securities" and "Common Stock" shall mean the securities of the
Surviving Corporation into which such Executive Securities or shares of Common
Stock, respectively, were converted in the Merger pursuant to the formulas set
forth in the Merger Agreement. The Executive and the Surviving Corporation
further acknowledge that the rights and obligations of the Executive Purchase
Agreement, including without limitation, the rights and obligations contained in
Sections 3, 4, 5 and 6 thereof, shall be binding upon and inure to the benefit
of the Surviving Corporation, as successor-in-interest to AHI.
2
<PAGE>
4. Executive Purchase Agreement Otherwise Unchanged. Except as expressly
------------------------------------------------
amended hereby, the Executive Purchase Agreement shall remain unchanged and in
full force and effect.
5. Counterparts. This Amendment Agreement may be executed in any number
------------
of counterparts, each of which shall constitute one and the same instrument.
6. Successors and Assigns. The rights and obligations of the parties
----------------------
hereunder shall be binding upon and inure to the benefit of the Surviving
Corporation, Wingate, ASI Partners and the Executive and each of their
respective successors and assigns.
7. Headings. The headings of the sections of this Amendment Agreement
--------
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
8. Governing Law. This Amendment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Illinois, without giving
effect to conflict of law principles.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement on the day and year first above written.
UNITED STATIONERS INC.
By:___________________________________
Thomas W. Sturgess,
Chairman of the Board
WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT
COMPANY, L.P., its general
partner
By:______________________________
Thomas W. Sturgess,
General Partner
ASI PARTNERS, L.P.
By: CUMBERLAND CAPITAL
CORPORATION, its general
partner
By:______________________________
Gary G. Miller,
President
_______________________________________
Michael D. Rowsey
4
<PAGE>
FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT
-----------------------------------------------------
This FIRST AMENDMENT TO EXECUTIVE STOCK PURCHASE AGREEMENT (this "Amendment
---------
Agreement") is made and entered into as of the Effective Time (hereinafter
- ---------
defined), by and among United Stationers Inc., a Delaware corporation and
successor-in-interest to AHI (as hereinafter defined) (the "Surviving
---------
Corporation"), Wingate Partners, L.P., a Delaware limited partnership
- -----------
("Wingate"), ASI Partners, L.P., a Delaware limited partnership ("ASI
------- ---
Partners"), and the undersigned officer of the Surviving Corporation (the
"Executive").
---------
RECITALS
A. Associated Holdings, Inc., a Delaware corporation ("AHI"), Wingate,
ASI Partners and the Executive are parties to that certain Executive Stock
Purchase Agreement dated as of January 31, 1992 (the "Executive Purchase
------------------
Agreement");
- ---------
B. Pursuant to that certain Agreement and Plan of Merger (the "Merger
------
Agreement"), dated as of February 13, 1995, between AHI and the Surviving
- ---------
Corporation, AHI was merged with and into the Surviving Corporation (the
"Merger"), with the Surviving Corporation surviving the Merger (the time upon
------
which the Merger became effective pursuant to the terms and conditions of the
Merger Agreement and as defined therein, is referred to herein as the "Effective
---------
Time"); and
- ----
C. In connection with the Merger, the parties to the Executive Purchase
Agreement desire to amend the Executive Purchase Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Surviving Corporation, Wingate, ASI Partners and the Executive
hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
-----------
shall have the respective meanings assigned to such terms in the Executive
Purchase Agreement.
<PAGE>
2. Amendments. The Executive Purchase Agreement is hereby amended as
----------
follows:
(a) The second and third sentences of Section 4(b) of the Executive
Purchase Agreement shall be amended and restated in their entirety as
follows:
"The Company agrees that within four years from the date hereof it
shall grant to the Key Executives or any successor officers to the Key
Executives an Option or Options to purchase an additional aggregate
number of shares of Common Stock equal to 50,303.95 (subject to the
anti-dilution adjustments set forth in the Plan) as allocated by the
Board of Directors of the Company (the "Second Options"). The
exercise price for the Common Stock subject to the Second Options
shall be $2.90 per share for each Key Executive, but, unless otherwise
determined by the Board, shall be the fair market value of each such
share for any successor officer to a Key Executive; provided, however,
-------- -------
that as of the Termination Date (as defined in the Escrow Agreement,
dated as of March __, 1995, among Chase Securities, Inc., The Roebling
Fund, the Escrow Agent (as defined therein), and the stockholders
party thereto (the "Escrow Agreement")), the number of shares of
Common Stock into which the Second Options may be exercised shall be
increased by a portion of the Second Option Additional Amount (as
hereinafter defined) equal to the percentage of shares of Common Stock
returned to the Stockholders as defined in the Escrow Agreement) on
the Termination Date. The "Second Option Additional Amount" shall
mean 24,425.32 shares of Common Stock."
(b) Section 4(c) of the Executive Purchase Agreement shall be
amended by deleting the second sentence thereof in its entirety.
3. Surviving Corporation as Successor-in-Interest to AHI. The Executive
-----------------------------------------------------
and the Surviving Corporation hereby acknowledge that all references to
"Executive Securities" and "Common Stock" shall mean the securities of the
Surviving Corporation into which such Executive Securities or shares of Common
Stock, respectively, were converted in the Merger pursuant to the formulas set
forth in the Merger Agreement. The Executive and the Surviving Corporation
further acknowledge that the rights and obligations of the Executive Purchase
Agreement, including without limitation, the rights and obligations contained in
Sections 3, 4, 5 and 6 thereof, shall be binding upon and inure to the benefit
of the Surviving Corporation, as successor-in-interest to AHI.
2
<PAGE>
4. Executive Purchase Agreement Otherwise Unchanged. Except as expressly
------------------------------------------------
amended hereby, the Executive Purchase Agreement shall remain unchanged and in
full force and effect.
5. Counterparts. This Amendment Agreement may be executed in any number
------------
of counterparts, each of which shall constitute one and the same instrument.
6. Successors and Assigns. The rights and obligations of the parties
----------------------
hereunder shall be binding upon and inure to the benefit of the Surviving
Corporation, Wingate, ASI Partners and the Executive and each of their
respective successors and assigns.
7. Headings. The headings of the sections of this Amendment Agreement
--------
are inserted for convenience only and shall not be deemed to constitute a part
hereof.
8. Governing Law. This Amendment Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Illinois, without giving
effect to conflict of law principles.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement on the day and year first above written.
UNITED STATIONERS INC.
By:_______________________________________
Thomas W. Sturgess,
Chairman of the Board
WINGATE PARTNERS, L.P.
By: WINGATE MANAGEMENT
COMPANY, L.P., its general
partner
By:_________________________________
Thomas W. Sturgess,
General Partner
ASI PARTNERS, L.P.
By: CUMBERLAND CAPITAL
CORPORATION, its general
partner
By:_________________________________
Gary G. Miller,
President
__________________________________________
Daniel J. Schleppe
4
<PAGE>
EXHIBIT 10.29
??????01-0012
---------------------------
LEASE AGREEMENT 79 Alameda Distribution Center
---------------------------
March 4, 1988
---------------------------
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between Crow-Alameda
------------
Limited Partnership, hereinafter referred to as ``Landlord'' and Stationers
- ------------------- ----------
Distributing Company, Inc., hereinafter referred to as ``Tenant'';
- ---------------------------
WITNESSETH:
1. Premises and Term. In consideration of the obligation of Tenant to pay
rent herein provided, and in consideration of the other terms, provisions and
convenants hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby takes from Landlord certain premises situated within the County of
Maricopa, State of Arizona, more particularly described on Exhibit "A" attached
- -------- -------
hereto and incorporated herein by reference, together with all rights,
privileges, easements, appurtenances, and immunities belonging to or in any way
pertaining to the premises and together with the buildings and other
improvements situated or to be situated upon said premises, said real property,
buildings and improvements being hereinafter referred to as the "premises").
TO HAVE AND TO HOLD the names for a term commencing on the "commencement
date", as hereinafter defined, and ending 60 month thereafter, provided,
--
however, that, in the event the "commencement date" is a date other than the
first day of a calendar month, said term shall extend for said number of months
in addition to the remainder of the calendar month following the "commencement
date."
A. The "commencement date" shall be April 1, 1988, Tenant acknowledges
-------------
that it has inspected and accepts the premises, and specifically the buildings
and improvements comprising the same, in their present condition as suitable for
the purpose for which the premises are leased. Taking of possession by Tenant
shall be deemed conclusively to establish that said buildings and other
improvements are in, good and satisfactory condition as of when possession was
taken. Tenant further acknowledges that no representations as to the repair of
the premises, nor promises to alter, remodel or improve the premises have been
made by Landlord, unless such are expressly set forth in this lease. If this
lease is executed before the premises become vacant or otherwise available and
ready for occupancy, or if any present tenant or occupant of the premises holds
over, and Landlord cannot acquire possession of the premises prior to said
"commencement date," Landlord shall not be deemed to be in default hereunder,
and Tenant agrees to accept possession of the premises at such time as Landlord
is able to tender the same, which date shall thenceforth be deemed the
"commencement date"; and Landlord hereby waives payment of rent covering any
period prior to the tendering of possession to Tenant hereunder. After the
commencement date Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the premises.
B. In the event this lease pertains to a building to be constructed, the
provisions of this subparagraph B shall apply in lieu of the provisions of
subparagraph A above and the "commencement date" shall be the date upon which
the buildings and other improvements erected and to be erected upon the premises
shall have been substantially completed in accordance with the plans and
specifications described on Exhibit "B" attached hereto and incorporated herein
by reference. Landlord shall notify Tenant in writing as soon as Landlord deems
said buildings and other improvements to be completed and ready for occupancy as
aforesaid. In the event that said buildings and other improvements have not in
fact been substantially completed as aforesaid, Tenant shall notify Landlord in
writing of its objections. Landlord shall have a reasonable time after delivery
of such notice in which to take such corrective action as may be necessary, and
shall notify Tenant in writing as soon as it deems such corrective action has
been completed so that said buildings and other improvements are completed and
ready for occupancy. Taking of possession by Tenant shall be deemed conclusively
to establish that said buildings and other improvements have been completed in
accordance with the plans and specifications and that the premises are in good
and satisfactory condition, as of when possession was so taken. Tenant
acknowledges that no representations as to the repair of the premises have been
made by Landlord, unless such are expressly set forth in this lease. After such
"commencement date" Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the premises. In the event of any dispute as
to substantial completion or work performed or required to be performed by
Landlord, the certificate of Landlord's architect or general contractor shall be
conclusive.
2. BASE RENT AND SECURITY DEPOSIT.
A. Tenant agrees to pay to Landlord rent for the premises in advance,
without demand, deduction or set off, for the entire term hereof at the rate of
__________________ See Addendum Paragraph 28 Dollars ($__________________),
per month. One such monthly installment shall be due and payable on the date
hereof and a like monthly installment shall be due and payable, without demand,
on or before the first day of each calendar month succeeding the "commencement
date" during the hereby demised term, except that the rental payment for any
fractional calendar month at the commencement of the lease term shall be
prorated.
B. In addition, Tenant agrees to deposit with Landlord on the date
hereof the sum of __________________ Dollars ($ __________________), which sum
shall be held by Landlord, without obligation for interest, as security for the
performance of Tenant's convenants and obligations under this lease, it being
expressly understood and agreed that such deposit is not an advance rental
deposit or a measure of Landlord's damages in case of Tenants default. Upon the
occurrence of any event of default by Tenant, Landlord may, from time to time,
without prejudice to any other remedy provided herein or provided by law, use
such fund to the extent necessary to make good any arrears of rent or other
payments due Landlord hereunder, and any other damage, injury, expense or
liability caused by such event of default; and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the security deposit to its
original amount. Although the security deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be returned by Landlord
to Tenant at such time after termination of this lease that all of the Tenant's
obligations under this lease have been fulfilled.
3. Use. The premises shall be used only for the purpose of receiving
storing, shipping and selling (other than retail) products, materials and
merchandise made and/or distributed by Tenant, and for such other lawful
purposes as may be incidental thereto. Outside storage is prohibited, without
Landlord's prior written consent. Tenant shall, at is own cost and expense,
obtain any and all licenses and permits necessary for any such use. Tenant shall
comply with all governmental laws, ordinances and regulations applicable to the
use of the premises, and shall promptly comply with all governmental orders and
directives for the correction, prevention and abatement of nuisances in or upon,
or connected with, the premises, all at Tenant's sole expense. Tenant shall not
permit any objectionable or unpleasant odors, smoke, dust, gas, noise or
vibrations to emanate from the premises, nor take any other action which would
constitute a nuisance or would disturb or endanger any other tenants of the
building in which the premises are situated or unreasonably interfere with their
use of their respective premises. Without Landlord's prior written consent,
Tenant shall not receive, store or otherwise handle any product, material or
merchandise which is explosive or highly inflammable. Tenant will not permit the
premises to be used for any purpose or in any manner (including without
limitation any method at storage) which would render the insurance, thereon void
or the insurance risk more hazardous or cause the State limit of Insurance or
other insurance authority to disallow any sprinkler credits. Nothing herein
shall require Tenant to make improvements to the leasehold premises unless the
requirement for such improvements is caused by a particular use of the premises
by Tenant not common to normal warehouse operations.
A. Tenant agrees to pay its proportionate share of all taxes assessments,
and governmental charges of any kind and nature whatsoever (hereinafter
collectively referred to as the "taxes") lawfully levied or assessed against the
building and the grounds, parking areas driveways and alleys around the
building. Tenant shall furnish to Landlord, not later than twenty (20) days
before the date any such taxes become delinquent, official receipts of the
appropriate taxing authority or other evidence satisfactory to Landlord
evidencing payment thereof. If Tenant should fail to pay any taxes, assessments,
or governmental charges required to be paid by Tenant hereunder, in addition to
any other remedies provided herein, Landlord may, if it so elects, pay such
taxes, assessments and governmental charges. Any sums so paid by Landlord shall
be deemed to be so much additional rental owing by Tenant to Landlord and due
and payable, on demand, by Landlord together with interest thereon, at the rate
of ten per cent (10%) per annum from date paid by Landlord to date of repayment
by Tenant.
B. The premises constitute a portion of a multiple company building
Landlord agrees to pay, before they become delinquent, all "taxes" lawfully
levied or assessed against such building and the grounds, parking areas,
driveways and alleys around the building, and Tenant agrees to pay to Landlord,
as additional rental, upon demand, the amount of Tenant's "proportionate share "
of all such "taxes" paid by Landlord. Tenant's "proportionate share" as used in
this lease, shall mean a fraction, the numerator of which is the space contained
in the premises and the denominator of which is the entire space contained in
the building.
C. If, at any time during the term of this lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments or governmental charges levied, assessed or imposed on real estate
and the improvements thereon, there shall be levied, assessed or imposed on
Landlord a capital levy or other tax directly on the rents received therefrom
and/or a franchise tax, assessment, levy or charge measured by or based, in
whole or in part, upon such rents for the present or any future building or
buildings on the premises, then all such taxes, assessments, levies or charges,
or the part thereof so measured or based, shall be deemed to be included within
the term "taxes" for the purposes hereof.
D. Tenant may, alone or along with any other tenants of said building, at
its or their sole cost and expense, in its or their own name(s) and/or in the
name of Landlord, dispute and contest any "taxes" by appropriate proceedings
diligently conducted in good faith, but only after Tenant and all other tenants,
if any, joining with Tenant in such contest, have deposited with Landlord the
amount so contested and unpaid, or their proportionate shares thereof, as the
case may be, which shall be held by Landlord without obligation for interest
until the termination of the proceedings, at which time the amount(s) deposited
shall be applied by Landlord toward the payment of the items held valid (plus
any court costs, interest, penalties, and other liabilities associated with the
proceedings), and Tenant's share of any excess shall be returned to Tenant.
Tenant further agrees to pay to Landlord, upon demand, Tenant's share (as among
all tenants who participated in the contest) of all court costs, interest,
penalties, and other liabilities relating to such proceedings. Tenant hereby
indemnities and agrees to hold harmless the Landlord from and against any cost,
damage, or expense (including attorneys' fees) in connection with any such
proceedings.
E. Any payment to be made pursuant to this Paragraph 4, with respect to the
real estate tax year in which this lease commences or terminates shall be
prorated.
5. REPAIRS AND MAINTENANCE.
A. Tenant shall, at its own cost and expense, keep and maintain all parts
of the premises in good condition, promptly making all necessary repairs and
replacements, interior and exterior, structural and non-structural ordinary and
extraordinary, including but not limited to, windows, glass and plate glass,
doors and any special office entry work and finish work, floors and doors
?????????????
<PAGE>
spouts, gutters, heating and air conditioning systems, dock boards, truck doors,
dock bumpers, paving, plumbing work and fixtures, termite and pest
extermination, regular removal of trash and debris, regular mowing of any grass,
trimming, weed removal and general landscape maintenance, including rail spur
areas, keeping the parking areas, driveways, alleys and the whole of the
premises in a clean and sanitary condition, and maintaining any spur track
serving the premises (Tenant agrees to sign a joint maintenance agreement with
the railroad company servicing the premises, if requested by the railroad
company). Tenant shall at its own cost and expense repaint exterior overhead
doors, canopies, entries, handrails, gutters, and other exposed parts of the
building which reasonably require periodic repainting to prevent deterioration
or to maintain aesthetic standards.
B. The cost of maintenance and repair of any common party wall (any wall,
divider, partition or any other structure separating the premises from any
adjacent premises occupied by other tenants) shall be shared equally by Tenant
and the tenant occupying adjacent premises. Tenant shall not damage any party
wall or disturb the integrity and support provided by any party wall and shall,
at its sole cost and expense, promptly repair any damage or injury to any party
wall caused by Tenant or its employees, agents or invitees.
C. In the event the premises constitute a portion of a multiple occupancy
building, Tenant and its employees, customers and licensees shall have the
exclusive right to use the parking areas, if any, as may be designated by
Landlord in writing, subject to such reasonable rules and regulations as
Landlord may from time to time prescribe. Further, in multiple occupancy
buildings. Landlord reserves the right to perform the rent????, paving and
landscape maintenance, exterior painting and common sewage line plumbing which
are otherwise Tenant's obligations under subparagraph A above, and Tenant shall,
in lieu of the obligations set forth under subparagraph A above with respect to
such items, he liable for its proportionate share (as defined in subparagraph 4
(B) above) of the cost and expense of the care for the ground around the
building, including but not limited to, the mowing of grass, care of shrubs,
general landscaping, maintenance of parking areas, driveways and alleys,
exterior repainting and common sewage line plumbing; provided, however, that
Landlord shall have the right to require Tenant to pay such other reasonable
proportion of said mowing, shrub care and general landscaping costs as may be
determined by Landlord in its sole discretion: and further provided that if
Tenant or any other particular tenant of the building can be clearly identified
as being responsible for obstruction or stoppage of the common sanitary sewage
lien then Tenant, if Tenant is responsible, or such other responsible tenant,
shall pay the entire cost thereof, upon demand, as additional rent. Tenant shall
pay when due its share, determined as aforesaid, of such costs and expenses
along with the other tenants of the building to Landlord upon demand, as
additional rent, for the amount of its share as aforesaid of such costs and
expenses in the event Landlord elects to perform or cause to be performed such
work. Landlord shall perform all maintenance and repair on roof, exterior wall,
and foundation without cost to Tenant.
D. In the event the premises constitute a portion of a multiple occupancy
building, Landlord shall be responsible for coordinating any repairs and other
maintenance of any rail tracks serving or to serve the building, and if Tenant
uses such rail tracks. Tenant shall reimburse Landlord from time to time upon
demand, as additional rent, for a share of the costs of such repairs and
maintenance and any other sums specified in any agreement to which Landlord is a
party respecting such tracks, such share to be a fraction, the numerator of
which is the space contained on the premises, and the denominator of which is
the entire space occupied by rail users in the building.
E. Tenants shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all heating and air conditioning systems and equipment within the
premises. The maintenance contractor and the contract must be approved by
Landlord. The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective (and a copy thereof delivered to Landlord) within thirty (30) days of
the date Tenant takes possession of the premises.
6. Alterations. Tenant shall not make any alterations, additions or
improvements to the premises costing more than five thousand ($5,000) dollars
without the prior written consent of Landlord. Tenant may, without the consent
of Landlord, but at its own cost and expense and in a good workmanlike manner
make such minor alterations, additions or improvements or erect, remove or alter
such partitions, or erect such shelves, bins, machinery and trade fixtures as it
may deem advisable, without altering the basic character of the building or
improvements and without overloading or damaging such building or improvements,
and in each case complying with all applicable governmental laws, ordinances,
regulations and other requirements. All alterations, additions, improvements and
partitions erected by Tenant shall be and remain the property of Tenant during
the term of this lease and Tenant shall unless Landlord otherwise elects as
hereinafter provided, remove all alterations, additions, improvements and
partitions erected by Tenant and restore the premises to their original
condition by the date of termination of this lease; provided, however, that if
Landlord so elects prior to termination of this lease, such alterations,
additions, improvements and partitions shall become the property of Landlord as
of the date of termination of this lease and shall be delivered up to the
Landlord with the premises. All shelves, bins, machinery and trade fixtures
installed by Tenant may be removed by Tenant prior to the termination of this
lease if Tenant so elects, and shall be removed if returned by Landlord: upon
any such removal Tenant shall restore the premises to their condition at
commencement of the lease. All such removals and restoration shall be
accomplished in a good workmanlike manner so as not to damage the primary
structure or structures qualities of the buildings and other improvements
situated on the premises.
7. Signs. Tenant shall have the right to install signs upon the premises
only when first approved in writing by Landlord and subject to any applicable
governmental laws, ordinances, regulations and other requirements. Tenant shall
remove all such signs by the termination of this lease. Such installations and
removals shall be made in such manner as to avoid injury to or defacement of the
building and other improvements, and Tenant shall repair any injury or
defacement including without limitation discoloration, caused by such
installation or removal.
8. Inspection. Landlord and Landlord's agents and representatives shall
have the right to enter and inspect the premises at any reasonable time during
business hours, for the purpose of ascertaining the condition of the premises or
in order to make such repairs as may be required or permitted to be made by
Landlord under the terms of this lease. During the period that is six (6) months
prior to the end of the term hereof, Landlord and Landlord's agents and
representatives shall have the right to enter the premises at any reasonable
time during business hours for the purpose of showing the premises, and shall
have the right to erect on the premises a suitable sign indicating that the
premises are available. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the premises and shall arrange to meet with
Landlord for a joint inspection of the premises at the time of vacating. In the
event of Tenant's failure to give such notice or arrange such joint inspection,
Landlord's inspection at or after Tenant's vacating the premises shall be
conclusively deemed correct for purposes of determining Tenant's responsibility
for repairs and restoration.
9. Utilities. Landlord agrees to provide, at its cost, water, electricity
and telephone service connections and meters to the premises: but Tenant shall
pay for all water, gas, heat, light, power, telephone, sewer, sprinkler charges
and other utilities and services used on or from the premises, together with any
taxes, penalties, surcharges or the like pertaining thereto, and maintenance
charges for utilities, and shall furnish all electric light bulbs and tubes. If
any such services are not separately metered in Tenant, Tenant shall pay a
reasonable proportion, as determined by Landlord, of all charges jointly metered
with other premises. Landlord shall in no event be liable for any interruption
or failure of utility services on the premises.
10. Assignment and Subletting. Tenant shall not have the right to assign
this lease or to sublet the whole or any part of the premises without the prior
written consent of Landlord which consent shall not be unreasonably withheld.
Notwithstanding any permitted assignment or subletting, Tenant shall at all
times remain directly, primarily and fully responsible and liable for the
payment of the rent herein specified and for compliance with all of Tenant's
other obligations under the terms, provisions and covenants of this lease. Upon
the occurrence of an "event of default" as hereinafter deemed, if the premises
or any part thereof are then assigned or sublet. Landlord, in addition to any
other remedies herein provided or provided by law, may at its option collect
directly from such assignee or subtenant all rents becoming due to Tenant under
such assignment or sublease and apply such rent against any sums due to Landlord
from Tenant hereunder, and no such collection shall be construed to constitute a
novation or a release of Tenant from the further performance of Tenant's
obligations hereunder.
11. INSURANCE, FIRE AND CASUALTY DAMAGE.
A. Landlord agrees to maintain insurance covering the building of which the
premises are a part in an amount not less than eighty per cent (80%) (or such
greater percentage as may be necessary to comply with the provisions of any co-
insurance clauses of the policy) of the "replacement cost" thereof as such term
is defined in the Replacement Cost Endorsement to be attached therein, insuring
against the perils of Fire, Lightning, Extended Coverage, Vandalism and
Malicious Mischief, extended by Special Extended Coverage Endorsement to insure
against all other Risks of Direct Physical Loss, such coverages and endorsements
to be as defined, provided and limited in the standard bureau forms prescribed
by the insurance regulatory authority for the State in which the premises are
situated for use by insurance companies admitted in such state for the writing
of such insurance on risks located within such state. Subject to the provisions
of subparagraphs 11B and 11D below, such insurance shall be for the sole benefit
of Landlord and under its sole control. Tenant agrees to pay, to Landlord, as
additional rental, Landlord's cost of maintaining such insurance on said
building (or, in the event the premises constitute a portion of a multiple
occupancy building, Tenant's full proportionate share (as defined in
subparagraph 4(B) above) of such cost). Said payments shall be made to Landlord
within ten (10) days after presentation to Tenant of Landlord's statement
setting forth the amount due. Any payment to be made pursuant to this
subparagraph A. with respect to the year in which this lease commences or
terminates shall bear the same ratio to the payment which would be required to
be made for the full year as that part of such year covered by the term of this
lease bears to a full year.
B. If the buildings situated upon the premises should be damaged or
destroyed by any peril covered by the insurance to be provided by Landlord under
subparagraph 11A above, Tenant shall give immediate notice thereof to Landlord,
and in Lessor's estimation, rebuilding or repairs can be substantially completed
within one hundred eighty (180) days after the date of such damage, this lease
shall not terminate. Notice of renewal???? to rebuild or repair must be given to
Tenant?????? Landlord shall at its sole cost and expense thereupon proceed with
reasonable diligence to rebuild and repair such buildings to substantially the
condition in which they existed prior to such damage or destruction, except the
Landlord shall not be required to rebuild, repair or replace any part of the
partitions, fixtures, additions and other improvements which may have been
placed in, on or about the premises by Tenant. If such repairs and rebuilding
have not been substantially completed within one hundred eighty (180) days after
the date of such damage, Lessee, as Lessees's exclusive remedy, may terminate
this lease by delivering written notice of termination to Lessor in which event
the rights and obligations hereunder shall cease and terminate.
D. Notwithstanding anything herein to the contrary, in the event the holder
of any indebtedness secured by a mortgage or deed of trust covering the premises
requires that the insurance proceeds be applied to such indebtedness, then
Landlord or Tenant, shall have the right to terminate this lease by delivering
written notice of termination to Tenant within fifteen (15) days after such
requirement is made by any such holder, whereupon all rights and obligations
hereunder shall cease and terminate.
E. Each of Landlord and Tenant hereby releases the other from any and all
liability or responsibility to the other or any claiming through or under them
by way of subrogation or otherwise for any loss or damage to property caused by
fire or any other perils insured in policies of insurance covering such
property, even if such loss or damage shall have been caused by the fault or
negligence of the other party, or anyone for whom such party may be responsible,
provided, however, that this release shall be applicable and in force and effect
only with respect to loss or damage occurring during such times as the
releasor's policies shall contain a clause or endorsement to the effect that any
such release shall not adversely affect or impair said policies or prejudice the
right of the releasor to recover thereunder and then only to the extend of the
insurance proceeds payable under such policies. Each of Landlord and Tenant
agrees that it will request its insurance carriers to include in its policies
such a clause or endorsement. If extra cost shall be charged therefore, each
party shall advise the other thereof and of the amount of the extra cost, and
the other party, at its election, may pay the same, but shall not be obligated
to do so.
<PAGE>
1. Liability. Landlord shall not be liable to Tenant or Tenant's employees
to the exer ???ents. patrons or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the premises, resulting
from and/or caused in part or whole by the negligence or misconduct of Tenant,
its agents, servants or employees, or of any other person entering upon the
premises, or caused by the buildings and improvements located on the premises
becoming out of repair, or caused by leakage of gas, oil, water or steam, or by
electricity emanating from the premises, or due to any cause whatsoever, and
Tenant hereby covenants and agrees that it will at all times indemnity and hold
safe and harmless the property, the Landlord (including without limitation the
trustee and beneficiaries if Landlord is a trust), Landlord's agents and
employees from any loss, liability, claims, suits, costs, expenses, including
without limitation attorneys less and damages, both real and alleged, arising
out of any such damage or injury; except injury to persons or damage to property
the cause of which is the negligence of Landlord. Tenant shall procure and
maintain throughout the term of this lease a policy or policies of insurance, at
its sole cost and expense, insuring both Landlord and Tenant against all claims,
demands, or actions arising out of or in connection with: twenty (20) days, then
Tenant shall not be in default ???? so long as Tenant acts promptly to effect
such cure. (iii) Tenant's operations in and maintenance and use of the premises:
and (iv) Tenant's liability assumed under this lease, the limits of such policy
or policies to be in the amount of not less than $300,000 per occurrence in
respect of injury in persons (including death), and in the amount of not less
than $50,000 per occurrence in respect of property damage or destruction,
including loss of use thereof. All such policies shall be procured by Tenant
from responsible insurance companies satisfactory to Landlord. Certified copies
of such policies, together with receipt evidencing payment of premiums therefor,
shall be delivered to Landlord prior to the commencement date of this lease. Not
less than fifteen (15) days prior to the expiration date of any such policies,
certified copies of the renewals thereof (bearing notations evidencing the
payment of renewal premiums) shall be delivered to Landlord. Such policies shall
further provide that not less than thirty (30) days written notice shall be
given to Landlord before such policy may be cancelled or changed to reduce
insurance provided thereby.
13. CONDEMNATION.
A. If the whole or any substantial part of the premises shall 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, and the
taking would prevent or materially interfere with the use of the premises for
the purpose for which they are then being used, this lease shall terminate and
the rent shall be abated during the unespired portion of this lease, effective
when the physical taking of said premises shall occur.
B. If part of the premises shall be taken for any public or quasi-public
use under any governmental law, ordinance, or regulation, or by right of eminent
domain, or by private purchase in lieu thereof, and this lease is not terminated
as, provided in the subparagraph above, this lease shall not terminate, but the
rent payable hereunder during the unespired portion of the lease shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances.
C. In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings.
14. Holding Over. Tenant will, at the termination of this lease by lapse of
time or otherwise, yield up immediate possession to Landlord. In the event of
any holding over by Tenant or any of its successors in interest after the
expiration or termination of this lease, unless the parties hereto otherwise
agree in writing, the hold over tenancy shall be subject to termination by
Landlord at any time upon not less than five (5) days advance written notice, or
by Tenant at any time upon not less than thirty (30) days advance written
notice, and all of the other terms and provisions of this lease shall be
applicable during that period, except that Tenant shall pay Landlord from time
to time upon demand, as rental for the period of any hold over, an amount equal
to one and one-half (1 1/2) the rent in effect on the termination date, computed
on a daily basis for each day of the holdover period. No holding over by Tenant,
whether with or without consent of Landlord, shall operate to extend this lease
except as otherwise expressly provided.
15. Quiet Enjoyment. Landlord covenants that it now has, or will acquire
before Tenant takes possession of the premises, good title to the premises, free
and clear of all liens and encumbrances, excepting only the lien for current
taxes not yet due, such mortgage or mortgages as are permitted by the terms of
this lease, zoning ordinances, and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions, and other conditions of record. In the event this lease is a
sublease, then Tenant agrees to take the premises subject in the provisions of
the prior leases. Landlord represents and warrants that it has full right and
authority to enter into this lease and that Tenant, upon paying the rental
herein set forth and performing its other covenants and agreements herein set
forth, shall peaceably and quietly have, hold, and enjoy the premises for the
term hereof without hindrance or molestation from Landlord, subject to the terms
and provisions of this lease.
16. Events of Default. The following events shall be deemed to be events of
default by Tenant under this lease:
(a) Tenant shall fail to pay any installment of the rent hereby reserved
when due, or any payment with respect to taxes hereunder when due, or any
other payment or reimbursement to Landlord required herein when due, and
such failure shall continue for a period of five (5) days after written
notice from Landlord to Tenant.
(b) Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors.
(c) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of
the United States or any State thereof; or Tenant shall be adjudged
bankrupt or insolvent in proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant.
(e) Tenant shall desert or vacate any substantial portion of the
premises.
(f) Tenant shall fail to comply with any term, provision, or covenant of
this lease (other than the foregoing in this Paragraph 16), and shall not
cure such failure within twenty (20) days after written notice thereof to
Tenant.*?????
17. Remedies. Upon the occurrence of any of such events of default
described in Paragraph 16 hereof, Landlord shall have the option to pursue any
one or more of the following remedies without any notice or demand whatsoever:
(a) Terminate this lease, in which event Tenant shall immediately
surrender the premises to Landlord, and if Tenant fails so to do, Landlord
may, without prejudice to any other remedy which it may have for possession
or arrearages in rent, enter upon and take possession of the premises and
expel or remove Tenant and any other person who may be occupying such
premises or any part thereof, by force if necessary, without being liable
for prosecution or any claim or damages therefor; and Tenant agrees to pay
to Landlord on demand the amount of any loss and damage which Landlord may
suier by reason of such termination, whether through inability to relet the
premises on satisfactory terms or otherwise.
(b) Enter upon and take possession of the premises and expel or remove
Tenant and any other person who may be occupying such premises or any part
thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefor, and relet the premises and receive the rent
therefor; and Tenant agrees to pay to the Landlord on demand any deficiency
that may arise by reason of such reletting. In the event Landlord is
successful in reletting the premises at a rental in excess of that agreed
to be paid by Tenant pursuant to the terms of this Agreement. Landlord and
Tenant each mutually agree that Tenant shall not be entitled, under any
circumstances, to such excess rental, and Tenant does hereby specifically
waive any claim to such excess rental.
(c) Enter upon the premises, by force if necessary, without being liable
for prosecution or any claim for damages therefor, and do whatever Tenant
is obligated to do under the terms of this lease; and Tenant agrees to
reimburse Landlord, on demand, for any expenses which Landlord may incur in
thus effecting compliance with Tenant's obligations under this lease, and
Tenant further agrees that Landlord shall not be liable for any damages
resulting to the Tenant from such action, whether caused by the negligence
of the Landlord or otherwise.
In the event Tenant fails to pay any installment of rent hereunder as
and when such installment is due, to help defray the additional cost in
Landlord for processing such late payments Tenant shall pay to Landlord on
demand a late charge in an amount equal to one hundred ($100) dollars at a
maximum occurance of four (4) times during the term of the lease, after
which the late charge will increase to five percent (5%) of such
installment; and the failure to pay such amount within ten (10) days after
demand therefor shall be an event of default hereunder. The provision for
such late charge shall be in addition to all of Landlord's other rights and
remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Landlord hereunder or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. No act or thing doing by the Landlord or its agents during the term
hereby granted shall be deemed a termination of this lease or an acceptance of
the surrender of the premises, and no agreement to terminate this lease or to
accept a surrender of said premises shall be valid unless in writing signed by
Landlord. No waiver by Landlord or any violation or breach of any of the terms,
provisions and covenants herein contained shall be deemed or construed to
constitute a waiver of any other violation or breach of any of the terms,
provisions and covenants herein contained. Landlord's acceptance of the payment
of rental or other payments hereunder after the occurrence of an event of
default shall not be construed as a waiver of such default, unless Landlord so
notifies Tenant in writing. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default or of Landlord's right to
enforce any such remedies with respect to such default or any subsequent
default. If, on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of this lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any reasonable attorneys' fees so incurred.
19. Mortgages. Tenant accepts this lease subject and subordinate to any
mortgage(s) and/or deed(s) of trust now or at any time hereafter constituting a
lien or charge upon the premises or the improvements situated therein: provided,
however, that if the mortgages, trustee, or holder of any such mortgage or deed
of trust elects to have Tenant's interest in this lease superior to any such
instrument, then by notice to Tenant from such mortgages, trustee or holder,
this lease shall be deemed superior in such lien, whether this lease was
executed before or after said mortgage or deed of trust. Tenant shall at any
time hereafter, on demand, execute any instruments, releases or other documents
which may be required by any mortgages for the purpose of subjecting and
subordinating this lease to the lien of any such mortgage. ???? receiving a
commitment from any such encumbrance holder to recognize this Lease and Tenant's
rights hereunder so long as Tenant is not in default.
<PAGE>
20. Landlord's Default. In the event Landlord should become in default ????
payments due ???? such mortgage described in Paragraph 15 ????. Tenant is
authorized and empowered, after giving Landlord five???? (5) days prior written
notice of such default and Landlord's failure to cure such default. In pay any
such items for and on behalf of Landlord, and the amount of any item so paid by
Tenant for or on behalf of Landlord, together with any interest or penalty
required to be paid in connection therewith, shall be payable on demand by
Landlord to Tenant: permitted, however, that Tenant shall not be authorized and
empowered to make any payment under the terms of this Paragraph 20, unless the
item paid shall be superior to Tenant's interest hereunder in the event Tenant
pays any mortgage debt in full, in accordance with this paragraph, it shall, at
its election, be entitled to the mortgage security by assignment or subrogation.
21. Mechanic's Liens. Tenant shall have no authority, express or impired,
to create or place any lien or encumbrance, of any kind or nature whatsoever
upon, or in any manner to bind, the interest of Landlord in the premises or to
charge the tenants payable hereunder for any claim in favor of any person
dealing with Tenant, including those who may furnish materials or perform labor
for any construction or repairs, and each such claim shall affect and each such
lien shall attach to, if at all, only the leasehold interest granted to Tenant
by this instrument. Tenant covenants and agrees that it will pay or cause to be
paid all sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the premises on
which any lien is or can be validly and legally asserted against its leasehold
interest in the premises or the improvements thereon and that it will save and
hold Landlord harmless from any and all loss, cost or expense based on or
arising out of asserted claims or liens against the leasehold estate or against
the right, title and interest of the Landlord in the premises or under the terms
of this lease.
22. Notices. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
by Landlord to Tenant or with reference to the sending, mailing, or delivery of
any notice or the making of any payment by Tenant to Landlord shall be deemed to
be complied with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address hereinbelow
set forth or at such other address as Landlord may specify from time to
time by written notice delivered in accordance herewith. Tenant's
obligation to pay rent and any other amounts to Landlord under the terms of
this lease shall not be deemed satisfied until such rent and other amounts
have been actually received by Landlord.
(b) All payment required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address hereinbelow set forth, or at such
other address within the continental United States as Tenant may specify
from time to time by written notice delivered in accordance herewith.
(c) Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not
when deposited in the United States Mail, postage prepaid. Certified or
Registered Mail, addressed to the parties hereto at the respective
addresses set out below, or at such other address as they have theretofore
specified by written notice delivered in accordance herewith:
LANDLORD: TENANT:
Crow-Alameda Limited Partnership Stationers Distributing Company, Inc.
- -------------------------------- -------------------------------------
c/o Trammell Crow Company 1009-1017 W. Alameda Drive
- -------------------------------- -------------------------------------
2 N. Central Avenue, Suite 400 Tempe, AZ 85282
- -------------------------------- -------------------------------------
Phoenix, AZ 85004
- -------------------------------- _____________________________________
If and when included within the term "Landlord", as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address for the receipt of notices
and payments to Landlord; if and when included within the term "Tenant", as used
in this instrument, there are more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of such a
notice specifying some individual at some specific address within the
continental United States for the receipt of notices and payments to Tenant. All
parties included within the terms "Landlord" and "Tenant", respectively, shall
be bound by notices given in accordance with the provisions of this paragraph to
the same effect as if each had received such notice.
23. Miscellaneous.
A. Words of any gender used in this lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
B. The terms, provisions, covenants, and conditions contained in this lease
shall apply to, inure to the benefit of, and be binding upon, the parties hereto
and upon their respective heirs, legal representatives, successors and permitted
assigns except as otherwise herein expressly provided. Each party agrees to
furnish the other, promptly upon demand, a corporate resolution, proof of due
authorization by partners, or other appropriate documentation evidencing the due
authorization of such party to enter into this lease.
C. The captions inserted in this lease are for convenience only and in no
way define, limit or otherwise describe the scope or intent of this lease, or
any provision hereof, or in any way affect the interpretation of this lease.
D. Tenant agrees from time to time within ten (10) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this lease is in full force and effect, the date to
which rent has been paid, the unexpired term of this lease and such other
matters pertaining to this lease as may be reasonably requested by Landlord. It
is understood and agreed that Tenant's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Landlord's
execution of this lease.
E. This lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
F. All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the premises. Upon the expiration or
earlier termination of the term hereof, and prior to Tenant vacating the
premises. Tenant shall pay to Landlord any amount reasonably estimated by
Landlord as necessary to put the premises, including without limitation all
heating and air conditioning systems and equipment therein, in good condition
and repair. Tenant shall also, prior to vacating the premises, pay to Landlord
the amount, as estimated by Landlord, of Tenant's obligation hereunder for real
estate taxes and insurance premiums for the year in which the lease expires or
terminates. All such amounts shall be used and held by Landlord for payment of
such obligations of Tenant hereunder, with Tenant being liable for any
additional costs therefor upon demand by Landlord, or with any excess to be
returned to Tenant after all such obligations have been determined and
satisfied, as the case may be. Any security deposit held by Landlord shall be
credited against the amount payable by Tenant under this Paragraph 23(F).
G. If any clause or provision of this lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
lease, then and in that event, it is the intention of the parties hereto that
the remainder of this lease shall not be affected thereby, and it is also the
intention of the parties of this lease that in lieu of each clause or provision
of this lease that is illegal, invalid or unenforceable, there be added as a
part of this lease contract a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may be possible and be
legal, valid and enforceable.
H. Because the premises are on the open market and are presently being
shown, this lease shall be treated as an offer with the premises being subject
to prior lease and offer subject to withdrawal or non-acceptance by Landlord or
to other use of the premises without notice, and this lease shall not be valid
or binding unless and until accepted by Landlord in writing and a fully executed
copy delivered to both parties hereto.
I. All references in this lease to "the date hereof" or similar references
shall be deemed to refer to the last date, in point of time, on which all
parties hereto have executed this lease.
24. Additional Provisions.
EXECUTED BY LANDLORD, this______ day of __________________, 19__.
LANDLORD:
Attest/Witness: [SIGNATURE NOT LEGIBLE]
---------------------------------
CROW-ALAMEDA LIMITED PARTNERSHIP,
____________________________ XX: a Texas Limited Partnership
-------------------------------
By Wilford M. Farnsworth, III
Title Title: as Attorney in Fact for
____________________________ -----------------------------
Charles R. Paul, Managing General Partner
EXECUTED BY TENANT, this _______ day of _________________, 19__.
TENANT:
Attest/Witness:
____________________________ [SIGNATURE NOT LEGIBLE]
----------------------------------
____________________________ By:
Title: _____________________ Title: President
-----------------------
<PAGE>
EXHIBIT B
BUILDING RULES & REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside or
inside of the building, the Premises or the surrounding area without the written
consent of the Landlord being first obtained. If such consent is given by
Landlord, Landlord may regulate the manner of display of the sign, placard,
picture, advertisement, name or notice. Landlord shall have the right to remove
any sign, placard, picture, advertisement, name or notice which has not been
approved by Landlord or is being displayed in a non-approved manner without
notice to and at the expense of the Tenant. All approved signs or lettering on
doors shall be printed, painted, affixed or inscribed at expense of Tenant by a
person approved by Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside of Premises.
2. The sidewalks, paved area, exits and entrances, shall not be obstructed
by any of the Tenants or used by them for any purpose other than for ingress to
and egress from their respective Premises. The paved areas, exits, entrances,
and roof are not for the use of the general public and the Landlord shall in all
cases retain the right to control thereof and prevent access thereto by all
persons whose presence in the judgment of the Landlord shall be prejudicial to
the safety, character, reputation, and interests of the Building or its Tenants;
provided, however, that nothing herein contained shall be construed to prevent
access by persons with whom Tenant normally deals in the ordinary course of
Tenant's business unless such persons are engaged in illegal activities. No
Tenant and no employees, invitees, contractors or subcontractors of any Tenant
shall go upon the roof of the Building. In addition, the Tenant will cause to be
removed all debris, pallets or any outside storage immediately in front or to
the rear of his space. If Landlord has to remove the above then Tenant will be
charged a minimum of $30 for the removal of the material.
3. Tenant shall not alter any lock or install any new additional locks or
any bolts on any door of the Premises without the written consent of Landlord.
4. The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from a violation of this rule shall
be borne by the Tenant who, or whose employees or invitees, shall have caused
it.
5. Tenant shall not overload the floor of the Premises, shall not mark on
or drive nails, screw or drill into the partitions, woodwork or plaster (except
as may be incidental to the hanging of the wall decoration), and shall not in
any way deface the Premises or any part thereof.
6. Tenant shall not use, keep or permit to be used or keep any food or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or other
occupants of the building by reason of noise, odors and/or vibrations, or
interfere in any way with the other Tenants or those having business in the
Building. No animals or birds shall be brought in or kept in or about the
Premises or the Building. No Tenant shall neighboring Buildings or Premises, or
with those having business with such occupants, by the use of any musical
instruments, radio, phonograph, unusual noise, or in any other way. No Tenant
shall throw anything out of doors or down the passageways. No cooking shall be
done or permitted by Tenant in the Premises.
7. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material or use any
method of heating or air conditioning other than that supplied by Landlord.
8. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for or stringing of
wires will be allowed without the consent of Landlord. The location of
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the approval of Landlord.
9. All keys to the Building, offices, rooms and toilet rooms shall be
obtained from Landlord's office. Tenant, upon termination of the tenancy, shall
deliver to the Landlord the keys to the Building, offices, rooms and toilet
rooms which shall have been furnished and shall pay the Landlord the cost of
replacing any lost key or of changing the lock or locks opened by such lost key
if Landlord deems it necessary to make such change.
10. No Tenant shall lay linoleum, tile, carpet or other similar floor
coverings so that the same shall be affixed to the floor of the Premises in any
manner except as approved by the Landlord. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by the Tenant by whom, or by whose contractors, employees or invitees,
the floor covering shall have been laid.
11. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgement of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any of
the rules and regulations of the Building.
12. Any requests of Tenant will be considered only upon application at the
office of the Landlord. Employees of Landlord shall not be requested to perform
any work or do anything outside of their regular duties unless under special
instructions from the Landlord.
13. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change name and the street address of the Building on
which the Premises are a part.
14. Tenant agrees that it shall comply with all fire regulations that may
be issued from time to time by Landlord and Tenant also shall provide Landlord
with the name of a designated responsible employee to represent Tenants in all
matters pertaining to fire regulations.
15. Landlord reserves the right by written notice to Tenant, to rescind,
alter or waive any rule or regulation at any time prescribed for the Building
when, in Landlord's judgment, it is necessary, desirable or proper for the best
interest of the Building or its Tenants.
16. Tenant shall not disturb, solicit, or canvas any occupant of the
Building and shall cooperate to prevent same.
17. Without the written consent of Landlord, Tenant shall not use the name
of the Building in connection with or in promotion or advertising the business
of Tenant except as Tenant's address.
18. Tenant shall be entitled to use parking spaces during working hours,
the exact location of which shall be designated by Landlord. Tenant shall not
park in driveways or loading areas nor reserved parking spaces of other Tenants.
Landlord or its agents shall have the right to cause to be removed any car of
Tenant, its employees or agents, that may be parked in unauthorized areas, and
Tenant agrees to save and hold harmless Landlord, its agents and employees from
any and all claims, losses, damages and demands asserted or arising in respect
to or in connection with the removal of any such vehicle and for all expenses
incurred by Landlord in connection with such removal. Tenant will from time to
time, upon request of Landlord, supply Landlord with a list of license plate
numbers of vehicles owned and/or operated by its employees and agents.
<PAGE>
ADDENDUM TO LEASE AGREEMENT
DATE: March 4, 1988
The parties hereto agree that the provisions of this Addendum to Lease Agreement
shall constitute an integral part of the Lease Agreement of even date herewith,
between Crow-Alameda Limited Partnership as Landlord, and Stationers
Distributing Company, Inc. as Tenant, (the "Lease") and in the event of a
conflict between the terms and provisions contained in this Addendum to Lease
Agreement and the terms and provisions set forth in the Lease Agreement, the
terms and provisions contained in this Addendum to Lease Agreement shall govern
and prevail.
Paragraph 25. A new Paragraph 25 is hereby added to the Lease Agreement as
------------
follows:
"25. Taxes on Rental and Other Sums Payable to Landlord.
Tenant shall pay to Landlord, in addition to and along with the rental
otherwise payable hereunder, a sum equal to the aggregate of any municipal,
city, county, state, or federal excise, sales, use or transaction privilege
taxes legally levied or imposed, or hereafter legally levied or imposed, during
the term hereof or any extension or renewal hereof, against or on account of any
or all amounts payable hereunder by Tenant of the receipts thereof by Landlord
(except state, federal or any other income taxes imposed or levied against
Landlord), which shall be paid monthly together with the minimum rental as
hereinabove provided."
Paragraph 26. A new Paragraph 26 is hereby added to the Lease Agreement as
------------
follows:
"26. Parking.
Tenant shall be entitled to park in common with other tenants of the
development in those areas designated for common or non-reserved parking. Tenant
agrees not to burden the parking facilities and agrees to cooperate with
Landlord and other tenants in the use of the parking facilities. Landlord
reserves the right, in its absolute discretion, to determine whether parking
facilities are becoming crowded, and in such event, to allocate parking spaces
among Tenant and other tenants. No storage of vehicles shall be allowed without
Landlord's prior consent."
Paragraph 27. A new Paragraph 27 is hereby added to the Lease Agreement as
------------
follows:
"27. Building Rules and Regulations.
Landlord and Tenant do hereby agree to the Building Rules and Regulations
attached as Exhibit B of this Lease Agreement. In the event of conflict, the
terms of the Lease Agreement shall control."
Paragraph 28. A new Paragraph 28 is hereby added to the Lease Agreement as
------------
follows:
"28. Rental Schedule.
The Base Monthly Rental amount shall be as set forth in the rent schedule
below:
April 1, 1988 through May 31, 1988 : No Base Rental Charge
June 1, 1988 through October 31, 1989 : $5,051.00 per month"
November 1, 1989 through March 31, 1993 : $24,420.00 per month."
<PAGE>
Paragraph 29. A new Paragraph 29 is hereby added to the Lease Agreement as
------------
follows:
"29. Tenant Improvements.
Landlord agrees to provide the following tenant improvements:
. Landlord will provide evaporative cooling, if required by the Tenant,
for Premises A (18,040 square feet). The number and size of units will
approximate the number of air exchanges per hour currently provided at
Premises B (63,360 square feet).
. Landlord will provide three (3) 12'x 12' openings in the demising
wall between Premises A and Premises B.
. Landlord agrees to construct and modify existing office space in
Premises B as specified by the Tenant and approved by the Landlord up
to an amount not to exceed $32,000.00."
Paragraph 30. A new Paragraph 30 is hereby added to the Lease Agreement as
------------
follows :
"30. Occupancy.
This Lease Agreement provides for occupancy of the premises labeled
"Premises A" (18,040 square feet) in Exhibit A, commencing April 1, 1988 and
expiring sixty (60) months thereafter on March 31, 1993. Occupancy for the
premises labeled "Premises B" (63,360 square feet) in Exhibit A shall commence
November 1, 1989 and expire forty-one (41) months thereafter on March 31, 1993."
IN WITNESS WHEREOF, the parties hereto have executed this Addendum to
Lease Agreement this _______________ day of _______________, 19 __________.
LANDLORD: CROW-ALAMEDA LIMITED TENANT: Stationers Distributing
PARTNERSHIP, a Texas Limited Company, Inc.
Partnership
/s/ Wilford M. Farnsworth, III [SIGNATURE NOT LEGIBLE]
- ---------------------------------- ---------------------------------
By Wilford M. Farnsworth, III
as Attorney in Fact for
Charles R. Paul,
Managing General Partner
<PAGE>
EXHIBIT C
LEASE RENEWAL AGREEMENT
LEASE AGREEMENT NUMBER: 801014-01-0012
DATE: MAY 31, 1990
This Lease Renewal Agreement is made this 31 day of May, 1990, by and
-- --- --
between CROW-ALAMEDA LIMITED PARTNERSHIP as Landlord, and STATIONER'S
DISTRIBUTING COMPANY, INC., as Tenant, covering the premises known as that
approximate 81,400 s.f. of space located at The Alameda Distribution Center,
1009-1017 Alameda Drive, Tempe, Arizona 85282.
RECITALS:
--------
1A. Landlord and Tenant have heretofore entered into that certain Lease
Agreement Number 801014-01-0012, dated March 4, 1988 (the "Lease") and the
------- --
Addendum dated March 10, 1988, the term of which expires March 31, 1993.
-------- --
B. Landlord and Tenant desire to renew the Lease on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
convenants herein contained, it is agreed as follows:
(a) The renewal term of the Lease shall be for thirty-six
----------
(36) months, commencing on April 1, 1993, and expiring on March 31, 1996.
-- ------- -- -------- --
(b) The base rent payable under Paragraph 2A of the Lease shall be
$24,420.00 per month upon commencement of the renewal term.
---------
(c) Landlord will provide Tenant with a $10,000.00 refurbishment
allowance, payable within sixty (60) days after executing this Agreement.
(d) Landlord shall become responsible for repairing damage to the
expansion joints within the warehouse during the entire term of this Lease.
Within thirty (30) days after executing this agreement, Landlord shall repair
280 lineal feet.
All other applicable terms, covenants, and conditions of the Base Lease shall
apply during this renewal lease term.
IN WITNESS WHEREOF, the parties have executed this Lease Renewal Agreement
as of the date first set forth above.
LANDLORD:
CROW-ALAMEDA LIMITED PARTNERSHIP, A
TEXAS LIMITED PARTNERSHIP
/s/Wilford M. Farnsworth,
-------------------------------
By: Wilford M. Farnsworth, III
Title: Managing General Partner
Executed by Tenant this 7th day of June, 1990.
TENANT:
STATIONERS DISTRIBUTING COMPANY, INC.
/s/ B. Neal Perkey VPs CFO
----------------------------------
By: B. Neal Perkey
Title: Vice President & Chief
Financial Off:
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
That approximate 110,000 square feet located at the Alamada Distribution
Center, 1005-1017 W. Alamada Drive, Tempe, A2 35282.
[DIAGRAM APPEARS HERE]
<PAGE>
LETTER AGREEMENT 3/10/88
<PAGE>
[Letterhead of Trammell Crow Company appears here]
William D Petsas Commercial
Two North Central Avenue
Suite 400
Phoenix, Arizona 85004
March 10, 1988
602/254-1500
Mr. Rob Hicks
STATIONERS DISTRIBUTING CO.
1009-1017 W. Alameda Dr.
Tempe, AZ 85282
RE: Addendum to Lease Agreement Number 801014-01-0012 dated March 4, 1988, for
approximately 81,400 square feet at the Alameda Distribution Center, 1009-
1019 W. Alameda Drive, Tempe, AZ 85282.
Dear Rob:
The parties hereto agree that the provisions of this Addendum to Lease Agreement
shall constitute an integral part of the Lease Agreement, between Crow-Alameda
Limited Partnership as Landlord, and Stationers Distributing Company, Inc. as
Tenant, and in the event of a conflict between the terms and provisions
contained in this Addendum to Lease Agreement and the terms and provisions set
forth in the Lease Agreement, the terms and provisions contained in this
Addendum to Lease Agreement shall govern and prevail.
Paragraph 31. A new Paragraph 31 is hereby added to the Lease Agreement as
------------
follows :
"31. Option to Renew.
Tenant shall have the right and option to renew this Lease for two (2)
additional terms of five (5) years each by delivering written notice of the
exercise thereof to Landlord at least 180 days prior to the expiration of the
primary lease term or any extension thereof pursuant to this paragraph, provided
that at the time of any such notice and at the commencement of any such extended
lease term Tenant is not in default hereunder. Upon the delivery of said notice
and subject to the conditions set forth in the preceding sentence, and upon the
execution by Landlord and Tenant of an extension agreement containing such terms
and provisions which are consistent with the provisions of this paragraph, this
Lease shall be extended upon the same terms, covenants and conditions as
provided in this Lease except as follows:
A. The Base Monthly Rent shall be established between Landlord and Tenant
at the market rate in effect at that time. If both parties are unable
to agree to a market rate and both parties consent to be bound, then
the method described in the following subparagraph B may be used to
determine the market rate.
<PAGE>
Trammell Crow Company
Mr. Rob Hicks
March 10, 1988
Page 2
B. In the event this Lease provides for the payment of rental at "the
prevailing rental rate" or at "the market rate" (the "Market Rate")
during the primary term hereof or during any extension or renewal
thereof or in connection with any expansion of the premises, and during
the primary term hereof or during any extension or renewal thereof or
in connection with any expansion of the premises, and Landlord and
Tenant are unable to agree upon the Market Rate, Landlord and Tenant
shall each promptly appoint a real estate appraiser who is a member of
the American Institute of Real Estate Appraisers (or its equivalent) to
assist in the determination of the Market Rate, and the two appraisers
shall appoint a third appraiser who is also a member of the American
Institute of Real Estate Appraisers (or its equivalent). The
determination of the Market Rate by the agreement of any two of such
three appraisers shall be accepted by and binding upon Landlord and
Tenant as the Market Rate, which rate shall thereafter be payable until
further adjustment as provided hereunder. Landlord and Tenant will use
all reasonable diligence to cause their appointed appraisers to perform
in good faith and in a timely manner in order to make the determination
of the Market Rate on or before the date on which the Market Rate is to
become effective. In the event such appraisers shall not make such
determination prior to the date on which the Market Rate is to become
effective, this Lease shall nevertheless continue in full force and
effect until such determination is made, and the rental for such period
shall be payable at the rate otherwise payable hereunder. Upon the
determination by such appraisers of the Market Rate, the payment of
the Market Rate shall commence on the first day of the month following
the date of such determination, and in addition to such monthly
installment of rental, Tenant shall pay to Landlord the increase in the
rental payable hereunder, if any, applicable to the period from the
date on which the Market Rate was scheduled to become effective to the
payment of the first installment at the Market Rate. Landlord and
Tenant shall each bear the costs and fees of their respective
appraisers and shall share equally the cost of the third appraiser."
Paragraph 32. A new Paragraph 32 is hereby added to the Lease Agreement as
------------
follows:
"32. Expansion Option.
Tenant is hereby granted the option to expand into Premises C (as shown on
the attached exhibit). Premises C is comprised of approximately 28,600 square
feet, and the right hereby granted gives Tenant the right to expand into the
entire 28,600 square feet or the southern-most 10,560 square feet of Premises C.
This option is subject to the following conditions:
<PAGE>
Trammell Crow Company
Mr. Rob Hicks
March 10, 1988
Page 4
Premises A. If Tenant so chooses, Tenant will be responsible for returning the
18,040 square foot premises to the Landlord in good condition, normal wear and
tear excepted. Tenant shall pay to Landlord as additional rent, the difference
between the rental amount that would have been owed on the 18,040 square feet
and the rent that is due on the 10,560 square feet. At such time as Landlord
commences to receive, from another tenant, rent on such 18,040 square feet,
Tenant's obligation to pay the difference in rent between the 18,040 square feet
and the 10,560 square feet (as noted above) is terminated."
All other terms, covenants and conditions of the Lease Agreement shall remain in
full force and effect, and apply to any expansions exercised hereunder.
Sincerely,
/s/William D. Petsas
William D. Petsas
Marketing
Signed and agreed to this ___________ day of ____________________________, 1988.
LANDLORD: CROW-ALAMEDA LIMITED TENANT: Stationers Distributing
PARTNERSHIP, a Texas Limited Company, Inc.
Partnership
/s/Wilford M. Farnsworth, III [SIGNATURE NOT LEGIBLE]
- --------------------------------------- --------------------------------
By Wilford M. Farnsworth, III
as Attorney in Fact for
Charles R. Paul,
Managing General Partner
<PAGE>
Trannell Crow Company
Mr. Rob Hicks
March 10, 1988
Page 3
1. No such option exists until the Lease with Welch Distributing, or its
assigns, has expired (whether through expiration of the initial term,
extensions that may be negotiated, or expiration of any options to
renew heretofore granted) or by other earlier termination of the Lease
Agreement.
2. Tenant has not been and is not currently in default of the Lease
Agreement.
3. Tenant agrees to pay all costs incidental to such expansion including,
but not limited to costs of constructing any demising partitions
(particularly given the expansion by 10,560 square feet), wiring and/or
re-wiring of any light fixtures to correspond with Tenant's electrical
plan, any architectural, engineering, or any municipal permit fees
required, and any other cost associated with such a move.
4. The Base Monthly Rent shall be increased as follows:
In the event Tenant chooses to expand by 10,560 square feet, the
additional Base Monthly Rent from April 1, 1988 through October 31,
1989 shall be $2,956.80, thereafter, for each month until March 31,
1993 the increase in the monthly rent shall be $3,168.00. In the event
the Tenant chooses to expand by 28,600 square feet, the increase in the
Base Monthly Rent from April 1, 1988 through October 31, 1989 shall be
$8,008.00, and thereafter, until March 31, 1993 the increase in the
Base Monthly Rent shall be $8,580.00 per month.
Upon written notification from Landlord that Premises C has become available, or
will become available, Tenant will have five (5) working days to sign such
documentation consistent with this option paragraph which Landlord deems
necessary to effectuate such change in the Lease Agreement. If Landlord has not
received such documentation by the end of the fifth working day, this option
will be null and void and of no effect.
In the event Tenant signs the documentation amending the Lease Agreement for
28,600 square feet of Premises C, Landlord and Tenant will immediately, at
Tenant's option and upon Tenant's written request, further amend the Lease
Agreement to reduce the Leased Premises by the 18,040 square feet known as
Exhibit A. If Tenant so chooses, Tenant will be responsible for returning the
18,040 square foot premises to the Landlord in good condition, normal wear and
tear excepted.
In the event Tenant signs the documentation amending the Lease Agreement for
10,560 square feet of Premises C, Landlord and Tenant will immediately, at
Tenant's option and upon Tenant's written request, further amend the Lease
Agreement to reduce the Leased Premises by the 18,040 square feet known as
<PAGE>
ADDENDUM TO LEASE 11/30/92
<PAGE>
ADDENDUM TO LEASE
THIS ADDENDUM TO LEASE is made this 30th day of November, 1992, to be
----
effective December 1, 1992, by and between SECURITY CAPITAL INDUSTRIAL
---------------------------
INVESTORS INCORPORATED, formerly INDUSTRIAL PROPERTY INVESTORS, INC.,
- ---------------------- --------
("Landlord") and UNITED STATIONERS SUPPLY CO., ("Tenant").
RECITALS
--------
A. Landlord (by Crow-Alameda Limited Partnership, predecessor-in-interest)
heretofore entered into a certain Lease Agreement Number 801014-01-0012 (the
"Lease"), dated March 4, 1988 with STATIONERS DISTRIBUTING COMPANY, INC.
("Stationers") covering the premises located at The Alameda Distribution Center,
1009-1017 Alameda Drive, Tempe, Arizona, 85282, containing approximately 81,400
square feet.
B. The Lease has previously been amended, the most recent amendment being
dated May 31, 1990, which amendment, among other things, extended the term of
the Lease to March 31, 1996.
C. Stationers has been merged with and into Tenant as of June 24, 1992,
and Tenant has, by reason of the merger, succeeded to all of the interests and
obligations of Stationers under the Lease, as amended.
D. Tenant desires to lease from Landlord, and Landlord desires to lease to
Tenant, adjacent space containing approximately 28,600 square feet.
THEREFORE, in consideration of the mutual agreements herein contained, the
parties agree that the Lease be amended as follows:
1. Assumption of Interest in Lease. Tenant, as successor in interest to
-------------------------------
STATIONERS DISTRIBUTING COMPANY, INC. ("Stationers") by reason of merger,
assumed all of the rights and obligations of Stationers as tenant in and under
the Lease.
2. Premises: Effective December 1, 1992, the leased premises are increased
--------
by approximately 28,600 square feet, to include the area described in and
outlined in red on Exhibit A attached hereto, commonly known as 1005 West
Alameda, Tempe, Arizona.
3. Base Rent: Effective April 1, 1993, the base rent for the premises
---------
including the additional portion added by this Addendum shall be increased
by $7,150.00 per month. Monthly Rent as increased shall be $31,570.00.
4. Operating Expenses: 1993 operating expenses for the premises,
------------------
including taxes, insurance, utilities, and common area maintenance shall be
$.0755 per square foot per month.
5. Improvements: Landlord, at its expense, shall make the following
------------
improvements:
(a) Paint, recarpet and repair as necessary, the existing office
space in the premises at 1005 West Alameda.
(b) Install two openings in the south demising wall separating the
original premises from the additional space, at locations to be designated by
Tenant.
<PAGE>
(c) Install metal-halide warehouse lighting per attached Richco
Electric bid and specifications.
(d) Service all HVAC equipment currently existing in the premises.
(e) Update electrical service to Tenant's requirements.
6. Condition of Premises: Landlord shall deliver the additional portion of
---------------------
the premises to Tenant in broom-clean condition, with the roof and structure,
all HVAC equipment, overhead doors and electrical, and plumbing and sprinkler
systems in good operating condition. Except as specified above, Tenant agrees to
accept the additional premises in its present condition.
7. Commencement Date: The commencement date for the occupancy of the
-----------------
additional portion of the premises shall be December 1, 1992. All improvements
specified herein shall be completed prior to the commencement date.
8. Environmental: Tenant shall indemnify and save Landlord harmless from
-------------
any costs, expenses, losses or damages (including reasonable attorney's fees and
expenses) arising out of any violation or claimed violation of any federal,
state or local environmental law or regulation, caused by Tenant or Tenant's use
and occupancy of the premises.
Landlord shall indemnify and save Tenant harmless from any costs, expenses,
losses, or damages (including reasonable attorney's fees and expenses) arising
out of any violation or claimed violation of any federal, state or local
environmental law or regulation arising prior to Tenant's occupancy of the
additional premises or due to any cause other than Tenant or Tenant's use and
occupancy of the premises.
Except as so amended herein, the Lease is otherwise in full force and
effect according to its terms.
LANDLORD: SECURITY CAPITAL INDUSTRIAL TENANT:
INVESTORS INCORPORATED (formerly
Industrial Property Investors, Inc.) United Stationers Supply Co.,
an Illinois corporation
By: /s/Robert A. Taitt By: /s/Otis H Halleen
------------------------------- -------------------------------
Its: Vice President Its: Vice President
------------------------------- -------------------------------
<PAGE>
EXHIBIT A
[FLOOR PLAN APPEARS HERE]
- -----------------------------------------------------------------------------
FEATURES
-------- . Security lighting
. Building spaces-18,040 s.f., . 8 10' x 10' rail doors
42,030 s.f.,21,330 s.f.,28,600 s.f . 12 10' x 10' truck doors
. Dock-High . Fully sprinklered
. Rail-served by Southern Pacific . Gas available, electric
. 24' clear height service by SRP
. Foil insulation on roof deck . 3 phase, 120/280 Volts
. Column spacing 48' x 48' . 136 parking spaces
. 36 4' x 8' skylights in warehouse . Mature landscaping
. 4 dock levelers . Office area
- -----------------------------------------------------------------------------
<PAGE>
EXHIBIT D
---------
ADDENDUM TO LEASE
THIS ADDENDUM TO LEASE is made this 30th day of November, 1992, to be
----
effective December 1, 1992, by and between SECURITY CAPITAL INDUSTRIAL
---------------------------
INVESTORS INCORPORATED, formerly INDUSTRIAL PROPERTY INVESTORS, INC.,
- ---------------------- --------
("Landlord") and UNITED STATIONERS SUPPLY CO., ("Tenant").
RECITALS
--------
A. Landlord (by Crow-Alameda Limited Partnership, predecessor-in-interest)
heretofore entered into a certain Lease Agreement Number 801014-01-0012 (the
"Lease"), dated March 4, 1988 with STATIONERS DISTRIBUTING COMPANY, INC.
("Stationers") covering the premises located at The Alameda Distribution Center,
1009-1017 Alameda Drive, Tempe, Arizona, 85282, containing approximately 81,400
square feet.
B. The Lease has previously been amended, the most recent amendment being
dated May 31, 1990, which amendment, among other things, extended the term of
the Lease to March 31, 1996.
C. Stationers has been merged with and into Tenant as of June 24, 1992,
and Tenant has, by reason of the merger, succeeded to all of the interests and
obligations of Stationers under the Lease, as amended.
D. Tenant desires to lease from Landlord, and Landlord desires to lease to
Tenant, adjacent space containing approximately 28,600 square feet.
THEREFORE, in consideration of the mutual agreements herein contained, the
parties agree that the Lease be amended as follows:
1. Assumption of Interest in Lease. Tenant, as successor in interest to
-------------------------------
STATIONERS DISTRIBUTING COMPANY, INC. ("Stationers") by reason of merger,
assumed all of the rights and obligations of Stationers as tenant in and under
the Lease.
2. Premises: Effective December 1, 1992, the leased premises are increased
--------
by approximately 28,600 square feet, to include the area described in and
outlined in red on Exhibit A attached hereto, commonly known as 1005 West
Alameda, Tempe, Arizona.
3. Base Rent: Effective April 1, 1993, the base rent for the premises
---------
including the additional portion added by this Addendum shall be increased
by $7,150.00 per month. Monthly Rent as increased shall be $31,570.00.
4. Operating Expenses: 1993 operating expenses for the premises,
------------------
including taxes, insurance, utilities, and common area maintenance shall be
$.0755 per square foot per month.
5. Improvements: Landlord, at its expense, shall make the following
------------
improvements:
(a) Paint, recarpet and repair as necessary, the existing office
space in the premises at 1005 West Alameda.
(b) Install two openings in the south demising wall separating the
original premises from the additional space, at locations to be designated by
Tenant.
<PAGE>
(c) Install metal-halide warehouse lighting per attached Richco
Electric bid and specifications.
(d) Service all HVAC equipment currently existing in the premises.
(e) Update electrical service to Tenant's requirements.
6. Condition of Premises: Landlord shall deliver the additional portion of
---------------------
the premises to Tenant in broom-clean condition, with the roof and structure,
all HVAC equipment, overhead doors and electrical, and plumbing and sprinkler
systems in good operating condition. Except as specified above, Tenant agrees to
accept the additional premises in its present condition.
7. Commencement Date: The commencement date for the occupancy of the
-----------------
additional portion of the premises shall be December 1, 1992. All improvements
specified herein shall be completed prior to the commencement date.
8. Environmental: Tenant shall indemnify and save Landlord harmless from
-------------
any costs, expenses, losses or damages (including reasonable attorney's fees and
expenses) arising out of any violation or claimed violation of any federal,
state or local environmental law or regulation, caused by Tenant or Tenant's use
and occupancy of the premises.
Landlord shall indemnify and save Tenant harmless from any costs, expenses,
losses, or damages (including reasonable attorney's fees and expenses) arising
out of any violation or claimed violation of any federal, state or local
environmental law or regulation arising prior to Tenant's occupancy of the
additional premises or due to any cause other than Tenant or Tenant's use and
occupancy of the premises.
Except as so amended herein, the Lease is otherwise in full force and
effect according to its terms.
LANDLORD: SECURITY CAPITAL INDUSTRIAL TENANT:
INVESTORS INCORPORATED (formerly
Industrial Property Investors, Inc.) United Stationers Supply Co.,
an Illinois corporation
By: /s/Robert A. Taitt By: /s/Otis H Halleen
------------------------------- -----------------------------
Its: Vice President Its: Vice President
------------------------------- -----------------------------
<PAGE>
EXHIBIT A
[FLOOR PLAN APPEARS HERE]
- -----------------------------------------------------------------------------
FEATURES
-------- . Security lighting
. Building spaces-18,040 s.f., . 8 10' x 10' rail doors
42,030 s.f.,21,330s.f.,28,600 s.f . 12 10' x 10' truck doors
. Dock-High . Fully sprinklered
. Rail-served by Southern Pacific . Gas available, electric
. 24' clear height service by SRP
. Foil insulation on roof deck . 3 phase, 120/280 Volts
. Column spacing 48' x 48' . 136 parking spaces
. 36 4' x 8' skylights in warehouse . Mature landscaping
. 4 dock levelers . Office area
- -----------------------------------------------------------------------------
<PAGE>
[Letterhead of Trammell Crow Company appears here]
Two North Central Avenue
December 1, 1992 Suite 400
Phoenix, Arizona 85004-2322
Mr. Otis H. Halleen 602/254-1500
V.P., Secretary and
General Counsel
UNITED STATIONERS SUPPLY CO.
2200 E. Golf Road
Des Plaines, IL 60016-1267
Re: Addendum to Lease No. 801014-01-0012
Dear Mr. Halleen:
Pursuant to the terms, covenants and conditions of the above referenced
Addendum, it is hereby agreed and understood that the following items shall be
modified:
Par. 5 (e) Upgraded electrical service allowance shall not exceed $3,100.00.
Par. 7 The Commencement date of this Addendum shall be December 1, 1992.
Tenant shall be granted immediate access to the warehouse portion of
the premises while Landlord completes those items so referenced in
Paragraph 5 (a) thru (e) as expeditiously as feasible and Tenant
agrees to fully cooperate with Landlord's contractor in completion
of same.
Your continued interest and support of this property is greatly appreciated.
Respectfully,
/s/Jim F. Clark
Jim F. Clark
Marketing Director
Trammell Crow Asset Manager
for Industrial Properties Investors, Inc.
Signed and agreed to on this 1st day of December 1992 by:
--- ----
LANDLORD: SECURITY CAPITAL INDUSTRIAL TENANT:
INVESTORS INCORPORATED (formerly
INDUSTRIAL PROPERTY INVESTORS, INC.) UNITED STATIONERS SUPPLY CO.,
an Illinois Corporation
By: /s/Robert A Taitt By: /s/Otis H. Halleen
-------------------------------- -------------------------------
Its: Vice President Its: Vice President
---------------------------- ---------------------------
<PAGE>
LETTER AGREEMENT 12/1/92
<PAGE>
[LOGO OF UNITED STATIONERS SUPPLY CO. APPEARS HERE]
- -------------------------------------------------------------------------------
EXECUTIVE OFFICES A subsidiary of UNITED STATIONERS INC.
2200 E. Golf Road
Des Plaines, IL 60016-1267
708/699-5000
December 10, 1992
TRAMMEL CROW COMPANY
Two North Central Avenue
Suite 400
Phoenix, Arizona 85004-2322
ATTN: Jim F. Clark
Marketing Director
RE: Addendum to Lease
No. 801014-01-0012
Dear Jim:
Enclosed are two signed copies of the clarification letter.
We greatly appreciate your cooperation.
Sincerely,
/s/Otis
Otis H. Halleen
Vice President, Secretary
and General Counsel
Enclosures
<PAGE>
[Letterhead of Trammell Crow Company appears here]
Two North Central Avenue
December 1, 1992 Suite 400
Phoenix, Arizona 85004-2322
Mr. Otis H. Halleen 602/254-1500
V.P., Secretary and
General Counsel
UNITED STATIONERS SUPPLY CO.
2200 E. Golf Road
Des Plaines, IL 60016-1267
Re: Addendum to Lease No. 801014-01-0012
Dear Mr. Halleen:
Pursuant to the terms, covenants and conditions of the above referenced
Addendum, it is hereby agreed and understood that the following items shall be
modified:
Par. 5 (e) Upgraded electrical service allowance shall not exceed $3,100.00.
Par. 7 The Commencement date of this Addendum shall be December 1, 1992.
Tenant shall be granted immediate access to the warehouse portion of
the premises while Landlord completes those items so referenced in
Paragraph 5 (a) thru (e) as expeditiously as feasible and Tenant
agrees to fully cooperate with Landlord's contractor in completion
of same.
Your continued interest and support of this property is greatly appreciated.
Respectfully,
/s/ Jim F. Clark
Jim F. Clark
Marketing Director
Trammell Crow Asset Manager
for Industrial Properties Investors, Inc.
Signed and agreed to on this 1st day of December 1992 by:
--- ----
LANDLORD: SECURITY CAPITAL INDUSTRIAL TENANT:
INVESTORS INCORPORATED (formerly
INDUSTRIAL PROPERTY INVESTORS, INC.) UNITED STATIONERS SUPPLY CO.,
an Illinois Corporation
By: /s/Robert A Taitt By: /s/Otis H. Halleen
-------------------------------- ----------------------------
Its: Vice President Its: Vice President
---------------------------- ------------------------
<PAGE>
[Letterhead of Trammell Crow company appears here]
Jim F. Clark Commercial
December 8, 1992 Marketing Principal Two North Central Avenue
Suite 400
Phoenix, Arizona 85004
Mr. Otis H. Halleen 602/254-1500
Vice President, Secretary
and General Counsel
UNITED STATIONERS SUPPLY CO.
2200 E. Golf Road
Des Plaines, IL 60016-1267
Re: Addendum to Lease No. 801014-01-0012
Alameda
Dear Mr. Halleen:
Please find enclosed a fully executed Addendum and an Agreement Clarification
Letter to be signed by you.
Our client, Security Capital Industrial Investors Incorporated (formerly
Industrial Property Investors, Inc.), wanted to make sure that their exposure
on item 5(e) would be limited to $3,100.00 or less based on a low bid to
replace an outdated Sylvania Breaker Panel in the warehouse area of United
Stationers Supply Co.'s main facility.
They also felt that the additional month's free rent specified in the Addendum
was satisfactory; however, they felt that in exchange for this, the Addendum
would have to start December 1, 1992 as drawn.
The Tenant Improvements have been started and, with the exception of the
warehouse lighting, should be completed by Friday, December 11, 1992. The
lighting has to be special ordered. Meanwhile, your people can have full access
to the additional space.
I hope this meets with your satisfaction and your continued interest in this
property is greatly appreciated.
Respectfully,
Jim F. Clark
Marketing Director
Trammell Crow Asset Manager for
Security Capital Industrial Investors Incorporated
\dq
Enclosures
<PAGE>
EXHIBIT 10.30
Southern California Chapter of the
[LOGO OF SIOR APPEARS HERE] Society of Industrial and Office Realtors,(R) Inc.
INDUSTRIAL REAL ESTATE LEASE
(MULTI-TENANT FACILITY)
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and are
to be read in conjunction with the Basic Terms.
Section 1.01. DATE OF LEASE: May 17, 1993
---------------------------------------------
Section 1.02. LANDLORD (INCLUDE LEGAL ENTITY): MAJESTIC REALTY CO. AND
---------------------------
PATRICIAN ASSOCIATES, INC., both California corporations
- --------------------------------------------------------------------------------
Address of Landlord: 13191 Crossroads Parkway North, Sixth Floor, City of
-----------------------------------------------------------
Industry, California 91746
- --------------------------------------------------------------------------------
Section 1.03. TENANT (INCLUDE LEGAL ENTITY): UNITED STATIONERS SUPPLY
-----------------------------
CO., an Illinois corporation
- --------------------------------------------------------------------------------
Address of Tenant: 2200 East Golf Road, Des Plaines, Illinois 60016-1267
--------------------------------------------------------------
- --------------------------------------------------------------------------------
Section 1.04. PROPERTY: The Property is part of Landlord's multitenant
real property development known as that approximately 250,000 sq. ft. industrial
---------------------------------------------
building situated on 13.95 acres of land more commonly known as 18305 - 18385 E.
- ---------------------------------------------------------------------
San Jose Avenue, City of Industry and described of depicted in Exhibit "A" (the
"Project"). The Project includes the land, the buildings and all other
improvements located on the land, and the common areas described in Paragraph
4.05(a). The Property is (include street address, approximate square footage and
description) that approximately 125,000 sq. ft. portion of the Project &
-------------------------------------------------------------------
associated paving, landscaping and other improvements thereon as shown on
- --------------------------------------------------------------------------------
Exhibit "A" attached hereto and made a part thereof and more commonly known as
- --------------------------------------------------------------------------------
18385 East San Jose Avenue, City of Industry, subject to the rights of adjoining
- --------------------------------------------------------------------------------
properties to use the arealabeled "Common Ingress and Egress".
- --------------------------------------------------------------------------------
Section 1.05. LEASE TERM: 5 years -- months beginning on June 1,
------- ------- ----------
1993 or such other date as is specified in this Lease, and ending on May 31,
- ---- ------------
1998
- --------------------------------------------------------------------------------
Section 1.06. PERMITTED USES: (See Article Five) Warehousing and
--------------------------
distribution of office supplies, furniture and equipment only.
- --------------------------------------------------------------- ----------------
Section 1.07. TENANT'S GUARANTOR: (If none, so state) None
---------------------
Section 1.08. BROKERS: (See Article Fourteen) (If none, so state)
Landlord's Broker: Majestic Realty Co.
-------------------------------------------------------------
Tenant's Broker: The Seeley Co.
---------------------------------------------------------------
Section 1.09. COMMISSION PAYABLE TO LANDLORD'S BROKER: (See Article
Fourteen) S per agreement
--------------------------------------------------------------------
Section 1.10. INITIAL SECURITY DEPOSIT: (See Section 3.03) S None
-------------
Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (See Section
4.05) 121 cars
--------------------------------------------------------------------------
Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT: THIRTY FIVE THOUSAND AND NO/100-------------Dollars
($35,000.00) per month for all 60 months, as provided in Section 3.01.
--------- -------------
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02):
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.0);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses 50 %
------------
(See Section 4.05); (v) Impounds for Insurance Premiums and Property Taxes (See
Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article Six).
Section 1.13. LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE:
(See Section 9.05) fifty percent ( 50 %) of the Profit (the
---------------- --------
"Landlord's Share").
Section 1.14. RIDERS: The following Riders are attached to and made a
part of this Lease: (If none, so state) ________________________________________
________________________________________________________________________________
Rider pages 1 through 13, Option to Extend Term Lease Rider, Exhibits "A", "B",
- --------------------------------------------------------------------------------
"C", "D", and "E"
- --------------------------------------------------------------------------------
1 Initials ____________________
(Multi-Tenant Net Form) ____________________
<PAGE>
ARTICLE TWO: LEASE TERM
Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the beginning
or end of the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term, unless advanced or delayed under any provision of
this Lease.
Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to
Tenant if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord's non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. If Landlord does not deliver possession of the Property to Tenant within
sixty (60) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the sixty
(60) -day period ends. If Tenant gives such notice, the Lease shall be cancelled
and neither Landlord nor Tenant shall have any further obligations to the other.
If Tenant does not give such notice, Tenant's right to cancel the Lease shall
expire and the Lease Term shall commence upon the delivery of possession of the
Property to Tenant. If delivery of possession of the Property to Tenant is
delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to
this Lease setting forth the actual Commencement Date and expiration date of the
Lease. Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.
Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse Landlord
for and indemnify Landlord against all damages which Landlord incurs from
Tenant's delay in vacating the Property. If Tenant does not vacate the Property
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant. Tenant's occupancy of the property shall be a
"month-to-month" tenancy, subject to all of the terms of this Lease applicable
to a month-to-month tenancy, except that the Base Rent then in effect shall be
increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01. TIME AND MANNER OF PAYMENT. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.
Section 3.02. COST OF LIVING INCREASES. The "Index" described in the
attached Option to Extend Term Lease Rider shall be the United States Department
of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban
Consumers (all items for the geographical Statistical Area in which the Property
is located on the base of 1982-1984 = 100). If the format or components of the
Index are materially changed after the Commencement Date, Landlord shall
substitute an index which is published by the Bureau of Labor Statistics or
similar agency and which is most nearly equivalent to the Index in effect on the
Commencement Date. The substitute index shall be used to calculate the increase
in the Base Rent unless Tenant objects to such index in writing within fifteen
(15) days after receipt of Landlord's notice. If Tenant objects, Landlord and
Tenant shall submit the selection of the substitute index for binding
arbitration in accordance with the rules and regulations of the American
Arbitration Association at its office closest to the Property. The costs of
arbitration shall be borne equally by Landlord and Tenant.
2 Initials ______________________
(Mutli-Tenant Net Form) ______________________
<PAGE>
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent" Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02. PROPERTY TAXES.
(a) REAL PROPERTY TAXES. Tenant shall pay all real property taxes on the
Property (including any fees, taxes or assessments against, or as a result of,
any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08
below, such payment shall be made at least ten (10) days prior to the
delinquency date of the taxes. Within such ten (10) -day period. Tenant shall
furnish Landlord with satisfactory evidence that the real property taxes have
been paid. Landlord shall reimburse Tenant for any real property taxes paid by
tenant covering any period of time prior to or after the Lease Term. If Tenant
fails to pay the real property taxes when due, landlord may pay the taxes and
Tenant shall reimburse Landlord for the amount of such tax payment as Additional
Rent. Alternatively, Landlord may elect to bill Tenant in advance for such taxes
and Tenant shall pay Landlord the amount of such taxes, as Additional Rent, at
least ten (10) days prior to delinquency. Landlord shall pay such taxes prior to
delinquency provided Tenant has timely made such payments to Landlord. Any
penalty caused by Tenant's failure to timely make such payments shall also be
Additional Rent owed by Tenant immediately upon demand.
(b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i) any
fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority against
the Property; (ii) any tax on the Landlord's right to receive, or the receipt of
rent or income from the Property or against Landlord's business of leasing the
Property; (iii) any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord's interest in the
Property; and (v) any charge or fee replacing any tax previously included within
the definition of real property tax. "Real property tax" does not, however,
include Landlord's federal or state income, franchise, inheritance or estate
taxes.
(c) JOINT ASSESSMENT. As used herein, "real property taxes" for the
Property shall be Tenant's pro-rata share as defined in Section 1.12(b) (iv) of
the real property taxes for the Project.
(d) PERSONAL PROPERTY TAXES.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from the
property.
(ii) If any of Tenant's personal property is taxed with the Property,
Tenant shall pay Landlord the taxes for the personal property within
fifteen (15) days after Tenant receives a written statement from Landlord
for such personal property taxes.
Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. 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.
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Section 4.04. INSURANCE POLICIES.
(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form
comprehensive general liability insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the Property. Tenant
shall name Landlord as an additional insured under such policy. The initial
amount of such insurance shall be Three Million Dollars ($3,000,000) per
occurrence. The liability insurance obtained by Tenant under this Paragraph
4.04(a) shall (i) be primary and non-contributing; (ii) contain cross-liability
endorsements; and (iii) insure Landlord against Tenant's performance under
Section 5.05, if the matters giving rise to the indemnity under Section 5.05
result from the negligence of Tenant. The amount and coverage of such insurance
shall not limit Tenant's liability nor relieve Tenant of any other obligation
under this Lease. Landlord may also obtain comprehensive public liability
insurance in an amount and with coverage determined by Landlord insuring
Landlord against liability arising out of ownership, operation, use or occupancy
of the Property. The policy obtained by Landlord shall not be contributory and
shall not provide primary insurance.
(b) PROPERTY AND RENTAL INCOME INSURANCE. During the Lease Term, Landlord
shall maintain policies of insurance covering loss of or damage to the Property
in the full amount of its replacement value. Such policy shall contain an
Inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain insurance
for Tenant's fixtures or equipment or building improvements installed by Tenant
on the Property. During the Lease Term, Landlord shall also maintain a rental
income insurance policy, with loss payable to Landlord, in an amount equal to
one year's Base Rent, plus estimated real property taxes and insurance premiums.
Tenant shall be liable for the payment of any deductible amount under Landlord's
or Tenant's insurance policies maintained pursuant to this Section 4.04 (other
than Landlord's liability insurance) in an amount not to exceed Ten Thousand
Dollars ($10,000). Tenant shall not do or permit anything to be done which
invalidates any such insurance policies.
(c) PAYMENT OF PREMIUMS. Subject to Section 4.08, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after Tenant's
receipt of a copy of the premium statement or other evidence of the amount due,
except Landlord shall pay all premiums for non-primary comprehensive public
liability insurance which Landlord elects to obtain as provided in Paragraph
4.04(a). For insurance policies maintained by Landlord which cover improvements
on the entire Project. Tenant shall pay Tenant's prorated share of the premiums,
in accordance with the formula in Paragraph 4.05(e) for determining Tenant's
share of Common Area costs. If insurance policies maintained by Landlord cover
improvements on real property other than the Project, Landlord shall deliver to
Tenant a statement of the premium applicable to the Property showing in
reasonable detail how Tenant's share of the premium was computed. If the Lease
Term expires before the expiration of an insurance policy maintained by
Landlord, Tenant shall be liable for Tenant's prorated share of the insurance
premiums. Before the Commencement Date, Tenant shall deliver to Landlord a copy
of any policy of insurance which Tenant is required to maintain under this
Section 4.04. At least thirty (30) days prior to the expiration of any such
policy, Tenant shall deliver to Landlord a renewal of such policy. As an
alternative to providing a policy of insurance, Tenant shall have the right to
provide Landlord a certificate of insurance, executed by an authorized officer
of the insurance company, showing that the insurance which Tenant is required to
maintain under this Section 4.04 is in full force and effect and containing such
other information which Landlord reasonably requires.
(d) GENERAL INSURANCE PROVISIONS.
(i) Any insurance which Tenant is required to maintain under this
Lease shall include a provision which requires the insurance carrier to
give Landlord not less than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.
(ii) If Tenant fails to deliver any policy, certificate or renewal to
Landlord required under this Lease within the prescribed time period or if
any such policy is cancelled or modified during the Lease Term without
Landlord's consent, Landlord may obtain such insurance, in which case
Tenant shall reimburse Landlord for the cost of such insurance within
fifteen (15) days after receipt of a statement that indicates the cost of
such insurance.
(iii) Tenant shall maintain all insurance required under this Lease
with companies holding a "General Policy Rating" of A-12 or better, as set
forth in the most current issue of "Best Key Rating Guide". Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04 may not be
available in the future. Tenant acknowledges that the insurance described
in this Section 4.04 is for the primary benefit of Landlord. If at any time
during the Lease Term, Tenant is unable to maintain the insurance required
under the Lease, Tenant shall nevertheless maintain insurance coverage
which is customary and commercially reasonable in the insurance industry
for Tenant's type of business, as that coverage may change from time to
time. Landlord makes no representation as to the adequacy of such insurance
to protect Landlord's or Tenant's interests. Therefore, Tenant shall obtain
any such additional property or liability insurance which Tenant deems
necessary to protect Landlord and Tenant.
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(iv) Unless prohibited under applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all rights of recovery
against the other, or against the officers, employees, agents or representatives
of the other, for loss of or damage to its property or the property of others
under its control, if such loss or damage is covered by any insurance policy in
force (whether or not described in this Lease) at the time of such loss or
damage. Upon obtaining the required policies of insurance, Landlord and Tenant
shall give notice to the insurance carriers of this mutual waiver of
subrogation.
Section 4.05. COMMON AREAS; USE, MAINTENANCE AND COSTS.
(a) COMMON AREAS. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant.
Such activities and changes are permitted if they do not materially affect
Tenant's use of the Property.
(b) USE OF COMMON AREAS. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or may
grant such rights) to use the Common Areas for the purposes intended, subject to
such reasonable rules and regulations as Landlord may establish from time to
time. Tenant shall abide by such rules and regulations and shall use its best
effort to cause others who use the Common Areas with Tenant's express or implied
permission to abide by Landlord's rules and regulations. At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the Project provided such closure
shall not unreasonably interfere with Tenant's use of or access to the Property.
Tenant shall not interfere with the rights of Landlord, other tenants or any
other person entitled to use the Common Areas.
(c) SPECIFIC PROVISION RE: VEHICLE PARKING. Tenant shall be entitled to
use the number of vehicle parking spaces in the Project allocated to Tenant in
Section 1.11 of the Lease without paying any additional rent. Tenant's parking
shall not be reserved and shall be limited to vehicles no larger than standard
size automobiles or pickup utility vehicles. Tenant shall not cause large trucks
or other large vehicles to be parked within the Project or on the adjacent
public streets. Temporary parking of large delivery vehicles in the Project may
be permitted by the rules and regulations established by Landlord. Vehicles
shall be parked only in striped parking spaces and not in driveways, loading
areas or other locations not specifically designated for parking. Handicapped
spaces shall only be used by those legally permitted to use them. If Tenant
parks more vehicles in the parking area than the number set forth in Section
1.11 of this Lease, such conduct shall be a material breach of this Lease. In
addition to Landlord's other remedies under the Lease, Tenant shall pay a daily
charge determined by Landlord for each such additional vehicle.
(d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
in good order, condition and repair and shall operate the Project, in Landlord's
sole discretion, as a first-class industrial/commercial real property
development. Tenant shall pay Tenant's pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of the Common
Areas. Common Area costs include, but are not limited to, costs and expenses for
the following: gardening and landscaping; utilities, water and sewage charges;
maintenance of signs (other than tenants' signs): premiums for liability,
property damage, fire and other types of casualty insurance on the Common Areas
and worker's compensation insurance; all property taxes and assessments levied
on or attributable to the Common Areas and all Common Area improvements; all
personal property taxes levied on or attributable to personal property used in
connection with the Common Areas; straight-line depreciation on personal
property owned by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance of the Common Areas; fees
for required licenses and permits; repairing, resurfacing, repaving,
maintaining, painting, lighting, cleaning, refuse removal, security and similar
items; and a reasonable allowance to Landlord for Landlord's supervision of the
Common Areas (not to exceed five percent (5%) of the gross rents of the Project
for the calendar year). Landlord may cause any or all of such services to be
provided by third parties and the cost of such services shall be included in
Common Area costs. Common Area costs shall not include depreciation of real
property which forms part of the Common Areas.
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(e) TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenant's annual pro rata
share of all Common Area costs (prorated for any fractional month) upon written
notice from Landlord that such costs are due and payable, and in any event prior
--
to delinquency. Tenant's pro rata share shall be calculated by dividing the
square foot area of the Property, as set forth in Section 1.04 of the Lease, by
the aggregate square foot area of the Project which is leased or held for lease
by tenants, as of the date on which the computation is made. Tenant's initial
pro rata share is set out in Paragraph 1.12(b). Any changes in the Common Area
costs and/or the aggregate area of the Project leased or held for lease during
the Lease Term shall be effective on the first day of the month after such
change occurs. Landlord may, at Landlord's election, estimate in advance and
charge to Tenant as Common Area costs, all maintenance and repair costs for
which Tenant is liable under Section 6.04 of the Lease, and all other Common
Area costs payable by Tenant hereunder. At Landlord's election, such statements
of estimated Common Area costs shall be delivered monthly, quarterly or at any
other periodic intervals to be designated by Landlord. Landlord may adjust such
estimates at any time based upon Landlord's experience and reasonable
anticipation of costs. Such adjustments shall be effective as of the next rent
payment date after notice to Tenant. Within sixty (60) days after the end of
each calendar year of the Lease Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by
Landlord during the preceding calendar year and Tenant's pro rata share. Upon
receipt of such statement, there shall be an adjustment between Landlord and
Tenant, with payment to or credit given by Landlord (as the case may be) so that
Landlord shall receive the entire amount of Tenant's share of such costs and
expenses for such period.
Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed encumbering the
Property. Therefore, if Landlord does not receive any rent payment within ten
(10) days after it becomes due, Tenant shall pay Landlord a late charge equal to
ten percent (10%) of the overdue amount. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment.
Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant
to Landlord which is not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this Lease
is higher than the rate permitted by law, the interest rate is hereby decreased
to the maximum legal interest rate permitted by law.
Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES.
If requested by any ground lessor or lender to whom Landlord has granted a
security interest in the Property, or if Tenant is more than ten (10) days late
in the payment of rent more than once in any consecutive twelve (12) -month
period. Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the
annual real property taxes and insurance premiums payable by Tenant under this
Lease, together with each payment of Base Rent. Landlord shall hold such
payments in a non-interest bearing impound account. If unknown, Landlord shall
reasonably estimate the amount of real property taxes and insurance premiums
when due. Tenant shall pay any deficiency of funds in the impound account to
Landlord upon written request. If Tenant defaults under this Lease, Landlord may
apply any funds in the impound account to any obligation then due under this
Lease.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.
Section 5.02. MANNER OF USE. Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
tenants of the Project, or which constitutes a nuisance or waste. Tenant shall
obtain and pay for all permits, including a Certificate of Occupancy, required
for Tenant's occupancy of the Property and shall promptly take all actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act. See Rider Section
5.03
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Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.
Section 5.05. INDEMNITY. Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant's use of the Property; (b) the conduct of Tenant's business or anything
else done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant's obligations under this Lease;
(d) any misrepresentation or breach of warranty by Tenant under this Lease; or
(e) other acts or omissions of Tenant. Tenant shall defend Landlord against any
such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord. As a material part of the consideration to Landlord,
Tenant assumes all risk of damage to property or injury to persons in or about
the Property arising from any cause, and Tenant hereby waives all claims in
respect thereof against Landlord, except for any claim arising out of Landlord's
gross negligence or willful misconduct. As used in this Section, the term
"Tenant" shall include Tenant's employees, agents, contractors and invitees, if
applicable.
Section 5.06. LANDLORD'S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall give
Tenant prior notice of such entry, except in the case of an emergency. Landlord
may place customary "For Sale" or "For Lease" signs on the Property.
Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. EXISTING CONDITIONS.* Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant's intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto.
Section 6.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant. Tenant's
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions arising in or about the
Property or upon other portions of the Project, or from other sources or places;
or (d) any act or omission of any other tenant of the Project. Landlord shall
not be liable for any such damage or injury even though the cause of or the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's gross negligence or willful misconduct.
Section 6.03. LANDLORD'S OBLIGATIONS.
(a) Except as provided in Article Seven (Damage or Destruction) and
Article Eight (Condemnation). Landlord shall keep the following in good order,
condition and repair: the foundations, exterior walls and roof of the Property
(including painting the exterior surface of the exterior walls of the Property
not more often than once every five (5) years, if necessary) and all components
of electrical, mechanical, plumbing, heating and air conditioning systems and
facilities located in the Property which are concealed or used in common by
tenants of the Project. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the interior surfaces of exterior walls.
Landlord shall make repairs under this Section 6.03 within a reasonable time
after receipt of written notice from Tenant of the need for such repairs.
(b) Tenant shall pay or reimburse Landlord for all costs Landlord incurs
under Paragraph 6.03(a) above as Common Area costs as provided for in Section
4.05 of the Lease.** Tenant waives the benefit of any statute in effect now or
in the future which might give Tenant the right to make repairs at Landlord's
expense or to terminate this Lease due to Landlord's failure to keep the
Property in good order, condition and repair.
*Landlord shall deliver the Property to Tenant in compliance with all
applicable laws including, but not limited to, the Americans with Disabilities
Act, as applied to a "non-public" facility. Furthermore, Landlord and Tenant
shall meet within fourteen days (14) of Tenant's occupancy to agree upon a
"punchlist" of non-working items in the Property as of the Commencement Date,
which items Landlord shall promptly repair. Except as set forth above, and
except for completion of Tenant Improvements,
**provided, however, in no event shall Tenant's share of Common Area
Expenses attributable to roof, foundation and structural repairs exceed ONE
THOUSAND AND NO/100 DOLLARS ($1,000.00) per calendar year.
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Section 6.04. TENANT'S OBLIGATIONS.
(a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all portions of
the Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior repainting
and refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the Property
or system or equipment in the Property, regardless of whether the benefit of
such replacement extends beyond the Lease Term; but if the benefit or useful
life of such replacement extends beyond the Lease Term (as such term may be
extended by exercise of any options), the useful life of such replacement shall
be prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that portion of the cost which is applicable to
the Lease Term (as extended). Tenant shall maintain a preventive maintenance
contract providing for the regular inspection and maintenance of the heating and
air conditioning system by a licensed heating and air conditioning contractor,
unless Landlord maintains such equipment under Section 6.03 above. If any part
of the Property or the Project is damaged by any act or omission of Tenant,
Tenant shall pay Landlord the cost of repairing or replacing such damaged
property, whether or not Landlord would otherwise be obligated to pay the cost
of maintaining or repairing such property. It is the intention of Landlord and
Tenant that at all times Tenant shall maintain the portions of the Property
which Tenant is obligated to maintain in an attractive, first-class and fully
operative condition.
(b) Tenant shall fulfil all of Tenant's obligations under this Section
6.04 Tenant's sole expense. If Tenant fails to maintain, repair or replace the
Property as required by this Section 6.04, Landlord may, upon ten (10) days'
prior notice to Tenant except that no notice shall be required in the case of an
emergency), enter the Property and perform such maintenance or repair (including
replacement, as needed) on behalf of Tenant. In such case, Tenant shall
reimburse Landlord for all costs incurred in performing such maintenance or
repair immediately upon demand.
Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord's prior written consent, except for non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in cost
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.
(b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days' prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.
Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required
to repair under Article Seven (Damage or Destruction). In addition, Landlord
may require Tenant to remove any alterations, additions or improvements other
than the Tenant Improvements described herein (whether or not made with
Landlord's consent) prior to the expiration of the Lease and to restore the
Property to its prior condition, all at Tenant's expense. All alterations,
additions and improvements which Landlord has not required Tenant to remove
shall become Landlord's property and shall be surrendered to Landlord upon the
expiration or earlier termination of the Lease, except that Tenant may remove
any of Tenant's machinery or equipment which can be removed without material
damage to the Property. Tenant shall repair, at Tenant's expense, any damage to
the Property caused by the removal of any such machinery or equipment. In no
event, however, shall Tenant remove any of the following materials or equipment
(which shall be deemed Landlord's property) without Landlord's prior written
consent: any power wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or other floor
coverings; heaters, air conditioners or any other heating or air conditioning
equipment; fencing or security gates; or other similar building operating
equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. PARTIAL DAMAGE TO PROPERTY
(a) Tenant shall notify Landlord in writing immediately upon occurrence of
any damage to the Property. If the Property is only partially damaged (i.e.,
less than twenty five percent (25%) of the Property is untenantable as a result
of such damage or less than twenty five percent (25%) of Tenant's operations are
materially impaired) and if the proceeds received by Landlord from the insurance
policies described in Paragraph 4.04(b) are sufficient to pay for the necessary
repairs, this Lease shall remain in effect and Landlord shall repair the damage
as soon as reasonably possible. Landlord may elect (but is not required) to
repair any damage to Tenant's fixtures, equipment, or improvements.
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(b) If the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, in which case this Lease shall remain in full force and effect, or
(ii) terminate this Lease as of the date the damage occurred. Landlord shall
notify Tenant within thirty (30) days after the occurrence of the damage whether
Landlord elects to repair the damage or terminate the Lease. If Landlord elects
to repair the damage, Tenant shall pay Landlord the "deductible amount" (if any)
under Landlord's insurance policies and, if the damage was due to an act or
omission of Tenant, or Tenant's employees, agents, contractors or invitees, the
difference between the actual cost of repair and any insurance proceeds received
by Landlord. If Landlord elects to terminate this Lease, Tenant may elect to
continue this Lease in full force and effect, in which case Tenant shall repair
any damage to the Property and any building in which the Property is located.
Tenant shall pay the cost of such repairs, except that upon satisfactory
completion of such repairs, Landlord shall deliver to Tenant any insurance
proceeds received by Landlord for the damage repaired by Tenant. Tenant shall
give Landlord written notice of such election within ten (10) days after
receiving Landlord's termination notice.
(c) If the damage to the Property occurs during the last six (6) months of
the Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of the
date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.
Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred at the election of
either party.
Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Tenant's use of the Property is impaired. However, the reduction
shall not exceed the sum of one year's payment of Base Rent, insurance premiums
and real property taxes. Except for such possible reduction in Base Rent,
insurance premiums and real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a result of any
damage, destruction, repair, or restoration of or to the Property.
Section 7.04. WAIVER. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is taken, either
Landlord or Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice to the other
within ten (10) days after receipt of written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
takes title or possession). If neither Landlord nor Tenant terminates this
Lease, this Lease shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord's expense.
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ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below, Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent. Tenant is a
corporation, any change in the ownership of a controlling interest of the voting
stock of the corporation shall require Landlord's consent.
Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all of
Tenant's obligations under this Lease.
Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Tenant's transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Tenant's transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Tenant's liability under
this Lease.
Section 9.05. LANDLORD'S CONSENT.
(a) Tenant's request for consent to any transfer described in Section 9.01
shall set forth in writing the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord deems relevant. Landlord shall have the right to terminate
this Lease or to withhold consent, if reasonable, or to grant consent, based on
the following factors: (i) the business of the proposed assignee or subtenant
and the proposed use of the Property; (ii) the net worth and financial
reputation of the proposed assignee or subtenant; (iii) Tenant's compliance with
all of its obligations under the Lease; and (iv) such other factors as Landlord
may reasonably deem relevant. If Landlord objects to a proposed assignment
solely because of the net worth and/or financial reputation of the proposed
assignee, Tenant may nonetheless sublease (but not assign), all or a portion of
the Property to the proposed transferee, but only on the other terms of the
proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the Lease
the Landlord's Share (stated in Section 1.13) of the Profit (defined below)
on such transaction as and when received by Tenant, unless Landlord gives
written notice to Tenant and the assignee or subtenant that Landlord's
Share shall be paid by the assignee or subtenant to Landlord directly. The
"Profit" means (A) all amounts paid to Tenant for such assignment or
sublease, including "key" money, monthly rent in excess of the monthly rent
payable under the Lease, and all fees and other consideration paid for the
assignment or sublease, including fees under any collateral agreements,
less (B) costs and expenses directly incurred by Tenant in connection with
the execution and performance of such assignment or sublease for real
estate broker's commissions and costs of renovation or construction of
tenant improvements required under such assignment or sublease. Tenant is
entitled to recover such costs and expenses before Tenant is obligated to
pay the Landlord's Share to Landlord. The Profit in the case of a sublease
of less than all the Property is the rent allocable to the subleased space
as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the Property within
thirty (30) days after the transaction documentation is signed, and
Landlord may inspect Tenant's books and records to verify the accuracy of
such statement. On written request, Tenant shall promptly furnish to
Landlord copies of all the transaction documentation, all of which shall be
certified by Tenant to be complete, true and correct. Landlord's receipt of
Landlord's Share shall not be a consent to any further assignment or
subletting. The breach of Tenant's obligation under this Paragraph 9.05(b)
shall be a material default of the Lease.
(c) See Rider Section 9.05 (c)
Section 9.06. NO MERGER. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
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ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. Covenants and Conditions. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned on such
performance. Time is of the essence in the performance of all covenants and
conditions.
Section 10.02. DEFAULTS. Tenant shall be in material default under this
Lease:
(a) If Tenant abandons the Property or if Tenant's vacation of the
Property results in the cancellation of any insurance described in Section 4.04;
(b) If Tenant fails to pay rent or any other charge when due;
(c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) -day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is tended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.
(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition or adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days. If a court of competent jurisdiction determines that any of
the acts described in this subparagraph (d) is not a default under this Lease,
and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent
(or any other consideration) paid in connection with such assignment or sublease
over the rent payable by Tenant under this Lease.
Section 10.03. REMEDIES. On the occurrence of any material default by
Tenant. Landlord may, at any time thereafter, with three (3) days prior written
notice (which notice may be in the form of a three (3) day notice to pay rent or
quit) or demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent. Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Tenant would have paid
for the balance of the Lease term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, any costs or expenses Landlord incurs
in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Landlord's reasonable
attorneys' fees incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the "worth at the time
of the award" is computed by allowing interest on unpaid amounts at the rate of
fifteen percent (15%) per annum, or such lesser amount as may then be the
maximum lawful rate. As used in subpart (iii) above, the "worth at the time of
the award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one percent
(1%). If Tenant has abandoned the Property, Landlord shall have the option of
(i) retaking possession of the Property and recovering from Tenant the amount
specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);
(b) Maintain Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due:
(c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.
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Section 10.04. REPAYMENT OF "FREE" RENT. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated Rent".
Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant's obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition required
by this Lease. Tenant acknowledges that its right to receive credit for the
Abated Rent is absolutely conditioned upon Tenant's full, faithful and punctual
performance of its obligations under this Lease. If Tenant defaults and does not
cure within any applicable grace period, the Abated Rent shall immediately
become due and payable in full and this Lease shall be enforced as if there were
no such rent abatement or other rent concession. In such case Abated Rent shall
be calculated based on the full initial rent payable under this Lease.
Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence of
any act which affirms the Landlord's intention to terminate the Lease is
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination. Landlord's damages for default shall
include all costs and fees, including reasonable attorneys' fees that Landlord
incurs in connection with the successful filing, commencement, pursuing and/or
defending of any action in any bankruptcy court or other court with respect to
the Lease; the obtaining of relief from any stay in bankruptcy restraining any
action to evict Tenant; or the pursuing of any action with respect to Landlord's
right to possession of the Property. All such damages suffered (apart from Base
Rent and other rent payable hereunder) shall constitute pecuniary damages which
must be reimbursed to Landlord prior to assumption of the Lease by Tenant or any
successor to Tenant in any bankruptcy or other proceeding.
Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall execute
such further documents and assurances as such lender may require, in the form
attached hereto as Exhibit "B" or such other form as is then required by
Landlord's lender, provided that Tenant's obligations under this Lease shall not
be increased in any material way (the performance of ministerial acts shall not
be deemed material), and Tenant shall not be deprived of its rights under this
Lease. Tenant's right to quiet possession of the Property during the Lease Term
shall not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.
Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale. Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten (10)
days after receipt of written request. Tenant hereby makes, constitutes and
irrevocably appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. ESTOPPEL CERTIFICATES.
(a) Upon Landlord's written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement in the form attached hereto as Exhibit
"C" or such other form as is then required by Landlord's lender, certifying: (i)
that none of the terms or provisions of this Lease have been changed (or if they
have been changed, stating how they have been changed); (ii) that this Lease has
not been cancelled or terminated; (iii) the last date of payment of the Base
Rent and other charges and the time period covered by such payment; (iv) that
Landlord is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why); and (v) such other representations or information with
respect to Tenant or the Lease as Landlord may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require. Tenant shall
deliver such statement to Landlord within ten (10) days after receipt of
Landlord's request. Landlord may give any such statement by Tenant to any
prospective purchaser or encumbrancer of the Property. Such purchaser or
encumbrancer may rely conclusively upon such statement as true and correct.
(b) If Tenant does not deliver such statement to Landlord within such ten
(10) -day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been cancelled or terminated except as
otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be estopped from denying
the truth of such facts.
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Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property,
Tenant represents and warrants to Landlord that each such financial statement is
a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01 LEGAL PROCEEDINGS. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the "Defaulting Party") shall reimburse
the other party (the "Nondefaulting Party") upon demand for any costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys' fees and
costs. The losing party in such action shall pay such attorneys' fees and costs.
Tenant shall also indemnify Landlord against and hold Landlord harmless from all
costs, expenses, demands and liability Landlord may incur if Landlord becomes or
is made a party to any claim or action (a) instituted by Tenant against any
third party, or by any third party against Tenant, or by or against any person
holding any interest under or using the Property by license of or agreement with
Tenant; (b) for foreclosure of any lien for labor or material furnished to or
for Tenant or such other person; (c) otherwise arising out of or resulting from
any act or transaction of Tenant or such other person; or (d) necessary to
protect Landlord's interest under this Lease in a bankruptcy proceeding, or
other proceeding under Title 11 of the United States Code, as amended. Tenant
shall defend Landlord against any such claim or action at Tenant's expense with
counsel reasonably acceptable to Landlord or, at Landlord's election. Tenant
shall reimburse Landlord for any legal fees or costs Landlord incurs in any such
claim or action.
Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for Landlord's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.
Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet been
applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not be
in default under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant's notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default if such
cure is commenced within such thirty (30) -day period and thereafter diligently
pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.
Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.04. INTERPRETATION. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permiss ion.
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Section 13.05. INCORPORATION OF PRIOR AGREEMENTS: MODIFICATIONS. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
Section 13.06. NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered sent by legible telecopy
with hard copy to follow by mail, sent by authorized prepaid overnight delivery
or sent by certified mail, return receipt requested, postage prepaid. Notices to
Tenant shall be delivered to the address specified in Section 1.03 above.
Notices to Landlord shall be delivered to the address specified in Section 1.02
above. All notices shall be effective upon delivery. Either party may change its
notice address upon written notice to the other party.
Section 13.07. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
Section 13.08. NO RECORDATION. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form" memorandum of this Lease executed by both parties be
recorded. The party requiring such recording shall pay all transfer taxes and
recording fees.
Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord.
Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.
Section 13.12. FORCE MAJEURE. If either party cannot perform any of its
obligations due to events beyond its control, the time provided for performing
such obligations shall be extended by a period of time equal to the duration of
such events. Events beyond control include, but are not limited to, acts of God,
war, civil commotion, labor disputes, strikes, fire, flood or other casualty,
shortages of labor or material, government regulation or restriction and weather
conditions.
Section 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 13.14. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. BROKER'S FEE. When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord's Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord's Broker, or the sum stated in
Section 1.09 above for services rendered to Landlord by Landlord's Broker in
this transaction. Landlord shall pay Landlord's Broker a commission if Tenant
exercises any option to extend the Lease Term or to buy the Property, or any
similar option or right which Landlord may grant to Tenant, or if Landlord's
Broker is the procuring cause of any other lease or sale entered into between
Landlord and Tenant covering the Property. Such commission shall be the amount
set forth in Landlord's Broker's commission schedule in effect as of the
execution of this Lease. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of its commission to Tenant's
Broker if so provided in any agreement between Landlord's Broker and Tenant's
Broker. Nothing contained in this Lease shall impose any obligation on Landlord
to pay a commission or fee to any party other than Landlord's Broker.
Section 14.02. PROTECTION OF BROKERS. If Landlord sells the Property, or
assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys' fees
shall be fixed by the court in such action. This Paragraph is included in this
Lease for the benefit of Landlord's Broker.
14 Initials _____________________
(Multi-Tenant Net Form) _____________________
<PAGE>
Section 14.03. BROKER'S DISCLOSURE OF AGENCY. Landlord's Broker hereby
discloses to Landlord and Tenant and Landlord and Tenant hereby consent to
Landlord's Broker acting in this transaction as the agent of (check one):
[X] Landlord exclusively; or
[_] both Landlord and Tenant.
Section 14.04. NO OTHER BROKERS. Tenant represents and warrants to
Landlord that the brokers named in Section 1.08 above are the only agents,
brokers, finders or other parties with whom Tenant has dealt who are or may be
entitled to any commission or fee with respect to this Lease or the Property.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED
HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED,
PLEASE DRAW A LINE THROUGH THE SPACE BELOW.
Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialled all Riders
which are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on _________________, 19____ MAJESTIC REALTY CO., a California
--------------------------------------
corporation
at ________________________________. BY:
______________________________________
By: __________________________________
PATRICIAN ASSOCIATES, INC., a
--------------------------------------
California corporation
----------
By: __________________________________
BY: __________________________________
"TENANT"
Signed on June 3, , 1993 UNITED STATIONERS SUPPLY CO., an
------------------ --- --------------------------------------
Illinois corporation
at Des Ploines, Illinois
------------------------------. ______________________________________
By:___________________________________
Its: Vice President
----------------------------------
By: __________________________________
Its: _________________________________
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION
OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS,<RM> INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS,<RM> INC.,
ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO
ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.
15 Initials ___________________
(Multi-Tenant Net Form) ___________________
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
SECTION 5.03 HAZARDOUS MATERIALS:
-------------------
5.03.1 DEFINITIONS.
-----------
A. "Hazardous Material" means any substance, whether solid, liquid
------------------
or gaseous in nature:
(i) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law; or
(ii) which is or becomes defined as a "hazardous waste",
"hazardous substance," pollutant or contaminant under any
federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. section 9601 et
seq.) and/or the Resource Conservation and Recovery Act (42
U.S.C. section 6901 et seq.); or
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous or is or becomes regulated by any
governmental authority, agency, department, commission,
board, agency or instrumentality of the United States, the
State of California or any political subdivision thereof;
or
(iv) the presence of which on the Property causes or threatens
to cause a nuisance upon the Property or to adjacent
properties or poses or threatens to pose a hazard to the
health or safety of persons on or about the Property; or
(v) the presence of which on adjacent properties could
constitute a trespass by Tenant; or
(vi) without limitation which contains gasoline, diesel fuel or
other petroleum hydrocarbons; or
(vii) without limitation which contains polychlorinated biphenyls
(PCBs), asbestos or urea formaldehyde foam insulation; or
1
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
(viii) without limitation which contains radon gas.
B. "Environmental Requirements" means all applicable present and
--------------------------
future:
(i) statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations,
concessions, franchises, and similar items (including, but
not limited to those pertaining to reporting, licensing,
permitting, investigation and remediation), of all
Governmental Agencies; and
(ii) all applicable judicial, administrative, and regulatory
decrees, judgments, and orders relating to the protection
of human health or the environment,
including, without limitation, all requirements pertaining to
emissions, discharges, releases, or threatened releases of
Hazardous Materials or chemical substances into the air, surface
water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Materials or chemical
substances.
C. "Environmental Damages" means all claims, judgments, damages,
---------------------
losses, penalties, fines, liabilities (including strict
liability), encumbrances, liens, costs, and expenses (including
the expense of investigation and defense of any claim, whether or
not such claim is ultimately defeated, or the amount of any good
faith settlement or judgment arising from any such claim) of
whatever kind or nature, contingent or otherwise, matured or
unmatured, foreseeable or unforeseeable (including without
limitation reasonable attorneys' fees and disbursements and
consultants' fees) any of which are incurred at any time as a
result of the existence of Hazardous Material upon, about, or
beneath the Property or migrating or threatening to migrate to or
from the
2
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
Property, or the existence of a violation of Environmental
Requirements pertaining to the Property and the activities
thereon, regardless of whether the existence of such Hazardous
Material or the violation of Environmental Requirements arose
prior to the present ownership or operation of the Property.
Environmental Damages include, without limitation:
(i) damages for personal injury, or injury to property or
natural resources occurring upon or off of the Property,
including, without limitation, lost profits, consequential
damages, the cost of demolition and rebuilding of any
improvements on real property, interest, penalties and
damages arising from claims brought by or on behalf of
employees of Tenant (with respect to which Tenant waives
any right to raise as a defense against Landlord any
immunity to which it may be entitled under any industrial
or worker's compensation laws);
(ii) fees, costs or expenses incurred for the services of
attorneys, consultants, contractors, experts, laboratories
and all other costs incurred in connection with the
investigation or remediation of such Hazardous Materials or
violation of such Environmental Requirements, including,
but not limited to, the preparation of any feasibility
studies or reports or the performance of any cleanup,
remediation, removal, response, abatement, containment,
closure, restoration or monitoring work required by any
Governmental Agency or reasonably necessary to make full
economic use of the Property or any other property in a
manner consistent with its current use or otherwise
expended in connection with such conditions, and including
without limitation any attorneys' fees, costs and expenses
3
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
incurred in enforcing the provisions of this Lease or
collecting any sums due hereunder;
(iii) liability to any third person or Governmental Agency to
indemnify such person or Governmental Agency for costs
expended in connection with the items referenced in
subparagraph (ii) above; and
(iv) diminution in the fair market value of the Property
including without limitation any reduction in fair market
rental value or life expectancy of the Property or the
improvements located thereon or the restriction on the use
of or adverse impact on the marketing of the Property or
any portion thereof.
D. "Governmental Agency" means all governmental agencies,
-------------------
departments, commissions, boards, bureaus or instrumentalities of
the United States, states, counties, cities and political
subdivisions thereof.
E. The "Tenant Group" means Tenant, Tenant's successors,
------------
assignees, guarantors, officers, directors, agents, employees,
invitees, permitees or other parties under the supervision or
control of Tenant or entering the Property during the term of this
Lease with the permission or knowledge of Tenant other than
Landlord or its agents or employees.
5.03.2 PROHIBITIONS.
------------
A. Other than normal quantities of general office supplies and except
as specified on Exhibit "D" attached hereto, Tenant shall not
cause, permit or suffer any Hazardous Material to be brought upon,
treated, kept, stored, disposed of, discharged, released,
produced, manufactured, generated, refined or used upon, about or
beneath the Property by The Tenant Group, or any other person
without the prior written consent of Landlord. From time to time
during the term of this Lease, Tenant may request Landlord's
approval of Tenant's
4
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
use of other Hazardous Materials, which approval may be withheld
in Landlord's sole discretion. Tenant shall, prior to the
Commencement Date, provide to Landlord for those Hazardous
Materials described on Exhibit "D" (a) a description of handling,
storage, use and disposal procedures, and (b) all "community right
to know" plans or disclosures and/or emergency response plans
which Tenant is required to supply to local governmental agencies
pursuant to any Environmental Requirements.
B. Tenant shall not cause, permit or suffer the existence or the
commission by The Tenant Group, or by any other person, of a
violation of any Environmental Requirements upon, about or beneath
the Property.
C. Tenant shall neither create or suffer to exist, nor permit The
Tenant Group to create or suffer to exist any lien, security
interest or other charge or encumbrance of any kind with respect
to the Property, including without limitation, any lien imposed
pursuant to section 107 (f) of the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. section 9607 (1)) or any
similar state statute.
D. Tenant shall not install, operate or maintain any above or below
grade tank, sump, pit, pond, lagoon or other storage or treatment
vessel or device on the property without Landlord's prior written
consent.
5.03.3 INDEMNITY.
---------
A. Tenant, its successors, assigns and guarantors, agree to
indemnify, defend, reimburse and hold harmless:
(i) Landlord; and
(ii) any other person who acquires all or a portion of the
Property in any manner (including purchase at a foreclosure
sale) or who becomes entitled to exercise the rights
5
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
and remedies of Landlord under this Lease; and
(iii) the directors, officers, shareholders, employees, partners,
agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees,
successors, assigns and invitees of such persons,
from and against any and all Environmental Damages which exist as
a result of the activities and negligence of The Tenant Group or
which exist as a result of the breach of any warranty or covenant
or the inaccuracy of any representation of Tenant contained in
this Lease, or by Tenant's remediation of the Property or failure
to meet its remediation obligations contained in this Lease.
Landlord shall indemnify, defend, reimburse and hold Tenant and
its employees, directors, officers and agents harmless from and
against any other Environmental Damages which exist on the
Property as of the Commencement Date of this Lease or which are
placed on the Property by Landlord, its agents, employees or
contractors.
B. The obligations contained in this Section 5.03 shall include, but
not be limited to, the burden and expense of defending all claims,
suits and administrative proceedings, even if such claims, suits
or proceedings are groundless, false or fraudulent, and conducting
all negotiations of any description, and paying and discharging,
when and as the same become due, any and all judgments, penalties
or other sums due against such indemnified persons. Each party, at
its sole expense, may employ additional counsel of its choice to
associate with counsel representing the other party.
C. The indemnified party shall have the right but not the obligation
to join and participate in, and Landlord may control, if it so
elects, any legal proceedings or actions initiated in connection
6
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
with the indemnifying party's activities. Landlord may also
negotiate, defend, approve and appeal any action taken or issued
by any applicable governmental authority with regard to
contamination of the Property by a Hazardous Material.
D. The obligations in this paragraph shall survive the expiration or
termination of this Lease.
E. The obligations under this paragraph shall not be affected by any
investigation by or on behalf of the other party, or by any
information which the other party may have or obtain with respect
thereto.
5.03.4 OBLIGATION TO REMEDIATE.
-----------------------
In addition to the obligations to indemnify pursuant to this Lease,
the indemnifying party shall, upon approval and demand of the indemnified
parties, at its sole cost and expense and using contractors approved by
Landlord, promptly take all actions to remediate the Property which are required
by any Governmental Agency, or which are reasonably necessary to mitigate
Environmental Damages or to allow full economic use of the Property, which
remediation is necessitated from the presence upon, about or beneath the
Property, at any time during or upon termination of this Lease, of a Hazardous
Material or a violation of Environmental Requirements existing as a result of
the activities or negligence of the indemnifying party. Such actions shall
include, but not be limited to, the investigation of the environmental condition
of the Property, the preparation of any feasibility studies, reports or remedial
plans, and the performance of any cleanup, remediation, containment, operation,
maintenance, monitoring or restoration work, whether on or off the Property,
which shall be performed in a manner approved by Landlord. The indemnifying
party shall take all actions necessary to restore the Property to the condition
existing prior to the introduction of Hazardous Material upon, about or beneath
the Property, notwithstanding any lesser standard of remediation allowable under
applicable law or governmental policies.
7
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
5.03.5 RIGHT TO INSPECT.
----------------
Landlord shall have the right in its sole and absolute discretion, but
not the duty, to enter and conduct an inspection of the Property, including
invasive tests, at any reasonable time to determine whether Tenant is complying
with the terms of the Lease, including but not limited to the compliance of the
Property and the activities thereon with Environmental Requirements and the
existence of Environmental Damages as a result of the condition of the Property
or surrounding properties and activities thereon. Landlord shall have the right,
but not the duty, to retain any independent professional consultant (the
"Consultant") to enter the Property to conduct such an inspection or to review
any report prepared by or for Tenant concerning such compliance. The cost of the
Consultant shall be paid by Landlord unless such investigation discloses a
violation of any Environmental Requirement by The Tenant Group or the existence
of a Hazardous Material on the Property or any other property caused by the
activities or negligence of The Tenant Group (other than Hazardous Materials
used in compliance with all Environmental Requirements and previously approved
by Landlord), in which case Tenant shall pay the cost of the Consultant. Tenant
hereby grants to Landlord, and the agents, employees, consultants and
contractors of Landlord the right to enter the Property and to perform such
tests on the Property as are reasonably necessary to conduct such reviews and
investigations. Landlord shall use its best efforts to minimize interference
with the business of Tenant.
5.03.6 NOTIFICATION.
------------
If Tenant shall become aware of or receive notice or other
communication concerning any actual, alleged, suspected or threatened violation
of Environmental Requirements, or liability of Tenant for Environmental Damages
in connection with the Property or past or present activities of any person
thereon, including but not any actual or threatened investigation, inquiry,
lawsuit, claim, citation, directive, summons, proceeding, complaint, notice,
order, writ, or injunction, relating to same, then Tenant shall deliver to
Landlord within ten (10) days of the receipt of such notice or communication by
Tenant, a written description of said violation, liability, or actual or
threatened
8
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
event or condition, together with copies of any documents evidencing same.
Receipt of such notice shall not be deemed to create any obligation on the part
of Landlord to defend or otherwise respond to any such notification.
Prior to the Commencement Date of this Lease, and on January 1 of each
year thereafter (each such date being hereafter referred to as a "Disclosure
Date"), Tenant shall disclose to Landlord the names and amounts of all Hazardous
Materials other than general office supplies referred to in Section 5.03.2 of
this Rider, which were used, generated, treated, handled, stored or disposed of
on the Property or which Tenant intends to use, generate, treat, handle, store
or dispose of on the Property, for the year prior to and after such Disclosure
Date. The foregoing in no way shall limit the necessity for Tenant obtaining
Landlord's consent pursuant to Section 5.03.2 of this Rider.
5.03.7 SURRENDER OF PREMISES.
---------------------
In the ninety (90) days prior to the expiration or termination of the
Lease Term, and for up to ninety (90) days after Tenant fully surrenders
possession of the Property, Landlord may have an environmental assessment of the
Property performed in accordance with Section 5.03.5 of this Rider. Tenant shall
perform, at its sole cost and expense, any clean-up or remedial work recommended
by the Consultant which is necessary to remove, mitigate or remediate any
Hazardous Materials and/or contamination of the Property caused by the
activities or negligence of The Tenant Group.
5.03.8 ASSIGNMENT AND SUBLETTING.
-------------------------
In the event the Lease provides that Tenant may assign the Lease or
sublet the Property subject to Landlord's consent and/or certain other
conditions, and if the proposed assignee's or sublessee's activities in or about
the Property involve the use, handling, storage or disposal of any Hazardous
Materials other than those used by Tenant and in quantities and processes
similar to Tenant's uses in compliance with the Rider, (i) it shall be
reasonable for Landlord to withhold its consent to such assignment or sublease
in light of the risk of contamination posed by such activities and/or (ii)
Landlord may impose an additional condition to such assignment or sublease which
requires Tenant to reasonably establish that such assignee's or sublessee's
activities pose no materially greater risk of
9
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
contamination to the Property than do Tenant's permitted activities in view of
the (a) quantities, toxicity and other properties of the Hazardous Materials to
be used by such assignee or sublessee, (b) the precautions against a release of
Hazardous Materials such assignee or sublessee agrees to implement, (c) such
assignee's or sublessee's financial condition as it relates to its ability to
fund a major clean-up and (d) such assignee's or sublessee's policy and
historical record respecting its willingness to respond to the clean up of a
release of Hazardous Materials.
5.03.9 SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION.
------------------------------------------
A party's breach of any of its covenants or obligations under this
Rider shall constitute a material default under the Lease. The obligations of
the parties under this Rider shall survive the expiration or earlier termination
of the Lease without any limitation, and shall constitute obligations that are
independent and severable from Tenant's covenants and obligations to pay rent
under the Lease.
5.03.10 ENVIRONMENTAL AUDIT:
-------------------
Landlord has ordered an environmental assessment of the Property and
shall provide Tenant a copy upon receipt.
SECTION 9.05 LANDLORD'S CONSENT:
------------------
(c) If Landlord elects to terminate this Lease pursuant to Section 9.05
(a), Landlord may, if it elects, enter into a new lease covering the Property
with the intended assignee or sublessee on such terms as Landlord and such
person may agree or enter into a new lease covering the Property with any other
person; in such event, Tenant shall not be entitled to any portion of the
profit, if any, which Landlord may realize on account of such termination and
reletting. From and after the date of such termination of this Lease, Tenant
shall have no further obligation to Landlord hereunder, except for matters
occurring or obligations arising hereunder prior to the date of such
termination.
ARTICLE FIFTEEN: REVENUE AND EXPENSE ACCOUNTING:
------------------------------
Landlord and Tenant agree that, for all purposes (including
any determination under Section 467 of the Internal Revenue Code), rental income
will accrue to the Landlord
10
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
and rental expenses will accrue to the Tenant in the amounts and as of the dates
rent is payable under the Lease.
ARTICLE SIXTEEN: LANDSCAPE MAINTENANCE:
---------------------
Notwithstanding the provisions of Sections 6.03 and 6.04,
Landlord shall maintain, at Tenant's expense, the landscaping of the Premises
and, if applicable, the common areas. Such maintenance shall include gardening,
tree trimming, replacement or repair of landscaping, landscape irrigation
systems and similar items. Such maintenance shall also include sweeping and
cleaning of asphalt, concrete or other surfaces on the driveway, parking areas,
yard areas, loading areas or other paved or covered surfaces. In connection with
Landlord's obligations under this Article, Landlord may enter into a contract
with a landscape contractor of Landlord's choice to provide some (but not
necessarily all) of the maintenance services listed above. Tenant's pro-rata
share of the monthly cost of such contract, hereinafter referred to as the
"Landscape Fee" is currently SIX HUNDRED AND SIXTY AND NO/100 DOLLARS ($660.00).
Landlord shall use its best efforts to maintain competitive contracts and shall
promptly notify Tenant of any increase in the Landscape Fee. Tenant agrees to
pay monthly to Landlord, as additional rent, the Landscape Fee. Tenant shall
make such payment together with Tenant's monthly rental payment, without the
necessity of notice from Landlord. It is the understanding of the parties that
the Landscape Fee only pertains to routine landscape maintenance on the Premises
and that Landlord may incur expenses in addition to the Landscape Fee in meeting
its obligations set forth above. Tenant shall pay to Landlord, as additional
rent, within ten (10) days after demand therefore, the cost of such additional
expenses.
ARTICLE SEVENTEEN: TENANT IMPROVEMENTS
-------------------
Landlord shall space plan, design, engineer, and construct
certain tenant improvements consisting of: (a) remodeling existing offices and
locker rooms, a lunchroom, a computer room and two (2) small offices, all as
shown on the space plan attached hereto as Exhibit "E" ("Space Plan"); and (b)
the relocation of warehouse lighting as mutually agreed upon by Landlord and
Tenant (the "Tenant Improvements").
11
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
Landlord shall prepare final working drawings and
specifications consistent with the Space Plan and submit such plans and
specifications to Tenant within thirty (30) days of execution by Tenant of this
Lease. Tenant shall approve or disapprove such plans and specifications within
seven (7) days after receipt from Landlord. Tenant shall have the right to
disapprove such drawings and specifications only if they materially differ from
the Space Plan. Final working drawings and specifications prepared in accordance
with this ARTICLE SEVENTEEN and approved by Landlord and Tenant, together with
the Cost Estimate, are hereafter referred to as the "Final Plans".
Landlord will be responsible for all costs of the Tenant
Improvements (including any engineering or design costs) in the maximum amount
of EIGHTY THOUSAND AND NO/100 DOLLARS ($80,000.00) ("Allowance"). If the cost of
constructing the Tenant Improvements exceeds the Allowance, Tenant will be
solely responsible for all costs of the Tenant Improvements in excess of the
Allowance. Tenant shall pay or reimburse Landlord for such excess costs within
fifteen (15) days after billing.
Landlord shall diligently pursue completion of the Tenant
Improvements and shall use its best efforts to substantially complete the Tenant
Improvements described in the Final Plans by August 1, 1993. Tenant shall not
interfere with Landlord's construction of the Tenant Improvements. For the
purposes of this Lease, the Tenant Improvements shall be conclusively deemed to
be substantially completed when all Tenant Improvements described in the Final
Plans are completed, except for minor items of work (e.g., "pick-up work") which
can be completed with only minor interference with Tenant's conduct of business
on the Property. Tenant shall execute an Estoppel Certificate in the form
attached hereto as Exhibit "C" immediately following substantial completion of
the Tenant Improvements.
Landlord's obligation to prepare the Property for Tenant's
occupancy is limited to the completion of the Tenant Improvements set forth in
the Final Plans. Landlord shall not be required to furnish, construct or install
any items not shown thereon or on the Final Plans. If Tenant requests any
change, addition or alteration ("Changes") in the Final Plans or in the
construction of the Tenant Improvements, Landlord shall promptly
12
<PAGE>
RIDER TO INDUSTRIAL REAL ESTATE LEASE DATED MAY 17, 1993 BY AND BETWEEN MAJESTIC
REALTY CO. AND PATRICIAN ASSOCIATES, INC., BOTH CALIFORNIA CORPORATION, LANDLORD
AND UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION, TENANT
ADDITIONAL TERMS, REVISIONS, AND PROVISIONS:
give Tenant an estimate of the additional cost, or cost reduction, if any, of
such Changes and the resulting delay in the delivery of the Property to Tenant.
Within three (3) Business Days after receipt of such estimate, Tenant shall give
Landlord written notice whether Tenant elects to proceed with such Changes. If
Tenant notifies Landlord in writing the Tenant elects to proceed with such
Changes and if Landlord approves such Changes, Landlord shall promptly make such
Changes. If Tenant fails to notify Landlord of its election with the three (3)
Business Day period, Landlord shall complete the Tenant Improvements without
making such Changes. Tenant shall pay or reimburse Landlord for the net
additional costs of such Changes in excess of the Allowance within fifteen (15)
days after billing. The Tenant Improvements shall be the property of Landlord
and shall remain upon and be surrendered with the Property upon the expiration
of the Lease Term.
Landlord shall allow Tenant, pursuant to the terms of this
Lease and subject to Landlord's review and approval of Tenant's specifications,
to install a wire guidance system in the warehouse floor and a
satellite/microwave dish on the roof of the Property.
ARTICLE EIGHTEEN: FIRST RIGHT OF REFUSAL ON ADJOINING SPACE
-----------------------------------------
If at any time during the Lease Term, Landlord desires to
lease to third parties the adjoining 125,000 square feet of a 250,000 square
foot building, Landlord shall first give written notice to Tenant of the rent
and other material terms upon which Landlord intends to offer the space for
lease. Tenant shall have seven (7) business days after receipt of such notice in
which to accept Landlord's offer to lease such space at the monthly rental and
upon the other terms set forth in Landlord's notice. The parties agree to
negotiate in good faith the proposed rent and other terms of such Lease. If
Tenant fails to accept Landlord's offer, or if the parties fail to otherwise
agree, within the seven (7) business day period, or if Tenant gives Landlord
notice that Tenant does not intend to lease such space on the terms set forth in
Landlord's notice, the Tenant's right under this Article Eighteen shall
terminate and Landlord shall thereafter be free to lease such space to other
tenants upon such terms as Landlord desires.
13
<PAGE>
[LOGO OF SIOR APPEARS HERE]
OPTION TO EXTEND TERM
LEASE RIDER
This Rider is attached to and made part of that certain Lease (the "Lease")
dated May 17, 1993 between Majestic Realty Co. and Patrician Associates, Inc.,
------------ --------------------------------------------------
as Landlord, and United Stationers Supply Co., as Tenant, covering the Property
-----------------------------
commonly known as 18385 E. San Jose Avenue, City of Industry, CA (the
----------------------------------------------
"Property"). The terms used herein shall have the same definitions as set forth
in the Lease. The provisions of this Rider shall supersede any inconsistent or
conflicting provisions of the Lease.
A. OPTION(S) TO EXTEND TERM.
1. Landlord hereby grants to Tenant two (2) option(s) (the "Option(s)") to
-------
extend the Lease Term for additional term(s) of three (3) years each (the
---------
"Extension(s)"), on the same terms and conditions as set forth in the Lease, but
at an increased rent as set forth below. Each Option shall be exercised only by
written notice delivered to Landlord at least one hundred twenty (120) days
before the expiration of the Lease Term or the preceding Extension of the Lease
Term, respectively. If Tenant fails to deliver Landlord written notice of the
exercise of an Option within the prescribed time period, such Option and any
succeeding Options shall lapse, and there shall be no further right to extend
the Lease Term. Each Option shall be exercisable by Tenant on the express
conditions that (a) at the time of the exercise, and at all times prior to the
commencement of such Extension, Tenant shall not be in default under any of the
provisions of this Lease and (b) Tenant has not been ten (10) or more days late
in the payment of rent more than a total of three (3) times during the Lease
Term and all preceding Extensions.
2. PERSONAL OPTIONS.
The Option(s) are personal to the Tenant named in Section 1.03 of the Lease
or any Tenant's Affiliate described in Section 9.02 of the Lease. If Tenant
subleases any portion of the Property or assigns or otherwise transfers any
interest under the Lease to an entity other than a Tenant Affiliate prior to the
exercise of an Option (whether with or without Landlord's consent), such Option
and any succeeding Options shall lapse. If Tenant subleases any portion of the
Property or assigns or otherwise transfers any interest of Tenant under the
Lease to an entity other than a Tenant Affiliate after the exercise of an Option
but prior to the commencement of the respective Extension (whether with or
without Landlord's consent), such Option and any succeeding Options shall lapse
and the Lease Term shall expire as if such Option were not exercised. If Tenant
subleases any portion of the Property or assigns or otherwise transfers any
interest of Tenant under the Lease in accordance with Article 9 of the Lease
after the exercise of an Option and after the commencement of the Extension
related to such Option, then the term of the Lease shall expire upon the
expiration of the Extension during which such sublease or transfer occurred and
only the succeeding Options shall lapse.
B. CALCULATION OF RENT.
The Base Rent during the Extension(s) shall be determined by one or a
combination of the following methods (INDICATE YOUR CHOICE UPON EXECUTION OF THE
LEASE):
1. Cost of Living Adjustment (Section B(1), below) [*]
1. COST OF LIVING ADJUSTMENT.
The Base Rent shall be increased on the first day of the 1st
-------------------
month(s) of the 1st & 2nd Extension(s) of the Lease Term (the
-------------------------
"Rental Adjustment Date") by reference to the Index defined in Section 3.02 of
the Lease or the substitute index described in Section 3.02 of the Lease, as
follows: The Base Rent in effect immediately prior to the applicable Rental
Adjustment Date (the "Comparison Base Rent") shall be increased by the
percentage that the Index has increased from the month in which the payment of
the Comparison Base Rent commenced through the month in which the applicable
Rental Adjustment Date occurs. In no event shall the Base Rent be reduced by
reason of such computation AND IN NO EVENT SHALL THE BASE RENT BE INCREASED BY
MORE THAN TWENTY PERCENT (20 FOR THE FIRST EXTENSION OR BY MORE THAN TWELVE
PERCENT (12%) FOR THE SECOND EXTENSION.
Initials __________________
__________________
<PAGE>
Initials __________________
__________________
<PAGE>
EXHIBIT "B"
Recording Requested By:
When Recorded, Mail To:
SUBORDINATION, NON-DISTURBANCE
------------------------------
AND ATTORNMENT AGREEMENT
------------------------
THIS AGREEMENT, made and entered into as of the ______ day of ______,
1991, by and between _______________, with its principal office at
_______________ (hereinafter called "Beneficiary"), _______________, with its
principal office at _______________, (hereinafter called "Landlord") and
_______________, having its principal office at _______________ (hereinafter
called "Tenant");
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Tenant has heretofore under date of _______________ by a
written lease (hereinafter called the "Lease") leased from Landlord all or part
of certain real estate and improvements thereon, located at _______________
(hereinafter called the "Demised Premises"); and
WHEREAS, Landlord has encumbered the Demised Premises as security for a
loan from Beneficiary to Landlord (the "Deed of Trust"); and
WHEREAS, Tenant, Landlord and Beneficiary have agreed to the following
as respects their mutual rights and obligations pursuant to the Lease and the
Deed of Trust;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties hereto do hereby covenant
and agree as follows:
(1) Tenant's interest in the Lease and all rights of Tenant thereunder
Lease shall be and hereby are declared subject and subordinate to the Deed of
Trust upon the Demised Premises. The term "Deed of Trust" as used herein shall
also include any amendment, supplement, modification, renewal or replacement
thereof.
(2) In the event of a foreclosure or conveyance in lieu of
foreclosure, and provided that the Lease, immediately prior to such foreclosure
or conveyance in lieu of foreclosure, shall have been in full force and effect
and Tenant shall not then be in default thereunder beyond any grace period
therein provided for curing the same, then in any of such events, Tenant shall
not be made a party in any action or proceeding to remove or evict Tenant or to
disturb its possession, nor shall the leasehold estate of Tenant created by the
Lease be affected in any way, and the Lease shall continue in full force and
effect as a direct lease between Tenant and Beneficiary.
(3) After the receipt by Tenant of notice from Beneficiary of any
foreclosure or any conveyance of the Demised Premises in lieu of foreclosure,
Tenant will thereafter attorn to and recognize Beneficiary as its substitute
Landlord, and having thus attorned, Tenant's possession shall not thereafter be
disturbed providing, and as long as, it shall continue to pay annual rental
under the Lease, and otherwise observes or performs the covenants, terms and
conditions of the Lease to be observed and performed by Tenant thereunder. Any
such attornment and recognition of a substitute Landlord shall be upon all of
the terms, covenants, conditions and agreements as are then set forth in the
Lease except as otherwise stated herein.
<PAGE>
EXHIBIT "B" (Continued)
(4) Tenant shall not prepay any of the rents or income from the
Demised Premises for more than one month except with the written consent of
Beneficiary.
(5) In no event shall Beneficiary be liable for any prior act or
omission of the Landlord, nor shall Beneficiary be subject to any offsets or
deficiencies which Tenant may be entitled to assert against the Landlord as a
result of any act or omissions of Landlord occurring prior to Beneficiary's
obtaining possession of the premises.
(6) No conveyance by Landlord of its interest in the Demised Premises
shall insofar as Beneficiary, its successors and assigns are concerned, cause
the fee simple ownership of the Demised Premises and the Tenant's leasehold
estate created by the Lease to merge, but said estate shall remain separate and
distinct notwithstanding the union of such estates in Beneficiary, Tenant or
any third party by reason of purchase or otherwise.
(7) Beneficiary has received an assignment of the Lease and the Lease
may not be amended or altered and Tenant may not be released therefrom or from
any of its obligations except with the written consent of Beneficiary.
(8) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, including
without limitation, any purchaser at any foreclosure sale.
IN WITNESS WHEREOF, this Agreement has been fully executed under seal
on the day and year first above written.
______________________,
Tenant
By: __________________
By: __________________
______________________,
Beneficiary
By: __________________
By: __________________
______________________,
Landlord
By: __________________
By: __________________
<PAGE>
EXHIBIT "C"
ESTOPPEL CERTIFICATE
--------------------
The undersigned, ________________, does hereby make the following
statements:
1. They are the Tenant under a certain Lease dated _______________ with
_______________, as Landlord, leasing the Property commonly known as
_______________, California.
2. The Lease dated _______________ is in full force and effect and the
undersigned is aware of no defaults under the terms and conditions of the
Lease and has no offsets against rentals due the Landlord or to become due
the Landlord.
3. The undersigned accepted possession of the Property on _______________, the
Lease Term began on _______________, and ends on _______________, and the
obligation to pay Base Rent begins on _______________, pursuant to the
terms and conditions of the Lease.
4. The total Base Rent to be paid pursuant to the terms of said Lease is not
less than $_______________ and no Base Rent has been paid more than one
month in advance.
5. In the event of a default by the Landlord under any of the terms and
conditions of the Lease, the undersigned at the same time notice thereof is
given to the Landlord, will notify holder of any first mortgage or deed of
trust covering the Property, provided Landlord has provided Tenant the
address of such Mortgagee. In the event that the default is not cured by
the Landlord within the time provided for under the terms and conditions of
the Lease and provided the Mortgagee has given the undersigned written
notice of Mortgagee's intention to cure such default, the undersigned will
allow the Mortgagee the opportunity and sufficient additional time within
which to correct Landlord's default, provided the Mortgagee diligently
pursues such cure.
___________________________
By: _______________________
Title: ____________________
Date: _____________________
Page 1 of 1
<PAGE>
EXHIBIT "D"
Tenant's office products which it carries in its catalogs and intends to store
and distribute from the Property, include some products which are deemed
Hazardous Materials under certain environmental laws. All such products will be
used, handled and stored in a manner that complies with all applicable laws
relating to such materials. Copies of Material Safety Data Sheets, and of all
notices and reports to governmental agencies, will be provided to Landlord.
<PAGE>
[FLOOR PLAN APPEARS HERE]
<PAGE>
EXHIBIT 10.31
STANDARD INDUSTRIAL LEASE - NET NET NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO OF AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION APPEARS HERE]
1. PARTIES. This Lease, dated for reference purposes only, March 15, 1991,
--------- ----
is made by and between Shelley B. & Barbara Detrick 101 First Street #145, Los
--------------------------------------------------------
Altos, CA 94022 (herein called "Lessor") and Lynn Edwards Corp, 3030 Orange
- --------------- -----------------------------------
Grove, North Highlands, CA 95660 (herein called "Lessee").
- --------------------------------
2. PREMISES. Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
that certain real property situated in the County of Sacramento State of
----------
California, commonly known as 3030 Orange Grove, North Highlands, CA and
- ---------- --------------------------------------
described as that certain warehouse building containing approximately 119,260
-----------------------------------------------------------------
square feet of net leaseable area including approximately 23,120 square feet of
- -------------------------------------------------------------------------------
office area
- -----------
________________________________________________________________________________
________________________________________________________________________________
Said real property including the land and all improvements therein, is herein
called "the Premises".
3. TERM.
3.1 TERM. The term of this Lease shall be for One Hundred Forty Four
-----------------------
Months (144 months) (12 years) commencing on June 1, 1991 and ending on May
- ------------------------------ ------------ ---
30, 2003 unless sooner terminated pursuant to any provision hereof.
- ---------------------
4. RENT. Lessee shall pay to Lessor as rent for the Premises, monthly payments
of $33,431.00, in advance, on the first day of each month of the term hereof.
---------- -----
Lessee shall pay Lessor upon the execution hereof $33,431.00 as rent for
----------
the first months rent. On every two year anniversary date of the commencement
- -----------------------------------------------------------------------------
date, rent will be adjusted by the change in the Consumer Price Index (CPI)-
- ----------------------------------------------------------------------------
see paragraph #52
- --------------------------------------------------------------------------------
________________________________________________________________________________
Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be payable
in lawful money of the United States to Lessor at the address stated herein or
to such other persons or at such other places as Lessor may designate in
writing.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
$50,000.00 as security for Lessee's faithful performance of Lessee's obligations
---------
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefore deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's failure
to do so shall be a material breach of this Lease. If the monthly rent shall,
from time to time, increase during the term of this Lease. Lessee shall
thereupon deposit with Lessor additional security deposit so that the amount of
security deposit held by Lessor shall at all times bear the same proportion to
current rent as the original security deposit bears to the original monthly rent
set forth in paragraph 4 hereof. Lessor shall not be required to keep said
deposit separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last assignee,
if any, of Lessee's interest hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for warehousing
-----------
and distribution as legally permitted under current zoning and regulations.
- ---------------------------------------------------------------------------
or any other use which is reasonably comparable and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in its state
existing on the date that the Lease term commences, but without regard to the
use for which Lessee will use the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or ordinance
in effect on such Lease term commencement date. In the event it is determined
that this warranty has been violated, then it shall be the obligation of the
Lessor, after written notice from Lessee, to promptly, at Lessor's sole cost and
expense, rectify any such violation. In the event Lessee does not give to Lessor
written notice of the violation of this warranty within six months from the date
that the Lease term commences, the section of same shall be the obligation of
the Lessee at Lessee's sole cost. The warranty contained in this paragraph 6.2
(a) shall be of no force or if, prior to the date of this Lease, Lessee was the
owner or occupant of the Premises, and, in such event, Lessee shall correct any
such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements in
effect during the term or any part of the term hereof, regulating the use by
Lessee of the Premises. Lessee shall not use nor permit the use of the Premises
in any manner that will tend to create waste or a nuisance or, if there shall
be more than one tenant in the building containing the Premises, shall tend to
disturb such other tenants.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession) and
Lessor further warrants to Lessee that the plumbing, lighting, air conditioning,
heating, and loading doors in the Premises shall be in good operating condition
on the Lease commencement date. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specificity the nature
of the violation, to promptly, at Lessor's sole cost, rectify such violation.
Lessee's failure to give such written notice to Lessor within thirty (30) days
after the Lease commencement date shall cause the conclusive presumption that
Lessor has complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect if prior to
the date of this Lease, Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts
the Premises in their condition existing as of the Lease commencement date or
the date that Lessee takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and any
covenants or restrictions of record, and accepts this Lease subject thereto and
to all matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS. Lessee shall keep in good order, condition
and repair the Premises and every part thereof, structural and non structural,
(whether or not such portion of the Premises requiring repair, or the means of
repairing the same are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises) including,
without limiting the generality of the foregoing, all plumbing, heating, air
conditioning, (Lessee shall procure and maintain, at Lessee's expense, an air
conditioning system maintenance contract) ventilating, electrical, lighting
facilities and equipment within the Premises, fixtures, walls (interior and
exterior), foundations, ceilings, roofs (interior and exterior), floors,
windows, doors, plate glass and skylights located within the Premises, and all
landscaping, driveways, parking lots, fences and signs located on the Premises
and sidewalks and parkways adjacent to the Premises.
7.2 SURRENDER. On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as when received, ordinary wear and tear excepted, clean and free of
debris. Lessee shall repair any damage to the Premises occasioned
Initials: __________
<PAGE>
by the installation or removal of Lessee's trade fixtures, furnishings and
equipment. Notwithstanding anything to the contrary otherwise stated in this
Lease. Lessee shall leave the air lines, power panels, electrical distribution
systems, lighting fixtures, space heaters, air conditioning, plumbing and
fencing on the premises in good operating condition.
7.3 LESSOR'S RIGHTS. If Lessee fails to perform Lessee's obligations
under this Paragraph 7, or under any other paragraph of this Lease, Lessor may
at its option (but shall not be required to) enter upon the Premises after ten
(10) days' prior written notice, to Lessee (except in the case of an emergency,
in which case no notice shall be required), perform such obligations on
Lessee's behalf and put the same in good order, condition and repair, and the
cost thereof together with interest thereon at the maximum rate than allowable
by law shall become due and payable as additional rental to Lessor together
with Lessee's next rental installment.
7.4 LESSOR'S OBLIGATIONS. Except for the obligations of Lessor under
Paragraph 6.2(a) and 6.3(a) (relating to Lessor's warranty). Paragraph 9
(relating to destruction of the Premises) and under Paragraph 14 (relating to
condemnation of the Premises), it is intended by the parties hereto that Lessor
have no obligation, in any manner whatsoever, to repair and maintain the
Premises nor the building located thereon nor the equipment therein, whether
structural or non structural, all of which obligations are intended to be that
of the Lessee under Paragraph 7.1 hereof. Lessee expressly waives the benefit
of any statute now or hereinafter in effect which would otherwise afford Lessee
the right to make repairs at Lessor's expense or to terminate this Lease
because of Lessor's failure to keep the premises in good order, condition and
repair.
7.5 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility installations in, on or about
the Premises, except for nonstructural alterations not exceeding $2,500 in
cumulative costs during the term of this Lease. In any event, whether or not in
excess of $2,500 in cumulative cost, Lessee shall make no change or alteration
to the exterior of the Premises nor the exterior of the building(s) on the
Premises without Lessor's prior written consent. As used in this Paragraph 7.5
the term "Utility Installation" shall mean carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing and fencing. Lessor may require that Lessee
remove any or all of said alterations, improvements, additions or Utility
installations at the expiration of the term, and restore the Premises to their
prior condition. Lessor may require Lessee to provide Lessor, at Lessee's sole
cost and expense, a lien and completion bond in an amount equal to one and one-
half times the estimated cost of such improvements, to insure Lessor against any
liability for mechanic's and materialmon's liens and to insure completion of the
work. Should Lessee make any alterations, improvements, additions of Utility
installations without the prior approval of Lessor, Lessor may require that
Lessee remove any or all of the same.
(b) Any in, or about the consent of the Lessor shall be presented to
Lessor in written form, with proposed detailed plans. If Lessor shall give its
consent, the consent shall be deemed conditioned upon Lessee acquiring a permit
to do so from appropriate governmental agencies, the furnishing of a copy
thereof to Lessor prior to the commencement of the work and the compliance by
Lessee of all conditions of said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of
any work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Lessee shall,
in good faith, contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend itself and Lessor against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof against the Lessor or the Premises, upon the
condition that if Lessor shall require, Lessee shall furnish to Lessor a surety
bond satisfactory to Lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorneys fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph
7.5(a), all alterations, improvements, additions and Utility installations
(whether or not such Utility Installations constitute trade fixtures of Lessee),
which may be made on the Premises, shall become the property of Lessor and
remain upon and be surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7.5(d), Lessee's machinery and
equipment, other than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises, shall remain the property of
Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2.
8. INSURANCE INDEMNITY.
8.1 INSURING PARTY. As used in this Paragraph 8, the term "Insuring
party" shall mean the party who has the obligation to obtain the Property
Insurance required hereunder. The insuring party shall be designated in
Paragraph 46 hereof. In the event Lessor is the insuring party, Lessor shall
also maintain the liability insurance described in paragraph 8.2 hereof, in
addition to, and not in lieu of, the insurance required to be maintained by
Lessee under said paragraph 8.2, but Lessor shall not be required to name
Lessee as an additional insured on such policy. Whether the insuring party is
the Lessor or the Lessee, Lessee shall, as additional rent for the Premises,
pay the cost of all insurance required hereunder, except for that portion of
the cost attributable to Lessor's liability insurance coverage in excess of
$1,000,000 per occurrence. If Lessor is the insuring party Lessee shall, within
ten (10) days following demand by Lessor, reimburse Lessor for the cost of the
insurance so obtained.
8.2 LIABILITY INSURANCE. Lessee shall, at Lessee's expense obtain and
keep in force during the term of this Lease a policy of Combined Single Limit,
Bodily Injury and Property Damage Insurance insuring Lessor and Lessee against
any liability arising out of the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto. Such insurance shall be a
combined single limit policy in an amount not less than $500,000 per
occurrence. The policy shall insure performance by Lessee of the Indemnity
provisions of this Paragraph 8. The limits of said insurance shall not,
however, limit the liability of Lessee hereunder.
8.3 PROPERTY INSURANCE.
(a) The insuring party shall obtain and keep in force during the term
of this Lease a policy or policies of insurance covering loss or damage to the
Premises, in the amount of the full replacement value thereof, as the same may
exist from time to time, which replacement value is now $ _______________, but
in no event less than the total amount required by lenders having liens on the
Premises, against all perils included within the classification of lire,
extended coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises), and special extended
perils ("all risk" as such term is used in the insurance industry). Said
insurance shall provide for payment of loss thereunder to Lessor or to the
holders of mortgages or deeds of trust on the Premises. The insuring party
shall, in addition, obtain and keep in force during the term of this Lease a
policy of rental value insurance covering a period of one year, with loss
payable to Lessor, which insurance shall also cover all real estate taxes and
insurance costs for said period. A stipulated value or agreed amount
endorsement deleting the coinsurance provision of the policy shall be procured
with said insurance as well as an automatic increase in insurance endorsement
causing the increase in annual property insurance coverage by 2% per quarter.
If the insuring party shall fail to procure and maintain said insurance the
other party may, but shall not be required to, procure and maintain the same,
but at the expense of Lessee. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence, and
Lessee shall be liable for such deductible amount.
(b) If the Premises are part of a larger building, or if the Premises
are part of a group of buildings owned by Lessor which are adjacent to the
Premises, then Lessee shall pay for any increase in the property insurance of
such other building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure
Lessee's fixtures, equipment or tenant improvements unless the tenant
improvements have become a part of the Premises under paragraph 7, hereof. But
if Lessee is the insuring party the Lessee shall insure its fixtures, equipment
and tenant improvements.
8.4 INSURANCE POLICIES. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus or such
other 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". The insuring
party shall deliver to the other party copies of policies of such insurance or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses as required by this paragraph 8. No such policy shall be
canceliable or subject to reduction of coverage or other modification except
after thirty (30) days' prior written notice to Lessor. If Lessee is the
insuring party Lessee shall, at least thirty (30) days prior to the expiration
of such policies, furnish Lessor with renewals of "binders" thereof, or Lessor
may order such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee upon demand. Lessee shall not do or permit to be
done anything which shall invalidate the insurance policies referred to in
Paragraph 8.3. If Lessee does or permits to be done anything which shall
increase the cost of the insurance policies referred to in Paragraph 8.3, then
Lessee shall forthwith upon Lessor's demand reimburse Lessor for any additional
premiums attributable to any act or omission or operation of Lessee causing
such increase in the cost of insurance. If Lessor is the insuring party, and if
the insurance policies maintained hereunder cover other improvements in
addition to the Premises, Lessor shall deliver to Lessee a written statement
setting forth the amount of any such insurance cost increase and showing in
reasonable detail the manner in which it has been computed.
8.5 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the
character loss or damage arising out of or incident to the perils insured
against under Paragraph 8.3, which perils occur in, on or about the Premises,
whether due to the negligence of Lessor or Lessee or their agents, employees,
contractors and/or invitees. Lessee and Lessor shall, upon obtaining the
policies of Insurance required hereunder, give notice to the insurance carrier
or carriers that the foregoing mutual waiver of subrogation is contained in
this Lease.
8.6 INDEMNITY. Lessee shall indemnify and hold harmless Lessor from
and against any and all claims arising from Lessee's use of the Premises, or
from the conduct of Lessee's business or from any activity, work or things
done, permitted or suffered by Lessee in or about the Premises or elsewhere and
shall further indemnity and hold harmless Lessor from and against any and all
claims arising from any breach of default in the performance of any obligation
on Lessee's part to be performed under the terms of this Lease, or arising from
any negligence of the Lessee, or any of Lessee's agents, contractors, or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon: and in case any action or proceeding be brought
against Lessor by reason of any such claim. Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel satisfactory to Lessor.
Lessee, as a material part of the consideration to Lessor, hereby assumes all
risk of damage to property or injury to persons, in, upon or about the Premises
arising from any cause and Lessee hereby waives all claims in respect thereof
against Lessor.
8.7 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom or for damage to the goods, wares, merchandise or other
property of Lessee. Lessee's employees, invitees, customers, or any other
person in or about the Premises, nor shall Lessor be liable for injury to the
person of Lessee, Lessee's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury results
from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources of places and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Lessee. Lessor shall not be liable for
any damages arising from any act of neglect of any other tenant. If any, of the
building in which the Premises are located.
Initials: __________
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9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Partial Damage" shall herein mean damage or destruction
to the Premises to the extent that the cost of repair is less than 50% of the
then replacement cost of the Premises. "Premises Building Partial Damage" shall
herein mean damage or destruction to the building of which the Premises are a
part to the extent that the cost of repair is less than 50% of the then
replacement cost of such building as a whole.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50% or more
of the then replacement cost of the Premises. "Premises Building Total
Destruction" shall herein mean damage or destruction to the Building of which
the Premises are a part to the extent that the cost of repair is 50% or more of
the then replacement cost of such building as a whole.
(c) "Insured Loss" shall herein mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8.
9.2 PARTLY DAMAGE-INSURED LOSS. Subject to the provisions of
paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there
is damage which is an Insured Loss and which falls into the classification of
Premises Partial Damage or Premises Building Partial Damage, then Lessor shall,
at Lessor's expense, repair such damage, but not Lessee's fixtures, equipment
or tenant improvements unless the same have become a part of the Premises
pursuant to Paragraph 7.5 hereof as soon as reasonably possible and this Lease
shall continue in full force and effect. Notwithstanding the above, if the
Lessee is the Insuring party, and if the insurance proceeds received by Lessor
are not sufficient to effect such repair, Lessor shall give notice to Lessee of
the amount required in addition to the insurance proceeds to effect such
repair. Lessee shall contribute the required amount to Lessor within ten days
after Lessee has received notice from Lessor of the shortage in the insurance.
When Lessee shall contribute such amount to Lessor, Lessor shall make such
repairs as soon as reasonably possible and this Lease shall continue in full
force and effect. Lessee shall in no event have any right to reimbursement for
any such amounts so contributed.
9.3 PARTIAL DAMAGE-UNINSURED LOSS. Subject to the provisions of Paragraphs
9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage
which is not an insured Loss and which falls within the classification of
Premises Partial Damage or Premises Building Partial Damage, unless caused by a
negligent or willful act of Lessee (in which event Lessee shall make the repairs
at Lessee's expense). Lessor may at Lessor's option either (i) repair such
damage as soon as reasonably possible at Lessor's expense, in which event this
Lease shall continue in full force and effect, or (ii) give written notice to
Lessee within thirty (30) days after the date of the occurrence of such damage
of Lessor's intention to cancel and terminate this Lease, as of the date of the
occurrence of such damage. In the event Lessor elects to give such notice of
Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
10-day period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.4 TOTAL DESTRUCTION. If at any time during the term of this Lease there
is damage, whether or not an Insured Loss, (including destruction required by
any authorized public authority), which falls into the classification of
Premises Total Destruction or Premises Building Total Destruction, this Lease
shall automatically terminate as of the date of such total destruction.
9.5 DAMAGE NEAR END OF TERM.
(a) If at any time during the last six months of the term of this
Lease there is damage, whether or not an insured Loss, which fails within the
classification of Premises Partial Damage, Lessor may at Lessor's option cancel
and terminate this Lease as of the date of occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within 30 days after the
date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an
option to extend or renew this Lease, and the time within which said option may
be exercised has not yet expired, Lessee shall exercise such option, if it is
to be exercised at all, no later than 20 days after the occurrence of an
insured Loss falling within the classification of Premises Partial Damage
during the last six months of the term of this Lease. If Lessee duly exercises
such option during said 20 day period, Lessor shall, at Lessor's expense,
repair such damage as soon as reasonably possible and this Lease shall continue
in full force and effect. If Lessee fails to exercise such option during said
20 day period, then Lessor may at Lessor's option terminate and cancel this
Lease as of the expiration of said 20 day period by giving written notice to
Lessee of Lessor's election to do so within 10 days after the expiration of
said 20 day period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and
Lessor or Lessee repairs or restores the Premises pursuant to the provisions of
this Paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of rent, if any, Lessee shall have no claim against Lessor for any damage
suffered by reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accure, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.7 TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall,
in addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.8 WAIVER. Lessor and Lessee waive the provisions of any statutes
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessee shall pay the real property tax, as
defined in paragraph 10.2, applicable to the Premises during the term of this
Lease. All such payments shall be made at least ten (10) days prior to the
delinquency date of such payment. Lessee shall promptly furnish Lessor with
satisfactory evidence that such taxes have been paid. If any such taxes paid by
Lessee shall cover any period of time prior to or after the expiration of the
term hereof. Lessee's share of such taxes shall be equitably prorated to cover
only the period of time within the tax fiscal year during which this Lease
shall be in effect, and Lessor shall reimburse Lessee to the extent required.
If Lessee shall fail to pay any such taxes. Lessor shall have the right to pay
the same, in which case Lessee shall repay such amount to Lessor with Lessee's
next rent installment together with interest at the maximum rate then allowable
by law.
10.2 DEFINITION OF "REAL PROPERTY TAX". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Premises by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Lessor in the
Premises or in the real property of which the Premises are a part, as against
Lessor's right to rent or other income therefrom, and as against Lessor's
business of leasing the Premises. The term "real property tax" shall also
include any tax, fee, levy, assessment or charge (i) in substitution of,
partially or totally, any tax, fee, levy, assessment or charge herein above
included within the definition of "real property tax," or (ii) the nature of
which was hereinbefore included within the definition of "real property tax,"
or (iii) which is imposed for a service or right not charged prior to June 1,
1978, or, if previously charged, has been increased since June 1, 1978, or (iv)
which is imposed as a result of a transfer, either partial or total, of
Lessor's interest in the Premises or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such transfer, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.4 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and leveled upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within 10 days after receipt of a written statement setting forth the
taxes applicable to Lessee's property.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises together
with any taxes thereon. If any such services are not separately metered to
Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of
all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's Interest in this Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by
or is under common control with Lessee, or to any corporation resulting from
the merger or consolidation with Lessee, or to any person or entity which
acquires all the assets of Lessee as a going concern of the business that is
being conducted on the Premises, provided that said assignee assumes, in full,
the obligations of Lessee under this Lease. Any such assignment shall not, in
any way, affect or limit the liability of Lessee under the terms of this Lease
even if after such assignment or subletting the terms of this Lease are
materially changed or altered without the consent of Lessee, the consent of
whom shall not be necessary.
12.3 NO RELEASE OF LESSEE. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee of Lessee's obligation
or alter the primary liability of Lessee to pay the rent and to perform all
other obligations to be performed by Lessee hereunder. The acceptance of rent
by Lessor from any other person shall not be deemed to be a walver by Lessor of
any provision hereof. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee of Lessee or any successor of Lessee, in the
performance of any of the terms hereof, Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee.
Lessor may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees.
Initials: __________
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<PAGE>
of Lessee, without notifying Lessee, or any successor of Lessee, and without
obtaining its or their consent thereto and such action shall not relieve Lessee
of liability under this Lease.
12.4 ATTORNEY'S FEES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such request.
13. DEFAULTS; REMEDIES.
13.1 DEFAULTS. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three days after written notice thereof
from Lessor to Lessee. In the event that Lessor served Lessee with a Notice to
Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice
to Pay Rent or Quit shall also constitute the notice required by this
subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in paragraph (b) above, where such failure shall
continue for a period of 30 days after written notice thereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than 30 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commenced such cure within said 30-day period
and thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. (S)101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within 30 days.
Provided, however, in the event that any provision of this paragraph 13.1(d) is
contrary to any applicable law, such provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor
in interest of Lessee or any guarantor of Lessee's obligation hereunder, and any
of them, was materially false.
13.2 REMEDIES. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's
fees, and any real estate commission actually paid; the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could be
reasonably avoided; that portion of the leasing commission paid by Lessor
pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but
in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and
thereafter diligently prosecutes the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor prevent Lessor
from exercising any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected, for
three (3) consecutive installments of rent, then rent shall automatically
become due and payable quarterly in advance, rather than monthly,
notwithstanding paragraph 4 or any other provision of this Lease to the
contrary.
13.5 IMPOUNDS. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to
Lessor, if Lessor shall so required under this Lease, a time as the monthly
rent, as estimated by Lessor, for real property tax and insurance expenses on
the Premises which are payable by Lessee under the terms of this Lease. Such
fund shall be established to insure payment when due, before delinquency, of any
or all such real property taxes and insurance premiums. If the amounts paid to
Lessor by Lessee under the provisions of this paragraph are insufficient to
discharge the obligations of Lessee to pay such real property taxes and
insurance premiums as the same become due, Lessee shall pay to Lessor, upon
Lessor's demand, such additional sums necessary to pay such obligations. All
moneys paid to Lessor under this paragraph may be intermingled with other moneys
of Lessor and shall not bear interest. In the event of a default in the
obligations of Lessee to perform under this Lease, then any balance remaining
from funds paid to Lessor under the provisions of this paragraph may, at the
option of Lessor, be applied to the payment of any monetary default of Lessee in
lieu of being applied to the payment of real property tax and insurance
premiums.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all terminate as to the part so taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than 10% of the floor
area Premises which is not occupied by any building, is taken by condemnation.
Lessee may, at Lessee's option, to be exercised in writing only within ten (10)
days after Lessor shall have given Lessee written notice of such taking (or in
the absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the rent shall be
reduced in the proportion that the floor area of the building taken bears to the
total floor area of the building situated on the Premises. No reduction of rent
shall occur if the only area taken is that which does not have a building
located thereon. Any award for the taking of all or any part of the Premises
under the power of eminent domain or any payment made under threat of the
exercise of such power shall be the property of Lessor, whether such award shall
be made as compensation for diminution in value of the leasehold or for the
taking of the fee, or as severance damages; provided, however, that Lessee shall
be entitled to any award for loss of or damage to Lessee's trade fixtures and
removable personal property. In the event that this Lease is not terminated by
reason of such condemnation, Lessor shall to the extent of severance damages
received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by such condemnation except to the extent that Lessee has
been reimbursed therefor by the condemning authority. Lessee shall pay any
amount in excess of such severance damages required to complete such repair.
15. BROKER'S FEE.
(a) Upon execution of this Lease by both parties, Lessor shall pay to
________________________________________________________________________________
Licensed real estate broker(s), between Lessor and said broker(s), or in the
event there is no separate agreement between Lessor and said broker(s), the sum
of $ _______________, for brokerage services rendered by said broker(s) to
Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as
defined in paragraph 39.1 of this Lease, which is granted to Lessee under this
Lease, or any subsequently granted option which is substantially similar to an
Option granted to Lessee under this Lease, or if Lessee acquires any rights to
the Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or if Lessee remains in possession of the Premises after
the expiration of the term of this Lease after having failed to exercise an
Option, or if said broker(s) are the procuring cause of any other lease or sale
entered into between the parties pertaining to the Premises and/or any adjacent
property in which Lessor has an interest, then as to any of said transactions,
Lessor shall pay said broker(s) a fee in accordance with the schedule of said
broker(s) in effect at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but
also on behalf of any person, corporation, association, or other entity having
an ownership interest in said real property or any part thereof, when such fee
is due hereunder. Any transferee of Lessor's interest in this Lease, whether
such transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Said broker shall be a
third party beneficiary of the provisions of this Paragraph 15.
16. ESTOPPEL CERTIFICATE.
(a) Lessee shall at any time upon not less than ten (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to Lessee's knowledge, any uncured
defaults on the part of Lessor hereunder, or specifying such defaults if any
are claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such statement
within such time shall be a material breach of this Lease or shall be
Initials: __________
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<PAGE>
conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor, (ii) that there
are no uncured defaults in Lessor's performance, and (iii) that not more than
one month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements include the past three
years' financial statements of Lessee. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a lessee's
interest in a ground lease of the Premises, and except as expressly provided in
Paragraph 15, in the event of any transfer of such title or interest. Lessor
herein named (and in case of any subsequent transfers then the grantor) shall
be relieved from and after the date of such transfer of all liability as
respects Lessor's obligations thereafter to be performed, provided that any
funds in the hands of Lessor or the then grantor at the time of such transfer,
in which Lessee has an interest, shall be delivered to the grantee. The
obligations contained in this Lease to be performed by Lessor shall, subject as
aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided,
any amount due to Lessor not paid when due shall bear interest at the maximum
rate then allowable by law from the date due. Payment of such interest shall
not excuse or cure any default by Lessee under this Lease, provided, however,
that interest shall not be payable on late charges incurred by Lessee nor on
any amounts upon which late charges are paid by Lessee.
20. TIME OF ESSENCE. Time is of the essence.
21. ADDITIONAL RENT. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest
at the time of the modification. Except as otherwise stated in this Lease,
Lessee hereby acknowledges that neither the real estate broker listed in
Paragraph 15 hereof nor any cooperating broker on this transaction nor the
Lessor or any employees or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or
use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable
laws and regulations in effect during the term of this Lease except as
otherwise specifically stated in this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail, and
if given personally or by mail, shall be deemed sufficiently given if addressed
to Lessee or to Lessor at the address noted below the signature of the
respective parties, as the case may be. Either party may by notice to the other
specify a different address for notice purposes except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for notice purposes. A copy of all notices required or permitted to be
given to Lessor hereunder shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate
by notice to Lessee.
24. WAIVERS. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder
by Lessor shall not be a waiver of any preceding breach by Lessee of any
provision hereof, other than the failure of Lessee to pay the particular rent
so accepted, regardless of Lessor's knowledge of such preceding breach at the
time of acceptance of such rent.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession
of the Premises or any part thereof after the expiration of the term hereof,
such occupancy shall be a tenancy from month to month upon all the provisions
of this Lease pertaining to the obligations of Lessee, but all options and
rights of first refusal, if any, granted under the terms of this Lease shall be
deemed terminated and be of no further effect during said month to month
tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State wherein the Premises are located.
30. SUBORDINATION.
(a) This Lease, at Lessor's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation or security
now or hereafter placed upon the real property of which the Premises are a part
and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's failure
to execute such documents within 10 days after written demand shall constitute
a material default by Lessee hereunder, or, at Lessor's option, Lessor shall
execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee
does hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. ATTORNEY'S FEES. If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the court.
The provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
32. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, lenders, or lessees, and making
such alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate or rent or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the Premises without Lessor's
prior written consent except that Lessee shall have the right, without the prior
permission of Lessor to place ordinary and usual for rent or sublet signs
thereon.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. CONSENTS. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party such consent shall
not be unreasonably withheld.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.
39. OPTIONS.
39.1 DEFINITION. As used in this paragraph the word "Options" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of
first refusal to lease other property of Lessor or the right of first offer to
lease other property of Lessor; (3) the right or option to purchase the
Premises, or the right of first refusal to purchase the Premises, or the right
of first offer to purchase the Premises or the right or option to purchase
other property of Lessor, or the right of first refusal to purchase other
property of Lessor or the right of first offer to purchase other property of
Lessor.
Initials: __________
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<PAGE>
39.2 OPTIONS PERSONAL. Each Option granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned voluntarily or
involuntarily by or to any person or entity other than Lessee, provided however,
the Option may be exercised by or assigned to any Lessee Affiliate as defined in
paragraph 12.2 of this Lease. The Options herein granted to Lessee are not
assignable separate and apart from this Lease.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary. (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the default
alleged in said notice of default is cured, or (ii) during the period of time
commencing on the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) continuing until
the obligation is paid, or (iii) at any time after an event of default described
in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any necessity of Lessor to
give notice of such default to Lessee), or (iv) in the event that Lessor has
given to Lessee three or more notices of default under paragraph 13.1(b), where
a late charge has become payable under paragraph 13.4 for each of such defaults,
or paragraph 13.1(c), whether or not the defaults are cured, during the 12 month
period prior to the time that Lessee intends to exercise the subject Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of 30 days after such obligation becomes due (without any necessity
of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to commence to
cure a default specified in paragraph 13.1(c) within 30 days after the date that
Lessor gives notice to Lessee of such default and/or Lessee fails thereafter to
diligently prosecute said cure to completion, or (iii) Lessee commits a default
described in paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of
Lessor to give notice of such default to Lessee), or (iv) Lessor gives to Lessee
three or more notices of default under paragraph 13.1(b), where a late charge
becomes payable under paragraph 13.4 for each such default, or paragraph
13.1(c), whether or not the defaults are cured.
40. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide by,
keep and observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care, and cleanliness of the building
and grounds, the parking of vehicles and the preservation of good order therein
as well as for the convenience of other occupants and tenants of the building.
The violations of any such rules and regulations shall be deemed a material
breach of this Lease by Lessee.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of Lessee, its agents and
invitees from acts of third parties.
42. EASEMENTS. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications. Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material breach of this Lease.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
44. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
45. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. INSURING PARTY. The insuring party under this lease shall be the Leasee
----------
47. ADDENDUM. Attached hereto is an addendum or addenda containing
paragraphs 48 through 56 which constitutes a part of this Lease.
------ ------
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING
THERETO: THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
THE PARTIES HERETO HAVE EXECUTED THIS LEASE AT THE PLACE ON THE DATES SPECIFIED
IMMEDIATELY ADJACENT TO THEIR RESPECTIVE SIGNATURES.
Executed at ____________________________ __________________________________
on _____________________________________ By [SIGNATURE NOT LEGIBLE]
-------------------------------
Address ________________________________ By [SIGNATURE NOT LEGIBLE]
-------------------------------
________________________________________ "LESSOR" (Corporate seal)
Executed at ____________________________ __________________________________
on _____________________________________ By _______________________________
Address ________________________________ By [SIGNATURE NOT LEGIBLE]
-------------------------------
________________________________________ "LESSEE" (Corporate seal)
NOTE: These forms are often modified to meet obtaining requirements of law and
needs of the industry. A ???? write or call to make sure you are utilizing
the most current form AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION 345 So
Figueroa ???? Los Angeles. CA 90071 (213) 687-8777
<PAGE>
48. Option Clause: Tenant, at Tenant's option, by giving Landlord 180 days
written notice before the expiration of this lease, may extend the term of the
lease for three (3) three (3) separate additional period of five (5) years,
provided Tenant is not in default hereunto at time option is exercised and at
the time of option period.
All terms remain the same excepting rental agreed to by lessor and lessee. If
rental is not agreed to by lessors or lessee then the Landlord and Tenant shall
thereupon determine the appraised rent as set forth in section A below. However,
in no event shall the rent be less than the ending rental of the lease.
A. Appraised Rent. Appraised Rent shall mean the triple net fair market rent a
willing tenant would pay a willing landlord in an arm's-length transaction
exclusive of a brokerage commission. The value of improvements to the Premises
made or paid for by Tenant shall not be included in the determination of
Appraised Rent. Further, the value to the Premises of the leasehold created by
this Lease shall not be included in the determination of Appraised Rent. The
parties shall attempt to mutually determine the Appraised Rent for the Premises.
If the parties are unable to agree on the Appraised Rent within thirty (30) days
following delivery of Tenant's notice of intent to exercise its option to
extend, each party shall appoint an independent appraiser who shall be a member
of the American Institute of Real Estate Appraisers with at least five (5) years
experience in appraising commercial properties in the Sacramento, California
area, to appraise and determine the Appraised Rent for the Premises. If a party
does not appoint an appraiser within ten (10) days after the other party has
given written notice of the name of its appraiser, the single appraiser
appointed shall be the sole appraiser and shall set the Appraised Rent for the
Premises. The two (2) appraisers shall attempt to determine the Appraised Rent
for the Premises. If the appraisers are unable to agree within thirty (30) days
after the second appraiser has been appointed, the appraisers shall elect a
third independent appraiser meeting the qualifications stated above. If the two
(2) appraisers are unable to agree upon a third appraiser within a ten (10) day
period, then either appraiser within five (5) day period, on behalf of both, may
petition the presiding judge of the Superior Court of the County in which the
Premises is located to appoint the third appraiser. Within thirty (30) days
after the appointment of the third appraiser, the third appraiser shall
determine the Appraised Rent for the Premises. This third appraisal shall then
be averaged with the closer of the two (2) previous appraisals for a
determination of the Appraised Rent for the Premises which will be binding to
both parties and become effective for the option period. Each party shall pay
the costs of the appraiser appointed by such party and one-half of the cost of
the third appraiser. The appraisers shall have no power to modify the provisions
of this Lease and the jurisdiction of the appraisers is limited accordingly.
49. Tenant shall do all future tenant improvements at tenant's expense
during the lease terms and any options.
50. Tenant will execute estoppel and subordination certificates on forms
required by lender. Any such requirements may include, but not be limited to
tenant notifying lender of any breach by lessor with lender having an
opportunity to cure same. Failure to timely sign such documents or those
pursuant to lease paragraph 1.8 will result in a material breach of this lease.
51. Tenant's Quitclaim: At the expiration or earlier termination of this
Lease, Tenant shall execute, acknowledge and deliver to Landlord, within ten
(10) days after written demand from landlord to Tenant, any quitclaim deed or
other document required by any reputable title company, licensed to operate in
the State of California, to remove the cloud or encumbrance created by this
Lease from the real property of which Tenant's Premises are a part. This
obligation shall survive said expiration or termination.
52. The rent as set forth in paragraph 4 of this lease agreement shall be
increased if Consumer Price Index - for all urban consumers - San Francisco-
Oakland - all items (Index) as published by the United States Department of
Labor's Bureau of Labor Statistics increases over the base period index. The
base period index shall be the Index for the calendar month which is four months
prior to the month in which the rentals commence (the month and each yearly
anniversary thereof in which the rent hereunder commences shall be known as the
rental commencement month). The base period index shall be compared with the
Index for the same calendar month for each subsequent year (comparison month).
If the Index for any comparison month is higher than the base period index, then
the rental for the next year shall be increased by the identical percentage
<PAGE>
commencing with the next rental commencement month. In no event shall the rental
be less than the preceding year of this lease agreement. (By the way of
illustration only, if Tenant commenced paying rent in August 1977, then the base
period index is that of April 1977 (assume 130) and the Index shall be compared
with the Index for April 1978 (assume 136), and because the Index for April 1987
is 4.61% higher, the rental commencing August 1978 shall be 4.61% higher;
likewise the Index for April 1979 shall be compared with the Index for April
1977). Lease escalations to be based on the above annual cumulative CPI
increases adjusted every 24 months.
Should the Bureau discontinue the publication of the above Index, or
publish same less frequently, or alter same in some other manner, then Landlord
shall adopt a substitute Index or substitute procedure which reasonably reflects
and monitors consumer prices.
53. Lessee's Covenants Regarding Hazardous Materials.
(A) Compliance with Environmental Laws. Lessee shall at all times and
in all respects comply with all federal, state and local laws, ordinances and
regulations ("Hazardous Materials Laws") relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
disposal or transportation of any oil, flammable explosives, asbestos, urea
formaldehyde, radioactive materials or waste, or other hazardous, toxic,
contaminated or polluting materials, substances or wastes, including, without
limitation, any "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under any such laws, ordinances or regulations
(collectively, "Hazardous Materials").
(B) Hazardous Materials Handling. Lessee shall at its own expense
procure, maintain in effect and comply with all conditions of any and all
permits, licenses and other governmental and regulatory approvals required for
Lessee's use of the Premises, including, without limitation, discharge of
(appropriately treated) materials or wastes into or through any sanitary sewer
serving the Premises. Except as discharged into the sanitary sewer in strict
accordance and conformity with all applicable Hazardous Materials Laws, Lessee
shall cause any and all Hazardous Materials removed from the Premises to be
removed and transported solely by duly licensed haulers to duly licensed
facilities for final disposal of such materials and wastes. Lessee shall in all
respects handle, treat, deal with and manage any and all Hazardous Materials in,
on, under or about the Premises in total conformity with all applicable
Hazardous Materials Laws and prudent industry practices regarding management of
such Hazardous Materials. Upon expiration or earlier termination of the term of
the Lease, Lessee shall cause all Hazardous Materials to be removed from the
Premises and transported for use, storage or disposal in accordance and
compliance with all applicable Hazardous Materials Laws. Lessee shall not take
any remedial action in response to the presence of any Hazardous Materials in
any way connected with the Premises, without first notifying Lessor of Lessee's
intention to do so and affording Lessor ample opportunity to appear, intervene
or otherwise appropriately assert and protect Lessor's interest with respect
thereto.
(C) Notices relating to hazardous materials or property violations.
Lessee shall immediately notify Lessor in writing of: (i) any enforcement,
cleanup, removal or other governmental or regulatory action instituted,
completed or threatened pursuant to any Hazardous Materials Laws; (ii) any claim
made or threatened by any person against Lessee, the Premises relating to
damage, contribution, cost recovery compensation, loss or injury resulting from
or claimed to result from any Hazardous Materials; and (iii) any reports made to
any environmental agency arising out of or in connection with any Hazardous
Materials in or removed from the Premises, including any complaints, notices,
warnings or asserted violations in connection therewith. Lessee shall also
supply to Lessor as promptly as possible, and in any event within five (5)
business days after Lessee first receives or sends the same, with copies of all
claims, reports, complaints, notices, warnings or asserted violations relating
in any way to the Premises or Lessee's use thereof. Lessee shall promptly
deliver to Lessor copies of hazardous waste manifests reflecting the legal and
proper disposal of all Hazardous Materials removed from the Premises.
54. Indemnification of Lessor. Lessee shall indemnify, defend (by counsel
reasonably acceptable to Lessor), protect, and hold Lessor, and each of Lessor's
partners, employees, agents, attorneys, successors and assigns, free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorney's fees) or death of or
injury
<PAGE>
to any person or damage to any property whatsoever, arising from or caused in
whole or in part, directly to indirectly, by (i) the presence in, on, under or
about the Premises or discharge in or from the Premises of any Hazardous
materials of Lessee's use, analysis, storage, transportation, disposal, release,
threatened release, discharge or generation of Hazardous materials to, in, on,
under, about or from the Premises, or (ii) Lessee's failure to comply with any
Hazardous Materials Law. Lessee's obligations hereunder shall include, without
limitation, and whether foreseeable or unforeseeable, all costs of any required
or necessary repair, cleanup or detoxification or decontamination of the
Premises, and the preparation and implementation of any closure, remedial action
or other required plans in connection therewith, and shall survive the
expiration or earlier termination of the term of the Lease. For purposes of the
release and indemnity provisions hereof, any acts or omissions of Lessee, or by
employees, agents, assignees, contractors or subcontractors of Lessee (whether
or not they are negligent, intentional, willful or unlawful) shall be strictly
attributable to Lessee.
55. Lessee or lessor shall have the benefit of all construction and
equipment warranties affecting the real property and all of its improvements.
56. Assignment and Subletting. Lessee shall be entitled to receive all
rents and profits paid to Lessee by reason of any assignment or subletting.
<PAGE>
EXHIBIT 10.32
LEASE AGREEMENT
---------------
STATIONERS ANTELOPE JOINT VENTURE, A CALIFORNIA GENERAL
-------------------------------------------------------
PARTNERSHIP, AVP TRUST, ADON V. PANATTONI AND
---------------------------------------------
YOLANDA M. PANATTONI
--------------------
AND
---
UNITED STATIONERS SUPPLY CO., AN ILLINOIS CORPORATION
-----------------------------------------------------
1
<PAGE>
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") effective this January 12, 1993, by and
-----------------
between STATIONERS ANTELOPE JOINT VENTURE, A CALIFORNIA GENERAL PARTNERSHIP,
AVP TRUST, ADON V. PANATTONI and YOLANDA M. PANATTONI, (the "Landlord") and,
UNITED STATIONERS SUPPLY CO., a corporation organized under the laws of the
State of Illinois (the "Tenant");
RECITALS
--------
WHEREAS on the 6th day of March, 1990, the Landlord entered into a Lease
Agreement with Stationers Distributing Company, Inc., a Delaware corporation
(the "Prior Lease") for the Premises described on Exhibit A attached hereto and
made a part hereof; and
WHEREAS on the 24th day of June, 1992, Stationers Distributing Company, Inc.
was merged with and into Tenant; and
WHEREAS by virtue of the merger, the Tenant has assumed all liabilities and
responsibilities with reference to the Prior Lease; and
WHEREAS the Landlord and Tenant now desire to enter into a new Lease
Agreement (the "Lease") which would replace the Prior Lease hereinabove
referred to; and
WHEREAS the Tenant shall occupy the premises described in the Prior Lease
between Landlord and Stationers Distributing Company, Inc., and additionally
will lease approximately 72,000 square feet to be constructed by Landlord;
NOW THEREFORE Landlord and Tenant agree to the following terms, covenants
and conditions:
ASSUMPTION OF THE MARCH 6, 1990 LEASE BY TENANT
Tenant does hereby agree to accept, assume and fulfill all the obligations
set forth for Tenant under the Prior Lease. The Prior Lease is attached hereto,
marked Exhibit "A-1" and made a part hereof by reference. Landlord has agreed
to recognize United Stationers Supply Co. as Tenant under said Prior Lease.
Tenant hereby represents that is has no claims or offsets against Landlord for
any of the obligations of Landlord set forth in said Prior Agreement as of the
mutual execution of this Lease. On the Commencement Date of the Lease, the
Prior Lease shall terminate and be removed as an Exhibit and Exhibit "A-1"
shall be physically removed as an Exhibit to this Lease.
2
<PAGE>
SECTION 1
CONSTRUCTION OF NEW IMPROVEMENTS
1.1 General. Landlord and Tenant agree that Landlord shall construct an
-------
additional approximate 72,000 square feet as more fully described and as set
forth in Exhibit "B" (which shall include a Tenant Building Specification Sheet,
Tenant approved drawings, plans and specifications, attached hereto and made a
part hereof by reference. Upon completion of the new construction and upon the
issuance of a Permanent Certificate of Occupancy therefor, or a Temporary
Certificate to be followed by a Permanent Certificate, the premises described in
Exhibit "A" and the premises shown on Exhibit "B" shall be deemed one premises
and shall thereafter be subject to performance of the terms, covenants and
conditions set forth in this Lease beginning with Section 1 through Section 26.
Tenant recognizes and acknowledges that Landlord will expend substantial amounts
of money, time and effort in the construction of new improvements as
contemplated hereunder, and both Landlord and Tenant hereby affirm the binding
effect of this Lease upon the mutual execution hereof, and limited only by any
rights of termination as may be set forth herein. Upon execution hereof,
Landlord will commence the following improvements at Landlord's sole cost and
expense, all of which shall be completed as soon as practicable but in no event,
later than August 15, 1993. Preliminary drawings, plans and specifications have
been initialed and approved by both Landlord and Tenant. The legal description
of the Parcel upon which the Premises is located is depicted on Exhibit "C",
attached hereto and made a part hereof by reference.
1.2 Plans and Specifications; Binding Effect of Prior Lease. Landlord
-------------------------------------------------------
agrees that it will, after execution of this Lease Agreement in accordance with
plans and specifications for the 72,000 square feet addition in accordance with
Exhibit "B", initialed by the parties contemporaneously with the execution of
this Lease Agreement, prepare and provide, within thirty (30) days of the date
hereof and at its sole cost and expense, final plans and specifications which
must be approved in writing by Tenant before Tenant becomes obligated under the
terms and provisions of this Lease. If Tenant does not approve the final plans
and specifications, or if Landlord fails to provide Tenant with such final plans
and specifications, Tenant may terminate this Lease. Any termination of this
Lease by Tenant prior to the Commencement Date shall not affect its duties and
obligations under the Prior Lease which Tenant has assumed. Once the final plans
and specifications have been approved by the Tenant, the Landlord shall commence
any demolition and removal, if any is required, and diligently proceed (but in
no event later than sixty [60] days after such approval of the final plans and
specifications, provided however that if a delay beyond sixty [60] days is
caused by a delay in the issuance of any necessary permit or license required
for demolition or construction, Landlord shall have one hundred twenty [120]
days to proceed) at its expense with the construction of the
3
<PAGE>
improvements as required in the approved plans and specifications and
diligently prosecute the work to completion. The work required by the final
plans and specifications shall hereinafter be referred to as the
"Improvements". True and correct copies of the initially approved plans and
specifications are attached hereto, marked Exhibit "B", and are incorporated
herein by reference. In the event that the drawings, plans and specifications
so approved are so voluminous as to make it impracticable to attach copies to
the Lease, the Landlord and Tenant may agree to attach, in place of such
drawings, plans and specifications, a statement signed by both indicating the
location and custody of the original drawings, plans and specifications and an
agreement that such will remain as Exhibits to the Lease even though not
attached hereto.
1.3 Construction. Landlord shall cause the construction work for which it
------------
is responsible hereunder to be performed in a good and workmanlike manner
without unreasonably interfering with Tenant's occupancy and use of the Premises
covered by the Prior Lease. Landlord represents the improvements will be
substantially complete on or before June 15, 1993, unless delays are caused by
events or occurrences beyond the control of Landlord, as more particularly
described in Section 20.
1.4 Completion. The work shall be deemed completed when all work
----------
specified on the plans and specifications has been completed, except for "punch-
list" items and such other items as will not substantially interfere with
Tenant's beneficial use and occupancy thereof and a temporary or permanent
Certificate of Occupancy has been issued for the building or the portion thereof
to be occupied by Tenant. If, however, the issuance of such Certificate of
Occupancy is delayed by reason of Tenant's work, installation of Tenant's
equipment, or Tenant's application for use permits or licenses or other
governmental inspections or requirements occasioned by Tenant's use of the
Premises, the term of this Lease shall coincide with the completion of
Landlord's work, as aforesaid, and the Certificate of Occupancy shall be
obtained thereafter upon completion of Tenant's work.
1.5 Tenant's Work. Tenant, at it's own cost and subject to all the terms
-------------
of this Lease, may perform work in the building concurrently with Landlord's
work, to fit the building for Tenant's occupancy, provided such work does not
interfere with Landlord's contractor or, if no labor discord would be caused
thereby, through Tenant's own contractor and/or employees.
1.6 Possession. If Landlord shall fail to substantially complete the
----------
construction of the Improvements by June 15, 1993, Landlord shall be in default
hereunder unless the Improvements shall not have been substantially complete on
or before such date because of any delay due to the enumerated contingencies in
Section 20. If Landlord shall fail to substantially complete the construction of
the Improvements by such date plus any additional
4
<PAGE>
time due to an enumerated contingency, or in any event by August 15, 1993,
Tenant may terminate this Lease by giving Landlord written notice of its
intention to do so, and Landlord and Tenant shall thereupon be relieved of all
liability hereunder.
1.7 Modifications. If in connection with obtaining construction and/or
-------------
permanent financing for this project, a bank, insurance company, pension trust
or other institutional lender shall request reasonable modifications in this
Lease Agreement as a condition of such financing, Landlord and Tenant will not
unreasonably withhold, delay or condition their consent thereto, provided that
such modifications do not increase the obligations of either party hereunder or
materially adversely affect the respective interests of either party.
1.8 Warranties. Landlord shall obtain and assign to Tenant warranties
----------
from Landlord's general contractor respecting the construction of the
Improvements on the 72,000 square feet addition which shall warrant such
improvements to be free of defects in material and workmanship for a one (1)
year period from the Commencement Date.
1.9 Objections. Landlord shall notify Tenant in writing as soon as
----------
Landlord deems said Improvements to be substantially completed. In the event
that said Improvements have not in fact been substantially completed as
aforesaid, Tenant shall notify Landlord in writing of its objections. Landlord
shall have a reasonable time (but not less than ten (10) days) after delivery of
such notice in which to commence corrective action as may be necessary, and
shall notify Tenant in writing as soon as it deems such corrective action has
been completed so that said Improvements are substantially completed. Landlord
shall diligently pursue such corrective action to completion.
SECTION 2
PREMISES
2.1 Leasehold. Landlord hereby leases unto Tenant and Tenant hereby
---------
leases from Landlord, subject to the terms of this Lease, the real property
located at the corner of Roseville Road and B Way, Sacramento County,
California, more particularly described in Exhibit "A" attached hereto and made
a part hereof together with all improvements, easements, rights and
appurtenances in connection therewith and all improvements now or hereafter
located thereon. The premises described on Exhibit "A" is made up of the
premises under the Prior Lease, as described in Exhibit "A-1" to the Prior
Lease and the 72,000 square foot addition described on Exhibit "B" to this
Lease. The real property and the structures existing and contemplated thereon
are collectively referred to herein as the "Premises". Upon the completion of
the construction described in Section 1, and the issuance of a permanent
Certificate of Occupancy therefor, or a temporary Certificate of Occupancy to
be followed by
5
<PAGE>
a permanent Certificate of Occupancy, this Lease shall commence (the
"Commencement Date"). On the Commencement Date of this Lease, the Prior Lease
shall be deemed canceled, terminated and of no further force and effect, and
the rights and liabilities of Landlord and Tenant with reference to the
Premises shall be limited, controlled and governed solely by this Lease
Agreement.
2.2 Representation and Warranties of Landlord. In order to induce
-----------------------------------------
Tenant to enter into this Lease Agreement, Landlord represents and warrants
to Tenant currently and as of the Commencement Date; that:
(a) Landlord is fully authorized to lease the Premises and has or will
have good and marketable title to the Premises subject to existing easements
and rights-of-way of record.
(b) The location and construction (including the buildings, improvements,
fixtures and equipment installed by Landlord) do not violate any applicable law,
statute, ordinance, rule, regulation, order or determination of any governmental
authority or any board of fire underwriters (or other body exercising similar
functions), or any restrictive covenants or deed restrictions (recorded or
otherwise) affecting the subject property, including without limitation all
applicable zoning ordinances and building codes, flood disaster laws and health
and environmental laws and regulations (hereinafter sometimes collectively
called "Applicable Laws"). Notwithstanding the above, Landlord makes no
representations or warranties concerning the nature of Tenant's business
activities or Tenant's uses of the building and whether said business or use
conforms to existing law. As to Tenant's business and uses, Tenant shall bear
the sole responsibility for determining compliance with existing law, except
that Landlord represents and warrants that the Tenant's proposed use as an
office and warehouse is permitted use under the Applicable Laws relating to the
Property.
(c) Except for violations caused by the Tenant, or Tenant's predecessor in
interest under the Prior Lease, the Premises, at Tenant's occupancy date, shall
not be in violation of any Applicable Laws pertaining to health or the
environment (hereinafter sometimes collectively called "Applicable Environmental
Laws"), including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Resource Conservation
and Recovery Act of 1976 ("RCRA"), any California laws and regulations
regulating water and the maintenance or disposal of solid waste, and this
representation and warranty would continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Premises;
(d) To the best of Landlord's knowledge, there is no pending or threatened
condemnation or similar proceeding or assessment affecting the Premises or any
part thereof, nor to the best knowledge and belief of Landlord is any such
proceeding or assessment contemplated by any governmental authority;
6
<PAGE>
(e) The appearance of the Premises as revealed by a normal inspection of
same accurately reflects its present condition and general state of repair;
(f) There are no unpaid charges, costs, or expenses for improvements in,
on, or upon the Premises which might form the basis for affixation of any type
of mechanic's, materialman's, laborer's, artisan's, or other statutory lien; and
(g) Except as hereinafter provided, there are no actions, suits, or
proceedings pending, or to the knowledge of Landlord, threatened against or
affecting the Premises or any portion thereof or relating to the ownership
thereof, before any court or before or by any federal, state, county, or
municipal department, commission, board, bureau, agency, or other governmental
instrumentality.
(h) The Premises and Building will be built and constructed in a good and
workmanlike manner, free from defects. Landlord specifically warrants the
structural soundness of the Premises and Building to be free from defects. The
Landlord further warrants and represents that all plumbing and electrical
improvements will be constructed in a good and workmanlike manner free from
defects in accordance with the plans and specifications described in Section
1.1. Landlord makes this warranty which shall endure for a period of one (1)
year from the Commencement Date and shall only apply to the construction of the
72,000 square feet addition.
(i) However, recognizing that Tenant, and Tenant's predecessor in
interest, have had exclusive possession of the Premises since November 19, 1990,
-----------------
the representations and warranties of Landlord set forth herein do not extend to
any matter, event or occurrence caused by Tenant, or Tenant's predecessor in
interest.
(j) Landlord has taken all steps necessary to determine and has determined
that no Hazardous Materials or solid wastes have been disposed of or otherwise
released on, in or to the Premises, as of the Commencement Date of the Prior
Lease, but makes no representation or warranty with reference to Hazardous
Materials after the Commencement Date of the Prior Lease.
2.3 Tenant's Environmental Compliance.
---------------------------------
(a) Tenant shall bear any liability and be required to process at its own
cost, any use license, permit, toxic waste management plan or other governmental
permission or review required by any rule, regulation or law relative to
Tenant's use or occupancy of the Premises. The effective date for performance of
this Lease by Tenant shall not be changed, extended or delayed for failure of
Tenant to obtain said license or permit.
(b) Reporting Requirements. Tenant or any occupant, sublessee or assignee
(collectively "User"), shall be required to report to the City or County
Division of Environmental Health or other applicable governmental agency, all
hazardous and extremely hazardous materials handled, stored, used, generated or
manufactured on the Premises as required by the California Health and Safety
Code, and all other Federal, State and local statutes and regulations. Any such
User shall be required to clean up and
7
<PAGE>
abate any environmental pollution and/or contamination resulting from the User's
use, generation, storage, manufacture, handling, spillage, of hazardous and/or
extremely hazardous materials upon the Premises. Tenant shall be required to
adhere to all Federal and State statutes, laws, rules, regulations and orders
regulating the presence, use, storage and disposal of toxic or hazardous
materials.
(c) Tenant shall not cause or permit any Hazardous Material to be brought
upon, kept or used in or about the Premises by Tenant, its agents, employees,
contractors or invitees, without the prior written consent of Landlord (which
Landlord shall not unreasonably withhold as long as Tenant demonstrates to
Landlord's reasonable satisfaction that such Hazardous Material is necessary or
useful to Tenant's business and will be used, kept and stored in a manner that
complies with all laws relating to any such Hazardous Material so brought upon
or used or kept in or about the Premises). Landlord hereby consents to Tenant
bringing upon, storing and/or using in or about the Premises, all products
carried from time to time in its catalog and/or offered generally for sale to
its customers, however Tenant shall be solely responsible for product compliance
with all Applicable Laws. If Tenant breaches the obligations stated in this
paragraph, then Tenant shall indemnify, defend and hold Landlord Harmless from
any and all claims, judgments, damages, penalties, fines, costs, liabilities or
losses (including, without limitation, diminution in value of the Premises,
damages for the loss or restriction on use of rentable or useable space or of
any amenity of the Premises, damages arising from any adverse impact on
marketing of the Premises, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or after the lease
term as a result of such contamination. The indemnification set forth herein
shall run to the benefit of any bank or other lender to which Landlord or
Landlord's successors and assigns may grant a security interest in the Premises
and/or the Premises. This indemnification of Landlord by Tenant includes,
without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal or restoration work required by any
federal, state or local government agency or political subdivision because of
Hazardous Material present in the soil or ground water on or under the Premises
caused or permitted by Tenant. Without limiting the foregoing, if the presence
of any Hazardous Material on the Premises caused or permitted by Tenant results
in contamination of the Premises, Tenant shall promptly take all actions at its
sole expense as are necessary to return the Premises to the condition existing
prior its introduction of any such Hazardous Material to the Premises; provided
that Landlord's approval of such actions shall first be obtained, which approval
shall not be unreasonably withheld as long as such actions would not potentially
have any material adverse long-term or short-term effect on the Premises.
8
<PAGE>
As used herein, the term "Hazardous Material" means any hazardous or toxic
substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous Material" includes, without limitation, any material or
substance which is (i) defined as a "hazardous waste," "extremely hazardous
waste" or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7,
or listed pursuant to Section 25140 of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a
"hazardous substance" under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance
Account Act); (iii) defined as a "hazardous material," "hazardous substance" or
"hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory); (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage
of Hazardous Substances); (v) petroleum; (vi) asbestos; (vii) listed under
Article 9 or deemed as hazardous or extremely hazardous pursuant to Article II
or Title 22 of the California Administrative Code, Division 4, Chapter 20;
(viii) designated as a "hazardous substance" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et. seq.
(42 U.S.C. Section 6903); (ix) defined as "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C. Section 9601); or (x)
any substance requiring remediation under any federal, state, municipal or other
governmental statute, ordinance, rule, regulation or policy.
2.4 Parties' Rights and Obligations. Anything to the contrary
-------------------------------
notwithstanding, in the event any environmental hazard is discovered on or about
the Premises that relates to any violation or obligation under any Applicable
Environmental Laws, and it is the direct result of Landlord's activities on the
Premises, or preexisted the Commencement Date (unless caused or permitted by
----------------------------------------------------
Tenant or Tenant's predecessor-in-interest), then Landlord shall, within twenty
- -------------------------------------------
(20) days of written request from Tenant, undertake to remedy said violation of
Applicable Environmental Law, provided, however, such violation or obligation is
not a direct result of the Tenant's release or storage of a Hazardous Material
in or about the Premises. The obligation of Tenant to pay rent shall not abate
during the remedy period unless Tenant is unable to use the Premises as intended
or if the use thereof may constitute a health risk or hazard to Tenant or
Tenant's agents, employees and invitees. It is the Parties' intent that any
violation or obligation so imposed that is a result of the construction of the
Building, the construction of any improvements on or about the Premises by
Landlord, its predecessors in interest or by other tenants or other parties in
possession, or the use of the Building
9
<PAGE>
and/or Premises by parties other than the Tenant or Tenant's predecessor-in-
interest, shall not be deemed to be a direct result of Tenant's release or
storage of any Hazardous Material. The term Tenant, for the purpose of this
paragraph, shall include Tenant's invitees, licensees, permitted users,
subtenants or predecessors having a leasehold interest in all or part of the
Premises. Should Landlord decline in writing to remedy said violation, or should
said violation not be remedied within 120 days of said notice to Landlord, the
Tenant may, upon twenty (20) days written notice, terminate this Lease.
SECTION 3
TERM
3.1 Commencement. The term of this Lease shall commence on the
------------
Commencement Date as defined in paragraph 2.1. In no event, shall the obligation
of Tenant to begin paying rent accrue prior to the Commencement Date, unless
Tenant takes full possession of the Premises under a legal occupancy permit
prior to such Commencement Date, in which case Tenant shall pay rent from the
actual occupancy date according to the schedule contained in Section 4.1
(Monthly Rent), 4.2 (Additional Rent), 4.3 (Partial Month) and 4.4 (Interest on
------------ --------------- ------------- -----------
Late Payments).
- -------------
3.2 Term. The term of this Lease shall continue for One Hundred Eighty
----
(180) full months from the Commencement Date, as specified in Section 3.1.
SECTION 4
RENT
4.1 Monthly Rent. The consideration for the one hundred eighty (180)
------------ ------------------------
full months of this Lease (exclusive of Additional Rent, as herein set forth,
and exclusive of Base Monthly Rent for the first partial calendar month, if any,
following the Commencement Date) shall be based on the following Rent formulas
and computation:
The Base Monthly Rent herein is calculated by adding two separate rent
rates described as follows: (a) the first rate encompasses 195,284 square feet
(the square footage constructed pursuant to the Prior Lease or March 6, 1990)
(Exhibit A) and described in Section 4.1(a), and (b) the second rate encompasses
approximately 72,000 square feet as more fully described in Section 1 of this
Lease (construction of new improvements) and Exhibit "B" and described in
Section 4.1(b).
<TABLE>
<CAPTION>
MONTHS NUMBER OF SQ. FEET BASE MONTHLY RENT
------ ------------------ -----------------
<S> <C> <C>
4.1(a): 1-30 195,284 $65,329.44
</TABLE>
10
<PAGE>
The Base Monthly Rent set forth above shall be adjusted at the end of each
thirty (30) month period by adding to said Base Monthly Rent an amount equal to
ninety-five percent (95%) of the increases over the prior thirty (30) month
period in an average of the Consumer Price Index for (1) all Urban Consumers,
All Items (San Francisco-Oakland-San Jose Metropolitan Area), and (2) the
National United States City Average, 1982-84=100, as published by the United
States Department of Labor, Bureau of Labor Statistics ("CPI"). Any increase in
Monthly Base Rent caused by increases in CPI shall not result in a Base Monthly
Rent greater than one hundred twelve percent (112%) of $65,329.44; plus
<TABLE>
<S> <C> <C> <C>
4.1(b): 1-30 72,000 $15,480.00
</TABLE>
In the event that the new improvements described in Section 1 of this Lease
result in square footage greater than or less than 72,000 square feet, the Lease
shall be amended to reflect the change in square footage and the resulting
change in Monthly Base Rent. The Monthly Base Rent for the 72,000 square feet is
calculated on twenty-one and one-half cents (.215) per square foot per month.
Tenant agrees to pay to Landlord on the Commencement Date and thereafter on
the first (1st) day of every calendar month thereafter for the first full one
hundred eighty (180) months of the term of this Lease, in lawful money of the
United States of America, without notice or demand, the amounts described and
calculated immediately above in this Section 4.1.
The Base Monthly Rent for the entire Premises shall be the sum of the two Base
Monthly Rent figures above set forth. The Base Monthly Rent for months 31
through 180 shall be adjusted every thirty (30) months from the Commencement
Date, based on 95% of the increases in an average of the Consumer Price Index
for (1) all Urban Consumers, All Items (San Francisco-Oakland-San Jose
Metropolitan Area), and (2) the National United States City average, 1982-
81=100, as published by the United States Department of Labor, Bureau of Labor
Statistics. Notwithstanding anything to the contrary in the preceding sentence,
the rent after adjustment shall not be greater than 112.0 percent (112.0%) of
the rent for the preceding thirty (30) month period.
4.2 Additional Rent. Tenant shall also be obligated to pay directly
---------------
as "Additional Rent" hereunder all "Property Taxes" and "All-risk Insurance" (as
such terms are hereinafter defined) with respect to each calendar year of the
Lease Term:
(i) Property Taxes:
(a) The term "Property Taxes" for the purposes of this Lease means
all general and special ad valorem real estate taxes, all special assessments
for local improvements, and all other similar general and special ordinary and
extraordinary, governmental charges assessed, levied, charged, or imposed upon
the
11
<PAGE>
Premises or Building during the term of the Lease, or any holdover or renewal
period, by any political or governmental body, or subdivision thereof, having
jurisdiction over the Premises or Building; excluding, however, franchise,
estate, inheritance, succession, capital levy, transfer, income, employment,
head or excess profits tax imposed upon Landlord. In the event that any
political body, or sub-division thereof, or any governmental authority having
jurisdiction over the Premises or Building imposes a tax, assessment, or charge
that is calculated by a method that values the rents payable by Tenant to
Landlord, by way of substitution for the taxes and assessments levied against
the Premises or Building, such tax, assessment, or charge may be deemed to
constitute a Property Tax for purposes of this Lease. Landlord shall not
initiate any procedure for placement of improvement bonds upon the Premises.
(b) Tenant shall pay directly to the appropriate taxing authority,
before the same become delinquent, all Property Taxes levied or assessed
against the Premises or Building during the Lease term.
(ii) All Risk Insurance. Tenant shall maintain standard "all-risk"
------------------
insurance, acceptable in the State of California, insuring the full value of the
Building, excluding cost of land, foundation, and footings (the "All-risk
Insurance"), as set forth in Section 8.5
With reference to the 72,000 square feet addition referred to in Section 1
above, Landlord and Tenant shall cause an inspection of the Premises to be made
simultaneously with the Commencement Date at a mutually agreeable time by their
respective representatives to determine and record the condition of the
Premises. These representatives shall prepare and sign a statement indicating
any defects, damage or deterioration existing at the time of the inspections.
Tenant shall not be responsible to return any item on said statement to Landlord
in a condition better than its condition on the date of the inspection indicated
on said statement. However, Landlord specifically agrees to promptly undertake
appropriate repairs to the Building heating, ventilation, air conditioning
system (HVAC), the electrical system and wiring (including computer
requirements), roof, doors, docks doors, floor, security system (including
security lighting), interior lighting and sprinklers upon execution of this
Lease Agreement.
4.3 Partial Month. If the term shall commence upon a day other than
-------------
the first (1st) day of a calendar month, or shall end upon a day other than the
last day of the calendar month, then Tenant shall pay upon such Commencement
Date and on the first (1st) day of the last calendar month, one-thirtieth
(1/30th) of the Base Monthly Rent as set forth in Section 4.1 hereof, if any,
for each day of such fractional calendar month.
12
<PAGE>
4.4 Interest on Late Payments. In the event that Tenant fails to pay any
-------------------------
installment of Base Monthly Rent or Additional Rent when such installment is
due, the total amount then due shall bear interest at the rate of twelve percent
(12%) per annum until paid after Landlord has given Tenant twenty (20) days
written notice of its obligation and/or delinquency, provided however, that if
Landlord has given such notice twice during any consecutive twelve (12) month
period, then Tenant shall pay such interest hereunder agreed to without the
requirement of written notice.
SECTION 5
USE
5.1 Prescribed Use. Tenant shall use the Premises for offices and
--------------
warehouse and reasonably related activities.
5.2 Nuisance. Neither Landlord nor Tenant shall commit, or suffer to be
--------
committed, upon the Premises, any nuisance or thing which may disturb the quiet
enjoyment of Tenant or any other lessee or any person or business within a
reasonable distance from the Premises.
5.3 Compliance with Laws. Landlord and Tenant shall comply with all laws
--------------------
ordinances, orders, rules and regulations promulgated by all federal, state,
county, municipal bodies and agencies having jurisdiction, which laws,
ordinances, orders, rules and regulations relate to the business of Landlord and
Tenant.
5.4 Dangerous Goods and Activities. Tenant hereby agrees not to engage in
------------------------------
any activity or store upon the Premises such goods or equipment which would
render the insurance described in Section 4.2 (ii) hereof void.
SECTION 6
UTILITIES
Tenant shall be responsible for and promptly pay all charges incurred for
all utility services to the Premises, including, but not limited to water,
natural gas, sanitary sewer, electricity and telephone. Tenant shall also
provide all replacement light bulbs and tubes after the Commencement Date of
this Lease.
SECTION 7
MAINTENANCE
7.1 Landlord's Obligations. Landlord shall, at its sole expense,
----------------------
maintain the structural soundness of the roof, roof trusses and structure of the
exterior walls and of the foundation, downspouts and roof gutters attached to
exterior Premises (other than for damages caused by Tenant's operation),
concealed plumbing, electrical and other repairs due to defective construction,
installation or design, reasonable wear and tear and events
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covered by the destruction provisions hereof excepted. The phrase "exterior
walls" shall not include windows or glass or plate glass, doors, window mullions
or gaskets or signs. Landlord shall also remedy or remove any inherent safety
problems or risks that may arise or exist because of hazardous or toxic
materials used in Building or construction of the Building or improvements. The
phrase "reasonable wear and tear" shall include minor cracking in the walls or
foundation, caused by the elements, or otherwise, which affects neither the
structural integrity nor safety of the Premises or the Tenant, its agents,
employees and invitees or Tenant's products. Landlord, at its sole expense,
shall guarantee and replace as necessary the heating, ventilation and air
conditioning systems which were installed at the time of construction of the
72,000 square feet addition referred to in Section 1 for a period of one (1)
year from the Commencement Date; any such repair or replacement shall thereafter
be the responsibility of Tenant. Provided, however, that Landlord shall not be
responsible for the following: (a) damage to the roof, exterior walls, and/or
foundation resulting from the negligent act or acts, or omissions of Tenant, or
Tenant's employees, contractors, agents, vendors, materialmen, suppliers,
customers, invitees or concessionaires; and (b) the upkeep or repair of any air
conditioning, heating, ventilation or refrigeration systems used or required for
the Premises except as otherwise provided herein.
7.2 Tenant's Obligations.
--------------------
(i) Tenant, at Tenant's sole cost and expense, shall maintain and repair
all other parts of the Premises, including but not limited to, the following
items: all glass, including windows of glass or glass plate, window mullions and
gaskets; interior portion of the doors and attached hardware; special store
fronts; interior walls, cabinets, millwork, paneling and other finish work;
floor and floor coverings; heating, ventilation, refrigeration and air
conditioning systems and related mechanical equipment; dock boards, dock
levelers, and/or dock bumpers; overhead truck doors; downspouts of roof gutters
attached to exterior of Premises for damage caused by Tenant's operation;
plumbing fixtures and above ground, non-concealed plumbing; electrical
facilities and electrical fixtures and all other fixtures and trade fixtures
except those plumbing and electrical repairs which may be due to defective
construction, installation, design or products. Provided, however, Tenant shall
incur no liability or expenses relative to reasonably required repair or removal
of hazardous substances, if any, in or about the Building except as set forth
hereinabove. Tenant shall also be responsible for the cleaning and sweeping of
Tenant's parking spaces as designated by Landlord pursuant to the terms of
Section 21. Tenant shall be responsible for the disposal of its trash and will
maintain adequate receptacles for such disposal. Replacement and repair parts,
materials, and equipment shall be of quality equivalent to those initially
installed within the Premises; repair and maintenance
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work shall be done in accordance with the then existing federal, state and local
laws, regulations and
(ii) Tenant shall maintain all landscaping, exterior lighting, site
concrete and paving including driveway and parking area surfaces (subject,
however, to the limitations of Section 7.2(i) hereof and to the warranties
contained in Section 1.8), and pedestrian walks.
7.3 Surrender of Possession. Upon any termination of this Lease, Tenant
-----------------------
shall surrender the Premises in a condition and repair similar to their original
condition, reasonable wear and tear, events of destruction, and modifications,
alterations and improvements for office facilities, storage, lighting and
sprinklers excepted.
The term "Original Condition" shall refer to the condition of the 195,284
square feet referred to in Section 3.1 above and Exhibit "A" to this Lease as it
existed on November 19, 1990; and shall refer to the condition of the 72,000
square feet addition set forth in Exhibit "B" on the Commencement Date.
SECTION 8
INSURANCE
8.1 Indemnification of Landlord. Tenant will indemnify Landlord and save
---------------------------
it harmless from and against any and all claims, actions, damages, liability and
expense in connection with the loss of life, personal injury, and/or damage to
Property arising from or out of (i) any occurrence in, upon or at the Premises
caused by the sole or contributory negligence or intentional misconduct of
Tenant or its respective agents, customers, invitees, concessionaires,
contractors, servants, vendors, materialmen or suppliers, (ii) any occurrence
elsewhere on the Premises occasioned wholly or in part by any act or omission
caused by Tenant or its agents, customers, invitees, concessionaires,
contractors, servants, vendors, materialmen or suppliers, or (iii) any
occurrence occasioned by the violation of any law, regulation or ordinance by
Tenant or its agents, customers, invitees, concessionaires, contractors,
servants, vendors materialmen or suppliers. In case the Landlord shall be made a
party to any litigation commenced by or against the Tenant for any of the above
reasons, then Tenant shall protect and hold the Landlord harmless and pay all
reasonable attorneys' fees paid by the Landlord. It is understood that the
provisions of this Section 8.1 shall not be applicable to any such claims,
actions, liabilities, or expenses, arising out of any negligent act or omission,
or intentional misconduct, of Landlord, its agents, materialmen, vendors or
suppliers.
8.2 Indemnification of Tenant. Landlord will indemnify Tenant and save it
-------------------------
harmless from and against any and all claims, actions, damages, liability and
expense in connection with the loss of life, personal injury, and/or damage to
property arising from or
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out of (i) any occurrence in, upon or at the Premises caused by the sole or
contributory negligence or intentional misconduct of Landlord or its respective
agents, customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers, (ii) any occurrence elsewhere on the Premises
occasioned wholly or in part by any act or omission caused by Landlord or its
agents, customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers, or (iii) any occurrence occasioned by the violation of
any law, regulation or ordinance by Landlord or its agents, customers, invitees,
concessionaires, contractors, servants, vendors materialmen or suppliers. In
case the Tenant shall be made a party to any litigation commenced by or against
the Landlord for any of the above reasons, then Landlord shall protect and hold
the Tenant harmless and pay all reasonable attorneys' fees paid by the Tenant.
It is understood that the provisions of this Section 8.2 shall not be applicable
to any such claims, actions, liabilities, or expenses, arising out of any
negligent act or omission, or intentional misconduct, of Tenant, its agents,
materialmen, vendors or suppliers.
8.3 Waiver of Subrogation. Anything in this Lease to the contrary
---------------------
notwithstanding, Landlord and Tenant each hereby waives any and all right to
recovery, claim, action or cause of action, against the other, its agents,
directors, officers or employees, for any loss or damage that may occur to the
Premises, or any improvements thereto, or the Building, or any improvements
thereto, or any personal property of such party therein, by reason of fire, the
elements, or any other cause which could be insured against under the terms of
insurance policies referred to in Section 4.2 (ii) hereof, regardless of cause
or origin, including negligence of the other party hereto, its agents,
directors, officers or employees, and covenants that no insurer shall hold any
right of subrogation against such other party.
8.4 Public Liability and Property Damage. Bodily injury liability
------------------------------------
insurance and property damage liability insurance will be carried and maintained
by Tenant, at Tenant's sole cost and expense, after the date of delivery of the
Premises from Landlord to Tenant in the following amounts:
Bodily Injury or Death,
per occurrence: $3,000,000
Property Damage: Full Replacement Value
Landlord's Rent Loss Coverage: $1,000,000 (to be increased each
thirty (30) months by the same
percentage as the Base Monthly
Rent by reference to CPI pursuant
to Section 4.1 hereinabove.)
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All such bodily injury liability insurance and property damage liability
insurance shall specifically make reference to the indemnity agreement in
Section 8.1 hereof, and Tenant shall add Landlord as an additional insured on
each of the policies herein mentioned.
8.5 Policy Form. All policies of insurance provided for herein to be
-----------
carried by Tenant shall be issued by insurance companies certified to do
business in the State of California and its insurance regulatory bodies and
shall be issued in the names of both Landlord and Tenant. Executed copies of
such policies of insurance or certificates thereof shall be delivered to the
Landlord within ten (10) days after delivery of possession of the Premises and
thereafter within thirty (30) days prior to the expiration of such policy. As
often as any such policy shall expire or terminate, renewal or additional
policies shall be procured and maintained by the Tenant in like manner and to
like extent. All policies of insurance delivered to Landlord must contain a
provision that the company writing said policy will give to the Landlord at
least twenty (20) days notice in writing in advance of any cancellation or lapse
or the effective date or any reduction in amounts of insurance. All public
liability and property damage policies shall be written as primary policies, not
contributing with and not in excess of coverage which Landlord may carry, if
any. Tenant shall pay all premiums for the insurance policies described in
Section 8.4 within fifteen (15) days after receipt by Tenant of a copy of the
premium statement or other evidence of the amount due. All insurance shall be
maintained with companies holding a "General Policyholder's Rating of B+ or
better, as set forth in the most current issue of "Best's Insurance Guide."
Tenant shall be liable for the payment of any deductible amount under Landlord's
insurance policies required hereunder; said deductible shall in no event be
greater than $100,000.00. Notwithstanding the foregoing, any insurance coverage
required to be carried by Tenant hereunder may be carried in whole or in part
(i) under any plan of self-insurance which Tenant may from time-to-time have in
force and effect and approved by the Insurance Commissioner and other
governmental authorities of the State of California whose approval is legally
necessary to operate as a self-insured in said state, so long as Tenant or any
assignee of this Lease who is liable hereunder shall have a net worth of
$25,000,000.000 or more, subject to Landlord's prior consent which shall not be
unreasonably withheld (Landlord shall be a named insured for the purposes of
this Lease under any approved program of self-insurance), or (ii) under a
"blanket" policy or policies covering other properties of Tenant and its
assignee of this Lease. The scope and extent of the insurance protection
afforded Landlord pursuant to this article shall not be diminished as a result
of any rights of self-insurance as hereinabove provided.
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SECTION 9
ALTERATIONS AND FIXTURES
9.1 Prior Consent. Tenant shall not make any alterations improvements,
-------------
modifications, or additions to the Premises costing more than $20,000.00,
without first having obtained the written consent of Landlord which consent
shall not be unreasonably withheld; provided, however, planned modifications and
improvements, including minor modification or improvements to the office
facilities, the sprinkler and lighting systems and the installation of normal
trade fixtures, shelves, machinery, racks, conveyors and apparatus are hereby
specifically approved. Tenant shall notify Landlord upon completion of any other
alterations, improvements, modifications, or additions and Landlord may inspect
same for workmanship and compliance with the approved plans and specifications.
Any alterations, improvements, modifications, or fixture which is installed by
either Landlord or Tenant on the Premises and which is in any manner attached to
the floors, walls, or ceilings shall remain upon the Premises when the Premises
are surrendered by Tenant except as described hereinbelow.
9.2 Trade Fixtures. Notwithstanding anything in this Section 9 to the
--------------
contrary, all normal trade fixtures, equipment, shelves, machinery, racks,
conveyors, apparatus, signs and furniture installed in the Premises at the cost
of Tenant, may be removed by Tenant on or before the termination date of this
Lease. Tenant must repair any damage caused by such removal.
9.3 Mechanics' Lien. Neither Landlord nor Tenant will create or permit to
---------------
be created or to remain any lien (including but not limited to, the liens of
mechanics, laborers, artisans, or materialmen for work or materials alleged to
be done or furnished in connection with the Premises), encumbrance or other
charge upon the Premises or any part thereof, upon Landlord's interest therein,
or upon Tenant's leasehold interest; provided that Tenant shall not be required
to discharge any such liens, encumbrances or charges as may be placed upon the
Premises by the act of Landlord.
SECTION 10
GRAPHICS AND ARCHITECTURAL CONTROL
10.1 Consistent with existing rules, requirements and regulations, Tenant
may place reasonable signage on the Building all at Tenant's own cost and
expense and Tenant shall remain liable for the upkeep and maintenance thereof.
10.2 Landlord agrees it will not alter or change the name of the Building,
Premises or street address thereof without first obtaining the prior written
consent of Tenant or in the alternative, by paying directly all costs, expenses,
fees and charges incurred by Tenant due to such change in name or address.
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SECTION 11
ASSIGNMENT AND SUBLETTING
In the event Tenant should desire to assign this Lease or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice of such
desire and Landlord shall then have a period of twenty (20) days following
receipt of such notice within which to notify Tenant in writing that Landlord
approves of such assignment or subletting. If Landlord should fail to notify
Tenant in writing of such approval within the twenty (20) day period, Landlord
shall be deemed to have elected not to permit such assignment or subletting.
Landlord shall not unreasonably withhold its consent to any such assignment or
subletting. No assignment or subletting by Tenant shall relieve Tenant of any
obligations under this Lease. In the event that the Landlord approves any such
assignment or subletting, such approval is conditional upon the assignee or
subtenant assuming in writing all of the terms, covenants, conditions and
obligations of Tenant under this Lease.
SECTION 12
RIGHT OF ACCESS
Landlord shall have the right to enter the Premises under ordinary
circumstances during normal business hours upon twenty-four (24) hours prior
written notice to Tenant, to examine the same and to make such repairs,
alterations, improvements, or additions as Landlord may deem necessary or
desirable to comply with this Lease. Landlord shall be allowed to take all
materials into and upon the Premises that may be required therefore without the
same constituting an eviction of Tenant, actual or constructive, and the rent
shall in no way abate while such repairs, alterations, improvements or additions
are being made, by reason of loss or interruption of business of Tenant unless
such repairs, alterations, improvements or additions restrict or interfere with
Tenant's use of a portion of the Building. In that event, the rent shall abate
as to that portion of the Building wherein the use thereof is restricted.
Landlord shall make reasonable efforts not to interfere with the normal business
operations of Tenant. In the event of any emergency, no prior written notice on
the part of the Landlord will be required to enter the Building and Premises.
During the three (3) months prior to the expiration of the term of this Lease,
Landlord may exhibit with twenty-four (24) hour notice the Premises to
prospective lessees or purchasers during normal business hours and place upon
the Premises the usual notices "For Sale" or "For Rent", and Tenant shall permit
the same to remain.
SECTION 13
HOLDING OVER
Should Tenant remain in possession of the Premises, or any part thereof,
after termination of this Lease (whether by the expiration of the term of this
Lease or otherwise) without the
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execution of a new lease by Landlord and Tenant, Tenant, at the option of
Landlord, shall become a tenant from month-to-month of the Premises, or part
thereof occupied, at one and one-quarter the Base Monthly Rent, under all other
terms, conditions, provisions and obligations of this Lease insofar as the same
are applicable to a tenancy from month-to-month.
SECTION 14
DEFAULTS AND REMEDIES
14.1 Events of Default by Tenant. The occurrence of one or more of the
---------------------------
following events shall constitute a default pursuant to the terms of this Lease:
(i) the failure of Tenant to comply with or to observe any terms, provisions, or
conditions of this Lease performable by and obligatory upon Tenant, within
thirty (30) days after written notice by Landlord; (ii) the assignment of this
Lease or subleasing of the Premises by Tenant without the prior written approval
of Landlord; (iii) the taking of Tenant's leasehold estate by execution or other
process of law; (iv) the judicial declaration of Tenant as bankrupt or insolvent
according to law or an assignment of a substantial part of Tenant's property for
the benefit of creditors; (v) the appointment of a receiver, guardian,
conservator, trustee in involuntary bankruptcy or similar officer by a court of
competent jurisdiction to take charge of a substantial part of Tenant's
property; (vi) the filing of a petition for involuntary or voluntary
reorganization or arrangement or bankruptcy of Tenant pursuant to any provision
of the Bankruptcy Code without subsequent dismissal thereof within sixty (60)
days.
14.2 Landlord's Remedies. Upon the occurrence of any event of default
-------------------
enumerated in Section 14.1 hereof, Landlord shall have the option of (i)
terminating this Lease by written notice thereof to Tenant, or (ii) continuing
this Lease in full force and effect, or (iii) curing the default of Tenant, or
(iv) pursuing any other remedy to which it may be entitled by law.
(i) In the event Landlord shall elect to terminate this Lease, upon
written notice to Tenant, this Lease shall be ended as to Tenant and all persons
holding under Tenant, and all of Tenant's rights shall be forfeited and lapsed,
as fully as if this Lease had expired by lapse of time. In such event, Tenant
shall be required immediately to vacate the Premises and there shall immediately
become due and payable the amount by which (a) the present value (determined
using the then current Prime Rate per annum as charged by Irving Bank of New
York, New York) of the total rent and other benefits which would have accrued to
Landlord under this Lease for the remainder of the Lease term if the terms and
provisions of this Lease had been fully complied with by Tenant exceeds (b) the
total fair market rent value (determined using the then current Prime Rate per
annum as charged by the Irving Bank of New York, New York) of the Premises for
the balance of the Lease term (it being the intention of both parties hereto
that Landlord shall receive the
20
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benefit of its bargain); and the Landlord shall at once have all the rights of
re-entry upon the Premises, without becoming liable for damages, or guilty of
trespass. In addition to the sum immediately due from Tenant under the foregoing
provision, there shall be recoverable from Tenant: (a) cost of restoring the
Premises to good condition, normal wear and tear excepted, (b) all accrued,
unpaid sums, plus interest at the maximum rate then permitted by law and late
charges, if in arrears, under the terms of this Lease up to the date of
termination, (c) Landlord's cost of recovering possession of the Premises, and
(d) rent and sums accruing subsequent to the date of termination pursuant to the
holdover provisions of Section 13.
(ii) In the event that Landlord shall elect to continue this Lease in full
force and effect, Tenant shall continue to be liable for all rents. Landlord
shall nevertheless have all the rights of re-entry upon the Premises without
becoming liable for damages, or guilty of a trespass and Landlord may relet the
Premises, or any part thereof, to a substitute tenant or tenant, for a period of
time equal to or lesser or greater than the remainder of the Lease term on
whatever terms and conditions Landlord reasonably deems advisable. Against the
rents and sums due from Tenant to Landlord during the remainder of the term,
credit shall be give Tenant in the net amount of rent received from the new
tenant after deduction by Landlord for: (a) the costs incurred by Landlord in
reletting the Premises (including, without limitation, remodeling costs,
brokerage fees, legal fees, and the like), (b) the accrued sums, plus interest
and late charges if in arrears, under the terms of this Lease, (c) Landlord's
cost of recovering possession of the Premises, and (d) the cost of restoring any
of Tenant's property left on the Premises after re-entry. Notwithstanding any
provision in this Section 14.2 (ii) to the contrary, upon the default of any
substitute tenant or upon the expiration of the Lease term hereof, Landlord may,
at Landlord's election, either relet to still another substitute tenant, or
terminate this Lease and exercise its rights under Section 14.2(i) hereof.
14.3 Attorneys' Fees. In the event either party hereto defaults in the
---------------
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and the other party hereto places the enforcement of this Lease,
or any part thereof, or the collection of any rent or charge due, or to become
due, or the recovery or the possession of the Premises, in the hands of
attorneys, or files suit upon the same, the non-prevailing party agrees to pay
the reasonable attorneys' fees of the prevailing party.
14.4 Waiver. Failure on the part of Landlord or Tenant to complain of any
------
action or non-action on the part of Landlord or Tenant, no matter how long the
same may continue, shall never be deemed to be a waiver by either party of any
of his rights hereunder. Further, it is covenanted and agreed that no waiver at
any time of any of the provisions hereof by either party shall be
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construed as a waiver of any of the other provisions hereof and that a waiver at
any time of the provisions hereof shall not be construed as a waiver at any
subsequent time of the same provisions.
SECTION 15
SUBORDINATION
15.1 Subordination. This Lease shall be subject and subordinate to any
-------------
mortgages or deeds of trust that may have been placed or may be hereafter placed
upon the Premises by Landlord and to any advances to be made thereunder, and to
any interest thereon, and all renewals, replacements and extensions thereof,
provided no such mortgage or deed of trust shall impair or disturb Tenant's
right to quiet enjoyment of the Premises under this Lease so long as Tenant is
not in default. Any mortgages or trustee may elect by written notification to
give the rights and interests of Tenant under this Lease priority over the lien
of its mortgage or deed of trust. In the event of foreclosure or trustee's sale
thereunder, the purchaser of Landlord's interest shall become Landlord hereunder
subject to all the terms, provisions and obligations created hereby. Tenant
shall, in the event any proceedings are brought for foreclosure of the Premises,
or the power of sale under any mortgage made by Landlord covering the Premises
is exercised, attorn to the purchaser (at the option of said purchaser, and not
otherwise) upon any such foreclosure or sale and recognize such purchaser as the
Landlord under this Lease.
15.2 Necessary Instruments. Although Section 15.1 hereof is
---------------------
self-executing, Tenant shall execute and deliver instruments that may be
reasonably required by Landlord's mortgagees for the purpose of evidencing the
subordination of this Lease within ten (10) days of written notice by Landlord
or such mortgagee or its trustee, the language thereof to be agreed upon by the
parties hereto.
SECTION 16
SALE BY LANDLORD
Landlord shall have the right to sell, transfer, or assign its interest
hereunder or any part thereof without the prior consent of Tenant. However,
Landlord shall give Tenant thirty (30) days written notice of the proposed
transfer and the transferee and assignee must assume all of the obligations of
Landlord hereunder in writing. After such sale, transfer or assignment, Tenant
shall attorn to such purchaser, transferee or assignee, and Landlord shall be
released of all obligation hereunder after the effective date of such sale,
transfer, or assignment, but only if the requirements created hereby have been
met by Landlord.
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SECTION 17
ESTOPPEL CERTIFICATES
Each party agrees within ten (10) days following request by the other party
(i) to execute and deliver to requesting party reasonably required documents
(including an estoppel certificate) (a) certifying that this Lease is unmodified
and in full force and effect, or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect and the date to which the rent and other charges are paid in advance,
if any, and (b) acknowledging that there are not, to such party's knowledge, any
uncured defaults hereunder, or so specifying such defaults, if any, (as are
claimed), evidencing the status of the Lease.
SECTION 18
DESTRUCTION
18.1 Landlord's Obligations. (i) In the event the Premises shall be
----------------------
damaged by fire, act of God, or other casualty, but shall not be rendered
untenantable in whole or in part, regardless of the time remaining in the term
of this Lease, Landlord shall, at its own expense, cause such damage to be
repaired, and the rent shall not be abated. (ii) If the Premises shall be
rendered partially untenantable, unless the damage occurs within the last one
(1) year of the term of this Lease, Landlord shall, at its own expense, cause
the damage to be repaired, and the Base Monthly Rent and Additional Rent shall
be abated proportionately as to the portion of the Premises rendered
untenantable. If, however, the damage occurs within the last one (1) year of the
term of this Lease, Landlord may, at its option, cause such damage to be
repaired or either party may terminate this Lease by giving the other party
written notice of termination within thirty (30) days from the date of such
occurrence, and in the event of such termination, rent shall be adjusted as of
the date of such occurrence. (iii) If the Premises shall be rendered wholly
untenantable by reason of such occurrence, regardless of the time remaining in
the term of this Lease, Landlord may at it own cost and expense cause such
damage to be repaired, and the Base Monthly Rent and the Additional Rent shall
abate until the Premises have been restored and rendered tenantable, or either
party may elect to terminate this Lease by giving the other party written notice
of termination within thirty (30) days from the date of said occurrence, and in
the event of such termination, rent shall be adjusted as of the date of such
occurrence. (iv) If the Building shall be damaged to such an extent that
Landlord shall determine that the repairs shall not be made or that demolition
of the Building is appropriate, then notwithstanding anything to the contrary
contained above, and whether or not the Premises have been damaged, Landlord or
Tenant may terminate this Lease by giving the other party written notice of
termination, in which event rent shall be adjusted as of the
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date of termination. (v) If Landlord has not initiated repair or restoration
within thirty (30) days of the event of the casualty, Tenant shall have the
right to terminate this Lease by written notice to Landlord at any time within
thirty (30) days after said thirty (30) days.
18.2 Scope of Landlord's Obligations. In the event Landlord elects or
-------------------------------
shall be obligated to repair or to restore any damage or destruction aforesaid,
the scope of the work shall be limited to the original basic Building and
Standard Leasehold Improvements, and time of completion shall be subject to the
provisions of Section 20, ("Force Majeure"). If Landlord notifies Tenant within
thirty (30) days after the casualty that the insurance proceeds are inadequate
to restore the Building and the standard leasehold improvements as aforesaid,
Tenant shall have right to terminate this Lease by giving written notice to
Landlord within thirty (30) days after Landlord's notice to Tenant.
SECTION 19
EMINENT DOMAIN
19.1 Total Taking. In the event of a taking of the Premises or damage
------------
related to the exercise of the power of eminent domain by any agency, authority,
public utility, person, or corporation or entity empowered to condemn property
("Taking") of the entire Premises or so much thereof as to prevent substantially
impair their use by Tenant during the Lease term (i) the rights of Tenant under
the Lease and the leasehold estate of Tenant in and to the Premises shall cease
and terminate as of the date upon which title to the Premises, or a portion
thereof, passes to and vests in the condemnor or the effective date of any order
for possession if issued prior to the date title vests in the condemnor ("Date
of Taking"), (ii) Landlord shall refund to Tenant any prepaid rent, (iii) Tenant
shall pay to Landlord any rent or charges due Landlord under the Lease, each
prorated as of the Date of Taking (iv) Tenant shall receive from the Award those
portions of the Award attributable to relocation of Tenant, improvements to the
Premises made and paid for by Tenant and trade fixtures, equipment, and
furniture of Tenant, and (v) the remainder of the Award shall be paid to and be
the Property of Landlord.
19.2 Partial Taking. In the event of a Taking of less than 58,000 square
--------------
feet, a "Partial Taking" of the Premises, which does not constitute a "Total
Taking" during the Lease term (i) the rights of Tenant under the Lease and the
leasehold estate of Tenant in and to the portion of the Premises taken shall
cease and terminate as of the Date of Taking, (ii) from and after the Date of
Taking the Total Monthly Rent shall be the product obtained by multiplying (a)
the Total Monthly Rent by (b) the quotient obtained by the total square feet of
the Premises after the Taking by the total square feet of the Premises prior to
the Taking, (iii) Tenant shall receive from the Award those portions of the
Award
24
<PAGE>
attributable to improvements to the Premises made and paid for by Tenant and
trade fixtures, equipment, and furniture of Tenant, and (iv) the remainder of
the Award shall be paid to and be the property of Landlord. Landlord, form his
portion of the Award, shall restore the remainder of the Premises, as nearly as
possible, to one architectural unit, and (v) if Landlord has not initiated
repair or restoration within ninety (90) days of the Partial Taking, Tenant
shall have the right to terminate this Lease by written notice to Landlord
within thirty (30) days after said ninety (90) days. In the event of a taking of
greater than 58,000 square feet, Tenant will have the option to treat same as a
Total Taking as set forth in Section 19.1
SECTION 20
FORCE MAJEURE
In the event Landlord shall be delayed, hindered or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor disputes, labor troubles, inability to procure materials,
failure of power, restrictive governmental laws or regulations, environmental
issues (including but not limited to wetlands and endangered species), or other
governmental laws or regulations, riots, insurrection, war or other cause not
within the reasonable control of Landlord, then the performance of such act
shall be excused for the period of the delay and the period for the performance
of any such act shall be extended for a period equivalent to the period of such
delay. In the event Landlord is delayed or prevented from accessing the Property
due to adverse weather at any time prior to completion of construction of the
walls, roof and slab and such weather creates an inability for Landlord to
safely perform the work, the time for performance shall be excused for the
period of the delay and the period for the performance shall be extended for a
like period. Delays incurred because of adverse weather apply only until walls,
roof and slab are complete.
SECTION 21
PARKING
Tenant shall have the use of the parking spaces and loading dock areas
located on the Premises and designated on Exhibit "B". Tenant agrees that it
will employ its best efforts to prevent the use by Tenant's employees and
visitors of parking spaces allocated to other tenants. Landlord represents that
it now has access and will retain access to the Building and Premises for the
use and benefit of Tenant, its employees, agents, licensees and invitees.
SECTION 22
INTERPRETATIVE PROVISIONS
22.1 Notice. Any notice, request, approval, consent or other communication
------
required or contemplated by this Lease must be in
25
<PAGE>
writing, and may, unless otherwise in this Lease expressly provided, be given or
be served by depositing the same in the United States Postal Service, post-paid
and certified, or other priority overnight delivery service and addressed to the
party to be notified, with return receipt requested, or by delivering the same
in person to such party (or, in the case of a corporate party, to an officer of
such party), or by prepaid telegram, or facsimile transmission when appropriate,
addressed to the party to be notified. Notice deposited in the mail in the
manner hereinabove described shall be effective from and after three (3) days
(exclusive of Saturdays, Sundays and postal holidays) after such deposit. Notice
given in any other manner shall be effective only if and when delivered to the
party to be notified to such party or at such party's address for purposes of
notice as set forth herein. For purposes of notice the addresses of the parties
shall, until changed as herein provided, be as follows:
For Landlord:
Stationers Antelope Joint Venture, A California
General Partnership
Attention: John Banchero
555 University Avenue, Suite 104
Sacramento, CA 95825
With a copy to:
Adon V. Panattoni
8401 Jackson Road
Sacramento, CA 95826
For Tenant:
United Stationers Supply Co.
5440 Stationers Way
Sacramento, CA 95842
With a copy to:
United Stationers Supply Co.
2200 East Golf Road
Des Plains, IL 60016-1267
Attention: President
However, the parties hereto shall have the right from time to time to
change their respective addresses by giving at least fifteen (15) days written
notice to the other party.
22.2 Captions. The title captions appearing in this Lease are inserted
--------
and included solely for convenience and shall never be considered or given any
effect in construing this Lease, or any provision or provisions hereof, or in
connection with the duties,
26
<PAGE>
obligations or liabilities of the respective parties hereto or in ascertaining
intent, if any question of intent exists.
22.3 Entire Contract: Amendment. It is expressly agreed by Tenant, as a
--------------------------
material consideration for the execution of this Lease, that this Lease,
including written extrinsic documents expressly identified herein is the entire
agreement of the parties, and that there are, and have been, no verbal
representations, understandings, stipulations, agreements or promises pertaining
to this Lease or the expressly mentioned written extrinsic documents not
incorporated in writing in this Lease. It is likewise agreed that this Lease may
not be altered, amended or extended except by an instrument in writing signed by
both Landlord and Tenant.
22.4 Severability. If any term or provision of this Lease, or the
------------
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 of 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 enforced to the fullest
extent permitted by law.
22.5 Successors and Assigns. Subject to the provisions of Sections 11
----------------------
and 16 of this Lease, all covenants and obligations as contained within this
Lease shall bind and extend and insure to the benefit of Landlord, its
successors and assigns, and shall be binding upon Tenant, its successors and
assigns.
22.6 Personal Pronouns. All personal pronouns used in this Lease shall
-----------------
include the other genders, whether used in the masculine, feminine or neutral
gender, and the singular shall include the plural (and vice versa) whenever and
as often as may be appropriate.
22.7 Short Form Lease. Tenant agrees not to record this Lease, but each
----------------
party hereto agrees, on request of the other, to execute a Short Form Lease in
form recordable and complying with applicable California laws. In no event shall
such document set forth the rent or other charges payable by Tenant under this
Lease; and any such document shall expressly state that it is executed pursuant
to the provisions contained in this Lease, and is not intended to vary the terms
and conditions of this Lease.
22.8 Legal Interpretation. This Lease and the rights and obligations of
--------------------
the parties hereto shall be interpreted, construed and enforced in accordance
with the laws of the State of California.
27
<PAGE>
22.9 Acceptance of Payments Under Protest. The acceptance by Landlord of
------------------------------------
payments by Tenant under protest shall not be deemed an acknowledgement by
Landlord, or a validation of, any contention or reservation of rights by Tenant.
22.10 Execution of Lease. This Lease may be executed in counterparts,
------------------
and, when all counterpart documents are executed, the counterparts shall
constitute a single binding instrument. The delivery of this Lease by Landlord
to Tenant shall not be deemed to be an offer and shall not be binding upon
either party until executed and delivered by both parties.
22.11 Relative Position of the Parties. It is agreed and understood by
--------------------------------
Landlord and Tenant that each is knowledgeable and sophisticated in matters of
business and real estate, including the matters set out in each section of this
Lease. It is also agreed that this Lease and each section thereof shall not be
interpreted against the drafting party but shall be interpreted equally for and
against each party hereto.
SECTION 23
AMENDMENT FOR COMMENCEMENT DATE AND BASE MONTHLY RENT
Landlord and Tenant shall mutually execute a written amendment hereto
setting forth the exact Commencement Date of this Lease and any changes in the
Base Monthly Rent set forth in Section 4.1 above, necessitated by any change in
square footage for the 72,000 square feet referred to therein.
SECTION 24
RENEWAL OPTION
Tenant shall have the right and option to renew this Lease for one (1)
additional five (5) year term by delivering written notice of the exercise
thereof to Landlord at least sixty (60) days prior to the expiration of the
primary lease term, provided that at the time of the commencement of any such
extended lease term Tenant is not in default hereunder. Upon the delivery of
said notice and subject to the conditions set forth in the preceding sentence,
and upon the execution by Landlord and Tenant of an extension agreement
containing such terms and provisions which are consistent with the provisions of
this paragraph, this Lease shall be extended upon the same terms, covenants and
conditions as provided in this Lease except as follows:
(i) The Base Monthly Rent shall be established between Landlord and Tenant
at the market rate in effect at that time. If both parties are unable to agree
to a market rate and both parties consent to be bound, then the method described
in the following subparagraph may be used to determine the market rate.
28
<PAGE>
(ii) In the event this Lease provides for the payment of rent at "the
prevailing rent rate" or at "the market rate" (the "Market Rate") during any
extension or renewal thereof, and Landlord and Tenant are unable to agree upon
the Market Rate, Landlord and Tenant shall each promptly appoint a real estate
appraiser which is a member of the American Institute of Real Estate Appraisers
(or its equivalent) to assist in the determination of the Market Rate, and the
two appraisers shall appoint a third appraiser who is also a member of the
American Institute of Real Estate Appraisers (or its equivalent). The
determination of the Market Rate by the agreement of any two of such three
appraisers shall be accepted by and binding upon Landlord and Tenant as the
Market Rate, which rate shall thereafter be payable until further adjustment as
provided hereunder. Landlord and Tenant will use all reasonable diligence to
cause their appointed appraisers to perform in good faith and in a timely manner
in order to make the determination of the Market Rate on or before the date on
which the Market Rate is to become effective. In the event such appraisers shall
not make such determination prior to the date on which the Market Rate is to
become effective, this Lease shall nevertheless continue in full force and
effect until such determination is made, and the rent for such period shall be
payable at the rate otherwise payable hereunder. Upon the determination by such
appraisers of the Market Rate, the payment of the Market Rate shall commence on
the first (1st) day of the month following the date of such determinations, and
in addition to such monthly installment of rent, Tenant shall pay to Landlord
the increase in the rent payable hereunder, if any, applicable to the period of
time from the date on which the Market Rate was scheduled to become effective to
the payment of the first installment at the Market Rate. Landlord and Tenant
shall each bear the costs and fees of their respective appraisers and shall
share equally the cost of the third appraiser.
SECTION 25
AGENTS OR BROKERS
The parties hereto agree and acknowledge that neither has dealt with, nor
negotiated with, any real estate agent or broker with reference to the
agreements contained owed by reason hereby indemnify and hold each other
harmless from any and all claims made against either by reason of contact with
any agent or broker by the other party.
SECTION 26
RIGHT OF FIRST REFUSAL
In the event the Property currently described as Parcel B of "C", upon
which a structure has not been built and is not contemplated by this Lease,
becomes available to lease for warehouse and/or office facilities, Landlord
shall offer the space
29
<PAGE>
first to Tenant at a rate no greater than that which Tenant is then paying under
this Lease, and Tenant shall have twenty (20) days to accept or reject all of
such additional space subject to lease and shall notify Landlord thereof in
writing within such twenty (20) day period. Failure of Tenant to notify Landlord
within such twenty (20) day period shall be deemed a waiver of Tenant's first
right of refusal hereunder.
SECTION 27
INDIVIDUAL PARTNERS RIGHT TO TAKE TITLE TO THE PROPERTY
At any time during the term of this Lease, or any extension thereof, and at
the option of Landlord, the ownership of the Property may be transferred into
the names of the individual partners which now comprise Stationers Antelope
Joint Venture, a California General Partnership. Tenant consents to the transfer
of title, as tenants in common, to Carl D. Panattoni, John Banchero, AVP Trust,
Adon V. Panattoni, individually and as Trustee. In the event of any such
transfer of title, the individual entities and persons herein named shall take
assignment in their individual capacities of the Lease from the Partnership, and
thereafter shall be collectively known as the Landlord.
EXECUTED IN MULTIPLE ORIGINAL COUNTERPARTS, which constitute but one and the
same instrument, as of the day and year first above written.
LANDLORD
STATIONERS ANTELOPE JOINT VENTURE,
A CALIFORNIA GENERAL PARTNERSHIP,
By: /s/ Carl Panattoni
----------------------------------
CARL PANATTONI,
Managing General Partner
AVP TRUST, ADON V. PANATTONI AND
YOLANDA M. PANATTONI
By:/s/ Adon V. Panattoni
----------------------------------
ADON V. PANATTONI, individually and
as co-trustee
By: /s/ Yolanda M. Panattoni
----------------------------------
YOLANDA M. PANATTONI, individually and
as co-trustee
30
<PAGE>
UNITED STATIONERS SUPPLY CO.,
an Illinois Corporation
ATTEST:
By: /s/ Otis H. Halleen By: [SIGNATURE NOT LEGIBLE]
--------------------------- --------------------------
(Name) (Name)
VP, Secretary Sr. V.P
--------------------------- --------------------------
(Title) (Title)
31
<PAGE>
RIDER ONE
---------
AMENDMENT TO LEASE AGREEMENT OF
-------------------------------
MARCH 6, 1990 AND JANUARY 12, 1993
----------------------------------
This Rider One is an amendment to that certain Lease Agreement dated March
6, 1990, by and between United Stationers Supply Co., an Illinois Corporation,
successor in interest to Stationers Distributing Company, Inc., a Delaware
Corporation ("Tenant") and Stationers Antelope Joint Venture, a California
General Partnership ("Landlord") and to that certain Lease Agreement dated
January 12, 1993, by and between United Stationers Supply Co., an Illinois
Corporation ("Tenant") and Stationers Antelope Joint Venture, a California
General Partnership, AVP Trust, Adon V. Panattoni and Yolanda M. Panattoni
("Landlord") (collectively "Leases"):
RECITALS
--------
WHEREAS, the Leases, in Section 3.1 of the March 6, 1990 Lease and Section
4.1(a) of the January 12, 1993 Lease, provide that the Base Monthly Rent shall
be adjusted at the end of each thirty (30) month period by adding to the Base
Rent an amount equal to ninety-five percent (95%) of the increases over the
prior thirty (30) month period in an average of the Consumer Price Index
("CPI"); and
WHEREAS, May 19, 1993, is a thirty (30) month anniversary date for
adjustment of the Base Monthly Rent by CPI; and
WHEREAS, the CPI has increased over the prior thirty (30) month period a
total of 8.3025%; and
WHEREAS, ninety-five percent (95%) of 8.3025% equals 7.88737% (percent of
Base Monthly Rent increase); and
WHEREAS, 7.88737% of $65,329.44 equals $5,152.77 Base Monthly Rent
increase;
NOW THEREFORE, Landlord and Tenant agree as follows:
The Leases shall be amended by adding the following sentence to Sections
3.1 and 4.1(a) respectively:
"On May 19, 1993, the Base Monthly Rent
shall be increased from Sixty-Five
Thousand Three Hundred Twenty-Nine
Dollars and Forty-Four Cents
($65,329.44) to Seventy Thousand Four
Hundred Eighty-Two Dollars and Twenty-
One Cents. ($70,482.21)."
1
<PAGE>
All other terms, covenants and conditions of the Leases, not in conflict
with this Rider One, shall remain in full force and effect.
UNITED STATIONERS SUPPLY CO.,
AN ILLINOIS CORPORATION
DATED: June 18, 1993
-----------------------------
BY /s/ Otis H. Halleen
---------------------------------
TITLE: Vice President, Secretary and
------------------------------
General Counsel
BY:_________________________________
TITLE: _____________________________
STATIONERS ANTELOPE JOINT VENTURE,
A CALIFORNIA GENERAL PARTNERSHIP
DATED: 6-21-93
-----------------------------
BY [SIGNATURE NOT LEGIBLE]
--------------------------------
TITLE: Owner
-----------------------------
BY: /s/ Yolanda M. Panattoni
--------------------------------
YOLANDA M. PANATTONI, Successor to
AYP Trust and Adon V. Panattoni
2
<PAGE>
RIDER ONE
---------
AMENDMENT TO LEASE AGREEMENT OF
-------------------------------
MARCH 6, 1990 AND JANUARY 12, 1993
----------------------------------
This Rider One is an amendment to that certain Lease Agreement dated March
6, 1990, by and between United Stationers Supply Co., an Illinois Corporation,
successor in interest to Stationers Distributing Company, Inc., a Delaware
Corporation ("Tenant") and Stationers Antelope Joint Venture, a California
General Partnership ("Landlord") and to that certain Lease Agreement dated
January 12, 1993, by and between United Stationers Supply Co., an Illinois
Corporation ("Tenant") and Stationers Antelope Joint Venture, a California
General Partnership, AVP Trust, Adon V. Panattoni and Yolanda M. Panattoni
("Landlord") (collectively "Leases"):
RECITALS
--------
WHEREAS, the Leases, in Section 3.1 of the March 6, 1990 Lease and Section
4.1(a) of the January 12, 1993 Lease, provide that the Base Monthly Rent shall
be adjusted at the end of each thirty (30) month period by adding to the Base
Rent an amount equal to ninety-five percent (95%) of the increases over the
prior thirty (30) month period in an average of the Consumer Price Index
("CPI"); and
WHEREAS, May 19, 1993, is a thirty (30) month anniversary date for
adjustment of the Base Monthly Rent by CPI; and
WHEREAS, the CPI has increased over the prior thirty (30) month period a
total of 8.3025%; and
WHEREAS, ninety-five percent (95%) of 8.3025% equals 7.88737% (percent of
Base Monthly Rent increase); and
WHEREAS, 7.88737% of $65,329.44 equals $5,152.77 Base Monthly Rent
increase;
NOW THEREFORE, Landlord and Tenant agree as follows:
The Leases shall be amended by adding the following sentence to Sections
3.1 and 4.1(a) respectively:
"On May 19, 1993, the Base Monthly Rent
shall be increased from Sixty-Five
Thousand Three Hundred Twenty-Nine
Dollars and Forty-Four Cents
($65,329.44) to Seventy Thousand Four
Hundred Eighty-Two Dollars and Twenty-
One Cents. ($70,482.21)."
1
<PAGE>
All other terms, covenants and conditions of the Leases, not in conflict
with this Rider One, shall remain in full force and effect.
UNITED STATIONERS SUPPLY CO.,
AN ILLINOIS CORPORATION
DATED: June 18, 1993
-------------------------------
BY /s/ Otis H. Halleen
-----------------------------------
TITLE: Vice President, Secretary and
-------------------------------
General Counsel
BY:___________________________________
TITLE: _______________________________
STATIONERS ANTELOPE JOINT VENTURE,
A CALIFORNIA GENERAL PARTNERSHIP
DATED: 6-21-93
-------------------------------
BY [SIGNATURE NOT LEGIBLE]
-----------------------------------
TITLE: Owner
-------------------------------
BY: /s/ Yolanda M. Panattoni
----------------------------------
YOLANDA M. PANATTONI, Successor to
AYP Trust and Adon V. Panattoni
2
<PAGE>
PDC PROPERTIES, LTD.
- --------------------
Commercial Property Management
October 12, 1993
Mr. Otis Halleen
UNITED STATIONERS SUPPLY CO.
2200 E. Golf Road
Des Plaines, IL 60016-1267
Re: Rider Two to Lease dated January 12, 1993 for 5440 Stationers Way,
Sacramento, CA
Dear Mr. Halleen:
Enclosed is a fully executed copy of Rider Two to the above referenced Lease.
Please attach this copy to your original lease as it is now considered a part
of the entire agreement between the parties to the lease.
Please feel free to call me if you have any questions.
Sincerely,
PDC PROPERTIES, LTD.
/s/ Lori Brett
Lori Brett
Property Manager
Enc.
<PAGE>
RIDER TWO
---------
AMENDMENT TO LEASE AGREEMENT
----------------------------
This Rider Two is an amendment to that certain Lease Agreement dated
January 12, 1993, by and between United Stationers Supply Co., an Illinois
Corporation ("Tenant") and Stationers Antelope Joint Venture, a California
General Partnership, AVP Trust, Adon V. Panattoni and Yolanda M. Panattoni
("Landlord") ("Lease").
RECITALS
--------
WHEREAS, the Lease provides that the Prior Lease (as defined therein) shall
terminate upon completion of the addition specified therein, and
WHEREAS, Section 3.1 of the Lease provides that the Lease is to commence
upon completion of the 72,000 square feet addition specified therein, and
WHEREAS, the Lease in Section 4.1(b) of the Lease, provides that the Base
Monthly Rent for the addition shall commerce upon the completion of the
additional square footage (72,000 Square Feet) and
WHEREAS, August 1, 1993 is the completion date of the additional 72,000
square feet, and
WHEREAS, the monthly rent amount for the additional 72,000 square feet is
Fifteen Thousand Four Hundred Eighty Dollars and no cents ($15,480.00),
NOW THEREFORE, Landlord and Tenant agree that the Commencement Date of the
Lease is August 1, 1993, and that the Prior Lease (as defined in the Lease) is
terminated and is no longer of any force and effect.
All other terms, covenants and conditions of the Leases, not in conflict
with this Rider Two, shall remain in full force and effect.
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
Dated: 9-15-93
---------------------------------
By: /s/Otis H. Halleen
------------------------------------
Otis H. Halleen
Title: Vice President, Secretary and General Counsel
---------------------------------------------
STATIONERS ANTELOPE JOINT VENTURE,
a California General Partnership
Dated: 10-5-93
---------------------------------
By: [SIGNATURE NOT LEGIBLE]
------------------------------------
Title: /s/ Yolanda M. Panattoni
---------------------------------
By: Partner
------------------------------------
YOLANDA M. PANATTONI, Successor to
AVP Trust and Adon V. Panattoni
<PAGE>
GUARANTY
UNITED STATIONERS INC., a Delaware corporation ("Guarantor"), hereby
unconditionally and irrevocably guarantees the payment and performance by United
Stationers Supply Co., an Illinois corporation and a wholly-owned subsidiary of
Guarantor ("Lessee"), of all obligations of Lessee as Lessee as Lessee under the
Lease dated January 12, 1993, ("Lease"), between Stationers Antelope Joint
Venture, a California General Partnership, AVP Trust, Adon V. Panattoni and
Yolanda M. Panattoni (collectively "Lessor") and Lessee.
The obligations of Guarantor shall not be affected by the failure of
Guarantor to receive notice of acceptance of this Guaranty and all other notices
in connection herewith or in connection with the liabilities, obligations and
duties guaranteed hereby, including notices of default by Lessee under the
Lease, or the failure of Lessor to exercise diligence, presentment, and suit
against Lessee in the enforcement of any liability, obligation or duty
guaranteed hereby.
Guarantor further agrees that Lessor shall not be first required to enforce
against Lessee or any other person any liability, obligation or duty guaranteed
hereby before seeking enforcement against the Guarantor. Suit may be brought and
maintained against the Guarantor by Lessor to enforce any liability, obligation
or duty guaranteed hereby without joinder of Lessee or any other person.
The liability of the Guarantor hereunder shall in no way be affected by (a)
the release or discharge of Lessee in any creditors, receivership, bankruptcy,
or other proceedings; (b) the impairment, limitation or modification of the
liability of Lessee or the estate of Lessee in bankruptcy or of any remedy for
the enforcement of Lessee's liability under the Lease, resulting from the
operation of any present or future provisions of the United States Bankruptcy
Code or other statute or form the decision in any court; (c) the rejection or
disaffirmance of the Lease in any such proceedings; (d) the assignment or
transfer of the Lease by Lessee; or (e) any disability or other defense of
Lessee.
This Guaranty shall be binding upon the Guarantor and its successors and
assigns, and shall inure to the benefit of Lessor and its successors and
assigns.
May 28 , 1993
- ------------------
UNITED STATIONERS INC.,
a Delaware corporation
By /s/ Otis H. Halleen
--------------------------------
Vice President, Secretary and
General Council
<PAGE>
EXHIBIT 10.33
LEASE
MERIDIAN BUSINESS CAMPUS AT WESTON
This LEASE is made on this 1st day of February 7 , 1993 between CMD
--- -----
FLORIDA FOUR LIMITED PARTNERSHIP, an Illinois limited partnership ("LESSOR"),
and UNITED STATIONERS SUPPLY CO., an Illinois corporation ("LESSEE").
A. LEASE. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, in "as is" condition, except to the extent expressly provided otherwise
herein, subject to and in accordance with the terms and conditions set forth
herein, the real estate ("SITE") described in Exhibit A attached hereto and made
---------
a part hereof, together with the Building (as hereinafter defined) and all other
improvements located on the Site (collectively, the "IMPROVEMENTS") (the Site,
together with the Improvements, referred to collectively herein as the
"PREMISES"), subject to all covenants, conditions, restrictions and easements
set forth in that certain Declaration of Covenants, Conditions, Restrictions and
Easements of the Meridian Business Campus at Weston, dated May 17, 1989,
recorded on August 4, 1989 in the Official Records Book 165654, Pages 386-420,
of Broward County, Florida, under Clerk's File No. 89312588, as amended from
time to time ("CERs").
B. USE. Lessee may use the Premises for a general office and warehouse,
and for no other purpose without the prior written consent of Lessor. As long
Lessee is not in default under this Lease, Lessee shall have quiet enjoyment of
the Premises, subject to the terms and conditions set forth in this Lease, free
of disturbance from Lessor or anyone claiming by or through Lessor.
C. LEASE TERM. The term of this Lease ("LEASE TERM") shall be the period
beginning on and including the date ("COMMENCEMENT DATE") which is the first
Business Day following the Completion Date (as hereinafter defined) and ending
on and including the date ("EXPIRATION DATE") which is next preceding the 10th
anniversary of the Commencement Date, as extended from time to time pursuant
this Lease. Lessor and Lessee shall execute and deliver to the other a written
memorandum which confirms the Commencement Date, the Expiration Date and the
Lease Term. The term "BUSINESS DAY" means any day of the week except Saturday,
Sunday and any holiday on which employees of the State of Florida are generally
not required to work.
D. INITIAL IMPROVEMENTS. Lessor shall diligently proceed to design and
make the improvements to the Site ("BUILDING") described on and substantially in
accordance with the plans attached hereto as Exhibit B and made a part hereof
("PLANS"), all subject to and in accordance with the terms and conditions of
this Section.
(1) CONSTRUCTION. Lessor shall cause the Building to be substantially
completed on or before July 1, 1993 ("SCHEDULED COMPLETION DATE"), subject
to all delays beyond the reasonable control of Lessor, its agent and
contractors, and subject to the terms and conditions set forth in this
Lease.
<PAGE>
(2) COMPLETION. The term "COMPLETION DATE" means earlier of (A) the
date on which Lessor delivers to Lessee a copy of a certificate of
occupancy issued by Broward County, Florida for the occupancy of the
Premises ("CERTIFICATE OF OCCUPANCY"), and (B) the date that a Certificate
of Occupancy would have been issued but for delays caused by any work,
installation of equipment, application for use permits or licenses or other
governmental inspections, requirements occasioned by Lessee's use of the
Premises, or any other activities by Lessee, its agents or contractors.
(3) LESSEE'S WORK. Lessee, on and after the 30th day before the
Scheduled Completion Date, at its own cost and subject to all terms of this
Lease, may perform work in the Building, concurrently with Lessor's work,
to fit the Building for Lessee's occupancy ("LESSEE'S WORK"), provided that
Lessee's Work (A) will not interfere with any work by Lessor, its agent and
contractors, (B) will not cause any delays in the completion of the
Building, or (C) will not cause any discord with any agents or contractors
of Lessor. The performance by Lessee of any Lessee's Work prior to the
Completion Date shall be subject to all of the terms and provisions of this
Lease, excepting only those requiring the payment of rent. Without
limitation of any other terms and conditions of this of this Lease, (i)
Lessee shall defend, completely indemnify and hold forever harmless Lessor,
its agents and contractors from and against any and all liabilities, fines,
suits, claims, demands actions, causes of action, losses, costs, damages,
judgments and expenses of any kind or character, name or nature due to or
arising out of Lessee's Work, (ii) as a condition to Lessee's right to
perform any Lessee's Work, Lessee shall maintain all insurance, and deliver
all insurance certificates and policies, required under Section 7 of the
General Terms and Conditions of this Lease during all periods of Lessee's
Work, (iii) Lessor shall have no liability, and Lessee hereby waives all
claims, for any damages caused by Lessor to any property of Lessee, any of
Lessee's Work, or any equipment and materials installed by Lessee in the
Premises.
(4) POSSESSION. Except to the extent expressly provided in this
subsection (4), Lessee hereby waives all claims against Lessor with respect
to the failure of the Completion Date to have occurred on or before the
Scheduled Completion Date. If the Completion Date occurs after the 30th day
after the Scheduled Completion Date, and the delay in the Completion Date
is not caused by any Lessee Delays, any Uncontrollable Delays or any
General Contractor Delays, then, as Lessee's sole and exclusive remedy
therefor, there shall be a credit against the first payments of Annual Base
Rent next due under this Lease in an amount, until exhausted, equal to
$2000.00 for each day of delay. If the Completion Date occurs after the
30th day after the Scheduled Completion Date, and the delay in the
Completion Date is not caused by any Lessee Delays, but is caused by any
Uncontrollable Delays or General Contractor Delays, then, as Lessee's sole
and exclusive remedy therefor, there shall be a credit against the first
payments of Annual Base Rent next due under this Lease in an amount, until
exhausted, equal to the
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lesser of (A) $2000.00 for each day of delay and (B) $60,000.00. The term
"LESSEE DELAYS" means any delays caused by Lessee, its agents or
contractors. The term "Uncontrollable Delays" means any delays, other than
Lessee Delays or General Contractor Delays, caused by reasons beyond the
reasonable control of Lessor. The term "GENERAL CONTRACTOR DELAYS" means
all delays caused by the failure of the General Contractor to complete its
obligations under the General Construction Contract on or before July 1,
1993.
(5) WARRANTIES.
(a) Lessor shall cause the contract with the general contractor
("GENERAL CONTRACTOR") for the construction of the Building to include
a warranty in the form of Exhibit C attached hereto and made a part
hereof ("GENERAL CONSTRUCTION WARRANTY"). Lessor shall deliver to
Lessee after the Completion Date copies of the General Construction
Warranty and all warranties obtained by Lessor with respect to the
Building covering equipment, systems, appliances and materials from the
suppliers thereof (collectively, the "WARRANTIES").
(b) If Lessee believes that there is a defect ("DEFECT") in the
construction of the Building which is covered by any of the Warranties,
then Lessee shall deliver to Lessor, after the Completion Date, a
written notice ("DEFECT NOTICE") which sets forth in reasonable detail
a description of the Defect. Lessor shall elect, by written notice to
Lessee within 10 days after Lessor receives the Defect Notice, to
either (a) enforce the Warranties in order to cause the correction of
the Defect, or (b) to assign to Lessee all of Lessor's rights under the
Warranties with respect to the Defect.
(c) Lessor makes no warranties or representations with respect to
the condition of the Site, Building, Premises, or any part thereof,
except to the extent expressly set forth in this Lease.
E. BASE RENT.
(1) ANNUAL BASE RENT. Lessee shall pay base rent to Lessor at the
following annual rates ("ANNUAL BASE RENT") applicable during each of the
following respective periods:
(a) During the period commencing on and including the
Commencement Date and ending on and including the date next preceding
the 1st anniversary of the Commencement Date, the Annual Base Rent
shall be $495,000.00.
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(b) During the period commencing on and including the 1st
anniversary of the Commencement Date and ending on and including the
date next preceding the 3rd anniversary of the Commencement Date, the
Annual Base Rent shall be $502,500.00.
(c) During the period commencing on and including the 3rd
anniversary of the Commencement Date and ending on and including the
date next preceding the 6th anniversary of the Commencement Date, the
Annual Base Rent shall be $553,500.00.
(d) During the period commencing on and including the 6th
anniversary of the Commencement Date and ending on and including the
date next preceding the 9th anniversary of the Commencement Date, the
Annual Base Rent shall be $607,500.00.
(e) During the period commencing on and including the 9th
anniversary of the Commencement Date and ending on and including the
date next preceding the 10th anniversary of the Commencement Date, the
Annual Base Rent shall be $669,000.00.
(2) MONTHLY BASE RENT. All amounts of Annual Base Rent shall be
payable in equal monthly installments ("Monthly Base Rent") each equal to
one twelfth (1/12) of the Annual Base Rent in effect during such month, in
advance on the Commencement Date and on the first day of each calendar
month thereafter of the Lease Term. Notwithstanding anything in this
subsection (2) to the contrary, (a) if the Commencement Date occurs on a
date other than the first day of a calendar month, the amount of the
Monthly Base Rent payable on the Commencement Date shall be prorated based
on the number of days from and including the Commencement Date through and
including the last day of such calendar month and a calendar month
consisting of thirty (30) days, (b) if the last day of the Lease Term
occurs on a day other than the last day of a calendar month, then the
amount of Monthly Base Rent payable on the first day of such calendar month
shall be prorated based on the number of days of such month which fall
within the Lease Term and a calendar month consisting of thirty (30) days,
and (c) the amount of the Monthly Base Rent payable on the first day of
each calendar month in which more than one rate of Annual Base Rent are
applicable shall be the sum of the amounts of the Monthly Base Rent payable
during each portion of such month during which each of such rates is
applicable prorated based on the number of days in such calendar month
during which each of such rates is applicable and a calendar month
consisting of thirty (30) days.
(3) REST DEPOSIT. Lessee shall deliver to Lessor, simultaneously with
the execution and delivery of this Lease by Lessee, an amount equal to
$41,250.00 ("RENT
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DEPOSIT"). Notwithstanding anything herein to the contrary, the Rent
Deposit shall be applied to the first payment of Monthly Base Rent payable
hereunder.
F. SECURITY DEPOSIT. [Intentionally Omitted].
G. EXTENSION OPTIONS.
(1) FIRST EXTENSION OPTION. Subject to the terms of this Section G,
Lessee shall have the right ("FIRST EXTENSION OPTION") to extend the term
of this Lease for the period ("FIRST EXTENSION TERM") beginning on and
including the 10th anniversary of the Commencement Date and ending on and
including the date next preceding the 15th anniversary of the Commencement
Date. All of the terms of this Lease shall be applicable during the First
Extension Term, except as follows:
(a) The Annual Base Rent during the period beginning on and
including the 10th anniversary of the Commencement Date and ending on
the date next preceding the 12th anniversary of the Commencement Date
shall be the Annual Base Rent applicable immediately before the first
day of the First Extension Term; and
(b) the Annual Base Rent during the period beginning on and
including the 12th anniversary of the Commencement Date and ending on
the date next preceding the 15th anniversary of the Commencement Date
shall be 110% of the Annual Base Rent applicable immediately before the
12th anniversary of the Commencement Date.
(2) SECOND EXTENSION OPTION. Subject to the terms of this Section G,
and provided that Lessee exercised the First Extension Option in accordance
with the terms of Section G(1) hereof, Lessee shall have the right ("SECOND
EXTENSION OPTION") to extend the term of this Lease for the period ("SECOND
EXTENSION TERM") beginning on and including the 15th anniversary of the
Commencement Date and ending on and including the date next preceding the
20th anniversary of the Commencement Date. All of the terms of this Lease
shall be applicable during the Second Extension Term, except that the
Annual Base Rent during the Second Extension Term shall be the Final Market
Rent determined for the Second Extension Option pursuant to Section G(5)
hereof.
(3) DEFINITIONS. Each of the First Extension Option and the Second
Extension Option is referred to individually and respectively as an
"EXTENSION OPTION". "EXTENSION TERM" means the First Extension Term with
respect to the First Extension Option, and the Second Extension Term with
respect to the Second Extension Option.
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(4) EXERCISE. Lessee shall exercise each Extension Option by
delivering written notice of such exercise (with respect to a particular
Extension Option, the "EXTENSION OPTION NOTICE") on or before the 210th day
before the first day of the Extension Term with respect to such Extension
Option (with respect to a particular Extension Option, the "EXTENSION
EXERCISE DATE"). The right of Lessee to exercise each respective Extension
Option is hereby expressly made conditioned upon this Lease being in full
force and effect and Lessee not being in material default under any terms
and conditions thereunder, both as of the Extension Exercise Date with
respect to such Extension Option, and as of the first day of the Extension
Term with respect to such Extension Option. If Lessee fails to deliver to
Lessor an Extension Option Notice with respect to a particular Extension
Option on or before the Extension Exercise Date with respect to such
Extension Option, then Lessee shall be deemed to have forever waived any
and all rights to extend the term of this Lease pursuant to this Section G.
(5) DETERMINATION OF FINAL MARKET RENT. The term "FINAL MARKET RENT"
means the Final Market Rent determined in accordance with this Section
G(5). Lessor shall deliver to Lessee, within 10 days after date on which
Lessee delivers to Lessor the Extension Option Notice with respect to the
Second Extension Option, a written notice ("PROPOSED RENT NOTICE") which
sets forth the amount of Annual Base Rent ("PROPOSED RENT") for which
Lessor is willing to lease the Premises to a third party during the Second
Extension Term. If Lessee approves the Proposed Rent, then Lessee shall,
within the 10 day period after the delivery of the Proposed Rent Notice
from Lessor to Lessee ("APPROVAL PERIOD"), deliver to Lessor a written
notice which approves the Proposed Rent ("APPROVAL NOTICE"). If Lessee
delivers an Approval Notice to Lessor within the Approval Period, then the
Final Market Rent shall be the Proposed Rent. If Lessee fails to deliver an
Approval Notice to Lessor within the Approval Period, then Lessor and
Lessee shall negotiate in good faith to agree in writing on the amount of
Annual Base Rent during the Second Extension Term ("AGREED RENT"). If
Lessor and Lessee execute and deliver to each other, within 20 days after
expiration of the Approval Period, a written agreement which sets forth an
Agreed Rent, then the Final Market Rent shall be the Agreed Rent. If Lessor
and Lessee fail to execute and deliver to each other, within 20 days after
expiration of the Approval, a written agreement which sets forth an Agreed
Rent, then the Extension Option Notice shall be deemed withdrawn, the
Second Extension Option shall be deemed terminated and of no further force
and effect, and Lessee shall be deemed to have waived any and all right to
extent the term of this Lease for the Second Extension Term pursuant to
Section G(2) hereof.
H. PURCHASE OPTION. Provided that this Lease is in full force and effect,
that Lessee is not in default hereunder, and that Lessee has not exercised the
First Extension Option, Lessee shall have the option ("PURCHASE OPTION") to
purchase the Premises for $6,850,000.00 ("PURCHASE PRICE") on the date ("CLOSING
DATE") next preceding the 10th anniversary of the Commencement Date, all in
accordance with and subject to the terms and
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conditions set forth in this Section H. If Lessee desires to exercise the
Purchase Option, then, on or before the 210th day before 10th anniversary of the
Commencement Date, Lessee shall (A) execute and deliver to Lessor a written
purchase agreement in substantially the form and substance of Exhibit D attached
hereto and made a part hereof ("PURCHASE AGREEMENT"), and (B) deliver to Lessor
an earnest money deposit equal to 5% of the Purchase Price ("EARNEST MONEY
DEPOSIT") pursuant to Section 2(A) of the Purchase Agreement. If Lessee executes
and delivers the Purchase Agreement, and delivers the Earnest Money Deposit, to
Lessor on or before the 210th day before the 10th anniversary of the
Commencement Date, then Lessor shall execute and deliver the Purchase Agreement
to Lessee within 10 days after the execution and delivery of the Purchase
Agreement, and the delivery of the Earnest Money Deposit, by Lessee to Lessor.
If, on or before the 210th day before the 10th anniversary of the Commencement
Date, Lessee fails to execute and deliver the Purchase Agreement, or fails to
deliver the Earnest Money Deposit, to Lessor, then the Purchase Option and all
rights of Lessee under this Section H shall be deemed terminated.
(1) MISCELLANEOUS.
(a) If Lessee waives or fails to exercise the Purchase Option,
Lessor may, at any time, request Lessee to acknowledge in writing such
waiver or failure to exercise the Option. Lessee shall deliver to
Lessor such written acknowledgment no later than 15 days after Lessor's
request for such acknowledgment. The failure by Lessee to deliver such
acknowledgement within such period shall be deemed a default under this
Lease without the benefit of any grace or cure periods.
(b) The rights of Lessee under this Section H are for the sole
benefit of United Stationers Supply Co., an Illinois corporation
("USSCO"), and all entities ("USSCO AFFILIATES") which own and control
USSCO, are owned and controlled by USSCO, or are under common ownership
and control with USSCO, and shall automatically terminate upon any
assignment of this Lease, sublease of the Premises, or other transfer
of this Lease or any rights of Lessee hereunder, except to a USSCO
Affiliate.
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I. INCORPORATION. All of the terms and conditions contained in the General
Terms and Conditions attached hereto are hereby incorporated and made a part
hereof as though all of such terms and conditions had been fully set forth
herein.
LESSOR:
CMD FLORIDA FOUR LIMITED PARTNERSHIP,
an Illinois limited partnership
By: CMD DEVELOPMENT OF FLORIDA, INC.,
a Florida corporation, its
general partner
By: _____________________________
Its: ____________________________
LESSEE:
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
By: _________________________
Its _________________________
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GENERAL TERMS AND CONDITIONS
1. TAXES. On the first day of each month during the Lease Term, Lessee
shall pay to Lessor, as additional rent, an amount equal to one-twelfth (1/12)
of the estimated Taxes (as hereinafter defined), such estimate to be made by
Lessor.
Upon receipt of bills for Taxes, Lessor will make payment thereof and
promptly provide Lessee with a copy of the receipted bill.
Adjustments of amounts paid (credit or debit) shall be made between the
parties within thirty (30) days of the delivery to Lessee of any such receipted
bill. All Taxes shall be prorated for the first and last years of the term
hereof and any extension or renewal thereof. Proration of the Taxes for the last
year of the term shall be made on the basis of the last available tax bill,
provided, however, that upon receipt of the tax bill an appropriate reproration
will be made. This obligation shall survive the termination of the Lease.
For the purposes of this Section "Tax" and "Taxes" shall mean ad valorem
real estate taxes and other taxes and assessments (including special and
extraordinary assessments) charges and fees imposed on the Site by public
authority. If, due to a future change in the method of taxation any franchise,
income, profit, excise or other tax, however designated, shall be levied against
Lessor in substitution in whole or in part for or in lieu of any tax which would
otherwise constitute a real estate tax such other tax shall be deemed to be a
real estate tax for the purposes hereof.
Lessee may, at its sole cost and expense, contest any assessment or levy of
Taxes, provided that Lessee either pays such Taxes under protest or deposits
with Lessor, prior to the date on which such Taxes are due and payable, an
amount which is necessary to pay the total amount of such Taxes, together with
all penalties and interest in the event that such contest is unsuccessful.
2. SPECIAL OPERATING EXPENSES. On the first day of each month during the
Lease Term, Lessee shall pay to Lessor, as additional rent, an amount equal to
One-twelfth (1/12) of the estimated annual Operating Expenses (as hereinafter
defined), such estimate to be made by Lessor.
Lessor shall submit to Lessee no less frequently than annually Lessor's
statement of the Operating Expenses for the previous calendar year and Lessor's
estimate of the increase or decrease if any for the forthcoming calendar year.
Lessor will make available to Lessee and Lessee's consultants, upon Lessee's
written request, reasonable access to Lessor's records on which such Operating
statements are based.
Adjustments of amounts paid (credit or debit) shall be made between the
parties within thirty (30) days of the delivery to Lessee of such a statement.
All Operating
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Expenses shall be prorated for the first and last years of the term hereof and
any extension renewal thereof. Proration of the Operating Expenses for the last
year of the term shall be made on the basis of the last estimate made by Lessor,
provided, however that upon receipt of a new statement showing the actual
Operating Expenses an appropriate reproration shall be made. This obligation
shall survive the termination of the Lease.
Subject to the further provisions hereof, for the purposes of this Section,
Operating Expenses shall means all assessments payable by Lessor and levied with
respect to the Site under the CCR's or by Meridian Business Campus at Weston
Owners Association.
3. SECURITY DEPOSIT. [Intentionally Omitted].
4. INTEREST ON PAST DUE OBLIGATIONS. Except as expressly provided, rentals
and other amounts due to Lessor, which are not paid when due, shall bear
interest ("DEFAULT INTEREST") at the rate per annum equal to 5% plus the prime
rate of interest announced from time to time by The First National Bank of
Chicago, or the highest legal rate, whichever is less, from the date due.
Payment of such interest shall not excuse or cure any default by Lessee under
this Lease.
5. HOLDOVER RENT. In the event Lessee remains in possession of the
Premises after the expiration of the term of this Lease, or any extension
hereof, without the written consent of Lessor, Lessee shall then be obligated to
pay 150% the rate of the Monthly Base Rent applicable on the last day of the
Lease Term as set forth herein, in equal monthly installments on the first day
of each calendar month, and all amounts of Taxes, Operating Expenses and other
amounts payable under this Lease, for so long as Lessor is willfully kept out of
possession of the Premises. No such payment, nor the acceptance thereof, shall
in any way constitute a waiver of the rights of Lessor to dispossess Lessee and
recover possession of the Premises and the just and former estate of Lessor and
to bring any action for damages suffered by Lessor on account of Lessee's
failure to vacate the Premises.
6. PERSONAL PROPERTY TAXES. Lessee agrees to pay or cause to be paid,
before delinquency, any and all taxes levied or assessed and which become
payable during the term hereof upon all equipment, furniture, trade or other
fixtures and other personal property located in the Premises.
7. INSURANCE.
A. Lessee, at Lessee's expense, and for mutual benefit of Lessor and
Lessee, shall maintain in force during the term of the Lease: (1)
Comprehensive Public Liability Insurance, covering the Premises in an
amount not less than ONE MILLION DOLLARS ($1,000,000), including the
following coverages:
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premises/operations, independent contractors, personal injury, broad form
property damage and contractual liability; (2) All-Risk property insurance
with extended coverage and vandalism and malicious mischief endorsements,
in an amount adequate to cover the full replacement value of the Building,
all leasehold improvements paid for by Lessee, and all trade fixtures and
contents of Lessee in the Premises.
B. The policy referred to in 7. A.(1) shall name Lessor, any manager
designated by Lessor, from time to time, and their respective agents and
employees, as additional insureds, and shall not provide for deductible
amounts. The policy referred to in 7.A.(2) shall not provide for deductible
amounts in excess of $100,000. Each policy referred to in 7.A. shall be
issued by one or more responsible insurance companies reasonably
satisfactory to Lessor and shall contain the following provisions and
endorsements: (i) that such insurance may not be canceled or amended
without Thirty (30) days prior notice to Lessor and the manager, if any;
(ii) an express waiver of any right of subrogation by the insurance company
against Lessor, the manager, if any, and their respective agents and
employees; and (iii) that the policy shall not be invalidated should the
insured waive, in writing, prior to a loss, any and all rights of recovery
against any other party for losses covered by such policies. Lessee agrees
to pay to Lessor all amounts which would have been paid under any of such
insurance policies had there been no deductibles thereunder.
C. Lessee shall deliver to Lessor, certificates of insurance of all
policies and renewals thereof to be maintained by Lessee hereunder, not
less than Ten (10) days prior to the commencement of the term of this Lease
and not less than Ten (10) days prior to the expiration date of each
policy. Provided that the insurance policies of Lessee will not be
invalidated nor will the right of the insured to collect the proceeds
payable under such policies be adversely affected by the waiver contained
in the following portion of this sentence, Lessee hereby expressly waives
all rights of recovery which it otherwise might have against Lessor, its
manager, if any, their respective agents and employees, for loss or damage
to person, property or business to the extent that such loss is covered by
valid and collectible insurance policies, notwithstanding that such loss or
damage may result from the negligence of Lessor, its manager, their
respective agents or employees. Lessee shall use its best efforts to obtain
from its insurer the right to waive claims as set forth in the preceding
sentence without thereby invalidating its insurance or affecting its right
to proceeds payable thereunder.
D. Lessor shall under no circumstances, be liable for any loss or
destruction of, damage to or shortage of equipment, inventory, merchandise
or any other type of personal property that may be placed or suffered to be
placed on or about the Premises, the Building or the Site by Lessee, its
agents, business invitees or the successors or assigns of any of them, it
being the intention of the parties that all risk of any such destruction,
loss, damage or shortage be borne by Lessee.
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8. SERVICES AND UTILITIES. All utilities shall be separately metered for
the Premises and paid for by Lessee directly to the billing party. Lessor shall
not be liable for, and Lessee shall not be entitled to any abatement or
reduction of rental by reason of, the lack of availability of any of the
foregoing when such failure is caused by accidents, breakage, repairs, strikes,
lockouts or other labor disturbances or labor disputes of any character, or by
any other cause, similar or dissimilar, beyond the reasonable control of Lessor.
Lessor shall not be liable under any circumstances for loss of or injury to
property, however, occurring through or in connection with or incidental to
failure to furnish, or failure or the refusal of a public utility to furnish,
any of the foregoing service facilities.
Lessee will not, in any way overload the electrical system of the Building,
nor without the written consent of Lessor connect with electric current,
telephone or water except through existing electrical outlets and water pipes in
the Premises. If Lessee shall require water, telephone service, or electric
current in excess of that capable of being transmitted by the facilities
existing in the Building and/or Premises, at the commencement of this Lease
Term, Lessee shall first produce the written consent of Lessor, which Lessor may
refuse in its sole discretion. The cost of any Lessor approved additional
equipment, its installation, maintenance and repair shall be paid for by Lessee
promptly on demand. Lessee shall also pay for all such electric current consumed
as shown on the utility meters pertaining to the Premises, such payment to be
made directly to the utility in a timely manner.
9. USES PROHIBITED. Lessee will not breach or suffer the breach of any of
the covenants, conditions, or restrictions of record affecting the Site, the
Building and/or the Premises including, without limitation the CCR's, and shall
use and occupy the Premises Building and Site in strict compliance therewith.
Lessee shall do or permit anything to be done in or about the premises nor bring
or keep anything therein which will in any way increase the existing premium
rate or otherwise affect any fire or other insurance upon the Building or any of
its contents, or cause a cancellation of any insurance policy covering said
Building or any part thereof or any of its contents including the property of
other tenants. Lessee shall not use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Lessee cause,
maintain or permit any nuisance in, on or about the Premises.
10. COMPLIANCE WITH LAW. Lessee shall not use the Premises nor permit
anything to be done in or about the Premises which will in any way conflict with
any law, statute, ordinance or governmental rule or regulation now in force or
which may hereafter be enacted or promulgated. Lessee shall at its sole cost and
expense promptly comply with all laws, statutes, governmental rules, regulations
or requirements now in force or which may hereafter be in force and with
requirements of any board of fire underwriters or other similar body now or
hereafter constituted relating to or affecting the condition, use or occupancy
of the Premises, excluding structural changes not related to or affected by
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Lessee's improvements or acts. The judgment of any court of competent
jurisdiction or the admission of Lessee in any action against Lessee, whether
Lessor be a party thereto or not, that Lessee has violated any law, statute,
ordinance or governmental rule, regulation or requirements, shall be conclusive
of that fact as between Lessor and Lessee.
Lessee has investigated the zoning classification and other rules,
ordinances, laws and regulations promulgated by Public Authority, the CCR's and
has satisfied itself that its intended use of the Premises is not in violation
thereof.
11. ALTERATIONS. Lessee shall not make or suffer to be made any
alterations, additions or improvements to or of the Premises or any part thereof
without the written consent of Lessor first had and obtained and any
alterations, additions or improvements to or of said Premises, except movable
furniture and trade fixtures, shall at once become a part of the realty and
belong to Lessor. All alterations, additions or improvements to the Premises by
Lessee shall be made by Lessee at Lessee's sole cost and expense and any
contractor or person selected by Lessee to make the same must first be approved
in writing by Lessor. All such alterations, additions and improvements and the
removal, restoration and repairs hereafter described shall be completed in a
good workmanlike manner with materials and labor in kind and quality similar to
that originally in the Premises and free and clear of all liens for labor, taxes
or material. Upon demand, Lessee shall provide Lessor with such waivers of lien
and other documents as Lessor reasonably requires to ascertain that the
provisions of this Section 11 have been complied with. Upon the expiration or
sooner termination of the Term, Lessee shall, upon demand by Lessor, at Lessee's
sole cost and expense, forthwith and with all due diligence, remove any
alterations, additions or improvements made by Lessee and designated by Lessor
to be removed, and Lessee shall, forthwith and with all due diligence at its
sole cost and expense, repair any damage to the Premises, the Building, or the
Site caused by such removal, restoring the Premises, the Building, and the Site
to the same condition as existed at the commencement of the Lease Term,
reasonable wear and tear excepted. Notwithstanding anything in this Section 11
to the contrary, Lessee may make alterations, additions or improvements to or of
the Premises or any part thereof without the prior written consent of Lessor
("PERMITTED ALTERATIONS") provided that (a) prior to the commencement of any
particular Permitted Alterations, Lessee delivers to Lessor plans and
specifications therefor prepared by an architect licensed by the State of
Florida, and all other information with respect thereto reasonably requested by
Lessor (collectively, "ALTERATIONS DOCUMENTS"), (b) the Permitted Alterations
are completely within the interior of the Building, not visible from the
exterior of the Building, and do not affect the structure or materially impair
the electrical, plumbing, heating, ventilation, air conditioning or other
systems of the Building, (c) the cost of any particular Permitted Alterations
does not exceed $25,000, and (d) the cost of any particular Permitted
Alterations, together with the cost of all other Permitted Alterations which
either were made or for which Lessee has delivered Alteration Documents within
the 12 month period prior to the date on which Lessee delivers Alteration
Documents to Lessor for such Permitted Alterations, does not exceed $100,000.
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12. MAINTENANCE AND REPAIR. Lessee shall maintain, repair and preserve the
Premises and improvements therein, including without limitation all plumbing,
mechanical and electrical systems, the heating, ventilating and air-conditioning
system servicing the Premises, all windows and doors in the Premises, toilets
and sinks; shall perform all necessary cleaning of the Premises, including
walls, windows, doors and floors; and shall replace all inoperative light bulbs
and ballasts and broken glass.
In the event Lessee fails to commence such repairs as are necessary to
maintain the Premises in good condition, within Fifteen (15) days after notice
from Lessor, or fails to diligently prosecute the same to completion, Lessor at
its option and without any obligation so to do, may make restorations as are
necessary to such maintenance, and amounts expended for such work by Lessor
shall be reimbursed by Lessee as additional rent hereunder promptly on demand,
together with Default Interest from the date of expenditure.
Lessee shall, upon the expiration or sooner termination of the term hereof,
surrender the Premises to Lessor in the same condition as when received,
ordinary wear and tear and damage by fire, earthquake, act of God or the
elements excepted. Notwithstanding the ordinary wear and tear exception to
Lessee's obligation to restore, Lessee shall keep and maintain the Premises in a
neat, clean and orderly appearance and shall suffer no abuse of the Premises,
nor waste thereof to be committed. It is specifically understood and agreed that
Lessor has no obligation and has made no promises to alter, improve, repair,
decorate or paint the Premises or any part thereof and that no representations
respecting the condition of the Premises or the Building of which the Premises
are a part have been made by Lessor to Lessee except as specifically herein set
forth.
13. LIENS. Lessee shall keep the Premises and the Building and Site in
which the Premises are situated free from any liens arising out of any taxes or
judgments levied against Lessee or arising out of any labor or materials
furnished or claimed to be furnished in connection with any construction, or
alteration or repair, performed or claimed to have been performed, on the
Premises, the Building or the Site at the direction or sufferance of Lessee
whether such labor or materials were furnished or claimed to have been furnished
prior or subsequent to the commencement of the Lease Term. Lessor shall keep the
Premises and the Building and Site in which the Premises are situated free from
any liens arising out of any judgments levied against Lessor (except to the
extent such judgments are caused by the failure of Lessee to perform any of its
obligations under this Lease) or arising out of any labor or materials furnished
or claimed to be furnished in connection with any construction, or alteration or
repair, performed or claimed to have been performed, on the Premises, the
Building or the Site at the direction or sufferance of Lessor whether such labor
or materials were furnished or claimed to have been furnished prior or
subsequent to the commencement of the Lease Term.
14. ABANDONMENT. Lessee shall not abandon the Premises at any time during
the Term.
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15. ASSIGNMENT AND SUBLETTING. Lessee shall not assign, transfer,
mortgage, pledge, hypothecate or encumber this Lease, or any interest therein,
and shall not sublet said Premises or any part thereof, or any right or
privilege appurtenant thereto, or suffer any other person (the agents and
servants of Lessee, and USSCO Affiliates, excepted) to occupy or use said
Premises, or any portion thereof, without the written consent of Lessor first
had and obtained, and a consent to one assignment, subletting, occupation or use
by any other person shall not be deemed to be a consent to a subsequent
assignment, subletting, occupation or use by that same or another person. Any
such assignment or subletting without such consent shall be void, and shall, at
the option of Lessor, terminate this Lease. This Lease shall not, nor shall any
interest therein, be assignable as to the interest of Lessee by operation of
law, without the written consent of Lessor. A transfer of a controlling interest
in Lessee (except to a USSCO Affiliate) shall be deemed a transfer which is
prohibited under this Section 15 without the prior written consent of Lessor.
Notwithstanding anything in this Section 15 to the contrary, Lessor shall not
unreasonably withhold its consent to any assignment by Lessee of all of its
interests under this Lease or sublease of all of the Premises. Lessor shall not
be deemed to have unreasonably withheld such consent if such consent is withheld
for any one or more of the following reasons: (a) Lessee is in default
hereunder, (b) there is less than 12 months remaining in the Lease Term, (c) the
net worth of the proposed assignee or subtenant is less than the net worth of
Lessee as of the date hereof, (d) the proposed use of the Premises is other than
that permitted hereunder, (e) Lessor or its affiliates have had previous
unsatisfactory experience with proposed assignee or subtenant, or (f) any other
reasonable basis. Notwithstanding anything in this Lease to the contrary, Lessor
agrees that Lessee may, without the prior written consent of Lessor, assign all
of its interests under this Lease, or sublease all of the Premises, to a USSCO
Affiliate, provided that (A) Lessee delivers to Lessor within 10 days after the
effective date of such assignment or sublease a true and correct copy of such
assignment or sublease, and (B) no such assignment or sublease shall in any way
relieve the assignor or sublessor from any liability under this Lease.
As a condition precedent to the approval of any sublease, assignment or any
other type of transfer by Lessee to any third party (other than a USSCO
Affiliate) of all or any portion of any interest of Lessee in and to the
Premises, Lessee agrees that it will pay to Lessor in cash, contemporaneously
with the rental payments due hereunder, Fifty Percent (50%) of the value of
increased economic benefit received by Lessee, including without limitation rent
in excess of the rent reserved herein and in the event less than all of the
Premises are so transferred, Lessee shall pay to Lessor monthly, Fifty Percent
(50%) of any increase in the square foot rate of rent or other economic benefit
received by Lessee to Lessor.
The additional rent that Lessee pays to Lessor for the purpose of this
Section 15 shall be calculated by dividing such additional monthly rent payments
required to be made by Lessee by the square foot area of the Premises as set
forth hereinabove.
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16. SURRENDER OF PREMISES. The voluntary or other surrender of this Lease
by Lessee, or a mutual cancellation thereof, shall not work a merger, and may,
at the option of Lessor, terminate all or any existing subleases or
subtenancies, or may, at the option of Lessor, operate as an assignment to it,
any or all such subleases or subtenancies.
17. INDEMNIFICATION OF LESSOR. To the extent permitted by law Lessee shall
defend, completely indemnify and hold forever harmless Lessor from and against
any and all liabilities, fines, suits, claims, demands actions, causes of
action, losses, costs, damages, judgments and expenses of any kind or character
name or nature due to or arising out of:
(a) any breach, violation or non performance of any covenant, obligation,
condition or agreement set forth in this Lease on the part of Lessee
to be fulfilled, kept, observed or performed; and/or
(b) any damage to, loss or destruction of any property arising directly or
indirectly out of Lessee's use or occupancy of the Premises; and/or
(c) any injury to any person, including death resulting at any time
therefrom occurring in or about the Premises.
In the event Lessor is made a party of any action or proceedings which
Lessee is required to defend pursuant to the provisions of this Lease, Lessor
shall have the right to appear and to take part in any such action or proceeding
by legal counsel of Lessor's choice.
Lessee shall pay to Lessor all costs and expenses incurred by Lessor in
connection with the enforcement of the terms, provisions, conditions or
covenants of this Lease, including, but not limited to, reasonable attorneys'
fees, provided that Lessor prevails in such enforcement. Lessor shall pay to
Lessee all costs and expenses incurred by Lessee in connection with the
enforcement of the terms, provisions, conditions or covenants of this Lease,
including, but not limited to, reasonable attorneys' fees, provided that Lessee
prevails in such enforcement.
Nothing herein shall be construed as obligating Lessee to indemnify or hold
harmless any party from and against the consequences of negligent or willful
acts or omissions of the party to be indemnified.
18. ENTRY BY LESSOR. Lessor reserves and shall at any and all reasonable
times, after reasonable prior notice to Lessee, have the right to enter the
Premises to inspect the same, alone or accompanied by representatives of
utilities and/or public authorities, to supply any service to be provided by
Lessor to Lessee hereunder, to submit said Premises to prospective purchasers or
tenants, to post notices of nonresponsibility, and to alter, improve or repair
the Premises and any portion of the Building of which the Premises are a part,
without abatement of rent, and may for that purpose erect scaffolding and other
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necessary structures where reasonably required by the character of the work to
be performed, always providing that the business of Lessee shall not be
interfered with unreasonably. For each of the aforesaid purposes, Lessor shall
at all times have and retain a key with which to unlock all of the doors in,
upon and about the Premises, excluding Lessee's vaults and safes, and Lessor
shall have the right to enter the Premises in an emergency and to use any and
all means which Lessor may deem proper to open said doors in such emergency, and
any entry to the Premises obtained by Lessor by any of said means shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction of Lessee from the
Premises or any portion thereof.
19. DEFAULT. If default shall be made in the payment of the rent, or any
installment thereof, or in the payment of any other charge or lien required to
be paid by Lessee under this Lease, or any other agreement between Lessor and
Lessee, and such default shall continue for Ten (10) days after written notice
thereof to Lessee, or if default shall be made in the performance of any of the
other covenants or conditions which Lessee is required to observe and perform
hereunder and such default shall continue for Thirty (30) days after written
notice thereof to Lessee, or if the interest of Lessee in this Lease shall be
levied on under execution or other legal process, or if any petition shall be
filed by or against Lessee to declare Lessee a bankrupt or to delay, reduce or
modify Lessee's debts or obligations, or if any petition shall be filed or other
action taken to reorganize or modify Lessee's capital structure, or if Lessee be
declared insolvent according to law, or if any assignment of Lessee's property
shall be made for the benefit of creditors, or if a receiver or trustee is
appointed for Lessee or its property, or if Lessee shall abandon the Premises
during the term of this Lease, then Lessor may treat the occurrence of any one
or more of the foregoing events as a breach of this Lease, and thereupon at its
option may, without notice or demand of any kind to Lessee or other person, have
any one or more of the following described remedies in addition to all other
rights and remedies now or hereafter provided at law or in equity:
(a) Lessor may re-enter the Premises with or without process of law
and take possession of the same and expel or remove Lessee and all other
parties occupying the Premises, using such force as so, without being
liable to any prosecution for such re-entry or for the use of such force
and without terminating this Lease, at any time and from time to time relet
the Premises or any part thereof for the account of Lessee, for such term,
upon such conditions and at such rental as Lessor may deem proper. In such
event, Lessor shall use reasonable efforts to receive and collect the rent
from such reletting and shall apply all rents actually collected against
any amounts due from Lessee hereunder (including without limitation such
expenses as Lessor may have incurred in recovering possession of the
Premises, placing the same in good order and condition, altering or
repairing the same for reletting, and all other expenses, commissions and
charges, including attorneys' fees, which Lessor may have paid or incurred
in connection with repossession and reletting). Lessor may execute any
Lease made
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pursuant hereto in Lessor's name as Lessor may see fit, and Lessee
thereunder shall be under no obligation to see to the application by Lessor
of any rent collected by Lessor nor shall Lessee have any right to collect
any rent thereunder. Whether or not the Premises are relet, Lessee shall
pay Lessor all amounts required to be paid by Lessee up to the date of
Lessor's re-entry and thereafter Lessee shall pay Lessor, until the end of
the term hereof, the amount of all rent and other charges required to be
paid by Lessee hereunder, less the proceeds of such reletting during the
term hereof, if any, after payment of Lessor's expenses as provided above.
Such payments by Lessee shall be due at such times as are provided
elsewhere in this Lease, and Lessor need not wait until termination of this
Lease to recover them by legal action or otherwise. Lessor shall not, by
any re-entry or other act, be deemed to have terminated this Lease or the
liability of Lessee for the total rent hereunder unless Lessor shall give
Lessee written notice to Lessor's election to terminate this Lease, or;
(b) Lessor may give written notice to Lessee of Lessor's election to
terminate this Lease, reenter the Premises with or without process of law
and take possession of the same, and expel or remove Lessee and all other
parties occupying the Premises, using such force as may be reasonably
necessary to do, without being liable to any prosecution for such re-entry
or for the use of such force. In such event, Lessor shall thereupon be
entitled to recover from Lessee the worth, at the time of such termination,
of the excess, if any, of the rent and other charges required to be paid by
Lessee hereunder for the balance of the term hereof (if this Lease had not
been so terminated) over the then reasonable rental value of the Premises
for the same period.
20. WAIVER. The waiver by Lessor of any term, covenant or condition herein
contained, or any default of Lessee pertaining thereto shall not be deemed to be
a waiver of any subsequent breach of the same or any other term, covenant or
condition herein contained, nor shall any forbearance by Lessor to seek a remedy
for any default by Lessee be a waiver by Lessor of any of the rights and
remedies of Lessor hereunder or by law granted or permitted, with respect to
such, or subsequent default. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of
any term, covenant or condition of this Lease, other than the failure of Lessee
to pay the particular rental so accepted, regardless of Lessor's knowledge of
such preceding breach at the time of acceptance of such rent. The waiver by
Lessee of any term, covenant or condition herein contained, or any default of
Lessor pertaining thereto shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition herein contained,
nor shall any forbearance by Lessee to seek a remedy for any default by Lessor
be a waiver by Lessee of any of the rights and remedies of Lessee hereunder or
by law granted or permitted, with respect to such, or subsequent default.
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21. DEFAULT BY LESSOR. In the event of any default by Lessor, Lessee,
before exercising any rights that it may have at law to cancel this Lease, must
first send notice by certified or registered mail to Lessor at such place as
Lessor has designated for the sending of notices, and Lessor shall have a
reasonable opportunity to correct and cure the default.
22. RECONSTRUCTION. In the event the Building of which the Premises are a
part are damaged, then Lessor shall forthwith repair the same, provided the
extent of the destruction be less than Thirty-three Percent (33%) of the then
full replacement value of the Building. In the event the destruction is greater
than Thirty-three Percent (33%) of said full replacement value, then Lessor
shall have the option either: (1) to repair or restore such damage, this Lease
continuing in full force and effect, but the rent shall be proportionately
reduced while such repairs are being made, such proportionate reduction to be
based upon the extent to which the damage to the Premises, or the repair thereof
reduces the usable area of the Premises; or (2) give notice to Lessee at any
time within Thirty (30) days after such damage, terminating this Lease as of the
date specified in such notice, which date shall be no less than Thirty (30) days
nor more than Sixty (60) days after the giving of such notice. In the event of
giving of such notice, this Lease shall expire and all interest of Lessee in the
Premises, the Building, and the Site shall terminate as of the date of the
destruction, and the rent, reduced by any proportionate reduction, based upon
the extent, if any, to which such damage reduced the usable area of the Premises
shall be paid up to date of such termination.
Notwithstanding anything to the contrary contained in this Section 22,
Lessor shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when the damage resulting from any casualty covered under
this Paragraph occurs during the last Twelve (12) months of the term of the
Lease Term or any extension thereof.
Lessor shall not be required to make any repairs or replacements of any
leasehold improvements or any other property installed or suffered to be
installed in the Premises by Lessee.
23. EMINENT DOMAIN. If all or any part of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, either party hereto shall have the right, at its option, to terminate
this Lease, by written notice to the other party within Thirty (30) days of such
taking, and Lessor shall be entitled to any and all income, rent, award or any
interest therein whatsoever which may-be paid or made in connection with such
public or quasi-public use or purpose, and Lessee shall have no claim against
Lessor for the value of any unexpired term of this Lease. Nothing in this
Section 23 shall prohibit Lessee from filing a separate claim with the
condemning authority for the value of its leasehold interest, its relocation
costs or moving expenses. If a part of the Premises shall be so taken or
appropriated and neither party hereto shall elect to terminate this Lease within
the time period provided, the rental thereafter to be paid shall be equitably
reduced. Lessee may terminate this Lease by reason of taking or appropriation
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as above provided, only in the event such taking or appropriation shall be of an
extent and nature as to substantially handicap, impede or impair Lessee's use of
the Premises. If any part of the Building other than the Premises shall be so
taken or appropriated, Lessor shall have the right, at its option, to terminate
this Lease and shall be entitled to the entire award, as above provided.
24. TRANSFER BY LESSOR. Lessor shall have the right to sell, convey,
mortgage, pledge, hypothecate or in any other manner, transfer, or assign the
interest of Lessor in the Site, the Building, the Premises and/or in the Lease.
The term "Lessor" as used in this Lease, means only the owner for the time being
of the Premises, or the interest of a lessor in the Premises or this Lease, and
in the event of any sale, conveyance or other transfer of the Premises whether
separately or as a part of the Site and/or the Building or the interest of
Lessor in this Lease, Lessor shall be and hereby is entirely freed of all
covenants and obligations of Lessor hereunder arising after the date of such
sale, transfer, assignment or conveyance. This Lease shall not be affected by
any such transfer and Lessee agrees to attorn to the purchaser or assignee.
25. SUBORDINATION AND ATTORNMENT. This Lease and all of the rights of
Lessee hereunder are and shall be subject and subordinate to the lien of any
mortgage or mortgages hereinafter placed on the Premises or any part thereof,
except Lessee's property or trade fixtures, and to any and all renewals,
modifications, consolidations, replacements, extensions or substitutions of any
such mortgages.
Such subordination shall be automatic, without the execution of any further
subordination agreement by Lessee. If, however, a written subordination
agreement consistent with this provision, is required by a mortgagee, Lessee
agrees to execute, acknowledge and deliver the same, provided that the holder of
the interest to which this Lease is made subordinate agrees not to disturb the
rights of Lessee to possession of the Premises as long as Lessee is not in
default under the terms of this Lease. Lessee shall deliver to Lessor such
written subordination agreement no later than 15 days after Lessor's request for
such agreement. The failure by Lessee to deliver such agreement within such
period shall be deemed a default under this Lease without the benefit of any
grace or cure periods.
In the event of any foreclosure of any mortgage placed at any time on the
Site, Building or Premises by Lessor, by a voluntary agreement or otherwise, or
the commencement of any judicial action seeking such foreclosure, Lessee, at the
request of the then first mortgagee or purchaser in foreclosure as Lessee's
Lessor under this Lease, agrees to attorn to such first mortgagee or purchaser
in foreclosure and to execute and deliver at any time upon request of such first
mortgagee, purchaser, or their successors, any instrument reasonably necessary
to further evidence such attornment. Lessee hereby waives its right, if any, to
elect to terminate this Lease or to surrender possession of the Premises in the
event of any such mortgage foreclosure.
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26. LESSEE'S ESTOPPEL LETTER. Lessee agrees at any time, from time to
time, upon not less than Ten (10) days prior written request by Lessor to
execute, acknowledge and 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 same is in full force and effect as modified and
stating the modification), and the dates to which the basic rent and other
charges have been paid in advance, if any, it being intended that any such
statement delivered pursuant to this Section may be relied upon by any
prospective purchaser of the fee or mortgage or assignee of any mortgage upon
the fee of the Premises and/or the Building and/or Site.
In the event, the interest of Lessee in and to the Premises and this Lease
is terminated whether by lapse of time or otherwise, Lessee shall execute and
deliver to Lessor, promptly on demand, all documents reasonably requested by
Lessor to evidence such termination; including without limitation a recordable
release and cancellation of this Lease. The failure of Lessee to so execute and
deliver such documents shall in no way affect the termination of this Lease and
the interest of Lessee in and to the Premises.
27. SEVERABILITY. The legal invalidity or unenforceability of any one or
more of the provisions of this Lease shall in no way affect the validity of any
other provisions hereof or of the Lease as a whole.
28. DEFINED TERMS AND MARGINAL HEADINGS. The words, "Lessor" and "Lessee",
as used herein shall include the plural, as well as singular. Words used in
masculine gender include the feminine and neuter. If there be more than one
Lessee, the obligations hereunder imposed upon Lessee shall be joint and
several. The marginal headings and titles to the paragraphs of this Lease are
not a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
29. TIME IS OF THE ESSENCE. Time is of the essence of this Lease and each
and all of its provisions.
30. SUCCESSORS AND ASSIGNS. This Lease and the covenants, terms,
conditions and provisions hereof, shall be binding upon the respective parties
hereto and to their respective successors, assigns and personal representatives
and shall inure to the benefit of said respective parties hereto and their said
respective successors, assigns and personal representatives. Wherever in this
Lease a reference to any of the parties hereto is made, such reference shall be
deemed to include, wherever applicable and even though not expressly stated,
also a reference to the successors, assigns and personal representatives of such
party, as the case may be, the same if in every case expressly stated. The
phrase "successors and assigns" is used in this Lease in its broadest possible
meaning and includes, in addition to administrators, trustees, conservators,
every person, firm, corporation or other entity succeeding to the interest in or
to this Lease, or any party thereof described or referred to herein or any part
hereto, or of any of the successors or assigns of any such party, whether such
succession results from the act of a party in interest, occurs by operation
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of law or is the effect of the operation of law together with any act(s) of any
such party or parties.
31. ATTORNEY'S FEES. In the event of any action or proceeding brought by
either party against the other under this Lease, the prevailing party shall be
entitled to recover for the fees of its attorneys in such action or proceeding
such amount as the Court may adjudge reasonable as attorney's fees.
32. NOTICE. All notices and demands which may or are required to be given
by either party to the other hereunder shall be in writing. All notices and
demands shall be effective and deemed delivered upon actual receipt. All notices
and demands shall be sent by (a) United States certified or registered mail,
postage prepaid, return receipt requested, (b) messenger or courier service, or
(c) facsimile, in all cases addressed (i) if to Lessor at 3265 Meridian Parkway,
Suite 100, Ft. Lauderdale, Florida 33331, Attention: President, with a copy to
c/o CMD Corporation, 227 West Monroe Street, Suite 3900, Chicago, Illinois
60606, Attention: General Counsel, or to such other person or place as Lessor
may from time to time designate in a notice to Lessee, and (ii) if to Lessee at
the Premises, with a copy to 2200 East Golf Road, Des Plaines, Illinois 60016,
Attention: President, or to such other person or place as Lessee may from time
to time designate in a notice to Lessee.
33. REPRESENTATIONS AND WARRANTIES OF LESSOR. In order to induce Lessor to
enter into this Lease, Lessor represents and warrants that:
(a) Lessor is fully authorized to lease the Premises, and has good
and marketable title to the Site.
(b) There are no condemnation or similar proceedings presently
pending, nor to the best of Lessor's knowledge threatened, with respect to
the Premises or any part thereof.
(c) There are no legal actions, suit or proceedings pending, or to
the best of Lessor's knowledge threatened, against Lessor which would have
a material adverse impact on the Premises, before any court or before or by
any federal, state, county or municipal department, commission, board,
bureau, agency or other governmental instrumentality.
34. MODIFICATION. This Lease may be modified only by written agreement
signed by Lessor and Lessee.
35. EFFECTIVENESS. This Lease shall not become effective until executed by
both Lessor and Lessee.
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36. SIGNS. No sign, placard, picture, advertisement, name or notice shall
be inscribed, displayed or printed or affixed on or to any part of the outside
of the Building without the written consent of Lessor first had and obtained and
Lessor shall have the right to remove any such sign, placard, picture,
advertisement, name or notice with notice to and at the expense of Lessee. All
approved signs or lettering on doors shall be printed, painted, affixed or
inscribed at the expense of Lessee by a person approved of by Lessor. Lessee
shall not place anything or allow anything to be placed near the glass of any
window, door partition, or wall which may appear unsightly from outside the
Premises.
37. WAIVER OF TRIAL BY JURY. Each party waives a trial by jury of any or
all issues arising in any action or proceeding between the parties hereto or
their successors or assigns arising out of, or in any way connected with this
Lease, or any of its provisions, pertaining to Lessee's use or occupancy of the
Demised Premises and/or any claim of injury or damage, provided, however, that
said waiver shall not be effective to the extent that it prejudices any
insurance coverage required to be provided hereunder.
38. LESSOR WAIVER. Anything to the contrary notwithstanding, in the event
any environmental hazard is discovered on or about the Premises that relates to
any violation or obligation under any applicable environmental laws, and was not
caused by Lessee, its contractors or agents, then Lessee shall have no
liability, and Lessor hereby waives all claims against Lessee, in connection
with such environmental hazard.
39. GOVERNING LAW. This Lease and the rights of the parties hereto shall
be interpreted and determined in accordance with the laws of Florida.
40. ENTIRE AGREEMENT. This Lease contains the entire agreement between the
parties and supersedes all prior agreements between the parties hereto.
41. RESOLUTION. Lessee shall contemporaneously with the execution and
delivery of this Lease, also deliver to Lessor a copy of a Resolution of the
Board of Directors of Lessee, specifically authorizing those of Lessee's
officers whose names are subscribed hereto to enter into this Lease with Lessor
named herein. Such Resolution shall make reference to this Lease, the Premises,
lease term and rental reserved, shall be duly certified to by the Secretary of
said Board of Directors and shall be appended hereto as Schedule 1.
42. FORCE MAJEURE, ETC. Notwithstanding anything contained in this Lease
to the contrary: except as otherwise provided in Section D of this Lease,
Lessor's obligations hereunder shall be excused to the extent that and during
such time as Lessor is prevented from discharging such obligations by acts of
God, strikes, material shortages or any other reason beyond Lessor's control;
Lessee will not avail itself of any remedy provided at law or in equity until
Lessor fails to cure any default on the part of Lessor within thirty days after
its receipt of written notice of such default from Lessee; and Lessor and Lessee
agree that, without limitation of any of the remedies of Lessor under Section 19
of this
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Lease, in no event shall Lessor or Lessee be liable to the other for any
consequential or incidental damages.
43. EXCULPATION. Neither the partners, if Lessor is a partnership, or if
Lessor is a trustee of a trust, the beneficiaries of such trust, nor the
shareholders (nor any of the partners comprising same) directors or officers of
any of the foregoing (collectively, the "Parties") shall be liable for the
performance of Lessor's obligations under this Lease. Lessee shall look solely
to Lessor to enforce Lessor's obligations hereunder and shall not seek any
damages against the rest of the Parties. The liability of Lessor for Lessor's
obligations under this Lease shall not exceed and shall be limited to the value
of Lessor's interest in the Premises and Lessee shall not look to the property
or assets of any of the Parties in seeking either to enforce Lessor's
obligations under this Lease or to satisfy a judgment for Lessor's failure to
perform as such obligation.
44. BROKERS. Lessor and Lessee each respectively represent and warrant to
the other that neither has employed the services of any real estate broker or
any similar agent for the purposes of procuring this Lease, other than ComReal
Ft. Lauderdale ("Broker"). Lessor shall be responsible for and pay Broker all
commissions due and owing under separate agreement between Lessor and Broker
including, in the event Lessee exercises its Purchase Option hereunder, a
commission equal to 2% of the purchase price, payable at closing. In the event
either party hereto has so employed any such broker or agent, other than Broker,
the party responsible for such employment shall indemnify, defend and hold the
other forever harmless from and against any commissions, fees, brokerage or
other compensation and for any claims for any such commissions, fees, brokerage
or other compensation arising out of this Lease, and/or such employment.
46. GUARANTY.
(a) United Stationers Inc., a Delaware corporation ("USI"),
simultaneously with the execution and delivery of this Lease by Lessee, has
executed and delivered to Lessor a guaranty of the obligations of Lessee
under this Lease.
(b) Lessee shall deliver to Lessor, within 75 days after the end of
each fiscal year of USI, a balance sheet, income statement and statement of
change in financial position, for USI, each prepared in accordance with
generally accepted accounting principles and certified by a nationally
recognized independent accounting firm, but only if the shares of USI cease
to publicize on a public stock exchange or in the over-the-counter market.
47. EXHIBITS AND SCHEDULES. The following Exhibits and Schedules are
attached hereto and expressly made a part hereof, to wit;
Exhibit A - Description of Site
Exhibit B - Plans
Exhibit C - General Construction Warranty
Exhibit D - Real Estate Purchase Agreement
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Schedule 1 - Lessee's Resolution
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EXHIBIT A
SITE
DESCRIPTION:
-----------
A portion of Tract "A" of the plat. "WESTON PARK OF COMMENCE, PLAT
ONE", as recorded in flat Book 138, Page 1 of the Public Records of
Broward County, being more particularly described as follows:
BEGINNING at the Southeast corner of Parcel "B", as shown on said
plat; thence N 01degrees 54degrees 15degrees E, along the East line of
said Parcel "N", a distance of 252.79 feet; thence N 10degrees
29degrees 23degrees E, continuing along said East line, a distance of
294.63 feet; thence N 88 degrees 37degrees 34degrees E, a distance of
858.50 feet to a point of intersection with the Westerly right-of-way
line of "Enterprise Avenue" as described in Official Records Book
16775, Page 506 of the Public Records of Broward County, Florida,
thence Southerly along said Westerly right-of-way line and along the
arc of a curve to the left, whose radius point bears N 88degrees
53degrees 23degrees, having a radius of 2778.0 feet, a central angle
of 83degrees 27degrees 02degrees, an arc length of 167.30 feet to a
point of tangency; thence S 04degrees 33degrees 39degreesE, continuing
along said Westerly right-of-way line, a distance of 167.17 feet to a
point of curvature; thence continuing Southerly along said Westerly
right-of-way line, along the arc of a curve to the left having a
radius of 1035.54 feet, a central angle of 83degrees 53degrees
02degrees, an arc distance of 99.05 feet to a point of tangency;
thence S 10degrees 02degrees 28degrees E, continuing along said
Westerly right-of-way line, a distance of 88.60 feet to a point of
curvature; thence Southwesterly along the arc of a curve to the right
having a radius of 33.00 feet, n central angle of 84degrees 40degrees
48degrees, an arc distance of 2.69 feet to a point of compound
curvature and the Northerly right-of-way line of "South Post Road", as
shown on said plat; thence Southwesterly along the arc of a curve to
the right having a radius of 1846.14 feet, a central angle of
87degrees 90degrees 59degrees, an arc distance of 44.56 feet to a
point; thence S 7degrees 32degrees 14degrees E, a distance of 12.00
feet to a point on curve; thence Southwesterly along the arc of a
curve to the right, whose radius point bears N 7degrees 32degrees
14degrees W, having a radius of 1858.14 feet, a central angle of
7degrees 8degrees 59degrees, an arc distance of 287.55 feet to a point
of tangency; thence 89degrees 28degrees 43degrees N, a distance of
781.22 feet to the POINT OF BEGINNING, the previous four courses and
distances being along the Northerly right-of-way line of "South Post
Road", as shown on said plat.
Said Lands situate in Broward County, Florida.
Containing 501,440 Square Feet / 11.5117 Acres, more or less.
Subject to ????, Restrictions, Reservations, Covenants, and Right-of-
Way of Record.
<PAGE>
EXHIBIT B
PLANS
UNITED STATIONERS
-----------------
List of Drawings
----------------
ARCHITECTURAL DRAWINGS
<TABLE>
<CAPTION>
Drawing # Title Date
- --------- ----- ----
<S> <C> <C>
A0-0 Cover sheet 12-30-92
A2-1 Floor plan 12-30-92
A3-1 Exterior elevations 12-30-92
A3-2 Wall sections 12-30-92
A5-1 Enlarged plan/interior elevations/reflected
ceiling plan 12-30-92
A8-1 Exterior details 12-30-92
A9-1 Finish and door schedule 12-30-92
</TABLE>
STRUCTURAL DRAWINGS
<TABLE>
<CAPTION>
Drawing # Title Date
- --------- ----- ----
<S> <C> <C>
S-1 Foundation plan 12-30-92
S-2 Roof framing plan 12-30-92
S-3 Foundation details 12-30-92
S-4 Roof framing details 12-30-92
S-5 Panel reinforcement and details 12-30-92
S-6 Structural notes 12-30-92
</TABLE>
MECHANICAL DRAWINGS
<TABLE>
<CAPTION>
Drawing # Title Date
- --------- ----- ----
<S> <C> <C>
M-1 Warehouse plumbing and HVAC 12-30-92
M-2 Plumbing floor plan and risers 12-30-92
M-3 HVAC ceiling plan and schedules 12-30-92
</TABLE>
ELECTRICAL DRAWINGS
<TABLE>
<CAPTION>
Drawing # Title Date
- --------- ----- ----
<S> <C> <C>
E-1 Site plan 12-30-92
E-2 Office power and lighting 12-30-92
E-3 Warehouse power 12-30-92
E-4 Warehouse lighting 12-30-92
E-5 Electrical details 12-30-92
</TABLE>
<PAGE>
EXHIBIT C
GENERAL CONSTRUCTION WARRANTY
4.5 WARRANTY
4.5.1 The Contractor warrants to the Owner that all materials and equipment
furnished under this Contract will be new unless otherwise specified,
and that all Work will be of good quality, free from faults and
defects and in conformance with the Contract Documents. All Work not
conforming to these requirements, including substitutions not properly
approved and authorized, may be considered defective. If required by
the Owner, the Contractor shall furnish satisfactory evidence as to
the kind and quality of materials and equipment. This warranty is not
limited by the provisions of Paragraph 13.2.
13.2 CORRECTION OF WORK
13.2.1 The Contractor shall promptly correct all Work rejected by the Owner
as defective or as failing to conform to the Contract Documents
whether observed before or after Substantial Completion and whether or
not fabricated, installed or completed. The Contractor shall bear all
costs of correcting such rejected Work, including compensation for the
Architect's additional services made necessary thereby.
13.2.2 If, within one year after the Date of Substantial Completion of the
Work or designated portion thereof or within one year after acceptance
by the Owner of designated equipment or within such longer period of
time as may be prescribed by law or by the terms of any applicable
special warranty required by the Contract Documents, any of the Work
is found to be defective or not in accordance with the Contract
Documents, the Contractor shall correct it promptly after receipt of a
written notice from the Owner to do so unless the Owner and Lessee
have previously given the Contractor a written acceptance of such
condition. This obligation shall survive termination of the Contract.
The Owner shall give such notice promptly after discovery of the
condition.
13.2.3 The Contractor shall remove from the site all portions of the Work
which are defective or non-conforming and which have not been
corrected under Subparagraphs 4.5.1, 13.2.1 and 13.2.2, unless removal
is waived by the Owner.
13.2.4 If the Contractor fails to correct defective or non-conforming Work as
provided in Subparagraphs 4.5.1, 13.2.1 and 13.2.2, the Owner may
correct it in accordance with Paragraph 3.4.
13.2.5 If the Contractor does not proceed with the correction of such
defective or non-conforming Work within a reasonable time fixed by
written notice from the Owner, the Owner may remove it and may store
the materials or equipment at the expense of the Contractor. If the
Contractor does not pay
<PAGE>
the cost of such removal and storage within ten days thereafter, the
Owner may upon ten additional days' written notice sell such Work at
auction or at private sale and shall account for the net proceeds
thereof, after deducting all the costs that should have been borne by
the Contractor, including compensation for the Architect's additional
services made necessary thereby. If such proceeds of sale do not cover
all costs which the Contractor should have borne, the difference shall
be charged to the Contractor and an appropriate Change Order shall be
issued. If the payments then or thereafter due the Contractor are not
sufficient to cover such amount, the Contractor shall pay the
difference to the Owner.
13.2.6 The Contractor shall bear the cost of making good all work of the
Owner or separate contractors destroyed or damaged by such correction
or removal.
13.2.7 Nothing contained in this Paragraph 13.2 shall be construed to
establish a period of limitation with respect to any other obligation
which the Contractor might have under the Contract Documents,
including Paragraph 4.5 hereof. The establishment of the time period
of one year after the Date of Substantial Completion or such longer
period of time as may be prescribed by law or by the terms of any
warranty required by the Contract Documents relates only to the
specific obligation of the Contractor to correct the Work, and has no
relationship to the time within which his obligation to comply with
the Contract Documents may be sought to be enforced, nor to the time
within which proceedings may be commenced to establish the
Contractor's liability with respect to his obligations other than
specifically to correct the Work.
3.4 OWNER'S RIGHT TO CARRY OUT THE WORK
3.4.1 If the Contractor defaults or neglects to carry out the Work in
accordance with the Contract Documents and fails within seven days
after receipt of written notice from the Owner to commence and
continue correction of such default or neglect with diligence and
promptness, the Owner may, after seven days following receipt by the
Contractor of an additional written notice and without prejudice to
any other remedy he may have, make good such deficiencies. In such
case an appropriate Change Order shall be issued deducting from the
payments then or thereafter due the Contractor the cost of correcting
such deficiencies, including compensation for the Architect's
additional services made necessary by such default, neglect or
failure. If the payments then or thereafter due the Contractor are not
sufficient to cover such amount, the Contractor shall pay the
difference to the Owner.
<PAGE>
GAF BUILDING MATERIALS
LIBERTY GUARANTEE
[FORM OF LIBERTY GUARANTEE APPEARS HERE]
[SPECIMIN]
<PAGE>
GAF BUILDING MATERIALS
LIBERTY GUARANTEE
[FORM OF LIBERTY GUARANTEE APPEARS HERE]
[SPECIMIN]
<PAGE>
EXHIBIT D
PURCHASE AGREEMENT
------------------
THIS AGREEMENT is made as of [insert date on which Buyer executes and
delivers this Agreement and the Earnest Money Deposit pursuant to section H the
Lease], by and between UNITED STATIONERS SUPPLY CO., an Illinois corporation,
2200 East Golf Road, Des Plaines, Illinois, 60016-1267 ("Buyer"), and [insert
name of Lessor under the Lease as of date of this Agreement] ("Seller").
WITNESSETH:
The parties agree as follows:
1. Sale of Property. Buyer agrees to purchase and Seller agrees to
----------------
sell on the terms set forth herein the land located in Broward County,
Florida, legally described on Exhibit A attached hereto, consisting of
approximately 11.5 acres, which is improved with an approximately
150,000 square feet industrial building and together with the building,
improvements, fixtures, and other items of personal property owned by
Seller and located thereon, used in conjunction with the operation of
said building. All of the above is hereinafter referred to as the
"Premises".
2. Purchase Price. The purchase price agreed upon is Six Million
--------------
Eight Hundred Fifty and 00/100 Dollars ($6,850,000.00) to be paid as
follows:
A. Three Hundred Forty-Two Thousand Five Hundred 00/100 Dollars
($342,500.00) as earnest money concurrently herewith, receipt of
which is hereby acknowledged.
B. The balance of Six Million Five Hundred Seven Thousand Five Hundred
and 00/100 Dollars ($6,507,500.00), in cashiers or certified checks
or by wire transfer of funds, at closing.
3. Title. Subject to performance by the Buyer, the Seller agrees to
-----
execute and deliver a Warranty Deed conveying marketable title to said
Premises subject only to the following exceptions.
A. Building and zoning laws, ordinances, state and federal
regulations;
B. Restrictions relating to use or improvement of the Premises without
effective forfeiture provision;
C. General taxes for the year 1993 and subsequent years;
<PAGE>
D. Special taxes and assessments;
E. Covenants, conditions, restrictions and easements set forth in that
certain Declaration of Covenants, Conditions, Restrictions, and
Easements of the Meridian Business Campus at Weston, dated May 17,
1989, recorded on August 4, 1989 in the Official Records Book
165654, Pages 386-420, of Broward County, Florida under Clerk's
File No: 89312588.
F. The matters set forth on Exhibit B attached hereto and made a part
hereof; and
G. All covenants, conditions, restrictions, easements and other
matters of record which do not materially adversely affect the
Premises.
4. Title Evidence/Conditions and Stipulations. Seller shall deliver
-------------------------
or cause to be delivered to Buyer or Buyer's agent, at Seller's cost,
notless than 10 days prior to the time of closing, a title commitment
for an owner's title insurance policy issued by a title insurance
company authorized to issue title insurance in the State of Florida in
the amount of the purchase price, covering title to the real estate on
or after the data hereof, showing title in the intended grantor subject
only to (a) the general exceptions contained in the policy, (b) the
title exceptions set forth above, and (c) title exceptions pertaining
to liens or encumbrances of definite or ascertainable amount which may
be removed by the payment of money at the time of closing and which the
Seller may so remove at that time by using the funds to be paid upon
the delivery of the deed (all of which are herein referred to as the
permitted exceptions). The title commitment shall be conclusive
evidence of good title as therein shown as to all matters insured by
the policy, subject only to the permitted exceptions in foregoing items
(b) and (c) and unpermitted exceptions, if any, as to which the title
insurer commits to extend insurance in the manner specified below.
If Seller fails to obtain the commitment for title insurance specified
above within the specified time, Buyer may, upon notice to Seller
within 10 days after the earlier of receipt of the actual title
commitment delivered by Seller, or within 10 days after the date on
which Seller was required to deliver, and Seller fails to deliver, the
title commitment, terminate this contract or may elect to take title as
it then is with the right to deduct from the purchase price liens or
encumbrances of a definite or ascertainable amount, in which event such
liens or encumbrances shall be paid in full by Buyer at the closing. If
Buyer does not so elect, this contract shall become null and void
without further actions of the parties.
2
<PAGE>
5. Closing Date. The time of the closing shall be on [insert date
------------
which is next preceding the 10th anniversary of Commencement Date],
unless subsequently agreed otherwise, at the office of the title ????
in Fort Lauderdale, Florida, provided that all the conditions precedent
have been satisfied. Possession shall be delivered to Buyer at closing.
6. Survey. Not less than fifteen (15) days before the date of
------
closing, Seller shall deliver to Buyer, at Seller's cost, a survey of
the Premises certified to Buyer and any title insurance company chosen
by Buyer, by a surveyor registered in the State of Florida showing
capped and flagged pipestakes at appropriate boundary reference
locations and showing the present location of all improvements on the
land, and showing no encroachments upon or by the subject premises, and
all easements, fences, building lines and access to public roads.
7. Prorations. [intentionally omitted]
----------
8. Closing Documents. At closing Seller shall deliver to Buyer, in
-----------------
addition to the Warranty Deed referred to above, the following:
A. Affidavit of Title covering the period from the date of the report
of title to the date of closing in form reasonably acceptable to
Buyer's counsel and to the title insurance company selected by
Buyer, if any;
B. A certificate dated as of the closing date that there are no
unreleased financing statements on file, and not lapsed, in the
proper office of Broward County and the office of the Florida
Secretary of State, affecting the fixtures or improvements on the
land, or any property involved in this transaction; and
C. All other documents customarily required or appropriate to
consummate this transaction.
9. Representations of Seller. Seller represents and warrants that,
-------------------------
except to the extent disclosed by Seller or to the knowledge of Buyer,
A. There are no actions, suits, or other legal proceedings presently
pending or to the knowledge of Seller threatened against the
Premises.
B. There are no judgments, liens, encumbrances, or charges against the
Seller, that there are no creditors bills or such proceedings
pending against it which may or can be a charge or encumbrance
against the Premises;
3
<PAGE>
C. Seller's performance of this Agreement will not constitute a
default under any agreement by which the Premises might be bound;
D. The Seller does not have knowledge of any pending condemnation,
rezoning or other land use regulation proceedings, either
instituted or planned to be instituted, which would detrimentally
affect the use and operation of the Premises for its intended
purpose;
E. The documents executed by the Seller that are to be delivered to
the Buyer at closing are, at the closing will be, duly authorized,
executed and delivered by the Seller; are, and at the closing will
be, legal, valid and binding obligations of the Seller; are, and at
the closing will be, sufficient to convey title if they propose to
do so; and do not, and at the closing will not, violate any
provisions of any agreement to which the Seller is a party or to
which it is subject; and
F. At the closing there will be no outstanding contracts made by the
Seller for any improvements to the Premises that have not been
fully paid, and the Seller shall cause to be discharged all
mechanics or materialmen's liens arising from any labor or material
furnished to the premises at the request of Seller, and not the
obligation of Buyer, prior to the closing.
10. Entire Agreement. This instrument constitutes the entire
----------------
agreement between the Buyer and the Seller and there are no
agreements, understandings, warranties, or representations between
them except as set forth herein. This Agreement cannot be amended
except by a writing executed by the Buyer and the Seller.
11. Binding Effect. This Agreement will inure to the benefit of and
--------------
bind the respective successors and permitted assigns of the parties
hereto.
12. Material Damage. [Intentionally Omitted].
---------------
13. Condemnation. [Intentionally Omitted].
------------
14. Escrow Closing. This sale may be closed through escrow with a
--------------
selected title company in Fort Lauderdale, Florida, in accordance with
the general provisions of the usual form of escrow agreement then in
use by such title company for transactions similar to this with such
special provisions inserted in the escrow agreement as may be required
to conform with this Agreement. Upon the creation of such an escrow,
anything herein to the contrary notwithstanding, payment of the
purchase price other than the earnest money,
4
<PAGE>
and delivery of the deed and other documents shall be made through the
escrows. The cost of the escrow shall be paid by Seller.
15. Miscellaneous.
-------------
A. Time is of the essence of this Agreement.
B. All notices herein required shall be in writing and shall be
served on the parties at the addresses following their signatures.
The mailing of a notice by registered or certified mail, return
receipt requested, shall be sufficient service and shall be
effective upon mailing.
C. Seller agrees to pay a brokerage commission to TJT Enterprises of
Broward, Inc. d/b/a Cornreal Ft. Lauderdale equal to 2% of the
Purchase Price earned as a result of this transaction (provided
that the sale and purchase of the Premises is consummated), and to
indemnify and hold Buyer harmless therefrom.
D. Seller shall pay the amount of any state deed tax imposed by state
law on the transfer of the title, and the cost of all title
insurance and surveys required to be delivered by Seller
hereunder.
16. Survival of Representations. The representations and warranties
---------------------------
made in paragraph 10 B, D and E shall survive the closing.
17. Remedies. In the event that Buyer defaults under the terms of
--------
this Agreement, Seller shall have the right to retain the earnest
money deposit and seek damages against Buyer and all guarantors of the
obligations of Buyer hereunder.
18. Exculpation. Neither the partners, if Seller is a partnership, or
-----------
if Seller is a trustee of a trust, the beneficiaries of such trust,
nor the shareholders (nor any of the partners comprising same)
directors or officers of any of the foregoing (collectively, the
"PARTIES") shall be liable for the performance of Seller's obligations
under this Agreement. Buyer shall look solely to Seller to enforce
Seller's obligations hereunder and shall not seek any damages against
the rest of the Parties. The liability of Seller for Seller's
obligations under this Agreement shall not exceed and shall be limited
to the greater of the Barnest Money Deposit or the value of Seller's
interest in the Premises, and Buyer shall not look to the property or
assets of any of the Parties in seeking either to enforce Seller's
obligations under this
5
<PAGE>
Agreement or to satisfy a judgment for Seller's failure to perform as
such obligation.
BUYER
UNITED STATIONERS SUPPLY CO.
By: ____________________________
Its ____________________________
2200 East Golf Road
Des Plaines, Illinois 60016-1267
SELLER
By: ____________________________
Its ____________________________
Date of Execution by Seller:
____________________________
6
<PAGE>
EXHIBIT A
PREMISES
DESCRIPTION
-----------
A portion of Tract "A" of the plat. "WESTON PARK OF COMMENCE, PLAT
ONE", as recorded in flat Book 138, Page 1 of the Public Records of
Broward County, being more particularly described as follows:
BEGINNING at the Southeast corner of Parcel "B", as shown on said
plat; thence N 01degrees 54degrees 15degrees E, along the East line of
said Parcel "N", a distance of 252.79 feet; thence N 10degrees
29degrees 23degrees E, continuing along said East line, a distance of
294.63 feet; thence N 88degrees 37degrees 34degrees E, a distance of
858.50 feet to a point of intersection with the Westerly right-of-way
line of "Enterprise Avenue" as described in Official Records Book
16775, Page 506 of the Public Records of Broward County, Florida,
thence Southerly along said Westerly right-of-way line and along the
arc of a curve to the left, whose radius point bears N 88degrees
53degrees 23degrees, having a radius of 2778.0 feet, a central angle
of 83degrees 27degrees 02degrees, an arc length of 167.30 feet to a
point of tangency; thence S 04degrees 33degrees 39degreesE, continuing
along said Westerly right-of-way line, a distance of 167.17 feet to a
point of curvature; thence continuing Southerly along said Westerly
right-of-way line, along the arc of a curve to the left having a
radius of 1035.54 feet, a central angle of 83degrees 53degrees
02degrees, an arc distance of 99.05 feet to a point of tangency;
thence S 10degrees 02degrees 28degrees E, continuing along said
Westerly right-of-way line, a distance of 88.60 feet to a point of
curvature; thence Southwesterly along the arc of a curve to the right
having a radius of 33.00 feet, n central angle of 84degrees 40degrees
48degrees, an arc distance of 2.69 feet to a point of compound
curvature and the Northerly right-of-way line of "South Post Road", as
shown on said plat; thence Southwesterly along the arc of a curve to
the right having a radius of 1846.14 feet, a central angle of
87degrees 90degrees 59degrees, an arc distance of 44.56 feet to a
point; thence S 7degrees 32degrees 14degrees E, a distance of 12.00
feet to a point on curve; thence Southwesterly along the arc of a
curve to the right, whose radius point bears N 7degrees 32degrees
14degrees W, having a radius of 1858.14 feet, a central angle of
7degrees 8degrees 59degrees, an arc distance of 287.55 feet to a point
of tangency; thence 89degrees 28degrees 43degrees N, a distance of
781.22 feet to the POINT OF BEGINNING, the previous four courses and
distances being along the Northerly right-of-way line of "South Post
Road", as shown on said plat.
Said Lands situate in Broward County, Florida.
Containing 501,440 Square Feet / 11.5117 Acres, more or less.
Subject to ????, Restrictions, Reservations, Comments, and Right-of-
Way of Record.
<PAGE>
Exhibit B
2. Declaration of Covenants filed August 4, 1982 in Official Records Book
10329, at Page 155, Supplemental Declaration of Covenants filed December 21,
1983 in Official Records Book 11355, at Page 680, Amended and Restated
Declaration of Covenants filed May 17, 1985 in Official Records Book 12546,
at Page 921, as affected by Supplemental Declaration filed May 5, 1989 in
Official Records Book 16416, at Page 143 and Amendment Withdrawing Property
filed May 5, 1989 in Official Records Book 16416, at Page 158.
Note: The property insured herein was withdrawn from the provisions of the
Amended and Restated Declaration of Covenants pursuant to the Amendment
Withdrawing Property and resubmitted to the provisions of the Amended and
Restated Declaration of Covenants pursuant to the Supplemental Declaration
solely for the purpose of levying assessments for entrance features and
landscaping. The lien of any assessments is specifically subordinated to the
lien of the mortgage insured hereunder.
3. Restrictions contained in Exhibit B of Special Warranty Deed from Arvida
Corporation to Tishman Speyer-Equitable South Florida Venture dated December
15, 1983 and filed December 21, 1983 in Official Records Book 11355, at Page
692 and Amendment No. 1 to Special Warranty Deed filed December 15, 1987 in
Official Records Book 15038, at Page 116, as affected by instrument filed
September 14, 1987, in Official Records Book 14796, at Page 666.
Note: The breach or violation of the restrictions set forth above will not
result in a reversion of title of the property insured herein.
4. Water and Waste Water Capacity Reservation Agreement filed October 6, 1986
in Official Records Book 13790, at Page 853, as affected by instrument filed
September 29, 1989 in Official Records Book 16804, at Page 446.
Note: The rights set forth above regarding capacity reservation have been
collaterally assigned to Wells Fargo Realty Advisors Funding Incorporated.
5. Ordinance No. 87-79 filed November 23, 1987 in Official
Records Book 14978, at Page 184, Ordinance No. 88-30 filed July 19, 1988 in
Official Records Book 15616, at Page 517, Ordinance No. 88-31 filed July 19,
1988 in Official Records Book 15616, at Page 557, Ordinance No. 88-32 filed
July 19, 1988 in Official Records Book 15616, at Page 604 and Ordinance No.
88-33 filed July 19, 1988 in Official Records Book 15616, at Page 629.
6. Intentionally Omitted.
7. Matters appearing on the Plat of Weston Park of Commerce
<PAGE>
8. Declaration of Covenants, Conditions, Restrictions and Easements of the
Meridian Business Campus at Weston by Donald R. Hall, as Trustee dated May
17, 1989 and filed August 4, 1989 in Official Records Book 16654, at Page
386, except that the rights of Declarant thereunder to purchase the
property shall have been deemed waived.
9. Easement granted to Broward County by instrument dated August 4, 1989 and
filed September 20, 1989 in Official Records Book 16775, at Page 522.
10. Terms and provisions of Revocable License Agreement filed October 19, 1989
in Official Records Book 16857, at Page 409, as assigned to the Meridian
Business Campus at Weston Owner's Association.
11. Easement granted to Indian Trace Community Development District dated
August 4, 1989 and filed October 19, 1989 in Official Records Book 16859,
at Page 414.
12. Easement granted to Florida Power and Light Company by instrument dated
September 1, 1989 and filed December 6, 1989 in Official Records Book
16980, at Page 437.
14. The Deed Restriction set forth on Exhibit 8-1 attached hereto and made
a part hereof.
15. All other matters approved by Purchaser.
<PAGE>
EXHIBIT B-1
DEED RESTRICTION
Notwithstanding anything herein or elsewhere to the contrary, no buildings
or other structures may be developed (as such term is hereinafter defined) on
the land conveyed by this deed, by either the grantee hereof or any other person
or party for any purpose whatsoever, except that buildings and other structures
may be developed on the land conveyed by this deed consistent with the
following: not more than zero (0) gross square feet of building area may be
developed for office uses (as hereinafter defined); not more than zero (0) gross
square feet of building area may be developed for hotel uses (as hereinafter
defined); not more than zero (0) gross square feet of building area may be
developed for commercial uses (as hereinafter defined); not more than 210,000
gross square feet of building area may be developed for industrial uses (as
hereinafter defined); and not more than zero (0) square feet of building area
may be developed for Retail Uses (as hereinafter defined). The term "developed"
shall mean the use or operation of any of the land in question, as well as each
of the following: the commencement of construction upon any land, or the filing
for a site plan approval or the filing of any other application to a
governmental authority (other than for the filing of a plat or an amendment to
the DO (as hereinafter defined) or a new development order in lieu thereof), or
the obtaining of a building permit, in each case where such act is done in
contemplation of the construction of any building area or other structures on
the land in question (excluding the filling of any ditches, the excavation of
any lakes, the storage of any fill material or muck from such excavation, the
erection of any signs or the performance of any site work on the land which does
not require a governmental permit). The definition of the terms "office uses",
"hotel uses", "commercial uses" and "industrial uses" shall be as set forth in
(and as permitted by the terms of) the Development Order enacted October 27,
1987, being Resolution No. 87-79 of the Board of County Commissioners of Broward
County (the "DO"), except that commercial uses shall be deemed to exclude any
and all uses which are Retail Uses, and except that industrial uses shall be
deemed to include the use of any space in a building which is physically
constructed and utilized consistent (in all respects) with the following
criteria: (i) the building is only one or two stories in height; (ii) the
building has one or more grade level or dock height truck door(s); (iii) the
building is used for single or multi-tenant occupancy; and (iv) the uses in the
building will include a variety of uses including office, showroom,
service/distribution, storage/warehouse and light assembly. The term "Retail
Uses" shall have the meaning ascribed thereto pursuant to that certain Special
Warranty Deed from Arvida Corporation to Tishman Speyer-Equitable South Florida
Venture dated December 15, 1983, and recorded as Document No. 83-416421 in
Official Records Book 11355, Page 692 of the Public Records of Broward County,
Florida, as amended by that certain Amendment No. 1 to Special Warranty Deed
dated November 23, 1987 and recorded as Document No. 87521577 in Official
Records Book 15038, Page 116 of Broward County, Florida.
<PAGE>
The foregoing restrictive covenant shall be deemed to be a covenant
running with the land conveyed by this deed, and shall be enforceable against
the grantee (and its successors and assigns) by either the grantor hereunder,
or by CMD Broward Associates I, an Illinois limited partnership and by such of
its successors and assigns to which the full right of enforcement of such
restrictive covenant shall have been expressly assigned in writing (singularly,
a "Beneficiary", and collectively, the "Beneficiaries"), each of which
Beneficiaries are hereby made express and intended third party beneficiaries of
such restriction. Any action or proceeding to enforce this restrictive covenant
may be brought by a single Beneficiary, without the need of all of the
Beneficiaries. The foregoing restrictive covenant may only be modified by a
written instrument in recordable form duly executed by either the grantor
hereunder or such successor of the grantor hereunder to which the right to
modify such restrictive covenant shall have been expressly assigned in writing,
or by both of the Beneficiaries.
2
<PAGE>
FIRST AMENDMENT TO LEASE
This AGREEMENT is made on this 17th day of July, 1993 between CMD FLORIDA FOUR
---- ----
LIMITED PARTNERSHIP, an Illinois limited partnership ("Lessor"), and UNITED
STATIONERS SUPPLY CO., an Illinois corporation ("Lessee").
A. Lessor and Lessee entered into a Lease, dated February 1, 1993,
pursuant to which Lessor agreed to improve and lease to Lessee, and Lessee
agreed to lease from Lessor, certain real property located in Meridian Business
Campus at Weston, Broward County, Florida ("Lease").
B. Lessor and Lessee desire to provide for certain rights and
obligations with respect to expansion of the improvements located on the leased
premises.
Lessor and Lessee agree as follows:
1. Site. Exhibit A to the Lease is hereby replaced with Exhibit A
attached hereto. All references in the Lease to Exhibit A shall be deemed to
refer to Exhibit A attached hereto, and all references in the Lease to the Site
shall be deemed to refer to the real estate as described in Exhibit A attached
hereto.
2. Plans. Exhibit B to the Lease is hereby replaced with Exhibit B
attached hereto. All references in the Lease to Exhibit B attached hereto, and
all references in the Lease to the Plans shall be deemed to refer to the plans
as described in Exhibit B attached hereto.
3. BASE RENT. Section E(1) of the Lease is hereby deleted and the
following substituted in its place:
"(1) Annual Base Rent. Lessee shall pay base rent to Lessor at the
following annual rates ("Annual Base Rent") applicable during each of
the following respective periods:
(a) During the period commencing on and including the
Commencement Date and ending on and including the date next
preceding the 1st anniversary of the Commencement Date, the
Annual Base Rent shall be $504,900.00.
(b) During the period commencing on and including the 1st
anniversary of the Commencement Date and ending on and including
the date next preceding the 3rd anniversary of the Commencement
Date, the Annual Base Rent shall be $512,400.00.
<PAGE>
(c) During the period commencing on and including the 3rd
anniversary of the Commencement Date and ending on and including
the date next preceding the 6th anniversary of the Commencement
Date, the Annual Base Rent shall be $563,400.00.
(d) During the period commencing on and including the 6th
anniversary of the Commencement Date and ending on and including
the date next preceding the 9th anniversary of the Commencement
Date, the Annual Base Rent shall be $617,400.00.
(e) During the period commencing on and including the 9th
anniversary of the Commencement Date and ending on and including
the date next preceding the 10th anniversary of the Commencement
Date, the Annual Base Rent shall be $678,900.00."
4. BROKERS. Section 44 of the Lease is deleted and the following
substituted in its place:
"44. BROKERS. Lessor and Lessee each respectively represent and
warrant to the other that neither has employed the services of any real estate
broker or any similar agent for the purpose of procuring this Lease, other than
ComReal Ft. Lauderdale ("Broker"). Lessor shall be responsible for and pay
Broker all commissions due and owing under separate agreement between Lessor
and Broker including, in the event Lessee purchases the Premises, a commission
equal to 2% of the purchase price, payable at closing. In the event either
party hereto has so employed any such broker or agent, other than Broker, the
party responsible for such employment shall indemnify, defend and hold the
other forever harmless from and against any commissions, fees, brokerage or
other compensation and for any claims for any such commissions, fees, brokerage
or other compensation arising out of this Lease, and/or such employment."
5. The following is added as Section J of the Lease:
"J. Permitted Expansion.
(a) "Permitted Expansion" means an expansion of the Building (1) which
is consistent with the site plan attached as Exhibit C, (2) the quality and
aesthetics of the exterior of which is consistent with the quality and
aesthetics of the exterior of the Building, and (3) which is in compliance with
all applicable laws and regulations.
(b) If at any time during the Lease Term, Lessee desires that the
Premises be improved with a Permitted Expansion of the Building, then Lessee
shall deliver a written notice ("Expansion Request Notice") which sets forth in
reasonable
<PAGE>
detail the specifications for the Permitted Expansion. Lessor may, but is
not obligated to deliver to Lessee, within 10 business days after receipt by
Lessor of the Expansion Request Notice, a written offer ("Expansion Offer")
which sets forth the terms and conditions, including rent, timing and other
conditions under which Lessor would make the expansion.
(c) If either Lessor fails to make an Expansion Offer within the
prescribed time, or Lessor and Lessee fail, within 30 days after the date on
which Lessee receives the Expansion Offer, to enter into a written amendment to
the Lease pursuant to which Lessor agrees to make the expansion, then,
notwithstanding anything in the Lease to the contrary, Lessee may make the
Permitted Expansion subject to the following:
(1) prior to commencement of construction of the Permitted Expansion,
Lessee shall have submitted to Lessor, and Lessor shall have approved in
writing (which approval shall not unreasonably be withheld or delayed),
complete working drawings and specifications, and copies of all construction
contracts (but not all subcontracts), for the expansion, and
(2) the terms and conditions of Section 11 of the Lease shall apply to
the expansion, except that no further written consent by Lessor shall be
required with respect to the Permitted Expansion, and Lessee shall not be
required to remove the Permitted Expansion upon the expiration or termination
of the Lease.
(d) Except to the extent set forth in the Lease, or a written amendment to
the Lease executed and delivered by Lessor and Lessee, Lessor shall have no
obligations whatsoever to make any Expansion or any other improvements to the
Premises.
6. Full Force and Effect. Except to the extent expressly set forth
herein, all of the terms and conditions of the Lease, as amended, including but
not limited to the Exculpations provisions of the Lease, shall remain in full
force and effect.
LESSOR:
CMD FLORIDA FOUR LIMITED PARTNERSHIP,
an Illinois limited partnership
By: CMD DEVELOPMENT OF FLORIDA, INC.
a Florida corporation, its general
partner
By:??
Its: PRESIDENT
<PAGE>
LESSEE:
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
By: /s/ Otis H. Halleen
Its: Vice President Secretary
and General Council
COMMENT
The undersigned consents to and agrees to be bound, as guarantor, by the
terms of the foregoing First Amendment to Lease.
UNITED STATIONERS INC.,
a Delaware corporation, Guarantor
By: /s/ Otis H. Halleen
Title: Vice President, Secretary
and General Council
<PAGE>
EXHIBIT 10.34
STANDARD FORM
INDUSTRIAL LEASE
(NET)
LANDLORD: CAROL POINT BUILDERS I GENERAL PARTNERSHIP
----------------------------------------------------------------------
TENANT: ASSOCIATED STATIONERS, INC.
------------------------------------------------------------------------
Dated for reference purposes as of: _______________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
STANDARD INDUSTRIAL MULTI-TENANT LEASE FORM
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE A: DEFINED TERMS, EXHIBITS AND PREAMBLE......................... 1
A-1. Defined Terms.......................................... 1
A-2. Exhibits............................................... 1
A-3. Preamble............................................... 2
A-4. Common Areas........................................... 2
A-5. Landlord's Reserved Rights in Common Areas............. 2
ARTICLE B: LEASEHOLD IMPROVEMENTS....................................... 2
ARTICLE C: TERM......................................................... 2
ARTICLE D: RENT......................................................... 2
D-1. Fixed Rent............................................. 2
D-2. Additional Rent........................................ 3
D-3. Tenant's Proportionate Share of Cost of
Operation and Maintenance.............................. 3
ARTICLE E: TAXES........................................................ 3
E-1. Tenant's Obligation.................................... 3
E-2. Installment Election................................... 4
E-3. Limitation............................................. 4
E-4. Landlord's Right....................................... 4
E-5. Personal Property Taxes................................ 4
ARTICLE F: INSURANCE AND INDEMNITY...................................... 4
F-1. Coverage............................................... 4
F-2. Insurance Policies..................................... 4
F-3. Tenant's General Liability Insurance................... 5
F-4. Tenant's Property Insurance............................ 5
F-5. Tenant's Insurance Certificates........................ 5
F-6. Tenant's Failure....................................... 5
F-7. Waiver or Subrogation.................................. 5
F-8. Indemnification of Landlord............................ 5
F-9. Distribution of Award.................................. 6
ARTICLE G: REPAIRS, MAINTENANCE AND ALTERATIONS......................... 6
G-1. Tenant Repairs and Maintenance......................... 6
G-2. Landlord's Rights...................................... 6
G-3. Landlord Repair and Maintenance........................ 6
G-4. Alterations............................................ 6
G-5. Inspection of Leased Premises.......................... 7
G-6. Workmanlike Quality.................................... 7
G-7. Liens.................................................. 7
G-8. Surrender.............................................. 7
ARTICLE H: TENANT'S FIXTURES AND PERSONAL PROPERTY...................... 7
ARTICLE I: UTILITIES AND EASEMENTS...................................... 7
I-1. EASEMENTS.............................................. 8
ARTICLE J: USE OF PREMISES.............................................. 8
J-1. General................................................ 8
J-2. Signs.................................................. 8
J-3. Prking and Use of Common Areas and Facilitie .......... 8
ARTICLE K: DAMAGE OR DESTRUCTION........................................ 9
K-1. Reconstruction......................................... 9
K-2. Rent Abatement......................................... 9
K-3. Excessive Damage or Destruction........................ 9
K-4. Uninsured Casualty..................................... 9
K-5. Waiver................................................. 9
K-6. Damage Near End of Term................................ 9
ARTICLE L: EMINENT DOMAIN............................................... 10
L-1. Total Condemnation of Demised Premises................. 10
L-2. Partial Condemnation................................... 10
L-3. Landlord's Award....................................... 10
L-4. Tenant's Award......................................... 10
L-5. Temporary Condemnation................................. 10
L-6. Notice and Execution................................... 10
ARTICLE M: DEFAULT...................................................... 10
M-1. Events of Default...................................... 10
M-2. Landlord's Remedies.................................... 11
ARTICLE N: ASSIGNMENT AND SUBLETTING.................................... 11
N-1. Prohibition............................................ 11
N-2. Landlord's Option...................................... 12
N-3. Excess Sublease Rental or Assignment
Consideration.......................................... 12
N-4. Scope.................................................. 12
N-5. Waiver................................................. 12
N-6. Release................................................ 12
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
STANDARD INDUSTRIAL MULTI-TENANT LEASE FORM (Continued)
Page
----
<S> <C>
ARTICLE O: ESTOPPEL STATEMENT, ATTORNMENT AND SUBORDINATION............. 12
O-1. Estoppel Statement..................................... 12
O-2: Attornment............................................. 13
O-3. Subordination.......................................... 13
ARTICLE P: NOTICES...................................................... 13
ARTICLE Q: MISCELLANEOUS................................................ 13
Q-1. Waiver................................................. 13
Q-2. Accord and Satisfaction................................ 13
Q-3. Individual Liability................................... 13
Q-4. Entire Agreement....................................... 13
Q-5. Time................................................... 13
Q-6. Recordation............................................ 13
Q-7. Professional Fees...................................... 14
Q-8. Captions and Section Numbers........................... 14
Q-9. Severability........................................... 14
Q-10. Applicable Law......................................... 14
Q-11. Examination of Lease................................... 14
Q-12. Financial Statements................................... 14
Q-13. Security Measures...................................... 14
Q-14. Lender's Requirements.................................. 14
Q-15. Security Deposit....................................... 14
Q-16. Administrative Charges................................. 14
Q-17. Late Payments.......................................... 14
Q-18. Holding Over........................................... 15
Q-19. Authority.............................................. 15
Q-20. Landlord's Access...................................... 15
Q-21. Hazardous Materials.................................... 15
ARTICLE R: SUCCESSORS BOUND............................................. 17
</TABLE>
ii
<PAGE>
ARTICLE A
DEFINED TERMS, EXHIBITS AND PREAMBLE
A-1. DEFINED TERMS. Each reference in this Lease to any of the terms described
in this Article A shall mean and refer to the following; other terms are as
defined in this Lease:
(a) LANDLORD: Carol Point Builders I
---------------------------
General Partnership
---------------------------
(b) TENANT: Associated Stationers, Inc.
---------------------------
___________________________
(c) LOCATION OF BUILDING: (Address) 898 Carol Court
--------------------------
Carol Stream, Illinois
--------------------------
(d) SUITE NUMBER OF DEMISED PREMISES: N/A
-------------------------------
(e) APPROXIMATE SQUARE FOOTAGE OF DEMISED PREMISES: 139,444
-----------------
(f) APPROXIMATE SQUARE FOOTAGE OF BUILDING: 274,952
-------------------------
(g) TENANT'S PROPORTIONATE SHARE: 50.72 %
-------
(h) TERM: APPROXIMATELY 5 years.
---------
(i) FIXED RENT: $ 49,502.67 per calendar month.
----------------
(j) SCHEDULED TERM COMMENCEMENT DATE: June 1, 1992
--------------------
(k) SECURITY DEPOSIT: $ Waived
--------------
(l) LIABILITY INSURANCE LIMITS: $ 2,000,000
----------------
(m) BROKER(S): Grubb & Ellis and Bennett & Kahnweiler
-------------------------------------------------------
<TABLE>
(n) LANDLORD'S ADDRESS:
<S> <C>
Carol Point Builders I Copy to: Messenger Investment Company
--------------------------------- -----------------------------
General Partnership
c/o Messenger Investment Company 9450 West Bryn Mawr, Suite 120
------------------------------
17512 von Karman Avenue
Irvine, California 92714 Rosemont, Illinois 60018
--------------------------------- ------------------------------
_________________________________ ______________________________
(o) TENANT'S ADDRESS:
Associated Stationers, Inc. Copy to: Associated Stationers, Inc.
--------------------------------- -----------------------------
898 Carol Court 1075 Hawthorne Parkway
--------------------------------- -----------------------------
Carol Stream, Illinois 60188 Itasca, Illinois 60142
-------------------------------- -----------------------------
Attn: Randall Teesdale
</TABLE>
(p) PERMITTED USES: Office, Warehouse
---------------------------------------
A-2. EXHIBITS. The following Exhibits, and Riders, if any, are attached to this
Lease after the signatures and are incorporated herein by reference thereto.
Exhibit A - Depiction of Demised Premises.
Exhibit B - Legal Description of Parcel
Exhibit C - Description of Leasehold Improvement to be Constructed
Exhibit D - Recording Information as to Declaration of Covenants
and Restrictions.
Exhibit E - Rules and Regulations
Exhibit F - Hazardous Material Questionnaire
Rider Nos. 1 through 1 , inclusive.
------- -------
1
<PAGE>
A-3. PREAMBLE. Landlord hereby leases to Tenant the space depicted on Exhibit A
of this Lease (the "Demised Premises"), being that portion of the Building,
including the "Improvements" as hereinafter defined, extending from the top
surface of sub-floor below Tenant's floor space to the bottom surface of
ceilings above Tenant's floor space, but excluding the common stairways,
stairwells, hallways, accessways, and pipes, ducts, conduits, wires and
appurtenant fixtures serving exclusively or in common other parts of the
Building, and if Tenant's floor space includes less than the entire rental area
of any floor, the Demised Premises shall exclude the remainder of the Floor
Common Areas as defined below. The Demised Premises are located on that certain
real property more particularly described in Exhibit "B" of this Lease ("the
Parcel"). See Rider No. 1.
A-4. COMMON AREAS. Tenant has the right to use in common with other tenants in
the Building, subject to the restrictions set forth herein and in Article J
hereof, the following areas appurtenant to the Demised Premises.
(a) BUILDING COMMON AREAS. The common stairways and accessways,
loading docks and platforms and passageways thereto, and the common pipes,
ducts, conduits, wires and appurtenant equipment serving the Demised Premises;
(b) FLOOR COMMON AREAS. If the Demised Premises include less than the
entire rentable area of any floor, the common lobbies, hallways, toilets and
other common facilities; if any, and
(c) LAND COMMON AREAS. Common walkways, sidewalks, and driveways
necessary for access to the Building and parking spaces or areas from time to
time maintained on the Parcel and to the extent from time to time arranged by
Landlord, on adjacent real property.
A-5. LANDLORD'S RESERVED RIGHTS IN COMMON AREAS. Landlord reserves the right
from time to time, without unreasonable interference with Tenant's use:
(a) BUILDING CHANGES. To install, use, maintain, repair and replace
pipes, ducts, conduits, wires and appurtenant meters and equipment for service
to other parts of the Building above the ceiling surfaces, below the floor
surfaces, within the walls and in the central core areas, and to relocate any
pipes, ducts, conduits, wires and appurtenant meters and equipment included in
the Demised Premises which are so located elsewhere outside the Demised
Premises;
(b) BOUNDARY CHANGES. To change the lines of the parcel; and
(c) FACILITY CHANGES. To alter or relocate any other common facility
other than exclusive parking for Tenant; provided, however, that substitutions
are substantially equivalent or better in quality.
ARTICLE B
LEASEHOLD IMPROVEMENTS
Landlord shall improve the Demised Premises with the Leasehold Improvements
described in Exhibit C to this Lease. The Demised Premises shall be deemed to be
ready for occupancy ("Ready for Occupancy") when the architect or engineer in
charge of construction (or, if none, Landlord's construction representative)
certifies (a) that the work of construction of the Leasehold Improvements has
been substantially completed in accordance with the approved plans (if any)
therefor, and (b) the date of such completion and the municipality issues a
certificate of occupancy. If, Tenant shall delay in performing any of its
responsibilities in connection with the work of construction, including but not
limited to approval of plans, or shall otherwise interfere with the commencement
of the Term of this Lease ("Tenant Delays") Landlord shall notify Tenant in
writing of the date Landlord determines the Demised Premises would have been
Ready for Occupancy if not for such Tenant Delays, and the Term of the Lease
shall be deemed to commence effective as of said date. By taking possession of
the Demised Premises, Tenant accepts said Leasehold Improvements as completed or
as substantially completed, and in the latter case, after consultation with
Tenant, Landlord shall provide Tenant with a list of incomplete and/or
corrective items, which list shall be approved and acknowledged by Tenant and
which items Landlord shall complete and/or correct promptly thereafter. Said
Leasehold Improvements are sometimes hereafter referred to in this Lease as the
"Improvements." See Rider No. ].
ARTICLE C
TERM
The Term of this Lease shall commence upon the date ("Commencement Date")
which is the earlier of the following two dates: (a) The date on which the
Demised Premises are Ready for Occupancy, as set forth in Article B above; or
(b) The date upon which Tenant actually commences to do business on the Demised
Premises with Landlord's written consent. The Term of this Lease shall, unless
terminated sooner in accordance with the terms of this Lease, expire at the end
of the period set forth in Section A-1 (e) above measuring from the Commencement
Date; provided that if such period ends on a day other than the last day of a
calendar month, the Term shall expire upon the last day of such calendar month.
Tenant agrees to execute upon request by Landlord a written confirmation of the
Commencement Date.
ARTICLE D
RENT
D-1. FIXED RENT. Tenant shall pay the Fixed Rent to Landlord in advance upon
the first day of each calendar month of the Term, at Landlord's address or at
such other place designated by Landlord in a notice to Tenant, without any prior
demand therefor and without any deduction or setoff whatsoever except as
otherwise set forth in this Lease. If the Term shall commence on a day other
than the first day of a calendar month, then Tenant shall pay, upon the
Commencement Date of the Term, a pro rata portion of the Fixed Rent, prorated on
a per diem basis, with respect to the portions of the fractional calendar month
included in the Term.
2
<PAGE>
D-2. ADDITIONAL RENT. Tenant shall pay to Landlord as additional rent under
this Lease ("Additional Rent"): (a) amounts required to be paid as "Costs of
Operation and Maintenance" pursuant to Section D-3 below, (b) amounts required
to be paid as "Taxes" pursuant to Article E below, and (c) amortization of all
costs, including financing costs, for capital expenditures required by a
governmental entity for energy conservation, life safety or other purposes.
Except as otherwise expressly provided in Section D-3 and Article E, Tenant
shall pay Additional Rent upon written demand by Landlord, including payment on
an impound basis if requested in writing by Landlord. "Rent" shall mean Fixed
Rent and Additional Rent. See Rider No. 1.
D-3. TENANT'S PROPORTIONATE SHARE OF COST OF OPERATION AND MAINTENANCE. Tenant
shall pay to Landlord Additional Rent as follows:
(a) COSTS OF OPERATION AND MAINTENANCE. The term "Costs of Operation
and Maintenance" as used in this Lease shall be deemed to mean those expenses
incurred by Landlord with respect to the operation and maintenance of the
Building and the Parcel which, in accordance with accepted principles of sound
accounting practice as applied to the operation, maintenance and security of a
first-class industrial building, are properly chargeable to the operation and
maintenance of the Building and the Parcel, which costs shall include, without
limitation, costs of Landlord's maintenance and repair obligations under Section
G-3 of this Lease, all costs assessed against the Building and/or the Parcel
pursuant to the Declaration of Covenants, Conditions and Restrictions for the
maintenance and repair of the common areas of the development in which the
Parcel is located, supplies, compensation and all fringe benefits, worker's
compensation insurance premiums and payroll taxes paid to, for or with respect
to all persons engaged in the operating, maintaining, or cleaning of the
Building or the Parcel but excluding executive salaries above the grade of
Project Superintendent; depreciation or rental of personal property used in
maintenance; the insurance required by Section F-1 of this Lease, all
Impositions as defined in Sections E-1 through E-5 of this Lease; and other
charges directly related to the operation and maintenance of the Building and
the Parcel. "Costs of Operations and Maintenance" shall specifically exclude any
expenses for which Landlord is compensated through proceeds from insurance,
leasing commissions, advertising and promotion expenditures, legal and auditing
fees other than reasonable legal and auditing fees necessarily incurred in
connection with the maintenance and operation of the Building and the Parcel and
all expenditures for capital improvements and repairs and for such other
purposes which are either the express financial responsibility of the Landlord
under the Lease or which are to be paid by Tenant separately in accordance with
procedures otherwise set forth in this Lease; and
(b) PROPORTIONATE SHARE AND PAYMENT. Tenant shall pay a sum equal to
Tenant's Proportionate Share of the Costs of Operation and Maintenance during
the Term of this Lease as set forth in clause (a) of Section D-3 above same
shall be incurred as a direct result of Tenant's disproportionate a direct
result of any other Tenant's disproportionate use of the Building and Parcel in
which event Tenant's Proportionate Share of the Costs of Operation and
Maintenance shall be equitably increased or reduced as applicable. Landlord
shall have the right from time to time to estimate and collect from Tenant in
advance on a monthly basis, Tenant's Proportionate Share of the Costs of
Operation and Maintenance estimated to be incurred by Landlord during each full
or partial calendar year of the Term. Tenant shall remit, on the first day of
each and every calendar month, one-twelfth (1/12) of such estimate as determined
by Landlord of Tenant's Proportionate Share of such Costs of Operation and
Maintenance as Additional Rent under this Lease. On or before the Commencement
Date of this Lease and thereafter within ninety (90) days following the end of
each full or partial calendar year during the Term, Landlord shall provide the
Tenant with a statement as to the actual Costs of Operation and Maintenance
incurred during the calendar year in question, and the parties shall within
thirty (30) days thereafter make payment or allowances necessary to adjust
Tenant's estimated payments to the actual Tenant's Proportionate Share of such
Costs of Operation and Maintenance as evidenced by the foregoing statement. If
Landlord shall determine at any time that the estimate of Tenant's Proportionate
Share of the Costs of Operation and Maintenance for the balance of the current
calendar year, is or will become, inadequate to meet all such costs and expenses
for any reason, Landlord shall immediately determine the approximate amount of
such deficiency and in addition to the regular periodic payment of Tenant's
Proportionate Share of such previously estimated Costs of Operation and
Maintenance, Landlord shall have the right to collect from Tenant in advance on
a monthly basis over the balance of the current calendar year, the full amount
of such estimated deficiency. Not more than once in any twelve (12) month
period, Tenant shall have the right at its sole cost to review Landlord's books
and records relating to Costs of Operation and Maintenance by written request to
Landlord.
ARTICLE E
TAXES
E-1. TENANT'S OBLIGATION. Subject to Section E-3 below, Tenant shall pay,
before any fine, penalty, interest or cost is incurred, all taxes, including,
without limitation, real estate taxes, rental taxes, all taxes which may be
levied in charges, or levies, general and special, ordinary and extraordinary,
unforeseen as well as foreseen, of any kind and nature for public improvements,
services or benefits (hereinafter collectively referred to as "Taxes"), which
are assessed, levied, confirmed, imposed or which become a lien upon the Demised
Premises or become payable with respect to a period of time occurring within the
Term, excepting only taxes levied on or computed by reference to the Landlord's
net income as a whole; provided, however, that any Taxes shall be prorated
between Landlord and Tenant so that Tenant shall pay only that portion thereof
which the part of such period within the Term bears to the entire period. Any
such sum payable by Tenant, which would not otherwise be due until after the
date of the termination of this Lease, shall be paid by Tenant to Landlord upon
such termination.
As used herein, the term "Taxes" shall include any form of assessment,
license fee, license tax, business license fee, business license tax, commercial
rental tax, levy, charge, penalty, tax or similar imposition, imposed by any
authority having the direct power to tax, including any city, county, state or
federal government, or any school, agricultural, lighting, drainage or other
improvement or special assessment district thereof, as against any legal or
equitable interest of Landlord in the Demised Premises, including, but not
limited to, the following:
3
<PAGE>
(a) any assessment, tax, fee, levy or charge in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously
included within the definition of real estate tax, it being acknowledged by
Tenant and Landlord that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or occupants. It is
the intention of Tenant and Landlord that all such new and increased
assessments, taxes, fees, levies and charges and all similar assessments, taxes,
fees, levies and charges be included within the definition of "Taxes" for the
purposes of this Lease;
(b) any assessment, tax, fee, levy or charge allocable to or measured
by the area of the Demised Premises or the rent payable hereunder, including,
without limitation, any gross income tax or excise tax levied by the State, city
or federal government, or any political subdivision thereof, with respect to the
receipt of such rent, or upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant or the Demised Premises, or any portion thereof; and
(c) any assessment, tax, fee, levy or charge, upon this transaction
or any document to which Tenant is a party which creates or transfers an
interest or an estate in the Demised Premises.
Further, in regard to this Section E-1, Landlord shall provide Tenant
with a copy of any notice of any "Tax" with respect to the Demised Premises
which Landlord receive together with an instruction as to whether to pay such
Tax to Landlord or to the governmental agency imposing the Tax. Such payment
shall be made by Tenant not later than ten (10) days after receipt by Tenant of
such notice from Landlord. Tenant shall not be obligated to pay for any Taxes of
which it has not received a notice either from Landlord or directly from the
governmental agency imposing the Tax. See Rider No. 1.
E-2. INSTALLMENT ELECTION. In the case of any Taxes which may be evidenced
by improvement or other bonds, or which may be paid in annual or other periodic
installments, so long as Tenant is not in default hereunder, Tenant may elect
to cause such bonds to be issued or cause such assessment to be paid in
installments over the maximum period permitted by law, subject, however, to
Tenant's obligation during the Term hereof to pay each and every installment of
principal, interest and charges on said deferred obligation from time to time,
prior to the date of delinquency thereof.
E-3. LIMITATION. Nothing contained in this Lease shall require Tenant to
pay any federal or state income, franchise, corporate, estate, inheritance,
succession or transfer tax of Landlord.
E-4. LANDLORD'S RIGHT. If any Tax is not paid as required by this Article
E, then, at its sole option, Landlord may, but shall not be required to, pay
the same and shall be entitled to repayment by Tenant as Additional Rent.
E-5. PERSONAL PROPERTY TAXES. Tenant shall pay or cause to be paid, prior
to delinquency, any and all taxes and assessments levied upon all trade
fixtures, inventories and other personal property placed in and upon the
Demised Premises by Tenant.
ARTICLE F
INSURANCE AND INDEMNITY
F-1. COVERAGE. The following insurance shall be carried protecting Landlord and
any mortgagee of the Demised Premises and first payable in case of loss to such
holders or mortgages of the Demised Premises as Landlord may from time to time
require:
(a) Insurance providing for payment of replacement costs against damage
by fire, extended coverage perils, vandalism and malicious mischief perils and
boiler and machinery accident, if applicable (including, without limitation,
cost of debris removal and demolition), in an amount not less than ninety
percent (90%) of the replacement cost of the Demised Premises. Said costs shall
be determined by agreement or appraisal made at the expense of Tenant by an
accredited insurance appraiser approved by Landlord. Said agreement or appraisal
may be required from time to time by either party whenever alterations or
additions increasing value have been made, or three (3) years have elapsed since
the last such agreement or appraisal;
(b) Insurance against damage by such other perils as Landlord, or any
mortgage lending institution holding a mortgage on the Demised Premises (or
mortgage lending institutions generally) may, from time to time, require in case
of similar properties and in such amounts;
(c) Insurance against abatement or loss of rent in case of fire or other
casualty required to be insured against pursuant to Subsections F-1 (a) and F-
1(b) hereof in an amount at least equal to the Fixed Rent, Additional Rent and
maintenance expenses to be made by Tenant during one (1) year next ensuring as
reasonably determined by Landlord; and
(d) Landlord's comprehensive general liability insurance with limits at
least as high as the limits set forth in Subsection A-1 of this Lease, or such
higher limits as Landlord may reasonably require in case of increase in risk.
F-2. INSURANCE POLICIES. Landlord shall obtain all insurance required pursuant
to Section F-1 hereof, and Tenant shall pay the cost thereof, upon demand, as
Additional Rent. All insurance required by the provisions of Section F-1 hereof
shall be written with companies reasonably satisfactory to Landlord and in the
forms customarily in use from time to time in the locality of the Demised
Premises. Landlord shall deposit with holders of mortgages encumbering the
Parcel insurance policies, duplicates or certificates as such holders may
require and shall provide Tenant with a copy of all such certificates of
insurance Said policies or certificates shall provide that such policies shall
not be cancelable or subject to reduction of coverage or otherwise be subject to
modification except after thirty (30) days' prior written notice to Landlord and
such mortgagees. Unless Landlord advises Tenant to the contrary in writing, such
policies carried by Landlord shall have a $1,000 deductible clause and Tenant
shall self-insure to the extent of said $1,000.
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F-3. TENANT'S GENERAL LIABILITY INSURANCE. Tenant shall, at its own cost and
expense, keep and maintain in full force during the Term a policy or policies of
comprehensive general liability insurance, written by an insurance company
approved by Landlord, in form customary to the locality, insuring Tenant's
activities with respect to the Demised Premises against loss, damage or
liability for personal injury or death of any person or loss or damage to
property occurring in, upon or about the Demised Premises, with limits of not
less than those set forth in Subsection A-1 hereinabove including coverage of
the liability of Tenant under the provisions of Section F-8 hereinbelow. Each
such policy shall name Landlord and Landlord's mortgagees as additional insured
and shall contain the following provision: "Such insurance as afforded by this
policy for the benefit of Landlord shall be primary as respects any claims,
losses or liabilities arising out of the use of the Demised Premises by Tenant
or by Tenant's operation and any insurance carried by Landlord shall be excess
and non-contributing." If at any time during the Term, Tenant shall have in full
force and effect a blanket policy of general liability insurance with the same
coverage for the Demised Premises with coverage to include personal injury,
bodily injury, broad form property damage, premises/operations, owner's
protective coverage, blanket contractual liability, products and completed
operations liability, and owned/non-owned auto liability and provisions for
cross liability as described above, as well as coverage of other premises and
properties of Tenant, or in which Tenant has some interest, such blanket
insurance shall satisfy the requirement hereof.
F-4. TENANT'S PROPERTY INSURANCE. Tenant shall assume the risk of damage to any
fixtures, goods, inventory, merchandise, equipment, furniture and Tenant's
leasehold improvements, and Landlord shall not be liable for injury to Tenant's
business or any loss of income therefrom relative to such damage unless due to
Landlord's gross negligence or willful misconduct Tenant shall maintain the
following coverage with respect to such items during the Term of this Lease, the
proceeds of which shall be used by Tenant for repair and replacement of the
property so incurred:
(a) Against fire, extended coverage, vandalism, malicious mischief and
all risks, upon property of every description and kind owned by Tenant and
located within the Demised Premises or for which Tenant is legally liable, or
except for real property improvements installed by Landlord prior to the
commencement of the Term, installed by or on behalf of Tenant, including,
without limitation, furniture, fittings, installations, including Tenant
improvements and betterments, fixtures and any other personal property, in an
amount not less than ninety percent (90%) of the full replacement cost thereof;
(b) Broad form boiler and machinery insurance on a blanket repair and
replacement basis with limits per accident not less than the replacement cost of
all Tenant's leasehold improvements and of all boilers, pressure vessels, air
conditioning equipment, miscellaneous electrical apparatus and all other
insurable objects owned or operated by the Tenant or by others (other than
Landlord) on behalf of Tenant in the Demised Premises, or relating to or serving
the Demised Premises;
(c) Loss of income and extra expense insurance in such amounts as will
reimburse Tenant for direct or indirect loss of earnings attributable to all
perils commonly insured against by prudent tenants or attributable to prevention
of access to the Demised Premises as a result of such perils; and
(d) Worker's compensation insurance covering all Tenant's employees
working in the Demised Premises.
F-5. TENANT'S INSURANCE CERTIFICATES. Tenant shall furnish to Landlord, upon
the date of commencement of the Term of this Lease and thereafter within thirty
(30) days prior to the expiration of each such policy, a certificate of
insurance issued by the insurance carrier of each policy of insurance carried by
Tenant pursuant hereto. Said certificates shall expressly provide that such
policies shall not be cancelable or subject to reduction of coverage or
otherwise be subject to modification except after thirty (30) days' prior
written notice by registered mail to the parties named as insureds in this
Section F-5. Landlord, its successors and assigns, and any entities holding any
interest in the Demised Premises, including, without limitation, any ground
lessor and the holder of any fee or leasehold mortgage, shall be named as
insureds under each such policy of insurance except worker's compensation
insurance, which insurance shall be maintained by Tenant pursuant to this Lease.
F-6. TENANT'S FAILURE. If Tenant fails to maintain any insurance required in
this Lease, Tenant shall be liable for any loss or cost resulting from said
failure. This Section F-6 shall not be deemed to be a waiver of any of
Landlord's rights and remedies under any other provision of this Lease. Nothing
in this Article F shall require Tenant to obtain insurance for leasehold
improvements installed by Landlord.
F-7. WAIVER OF SUBROGATION. All insurance as required by Section F-1(a)(b)(c)
and F-4 carried by either party, shall include provisions denying to the insurer
acquisition by subrogation of rights of recovery against the other party to the
extent the rights have been waived by the insured prior to occurrence of loss or
injury. The other party shall be entitled to have certificates of the policies
containing such provisions. Tenant shall not acquire as an insured under any
insurance on the Building, or as a payee of any such insurance proceeds, any
right to participate in the adjustment of loss or to receive the proceeds except
as specifically provided in Section K-1. Each party, notwithstanding any
provisions of this Lease to the contrary, waives any rights of recovery against
the other for loss or injury against which the waiving party is protected by
insurance containing provisions denying to the insurer acquisition of rights by
subrogation.
F-8. INDEMNIFICATION OF LANDLORD. Tenant shall indemnify and hold Landlord and
the Demised Premises harmless from and against (a) any and all liability,
penalties, losses, damages, costs and expenses, demands, causes of action,
claims or judgments arising from or growing out of any injury to any person or
persons or any damage to any property as a result of any accident or other
occurrence during the Term of this Lease occasioned by any act or omission of
the Tenant, its officers, employees, agents, servants, subtenants,
concessionaires, licensees, contractors, invitees or permittees, or arising from
or growing out of the use, maintenance, occupation or operation of the Demised
Premises during the Term of this Lease, and (b) all legal costs and charges,
including, without limitation, attorneys' fees, incurred with respect to any of
such matters and the defense of any action out of the same or in discharging the
Demised Premises or any part thereof from any and all liens, charges or
judgments which may accrue or be placed thereon by reason of any act or omission
of the Tenant; provided, however, that Tenants shall not be required to
indemnify Landlord for any damage or injury of any kind arising as the result of
Landlord's grossly negligent or willful acts or those of its agents or
employees.
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F-9. DISTRIBUTION OF AWARD. In the event of damage to or destruction of the
Demised Premises entitling Landlord to terminate this Lease pursuant to Article
K hereinbelow, and if Landlord terminates this Lease, Tenant will immediately
pay to Landlord all of Tenant's insurance proceeds, if any, relating to the
unamortized portion, if any Tenant's leasehold improvements and alterations (but
not to Tenant's trade fixtures, equipment, furniture or other personal property
of Tenant) installed at Landlord's expense in the Demised Premises.
ARTICLE G
REPAIRS, MAINTENANCE AND ALTERATIONS
G-1. TENANT REPAIRS AND MAINTENANCE. In addition to the payments to be made by
Tenant pursuant to Section D-3 hereof, Tenant shall, at Tenant's sole cost and
expense, keep and maintain the Demised Premises, including, without limitation,
all floors except latent construction defects, subfloors, floor coverings,
windows, ceilings, skylights, interior walls, fixtures, doors, electrical and
lighting equipment, plumbing, heating, ventilating, air conditioning (Tenant
shall procure and maintain, at Tenant's expense, an HVAC maintenance contract, a
copy of which shall be delivered to Landlord), loading areas, signs, and all
other portions of the Demised Premises not maintained by Landlord pursuant to
Section G-3 below, in all respects in good repair and in a clean and safe
condition, and if impractical to repair, then the foregoing items shall be
replaced. Tenant shall, at Tenant's sole cost and expense, immediately upon
breakage, replace all glass in the Demised Premises that may be broken during
the Term with glass at least equal to the specification and quality of the glass
so replaced. Notwithstanding the foregoing. If Tenant is not properly performing
any such maintenance or repair responsibilities, Landlord shall have the option
to assume any or all of the foregoing maintenance and repair responsibilities
and to require Tenant to reimburse Landlord, as Additional Rent, for the cost of
all such services, together with an accounting and management services fee of
ten percent (10%) of the cost of such services.
G-2. LANDLORD'S RIGHTS. If Tenant fails to perform Tenant's obligations under
Section G-1, or under any other provision of this Lease, or if Landlord
otherwise deems it reasonably necessary to do so, Landlord shall have the option
to enter upon the Demised Premises after ten (10) days' prior written notice to
Tenant, or in the case of any emergency immediately with such notice, if any, as
is possible under the circumstances, in order to perform such obligations on
Tenant's behalf and put the Demised Premises in good order, condition, and
repair. The cost of such performance by Landlord together with interest thereon
at the Default Rate then allowable by law shall become due and payable as
Additional Rent to Landlord.
G-3. LANDLORD REPAIR AND MAINTENANCE. Except as may be attributable to the
Tenant's negligence or willful misconduct or breach of its obligations
hereunder, Landlord shall keep and maintain in good condition and repair the
foundation, exterior walls, structural elements and the roof structure and roof
skin of the Building. In addition, Landlord will maintain the driveways,
sidewalks, walkways, parking lots, fences, lawns and landscaping on the Parcel.
"Costs of Operation and Maintenance" (as defined in Section D-3 hereof) shall
include all expenses incurred by Landlord pursuant to this Section G-3. (except
the structural responsibilities of Landlord described above). Except for the
obligations of Landlord hereunder and under Article K (Damage or Destruction)
and Article L (Eminent Domain), it is intended by the parties to this Lease that
Landlord have no additional obligations to repair and maintain the Demised
Premises or the equipment therein, all of which other obligations are intended
to be those of the Tenant under Section G-1. Tenant expressly waives the benefit
of any statute or regulation which would otherwise afford Tenant the right to
make repairs at Landlord's expense or to terminate this Lease because of
Landlord's failure to keep the Demised Premises in good order, condition and
repair. Landlord shall not be liable to Tenant for injury or damage that may
result from any defect in the construction or condition of the Demised Premises
except due to Landlord's gross negligence or willful misconduct; provided,
however, that Landlord shall be responsible for latent defects of construction
in the building floor slab. Tenant waives any right to make repairs at the
expense of Landlord under any law, statute or ordinance now or hereafter in
effect.
G-4. ALTERATIONS.
(a) INSTALLATION AND REMOVAL. Tenant shall not, without Landlord's prior
written consent, make any alterations, improvements or additions, including,
without limitation, the installation of lighting fixtures, space heaters, air
conditioning, electrical equipment, power panels, plumbing, carpeting, window
coverings, air lines and fencing or changes to the exterior paint or type of
exterior materials (collectively "Alterations"), in, on or about the Demised
Premises, except for interior non-structural alterations not exceeding $10,000
in cost. In no event shall Tenant be entitled to penetrate the exterior or roof
of the Building with respect to any alteration without Landlord's prior written
approval. As a condition to any approval by Landlord of any such alterations or
improvements, Landlord may at the time of the request require that Tenant remove
any or all of said Alterations at the expiration of the Term and restore the
Demised Premises to their condition prior to Tenant's installing Alterations.
Should Tenant make any Alterations without the prior approval of Landlord,
Landlord may require that Tenant remove any or all of the same.
(b) PLANS AND PERMITS. Any Alterations in or about the Demised Premises
that Tenant shall desire to make and which require the consent of the Landlord
shall be presented to the Landlord in written form, with proposed detailed
plans. If Landlord shall give its consent, the consent shall be deemed
conditioned upon Tenant's acquiring a permit to perform such Alterations from
appropriate governmental agencies, the furnishing of a copy thereof to Landlord
prior to the commencement of the work and the compliance by Tenant with all
conditions of said permit in a prompt and expeditious manner. In considering
whether or not to issue Landlord's prior written consent to any Alterations,
Landlord shall have the right to require Tenant to take all reasonable necessary
steps to avoid potential mechanics' or materialmen's liens, which rights shall
include, but not be limited to, requiring Tenant to obtain a payment or
performance bond (only with respect to improvements costing in excess of
$100,000) requiring that Tenant use only creditworthy subcontractors, requiring
that Tenant obtain lien releases during the progress of construction and
requiring that Tenant hold back a percentage of the cost of construction until
lien free completion has occurred. Tenant shall reimburse to Landlord, on
demand, Landlord's reasonable costs of review and approval of such plans and
permits, including any out-of-pocket costs incurred by Landlord for any third
party services contracted by Landlord to assist Landlord in connection with its
work of review and approval.
(c) EXPIRATION OF TERM. Unless Landlord requires their removal, as set
forth in Subsection G-4(a), all Alterations which may be made on the Demised
Premises shall become the property of surrendered with the Demised Premises at
the expiration of the Term. Notwithstanding the provision of this Subsection G-
4(c), Tenant's machinery and equipment (including the bin mezzanine) other than
that which is affixed to the Demised Premises so that it cannot be removed
without
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material damage to the Demised Premises, shall remain the property of the Tenant
and shall be removed by Tenant. Subject to the foregoing, on the last day of the
Term hereof, or on any sooner termination, Tenant shall surrender the Demised
Premises, including but not limited to all buildings, equipment, landscaping,
driveways, walkways and parking lots, to Landlord to the extent provided by
Landlord in the same condition as when received, broom clean, ordinary wear and
tear and casualty excepted. Tenant shall repair any damage to the Demised
Premises occasioned by the removal of Tenant's trade fixtures, furnishings and
equipment pursuant to this Subsection G-4(c), which repair shall include the
patching and filling of holes and repair of structural damage. Notwithstanding
anything to the contrary stated or implied elsewhere in this Lease, Tenant shall
leave all power panels, electrical systems, lighting fixtures, plumbing, space
heaters, air conditioning, air lines, and fencing on the Demised Premises in
good operating condition.
G-5. INSPECTION OF LEASED PREMISES. Landlord, at reasonable times, with prior
notice may go upon and into the Demised Premises for the purpose of inspecting
the same for the purpose of inspecting the performance by Tenant of the terms
and conditions hereof, and/or for the purpose of affixing reasonable signs and
displays and showing the Demised Premises to prospective purchasers, tenants and
lenders.
G-6. WORKMANLIKE QUALITY. All repairs, alterations, additions, and restoration
by Landlord or Tenant hereinafter required or permitted shall be done in a good
and workmanlike manner and in compliance with all applicable laws and lawful
ordinances, by-laws, regulations and order of applicable governmental authority
and of the insurers of the Building.
G-7. LIENS. Tenant shall promptly pay and discharge all claims for services,
supplies, labor or materials furnished or alleged to have been furnished to or
for Tenant at or for use in the Demised Premises excluding original improvements
installed by Landlord pursuant to Exhibit C which claims are or may be secured
by any mechanics' or materialmen's lien against the Demised Premises or any
interest therein. Tenant shall give Landlord not less than ten (10) days'
written notice prior to the commencement of any work in the Demised Premises,
and Landlord shall have the right to post notices of non-responsibility in or on
the Demised Premises as provided by law. If Tenant shall, in good faith, contest
the validity of any such lien claim or demand then Tenant shall at its sole
expense defend itself and Landlord against the same and shall pay and satisfy
any adverse judgment that may be rendered thereon before the enforcement thereof
against the Landlord or the Demised Premises, upon the condition that if
Landlord shall require, Tenant shall furnish to Landlord a surety bond or other
security satisfactory to Landlord in an amount equal to such contested lien
claim or demand indemnifying Landlord against liability for the same and holding
the Demised Premises free from the effect of such lien or claim. If any such
lien is filed and Tenant has not provided security as described above Landlord
may, but shall not be required to, take such action or pay such amount as may be
necessary to remove such lien and Tenant shall pay Landlord as Additional Rent
any such amounts expended by Landlord together with interest thereon at the
Default Rate from the date of expenditure and other remedies of Landlord not
waived.
G-8. SURRENDER. On the last day of the termination, Tenant shall surrender the
Demised same condition as when received, broom clean, ordinary wear and tear and
casualty excepted. Tenant shall repair any damage to the Demised Premises
occasioned by the removal of Tenant's trade fixtures, furnishings and equipment
as more particularly provided in Article H hereinbelow, which repair shall
include but not be limited to the patching and filling of holes within the
Demised Premises, repair of structural damage, and resurfacing of the parking
areas if the parking areas require the filling of holes or the patching of
broken-up material. All penetrations of the roof made by or at the request of
Tenant shall be resealed and water-tight. In no event may Tenant remove from the
Demised Premises any mechanical or electrical systems, including heating or
ventilating, air lines, power panels, electrical distribution system, lighting
fixtures, space heaters, air conditioning, plumbing and fencing, unless Landlord
specifically permits such removal in writing.
ARTICLE H
TENANT'S FIXTURES AND PERSONAL PROPERTY
Except as may be otherwise provided in Section G-4 above, Tenant, at Tenant's
sole cost and expense, may install any necessary trade fixtures, equipment and
furniture in the improvements, provided that such items are installed and are
removable without damage to the structure of the Building. Landlord reserves the
right to approve or disapprove curtains, draperies, shades, paint, or other
interior improvements visible from outside the Building on wholly aesthetic
grounds. Such improvements must be submitted for Landlord's written approval
prior to installation, or Landlord may remove or replace such items at Tenant's
sole expense. Said trade fixtures, equipment and furniture shall remain Tenant's
property and shall be removed by Tenant upon expiration of the Term, or earlier
termination of this Lease. Upon Landlord's prior written approval, Tenant may
install temporary improvements in the Demised Premises, provided that such
temporary improvements are installed and are removable without damage to the
structure of the Building. Such temporary improvements shall remain the property
of Tenant and shall be removed by Tenant upon expiration of the Term, or earlier
termination of this Lease. Tenant shall repair, at its sole cost and expense,
all damage caused by the installation or removal of trade fixtures, equipment,
furniture or temporary improvements. If Tenant fails to remove the foregoing
items on termination of this Lease, Landlord may keep and use them or remove any
or all of them and cause them to be stored or sold in accordance with applicable
law.
ARTICLE I
UTILITIES AND EASEMENTS
I-1. UTILITIES. Tenant shall be solely responsible for and shall promptly pay
all charges for heat, water, gas, electricity and any other utilities used or
consumed on the Demised Premises. Landlord shall not be liable to Tenant for
interruption in or curtailment of any utility service unless due to Landlord's
gross negligence or willful misconduct nor shall any such interruption or
curtailment constitute a constructive eviction or
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grounds for rental abatement in whole or in part hereunder. In the event that
any utility provided to the Demised Premises is not currently metered separately
to the Demised Premises, Landlord shall allocate on a equitable basis the
charges for such utility as a "Cost of Operation and Maintenance" pursuant to
Section D-3 of this Lease. In the event that, in Landlord's reasonable
determination, Landlord shall elect to cause any utility to be separately
metered to the Demised Premises, the costs thereof shall be paid by Tenant as
Additional Rent. Tenant shall have the right to install a submeter at its own
cost and expense.
I-2. EASEMENTS. Landlord reserves the right to grant easements on the Parcel,
make boundary adjustments to the Parcel, and to dedicate for public use portions
of the Parcel, without Tenant's consent, provided that no such grant or
dedication shall interfere with Tenant's use of the Demised Premises, the
Tenant's exclusive parking or access to the Premises or otherwise cause Tenant
to incur cost or expense. From time to time upon Landlord's demand, Tenant shall
execute, acknowledge and deliver to Landlord in accordance with Landlord's
instructions any and all documents or instruments necessary to effect Tenant's
covenants herein.
ARTICLE J
USE OF PREMISES
J-1. GENERAL. The Demised Premises shall be used for the uses consistent with
the Declaration of Covenants and Restrictions and any supplement thereto. Tenant
shall, at Tenant's sole cost and expense, comply with all of the requirements of
the Declaration of Covenants and Restrictions as described in Exhibit D to this
Lease, the Rules and regulations attached as Exhibit E to the Lease, and all
requirements of municipal, county state, federal and other applicable
governmental authorities, now in force, or which may hereafter be in force,
pertaining to the Demised Premises, including without limitation, any
certificate of occupancy, shall not permit outside storage or dumping of waste
or refuse nor permit any harmful materials to be placed in any drainage system
or sanitary system, shall secure all necessary permits for the use of the
Demised Premises and shall faithfully observe, in the use of the Demised
Premises, all municipal and county ordinances and state and federal statutes now
in force, or which may hereafter be in force. Tenant in its use and occupancy of
the Demised Premises shall not commit waste, nor overload the walls, ceilings,
roof, floors or structure, nor subject the Demised Premises to any use which
would tend to damage any portion thereof, nor permit any nuisance therein or
thereupon such as offensive sound, light or odor.
J-2. SIGNS. Any sign placed or erected by Tenant on the Demised Premises,
except those not visible from the exterior of the Demised Premises, shall be in
full compliance with the sign program for the development in which the Building
is located, and shall contain only Tenant's name or the name of any affiliate of
Tenant actually occupying the Demised Premises, and shall not contain any
advertising matter. No such sign shall be erected until Tenant has obtained
Landlord's written approval of the location, materials, size, design and content
thereof and any necessary permit therefor. Tenant shall remove any such sign
upon termination of this Lease and shall return the Demised Premises to their
condition prior to the placement or erection of said sign.
J-3. PARKING AND USE OF COMMON AREAS AND FACILITIES.
(a) Landlord hereby grants to Tenant and its successors and assigns, a
non-exclusive license and right for Tenant and its permitted subtenants, in
common with Landlord and all persons, firms and corporations conducting business
in the Demised Premises and their respective customers, guests, licensees,
invitees, subtenants, employees and agents to use the Common Areas for vehicular
parking, for pedestrian and vehicular ingress, egress and travel, and for such
other purposes as may be provided for, authorized and/or permitted by the
Declaration of Covenants, Conditions and Restrictions, such non-exclusive
license and right to be appurtenant to Tenant's leasehold estate in and to the
Demised Premises created by this Lease. The non-exclusive license and right
granted pursuant to the provisions of this Paragraph shall be subject to the
Declaration of Covenants, Conditions and Restrictions and the provisions of this
Lease.
(b) USE OF COMMON AREAS. Nothing to the contrary herein, Tenant agrees
for itself and for its successors, assigns, employees, and agents that it and
they shall use the Common Areas only for the purposes permitted hereby. It is
understood that all uses permitted within the Common Areas shall be undertaken
with reason and judgment so as not to interfere with the primary use of said
Common Areas which is to provide parking and vehicular and pedestrian access
throughout the Common Areas and to adjacent public streets for the Landlord, its
tenants, subtenants and all persons, firms and corporations conducting business
within the Demised Premises and their respective customers, guests, and
licensees. In no event shall Tenant erect or cause to be erected any structure,
building, trailer, fence, wall, signs or other obstructions on the Common Areas,
nor shall Tenant store or sell any merchandise, equipment and/or materials on
the Common Areas.
(c) CONTROL AND MAINTENANCE OF COMMON AREAS.
(i) Subject to provisions of the Declaration of Covenants,
Conditions and Restrictions, and except as provided below, it is understood and
agreed that all Common Areas and all improvements located from time to time
within such Common Areas are for the general use, in common, of the Landlord and
its tenants and subtenants and all persons, firms and corporations conducting
business in the Demised Premises and their respective customers, guests,
licensees, invitees, employees and agents, and shall at all times be subject to
the exclusive control and management of the Landlord.
(ii) Landlord shall have the right to construct, maintain and
operate lighting facilities within the Common Areas; to police the Common Areas
from time to time; to change the area, level, location and arrangement of the
parking areas and other improvements within the Common Areas other than in the
exclusive parking area without Tenant's prior consent to restrict parking by
tenants, their officers, agents and employees to employee parking areas; to
reserve certain portions of the Common Areas (including parking spaces) for a
particular manner of use or for use by specific tenants of the Building; to
enforce parking charges by operation of meters or otherwise if required to do so
by any governmental entity; to close all or any portion of the Common Areas or
improvements therein to such extent as may, in the opinion of counsel for
Landlord, be legally sufficient to prevent a dedication thereof or the accrual
of any rights to any person or to the public therein; to close temporarily all
or any portion of the Common Areas and/or the improvements thereon; to
discourage non-customer parking; and to do and perform such other acts in and to
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said Common Areas and improvements thereon as, in the use of good business
judgment, Landlord shall determine to be advisable.
(iii) Subject to the provisions of the Declaration of Covenants,
Conditions and Restrictions, Landlord shall have the full right and authority
(but not the obligation) to employ or cause to be employed all personnel and to
make or cause to be made all rules and regulations pertaining to or necessary
for the proper operation and maintenance of the Common Areas and the
improvements located thereon. The current rules and regulations pertaining to
the Building and the Parcel ("Rules and Regulations") are attached hereto as
Exhibit E. Such Rules and Regulations are subject to addition, deletion and
modification by Landlord from time to time provided that such changes are
nondiscriminatory as to Tenant and further provided that copies of such
revisions are delivered to Tenant and not enforced in a discriminatory manner.
(iv) Any use of the Common Areas in violation of the restrictions
set forth hereinabove shall constitute a material default under this Lease.
(d) PARKING ACCESS. In addition to the general obligation of Tenant to
comply with laws, and without limitation thereof, Landlord shall not be liable
to Tenant nor shall this Lease be affected if any parking privileges appurtenant
to the Demised Premises are impaired by reason of any moratorium, initiative,
referendum, statute, regulation, or other governmental decree or action, or by
any flooding of the parking areas, which could in any manner prevent or limit
the parking rights of Tenant hereunder. Any governmental charges or surcharges
or other monetary obligations imposed relative to parking rights with respect to
the Demised Premises shall be considered as Taxes and shall be payable by Tenant
under the provisions of Article E hereinabove.
ARTICLE K
DAMAGE OR DESTRUCTION
K-1. RECONSTRUCTION. If the improvements are damaged or destroyed during the
Term, Landlord shall, except as hereinafter provided, diligently repair or
rebuild them to substantially the condition in which they existed immediately
prior to such damage or destruction; provided that any damage which is estimated
in good faith by Landlord to be under $5,000 shall be repaired by Tenant, and
Landlord shall reimburse Tenant upon demand for expenses incurred in such repair
work to the extent of any proceeds received by Landlord from extended coverage
insurance described in Section F-1.
K-2. RENT ABATEMENT. Rent due and payable hereunder shall be abated
proportionately, during any period in which, by reason of any such damage or
destruction, Tenant reasonably determines that there is substantial interference
with the operation of Tenant's business in the Demised Premises, having regard
to the extent to which Tenant may be required to discontinue its business in the
Demised Premises. Such abatement shall continue for the period commencing with
such damage or destruction and ending with the substantial completion by
Landlord of the work or repair or reconstruction which Landlord is obligated or
undertakes to do. If it be determined that continuation of business is not
practical pending reconstruction, all Rent due and payable hereunder shall abate
to the extent the Premises is not in use until reconstruction is substantially
completed or until business is totally or partially resumed, whichever is the
earlier.
K-3. EXCESSIVE DAMAGE OR DESTRUCTION. If the Improvements are damaged or
destroyed to the extent the Landlord determines that they cannot, with
reasonable diligence, be fully repaired or restored by Landlord within one
hundred eighty (180) days after commencement of restoration work with respect to
the damage or destruction, the sole right of both Landlord and Tenant shall be
the option to terminate this Lease. Landlord shall determine whether the
improvements can be fully repaired or restored within the one hundred eighty
(180) day period, and Landlord's determination shall be conclusive on Tenant.
Landlord shall notify Tenant of its determination, in writing, within thirty
(30) days after the date of the damage or destruction. If Landlord determines
that the improvements can be fully repaired or restored within the one hundred
eight (180) day period, or if it is determined that such repair or restoration
cannot be made within said period but neither party elects to terminate this
Lease within thirty (30) days from the date of said determination, this Lease
shall remain in full force and effect and Landlord shall diligently repair and
restore the damage as soon as reasonably possible.
K-4. UNINSURED CASUALTY. Notwithstanding anything contained herein to the
contrary, in the event of damage to or destruction of all or any portion of the
improvements which damage or destruction is not fully covered by the insurance
proceeds received by Landlord or which has not been insured under the insurance
policies required under Section F-1 above, Landlord may terminate this Lease by
written notice to Tenant, given within thirty (30) days after the date of notice
to Landlord that said damage or destruction is not so covered. If Landlord does
not elect to terminate this Lease, this Lease shall remain in full force and
effect and the Improvements shall be repaired and rebuilt in accordance with the
provision for repair set forth in Section K-1 hereinabove. See Rider No. 1.
K-5. WAIVER. With respect to any destruction which Landlord is obligated to
repair or may elect to repair under the terms of this Article K, Tenant hereby
waives all right to terminate this Lease pursuant to rights otherwise presently
or hereafter accorded by law to tenants, except as otherwise expressly provided
herein.
K-6. DAMAGE NEAR END OF TERM. If the Improvements are destroyed or materially
damaged during the last twenty-four (24) months of the term of this Lease,
Landlord may at Landlord's option, cancel and terminate this Lease as of the
date of occurrence of such damage by giving written notice to Tenant of
Landlord's election to do so within thirty (30) days after the date of
occurrence of such damage.
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ARTICLE L
EMINENT DOMAIN
L-1. TOTAL CONDEMNATION OF DEMISED PREMISES. If the whole of the Demised
Premises or access thereto is acquired or condemned by eminent domain, inversely
condemned or sold in lieu of condemnation, for any public or quasi-public use or
purpose ("Condemned"), then the Term shall terminate as of the date of title
vesting in such proceeding, and Rent shall be adjusted to the date of
termination. Tenant shall immediately notify Landlord of any such occurrence.
L-2. PARTIAL CONDEMNATION. If any part of the Demised Premises is partially
Condemned, and such partial condemnation renders the Demised Premises unusable
for the business of the Tenant, then the Term of the Lease shall terminate as of
the date of title vesting in such proceeding and Rent shall be adjusted to the
date of termination. Tenant shall immediately notify Landlord of any such
occurrence. If such condemnation is not extensive enough to render the Demised
Premises unusable for the business of Tenant, then Landlord shall promptly
restore the Demised Premises to a condition comparable to its condition
immediately prior to such condemnation to the extent of any condemnation
proceeds recovered by Landlord less 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 the Rent shall be reduced as reasonably
determined by Landlord. If any parking areas are Condemned, Landlord has the
option, but not the obligation, to supply Tenant with alternate parking or
Tenant may terminate by not less than thirty (30) days prior written notice to
Landlord.
L-3. LANDLORD'S AWARD. If the Demised Premises are wholly or partially
Condemned, then, subject to the provision of Section L-4, Landlord shall be
entitled to the entire award paid for such condemnation, and Tenant waives any
right or claim in any part thereof from Landlord or the condemning authority.
L-4. TENANT'S AWARD. Tenant shall have the right to claim and recover from the
condemning authority, but not from Landlord, such compensations as may be
separately awarded or recoverable by Tenant in Tenant's own right on account of
any and all costs or loss (including loss of business) to which Tenant might be
put in removing Tenant's merchandise, furniture, fixtures, leasehold
improvements and equipment to a new location.
L-5. TEMPORARY CONDEMNATION. If the whole or any part of the Demised Premises
shall be Condemned for any temporary public or quasi-public use or purpose, this
Lease shall remain in effect and Tenant shall be entitled to receive for itself
such portion or portions of any award made for such use with respect to the
period of the taking which is within the Term. Tenant shall immediately notify
Landlord of any such occurrence. If a temporary condemnation remains in force at
the expiration or earlier termination of this Lease, Tenant shall pay to
Landlord a sum equal to the reasonable cost of performing any obligations
required of Tenant by this Lease with respect to the surrender of the Demised
Premises, including, without limitation, repairs and maintenance required, and
upon such payment Tenant shall be excused from any such obligations. If a
temporary condemnation is for an established period which extends beyond the
Term, this Lease shall terminate as of the date of occupancy by the condemning
authority, and the damages shall be as provided in Section L-3 and L-4 and Rent
shall be adjusted to the date of such condemnation.
L-6. NOTICE AND EXECUTION. Landlord shall, immediately upon service of process
in connection with any condemnation or potential condemnation, give Tenant's
notice in writing thereof. Tenant shall immediately execute and deliver to
Landlord all instruments that may be required to effect the provision of this
Article L.
ARTICLE M
DEFAULT
M-1. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" on the part of Tenant with or without notice
from Landlord:
(b) PAYMENT. Failure to pay an installment of Rent or other monies due
and payable hereunder upon the date when said payment is due, the failure
continuing for a period of ten (10) days after written notice is delivered to
Tenant that said payment is due delinquent
(c) PERFORMANCE. Default in the performance of any of Tenant's covenants,
agreements or obligations hereunder, except default in the payment of Rent or
other monies, the default continuing for thirty (30) days after written notice
thereof from Landlord; provided, that if the default can not be cured in thirty
(30) days, Tenant shall have such time as is reasonably required to complete
such cure, but in no event to exceed sixty (60) days.
(d) ASSIGNMENT. A general assignment by Tenant for the benefit of
creditors; event to exceed sixty (60) days.
(e) BANKRUPTCY. The filing of a voluntary petition in bankruptcy by
Tenant, a voluntary petition for an arrangement, a voluntary or involuntary
petition for reorganization, or the filling of an involuntary petition by
Tenant's creditors, immediately unless involuntarily, in which case when the
petition remains undischarged for a period of ninety (90) days;
(f) RECEIVER. The appointment of a receiver to take possession of
substantially all of Tenant's assets or of this leasehold, the receivership
remaining undissolved for a period of ninety (90) days; or
(g) ATTACHMENT. Attachment, execution or other judicial seizure of all or
substantially all of Tenant's assets or this leasehold, the attachment,
execution or other seizure remaining undismissed or undischarged for a period of
ninety (90) days after the levy thereof.
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M-2. LANDLORD'S REMEDIES.
(a) ABANDONMENT. If Tenant vacates or abandons the Demised Premises, this
Lease shall continue in effect. Landlord shall not be deemed to have terminated
this Lease other than by written notice of termination from Landlord, and
Landlord shall have all of the remedies of a landlord provided by the laws of
the State in which the Demised Premises are located. At any time subsequent to
vacation or abandonment of the Demised Premises by Tenant, Landlord may give
notice of termination and shall thereafter have all of the rights hereinafter
set forth.
(b) TERMINATION. Following the occurrence of any Event of Default,
Landlord shall have the right, so long as the default continues, to terminate
this Lease by written notice to Tenant setting forth: (i) the default, (ii) the
requirements to cure it, and (iii) a demand for possession, which shall be
effective three (3) days after it is given or upon expiration of the time
required by applicable law, whichever is later.
(c) POSSESSION. Following termination under Subsection M-2(b), without
prejudice to any other remedies Landlord may have by reason of Tenant's default
or of such termination, Landlord may then or at any time thereafter (i)
peaceably reenter the Demised Premises, or any part thereof, upon voluntary
surrender by Tenant, or expel or remove Tenant therefrom together with any other
persons occupying them, using such legal proceedings as are then available; (ii)
again repossess and enjoy the Demised Premises, or relet the Demised Premises,
or any part thereof, for such term or terms (which may be for a term extending
beyond the Term) at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion shall determine, with the right to
make reasonable alterations and repairs to the Demised Premises; and (iii)
remove all property therefrom at Tenant's sole cost and expense, and all
fixtures and Tenant's temporary improvements within the Demised Premises shall
become the property of Landlord.
(d) RECOVERY. Following termination under Subsection M-2(b), Landlord
shall have all the rights and remedies of a landlord provided by the laws of the
State in which the Demised Premises are located. The amount of damages which
Landlord may recover following termination under Subsection M-2(b) shall
include: (i) the worth at the time of award of any unpaid Rent which had been
earned at the time of termination of Tenant's right to possession; (ii) the
worth at the time of award of the amount by which the unpaid Rent which would
have been earned after the date of termination of Tenant's right to possession
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; (iii) 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 such rental loss that Tenant proves could be
reasonably avoided; and (iv) any and all other amounts, including court,
attorney and collection costs, necessary to compensate Landlord for all
detriment approximately caused by Tenant's failure to perform all of Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom. The "worth" as used for clauses (i) and (ii) in this
subparagraph (d) is to be computed by allowing interest at the Default Rate as
defined in Section Q-17 hereof. The "worth" as used for clause (iii) in this
subparagraph (d) is to be computed by discounting such amount at the discount
rate of the Federal Reserve Bank located nearest the Demised Premises at the
time of the award plus one percent (1%).
(e) ADDITIONAL REMEDIES. In addition to the foregoing remedies, Landlord,
shall, so long as this Lease is not terminated, have the right to remedy any
default of Tenant, to maintain or improve the Demised Premises without
terminating this Lease, to incur expenses on behalf of Tenant in seeking a new
subtenant, or to cause a receiver to be appointed to administer the Demised
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 Default
Rate from the date of such expenditure until the same is repaid.
(f) OTHER. If Tenant causes or threatens to cause a breach of any of the
covenants, agreements, terms or conditions contained in this Lease, Landlord
shall be entitled to repossess the Premises by forcible entry or unlawful
detainer suit, otherwise, to enjoin such breach or threatened breach, and to
invoke any right and remedy allowed at law or in equity or by statute or
otherwise as though reentry, summary proceedings and other remedies were not
provided for in this Lease.
(g) CUMULATIVE. Each right and remedy of Landlord provided for in this
Lease shall be cumulative and shall be in addition to every other right or
remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise. The exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided for in this
Lease, or now or hereafter existing at law or in equity or by statute or
otherwise, shall not preclude the simultaneous or later exercise by Landlord of
any or all other rights or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or otherwise.
(h) NO WAIVER. No failure by Landlord to insist upon the strict
performance of any term hereof or to exercise any right or remedy consequent
upon a breach thereof, and no acceptance of full or partial payment of Rent
during the continuance of any such breach, shall constitute a waiver of any such
breach or of any such term. Efforts by Landlord to mitigate the damages caused
by Tenant's breach of this Lease shall not be construed to be a waiver of
Landlord's right to recover damages under this Article M. Nothing in this
Article M affects the right of Landlord to indemnification by Tenant in
accordance with Section F-8 hereinabove for liability arising prior to the
termination of this Lease for personal injuries or property damage.
ARTICLE N
ASSIGNMENT AND SUBLETTING
N-1. PROHIBITION. Tenant shall not assign, mortgage, pledge or otherwise
transfer this Lease, in whole or in part, nor sublet or permit occupancy by any
party other than Tenant of all or any part of the Demised Premises, without the
prior written consent of Landlord in each instance. Any purported Assignment or
subletting contrary to the provisions hereof without consent shall be void. The
consent by Landlord to any assignment or subletting shall not constitute a
waiver of the necessity for such consent to any subsequent assignment or
subletting. As Additional Rent hereunder, Tenant shall
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reimburse Landlord for reasonable legal and other expenses incurred by Landlord
in connection with any request by Tenant for consent to assignment or
subletting.
N-2. LANDLORD'S OPTION.
(a) SUBLESSEE OR ASSIGNEE DATA. In connection with any proposed
assignment or sublease, Tenant shall submit to Landlord in writing (i) the name
of the proposed assignee or sublessee, (ii) such information as to such
sublessee's or assignee's financial responsibility and standing as Landlord may
reasonably require, and (iii) all of the terms and conditions upon which the
proposed assignment or subletting is to be made. Landlord shall have an option
to cancel and terminate this Lease, if the request is to assign the Lease or to
sublet all of the Demised Premises; or, if the request is to sublet in excess of
one half (1/2) of the Demised Premises, to cancel and terminate this Lease with
respect to such portion. Landlord may exercise said option in writing within
thirty (30) days after its receipt from Tenant of such request, and in each case
such cancellation or termination shall occur as of the date set forth in
Landlord's notice of exercise of such option, which shall be not less than sixty
(60) days nor more than one hundred-twenty (120) days following the giving of
such notice. See Rider No. 1
(b) CANCELLATION. If Landlord shall exercise its option, Tenant shall
surrender possession of the entire Demised Premises, or the portion thereof
which is subject of the option, as the case may be, on the date set forth in
such notice in accordance with the provisions of this Lease relating to
surrender of the Demised Premises at the expiration of the Term. If this Lease
is canceled as to a portion of the Demised Premises only, the Fixed Rent after
the date of cancellation shall be reduced ratably based upon the portion of the
Demised Premises recaptured by Landlord.
(c) NONCANCELLATION. If Landlord does not exercise its option to cancel
this Lease pursuant to the foregoing provision, Landlord may withhold its
consent to such assignment or subletting, as long as the withholding is not done
unreasonably, and such consent shall be deemed reasonably withheld if the
sublease/assignment and Tenant's sublessee/assignee do not comply with the
provisions of Article N.
(d) ASSUMPTION. No assignment shall be binding upon Landlord, any ground
lessor or any mortgagee, unless Tenant shall deliver to Landlord an assignment
in recordable form which contains an assumption by the assignee, but the failure
or refusal of the assignee to execute such instrument or assumption shall not
release or discharge assignee from liability as Tenant hereunder, provided that
the terms and provisions of the assignment or subletting specifically make
applicable to the assignee or sublessee all of the provisions of this Lease.
(e) INDUCEMENT. Tenant understands and acknowledges that the option to
terminate this Lease rather than approve the assignment thereof, or the
subletting of all or a portion of the Demised Premises, as provided in this
Section N-2, is a material inducement for Landlord's agreeing to lease the
Demised Premises to Tenant upon the terms and conditions herein set forth.
N-3. EXCESS SUBLEASE RENTAL OR ASSIGNMENT CONSIDERATION. If for any sublease or
assignment, Tenant receives rent or other consideration, either initially or
over the term of the sublease or assignment, in excess of the Rent called for
hereunder, or in case of the sublease of a portion of the Demised Premises, in
excess of such Rent fairly allocable to such portion, after appropriate
adjustments to assure that all other payments called for hereunder are
appropriately taken into account, and less reasonable costs of subleasing, such
as broker commissions and tenant improvements. Tenant shall pay to Landlord, as
Additional Rent hereunder, one-half (1/2) of the excess of such payment of rent
or other consideration received by Tenant promptly after Tenant's receipt.
N-4. SCOPE. The prohibition against assigning or subletting contained in this
Article N shall be construed to include a prohibition against any assignment or
subletting by operation of law. If this Lease is assigned, or if the underlying
beneficial interest of Tenant has transferred, or if the Demised Premises or any
part thereof is sublet or occupied by anybody other than Tenant, Landlord may
collect rent from the assignee, subtenant or occupancy and apply the net amount
collected to the Rent herein reserved and apportion any excess rent so collected
in accordance with the terms of Section N-3 hereof, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of this covenant,
or the acceptance of the assignee, subtenant or occupant as tenant, or a release
of Tenant from the further performance by Tenant of covenants on the part of
Tenant herein contained. No assignment or subletting shall affect the continuing
primary liability of Tenant (which, following assignment and subletting, shall
be joint and several with the assignee or sublessee), and Tenant shall not be
released from performing any of the terms, covenants and conditions of this
Lease.
N-5. WAIVER. Notwithstanding any assignment or sublease, or any indulgences,
waivers or extensions of time granted by landlord to any assignee or sublessee,
or the failure by landlord to take action against any assignee or sublessee,
Tenant hereby waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at its option, proceed against Tenant without having
taken action against or joined such assignee or sublessee, except that Tenant
shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.
N-6. RELEASE. Whenever Landlord conveys its interest in the Parcel, Landlord
shall be automatically released from the further performance of covenants on the
part of Landlord herein contained, and from any and all further liability,
obligations, costs and expenses, demands, causes of action, claims or judgments
arising from or growing out of, or connected with this Lease after the effective
date of said release. The effective date of said release shall be the date the
assignee executes an assumption of such an assignment whereby the assignee
expressly agrees to assume all of Landlord's obligations, duties,
responsibilities and liabilities with respect to this Lease. If requested,
Tenant shall execute a form of release and such other documentation as may be
required to further effect the provisions of this Section N-6.
ARTICLE O
ESTOPPEL STATEMENT, ATTORNMENT AND SUBORDINATION
O-1. ESTOPPEL STATEMENT. Within ten (10) days after request therefor by
Landlord, or, if on any sale, ground lease, assignment or hypothecation by
Landlord of its interest in the Parcel or the Building, an estoppel statement
shall be required
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from Tenant, Tenant shall deliver, in form satisfactory to Landlord and the
requesting party, a certificate to any proposed mortgagee, beneficiary, ground
lessor or purchaser, and/or if so requested to Landlord, certifying (if such be
the case) that this Lease is in full force and effect (without modification
except as disclosed therein), the Commencement Date hereof, that except as
disclosed on such certificate, there are no material changes in the information
disclosed to Landlord in the Hazardous Materials Questionnaire described in
Section Q-21 (a) hereof, the date of Tenant's most recent payment of Rent, that
there are no defenses or offsets outstanding, or stating those claimed by
Tenant, and as to any other matters affecting the Lease and/or Tenant's
occupancy of the Demised Premises as the requesting party has a legitimate
interest in knowing. Tenant's failure to deliver said statement within the
allotted time shall be conclusive upon Tenant that: (a) this Lease is in full
force and effect, without modification except as may be represented by 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 calendar month's Fixed Rent has been paid in advance, and shall
further constitute an Event of Default under this Lease.
O-2. ATTORNMENT. In the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under, any mortgage or deed
of trust made by the encumbering the Demised Premises, or any part thereof, or
in the event of termination of the ground lease, if any, and if so requested,
Tenant shall attorn to the purchaser upon such foreclosure or sale or upon any
grant of a deed in lieu of foreclosure and shall recognize such purchaser as the
Landlord under this Lease.
O-3. SUBORDINATION. The rights of Tenant hereunder are, and shall be, at the
election of any mortgagee encumbering the Demised Premises, subject and
subordinate to the lien of any mortgage or mortgages, or the lien resulting from
any other method of financing or refinancing now or hereafter in force against
the Parcel, and to all advances made or hereafter to be made upon the security
thereof; provided, however, that notwithstanding such subordination, so long as
the Tenant herein is not in default under any of the terms, covenants and
conditions of this Lease, and upon Tenant's covenanting that Tenant is not in
default hereunder, neither this Lease nor any of the rights of Tenant hereunder
shall be terminated or subject to termination by any trustee's sale by any
action to enforce the security, or by any proceeding or action in foreclosure.
If requested, Tenant agrees to execute whatever documentation may be required to
further effect the provisions of this Section O-3. Landlord shall assist Tenant
in obtaining Landlord's lender's form of and consent to a subordination and non-
disturbance agreement.
ARTICLE P
NOTICES
All notices required to be given hereunder shall be in writing and mailed
postage prepaid by certified or registered mail, return receipt requested, or by
personal delivery, to the addresses for Landlord and Tenant indicated in Section
A-1 hereof, or at such other place or places as either Landlord or Tenant may,
from time to time, respectively designated in a written notice given to the
other. Notices shall be deemed sufficiently served upon delivery if personally
delivered, or four (4) days after the date of mailing thereof, if mailed.
ARTICLE Q
MISCELLANEOUS
Q-1. WAIVER. No waiver of any default or breach of any covenant by either party
hereunder shall be implied from any omission by either party to take action on
account of such default if such default persists or is repeated, and no express
waiver shall affect any default other than the default specified in the waiver,
and in such event said waiver shall be operative only for the time and to the
extent therein stated. Waivers of any covenant, term or condition contained
herein by either party shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by
either party to or of any act by either party requiring further consent or
approval to or of any subsequent similar acts.
Q-2. ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a
lesser amount than the Rent payment herein stipulated shall be deemed to be
other than on account of the Rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as Rent be deemed in
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or pursue any
other remedy provided in this Lease.
Q-3. INDIVIDUAL LIABILITY. The obligations of Landlord under this Lease do not
constitute personal obligations of the individual partners, joint venturers,
directors, officers, shareholders or beneficial owners of Landlord, and Tenant
shall look solely to the real estate that is the subject of this Lease and to no
other assets of the Landlord for satisfaction of any liability in respect to
this Lease and will not seek recourse against the individual partners, joint
venturers, directors, officers, shareholders or beneficial owners of Landlord or
any of their personal assets for such satisfaction.
Q-4. ENTIRE AGREEMENT. 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 as
are herein set forth. Except as otherwise provided herein, 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.
Q-5. TIME. TIME IS OF THE ESSENCE FOR EACH AND EVERY PROVISION HEREOF.
Q-6. RECORDATION. Neither Landlord nor Tenant shall record this Lease nor
permit the same to be recorded (including any short form hereof) without the
written consent of the other.
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Q-7. PROFESSIONAL FEES. Tenant shall reimburse Landlord, upon demand, for any
costs or expenses incurred by Landlord in connection with any breach or default
of Tenant under this Lease, whether or not suit is commenced or judgment
entered. Such costs shall include, but not be limited to, actual professional
fees such as accountants' fees, appraisers' fees and attorneys' fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, the prevailing party's actual professional
fees such as accountants' fees, appraisers' fees and attorneys' fees and costs.
Such professional fees and costs shall be paid by the losing party in such
action. Tenant shall also indemnify Landlord against and hold Landlord harmless
from all costs, expenses, demands and liability incurred by Landlord if Landlord
becomes or is made a party to any claim or action: (a) instituted by Tenant
against third party or by any third party against Tenant, or by or against any
person holding any interest under or using the Demised Premises by license of or
agreement with Tenant; (b) for foreclosure of any lien for labor or material
furnished to or for Tenant or such other person; (c) otherwise arising out of or
resulting from any act or transaction of Tenant or such other person; and (d)
necessary to protect Landlord's interest under this Lease in a bankruptcy
proceeding, or other proceeding under Title 11 of the United States Code, as
amended. Tenant shall defend Landlord against any such claim or action at
Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for Landlord's actual
professional fees such as accountants' fees, appraisers' fees and attorneys'
fees or costs incurred by Landlord in any such claim or action.
Q-8. CAPTIONS AND SECTION NUMBERS. The captions, section numbers, article
numbers and table of contents appearing in this Lease 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 of this Lease nor in any way affect
this Lease.
Q-9. SEVERABILITY. If any term, covenant, condition or provision of this Lease,
or the application thereof to any person or circumstances, shall to any extent
be held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, covenants, conditions or provision of
this Lease, or the application thereof to any person or circumstance, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby.
Q-10. APPLICABLE LAW. This Lease, and the rights and obligations of the parties
hereto, shall be construed and enforced in accordance with the laws of the state
in which the Demised Premises are located.
Q-11. EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option to Lease, and
it is not effective as a Lease or otherwise until execution and delivery by both
Landlord and Tenant.
Q-12. FINANCIAL STATEMENTS. At any time during the term of the Lease, Tenant
shall, at Tenant's sole cost and expense, upon ten (10) days prior written
notice from Landlord, provide Landlord, Landlord's lenders or any prospective
purchaser of the Building or Parcel with a current financial statement and
financial statements for each of the two years prior to the current financial
statement year. Such statement shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant,
shall be audited by an independent certified public accountant. See Rider No. 1.
Q-13. SECURITY MEASURES. Tenant acknowledges that Rent payable to Landlord does
not include the cost of guard service or other security measurers, and that
Landlord has no obligation to provide such services or measures. Tenant assumes
all responsibility, including costs, for the security of the Demised Premises
and of Tenant, its agents or invitees.
Q-15. SECURITY DEPOSIT. Tenant has deposited with Landlord the Security Deposit
set forth in Section A-1 above as security for Tenant's faithful performance of
Tenant's obligations hereunder. If Tenant fails to pay Rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Landlord may use, apply or retain all or any portion of said Security Deposit
for the payment of any Rent or other charge in default or for the payment of any
other sum for which Landlord may become obligated by reason of Tenant's default
or to compensate Landlord for any loss or damage which Landlord may suffer
thereby. If Landlord so uses or applies all or any portion of said Security
Deposit, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore said Security
Deposit to the full amount stated in Section A-1 hereinabove, and Tenant's
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep said Security Deposit separate from its general accounts. If
Tenant performs all of Tenant's obligations hereunder, said Security Deposit, or
so much thereof as has not therefore been applied by Landlord, shall be
returned, without payment of interest or other increment for its use, to Tenant
(or at Landlord's option to the last assignee of any of Tenant's interest
hereunder) at the expiration of the Term hereof, and after Tenant has vacated
the Demised Premises. If the Fixed Rent shall increase, for any reason, and at
any time during the Term of this Lease, Tenant shall thereupon deposit with
Landlord an addition to the Security Deposit so that the total Security Deposit
held by Landlord shall at all times bear the same proportion to the current
Fixed Rent as the original Security Deposit bears to the original Fixed Rent.
Q-16. ADMINISTRATIVE CHARGES. As Additional Rent, Tenant shall pay to Landlord
an overall administrative charge of five percent (5%) of any charge which Tenant
is obligated to pay under this Lease and exclusive of taxes and insurance which
Landlord pays on behalf of Tenant and for which Landlord subsequently bills
Tenant. Also, Tenant shall pay to Landlord an administrative overhead charge for
the supervision of the construction and installation of any additional
improvements or alterations made to the Demised Premises during the term of this
Lease.
Q-17. LATE PAYMENTS. Tenant hereby acknowledges that late payment by Tenant to
Landlord of Rent will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain. Such
costs include but are not limited to, processing and accounting charges and late
charges which may be imposed on Landlord by
14
<PAGE>
the terms of any mortgage or deed of trust affecting the Demised Premises.
Accordingly, if any installment of Rent due from Tenant shall not be received by
Landlord within ten (10) days after such amount shall be due, then Tenant shall
pay to Landlord a late charge equal to six percent (6%) of such overdue amount.
In addition, if Tenant shall fail to remit said late payment and late charges to
Landlord on or before thirty (30) days following the date such payment becomes
due, said past due amounts shall thereafter accrue interest at the rate
("Default Rate") which is the lesser rate of the maximum rate permitted by law
or three percent (3%) in excess of the prime rate (reference rate) announced
from time to time by Bank of America, N.T. & S.A. from the date due. The parties
hereby agree that such late charge and interest represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's default with respect to such overdue amount, nor prevent Landlord
from exercising any of the other rights and remedies granted in this Lease with
respect to events of default.
Q-18. HOLDING OVER. If Tenant holds over after the expiration or earlier
termination of the Term hereof without the express written consent of Landlord,
Tenant shall become a tenant at sufferance only, at a rental rate equal to one
hundred twenty percent (120%) of Landlord's then scheduled rental rate which
would be applicable to the Demised Premises upon the date of such expiration,
prorated on a daily basis, and otherwise subject to the terms, covenants and
conditions herein specified so far as applicable. Acceptance by Landlord of Rent
after such expiration or earlier termination shall not constitute a holdover
hereunder or result in a renewal. The foregoing provisions of this Section Q-18
are in addition to and shall not affect Landlord's right to reentry or any
rights of Landlord hereunder or as otherwise provided by law. If Tenant fails to
surrender the Demised Premises upon the expiration of this Lease despite a
written request to do so by Landlord, Tenant shall indemnify and hold Landlord
harmless from all loss or liability, including without limitation any claim made
by any succeeding tenant founded upon or resulting from such failure to
surrender.
Q-19. AUTHORITY. If Tenant is a corporation, trust or general or limited
partnership, Tenant shall, prior to the commencement of the Term of the Lease
but in no event later than thirty (30) days after execution of this Lease,
deliver to Landlord satisfactory evidence of the signing authority of each
individual executing this Lease on behalf of such entity.
Q-20. LANDLORD'S ACCESS. Landlord and Landlord's agents and employees shall
have the right to enter the Demised Premises with reasonable notice at
reasonable times for the purpose of inspecting the same, showing the same to
prospective purchasers or lenders and making such alterations, repairs,
improvements or additions to the Demised Premises as Landlord may deem
reasonably necessary or desirable. Landlord may at any time during the last one
hundred twenty (120) days of the Term of this Lease place on or about the
Demised Premises any ordinary "For Sale" or "For Lease" signs all without rebate
of rent or liability to Tenant.
Q-21. HAZARDOUS MATERIALS.
(a) USE, STORAGE, HANDLING AND DISPOSAL OF HAZARDOUS MATERIALS.
Except as provided herein, Tenant shall neither cause nor permit any Hazardous
Materials as such term is defined in subparagraph (h) of this Section Q-21 to be
used, generated, stored, transported, handled or disposed of in or about the
Demised Premises at any time during the Lease Term (such activities are
hereinafter referred to as "Environmental Activities"). This prohibition shall
extend to Tenant's employees, agents, contractors, sublessees, assignees,
licensees, concessionaires and invitees (collectively referred to herein as
"Tenant's Agents") and Tenant shall be responsible for assuring compliance by
such persons with the foregoing prohibition. Notwithstanding the foregoing, and
subject to Tenant's covenant to strictly comply with all "Hazardous Materials
Laws" (as such term is defined in subparagraph (b) below) and all other terms
and conditions of this Section Q-21, Tenant and Tenant's Agents may bring upon,
keep and use in or about the Demised Premises (i) general office supplies
typically used in an office area in the ordinary course of business, such as
copier toner, liquid paper, glue, ink, and cleaning solvents, for use in the
manner for which they were designed, in such amounts as may be normal for any
office business operations conducted by Tenant on the Demised Premises, and (ii)
only those Hazardous Materials described on the Hazardous Materials
Questionnaire (as defined below) provided Tenant has delivered to Landlord (1) a
description of handling, storage, use and disposal procedures and (2) all
"community right to know" plans or disclosures and/or emergency response plans
which Tenant is required to supply to local governmental agencies pursuant to
any Hazardous Materials Laws and Landlord has approved the same. Any consent or
approval by Landlord of Tenant's use or handling of Hazardous Materials shall
not constitute an assumption of risk respecting the same nor a warranty or
certification by Landlord that Tenant's proposed use and handling of Hazardous
Materials is safe or reasonable or in compliance with Hazardous Materials Laws.
Prior to the execution of this Lease, Tenant will complete, execute and deliver
to Landlord a Hazardous Materials Questionnaire ("Hazardous Materials
Questionnaire") in the form attached hereto as Exhibit F, which completed
questionnaire will be deemed incorporated in this Lease, and Landlord shall be
certified to rely fully on the information provided therein.
Tenant may also use other Hazardous Materials in connection with its
use of the Demised Premises if Tenant has received Landlord's prior written
consent to the same. Landlord shall not unreasonably withhold its consent
provided (i) Tenant demonstrates to Landlord's reasonable satisfaction that such
Hazardous Materials (A) are necessary or useful to Tenant's business; (B) will
be monitored, used, stored, handled and disposed of in compliance with all laws,
ordinances and regulations regulating such Hazardous Materials; (C) will not
endanger any persons or property; and (D) will not invalidate or limit the
coverage or increase the premiums of any insurance policy effecting or covering
the Demised Premises, (ii) Tenant provides Landlord with such security deposit
as may be reasonably required by Landlord to help secure Tenant's performance of
its obligations under this Section Q-21, and (iii) Tenant satisfies any other
requirements Landlord may reasonably impose with respect to the Tenant's use of
the subject Hazardous Materials. In no event shall Tenant install any
underground storage tank on the Demised Premises, and Tenant's installation of
an underground storage tank shall be deemed an immediate incurrable default
under the Lease. The Environmental Activities and Hazardous Materials which
Landlord has consented to are described in the Hazardous Materials Questionnaire
attached to this Lease. The absence of any Environmental Activities and
Hazardous Materials from such questionnaire shall be conclusive evidence that
such consent has not been given. No other form of consent, whether or not
written, express or implied, shall be valid and enforceable as against Landlord.
Notwithstanding the foregoing, Tenant shall not install, operate or maintain any
above or below grade tank, sump, pit, pond, lagoon or other storage or treatment
vessel or device on the Demised Premises.
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(b) COMPLIANCE WITH LAWS AND RIDER. Tenant, at its sole cost and expense,
shall comply and shall cause Tenant's Agents to comply, with federal, state and
local laws, ordinances and regulations and all rules, licenses, permits, orders,
decrees and judgments relating to Environmental Activities (collectively
referred to as "Hazardous Materials Laws") conducted on the Demised Premises.
Tenant's breach of any of its covenants or obligations under this Section Q-21
shall constitute a material default under the Lease. The obligations of Tenant
under this Section Q-21 shall survive the expiration or earlier termination of
the Lease, and shall constitute obligations that are independent and severable
from Tenant's covenants and obligations to pay Rent under the Lease.
(c) DISCLOSURE AND NOTIFICATION. Except as may have been disclosed in
writing by Landlord or any report Landlord may make available to Tenant
respecting the results of any environmental assessment of the Demised Premises,
Landlord has no actual knowledge nor reasonable cause to believe that any
release of Hazardous Materials has occurred on the Demised Premises or parcel.
Tenant shall immediately advise Landlord in writing of, and provide Landlord
with a copy of: (i) any notices of violation or potential or alleged violation
of any Hazardous Materials Laws which are received by Tenant from any
governmental agency concerned with Tenant's or Tenant's Agent's Environmental
Activities or otherwise; (ii) any and all inquiry, investigation, enforcement,
clean-up, removal or other governmental or regulatory actions instituted or
threatened relating to Tenant or the Demised Premises; (iii) all claims made or
threatened by any third party against Tenant or the Demised Premises relating to
any Hazardous Materials; (iv) any release of Hazardous Materials on or about the
Demised Premises which Tenant knows of or reasonably believes may have occurred
and (v) any material change in the information disclosed in the Hazardous
Material Questionnaire.
(d) INSPECTION OF DEMISED PREMISES. From time to time, but in no event
more often than once every two years during the Lease Term (except in the event
of a release or suspected release of Hazardous Materials), as it may be
extended, Landlord may retain a registered environmental consultant (the
"Consultant") acceptable to Landlord to conduct an investigation of the Demised
Premises ("Environmental Assessment") (i) for Hazardous Materials contamination
in, about or beneath the Demised Premises and (ii) to assess all Environmental
Activities on the Demised Premises for compliance with all applicable laws,
ordinances and regulations and for the use of procedures intended to reasonably
reduce the risk of a release of Hazardous Materials. The Environmental
Assessment shall be performed in a manner reasonably calculated to discover the
presence of Hazardous Materials contamination and shall be of a scope and
intensity reflective of the general standards of professional environmental
consultants who regularly provide environmental assessment services in
connection with the transfer or leasing of real property. Additionally, the
Environmental Assessment shall take into full consideration the past and present
uses of the Demised Premises and other factors unique to the Demised Premises.
The Consultant shall concurrently deliver the written results of its
investigation in writing directly to Landlord and Tenant. If Landlord so
requires, Tenant shall comply, at its sole cost and expense, with all
recommendations contained in the Environmental Assessment, including any
recommendation with respect to the precautions which should be taken with
respect to Environmental Activities on the Demised Premises or any
recommendations for additional testing and studies to detect the presence of
Hazardous Materials. Tenant covenants to reasonably cooperate with the
Consultant and to allow entry and reasonable access to all portions of the
Demised Premises for the purpose of Consultant's investigation.
(e) INDEMNIFICATION OF LANDLORD. Tenant shall indemnify, defend (with
counsel satisfactory to Landlord) and hold Landlord, its directors, officers,
employees, agents, assigns and any successors to Landlord's interest in the
Demised Premises, harmless from and against any and all loss, cost, damage,
expense (including reasonable attorneys' fees), claim, cause of action,
judgment, penalty, fine or liability directly or indirectly relating to or
arising from any Tenant Environmental Activity on the Demised Premises during
the Term of the Lease or any remedial or clean-up work undertaken by or for
Tenant in connection with its Environmental Activities or its compliance with
Hazardous Materials Laws. This indemnification shall include without limitation
(i) personal injury claims, (ii) the payment of liens, (iii) diminution in the
value of the Demised Premises, (iv) damages for the loss or restriction on use
of the Demised Premises, (v) sums paid in settlement of claims, (vi) reasonable
attorneys' fees, consulting fees and expert fees, (vii) the cost of any
investigation of site conditions, and (vii) the cost of any repair, clean-up,
remedial, removal or restoration work or detoxification if required by any
governmental or quasi-governmental agency or body or deemed necessary in
Landlord's reasonable judgment. Landlord shall have the right but not the
obligation to join and participate in, and control, if it so elects, any legal
proceedings or actions initiated in connection with Tenant's Environmental
Activities. Landlord may also negotiate, defend, approve and appeal any action
taken or issued by any applicable governmental authority with regard to
contamination of the Demised Premises by a Hazardous Material. Any costs or
expenses incurred by Landlord for which Tenant is responsible under this Section
Q-21 or for which Tenant has indemnified Landlord shall be reimbursed by Tenant
on demand as Additional Rent. Tenant's obligations pursuant to the foregoing
indemnity shall survive the expiration or termination of the Lease and shall
bind Tenant's successors and assignees and inure to the benefit of Landlord's
successors and assignees. See Rider No. 1.
(f) REMEDIATION. If any Environmental Activities undertaken by Tenant or
Tenant's Agents result in contamination of the Demised Premises or any portion
to Landlord's prior written approval and any conditions imposed by Landlord,
Tenant shall promptly take all actions, at its sole expense and without
abatement of rent, as are necessary to return the affected portion of the
Demised Premises and the soil and ground water to the condition existing prior
to the introduction of the contaminating Hazardous Material. Landlord's approval
of such remedial work shall not be unreasonably withheld so long as such actions
will not cause a material adverse effect on the Demised Premises whether during
or after expiration of the Lease Term and provided such actions will actually
return the affected portion of the Demised Premises and/or soil or ground water
to its prior condition. Notwithstanding the foregoing, Landlord's prior consent
shall not be necessary in the event that the presence of Hazardous Materials
contamination on, under or about the Demised Premises either poses an immediate
threat to the health, safety or welfare of any persons or is of such a nature
that an immediate remedial response is necessary and it is not possible to
obtain Landlord's consent before taking such action, provided that in such event
Tenant shall notify Landlord as soon as possible of any action so taken.
Landlord shall also have the right to approve any and all contractors hired by
Tenant to perform such remedial work. All such remedial work shall be performed
in compliance with all applicable laws, ordinances and regulations and in such a
manner as to minimize any interference with the use and enjoyment of the Demised
Premises. Appearance of a Hazardous Material in or about the Demised Premises
shall not be deemed an occurrence of damage or destruction subject to the terms
of Article K of this Lease respecting damage or destruction.
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(g) SURRENDER OF DEMISED PREMISES. Just prior to expriation or other
termination of the Lease Term, as it may be extended, Landlord may have an
Environmental Assessment of the Demised Premises performed in accordance with
subparagraph (d) above. Tenant shall perform, at its sole cost and expense, any
clean-up or remedial work recommended by the Consultant which is necessary to
remove, mitigate or remediate any Hazardous Materials contamination of the
Demised Premises in connection with Tenant's or Tenant's Agent's Environmental
Activities Prior to surrendering possession of the Demised Premises, Tenant
shall also remove any personal property, equipment, fixture (except for any
fixtures installed by Landlord) and/or storage device or vessel on or about the
Demised Premises which is contaminated by or which contains Hazardous Materials.
If any clean-up or monitoring procedure is required by any applicable
governmental authorities in or about the Demised Premises during the Lease Term
as a consequence of any Hazardous Materials contamination directly or indirectly
arising out of Tenant's Environmental Activities on the Demised Premises during
the Lease Term and the procedure for clean-up is not completed (to the
satisfaction of the governmental authorities) prior to the expiration or earlier
termination of the Lease, then at Landlord's election, (i) this Lease shall be
deemed renewed for a term commencing on the expiration or termination date of
this Lease and ending on the date the clean-up procedure is anticipated to be
completed; or (ii) Tenant shall have deemed to have impermissibly held over, and
Landlord shall be entitled to all damages directly or indirectly incurred,
including, without limitation, damages occasioned by the inability to redevelop
or relet the Demised Premises or a reduction of the fair market or rental value
of the Demised Premises.
(h) DEFINITION OF HAZARDOUS MATERIALS. In addition to those materials
described in the Hazardous Materials Questionnaire, "Hazardous Material" shall
mean any hazardous or toxic substance, material or waste which is or becomes
regulated by any local governmental authority, the State in which the Demised
Premises are located or the United States Government. The term "Hazardous
Material" includes, without limitation, any material or substance which is (i)
defined as a "hazardous waste," "extremely hazardous waste" or "restricted
hazardous waste" under applicable State or federal laws; (ii) petroleum; (iii)
asbestos; (iv) polychlorinated biphenyls (PCBs); (v) urea formaldehyde foam
insulation; (vi) freon and other chlorofluorocarbons; (vii) designated as a
"toxic pollutant or "hazardous substance" pursuant to Sections 311 or 307 of the
Federal Water Pollution Control Act (33 U.S.C. 1317); (viii) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903); (ix) defined as a
-- ---
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C.
-- ---
9601); or (x) becomes regulates by any other federal, state or local laws and
ordinances governing similar matters now or hereafter enacted, and any
regulations adopted and any publications promulgated thereto.
ARTICLE R
SUCCESSORS BOUND
This Lease and each of its covenants and conditions shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors and legal representatives and their respective assigns, subject to
the provisions hereof. Whenever in this Lease a reference is made to the
Landlord, such reference shall be deemed to refer to the person in whom the
interest of the Landlord shall be vested, and Landlord shall have no obligation
hereunder as to any claim arising after the transfer of its interest in the
Parcel. Any successor or assignee of the Tenant who accepts an assignment of or
the benefit of this Lease and enters into possession or enjoyment thereunder
shall thereby assume and agree to perform and be bound by the covenants and
conditions thereof. Nothing herein contained shall be deemed in any manner to
give a right of assignment to Tenant without the written consent of Landlord.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date set
forth on the cover page of this Lease.
"Tenant"
ASSOCIATED STATIONERS, INC.
---------------------------
a DELAWARE CORPORATION
---------------------------
__________________________
By: /s/Daniel Bushell DB
---------------------
Its: Chief Financial Officer
------------------------
"Landlord"
CAROL POINT BUILDERS I GENERAL PARTNERSHIP
a California General Partnership
BY: Messenger Partnership XVII
Limited Partnership,
a California Limited Partnership
Managing General Partner
BY: Messenger Investment Company
a California corporation
/s/MESSENGER
--------------------------------
William S. Messenger, Jr.
President
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<PAGE>
RIDER NUMBER ONE TO STANDARD
FORM INDUSTRIAL LEASE
This Rider No. One is made and entered into by and between Carol Point
Builders I General Partnership, a General Partnership ("Landlord"), and
Associated Stationers, Inc., a Delaware corporation, ("Tenant"), and is
------------
dated as of the date set forth on the cover page of the Lease between Landlord
and Tenant to which this Rider No. One is attached (the "Lease").
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set forth
at length in the body of the Lease. To the extent that the provisions of this
Rider No. One are inconsistent with the terms and conditions of the Lease, the
terms hereof shall control.
1. LEASEHOLD IMPROVEMENTS.
----------------------
In the event that, for any reason other than delays attributable to
Tenant, Landlord shall not have delivered the Demised Premises to Tenant Ready
for Occupancy as described in Article B of this Lease on or before the date
which is forty-five (45) days following the Scheduled Term Commencement Date,
then for each additional day beyond the expiration of such forty-five (45) day
period as it shall take Landlord to deliver the Demised Premises to Tenant
Ready for Occupancy, Tenant shall be entitled to an additional day of rental
abatement pursuant to the provision of Paragraph 3 hereinbelow.
2. TAXES; SPECIAL SERVICE AREA
---------------------------
A. Landlord and Tenant acknowledge and agree there is an existing Village
of Carol Stream, Illinois Special Service Area No. 1 (Series 1992 Bonds)
currently encumbering the property as well as a larger area within Carol Point
Business Center, which district was established to pay for infrastructure
improvements benefiting the area within the district (including the Property),
and that there are assessments against the Property pursuant to such Special
Service Area. Tenant agrees to pay Tenant's Proportionate Share of any Special
Service Area Taxes assessed against the Property; provided, however, that for
purposes of determining Tenant's Proportionate Share of such Taxes, Landlord may
not include any portion of such Taxes as exceed the amount which would be
assessed against the Property based upon the ratio of the land area of the
Property to the land area of all property subject to such Special Service Area.
For purposes of this Lease, Landlord and Tenant acknowledge and agree that the
land area of the property subject to this Special Service Area is 184.93 acres,
and that the gross acreage of the Property is 13.33 acres. Accordingly, the
maximum percentage of such Special Service Area Taxes which are assessed against
the entire area within the district that may be included as Taxes attributable
to the Property shall be 7.21%.
B. Upon written request by Tenant, Landlord Tenant evidence of Landlord's
payment of Taxes due under this Lease to the appropriate governmental
authorities. If Landlord shall ever fail to pay any such Taxes prior to
delinquency, and provided Tenant is not then in default under this Lease, then,
following not less than thirty (30) days prior written notice to Landlord,
Tenant may pay any portion of such Taxes (including penalties and the like) as
are attributable to the Demised Premises to the applicable governmental
authorities and shall receive credit therefore against Additional Rent owing
under this Lease for any amounts properly paid to such governmental authorities.
In no event shall Landlord be responsible hereunder for, nor shall Tenant have
the right to offset against Additional Rent, the amount of any Taxes or other
amounts which remain legally unpaid by Landlord pursuant to a protest filed by
Landlord with respect to such Taxes, provided that Landlord advises Tenant of
such protest prior to the expiration of the thirty (30) day notice described
above.
3. RENTAL ABATEMENT
----------------
Provided Tenant shall faithfully perform all of the terms and conditions of
this Lease, including payment of the Security Deposit and Fixed Rent for the
first (1st) month of the Term upon the execution of this Lease, and subject to
increase as described in Paragraph 1 above, Landlord hereby agrees to abate
Tenant's obligation to pay Fixed Rent from the second (2nd) month of the Lease
Term and continuing through and including the tenth (10th) month of the Lease
Term. During such abatement period, Tenant shall nevertheless pay all Additional
Rent under the Lease as well as any other costs or expenses under the Lease
which are the obligation of Tenant, including any amounts which may be owing by
Tenant pursuant to Exhibit C to the Lease (Work Letter Agreement) (other than
amounts included in Fixed Rent pursuant to said Exhibit C). In the event of a
default by Tenant under this Lease which results in a termination prior to the
expiration of the Term, then as a part of the recovery set forth in Article M of
the Lease, Landlord shall be entitled to the recovery of the Fixed Rent which
was abated under the provisions of this Rider No. One (but not to exceed nine
(9) months of Fixed Rent); i.e., such Fixed Rent shall not deemed to have been
---
forgiven or abated, but shall become immediately due and payable as unpaid rent
which had been earned at the time of termination.
4. OPTION TO EXTEND
----------------
With respect to the provisions of Section A-1(e) relative to the Term,
Landlord and Tenant hereby agree that the Term of this Lease may be extended for
up to two (2) three (3) year periods ("Option Term(s)") at the election of
Tenant exercised by delivery to Landlord of a written notice delivered not
earlier than 360 days and not later than 180 days prior to the end of the
initial term ("Initial Term") or the extended Term, as the case may be, and so
long as (i) Tenant is in possession of the Demised Premises and (ii) Tenant is
not in default under the Lease. The Fixed Rent payable upon the commencement of
the applicable Option Term shall be:
. Month 61 through and including month 96 (First Option Term) --
$59,496.11 per month.
. Month 97 through and including month 132 (Second Option Term) --
$66,584.51 per month.
In addition, and as a material inducement to Landlord's entering into this
Lease, Tenant hereby agrees that in the event Tenant does not exercise its right
to extend the Term for the First Option Term as set forth above, Tenant shall
pay
<PAGE>
to Landlord on or before the expiration of the Initial Term, the sum of Two
Hundred Sixty Three Thousand, Four Hundred Twenty-One Dollars ($263,421) as a
cancellation fee to reimburse Landlord for the unamortized value of the "Special
Leasehold Improvements" (as defined below) installed by Landlord at the
commencement of the Term of this Lease. Similarly, if Tenant exercises its right
to extend the Term for the First Option Term, but does not elect to extend for
the Second Option Term, then on before the expiration of the First Option Term,
Tenant shall pay to Landlord the sum of One Hundred Fifty Three Thousand, One
Hundred Fifty-One Dollars ($153,151) to reimburse Landlord for the unamortized
portion of the Special Leasehold Improvements installed by Landlord at the
commencement of the Term of the Lease. In the event that for any reason other
than Landlord's default the Lease is terminated prior to the expiration of the
Initial Term, or prior to the expiration of either the First or Second Option
Term if Tenant shall have exercised its right to extend for such Option Term(s),
then in addition to any other remedies of Landlord, Tenant shall pay to Landlord
an amount equal to the outstanding unamortized portion of the "Special Leasehold
Improvements" installed by Landlord of the Commencement of the Term totalling
Three Hundred Eighty Two Thousand Nine Hundred Dollars ($382,900.00
5. TENANT'S REPAIR RIGHTS
----------------------
Notwithstanding anything to the contrary set forth in the Lease, if Tenant
provides written notice to Landlord of the need for repairs and/or maintenance
which are Landlord's obligation under the Lease, and Landlord fails to undertake
such repairs and/or maintenance within a reasonable period of time, given the
circumstances, after the receipt of such written notice, but in no event earlier
than thirty (30) days after receipt of such written notice (except with respect
to emergency repairs which are necessary for Tenant's occupancy of the
Premises -- such emergency repairs must be under taken by Landlord within
forty-eight (48) hours after the receipt of such written notice), then Tenant
may proceed to undertake such repairs and/or maintenance upon deliver of an
additional three (3) business days prior written notice to Landlord specifying
that Tenant is taking such action, and if such action was required under the
terms of this Lease to be taken by Landlord, then Tenant shall be entitled to a
prompt reimbursement by Landlord for Tenant's reasonable costs and expenses in
taking such action. In the event Tenant undertakes such repairs and/or
maintenance, and such work will affect the Building's life safety system,
heating, ventilating and air conditioning systems and elevator systems, Tenant
shall use only those contractors used by Landlord in the Building for work on
such systems. Further, if Landlord does not deliver a written objection to
Tenant within thirty (30) days after receipt of an invoice by Tenant for
Tenant's costs of undertaking such repairs taken by Landlord, and if such
invoice from Tenant sets forth a reasonably particularized breakdown of its
costs and expenses in connection with taking such action on behalf of Landlord,
then Tenant shall be entitled to deduct from rental payable by Tenant under this
Lease, the amount set forth in such invoice. If, however, Landlord delivers to
Tenant within thirty (30) days after receipt of Tenant's invoice, a written
objection to the payment of such invoice, setting forth with reasonable
particularity Landlord's reasons for its claim that such repairs and/or
maintenance was not to have been undertaken by Landlord pursuant to the terms of
this Lease, then Tenant shall not be entitled to such deduction from rental but
as Tenant's sole remedy, Tenant may proceed to claim a default and sue Landlord.
6. QUIET ENJOYMENT
---------------
Landlord represents that (a) it has lawful title to the Leased Premises and
the right to make this Lease, (b) it will maintain Tenant in full and exclusive
possession of the Demised Premises, (c) if Tenant shall pay the rent and perform
all the agreements, covenants and conditions required by this Lease to be
performed by it, Tenant may quietly occupy and enjoy the Leased Premises;
provided, however, that nothing contained herein shall render Landlord liable
for any acts or omissions of third parties; and (d) it will deliver the Leased
Premises to Tenant with plumbing, heating, air conditioning, electrical,
lighting and mechanical systems in good working order.
7. DEMISED PREMISES/PARKING.
------------------------
The Demised Premises shall include dock area adjacent to the Building as
more particularly shown on Exhibit A of the Lease. Landlord shall reserve for
use exclusively by Tenant and its employees and invitees the parking spaces
located at the north end of the Building designated as "Exclusive Parking for
Tenant" on Exhibit A of the Lease.
8. REASONABLE TERMS.
----------------
Except for any provisions of this Lease which specifically provide for
determinations to be made by Landlord in its "sole" or "absolute" discretion or
judgment, and except for matters affecting (a) the Building's HVAC system,
plumbing system, electrical system, or life safety systems or the exterior
appearance of the Building, or (b) the Landlord's option to cancel the Lease as
set forth in Section N-2 of the Lease, at any time the consent of Landlord or
Tenant is required pursuant to this Lease, including, without limitation, the
provisions of Section Q-21 hereof, such consent shall not be unreasonably
withheld or delayed. Whenever the Lease grants Landlord or Tenant the right to
take action, exercise discretion, establish rules and regulations or make an
allocation or other determination, Landlord and Tenant shall act reasonably and
in good faith (including with respect to the incurring of costs and expenses)
and take no action which will result in the frustration of the other party's
reasonable expectations concerning the benefits to be enjoyed under the Lease.
9. HAZARDOUS MATERIALS. (Supplement to Section Q-21 of the Lease)
-------------------
Landlord shall indemnify, defend (with counsel satisfactory to Tenant) and
hold Tenant, its directors, officers, employees, agents, assigns and any
successors to Tenant's interest in the Demised Premises, harmless from and
against any and all loss, cost, damage, expense (including reasonable attorneys'
fees), claim, cause of action, judgment, penalty, fine or liability directly or
indirectly relating to or arising from any Landlord Environmental Activity on
the Demised Premises during the Term of the Lease or any remedial or clean-up
work undertaken by or for Landlord in connection with its Environmental
Activities or its compliance with Hazardous Materials Laws. This indemnification
shall include without limitation (i) personal injury claims, (ii) the payment of
liens, (iii) diminution in the value of the leasehold interest in the Demised
Premises, (iv) damages for the loss or restriction on use of the Demised
Premises, (v) sums paid in settlement of claims, (vi) reasonable attorneys'
fees, consulting fees and expert fees, (vii) the cost of any investigation of
site conditions, and (viii) damage to any personal equipment, inventory or other
property of Tenant located on the Demised Premises. Tenant shall have the right
but not the obligation to join and participate in any legal proceedings or
actions initiated in connection with Landlord's Environmental Activities. Any
costs or expenses incurred by Landlord for which Landlord is responsible under
<PAGE>
this Section 8 or for which Landlord has indemnified Tenant shall be reimbursed
by Landlord on demand. Landlord's obligations pursuant to the foregoing
indemnity shall survive the expiration or termination of the Lease and shall
bind Landlord's successors and assignees and inure to the benefit of Tenant's
successors and assignees.
Notwithstanding anything contained in Section 8 to the contrary, in the
event that Landlord makes any claim upon Tenant pursuant to Section 8 hereunder
relative to any Tenant Environmental Activity and/or any contamination allegedly
resulting from any such Environmental Activity, Tenant shall have the right,
exercisable within ten (10) days from receipt by Tenant of notice of such claim
by Landlord and the results of any inspection or investigation conducted by
Landlord relative to such claim, to object to such claim by Landlord in writing
and to independently verify through its own inspections and/or investigations
the validity of such claim. Landlord agrees, unless there is an imminent threat
of damage to person or property requiring immediate action, to provide Tenant
with a period of time not to exceed thirty (30) days from the date of receipt by
Tenant of such claim by Landlord, to permit Tenant to independently investigate
such claim at its sole expense and respond to Landlord in writing regarding
Tenant's determination of the validity of such claim. In the event that Tenant
timely objects in writing to Landlord in the manner set forth above and
indicates its intent to conduct an independent verification of such claim,
Landlord agrees not to resort to any of Landlord's remedies pursuant to Section
Q-21 (except in the case of emergency as set forth above) unless and until
Landlord has either received a written response from Tenant regarding the result
of Tenant's independent investigation of the matter or the thirty (30) day
period described above has expired. In the event Tenant makes a claim against
Landlord pursuant to Landlord's indemnity hereinabove, Landlord shall have the
same rights as Tenant set forth in this paragraph.
10. RIGHT TO CONTEST REAL PROPERTY TAXES.
------------------------------------
Notwithstanding anything contained in Article E to the contrary, in the
event that Landlord elects not to do so, Tenant may contest the amount or
validity of any Taxes by appropriate proceedings; provided that Tenant shall
promptly pay its applicable portion of such Taxes unless such proceedings shall
operate to prevent or stay the collection of the tax so contested. Landlord
shall join in any such proceeding if any law shall so require, provided that
Tenant shall indemnify Landlord against any liability, loss, cost or expense in
connection therewith, including, without limitation, actual attorneys fees and
costs .
11. DAMAGE OR DESTRUCTION
---------------------
Section K-4 of the Lease, titled "Uninsured Casualty," is hereby amended to
provide that Landlord shall have no right to terminate the Lease in the event of
an uninsured casualty unless the amount of uninsured casualty exceeds the sum of
ten thousand dollars ($10,000) and that Landlord shall be responsible for paying
the uninsured portion of any such casualty up to the amount of $10,000. In the
event that the uninsured portion of any casualty exceeds $10,000, Landlord may
elect to terminate the Lease pursuant to Section K-4; provided, however, that
Tenant may elect to cancel such termination by Landlord by delivering notice to
Landlord within ten (10) business days following receipt by Tenant of Landlord's
written notice of termination that Tenant elects to pay for the uninsured
portion of such casualty which exceeds $10,000. In the event Tenant delivers
such notice, Landlord's termination notice shall be void and of no further force
or effect, provided that Tenant shall pay to Landlord prior to commencement of
any restoration by Landlord the amount of any uninsured portion of the casualty
damage which exceeds $10,000.
12. SUBLEASE OR ASSIGNMENT
----------------------
Notwithstanding anything contained in Article M to the contrary, Landlord's
consent shall not be required with respect to any sublease or assignment by
Tenant to any parent or subsidiary corporation of Tenant, or to any entity into
whom Tenant is merged or to whom Tenant is sold pursuant to any corporate
reorganization of Tenant; provided, however, that Tenant shall provide Landlord
with not less than thirty (30) days prior written notice of any such assignment,
and further provided such assignment shall not relieve Tenant of any liability
under this Lease. In the event that as a result of any merger or other corporate
reorganization of Tenant, Tenant shall cease to exist as a viable business
entity, or if all or substantially all the assets of Tenant are no longer owned
by Tenant, Landlord shall have a right of consent to any assignment to a new
entity for the limited purpose of assuring that the entity assuming the Tenant's
interest in this Lease shall either have a net worth substantially similar to
that of Tenant at the time of such transfer and/or shall possess, in Landlord's
reasonable determination, other financial means to adequately perform the
Tenant's obligations under the Lease.
In addition, in the event Tenant elects to mortgage or pledge all or any
portion of the Tenant's interest in the Lease, Landlord shall not unreasonably
withhold its approval of such leasehold mortgage or pledge provided that the
rights provided to any leasehold mortgagee thereunder do not conflict with any
of the provisions of this Lease. Landlord shall have no right of cancellation
with respect to any sublease or assignment by Tenant relative to a merger or
corporate reorganization and/or a request by Tenant to mortgage or pledge its
interest in the Lease.
13. FINANCIAL STATEMENTS
--------------------
Landlord agrees to keep any financial statements and/or any other financial
information provided to Landlord by Tenant which is not otherwise publicly
disclosed by Tenant confidential; provided, however, that Landlord may disclose
such financial information to any actual or potential lenders, partners,
purchasers and Landlord's accountants and attorneys and/or the accountants and
attorneys of any of the foregoing (provided that Landlord shall request that any
such disclosures to any third parties be kept confidential). In addition, in the
event any such information is required relative to any litigation or proceeding
in which Landlord becomes involved, Landlord may disclose such financial
information to the extent it is necessary and appropriate (or required by lawful
discovery) in such action.
<PAGE>
Right of First Notification. Not earlier than nine (9) months prior to
---------------------------
the availability of said space, Tenant shall be granted a Right of First
Notification with respect to the entirety of the balance of the Building
("Expansion Space") comprising of approximately 135,508 square feet. Tenant
shall be given until the expiration of three (3) business days to respond in
writing to Landlord's written notification of the availability of the Expansion
Space. If Tenant timely responds to Landlord's written notification, Tenant
shall have a period of ten (10) business days following the expiration of such
three (3) business day period to negotiate on an exclusive basis with Landlord
for a lease on the Expansion Space on the terms and conditions acceptable to
Landlord and Tenant. In the event that for any reason Landlord and Tenant shall
not agree to acceptable terms for the lease of such Expansion Space on or before
the expiration of such ten (10) business day period, Tenant's right of exclusive
negotiation shall expire and Landlord shall be entitled to market and/or lease
the Premises to any third party on such terms and conditions as Landlord shall
deem appropriate. In the event that Tenant and Landlord agree on terms for a
lease of the Expansion Space, Landlord shall prepare a lease amendment
reflecting the foregoing and Tenant and Landlord shall promptly execute the
same.
<PAGE>
EXHIBIT A
DEPICTION OF DEMISED PREMISES
-----------------------------
[DIAGRAM APPEARS HERE]
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION OF PARCEL
---------------------------
Carol Point Business Center Building #2:
Lot 6, Block 2, of the Carol Point Business Center, being a subdivision of
parts of the south east quarter of Section 20, of the north east quarter
of Section 29, and of the north west quarter of Section 28, township 41
north, range 10 east of the third principal meridian in DuPage County,
Illinois.
<PAGE>
EXHIBIT C
WORKLETTER AGREEMENT
Gentlemen,
You (hereinafter called "Tenant") and we (hereinafter called Landlord) are
executing simultaneously with this Work Letter Agreement, a written lease (the
"Lease") covering those certain premises more particularly described in Exhibit
A to the Lease, (hereinafter referred to as "premises") in the building
addressed at 898 Carol Court, Carol Stream, Illinois.
To induce Tenant to enter into the Lease (which is hereby incorporated by
reference to the extent that the provisions of this agreement may apply thereto)
and in consideration of the mutual covenants hereinafter contained, Landlord and
Tenant mutually agree as follows:
1. TENANT'S PLANS AND SPECIFICATIONS
a. Except to the extent otherwise provided in subparagraph b and c of this
paragraph, Landlord agrees that, through its architect or space
planner, Landlord will furnish all architectural, mechanical and
electrical engineering plans required for the performance of the work
(hereinafter referred to as "Building Standard Work") hereinbelow
described, including complete detailed plans and specifications for
Tenant's partition layout, reflected ceiling, heating and air
conditioning, electrical outlets and switches, telephone outlets and
plumbing.
b. It is understood and agreed that Tenant may require work (hereinafter
referred to as "Building Nonstandard Work") different from or in
addition to the Building Standard Work. In such event, any
architectural, mechanical, electrical and plumbing plans and
specifications required shall be furnished, at Tenant's sole cost and
expense, by Landlord's architect or space planner.
c. It is understood and agreed that any interior decorating services, such
as selection of wall paint colors and/or wall coverings, fixtures,
carpeting, and any or all other decorator items required by Tenant in
the performance of said work referred to hereinabove in subparagraphs a
and b shall be at the Tenant's sole cost and expense.
d. It is understood and agreed that all plans and specifications referred
to hereinabove in subparagraphs a and b are subject to Landlord's
approval, which Landlord agrees shall not be unreasonably withheld.
e. It is understood and agreed by Tenant that in order to permit Landlord
to timely commence and complete the improvements, Tenant will furnish
complete information respecting Tenant's requirements, including
without limitation, material storage and racking layout(s) and
information relating to the type of product to be stored and that
complete plans and specifications will be approved by Tenant on or
before February 24, 1992, and that a budget for the commencement of
construction will be approved by Tenant on or before February 24, 1992.
2. BUILDING STANDARD WORK AT LANDLORD'S COST AND EXPENSE
Landlord agrees to furnish and install the following "Building Standard Work".
Any requests for improvements in excess of the Building Standard Work (as
hereafter defined) will be the responsibility of Tenant. Building Standard
specifications are set forth on Exhibits C-1 and C-2 attached hereto. Said work
is limited as specified hereinbelow, and as selected and specified by Landlord
and as indicated on Tenant's final approved plan:
OFFICE: * Construction of approximately 8000 SF of finished office
- ------- space as depicted on the preliminary space plan prepared by
Boise Cascade dated October 14, 1991.
WAREHOUSE: * Construction of approximately 129,280 SF of warehouse
- ---------- space as depicted on the preliminary space plan prepared by
Boise Cascade dated October 8, 1991.
Landlord shall provide Tenant the Building Standard Work on the premises as set
forth above. The fees and costs of the Landlord's architect in preparing plans
and specifications with respect to the Building Standard Work shall be included
in the cost of the Building Standard Work herein. In the event that changes are
made and the cost of the work exceeds the Building Standard Work; Tenant shall,
as a condition to Landlord's obligation to commence and complete the Building
Standard Work, pay to Landlord the difference between the total cost of the work
and the Building Standard Work (or the excess over the item allowance, as
applicable) upon demand by Landlord. At Landlord's sole and
<PAGE>
absolute discretion, Landlord may elect to permit all or any portion of excess
costs under paragraphs 3, 4 and/or 5 hereof to be amortized over the initial
Term of the Lease as Additional Rent at an annual rate of 11%. Tenant may apply
any unused cost of Building Standard Work toward the cost of any Building Non-
Standard Work which Tenant has request Landlord to construct.
4. BUILDING NONSTANDARD WORK AT TENANT'S COST AND EXPENSE
Provided Tenant's plans and specifications are furnished by the date required
hereinabove in paragraph 1e, the Landlord shall cause Tenant's "Building
Nonstandard Work" to be installed by Landlord's contractor, but at Tenant's sole
cost and expense. Prior to commencing any such work, Landlord, its contractors,
or its architects shall submit to Tenant a written estimate of the cost thereof.
If Tenant fails to provide to Landlord written notice of its approval of such
costs within ten (10) days after submission thereof to Tenant, such failure
shall be deemed a disapproval thereof, and Landlord's contractor shall not
proceed with such work.
5. SUBSTITUTIONS AND CREDITS
Subject to Landlord's prior written approval, Tenant may select alternative or
substitute materials in place of "Building Standard Work" materials as shown on
Exhibits C-1 and C-2 which would otherwise be furnished and installed by
Landlord for or in the interior of the Premises under the provisions of this
Work Letter Agreement, provided such selection is indicated on said Tenant's
final plans. If Tenant shall make any such selection and if the cost of such
alternative or substitute materials of Tenants selection shall cause the cost of
the "Building Standard Work" to exceed the Improvements as described above,
Tenant shall pay to Landlord, as hereinafter provided, the difference between
the cost of such alternative or different materials and the credit given by
Landlord for the materials thereby replaced.
No such alternative or substitute materials shall be furnished and installed in
replacement for any of Landlord's "Building Standard Work" materials until
Landlord, or its contractor and/or its architect or space planer shall have
advised Tenant in writing of, and Landlord or its contractor and/or its
architect or space planer have agreed in writing on, the cost of such different
new materials and the Landlord's cost of such replaced Landlord's "Building
Standard Work" materials.
One hundred (100%) of all amounts then estimated by Landlord to be payable by
Tenant to Landlord pursuant to paragraphs 3 and 4 of this Work Letter Agreement
shall be paid by Tenant upon Tenant's execution of the written estimate for the
work.
6. COMPLETION AND RENTAL COMMENCEMENT DATE
It is agreed that Tenant's obligation for the payment of rental under the Lease
shall not commence until Landlord has substantially completed all Building
Standard Work to be performed by Landlord as hereinabove set forth in paragraph
2; provided, however, that if Landlord shall be delayed in substantially
completing said work as a result of:
a. Tenant's failure to furnish complete and accurate information, plans
and specifications or approvals in accordance with date specified
hereinabove in paragraph 1e; or
b. Tenant's request for materials, finishes, or installations other than
Landlord's "Building Standard Work"; or
c. Tenant's changes in said plans and specifications after their
submission to Landlord in accordance with the provisions of paragraph
1e hereinabove;
then the commencement of the Term of the Lease shall be accelerated by the
number of days of such delay. If the foregoing correctly sets forth our
understanding, kindly sign copies of this Letter Agreement where indicated.
<PAGE>
IN WITNESS THEREOF, the parties have executed this Work Letter Agreement as
of the date set forth on the cover page of the Lease.
"Tenant"
ASSOCIATED STATIONERS, INC.
a DELAWARE CORPORATION
-----------------------
BY Daniel Bushell DB
--------------------
ITS Chief Financial Officer
--------------------
"Landlord"
CAROL POINT BUILDERS I GENERAL PARTNERSHIP
a California General Partnership
BY Messenger Partnership XVII Limited Partnership,
a California Limited Partnership
Managing General Partner
BY Messenger Investment Company
a California Corporation
General Partner
BY /S/W. Messenger
------------------------------
William S. Messenger, Jr.
President
<PAGE>
EXHIBIT C-1
BUILDING SPECIFICATIONS
-----------------------
BUILDING
EXTERIOR: The exterior wall materials for the building shall consist of
a combination of insulated, architectural precast panels and
insulated glass. This glass shall be set into aluminum
thermal break window frame sections. The precast shall be
load bearing, 8" insulated core panels with an "R" value of
8. All exterior panels of the building will be stained. The
existing building will have seven (7) 4' x 4'-6" aluminum
thermal brake windows added to the north wall in the office
section of the space.
ROOF & STRUCTURAL
SYSTEM: The roof for the building shall be a single ply rubber roof
membrane with a "U" value of approximately .07 and an "R"
value of 14 with a ten (10) year guarantee. The general
construction of this facility will be structural steel
columns, steel truss girders and steel bar joists. A
mezzanine with a 200#/SF live load is provided over the
office area with a nominal 3 1/2" concrete slab on metal
deck.
CLEAR HEIGHT: The clear height in the entire facility in Building #2 shall
be 30 ft. clear as measured to the underside of the steel
truss girders.
FLOOR: All concrete floor and dock slabs shall be 6" thick poured
concrete over 2" granular fill. A mezzanine is provided above
the office with structural steel columns, girders and beams.
All concrete is designed for compressive strength of 3,000
psi. One (1) coat of Ashford formula floor sealer is provided
and all floor joints will be cleaned of debris and caulked
and any existing cracks in the floor will be cut and caulked.
BAY SIZE: The standard bay size for the building is 40' x 40' in each
direction. The mezzanine over the office has a 20' x 20'
grid.
EXIT DOORS: Exit man doors shall be provided in the exterior wall
(including office entries) of the building as required by
Carol Stream Municipal Code.
OVERHEAD
DOORS: The base building shall contain twenty five (25) 9' wide x
10' high insulated truck dock doors. Twenty three (23) doors
would be equipped with "Rite Hite" or "Serco" or equal 6' x
8' minimum 20,000 lb. mechanical dock levelers with
"Frommelt" or equal dock shelters. Twenty five (25) Phoenix
or equal dock lights are included. The remaining two (2)
overhead doors will have a 6' x 8' platform, 5,000# capacity
powered docks manufactured by Autoquip or equal.
In addition, the facility will contain two (2) 12' wide x 14'
high insulated overhead doors complete with electric
operators. Two (2) bumper posts shall be provided at the
interior of each dock door and four (4) bumper posts shall be
provided at each drive in door.
ROOF ACCESS: Included in the construction of the building is one (1) cage,
ladder, and roof hatch for convenient roof access to service
the entire building. If necessary, the roof hatch and ladder
can be relocated if it interferes with Associated Stationer's
conveyor system.
WIND BRACING: Included in the construction is the relocation of a portion
of the building wind bracing. The final location of the wind
bracing will be coordinated with Associated Stationer's final
warehouse racking layout.
RAIL SIDING: A deep foundation system has been provided along the entire
west elevation of Building #2 in order to accommodate a
future rail spur to service the building.
TRUCK APRONS: A 60' wide, 7" thick concrete truck apron is located in front
of all dock areas.
TRUCK
SCREENING: All truck dock and parking areas are screened from view of
the street by an 8' high precast concrete wall.
Electrical: The electrical design for the facility shall consist of one
(1) 1,600 amp, 3 phase, 480 volt electrical service. This
would be located at a single main service location at the
closet entry point to the transformer as practical. This
design would include detailed drawings depicting the exact
locations of all building equipment including the voltage,
phase, horsepower and amperage. Also included shall be a
complete schedule of all main power panels lighting panels,
and the electrical service
<PAGE>
equipment for the basic Tenant space. The following
distribution panels and disconnects are included:
* 480V/3Ph 200 amp distribution panel for battery charging
area with twelve (12) 30 amp disconnect switches. Each
switch to be wired for female quick disconnect outlet and
the tenant will be provided male end for use.
* 480V/3Ph 200 amp distribution panel for conveyor system.
* 120V/1Ph 200 amp distribution panel for convenience
outlets on mezzanine.
* 120V exterior electrical outlet at every other dock door
on shipping side for truck engine warmers.
* 480V/3Ph 60 amp disconnect for the trash compactor.
* 480V/3Ph 60 amp disconnect for the corrugated compactor.
Routing of all feeders and circuits shall be assembled and
provided along with accurate, final, electrical drawings.
The electrical design for each Tenant facility shall be
developed under the direct supervision of a registered
professional engineer.
Plumbing: Roof drainage shall be provided by means of interior roof
drains connected to the storm drainage system. The plumbing
design shall be complete and individual for the facility.
The plumbing design shall include all pipe location
drawings, schedules, pipe sizes and materials. The plumbing
design will be developed for each individual Tenant under
the direct supervision of a registered professional
engineer.
Fire Prevention Sprinkler
System: The existing sprinkler system shall be modified to
accommodate ESFR sprinklers. The system shall be based on
twelve (12) heads operating with an end pressure of 75 psi
per Factory Mutual's requirement in lieu of the standard 50
psi since the building exceeds 30' in height. The ESFR
system eliminates in-rack requirements by the Village
provided FM approves the system with acceptance letter to
the Village.
Sixteen (16) hose stations are included.
The bin storage mezzanine shall be designed for a .30 GPM/SF
density over 2,500 SF. This proposal excludes fire
extinguishers.
Smoke Evacuation
System: A mechanical smoke evacuation system has been provided to
meet the Village of Carol Stream fire protection
requirements. This system shall consist of rooftop exhaust
fans which can be individually controlled at a panel near
the fire sprinkler riser area. The exhaust fans will be
manually controlled by the fire department and will be
interconnected to the overhead doors; selected overhead
doors will open to provide make up air when exhaust fans are
in operation.
Warehouse
Lighting: Warehouse lighting shall be provided as indicated.
Skylights: The base building also includes approximately thirty (30)
skylights.
Parking Areas: The automobile parking areas of the facility (over 100
stalls) shall be constructed of 2 1/2" Illinois Highway
Department Class 1 bituminous over 9" of granular base. The
truck drive area will be constructed of 3" Illinois Highway
Department Class bituminous over 13" of granular base.
Concrete truck aprons to be 7" of 4,000 p.s.i. concrete on
2" of stone base.
Utilities: All utilities shall be installed to the building from
underground utilities located in the public right of way
adjacent to the street. Utilities provided to the building
include electric, gas, telephone, water, sanitary sewer and
storm sewer. The actual usage of these services shall be
provided by the respective utility companies.
Site Lighting: Wall mounted light fixtures and pole mounted lights have
been provided for site and parking lot lighting as required
by the Village of Carol Stream.
Landscaping: Landscaping for this building has been provided including
seed and sod for all grass areas; as well as trees and
shrubs at office entries.
<PAGE>
WAREHOUSE
HEATING: Warehouse area heating shall be designed to a performance
specification that requires a heat maintenance level of
65/o/ at a 0/o/ outdoor temperature. In addition, ceiling
fans will be provided in the warehouse area to promote air
circulation.
WAREHOUSE
DEMISING WALL: Warehouse demising wall shall be of full height metal stud
construction, with a single layer of drywall, both sides, to
conform with Carol Stream municipal code.
<PAGE>
EXHIBIT C-2
OFFICE SPECIFICATIONS
---------------------
* Office shall be metal stud or metal furring channel with 5/8 drywall, taped
and sanded both sides. Sound Batt insulation is provided for rooms
requested.
* All interior office walls to be vinyl finished with an allowance of
$14,000. The toilet rooms have ceramic tile wainscot on plumbing wall.
Warehouse side of walls to be taped only.
* All doors shall consist of a hollow metal type frame and a 3' x 7' solid
core wood veneer door. All doors shall be finished with one (1) coat of
stain and one (1) coat of clear sealer. All interior office doors shall
have locksets, all exterior office doors shall have locksets and closers,
restroom doors shall have closers and all other doors will have latchsets.
All hardware shall be commercial quality.
* Ceilings shall be 2' x 4' lay-in type acoustical tile with white grid and
white fissured tile. Ceiling system shall be suspended from roof joists.
* Floor covering shall be 1/8" vinyl composition floor tile with vinyl base
in restrooms, mail/copy, storage, telephone and kitchen areas. Carpeting
shall be 22 oz. loop pile in remaining areas.
* Office areas shall be heated and air conditioned with combination gas or
electric heating (75/o/ inside at 0/o/ outside) and air conditioning (78/o/
inside at 95/o/ outside). Forced air exhaust system shall be installed in
all toilet rooms.
* Private office areas shall be lighted with one 2' x 4' lay-in type
parabolic fixture for 70 FC. A maximum of ninety (90) duplex electrical
outlets (110 V) shall be installed. A maximum of forty five (45) telephone
outlets shall also be installed.
EXCLUDED ITEMS:
1. Bin mezzanine system
2. Wire Guidance system
3. Appliances in lunch room
<PAGE>
EXHIBIT D
RECORDING INFORMATION AS TO DECLARATION OF COVENANTS
CONDITIONS, RESTRICTIONS, AND EASEMENTS FOR
CAROL POINT BUSINESS CENTER
---------------------------
The Codes, Covenants, and Restrictions for the Carol Point Business Center is a
recorded document on file with the DuPage County Clerk's office as Document
#R90-136841.
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
---------------------
1. Tenant, its agents, servants and employees shall not block or obstruct
any of the entries, passages, doors, or sidewalks of the Project, or place,
empty, or throw any rubbish, litter, pallets, or material of any nature into
such areas, or permit such areas to be used at any time except for the ingress
and egress of Tenant, its agents, employees, visitors or invitees.
2. All trash, rubbish or litter removed from the Demised Premises by
Tenant, its agents, and employees shall be placed only in such areas and/or
receptacles as may be designated or provided by Landlord.
3. Tenant shall not store any materials, equipment, products, pallets,
etc., outside the Demised Premises without the prior consent of Landlord.
4. No sign, placard, picture, advertisement, name or notice shall be
displayed, painted, or affixed by Tenant, its agent or employees in or on any
part of the Building or the Project without the prior written consent of
Landlord and then only of such color, size, character, style, material,
installation and in such places as shall be approved and designated by Landlord.
5. Tenant, its agents and employees shall not use the Parcel, the
Building or the Demised Premises for housing, lodging, or sleeping purposes.
6. No birds, fowl, or animals shall be brought into or kept in or about
the Premises without the prior written consent of Landlord.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installation.
8. Canvassing, soliciting, distribution of handbills or any other written
material and peddling on or about Building or the Common Areas are prohibited,
and each Tenant shall cooperate to prevent the same.
9. The only window treatment permitted for the windows in the Demised
Premises is that installed by or approved in writing by Landlord. If Landlord
objects in writing to any curtains, blinds, shades, screens, hanging plants or
other similar objects attached to or used in connection with any window or door
of the Demised Premises, Tenant shall immediately discontinue such use. No
awning shall be permitted on any part of the Demised Premises. Tenant shall not
place anything against or near glass partitions or doors or windows which may
appear unsightly from outside the Premises.
10. No tenant shall do or permit anything to be done in any Demised
Premises, or bring or keep anything therein which will in any way increase the
rate of fire insurance on the Building or Project or on property kept therein.
Unless approved by Landlord, no kerosene, gasoline, oil, acids, caustics or any
other inflammable or combustible fluid, explosive or hazardous material shall be
used or kept in or about any premises, nor shall any method or heating or air
conditioning be used for any Demised Premises other than that approved by
Landlord. In the event any use or activity shall lead to an increase in fire or
other insurance premiums payable on the insurance obtained by Landlord, or
insurance procured by an individual tenant, the party causing such increase
shall be liable for payment of the same to Landlord or such individual tenant,
as the case may be. Tenant understands and agrees that the vehicle of any
tenant, or a vehicle belonging to any employee, licensee, invitee, agent, client
or visitor of a tenant or occupant, obstructing any unauthorized area,
particularly in areas designated by specially painted curbs such as fire lane
areas, may be towed away at the owner's risk and expense.
11. No Tenant shall install any radio or television antenna, loudspeaker
or other device on the roof or exterior walls of the Building or elsewhere on
the Parcel. No television, radio or recorder shall be played in such a manner as
to cause a nuisance to any other tenant.
12. Any damage done to the Building, the Parcel or the Demised Premises in
any way by the movement of furniture, equipment, or merchandise within, into or
out of the Building, the Parcel or the Demised Premises by Tenant's servants,
agents, employees, visitors or invitees shall be the responsibility of and paid
by Tenant.
13. Landlord reserves the right to exclude or expel from the Parcel any
person who, in Landlord's judgment, is intoxicated or under the influence or
liquor or drugs or who is in violation of any of these Rules and Regulations.
14. Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name or street address of the Building or
the Parcel.
15. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify, alter or amend, in whole or in part, any terms,
covenants, conditions and restrictions encumbering the Parcel and the terms of
any lease of space in the Building.
16. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
17. Landlord reserves the right to amend or repeal these Rules and
Regulations and to make such other Rules and Regulations as in its judgment may
from time to time be needed for the safety, care and cleanliness of the Building
and the Parcel and for the preservation of good order therein.
1
<PAGE>
EXHIBIT F
HAZARDOUS MATERIALS QUESTIONNAIRE
This questionnaire is designed to solicit information regarding your
proposed use of hazardous or toxic materials. Please complete the questionnaire
and return it to ___________________ for evaluation. If your use of materials or
generation of wastes is considered to be significant, further information may
be requested regarding your plans for hazardous and toxic materials management.
Your cooperation in this matter is appreciated. If you have any questions,
do not hesitate to call us for assistance.
I. PROPOSED TENANT
Associated Stationers, Inc.
--------------------------------------------------------------------
Name (Corporation, Individual, Corporate or Individual DBA, or Public
Agency)
5112
---------------------------------------------------------------------
Standard Industrial Classification Code (SIC)
1075 Hawthorne Drive
---------------------------------------------------------------------
Street Address
Itasca, Illinois 60143
---------------------------------------------------------------------
City, State, Zip Code
Contact Person & Title: Randall L. Teesdale, Sr. Distribution Mgr.
---------------------------------------------
Telephone Number: (708) 773-5172 Facsimile Number: (708) 7736491
--- -------------- --- --------
II. LOCATION AND ADDRESS OF PROPOSED LEASE
898 Carol Court
---------------------------------------------------------------------
Street Address
Carol Stream, Illinois 60188
---------------------------------------------------------------------
City, State, Zip Code
III. DESCRIPTION OF PROPOSED FACILITY USE
Describe proposed use and operation of Premises including principal
products or service to be conducted at facility:
This facility will be used for the wholesale distribution of
---------------------------------------------------------------------
office products.
---------------------------------------------------------------------
_____________________________________________________________________
Does the operation of your business involve the use, generation,
treatment, storage, transfer or disposal of hazardous wastes or
materials? Yes XX No ____. If yes, or if your SIC code number is
----
between 2000 to 4000, please complete Section IV.
IV. PERMIT DISCLOSURE
Does the operation of your business require permits, license or plan
approval from any of the following agencies? No
U.S. Environmental Protection Agency
City or County Sanitation District
State Department of Health Services
U.S. Nuclear Regulatory Commission
Air Quality Management District
Bureau of Alcohol, Firearms and Tobacco
City or County Fire Department
Regional Water Quality Control Board
1
<PAGE>
Indicate permit or license numbers, issuing agency and expiration
date or renewal date, if applicable.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
If your answer is yes to any of the above questions, please complete
Sections V and VI.
V. HAZARDOUS MATERIALS DISCLOSURE
Will any hazardous or toxic materials or substances be stored
onsite? Yes XX No _____. If yes, please describe the materials or
----
substances to be stored, quantities and proposed method of storage
(i.e., drums, aboveground or underground storage tanks, cylinders,
other), and whether the material is a Solid (S), Liquid (L) or Gas
(G):
Quantity on a
Material Storage Method Monthly Basis
See Attachment
_________________ ___________________ ___________________
_________________ ___________________ ___________________
_________________ ___________________ ___________________
Attach additional sheets if necessary.
Is any facility modification required or planned to mitigate the
release of toxic or hazardous substances or wastes into the
environment? Yes ____ No XX . If yes, please describe the proposed
---
facility modifications:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
IV. HAZARDOUS WASTE DISCLOSURE
Will any hazardous waste, including recyclable waste, be generated
by the operation of your business? Yes ____ No XX . If yes, please
----
list the hazardous waste which will be generated at the facility,
its hazard class and volume/frequency of generation on a monthly
basis.
Waste Name Hazard Class Volume/Month
________________ __________________ ___________________
________________ __________________ ___________________
________________ __________________ ___________________
Attach additional sheets if necessary.
The premises and the proposed method of storage (i.e., drums,
aboveground or underground storage tanks, cylinders, other).
Waste Name Storage Method Volume/Month
________________ __________________ ___________________
________________ __________________ ___________________
________________ __________________ ___________________
If yes, please also describe the methods(s) of disposal for each
waste. Indicate where disposal will take place and method of
transportation to be used:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Is any treatment or processing of hazardous wastes to be conducted
onsite? Yes ____ No XX . If yes, please describe proposed treatment/
----
processing methods:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2
<PAGE>
Which agencies are responsible for monitoring and evaluating
compliance with respect to the storage and disposal of hazardous
materials or wastes at or from the Premises:
(Please list all agencies)
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Have there been any agency enforcement actions regarding the company
facilities, or any existing company facilities, or any past, pending
or outstanding administrative orders or consent decrees? Yes ____
No XX . If yes, have there been any continuing compliance
----
obligations imposed on your company as a result of decrees or orders?
Yes ____ No ____. If yes, please describe:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Has the company been the recipient of requests for information,
notice and demand letters, cleanup and abatement orders, or cease and
desist orders or other administrative inquiries. Yes ____ No XX . If
----
yes, please describe:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Are there any pending citizen lawsuits, or have any notices of
violations been provided to the company or any existing facilities
pursuant to the citizens suit provisions of any statute? Yes ____
No XX . If yes, please describe:
----
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Have there been any previous lawsuits against the company regarding
environmental concerns? Yes ____ No XX.If yes, please describe how
----
these lawsuits were resolved?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Has an environmental audit ever been conducted at any of your
company's existing facilities? Yes ____ No XX . If yes, please
----
describe:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Does your company carry environmental impairment insurance? Yes ____
No XX . If yes, what is the name of the carrier and what are the
----
effective periods and monetary limits of such coverage?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
This Hazardous Materials Questionnaire is certified as being true and
accurate and has been completed by the party whose signature appears
below on behalf of Tenant as of the date set forth below.
DATE: 3/2/92 SIGNATURE /s/ Randall L. Dendaes
--------------------------- -------------------------
PRINT NAME: Randall L. Teesdale
--------------------------
TITLE: Sr. Dist. Serv. Mgr.
------------------------------
3
<PAGE>
EXHIBIT 10.35
LEASE
THIS INDENTURE, made March 22, 1973. between National Boulevard Bank of
Chicago, not individually but solely as Trustee under Trust Agreement, dated
March 15, 1973 and known as Trust No. 4722 hereinafter sometimes referred to as
Lessor, and UTILITY SUPPLY COMPANY, a corporation of Illinois hereinafter
sometimes referred to as Lessee;
WITNESSETH:
PREMISES
Section 101. Lessor, for and in consideration of the rents herein reserved
and of the covenants and agreements herein contained on the part of the Lessee
to be kept, observed and performed, does by these presents, demise and lease to
Lessee and Lessee hereby hires and lets from lessor the real estate located at
FOREST PARK INDUSTRIAL CENTER, FOREST PARK, ILLINOIS and described on Exhibit A
hereto attached, together with all improvements now located and to be
constructed thereon as hereinafter provided.
Section 102. Said real estate and improvements are sometimes herein
referred to as "demised premises."
TERM
Section 201. The term of this Lease shall commence on the first day of
the calendar month after completion of construction of a new building and other
improvements to be constructed by Lessor on the demised premises, as
hereinafter provided, and shall end March 31, 1995 unless sooner terminated as
herein set forth.
Section 202. Lessor and Lessee shall execute an instrument fixing the date
of commencement and termination of the term of this Lease.
Section 203. The term as so fixed is sometimes herein referred to as
"original term."
CONSTRUCTION OF IMPROVEMENTS
Section 301. Lessor agrees to construct on the demised premises
Section 302. Lessor shall diligently proceed with such construction and
shall complete the same and deliver possession thereof to Lessee on provided,
however, if construction is delayed because of changes in construction requested
by Lessee, strikes, lockouts, acts of God or the public enemy, governmental
restrictions, unavailability of materials or other matters beyond the control of
Lessor, then the time of completion of such construction shall be extended for
the additional time caused by such delay.
RENTAL
Section 401. In consideration of the leasing, aforesaid Lessee agrees to
pay Lessor, in coin or currency which at the time or times of payment is legal
tender for public or private debts in the United States of America, at or at
such other place as Lessor may from time to time designate in writing, a monthly
rent of $10,000.00 payable monthly in advance commencing on the first day of the
term and continuing on the first day of each month thereafter for the balance of
term. Any installment of rent accruing under the provisions of this Lease which
shall not be paid when due, shall bear interest at the rate of seven per cent
(7%) per annum from the date when the same is due hereunder until the same shall
be paid.
Section 402. In the event construction is completed and the demised
premises are delivered to and are accepted by Lessee, prior to the date of
commencement of the term of this Lease, rental shall be paid on a prorata basis
from the date of such delivery of such possession to date of the commencement of
the term.
TAXES AND ASSESSMENTS
Section 501. Lessee further agrees to pay as additional rent for the
demised premises, all taxes and assessments, general and special, water rates
and all other impositions, ordinary and extraordinary, of every kind and nature
what-
-1-
<PAGE>
soever, which may be levied, assessed or imposed upon the demised premises or
any part thereof or upon any building or improvements at any time situated
thereon, accruing or becoming due and payable during the term of this Lease and
any extension thereof, provided, however, that the general taxes levied against
the demised premises shall be prorated between Lessor and Lessee as of the date
of commencement of the term hereof for the first year of the term of this Lease,
and as of the date of expiration of said term for the last year of the term
hereof and any extension thereof, all on the basis of the then last available
tax bills. Benefit may be taken by Lessee of the provisions of any statute or
ordinance permitting any assessment to be paid over a period of years.
Section 502. Nothing herein contained shall be construed to require Lessee
to pay any franchise, inheritance, estate, succession or transfer tax of Lessor
or any income or excess profits tax assessed upon or in respect of any income of
Lessor or chargeable to or required to be paid by Lessor unless such tax shall
be specifically levied against the income of Lessor derived from the rent by
this Lease reserved, expressly and as and for a specific substitute for the real
estate taxes, in whole or in part, upon the demised premises or the improvements
situated thereon in which event said rent shall be considered as the sole income
of Lessor.
Section 503. Lessee further agrees to deliver to Lessor, duplicate receipts
or photostatic copies thereof showing the payment of all said taxes,
assessments, and other impositions, within thirty (30) days after the respective
payments evidenced thereby.
Section 504. Lessor shall, at its option, have the right at all times
during the term hereof to pay any such taxes, assessments or other charges or
impositions not paid by Lessee, and the amounts so paid, including reasonable
expenses, shall be so much additional rent due at the next rent day after any
such payments, with interest at the rate of seven per cent (7%) per annum from
the date of payment thereof.
Section 505. Lessee shall not be required to pay any tax, assessment, tax
lien or other imposition or charge upon or against said demised premises or any
part thereof or the improvements at any time situated thereon so long as Lessee
shall, in good faith and with due diligence, contest the same or the validity
thereof by appropriate legal proceedings which shall have the effect of
preventing the collection of the tax, assessment, tax lien or other imposition
or charge so contested, provided that, pending any such legal proceedings Lessee
shall give Lessor such reasonable security as may be demanded by Lessor to
insure payment of the amount of the tax, assessment, tax lien or other
imposition or charge, and all interest and penalties thereon.
Section 506. In the event that Lessee at any time institutes suit to
recover any tax, assessment, tax lien or other imposition or charge paid by
Lessee under protest in Lessor's name, Lessee shall have the right, at its own
sole expense, to institute and prosecute such suit or suits in Lessor's name, in
which event Lessee covenants and agrees to indemnify Lessor and save it harmless
from and against all costs, charges or liabilities in connection with any such
suit. All funds recovered as a result of any such suit shall belong to Lessee.
USE
Section 601. The demised premises shall be used for warehousing, office,
sales and distribution of Lessee's merchandise.
Lessee shall not use or occupy the demised premises or permit the demised
premises to be used or occupied contrary to any statute, rule, order, ordinance,
requirement or regulation applicable thereto or in any manner which would
violate any certificate of occupancy affecting the same, or which would cause
structural injury to the improvements or cause the value or usefulness of the
demised premises or any part thereof to diminish or which would constitute a
public or private nuisance or waste, and Lessee agrees that it will, promptly
upon discovery of any such use, take all necessary steps to compel the
discontinuance of such use and to oust the sub-tenants or occupants guilty of
such use.
MAINTENANCE OF PREMISES
Section 701. Lessee further agrees, at its expense to keep the demised
premises in good repair and in a clean and wholesome condition and to at all
times fully comply with all health and police regulations in force and also that
it will keep the improvements at any time situated upon the demised premises and
all sidewalks and area adjacent thereto, as well as in the area thereof, safe
and secure and conformable to the lawful and valid requirements of any
municipality in which said demised premises may be situated and of all other
public authorities, and will make, at its own expense, all additions,
improvements, alterations and repairs on the demised premises and on and to the
appurtenances and equipment thereof required by any lawful authorities or which
may be made necessary by the act or neglect of any other person or corporation
(public or private), including supporting the streets and alleys adjoining the
demised premises, and will keep Lessor harmless and indemnified at all times
against any loss, damage, cost or expense by reason of the failure so to do in
any respect or by reason of any accident, loss or damage resulting to persons or
property from any use which may be made of said premises or of any improvements
at any time situated thereon or by reason of or growing out of any act or thing
done or omitted to be done upon said premises or in any building at any time
situated thereon; and Lessee agrees that it will save, hold and keep Lessor and
the demised premises free and clear of and from any and all claims, demands,
penalties, liabilities, judgments, costs
-2-
<PAGE>
and expenses, including reasonable attorneys' fees, arising out of damage which
may be sustained by adjoining property or adjoining owners other persons or
property in connection with any remodeling, altering or repairing of any
building or buildings on the demised premises or the erection of any new
building or buildings thereon.
LIABILITY AND BOILER INSURANCE
Section 801. Lessee further agrees that it will at all times during the
term hereof, carry and maintain, for the mutual benefit of Lessor and Lessee,
general public liability insurance against claims for personal injury, sickness
or disease, including death and property damage in, on or about the demised
premises, or in, on or about the streets, sidewalks or premises adjacent to the
demised premises, such insurance to afford protection to the limit of not less
than $300,000.00 in respect to each person, and to the limit of not less than
$1,000,000.00, in respect to any one occurrence causing bodily injury or death,
and to the limit of not less than $100,000.00, in respect to property damage,
and will also carry, for the mutual benefit of Lessor and of Lessee, if any is
required, steam boiler insurance on all steam boilers, pressure vessels and
other such apparatus, including piping, in such amounts as Lessor may from time
to time reasonably require. Lessee shall furnish Lessor with a duplicate
certificate or certificates of such insurance policy or policies. All such
insurance shall be procured from a responsible insurance company or companies
satisfactory to Lessor and authorized to do business in the state where the
demised premises are located and may be obtained by Lessee by endorsement on its
blanket insurance policies, provided the insurance company or companies are
satisfactory to Lessor. All such policies shall provide that the same may not be
cancelled or altered except upon ten (10) days' prior written notice to Lessor.
Section 802. In case any action or proceeding shall be commenced against
Lessor growing out of any such loss, cost, damage or expense, Lessor may give
written notice of the same to Lessee and thereafter Lessee shall assume and
discharge all obligation to defend the same and save and keep Lessor harmless
from all expenses, counsel fees, costs, liabilities, judgments and executions in
any manner growing out of, pertaining to or connected therewith.
Section 803. Lessee will, at all such times as there may be one or more
passenger or freight elevators in any building on the premises, during the term
hereof, and any extensions thereof, carry and maintain elevator liability
insurance, for the mutual benefit of Lessor and Lessee, in an amount, in form
and with companies satisfactory to Lessor.
FIRE INSURANCE
Section 901. Lessee shall, at all times during the term of this Lease, at
its expense, keep in effect, insurance on all buildings and improvements on the
demised premises against loss by fire, the risks covered by what is commonly
known as "extended coverage," malicious mischief and vandalism, in an amount
equal to the full replacement value, from time to time, of such buildings and
improvements. The policy or policies evidencing such insurance shall be written
by a company or companies satisfactory to Lessor and authorized to do business
in the state where the demised premises are located, shall name Lessor and
Lessee as insureds thereunder, and shall provide that losses shall be paid to
said insureds as their respective interests may appear. At the request of
Lessor, a mortgage clause may be included in said policies covering Lessor's
mortgagee. Said policies shall contain a waiver by the insurance company of
recourse against Lessee and its agents because of any act or negligence of
Lessee and shall further provide that the same shall not be cancelled or altered
except upon ten (10) days' prior written notice to Lessor and to mortgagee. The
original of such policies shall be deposited with Lessor who may deposit the
same with its mortgagee.
Section 902. In case Lessee shall at any time fail, neglect or refuse to
insure such buildings and improvements and to keep the same insured as
hereinabove provided, then Lessor may, at its election, procure or renew such
insurance, and any amounts paid therefor by Lessor shall be so much additional
rental due at the next rent day after any such payment, with interest at the
rate of seven per cent (7%) per annum from the date of payment thereof.
Section 903. Not less frequently than once in each five (5) years after the
commencement of the term hereof, Lessee shall furnish, at its expense, to
Lessor, insurance appraisals such as are regularly and ordinarily made by
insurance companies, if procurable for such purpose, in order to determine the
then replacement value of the building or buildings and improvements on the
demised premises.
Section 904. It is further agreed that, in the event of loss under any such
policy or policies, the insurance proceeds shall be paid out upon architects'
certificates for the expense of repairing or rebuilding the buildings or
improvements which have been damaged or destroyed, provided, however, that it
shall first appear to the satisfaction of Lessor that the amount of insurance
money in its hands shall at all times be sufficient to pay for the completion of
said repairs and rebuilding; and upon the completion of said repairs or
rebuilding, free from all liens of mechanics and materialmen and others, any
surplus of insurance money shall be paid to Lessee.
Section 905. Lessee further agrees that, at Lessor's written request, and
provided such insurance is obtainable from an agency of the United States
Government, if and when obtainable, it will procure and maintain so-called war
risk and war damage insurance on the improvements located upon the demised
premises for not less than ninety (90%) per cent of their full insurance value
above foundation. Such insurance shall provide for payment of loss thereunder to
Lessor and Lessee, as their interests may appear, and shall at Lessor's request,
contain a mortgage clause in favor of Lessee's mortgagee, and the policies or
certificates evidencing such insurance shall be delivered to Lessor within sixty
(60) days after demand, and renewals thereof shall be delivered to Lessor at
least ten (10) days' prior to the expiration dates of the respective policies.
The provisions of Section 904 of this Lease shall apply with respect to any loss
payable under any such policy or policies of insurance.
-3-
<PAGE>
DAMAGE OR DESTRUCTION
Section 1001. Lessee further agrees that in case of damage to or
destruction of any building or improvements on the demised premises or of the
fixtures and equipment therein, by fire or other casualty, it will promptly, at
its expense, repair, restore or rebuild the same to the extent that it shall
deem necessary or desirable in connection with the requirements of its business,
provided that, upon the completion of such repairs, restoration or rebuilding,
the value and rental value of the buildings and improvements upon the demised
premises shall be substantially equal to the value and rental value of the
buildings and improvements thereon immediately prior to the happening of such
fire or other casualty. Rent shall not abate during the period of such repair,
restoration or rebuilding or if the improvements are not tenantable because of
such damage or destruction.
Section 1002. Before commencing such repairing, restoration or rebuilding,
involving an estimated cost of more than $2,500.00, (a) plans and specifications
therefore, prepared by a reputable licensed architect, shall have been submitted
to and approved by Lessor; (b) Lessee shall have furnished to Lessor, an
estimate of the cost of the proposed work, certified to by the architect by whom
such plans and specifications shall have been prepared; and (c) Lessee shall
either have furnished to Lessor a bond on which Lessee shall be principal, and a
surety company, authorized to do business in the state where the demised
premises are located, satisfactory to Lessor, shall be surety, and which bond
shall be in form satisfactory to Lessor, conditioned upon the completion of and
payment in full for such work within a reasonable time, subject, however, to
delays occasioned by strikes, lockouts, acts of God, governmental restrictions
or similar causes beyond the control of Lessee, or other security satisfactory
to Lessor to insure payment for the completion of all work free and clear of
liens.
LIENS
Section 1101. Lessee shall not do any act which shall in any way encumber
the title of Lessor in and to said demised premises, nor shall the interest or
estate of Lessor in said demised premises be in any way subject to any claim by
way of lien or encumbrance, whether by operation of law or by virtue of any
express or implied contract by Lessee, and any claim to or lien upon said
demised premises arising from any act or omission of Lessee shall accrue only
against the leasehold estate of Lessee and shall in all respects be subject and
subordinate to the paramount title and rights of Lessor in and to said premises
and the buildings and improvements thereon. Lessee will not permit the demised
premises to become subject to any mechanics', laborers' or materialmen's lien on
account of labor or material furnished to Lessee or claimed to have been
furnished to Lessee in connection with work of any character performed or
claimed to have been performed on the demised premises by or at the direction or
sufferance of Lessee; provided, however, that Lessee shall have the right to
contest in good faith and with reasonable diligence, the validity of any such
lien or claimed lien if Lessee shall give to Lessor such security as many be
demanded by Lessor to insure payment thereof and to prevent any sale,
foreclosure or forfeiture of the demised premises by reason of non-payment
thereof; provided, on final determination of the lien or claim for lien, Lessee
will immediately pay any judgment rendered, with all proper costs and charges,
and will, at its own expense, have the lien released and any judgment satisfied.
Section 1102. In case Lessee shall fail to contest the validity of any or
having commenced to contest the same and having given such security, shall fail
to prosecute such contest with diligence, or shall fail to have the same
released and satisfy any judgment rendered thereon, then Lessor may, at its
election (but shall not be required so to do,) remove or discharge such lien or
claim for lien (with the right, in its discretion, to settle or compromise the
same), and any amounts advanced by Lessor for such purposes shall be so much
additional rental due from Lessee to Lessor at the next rent day after any such
payment, with interest at the rate of seven per cent (7%) per annum from the
date of payment thereof.
CONDEMNATION
Section 1201. In the event the whole of the demised premises, or so much
thereof, including however a portion of the building or buildings, shall be
taken or condemned for a public or quasi-public use or purpose by any competent
authority and as a result thereof the balance of said premises cannot be used
for the same purpose as before such taking or condemnation, then and in either
of such events, the term of this Lease shall terminate when possession of the
demised premises shall be required for such use or purpose, and any award,
compensation or damages (here-after sometimes called the "award"), shall be paid
to and be the property of Lessor.
Section 1202. In the event only a part of the demised premises shall be
taken or condemned for a public or quasi-public use or purpose by any competent
authority, and as a result thereof the balance of said premises can be used for
the same purpose as before such taking or condemnation, this Lease shall not
terminate and Lessee, at its sole costs and expense, shall repair and restore
the premises and all improvements thereon. Any award paid as a consequence of
such taking or condemnation, shall be paid to Lessee and be applied to the cost
of said repairing and restoration. Any sums remaining after such application
shall be paid to Lessor. There shall be no reduction in the fixed rental because
of such taking.
RENT ABSOLUTE
Section 1301. Except as otherwise specifically provided herein, damage to
or destruction of any port on or all of the buildings, structures and fixtures
upon the demised premises, by fire, the elements or any other cause whatsoever,
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whether with or without fault on the part of Lessee, shall not terminate this
Lease or entitle Lessee to surrender the demised premises or entitle Lessee to
any abatement of or reduction in the rent payable, or otherwise affect the
respective obligations of the parties hereto, any present or future law to the
contrary notwithstanding. If the use of the demised premises for any purpose
should, at any time during the term of this Lease, be prohibited by law or
ordinance or other governmental regulation, or prevented by injunction, or if
there be any eviction by title paramount, this Lease shall not, except as
otherwise specifically provided herein, be thereby terminated, nor shall Lessee
be entitled by reason thereof to surrender the demised premises or to any
abatement or reduction in rent, nor shall the respective obligations of the
parties hereto be otherwise affected unless such eviction is due to the act of
Lessor or any person or persons claiming any interest in the demised premises by
or under Lessor.
ASSIGNMENT BY LESSEE
Section 1401. Lessee shall not assign this Lease without the written
consent of Lessor, which consent shall not be unreasonably withheld, and no such
assignment shall relieve Lessee of its obligations hereunder and Lessee shall
continue to be liable as a principal and not as a guarantor or surety, to the
same extent as though no assignment had been made.
Section 1402. Lessee may, without Lessor's consent, assign this Lease to
any corporation resulting from a merger or consolidation of the Lessee, provided
that the total assets and net worth of such assignee after such consolidation or
merger shall be more than that of Lessee immediately prior to such consolidation
or merger, and provided that Lessee is not at such time in default hereunder,
and provided further that such successor shall execute an instrument in writing
fully assuming all of the obligations and liabilities imposed upon Lessee
hereunder and deliver the same to Lessor; whereupon Lessee shall be discharged
from any further liability hereunder.
Section 1403. Lessee shall not allow or permit any transfer of this Lease,
or any interest hereunder, by operation of law, or convey, mortgage, pledge, or
encumber this Lease or any interest hereunder.
ANNUAL STATEMENTS
Section 1501. Lessee further agrees to furnish Lessor annually within
seventy-five (75) days of the end of each fiscal year, with a copy of its
*annual audited statement, and agrees that Lessor may deliver such statements to
its mortgagee.* and Guarantor's
INDEMNITY FOR LITIGATION
Section 1601. Lessee further agrees to pay all costs and expenses,
including attorney's fees, which may be incurred by or imposed on Lessor either
in enforcing this Lease or in any litigation to which Lessor, without fault on
its part, may be made a party, and if paid by Lessor, shall be so much
additional rent due on the next rent date after such payment together with
interest at seven percent (7%) per annum from the date of payment.
ESTOPPEL CERTIFICATE BY LESSEE
Section 1701. Lessee further agrees at any time and from time to time, upon
not less than twenty (20) days' prior written request by Lessor, to execute,
acknowledge and 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 same is in full force and effect as modified, and
stating the modifications), and the date to which the rental and other charges
have been paid in advance, if any, it being intended that any such statement
delivered pursuant to this Section 1701, may be relied upon by any prospective
purchaser of the fee, or mortgagee or assignee of any mortgage upon the fee, of
the demised premises.
INSPECTION OF PREMISES
Section 1801. Lessee agrees to permit Lessor and the authorized
representatives of Lessor, to enter the demised premises at all reasonable times
during business hours for the purpose of inspecting the same.
FIXTURES
Section 1901. All buildings and improvements and all plumbing, heating,
lighting, electrical and air-conditioning fixtures and equipment and other
articles of personal property used in the operation of such buildings as such
(as distinguished from operations incident to the business of Lessee) now or
hereafter located upon said land, together with all duct electrical lines,
whether or not attached or affixed to said land or any buildings thereon,
sometimes herein referred to as "building fixtures," shall be and remain a part
of the real estate and shall constitute the property of Lessor.
Section 1902. All of Lessee's trade fixtures and all personal property,
fixtures, apparatus, machinery and equipment now or hereafter located upon said
land, other than building fixtures as defined in Section 1901 hereof, and owned
by Lessee or any other occupants of the demised premises and whether or not the
same are affixed thereto, shall be and remain the personal property of Lessee or
such other occupants, and the same are herein sometimes referred to as "Lessee's
equipment."
Section 1903. Lessee's equipment may be removed from time to time by Lessee
or other occupants of the demised premises, provided, however, that if such
removal shall injure or damage the premises, Lessee shall reasonably repair the
damage and place the premises in the same condition as it would have been if
such equipment had not been installed.
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RE-ENTRY UPON DEFAULT
Section 2001. Lessee further agrees that any one or more of the following
events shall be considered events of default as said term is used herein, that
is to say, if
(a) Lessee shall be adjudged a bankrupt, or a decree or order
approving, as properly filed, a petition or answer asking reorganization of
Lessee under the Federal bankruptcy laws as now or hereafter amended, or
under the laws of any State, shall be entered, and any such decree or
judgment or order shall not have been vacated or stayed or set aside within
sixty (60) days from the date of the entry or granting thereof; or
(b) Lessee shall file or admit the jurisdiction of the court and the
material allegations contained in, any petition in bankruptcy, or any
petition pursuant or purporting to be pursuant to the Federal bankruptcy
laws as now or hereafter amended, or Lessee shall institute any proceedings
or shall give its consent to the institution of any proceedings for any
relief of Lessee under any bankruptcy or insolvency laws or any laws
relating to the relief of debtors, readjustment of indebtedness,
reorganization, arrangements, composition or extension; or
(c) Lessee shall make any assignment for the benefit of creditors or
shall apply for or consent to the appointment of a receiver for Lessee or
any of the property of Lessee; or
(d) A decree or order appointing a receiver of the property of Lessee
shall be made and such decree or order shall not have been vacated, stayed
or set aside within sixty (60) days from the date of entry or granting
thereof; or
(e) Lessee shall vacate the leased premises or abandon the same
during the term hereof; or
(f) Lessee shall make default in any monthly payments of basic rent
required to be made by Lessee hereunder when due as herein provided and
such default shall continue for ten (10) days after notice thereof in
writing to Lessee; or
(g) Lessee shall make default in any of the other covenants and
agreements herein contained to be kept, observed and performed by Lessee,
and such default shall continue for sixty (60) days after notice thereof in
writing to Lessee.
Upon the occurrence of any one or more of such events of default, it shall
be lawful for Lessor, at its election, to declare the said term ended, and the
said demised premises and the buildings and improvements then situated thereon
or any part thereof, either with or without process of law, to re-enter and to
expel, remove and put out, Lessee and all persons occupying said premises under
Lessee, using such force as may be necessary in so doing, and the said premises
and the buildings and improvements then situated thereon, again to repossess and
enjoy as in their first and former estate, without such re-entry and
repossession working a forfeiture of the rents to be paid and the covenants to
be performed by Lessee during the full term of this Lease. If default shall be
made in any covenant, agreement, condition or undertaking herein contained to be
kept, observed and performed by Lessee, other than the payment of rent as herein
provided, which cannot with due diligence be cured within a period of sixty (60)
days, and if notice thereof in writing shall have been given to Lessee, and if
Lessee, prior to the expiration of sixty (60) days from and after the giving of
such notice, commences to eliminate the cause of such default and proceeds
diligently and with reasonable dispatch to take all steps and do all work
required to cure such default and does so cure such default, then Lessor shall
not have the right to declare the said term ended by reason of such default;
provided, however, that the curing of any default in such manner shall not be
construed to limit or restrict the right of Lessor to declare the said term
ended and enforce all of its right and remedies hereunder for any other default
not so cured.
Section 2002. The foregoing provisions for the termination of this Lease
for any default in any of its covenants, shall not operate to exclude or suspend
any other remedy of Lessor for breach of any of said covenants or for the
recovery of said rent or any advance of Lessor made thereon, and in the event of
the termination of this Lease as aforesaid, Lessee agrees to indemnify and save
harmless Lessor from any loss arising from such termination and re-entry in
pursuance thereof, and to that end Lessee agrees to pay Lessor, after such
termination and re-entry and upon demand, all reasonable expenses of re-letting,
including, without limiting the generality of the foregoing, the reasonable
costs of decorating and restoring the premises, brokers' commissions and
Lessor's attorneys' fees, plus, at the end of each month of the demised term,
the difference between the net income actually received by Lessor from said
demised premises during such month and the rent agreed to be paid by the terms
of this Lease during such month.
LESSOR'S PERFORMANCE OF LESSEE'S COVENANTS
Section 2101. Should Lessee at any time fail to do any of the things
required to be done by it under the provisions of this Lease, Lessor, at its
option and pursuant to the provisions relating to notice contained in Section
2001, may (but shall not be required to) do the same or cause the same to be
done, and the amounts paid by Lessor in connection therewith shall be so much
additional rent due on the next rent date after such payment together with
interest at seven per cent (7%) per annum from the date of payment.
SUBORDINATION TO MORTGAGES
Section 2201. It is further expressly understood and agreed that this Lease
shall be subject and subordinate to any mortgage or deed of trust now upon the
demised premises and any mortgage or deed of trust hereafter placed upon
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the demised premises, provided that the mortgage or beneficiary under such deed
of trust agrees in writing with Lessee or adequate provision is made in such
mortgage or deed of trust, that, regardless of any default or breach under said
mortgage or deed of trust or of any possession or sale of the whole or any part
of the premises under or through such mortgage or deed of trust, that this Lease
and Lessee's possession shall not be disturbed by mortgagee or beneficiary or
any other party claiming under or through such mortgage or deed of trust,
provided, however, that Lessee shall continue to observe and perform Lessee's
obligations under this Lease and pay rent to whosoever may be lawfully entitled
to same from time to time. Lessee hereby agrees to execute, if same is required,
any and all instruments in writing which may be requested by Lessor to
subordinate Lessee's rights acquired by this Lease to the lien of any such
mortgage or deed of trust, all as aforesaid. Irrespective of whether or not this
Lease is subordinated to any such mortgage or deed of trust, the mortgagee or
beneficiary under such mortgage or deed of trust, shall agree in writing that
proceeds of insurance, or awards, payable to Lessee in the event of partial
condemnation as provided in Section 1202 shall be made available to Lessee for
the purpose of repairing, restoring and rebuilding, as provided in this Lease,
or adequate provision relative thereto shall be made in such mortgage or deed of
trust.
REMEDIES TO BE CUMULATIVE
Section 2301. No remedy herein or otherwise conferred upon or reserved to
Lessor, shall be considered exclusive of any other remedy, but the same shall be
cumulative and shall be in addition to every other remedy given hereunder now or
hereafter existing at law or in equity or by statute, and every power and remedy
given by this Lease to Lessor may be exercised from time to time and as often as
occasion may arise or as may be deemed expedient. No delay or omission of Lessor
to exercise any right or power arising from any default, shall impair any such
right or power or shall be construed to be a waiver of any such default or an
acquiescence therein.
Section 2302. No waiver of any breach of any of the covenants of this Lease
shall be construed, taken or held to be a waiver of any other breach or waiver,
acquiescence in or consent to any further or succeeding breach of the same
covenant.
Section 2303. Neither the rights herein given to receive, collect, sue for
or distrain for any rent or rents, moneys or payments, or to enforce the terms,
provisions and conditions of this Lease, or to prevent the breach or non-
observance thereof, or the exercise of any such right or of any other right or
remedy hereunder or otherwise granted or arising, shall in any way affect or
impair or toll the right or power of Lessor to declare the term hereby granted
ended, and to terminate this Lease as provided for in this Lease, because of any
default in or breach of the covenants, provisions or conditions of this Lease.
SURRENDER OF POSSESSION
Section 2401. Whenever the said term herein demised shall be terminated,
whether by lapse of time, forfeiture or in any other way, Lessee agrees that it
will at once surrender and deliver up said premises, including the buildings and
improvements thereon and the fixtures and equipment belonging to Lessor therein
contained, peaceably to Lessor and if Lessee shall thereafter remain in
possession thereof, it shall be deemed guilty of forcible detainer of the
premises under the statute and shall be subject to all the conditions and
provisions above named and to ejection and removal, forcibly and otherwise, with
or without process of law as above stated.
COVENANT OF QUIET ENJOYMENT
Section 2501. Lessor further agrees that at all times when Lessee is not in
default under the terms of and during the term of this Lease, Lessee's quiet and
peaceable enjoyment of the demised premises shall not be disturbed or interfered
with by Lessor or by any person claiming by, through or under Lessor.
SHORT FORM LEASE
Section 2601. This Lease shall not be recorded, but the parties agree, at
the request of either of them, to execute a Short Form Lease for recording,
containing the name of the parties, the legal description and the term of the
Lease.
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Section 2702. Such options may be exercised only (i) upon notice in writing
to Lessor not earlier than one (1) year, and not later than six (6) months prior
to the end of the preceding term; (ii) if Lessee is not then in default
hereunder; and (iii) if the preceding term has not therefore been terminated.
Section 2703. All such annual rentals during the extended periods as set
forth in Section 2701, shall be payable monthly in advance, in installments
equal to one twelfth (1/12th) of the applicable annual rental commencing on the
first day of each such extended term.
NOTICES OR DEMANDS
Section 2801. All notices to or demands upon Lessor or Lessee desired or
required to be given under any of the provisions hereof, shall be in writing.
Any notices or demands from Lessor to Lessee shall be deemed to have been duly
and sufficiently given if a copy thereof has been mailed by United States
registered or certified mail in an envelope properly stamped and addressed to
Lessee at 1900 South Des Plaines Avenue, Forest Park, Illinois, or at such other
address as Lessee may theretofore have furnished by written notice to Lessor,
and any notices or demands from Lessee to Lessor shall be deemed to have been
duly and sufficiently given if mailed by United States registered mail or
certified mail in an envelope properly stamped and addressed to Lessor at
P.O.Box 111, Forest Park, Illinois, and copy to Maynard J. Marks, 77 W.
Washington St., Pm, 717, Chicago, Illinois or at such other address as Lessor
may theretofore have furnished by written notice to Lessee. The effective date
of such notice shall be three (3) days after delivery of the same to the United
States Post Office for mailing.
COVENANTS RUN WITH LAND
Section 2901. All of the covenants, agreements, conditions and undertakings
in this Lease contained shall extend and inure to and be binding upon the heirs,
executors, administrators, successors and assigns of the respective parties
hereto, the same as if they were in every case specifically named, and shall be
construed as covenants running with the land, and wherever in this Lease
reference is made to either of the parties hereto, it shall be held to include
and apply to, wherever applicable, the heirs, executors, administrators,
successors and assigns of such party. Nothing herein contained shall be
construed to grant or confer upon any person or persons, firm, corporation or
governmental authority, other than the parties hereto, their heirs, executors,
administrators, successors and assigns, any right, claim or privilege by virtue
of any covenant, agreement, condition or undertaking in this Lease contained.
Section 2902. The term "Lessor" as used in this Lease, so far as covenants
or obligations on the part of Lessor are concerned, shall be limited to mean and
include only the owner or owners at the time in question of the fee of the
demised premises, and in the event of any transfer or transfers of the title to
such fee, Lessor herein named (and in case of any subsequent transfers or
conveyances, the then grantor) shall be automatically freed and relived, from
and after the date of such transfer or conveyance, of all personal liability as
respects the performance of any covenants or obligations on the part of Lessor
contained in this Lease thereafter to be performed; provided that any funds in
the hands of such Lessor or the then grantor at the time of such transfer, in
which Lessee has an interest, shall be turned over to the grantee, and any
amount then due and payable to Lessee by Lessor or the then grantor under any
provisions of this Lease, shall be paid to Lessee.
TIME OF ESSENCE
Section 3001. Time is of the essence of this Lease, and all provisions
herein relating thereto shall be strictly construed.
MISCELLANEOUS
Section 3101. The captions of this Lease are for convenience only and are
not to be construed as part of this Lease and shall not be construed as defining
or limiting in any way the scope or intent of the provisions hereof.
Section 3102. If any term or provision of this Lease shall to any extent be
held invalid or unenforceable, the remaining terms and provision of this Lease
shall not be affected thereby, but each term and provision of this Lease shall
be valid and be enforced to the fullest extent permitted by law.
Section 3103. This Lease shall be construed and enforced in accordance with
the laws of the state where the demised premises are located.
Section 3104. In addition to the insurance above provided, the Lessee
agrees to carry what is generally known as "rent insurance" in an amount equal
to one (1) year's rent covering any loss which may be occasioned by loss of use
of the demised premises in whole or in part, with loss payable clause to Lessor
and/or Mortgage of Lessor. National Boulevard Bank of Chicago as Trustee under
Trust No. 4722, its beneficiary under said Trust and the agents of the Lessor
and of the beneficiary shall be named as additional assured parties in all
policies of insurance provided for in Sections 801 and 803 of this lease.
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AMENDMENT AND ADDITION TO SECTION 201 OF PRINTED PORTION OF LEASE
-----------------------------------------------------------------
Section 3201. Section 201 of printed portion of lease is hereby amended and
supplemented as follows: by inserting the words "the substantial" between the
word "after" and the word "completion" in the second line of said Section 201
and adding to said Section the following: the term "substantial completion" as
used in this lease shall mean that most of the work required to be done by the
Lessor has been completed so that the building is ready for beneficial occupancy
for Lessee's use and purposes, and any remainder of the work to be done in
accordance with the plans and specifications will constitute minor items which
will not materially interfere with said beneficial occupancy. The demised
premises shall be deemed ready for occupancy and substantially completed when
John A. Iree, Architect, shall so certify in writing or when Lessee shall have
entered said premises and taken possession of same, whichever shall first occur.
CONSTRUCTION OF IMPROVEMENTS
----------------------------
Section 3301. Section 302 of the printed portion of this lease are hereby
deleted and in lieu thereof the following is substituted: A warehouse and office
building containing approximately 81,000 square feet on a plot of land
containing approximately 147,000 square feet substantially in conformity and in
accordance with the preliminary sketch ("Proposal") prepared by J. L. Williams &
Co., Inc., Contractors and Engineers, dated January 15, 1972 with revisions,
last of which is dated February 22, 1973, designated as Job No. 1-7302,
consisting of three (3) sheets designated SK-1, SK-2, SK-3 and preliminary
specifications dated March 5, 1973 consisting of five (5) pages, which sketch or
"Proposal" and preliminary specifications have been approved by the Lessor and
the Lessee, and are identified by the signatures of the parties to this lease
placed upon said sketch or "Proposal" and specifications. Final plans, drawings
and specifications are to be prepared by John A. Irbe, architect employed by J.
L. Williams & Co., Inc. within a reasonable time after date of this lease, and
when so prepared and completed shall be approved by the Lessor and Lessee within
ten (10) days after their submission to said parties. In connection herewith it
is expressly agreed that the parties hereto will not withhold approval of said
final plans, drawings and specifications to the extent that same are consistent
with the preliminary sketches or "Proposal" and specifications, and that the
parties hereto will in no event unreasonably withhold approval of such final
plans, drawings and specifications. In the event Lessee desires any changes from
the preliminary sketches, "Proposal" or specifications or final drawings or
specifications which will increase the cost of the improvements based upon the
preliminary sketch, "Proposal and specifications, that Lessee will pay the cost
and expenses of such changes and will contract for same directly with J. L.
Williams & Co., Inc., the General Contractor, who will erect and construct the
improvements and will do so at no cost and/or expense whatsoever to the Lessor,
provided, however, that no such changes shall be made without the express
written consent of the Lessor.
Section 3302. The selection of J. L. Williams & Co., Inc. as General
Contractor by the Lessor has been made with the consent and approval of It is
understood that a portion of the improvements to be erected on the demised
premises are commonly referred to as an "arcade" or "entrance" leading to the
building or improvements, part of which is located on Lot 1 of the resubdivision
described on Exhibit A attached to this Lease. Lessee agrees to deliver to
Lessor, upon request, written permission from the owner of the fee of said Lot 1
and the Lessee of the improvements on Lot 1 and the party in possession of such
improvements to erect part of said "arcade" or "entrance"
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on said Lot 1. Lessee agrees that upon termination of this lease by lapse of
time or otherwise to close off the said "arcade" or "entrance" to the building
being erected on the demised premises at its own cost and expense in a good
workman like manner to the satisfaction of the Lessor so as to make the
improvements or building erected on the demised premises a self-contained and
self-standing building as if said "arcade" or "entrance" had not been
constructed.
Section 3303. Lessor agrees to cause to be provided in the Construction
Contract with J. L. Williams & Co., Inc., General Contractor, for substantial
completion of the improvements above described on the demised premises and the
delivery of possession thereof to Lessee by September 1, 1973, subject to delays
caused by changes in construction requested by Lessee, strikes, lock-outs, acts
of God or public enemy, governmental restrictions, unavailability of materials
or other matters beyond the control of the General Contractor, J. L. Williams &
Co., Inc., and that in any of such events, the time of completion of such
construction shall be extended for an additional period of time equal to that
caused by such delay. The provisions contained in this Section shall impose no
obligation or responsibility on the part of the Lessor to complete said
improvements on the demised premises within the time provided for in the
Construction Contract with J. L. Williams & Co., Inc., the General Contractor,
and Lessee shall have no recourse against Lessor, and does hereby waive and
release Lessor from any responsibility for failure of the Contractor to complete
said construction of the improvements as agreed to by the General Contractor, J.
L. Williams & Co., Inc., and Lessee's only recourse for failure to substantially
complete the improvements on the demised premises as in said contract provided
for shall be against J. L. Williams & Co., Inc. only. Lessor, if necessary, will
assign any and all of its rights against J. L. Williams & Co., Inc. to Lessee so
that Lessee may enforce the obligations of J. L. Williams & Co., Inc. as
undertaken by it in its Construction Contract with Lessor, but all at the sole
cost and expense of Lessee.
AMENDMENT TO SECTION 401 OF PRINTED PORTION OF LEASE
----------------------------------------------------
Section 3401. Notwithstanding the provisions contained in Section 401 of
the printed portion of the lease, the rental therein provided shall be paid to
the order of Forest Park Industrial Center, Inc., P.O. Box 111, Forest Park,
Illinois, until otherwise notified in writing by Lessor, and such rental when
paid to Forest Park Industrial Center, Inc. shall satisfy the obligation
contained in said Section 401 of the printed form of this lease.
AMENDMENT TO SECTION 402 OF PRINTED PORTION OF LEASE
----------------------------------------------------
Section 3501. Section 402 of printed portion of lease is hereby amended by
inserting the word "substantially" before the word "completed" in the first line
of said Section 402.
AMENDMENT TO SECTION 505 OF PRINTED PORTION OF LEASE
----------------------------------------------------
Section 3601. Section 505 of printed portion of lease is hereby amended and
supplemented as follows: by striking from said Section 505 beginning with the
word "give" in the fifth line of said Section to the end of said Section and
substituting after the word "shall" in the fifth line of said Section the
following: "Upon request of Lessor, deposit with the Lessor cash or government
bonds satisfactory to the Lessor
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in an amount equal to not less than one hundred twenty-five percent (125%) of
the amount of the tax, assessment, tax lien or other imposition or charge, and
such additional amounts from time to time as may be necessary to keep on deposit
at all time an amount equal to one hundred twenty-five percent (125%) of said
taxes, assessment, tax liens or other impositions, and all interest and
penalties thereon so contested. Pending the diligent prosecution of any such
legal proceedings, and provided Lessee has maintained the deposit above provided
for, Lessor shall not have the right to pay, remove or discharge the tax,
assessment, tax lien or other imposition or charge so contested. The cash or
government bonds so deposited shall be held by the Lessor until said premises
shall have been released and discharged from any such tax, assessment, tax lien
or other imposition or charge and shall thereupon be returned to the Lessee less
the amount of any loss, cost, damage and reasonable expense that Lessor may
sustain in connection with the tax, assessment, tax lien or other imposition or
charge so contested; provided, however, that if Lessee fails to prosecute such
contest with due diligence, or fails to maintain said deposit as above provided,
or if Lessee is otherwise in default under the provisions of this Lease, Lessor
may use the cash or government bonds so deposited to pay any item for which
Lessor would be entitled to make advances, or to cure any other such default of
Lessee."
Section 3602. Lessee agrees that if the Mortgage holding a mortgage secured
by the demised premises shall at any time require monthly deposits of taxes and
insurance premiums, that said Lessee will make such deposits as and when
required by said Mortgage.
RATE OF INTEREST TO BE CHARGED
------------------------------
Section 3701. It is agreed that the rate of interest to be charged by
Lessor to Lessee for any advances made by Lessor pursuant to the term of this
Lease or for monies not paid by Lessee to Lessor when due, shall be at the rate
of 11% per annum instead of 7% as provided in the printed portion of this Lease.
AMENDMENTS OR OTHER DOCUMENTS REQUIRED BY THE MORTGAGE
------------------------------------------------------
Section 3801. If Mortgagee in the Mortgage to secure an indebtedness of
Lessor conveying the demised premises requires an additional or other covenants
and agreements than that contained in this lease or any amendments to the lease,
Lessee agrees to execute such amendments and changes as may be required by the
Mortgagee so long as the term of the lease is not changed and the maximum rental
provided by this lease is not increased and the option hereinafter contained is
not eliminated or altered. Specifically without limitation, Lessee agrees to
execute and deliver in the form required by the Mortgagee acceptance of the
premises, the commencement of the term and a receipt of a copy of Lessor's
assignment of the lease to the Mortgagee.
OPTION TO PURCHASE
------------------
Section 3901. If Lessee shall not be in default under the terms of this
lease, and provided that this lease has not theretofore been terminated, then
Lessee shall have the option not later than September 1, 1994 or earlier than
March 1, 1994 to purchase the demised premises during the month of March 1995 at
a price to be determined by an appraisal as of March 31, 1995, which appraisal
shall be made as hereinafter set forth. The purchase price determined by such
appraisal shall be paid in cash
-11-
<PAGE>
excepting that any balance then remaining unpaid of any encumbrance against said
demised premises shall be deducted from the purchase price. Title to the demised
premises shall be conveyed to the Lessee or its nominee if it exercises the
option herein granter and pays the purchase price by Trustee's Deed or other
suitable conveyance. The title to be conveyed shall be subject to the following:
(a) Taxes for the year 1973 and subsequent years;
(b) All utility easements of record and not of record;
(c) Railroad easements, if any;
(d) Other easements or claims of easements not shown by the public
record;
(e) Any lien or right to a lien for services, labor or material
heretofore or hereafter furnished to Lessee imposed by law whether
shown by the public records or not of record;
(f) Taxes or special assessments which are shown or not shown as
existing liens by the public records at the time of the exercise of
the option;
(g) Any defects of title liens, adverse claims or other matters which
result from any act after date hereof of Lessee or its successors
and assigns or any one claiming through or under any of them;
(h) Questions of survey, and particularly the fact that part of the
improvements are erected on part of Lot 1 of the subdivision
described in Exhibit A attached to this lease; and
(i) Standard exceptions contained in Owner's Title Policies as then
issued by the Lawyers' Title Insurance Corporation.
Section 3902. Lessee may exercise the foregoing option to purchase within
the time above provided by written notice to Lessor given in the manner
specified in Section 2801 of this lease with return receipt requested and shall
be accompanied by a certified or cashier's check to the order of Lessor or its
successor in the sum of $75,000.00 as earnest money, which earnest money shall
be increased to equal 10% of the purchase price when ascertained as hereinafter
provided. The sale shall be consummated pursuant to the terms of the Real Estate
Contract of like tenor and effect as that attached hereto marked Exhibit B, and
by this express reference thereto made a part hereof. The closing shall be made
through an escrow as provided in Exhibit B and Lessor shall deposit in the
escrow when established the earnest money paid to it and deed or instrument of
conveyance as above provided, and Lessee shall deposit the remainder of said
purchase price in said escrow. Said deposit shall be made within twenty (20)
days after the price is determined by the appraisal as hereinafter provided.
Lessee shall pay the rent at the rate provided for by this lease until the
entire purchase price is deposited in the escrow. Prepaid rent shall be the only
item to be prorated. It is agreed that the purchase price shall be net to the
Lessor, and, therefore, Lessee agrees to pay in addition to the purchase price
all broker's commission payable by reason of said sale of the demised premises
and to keep the Lessor and its beneficiary free and harmless of any claim for
such commissions. Lessor shall furnish the Owner's Guaranty Policy for the
purchase price at its cost, but the delivery of a commitment for such Owner's
Policy shall be sufficient for purpose of consummating the said sale and
purchase of the demised premises.
Section 3903. The appraisal provided for above, if the option to purchase
is exercised as above provided, shall be made by three (3) real estate
appraisers as follows:
Lessor and Lessee shall each appoint one (1) real estate appraiser not
later than fifteen (15) days after the giving of notice by Lessee of
-12-
<PAGE>
the exercise of its option to purchase as above provided, and the two (2)
appraisers so appointed shall select a third real estate appraiser not
later than fifteen (15) days after the expiration of said fifteen (15)
days. If the two (2) appraisers appointed by Lessor and Lessee are unable
or fail to neglect to appoint a third appraiser within the time above
provided, then the senior acting Judge of the United States District Court
for the District having jurisdiction of Cook Country, Illinois, at said
time or any other court that may then be in existence in lieu of the United
States District Court shall appoint the third appraiser. The three (3)
appraisers selected as aforesaid shall fix and determine the value of the
demised premises, including all improvements thereon and the amount so
fixed by them shall be the purchase price to be paid by Lessee to Lessor
for the demised premises. The value fixed and determined by said three (3)
appraisers shall be final and binding upon the parties hereto and not
subject to review except for fraud. Each of the parties shall pay the fee
of the appraiser appointed by them respectively and one-half of the fee of
the third appraiser who may be appointed pursuant to this Section.
Section 3904. It is agreed that the foregoing option given to Lessee to
purchase the demised premises shall not be assignable or transferable
voluntarily or involuntarily without the written consent of the Lessor first had
and obtained, and any assignment or transfer, voluntary or involuntary, or by
operation of law, shall be void. If Lessee is at any time permitted by Lessor to
make an assignment of this lease, such assignment shall not carry with it the
option to purchase, unless the Lessor specifically in writing consents to same,
but the option to purchase shall then be deemed to have terminated and become of
no force or effect.
CONTINGENCIES UNDER WHICH THIS LEASE WILL NOT BECOME EFFECTIVE
--------------------------------------------------------------
Section 4001. This lease is expressly subject to the approval of the final
plans, drawings and specifications by the parties hereto as above provided, and
is also expressly subject to Lessor's ability to obtain satisfactory interim and
permanent financing. Anything in this lease to the contrary notwithstanding, it
is hereby agreed that this lease shall be of no force or effect and there shall
be no liability on the part of the parties hereto if the approval is withheld by
the parties hereto of the final plans and specifications within the time above
provided and/or if Lessor is unable to obtain interim and/or permanent financing
to be secured by the demised premises and the improvements to be erected thereon
in a sum and upon terms and other conditions satisfactory to Lessor within
forty-five (45) days from the date of this lease.
LESSOR'S LIMITED LIABILITY
--------------------------
Section 4101. All representations and undertakings of National Boulevard
Bank of Chicago, as Trustee as aforesaid and not individually, are those of its
beneficiaries only, and no liability is assumed by or shall be asserted against
the National Boulevard Bank of Chicago personally as a result of the signing of
this instrument.
This lease consists of fifteen (15) pages, including eight (8) printed
pages
-13-
<PAGE>
and various exhibits described in this Lease.
IN WITNESS WHEREOF NATIONAL BOULEVARD BANK OF CHICAGO, not personally, but
as Trustee as aforesaid, has caused this lease to be signed by its Vice-
President and its corporate seal hereunto affixed by its Assistant Trust
Officer, and UTILITY SUPPLY COMPANY, a corporation of Illinois, has caused this
lease to be executed by its President and attested to by its Secretary, and has
caused its corporate seal to be affixed hereto, all on the date and year first
above written.
NATIONAL BOULEVARD BANK OF CHICAGO, as
Trustee aforesaid and not personally
By /s/ John O. Stouate
-------------------------------
ASST VICE PRESIDENT
ATTEST:
/s/ Roger L. Clifford
- ----------------------------
Assistant Trust Officer
UTILITY SUPPLY COMPANY
By /s/ Howard Wolf
-------------------------------
President
[CORPORATE SEAL APPEARS HERE]
ATTEST:
/s/ Harry Hecktman
- ----------------------------
Secretary
-14-
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Hyacinth E. Coney, a Notary Public in and for the said County in the
-----------------
State aforesaid, DO HEREBY CERTIFY that John O. Stouate, Asst, Vice President of
----------------------
the NATIONAL BOULEVARD BANK OF CHICAGO, and Roger L. Clifford Assistant Trust
-----------------
Officer of said Bank, who are personally known to me to be the same persons
whose names are subscribed to the foregoing instrument as such Vice President
and Assistant Trust Officer, respectively, appeared before me this day in person
and acknowledged that they signed and delivered said Instrument as their own
free and voluntary act and as the free and voluntary act of said Bank, as
Trustee, as aforesaid, for the uses and purposes therein set forth; and the said
Assistant Trust Officer then and there acknowledged that as custodian of the
corporate Seal of said Bank did affix the corporate Seal of said Bank to said
Instrument as his own free and voluntary act and as the free and voluntary act
of said Bank, as Trustee as aforesaid, for the uses and purposes therein set
forth.
Given under my Hand and Notarial Seal this 23rd day of March, 1973.
---- -----
/s/ Hyacinth E. Coney
----------------------
Notary Public
HYACINTH E. CONEY
My Commission Expires May 16, 1976
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY that Howard Wolf personally known to me to be the
-----------
President of UTILITY SUPPLY COMPANY, an Illinois corporation, and Harry
-----
Hecktman, personally known to me to be the Secretary of said corporation, and
- --------
personally known to me to be the same persons whose names are subscribed to the
foregoing Instrument, appeared before me this day in person and severally
acknowledged that as such President and Secretary of said corporation they
signed and delivered said instrument of said corporation and caused its
corporate Seal to be affixed thereto, pursuant to authority given by the Board
of Directors of said corporation as their free and voluntary act and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein set forth.
Given under my Hand and Notarial Seal this 22 day of March, 1973.
--- -----
/s/ Annette Davidson
[SEAL APPEARS HERE] ----------------------
Notary Public
-15-
<PAGE>
EXHIBIT A
---------
Lot 2 (except the East 24.15 feet thereof) in Forest Park Industrial Center Inc,
Resubdivision of that part of Blocks 1 and 2 and Lots 5, 6, 7, 8, 9, 10, 11, 12,
13 and 14, taken as a tract, in the Subdivision of the S.1/2 of Section 24,
Township 39 North, Range 12 East of the Third Principal Merician, in Cook
Country, Illinois.
Subject to all utility and other easements of record and not of record.
<PAGE>
REAL ESTATE SALE CONTRACT
1. UTILITY SUPPLY COMPANY, a corporation of Illinois (Purchaser) agrees to
--------------------------------------------------
purchase at a price of $ ____________________ on the terms set forth herein, the
following described real estate in Cook County, Illinois:
Lot 2 (except the East 24.15 feet thereof) in Forest Park Industrial Center
Inc. Resubdivision of that part of Blocks 1 and 2 and Lots 5, 6, 7, 8, 9,
10, 11, 12, 13 and 14, taken as a tract in the Subdivision of the S.1/2 of
Section 24, Township 39 North, Rante 12 East of the 3rd Principal Meridian
in Cook County, Illinois commonly known as ___________________, and with
approximate for dimensions of ___________ x __________, together with the
following property presently located thereon:
2. NATIONAL BOULEVARD BANK OF CHICAGO, not individually, solely as Trustee
-----------------------------------------------------------------------
under Trust Agreement dated 3/15/73 & known as just No. 4 (Seller) agrees to
- ---------------------------------------------------------
sell the real estate and the property described above, if any, at the price and
terms set forth herein, and to convey or cause to be conveyed to Purchaser or
nominee title thereto by a recordable Trustee's deed or other suitable
---------
instrument of conveyance with release of dower and homestead rights, if any, and
a proper bill of sale, subject only to: (a) covenants, conditions and
restrictions of record; (b) private, public and utility easements and roads and
highways, if any; (d) existing leases and tenancies (e) special taxes or
assessments for improvements not yet completed; (f) installments not due at the
date hereof of any special tax or assessment for improvements heretofore
completed; (g) mortgage or trust deed specified below, if any; (h) general taxes
for the year 1973 and subsequent years; and to exceptions set forth in Section
----
3901 of the Lease of which this Exhibit forms a part.
3. Purchaser has paid $75,000.00 as earnest money to be applied on the purchase
---------
price, and agrees to pay or satisfy the balance of the purchase price, plus or
minus prorations, at the time of closing as follows: (strike language and
subparagraphs not applicable) Earnest money to increased to equal ten (10%)
percent of the purchase price as ascertained.
Balance of purchase price ascertained as provided in Section 3901 of the
-----------------------------
Lease of which this Exhibit forms a part payable in cash.
<PAGE>
AMENDMENT OF LEASE
------------------
THIS AMENDMENT OF LEASE ("Amendment") is made this 17th day of January, 1995, by
and between FIRST BANK, N.A., as successor trustee to National Boulevard Bank of
Chicago, not personally or individually, but solely as Trustee under a Trust
Agreement dated March 15, 1973 and known as Trust No. 4722 ("Lessor"), and
UNITED STATIONERS SUPPLY CO. (formerly, UTILITY SUPPLY CO.), an Illinois
corporation ("Lessee").
RECITALS:
--------
A. Lessor and Lessee entered into a lease dated March 22, 1973, as amended
by Amendment to Lease of Real Estate dated May 4, 1973 (collectively, the
"Lease"), whereby Lessor leased to Lessee certain Premises (the "Premises")
commonly known as 7750 West Industrial Drive, Forest Park, Illinois.
B. The parties hereto by negotiation and agreement, desire to modify and
amend certain portions of said Lease to the mutual advantage of both parties.
NOW, THEREFORE, in consideration of the mutual covenants herein and in the
Lease contained, it is hereby agreed as follows:
<PAGE>
1. Commencing on April 1, 1995 the Lease shall be amended in the
following respects:
(a) Section 201 of the Lease shall be deleted in its entirety and
replaced with the following provision:
"Section 201. Term of Lease. The term of this Lease is hereby
extended through and including March 31, 1996, unless otherwise
terminated or extended as provided herein."
(b) In Section 401 of the Lease, the clause reading "...a monthly
rental of $10,000.00..." shall be deleted and replaced with the following
provision:
"... a monthly rental of $19,237.50 ($230,850.00 per annum or
$2.85 per square foot) ..."
(c) The following language shall be added to the Lease as Sections 2701
and 2702:
"Lessee's Option to Extend.
-------------------------
Section 2701. Lessee shall have, and is
hereby given, an option to extend the term
hereof for an additional one (1) year period
through and including March 31, 1997, upon the
same terms and conditions contained in this
Lease, except that, in lieu of the rental
provided in Section 401 of the Lease for the
term ending March 31, 1996, Lessee shall pay
during the extended term a monthly rental of
$19,912.50 ($238,950.00 per annum or $2.95 per
square foot).
Section 2702. Such option may be exercised
only: (i) upon written notice to Lessor given at
least one hundred and eighty (180) days prior to
March 31, 1996; (ii) if Lessee is not then in
default under the Lease; and (iii) if the
preceding Lease term has not theretofore been
terminated."
2
<PAGE>
(d) Sections 3901 through 3904 of the Lease shall be deleted in their
entirety and replaced with the following provisions:
"Option to Purchase
------------------
Section 3901. If Lessee shall not be in default under the terms of
this Lease, and provided that this Lease has not theretofore been
terminated, then Lessee shall have the option not later than September 1,
1995, or September 1, 1996 if Lessee exercises its Option to Extend the
term of the Lease as heretofore provided, to purchase the demised premises
during the month of April 1996 or April 1997, as the case may be, at a
price to be determined by agreement of the parties, or if the parties fail
to agree within ten days after notice of exercise as specified in Section
3902, by an appraisal as of March 31, 1996, or March 31, 1997, as the case
may be, which appraisal shall be made as hereinafter set forth. The
purchase price determined by such appraisal shall be paid in cash excepting
that any balance then remaining unpaid of any encumbrance against said
demised premises shall be deducted from the purchase price. Title to the
demised premises shall be conveyed to the Lessee or its nominee if it
exercises the option herein granted and pays the purchase price by
Trustee's Deed or other suitable conveyance. The title to be conveyed shall
be subject to the following:
(a) Taxes for the year 1995 (if purchased in 1996) or 1996 (if
purchased in 1997);
(b) All utility easements of record and not of record;
(c) Railroad easements, if any;
(d) Other easements or claims of easements not shown by the public
record;
(e) Any lien or right to a lien for services, labor or material
heretofore or hereafter furnished to Lessee imposed by law
whether shown by the public records or not of record;
(f) Taxes or special assessments which are shown or not shown as
existing liens by the public records at the time of the exercise
of the option;
3
<PAGE>
(g) Any defects of title liens, adverse claims
or other matters which-result from any act
after the date hereof of Lessee or its
successors and assigns or any one claiming
through or under any of them;
(h) Questions of survey, and particularly the
fact that part of the improvements are
erected on part of Lot 1 of the subdivision
described in Exhibit A attached to the
Lease; and
(i) Standard exceptions contained in Owner's
Title Insurance Policies as then issued by
the Chicago Title Insurance Company.
Section 3902. Lessee may exercise the foregoing option to purchase
within the time above provided by written notice to Lessor, given in the manner
specified in Section 2801 of the Lease, with return receipt requested, and shall
be accompanied by a certified or cashier's check to the order of Lessor or its
successor in the sum of $75,000.00 as earnest money, which earnest money shall
be increased to equal 10% of the purchase price when ascertained as hereinafter
provided. The sale shall be consummated pursuant to the terms of the Real Estate
Contract of like tenor and effect as that attached to the Lease as Exhibit B,
with such changes thereto as may be required by law at the time of the exercise
of the option to purchase.
The closing shall be made through an escrow as provided in Exhibit B.
Lessor shall deposit in the escrow, when established, the earnest money paid to
it and the Trustee's deed or instrument of conveyance as above provided, and
Lessee shall deposit the remainder of said purchase price in said escrow. Said
deposit shall be made within twenty (20) days after the price is determined by
the appraisal as hereinafter provided. Lessee shall pay the rent at the rate
provided for by this Lease until the entire purchase price is deposited in the
escrow. Prepaid rent shall be the only item to be prorated.
It is agreed that the purchase price shall be net to the Lessor, and,
therefore, Lessee agrees to pay, in addition to the purchase price, all broker's
commissions payable by reason of said sale of the demised premises and to keep
the Lessor and its beneficiary free and harmless of any claim for such
commissions.
Lessor shall furnish the Owner's Title Insurance Policy for the purchase
price at its cost, but the delivery of a commitment for such Owner's Policy
shall be sufficient for purpose of consummating the said sale
4
<PAGE>
and purchase of the demised premises.
In the event that Lessee exercises its option to purchase, as provided
above, Lessor reserves the right to assign all of Lessor's right,
title, and interest (but not Lessor's obligations) in and to the Real
Estate Contract to a Qualified Intermediary, as provided in IRC Reg.
1.1031(k)-1(g) (4) on or before the closing date, pursuant to an
exchange of the demised premises for other property of a like kind and
qualifying use within the meaning of Section 1031 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder.
Section 3903. The appraisal provided for above, if the option to purchase
is exercised as above provided, and the parties fail to agree upon the purchase
price, shall be made by three(3) real estate appraisers as follows:
Lessor and Lessee shall each appoint one (1) real estate
appraiser not later than fifteen (15) days after the giving of notice
by Lessee of the exercise of its option to purchase as above provided,
and the two (2) appraisers so appointed shall select a third real
estate appraiser not later than fifteen (15) days after the expiration
of said fifteen (15) days. If the two (2) appraisers appointed by
Lessor and Lessee are unable or fail or neglect to appoint a third
appraiser within the time above provided, then the senior acting Judge
of the United States District Court for the District having
jurisdiction of Cook County, Illinois, at said time or any other court
that may then be in existence in lieu of the United States District
Court shall appoint the third appraiser. The three (3) appraisers
selected as aforesaid shall fix and determine the value of the demised
premises, including all improvements thereon and the amount so fixed
by them shall be the purchase price to be paid by Lessee to Lessor for
the demised premises. The value fixed and determined by said three (3)
appraisers shall be final and binding upon the parties hereto and not
subject to review except for fraud. Each of the parties shall pay the
fee of the appraiser appointed by them respectively and one-half of
the fee of the third appraiser who may be appointed pursuant to this
Section.
Section 3904. It is agreed that the foregoing option given to Lessee to
purchase the demised premises shall not be assignable or transferable
voluntarily or involuntarily without the written consent of the Lessor first had
and obtained, and any assignment or transfer, voluntary or involuntary, or by
operation of law, shall be void. If Lessee is at any time permitted by Lessor to
make an assignment of this Lease,
5
<PAGE>
such assignment shall not carry with it the option to purchase, unless the
Lessor specifically in writing consents to same, but the option to purchase
shall then be deemed to have terminated and become of no force or effect."
2. Binding Effect. Except as modified herein, the terms, conditions
--------------
and covenants of the Lease shall remain in full force and effect, and shall be
binding upon and inure to the benefit of Lessor, Lessee and their respective
successors and permitted assigns.
3. Paragraph Headings. The paragraph headings herein contained are for
------------------
convenience and shall not be deemed to govern or control the substance hereof.
4. Governing Law. This Agreement shall be governed and construed under the
-------------
laws of the State of Illinois.
5. Inconsistency. Except as modified herein, the terms, conditions
-------------
and covenants of the Lease shall remain unchanged and otherwise in full force
and effect, and are hereby ratified and reaffirmed. In the event of an
inconsistency between this Amendment and the Lease, the terms herein shall
control.
6. Modification. This Amendment may not be modified or amended except
------------
by written agreement executed by the parties hereto.
6
<PAGE>
7. Capitalized Terms. All capitalized terms as used herein and not
-----------------
otherwise defined herein shall have the same meanings as are ascribed to them in
the Lease.
IN WITNESS WHEREOF, this Amendment is executed as of the day and year
set forth above.
LESSOR: FIRST BANK, N.A., as successor trustee
- ------ to National Boulevard Bank of Chicago,
as trustee under Trust Agreement dated
March 15, 1973 and known as Trust No.
4722
ATTEST:
By: [SIGNATURE NOT LEGIBLE] By:[SIGNATURE NOT LEGIBLE]
------------------------- ------------------------------------
Its: ASST. VICE PRESIDENT Its: ASST. VICE PRESIDENT
LESSEE: UNITED STATIONERS SUPPLY CO.
- ------
ATTEST:
By:[SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
------------------------- -------------------------------------
Its: Its: Vice President, Secretary
7
<PAGE>
EXHIBIT 10.36
LEASE AGREEMENT
BETWEEN
OTR, AN OHIO GENERAL PARTNERSHIP
on behalf of Landlord
AND
UNITED STATIONERS SUPPLY CO.
An Illinois Corporation
DATED __________, 199_____
<PAGE>
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT ("Lease"), dated May ______________, 1993, is between
OTR, an Ohio general partnership ("Landlord") acting as the duly authorized
nominee of the BOARD OF THE STATE TEACHERS RETIREMENT SYSTEM OF OHIO ("STRBO"),
and United Stationers Supply Co., an Illinois Corporation ("Tenant").
1. Premises. In consideration of the rents, terms, provisions and covenants
--------
of this Lease, Landlord hereby leases unto Tenant and Tenant hereby rents and
accepts from Landlord those certain premises containing approximately 46,847
rentable square feet, located on the 3rd and 4th Floors (the "Premises"). The
Premises are outlined on the floor plan attached hereto as Exhibit A and
incorporated herein by reference. The Premises are contained in that certain
building located at 1661 Feehanville Drive, Mt. Prospect, IL (the "Building"),
which Building contains eighty-five thousand six hundred fifty six (85,656) net
rentable square feet of space. The land on which the Building is situated,
together with all improvements located thereon (collectively, the "Property"),
is more particularly described on Exhibit B, attached hereto and incorporated
herein by reference.
2. Term.
----
(a) Subject to and upon the terms and conditions set forth below, the
initial term of this Lease shall be for a period of Sixty-six (66) Months (as
hereinafter defined), commencing on the Commencement Date (as hereinafter
defined) and ending on last day of the Sixty-sixth Month.
(b) For purposes of this Lease, the following terms shall have the
following meanings:
(i) "Commencement Date" shall mean the later of September 30, 1993 or
substantial completion (as hereinafter defined). Promptly upon
determination of the Commencement Date, Landlord and Tenant shall execute
a memorandum, setting forth the Commencement Date and the expiration date
of this Lease, in form and substance substantially similar to that
attached hereto as Exhibit C and incorporated by reference.
(ii) "Lease Year" shall mean each twelve (12) month period commencing
on the first day of the first full month after the Commencement Date and
each anniversary thereafter during the Term (as hereinafter defined) of
this Lease; provided, however, that if the Commencement Date is the first
day of the month, the first Lease Year shall commence on the Commencement
Date. The first Lease
1
<PAGE>
Year shall commence on the Commencement Date and end on the last day of
the last month of the first Lease Year regardless of whether the first
Lease Year is longer than twelve (12) months.
(iii) "Term" shall mean the initial term of this Lease and any
renewals or extensions thereof.
3. Rental.
------
(a) Base Rental. During the Term of this Lease, Tenant shall pay to
-----------
Landlord, as base rental (the "Base Rental") for the Office Space as follows:
<TABLE>
<CAPTION>
Lease Months Annual Base Rent Monthly Base Rent
------------ ---------------- -----------------
<S> <C> <C>
1 - 6 - -
7 - 12 $138,198.66 $23,033.11
13 - 24 $295,136.16 $24,594.68
25 - 36 $313,874.88 $26,156.24
37 - 48 $332,613.72 $27,717.81
49 - 60 $351,352.56 $29,279.38
61 - 66 $185,045.64 $30,840.94
</TABLE>
Each such monthly installments shall be due and payable in advance, on or
before the first day of each and every month during the Term, without notice,
demand or set-off; provided, however, that the first six month's rent will be
abated.
(b) Additional Rental. Tenant shall pay to Landlord, as Additional
-----------------
Rental (hereinafter defined), Tenant's Proportionate Share (as hereinafter
defined) of the Operating Expenses. If this Lease commences or terminates on
a date other than January 1, the annual Operating Expenses shall be prorated
by multiplying one-twelfth (1/12) of the annual Operating Expenses by the
number of full or partial months between the Commencement Date and December
31 of the year of commencement or between January 1 of the year of
termination and the termination date, as the case may be. As used in this
Lease, "Proportionate Share" shall mean a percentage factor, determined by
dividing the net rentable square footage contained in the Premises by the net
rentable square footage contained in the Building, or 85,656 percent
(54.69%); provided, however, that if the Building is not fully occupied,
Tenant's Proportionate Share of the Operating Expenses (which shall include
but not limited to Utilities and Janitorial) that vary with the occupancy of
the Building shall mean a percentage factor determined by dividing the net
rentable square footage contained in the Premises by the average net rentable
square footage occupied by tenants in the Building during a calendar year.
(i) Operating Expenses. "Operating Expenses" shall include those
------------------
expenses paid by or on behalf of Landlord in
<PAGE>
respect to the management, operation, service and maintenance of the
Property, including the Premises, in accordance with generally accepted
principles of office building management as applied to the operation and
maintenance of office buildings similar to the type and nature of the
Property and in the general market area as the Property. Operating
Expenses shall include, but not be limited to, (A) Real Estate Taxes (as
hereinafter defined); (B) premium costs for liability, boiler, extended
coverage, casualty and other insurance covering the Property to be
maintained by Landlord and required by the terms of this Lease; (C)
electricity, gas, water and other utility charges for the Property not
separately metered; (D) repair and maintenance of HVAC systems,
elevators, irrigation systems and other mechanical systems other than
repairs or maintenance made necessary due to negligence or wrongful
conduct of Landlord, its personnel, or by other Tenant; (E) repair and
maintenance of the Common Areas (as hereinafter defined) and the Building
structure and roof; (F) trash removal and snow removal; (G) janitorial
service; (H) wages, salaries and fees of operating, auditing, accounting,
maintenance and management personnel in connection with the Property; (I)
all payroll charges for such personnel, such as unemployment and social
security taxes, workers' compensation, health, accident and group
insurance, and other so-called fringe benefits; (J) rental charges for
office space chargeable to the operation and management but not rental of
the Property; (K) license permits and inspection fees; (L) supplies and
materials used in the operation and management of the Property; (M)
furnishings and equipment not treated by Landlord as capital expenditures
of the Property; (N) depreciation and the cost of any labor saving
devices that may, from time to time, be placed in operation as a part of
Landlord's maintenance program; (O) personal property taxes on property
used in the operation, maintenance, service and management of the
Property; (P) the cost, as reasonably amortized by Landlord, with
interest at the rate of ten percent (10%) per annum on the unamortized
amount, of any capital improvement made after completion of initial
construction of the Building which reduces Operating Expenses, but in an
amount not to exceed such reduction for the relevant year; (Q) management
fees relating to the Property; (R) the cost of any installation or
improvement required by reason of any law, ordinance or regulation, which
requirement did not exist on the date of the Lease and is generally
applicable to similar office buildings; and (S) all other expenses
necessary for the operation and management of the Property. (See insert
#1)
(ii) Real Estate Taxes. "Real Estate Taxes" shall include all taxes,
-----------------
including state equalization factor, if
3
<PAGE>
Insert #1
"Operating Expenses" shall not include:
(a) all costs and expenditures for which Landlord has a right to be reimbursed,
whether by insurance proceeds or otherwise, except through Additional Rent
payments by tenants:
(b) costs of improvements to leasable space in the Property;
(c) Costs of capital improvements (except for costs of any capital imporvements
made or installed for the purpose of reducing Expenses - to the extent of such
reductions - or made or installed pursuant to governmental requirement;
(d) All cost relating to activities for the solicitation and execution of
leases of space in the Property, including but not 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;
(e) expenses incurred in enforcing obligations of other tenants of the
Property;
(f) costs of decorating, redecorating, or special cleaning of tenant spaces not
provided on a regular basis to all tenants of the Property;
(g) wages, salaries, fees and fringe benefits paid to executive personnel,
officers or partners of Landlord or STRBO;
(h) The cost of abatement of pollutants and/or hazardous substances or
materials;
(i) Fines and/or penalties incurred due to non-compliance by Landlord or the
Property or any other tenant in the Property, with any law, governmental rule or
regulation or directive of any governmental authority;
(j) The costs and expenses to Landlord in curing its defaults or performing
work expressly provided in the Lease to be borne at Landlord's expense;
(k) the cost of any work or service performed for any facility other than the
Property and the Property systems;
(l) Any costs included in Operating Expenses representing an amount paid to a
person, firm, corporation or other entity related to landlord, STRBO, or
Landlord's management company, which is in excess of the amount which would have
been paid in the absence of such relationship;
<PAGE>
any, and assessments, special or otherwise, exclusive of penalties or
discounts levied upon or with respect to the Property, including the
Premises, imposed by any federal, state or local governmental agency, and
including any use, occupancy, excise, sales or other like taxes (other
than general income taxes on rent or other income from the Building
computed in the case of a graduated tax, as if Landlord's rent and other
income from the Building was Landlord's sole taxable income).
Real Estate Taxes also shall include the expense of contesting the
amount or validity of any such taxes, charges or assessments, such
expense to be applicable to the period of the item contested but no more
than realized savings from the contest. Real Estate Taxes shall not,
however, include income, franchise, capital stock, estate or inheritance
taxes unless Landlord reasonably determines that such taxes are in lieu
of real estate taxes, assessments, rental, occupancy and other like
excise taxes. For purposes of this Lease, Real Estate Taxes for any
calendar year shall be those taxes the last timely payment date for which
occurs within such calendar year. In case of special taxes or assessments
payable in installments, only the amount of the installment(s) the last
timely payment date for which occurs on or after the first day and on or
before the last day of such year shall be included in Real Estate Taxes
for that year.
Landlord shall retain the sole right to participate in any
proceedings to establish or contest the amount of Real Estate Taxes. If a
complaint against valuation, protest of tax rates or other action
increases or decreases the Real Estate Taxes for any calendar year,
resulting in an increase or decrease in rent hereunder, the Real Estate
Taxes for the affected calendar year shall be recalculated accordingly
and the resulting increased rent plus the expenses incurred in connection
with such contest, or decreased rent, less the expenses incurred in
connection with such contest, shall be paid simultaneously with or
applied as a credit against, as the case may be, the rent next becoming
due.
TENANT SHALL HAVE THE RIGHT TO PARTICIPATE IN ANY SUCH PROCEEDINGS OR,
WITH LANDLORDS PRIOR APPROVAL (WHICH SHALL NOT BE UNREASONABLY
WITHHELD), TO INSTITUTE SUCH PROCEEDINGS IF LANDLORD HAS NOT.
(c) Payment of Proportionate Share. To provide for current payments
------------------------------
of Operating Expenses, Tenant shall pay Tenant's Proportionate Share of the
Operating Expenses, as estimated by Landlord from time to time, in twelve
(12) monthly installments, commencing on the first day of the month following
the month in which Landlord notifies Tenant
4
<PAGE>
of the amount of its estimated Proportionate Share. Landlord and Tenant
intend to estimate the amount of Operating Expenses for each year and then to
reconcile such estimated expenses in the following year based on actual
Operating Expenses for such year paid by Landlord. If Tenant's Proportionate
Share of the actual Operating Expenses shall be greater than or less than the
aggregate of all installments so paid on account to Landlord for such twelve
(12) month period, then within twenty (20) days of Tenant's receipt of
Landlord's statement of reconciled Operating Expenses, Tenant shall pay to
Landlord the amount of such underpayment, or Landlord shall credit Tenant for
the amount of such overpayment against the next maturing installment(s) of
rent, as the case may be. The obligation of Tenant with respect to the
payment of Tenant's Proportionate Share of the Operating Expenses shall
survive the termination of this Lease. Any payment, refund, or credit made
pursuant to this subparagraph 3(c) shall be made without prejudice to any
right of Tenant to dispute the statement as hereinafter provided, or of
Landlord to correct any item(s) as billed pursuant to the provisions hereof.
Landlord's failure to give such statement shall not constitute a waiver by
Landlord of its right to recover rent that is due and payable pursuant to
this subparagraph 3(c). Landlord shall furnish to tenant a detailed statement
itemizing expenses including but not limited to the following; cleaning,
electrical maintenance, plumbing maintenance, heating, ventilation, air
conditioning equipment maintenance, elevator maintenance, general building
supplies, security, administrative staff and management fees, utility
expenses, payroll taxes, benefit/pension costs and insurance expenses
(Landlords statement) for such adjustment year.
(d) Dispute of Operating Expenses. Landlord shall maintain books and
-----------------------------
records showing Operating Expenses in accordance with sound management
practices and accounting, consistently applied. The books and records shall
be available to Tenant and its representatives for inspection an copying at
the offices of the Building upon reasonable prior notice. If Tenant questions
in writing any notice of reconciled Operating Expenses (or revised notice
thereof), and if the question is not amicably settled between Landlord and
Tenant within thirty days after said notice of reconciled Operating Expenses
(or revised notice) has been given, (during which Tenant shall not be deemed
to be in default the with respect to any items in dispute), Landlord shall,
during the 60 days next following the expiration of such 30-day period,
employ an independent certified public accountant acceptable to tenant to
audit Operating Expenses. The detail and results of such audit shall be made
available to both Landlord and Tenant (and such audit, it is determined or
agreed by the parties that Landlord has overcharged tenant in the notice of
reconciled Operating Expenses, by an amount
5
<PAGE>
which is greater that 5% of Tenant's proportionate share (as corrected) of
all actual Operating Expenses for the particular year, the Landlord will pay
for the cost of such audit. If the overcharge, if any, is less than 5%, the
Tenant will pay for the cost of such audit.
(e) Adjustments to Operating Expenses. If a clerical error occurs or
---------------------------------
Landlord or Landlord's accountants discover new facts, which error or
discovery causes Operating Expenses for any period to increase or decrease,
upon notice by Landlord to Tenant of the adjusted additional Operating
Expenses for such calendar year, the adjusted additional Operating Expenses
shall apply and any deficiency or overpayment of Tenant's Proportionate Share
of the Operating Expenses, as the case may be, shall be paid by Tenant or
taken as a credit by Tenant according to the provisions set forth above. This
provision shall survive the termination of the Lease.
(f) Other Charges. All costs, expenses and other sums that Tenant
-------------
assumes or agrees to pay to Landlord pursuant to this Lease ("Other Charges")
shall be deemed rental and, in the event of nonpayment thereof, Landlord
shall have all the rights and remedies herein provided for in case of
nonpayment of Base Rental. If a monthly installment of rent is not received
on or before the fifth (5th) day of the month in which it is due, other
remedies for nonpayment of rent notwithstanding, Tenant shall pay to
Landlord, a late charge of five percent (5%) of such installment as rent for
the purpose of defraying Landlord's administrative expenses incident to the
handling of such overdue payment, and such past due rent shall bear interest
at the greater of (i) a rate of interest equal to fifteen percent (15%) per
annum; (ii) a rate of interest equal to the prime rate as announced (the
"Default Rate"), for each day from the first day of the month through the
date such monthly installment of rent is received by Landlord. For purposes
of this Lease, "rent" shall mean Base Rental, Additional Rental, and Other
Charges.
(g) Place of Payment. Tenant shall pay all rent and other charges due
----------------
under this Lease without demand, deduction or set off to Landlord at the
office of Frain Camins & Swartchild at 1661 Feehanville, Mt. Prospect,
Illinois or at such other place as Landlord may designate from time to time
hereafter by written notice to Tenant.
4. Construction.
------------
(a) Improvements to be Constructed. Landlord, at its own cost and
------------------------------
expense, shall perform the work and make the installations in the Premises
that are designated as
6
<PAGE>
Landlord's Work in Exhibit D, attached hereto and incorporated herein by
reference. Landlord, at Tenant's cost and expense, shall perform the work and
make the installations in the Premises that are designated as Tenant's Work
in Exhibit D. Except as expressly set forth in Exhibit D, Landlord has made
no promise to alter, remodel or improve the Premises, the Building or the
Property.
(b) Work Prior to Commencement Date. All work, including Tenant's
-------------------------------
Work, in the Premises shall be substantially completed prior to September 30,
1993 (the "Estimated Completion Date") and the Premises shall be in good and
tenantable condition in all respects for occupancy by Tenant for its purposes
and uses so long as Tenant shall have approved the plans and specifications
for construction and remodeling of the Premises on or before July 1, 1993.
Tenant may make changes in said plans and specifications on or before July 9,
1993; provided, however, that in such event Landlord shall be given a
reasonable extension of time to complete Landlord's Work after the Estimated
Completion Date. Any extension of time and modifications to plans and
specifications shall be in writing, dated and signed by both parties. (If
Tenant does not timely submit to Landlord approved plans and specifications,
the Commencement Date shall be the Estimated Completion Date and rental shall
commence from that date notwithstanding the fact that the Premises are not
substantially completed.) The Estimated Completion Date shall be postponed in
the event of (i) the unavailability of materials and equipment that have been
specified and requested by Tenant so long as a reasonable effort on Landlords
behalf has been made to obtain an acceptable alternative or (ii) delays
caused by acts of God, strikes and other events beyond the reasonable control
of Landlord, and neither circumstance shall give rise to liability of
Landlord. Should the commencement date be delayed ninety (90) days beyond
that scheduled, Tenant shall have the right to cancel this lease. This right
to cancel shall not apply to delays caused by Tenant or by acts of God.
If the Premises are not completed by September 30, 1993 Landlord shall pay
for the holdover portion of costs associated with their existing premises.
Landlord shall be responsible for providing all construction documents at
Landlords sole cost and expense.
(c) Availability of Premises Prior to Commencement Date.
---------------------------------------------------
7
<PAGE>
Landlord shall permit Tenant and its contractors, mechanics, suppliers and
workmen to enter the Premises prior to the commencement date in order that
Tenant may perform any work, alterations, or installations, including
telephone, computer installations, and furniture move-in which are not being
performed by Landlord, notwithstanding that Landlord's contractors or
subcontractors are working in the Premises. The scheduling and coordination
of Tenant's contractors and their workmen and mechanics will be subject to
reasonable regulation by landlord and Landlord's contractor to avoid
reasonable interferences with labor employed by Landlord or Landlord's
contractor. Any such entry before the commencement date shall be subject to
all terms of this lease, except the covenant to pay rent; provided, that no
such early entry shall be deemed to constitute occupancy by Tenant or change
the commencement date or the expiration date.
(d) Substantial Completion. As used herein, the work in the Premises
----------------------
shall be "substantially completed" when; A) the work has been completed in
accordance with the plans and specifications subject to the completion of
punch list items B) a certificate of occupancy has been issued. C) The
Premises are free from debris and broom clean. D) The HVAC, passenger and
freight elevators and utility and plumbing systems (including telephone trunk
lines to the Premises) for the Premises, the lobby and all common and public
areas of floors to be occupied by Tenant are substantially completed and
fully operating in accordance with the approved plans and specifications. E)
All facilities and systems servicing the building and passing through the
Premises or any part thereof shall have been enclosed and there shall be no
access through the Premises which will materially interfere with or adversely
affect Tenant's use thereof for the purposes intended; any work remaining to
be done in the building shall be of such nature so as to not materially and
adversely interfere in a substantial and continuing manner with Tenant's use
and occupancy of the Premises for the normal conduct of Tenant's business. F)
All room located in the building core on all floors to be occupied in whole
or in part by Tenant, including mechanical rooms, toilet rooms, electrical
closest, janitor closets, freight elevator anterooms, lobbies and elevator
cars and stairways shall have been substantially completed with the building
standard finishes, fixtures, and accessories corresponding to each particular
core area. G) Landlord shall have delivered to Tenant the certificate of
Landlord's architect certifying the space is substantially completed. Tenant
and Landlord shall mutually prepare a punch list within 5 days after
occupancy and Landlord shall then have 30 days to complete or repair
8
<PAGE>
these items, if punch list is not completed within this stated time frame
Tenant can make repairs and deduct them from rent.
(e) Condition of Premises. Except as otherwise agreed to in writing,
---------------------
Tenant's taking possession of the Premises shall be conclusive evidence
against Tenant that the Premises were in good order and satisfactory
condition when Tenant took possession notwithstanding paragraph(d) above.
Landlord has made no representation respecting the condition of the Premises,
the Building or the Property, except as is expressly set forth in this Lease.
At the termination of this Lease, by lapse of time or otherwise, Tenant shall
remove all Tenant's property, including but not limited to, trade fixtures,
from the Premises, and shall return the Premises broom-clean and in as good a
condition as when Tenant took possession or as same may thereafter have been
put by Landlord, except for ordinary wear, loss by fire or other casualty,
and repairs that Landlord is required to make under this Lease. If Tenant
fails to remove any or all of its property upon termination of this Lease,
such property shall be deemed to be abandoned and shall become the property
of Landlord.
(f) Overload. To coordinate orderly move-ins and move-outs, no
--------
furniture, freight or equipment of any kind exceeding three hundred (300)
pounds shall be brought into the Building without prior notice to Landlord
and Landlord shall designate the time and manner of moving of the same.
Landlord shall have the right to prescribe the weight, size and position of
all safes and other heavy equipment (EXCEEDING ONE HUNDRED POUNDS PER SQUARE
FOOT) brought into the Building and also the times and manner of moving the
same in and out of the Building. Safes or other heavy objects shall, if
considered necessary by Landlord, stand on supports of such thickness as is
necessary to properly distribute the weight. Landlord will not be responsible
for loss of or damage to any such safe or property from any cause, and all
damage done to the Building by moving or maintaining any such safe or other
property shall be repaired at Tenant's expense.
5. Use of the Premises.
-------------------
(a) Use. Tenant shall use the Premises for the conduct of Tenant's
---
general business activity, and for no other purpose whatsoever. Tenant shall
not, without the prior written consent of Landlord, exhibit, sell or offer
for sale on the Premises or in the Building any article or thing, except
those articles and things generally connected with Tenant's stated use of the
Premises.
(b) Advertisement. Tenant shall not advertise the business, profession
-------------
or activities of Tenant conducted in the
9
<PAGE>
Building in any manner which violates the letter or spirit of any code of
ethics adopted by any recognized association or organization pertaining to
such business of Tenant, and shall never use any picture or likeness of the
Building in any circulars, notices, advertisements or correspondence without
Landlord's prior written consent.
(c) Solicitation. Tenant shall not disturb, solicit, or canvas any
------------
occupant of the Building and shall cooperate with Landlord to prevent same.
(d) Care. Tenant shall use and occupy the Premises so that no other
----
occupant of any adjoining premises will be unreasonably disturbed and shall
create no nuisance in, upon or about the Premises. Subject to the provisions
of Paragraph 8(b), Tenant shall take good care of the Premises, the fixtures
and appurtenances thereto, and all alterations, additions and improvements
thereto. Tenant will not make or permit to be made any use of the Premises or
any part thereof, and will not bring into or keep anything in the Premises or
any part thereof, that (i) violates any of the covenants, agreements, terms,
provisions and conditions of this Lease; (ii) directly or indirectly is
forbidden by public law, ordinance or regulation of any governmental or
public authority (including zoning ordinances); (iii) is dangerous to life,
limb or property; (iv) increases the risk to Landlord or any other tenant or
invalidate or increase the premium cost of any policy of insurance carried on
the Building or covering its operation; or (v) in the reasonable judgment of
Landlord, in any way impairs or tends to impair the character, reputation or
appearance of the Property as a first-class office building, or impairs or
interferes with any of the services performed by Landlord for the Property.
(e) Noise; Odors. Tenant shall not use, keep or permit to be used or
------------
kept any foul or noxious gas or substance in the Premises; permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors and/or
vibrations; interfere in any way with other tenants or those having business
therein; or bring in or keep any animals or birds in the Premises. Tenant
shall not use the Premises for housing accommodations or lodging or sleeping
purposes, or use any illumination other than electric light. Landlord at
their sole cost and expense, shall remove the halon prior to commencement of
construction.
6. Alterations.
-----------
(a) Prohibition. Tenant shall not make any alterations, additions or
-----------
improvements (collectively, the "Alterations") to the Premises, or to the
Building without
10
<PAGE>
the express prior written consent of Landlord; provided, however, that
Landlord shall not be unreasonable in withholding consent to nonstructural
Alterations. Before commencing any work in connection with the Alterations,
Tenant shall furnish to Landlord for its approval the following: (i) detailed
plans and specifications therefor, (ii) names and addresses of each of the
contractors and subcontractors, (iii) copies of all contracts, subcontracts
and necessary permits, (iv) a payment and performance bond, or other
indemnification, in form and amount satisfactory to Landlord, protecting
Landlord against any and all claims, costs, damages, liabilities and expenses
that may arise in connection with the Alterations, (v) such documentation as
is necessary to comply fully with the mechanics' lien law of the state in
which the Premises is located, and (vi) certificates of insurance, in form
and amount satisfactory to Landlord, from all contractors and subcontractors
who will perform labor or furnish materials, insuring Landlord against any
and all liability for personal injury, including workers' compensation claims
and for property damage that may arise out of or be in any manner connected
with the Alterations.
(b) Indemnification. In addition to the indemnity set forth in
---------------
Paragraph 12 of this Lease, Tenant hereby specifically agrees to indemnify
and hold harmless Landlord from and against any and all liabilities, costs
and expenses of every kind and description, including attorneys' fees, that
may arise out of or in any manner be connected with any Alterations made by
Tenant. Tenant shall pay the cost of all such Alterations and all costs
associated with decorating the Premises that may be occasioned thereby. Upon
completion of any such Alterations, Tenant shall furnish Landlord with (i)
receipted bills covering all labor and materials used, together with such
documentation as is necessary to comply fully with the mechanics' lien law of
the state in which the Premises are located; (ii) a true and correct copy of
the certificate of occupancy, if one is issued; and (iii) a certificate of
Tenant's architect or engineer stating that such Alterations were made in
accordance with the plans and specifications. Notice is hereby given that
Landlord shall not be liable for any labor or materials furnished or to be
furnished to Tenant upon credit, and that no mechanic's or other lien for
such labor or material shall attach to or affect the reversion or other
estate or interest of Landlord in and to the Premises.
(c) Compliance and Supervision of Alterations. All Alterations made by
-----------------------------------------
Tenant hereunder shall be installed in a good and workmanlike manner, using
only materials of the same or higher quality as those installed in the
Building. All Alterations shall comply with all requirements of Landlord's
insurance carriers and with all laws, rules, ordinances and regulations of
any lawful authority. Tenant shall permit
11
<PAGE>
Landlord to supervise construction operations in connection with any such
Alterations, if Landlord requests the right to do so (but Landlord shall have
no obligation to make such requests, or having done so, to supervise
construction). If Landlord chooses to supervise there shall be not cost to
tenant for such supervision. Landlord's supervision of construction shall be
done solely for the benefit of Landlord and shall not alter Tenant's
liability and responsibility under this Paragraph 6.
(d) Landlord's Property. All Alterations, whether temporary or
-------------------
permanent, including hardware, non-trade fixtures and wall and floor
coverings, whether placed in or upon the Premises by Landlord or Tenant,
shall become Landlord's property and shall remain with the Premises at the
termination of this Lease, whether by lapse of time or otherwise, without
compensation, allowance or credit to Tenant; provided, however, that
notwithstanding the foregoing, Landlord may request that any or all of said
Alterations in or upon the Premises made by Tenant be removed by Tenant at
the termination of this Lease. If Landlord requests such removal or if Tenant
removes its trade fixtures, Tenant shall remove the same prior to the end of
the Term and shall repair all damage to the Premises, the Building or the
Property caused by such removal. Tenant shall not, however, be required to
remove pipes and wires concealed in floors, walls or ceilings, provided that
Tenant properly cuts and caps the same, and seals them off in a safe, lawful
and workmanlike manner, in accordance with Landlord's reasonable requirements
and all applicable building codes. If Tenant does not remove any Alterations
when requested by Landlord to do so, Landlord may remove the same and repair
all damage caused thereby, and Tenant shall pay to Landlord the cost of such
removal and repair immediately upon demand therefor by Landlord, plus fifteen
percent (15%) of the cost of such removal to reimburse Landlord for its
administrative expense. Tenant's obligation to observe or perform this
covenant shall survive the expiration or termination of this Lease.
(e) Wiring. Landlord will direct electricians as to where and how
------
telephone and computer wires are to be introduced. The location of
telephones, call boxes and other office equipment affixed to the Premises
shall be subject to Landlord's approval. Landlord will provide Tenant with
specifications for the telephone and computer installation.
7. Mechanics' Liens.
----------------
(a) If, because of any act or omission of Tenant, any mechanic's lien
or other lien, charge or order for the payment of money shall be filed
against any portion of the Premises (other than for Landlords work), Tenant,
at its own
12
<PAGE>
cost and expense, shall cause the same to be discharged of record or bonded
against within ten (10) days of the filing thereof unless Tenant shall
contest the validity of such lien by appropriate legal proceedings diligently
conducted in good faith and without expense to Landlord; and Tenant shall
indemnify and save harmless Landlord against and from all costs, liabilities,
suits, penalties, claims and demands, including attorneys' fees, on account
thereof.
(b) If Tenant shall fail to cause such liens to be discharged of record
or bonded against within the aforesaid ten (10) day period or shall fail to
satisfy such liens within ten (10) days after any judgment in favor of such
lien-holders from which no further appeal might be taken, then Landlord shall
have the right to cause the same to be discharged. All amounts paid by
Landlord to cause such liens to be discharged, plus interest on such amounts
at the Default Rate shall constitute Other Charges payable by Tenant to
Landlord.
8. Maintenance and Repair.
----------------------
(a) Tenant's Maintenance. Except as provided in Paragraph 8(b) below,
--------------------
Tenant, at its sole cost and expense, shall maintain and repair during the
Term of this Lease the Premises and every part thereof and any and all
appurtenances thereto, including but not limited to, the doors and interior
walls of the Premises; special light fixtures; kitchen fixtures; auxiliary
heating, ventilation, or air-conditioning equipment; private bathroom
fixtures and any other type of special equipment, together with related
plumbing or electrical services; and rugs, carpeting, wall coverings, and
drapes within the Premises, whether installed by Tenant or by Landlord on
behalf of Tenant, and whether or not such items will become Landlord's
property upon expiration or termination of this Lease. Notwithstanding the
provisions hereof, in the event that repairs required to be made by Tenant
become immediately necessary to avoid possible injury or damage to persons or
property, Landlord may, but shall not be obligated to, make repairs to such
items at Tenant's expense, which shall constitute Other Charges payable by
Tenant to Landlord. Within ten (10) days after Landlord renders a bill for
the cost of said repairs, Tenant shall reimburse Landlord.
(b) Landlord's Maintenance. Subject to Paragraph 8(a) above, Landlord
----------------------
shall keep, repair and maintain the Building (including the roof and
structural members, the Common Areas, HVAC, plumbing, sprinklers, mechanical
and electrical equipment, the exterior and architectural finish, and all
items except those excepted elsewhere in this Lease) of which the Premises
are a part, and the lawn, shrubs and other landscaping on the Property, all
in good and tenantable
13
<PAGE>
condition during the Term of this Lease. Landlord shall, in addition, supply
reasonable snow removal for the walkways and parking areas of the Property
during Normal Business Hours (as hereinafter defined). Tenant shall notify
Landlord immediately when any repair to be made by Landlord is necessary. If
any portion of the Building or the Premises is damaged through the fault or
negligence of Tenant, its agents, employees, invitees or customers, then
Tenant shall promptly and properly repair the same at no cost to Landlord;
provided, however, that Landlord may, at its option, make such repairs and
Tenant shall, on demand, pay the cost thereof, together with interest at the
Default Rate to Landlord as Other Charges. Tenant shall immediately give
Landlord written notice of any defect or need for repairs, after which notice
Landlord shall have reasonable opportunity to repair same or cure such
defect. For the purposes of making any repairs or performing any maintenance,
Landlord may block, close or change any entrances, doors, corridors,
elevators, or other facilities in the Building or in the Premises, and may
close, block or change sidewalks, driveways or parking areas of the Property.
Landlord shall not be liable to Tenant, except as expressly provided in this
Lease, for any damage or inconvenience and Tenant shall not be entitled to
any abatement of rent by reason of any repairs, alterations or additions made
by Landlord under this Lease.
(c) Inspection. Tenant shall permit Landlord, its agents, employees
----------
and contractors, at any time and otherwise at reasonable times, upon
reasonable notice, to take any and all measures, including inspections,
repairs, alterations, additions and improvements to the Premises or to the
Building, as may be necessary or desirable to safeguard, protect or preserve
the Premises, the Building or Landlord's interests; to operate or improve the
Building; to comply on behalf of Tenant with all laws, orders and
requirements of governmental or other authority (if Tenant fails to do so)
after reasonable written notice; to examine the Premises to verify Tenant's
compliance with all of the terms, covenants, obligations and conditions of
this Lease; or to exercise any rights with respect to the Premises that
Landlord may exercise in the event of default by Tenant.
9. Common Areas.
------------
(a) Grant. During the Term of this Lease, Landlord grants to Tenant,
-----
its employees, customers and invitees, a nonexclusive license to use, in
common with all others to whom Landlord has granted or may hereafter grant a
license to use, the common areas of the Property, including but not limited
to, the sidewalks, lobbies, halls, passages, exits, vending/food services
areas, entrances, elevators, stairways, restrooms, parking areas (except as
provided for in subparagraph (b) below), driveways and landscaped areas
14
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(collectively, the "Common Areas") subject to reasonable rules and
regulations respecting the Common Areas as Landlord may from time to time
promulgate. The Common Areas shall not be obstructed by Tenant or used for
any purpose other than for ingress to and egress from the Premises. The
Common Areas are not for the use of the general public and Landlord shall in
all cases retain the right to control and prevent access thereto by all
persons whose presence, in the judgment of Landlord, shall be prejudicial to
the safety, character, reputation and interests of the Building and its
tenants, provided that nothing herein contained shall be construed to prevent
such access to persons with whom Tenant normally deals in the ordinary course
of Tenant's business unless such persons are engaged in illegal activities.
Neither Tenant nor its employees, customers or invitees shall go upon the
roof or mechanical floors or into mechanical areas of the Building.
(b) Parking. Parking will be provided in the surface parking area of
-------
the Property, and subject to the limitations below. Landlord shall have the
right to designate aboveground parking areas for the use of the Building, and
Tenant and its employees shall not park in parking areas not so designated,
specifically including entrances. Upon written notice from Landlord, Tenant
shall furnish to Landlord, within five (5) days after receipt of such notice,
the state automobile license numbers assigned to the automobiles of Tenant
and its employees. Landlord shall not be liable for any vehicle of Tenant or
its employees that the Landlord shall have towed from the Premises when
illegally parked. Landlord shall have no liability to Tenant for any damages
or claims arising from the use of the parking area or roadways by Tenant,
other tenants, or their customers, invitees or employees. Tenant shall be
allotted two hundred and thirty (230) nonreserved parking spaces. Landlord is
not responsible for the policing or enforcement of the exclusivity of these
underground spaces. Landlord will provide Tenant with seven (7) reserved
parking spaces as designated by Landlord. Landlord will also provide for
eight (8) non-exclusive visitor parking spaces as designated by Landlord.
(c) Right to Change Common Areas. Landlord may do and perform such
----------------------------
acts in and to the Common Areas as, Landlord, in its good business judgment,
shall determine to be advisable. Landlord hereby reserves the right to make
alterations, additions, deletions or changes to the Common Areas,
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including, but not limited to, changes in its size and configuration.
10. Building Services.
-----------------
(a) Electric. Landlord shall provide electric power to the Premises as
--------
an element of tenant improvements. At Landlords sole cost and expense Tenant
will be separately metered. Tenant will be billed directly by Commonwealth
Edison for their use of electrical service related to use of lights and
outlets.
(b) Water. Landlord shall provide water for drinking, lavatory and
-----
toilet purposes from the regular Building supply (at the prevailing
temperature) through fixtures installed by Landlord (or by Tenant with
Landlord's prior written consent); provided that Tenant shall reimburse
Landlord, at rates fixed by Landlord, for water used by Tenant for
supplementary air-conditioning or refrigerating installed by or for Tenant
and for any other water used by Tenant (except for public drinking water and
public lavatory use).
(c) Air-Conditioning and Heat. Landlord shall provide air conditioning
-------------------------
and heat to the Premises for comfortable occupancy during Normal Business
Hours, subject at all times, however, to restrictions placed upon Landlord by
any duly constituted governmental agency and/or by any utility supplier.
Tenant shall cooperate fully with Landlord to assure the effective operation
of the Building's air-conditioning and heating systems, including the closing
of venetian blinds and drapes, and if windows are operable, to keep them
closed when the air-conditioning or heating system is in use. Tenant shall
not use any apparatus or device in, upon or about the Premises that in any
way may increase the amount of such services usually furnished or supplied to
tenants in the Building, and Tenant shall not connect any apparatus or device
with the conduits or pipes, or other means by which such services are
supplied for the purpose of using additional or unusual amounts of such
services, without the prior written consent of Landlord. If Tenant uses such
16
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services under this provision to excess, Landlord reserves the right to
charge Tenant for such services, as rent. If Tenant refuses to make payment
upon demand of Landlord, such excess charge shall constitute a breach of the
obligation to pay rent under this Lease and shall entitle Landlord to the
rights granted in this Lease for such breach.
(d) Janitor Service. Landlord shall provide janitor service in and
---------------
about the Premises and the Building at the end of each Monday, Tuesday,
Wednesday and Thursday, and at Landlord's option, at the end of either Sunday
or Friday, except for Holidays (as hereinafter defined). Tenant shall not
provide any janitor service without Landlord's prior written consent. If
Landlord consents to janitor service provided by Tenant, the same shall be
subject to Landlord's rules and regulations and to Landlord's supervision,
but at Tenant's sole cost and expense (without reduction in Base Rent or
Additional Rental). Landlord shall further provide carpet cleaning in the
Common Areas and window cleaning at such times as Landlord, in its sole
opinion, considers that such cleaning is necessary. Each Tenant shall
cooperate with any janitor service in keeping the Premises neat and clean.
Landlord shall be in no way responsible to Tenant, its agents, employees or
invitees, for any loss of property from the Premises or for any damage to
property thereon, from any cause.
(e) Elevator Service. If the Building contains elevators, Landlord
----------------
shall provide passenger elevator during Normal Business Hours. In addition
subject to necessary scheduling to coordinate Tenants use with the use by
Landlord and the other Tenants of the building, Landlord shall provide
Tenant, at no additional cost, weekend use of the elevators for Tenant's
initial move to the Premises.
(f) Interruption of Services. Tenant hereby acknowledges that any one
------------------------
or more of the utilities or building services specified in this Paragraph 10
may be interrupted or diminished temporarily by Landlord or other person
until certain repairs, alterations or other improvements to the Premises or
other parts of the Property can be made or by any event or cause which is
beyond Landlord's reasonable control, including, without limitation, any
ration or curtailment of utility services; that Landlord does not represent,
warrant or guarantee to Tenant the continuous availability of such utilities
or building services; and that any such interruption shall not be deemed or
construed to be an interference with Tenant's right of possession, occupancy
and use of the Premises, shall not render Landlord liable to Tenant for
damages or entitle Tenant to any reduction of Base Rental, and shall not
relieve Tenant from its obligation to pay Base Rental and to perform its
other obligations under this Lease. If any substantial
17
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service or facility provided by Ownership is unavailable for longer than ten
(10) days, Tenant shall have full rights under remedies contain in the lease
hereunder.
(g) Energy Curtailment. Landlord and Tenant specifically acknowledge
------------------
that energy shortages in the region in which the Property is located may from
time to time necessitate reduced or curtailed energy consumption on the
Property. Tenant shall comply with all such rules and regulations as may be
promulgated from time to time by any governmental authority with respect to
energy consumption, and during such period of time as such governmental
authority may so require, Tenant shall reduce or curtail operations in the
Premises as shall be directed by Landlord or such governmental authority.
Compliance with such rules and regulations and/or such reduction or
curtailment of operation shall not constitute a breach of Landlord's covenant
of quiet enjoyment or otherwise invalidate or affect this Lease, and Tenant
shall not be entitled to any diminution or abatement in Base Rental during
the periods of reduction or curtailment of operations.
(h) Normal Business Hours. For purposes of this Lease, "Normal
---------------------
Business Hours" shall mean 7:00 a.m. to 6:00 p.m., Monday through Friday, and
8:00 a.m. to 1:00 p.m. on Saturday and not including Sundays and Holidays.
However, the normal business hours for the fourth floor will be extended to
7:00 p.m. Monday through Friday.
(i) Holidays. For purposes of this Lease, Holidays shall mean New
--------
Year's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving and
Christmas.
(j) "Upon request of Tenant, Landlord shall furnish air conditioning
and heating at times other than the times specified in the Lease, and if such
services are furnished by Landlord at such other times, Tenant shall
reimburse Landlord for furnishing such services, at Landlord's direct cost.
Landlord's cost shall be deemed to mean the minimum reasonable cost required
to provide heating and air conditioning to Tenant on an hourly after hours
basis or, alternately, shall be shared proportionately between the Tenant and
other Tenant, if any, located in the same HVAC zone who are receiving the
benefit of such services at the same time as the receiving Tenant.
Notwithstanding anything contained to the contrary herein, Landlord
shall not charge Tenant unit prices for such additional services in excess of
any other similar charge to any other Tenant in the Building."
"In the event Landlord has not billed the Tenant for additional
charges within 120 days after the month in
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which the Landlord claims the charges accrued, the Landlord shall be
conclusively presumed to have waived such charge(s).
11. Estoppel Certificates. Within ten (10) days after receipt of written
---------------------
request by Landlord, Tenant shall execute, acknowledge and deliver to Landlord
or to Landlord's mortgagee, prospective mortgagee, land lessor or prospective
purchaser of the Property or any part thereof, an estoppel certificate, in form
and substance substantially similar to that attached as Exhibit E and
incorporated herein by reference. Tenant shall make such modifications to such
estoppel certificate as may be necessary to make such certificate true and
accurate, it being intended that any such statement delivered pursuant to this
Paragraph 11 may be relied upon by any such mortgagee, prospective mortgagee,
prospective purchaser, or land lessor of the Property. If Tenant fails to
provide such estoppel certificate with ten (10) days after receipt of Landlord's
request, Tenant shall be deemed to have approved the contents of any such
certificate submitted to Tenant by Landlord and Landlord is hereby authorized to
so certify.
12. Indemnification; Waiver of Claims.
---------------------------------
(a) Tenant shall protect, indemnify, and hold harmless Landlord, its
agents, servants, employees, officers, directors and partners forever against
and from (i) any penalty, damages, charges or costs imposed or resulting from
any violation of any law, order or ordinance of any governmental agency, by
the use and occupancy of the Premises by Tenant, whether occasioned by the
neglect of Tenant or those holding under Tenant; (ii) all claims, losses,
costs, damages and expenses, including attorneys' fees, arising out of or
from any accident or other occurrence on or about the Premises or the
Property causing injury to any person or property, caused by the negligent or
intentional act or omission of Tenant or its servants, agents or employees;
(iii) all claims, losses, costs, damages and expenses, including attorneys'
fees, arising out of any failure of Tenant in any respect to comply with or
perform all the requirements and provisions of this Lease or arising out of
any use of the Premises or the Property by Tenant or any one claiming by,
through or under Tenant.
(b) Landlord shall not be liable for, and Tenant hereby waives all
claims against Landlord, (i) for any and all damage or loss to fixtures,
equipment or other property of Tenant and its servants, agents, employees,
contractors, suppliers, invitees, patrons and guests, in, upon or about the
Premises or the Property, or (ii) for injury or death to any person,
occurring in, upon or about the Premises or the
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Property, resulting from any cause whatever (except caused by the negligent
or intentional act or omission of Landlord or its servants, agents or
employees), including, but not limited to, water, snow, frost, ice,
explosion, falling plaster, fire or gas, smoke or other fumes, nor by reason
of the leaking, breaking, backing up or other malfunction of any lines,
wires, pipes, tanks, boilers, lifts or any other appurtenances, regardless by
whom installed or maintained (Tenant hereby expressly assuming all
responsibility for the safety and security of the person and property of
Tenant, and its servants, agents, employees, contractors, suppliers,
invitees, patrons and guests, while in, upon or about the Premises). The
occurrence of any event described in this Paragraph 12 shall not constitute a
breach of Landlord's covenant of quiet enjoyment set forth in Paragraph 17.
13. Insurance.
---------
(a) Tenant's Insurance. Tenant, at its sole cost and expense, shall
------------------
carry during the entire Term of this Lease, the following types of insurance:
(i) Commercial general liability insurance against injuries to
persons occurring in, upon or about the Premises, with minimum coverage
of Three Million Dollars ($3,000,000.00) per occurrence and Three Million
Dollars ($3,000,000.00) aggregate coverage per one (1) accident or
disaster, and One Million Dollars ($1,000,000.00) for property damage;
(ii) Fire, extended coverage, vandalism and malicious mischief, and
sprinkler damage and all-risk insurance coverage on all personal
property, trade fixtures, floor coverings, wall coverings, furnishings,
furniture, and contents for their full insurable value on a replacement
cost basis;
(iii) Business interruption insurance, against loss or damage
resulting from the same risks as are covered by the insurance mentioned
in subparagraph (i) above in an amount equal to the aggregate of one (1)
year's requirement of (A) Base Rental, (B) the amounts payable by Tenant
for Additional Rental as provided in subparagraph 3(b), and (C) insurance
premiums necessary to comply with this Paragraph 13; and
(iv) Workers' Compensation or similar insurance, if and to the extent
required by law and in form and amounts required by law.
(b) Landlord as Additional Insured. All such insurance required to be
------------------------------
maintained by Tenant shall name Landlord as an additional insured and shall
be written with a company or
20
<PAGE>
companies reasonably satisfactory to Landlord, having a policyholder rating
of at least "A" and be assigned a financial size category of at least "Class
XIV" as rated in the most recent edition of "Best's Key Rating Guide" for
insurance companies, and authorized to engage in the business of insurance in
the state in which the Premises are located. Tenant shall deliver to Landlord
copies of such policies and customary insurance certificates evidencing such
paid-up insurance. Such insurance shall further provide that the same may not
be canceled, terminated or modified unless the insurer gives Landlord and
Landlord's mortgagee(s) at least thirty (30) days' prior written notice
thereof.
(c) Landlord's Insurance. Landlord shall maintain in force, at all
--------------------
times during the Term of this Lease, a policy or policies of fire and
extended coverage insurance to the extent of at least 100% at the replacement
value of the Building.
(d) Increase in Premiums. If insurance premiums payable by Landlord or
--------------------
any other tenant are increased as a result of any breach of Tenant's
obligations under this Lease or as a result of Tenant's use and occupancy of
the Premises, Tenant shall pay to Landlord an amount equal to any increase in
such insurance premiums. Tenant shall have no obligation to pay any portion
of insurance premium increases resulting from any other Tenant's use or
occupancy.
14. Waiver of Subrogation. Neither Landlord nor Tenant shall be liable to
---------------------
the other for any business interruption or any loss or damage to property or in
any manner growing out of or connected with Tenant's use and occupation of the
Premises, the Building or the Property or the condition thereof, or of the
adjoining property, whether or not caused by the negligence or other fault of
Landlord or Tenant or of their respective agents, employees, subtenants,
licensees or assignees; provided, however, that this release shall apply only to
the extent that such business interruption or loss or damage is covered by
insurance, regardless of whether such insurance is payable to or protects
Landlord or Tenant or both. Nothing in this Paragraph 14 shall be construed to
impose any other or greater liability upon either Landlord or Tenant than would
have existed in the absence hereof. Because this Paragraph 14 will preclude the
assignment of any claim mentioned in it by way of subrogation (or otherwise) to
an insurance company (or any other person), each party to this Lease agrees
immediately to give to each insurance company that has issued to it policies of
fire and extended coverage insurance, written notice of the terms of the mutual
waivers contained in this paragraph, and to have the insurance policies properly
endorsed, if necessary, to prevent the invalidation of the insurance coverages
because of the mutual waivers contained in this Paragraph 14.
21
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15. Holding Over. If Tenant retains possession of the Premises or any part
------------
thereof after the termination of this Lease, Tenant shall, for the next thirty
days Tenant shall pay Landlord rent at one hundred twenty-five percent (125%)
times the monthly rate in effect immediately to the termination of this Lease.
After the initial thirty day period, from that day forward Tenant shall be a
Tenant from month to month and Tenant shall pay Landlord rent at one hundred and
fifty percent (150%) times the monthly rate in effect prior to the termination
of this lease for the time the Tenant remains in possession. No acceptance of
rent by, or other act or statement whatsoever on the part of Landlord or its
agent or employee, in the absence of a writing signed by Landlord, shall be
construed as an extension of or as a consent for further occupancy. Tenant shall
indemnify Landlord for all damages, consequential as well as direct, sustained
by reason of Tenant's retention of possession. The provisions of this Paragraph
15 do not exclude pursuit of Landlord's right of re-entry or any other right
hereunder.
16. Assignment and Sublease.
-----------------------
(a) Prohibition. Tenant shall not assign, convey, mortgage, pledge,
-----------
encumber or otherwise transfer this Lease or any interest therein, sublet the
Premises or any part thereof, or permit the use or occupancy of the Premises
or any part thereof by anyone other than Tenant or any successor of Tenant
resulting from a merger or consolidation, any entity under common control of
any of the partners of Tenant, without receiving Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed. Tenant
may however assign the Premises to an affiliate of Tenant. A transfer by
operation of law, merger or consolidation, or a change of any partnership
interest in Tenant or in the ownership of the voting stock of Tenant or any
direct or indirect parent of Tenant shall be deemed an assignment for
purposes of this Paragraph 16. Any purported transfer, encumbrance, pledge,
mortgage, assignment or subletting not in compliance herewith shall be void
and of no force or effect. In the event of any assignment, subletting,
transfer or occupancy by someone other than Tenant, whether or not expressly
or impliedly approved by Landlord, Tenant shall, nevertheless, at all times,
remain fully responsible and jointly and severally liable for the payment of
the rent and for compliance with all other obligations imposed upon Tenant
under the terms, provisions and covenants of this Lease. Any assignment or
sublease shall contain a provision whereby the assignee or subtenant agrees
to comply with and be bound by all of the terms, covenants, conditions,
provisions and agreements of this Lease to the extent applicable, and Tenant
shall deliver to Landlord, promptly after execution, an executed copy of each
assignment or sublease and an agreement of compliance by each assignee or
subtenant. Any sublease shall also contain a provision that
22
<PAGE>
in the event of default by Tenant hereunder and a termination of this Lease
by Landlord, such subtenant shall, at Landlord's option, attorn to Landlord
as if Landlord were the lessor under the sublease.
(b) Option to Cancel. Upon receipt of Tenant's written request for
----------------
Landlord's consent to subletting, assignment, transfer or occupancy by
someone other than Tenant, Landlord shall have the option to cancel this
Lease as of the date the requested subletting, assignment, transfer or
occupancy by someone other than Tenant, Landlord shall have the option to
cancel this Lease as of the date the requested subletting, assignment,
transfer or occupancy by someone other than Tenant is to be effective.
Landlord shall exercise its option to cancel this Lease by written notice to
Tenant within thirty (30) days after Landlord receives Tenant's request for
Landlord's consent. This option to cancel/recapture Premises shall be a one
time right at the time Tenant gives notice of intent to sublease, rather than
after Tenant has procured a sub-Tenant. If an affiliate Tenant is in
involved, Landlord may not cancel or recapture the Premises.
(c) Right to Collect Rents Directly. Upon the occurrence of an "event
-------------------------------
of default" as set forth in Paragraph 21 hereof, if all or any part of the
Premises is then assigned, sublet, transferred or occupied by someone other
than Tenant, then, in addition to any other remedies provided in this Lease
or provided by law, Landlord, at its option, may collect directly from the
assignee, subtenant, transferee or occupant all rent becoming due to Tenant
by reason of the assignment, sublease, transfer or occupancy. Any collection
directly by Landlord from the assignee or subtenant shall not be construed to
constitute a novation or a release of Tenant from the further performance of
its obligations under this Lease.
(d) Excess Rent. If Tenant assigns this Lease or sublets all or a
-----------
portion of the Premises for an amount in excess of the Base Rental (or the
pro rata share of Base Rental in the case of a sublease of a portion of the
Premises), then Tenant shall pay to Landlord, as rent, fifty percent (50%) of
such excess received by Tenant.
17. Quiet Enjoyment. If Tenant shall pay the rents and other sums due to
---------------
be paid by Tenant hereunder as and when the same become due and payable, and if
Tenant shall keep, observe and perform all of the other terms, covenants and
agreements of this Lease on Tenant's part to be kept, observed and performed,
Tenant shall, at all times during the Term herein granted, peacefully and
quietly have and enjoy possession of the Premises without any encumbrance or
hindrance by, from or through Landlord, except for regulations imposed by any
governmental or quasi-governmental agency on the occupancy of Tenant or the
conduct of Tenant's business operations.
23
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18. Compliance with Laws and with Rules and Regulations.
---------------------------------------------------
(a) Laws. Tenant, at its sole cost and expense, shall procure any
----
permits and licenses required for the transaction of Tenant's business in the
Premises. Tenant, at its sole cost and expense, shall promptly observe and
comply with all present and future laws, ordinances, requirements, orders,
directives, rules and regulations of all state, federal, municipal and other
agencies or bodies having jurisdiction relating to the use and occupancy of
the Premises, the Building and the Property at any time in force, applicable
to Tenant's use thereof, except that Tenant shall not be under any obligation
to comply with any law, ordinance, rule or regulation requiring any
alteration of the Premises, unless such alteration is required because of a
condition that has been created by, or at the instance of, Tenant, or is
required by reason of a breach of any of Tenant's covenants and agreements
under this Lease. Landlord shall not be required to repair any injury or
damage by fire or other cause, or to make any repairs or replacements of any
panels, decoration, office fixtures, railing, ceiling, floor covering,
partitions, or any other property installed in the Premises by Tenant.
(b) Rules and Regulations. Tenant and Landlord shall comply with all
---------------------
rules and regulations for the Building, which current rules and regulations
are attached hereto as Exhibit F and with such reasonable modifications
thereof and additions thereto as Landlord may make hereafter, from time to
time. Notwithstanding anything contained in this Lease, Landlord shall not be
responsible nor liable to Tenant, it agents, representatives, employees,
invitees or licensees, for the nonobservance by any other tenant of any rules
and regulations.
19. Fire and Casualty.
-----------------
(a) If the Premises or the Building or any substantial part 50% of
either is damaged or destroyed by fire or other casualty, cause or condition
whatsoever, and such damage or destruction cannot be repaired within one
hundred twenty days (120) days, Landlord and Tenant may terminate this Lease,
by written notice to Tenant given within thirty (30) days after such damage.
If the Premises are damaged or destroyed or access thereto or use thereof is
affected by the damage, then Landlord's termination shall be effective as of
the date of such damage; otherwise said termination shall be effective thirty
(30) days after such notice. Landlord shall give Tenant a written estimate of
time required to repair within thirty (30) days after such damage.
(b) If the Common Areas in the Building are damaged or destroyed by
fire or other casualty, cause or condition
24
<PAGE>
whatsoever, to such an extent as to substantially interfere with Tenant's use
of the Premises or if the Premises or a substantial part thereof are made
untenantable, and such damage or destruction cannot be repaired within one
hundred and ninety (90) days, then Tenant may terminate this Lease by giving
written notice to Landlord within thirty (30) days after such damage, said
termination to be effective as of the date of such damage.
(c) Unless this Lease is terminated as herein above provided, Landlord
shall proceed with due diligence to restore, repair and replace the Premises
and the Building to the same condition as they were in as of the Commencement
Date. Provided such damage or destruction was not caused or contributed to by
an intentional act or negligence of Tenant, its agents, employees, invitees
or those for whom Tenant is responsible, from and after the date of such
damage to date of completion of said repairs, replacements and restorations,
a just proportion of the rent shall abate according to the extent the full
use and enjoyment of the Premises are rendered impossible by reason of such
damage. Landlord shall be under no duty to restore any alterations,
improvements or additions made by Tenant. In all cases, due allowance shall
be given to Landlord for any reasonable delays caused by adjustment of
insurance loss, strikes, labor difficulties or any cause beyond Landlord's
control.
20. Eminent Domain.
--------------
(a) If all the Premises or a fifty (50%) percent or more substantial
part thereof shall be taken for any public or quasi-public use under any
statute or by rights of eminent domain or by private purchase in lieu
thereof, this Lease shall terminate as of the date of vesting of title.
Landlord shall be entitled to receive the entire award paid for such taking
or condemnation, Tenant hereby assigning to Landlord all Tenant's right,
title and interest therein, if any. Nothing contained 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, for the interruption of or damage to Tenant's business
or for Tenant's moving expenses but only if such award shall be in addition
to the award for the Property and the Building (or portion thereof)
containing the Premises.
(b) If fifty percent (50%) or more of the Building other than the
Premises shall be condemned, taken or purchased in lieu thereof, then
Landlord may terminate this Lease by notifying Tenant of such termination
within sixty (60) days after the date of vesting of title. This Lease shall
expire on the date specified in such notice of termination, which date shall
be not less than sixty (60)
25
<PAGE>
days after the giving of such notice. The rent hereunder shall be apportioned
as of such termination date.
(c) If more than twenty five (25%) of the surface parking area of the
Property is condemned, taken or purchased in lieu thereof, 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 and this Lease shall
terminate thirty (30) days after the date of such notice.
(d) Any such taking, condemnation or temporary requisition which does
not result in a termination of this Lease, as hereinbefore provided in this
Paragraph 20, shall not be cause for any reduction or diminution of the
rental payment hereunder.
21. Default.
-------
(a) If (i) Tenant fails to pay when due any rent, or any other sums
required to be paid hereunder by Tenant; or (ii) Tenant defaults in the
performance or observance of any other agreement or condition on its part to
be performed or observed, and Tenant shall fail to cure said default within
twenty (20) days after receipt of written notice thereof by Landlord; or such
longer period as is reasonably necessary to remedy such failure provided that
Tenant shall continuously and diligently pursue such remedy until such
failure is cured: or (iii) Tenant files a voluntary petition in bankruptcy or
is adjudicated a bankrupt or insolvent, or files any petition or answer
seeking any arrangement, composition, liquidation or dissolution under any
present or future federal, state or other statute, law or regulation relating
to bankruptcy, insolvency or other relief for debtors or seeks or consents to
or acquiesces in the appointment of any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties, or of the
Premises, or makes any general assignment for the benefit of creditors, or
admits in writing its inability to pay its debts generally as they become
due; or (iv) a court enters an order, judgment or decree approving a petition
filed against Tenant seeking any arrangement, composition, liquidation,
dissolution or similar relief under any present or future federal, state or
other statute, law or regulation relating to bankruptcy, insolvency or other
relief for debtors, and such order, judgment or decree shall remain unvacated
or unstayed for an aggregate of sixty (60) days (whether or not consecutive);
or (v) Landlord believes in its reasonable judgment that the prospect of
payment or performance of any of the terms, conditions and covenants of this
Lease to be paid or performed by Tenant are about to be impaired; or
26
<PAGE>
or (vii) Tenant abandons the Premises; then in any such event and at any time
thereafter, Landlord may, without further notice to Tenant, and in addition
to and not in lieu of any other rights or remedies available to Landlord at
law or in equity, exercise any one ormore of the following rights:
(x) Landlord may (A) terminate this Lease and the tenancy created
hereby by giving notice of such election to Tenant, and (B) reenter the
Premises, by summary proceedings or otherwise, remove Tenant and all
other persons and property from the Premises and store such property in a
public warehouse or elsewhere at the sole cost and expense of and for the
account of Tenant without Landlord being deemed guilty of trespass or
becoming liable for any loss or damage occasioned thereby.
(y) Landlord may reenter and take possession of the Premises, without
terminating this Lease and without relieving Tenant of its obligations
under this Lease, and divide or subdivide the Premises in any manner
Landlord may desire and lease or let the Premises or portions thereof,
alone or together with other premises, for such term or terms (which may
be greater or less than the balance of the remaining portion of the Term
of this Lease) and on such terms and conditions (which may include
concessions or free rent and alterations of the Premises) as Landlord, in
its discretion, may determine.
(b) If this Lease is terminated by Landlord pursuant to this Paragraph
21, Tenant nevertheless shall remain liable for any Base Rental, Additional
Rental, Other Charges required to be paid hereunder and damages that may be
due or sustained prior to such termination, and for all reasonable costs,
fees and expenses incurred by Landlord in pursuit of its remedies hereunder,
including attorneys', brokers' and other professional fees (all such rents,
damages, costs, fees and expenses being referred to herein collectively as
"Termination Damages") plus additional damages (the "Liquidated Damages")
which are hereby stipulated to be equal to the present value of Base Rental,
Additional Rental and Other Charges required to be paid hereunder that, but
for termination of this Lease, would have become due during the remainder of
the Term, plus the unamortized portion of tenant improvements and leasing
commissions, less the fair market rental rate for the remainder of the Term
of this Lease discounted at the current five (5) year treasury bill rate.
Termination Damages and Liquidated Damages shall be due and payable
immediately upon demand by Landlord following any termination of this Lease
pursuant to this Paragraph 21.
27
<PAGE>
(c) If Landlord reenters and takes possession of the Premises pursuant
to this Paragraph 21, without terminating this Lease, and relets the Premises
or any part thereof (which Landlord shall have no obligation to do), the net
rentals from such letting shall be applied first to the costs, fees and
expenses incurred by Landlord in pursuit of its remedies hereunder, including
attorneys', brokers' and other professional fees, in renting the Premises or
part thereof to others from time to time (including the cost and expense of
making such improvements to the Premises as may be necessary, in Landlord's
sole discretion, to enable Landlord to relet same). The balance, if any,
shall be applied by Landlord from time to time on account of the rent and
other payments due from Tenant hereunder, with the right reserved to Landlord
to bring such actions or proceedings for the recovery of any deficits
remaining unpaid as Landlord may deem favorable from time to time without
being obligated to await the end of the Term for the final determination of
Tenant's account. Any balance remaining, however, after full payment and
liquidation of Tenant's account as aforesaid shall be paid to Tenant with the
right reserved to Landlord at any time to give notice in writing to Tenant of
Landlord's election to cancel and terminate this Lease and the giving of such
notice and the simultaneous payment by Landlord to Tenant of any credit
balance in Tenant's favor that may at the time be owing to Tenant shall
constitute a final and effective cancellation and termination of this Lease
and the obligations hereunder on the part of either party to the other.
Landlord shall not be liable for, nor shall Tenant's obligations be
diminished by reason of, any failure by Landlord to relet the Premises or any
failure of Landlord to collect any rent due upon such reletting, providing
reasonable efforts to relet or collect have been made by Landlord.
(d) Upon the termination of this Lease or of Tenant's right to
possession of the Premises by lapse of time or earlier termination as herein
provided, Tenant shall remove its property from the Premises. Any such
property of Tenant not removed from the Premises by Tenant within thirty (30)
days after the end of the term or of Tenant's right to possession of the
Premises, however terminated, whichever occurs earlier, shall be conclusively
deemed to have been forever abandoned by Tenant and either may be retained by
Landlord as its property or may be disposed of in such manner as Landlord may
see fit.
(e) Notwithstanding anything contained herein, if Landlord shall have
given written notice of three (3) defaults in any twelve (12) month period,
no further prior notice by Landlord shall be required for Landlord to declare
this Lease to be in default.
28
<PAGE>
(f) If Tenant at any time fails to make any payment or perform any
other act on its part to be made or performed under this Lease, Landlord may,
but shall not be obligated to, and after reasonable notice or demand and
without waiving or releasing Tenant from any obligation under this Lease,
make such payment or perform such other act to the extent Landlord may deem
desirable, and in connection therewith to pay expenses and employ counsel.
Tenant shall pay upon demand all of Landlord's costs, charges and expenses,
including the fees of counsel, agents and others retained by Landlord,
incurred in SUCCESSFULLY enforcing Tenant's obligations hereunder or incurred
by Landlord in any litigation, negotiations or transactions in which Tenant
causes Landlord, without Landlord's fault, to become involved or concerned,
which amount shall be deemed to be rent due and payable by Tenant, upon
demand by Landlord, and Landlord shall have the same rights and remedies for
the nonpayment thereof, as in the case of default in the payment of rent.
(g) All rights and remedies of Landlord herein enumerated shall be
cumulative, and none shall exclude any other right or remedy allowed by law.
In addition to the other remedies in this Lease provided, Landlord shall be
entitled to the restraint by injunction of the violation or attempted
violation of any of the covenants, agreements or conditions of this Lease.
22. Waiver of Default or Remedy. No waiver of any covenant or condition or
---------------------------
of the breach of any covenant or condition of this Lease shall be taken to
constitute a waiver of any subsequent breach of such covenant or condition nor
to justify or authorize the nonobservance on any other occasion of the same or
of any other covenant or condition hereof, nor shall the acceptance of rent by
Landlord at any time when Tenant is in default under any covenant or condition
hereof be construed as a waiver or such default or of Landlord's right to
terminate this Lease on account of such default, nor shall any waiver or
indulgence granted by Landlord to Tenant be taken as an estoppel against
Landlord, it being expressly understood that if at any time Tenant shall be in
default in any of its covenants or conditions hereunder an acceptance by
Landlord of rental during the continuance of such default or the failure on the
part of Landlord promptly to avail itself of such rights or remedies as Landlord
may have, shall not be construed as a waiver of such default, but Landlord may
at any time thereafter, if such default continues, terminate this Lease or
assert any other rights or remedies available to it on account of such default
in the manner hereinbefore provided.
23. Landlord's Lien.
---------------
29
<PAGE>
25. Force Majeure. If Landlord or Tenant shall be delayed, hindered in or
-------------
prevented from the performance of any act required hereunder (other than the
payment of rent and other charges payable by Tenant) by reason of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
riots, insurrection, the act, failure to act or default of the other party, war
or any other reason beyond the reasonable control of the party who is seeking
additional time for the performance of such act, then performance of such act
shall be excused for the period of the delay and the period for the performance
of any such act shall be extended for a reasonable period, in no event to exceed
a period equivalent to the period of such delay. No such interruption of any
service to be provided by Landlord shall ever be deemed to be an eviction,
actual or constructive, or disturbance of Tenant's use and possession of the
Premises, the Building or the Property.
26. Subordination of Lease.
----------------------
30
<PAGE>
(a) Landlord reserves the right and privilege to subject and
subordinate this Lease to any and all mortgages, deeds of trust or land
leases now existing upon or that may be hereafter placed upon the Premises
and the Property and to all advances made or to be made thereon and all
renewals, modifications, consolidations, replacements or extensions thereof
and if such right is exercised, the lien of any such mortgages, deeds of
trust or land leases shall be superior to all rights hereby or hereunder
vested in Tenant, to the full extent of all sums secured thereby. In
confirmation of such subordination, Tenant shall, on request of Landlord or
the holder of any such mortgages, deed(s) of trust and land leases, execute
and deliver to Landlord within ten (10) days any instrument that Landlord or
such holder may reasonably request. Landlord shall use their best efforts to
obtain a non-disturbance agreement. "Notwithstanding anything to the contrary
in this Lease, Landlord's right to subordinate this Lease is conditioned upon
Landlord providing Tenant with a Non-Disturbance and Attornment Agreement,
signed by the Lender, in the form attached as Exhibit 26(a) to this Lease,"
or in such other form as is acceptable to Lender and Tenant.
(b) If the interest of Landlord under this Lease shall be transferred
by reason of foreclosure, deed in lieu of foreclosure, or other proceedings
for shall be bound to the transferee (the "Purchaser") under the terms,
covenants and conditions of this Lease for the balance of the Term remaining,
and any extensions or renewals, with the same force and effect as if the
Purchaser were the landlord under this Lease, and at the option of Purchaser,
Tenant shall attorn to the Purchaser (including the mortgagee under any such
mortgage, if it be the Purchaser), as its landlord, the attornment to be
effective and self-operative without the execution of any further instruments
upon the Purchaser succeeding to the interest of Landlord under this Lease.
The respective rights and obligations of Tenant and the Purchaser upon the
attornment, to the extent of the then remaining balance of the Term of this
Lease, and any extensions and renewals, shall be and are the same as those
set forth in this Lease.
27. Notices and Consents. All notices, demands, requests, consents and
--------------------
approvals that may or are required to be given by either party to the other
shall be in writing and shall be deemed given when sent by United States
certified or registered mail, postage prepaid, or by overnight courier (a) if
for Tenant, addressed to Tenant at 2200 Golf Road, Des Plaines, Illinois 60016
Attention: President, or at such other place as Tenant may from time to time
designate by notice to Landlord, or (b) if for Landlord, addressed to __________
_______________ with a copy to Landlord, c/o OTR, 275 East Broad Street,
Columbus, Ohio 43215, Attention: Real Estate Manager, or at such other place as
31
<PAGE>
Landlord may from time to time designate by notice to Tenant. All consents and
approvals provided for herein must be in writing to be valid. Notice shall be
deemed to have been given if addressed and mailed as above provided on the date
two (2) days after deposit in the United States mail or one (1) day after
deposit with an overnight courier.
28. Security Deposit.
----------------
29. Miscellaneous Taxes. Tenant shall pay, prior to delinquency, all taxes
-------------------
assessed against or levied upon its
32
<PAGE>
occupancy of the Premises, or upon the fixtures, furnishings, equipment and all
other personal property of Tenant located in the Premises, if nonpayment thereof
shall give rise to a lien on the Premises, and when possible Tenant shall cause
said fixtures, furnishings, equipment and other personal property to be assessed
and billed separately from the property of Landlord. In the event any or all of
Tenant's fixtures, furnishings, equipment and other personal property, or upon
Tenant's occupancy of the Premises, shall be assessed and taxed with the
property of Landlord, Tenant shall pay to Landlord its share of such taxes
within ten (10) days after delivery to Tenant by Landlord of a statement in
writing setting forth the amount of such taxes applicable to Tenant's fixtures,
furnishings, equipment or personal property.
33
<PAGE>
[PAGE LEFT BLANK]
34
<PAGE>
31. Brokerage Commission. Tenant represents and warrants to Landlord that
--------------------
Tenant has been represented by Grubb & Ellis, whose fee shall be paid by
Landlord, in connection with this leasing transaction. Landlord represents and
warrants to Tenant that Landlord has dealt with no broker, agent or other person
in connection with this transaction other than Frain Camins & Swartchild who
would be entitled to a fee or commission. Landlord and Tenant each shall
indemnify and hold harmless the other from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with such indemnifying party with regard
to this leasing transaction. The provisions of this Paragraph 31 shall survive
the termination of this lease.
32. Hazardous Devices and Contaminants.
----------------------------------
(a) Prohibition. Except with the prior written consent of Landlord,
-----------
Tenant shall not install or operate any steam or internal combustion engine,
boiler, machinery, refrigerating
35
<PAGE>
or heating device or air-conditioning apparatus in or about the Premises, or
carry on any mechanical business therein. Except for Contaminants (as
hereinafter defined) used in the ordinary course of business and in
compliance with Requirements of Law (as hereinafter defined), Tenant and its
agents, employees, contractors and invitees shall not use, store, release,
generate or depose of or permit to be used, stored, released, generated or
disposed of any Contaminants on or in the Premises.
(b) Indemnification. Tenant shall indemnify and hold harmless Landlord,
---------------
its agents, servants, employees, officers and directors forever from and
against any and all liability, claims, demands and causes of action,
including, but not limited to, any and all liability, claims, demands and
causes of action by any governmental authority, property owner or any other
third person and any and all expenses, including attorneys' fees (including,
but not limited to, attorneys' fees to enforce Tenant's obligation of
indemnification under this Paragraph 32(b)), relating to any environmental
liability resulting from (i) any Release by Tenant, its agents or employees,
servants and assignees (as hereinafter defined) of any Contaminant at the
Premises or emanating from the Premises to adjacent properties or the
surrounding environment during the Term of this Lease; (ii) during the Term
of this Lease, any generation, transport, storage, disposal, treatment or
other handling of any Contaminant at the Premises by Tenant, including, but
not limited to, any and all off-site transport, storage, disposal, treatment
or other handling of any Contaminant generated, produced, used and/or
originating in whole or in part from the Premises; and (iii) any activities
by Tenant at the Premises during the Term of this Lease that in any way might
be alleged to fail to comply with any Requirements of Law.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD AND
STRBO SHALL INDEMNIFY AND HOLD TENANT AND ITS EMPLOYEES HARMLESS FROM ANY LOSS,
LIABILITY, SUITS AND EXPENSES, INCLUDING BUT NOT LIMITED TO ANY CLEAN-UP COSTS
AND RELATED REMEDIAL INVESTIGATIONS, AND INCLUDING REASONABLE CONSULTANTS' AND
ATTORNEYS' FEES AND COSTS, ARISING OUT OF OR RELATED TO ANY CONTAMINATION OR
RELEASE EXISTING OR OCCURRING PRIOR TO THE COMMENCEMENT DATE.
(c) Definitions.
-----------
(i) "Contaminant" shall mean any substance or waste containing
hazardous substances, pollutants, and contaminants as those terms are
defined in the federal Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq. and any substance
similarly defined or identified in any other federal, provincial or state
laws, rules or regulations
36
<PAGE>
governing the manufacture, import, use, handling, storage, processing,
release or disposal of substances or wastes deemed hazardous, toxic,
dangerous or injurious to public health or to the environment. This
definition includes friable asbestos and petroleum or petroleum-based
products.
(ii) "Requirements of Law" shall mean any federal, state or local
law, rule, regulation, permit, agreement, order or other binding
determination of any governmental authority relating to the environment,
health or safety.
(iii) "Release" shall have the same meaning as in the federal
Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Section 9601, et seq.
33. Exculpation. This Lease is executed by certain general partners of
-----------
Landlord, not individually, but solely on behalf of, and as the authorized
nominee and agent for STRBO, and in consideration for entering into this Lease,
Tenant hereby waives any rights to bring a cause of action against the
individuals executing this Lease on behalf of Landlord (except for any cause of
action based upon lack of authority or fraud), and all persons dealing with
Landlord must look solely to STRBO's assets for the enforcement of any claim
against Landlord, and the obligations hereunder are not binding upon, nor shall
resort be had to the private property of any of, the trustees, officers,
directors, employees or agents of STRBO.
34. Signs. Tenant shall not display, inscribe, print, paint, maintain or
-----
affix on any place in or about the Building any sign, notice, legend, direction,
figure or advertisement, except on the doors of the Premises, and then only such
name(s) and matter, and in such color, size, place and materials, as shall first
have been approved by Landlord in writing. Landlord reserves the right to
install and maintain a sign or signs on the exterior or interior of the
Building. If Tenant desires, Landlord shall list Tenant on the Building
directory board, at Tenant's sole cost and expense.
35. Locks. No additional locks or similar devices shall be attached to any
-----
door or window without Landlord's prior written consent. Except for those keys
provided by Landlord, no keys for any door shall be made. If more than two keys
for one lock are desired, Landlord will provide the same upon payment by Tenant.
All keys must be returned to Landlord at the expiration or Termination of this
Lease. Tenant shall see that the doors and windows, if operable, of the Premises
are closed and securely locked before leaving the Building.
36. Employment. Tenant shall not contract for any work or service that
----------
might involve the employment of labor incompatible
37
<PAGE>
with the Building employees or employees of contractors doing work or performing
services by or on behalf of Landlord.
37. Plumbing. Tenant must observe strict care and caution that all water
--------
faucets and water apparatus are shut off before Tenant or its employees leave
the Building to prevent waste or damage. Plumbing fixtures and appliances shall
be used only for purposes for which constructed, and no sweepings, rubbish, rags
or other unsuitable material shall be thrown or placed therein. Damage resulting
to any such fixtures or appliances from misuse by Tenant shall be paid by Tenant
and Landlord shall not in any case be responsible therefor.
38. Certain Rights Reserved to Landlord. Landlord reserves the following
-----------------------------------
rights:
(a) To name the Building and to change the name or street address of
the Building;
(b) To designate all sources furnishing sign painting and lettering,
ice, towels, toilet supplies, and like services used on the Premises or in
the Building;
(c) On reasonable prior notice to Tenant, to exhibit the Premises to
prospective tenants during the last twelve (12) months of the Term, and to
exhibit the Premises to any prospective purchaser, mortgagee, or assignee of
any mortgage on the Property and to others having a legitimate interest at
any time during the Term; and
(d) To install vending machines of all kinds in the Property, and to
provide mobile vending service therefor, and to receive all of the revenue
derived therefrom; provided, however, that no vending machines shall be
installed by Landlord in the Premises nor shall any mobile vending service be
provided therefor, unless Tenant so requests.
39. Miscellaneous.
-------------
(a) No receipt of money by Landlord from Tenant after the termination
of this Lease or after the service of any notice or after the commencement of
any suit, or after final judgment for possession of the Premises shall
reinstate, continue or extend the Term of this Lease or affect any such
notice, demand or suit or imply consent for any action for which Landlord's
consent is required.
(b) The term "Landlord" as used in this Lease, so far as covenants or
agreements on the part of Landlord are concerned, shall be limited to mean
and include only the
38
<PAGE>
owner (or ground lessor, as the case may be) for the time being of the
Premises. If the Premises or the underlying lease, if any, be sold or
transferred, the seller thereof shall be automatically and entirely released
of all covenants and obligations under this Lease from and after the date of
conveyance or transfer, provided the purchaser on such sale has assumed and
agreed to carry out all covenants and obligations contained in this Lease to
be performed on the part of Landlord hereunder, it being hereby agreed that
the covenants and obligations, contained in this Lease to be performed on the
part of Landlord, hereunder it being hereby agreed that the covenants and
obligations contained in this Lease shall be binding under Landlord, its
successors and assigns, only during their respective successive period of
ownership.
(c) It is understood that Landlord may occupy portions of the Building
in the conduct of Landlord's business. In such event, all references herein
to other tenants of the Building shall be deemed to include Landlord as
occupant.
(d) All of the covenants of Tenant hereunder shall be deemed and
construed to be "conditions" as well as "covenants" as though the words
specifically expressing or implying covenants and conditions were used in
each separate instance.
(e) In the event of variation or discrepancy among counterparts,
Landlord's original copy of this Lease shall control.
(f) This Lease shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
this provision shall in no manner enlarge Tenant's rights of assignment,
which right of assignment has been restricted under the foregoing provisions
of this Lease.
40. Relationship of Parties. Any intention to create a joint venture,
-----------------------
partnership or principal and agent relationship between the parties hereto is
hereby expressly disclaimed. This Lease shall create the relationship of
landlord and tenant between Landlord and Tenant.
41. Gender and Number. Whenever words are used herein in any gender, they
-----------------
shall be construed as though they were used in the gender appropriate to the
context and the circumstances, and whenever words are used herein in the
singular or plural form, they shall be construed as though they were used in the
form appropriate to the context and the circumstances.
42. Topic Headings. Headings and captions in this Lease are inserted for
--------------
convenience and reference only and in no way
39
<PAGE>
define, limit or describe the scope or intent of this Lease nor constitute any
part of this Lease and are not to be considered in the construction of this
Lease.
43. Counterparts. Several copies of this Lease may be executed by all of the
------------
parties. All executed copies constitute one and the same Lease, binding upon all
parties.
44. Entire Agreement. This Lease contains the entire understanding between
----------------
the parties and supersedes any prior understanding or agreements between them
respecting the subject matter. No representations, arrangement, or
understandings except those fully expressed herein, are or shall be binding upon
the parties. No changes, alterations, modifications, additions or qualifications
to the terms of this Lease shall be made or be binding unless made in writing
and signed by each of the parties.
45. Recording. The parties agree that this Lease shall not be recorded, but
---------
a Short Form Lease or Memorandum of Lease, complying in form with applicable
state law, shall be executed setting forth the description of the Premises, the
Term of this Lease and other pertinent provisions, which Short Form Lease or
Memorandum of Lease may be recorded by either party in lieu of recordation of
this Lease.
46. Governing Law; Invalidity of any Provisions. This Lease shall be subject
-------------------------------------------
to and governed by the laws of the state in which the Premises are located. If
any term or provision of this Lease or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the other terms 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.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and
year first above written.
Witness: LANDLORD:
OTR, an Ohio general
partnership,
acting as the duly authorized
nominee of the BOARD OF THE
STATE TEACHERS RETIREMENT
SYSTEM OF OHIO
[SIGNATURE NOT LEGIBLE]
- ----------------------------------
[SIGNATURE NOT LEGIBLE]
- ---------------------------------- By: [SIGNATURE NOT LEGIBLE]
--------------------------------
40
<PAGE>
[SIGNATURE NOT LEGIBLE], a general
-----------------------
partner
TENANT:
UNITED STATIONERS SUPPLY CO.,
an Illinois Corporation
________________________________
________________________________ By:________________________________
STATE OF OHIO )
) SS:
COUNTY OF FRANKLIN )
BE IT REMEMBERED, that on this 30th day of July, 1993 before me, the
---- ---- --
subscriber, a Notary Public, personally appeared the above-named OTR, an Ohio
general partnership, by Stephen A. Mitchell, a general partner, known to me and
-------------------
known to me to be the person who signed the foregoing instrument as such
partner, who acknowledged to me that he signed said instrument as such partner,
duly authorized by the partnership so to do, and that the signing of the same
was his free act and deed, as such partner, for and on behalf of said
partnership, for the uses and purposes therein set forth.
IN TESTIMONY WHEREOF, I have hereunto subscribed by name and affixed the
official seal of my office at Chambers, Ohio, on the day and year last above
-------- ----
written.
/s/ PAMELA J. MCCAMMON
- ------------------------------------
Notary Public
STATE OF ILLINOIS )
--------
) SS:
COUNTY OF COOK )
----
BE IT REMEMBERED, that on this 15th day July, 1993, before me, the
---- ---- --
subscriber, a Notary Public and for said County and State, personally appeared
the above-named UNITED STATIONERS SUPPLY CO. organized under the laws of the
----------------------------
State of ILLINOIS by OTIS H HALLEEN, its Vice Pres., known to me and known to me
-------- -------------- ---------
to be the person who signed the foregoing instrument as such Vice President, who
--------------
acknowledged to me that he signed said instrument as such Vice Pres., duly
-- ---------
authorized by the
41
<PAGE>
directors of said corporation so to do, and that the signing of the same was his
- --------- ----------- ---
free act and deed, as such officer, for and on behalf of said United Stationers
-----------------
Supply Co, for the uses and purposes therein set forth.
- ---------
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed the
official seal of my office at Des Plaines, Illinois, on the day and year last
----------- --------
above written.
/s/ Joan M. Hefferman
- ---------------------------------------
Notary Public
[SEAL APPEARS HERE]
42
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION
Lot 501 in Kensington Center - Phase Five, being a subdivision in part of the
Northeast 1/4 of Section 35, Township 42 North, Range 11 East of the Third
Principal Meridian, as per plat filed February 8, 1985 as LR 3418941 in Cook
County, Illinois.
<PAGE>
EXHIBIT C
COMMENCEMENT DATE AGREEMENT
---------------------------
THIS COMMENCEMENT DATE AGREEMENT ("Agreement") dated _________, 199_ is
between OTR, an Ohio general partnership, whose address is 275 East Broad
Street, Columbus, Ohio 43215, acting as the duly authorized nominee of The State
Teachers Retirement System of Ohio ("Landlord"), whose address is 275 East Broad
Street, Columbus, Ohio 43215, and _______________, a _______________ ("Tenant"),
whose address is _________________________________.
W I T N E S S E T H:
- - - - - - - - - -
A. Landlord and Tenant executed a certain Lease dated _____________, 199_
(the "Lease").
B. The Lease provides that the Lease will commence on the date that
Landlord delivers possession of the Premises (as defined in the Lease) to
Tenant.
C. Landlord and Tenant now desire to set forth in writing the actual date
of delivery of the Premises and the actual commencement date of the Lease.
NOW THEREFORE in consideration of the mutual covenants and promises contained
herein and other valuable consideration, the parties agree that the Lease
commenced on ______________, 199_ and shall terminate on _______________,
______.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on the day and year first above written.
Signed and Acknowledged LANDLORD: OTR, an Ohio
general partnership
the Presence of: acting as the duly authorized
nominee of The State Teachers
Retirement System of Ohio
________________________________
________________________________ By:_____________________________
________________, a general
partner
TENANT:
UNITED STATIONERS SUPPLY CO.
______________________________
<PAGE>
_______________________________ By: ________________________________
Its: ___________________________
STATE OF OHIO )
) SS:
COUNTY OF FRANKLIN )
BE IT REMEMBERED, that on this ______ day of _____________, 199_, before me,
the subscriber, a Notary Public, personally appeared the above-named OTR, a
partnership organized under the laws of the State of Ohio, by Stephen A.
Mitchell, a general partner, known to me and known to me to be the person who
signed the foregoing instrument as such partner, who acknowledged to me that he
signed said instrument as such partner, duly authorized by the partnership so to
do, and that the signing of the same was his free act and deed , as such
partner, for and on behalf of said partnership, for the uses and purposes
therein set forth.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed the
official seal of my office at Columbus, Ohio, on the day and year last above
written.
_______________________________________________
Notary Public
STATE OF ________________ )
) SS:
COUNTY OF _______________ )
BE IT REMEMBERED, that on this _____ day _________, 19__, before me, the
subscriber, a Notary Public and for said County and State, personally appeared
the above-named ____________ organized under the laws of the State of
____________ by ___________, its ___________, known to me and known to me to be
the person who signed the foregoing instrument as such ___________, who
acknowledged to me that _____ signed said instrument as such __________, duly
authorized by the ______________ of said _____________ so to do, and that the
signing of the same was _____ free act and deed, as such officer, for and on
behalf of said _____________, for the uses and purposes therein set forth.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed the
official seal of my office at ____________, __________, on the day and year last
above written.
2
<PAGE>
______________________________________________
Notary Public
3
<PAGE>
EXHIBIT D TENANT IMPROVEMENTS
Landlord will provide a turnkey buildout based on plans and specifications
prepared by SDG Architects dated 7-14-93.
[MAP APPEARS HERE]
<PAGE>
EXHIBIT D TENANT IMPROVEMENTS CONTINUED
[PLAN APPEARS HERE]
<PAGE>
EXHIBIT E
TENANT ESTOPPEL CERTIFICATE
---------------------------
RE:
Premises:_________________________________
Lease Dated:________________________________
Amendment(s) Dated:________________________
Between___________________________________ (Landlord)
and_________________________________________ (Tenant)
Square Footage Leased:_______________________
Floor(s)/Suite #(s):_____________________________
The undersigned, Tenant under the above-referenced lease ("Lease"), certifies to
the following:
1. We have taken possession of and accepted the Premises described above, except
as follows:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
______________________________
2. The lease terms as described below are true and accurate, and the lease is in
full force and effect:
Base Rent: _________________________________________ per year
Expense Stop: ______________________________________ per square foot
Escalations:____________________________________________________________________
_______
Free Rent: ____________________________________________
Commencement Date: ____________________________________
Expiration Date: ______________________________________
Renewals: _____________________________________________
3. No part of the Premises has been subleased or assigned except as
follows:_______________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
4. The rent has been paid
through: ____________________________________________________________________
_______
5. The security deposit is
_____________________________________________________________________________
______
There are no tax or insurance
escrows______________________________________________________________________
<PAGE>
6. We are not in default of our obligations under the Lease. Landlord, to the
best of our knowledge, is not in default of its obligations under the Lease.
There exists no defense or counterclaim to rent or other sums required to be
paid by us under or pursuant to the Lease.
If Tenant is a corporation, the undersigned is a duly appointed officer of the
corporation signing this certificate and is the incumbent in the office
indicated under his/her name. In any event, the undersigned individual is duly
authorized to execute this certificate.
Date: ________________________, 19___
Signed: __________________________________________________
(Signature)
__________________________________________________________
(Print Name & Title)
<PAGE>
EXHIBIT F
---------
RULES AND REGULATIONS
1. Any sign, lettering, picture, notice or advertisement installed on
or in any part of the Premises and visible from the exterior of the Building,
or visible from the exterior of the Premises, shall be installed at Tenant's
sole cost and expense and in such manner, character and style as Landlord may
approve in writing. In the event of a violation of the foregoing by Tenant,
Landlord may remove the same without any liability and may charge to Tenant the
expense incurred by such removal.
2. No awning or other projection shall be attached to the outside
walls of the Building. No curtains, blinds, shades or screens shall be visible
from the exterior of the Building, or hung in, or used in connection with any
window or door of the Premises without the prior written consent of Landlord.
Such quality, type, design and color of window treatments shall be approved by
Landlord and shall be attached in a manner approved by Landlord.
3. Tenant shall not place objects against glass partitions, doors or
windows of the exterior of the Building and shall promptly remove any such
objects upon notice from Landlord.
4. Tenant shall not make excessive noises, cause disturbances or
vibrations or use or operate any electrical or mechanical devices that emit
excessive sound or other waves or disturbances or create obnoxious odors, any
of which may be offensive to other tenants and occupants of the Building, or
that would interfere with the operation of any device, equipment, radio,
television broadcasting or reception from or within the Building or elsewhere
and shall not place or install any projections, antennas, aerials or similar
devices inside or outside of the Premises or on the Building.
5. Tenant assumes full responsibility for protecting its space from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed and secured after normal business hours.
6. No person or contractor not employed by Landlord shall be used to
perform janitorial work, window washing, cleaning, maintenance, repair or
similar work in the Premises without the written consent of Landlord, which
consent shall not be unreasonably withheld.
7. Landlord shall have the right to prohibit any advertising by Tenant
which in Landlord's reasonable opinion tends to impair the reputation of the
Building or its desirability as an office complex for office use, and upon
written notice from Landlord, Tenant shall refrain from or discontinue such
advertising.
8. Any carpeting cemented down by Tenant shall be installed with a
releasable adhesive. In the event of a violation of the foregoing by Tenant,
Landlord may charge the expense incurred by such removal to Tenant.
9. No electric circuits for any purpose shall be brought into the
Premises without Landlord's written permission specifying the manner in which
same may be done.
10. No bicycle or other vehicle, and no dog or other animal other than
service animals for persons with disabilities, shall be allowed in offices,
halls, corridors, or elsewhere in the Building.
11. Tenant shall not throw anything out of the door or windows, or
down any passageways or elevator shafts.
1
<PAGE>
12. All loading, unloading, receiving or delivering of goods, supplies
or disposal of garbage or refuse shall be made only through entryways and
freight elevators provided for such purposes and indicated by Landlord. Tenant
shall be responsible for any damage to the Building or the property of its
employees or others and injuries sustained by any person whomsoever resulting
from the use or moving of such articles in or out of the Premises, and shall
make all repairs and improvements required by Landlord or governmental
authorities in connection with the use or moving of such articles.
13. All safes, equipment or other heavy articles shall be carried in
or out of the Premises only at such time and in such manner as shall be
prescribed in writing by Landlord. Any such safe, equipment or other heavy
article shall only be used by Tenant in a manner which will not interfere with
or cause damage to the Premises or the Building in which they are located, or
to the other tenants or occupants of the Building. Tenant shall be responsible
for any damage to the Building or the property of its employees or others and
injuries sustained by any person whomsoever resulting from the use or moving of
such articles in or out of the Premises, and shall make all repairs and
improvements requires by Landlord or governmental authorities in connection
with the use or moving of such articles.
14. Vending machines shall not be installed without permission of the
Landlord except for food and soft drink vending machines which are for the sole
and exclusive use of Tenant's employees.
15. Wherever in these Building Rules and Regulations the word "Tenant"
occurs, it is understood and agreed that it shall mean Tenant's servants,
employees, agents, customers, invitees, successors and assigns. Wherever the
work "Landlord" occurs, it is understood and agreed that it shall mean
Landlord's servants, employees, agents, customers, invitees, successors and
assigns.
16. Landlord shall have the right upon notice to Tenant at least
twenty-four (24) hours in advance, which notice may be oral, telephonic or
otherwise, to enter upon the Premises at all reasonable hours for the purpose
of inspecting the same.
17. Tenant shall, when using the common parking facilities, if any, in
and around the building, observe and obey all signs regarding fire lanes and no
parking zones, and when parking always park between the designated lines.
Landlord reserves the right to tow away, at the expense of the owner, any
vehicle which is improperly parked or parked in a no parking zone. All vehicles
shall be parked at the sole risk of the owner, and Landlord assumes no
responsibility for any damage to or loss of vehicle. No vehicles shall be
parked overnight.
18. At all times Landlord's property manager shall be in charge of the
Building and (a) persons may enter the Building only in accordance with
Landlord's regulations, (b) persons entering or departing from the Building may
be questioned regarding their business in the Building, and the right is
reserved to require the use of an identification card or other access device
and the registering of such persons as to the hour of entry and departure,
nature of visits, and other information deemed necessary for the protection of
the Building, and (c) all entries into and departures from the Building will
take place through such one or more entrances as Landlord shall from time to
time designate; provided, however, anything herein to the contrary
notwithstanding, Landlord shall not be liable for any lack of security in
respect to the Building whatsoever. Landlord will normally not enforce clauses
(a), (b) and (c) above from 7:00 a.m. to 6:00 p.m., Monday through Friday, and
from 8:00 a.m. to 1:00 p.m. on Saturdays, but it reserves the right to do so or
not to do so at any time at its sole discretion. In case of invasion, mob riot,
public excitement, or other commotion, Landlord reserves the right to prevent
access to the Building during the continuance of the same by closing the doors
or otherwise, for the safety of the tenants or the protection of the Building
and the property therein. Landlord shall in no case be liable for damages for
any error or other action taken with regard to the admission to or exclusion
from the Building of any person.
2
<PAGE>
19. Landlord reserves the right at any time and from time rescind, alter
or waive, in whole or in part, any of these Rules and Regulations when it is
deemed necessary, desirable, or proper, in Landlord's judgment, for its best
interest or for the best interest of the tenants of the Building.
20. Tenant shall observe faithfully and comply strictly with the
foregoing rules and regulations and such other and further appropriate rules and
regulations as Landlord and Landlord's additional rules and regulations shall be
given in such manner as Lessor may reasonably elect.
<PAGE>
"EXHIBIT G"
JANITORIAL SPECIFICATIONS
-------------------------
A. TENANT AREAS
------------
DAILY SERVICES - Five (5) days per week (Monday through Friday),
--------------
between the hours of 6:00 p.m. and 2:00 a.m. or other schedule to be
reviewed and approved by FC&S.
1. Clean, polish and sanitize drinking fountains.
2. Empty waste baskets, ash trays and other trash receptacles.
3. Ash trays to be wiped clean. Trash to be removed from building
to designated pick up areas.
4. All chairs and waste baskets to be returned to proper position
when cleaned.
5. Dust mop all hard surface floors with specially treated dust
mops and spot mop daily.
6. Thoroughly vacuum carpets. Remove spots and chewing gum from
carpet.
7. Thoroughly dust desks and office furniture and office
accessories. Spot clean with mild soap solution as required.
Items included are as follows:
Desks
Bookcases
Counters
Clocks
Tables
File Cabinets
Telephones
Chairs
Pictures
Desk Displays
Desk Accessories
Lamp/Shades
8. All items to be returned to proper position after clean-up.
9. Remove finger prints from doors, door frames, walls and wall
switches.
10. Spot clean entrance door glass and all partition glass.
11. Clean glass desk tops.
WEEKLY SERVICES
---------------
12. Thoroughly polish/clean desks, office furniture and office
accessories (encompassing above listed items) taking care that
build-up does not occur on items treated with an oil based polish.
<PAGE>
B. PUBLIC AREAS
------------
DAILY SERVICES - Five (5) days per week (Monday through Friday)
--------------
1. Dust mop all hard surface floors with specially treated dust
mop. Damp mop and buff, as necessary.
2. All carpets are to be vacuumed nightly.
3. Clean, polish and sanitize drinking fountain.
4. Remove fingerprints from doors, door frames, wall and wall
switches.
5. Empty waste baskets, ash trays and other trash receptacles.
6. Ash trays to be wiped clean. Trash to be removed from building
to designated pick up area.
7. Spot clean entrance door glass and all partition glass.
8. Clean and polish elevator doors and control panels. Thoroughly
clean inside of elevator cabs. Vacuum elevator carpeting, door
tracks and saddles.
9. Clean lunchroom furniture and appliances.
10. Damp mop and spot clean lunchroom floors.
11. Spot mop hard surface floor areas for spillage.
12. Maintain walk-off mats in lobby vacuuming daily and shampooing
as necessary.
C. TENANT AND PUBLIC AREAS
-----------------------
WEEKLY SERVICES
---------------
1. Completely dust all low reach areas, chair rungs, and inside
of door jams.
2. Completely dust window sills, ledges, door louvers and wood
paneling molding, handrails and railings.
3. Raise and dust all levelors, window frames and sills. Do not
use acetone as this is painted surface.
4. Clean and polish entrance door metal and thresholds.
5. Clean fire extinguishers and/or fire hose cabinet - dust and
clean glass.
6. Remove all spots, smudges and marks from doors, partitions,
walls, wood-work, window frames, mullions and ledges, wall
switches and outlet plugs in floors and walls.
7. Thoroughly sweep stairwells throughout building.
8. Clean and sanitize telephones.
9. Clean outside doors and mailchutes.
10. All carpets are to be edged with an edging tool and baseboards
will be wiped with a treated dust cloth weekly.
11. Damp mop and spray buff all hard surface floors weekly.
12. Dust all high-reach areas, door frames and tops of partitions.
<PAGE>
MONTHLY SERVICES
----------------
13. Vacuum upholstered furniture.
14. Dust all picture moldings and frames.
15. Vacuum wall vents and ceiling vents.
QUARTERLY SERVICES
------------------
16. Wipe down all plastic, leather and wood furniture.
17. Vacuum draperies and cornices or blinds.
18. Shampoo carpets of public areas in front of elevators and
corridor areas on all floors.
19. Scrub and refinish all hard surface floors quarterly.
SEMI-ANNUAL SERVICES
--------------------
20. Strip and refinish all hard surface floors semi-annually.
D. RESTROOM SERVICES
-----------------
NIGHTLY
-------
1. Floors. Floors will be swept clean and wet-mopped using a
------
germicidal detergent approved by FC&S. The floors will then be
mopped dry and all watermarks and stains wiped from walls and
metal partition bases.
2. Metal Fixtures. Wash and polish all mirrors, powder shelves,
--------------
bright work (including exposed piping below wash basins), towel
dispensers, receptacles and any other metal accessories. Mirrors
will be cleaned and polished. Contractor shall use only non-
abrasive, non-acidic material to avoid damage to metal fixtures.
3. Ceramic Fixtures. Scour, wash and disinfect all basins, bowls, and
----------------
urinal with FC&S approved germicidal detergent solution, including
tile walls near urinals. Special care must be taken to inspect and
clean areas of difficult access such as the underside of toilet
bowls rings and urinals, to prevent building up of calcium and
iron oxide deposits. Wash both sides of all toilet seats with
approved germicidal solution and wipe dry. Toilet seats to be left
in an upright position.
4. Walls and Metal Partitions. Spot clean all metal toilet partitions
--------------------------
and modesty screens and tiled walls nightly using approved
germicidal solution to remove fingermarks, etc. All surfaces are
to be wiped dry so that all wiped marks are removed and surface
has
<PAGE>
a uniformly bright appearance. Dust the top edges of all
partitions, ledges and mirror tops.
5. General. It is the intention of this specification to keep
-------
lavatories thoroughly clean and not to use disinfectant to mask
odors. Odorless disinfectants shall be used.
Remove all waste paper and refuse, including soiled sanitary
napkins, to designated areas in the building. All
receptacles are to be thoroughly cleaned and washed, and new
liners installed. Fill toilet tissue holders, seat cover
containers, soap dispenser, towel dispensers (Kleenex and
hand lotion dispenser where applicable). Damage and/or
improper operation of same should be reported to FC&S.
Materials, as specified by FC&S, to be furnished by
Contractor. The filling of such dispensers to be in such
quantity as to last the entire business day, whenever
possible. This work is to be performed by the night crew.
WEEKLY
------
1. Floors. All restroom floors will be machine scrubbed using a
------
germicidal solution, detergent and water. After scrubbing, floors
will be rinsed with clear water and dried. All water marks will be
removed from walls, partitions and fixtures. If directed by Owner,
an approved floor finish will be applied.
2. Floor Drains. Clean, disinfect and fill with water at least
------------
weekly.
3. Walls and Metal Partitions. Completely sanitize all metal toilet
--------------------------
partitions an modesty screens and tiled walls using approved
germicidal solution. All surfaces are to be wiped dry so that all
wipe marks are removed and surface has a uniformly bright
appearance.
E. FLOOR SERVICES
--------------
1. Lobby floors to be thoroughly damp mopped and spray buffed daily.
2. Baseboards to be cleaned concurrent with floor service.
<PAGE>
F. WINDOW CLEANING SERVICES
------------------------
1. Wash lobby entrance ways and doors daily.
2. Wash all partition glass as needed.
G. ALL BUILDINGS ANNUALLY
----------------------
1. Thoroughly clean all ceiling and wall vents and louvers annually
or as required.
H. SERVICE AREAS
-------------
1. Dust all pipes, ducts, ventilating grills, air conditioning
machines and other accessible equipment outside of machinery
spaces, quarterly.
2. Slop sinks are to be cleaned after use. Mops, rags and equipment
are to be cleaned and stored in racks. Walls and floors are to be
kept clean at all times.
3. Electric, telephone closets and storerooms are to be kept free
from debris and material. Floors are to swept weekly and washed
monthly. Report storage of extraneous material and equipment to
building management.
I. EXTERIOR CLEANING
-----------------
Maintain entire ground level exterior including metal work, entrance doors,
store from trim and exterior window frames, and mullions and hose bibs; in
short, properly maintain the exterior of the building so that there is
uniformity of color, brightness and cleanliness at all times.
1. Maintain entire building exterior, and sidewalks in a first class
condition.
2. Sweep sidewalks daily.
3. Keep in clean condition and control litter in all planting areas.
4. Remove all gum and foreign matter from sidewalks on sight.
5. Police entire area as needed, picking up all foreign matter on
sight.
<PAGE>
Exhibit "H"
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Agreement is made on _______________, 199_______, between:
_______________, ("Mortgagee"), whose address is _______________,
BOARD OF THE STATE TEACHERS RETIREMENT SYSTEM OF
OHIO, ("Landlord"), whose address is
________________________________, and
UNITED STATIONERS SUPPLY CO., ("Tenant"), whose
address is 2200 E. Golf Road, Des Plaines,
Illinois 60016, who agree as follows:
1. Recitals. This Agreement is made with reference to the following facts
--------
and objectives:
(a) Mortgages is, or it is anticipated that Mortgagee will become,
mortgagee under a certain mortgage ("Mortgage") on improved property located at
1661 Feehanville Drive, Mt. Prospect, Illinois ("Property"), and legally
described on Exhibit A attached hereto. Mortgagee shall also be deemed to
include any lender who executes this Agreement and subsequently acquires title
to the Property pursuant to a bankruptcy proceeding involving Landlord.
(b) On or about _______________, 1993, Landlord leased to Tenant, and
Tenant leased from Landlord, a portion of the Property ("Premises"). A copy of
the Lease is attached as Exhibit B ("Lease").
(c) The parties desire, under the provisions set forth in this Agreement,
to assure Tenant that in the event of the foreclosure of the Mortgage, or in the
event of a sale in lieu of such foreclosure, or in the event that Mortgagee
directly or indirectly becomes the new landlord of the Property because of its
providing financing to Landlord, the terms of the Lease shall not be terminated,
disturbed, or adversely affected, provided an event of default has not occurred
under Section 21 of the Lease and subject to the cure rights set forth in the
Lease ("Tenant Default").
2. Attornment. If Landlord is in default under the Mortgage after the
----------
expiration of the applicable period that Landlord has in which to cure its
default, and if a foreclosure sale takes place due to such default, or if
Mortgagee shall notify Tenant of such transfer of title to the Property or if
Mortgagee becomes the new Landlord of the Property, after receipt of such
notice, upon the effective date of such transfer of title, and after Tenant has
received written notice of such transfer of title, Tenant shall attorn to
Mortgagee and shall recognize Mortgagee as
1
<PAGE>
Tenant's landlord under the Lease, and Tenant agrees to execute any
instruments reasonably requested to evidence such attornment. Upon attornment,
the Lease shall continue in full force and effect, so long as a Tenant Default
has not occurred, and Tenant shall perform all Tenant's obligations under the
Lease directly to Mortgagee, as if Mortgagee were the landlord under the Lease.
Tenant agrees to make any modifications of the Lease requested by Mortgagee
hereunder, provided that such modifications do not adversely affect any right
of Tenant under the Lease or increase any of Tenant's monetary obligations
under the Lease.
3. Non-Disturbance by Mortgagee. If a Tenant Default is not in existence at the
----------------------------
time of the transfer of title, the Lease shall continue with the same force and
effect as if Mortgagee and Tenant had entered into a lease with the same
provisions as those contained in the Lease, and the terms of the Lease and
Tenant's leasehold estate in the Property shall not be terminated, disturbed, or
adversely affected, except according to the terms of the Lease.
4. Conditions of Mortgagee's Recognition. Until a Tenant Default occurs,
-------------------------------------
Mortgagee or such other purchaser shall recognize the leasehold estate of Tenant
under all of the terms, covenants and conditions of the Lease for the remaining
balance of the term and any renewals thereof with the same force and effect as
if Mortgagee or such other purchaser were the landlord under the Lease, and
Mortgagee and Tenant shall immediately enter into a written agreement with the
same provisions as those in the Lease, except for any technical changes that are
necessary because of the substitution of Mortgagee in place of Landlord;
provided, however, that Mortgagee, or such other purchaser, shall not be:
(i) liable for any act or omission of Landlord or any other prior
lessor which occurred prior to the time the Mortgagee purchased or acquired its
interest under the Lease, except with respect to Tenant's right to deduct from
rents next due under the Lease any (a) unpaid arbitration awards or court
judgment, or (b) unpaid commission due and owing the Tenant's real estate
broker all as set forth in the Lease;
(ii) except as provided in (i) to the contrary, obligated to cure any
defaults of Landlord or any other prior lessor under the Lease which occurred
prior to the time that Mortgagee purchased or acquired its interest under the
Lease (except to the extent that the default is not monetary and remains in
existence at the time Mortgagee purchased or acquired its interest under the
Lease);
(iii) except as provided in (i) to the contrary, subject to any offsets or
defenses which Tenant may be
2
<PAGE>
entitled to assert against Landlord or any other prior lessor;
(iv) bound by any payment of rent or additional rent by Tenant to Landlord
or any other prior lessor for more than one month in advance;
(v) bound by any amendment or modification of the Lease which would
adversely affect any right of Landlord under the Lease made without the written
consent of Mortgagee or such other purchaser who has first, in writing,
notified Tenant of its interest, which consent cannot be unreasonably withheld.
5. Miscellaneous.
-------------
(a) No Effect on Mortgage. Nothing in this Agreement shall be deemed to
---------------------
change in any manner the provisions of the Mortgage as between Mortgagee and
Landlord, to waive any right that Mortgagee may now have or later acquire
against Landlord by reason of the Mortgage.
(b) Attorneys' Fees. If any party commences an action against any of the
---------------
other parties arising out of or in connection with this Agreement, the
prevailing party shall be entitled to recover from the losing party reasonable
attorneys' fees and costs of such action.
(c) Notice. Any notice, demand, request, consent, approval, or
------
communication that any party desires or is required to give the other party or
any other person shall be in writing and either served personally or sent by
prepaid first-class mail, addressed to the other party at the address set forth
in the introductory paragraph of this Agreement. Any party may change its
address by notifying the other parties of the change of address. Notice shall be
deemed communicated within 3 business days from the time of mailing, if mailed
as provided in this paragraph.
(d) Successors. This Agreement shall be binding on and inure to the
----------
benefit of the parties and their successors.
(e) Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Illinois.
(f) Modifications. This Agreement contains all of the agreements and
-------------
understandings between the parties regarding the subject matter of this
Agreement. This Agreement supersedes any and all prior agreements and
understandings between Landlord, Tenant and Mortgagee and alone expresses the
agreement of the parties. This Agreement shall not be amended, changed or
modified in any way unless in writing
3
<PAGE>
executed by Landlord, Tenant and Mortgages. Landlord, Tenant and Mortgagee
shall not have waived or released any of their rights hereunder unless in
writing and signed by Landlord, Tenant and Mortgagee.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LANDLORD:
BOARD OF THE STATE TEACHERS RETIREMENT SYSTEM
OF OHIO,
A _______________________,
By: _____________________
Its
TENANT:
United Stationers Supply Co.
an Illinois corporation
By _______________________
Its
MORTGAGEE:
__________________________,
a ________________________
By: ______________________
Its
4
<PAGE>
LEASE EXHIBIT I TENANT OCCUPANCY TIMETABLE
TENANT: United Stationers Supply Company PROJECT: Mt. Prospect
RSF: 46,847 DATE: Issued 15-Jul-93
<TABLE>
<CAPTION>
- --------------------------------------------------------- -------------------------------------------------------------------------
WKG DAYS END DATE
---------------------------------
CRITICAL PATH EVENTS RESPONSIBILITY REQUIRED SCHEDULED ACTUAL
- --------------------------------------------------------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Approved Space Utilization Plans Delivered to Landlord TENANT N/A June 14, 1993 June 15, 1993
EXECUTED LEASE DELIVERED TO LANDLORD TENANT N/A July 16, 1993
Construction Documents Delivered from Landlord
to Tenant LANDLORD N/A June 25, 1993
Approved or Comments on Construction Documents Returned TENANT 2 DAYS June 29, 1993
Finishes & Furniture Specifications Delivered from Tenant
to Landlord Provision of Exhibit D to Lease TENANT N/A July 6, 1993
Building Permit Obtained LANDLORD N/A July 1, 1993
Construction Begins LANDLORD N/A July 19, 1993
Immaterial Changes to Construction Documents/Construction
by Tenant Until This Date Without Delay by
Landlord/Contractor TENANT N/A Aug 6, 1993
Substantial Completion of Demised Premises LANDLORD 35 DAYS Sept 3, 1993
Inspection & Punchlist of Demised Premises: TENANT/LANDLORD N/A Sept 7, 1993
Execution of Commencement Date Agreement
Complete Occupancy of Demised Premises TENANT N/A Sept 27, 1993
</TABLE>
<PAGE>
RIDER TO LEASE
BETWEEN
OTR, AN OHIO GENERAL PARTNERSHIP (LANDLORD)
AND
UNITED STATIONERS SUPPLY CO. (TENANT)
An Illinois Corporation
DATED:
This rider is annexed to and make a part of the Landlord's Lease to which it
is attached, and in each instance in which the provisions of this Rider shall
contradict or be inconsistent with the provisions of the Lease, the provisions
of this Rider shall prevail and govern, and the contradicted or inconsistent
provision of the Lease shall be deemed amended accordingly.
Renewal Right: Tenant shall receive two (2) consecutive three year options
- --------------
to renew this lease. Nine (9) months prior written notice by Tenant to Landlord
will be required. The base rental rate for the initial option will be at $8.40
per square foot escalating at a rate of $.40 annually. The base rental rate for
the second option will be at $9.60 per square foot escalating at a rate of $.40
annually.
Expansion Option: If Tenant is not then in default of the terms, covenants
- -----------------
and conditions of this Lease, Tenant shall have the option to expand into
approximately 5,000 rentable square feet on the first floor within the initial
two (2) years of occupancy. Nine months prior written notice will be required.
The base rental rate will be at Tenants then escalated rent.
Termination Option: If Tenant is not then in default of the terms, covenants
- --=----------------
and conditions of this Lease, Tenant shall have the option to terminate this
lease at the end of the third year of occupancy. Tenant must provide nine (9)
months prior written notification to Landlord together with the payment of a
termination fee equal to the unamortized Tenant Improvements and leasing costs.
This termination option will apply to the third or fourth spaces or both.
Right of First Offer: If Tenant is not in default of the terms, covenants and
- ---------------------
conditions of this Lease at the time of the exercise of the right of first offer
granted hereunder, Landlord hereby grants to Tenant the option to lease
additional space on the first floor of the Building as such space becomes
available
<PAGE>
for occupancy by termination, expiration, vacation or otherwise, all upon
the same terms and conditions as contained in this Lease, except for base rent
which shall be at the Market Base Rental Rate (the "First Offer Option").
Within thirty (30) days after Landlord has determined that such space will be
or has become available for leasing, Landlord shall give written notice of the
additional space that is available to Tenant for rent, the terms and conditions
under which the space is available and the approximate date that such space is
available for possession. Tenant shall exercise its First Offer Option by
written notice to Landlord within thirty (30) days after such notice from
Landlord. If Tenant fails to exercise the First Offer Option with respect to
such space, the First Offer Option with respect to such space be null and void.
If Tenant fails to exercise its option, nothing shall preclude Tenant from
exercising its First Offer Option on any other space on the first floor of the
Building (including the space for which Tenant failed to exercise its option
and which has been thereafter leased to a third party) as it becomes available
during the term of this Lease.
Moving Allowance: Landlord will provide Tenant with a moving allowance
- ----------------
equal $1.00 per rentable square foot. This allowance will be paid to Tenant upon
occupancy.
Signage: Landlord will provide at its sole cost and expense a monument sign
- -------
at the entrance to the property. All signage must be approved by Landlord and
meet all the covenants and restrictions of the park and village.
Satellite Dish: Tenant may, at their own cost and expense,install a satellite
- --------------
dish at the property in a location designated by Landlord. All installations
must be supervised and approved by Landlord.
<PAGE>
- ----------------------------FIRST AMENDMENT TO LEASE---------------------------
<PAGE>
First Amendment to Lease
------------------------
The First Amendment To Lease is made entered into this 30th day of Sept, 1993 by
------ ------
and between OTR, an Ohio general partnership, ("Landlord") acting as the duly
authorized nominee of the BOARD OF THE STATE TEACHERS RETIREMENT SYSTEM OF
("STROB") and United Stationers Supply Co., an Illinois Corporation ("Tenant").
WITNESSETH THAT:
WHEREAS, Lessor and Lessee entered into an office lease dated July 30,
1993 for certain premises located at 1661 Feehanville Drive, Suite 300 and 400,
Mt. Prospect, IL 60056 (said Lease, being hereinafter referred to as the
"Lease"); and
WHEREAS, Lessor and Lessee desire to amend the Lease by modifying
language as it relates to obligations regarding the Tenant maintenance of
auxiliary heating, ventilation and air conditioning equipment.
NOW THEREFORE, in consideration of the mutual covenants hereinafter made
and contained, Landlord and Tenant agree that the Lease shall be amended as
follows:
1. Landlord will be responsible for the major repair or
replacement of Tenant's auxiliary heating, ventilation
and air conditioning equipment.
2. Tenant will be required to provide for a preventative
maintenance agreement on Tenant's auxiliary heating,
ventilation and air conditioning equipment. Such
agreement will provide for the replacement of filters,
inspections and the replacement of any minor parts
associated with the overall maintenance of the
equipment.
IN WITNESS WHEREOF, this First Amendment to the Lease has been executed
as of the day and year first above written.
<PAGE>
Signed in presence of: Landlord:
_____________________ OTR, an Ohio general partnership
acting as the duly authorized
nominee
_____________________ of the BOARD OF THE STATE
TEACHERS RETIREMENT SYSTEM
OF OHIO
/s/ Pamela J. McCammon
---------------------
_____________________ By: _______________________
____________________, a
general partner
TENANT:
_____________________ UNITED STATIONERS SUPPLY,
CO., an Illinois Company
_____________________
By: /s/ Otis H. Halleen
------------------------
Vice President
<PAGE>
EXHIBIT 10.37
LEASE AGREEMENT
by and between
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
A DELAWARE LIMITED PARTNERSHIP
as LANDLORD
and
STATIONERS DISTRIBUTING COMPANY, INC.
as TENANT
Premises: Plauche Street and Beven Street, New Orleans, LA
Harbor Avenue, Memphis, TN
Highpoint Drive, San Antonio, TX
Dated as of: December 20, 1988
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties................................................. 1
1. Demise of Premises...................................... 1
2. Certain Definitions..................................... 1
3. Title and Condition..................................... 7
4. Use of Leased Premises; Quiet Enjoyment................. 8
5. Term.................................................... 9
6. Rent.................................................... 11
7. Net Lease; Non-Terminability............................ 12
8. Payment of Impositions; Compliance with Law............. 13
9. Liens; Recording and Title.............................. 15
10. Indemnification......................................... 15
11. Maintenance and Repair.................................. 16
12. Alterations and Improvements............................ 18
13. Condemnation............................................ 19
14. Insurance............................................... 22
15. Restoration; Reduction of Rent.......................... 27
16. Procedures Upon Purchase................................ 29
17. Assignment and Subletting............................... 30
18. Permitted Contests...................................... 32
19. Conditional Limitations; Default Provision.............. 33
20. Additional Rights of Landlord........................... 38
21. Notices................................................. 39
22. Estoppel Certificate.................................... 40
23. Surrender............................................... 40
24. Risk of Loss............................................ 41
25. No Merger of Title...................................... 41
26. Books and Records....................................... 41
27. Determination of Value.................................. 42
28. Financing............................................... 44
29. Non-Recourse as to Landlord............................. 44
30. Substitution and Exchange of Property................... 45
31. Financial Covenant...................................... 46
32. Subordination........................................... 47
33. First Refusal Right..................................... 47
34. Miscellaneous........................................... 49
</TABLE>
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Allocation of Acquisition Cost
Exhibit "F" - Percentage Allocation
-i-
<PAGE>
LEASE AGREEMENT, made as of this 20th day of December, 1988, between
CORPORATE PROPERTY ASSOCIATES 8 L.P., A DELAWARE LIMITED PARTNERSHIP
("Landlord"), a Delaware limited partnership with an address c/o W. P. Carey &
Co., Inc., 689 Fifth Avenue, New York, New York 10022, and STATIONERS
DISTRIBUTING COMPANY, INC. ("Tenant"), a Delaware corporation with an address at
4055 International Plaza, Suite 450, Fort Worth, Texas 76109.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant,
------------------
and Tenant hereby takes and leases from Landlord, for the term or terms and upon
the provisions hereinafter specified, the following described property
(hereinafter referred to individually as the "New Orleans Premises", the
"Memphis Premises" and the "San Antonio Premises" [each of which Premises shall
include the portions of items (a), (b) and (c) of this Paragraph 1 located
thereon or therein or appertaining thereto] and collectively as the "Leased
Premises"): (a) the premises described in Exhibit "A" attached hereto and made a
part hereof, together with the easements, rights and appurtenances thereunto
belonging or appertaining (collectively, the "Land"); (b) the buildings,
structures and other improvements now or hereafter constructed on the Land
(collectively, the "Improvements"); and (c) the machinery and equipment
described in Exhibit "B" attached hereto and made a part hereof and installed in
and upon the Improvements, together with all additions and accessions thereto,
substitutions therefor and replacements thereof permitted by this Lease
(collectively, the "Equipment").
2. Certain Definitions.
-------------------
"Acquisition Cost" shall mean $4,630,000.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 6(b).
"Adjoining Property" shall mean all sidewalks, curbs and vault
spaces adjoining any of the Leased Premises.
"Affected Premises" shall mean the Affected Premises as defined
in Paragraph 13(b) or Paragraph 14(i), as the case may be, and as the context
requires.
"Affiliate" shall mean any Person in controlling, control of or
under common control with Tenant.
"Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals or removals of and all
substitutions or replacements for any of the Improvements or Equipment, both
interior and exterior, structural and non-structural, and ordinary and
extraordinary.
<PAGE>
"Applicable Final Date" shall mean the Applicable Final Date as
defined in Paragraph 27.
"Applicable Initial Date" shall mean the Applicable Initial Date
as defined in Paragraph 27.
"Applicable Provision" shall mean the Applicable Provision as
defined in Paragraph 27.
"Assignment" shall mean an assignment of rents and leases from
Landlord to Lender securing Landlord's obligation to repay the Loan and/or any
subsequent assignment of rents covering any of the Leased Premises from Landlord
to Lender, as the same may from time to time be amended, supplemented or
modified, securing repayment of the Loan.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6(a).
"Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6(a).
"Casualty Offer Amount" shall mean the Casualty Offer Amount as
defined in Paragraph 14(i).
"Casualty Termination Date" shall mean the Casualty Termination
Date as defined in Paragraph 14(i).
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Default Offer Amount" shall mean the Default Offer Amount as
defined in Paragraph 19(b)(v).
"Default Rate" shall mean the Default Rate as defined in
Paragraph 6(b).
"Delay Period" shall mean the Delay Period as defined in
Paragraph 27.
"Environmental Laws" shall mean all federal, state or local laws,
ordinances, rules, regulations or written policies, now or hereafter existing,
which govern or otherwise relate to the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
any Hazardous Substance, including the laws, ordinances, regulations and
written policies provided pursuant to or under (i) Toxic Substances Control
Act, 15 U.S.C. (s)(s) 2601 et seq., (ii) National Historic Preservation Act, 16
-- ---
U.S.C. (s)(s)470 et. seq., (iii) Coastal Zone Management Act of 1972,
-------
-2-
<PAGE>
16 U.S.C. (s)(s)1451 et seq., (iv) Rivers and Harbors Act of 1899, 33 U.S.C.
-- ---
(s)(s)401 et seq., (v) Clean Water Act, 42 U.S.C. (s)(s)1251 et seq, (vi) Flood
-- --- -- ---
Disaster Protection Act, 42 U.S.C. (s)(s)4321 et seq., (vii) National
-- ---
Environmental Policy Act, 42 U.S.C. (s)(s)4321 et seq., (viii) Resource
-- ---
Conservation and Recovery Act of 1976, 42 U.S.C. (s)(s)6901 et seq., (ix) Clean
-- ---
Air Act, 42 U.S.C. (s)(s)7401 et seq. and (x) Comprehensive Environmental
-- ---
Response Compensation and Liability Act, 42 U.S.C. (s)(s)9601 et seq.
-- ---
("CERCLA").
------
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 19(a).
"Exchange" shall mean Exchange as defined in Paragraph 32.
"Exchange Date" shall mean Exchange Date as defined in Paragraph
32.
"Existing Property" shall mean Existing Property as defined in
Paragraph 32.
"Fair Market Value" shall mean the higher of (a) the fair market
value of the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, as affected and encumbered by this Lease and assuming that the
Term has been extended for all extension periods, if any, provided for herein.
Fair Market Value, for all purposes of this Lease, shall be determined in
accordance with the procedure specified in Paragraph 27.
"Guarantor" shall mean SDC Distributing Corp., a Delaware
corporation.
"Guaranty" shall mean the Guaranty of even date herewith from
Guarantor to Landlord.
"Hazardous Substances" shall mean (i) any flammable substance,
radioactive materials, hazardous materials, hazardous wastes, toxic substances,
pollutants, pollution or any related materials or substances specified in any
of the Environmental Laws (including any "hazardous substance" as defined in
CERCLA) and (ii) asbestos and polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in Paragraph
8(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Land" shall mean the Land as defined in Paragraph 1.
-3-
<PAGE>
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation or requirement,
even if unforeseen or extraordinary, of every duly constituted governmental
authority, court or agency.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean all present and future Laws
(including but not limited to Environmental Laws) and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to Tenant or to any of the Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any Person or entity which may, after the
date hereof, make a Loan to Landlord.
"Loan" shall mean one or more loans of not more than $2,500,000
which may be made by Lender to Landlord after the date hereof, secured by a
Mortgage and an Assignment and evidenced by a Note.
"Memphis Premises" shall mean the Memphis Premises as defined in
Paragraph 1.
"Mortgage" shall mean any mortgage or deed of trust encumbering
the Leased Premises from Landlord to Lender, as the same may from time to time
be amended, supplemented or modified.
"Net Award" shall mean the entire award payable to Landlord by
reason of a Condemnation, less any reasonable out-of-pocket expenses and
reasonable attorney's fees, if applicable incurred by Landlord and Lender in
collecting such award.
"Net Proceeds" shall mean the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent payable to Landlord or Lender),
(iv) and (v) of Paragraph 14(a), less any reasonable out-of-pocket expenses and
reasonable attorney's fees, if applicable incurred by Landlord and Lender in
collecting such proceeds.
"New Orleans Premises" shall mean the New Orleans Premises as
defined in Paragraph 1.
-4-
<PAGE>
"Note" shall mean a promissory note evidencing Landlord's
obligation to repay the Loan, which Note may be secured by the Mortgage and the
Assignment, as the same may from time to time be amended, supplemented or
modified.
"Offer Amount" shall mean the Termination Offer Amount, the
Casualty Offer Amount, the Transfer Offer Amount, the Default Offer Amount or
the Purchase Price, as the case may be, and as the context requires.
"Option Purchase Date" shall mean the Option Purchase Date as
defined in Paragraph 28.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements, listed on Exhibit
"C" attached hereto and made a part hereof.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prime Rate" shall mean the average of the interest rates per
annum quoted by Bank of America NT & SA, San Francisco, CA, The Chase Manhattan
Bank, N.A., New York, NY, Chemical Bank, New York, NY, Citibank, N.A., New York,
NY, and Morgan Guaranty Trust Company, New York, NY, as their respective prime
rates, such average to change effective as of the effective date of any change
in any of the aforesaid prime rates. The Prime Rate shall be the average of such
publicly announced prime rates even though one or more of the aforesaid banks
may actually charge interest on some of its loans at lower rates; and if any of
the aforesaid banks has more than one prime rate of interest in effect
simultaneously, the prime rate of such bank for the purposes of this definition
shall be deemed to be the highest of such prime rates then simultaneously in
effect for such bank. If three or more of the aforesaid banks cease to have a
publicly announced prime rate, then, for so long as three or more of the
aforesaid banks cease to have a publicly announced prime rate, the Prime Rate
shall be the average per annum discount rate from time to time on ninety-one
(91) day bills issued by the United States Treasury (the so-called "Treasury
bills") at the most recent auction or, if no such ninety-one (91) day bills are
then being issued, Treasury bills then being issued for the period of time
closest to ninety-one (91) days.
"Purchase Price" shall mean the Purchase Price as defined in
Paragraph 28.
"Remaining Sum" shall mean the Remaining Sum as defined in
Paragraph 15(a).
"Rent" shall mean Basic Rent and Additional Rent.
"Replaced Equipment" shall mean the Replaced Equipment as defined
in Paragraph 11(d) .
-5-
<PAGE>
"Replacement Equipment" shall mean the Replacement Equipment as
defined in Paragraph 11(d).
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Affected Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of a Remaining Sum is finally determined or the date on which Landlord's
right to retain the Remaining Sum is finally determined.
"San Antonio Premises" shall mean the San Antonio Premises as
defined in Paragraph 1.
"Selected Premises" shall mean the Selected Premises as defined
in Paragraph 19(b)(v).
"Set-Off" shall mean a Set-Off as defined in Paragraph 7(a).
"Site Assessments" shall mean the Site Assessments as defined in
Paragraph 8(d).
"Site Reviewers" shall mean the Site Reviewers as defined in
Paragraph 8(d).
"State" shall mean the State of Louisiana, the State of Tennessee
and/or the State of Texas, as applicable.
"Substitute Property" shall mean the Substitute Premises as
defined in Paragraph 32 .
"Taking" shall mean any taking of any of the Leased Premises in
or by condemnation or other eminent domain proceedings pursuant to any Law,
general or special, or by reason of any agreement with any condemnor in
settlement of or under threat of any such condemnation or other eminent domain
proceeding, or by any other means, or any de facto condemnation.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Date" shall mean the Termination Date as defined in
Paragraph 13(b).
"Termination Offer Amount" shall mean the Termination Offer
Amount as defined in Paragraph 13(b).
-6-
<PAGE>
"Transfer Offer Amount" shall mean Transfer Offer Amount as
defined in Paragraph 17 .
"Transfer Purchase Date" shall mean Transfer Purchase Date as
defined in Paragraph 17.
3. Title and Condition.
-------------------
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and the Assignment, (ii) the rights of any parties in possession of any
of the Leased Premises, (iii) the existing state of title of the Leased
Premises, including the Permitted Encumbrances, as of the commencement of the
Term, (iv) any state of facts which an accurate survey or physical inspection of
the Leased Premises might show, (v) all Legal Requirements, including any
existing violation of any thereof, and (vi) the condition of the Leased Premises
as of the commencement of the Term, without representation or warranty by
Landlord; it being understood and agreed, however, that the recital of the
Permitted Encumbrances herein shall not be construed as a revival of any thereof
which for any reason may have expired or terminated.
(b) Tenant acknowledges that the Leased Premises are in
satisfactory condition and repair at the inception of this Lease. LANDLORD HAS
NOT MADE AND WILL NOT MAKE ANY INSPECTION OF ANY OF THE LEASED PREMISES.
LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
-----
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL
LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE
-------------------------------------------------------
OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE
- ----------
EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v)
VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix)
CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii)
---------------
DURABILITY OR (xiv) OPERATION; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO
ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT
AND ARE SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF
THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED; AND THE FOREGOING PROVISIONS ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT
TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR
ARISING OTHERWISE.
-7-
<PAGE>
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby,
and acknowledges that title is in Landlord and that Tenant has only the right of
possession and use of the Leased Premises (and a right of first refusal) as
provided in this Lease. Tenant further acknowledges that to its knowledge (i)
the Improvements conform to all Legal Requirements and all requirements of the
carriers of all insurance on any of the Leased Premises, (ii) all easements
necessary or appropriate for the use or operation of the Leased Premises have
been obtained, (iii) all contractors and subcontractors who have performed work
on or supplied materials to the Leased Premises have been fully paid, and all
materials and supplies have been fully paid for, (iv) the Improvements have been
fully completed in a workmanlike manner, and (v) all Equipment necessary for the
use or operation of the Leased Premises has been installed and all Equipment in
the Leased Premises is presently operative.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties and indemnities, express or
implied, and similar rights which Landlord may have against any manufacturer,
seller, engineer, contractor or builder in respect of any of the Leased
Premises, including any rights and remedies existing under contract or pursuant
to the Uniform Commercial Code. Such assignment shall remain in effect until the
termination of this Lease, and upon the termination of this Lease, such
assignment shall cease and all the said warranties, guaranties, indemnities and
other rights shall automatically revert to Landlord unless Tenant shall have
acquired the Premises in which event the assignment shall continue in effect.
4. Use of Leased Premises: Quiet Enjoyment.
---------------------------------------
(a) Tenant may occupy and use the Leased Premises for any lawful
purpose, provided that no Alterations may be made and no additional Improvements
may be constructed except in accordance with Paragraph 12, no Equipment may be
removed from the Leased Premises except in accordance with Paragraphs 11(d),
13(d) and 14(h), and such use will not otherwise violate any provision of this
Lease. Tenant shall not permit any unlawful occupation, business or trade to be
conducted on any of the Leased Premises or any use to be made thereof contrary
to any applicable Legal Requirement then in effect. Tenant shall not use or
occupy or permit any of the Leased Premises to be used or occupied, nor do or
permit anything to be done in or on any of the Leased Premises, in a manner
which would (i) violate any certificate of occupancy affecting any of the Leased
Premises, (ii) make void or voidable any insurance then in force with respect to
any of the Leased Premises, (iii) make it difficult or impossible to obtain fire
or
-8-
<PAGE>
other insurance which Tenant is required to furnish hereunder, (iv) cause
structural injury to any of the Improvements, or (v) constitute a public or
private nuisance or waste.
(b) Subject to the other provisions of this Lease, so long as no
Event of Default exists hereunder, Landlord covenants to do no act to disturb
the peaceful and quiet occupation and enjoyment of the Leased Premises by
Tenant, provided that Landlord may enter upon and examine any of the Leased
Premises at reasonable times and upon five (5) days advance notice to Tenant
(except in the event of an emergency or upon the occurrence of an Event of
Default in either of which events no notice shall be required) and may take such
action with respect to the Leased Premises as is permitted by any provision
hereof.
5. Term. Subject to the provisions hereof, Tenant shall have and hold
----
the Leased Premises for an initial term (such term, as extended or renewed in
accordance with the provisions hereof, being called the "Term") commencing on
the date hereof and ending on the last day of the one hundred and eightieth
(180th) calendar month next following the date hereof. If all Rent and all other
sums due hereunder shall not have been fully paid by the end of the Term,
Landlord may, at its option, extend the Term until all said sums shall have been
fully paid.
Provided this Lease shall not have been terminated pursuant to any
provision hereof, the initial Term shall be deemed to be automatically extended
for an additional period of five (5) years unless Tenant shall notify Landlord
in writing at least eighteen (18) months prior to the expiration of the initial
Term that Tenant is terminating this Lease as of the end of the initial Term
provided, however, that Tenant shall have a period equal to the shorter of (a)
six (6) months following the date of the notice of intention to terminate or (b)
sixty (60) days following the date on which Landlord notifies Tenant that it has
entered into a letter of intent with a third party to lease any of the Selected
Premises to notify Landlord that it is rescinding its notice to terminate this
Lease and in the event Tenant so rescinds its notice to terminate, this Lease
and the Term shall be automatically extended for an additional period of five
(5) years. If the initial Term is automatically extended as aforesaid and this
Lease has not been terminated pursuant to any provision hereof prior to the
expiration of the first extension period, the Term shall be further
automatically extended for an additional consecutive period of five (5) years
unless Tenant shall notify Landlord in writing at least eighteen (18) months
prior to the expiration of the first extension period that Tenant is terminating
this Lease as of the end of the first extension period provided, however, that
Tenant shall have a period equal to the shorter of (a) six (6) months following
the date of the notice of intention to terminate or (b) sixty (60) days
following the date on which Landlord notifies Tenant that it has entered into a
letter of intent with a third party to lease any of the Selected Premises to
notify Landlord that it is rescinding its notice to
-9-
<PAGE>
terminate this Lease and in the event Tenant so rescinds its notice to terminate
this Lease and the Term shall be automatically extended for an additional period
of five (5) years. If the Term is automatically extended as aforesaid and this
Lease has not been terminated pursuant to any provision hereof prior to the
expiration of the second extension period, the Term shall be further
automatically extended for an additional consecutive period of five (5) years
unless Tenant shall notify Landlord in writing at least eighteen (18) months
prior to the expiration of the second extension period that Tenant is
terminating this Lease as of the end of the second extension period provided,
however, that Tenant shall have a period equal to the shorter of (a) six (6)
months following the date of the notice of intention to terminate or (b) sixty
(60) days following the date on which Landlord notifies Tenant that it has
entered into a letter of intent with a third party to lease any of the Selected
Premises to notify Landlord that it is rescinding its notice to terminate this
Lease and in the event Tenant so rescinds its notice to terminate this Lease and
the Term shall be automatically extended for an additional period of five (5)
years. If the Term is automatically extended as aforesaid and this Lease has not
been terminated pursuant to any provision hereof prior to the expiration of the
third extension period, the Term shall be further automatically extended for an
additional consecutive period of five (5) years unless Tenant shall notify
Landlord in writing at least eighteen (18) months prior to the expiration of the
third extension period that Tenant is terminating this Lease as of the end of
the third extension period provided, however, that Tenant shall have a period
equal to the shorter of (a) six (6) months following the date of the notice of
intention to terminate or (b) sixty (60) days following the date on which
Landlord notifies Tenant that it has entered into a letter of intent with a
third party to lease any of the Selected Premises to notify Landlord that it is
rescinding its notice to terminate this Lease and in the event Tenant so
rescinds its notice to terminate this Lease and the Term shall be automatically
extended for an additional period of five (5) years.
In the absence of such notice of termination by Tenant to Landlord and
in the absence of any termination of this Lease pursuant to any other provision
hereof, the Term shall be automatically extended for the applicable extension
period specified above and no instrument of extension or renewal need be
executed. Any such extension of the Term shall be subject to and continue in
full force and effect all of the provisions of this Lease except that the Basic
Rent payable during each extension period shall be as provided in Exhibit "C"
attached hereto and made a part hereof.
In the event that Tenant exercises its option not to extend or not to
further extend the Term, as hereinabove provided or upon the occurrence of an
Event of Default hereunder, then Landlord shall have the right during the
remainder of the Term then in effect to (a) advertise the availability of the
Leased
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Premises for sale or for reletting and to erect upon the Leased Premises signs
indicating such availability provided that such signs shall not unreasonably
interfere with the use of the Leased Premises by Tenant, and (b) show the Leased
Premises to prospective purchasers or tenants at such reasonable times during
normal business hours as Landlord may select.
6. Rent.
----
(a) Tenant shall pay to Landlord, as annual rent for the Leased
Premises during the Term the amounts determined in accordance with the schedule
set forth in Exhibit "D" attached hereto and made a part hereof ("Basic Rent"),
commencing on the first day of the first month next following the date hereof
and continuing on the first day of each month thereafter during the Term (the
said days being called the "Basic Rent Payment Dates"), and shall pay the same
at Landlord's address set forth above, or at such other places or to such other
Persons as Landlord from time to time may designate to Tenant in writing. Each
rental payment shall be made to Landlord on or before the applicable Basic Rent
Payment Date in immediately available funds which at the time of such payment
shall be legal tender for the payment of public or private debts in the United
States of America. Pro rata Basic Rent for the period from the date hereof
through the last day of the month hereof shall be paid on the date hereof.
Landlord may, at Landlord's option, by written notice to Tenant, require Tenant
to pay installments of Basic Rent directly to one or more Persons in addition to
Landlord, in such proportions as Landlord may select; and Tenant agrees to make
such "split" payments of Basic Rent in the amounts, to the payees and in the
manner specified by Landlord in any such notice, provided, however, that Tenant
shall not be required to make more than two (2) "split" payments.
(b) Tenant shall pay and discharge when the same shall become
due, as additional rent, all other amounts and obligations which Tenant assumes
or agrees to pay or discharge pursuant to this Lease (except that amounts
payable as liquidated damages pursuant to Paragraph 19(b) (iv) shall not
constitute additional rent), together with every fine, penalty, interest and
cost which may be added for non-payment or late payment thereof. If any
installment of Basic Rent is not paid on or before the due date therefor, Tenant
shall pay to Landlord, as additional rent, an amount equal to three percent (3%)
of the amount of such installment, provided, however, that with respect to the
first three (3) late payments in any twelve (12) month period (the first such
period to commence on the first Basic Rent Payment Date following the date of
this Lease) such late payment charge shall not be payable until two (2) business
days following receipt of notice by Tenant that such payment has not been
received. From the date of occurrence of any Event of Default until all Events
of Default are fully cured, Tenant shall pay to Landlord on demand, as
additional rent, a sum equal to any additional sums which might be payable by
Landlord to any lender under any note occasioned by
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the occurrence of an Event of Default under this Lease. The requirements of
Paragraph 19(g) regarding notice and grace periods need not be satisfied prior
to the imposition of Additional Rent (as hereinafter defined) under foregoing
provisions of this Paragraph 6(b). In addition, upon the occurrence of an Event
of Default, Tenant shall pay to Landlord on demand, as additional rent, interest
at the rate (the "Default Rate") of three percent (3%) per annum over the Prime
Rate on the following sums until paid in full: (i) all overdue installments of
Basic Rent in excess of the payments due under any note for the same period from
the respective due dates thereof, (ii) all overdue amounts of additional rent
relating to obligations which Landlord shall have paid on behalf of Tenant, from
the date of payment thereof by Landlord, and (iii) on all other overdue amounts
of additional rent from the date Landlord demands payment. All the foregoing
additional rent is herein sometimes called "Additional Rent". In the event of
any failure by Tenant to pay or discharge any Additional Rent, Landlord shall
have all rights, powers and remedies provided herein, by law or otherwise, in
the event of non-payment of Basic Rent.
7. Net Lease: Non-Terminability.
----------------------------
(a) This is a net lease and all Rent and all other sums payable
hereunder by Tenant shall be paid without notice or demand, and without set-off,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense (collectively, a "Set-Off").
(b) This Lease shall not terminate, Tenant shall not have any
right to terminate this Lease during the Term (except as otherwise expressly
provided herein), Tenant shall not be entitled to any Set-Off of or to any Rent
or any other sums payable under this Lease (except as otherwise expressly
provided herein), and the obligations of Tenant under this Lease shall not be
affected by any interference with Tenant's use of any of the Leased Premises for
any reason, including the following: (i) any damage to or destruction of any of
the Leased Premises by any cause whatsoever, (ii) any Condemnation, (iii) the
prohibition, limitation or restriction of Tenant's use of any of the Leased
Premises, (iv) any eviction by paramount title or otherwise as long as the same
does not constitute a breach of Paragraph 4(b) hereof, (v) Tenant's acquisition
of ownership of any of the Leased Premises other than pursuant to an express
provision of this Lease, (vi) any default on the part of Landlord hereunder or
under any other agreement as long as the same does not constitute a breach of
Paragraph 4(b) hereof, (vii) any latent or other defect in, or any theft or loss
of, any of the Leased Premises, (viii) the breach of any warranty of any seller
or manufacturer of any of the Equipment, or (ix) any other cause, whether
similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding. It is the intention of the parties hereto that the
obligations of Tenant hereunder shall be separate and independent covenants and
agreements, that all Rent and all
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other sums payable by Tenant hereunder shall continue to be payable in all
events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and that
the obligations of Tenant hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated pursuant to an
express provision of this Lease. The obligation to pay Rent or amounts equal
thereto shall not be affected by any collection of rents by any governmental
body pursuant to a tax lien or otherwise, even though such obligation results in
a double payment of Rent.
(c) Tenant agrees that it shall remain obligated under this
Lease in accordance with its provisions and that, except as otherwise expressly
provided herein, it shall not take any action to terminate, rescind or avoid
this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding-up or other
proceeding affecting Landlord, (ii) the exercise of any remedy, including
foreclosure, under the Mortgage or the Assignment, or (iii) any action with
respect to this Lease (including the disaffirmance hereof) which may be taken by
Landlord, any trustee, receiver or liquidator of Landlord or any court under the
Federal Bankruptcy Code or otherwise.
(d) Tenant waives all rights which may now or hereafter be
conferred by law (i) to quit, terminate or surrender this Lease or any of the
Leased Premises, or (ii) to any Set-Off of or to any Rent or any other sums
payable under this Lease, except as otherwise expressly provided herein.
8. Payment of Impositions: Compliance with Law.
-------------------------------------------
(a) Subject to the provisions of Paragraph 18 hereof (relating
to contests) and the exclusions specified in the following paragraph of this
Paragraph 8(a), Tenant shall, before interest or penalties are due thereon, pay
and discharge all taxes of every kind and nature (including real and Personal
property, franchise, withholding, profits and gross receipts taxes), all charges
for any easement or agreement maintained for the benefit of any of the Leased
Premises, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges, all charges for utility and
communication services relating to any of the Leased Premises, all ground rents,
and all other public charges whether of a like or different nature, even if
unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii)
any of the Leased Premises, (iii) Landlord as a result of or arising in respect
of the acquisition, ownership, occupancy, leasing, use, possession or sale of
any of the Leased Premises, any activity conducted on the Leased Premises, or
Rent (including without limitation, any gross income tax or excise tax levied by
any governmental body on or with respect to such Rent), or (iv) Lender by reason
of the Note or Mortgage and which (as to this clause (iv)) Landlord has agreed
to pay (collectively, the "Impositions").
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Nothing in this Lease shall obligate Tenant to pay (A) Federal, State
or local income, excess profits, or other taxes, if any, of Landlord or Lender,
determined on the basis of their net income, (B) any estate, inheritance,
succession, gift or similar tax, or (C) any capital gains tax imposed on
Landlord by the State or municipality in which the Leased Premises are located
in connection with the sale of any of the Leased Premises or any Federal capital
gains tax, unless the taxes referred to in clause (A) above are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
any of the Leased Premises which, if such other tax, assessment or other charge
were in effect, would be payable by Tenant. In the event that any assessment
against any of the Leased Premises may be paid in installments, Tenant shall
have the option to pay such assessment in installments; and, in such event,
Tenant shall be liable only for those installments which become due and payable
during the Term. Tenant shall prepare and file all tax reports required by
governmental authorities which relate to the Impositions. Tenant shall deliver
to Landlord, within ten (10) days of receipt thereof, copies of all settlements
and notices pertaining to the Impositions which may be issued by any
governmental authority and, within ninety (90) days after the end of each
calendar year of the Term, receipts for payments of all Impositions made during
such year.
(b) Tenant shall promptly comply with and conform to all of the
Legal Requirements, subject to the provisions of Paragraph 18 hereof.
(c) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any spill of any Hazardous Substance
affecting the Leased Premises or in connection with the deposit, storage,
placement or use of any Hazardous Substance at, upon, under or within the Leased
Premises or any real estate contiguous thereto, Landlord may, at its sole
option, upon prior written notice to Tenant, take any and all actions as
Landlord shall deem reasonably necessary or advisable in order to cure such
noncompliance. Any amounts so paid, together with interest thereon at the
Default Rate from the date of payment by Landlord, shall be immediately due and
payable by Tenant to Landlord. Nothing contained herein shall obligate Landlord
to cure such noncompliance or release Tenant from any of its obligations
hereunder.
(d) Tenant shall notify Landlord immediately after becoming
aware thereof of any violation of or noncompliance with any of the covenants
contained in this Paragraph hereof and shall forward to Landlord immediately
upon receipt thereof copies of all orders, reports, notices, permits,
applications or other communications relating to any such violation or
noncompliance or any other matter relating in any fashion to any Environmental
Law as it may affect or relate to the Leased Premises.
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<PAGE>
(e) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party thereto which are identical to the covenants contained in
Paragraphs 8(c) and 8(d).
9. Liens; Recording and Title.
--------------------------
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain, and shall promptly discharge or remove, any lien on
any of the Leased Premises or on any Rent or any other sums payable by Tenant
under this Lease, other than the Mortgage, the Assignment, the Permitted
Encumbrances and any mortgage, lien, encumbrance or other charge created by or
resulting solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN
THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING ANY OF THE LEASED PREMISES
THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD
IN AND TO ANY OF THE LEASED PREMISES.
(b) Tenant shall execute, deliver and record, file or register
from time to time all such instruments as may be required by any present or
future Law in order to evidence the respective interests of Landlord and Tenant
in any of the Leased Premises, and shall cause this Lease, or a memorandum of
this Lease, and any supplement hereto or to such other instrument, if any, as
may be appropriate, to be recorded, filed or registered and re-recorded, refiled
or re-registered in such manner and in such places as may be required by any
present or future Law in order to publish notice and protect the validity or
priority of this Lease.
(c) Nothing in this Lease and no action or inaction by Landlord
shall be deemed or construed to mean that Landlord has granted to Tenant any
right, power or permission to do any act or to make any agreement which may
create, give rise to, or be the foundation for, any right, title, interest or
lien in or upon the estate of Landlord in any of the Leased Premises.
10. Indemnification. Tenant agrees to pay, protect, indemnify, save
---------------
and hold harmless Landlord and all other Persons described in Paragraph 29 from
and against any and all liabilities, losses, damages, penalties, costs, expenses
(including all reasonable attorneys' fees and expenses), causes of action,
suits, claims, demands or judgments of any nature whatsoever, howsoever caused
from any of the following (except for an affirmative act or omission of Landlord
unless such act or omission is otherwise the obligation of Tenant under this
Lease or unless arising from an internal conflict among the partners of Landlord
or Persons described in Paragraph 29 that is not related to Tenant's performance
under this Lease): (a) any matter pertaining to any of the Leased Premises or
Adjoining Property or
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the ownership, use, non-use, occupancy, operation, condition, design,
construction, maintenance, repair or rebuilding of any of the Leased Premises or
Adjoining Property, (b) any injury to or death of any Person or any loss of or
damage to any property in any manner arising from the Leased Premises or
Adjoining Property or from any matter described in clause (a) above, or
connected therewith or occurring thereon, whether or not Landlord has or should
have knowledge or notice of the defect or condition, if any, causing or
contributing to said injury, death, loss, damage or other claim, (c) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance, (d)
any other cause pertaining to this Lease or any of the Leased Premises or
Adjoining Property or the transaction of which this Lease forms a part, or (e)
the alleged deposit, storage, disposal, burial, dumping, injecting, spilling,
leaking or other use, placement or release in, on, or affecting the Leased
Premises of a Hazardous Substance or otherwise arising from any other alleged
violation of any of the Environmental Laws including (i) liability for costs of
removal or remedial action incurred by the United States Government or the
State, or response costs incurred by any other Person or entity, or damages from
injury to or destruction or loss of natural resources, including the reasonable
costs of assessing such injury, destruction or loss, incurred pursuant to
Section 107 of CERCLA, or any successor Section or Act; (ii) liability for costs
and expenses of abatement, correction or clean-up, fines, damages, response
costs or penalties which arise from the provisions of any of the other
Environmental Laws; and (iii) liability for personal injury or property damage
arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of an abnormally dangerous activity. In case any action or proceeding is brought
against Landlord or any other Person described in Paragraph 29 by reason of any
such claim, Tenant covenants upon notice from Landlord to resist and defend such
action or proceeding by counsel reasonable satisfactory to Landlord, and
Landlord or such other Person will cooperate and assist in the defense of such
action or proceeding if requested to do so by Tenant.
The obligations of Tenant under this Paragraph 10 shall survive any
termination of this Lease.
11. Maintenance and Repair.
----------------------
(a) Tenant shall at all times, including any Requisition period,
maintain the Leased Premises and the Adjoining Property in good repair and
condition and, in the case of the Equipment, in ordinary wear and tear, and
shall promptly make all repairs (substantially equivalent in quality and
workmanship to the original work) of every kind and nature, whether foreseen or
unforeseen, which may be required to be made upon or in connection with any of
the Leased Premises in order to keep and maintain the Land and
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Improvements in as good repair and condition as they were on the date hereof,
and the Equipment in as good mechanical condition as it was on the later of the
date hereof or the date of its installation, except for ordinary wear and tear,
in accordance with the better of the practices generally recognized as then
acceptable within the Tenant's industry and in conformity with all legal
requirements and insurance requirements. Tenant shall do or cause others to do
all shoring of the Leased Premises or Adjoining Property or of foundations and
walls of the Improvements and every other act necessary or appropriate for the
preservation and safety thereof, by reason of or in connection with any
excavation or other building operation upon any of the Leased Premises or
Adjoining Property, whether or not Landlord shall, by any Legal Requirement, be
required to take such action or be liable for failure to do so. Landlord shall
not be required to make any Alteration, whether foreseen or unforeseen, or to
maintain any of the Leased Premises or Adjoining Property in any way, and Tenant
hereby expressly waives any right which may be provided for in any Law now or
hereafter in effect to make Alterations at the expense of Landlord. Any
Alteration made by Tenant pursuant to this subparagraph (a) or pursuant to
subparagraph (b) of this Paragraph 11 shall be made in conformity with the
provisions of Paragraph 12.
(b) Except for the Permitted Encumbrances, in the event that any
Improvement, now or hereafter constructed, shall encroach upon any property,
street or right-of-way (including the Adjoining Property) adjoining any of the
Leased Premises, shall violate the provisions of any restrictive covenant
affecting any of the Leased Premises, shall hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject, or shall impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance, obstruction
or impairment, whether the same shall affect Landlord, Tenant or both, or (ii)
take such reasonable action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
(c) Landlord shall have the right (but no obligation), upon at
least five (5) days prior notice to Tenant (or without notice in case of
emergency), to enter upon any of the Leased Premises for the purpose of making
any Alterations which may be necessary by reason of Tenant's failure to comply
with the provisions of subparagraphs (a) and (b) of this Paragraph 11. Except in
case of emergency, the right of entry shall be exercised at reasonable times and
at reasonable hours and upon at least five (5) days prior notice. The cost of
any such entry, together with the reasonable and actual cost of all such
Alterations, shall be Additional Rent; and Tenant shall pay the same to
Landlord, together with interest thereon at the Default Rate from the time
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of payment by Landlord until paid by Tenant, immediately upon written demand
therefor and upon submission of evidence of Landlord's payment of such costs.
(d) Tenant shall, from time to time, to the extent necessary or
commercially reasonable, replace with other operational equipment or parts (the
"Replacement Equipment") any of the Equipment (the "Replaced Equipment") which
shall have (i) become worn out, obsolete or unusable for the purpose for which
it is intended, (ii) been taken by a Condemnation as provided in Paragraph
13(d), or (iii) been lost, stolen, damaged or destroyed as provided in Paragraph
14(h); provided, however, that the Replacement Equipment shall (A) be in good
operating condition, (B) have a value and useful life at least equal to the
value and estimated useful life of the Replaced Equipment immediately prior to
the time that the Replaced Equipment had become so worn out, or unusable, so
taken, or so lost, stolen, damaged or destroyed, and (C) be suitable for a use
which is the same or similar to that of the Replaced Equipment. Tenant shall
repair at its sole cost and expense all damage to the Leased Premises caused by
the removal of Replaced Equipment or other Personal property of Tenant or the
installation of Replacement Equipment. All Replacement Equipment shall become
the property of Landlord, shall be free and clear of all liens and rights of
others and shall become a part of the Equipment to the same extent as the
Replaced Equipment had been. If so requested by Landlord in writing, Tenant
shall promptly cause to be executed and delivered to Landlord an invoice, bill
of sale or other appropriate instrument evidencing the transfer or assignment to
Landlord of all estate, right, title and interest (other than the leasehold
estate created hereby) of Tenant or any other Person in and to the Replacement
Equipment, free from all liens and other exceptions to title; and Tenant shall
pay all taxes, fees, costs and other expenses that may become payable as a
result thereof. At the expiration of the Term or the sooner termination of this
Lease, all Equipment shall be in good operating condition, ordinary wear and
tear excepted.
12. Alterations and Improvements. Except with respect to the
----------------------------
maintenance and repair required to be performed by Tenant pursuant to in
Paragraph 11 and otherwise as provided in this Paragraph 12, Tenant shall not
with respect to any of Memphis Premises, the New Orleans Premises Antonio
Premises (a) make any Alterations the cost of which exceeds $250,000 for any
single alteration or $500,000 in the aggregate over the Term, (b) construct upon
the Land any additional Improvements or (c) install equipment in the
Improvements or accessions to the Equipment, without the prior written approval
of Landlord, which approval shall not be unreasonably withheld or delayed. In
addition, Tenant shall not do any other act which, in the sole opinion of
Landlord, would tend to impair the value of the Leased Premises. Tenant agrees
that (i) the market value of the Leased Premises shall not be lessened by any
such Alteration, construction or installation, or its usefulness impaired, (ii)
all such Alterations, construction and installations shall be
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performed in a good and workmanlike manner, (iii) all such Alterations,
construction and installations shall be expeditiously completed in compliance
with all Legal Requirements, (iv) all work done in connection with any such
Alteration, construction or installation shall comply with the requirements of
all insurance policies required to be maintained by Tenant hereunder, (v) Tenant
shall promptly pay all costs and expenses of any such Alteration, construction
or installation and shall discharge or remove all liens filed against any of the
Leased Premises arising out of the same, (vi) Tenant shall procure and pay for
all permits and licenses required in connection with any such Alteration,
construction or installation, (vii) all such Alterations, construction and
installations shall be the property of Landlord and shall be subject to this
Lease, and (viii) Tenant shall comply, to the extent requested by Landlord, with
the provisions of clauses (i) through (iv) of Paragraph 15(a).
Notwithstanding the foregoing, Tenant shall be permitted to construct
additional Improvements upon the Land in order to expand the existing facilities
so long as (a) Landlord receives prior written notice of Tenant's intention to
construct such Improvements and (b) Tenant complies fully with all of the
provisions of this Paragraph 12, including, but not limited to, subparagraphs
(i) through (viii) herein.
13. Condemnation.
------------
(a) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord thereof and, so long as an Event of Default has not
occurred and is continuing, Tenant shall have the right on behalf of Tenant,
Landlord and Lender to negotiate the settlement in any Condemnation proceeding
and/or threat thereof and to contest the Condemnation and/or the amount of the
Net Award therefor, all at Tenant's expense; provided, however, that if an Event
of Default has occurred and is continuing Tenant shall have no right to
participate in any such proceedings, negotiation or contest. Lender shall be
entitled to participate with Tenant in any such proceeding, negotiation and/or
contest, all at Tenant's expense, provided, however, that so long as an Event of
Default has not occurred and is continuing counsel selected by Tenant shall
represent Tenant, Landlord and Lender in any such proceeding, negotiation and/or
contest. Subject to the provisions of this Paragraph 13, Tenant hereby
irrevocably assigns to Landlord any award or payment to which Tenant is or may
be entitled by reason of any Condemnation, whether the same shall be paid or
payable for Tenant's leasehold interest hereunder or otherwise; but nothing in
this Lease shall impair Tenant's right to any award or payment on account of
Tenant's trade fixtures, equipment or other tangible property which is not part
of the Equipment, moving expenses or loss of business, if available, to the
extent that and so long as (i) Tenant shall have the right to make, and does
make, a separate claim therefor against the condemnor and (ii) such claim does
not in any way reduce either the amount of the award otherwise payable to
Landlord for the
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Condemnation of Landlord's fee interest in the Leased Premises or the amount of
the award (if any) otherwise payable for the Condemnation of Tenant's leasehold
interest hereunder.
(b) If (i) the entire "New Orleans Premises", the entire
"Memphis Premises" or the entire "San Antonio Premises" or (ii) any substantial
portion of the "New Orleans Premises", the Memphis Premises" or the "San Antonio
Premises", which portion Tenant determines, in good faith, to be sufficient to
render the remaining portion thereof uneconomic for the use of Tenant or any
other tenant to which such premises might reasonably be leased, shall be taken
by a Taking or under threat thereof, (any one or all of which is affected by a
taking described in (i) or (ii) being hereinafter referred to as the "Affected
Premises") then Tenant shall, not later than thirty (30) days after Landlord
gives Tenant notice that Landlord has received a Condemnation Notice or Tenant
otherwise receives a Condemnation Notice, give notice to Landlord of its
intention to terminate this Lease as to the Affected Premises on the first Basic
Rent Payment Date (the "Termination Date") occuring after the date on which the
Landlord rejects Tenant's offer to purchase the Affected Premises.
Such notice of intention to terminate shall contain (A) an irrevocable
offer of Tenant to purchase the remaining portion of the Affected Premises, if
any, on the Termination Date for the purchase price (the "Termination Offer
Amount") specified in the next sentence and (B) in the event that less than the
entire Affected Premises shall have been taken or be under threat thereof, a
certificate of Tenant, signed by the president or a vice president thereof,
stating that, in Tenant's good faith judgment, the portion of the Affected
Premises so taken or under threat thereof is sufficient to fulfill the
conditions set forth in clause (ii) of the first subparagraph of this Paragraph
13(b) and certifying that Tenant will forever abandon operations on the
remainder of the Affected Premises. The Termination Offer Amount shall be the
greater of (1) the Fair Market Value of the Affected Premises as of the date
immediately prior to the Condemnation Notice or (2) the sum of that portion of
the Acquisition Cost applicable to the Affected Premises, as set forth in
Exhibit "E" attached hereto and made a part hereof, and one-half of any
prepayment penalty or premium up to a maximum payment by Tenant of Fifty
Thousand Dollars ($50,000) which may be payable under a Note or Mortgage.
Promptly upon the delivery to Landlord of such notice of intention to terminate,
Landlord and Tenant shall commence to determine such Fair Market Value in
accordance with the procedure specified in Paragraph 27.
Tenant agrees that no rejection of an offer hereunder shall be
effective for any purpose unless consented to by Lender. If Landlord shall
reject such offer by notice to Tenant, containing the written consent of Lender
to such rejection, not later than the twentieth (20th) day following the
determination of Fair Market Value, then upon (x) payment of all Rent and any
other charges due and unpaid under this Lease as of the Termination Date
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and (y) compliance by Tenant with all other obligations and liabilities under
this Lease which have arisen on or prior to the Termination Date, this Lease
shall terminate on the Termination Date as to the Affected Premises and Tenant
shall promptly vacate and have no further right, title or interest in or to any
of the Affected Premises.
Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the twentieth (20th) day following the determination of
Fair Market Value, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Termination Offer Amount on the Termination Date and, provided all Rent and
other sums due and unpaid hereunder are paid in full, Landlord shall convey to
Tenant the remaining portion of the Affected Premises, if any, in accordance
with the provisions of Paragraph 16 and Landlord shall assign to Tenant its
entire interest in and to the Net Award including any part thereof that has not
been received by Landlord and/or deliver to Tenant or credit against the
Termination Offer Amount such Net Award including any part thereof which shall
have been received by Landlord.
(c) In the event of any Taking of any of the Land or
Improvements which does not result in a termination of this Lease as to any or
all of the "New Orleans Premises", the "Memphis Premises", or the "San Antonio
Premises", the Term shall, notwithstanding the Taking, continue and there shall
be no abatement or reduction of Rent or any other sums payable by Tenant
hereunder, except as expressly provided in Paragraph 15(b). Promptly after such
Taking, Tenant, as required in Paragraph 11(a), shall commence and diligently
continue to restore the Improvements as nearly as possible to their value,
condition and character immediately prior to such Taking, in accordance with the
provisions of Paragraph 12. Landlord shall make the Net Award available to
Tenant as and when received by Landlord for restoration in accordance with and
subject to the provisions of Paragraph 15(a).
In the event of a Requisition of any of the Land or Improvements, if
Landlord is required to pay the Net Award of such Requisition to Lender in
accordance with the provisions of the Note and the Mortgage and the debt service
payments due under the Note are thereafter reduced by virtue of such payment of
the Net Award to Lender, then each installment of Basic Rent payable on or after
the effective date of such reduction in debt service shall be reduced in the
same amount and for the same period as payments are reduced under the Note. In
the event that the Net Award of a Requisition of any of the Land or Improvements
is retained by Landlord, Landlord shall apply such Net Award, to the extent
received, to the installments of Basic Rent thereafter payable until such Net
Award has been applied in full or until the Term
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hereof has expired, whichever first occurs. Upon the expiration of the Term, any
portion of such Net Award which shall not have been previously credited to
Tenant shall be retained by Landlord.
(d) If any of the Equipment shall be taken by a Condemnation
other than a Condemnation which falls within the provisions of Paragraph 13(b),
the Term shall nevertheless continue and there shall be no abatement or
reduction of Rent or any other sums payable by Tenant hereunder. Tenant shall,
whether or not the Net Award is sufficient for the purpose, promptly replace the
Equipment so taken, in accordance with the provisions of Paragraph 11(d), and
the Net Award of such a Condemnation made for the loss of the replaced Equipment
only shall thereupon be payable to Tenant. The remainder of the Net Award shall
be applied as hereinabove provided.
(e) Except as specifically provided in subparagraph (a) of this
Paragraph 13, no agreement with any condemnor in settlement of or under threat
of any Condemnation shall be made by Tenant without the written consent of
Landlord and Lender.
14. Insurance.
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(a) Tenant shall maintain at its sole cost and expense the
following insurance on or in connection with the Leased Premises:
(i) Insurance against loss or damage to the Improvements
and Equipment by fire and other risks from time to time included under standard
extended and additional extended coverage policies, including vandalism and
malicious mischief, sprinkler, plate glass and flood insurance, to the extent
any of the Leased Premises are in a flood zone, in amounts not less than the
actual replacement value of the Improvements and Equipment, excluding footings
and foundations and other parts of the Improvements which are not insurable (or,
in the case of plate glass insurance, the replacement cost of all plate glass in
the Leased Premises). Such policies shall contain replacement cost endorsements.
(ii) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about any of the
Leased Premises or the Adjoining Property, in an amount not less than $1,000,000
primary combined single limit for bodily injury or death and/or property damage,
each occurrence with a general aggregate limit of $2,000,000, combined single
limit; provided, however, that Landlord shall have the right to determine such
other limits as may be reasonable and customary for transactions and properties
of this size and type. Policies for such insurance shall be for the mutual
benefit of Landlord, Tenant and Lender.
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(iii) Worker's compensation insurance covering all fulltime
employees of Tenant employed in connection with any work done on or about any of
the Leased Premises for which claims for death or bodily injury could be
asserted against Landlord, Tenant or any of the Leased Premises, or, in lieu of
such worker's compensation insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) To the extent that the Improvements include at any time
Equipment or any other equipment on or in the Leased Premises which by reason of
its use or existence is capable of bursting, erupting, or exploding, boiler and
pressure vessel insurance on any such Equipment, in an amount not less than
$5,000,000 for damage to property, bodily injury or death resulting from such
perils.
(v) Such other insurance, including business interruption
insurance which would provide an amount necessary to pay Rent for at least one
(1) year, on or in connection with any of the Leased Premises as Landlord or
Lender may reasonably require, which at the time is prudent for Tenant's
industry and is commonly obtained in connection with properties similar to the
Leased Premises.
(b) The insurance required by Paragraph 14(a) shall be written
by companies of recognized financial standing which are approved by Landlord,
which approval shall not be unreasonably withheld, and are authorized to do an
insurance business in the State. The insurance policies (i) shall be for such
terms as Landlord may reasonably approve, (ii) shall be in amounts sufficient at
all times to satisfy any coinsurance requirements thereof, and (iii) shall
(except for the worker's compensation insurance referred to in Paragraph
14(a)(iii) hereof) name Landlord, Tenant and Lender as insured parties, as their
respective interests may appear. If said insurance or any part thereof shall
expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become unsatisfactory to Landlord, Tenant shall promptly
obtain new or additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv) and
(v) of Paragraph 14(a) shall contain standard non-contributory mortgagee clauses
in favor of and reasonably acceptable to Lender. Each policy required by any
provision of Paragraph 14(a), except clause (iii) thereof, shall provide that it
may not be cancelled except after thirty (30) days' prior notice to Landlord and
Lender except for the non-payment of premiums which shall require at least ten
(10) days notice of cancellation. Each such policy shall also provide that any
loss otherwise payable thereunder shall be payable notwithstanding (i)
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any act or omission of Landlord or Tenant which might, absent such provision,
result in a forfeiture of all or a part of such insurance payment, (ii) the
occupation or use of any of the Leased Premises for purposes more hazardous than
those permitted by the provisions of such policy, (iii) any foreclosure or other
action or proceeding taken by Lender pursuant to any provision of the Mortgage
upon the happening of an event of default therein, or (iv) any change in title
to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due in installments or
otherwise all premiums for the insurance required by this Paragraph 14, shall
renew or replace each policy and deliver to Landlord evidence of the payment of
the full premium or next succeeding installment, as the case may be, therefor at
least twenty (20) days prior to the expiration date of such policy, and shall
promptly deliver to Landlord all original policies; and in the event of Tenant's
failure to comply with any of the foregoing requirements, Landlord shall be
entitled, but not obligated, to procure such insurance. Any sums expended by
Landlord in procuring such insurance shall be Additional Rent and shall be
repaid by Tenant, together with interest thereon at the Default Rate from the
time of payment by Landlord until fully paid by Tenant, immediately upon written
demand therefor by Landlord.
(e) Tenant shall have the replacement cost and insurable value
of the Improvements determined from time to time as required by the replacement
cost endorsements and shall deliver to Landlord the new replacement cost
endorsement or certificate evidencing such endorsement promptly upon Tenant's
receipt thereof. If, at any time, a replacement cost endorsement is not
available, Tenant shall have the replacement cost and insurable value of the
Improvements determined at least once a year by the underwriter of fire
insurance on the Leased Premises or, if such underwriter will not act, by a
qualified appraiser satisfactory to Landlord, and shall deliver to Landlord such
determination promptly upon receipt.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 14 and (ii) all
requirements of the insurers thereunder, applicable to Landlord, Tenant or any
of the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates structural changes or improvements or results in
interference with the use or enjoyment of any of the Leased Premises. Tenant
shall not use any of the Leased Premises in any manner which would permit the
insurer to cancel or increase the premium for any insurance policy.
(g) In the event of any loss, Tenant shall give Landlord and
Lender immediate notice thereof. So long as an Event of Default has not occurred
and is continuing, Tenant is hereby
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authorized to adjust and compromise, in its discretion, all claims under any of
the insurance policies required by this Paragraph 14 (except public liability
insurance claims payable to a person other than Tenant, Landlord or Lender) and
to execute and deliver of behalf of Landlord and Lender all necessary proofs of
loss, receipts, vouchers and release required by the insurers; and Landlord
agrees to sign, upon the request of Tenant, all such proofs of loss, receipts,
vouchers and releases. However, if Lender so elects, Lender shall adjust and
compromise any and all such claims. Any adjustment, settlement or compromise of
any such claim shall be subject to the prior written approval of Lender unless
Tenant receives a prior written waiver from Lender, and Lender shall have the
right to prosecute or contest, or to require Tenant to prosecute or contest, any
such claim, adjustment, settlement or compromise, all at Tenant's expense. All
proceeds of any insurance required under clauses (i) (in excess of One Hundred
Thousand Dollars ($100,000), (ii), (except proceeds payable to a person other
than Tenant, Landlord or Lender), (iv) and (v) of Paragraph 14(a) shall be
payable to Landlord and Lender. Each insurer is hereby authorized and directed
to make payment under said policies, including return of unearned premiums,
directly to Landlord and Lender instead of to Landlord and Tenant jointly
(except for a casualty loss payment of less than One Hundred Thousand Dollars
($100,000) which shall be paid directly to Tenant); and Tenant hereby appoints
each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft
therefor.
In the event of any casualty (whether or not insured against)
resulting in damage to any of the Improvements which does not result in a
termination of this Lease, the Term shall, notwithstanding such casualty,
continue and there shall be no abatement or reduction of Rent or any other sums
payable by Tenant hereunder, except as expressly provided in Paragraph 15(b).
Promptly after such casualty, Tenant, as required in Paragraph 11(a), shall
commence and diligently continue to restore the Improvements as nearly as
possible to their value, condition and character immediately prior to such
damage, subject to and in accordance with the provisions of Paragraph 12.
Landlord shall make such Net Proceeds available to Tenant as and when received
by Landlord for restoration by Tenant in accordance with and subject to the
provisions of Paragraph 15(a).
In the event of any loss of any of the Equipment in a casualty
which does not result in a termination of this Lease, the Term shall
nevertheless continue and there shall be no abatement or reduction of Rent or
any other sums payable by Tenant hereunder. Tenant shall, whether or not the Net
Proceeds are sufficient for the purpose, promptly repair or replace such
Equipment, subject to and in accordance with the provisions of Paragraph 11(d),
and the Net Proceeds paid for the loss of such Equipment only shall thereupon be
payable to Tenant. The remainder of the Net Proceeds shall be applied as
hereinabove provided.
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(h) If (a) the entire "New Orleans Premises", the entire
"Memphis Premises" or the entire "San Antonio Premises" or (b) a substantial
portion of the "New Orleans Premises", the "Memphis Premises" and the "San
Antonio Premises", shall be damaged or destroyed by fire or other casualty and,
in Tenant's good faith judgment, it is uneconomical to replace, repair or
restore the Affected Premises within one hundred and fifty (150) days of the
date of such casualty for continued use and occupancy by Tenant or any other
tenant to which the Affected Premises might reasonably be leased (any one or all
of which is affected by a fire or casualty described in (a) or (b) being
hereinafter referred to as the "Affected Premises"), then Tenant shall, not
later than twenty (20) days after such occurrence, give notice to Landlord of
its intention to terminate this Lease as to the Affected Premises on the first
Basic Rent Payment Date (the "Casualty Termination Date") which occurs after the
date on which Landlord rejects Tenant's offer to purchase the Affected Premises.
Such notice shall contain (A) an irrevocable offer of Tenant
purchase the Affected Premises on the Casualty Termination Date for the purchase
price (the "Casualty Offer Amount") specified in the next sentence and (B) a
certificate of Tenant, signed by the president or a vice president of Tenant,
stating that, in Tenant's good faith judgment, the portion of the Affected
Premises so damaged or destroyed is sufficient to render the Affected Premises
uneconomical for restoration for continued use and occupancy by Tenant or any
other tenant to which the Affected Premises might be leased and certifying that
Tenant will not restore the Affected Premises for the use to which such Premises
was devoted prior to such damage or destruction. The Casualty Offer Amount shall
be the greater of (1) the Fair Market Value of the Affected Premises as of the
date immediately prior to such casualty or (2) the sum of that portion of the
Acquisition Cost applicable to the Affected Premises, as set forth in Exhibit
"E", and one-half (1/2) of any prepayment penalty or premium up to a maximum
payment by Tenant of Fifty Thousand Dollars ($50,000.00) which may be payable
under a Note or Mortgage. Promptly upon the delivery of such notice from Tenant
to Landlord, Landlord and Tenant shall commence to determine such Fair Market
Value in accordance with the procedure specified in Paragraph 27.
No rejection of an offer hereunder shall be effective for any
purpose unless consented to by Lender. If Landlord shall reject such offer by
notice to Tenant, containing the written consent of Lender to such rejection,
not later than the twentieth (20th) day following the determination of Fair
Market Value, then upon (x) payment of all Rent and any other charges due and
unpaid under this Lease as of the Casualty Termination Date and (y) compliance
by Tenant with all other obligations and liabilities under this Lease which have
arisen on or prior to the Casualty Termination Date, this Lease shall terminate
on the Casualty Termination Date as to the Affected Premises and Tenant shall
promptly vacate and have no further right, title or interest in or to any of the
Affected Premises.
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Unless Landlord shall have rejected such offer by the foregoing
notice to Tenant not later than the twentieth (20th) day prior to the Casualty
termination Date, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Casualty Offer Amount on the Casualty Termination Date and, provided an Event of
Default does not then exist, Landlord shall convey to Tenant the Affected
Premises in accordance with the provisions of Paragraph 16 and, provided all
Rent and other sums due and unpaid under this Lease are paid in full, Landlord
shall assign to Tenant its entire interest in and to the Net Proceeds including
any part thereof that has not been received by Landlord and/or deliver to Tenant
or credit against the Casualty Offer Amount such Net Proceeds including any part
thereof which shall have been received by Landlord.
(i) Tenant shall not carry separate insurance concurrent in form
or contributing in the event of loss with that required in this Paragraph 14
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 14. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
therefor.
15. Restoration: Reduction of Rent.
------------------------------
(a) If (on the basis of a cost breakdown provided by Tenant) the
cost of restoration is reasonably estimated by Landlord to be One Hundred
Thousand Dollars ($100,000) or less, then, so long as an Event of Default has
not occurred and is continuing, such amount shall be disbursed to Tenant from
the Net Proceeds or a Net Award, and Tenant shall promptly restore the Affected
Premises in accordance with and subject to Paragraph 12 of this Lease. Net
Proceeds or a Net Award which are for restoration of the Land or Improvements
the cost of which is reasonably estimated of Landlord to be in excess of One
Hundred Thousand Dollars ($100,000) shall be disbursed to Tenant only in
accordance with the following conditions:
(i) prior to commencement of restoration, the architects,
contracts, contractors, plans and specifications for the restoration shall have
been approved by Landlord, which approval shall not be unreasonably withheld or
delayed; Landlord shall be provided with mechanics' lien insurance (if
available) and acceptable performance and payment bonds which insure
satisfactory completion of the restoration, are in an amount and form and have a
surety acceptable to Landlord, and name Landlord and Lender as additional dual
obligees; and appropriate waivers of mechanics' and materialmen's liens shall
have been filed;
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(ii) at the time of any disbursement, no Event of Default shall
exist and no mechanics' or materialmen's liens shall have been filed against any
of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time in an amount
not exceeding the cost of the work completed since the last disbursement, upon
receipt of (A) satisfactory evidence, including architects' certificates, of the
stage of completion, of the estimated cost of completion and of performance of
the work to date in a good and workmanlike manner in accordance with the
contracts, plans and specifications, (B) waivers of liens for work covered by
the prior disbursement, (C) contractors' and subcontractors' sworn statements as
to completed work for which payment is requested, (D) a satisfactory bringdown
of title insurance, and (E) other evidence of cost and payment so that Landlord
can verify that the amounts disbursed from time to time are represented by work
that is completed, in place and free and clear of mechanics' and materialmen's
lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of Tenant,
describing the work for which payment is requested, stating the cost incurred in
connection therewith, stating that Tenant has not previously received payment
for such work and, upon completion of the work, also stating that the work has
been fully completed and complies with the applicable requirements of this
Lease;
(v) Landlord may retain ten percent (10%) of the restoration
fund until the restoration is fifty percent (50%) completed;
(vi) the restoration fund may not be commingled with Landlord's
other funds and shall bear interest which shall be added to the restoration
fund;
(vii) at all times the undisbursed balance of the restoration
fund held by Landlord shall be not less than the cost of completing the
restoration work free and clear of all liens; and
(viii) such other reasonable conditions as Landlord may impose.
In addition, prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as determined by Landlord, exceeds the amount of the Net
Proceeds or the Net Award available for such restoration, the amount of such
excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be added
to the restoration fund. Any sum which remains in the restoration fund upon
completion of restoration (the "Remaining Sum") shall be refunded to Tenant,
unless such sum is required to be applied by
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Landlord to reduce principal outstanding under the Note, in which event it shall
be paid by Landlord to Lender to reduce principal outstanding under the Note.
For purposes of determining the source of funds with respect to the disposition
of funds remaining after the completion of restoration, the Net Proceeds or the
Net Award shall be deemed to be disbursed prior to any amount added by Tenant.
(b) In the event that there is a Remaining Sum upon completion
of restoration which is paid by Landlord to Lender, as aforesaid, then each
installment of Basic Rent payable on or after the effective date of such
reduction in debt service shall be reduced in the same amount and for the same
period as payments are reduced under the Note.
16. Procedures Upon Purchase.
------------------------
(a) In the event of the purchase of any of the Leased Premises
by Tenant pursuant to any provision of this Lease, Landlord need not transfer
and convey to Tenant or its designee any better title thereto than that which
was transferred and conveyed to Landlord, and Tenant shall accept such title,
subject, however, to all Permitted Exceptions and to all liens, exceptions and
restrictions on, against or relating to any of the Leased Premises which were
created with the concurrence of Tenant or as a result of a default by Tenant
under this Lease and to all applicable Laws, but free of the lien of and
security interest created by the Mortgage and the Assignment and liens,
exceptions and restrictions on, against or relating to the Leased Premises which
have been created by or resulted solely from acts of Landlord without the
concurrence of Tenant.
(b) Upon the date fixed for any such purchase of any of the
Leased Premises pursuant to any provision of this Lease, Tenant shall pay to
Landlord or to any Person to whom Landlord directs payment, at its address set
forth above, or at any other place designated by Landlord, the Offer Amount
therefore specified herein, in federal or other immediately available funds
which at the time of such payment shall be legal tender for the payment of
public or private debts in the United States of America, less any credits of the
Net Award or Net Proceeds allowed against the Offer Amount pursuant to the
provisions of Paragraphs 13(b) or 14(i), and Landlord shall thereupon deliver to
Tenant (i) a special warranty deed in form satisfactory to Landlord's counsel
which describes any of the Leased Premises then being sold to Tenant and conveys
and transfers the title thereto which is described in Paragraph 16(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Proceeds or Net Award not yet received
by Landlord) then required to be sold by Landlord pursuant to this Lease and
(iii) any Net Award or Net Proceeds received by Landlord, not credited to Tenant
against the Offer Amount and required to be delivered by Landlord to Tenant
pursuant to this Lease. Tenant shall pay all reasonable charges incident
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to such conveyance and transfer, including Landlord's reasonable counsel fees,
escrow fees, recording fees, title insurance or guarantee premiums all
applicable federal, state and local taxes which may be incurred or imposed by
reason of such conveyance and transfer and/or by reason of the delivery of said
deed and other instruments (excluding, however, any capital gains or net income
tax payable by Landlord as a result of said transfer). Tenant agrees, upon the
request and direction of Landlord, to pay a portion of the Offer Amount as a
brokerage commission to Landlord or one of its Affiliates who Tenant
acknowledges shall be deemed the broker of record in connection with the
transfer of the Leased Premises. Upon the completion of such purchase, but not
prior thereto (whether or not any delay in the completion of or any failure to
complete such purchase shall be the fault of Landlord), Tenant may elect to
terminate this Lease and all obligations hereunder (including the obligations to
pay Rent) with respect to any of the Leased Premises conveyed to Tenant, except
any obligations and liabilities of Tenant, actual or contingent, under this
Lease, which arose on or prior to such date of purchase. In the event that the
completion of such purchase shall be delayed for more than ninety (90) days
solely as a result of acts or omissions of Tenant, then the Offer Amount payable
by Tenant upon the purchase of any of the Leased Premises pursuant to any
provisions of this Lease shall, at Landlord's sole option, be determined as of
the actual date of such purchase by Tenant, provided that Tenant shall have paid
to Landlord all Rent due and payable hereunder to and including such date. Any
prepaid Basic Rent or other prepaid sums paid to Landlord shall be prorated as
of the date the purchase is completed, and the prorated unapplied balance shall
be deducted from the Offer Amount due to Landlord.
No apportionment of any Impositions shall be made upon such purchase,
Tenant being liable for payment thereof during the Term as Tenant and being
liable thereafter as owner.
17. Assignment and Subletting. Tenant may not assign this Lease at
-------------------------
any time to any other party without the prior written consent of Landlord;
provided, however, that upon prior notice to Landlord, Tenant shall have the
right to assign this Lease to any party which, immediately following such
assignment, complies both with the provisions of Paragraph 31 of this Lease and
with the provisions of this Paragraph 17. Tenant may sublet any of the Leased
Premises at any other time to any other party without the prior written consent
of Landlord. Each sublease of any of the Leased Premises shall be subject and
subordinate to the provisions of this Lease. If Tenant assigns all its rights
and interest under this Lease, the assignee under such assignment shall
expressly assume all the obligations of Tenant hereunder, including obligations,
actual or contingent, of Tenant which may have arisen on or prior to the date of
such assignment, by a written instrument delivered to Landlord at the time of
such assignment. No assignment other than as specifically permitted by this
Paragraph and Paragraph 31 and no sublease made as permitted
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by this Paragraph shall affect or reduce any of the obligations of Tenant
hereunder; and all such obligations shall continue in full force and effect as
obligations of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease shall impose any
obligations on Landlord under this Lease. Tenant shall, within ten (10) days
after the execution and delivery of any such assignment, deliver a duplicate
original copy thereof in recordable form to Landlord, and within ten (10) days
after the execution and delivery of any such sublease, Tenant shall deliver a
duplicate original copy thereof to Landlord.
In the event Tenant desires to assign its interest in this Lease or
effect a Change in Control (as defined in Paragraph 31) and such assignment or
Change of Control would cause a breach of Paragraph 31 and such anticipatory
breach is not waived in writing by Landlord within (10) days after receipt of
notice from Tenant, then Tenant shall, not later than sixty (60) days prior to
such occurrence, make an irrevocable offer to purchase the Leased Premises on
the first Basic Rent Payment Date (the "Transfer Purchase Date") which occurs
after the date on which Landlord accepts Tenant's offer to purchase the Leased
Premises for the purchase price (the "Transfer Offer Amount") specified in the
next sentence. The Transfer Offer Amount shall be the greater of (1) the Fair
Market Value of the Leased Premises as of the date immediately prior to such
assignment or Change in Control or (2) the Acquisition Cost and any prepayment
penalty or premium which may be payable under a Note or Mortgage. Promptly upon
the deliver of such notice from Tenant to Landlord, Landlord and Tenant shall
commence to determine such Fair market Value in accordance with the procedure
specified in Paragraph 27.
No rejection of an offer hereunder shall be effective for any purpose
unless consented to by Lender. If Landlord shall reject such offer by notice to
Tenant, containing the written consent of Lender to such rejection, not later
than the twentieth (20th) day following the determination of Fair Market Value,
then the breach of Paragraph 31 shall be deemed waived by Landlord, subject,
however, to the terms of this Paragraph 17 and this Lease shall continue in full
force and effect.
Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the twentieth (20th) day following the determination of
Fair Market Value, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Transfer Offer Amount on the Transfer Purchase Date and, provided all Rent and
other sums due hereunder are paid in full, Landlord shall convey to Tenant the
Leased Premises in accordance with the provisions of Paragraph 16.
Upon the occurrence of an Event of Default under this Lease, Landlord
shall have the right immediately or at any time thereafter to collect and enjoy
all rents and other sums of money
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payable under any sublease of any of the Leased Premises, and Tenant hereby
irrevocably and unconditionally assigns such rents and money to Landlord, which
assignment may be exercised upon and after (but not before) the occurrence of an
Event of Default. Tenant shall not mortgage or pledge this Lease, and any such
mortgage or pledge made in violation of this Paragraph shall be void.
18. Permitted Contests. Tenant shall not be required to (a) pay any
------------------
imposition, (b) comply with any Legal Requirement, (c) discharge or remove any
lien referred to in Paragraph 9 or 12, or (d) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment referred to in
Paragraph 11(b), so long as Tenant shall contest, in good faith and at its
expense, the existence, the amount or the validity thereof, the amount of the
damages caused thereby, or the extent of its or Landlord's liability therefore,
by appropriate proceedings which shall operate during the pendency thereof to
prevent (i) the collection of, or other realization upon, the Imposition, lien
or claim so contested, (ii) the sale, forfeiture or loss of any of the Leased
Premises or any Rent to satisfy the same or to pay any damages caused by the
violation of any such Legal Requirement or by any such encroachment, violation,
hindrance, obstruction or impairment, (iii) any interference with the use or
occupancy of any of the Leased Premises, (iv) any interference with the payment
of any Rent, and (v) the cancellation of any fire or other insurance policy. If
the contested amount is in excess of Twenty Thousand Dollars ($20,000.00),
Tenant shall provide Landlord security which is reasonably satisfactory to
Landlord, to assure the payment, compliance, discharge, removal and/or other
action, including all costs, attorneys' fees, interest and penalties that may be
or become due in connection therewith. While any proceedings which comply with
the requirements of this Paragraph 18 are pending and the required security is
held by Landlord, Landlord shall not have the right to pay, remove or cause to
be discharged the Imposition, lien or claim thereby being contested. Tenant
further agrees that each such contest shall be promptly and diligently
prosecuted to a final conclusion, except that Tenant shall, so long as the
conditions of the first sentence of this Paragraph are at all times complied
with, have the right to attempt to settle or compromise such contest through
negotiations. Tenant shall pay, and save Landlord harmless against, any and all
losses, judgments, decrees and costs (including all reasonable attorneys' fees
and expenses) in connection with any such contest and shall, promptly after the
final determination of such contest, fully pay and discharge the amounts which
shall be levied, assessed, charged or imposed or be determined to be payable
therein or in connection therewith, together with all penalties, fines,
interest, costs and expenses thereof or in connection therewith, and perform all
acts the performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord to the risk of any civil or criminal
liability.
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19. Conditional Limitations; Default Provision.
------------------------------------------
(a) The occurrence of any one or more of the following events
which continue for a period equal to the greater of (i) any grace period
specified in this subparagraph 19(a) or in subparagraph 19(g) hereof or (ii) two
(2) days less than any applicable grace period, if any, given to Landlord for
such default under any Note and Mortgage shall constitute an Event of Default
under this Lease: (i) a failure by Tenant to make (regardless of the pendency of
any bankruptcy, reorganization, receivership, insolvency or other proceedings,
in law, in equity, or before any administrative tribunal, which have or might
have the effect of preventing Tenant from complying with the provisions of this
Lease) any payment of Rent or other sum herein required to be paid by Tenant;
(ii) a failure by Tenant duly to perform and observe, or a violation or breach
of, any other provision or covenant hereof not otherwise specifically mentioned
in this Paragraph 19(a); (iii) any representation or warranty made by Tenant
herein or in the Assignment or in any certificate, demand or request made
pursuant hereto or thereto proves to be incorrect, now or hereafter, in any
material respect; (iv) Tenant shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a receiver or trustee for
itself or for any of the Leased Premises, (C) file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state or
any jurisdiction, or (D) make a general assignment for the benefit of creditors;
(v) a court shall enter an order, judgment or decree appointing, without the
consent of Tenant, a receiver or trustee for it or for any of the Leased
Premises or approving a petition filed against Tenant which seeks relief under
the bankruptcy or other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain in force,
undischarged or unstayed, sixty (60) days after it is entered; (vi) any
Improvement is substantially damaged or destroyed by an uninsured casualty and
Tenant fails to commence promptly thereafter to restore the Leased Premises to
its condition immediately prior to such casualty or fails to proceed actively,
diligently and in good faith with such restoration and to continue such
restoration until the Leased Premises have been fully restored; (vii) any of the
Leased Premises shall have been vacated or abandoned; (viii) Tenant shall be
liquidated or dissolved or shall begin proceedings towards its liquidation or
dissolution; (ix) the estate or interest of Tenant in any of the Leased Premises
shall be levied upon or attached in any proceeding and such estate or interest
is about to be sold or transferred or such proceeding shall not be vacated or
discharged within sixty (60) days after it is commenced; or (x) a failure by
Guarantor duly to perform and observe any provision under the Guaranty, or a
violation or breach of any covenant made by Guarantor under the Guaranty.
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(b) If an Event of Default shall have occurred, Landlord shall
have the right at its option, then or at any time thereafter to do any one more
of the following without demand upon or notice to Tenant (except as otherwise
provided in subparagraph (g) of this Paragraph 19):
(i) Landlord shall give Tenant ten (10) days written
notice of Landlord's intention to terminate this Lease on a date specified in
such notice. Upon the date therein specified, the Term, the estate hereby
granted and all rights of Tenant hereunder, shall expire and terminate as if
such date were the date herein before fixed for the expiration of the Term, but
Tenant shall remain liable for all its obligations hereunder, including its
liability for Rent, as hereinafter provided.
(ii) Landlord may, whether or not the Term of this Lease
shall have been terminated pursuant to clause (i) above, (A) give Tenant notice
to surrender any of the Leased Premises to Landlord immediately or on a date
specified in such notice, at which time Tenant shall surrender and deliver
possession of the Leased Premises or the specified portion thereof to Landlord
or (B) re-enter and repossess any of the Leased Premises, with or without legal
process, by peaceably entering the Leased Premises and changing locks or by
summary proceedings, ejectment or any other lawful means or procedure. Upon or
at any time after taking possession of any of the Leased Premises, Landlord may,
by peaceable means or legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any such entry,
repossession or removal. No such entry or repossession shall be construed as an
election by Landlord to terminate this Lease unless Landlord gives a written
notice of such intention to Tenant pursuant to clause (i) above.
(iii) After repossession of any of the Leased Premises
pursuant to clause (ii) above, whether or not this Lease shall have been
terminated pursuant to clause (i) above, Landlord shall have the right (but
shall be under no obligation) to relet any of the Leased Premises to such tenant
or tenants, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term), for such rent,
on such conditions (which may include concessions or free rent) and for such
uses as Landlord, in its absolute discretion, may determine; and Landlord may
collect and receive any rents payable by reason of such reletting. Landlord
shall have no duty to mitigate damages and shall not be responsible or liable
for any failure to relet any of the Leased Premises or for any failure to
collect any rent due upon any such reletting. Landlord may make such Alterations
as Landlord, in its sole discretion, may deem advisable. Tenant agrees to pay
Landlord, as Additional Rent, immediately upon demand, all expenses incurred by
Landlord in obtaining possession, in performing Alterations and in reletting any
of the Leased Premises, including fees and commissions of attorneys, architects,
agents and brokers.
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(iv) Unless Landlord shall have exercised its remedy under
Paragraph 19(b) (v) (as to the entire Leased Premises) or 19(b) (vi) hereof and
shall have received all sums due thereunder, Landlord may, upon written demand
to Tenant, recover from Tenant, and Tenant shall pay to Landlord, as and for
liquidated and agreed final damages for Tenant's default and in lieu of all
current damages beyond the date of such demand (it being agreed that it would be
impracticable or extremely difficult to fix the actual damages), an amount equal
to the present value of the excess, if any, of (A) all Rent from the date of
such demand to the date on which the then Term is scheduled to expire hereunder
in the absence of any earlier termination, re-entry or repossession over (B) the
then fair market rental value of the Leased Premises for the same period;
provided, however, that in the event Landlord shall have exercised its remedy
under Paragraph 19(b) (v) to require the purchase of less than the entire Leased
Premises and shall have received all sums due in connection therewith, the Rent
referred to in clause (A) above shall be that portion of the Rent which is
attributable to that portion of the Leased Premises which is not sold to Tenant
pursuant to said Paragraph 19(b) (v) and the fair rental value referred to in
clause (B) above shall be the fair rental value of such unsold remainder of the
Leased Premises. The present value of such excess shall be determined by
discounting the Rent and such fair market rental value at the rate per annum
which is the lower of the then Prime Rate or nine percent (9%) per annum. If any
Law shall validly limit the amount of such liquidated final damages to less than
the amount above agreed upon, Landlord shall be entitled to the maximum amount
allowable under such Law.
(v) Unless Landlord shall have exercised its remedy under
Paragraph 19(b) (iv) or 19(b) (vi) hereof and shall have received all sums due
thereunder, Landlord may, upon notice to Tenant, require Tenant to make an
irrevocable offer to purchase, for the purchase price (the "Default Offer
Amount") specified in the next two sentences, either (A) the entire Leased
Premises or (B) any one or more of the New Orleans Premises, the San Antonio
Premises and the Memphis Premises (such entire Leased Premises or any one or
more of the New Orleans Premises, the San Antonio Premises and the Memphis
Premises, as applicable, being hereinafter referred to as the "Selected
Premises"), as Landlord in its sole discretion may select. The Default Offer
Amount shall be the greater of (1) the then Fair Market Value of the Selected
Premises, (2) the sum of that portion (determined in accordance with the
percentages set forth in Exhibit "F") of the unpaid balance of the Note and
Mortgage covering any of the Selected Premises, all interest accrued thereon,
and prepayment penalties payable in connection therewith and all other sums due
thereunder as of the date of such purchase, or (3) an amount equal to the sum of
the Acquisition Cost with respect to the Selected Premises and any prepayment
penalty payable under the Loan with respect to the Selected Premises. Upon such
notice by Landlord to Tenant, Tenant shall be deemed to have made such offer,
and the Fair Market Value
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of the Selected Premises shall be determined in accordance with the procedure
set forth in Paragraph 27 hereof. Within thirty (30) days after such
determination of the Fair Market Value, Landlord shall accept or reject such
offer. If Landlord accepts such offer, then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the Default Offer Amount and
purchase the Selected Premises in accordance with Paragraph 16 hereof. Any
rejection by Landlord of such offer shall have no effect on any other provision
of this Lease.
(vi) Unless Landlord shall have exercised its remedy under
Paragraph 19(b) (iv) or 19(b) (v) (as to the entire Leased Premises) hereof and
shall have received all sums due thereunder or shall have repossessed and relet
the Leased Premises, Landlord may declare by notice to Tenant the entire Basic
Rent (in the amount of Basic Rent then in effect) discounted at the rate per
annum which is the lower of the then Prime Rate or nine percent (9%) per annum
for the remainder of the then current Term, to be immediately due and payable.
In that event, Tenant shall immediately pay to Landlord all such Basic Rent, all
accrued Rent then due and unpaid, all other sums which are then due or which
would have been due hereunder but for the aforesaid Event of Default and all
sums which arise or become due by reason of such Event of Default (including any
attorneys' fees and costs). Upon receipt of all such accelerated Basic Rent and
other sums, this Lease shall remain in full force and effect and Tenant shall
have the right to possession of the Leased Premises from the date Landlord
receives the accelerated Basic Rent and all the other said sums to the end of
the Term then in effect (or that would be in effect but for the Event of
Default) pursuant and subject to all the provisions of this Lease, including the
obligation to pay all increases in Basic Rent and all Additional Rent and other
sums that subsequently become due, except that (A) no Basic Rent which has been
prepaid hereunder shall be due thereafter during the said Term, (B) Tenant shall
have no option to extend or renew the then current Term and (C) Tenant shall
have no further rights, if any, under Paragraph 28. Notwithstanding the
foregoing, in the event Landlord shall have exercised its remedy under Paragraph
19(b) (v) to require the purchase of less than the entire Leased Premises and
shall have received all sums due in connection therewith, the Basic Rent to be
accelerated pursuant to this Paragraph 19(b) (vi) shall be that portion of the
Basic Rent which is attributable to that portion of the Leased Premises which is
not sold to Tenant pursuant to said Paragraph 19(b)(v) and Tenant's right to
possession pursuant to this Lease shall extend only to such unsold remainder of
the Leased Premises.
(vii) Landlord may exercise any other right or remedy now or
hereafter existing by Law or in equity.
(c) No expiration or termination of this Lease pursuant to
Paragraph 19(b)(i) or any other provision of this Lease, by operation of law or
otherwise, before the expiration date provided in Paragraph 5 or if applicable
the termination date
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provided in Paragraph 13(b), 14(i) or 28, no repossession of any of the Leased
Premises pursuant to Paragraph 19(b)(ii) or otherwise, nor any reletting of any
of the Leased Premises pursuant to Paragraph (19)(b)(iii) shall relieve Tenant
of any of its liabilities and obligations hereunder, including the liability for
Rent, all of which shall survive such expiration, termination, repossession or
reletting.
(d) In the event of any expiration or termination of this Lease
or repossession of any of the Leased Premises by reason of the occurrence of an
Event of Default, and provided that Landlord has not exercised its remedy under
Paragraph 19(b)(iv), 19(b)(v) (as to the entire Leased Premises) or 19(b)(vi) or
has not received all sums due thereunder, Tenant shall pay to Landlord all Rent
and all other sums required to be paid by Tenant to and including the date of
such expiration, termination or repossession and, thereafter, Tenant shall,
until the end of what would have been the Term in the absence of such
expiration, termination or repossession, and whether or not any of the Leased
Premises shall have been relet, be liable to Landlord for, and shall pay to
Landlord, as liquidated and agreed current damages (i) Basic Rent, Additional
Rent and all other sums which would be payable under this Lease by Tenant in the
absence of such expiration, termination or repossession, less (ii) the net
proceeds, if any, of any reletting pursuant to Paragraph 19(b)(iii), after
deducting from such proceeds all of Landlord's expenses in connection with such
reletting (including all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, employees' expenses, costs of Alterations and
expenses of preparation for reletting) provided, however, that in the event
--------- -------
Landlord has exercised its remedy under Paragraph 19(b)(v) to require the
purchase of less than the entire Leased Premises and has received all sums due
in connection therewith, the Rent hereinabove in this Paragraph 19(d) referred
to shall mean that portion of the Rent which is applicable to that portion of
the Leased Premises which is not sold to Tenant pursuant to said Paragraph
19(b)(v). Tenant hereby agrees to be and remain liable for all sums aforesaid;
and Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by limitation had there been no such Event of Default.
(e) The words "enter," "re-enter," or "re-entry," as used in
this Paragraph 19 are not restricted to their technical meaning.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY.
(g) Except as otherwise hereinafter in this Paragraph 19(g)
provided, before an Event of Default shall exist under this Paragraph 19,
Landlord shall have given Tenant notice
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thereof and Tenant shall have failed to cure the default within the applicable
grace period stated below. If the default consists of a failure to pay Rent, the
applicable grace period shall be two (2) business days from the date such notice
is given. If the default consists of the failure to provide any insurance
required pursuant to Paragraph 14, the applicable grace period shall be seven
(7) days from the date on which the notice is given, but Landlord shall not be
obligated to give notice of, or allow any grace period for, any such default
more than twice within any twelve (12) month period. If the default consists of
something other than the failure to provide any such insurance, the applicable
grace period shall be twenty (20) days from the date on which the notice is
given or, if the default cannot be cured within the said twenty-day period and
delay in the exercise of a remedy would not (in Landlord's reasonable judgment)
cause any material adverse harm to Landlord or any of the Leased Premises, the
grace period shall be extended for the period required to cure the default (but
such grace period, including any extension, shall not in the aggregate exceed
sixty (60) days), provided that Tenant shall commence to cure the default within
the said twenty-day period and shall actively, diligently and in good faith
proceed with and continue the curing of the default until it shall be fully
cured. However, no notice or grace period shall be required in any one or more
of the following events: (i) substantial damage to any of the Leased Premises
will, in Landlord's reasonable judgment, probably occur unless a remedy is
exercised promptly; (ii) the occurrence of a default under clause (iii), (iv),
(v), (viii), or (ix) of subparagraph (a) of this Paragraph 19; or (iii) the
default is such that any delay in the exercise of a remedy by Landlord could
reasonably be expected to cause irreparable harm to Landlord.
20. Additional Rights of Landlord.
-----------------------------
(a) No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to any other right or
remedy given hereunder or now or hereafter existing by Law or in equity. Upon
the occurrence of any Event of Default, Landlord shall have the right (but no
obligation) to perform any act required of Tenant hereunder, whether as agent
for Tenant or otherwise; and the cost thereof shall be Additional Rent hereunder
and shall be paid by Tenant to Landlord, together with interest thereon at the
Default Rate from the date such cost is incurred until it shall be fully paid by
Tenant, immediately upon demand. Tenant agrees that Tenant shall be liable to
Landlord for any and all damages suffered or incurred by Landlord in connection
with any Event of Default and Tenant further agrees that Landlord shall be
entitled to exercise any and all remedies existing at law or in equity for the
recovery thereof. Tenant acknowledges that time is of the essence in the
performance of its obligations under this Lease. No failure of Landlord (i) to
insist at any time upon the strict performance of any provision of this Lease or
(ii) to exercise any
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option, right, power or remedy contained in this Lease shall be constructed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any
Rent or other sum due hereunder with knowledge of the breach of any provision
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver by Landlord of any provision of this Lease shall be deemed to have been
made unless expressed in a writing signed by Landlord. In addition to the other
remedies provided in this Lease, Landlord shall be entitled, to the extent
permitted by applicable Law, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the provisions of this Lease, or to
specific performance of any of the provisions of this Lease.
(b) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.
(c) Tenant shall pay to Landlord, as Additional Rent, all the
expenses incurred by Landlord in connection with any Event of Default or the
exercise of any remedy by reason of an Event of Default or otherwise in
connection with the enforcement of this Lease, including reasonable attorneys'
fees and expenses. If Landlord shall be made a party to any litigation commenced
against Tenant or any litigation pertaining to this Lease or any of the Leased
Premises (except litigation among the partners of Landlord or other Persons
described in Paragraph 29 which does not arise out of any act or omission of
Tenant under this Lease), then, at the option of Landlord, Tenant, at its
expense, shall provide Landlord with counsel approved by Landlord and, in any
event, Tenant shall pay all costs and reasonable attorneys' fees incurred or
paid by Landlord in connection with such litigation; provided, however, that if
in a non-appealable decision, a court of competent jurisdiction determines that
Landlord was the sole cause of litigation pertaining to this Lease or any of the
Leased Premises then all costs and fees incurred by Tenant in connection with
such litigation shall be refunded to Tenant.
21. Notices. All notices, demands, requests, consents, approvals,
-------
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given for all purposes when delivered in Person or
by Federal Express or other 24-hour delivery service or five (5) business days
after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, addressed to the other party at
its address stated above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay,
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1600 Avenue of the Arts Building, Philadelphia, PA 19107, Attention: Chairman,
Real Estate Department. For the purposes of this Paragraph, any party may
substitute its address by giving fifteen (15) days' notice to the other party,
in the manner provided above.
22. Estoppel Certificate. Tenant shall, at any time and from time to
--------------------
time, but not more than three (3) times in any calendar year, upon not less than
ten (10) days' prior written request by Landlord, execute, acknowledge and
deliver to Landlord a statement in writing, executed by the President or a vice
president of Tenant, certifying (a) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that this Lease is in
full force and effect as modified, and setting forth such modifications), (b)
the dates to which Basic Rent, Additional Rent and all other sums payable
hereunder have been paid, (c) that, to the knowledge of the signer of such
certificate, no default by either Landlord or Tenant exists hereunder or
specifying each such default of which the signer may have knowledge, and (d)
that, to the knowledge of the signer of such certificate, there are no
proceedings pending or threatened against Tenant before or by any court or
administrative agency which, if adversely decided, would materially and
adversely affect the financial condition and operations of Tenant or, if any
such proceedings are pending or threatened to said signer's knowledge,
specifying and describing the same. It is intended that any such statements by
Tenant may be relied upon by Lender, Landlord or their assignees or by any
prospective purchaser or mortgagee of the Leased Premises.
Landlord shall, at any time and from time to time but not more
often than twice in any twelve (12) month period upon not less than ten (10)
days' prior written request by Tenant, execute, acknowledge and deliver to
Tenant a statement in writing, executed by a general partner of landlord
certifying (a) that this Lease in unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications), (b) the dates to which Basic
Rent, Additional Rent and all other sums payable hereunder have been paid, (c)
that, to the knowledge of the signer of such certificate, no default by Tenant
exists hereunder of specifying each such default of which the signer may have
knowledge. It is intended that nay such statements by Landlord may be relied
upon by Tenant, its lenders or its permitted assignees.
23. Surrender. Upon the expiration of earlier termination of this
---------
Lease, Tenant shall peaceably leave and surrender the Leased Premises (except
for any portion thereof with respect to which this Lease has previously
terminated or with respect to which Tenant has purchased) to Landlord in the
same condition in which the Leased Premises were originally received from
Landlord at the commencement of this Lease, except as repaired, rebuilt,
restored, altered, replaced or added to as
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permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Tenant shall remove from the Leased Premises on or prior to such
expiration or earlier termination all property which is owned by Tenant or third
parties other than Landlord and Tenant; and Tenant, at its expense, shall, on or
prior to such expiration or earlier termination, repair any damage caused by
such removal. Property not so removed shall become the property of Landlord;
Landlord may thereafter cause such property to be removed from the Leased
Premises; and the cost of removing and disposing of such property and repairing
any damage to any of the Leased Premises caused by such removal shall be borne
by Tenant. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
upon the expiration or earlier termination of this Lease.
24. Risk of Loss. The risk of loss or of decrease in the enjoyment
------------
and beneficial use of any of the Leased Premises in consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosure, attachments, levies or executions,
is assumed by Tenant, and Landlord shall in no event be answerable or
accountable therefor. Except as otherwise specifically provided in this Lease,
none of the events mentioned in this Paragraph shall entitle Tenant to any
abatement of Rent.
25. No Merger of Title. There shall be no merger of this Lease nor of
------------------
the leasehold estate created by this Lease with the fee estate in or ownership
of any of the Leased Premises by reason of the fact that the same Person may
acquire or hold or own, directly or indirectly, (a) the leasehold estate created
by this Lease or any part thereof or interest therein or any interest of Tenant
in this Lease, and (b) the fee estate or ownership of any of the Leased Premises
or any interest in such fee estate or ownership; and no such merger shall occur
unless and until all Persons having any interest in (i) this Lease as Tenant or
the leasehold estate created by this Lease and (ii) this Lease as Landlord or
the fee estate in or ownership of the Leased Premises or any part thereof sought
to be merged shall join in a written instrument effecting such merger and shall
duly record the same.
26. Books and Records. Tenant shall permit Landlord and Lender by
-----------------
their respective agents, accountants and attorneys, to visit and inspect the
Leased Premises and to discuss the finances and business with the officers of
Tenant, at such reasonable times as may be requested by Landlord, and, upon the
occurrence of an Event of Default, to examine the records and books of account
Tenant, at such reasonable times as may be requested by Landlord.
Tenant shall deliver to Landlord and to Lender (i) within thirty (30)
days of the end of each calendar month the monthly management reports of Tenant
for the prior calendar month and (ii) within ninety (90) days of the close of
each fiscal year annual audited financial statements of Tenant prepared by
independent
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certified public accountants satisfactory to Landlord, and such other relevant
financial data as Landlord may reasonably require pertaining to Tenant or to the
Leased Premises. Tenant shall also furnish to Landlord all filings, if any, of
Form 10-K, Form 10-Q and other required filings with the Securities and Exchange
Commission pursuant to the provisions of the Securities Exchange Act of 1934, as
amended, or any other Law. All financial statements of Tenant shall be prepared
in accordance with generally accepted accounting principles consistently applied
and the annual statements hereinabove referred to shall be accompanied by an
unqualified opinion of said accountants and by the affidavit of the president or
a vice president of Tenant dated within five (5) days of the delivery of such
statement, (a) stating that the affiant knows of no Event of Default or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder, or, if any such event
has occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (b) except as otherwise specified, with respect to Tenant stating
that Tenant has fulfilled all of its obligations under this Lease which are
required to be fulfilled on or prior to the date of such affidavit.
27. Determination of Value.
----------------------
(a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such
Fair Market Value within fifteen (15) days after the date (the "Applicable
Initial Date") on which (A) Tenant provides Landlord with notice of its
intention not to extend or to terminate this Lease as to the Affected Premises
pursuant to Paragraph 13(b) or Paragraph 14(h) hereof of (B) Landlord provides
Tenant with notice of its intention to require Tenant to make an offer to
purchase the Selected Premises pursuant to Paragraph 19(b) (v) hereof, as
applicable. Upon reaching such agreement, the parties shall execute an agreement
setting forth the amount of such Fair Market Value.
(ii) If the parties shall not have signed such agreement
setting forth the amount of such agreed Fair Market Value within fifteen (15)
days after the Applicable Initial Date, Tenant shall within ten (10) days after
the Applicable Initial Date select an appraiser and notify Landlord in writing
of the name, address and qualifications of such appraiser. Within ten (10) days
thereafter, Landlord shall select an appraiser and notify Tenant of the name,
address and qualifications of such appraiser. The appraiser selected by Tenant
and the appraiser selected by Landlord shall endeavor to agree upon the Fair
Market Value of the Leased Premises or the Affected Premises or the
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Selected Premises, as applicable, as of the date specified in the particular
provision of this Lease (the "Applicable Provision") pursuant to which the
determination of Fair Market Value is being made. If the said two appraisers
shall agree upon such Fair Market Value, the amount of such Fair Market Value as
agreed to by the said two appraisers shall be binding and conclusive.
(iii) If the appraiser selected by Tenant and the appraiser
selected by Landlord shall be unable to agree upon such Fair Market Value within
twenty (20) days after the selection of an appraiser by Landlord, then the said
two appraisers shall select a third appraiser to make the determination of such
Fair Market Value and the determination of such third appraiser shall be binding
and conclusive upon Landlord and Tenant.
(iv) In the event the appraiser selected by Tenant and the
appraiser selected by Landlord shall be unable to agree upon the designation of
a third appraiser within ten (10) days after the expiration of the twenty (20)
day period referred to in clause (iii) above or in the event the third appraiser
so selected does not make a determination of the Fair Market Value of the Leased
Premises or the Affected Premises or the Selected Premises within twenty (20)
days after his selection, then such third appraiser, or a substituted third
appraiser, as applicable, shall, at the request of either party hereto, be
appointed by the President or Chairman of the American Arbitration Association
in Philadelphia, Pennsylvania. The determination of Fair Market Value made by
the third appraiser appointed pursuant hereto shall be made within twenty (20)
days after such appointment. Fair Market Value shall be the average of the
determination of Fair Market Value made by the third appraiser and the
determination of Fair Market Value made by the appraiser whose determination of
Fair Market Value is nearest to that of the third appraiser. Such average shall
be binding and conclusive upon Landlord and Tenant.
(v) All appraisers selected or appointed pursuant to this
Paragraph 27(a) shall be independent qualified appraisers. Such appraisers shall
have no right, power or authority to alter or modify the provisions of this
Lease and in determining the Fair Market Value of the Leased Premises or the
Leased Premises or the Leased Premises or the Selected Premises, as applicable,
such appraisers shall utilize the definition of Fair Market Value hereinabove
set forth above.
(b) The cost of the appraiser selected by Tenant shall be paid
by Tenant and the cost of the appraiser selected by Landlord shall be paid by
Landlord; the cost of a third appraisal, if required, will be split equally
between Landlord and Tenant.
(c) If, by virtue of any delay in the appointment of a third
appraiser pursuant to Paragraph 27(a) (iv) above or of any delay by such
appointed third appraiser to determine such Fair Market Value, the Fair Market
Value of the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, is not
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determined by such appointed third appraiser within one hundred forty (140) days
after the Applicable Initial Date, then the date (the "Applicable Final Date")
on which the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, would otherwise be sold to Tenant or on which this Lease would
otherwise terminate, as specified in the Applicable Provision, shall be extended
the same number of days (the "Delay Period") by which the total period so
required for the binding and conclusive determination of Fair Market Value
exceeds one hundred forty (140) days and all relevant defined terms used in the
Applicable Provision shall be deemed amended accordingly, anything to the
contrary in the Applicable Provision notwithstanding. In addition, any time
period which is afforded Landlord under the Applicable Provision within which to
accept or reject an offer by Tenant shall likewise be extended by the number of
days equal to the Delay Period.
28. Financing.
---------
(a) Tenant shall pay, within three (3) business days of written
demand therefore, all out of pocket costs (including but not limited to closing
costs, title charges, commitment or application fees, and attorneys' fees), not
to exceed $50,000 in the aggregate (other than the principal of the Note and
interest thereon at the contract rate of interest specified therein), imposed
upon Landlord by Lender pursuant to the initial Loan to Landlord evidenced by a
Note and secured by a Mortgage constituting a first lien on the Leased Premises
provided that Landlord obtains such Loan no later than the fourth (4th)
anniversary of the initial Basic Rent Payment Date.
(b) In the event that Landlord desires to obtain a Loan to be
secured any of the Leased Premises, Tenant shall negotiate in good faith with
Landlord concerning any request made by the proposed mortgagee for changes or
modifications in this Lease. Tenant shall not unreasonably withhold or delay its
consent to such financing, and Tenant hereby agrees that Tenant shall provide
any other consent or statement and shall execute any and all other documents
that any proposed mortgagee requires in connection with such financing, so long
as the same do not materially adversely affect any right, benefit or privilege
of Tenant under this Lease or increase the Rent or other obligations of Tenant
hereunder.
29. Non-Recourse as to Landlord. Anything contained herein to the
---------------------------
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord or any general partner of Landlord (or any legal representative, heir,
estate, successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or
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other entity) of Landlord or any general partner of Landlord, either directly or
through Landlord or its general partners or any predecessor or successor
partnership or corporation (or other entity) of Landlord or any general partner
of Landlord, or (d) any other Person or entity (including Eighth Carey Corporate
Property, Inc., W. P. Carey & Co. Inc., Carey Corporate Property Management,
Inc., Clark & Pendleton Realty Corp. or any Person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof).
30. Substitution and Exchange of Property. If the Board of Directors
-------------------------------------
of Tenant determines, in good faith, that any one or more of the New Orleans
Premises, the San Antonio Premises or the Memphis Premises (any one or more of
which that is determined to be uneconomically viable as provided hereunder being
hereinafter referred to as the "Existing Property") is no longer economically
viable for Tenant's continued use and operation for any reason, including, but
not limited to, unprofitability, obsolescence or change in zoning regulations;
then Tenant shall have the right, during the Term of this Lease or any renewal
hereof, to convey to Landlord a substitute property (the "Substitute Property")
and lease the Substitute Property back from Landlord on the terms and conditions
provided herein in exchange for the conveyance to Tenant of the Existing
Property and the termination of the Lease with respect to such Existing Property
(the "Exchange"), upon the terms and conditions set forth herein. In the event
that Tenant elects to exercise such right, Tenant shall give written notice to
Landlord and Lender, which notice shall contain (i) a resolution of Board of
Directors of Tenant stating that the Existing Property is no longer economically
viable and setting forth in reasonable detail the reasons for such
determination; (ii) a description and MAI Appraisal of the Substitute Property;
(iii) such relevant data as Landlord may request demonstrating the economic
viability of the Substitute Property; (iv) Tenant's offer to convey the
Substitute Property to Landlord and Lease back the Substitute Property in
exchange for Landlord conveying the Existing Property to Tenant and terminating
the Lease with respect to the Existing Property; and (v) notice to Landlord of
Tenant's intention to affect the Exchange on the first Basic Rent Payment Date
occurring at least ninety (90) days after the date on which Landlord receives
such notice (the "Exchange Date").
Landlord (if Landlord obtains the written consent of Lender) shall
accept or reject Tenant's offer of the Substitute Property not later than the
thirtieth (30th) day prior to the Exchange Date; and Landlord shall accept such
offer if Landlord (in its reasonable discretion) receives and approves all items
listed in the foregoing paragraph. If Landlord, with the written consent of
Lender, has accepted Tenant's offer and if on the Exchange Date all conditions
and requirements imposed by Landlord and Lender in connection with the
acceptance of Tenant's offer of substitution have been satisfied, including, but
not limited to, (i) the approval of Landlord, Lender and their respective
counsel
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of all documents relating to the Exchange; (ii) all installments of annual Basic
Rent, Additional Rent and all other charges due and unpaid hereunder having been
paid in full by Tenant; (iii) Tenant's compliance with all other obligations and
liabilities, actual or contingent, under this Lease which have arisen on or
prior to the Exchange Date and Tenant not then being in default hereunder; (iv)
delivery to Landlord and Lender, respectively, of ALTA "owner" and "mortgagee"
title insurance policies insuring Landlord's fee title to the Substitute
Property and Lender's first lien thereon; and (v) Tenant's conveyance of the
Substitute Property to Landlord, the lease back of the Substitute Property to
Tenant, and the mortgaging of the Substitute Property to Lender; then the
Existing Property shall be conveyed to Tenant in accordance with the provisions
of Paragraph 16(a) and all obligations hereunder with respect to the Existing
Property shall terminate, except for any obligations or liabilities of Tenant,
actual or contingent, arising prior to such conveyance.
Tenant shall pay all charges incident to the Exchange, regardless of
whether or not the Exchange occurs, including, but not limited to, Landlord's
and lender's counsel fees, escrow fees, recording fees, brokerage fees, title
insurance and all federal, state and local taxes which may be incurred or
imposed by reason of such conveyance and transfer and/or by delivery of any deed
or other instrument.
31. Financial Covenant. Tenant shall not sell, assign or transfer its
------------------
interest in this Lease and shall not permit a Change in Control of Tenant to an
entity which, immediately following such sale, transfer, assignment or Change in
Control has a Tangible Net Worth of less than $18,996,000 or a secured debt to
equity ratio of greater than 4:1.
"Tangible Net Worth" as used herein shall mean as of any date the
excess of (A) the aggregate gross book value of all assets of Tenant or any
other entity, as the case may be, as of such date (excluding all franchises,
licenses, permits, drawings, patents, patent applications, copyrights,
trademarks, trade names, goodwill, experimental or organizational expenses and
all other assets which, in accordance with generally accepted accounting
principles, are deemed intangible) over (B) the aggregate of all liabilities of
Tenant or such other entity as of such date, all computed in accordance with
generally accepted accounting principles.
"Change in Control" as used herein shall mean as of any date (i)
a sale of all or substantially all of the Tenant's assets to any Person or
related group of Persons as an entirety or substantially as an entirety in one
transaction or series of transactions, (ii) the merger or consolidation of the
Tenant with or into another corporation or the merger of another corporation
into the Tenant or the sale of the stock of Tenant with the effect that
Guarantor holds less than 51% of the total voting power
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entitled to vote in the election of directors, managers or trustees of the
surviving corporation of such merger or consolidation (any nonvoting common
stock now outstanding or issued after the date hereof of the surviving
corporation having terms substantially similar to the Tenant's nonvoting common
stock shall be considered voting stock for purposes of this provision) or holds
less than 51% of the total voting power entitled to vote in the election of
directors, managers or trustees of Tenant following such sale or (iii) the
liquidation or dissolution of the Tenant.
32. Subordination. Tenant agrees that this Lease and its interest
-------------
hereunder shall be subordinate to any mortgage, deed of trust, and/or other
security instrument hereafter placed upon the Leased Premises by the Landlord,
and to any and all advances made or to be made thereunder, to the interest
thereon, and all renewals, replacements and extensions thereof provided that any
such instrument (or separate instrument in recordable form duly executed by the
holder of any such mortgage, deed of trust or security instrument and delivered
to Tenant) shall provide for the recognition of this Lease and the non-
disturbance of all of Tenant's rights hereunder until such time as Landlord
shall have the right to terminate this Lease pursuant to any applicable
provisions of Paragraph 19 hereof.
33. First Refusal Right.
-------------------
(a) Except as otherwise provided in subparagraph (c) below, if
Landlord should desire to sell or shall receive an offer for its interest in any
one or more of the Memphis Premises, the New Orleans Premises and/or the San
Antonio Premises (any one or more of which Landlord desires to sell or for which
Landlord receives an offer being hereinafter referred to as the "Sale Premises")
prior to the tenth (10th) anniversary of the initial Basic Rent Payment Date as
subject to this Lease, then subject to the limitation set forth in subparagraph
(d) below Landlord first shall be required (i) either to obtain a bona fide
written offer to purchase the Sale Premises acceptable to Landlord or to enter a
contract for sale of the Sale Premises to Landlord or to enter a contract for
sale of the Sale Premises conditioned upon Tenant's failure to exercise its
right under this subparagraph (a), and (ii) to give written notice to Tenant of
the offer (and Landlord's willingness to accept the same) or contract for sale
accompanied by a copy of the executed offer or contract together with the name
and business address of the prospective purchaser ("Third Party Purchaser"). For
a period of fifteen (15) business days following receipt of such notice and
provided that Basic Rent shall be current at the time of the exercise of such
right of first refusal, Tenant shall have the right and option, exercisable by
written notice to landlord given within said fifteen (15) business days period
to purchase Landlord's interest in the Sale Premises at the purchase price and
upon the terms and conditions set forth in such written offer or agreement,
subject in addition, to the provisions of Paragraph 16(a) hereof. The closing
date for the purchase shall
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be the later to occur of (i) ninety (90) days from the date of Tenant's notice
to Landlord or (ii) the closing date provided in the applicable contract of sale
or offer to purchase. If at the expiration of the aforesaid fifteen (15) day
period, Tenant shall have failed to exercise the aforesaid option, Landlord's
interest in the Sale Premises may be sold for the consideration, to the Third
Party Purchaser, and upon the terms and conditions set forth in the original
offer or agreement of sale provided the sale is consummated with a period of one
hundred eighty (180) days after the giving of the original notice to Tenant
pursuant to subparagraph (a) (ii) above.
(b) If Tenant does not exercise its option to purchase any Sale
Premises, then Tenant agrees that (i) the Lease is bifurcated with respect to
remaining Leased Premises and the Sale Premises; (ii) Tenant will attorn to any
Third Party Purchaser as Landlord with respect to the Sale Premises purchased so
long as the third Party Purchaser assumes the obligations of Landlord under the
Lease; and (iii) the terms of the Lease will remain in full force and effect
with respect to the Sale Premises except that the Basic Rent will be that
percentage of the then Basic Rent which is allocated to the Sale Premises as set
forth on Exhibit "F" attached hereto and made a part hereof. At the request of
Landlord, Tenant will promptly execute such documents confirming (i) that, if
the sale occurs after the fifth (5th) anniversary of the initial Basic Rent
Payment Date its option to purchase the Sale Premises is null and void, (ii) the
agreements referred to above and (iii) such other agreements as Landlord may
reasonably request provided that such do not increase the liabilities and
obligations of Tenant hereunder.
(c) The provisions of subparagraph (a) shall not apply to or
prohibit -(i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the leased private power of sale under or judicial
foreclosure of any mortgage, deed of trust or other security instrumunent or
devise to which Landlord's interest in the Leased Premises is now or hereafter
subject, (iii) any transfer or Landlord's interest in the Leased Premises to a
mortgage, beneficiary under deed of trust or other holder of a security interest
therein by deed in lieu of foreclosure, or (iv) any transfer of the Leased
Premises to an Affiliate of Landlord or (v) to any governmental or quasi-
governmental agency with power of condemnation.
(d) If Landlord elects to sell any one or more of the Memphis
Premises, New Orleans Premises or Tulsa Premises prior to the fifth (5th)
anniversary of the initial Basic Rent Payment Date and Tenant does not elect to
purchase such Sale Premises, Tenant shall have one (1) additional first refusal
right for the initial offer or contract of sale with respect to such Sale
Premises which occurs during the period which commences with the fifth (5th)
anniversary of the initial Basic Rent Payment Date and terminates on the one
hundred twenty-seventh (127th) Basic Rent Payment Date. Notwithstanding anything
to the contrary set forth
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in this Paragraph 33, the first of first refusal granted by this Paragraph 33
shall terminate and be null and void with respect to the Leased Premises upon
the earlier to occur of (i) the one-hundred twenty seventh (127th) Basic Rent
Payment Date or (ii) the termination of this Lease.
34. Miscellaneous. The paragraph headings in this Lease are used only
-------------
for convenience in finding the subject matters and are not part of this Lease or
to be used in determining the intent of the parties or otherwise interpreting
this Lease. As used in this Lease, the singular shall include the plural as the
context requires and the following words and phrases shall have the following
meanings: (a) "including" shall mean "including but not limited to"; (b)
"provisions" shall mean "provisions, terms, agreements, covenants and/or
conditions"; (c) "lien" shall mean "lien, charge, encumbrance, title retention
agreement, pledge, security interest, mortgage and/or deed of trust"; (d)
"obligation" shall mean "obligation, duty, agreement, liability, covenant and/or
condition"; (e) "any of the Leased Premises" shall mean "the Leased Premises or
any part thereof or interest therein"; (f) "any of the Land" shall mean "the
Land or any part thereof or interest therein"; (g) "any of the Improvements"
shall mean "the Improvements or any part thereof or interest therein"; (h) "any
of the Equipment" shall mean "the Equipment or any part thereof or interest
therein"; and (i) "any of the Adjoining Property" shall mean "the Adjoining
Property or any part thereof or interest therein". Any act which Landlord is
permitted to perform under this Lease may be performed at any time and from time
to time by Landlord or any Person or entity designated by Landlord. Any act
which Tenant is required to perform under this Lease shall be performed at
Tenant's sole cost and expense. Each appointment of Landlord as attorney-in-fact
for Tenant under this Lease is irrevocable and coupled with an interest.
Landlord shall in no event be construed for any purpose to be a partner, joint
venturer or associate of Tenant or of any subtenant, operator, concessionaire or
licensee of Tenant with respect to any of the Leased Premises or otherwise in
the conduct of their respective businesses. This Lease and any documents which
may be executed by Tenant on or about the effective date hereof at Landlord's
request constitute the entire agreement between the parties and supersede all
prior understandings and agreements, whether written or oral, between the
parties hereto relating to the Leased Premises and the transactions provided for
herein. This Lease may be modified, amended, discharged or waived only by an
agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought. The covenants of this
Lease shall run with the land and bind Tenant, the heirs, distributees, Personal
representatives, successors and assigns of Tenant, and all present and
subsequent encumbrancers and subtenants of any of the Leased Premises, and shall
inure to the benefit of Landlord, its successors and assigns. In the event there
is more than one Tenant, the obligations of each shall be joint and several. In
the event any one or more of the provisions contained in this Lease shall for
any reason be held to be
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invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein. This Lease shall be governed by and construed
according to the Laws of the State of Louisiana with respect to the New Orleans
Premises, the State of Texas with respect to the San Antonio Premises and the
State of Tennessee with respect to the Memphis Premises.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
CORPORATE PROPERTY ASSOCIATES 8,L.P.,
A DELAWARE LIMITED PARTNERSHIP
By Eighth Carey Corporate Property,
Inc., a General Partner
By _______________________________
H. Cabot Lodge III
Senior Vice President
Attest: __________________________
Assistant Secretary
TENANT:
STATIONERS DISTRIBUTING COMPANY, INC.
By __________________________________
David R. Smith,
Chairman
Attest: _____________________________
______ Secretary
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EXHIBIT "A"
LOUISIANA PROPERTY
TRACT I
-------
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon and all the rights, ways, privileges, servitudes, appurtenances and
advantages thereunto belonging, or in anywise appertaining, designated as PARCEL
------
1F-B6, said parcel being situated in ELMWOOD INDUSTRIAL PARK, according to a
- ------ ------------------------
plan of resubdivision of J. J. Krebs & Sons, Inc., C.E. & S., dated June 9,
1977, approved by Ordinance No. 13026 of the Jefferson Parish Council, dated
September 13, 1977, filed for record September 13, 1977, and recorded in COB
905, folio 321, which Parcel 1F-B6 is composed of a portion of original Lot 1-F,
Elmwood Industrial Park (which includes all or a portion of resubdivided Parcel
1-F-B, created by Ordinance No. 12675, recorded in COB 882, folio 820), and
according to said resubdivision plan dated June 9, 1977, said property is more
fully described as follows:
Parcel 1F-B6 commences at the most northerly corner of Plauche Industrial Park,
being the point of intersection of the southerly right of way line of Edwards
Avenue along Plauche Industrial Park, and the westerly right of way line of
Plauche Street, thence North 47 degrees 54 minutes 41 seconds West, a distance
of 48.50 feet to a point on Edwards Avenue; thence South 42 degrees 6 minutes 4
seconds West, a distance of 708.63 feet to a point; thence South 55 degrees 24
minutes 35 seconds West, a distance of 193.94 feet; thence South 73 degrees 24
minutes 17 seconds West, a distance of 56.18 feet to the northerly most corner
of the property herein described, being the point of beginning;
Thence from said point of beginning, South 47 degrees 53 minutes 49 seconds
East, a distance of 98.21 feet to a point on the westerly right of way line of
Beven Street:
Thence along said westerly right of way line of Beven Street, South 42 degrees
06 minutes 04 seconds West, a distance of 99.32 feet to a point on the westerly
right of way line of Beven Street:
<PAGE>
Thence North 47 degrees 54 minutes 41 seconds West, a distance of 158.63 feet to
a point:
Thence North 73 degrees 24 minutes 17 seconds East, a distance of 116.28 feet to
the point of beginning.
Containing an area of 12,755.84 square feet.
TRACT II
--------
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon and all the rights, ways, privileges, servitudes, appurtenances and
advantages thereunto belonging, or in anywise appertaining, designated as PARCEL
------
14-A, said parcel being situated principally in PLAUCHE INDUSTRIAL PARK, AND
- ----- ----------------------------
ALSO IN ELMWOOD INDUSTRIAL PARK, according to a plan of resubdivision of J. J.
- --------------------------------
Krebs & Sons, Inc., C.E. & S., dated September 13, 1976, revised February 8,
1977, approved by Ordinance No. 12783 of the Jefferson Parish Council, dated
March 17, 1977, filed for record March 28, 1977, and recorded in COB 888, folio
74, which Parcel 14-A is composed of all of former Lot 14, Square 2, Plauche
Industrial Park, and a portion of original Lot 1-F Elmwood Industrial Park, and
according to said resubdivision plan and the subdivision plan of J.J. Krebs &
Sons, Inc., dated May 15, 1975, showing Squares 1 and 2 of Plauche Industrial
Park, said property is more fully described as follows:
Commencing at the most northerly corner of Plauche Industrial Park, being the
point of intersection of the southerly right of way line of Edwards Avenue along
Plauche Industrial Park, and the westerly right of way line of Plauche Street,
thence South 42 degrees 6 minutes 4 seconds West, as distance of 627.20 feet
along the westerly right of way line of Plauche Street to a point, being the
northerly corner of former Lot 14, Square 2, Plauche Industrial Park, for the
point of beginning.
Thence South 47 degrees 53 minutes 49 seconds East along Plauche Street right of
way a distance of 284.18 feet to a point and corner:
Thence South 42 degrees 6 minutes 4 seconds West a distance of 330 feet to a
point and corner:
Thence North 47 degrees 53 minutes 49 seconds West a distance of 365.68 feet to
a point and corner on the center line of a 20 foot railroad servitude:
<PAGE>
Thence following the center line of said 20 foot railroad servitude, along a
curve to the left having a radius of 501.95 feet, an arc distance of 244.60 feet
to a point;
Thence continue along the center line of said 20 foot railroad servitude North
42 degrees 1 minute 1 second East, a distance of 94.88 feet to a point and
corner on the southerly right of way line of Plauche Street extended:
Thence South 47 degrees 53 minutes 49 seconds East, a distance of 23.56 feet to
a Plauche Street corner, being the point of beginning:
Containing an area of 105,940.80 square feet.
<PAGE>
TENNESSEE PROPERTY
Being Lots 359, 360, and 361 in the Resubdivision of Lot "A" Second Addition to
Memphis and Shelby County Port Commission Industrial Subdivision as recorded in
Plat Book 25, Page 56, in the Register's Office of Shelby County, Tennessee, and
being more particularly described as follows:
Beginning at a point in the southeast line of Harbor Avenue 756.0 feet northeast
of the centerline of Pier Street as measured along the southeast line of Harbor
Avenue; thence North 65 degrees 13 minutes 18 seconds East along the southeast
line of Harbor Avenue a distance of 299.60 feet to a point; thence South 24
degrees 42 minutes 51 seconds East a distance of 515.92 feet to a point in the
northwest line of a railroad right-of-way; thence South 65 degrees 10 minutes 40
seconds West along the northwest line of said railroad right-of-way a distance
of 299.97 feet to a point; thence North 24 degrees 40 minutes 23 seconds West a
distance of 516.15 feet to the point of beginning.
The above described property is improved with a one story concrete building
known as 2483 Harbor Avenue.
The above described property has an area of 154,700 square feet or 3.551 acres.
<PAGE>
TEXAS PROPERTY
Lot 1, Block 1, New City Block 16837, NACOGDOCHES ROAD BUSINESS PARK
SUBDIVISION, UNIT 1, in the City of San Antonio, Bexar County, Texas, according
to plat thereof recording in Volume 8600, Page 202, Deed and Plat Records of
Bexar County, Texas, being more particularly described as follows:
BEGINNING: at a 1/2" iron pin set in the Northeast R.O.W. line of Highpoint
Drive at the West corner of said Lot 11, said point being South 34
deg. 50 min., 00 sec., West, 69.19' from the curve return at the
intersection with Crosspoint Drive;
THENCE: North 55 deg., 10 min., 00 sec., East, 355.45' to a point in the
center of a Mo-pac Railroad Spur Tract for the North corner of said
Lot 1:
THENCE: along the Southwesterly line of the Mo-pac Railroad Spur Tract
R.O.W., South 34 deg., 28 min., 31 sec., East, 389.82' to a 1/2"
iron pin set at an angle point and South 36 deg., 21 min., 13 sec.,
East, 95.22' to a 1/2" iron pin set at the East corner of said Lot
1;
THENCE: South 55 deg., 10 min., 00 sec., West, 355.54' to a 1/2" iron pin
set in the Northeast R.O.W. line of Highland Drive at the South
corner of said Lot 1;
THENCE: along the Northeast R.O.W. line Highpoint Drive, North 34 deg., 50
min., 00 sec., East, 485.0' to the Point of Beginning and containing
3.944 acres of land.
<PAGE>
EXHIBIT "B"
FIXTURES AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances
of every kind and nature whatsoever, including all electrical, anti-pollution,
heating, lighting (including hanging fluorescent lighting and outside yard
lights), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, power, plumbing, lifting, cleaning, fire prevention, fire
extinguishing and ventilating systems, devices and machinery and all engines,
pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors,
conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors (including fiberglass roll-up doors and rail doors),
windows, loading platforms (including sunken interior truck docks), lavatory
facilities, stairwells, fencing (including cyclone fencing), rail siding and
switches, flagpoles, passenger and freight elevators and garage units, but
excluding all Personal property and all trade fixtures, machinery, appliances,
office, manufacturing and warehouse equipment, movable partitions and other
barriers which are not necessary to the operation, as buildings, of the
buildings which constitutes part of the Leased Premises, whether or not such
items are affixed to the Leased Premises, and which can be removed without
material damage to the Leased Premises.
<PAGE>
EXHIBIT C
---------
The matters set forth on those certain commitments issued by Lawyers Title
Insurance Corporation, nos. 296595, 36999/C1061CCBF213032 and BF-042778.
<PAGE>
EXHIBIT "D"
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2, 3
----------
and 4 below, Basic Rent payable in respect of the Term shall be $523,600
per annum, payable monthly in advance on each Basic Rent Payment Date, in
equal monthly installments of $43,633.33 each.
2. CPI Adjustments to Basic Rent. Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items, (1982-
84-100) ("CPI") or the successor index that most closely approximates the CPI.
If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted from the CPI adjustment be less than the
Basic Rent in effect for the five (5) year period immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted to
----------------------------------
reflect changes in the CPI until the fifth (5th) anniversary of the Basic Rent
Payment Date on which the first monthly installment of Basic Rent shall be due
and payable (the "First Full Basic Rent Payment Date"). As of the fifth (5th)
anniversary of the First Full Basic Rent Payment Date and thereafter on the
tenth (10th) and, if the term is extended, on the fifteenth (15), twentieth
(20th), twenty-fifth (25), and thirtieth (30th), anniversaries of the First Full
Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent five (5) year period immediately preceding each
of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").
4. Method of Adjustment for CPI Adjustment.
---------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date (subject to adjustment as provided in the following
subparagraph 4(b)) shall be multiplied by a fraction, the numerator of which
shall be the difference between (i) the average CPI for the three
<PAGE>
(3) most recent calendar months (the "Prior Months") ending prior to such Basic
Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. The Beginning CPI shall
mean the average CPI for the three (3) calendar months corresponding to the
Prior Months, but occurring five (5) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing five (5) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic Rent
payable under this Lease until the next succeeding Basic Rent Adjustment Date
shall be the Basic Rent in effect after the adjustment provided for as of such
Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to Tenant
on or before the thirtieth (30th) day preceding each Basic Rent Adjustment Date.
<PAGE>
EXHIBIT "E"
ALLOCATION OF ACQUISITION COST
------------------------------
<TABLE>
<S> <C>
New Orleans Premises: $1,640,000
Memphis Premises: $1,420,000
San Antonio Premises: $1,570,000
Entire Leased Premises $4,630,000
</TABLE>
<PAGE>
EXHIBIT "F"
PERCENTAGE ALLOCATION
---------------------
<TABLE>
<S> <C>
New Orleans Premises: 35.42%
Memphis Premises: 30.67%
San Antonio Premises: 33.91%
</TABLE>
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement ("First Amendment") made this
---------------
29th day of March, 1995, by and between CORPORATE PROPERTY ASSOCIATES 8, L.P., a
- ----
Delaware limited partnership ("Landlord") and UNITED STATIONERS SUPPLY CO.
--------
("Tenant") successor-in-interest to Stationers Distributing Company, Inc.
------
("Original Tenant").
---------------
WHEREAS, Landlord and Original Tenant entered into a Lease Agreement
dated as of December 20, 1988 (the "Lease") pursuant to which Landlord leased to
-----
Original Tenant certain premises located in New Orleans, Louisiana, Memphis,
Tennessee and San Antonio, Texas; and
WHEREAS, Tenant is the successor-in-interest to Original Tenant
pursuant to a Merger which occurred on or about July 1, 1992; and
WHEREAS, Landlord and Tenant desire to amend the Lease as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged Landlord and Tenant covenant and
agree as follows:
<PAGE>
1. Paragraph 2. Certain Definitions is hereby amended in the
-------------------
following respects:
(a) the definition of "Guarantor" is hereby deleted and the
following is inserted in lieu thereof:
"Guarantor" shall mean United Stationers, Inc., a Delaware
Corporation.
(b) the term "Guaranty" is hereby deleted and the following is
inserted in lieu thereof:
"Guaranty shall mean the Guaranty of even date with the First
Amendment from Guarantor to Landlord."
2. The first sentence of Paragraph 5. Term is hereby deleted in its
----
entirety and the following is inserted in lieu thereof:
"Subject to the provisions hereof, Tenant shall have
and hold the Leased Premises for an initial Term (such
Term as extended or renewed in accordance with the
provisions hereof being called the "Term") commencing on
December 20, 1988 and ending on March 31, 2010."
3. The last sentence of Paragraph 17. Assignment and Subletting is
-------------------------
hereby deleted in its entirety and the following is inserted in lieu
thereof:
"Tenant shall have the right to mortgage or pledge
this Lease and in connection with
-2-
<PAGE>
any such mortgage or pledge Landlord agrees that it
will enter into an Estoppel and Consent substantially
in the form of the Estoppel and Consent of even date
herewith among Landlord, Tenant and Bank of America
National Trust and Savings Association, as Trustee
under that certain Pooling and Servicing Agreement
dated as of July 1, 1992 for RTC Commercial Mortgage
Pass-Through Certificates Series 1992-C5 with such
modifications as are acceptable to Landlord in its
reasonable discretion."
4. Clause (iv) of Subparagraph (c) of Paragraph 33. First Refusal Right
-------------------
is hereby deleted in its entirety and the following is inserted in
lieu thereof:
"(iv) any transfer of the Leased Premises to
any Person, controlling, in control of, or under
common control with Landlord, or any Person and its
affiliates to whom Landlord sells all or substantially
all of its assets, provided that the purchaser of all
or substantially all of the assets of Landlord is an
entity for which W.P. Carey & Co., Inc., W.P. Carey
Incorporated or their affiliates or successors provide
investment advice or management services."
5. The following is hereby added as Paragraph 35. Tax Treatment
-------------
Reporting; Useful Life.
- ----------------------
"Landlord and Tenant each acknowledge that each
shall treat this transaction as a true lease for state
law purposes and shall report this transaction as a
Lease for Federal income tax purposes. For Federal
income tax purposes each shall report this Lease as a
true lease with Landlord as the owner of the Leased
Premises and Equipment and Tenant as the lessee of such
Leased Premises and Equipment including: (1) treating
Landlord as the owner of the property eligible to claim
depreciation deductions under Section 167 or
-3-
<PAGE>
168 of the Internal Revenue Code of 1986 (the "Code")
with respect to the Leased Premises and Equipment,
(2) Tenant reporting its Rent payments as rent
expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
6. Exhibit D Basic Rent Payments is hereby deleted in its entirety
-------------------
from the Lease and Exhibit D Basic Rent Payments attached to this First
-------------------
Amendment is hereby incorporated in the Lease as is fully set forth therein.
7. Except as specifically amended hereby the terms and conditions of
the Lease shall remain in full force and effect and binding upon Landlord and
Tenant and their respective successors and assigns.
8. From and after the date hereof, the term "Lease" shall mean the
Lease as amended by this First Amendment.
WITNESS the due execution hereof the day and year first above written.
LANDLORD:
CORPORATE PROPERTY ASSOCIATES 8,
L.P.
By: Eighth Carey Corporate, Inc.
By: [SIGNATURE ILLEGIBLE]
-------------------------
Title:______________________
-4-
<PAGE>
TENANT:
UNITED STATIONERS SUPPLY CO.
BY:/s/David Bushell
------------------------------
Title:/s/Patrick H. Bushell
---------------------------
-5-
<PAGE>
CONSENT
-------
Bank of American National Trust and Savings Association, as
Trustee under that certain Pooling and Servicing Agreement dated as of July
1, 1992 for RTC Commercial Mortgage Pass-Through Certificates Series 1992-
C5 hereby consents to the within First Amendment to Lease.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS TRUSTEE
UNDER THAT CERTAIN POOLING AND
SERVICING AGREEMENT DATED AS OF JULY
1, 1992 FOR RTC COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES SERIES
1992-C5
By: __________________ (SEAL)
Name: Michael Green
--------------------
Title: Vice President
-------------------
-6-
<PAGE>
EXHIBIT "D"
BASIC RENT PAYMENTS
1. Basic Rent. Basic Rent payable for the period from December 20,
----------
1988 to and including December 31, 1993 was $523,600 per annum, payable monthly
in advance on each Basic Rent Payment Date, in equal monthly installments of
$43,633.33 each. Following the first adjustment provided for in Paragraphs 2, 3
and 4 below, Basic Rent for the period from January 1, 1994 to and including
March 28, 1995 was $635,283 per annum payable in monthly installments of
$52,940.25. Subject to the adjustments provided for in Paragraphs 2, 3 and 4
below, Basic Rent from March 29, 1995 through the balance of the Term shall be
$812,500 per annum, payable monthly in advance on each Basic Rent Payment Date,
in equal monthly installments of $67,708.33.
2. CPI Adjustments to Basic Rent. Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items, (1982-
84=100) ("CPI") or the successor index that most closely approximates the CPI.
---
If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted from the CPI adjustment be less than the
Basic Rent in effect for the five (5) year immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. As of January 1, 1999,
----------------------------------
January 1, 2004, January 1, 2009, and if the Term is extended, January 1, 2014,
January 1, 2019 and January 1, 2024, Basic Rent shall be adjusted to reflect
increases in the CPI during the most recent five (5) year period immediately
preceding each of the foregoing dates (each such date being hereinafter referred
to as the "Basic Rent Adjustment Date").
--------------------------
4. Method of Adjustment for CPI Adjustment.
---------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4 (a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date (subject to adjustment as provided in the following
subparagraph 4(b)) shall be multiplied by a fraction, the numerator of which
shall be the difference between (i) the average CPI for the three
<PAGE>
(3) most recent calendar months (the "Prior Months") ending prior to such Basic
------------
Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. The Beginning CPI shall
mean the average CPI for the three (3) calendar months corresponding to the
Prior Months, but occurring five (5) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing five (5) year period.
By way of example:
Second Basic Rent Adjustment Date: January 1, 1999
Basic Rent in Effect: $812,500
Assume Average CPI for Prior Months - 145.20
Assume Beginning CPI - 119.67
812.500 x 145.20-119.67
-------------
119.67
812.500 x .2133=$173,336.05
Basic Rent as of January 1, 1999=$985,836.05
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the thirtieth (30th) day preceding each Basic Rent
Adjustment Date.
-2-
<PAGE>
EXHIBIT 10.38
I N D U S T R I A L L E A S E
------------------------------
THIS INDENTURE, made and entered into this 22nd day of February , 1988 .
---- ------------ ---
W I T N E S S E T H:
NORTHTOWN DEVCO, a Missouri General Partnership of Kansas City, Missouri,
"Landlord", hereby leases unto STATIONER'S DISTRIBUTING COMPANY
-------------------------------------------------
4055 International Plaza, Fort Worth, Texas 76109
- --------------------------------------------------------------------------------
"Tenant", and the Tenant accepts the premises known as:
1606 Linn Street, the leased premises located in that certain warehouse
on Linn Street consisting of 77,244 square feet,
as outlined in red on the attached floor plan marked Exhibit "A" attached hereto
and made a part hereof in North Kansas City, Clay County, Missouri, for the TERM
of Seven (7) Years and Three (3) Months , commencing March 1 , 1988 ,
--------------------------------------- ------------- ----
and ending May 31 , 1995 , unless sooner terminated as provided herein,
----------- ----
to be occupied and used by Tenant for the sole purpose of: General offices,
----------------------
warehousing and distribution of office furniture, supplies and related items of
- --------------------------------------------------------------------------------
Tenant's products.
- --------------------------------------------------------------------------------
IN CONSIDERATION THEREOF, THE PARTIES COVENANT AND AGREE:
1. RENT. Tenant shall pay to Landlord at the offices of Leo Eisenberg Co., 1101
Walnut, Suite 800, Kansas City, Jackson County, Missouri 64106, or elsewhere as
designated from time to time by Landlord's notice, the sum of One Million Three
------------------
Hundred Twelve Thousand One Hundred Eighty and 77/100 ----------------- DOLLARS
- ------------------------------------------------------------------------
($ 1,312,180.77) in installments as follows:
------------
Commencing March 1, 1988, and ending May 31, 1989, (15 months) the monthly
rental shall be Thirteen Thousand Three Hundred Twenty Four and 59/100
Dollars ($13,324.59).
Commencing June 1, 1989, and ending May 31, 1991, (24 months) the monthly
rental shall be Fourteen Thousand One Hundred Sixty One and 33/100 Dollars
($14,161.33).
Commencing June 1, 1991, and ending May 31, 1993, (24 months) the monthly
rental shall be Fifteen Thousand Four Hundred Forty Eight and 80/100
Dollars (15,448.80).
Commencing June 1, 1993, and ending May 31, 1995, (24 months) the monthly
rental shall be Sixteen Thousand Seven Hundred Thirty Six and 20/100
Dollars ($16,736.20).
The annual rent shall be payable in equal monthly installments, without
deduction or set off, each such monthly installment due and payable to Landlord
on the first day of each and every month of the term hereof in advance. Any
rentals or other payments (hereinafter sometimes referred to as "additional
rent") required by this Lease not received by Landlord within ten (10) days
after the due date set forth herein shall be subject to a late charge of five
percent (5%) of the amount thereof for each month or portion of a month during
which said rental remains unpaid plus interest on the past due amount from the
due date thereof to the date of payment at a rate (the "Default Rate") equal to
the lesser of (i) 2% in excess of the prime rate from time to time announced by
The Mercantile Bank of Kansas City (or its successor) or (ii) the highest lawful
rate that may be charged to Tenant under the laws of the state in which the
premises are located. Failure by Tenant to pay said late charge within ten (10)
days after receipt of notice from Landlord that it is due shall constitute a
default of this Lease by Tenant.
LL:__________
TT:__________
<PAGE>
2. SECURITY DEPOSIT. Tenant agrees to deposit on the date hereof the sum of
---------------- N/A --------------- Dollars ($ N/A ), which sum
- ------------------------------------------- ------------
shall be held by Landlord, without obligation for interest, as security for the
performance of Tenant's covenants and obligations under this Lease; it being
expressly understood that such deposit is not an advance rental deposit or a
measure of Landlord's damages in case of Tenant's default. Upon the occurrence
of any event of default by Tenant, Landlord may, from time to time, without
prejudice to any other remedy provided herein or provided by law, use such fund
to the extent necessary to make good any such default, or any damage, expense,
or liability caused by such default, and Tenant shall promptly pay to Landlord
on demand the amount as applied in order to restore the security deposit to its
original amount. Failure of Tenant to restore the security deposit, as set forth
above, within ten (10) days from demand by Landlord shall constitute an act of
default under this Lease. Should Tenant comply with all the covenants and
conditions under the Lease, the security deposit or any balance thereof shall be
returned to the Tenant at the expiration of the term provided Tenant shall have
made all such payments and performed all covenants and agreements. Nothing in
this paragraph shall be deemed to limit the amount of any claim, demand or cause
of action of Landlord against Tenant under the provisions of this Lease.
3. SERVICE. All utility services used in or assessed against the premises shall
be paid for and contracted for in the name of Tenant.
4. REAL ESTATE TAXES. In the event the general real estate taxes, assessments
and other similar charges, levies, fees or excises (whether general or special,
ordinary or extraordinary, or foreseen or unforeseen) (the "Real Estate Taxes")
on the premises hereinbefore described for the calendar year 1981 , or any
--------
thereafter, exceeds the Real Estate Taxes for the calendar year 1980 , the
--------
Tenant agrees to pay to the Landlord the full amount of such increase as
additional rent within thirty (30) days after notice that the same is due.
Should Tenant occupy less than the whole of the property against which such
taxes are assessed, the Tenant agrees to pay, as additional rental, a percentage
of the said increase based on the ratio of square footage of floor area in the
demised premises to the total square footage of the floor area of the building
or buildings included in the tax bill, during the calendar year to which the
increased tax bill applies. Tenant shall have the right to inspect any real
estate tax bill involved in Landlord's request for such additional rental. The
Real Estate Taxes payable by Tenant for the years in which this lease commences
and terminates shall be prorated.
5. INSURANCE. Tenant shall cause Landlord, as well as any entity named by
Landlord and in privity with Landlord, to be named as "Additional Insured" in a
comprehensive public liability insurance policy to be carried by the Tenant
covering the premises during the term of the lease or any extension thereof with
limits not less than One Million and no/100 Dollars ($1,000,000.00) (combined
single limit bodily injury and property damage). Such policy shall also include
a contractual endorsement insuring Tenant's indemnity obligations set forth in
paragraphs 8 and 10 of this lease. Tenant shall furnish the Landlord with a
certificate of said insurance coverage. Said certificate shall affirmatively
agree that Tenant's policy shall not be cancelled, materially amended or allowed
to lapse without ten (10) days prior written notice to Landlord. Tenant shall
comply with all insurance regulations so the lowest insurance rates consistent
with the use of the premises permitted by this Lease may be obtained, and shall
not permit anything on or about the leased premises which would make void or
voidable any insurance now or hereafter maintained on the premises by Landlord
or Tenant. If, during the term of this lease, the hazard insurance rates of
Landlord are increased, or the amount of insurance coverage Landlord is required
to maintain is increased by reason of Tenant's use of the premises, Tenant
agrees to reimburse Landlord for the amount of such increased insurance premium
in any year of the lease term in excess of the insurance premium covering the
premises for the calendar year 1986 . Proration shall be made for partial
---------
year's occupancy in the last year of lease term.
LL:__________
TT:__________
- 2 -
<PAGE>
6. MULTIPLE TENANCY BUILDING. Tenant's responsibility for reimbursements, as
called for this Paragraph of this lease, shall be for payment of Tenant's
percentage share of such reimbursements based upon the percentage of floor space
as calculated by Landlord from time to time, that Tenant occupies in the
building or buildings included within the area subject to the reimbursement
charge of this paragraph.
Following execution of this Lease, and prior to the commencement of each
calendar year during the term of this lease, Landlord shall notify Tenant of the
estimated annual amount of Tenant's percentage of the reimbursements called for
in this Paragraph, and Tenant shall pay one-twelfth (1/12th) of said estimated
amount as additional rent with each monthly installment of base rent due under
this lease. Tenant shall pay the balance due, if any, upon receipt of statement
therefor, or shall receive credit for any excess paid by Tenant during the
previous year.
Tenant agrees to conduct its business in a manner that will not be objectionable
to other tenants in the building of which the premises are a part, including
noise, vibration, odor, or fumes. In the event Landlord receives complaints from
other tenants in the building and determines, in its sole reasonable judgment,
that Tenant is conducting its operations in a manner so as to be objectionable
to other tenants, Tenant agrees, upon notice from Landlord thereof, to promptly
modify the conduct of its operations to eliminate such objectionable operations.
7. POSSESSION AND CONDITION AT BEGINNING OF TERM. Landlord shall use due
diligence to give possession as nearly as possible at the beginning of the term
of this Lease, and rent shall abate pro rata for the period of any delay in so
doing. Tenant shall make no other claims against Landlord for such delay. Tenant
has inspected and knows the condition of the premises and accepts the same in
their present "as is" condition. Tenant acknowledges that neither Landlord, nor
Landlord's agent, has made any representations or warranties concerning the
premises or their suitability for Tenant's use, except as is set forth in this
Lease.
8. PUBLIC REQUIREMENTS. Tenant shall comply with all laws, ordinances,
governmental orders and regulations and other requirements now and hereafter
affecting the premises or the use thereof, including but not limited to all
recorded covenants and restrictions, if any, and all rules and regulations of
Landlord's hazard and liability insurance carrier, and all governmental
requirements requiring replacements, additions, repairs and alterations to those
portions of the premises constructed by Tenant and to those portions of the
premises which Tenant is required to maintain under Section 13 of this lease,
and shall save and hold Landlord harmless from expense or damage resulting from
failure to do so.
9. ASSIGNMENT AND SUBLETTING. (a) Tenant shall not sell, assign, mortgage,
pledge, encumber, or in any manner transfer the lease, or any interest therein,
or agree to do so; permit any transfer of or lien upon this lease or any
interest therein by operation of law; sublet the premises, or any part thereof,
or permit the occupancy of the leased premises, or any part thereof, by anyone
other than Tenant without the prior written consent of Landlord. With respect to
any permitted assignment or subletting, such assignee or sublessee shall be
bound by and shall perform all of the terms, conditions and covenants by which
the Tenant hereunder is bound. Consent by Landlord to one assignment or
subletting of the leased premises, or any part thereof, shall not constitute a
waiver of Landlord's rights hereunder, including but not limited to consent to
any future assignment or subletting. Any assignment or subletting,
notwithstanding the consent of Landlord, shall not in any manner release the
Tenant herein from its continued liability for the performance of the provisions
of this lease and any amendments or modifications. The acceptance of any rental
payments by Landlord from any alleged assignee
LL:__________
TT:__________
- 3 -
<PAGE>
shall not constitute approval of the assignment of this lease by the Landlord.
(b) If at any time during the term a cumulative total of more than 49% of the
voting stock of Tenant (if Tenant shall be a corporation) shall be transferred,
directly or indirectly, by sale, assignment, gift or in any other manner, any
such transfer shall, unless made with Landlord's prior consent, be deemed an
unauthorized assignment of this lease and a default by Tenant under this lease.
(c) Landlord shall have the right to sell, convey or transfer all or any part of
its interest in this lease, and all covenants and obligations of Landlord under
this lease accruing thereafter shall cease, but such covenants and obligations
shall run with the land and shall be binding upon the subsequent owners or
assignees thereof.
10. LIABILITY. Tenant hereby relinquishes all claims, releases, assumes all
risks and agrees to hold Landlord harmless from any liability for any damage
done or occasioned by Tenant's use of the premises or by or from any plumbing,
wiring, gas, water, steam, sprinkler system, equipment or other pipes, or the
bursting, leaking or running of any tank, washstand, water closet, waste pipe or
other articles in, above, upon or about the building or premises, or for damage
occasioned from or by water, snow or ice being upon, above or about the premises
unless caused by the intentional act of Landlord.
Landlord and Tenant hereby expressly waive any cause of action or right of
recovery which either may have hereafter against the other for any loss or
damage to the leased premises, or to the contents thereof, from all claims and
liabilities arising from or caused by any hazard that could be covered by a
standard fire insurance policy with extended coverage and "all risk" endorsement
on the premises, or on the contents thereof, (whether or not such insurance is,
in fact, so maintained) and each party hereto shall, to the extent reasonably
obtainable, obtain a waiver from any insurance carrier with which it carries
insurance covering the leased premises, or the contents thereof, releasing its
subrogation rights as against the other party, and upon request by either party
evidence of said waiver shall be furnished by each party hereto to the other
party.
Tenant agrees to save, defend and hold Landlord harmless from any claim, damage,
liability or expense arising from any injury (including death) to persons or
damage to property occurring in, on or about the premises, occurring from any
use of the premises or any part thereof, or occurring from the failure of Tenant
to comply with the terms of this lease, including, without limitation, those set
forth in Section 34.
All merchandise and property in or about the premises shall be at Tenant's sole
duty and risk and Tenant does hereby now and forever relinquish all claims,
release and agree to hold Landlord harmless from any claims or damages thereto
or any of same, howsoever caused.
11. UNTENANTABILITY. In the event the leased premises shall be destroyed or so
damaged by fire, explosion, windstorm or other casualty as to be wholly or
partially untenantable, Landlord may restore the leased premises within a
reasonable time after such destruction or damage, or may terminate this lease
and the term demised as of the date of the destruction or damage, in either case
by giving Tenant notice within thirty (30) days after the date of the
destruction or damage, and the rent shall abate on a per diem thirty-day month
basis during the period of restoration.
In the event the leased premises shall be damaged as aforesaid but are not
thereby rendered untenantable, Landlord shall (but only to the extent of the
insurance proceeds actually received by Landlord on account thereof) restore the
leased premises with reasonable dispatch, and while such damage is being
repaired, Tenant shall be entitled to an equitable abatement of the rent as
determined by Landlord provided that if the leased premises must be restored and
repaired by Landlord within ninety (90) days following such damage, Tenant may
elect to terminate this Lease. Landlord shall not be liable or responsible for
any delays in rebuilding or repairing due to labor controversies, riots, acts of
God, national emergency, acts of a public enemy, governmental laws or
regulations, inability to procure materials or labor, or both, or any other
cause beyond its control.
12. MAINTENANCE BY LANDLORD. Landlord shall keep in repair, ordinary wear and
tear excepted, only the roof, foundations, exterior walls (exclusive of inside
surfaces, glass, dock bumpers, levelers or doors therein), gutters and
downspouts, but Tenant shall be responsible for any of the foregoing repairs
resulting from Tenant's negligence or abuse. Tenant shall reimburse Landlord for
the cost of repairing any damage to exterior walls, canopies, gutters or
downspouts damaged by Tenant or Tenant's invitees (e.g., delivery trucks, etc.).
Before any obligation on Landlord to make repairs, Landlord shall first be given
written notice of any defects and shall have a reasonable time thereafter to
make such repair. Landlord shall not be liable, beyond the actual cost of any
repairs Landlord fails to make within a reasonable time after such written
notice, for any failure to make such repairs.
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13. MAINTENANCE BY TENANT. Subject to the foregoing obligation of Landlord,
Tenant agrees to take good care of the premises and the equipment and fixtures
therein (including replacement of parts and components of heating and air
conditioning equipment) and shall keep the same in good working order and
condition, including, without limitation, the water pipes, electrical heating
and air conditioning equipment, plumbing, windows, doors, frames, glass, and
dock bumpers, dividing walls, all interior and office decoration, entrance and
exit doors and locks, overhead doors, fixtures, appliances, unit heaters and
sprinkler system, and shall keep the premises and approaches, sidewalks and the
alleys adjacent thereto, if any, clean and sightly and free from ice and snow
(including policing the grounds if they are included in the premises). In
addition, Tenant shall repair any damage to the parking area in front of or
immediately adjacent to the demised premises which is due to Tenant's
negligence. At the expiration of the term, Tenant shall (i) surrender the
premises broom clean and in good condition and repair, subject to ordinary wear
and tear; and (ii) at its expense, remove all of "Tenant's Property" from the
leased premises, such removal to be in accordance with all applicable
governmental laws and codes. All damage or injury to the premises not caused by
fire or other casualty and all damage to glass, windows and doors shall be
promptly repaired by Tenant.
14. ALTERATIONS AND INSTALLATIONS. Tenant shall not make any alterations in or
additions to the leased premises nor make any contract therefor, without first
procuring Landlord's written consent and delivering to Landlord the plans,
specifications, names and addresses of contractors, copies of proposed contracts
and the necessary permits, all in form and substance satisfactory to Landlord,
and furnishing indemnification against liens, costs, damages and expenses as may
be required by Landlord. All alterations, additions, improvements and fixtures,
(other than Tenant's trade fixtures, signs and moveable furniture installed by
Tenant at its sole cost and expense [collectively "Tenant's Property]), which
may be made or installed by either Landlord or Tenant upon the leased premises
shall be the property of Landlord and shall remain upon and be surrendered with
the leased premises as a part thereof, without disturbance, molestation or
injury at the termination of the term of this lease, whether by lapse of time or
otherwise, all without compensation or credit to Tenant, provided, however, if
prior to said termination or within fifteen (15) days thereafter, Landlord so
directs by written notice to Tenant, Tenant shall promptly remove the additions,
improvements, fixtures and installations which were placed in the leased
premises by Tenant and which are designated in said notice, and repair any
damage occasioned by such removals, and in default, thereof, Landlord may effect
said removals and repairs, and Tenant will pay to Landlord, on demand, the
reasonable cost thereof. Any linoleum or other floor covering that is cemented
or otherwise adhesively affixed to the floor of the leased premises shall be
deemed a non-trade fixture and become the property of the Landlord. All of
Tenant's Property not removed by Tenant prior to the expiration of the lease
shall, at Landlord's option, become the property of Landlord.
15. ACCESS TO PREMISES. Landlord reserves the right to enter upon the leased
premises at all reasonable hours for the purpose of inspecting the same, or of
making repairs, additions or alterations to the building in which the leased
premises are located, to exhibit the leased premises to prospective tenants,
purchasers, or others, to display during the last ninety (90) days of the term,
without hindrance or molestation by Tenant, "For Rent" or similar signs on
windows or doors in the leased premises. The exercise by Landlord of any of its
rights under this section shall not be deemed an eviction or disturbance of
Tenant's use and possession of the leased premises. Landlord agrees that, in
making any such repairs, additions or alterations, it shall use reasonable
efforts not to interfere with the conduct of Tenant's business operations.
16. SIGNS. Tenant shall not place on any exterior door, wall or window of the
premises any sign or advertising matter without first obtaining Landlord's
reasonable written approval and consent. Tenant agrees to maintain such sign or
advertising matter as approved by Landlord in good condition and repair. All
signs shall comply with applicable ordinances or other governmental restrictions
and the determination of such requirements and the prompt compliance therewith
shall be the responsibility of the Tenant.
17. DEFAULT AND REMEDIES. In the event (a) Tenant fails to comply with any
term, provision, condition, or covenant of this lease including, without
limitation, the payment of any rent or additional rent; (b) Tenant deserts or
vacates the premises; (c) any petition is filed by or against Tenant under any
section or chapter of the Federal Bankruptcy Act, as amended, or under any
similar law or statute of the United States or any state thereof; (d) Tenant
becomes insolvent or makes a transfer in fraud of creditors; (e) Tenant makes an
assignment for benefit of creditors; or (f) a receiver is appointed for Tenant
or any of the assets of Tenant, then in any
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of such events, Tenant shall be in default and the Landlord shall have the
option, in addition to any other rights or remedies Landlord may have at law or
in equity, to do any one or more of the following: upon ten (10) days prior
written notice, except in the payment of rent or additional rent for which no
demand or notice shall be necessary, in addition to and not in limitation of any
other remedy permitted by law; to enter upon the demised premises or any part
thereof either with or without process of law, and to expel, remove and put out
Tenant or any other persons who might be thereon, together with all personal
property found therein; and, Landlord may terminate this Lease, or it may from
time to time, without terminating this Lease, relet said demised premises or any
part thereof for such term or terms (which may be for a term extending beyond
the term of this Lease) and at such rental or rentals and upon such other terms
and conditions as Landlord in its sole discretion may deem advisable, with the
right to repair, renovate, remodel, redecorate, alter and change said premises.
At the option of Landlord, rents received by Landlord from such reletting shall
be applied first to the payment of any indebtedness from Tenant to Landlord
other than rent and additional rent due hereunder; second, to payment of any
costs and expenses of such reletting, including but not limited to attorney's
fees, advertising fees and brokerage fees, and to the payment of any repairs,
renovation, remodeling, redecorations, alterations and changes in the premises;
third, to the payment of rent and additional rent due and payable hereunder and
interest thereon, and, if after applying said rentals there is any deficiency in
the rent and additional rent and interest to be paid by Tenant under this Lease,
Tenant shall pay any such deficiency to Landlord and such deficiency shall be
calculated and collected by Landlord monthly. No such re-entry or taking
possession of said premises shall be construed as an election on Landlord's part
to terminate this Lease unless a written notice of such intention be given to
Tenant. Notwithstanding any such reletting without termination, Landlord may at
any time thereafter elect to terminate this Lease for such previous breach and
default. Should Landlord at any time terminate this Lease by reason of any
default, in addition to any other remedy it may have, it may recover from Tenant
the worth, at the time of such termination, of the excess of the amount of rent
and additional rent reserved in this Lease for the balance of the term hereof
over the then reasonable rental value of the premises for the same period.
Landlord shall have the right and remedy to seek redress in the courts at any
time to correct or remedy any default of Tenant by injunction or otherwise,
without such resulting or being deemed a termination of this Lease, and
Landlord, whether this Lease has been or is terminated or not, shall have the
absolute right, by court action or otherwise, to collect any and all amounts of
unpaid rent or unpaid additional rent or any other sums due from Tenant to
Landlord under this Lease which were or are unpaid at the date of termination.
In case it should be necessary for Landlord to bring any action under this
lease, to consult or place said lease or any amount payable by Tenant hereunder
with an attorney concerning or for the enforcement of any of Landlord's rights
hereunder, then Tenant agrees in each and any such case to pay to Landlord,
Landlord's reasonable attorney's fees.
18. EMINENT DOMAIN. If the premises or any substantial part thereof shall be
taken by any competent authority under the power of eminent domain or be
acquired for any public or quasi-public use or purpose, the term of this lease
shall cease and terminate upon the date when the possession of said premises or
the part thereof so taken shall be required for such use or purpose and without
apportionment of the award, and Tenant shall have no claim against Landlord for
the value of any unexpired term of this lease. If any condemnation proceedings
shall be instituted in which it is sought to take or damage any part of
Landlord's building or the land under it, or if the grade of any street or alley
adjacent to the building is changed by any competent authority and such change
of grade makes it necessary or desirable to remodel the building to conform to
the changes of grade, Landlord shall have the right to cancel this lease after
having given written notice of cancellation to Tenant not less than one hundred
twenty (120) days prior to the date of cancellation designated in the notice. In
either of said events, rent at the then current rate shall be apportioned as of
the date of the termination. No money or other consideration shall be payable by
the Landlord to the Tenant for the right of cancellation, and the Tenant shall
have no right to share in the condemnation award or in any judgment for damages
caused by the taking or the change of grade. Nothing in this paragraph shall
preclude an award being made to Tenant for loss of business or depreciation to
and cost of removal of equipment or fixtures.
19. MECHANIC'S LIENS. Tenant will not permit any mechanic's liens, or other
liens, to be placed upon the premises or any building or improvement thereon
during the term hereof, and in case of the filing of any such lien, Tenant will
promptly pay same; provided, however, that Tenant shall have the right to
contest the validity or amount of any such lien upon posting security with
Landlord which in Landlord's sole reasonable judgment is adequate to pay and
discharge any such lien in full if held valid. If default in payment thereof
shall continue for thirty (30) days after notice thereof from Landlord to
Tenant, Landlord shall have the right and
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privilege at Landlord'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 immediately due by Tenant to Landlord and shall
be paid promptly upon presentation of bill therefor.
20. MORTGAGES AND ESTOPPEL CERTIFICATES. This lease shall be subject and
subordinate to any mortgage or deed of trust now or at any time hereafter
constituting a lien or charge upon the premises or the improvements situated
thereon. Tenant shall, at any time hereafter, on demand, execute any
instruments, releases or other documents which may be required by any such
mortgagee for the purpose of subjecting and subordinating this lease to the lien
of any such mortgage.
Tenant shall, at any time, and from time to time, upon not less than ten (10)
days' prior request by Landlord, execute, acknowledge and deliver to Landlord, a
statement in writing certifying that (i) 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 identifying the modifications), (ii) the dates
to which the base rent and other charges have been paid, and (iii) Landlord is
not in default under any provisions of this lease (or if there are defaults,
specifying the defaults). It is intended that any such statements may be relied
upon by any person proposing to acquire Landlord's interest in this lease or the
premises, or any prospective mortgagee of, or assignee of any mortgage upon such
interest in the premises.
21. GENERAL. No waiver of any default of Tenant hereunder shall be implied from
any omission by Landlord to take any action on account of such default if such
default persists or is repeated, and 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. One or more waivers of any covenant, term
or condition of this lease by Landlord shall not be construed as a waiver of a
subsequent breach of the same covenant, term or condition. The consent or
approval by Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
or approval to or of any subsequent similar act by Tenant. The invalidity or
unenforceability of any provision hereof shall not affect or impair any other
provisions. 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. The laws of the State of Missouri shall govern the validity,
performance and enforcement of this lease. Submission of this instrument for
examination does not constitute a reservation of or option for the premises. The
instrument becomes effective as a lease upon execution and delivery by both
Landlord and Tenant.
22. NOTICES. Any notice required or permitted under this lease shall be deemed
sufficiently given or served if sent by registered or certified mail to Tenant
at the address of the leased premises and to Landlord at the address then fixed
for the payment of rent, and either party may be like notice at any time and
from time to time designate a different address to which notices shall be sent.
Notices given in accordance with these provisions shall be deemed received when
mailed.
23. SUCCESSORS. All of the terms, covenants and conditions of this lease shall
apply and inure to the benefit of, and be binding upon the parties hereto, and
upon their respective successors in interest and legal representatives, except
as otherwise provided herein.
24. QUIET POSSESSION. Landlord covenants with Tenant that said Tenant, on
paying the rent herein required to be paid and performing the covenants herein
contained, shall and may peaceably and quietly have, hold and enjoy the premises
during the term of this lease without hindrance or interruption by Landlord or
any other person or persons lawfully or equitably claiming by, through or under
Landlord.
25. HOLDING OVER. If Tenant retains possession of the premises or any part
thereof after the termination of the term by lapse of time or otherwise, Tenant
shall pay Landlord at double the rate specified in Section 1, for the time
Tenant thus remains in possession, and in addition thereto, shall pay Landlord
all damages sustained by reason of Tenant's retention of possession. If Tenant
remains in possession of the premises or any part thereof after termination of
the term by lapse of time or otherwise, such holding over shall constitute a
month-to-month tenancy. Landlord may terminate Tenant's month-to-month tenancy
at any time with thirty (30) days written notice. Landlord's acceptance of any
rent after holding over does not renew the lease. The provisions of this section
do not waive Landlord's right of re-entry or any other right hereunder.
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26. FLOOR LOADING. Tenant shall not overload the floors of the premises. In no
event shall machinery be positioned so as to exert a floor load in excess of
1,000 pounds on any square foot. Landlord shall have the election either to
repair any damage caused by overloading the floors or to require Tenant to
repair such damage immediately after written demand to that effect is made to
Tenant. If Tenant elects to repair the damage or if Tenant fails to do so
immediately after demand by Landlord, the cost of all such repairs shall be paid
to Landlord by Tenant upon demand.
27. USE OF PREMISES. (a) Tenant shall occupy and use the premises for the
purpose above specified and none other. (b) Tenant shall not exhibit, sell or
offer for sale, use, rent or exchange on the premises or in the building any
article, thing or service except those ordinarily embraced within the stated use
of the premises; and will not make or permit any use of the premises which
directly or indirectly is forbidden by Public Law, ordinance or governmental or
municipal regulation or order, or which may be dangerous to life, limb or
property. (c) All vehicles stored or parked on premises must be operational and
properly licensed. (d) Tenant will comply with all requirements for state,
municipal and other governmental inspections, licenses and permits, and will
promptly pay all proper fees and charges in connection therewith, failing which
Landlord may, but need not, pay any and all such fees and charges for the
account of Tenant and Tenant shall pay the amount thereof to Landlord upon
demand. (e) Tenant shall not take or permit to be taken any supplies,
merchandise, fixtures, equipment or appliances in or out of the premises or the
building except through proper exit doors. (f) Tenant shall not cause any of the
area outside of the building to be used for storage of any goods or materials.
(g) Tenant shall have the right to use the driveway parking and sidewalk space
in the immediate front of the premises except that Landlord reserves the right
to make parkway or sidewalk spaces which adjoin similar spaces in the immediate
front of adjoining spaces, if any, available for joint use of the demised and
adjoining premises. (h) At the expiration of this lease, whether by lapse of
time or otherwise, Tenant shall surrender all keys for the leased premises to
the Landlord at the place then fixed for the payment of rent and shall inform
Landlord of the explanation of all combinations on locks, safes and vaults, if
any, in the leased premises. (i) Tenant shall have the right to use the
switching track located west of the demised premises. (j) Tenant, at its own
--------
expense, shall be responsible for snow removal in front of the leased premises
during the term of this lease.
28. ATTORNMENT AND PRIORITY AND LANDLORD'S MORTGAGEE. (a) Tenant shall, in the
event any proceedings are brought for the foreclosure of, or in the event of the
exercise of the power of sale under, any mortgage covering any part of the
premises, attorn to the purchase upon any such foreclosure or sale and recognize
such purchaser as Landlord under this lease, and upon the request of any
interested party, Tenant shall execute, acknowledge and deliver an instrument,
in form and substance satisfactory to such party, evidencing such attornment.
(b) In the event the holder of any mortgage elects to have this lease superior
to its mortgage, then upon Tenant being notified to that effect by such
encumbrance holder, this lease shall be deemed prior to the lien of said
mortgage, whether this lease is dated prior or subsequent to the date of said
mortgage, and Tenant shall execute, acknowledge and deliver an instrument in the
form customarily used by such encumbrance holder, effecting such priority. (c)
Upon written demand by the holder of any mortgage covering any part of the
premises, Tenant shall forthwith execute, acknowledge and deliver an agreement
in favor of and in the form customarily used by such encumbrance holder, by the
terms of which Tenant will agree to give prompt written notice to such
encumbrance holder in the event of any casualty damage to the premises or in the
event of any default on the part of Landlord under this lease, and will agree to
allow such encumbrance holder a reasonable length of time (taking into
consideration for the purpose of determining such permitted length of time any
delays encountered by reason of any causes beyond the reasonable control of such
holder) after notice to cure or cause the curing of such default before
exercising Tenant's rights of self-help under this lease, if any, or terminating
or declaring a default under this lease.
29. LANDLORD'S RIGHT TO CURE DEFAULTS. If Tenant fails to perform any of the
agreements or obligations on its part to be performed under this lease, Landlord
shall have the right (i) if no emergency exists, to perform the same after
giving ten (10) days' notice to Tenant, and (ii) in any emergency situation, to
perform the same immediately without notice or delay. For the purpose of
rectifying Tenant's defaults as aforesaid, Landlord shall have the right to
enter the premises. Tenant shall on demand reimburse Landlord for the costs and
expenses incurred by Landlord in rectifying Tenant's defaults as aforesaid,
including reasonable attorneys' fees.
30. LIMITATION OF LIABILITY. Anything contained in this lease to the contrary
notwithstanding, Tenant agrees that Tenant shall look solely to the estate of
Landlord in the premises for the collection of any judgment (or other judicial
process) requiring the payment
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of money by Landlord in the event of any default or breach by Landlord with
respect to any of the terms and provisions of this lease to be observed or
performed by Landlord, subject, however, to the prior rights of the holder of
any mortgage covering the premises, and no other assets of Landlord shall be
subject to levy, execution or other judicial process for the satisfaction of
Tenant's claim and Landlord shall not be liable for any such default or breach
except to the extent of Landlord's estate in the premises.
31. LEGAL EXPENSES. In case suit shall be brought because of the breach of any
covenant herein contained on the part of Tenant or Landlord to be kept or
performed, and a breach shall be established, the prevailing party shall be
entitled to recover all expenses incurred therefor, including reasonable
attorneys' fees.
32. BROKER'S COMMISSION. Tenant represents and warrants to Landlord that it has
not incurred or caused to be incurred any liability for real estate brokerage
commissions or finder's fees in connection with the execution of this lease for
which Landlord may be liable, other than a commission payable by Landlord to Leo
Eisenberg Co. Tenant agrees to indemnify and hold Landlord harmless from and
against any and all claims, liabilities or expense (including reasonable
attorneys' fees) in connection with its breach of the foregoing representation.
33. TRIAL BY JURY WAIVER. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY
MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP
OF LANDLORD AND TENANT, OR TENANT'S USE AND OCCUPANCY OF THE PREMISES.
34. HAZARDOUS MATERIAL. Tenant shall not store or permit or suffer the storage
of any hazardous or dangerous waste, chemicals or other materials, including,
without limitation, those defined in the Comprehensive Environmental Response
Compensation and Liability Act, as amended, as "Hazardous Substances" (the
foregoing are hereinafter collectively called "Hazardous Materials") within the
premises without the prior written consent of Landlord, which consent Landlord
may withhold arbitrarily. If Tenant shall store or permit or suffer the storage
of any Hazardous Materials without the prior written consent of Landlord, then
(i) Tenant shall immediately, upon notice from Landlord, remove the same from
the premises and perform such other clean-up work and procedures necessary to
cause the premises to comply with all applicable governmental laws, codes,
statues and regulations, and (ii) Landlord shall have the right to immediately,
without further notice, terminate this lease, provided, however, such
termination shall not release Tenant from the foregoing clean-up obligations. If
Landlord shall not so elect to terminate this lease, then Tenant shall pay
Landlord, in addition to the rent and other charges payable hereunder, (a) an
amount equal to 1/15th of the monthly base rent then payable by Tenant for each
day Tenant shall store or permit or suffer the storage of such Hazardous
Materials in violation of this Section, plus (b) all costs and expenses incurred
by Landlord in connection with the clean-up and/or removal of all such Hazardous
Materials in accordance with all applicable governmental laws, codes, statutes
and regulations.
35. SURVIVAL OF TENANT'S OBLIGATIONS. All obligations of Tenant which by their
nature involve performance, in any particular, after the end of the term, or
which cannot be ascertained to have been fully performed until after the end of
the term, shall survive the expiration or sooner termination of the term hereof.
IN WITNESS WHEREOF, Landlord and Tenant have executed this lease
agreement or have caused it to be executed by their respective authorized
representatives the day and year first above written. Each of the persons
executing this lease represent that they are authorized to execute the same on
behalf of the party for whom they have executed hereafter.
NORTHTOWN DEVCO, a Missouri General
Partnership
STATIONER'S DISTRIBUTING COMPANY By: LECO NORTHTOWN PARTNERS, a
Missouri General Partnership,
Managing General Partner
By: [SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
--------------------------- --------------------------------
TENANT
________________________________
a Managing General Partner
LANDLORD
Date:__________________________ Date: 3/14/88
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A D D E N D U M
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COMMON AREA MAINTENANCE. Landlord shall maintain the parking lot and loading
areas including the lighting, striping, snow removal, surface repair and
landscaping. Tenant agrees to reimburse Landlord, as and when statements are
rendered therefore, for its prorated share of the cost of such maintenance,
which prorated share shall be computed on the ratio of the area of the premises
to the total rentable space in the property of which the premises are a part.
Landlord further represents and warrants to Tenant that in no event shall such
costs to Tenant exceed the sum of five cents ($.05) per square foot per month,
and Tenant shall have no obligation for any costs in excess of five cents ($.05)
per square foot per month during the term of this lease or any extension hereof.
Further, if the useful life of any improvement or repair made to the common area
extends beyond the term life of this lease or any extension thereof, then Tenant
shall have no obligation to pay any amount with respect thereto in excess of
that portion of the cost of such improvement which is equitably and fairly
attributable or allocable to the remaining term of this lease or any extension
thereof. In addition, Landlord agrees that Landlord shall give no other tenant
in the project (which project consists of the building in which Tenant occupies
space and the building located at 1602 Linn) terms relating to the payment or
determination of common area costs more favorable than the terms given to Tenant
under this lease, if said tenant enters into a lease in which the tenant is
obligated to pay common area costs, unless the same more favorable terms are
offered to Tenant hereunder retroactive to the date this Tenant's lease
commences. Landlord shall give Tenant immediate written notice of any lease in
which it has agreed to any such favorable terms. Copies of all invoices for
services will be presented to Tenant for verification.
LEASE OBLIGATION. By letter agreement dated February 18, 1988, Stationer's
Distributing Company agreed to purchase certain assets of McKesson Corporation
and assign the dated January 27, 1986, to McKesson Corporation. McKesson has
agreed to be bound by and to perform all obligations of the lease on space a
1621 Jasper Street in accordance with its terms.
The lease dated February 22, 1988, for 1602 Linn Street, shall supersede the
lease between Northtown Devco and Stationer's Distributing Company for 1621
Jasper Street.
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[PLAN APPEARS HERE]
<PAGE>
NORTHTOWN DEVCO, a Missouri General Partnership of Kansas City, Missouri
("Landlord"), and
UNITED STATIONERS SUPPLY CO., an Illinois corporation, 2200 East Golf Road, Des
Plaines, Illinois 60016, as successor-in-interest to Stationers Distributing
Company by reason of merger ("Tenant").
Landlord and Tenant are parties to a Lease dated February 22, 1988 ("Lease") for
the premises known as 1606 Linn Street, North Kansas City, Missouri, consisting
of 77,244 square feet (the "Premises"). The Lease is scheduled to expire May 31,
1995. The parties desire to extend the term of the lease for an additional five
years.
THEREFORE, FOR VALUABLE CONSIDERATIONS, THE PARTIES AGREE AS FOLLOWS:
1. The Lease is hereby renewed for an additional five-year term, to expire May
31, 2000.
2. The rent for the renewal term shall be payable in monthly installments
of Sixteen Thousand Seven Hundred Thirty-six and 20/100 Dollars ($16,736.20).
3. Landlord shall make, at Landlord's expense, the following repairs and
improvements:
a. Paint outside of building
b. Paint office space
c. Replace damaged and stained ceiling tiles
d. Repair warehouse floor where deteriorating
e. Raise dock level where floor has sunk.
4. Except as otherwise provided in this Agreement, the terms and conditions of
the Lease shall remain in full force and effect for the renewal term.
UNITED STATES SUPPLY CO. NORTHTOWN DEVCO, a Missouri
Tenant General Partnership, Landlord
By: [Signature Illegible] By:_____________________________
-------------------------
Its Vice President a General Partner
Date signed: 5/10/95 Date signed:
<PAGE>
EXHIBIT 10.39
THIS LEASE, dated the 17th day of April 1989, between ISAAC HELLER
having an office at 205 Mill Road, Edison, New Jersey 08817
(hereinafter designated as Landlord), and UNITED STATIONERS SUPPLY CO. a
corporation of the State of Illinois
having an office at 2200 East Golf Road, Des Plaines, Illinois 60016
(hereinafter designated as Tenant).
WITNESSETH:
ARTICLE I - DEMISE AND PREMISES
SECTION 1.01. DEMISE AND PREMISES. Landlord does hereby demise and lease
to Tenant and Tenant does hereby take and hire from Landlord all that certain
tract or parcel of land, together with the building and improvements, both
hereinafter designated as the Building, to be erected thereon by Landlord, as
provided herein, situate, lying and being in the Township of Edison, Middlesex
County, New Jersey and shown on the plot plan designated Exhibit A, annexed
hereto and made a part hereof, the lands aforesaid being more particularly
described on Exhibit B annexed hereto and made a part hereof, together with the
fixtures and equipment therein and the appurtenances now or hereafter belonging
or pertaining thereto (all referred to hereinafter as the Demised Premises or
the Premises).
TO HAVE AND TO HOLD for the Term and at the rents as herein provided,
subject to the terms, covenants and conditions herein contained which each of
the parties hereto expressly covenants and agrees to keep, perform and observe.
ARTICLE II - TERM AND COMMENCEMENT
SECTION 2.01. TERM AND COMMENCEMENT.
(a) TERM. The term of this Lease is three (3) years plus the fractional
month, if any, referred to in this section. (Term). If the Commencement Date is
the first day of a calendar month, the Term of this Lease shall terminate at
5:00 P.M. (prevailing time) on the day before the third anniversary of the
Commencement Date. If the Commencement Date is not the first day of a calendar
month (the period between the latter Commencement Date and the end of the month
in which it falls being herein called Fractional Month) this Lease shall
terminate on the last day of the month in which shall fall the third anniversary
of the Commencement Date.
(b) COMMENCEMENT OF TERM. The Term shall commence on the first business
day (hereinafter designated as Commencement Date) following the date on which
the last of all of the following shall have occurred or been performed:
(i) After or simultaneously with substantial compliance with the
conditions in (ii), (iii), (iv) and (v) of this paragraph (b) Tenant shall
have received written notice from Landlord authorizing Tenant to enter upon
the premises to do such work as Tenant may decide, the Commencement Date
shall be the next business day following the receipt by Tenant of said
notice. By sending such notice to Tenant, Landlord covenants, represents
and warrants that it has theretofore performed, or that it will thereafter
complete the performance of the covenants and conditions set forth in (ii),
(iii), (iv), and (v) of this paragraph (b), which obligation to perform
shall survive the commencement of the Term;
(ii) Landlord shall have certified to Tenant, in writing, that the
construction work as defined in Article III hereof has been substantially
completed in accordance with the Final Plans (as defined in said Article
III), and that the Building is ready for Tenant's occupancy and use except
for any installations Tenant may make;
(iii) Landlord shall deliver to Tenant a copy of a Certificate of
Occupancy (or temporary certificate of occupancy if Tenant is permitted
thereunder to have full use and enjoyment of the Premises) issued by the
appropriate local authority certifying that the Demised Premises may be
lawfully occupied for the purposes set forth in Section 15.01 of this
Lease;
(iv) All utilities required by the Final Plans shall have been
connected and shall be ready for use.
(v) Landlord shall deliver to Tenant a copy of Architects
Certificates that the Building has been substantially completed in
accordance with the Final Plans.
Notwithstanding the above, Landlord hereby agrees that
Commencement of the Lease shall not occur prior to June 1, 1989.
(c) COMMENCEMENT DATE AGREEMENT. Within 10 days after the request of
either party after the Commencement Date has been determined, Landlord and
Tenant shall execute, acknowledge and deliver to each other duplicate originals
of an agreement, in recordable form, setting forth the Commencement Date.
(d) RIGHT OF TERMINATION. Notwithstanding anything herein contained to the
contrary, in the event that Landlord enters into a contract with Tenant to build
for Tenant an expansion of the existing facility owned by Tenant and located at
77 Executive Avenue, Edison, New Jersey; Landlord and Tenant hereby agree that
Tenant shall have the right to terminate this Lease by serving written notice to
Landlord of such desire to terminate within 30 days of execution of the
aforesaid contract. In such event, this Lease would terminate simultaneously
with Tenant taking occupancy of the expanded facility.
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SECTION 2.02. OCCUPANCY PRIOR TO COMMENCEMENT. Subject to all provisions
of this Lease relating to occupancy or performance of Tenant's Work by Tenant
prior to the Commencement Date as provided in this Lease, Tenant shall have the
right to occupy and use a portion of the Demised Premises (hereinafter called
Portion) prior to the commencement of the Term provided that Landlord shall have
issued to Tenant written authorization for such occupancy and use and the
Portion has been substantially completed and can be legally occupied and used by
Tenant. The performance of Tenant's Work as set forth in Section 26.21 of this
Lease shall not be considered Occupancy Prior to Commencement.
SECTION 2.03. PRO-RATA RENT DURING PRE COMMENCEMENT OCCUPANCY. If Tenant
occupies the Portion, as aforesaid, (i) it shall commence to pay rent and all
other charges payable under the Lease, as of the date of occupancy, on a pro-
rata basis in proportion to the area occupied, (ii) all of the terms and
provisions of this Lease shall become operative with respect to the Portion as
if the Commencement Date had occurred including, without limitation, the
obligation of Tenant to provide insurance coverage hereunder; provided, however,
that notwithstanding such partial occupancy the Term shall not commence until
the conditions of Section 2.01(b) have been fulfilled. During the period it
occupies a Portion of the premises, Tenant shall, at its cost and expense as a
condition precedent to such prior occupancy, obtain and keep in force during the
period in which Landlord is completing the balance of the Construction Work,
insurance coverage in amounts as required in Section 7.01(i) of this Lease in
respect of the entire Demised Premises, including the portion being completed by
Landlord. However, Landlord shall reimburse Tenant for that portion of the cost
of such insurance in proportion to the part of the building not occupied by
Tenant and being completed by Landlord for the period ending with delivery of
possession thereof to Tenant.
SECTION 2.04. RIGHT OF RENEWAL. Provided this Lease is not in default, the
Tenant is granted a right of renewal of this Lease as follows: At the option of
the Tenant, the Term of this Lease may be extended for three renewal period(s)
of 2 years, 3 years, 2 years respectively each by written notice to the Landlord
at least six (6) months prior to the expiration of the Term, or any renewal term
thereof, as the case may be.
Upon valid exercise of any such rights of renewal, the terms of this
Lease shall remain in full force and effect except that the rental shall be as
stipulated in Section 5.03.
ARTICLE III - PLANS AND CONSTRUCTION
SECTION 3.01. PLANS AND SPECIFICATIONS.
PLANS. The parties hereto have approved and signed for purposes of
identification plans and specifications for construction of the Building
(hereinafter called Plans) prepared by Abrahm Hertzberg, Consulting Engineer,
P.C. (hereinafter called Architect) and attached hereto as Exhibit A.
SECTION 3.02. CONSTRUCTION OF IMPROVEMENTS.
(a) SUBSTANTIAL COMPLETION. Landlord shall as soon after the date of
execution of this Lease as is practicable start construction hereunder and
thereafter proceed with diligence and substantially complete the Construction
Work on or before June 1, 1989 all at Landlord's cost and expense. The term
Substantial Completion as used in this Lease is intended to constitute that
stage of completion which will permit the Tenant to occupy the Demised Premises
and to use the same for intended purpose of such occupancy without any
substantial interference by reason of any failure of Landlord to finish punch
list items.
(b) INSPECTION BY TENANT. Tenant may inspect the progress of the
Construction Work as frequently as it may desire provided Tenant does not
interfere with the Construction Work or with the workmen.
ARTICLE IV - LANDLORD'S COVENANTS
SECTION 4.01. NO WAIVER BY TENANT. No act of Tenant, including the taking
possession of the Demised Premises, shall constitute a waiver by Tenant of any
of Landlord's obligations respecting the Construction Work or to correct any
defects in materials or workmanship as provided in this Lease.
SECTION 4.02. LANDLORD'S COVENANTS REGARDING CONSTRUCTION. Landlord
represents, warrants and covenants that on the Commencement Date:
(i) The Building will be structurally safe and sound and that all
parts thereof and all mechanical equipment therein (except such as may be
installed by Tenant) will be in good working order;
(ii) Liability of the Landlord as to the foregoing (i) shall be
limited to one year and to the extent set forth in Section 10.01:
(iii) All utilities serving the Demised Premises will have been
installed and paid for.
(iv) To the best of Landlord's knowledge and belief there are no
"Hazardous Substances" or "Wastes" (as defined in ECRA and/or Spill Compensation
and Control Act) presently upon the Demised Premises.
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ARTICLE V - RENT AND PAYMENT
SECTION 5.01. RENT DURING TERM. Landlord reserves and Tenant covenants
to pay to Landlord during the Term of this Lease without demand or notice, and
without any setoff or deduction, a net basic rental (herein called Basic Rent)
as follows:
First Year - $519,390.30 per year ($43,282.53 per month)
Second Year - $532,708.00 per year ($44,392.33 per month)
Third Year - $546,025.70 per year ($45,502.14 per month)
Such annual Basic Rent shall be paid monthly in installments in the amounts
set forth above, in advance, on the first day of each and every month.
SECTION 5.02. PAYMENT OF RENT. The Basic Rent and all additional rents and
moneys payable to Landlord under this Lease shall be paid at the above address
of Landlord or at such other address as may be specified by Landlord from time
to time by notice given to Tenant.
SECTION 5.03. RENT DURING RENEWAL TERM(S). In the event the Tenant shall
exercise the option(s) to renew this Lease for any of the renewal period
provided for in Section 2.04, the annual Basic Rent during each renewal period
shall be adjusted for the applicable year term thereof by multiplying
$532,708.00 by the "Index Change" herein after defined, provided, however, that
the Basic Rent during the renewal period(s) shall not be less than the Basic
Rent paid for the immediately preceding period.
SECTION 5.04. The first monthly installment of Basic Rent shall be due
and payable by Tenant on the Commencement Date. Subsequent monthly installments
of Basic Rent shall be due and payable by Tenant on or before the first day of
each month following the Commencement Date and continuing thereafter until the
expiration of the Term. Basic Rent for the Fractional Month, if any, shall be
prorated and shall be due and payable by Tenant on the first day of the month
following the month in which the Commencement Date occurs.
Upon the execution of this Lease, Tenant shall pay to Landlord a deposit in
the amount of the first monthly installment of Basic Rent which deposit shall be
held by Landlord as additional security for Tenant's performance of this Lease
and applied by Landlord against the first monthly installment of Basic Rent on
the Commencement Date.
ARTICLE VI - TAXES AND IMPOSITIONS
SECTION 6.01. REAL ESTATE TAXES. As additional rental hereunder Tenant
shall, throughout the term, pay to the Landlord pro rata taxes and assessments
levied or assessed against the Demised Premises or any part thereof, including
those presently in effect, as well as those which may be enacted in the future.
Such payment as to all real estate taxes levied or assessed against the Demised
Premises or any part thereof, shall be made by Tenant to Landlord at the time of
the next Basic Rent payment due after Tenant's receipt of an invoice or
statement from Landlord setting forth the amount of such taxes or assessments
and Tenant's pro rata share thereof.
The real estate taxes and assessments aforesaid shall be apportioned by
Landlord among tenants or users of Landlord's Property including Landlord, to
arrive at Tenant's pro rata share of real estate taxes and assessments.
Landlord's Property shall mean the two (2) buildings totalling 336,464 sq. ft.
located on Lot 15, Block 366-A. The computation of Tenant's pro rata share of
taxes and assessments on land and building shall be made by multiplying the real
estate taxes or assessments levied against the Landlord on Landlord's Property
by a fraction the numerator of which is the number of square feet of building
premises demised to Tenant and the denominator of which is the total number of
square feet in Landlord's Property assessed by the taxing authorities.
In the calculation of the total number of square feet of building
premises demised to Tenant, finished space, i.e. offices, including toilet
areas, shall be weighted in determination of the numerator in the fraction
described in this subsection by doubling the square footage devoted to such
finished space. Tenant's pro rata share will be 40.08%. In the event that
subsequent to the date hereof the total square footage of either building
changes, the percentage set forth herein shall be recalculated accordingly.
Notwithstanding the above, Landlord hereby agrees that he will attempt to
obtain a statement from the Edison Township Tax Assessor's office allocating the
taxes applicable to each of the buildings located on Landlord's Property. In
such event, Tenant's pro rata share of taxes shall be determined based on the
statement received from the Tax Assessor's office.
To the extent that Tenant shall be liable for the payment of other taxes
under this Article VI which may be assessed against Landlord or for which
Landlord may become liable by reason of its estate or interest in the Demised
Premises, Tenant shall pay its pro rata share thereof in accordance with the
above.
SECTION 6.02. OTHER TAXES AND PAYMENT THEREOF. In addition to the pro rata
taxes and assessments described in Section 6.01, Tenant shall pay pro rata in
accordance with Section 6.01 for each and every item of expense in the nature of
a tax or charge or assessment for which Landlord is or shall become liable by
reason of its estate or interest in the Demised Premises, or any part thereof,
including, without limiting the generality thereof, all personal property taxes,
gross receipts taxes, use and occupancy taxes, and excise taxes levied or
assessed against Landlord or Tenant by reason of the use, occupancy or any other
activity by the Tenant in connection with the Demised Premises or any part
thereof, or which may be levied or assessed or imposed upon any rents or rental
income, as such, payable to Landlord or payable to Tenant from any subtenant in
connection with the Demised Premises or any part thereof. There is expressly
included among Tenant's obligations with respect to taxes and assessments as set
forth in this Article any tax which may be levied against Landlord enacted as
part of tax reform legislation in lieu of taxes presently levied against real
estate or any portion thereof.
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SECTION 6.03. CERTAIN TAXES NOT PAYABLE BY TENANT. Tenant shall not be
required to pay any of the following taxes or governmental impositions which
shall be levied or imposed against Landlord by any governmental authority:
(i) Any estate, inheritance, devolution, succession, transfer,
legacy or gift tax which may be imposed upon or with respect to any transfer of
Landlord's interest in the Demised Premises;
(ii) Any capital stock tax or other tax imposed against Landlord
for the privilege of doing business;
(iii) Any income tax levied upon or against the profits of the
Landlord from all sources.
SECTION 6.04. APPORTIONMENT DURING FIRST AND LAST YEAR OF TERM. All
taxes which shall become payable during the tax fiscal year in which this lease
commences or ends shall be apportioned between Landlord and Tenant in
accordance with the portion of the tax year within the term.
SECTION 6.05. ASSESSMENTS PAYABLE IN INSTALLMENTS. With respect to any
assessment levied by any governmental or municipal agency or authority which is
or may be payable, at the option of the taxpayer, in installments, Tenant
agrees to pay Landlord, as additional rent, annually, from the date of payment
of the assessment, the installment due therefor, at least five (5) days before
the last day on which each such installment may be paid without penalty or
interest. Tenant shall not be required to pay any installment which shall fall
due after the expiration of this Lease.
ARTICLE VII - INSURANCE
SECTION 7.01. COVERAGE AND AMOUNT. Tenant shall, at its sole cost and
expense, and as additional rent, during the term of this Lease:
(i) Keep and maintain the Building and the building equipment, fixtures
and appurtenances insured with 100% co-insurance against all loss and
damage including, but not limited to, coverage by an all risk form of
insurance policy issued by a "Best A Rated Co." or better with agreed
amount endorsement and replacement cost endorsement, in an amount no less
than One Hundred percent (100%) of the full replacement value thereof
(exclusive of cost of foundation, excavation and land) from time to time.
(ii) Rent insurance covering the risks described in (i) above in an
amount equal to the Basic Rent and additional rent payable; and
(iii) Provide, keep and maintain in force, if and when obtainable and
generally carried on building of the type to be leased hereunder, war risks
and nuclear damage, as well as flood and earthquake insurance for the full
replacement value of the Demised Premises if such insurance is required by
any institutional first mortgagee of the Premises; and
(iv) Provide any additional insurance coverages as may be reasonably
required from time to time, by any institutional first mortgagee of the
Premises; and
(v) Provide, keep and maintain in force, comprehensive general public
liability insurance against claims arising out of the ownership, operation
and control of the Demised Premises, including but not limited to
contractual liability in connection with the Tenant's indemnification of
Landlord herein as to the liability of Landlord to Tenant's employees,
agents, invitees and licensees in limits of not less than Five Million
Dollars ($5,000,000.00) combined single limit arising out of one
occurrence. The Landlord may insure his Liability under his Blanket
Comprehensive General Liability Policy, Umbrella Liability Policy, and
Environmental Impairment Liability Policy, and the Tenant will reimburse
the Landlord for the Tenant's pro rata share of the premium.
(vi) PROVIDE INSURANCE COVERAGE OF ANY AND ALL TRADE FIXTURES AND
PERSONAL PROPERTY (INCLUDING, BUT NOT LIMITED TO, ANY FURNITURE, MACHINERY,
GOODS OR SUPPLIES) OF TENANT, WHICH TENANT MAY HAVE UPON OR WITHIN THE
DEMISED PREMISES WHICH TENANT DEEMS NECESSARY.
SECTION 7.02. FORMS AND CERTIFICATES. The coverage above required in
Section 7.01 and its subsections shall be:
(i) As to 7.01 (i), (ii), (iii), and (iv), by policies in form and
reasonably acceptable to Landlord showing loss payable to Landlord and to the
first mortagee by standard mortgage clause, as their respective interests may
appear. Tenant shall furnish a certificate thereof to the first mortgagee and
to the Landlord showing continuous coverage for the risks stated; and
(ii) As to 7.01 (v) and (vi) by policies in form reasonably
acceptable to Landlord. Tenant shall provide Landlord with certificates of such
policies showing continuous coverage for the risks stated. As to 7.01 (v),
Landlord shall be named as an additional named insured on any such policy.
SECTION 7.03. BLANKET POLICIES, RENEWALS, RECOGNIZED INSURANCE
COMPANIES, CANCELLATION. Tenant may carry any or all of such insurance under
blanket policies. In any case, Tenant shall deliver to Landlord at or prior to
the Commencement Date, policies or certificates of the insurance required
above, and shall procure and deliver to Landlord, policies or certificates of
renewals thereof from time to time at least thirty (30) days before the
expiration thereof, together with evidence of payment as is required by the
first mortgagee. If Tenant shall default in such delivery or renewal, Landlord
may, at its option, without waiving or releasing Tenant from any obligation
hereunder, procure any such insurance and Tenant shall, on demand, pay to
Landlord as additional rent, the cost of the premium thereof, plus a 15%
handling charge, together with interest at the Lease Interest Rate (as
hereinafter defined). All such insurance shall be taken in companies of
recognized responsibility licensed to do business in the state in which the
Premises are located and be reasonably acceptable to Landlord and to each
mortgagee. Every policy shall provide that it may not be cancelled by the
carrier without at least (30) days prior written notice to each insured.
SECTION 7.04. WAIVER OF SUBROGATION. Landlord shall not be liable for
any damage by fire or other peril in the coverage afforded by the Standard All
Risk Policy (whether or not such coverage is in effect), no matter how caused,
it being understood that the Tenant will look solely to its insurer for
reimbursement. Tenant shall not be liable for any damage by fire or other peril
includable in the coverage afforded by the Standard All Risk Policy (whether or
not such coverage is in effect), no matter how caused, it being understood that
the Landlord will look solely to its insurer for reimbursement. Each party, as
applicable, shall obtain a Waiver of Subrogation Endorsement if necessary to
permit the Waiver of Subrogation and mutual release as set forth herein in
connection with any applicable Insurance Policy carried by it. Any Waiver of
Landlord's rights against Tenant as contained in this Section shall be
ineffective if such Waiver of Subrogation Endorsement shall not be obtained.
*pursuant to Section 7.01 (i) through (iv) above
SECTION 7.05. PAYMENT OF LOSSES. All property losses of Seventy-Five
Hundred ($7,500.00) Dollars or less* shall be settled by Tenant and loss
payments therefor paid to Tenant alone, to be held and used by Tenant pursuant
to Article XI hereof. All losses in excess of Seventy-Five Hundred ($7,500.00)
Dollars shall be settled jointly by Landlord and Tenant. Loss payments in such
case shall be paid jointly to Landlord and first mortgagee and shall be held in
trust for repair and restoration pursuant to Article XI hereof.
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ARTICLE VII - CONSTRUCTION OR OTHER WORK
SECTION 8.01. CONDITIONS AS TO REPAIRS, ALTERATIONS OR OTHER WORK.
Whenever any repairs, alterations, changes or other work in on, to or about the
Premises shall be made by either Landlord or Tenant as provided in this Lease:
(i) The work shall be done in a good and workmanlike manner and in
compliance with all applicable laws, ordinances and codes, and all
applicable governmental rules, regulations and requirements, and in
accordance with the standards, if any, of the Board of Fire Underwriters,
or other organizations exercising the functions of a board of fire
underwriters whose jurisdiction includes the Demised Premises.
(ii) All materials and workmanship shall be of good quality, and in
case of repairs, restoration, changes, additions, alterations or
improvements, shall be at least equal to the original;
(iii) All said work shall be paid for as promptly as is practicable and
consistent with good business practices under the then existing
circumstances;
(iv) Such work shall be done as promptly as is possible and practicable
under the existing circumstances;
(v) The comprehensive general liability insurance provided for in
Section 7.01 shall be extended by Tenant, if necessary, to apply to the
work being done, and evidence thereof shall be delivered to the Landlord
prior to commencement of such work.
(vi) The party doing or having the work done shall carry or cause its
contractors, if any, to carry workman's compensation insurance as required
by law in connection with such work, and evidence thereof shall be
delivered to the other party prior to commencement of such work;
(vii) Title to all buildings, building fixtures and improvements erected
and installed by Tenant (but not Tenant's trade fixtures, however the same
may be attached to the realty) shall become the property of Landlord upon
the expiration or earlier termination of this Lease;
(viii)The contractor or the party performing the work shall obtain an
official certificate of occupancy or an amended certificate of occupancy
upon completion of the work in each instance if under local practice such
certificates of occupancy are issued or required in connection with such
work. The party performing the work shall also obtain the certificate from
the Board of Fire Underwriters, or other organization exercising the same
functions, whose jurisdiction includes the Demised Premises in each
instance, certifying that the electrical work has been properly completed
whenever the work done involves any electrical work for which such a
certificate is issued under local practice. If, under local practice,
official certificates of occupancy are not issued or required by a
governmental officer or department, or if the Board of Fire Underwriters,
or other such organization does not issue certificates on proper completion
of electrical work, this covenant shall be satisfied upon issuance of such
certifications by an architect or engineer selectedby Landlord.
(ix) Landlord agrees to join in the applications for all permits and
authorizations whenever necessary.
ARTICLE IX - MECHANIC'S LIENS
SECTION 9.01. MECHANIC'S LIENS PROHIBITED. Tenant shall not suffer any
mechanic's lien to be filed against the Demised Premises by reason of work,
labor, services or materials performed or furnished to Tenant or to anyone
holding the Demised Premises, or any part thereof, through or under Tenant. If
any mechanic's lien or any notice of intention to file a mechanic's lien shall
at any time be filed against the Demised Premises, (unless the labor or
materials were actually performed for or furnished to Landlord in connection
with its obligations under this Lease) Tenant shall at Tenant's cost, within
fourteen (14) days after knowledge or notice of the filing of any mechanic's
lien cause the same to be removed or discharged of record by payment, bond,
order of a court of competent jurisdiction, or otherwise.
SECTION 9.02. LANDLORD'S REMEDY FOR TENANT'S BREACH. If Tenant shall
fail to remove or discharge any mechanic's lien or any notice of intention to
file a mechanic's lien within the prescribed time, then in addition to any
other right or remedy of Landlord. Landlord may, at its option, procure the
removal or discharge of the same by payment or bond or otherwise. Any amount
paid by Landlord for such purpose, together with all legal and other expenses
of Landlord in procuring the removal or discharge of such lien or notice of
intention and together with interest thereon at the Lease Interest Rate (as
hereinafter defined), shall be and become due and payable by Tenant to Landlord
as additional rent, and in the event of Tenant's failure to pay therefor within
fifteen (15) days after demand, the same shall be added to and be due and
payable with the next month's rent.
SECTION 9.03. NON-CONSENT OF LANDLORD TO FILING OF LIENS. Nothing
contained in this Lease shall be construed as a consent on the part of Landlord
to subject Landlord's estate in the Demised Premises to any lien or liability
arising out of Tenant's use or occupancy of the Premises.
ARTICLE X - REPAIRS AND MAINTENANCE
SECTION 10.01 (a) LANDLORD'S COVENANTS. Landlord at its sole cost and
expense shall remedy all defects in workmanship and materials in the
Construction Work, evidence of which shall appear or be discovered within
twelve (12) months after the Commencement Date. Landlord shall not be liable
under this Section however unless Tenant shall give Landlord notice specifying
such defects or of the need for remedying them on or before the last day of the
twelfth month of the Term.
In addition, Landlord agrees to procure a five (5) year guarantee of
the roof installation from the roofer in the form attached hereto as Exhibit D,
and to assign said guarantee to Tenant. Landlord agrees to exercise its
reasonable efforts to cause the guarantor on the roof guarantee to perform its
obligations thereunder.
(b) STRUCTURAL COMPONENTS. In addition Landlord at its sole cost and
expense shall remedy all defects in workmanship and materials in the
Construction Work with respect to the Structural Components of the Building,
evidence of which shall appear or be discovered within thirty-six (36) months
after the Commencement Date, and shall repair all damage to the Demised
Premises caused thereby. For the purpose of this paragraph, this term
Structural Components, shall be limited to the structural steel framing
including roof framing, the foundations, and the masonry perimeter walls
(excluding all windows, plate glass, and doors). Landlord shall not be liable
under this Section however unless Tenant shall give Landlord notice specifying
such defects or the need for remedying them on or before the last day of the
thirty-sixth month of the Term.
(c) ALTERATIONS BY TENANT. Notwithstanding any of the above, if Tenant
shall make any changes or alterations, structural or otherwise, to any portion
of the building, Landlord's obligations under this Section 10.01 shall not
thereafter extend to any portion of the building affected by such change or
alteration.
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(d) LIMITED LIABILITY OF LANDLORD. Landlord's liability under the
provisions of this Article X is limited to repair or correction of the defect
or condition to be rectified, and Landlord shall not be liable for any
consequential loss or damage. Landlord shall not be required to make any
repairs caused by Tenant's abuse or misuse, or lack of routine maintenance, of
the Demised Premises.
Section 10.02. TENANT'S OBLIGATIONS. Except for items which are the
obligation of Landlord under Section 10.01 hereof, Tenant, for and during the
Term of this Lease, at Tenant's sole cost and expense, assumes all
responsibility and obligation for the physical condition of the Demised
Premises and shall:
(a) Keep and maintain in good repair, as well as paint and decorate,
both the exterior and interior of the Demised Premises including, but not
limited to, all structural repairs, roof, floor, heating and air conditioning
systems, electrical system, sprinkler system and plumbing facilities.
(b) Keep and maintain the Demised Premises in a clean and sanitary
condition free from rubbish, flammable or other objectionable materials.
(c) Perform all normal routine adjustments and maintenance on all
equipment, including but not limited to filter changes, cleaning and
lubrication of heating, ventilating and air conditioning systems.
(d) Replace all mechanical and working parts used in connection with
the heating, air conditioning, electrical and plumbing and sprinkler and other
systems.
(e) Keep, maintain and repair all drainage facilities including drain
pipes, ditches and detention areas, as well as the lawns, shrubbery, driveways
and parking areas, including the keeping of the driveways, sidewalks and steps
and parking areas free and clear of ice and snow.
(f) Comply with all present and future applicable Federal, State and
local laws, ordinances and codes and all applicable rules, regulations and
requirements, including without limitation, those relating to environmental
protection and the requirements set forth in the applicable sections of the
"National Fire Codes" as published by the National Fire Protection Association;
and pay any and all costs of compliance and all fines and penalties imposed
upon Landlord, or consequential damages incurred, by reason of any violations
thereof.
SECTION 10.03 LANDLORD'S REMEDY FOR TENANT'S BREACH. In the event
Tenant shall fail or neglect to comply with the aforesaid statutes, ordinances,
rules, orders, regulations and requirements referred to in this Article X, or
any of them, or in the event Tenant shall fail or neglect to make any repairs
required of it, then Landlord or Landlord's agents may, after compliance with
the notice requirements set forth in Section 13.01 hereof, enter in and upon
the Demised Premises to make an inspection and make said repairs and comply
with any and all the said statutes, ordinances, rules, orders, regulations or
requirements, at the cost and expense of Tenant, and in the event of Tenant's
failure to pay therefor within 15 days after demand the said cost and expense
shall be added to the next month's rent and be due and payable as additional
rent. This provision is in addition to the right of the Landlord to terminate
this Lease by reason of any default on the part of Tenant, and Landlord's
remedies provided in Article XXI.
ARTICLE XI - FIRE, DAMAGE AND DESTRUCTION
SECTION 11.01. NOTICE OF CASUALTY, CONTINUATION OF LEASE, RESTORATION.
In the event of the total destruction of the Building by fire or otherwise
during the term created hereby, or in the event of such partial destruction
thereof:
(a) Tenant shall immediately notify Landlord in writing thereof;
(b) Upon receipt of said notice Landlord shall have its Architect make
a full and comprehensive report on the damage of the building, and ascertain
the number of days to complete the repair of the building. Unless such damage
can, in the opinion of Landlord's Architect, be repaired within ninety (90)
days after it occurrence, this Lease and the term hereby created shall cease
and become null and void from the date of such damage or destruction, and
Tenant shall upon written notice from Landlord, then immediately surrender the
Demised Premises and all interest therein to Landlord, and Tenant shall pay
rent within said term only to the time of such damage or destruction.
If, however, in such Architect's opinion, the damage aforesaid can be
repaired within ninety (90) days from the occurrence thereof, Landlord shall
repair or rebuild the Demised Premises with all reasonable speed, and this
Lease shall continue in full force and effect, but there shall be an abatement
of rent to the extent of insurance payments received from rent insurance.
SECTION 11.02. INSURANCE PROCEEDS UP TO $7,500. The net insurance
proceeds amounting to Seventy-Five Hundred ($7,500.00) Dollars or less payable
to Tenant shall be held in trust by Tenant for the purpose of promptly
repairing, restoring or rebuilding that portion of the Demised Premises so that
the Demised Premises will be as nearly as practicable in the condition they
were immediately prior to the occurrence of such damage or destruction.
SECTION 11.03. INSURANCE PROCEEDS ABOVE $7,500.00. The net insurance
proceeds amounting to more than Seventy-Five Hundred ($7,500.00) Dollars
payable to Landlord, first mortgagee and Tenant jointly shall be held in trust
by a trustee satisfactory to the first mortgagee for application to the repair,
restoration and rebuilding of the Demised Premises. Any proceeds remaining
after such repair, restoration and rebuilding shall have been paid for, shall
be the property of and belong solely to Tenant. If the insurance proceeds are
insufficient to cover the cost of restoration, repair, and rebuilding, Tenant
agrees to pay whatever additional sums are necessary to complete such
restoration, repair and rebuilding.
SECTION 11.04. STATUTORY CONDITIONS. Tenant hereby expressly waives the
benefit of New Jersey Revised Statutes, Title 46, Chapter 8, Sections 6 and 7.
Tenant agrees that it will not be relieved of the obligation to pay basic net
rent or any additional rent in case of damage to or destruction of the Demised
Premises except as specifically provided in this Lease.
ARTICLE XII - EMINENT DOMAIN
SECTION 12.01. TOTAL TAKING. In the event that any public authority or
agency holding the power of eminent domain under applicable law shall at any
time during the term of this Lease condemn or acquire title in lieu of
condemnation of substantially all of the Demised Premises, this Lease and the
Term hereby created shall terminate and expire as of the date upon which title
shall vest in such authority, and Tenant shall pay rent only to the time of
such vesting of title.
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SECTION 12.02. PARTIAL TAKING. If there shall be only a partial taking
or condemnation as aforesaid which shall not substantially prevent Tenant's use
of the Demised Premises for purposes of its business, this Lease shall
thereafter continue as to the untaken part and Tenant shall be entitled to a
reduction in the basic rent in such proportion and in such manner as shall be
fair and equitable, and if the parties hereto cannot agree thereto the dispute
shall be settled by arbitration as set forth in this Lease.
SECTION 12.03. RESTORATION BY LANDLORD. If there shall be a partial
taking and this Lease shall continue as to the remaining balance of the Demised
Premises, Landlord, at its own expense and as promptly as practicable, shall
restore the remaining building and land as nearly as may be practicable to
their former condition.
SECTION 12.04. AWARD TO LANDLORD. Landlord reserves the exclusive
right to negotiate with the condemning authority with respect to any proposed
award, and all damages and compensation paid for the taking under the power of
eminent domain, whether for the whole or a part of the Demised Premises shall
belong to and be the property of Landlord, except that Landlord consents to
efforts by Tenant separately to seek additional compensation from the
condemning authority for the loss of depreciated value of leasehold
improvements installed by Tenant resulting from the taking, provided always,
that Tenant hereby releases and disclaims any interest or right whatsoever in
the award or compensation offered or paid by the condemning authority to the
Landlord for the loss of the fee. There is expressly excluded from any right of
compensation to the Tenant and the Tenant expressly waives, any claim against
the condemning authority for dimunition in the value of the leasehold.
SECTION 12.05. Notwithstanding any of the paragraphs above pertaining
to eminent domain, there is expressly reserved to the Tenant the right to
recover against the condemning authority for its actual reasonable expenses in
moving its business from the Demised Premises and its actual direct losses in
tangible personal property by virtue of the taking, all as contemplated in the
the Relocation Assistance Act (R. S. 20:4-1 et seq), and rules and regulations
adopted by the Department of Community Affairs of the State of New Jersey
pursuant to the legislation aforesaid, and applicable regulations of the State
Department of Transportation contemplated in the said Relocation Assistance Act.
ARTICLE XIII - NOTICES
SECTION 13.01. NOTICES. Every notice required or permitted under this
Lease shall, unless otherwise specifically provided herein, be given in writing
and shall be sent by United States certified mail, return receipt requested,
addressed by the party giving, making or sending the same to the Landlord at
the address first above given, and to the Tenant at the Demised Premises or to
such other address as either party may designate from time to time by a notice
given to the other party. Notice shall be deemed to be given upon receipt,
provided, however, that in the event a party shall refuse to accept delivery of
said Certified Mail, the notice shall nevertheless be deemed to be given upon
the date of refusal to accept delivery and further provided that if the postal
service is unable to deliver said Certified Mail the notice shall nevertheless
be deemed to be given as of the date of the Postal Service's second notice of
attempted delivery. Notwithstanding the above, a notice of change of address
shall not be effective until received.
Landlord may, at its option, substitute for service by United States
First Class Certified Mail, service by Federal Express or similar overnight
courier, provided that such courier obtains and makes available to its
customers evidence of delivery. Notice given via such courier shall be deemed
to be given upon receipt.
ARTICLE XIV - MEMORANDUM OF LEASE
SECTION 14.01. MEMORANDUM OF LEASE. Tenant shall not record this
lease, but if either party should desire to record a short form Memorandum of
Lease setting forth only the parties, the Demised Premises and the Term, such
Memorandum of Lease shall be executed, acknowledged and delivered by both
parties upon notice from either party.
ARTICLE XV - USE
SECTION 15.01. USE. The Demised Premises shall be used and occupied by
Tenant as a warehouse and office for the distribution of office products and
other similar uses.
ARTICLE XVI - ASSIGNMENT, SUBLETTING, ETC.
SECTION 16.01. ASSIGNMENT, SUBLETTING, ETC. Tenant shall not sell,
assign, mortgage, pledge, or, in any manner, transfer or encumber this Lease or
any estate of interest hereunder (hereinafter designated as Assignment), or
sublet the Demised Premises or any part thereof without the previous written
consent of the Landlord which consent shall not be unreasonably withheld;
provided, however, with respect to a corporation into which Tenant shall have
been merged or consolidated or which shall have purchased all or substantially
all of the assets of Tenant, such previous written consent by Landlord shall
not be necessary. In any of the events aforesaid, Tenant, nevertheless, shall
remain primarily liable for the payment of the basic net rent and all
additional rents, and the performance of Tenant's other covenants and
obligations hereunder. No consent to any Assignment of this Lease or subletting
of any or all of the Demised Premises shall be deemed or be construed as a
consent by Landlord to any further or additional Assignment or subletting. In
the event of an Assignment of this Lease, the assignee shall assume, by written
recordable instrument reasonably satisfactory to Landlord, the due performance
of all Tenant's obligations under this Lease. No Assignment shall be valid or
effective in the absence of such assumption. A true copy of such Assignment and
the original assumption agreement or the sublease, as the case may be, shall be
delivered to Landlord within 10 days of the effective date thereof.
Notwithstanding anything hereinabove contained to the contrary, Landlord may
refuse to permit Tenant to assign this Lease or sublet to a third party any
portion of the Demised Premises if Landlord agrees to sublet back the Demised
Premises from Tenant under the same terms and conditions as set forth in this
Lease and for the remaining term of this Lease.
ARTICLE XVII - WARRANTY OF TITLE
SECTION 17.01. WARRANTY OF TITLE. Landlord covenants, represents and
warrants that Landlord on the Commencement Date will be the sole and absolute
owner of the fee title to the Demised Premises and has the right to execute
this Lease, and that on the Commencement Date there will be no liens affecting
the Demised Premises, or any covenants, easements or restrictions adversely
affecting Tenant's use of the Demised Premises except as set forth in Exhibit
B. Such exceptions are herein referred to as Permitted Encumbrances.
ARTICLE XVIII - SUBORDINATION
SECTION 18.01. SUBORDINATION TO MORTGAGES. At the option of Landlord,
this Lease shall either be:
(a) Subject and subordinate to all mortgages which may now or
hereafter affect the Demised Premises, and to all renewals, modifications,
consolidations, replacements or extensions thereof, PROVIDED HOWEVER THAT THE
HOLDER OF ANY SUCH MORTGAGE SHALL EXECUTE A "NON-DISTURBANCE" AGREEMENT
SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS EXHIBIT E.
OR
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(b) This Lease shall be paramount in priority as an encumbrance against
the Demised Premises with respect to the lien of any mortgage which may now or
hereafter affect the Demised Premises and to all renewals, modifications,
consolidations, replacements and extensions thereof.
SECTION 18.02. TENANT'S CERTIFICATE. Tenant further agrees, upon request
of Landlord, to certify by written instrument duly executed and acknowledged to
any mortgagee or purchaser, or any proposed mortgage lender, or purchaser, that
this Lease is in full force and effect or, if not, in what respect it is not;
that this Lease has not been modified, or to the extent to which it has been
modified: that there are no existing defaults hereunder to the best of the
knowledge of the party so certifying, or specifying the defaults, if any; and
any additional statements of fact that may be requested or required from time to
time by any mortgagee or purchaser, or any proposed mortgage lender or
purchaser; that any such certification shall be without prejudice as between the
Landlord and Tenant, it being agreed that any document required hereunder shall
not be used in any litigation between Landlord and Tenant.
ARTICLE XIX - QUIET ENJOYMENT
SECTION 19.01. QUIET ENJOYMENT. Tenant, upon payment of the Basic Rent
and all additional rents and all sums herein reserved and due upon the due
performance of all the Terms, covenants and conditions herein contained on the
Tenant's part to be kept and performed, shall and may at all times during the
Term hereby granted peaceably and quietly enjoy the Demised Premises, subject,
however, to the Terms of this Lease.
ARTICLE XX - INDEMNIFICATION
SECTION 20.01. INDEMNIFICATION OF LANDLORD. Tenant agrees to indemnify and
save Landlord harmless from and against all liability, and all loss, cost and
expense, including reasonable attorneys' fees, arising out of the operation,
maintenance, management and control of the Premises or in connection with (a)
any loss, injury or damage whatsoever caused to or by any person, including but
not limited to Tenant, its employees or agents, licensees or invitees, or
property including Tenant's property arising out of any occurrence on the
Premises, (b) any breach of this Lease by Tenant, (c) any act or omission of
Tenant or of any person on the Premises, occuring in, on, or about the Premises
or on the sidewalks adjoining the same, or (d) any contest or proceeding brought
by Tenant as provided for herein. However, notwithstanding anything herein
contained to the contrary, Tenant shall not be obligated or required hereunder,
to hold harmless or indemnify Landlord from or against any liability, loss,
cost, expense, or claim arising from any act, omission or negligence of Landlord
or its agents, servants, employees or contractors. The provisions hereof are not
intended to abrogate the provisions regarding waiver of subrogation by the
parties to this Lease.
ARTICLE XXI - DEFAULTS AND REMEDIES
SECTION 21.01. TENANT'S DEFAULTS. If Tenant defaults (a) in the payment of
Basic Rent or any additional rent and fails to cure the default within 10 days
after receipt of notice specifying the default, or (b) in compliance with or in
the performance of any of the other covenants or conditions of this lease, and
fails to cure the same within 30 days after the receipt of notice specifying the
default, or within such additional period of time beyond said 30 days as shall
be required by reason of strikes, lockouts, acts of God, governmental
restrictions or prohibitions, or other causes beyond Tenant's Control, whether
similar or dissimilar to the foregoing (each of which notices specifying a
default is referred to in this lease as "FIRST NOTICE"), then at the expiration
of said 10 days in the case of a default described in (a), at the expiration of
said 30 days (or longer period as aforesaid in the case of a default described
in (b), Landlord may (x) cancel and terminate this lease on not less than five
days' notice (hereinafter called "SECOND NOTICE") to Tenant, and on the date
specified in the Second Notice the term of this lease shall terminate and
expire, and Tenant shall then quit and surrender the Premises to Landlord, but
Tenant shall remain liable as hereinafter provided and/or (y) at any time
thereafter re-enter and resume possession of the Premises by summary
proceedings, an action in ejectment or by force or otherwise and dispossess or
remove Tenant and other occupants and their effects and hold the Premises as if
this lease had not been made; and Tenant waives the service of any additional
notice of intention to re-enter or to institute legal proceedings to that end.
SECTION 21.02. LANDLORD'S REMEDIES. If this lease shall be terminated or
if Landlord shall be entitled to re-enter the Demised Premises and dispossess or
remove Tenant under the provisions of Section 21.01, the Landlord, or Landlord's
agents or servants, may immediately or at any time thereafter re-enter the
Demised Premises and remove therefrom the Tenant, its agents, employees,
servants, licensees, and any subtenants and other persons, firms or
corporations, and all or any of its or their property therefrom, either by
summary dispossess proceedings or by any suitable action or proceeding at law
without being liable to indictment, prosecution or damages therefor, and
repossess and enjoy said premises together with all additions, alterations and
improvements thereto.
SECTION 21.03. LANDLORD'S DAMAGES. In case of such termination, re-entry,
or dispossess or removal by summary proceedings or otherwise, the annual rent
and all other charges required to be paid by the Tenant hereunder shall
thereupon become due and be paid up to the time of such termination, re-entry,
or dispossess or removal; and the Tenant shall also pay to the Landlord all
reasonable expenses which the Landlord may then or thereafter incur for
necessary legal expenses, attorneys' fees, brokerage commissions, and all other
necessary costs paid or incurred by the Landlord for restoring the Demised
Premises to good order and condition and for altering and otherwise preparing
the same for re-letting. The Landlord may, at any time and from time to time,
re-let the Demised Premises, in whole or in part, either in its own name or as
agent of the Tenant, for a term or terms which, at the Landlord's option, may be
for the remainder of the then current Term of this Lease, or for any longer or
shorter period, and (unless the statute or rule of law which governs the
proceedings in which such damages are to be proved, limits or shall limit the
amount of such claim capable of being so provided and allowed, in which case the
Landlord shall be entitled to prove as and for liquidated damages and have
allowed an amount equal to the maximum allowed by or under any such statute or
rule of law) the Tenant shall be obligated to, and shall pay to the Landlord as
damages, upon demand, and the Landlord shall be entitled to recover of and from
the Tenant, at the election of the Landlord, either
(a) liquidated damages, in an amount which, at the time of such
termination, re-entry or dispossess or removal by the Landlord, as the case may
be, is equal to the excess, if any, of the then present value of the
installments of annual rent reserved hereunder, otherwise have constituted the
unexpired portion of the then current Term of this Lease, over the then present
value of the market rental value of the Demised Premises for such unexpired
portion of the then current Term of this Lease, discounted at the rate of six
(6%) percent per annum; or
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(b) damages (payable in monthly installments, in advance, on the first
day of each calendar month following such termination re-entry or dispossess,
and continuing until the date originally fixed herein for the expiration of the
then current Term of this Lease) in any amount or amounts equal to the excess,
if any, of the sums of the aggregate expenses paid by the Landlord during the
month immediately preceding such calendar month for all such items as, by the
terms of this Lease, are required to be paid by the Tenant, plus an amount
equal to the amount of the installment of annual rent which would have been
payable by the Tenant hereunder in respect to such calendar month, has this
Lease and the Demised Term not been so terminated, and had the Landlord not so
re-entered, over the sum of rents, if any, collected by or accruing to the
Landlord in respect to such calendar month pursuant to such re-letting or any
holding over by any subtenants of the Tenant, plus the amount of the rental
value of any portion of the Demised Premises occupied by the Landlord or any
agent of the Landlord. Any suit for any month shall not prejudice in any way
the rights of the Landlord to collect the deficiency for any subsequent month
by a similar proceeding. The Landlord, at its option and at its expense, may
make such alterations, repairs and/or decorations in the Demised Premises as in
its reasonable judgment the Landlord considers advisable and necessary, and the
making of such alterations, repairs and/or decorations shall not operate or be
construed to release the Tenant from liability hereunder.* Landlord will use
reasonable efforts to re-let Demised Premises, however Landlord shall in no
event be liable in any way whatsoever for failure to re-let the Demised
Premises, or in the event that the Demised Premises are re-let, for failure to
collect rent thereof under such re-letting; and in no event shall the Tenant be
entitled to receive any excess of such annual rents over the sums payable by
the Tenant to the Landlord hereunder but such excess shall be credited to the
unpaid rentals due hereunder, and to the expenses of re-letting and preparing
for re-letting as provided in this Section 21.03. Suit or suits for the
recovery of such damages, or any installments thereof, may be brought by the
Landlord from time to time at its election, and nothing herein contained shall
be deemed to require the Landlord to postpone suit until the date when the Term
of this Lease would have expired if it has not been terminated under the
provisions of this Lease, or under any provision of law, or had the Landlord
not re-entered into or upon the Demised Premises.
SECTION 21.04. WAIVER OF REDEMPTION. Tenant hereby waives all rights of
redemption to which Tenant or any person claiming under Tenant might be
entitled, after an abandonment of the Premises, or after a surrender and
acceptance of the Premises and the Tenant's leasehold estate, or after a
dispossession of Tenant from the Demised Premises, or after a termination of
this lease, or after a judgment against Tenant in an action in ejectment, or
after the issuance of a final order or warrant of dispossess in a summary
proceeding, or any other proceeding or action authorized by any rule of law or
statute now or hereafter in force or effect.
ARTICLE XXII - BANKRUPTCY
SECTION 22.01. BANKRUPTCY, INSOLVENCY, ETC. If the Tenant shall have
applied or consented to the appointment of a custodian, receiver, trustee or
liquidator, or other court appointed fiduciary of all or a substantial part of
its property; or a custodian shall have been appointed with or without the
consent of the Tenant; or Tenant is generally not paying its debts as they
become due by means of available assets and the fair use of credit; or has made
a general assignment for the benefit of creditors; or has committed an act of
bankruptcy, or has filed a voluntary petition in bankruptcy, or a petition or
an answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any insolvency law, or an answer admitting the material
allegations of a petition in any bankruptcy, reorganization or insolvency
proceeding; or has taken corporate action for the purpose of effecting any of
the foregoing, or if within thirty (30) days after the commencement of any
proceeding against the Tenant seeking any reorganization, rehabilitation,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy code or any present
or future applicable federal, state or other statute or law, such proceeding
shall not have been dismissed; or if, within thirty (30) days after entry of an
Order for Relief under the present Bankruptcy Code, or similar order under
future similar legislation, or the appointment of any trustee, receiver,
custodian, liquidator, or other court appointed fiduciary of the Tenant
(without the consent or acquiescence of such party), or of all or any
substantial part of its property or any of the leased Premises, such order or
appointment shall not have been vacated or stayed on appeal or otherwise or if,
within thirty (30) days after the expiration of any such stay, such order or
appointment shall not have been vacated, the occurrence of any one of such
contingencies shall be deemed to constitute and shall be construed as a
repudiation by Tenant of Tenant's obligations hereunder and shall cause this
lease IPSO FACTO to be cancelled and terminated, without thereby releasing
Tenant; and upon such termination Landlord shall have the immediate right to
re-enter the Demised Premises and to remove all persons and property therefrom
and this lease shall not be treated as an asset of the Tenant's estate and
neither the Tenant nor anyone claiming by, through or under Tenant by virtue of
any law or any order of any Court shall be entitled to the possession of the
Demised Premises or to remain in the possession thereof. Upon the termination
of this lease, as aforesaid, Landlord shall have the right to retain as partial
damages, and not as a penalty, any prepaid rents and any security deposited by
Tenant hereunder and Landlord shall also be entitled to exercise such rights
and remedies to recover from Tenant as damages such amounts as are specified in
Article XXI hereof, unless any statute or rule of law governing the proceedings
in which such damages are to be proved shall lawfully limit the amount of such
claims capable of being so proved, in which case Landlord shall be entitled to
recover, as and for liquidated damages, the maximum amount which may be allowed
under any such statute or rule of law. As used in this Article XXII, the term
"Tenant" shall be deemed to include Tenant and its successors and assigns and
the guarantor of the Tenant's obligations under this lease, if any.
ARTICLE XXIII - CHANGES, ALTERATIONS
SECTION 23.01. CHANGES AND ALTERATIONS. If Landlord shall have first
consented thereto in writing, Tenant may make structural and nonstructural
changes, alterations, additions and improvements to the Demised Premises.
Landlord's reasonable consent shall be granted if the proposed work does not:
(a) Impair the structural soundness of the building;
(b) Lessen the present and future value of the building or improvement;
(c) Change the type of use from a general warehouse to a specialty type of
building with a limited resale or re-letting market; or
(d) Increase risk or endanger the building or occupants of the building.
Furthermore, Landlord reserves the right to require Tenant to restore the
premises to the original condition as nearly as may be practical, upon the
expiration or sooner termination of this Lease. If Landlord requests, Tenant
shall deliver to Landlord assurance, reasonably satisfactory to Landlord, of
Tenant's financial ability to complete and pay for such changes, alterations,
additions or improvements, and restorations thereof. In any event, however,
Tenant may, without Landlord's consent, make nonstructural changes,
alterations, additions and improvements costing in each case less than
$10,000.00 (hereinafter called Minor Alterations). Tenant shall give written
notice to Landlord of each change, alteration, addition and improvement to the
Demised Premises costing more than $10,000.00 and obtain Landlord's consent as
provided herein. In the event, however, that as the result of any changes,
alterations, additions and improvements made by Tenant with or without
Landlord's consent, the Building or any other part of the Demised Premises is
damaged thereby, Tenant, at Tenant's sole cost, shall be obligated and
responsible to repair said damage forthwith and restore the Building or Demised
Premises to the condition they were in just prior to the damage. Landlord shall
have no obligation to make any repairs with respect to any changes,
alterations, additions, and improvements made by Tenant. Tenant need not obtain
or furnish Landlord any certificate of completion or otherwise (unless required
by law) with respect to Minor Alterations.
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ARTICLE XXIV - END OF TERM
SECTION 24.01. END OF TERM.
(a) CONDITION OF THE DEMISED PREMISES. Tenant shall on the last day of
the Term, or upon its earlier termination, peaceably and quietly surrender and
deliver up to Landlord the Demised Premises broom clean including all
buildings, alterations, rebuildings, replacements, changes or additions placed
by Tenant thereon (except as expressly provided to the contrary in Section
23.01), with all equipment in or appurtenant thereto, in as good condition and
repair as when delivered to Tenant; subject, however, to reasonable wear and
tear, and to damage or destruction by any of the risks covered by insurance
required under Section 7.01 of this Lease, or a taking by eminent domain, if
this Lease is terminated by reason of such damage or destruction, or such
taking.
(b) REMOVAL OF TRADE FIXTURES. Not withstanding anything to the
contrary contained in any other Article of this Lease but subject to subsection
24.01 (c) below and provided Tenant is not in default hereunder beyond any
grace period to cure the same, Tenant may remove all trade fixtures installed
or paid for by it, however affixed to the realty. If any trade fixtures or
personal property are not removed by the end or earlier termination of the
Term, they shall be deemed abandoned if Landlord shall so elect, and if
Landlord shall not so elect, it may cause the removal and storage of same at
Tenant's risk and expense, but if the Term ends by reason of condemnation or
destruction of all or part of the Premises. Tenant shall have a reasonable time
to effect such removal without being deemed to abandon said property. Tenant,
at Tenant's cost, shall repair any damage caused to the Premises by reason of
such removal. All obligations of Tenant under this paragraph shall survive the
termination of this lease.
(c) COMPLETION OF REPAIRS. Any repair or restoration required to be
performed by Tenant in order for Tenant to comply with its obligations under
this Section 24.01 shall be completed on or before thirty (30) days prior to
the end of the term or earlier termination of this Lease ("End of Term"). On or
about thirty (30) days prior to this End of Term representatives of Landlord
and Tenant shall inspect the Demised Premises to determine what repair or
restoration remains to be completed, if any. If Tenant has not completed said
repair or restoration within the time set forth above Landlord shall promptly
advise Tenant of such fact and shall specify the work which has not been
completed. Notwithstanding any other provision of this Lease, Tenant's failure
to complete such repair or restoration by no later than fifteen (15) days prior
to the End of Term shall, without further notice, constitute an uncured event
of default hereunder. Landlord shall have the right to inspect the Demised
Premises to determine whether Tenant has completed such work within the time
periods provided herein. During the last thirty (30) days prior to the End of
Term Landlord shall be permitted access to the Demised Premises for the purpose
of performing such work as Landlord may desire in which event Landlord shall
use reasonable efforts not to interfere with Tenant's activities at the Demised
Premises.
SECTION 24.02. LANDLORD'S RIGHT TO INSPECT AND EXHIBIT SIGNS. Tenant
shall permit Landlord or its agents to enter the Demised Premises during
business hours on not less than 48 hours prior notice for the purpose of
inspecting or showing the Demised Premises to persons wishing to purchase the
same and, at any time within one year prior to the expiration of the term, to
persons wishing to rent same; and Tenant shall, within one year prior to the
expiration of the term, permit the usual notice of "To Let", "For Rent" and
"For Sale" to be placed at reasonable locations on the Demised Premises and to
remain thereon without hindrance and molestation.
ARTICLE XXV - DISPUTES
SECTION 25.01. RESOLUTION OF DISPUTES. All disagreements, controversies
and disputes (other than with regard to the payment of the Basic Rent and
additional rent) between the parties arising out of or related to
interpretation, performance, validity or enforcement of any of the provisions of
this Lease shall be resolved by a final judgment in any court of competent
jurisdiction.
SECTION 25.02. NO ABATEMENT IN RENT PENDING FINAL JUDGMENT; LIMITED
RIGHT OF OFFSET AFTER AWARD. The parties expressly agree that during the
pendency of any litigation and until such dispute shall have been resolved
thereby, Tenant shall continue to pay the Basic Rent and any additional Rent
stipulated herein without any abatement or deduction. If the dispute as
resolved by a court of competent jurisdiction results in an award to Tenant,
and Landlord does not promptly satisfy the said award in accordance with the
Terms thereof, the Tenant shall have the right to offset said award against the
Basic Rent to become due hereunder; provided, however, that the right of offset
is expressly limited to exclude from any right of offset that portion of the
Basic Rent necessary to satisfy (i) the mortgage obligations of the Landlord as
Mortgagor, to the extent such obligations are set forth in the provisions of
the Note and Mortgage; and (ii) in addition to the amounts required under (i)
above, such amounts as then may be required to satisfy the obligations of the
Landlord in the operation of the Demised Premises under the provisions of this
Lease.
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ARTICLE XXVI - GENERAL PROVISIONS
SECTION 26.01. NO WASTE. The Tenant covenants not to do or suffer any
waste or damage, or injury to any building or improvement now or hereafter on
the Demised Premises, or the fixtures and equipment thereof, or permit or
suffer any overloading of the floors thereof.
SECTION 26.02. LANDLORD'S LIABILITY. If Landlord shall breach any of
the provisions hereof, Landlord shall only be liable to Tenant for monetary
damages and Landlord's liability shall in no event exceed the Landlord's
interest in Landlord's Property as of the date of Landlord's breach; and Tenant
expressly agrees that any judgment or award which it may obtain against
Landlord shall be recoverable and satisfied solely out of the right, title and
interest of Landlord in the Demised Premises and Tenant shall have no rights of
lien or levy against any other property of Landlord, nor shall any other
property or assets of the Landlord be subject to levy, execution or other
enforcement proceedings for the collection of any such sums or satisfaction of
any such judgment or award.
Landlord hereby agrees that the aggregate principal outstanding under
any mortgage or mortgages placed upon Landlord's Property during the Initial
Term of this Lease shall not exceed $10,000,000.00; and thereafter the maximum
mortgage amount shall be increased by multiplying $10,000,000.00 by the Index
Change as defined in Section 26.22(e). For purposes of this Section, in the
definition of "Index Change" the words "mortgage is signed" shall be
substituted for the words "relevant Renewal Term commences" in the fifth line.
SECTION 26.03. PARTIAL INVALIDITY. If any Term or provision of this
Lease or the application thereof to any party or circumstances shall to any
extent be invalid or unenforceable, the remainder of this Lease or the
application of such term or provision to parties or circumstances other than
those 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 enforced
to the fullest extent permitted by law.
SECTION 26.04. NO WAIVER. One or more waivers by either party of the
obligation of the other to perform any covenant or condition shall not be
construed as a waiver of a subsequent breach of the same or any other covenant
or condition.
The receipt of rent by the Landlord, with knowledge of any breach of
this Lease by the Tenant or of any default on the part of the Tenant in the
observance or performance of any of the conditions or covenants of this Lease,
shall not be deemed to be a waiver of any provision of this Lease. Neither the
acceptance of the keys nor any other act or thing done by the Landlord or any
agent or employee during the Term herein demised shall be deemed to be an
acceptance of a surrender of said premises, excepting only an agreement, in
writing, signed by the Landlord accepting or agreeing to accept such a
surrender.
SECTION 26.05. NUMBER AND GENDER. Wherever herein the singular number
is used, the same shall include the plural and the masculine gender shall
include the feminine and neuter genders.
SECTION 26.06. SUCCESSORS AND ASSIGNS. The Terms, covenants and
conditions herein contained shall be binding upon and inure to the benefit of
the respective parties and their successors and assigns.
SECTION 26.07. ARTICLE AND MARGINAL HEADINGS. The article and marginal
headings herein are intended for convenience in finding the subject matters,
are not to be used in determining the intent of the parties to this Lease.
SECTION 26.08. ENTIRE AGREEMENT. This instrument contains the entire
and only agreement between the parties, and no oral statements or
representations or prior written matter not contained in this instrument shall
have any force or effect. This Lease shall not be modified in any way or
terminated except by a writing executed by both parties.
SECTION 26.09. OBLIGATIONS ALSO COVENANTS. Whenever in this Lease any
words of obligation or duty are used, such words or expressions shall have the
same force and effect as though made in the form of covenants.
SECTION 26.10. COST OF PERFORMING OBLIGATIONS. The respective obligations
of the parties to keep, perform and observe any Terms, covenants or conditions
of this Lease shall be at the sole cost and expense of the party so obligated.
SECTION 26.11. REMEDIES CUMULATIVE. The specified remedies to which
the Landlord or Tenant may resort under the Terms of this Lease are cumulative
and are not intended to be exclusive of any other remedies or means of redress
to which the Landlord or Tenant may be lawfully entitled in case of any breach
or threatened breach of any provision of this Lease.
SECTION 26.12. HOLDING OVER. If Tenant holds over after the expiration
or earlier termination of this Lease, and if Tenant is not otherwise in default
hereunder, such holding over shall not be deemed to create an extension of the
Term, but such occupancy shall be deemed to create a month-to-month tenancy at
a rental rate of 150% of the then current Basic Rent, and on the same terms and
conditions (except as the same may be then inapplicable) as are in effect on
the date of said expiration or earlier termination.
SECTION 26.13. UTILITIES.
(a) UTILITY LINES. Landlord shall be responsible for bringing all
utilities and utility services to the Building and connecting them to the
interior lines installed in the Demised Premises.
(b) UTILITY CHARGES. Tenant shall undertake and be responsible for having
all utilities metered in its name in the Demised Premises and agrees to pay all
charges for same directly to the respective utility companies. Such utilities
include gas, water, sewer, electricity, heat, power, telephone or other
communication service or other utility or service used, rendered or supplied to
Tenant at the Demised Premises throughout the demised Term.
(c) SPRINKLER AND SECURITY MONITORING SERVICE. Tenant shall install a
Sprinkler Monitoring Service and a Security Monitoring Service with respect to
the Demised Premises, all at Tenant's own cost and expense, and subject to all
provisions of this Lease pertaining to construction and alterations in Articles
VIII and XXIII and in Section 26.21 of this Article.
(d) WATER LINE AND SEWER. Tenant acknowledges that the water line and
the sanitary sewer pump station and force main shown on Exhibit A, serve both
buildings on Landlord's Property. The costs of operation, maintenance and
repair of the water line, pump station and force main shall be performed by
Landlord and Tenant shall reimburse Landlord for its pro rata share of the
costs, such share to be calculated in accordance with the formula in Section
6.01.
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SECTION 26.14. SIGNS.
(a) ERECTION OF SIGNS. Tenant shall have the right and privilege of
erecting signs for identification purposes at the Demised Premises provided,
however, that no sign shall be erected on the roof and that all signs comply
with the applicable rules and regulations of the applicable governmental boards
and bureaus having jurisdiction thereof, and Tenant shall remove same at the
expiration or sooner termination of this Lease. Notwithstanding the foregoing,
Landlord shall have the right to order removal of such signs if in its
reasonable judgment the content or design of said signs are not in harmony with
the character of the building or the surrounding locale. In such case Tenant
shall promptly remove same.
(b) REPAIR OF DAMAGE. Tenant shall be responsible for any damage
caused by said signs and any damage so caused shall be repaired forthwith at
Tenant's sole cost and expense. In the event any sign erected by Tenant is
removed during the term of this Lease or at the expiration or earlier
termination thereof, Tenant shall repair any damage whatsoever caused by the
removal at Tenant's sole cost and expense.
SECTION 26.15. FORCE MAJEURE. The period of time during which the
Landlord is prevented from performing any act required to be performed under
this Lease by reason of fire, catastrophe, labor difficulties, strikes,
lock-outs, civil commotion, acts of God or of the public enemy, governmental
prohibitions or preemptions, embargoes, inability to obtain materials or labor
by reason of governmental regulations or prohibitions, or other events beyond
the reasonable control of Landlord, as the case may be, shall be added to the
time for performance of such act, and Landlord shall not be liable to Tenant or
in default under this Lease as the result thereof.
SECTION 26.16. VACANCY OR ABANDONMENT. In the event that the Demised
Premises shall become vacant as the result of being vacated or abandoned by
Tenant during the Term and such vacancy or abandonment shall exist for a period
of two months, Landlord may re-enter the same, either by force or otherwise,
without being liable to prosecution therefor and re-let said Demised Premises
as agent of Tenant and receive the rent therefor and apply the same first to
payment of such expenses as Landlord may be put to in reentering and then to
payment of rent due under this Lease. In addition, such vacancy or abandonment
shall constitute a default under paragraph (b) of Section 21.01. In any event,
Tenant shall remain liable for any deficiency.
SECTION 26.17. GOVERNING LAW. The interpretation and validity of this
Lease shall be governed by the laws of the state in which the Demised Premises
are located.
SECTION 26.18. BROKERAGE. Tenant warrants and represents to the
Landlord that it has not sought or engaged the services of any real estate
broker with respect to leasing the Demised Premises.
SECTION 26.19. ADDITIONAL RENT. If Tenant shall be in default under
any term, covenant, provision or condition hereof, Landlord, after 30 days
notice that Landlord intends to cure such default, or without notice if in
Landlord's reasonable judgment an emergency shall exist, shall have the right,
but not the obligation, to cure such default, and Tenant shall pay to Landlord
upon demand as additional rent the reasonable cost thereof with interest at the
Lease Interest Rate (as hereinafter defined).
SECTION 26.20. NOTICE BY TENANT TO MORTGAGEE. If required by the
holder of a mortgage lien on the Premises (provided Tenant is furnished with
written notice of such requirement), Tenant agrees (a) to notify such mortgagee
of any alleged default by Landlord in any of the provisions of this Lease; and
(b) to allow to the said mortgagee a reasonable period of time to cure such
alleged default.
SECTION 26.21. CONDUCT OF TENANT'S WORK.
(a) The parties mutually acknowledge that Tenant may determine to
effect installation on the premises which are the subject of this Lease certain
leasehold improvements (Tenant's Work) in the nature of fixtures, equipment and
personalty. Such Tenant's Work is contemplated to be effected subsequent to the
execution hereof and prior to the Commencement Date as herein defined. Landlord
agrees to permit Tenant and its agents and contractors to enter upon the
premises for such purposes with the understanding by the parties that it is of
the essence that the progress of Landlord's construction of the improvements
required hereunder (Landlord's Work) on the lands described in Exhibit "B"
shall not be delayed, interrupted, or impeded; nor shall Landlord's Work be
affected in any manner whatsoever which, will result in an increase in the
Landlord's cost in completion of Landlord's Work prior to the Commencement Date.
(b) Subject to all of the provisions hereof, if Tenant shall determine
to perform Tenant's Work, Landlord agrees to permit Tenant and its contractors
and agents to enter upon the Demised Premises for such purposes.
(c) Labor used in the performance of Tenant's Work (Tenant's Labor)
shall be such as is compatible with the Labor used in the performance of
Landlord's Work (Landlord's Labor); and use of Tenant's Labor shall not result
in any stoppage, delay or interruption whatsoever in Landlord's Work.
(d) In the event of any stoppage, delay or interruption in Landlord's
Work while Tenant's Labor is engaged on the premises, Tenant shall forthwith
cease and desist use of Tenant's Labor on the premises upon receipt of written
notice from Landlord demanding cessation of Tenant's Work. Thereafter, Tenant
shall not engage Tenant's Labor on the premises until Landlord shall have given
written approval therefor.
(e) The parties acknowledge that the performance of Tenant's Work on
the premises may effect additional costs to Landlord above those costs
contemplated by Landlord in the performance of Landlord's Work by virtue of (i)
delay in the progress of Landlord's Work, or (ii) additional work made
necessary to complete Landlord's Work because of required changes in work
procedures to accommodate Tenant's Work.
(f) If Landlord determines during the progress of Tenant's Work that
the cost of Landlord's Work is being increased or will be increased by virtue
of the factors described in (e) (i) and (ii) above, Landlord shall have the
right to order Tenant to cease and desist in the performance of Tenant's Work;
and Tenant agrees to comply with such order or orders. Tenant shall not
recommence Tenant's Work unless and until Landlord and Tenant shall have
mutually agreed upon compensation to Landlord for such increase in costs to
Landlord. Any such agreement between Landlord and Tenant to compensate Landlord
for increased costs shall, among other things, provide for monthly invoices and
monthly payment.
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SECTION 26.22. DEFINITIONS.
(a) "RE-ENTER AND RE-ENTRY". The terms "re-enter" and "re-entry" as
used in this Lease are not restricted to their technical legal meaning.
(b) "LANDLORD". The term "Landlord" as used in this Lease means only
the holder, for the time being, of Landlord's interest under this Lease so that
in the event of any transfer of title to the Demised Premises Landlord shall be
and hereby is entirely freed and relieved of all obligations of Landlord
hereunder accruing after such transfer, and it shall be deemed without further
agreement between the parties that such grantee, transferee or assignee has
assumed and agreed to observe and perform all obligations of Landlord hereunder
arising during the period it is the holder of Landlord's interest hereunder.
(c) "LEASE INTEREST RATE". The term "Lease Interest Rate", as used in
Sections 7.03, 9.02 and 26.19 of this Lease, shall mean interest at the rate
which is three percent 3% in excess of the then current rate of interest
charged by the First Fidelity Bank, N.A., New Jersey as its so called "base
rate."
(d) "CONSTRUCTION WORK". The term "Construction Work" means the
performing of all services and the furnishing of labor and material and all
equipment necessary in the preparation for and completion of the construction
of the Building in accordance with the Final Plans, including, but not limited
to, the design of the improvements to be erected by Landlord, site preparation
and subsoil footings and foundations, grading, surfacing of parking area, paths
and ways, installation of all utilities, and the cleaning up and removal of
debris, so that when the Demised Premises are completed the Building shall be
fully available for the conduct of Tenant's business, except for such
installations as Tenant may make.
(e) "INDEX CHANGE". The term "Index Change" shall mean the "all items"
portions of the United States Department of Labor Bureau of Labor Statistics
Consumer Price Index for urban wage earners and clerical workers (1982-1984 =
100) for the city or region closest to the Demised Premises for which an index
is prepared for the shortest period for which an index is published which
includes the date on which this lease is signed, divided into the said index
for the shortest period for which an index is published which includes the date
on which the relevant Renewal Term commences. If the index is no longer
published, the index of consumer prices in such city or region most closely
comparable to said index, after making such adjustments as may be prescribed by
the agency publishing same or as otherwise may be required to compensate for
changes subsequent to the Commencement Date, in items included or method of
compilation or computation thereof, shall be substituted therefor.
SECTION 26.23 LATE PAYMENT SERVICE CHARGE Tenant covenants and agrees
to pay to the Landlord a "late payment service charge" equal to 4% of any rent
payment, or any other payment prescribed herein, which has not been paid in
accordance with the terms and conditions of this Lease Agreement. Said "late
payment service charge" shall be paid by Tenant to Landlord promptly upon
proper notice and demand therefor.
SECTION 26.24. CONSENTS. With respect to any provision of this Lease
which provides, or is held to provide that Landlord shall not unreasonably
withhold or unreasonably delay any consent or any approval. Tenant, in no
event, shall be entitled to make, nor shall Tenant make, any claim for, and
Tenant hereby waives any claim for money damages; nor shall Tenant claim any
money damages by way of setoff, counterclaim or defense, based upon any claim
or assertion by Tenant that Landlord has unreasonably withheld or unreasonably
delayed any consent or approval; but Tenant's sole remedy shall be to seek
specific performance of the Consent or approval in question through arbitration
proceedings as set forth in Article XXV.
SECTION 26.25. SAFETY REQUIREMENTS. All requirements promulgated by
any Federal, State or local governmental authority, including without
limitation, under the Occupational Safety and Health Act (OSHA), the Spill
Compensation and Control Act and the Environmental Clean Up Responsibility Act
(ECRA), with respect to Tenant's use of the Premises shall be the sole
responsibility of the Tenant, except that Landlord warrants that the Premises
are in compliance with governing requirements, if any, which are of general
application at the Commencement Date of the Lease Term for light industrial
type buildings, without regard to any specific use thereof (notwithstanding
that such use may be for the purposes herein permitted or may have been
consented to by Landlord).
SECTION 26.26. INFORMATION FOR MORTGAGEE. The Tenant shall furnish to
the Landlord any data or information which the Landlord shall reasonably
require in his preparation of applications for mortgage financing, or as may be
required by the Mortgage from time to time throughout the term of this Lease.
SECTION 26.27. INSPECTION BY LANDLORD. The Tenant agrees that Landlord,
its agents and other representatives, shall have the right to enter into and
upon said Premises, or any part thereof, at all reasonable hours, for the
purpose of examining the same upon reasonable advance notice not less than 24
hours, except in the event of emergency, or making such repairs or alterations
therein as may be necessary for the safety and preservation thereof, without
unduly disturbing the operations of Tenant.
SECTION 26.28. SUBMISSION. Submission of this Lease for examination or
signature of Tenant does not constitute an offer, reservation of, or option to
lease; and this Lease will not be effective or binding upon the parties as a
Lease or otherwise, until execution and delivery by both Landlord and Tenant.
SECTION 26.29. ENVIRONMENTAL COVENANTS.
(a) Tenant covenants not to discharge any "Hazardous Substances" or
"Wastes" (as said terms are defined in ECRA and/or Spill Compensation and
Control Act) upon the Premises or any adjacent lands. In the event of any such
discharge, Tenant shall immediately notify Landlord, and shall, at Tenant's
sole cost and expense, immediately take any and all actions required by law.
(b) Tenant agrees to conduct any and all environmental testing and
sampling required by ECRA not more than six months, or less than two months,
before the earlier of (i) the anticipated termination date of this Lease, or
(ii) the date on which Tenant intends to "close, terminate or transfer
operations" at the Premises (as those terms are defined in ECRA), or (iii) the
commencement of an assignment or sublease of all or a portion of the Premises,
or (iv) the termination of any such assignment or sublease. Tenant shall notify
Landlord at least seven days in advance of any such testing or sampling and
permit Landlord or its representatives to observe all testing and sampling
activities. Tenant shall provide to the Landlord, within seven days from
Landlord's request the following:
(1) the name, address and telephone number and primary contact name of
Tenant's environmental testing or sampling consultants or
contractors; and
(2) written authorization to such consultant or contractor to
communicate freely with Landlord or its environmental consultants
and to provide to Landlord or its environmental consultants, copies
of all written materials relating to the Premises.
(c) Tenant agrees to remove and clean up any Hazardous Substances or
Wastes prior to cessation of operation or termination of this Lease. In the
event that the clean-up is not completed prior to the termination date of this
Lease, Tenant shall be deemed to be a Hold Over in accordance with Section
26.12 and all the obligations of Tenant under the Lease shall continue until
such completion, including, but not limited to, the Tenant's obligation to pay
rent; provided, however, that Tenant's rights under the Lease shall be limited
to a right of access for the sole and limited purpose of completing the
required clean-up.
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(d) Landlord shall have the right to inspect the Premises and
surrounding lands and waters and to conduct environmental surveys and testing
of any nature whatsoever (collectively "Inspection"), at any time. Landlord's
right to conduct Inspection shall include, without limitation, a right of
access to all portions of the Premises for testing and a right to inspect all
of Tenant's raw materials, processes, work in process, finished products,
machinery, waste disposal procedures, waste disposal equipment and waste
materials, and the right to remove samples of any of the foregoing for
analysis. Landlord shall pay the cost of such Inspection unless any one or more
of the following conditions are applicable, in which event the entire cost and
expense of the Inspection shall be borne by the Tenant:
(1) the Inspection occurs within six months prior to, or within a
reasonable time after, (i) the termination date of the Lease or the
closure, termination or transfer of operations at the Premises and
Tenant has failed to provide such testing as required in subsection
(b) above; (ii) the assignment or sublease of all or a portion of
the Premises by Tenant and Tenant has failed to provide such
testing as required in subsection (b) above; or (iii) the
termination of any such assignment or sublease and Tenant or
Subtenant has failed to provide such testing as required in
subsection (b) above; or
(2) the Inspection is required by any governmental authority having
jurisdiction ("Environmental Regulator") and is related to Tenant's
use of or operations at the Premises; or
(3) the Inspection reveals any unlawful environmental contamination of
or discharge on the Premises; or
(4) the Inspection is the result of or in response to any discharge,
spill or contamination of the Premises, or any clean-up of any of
the foregoing.
As used herein, the costs and expenses of Inspection includes all costs
directly or indirectly related to such Inspection, or as may be required by any
Environmental Regulator in the formulation of a clean-up plan or otherwise.
(e) Landlord shall have the right of injunctive relief to enforce any and
all of Tenant's obligations under this Section.
(f) Landlord shall have the right to remedy, at Tenant's sole cost and
expense, which shall be due from Tenant upon demand as additional rent, any
environmental contamination revealed by any Inspection or clean-up required by
any Environmental Regulator.
(g) All rights and remedies of the Landlord under this Section are
cumulative and in addition to any other rights or remedies provided to Landlord
elsewhere in this Lease or pursuant to applicable law. In the event of any
conflict between the provisions of this Section and the other provisions of this
Lease, the provision which gives the greater protection to the Landlord shall
control.
(h) Notwithstanding anything to the contrary contained in this Lease,
Landlord shall indemnify and hold Tenant and its employees harmless from any
loss, liability, suits, expenses, including but not limited to reasonable
attorneys fees and expenses, and costs, including but not limited to any clean-
up costs and related remedial investigations and feasibility studies, arising
out of or related to Hazardous Substances or Waste existing on the Demised
Premises prior to the Commencement date hereof.
SECTION 26.30. TESTS PRIOR TO COMMENCEMENT. Prior to the Commencement
Date, the Landlord, at its own cost and expense, shall cause the Demised
Premises to be inspected by an environmental testing consultant who shall make
such tests as he shall deem reasonable so that he may issue to Landlord and
Tenant a report confirming that as of the Commencement Date of this Lease the
Demised Premises are in compliance with applicable governmental regulations.
SECTION 26.31. FIT AND FINISH. The parties herein acknowledge that
they have inspected several buildings constructed and leased by the Landlord to
others. The parties agree that the fit and finish of the Demised Premises shall
be substantially equal to the quality of those which they have inspected.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.
Witness: LANDLORD:
/s/Ellen M. Carpenter /s/Isaac Heller
- ------------------------- -------------------------------
ELLEN M. CARPENTER Isaac Heller
Attest: TENANT:
/s/Emily Burger UNITED STATIONERS SUPPLY CO.
- ------------------------ -------------------------------
EMILY BURGER By:/s/Ronald W. Weissman
----------------------------
Ronald W. Weissman
Sr. Vice President, Logistics
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EXHIBIT "B"
Township of Edison, County of Middlesex, State of New Jersey Being part of Lot
15, in Block 366-A, as shown on a map entitled Tax Map of the Township of
Edison.
The said Demised Premises consist of a one-story building located upon
the land above described. The said building encloses a total area of 133,177
sq. ft. including 12,578 sq. ft. of mezzanine area as more particularly shown
on Exhibit A. The land demised includes all of the land under the building
demised and additional lands as is more particularly shown within the Lease
Line on Exhibit A.
This demise is subject to the following Permitted Exceptions:
(a) A servitude of the public in and to that portion of the Premises that
lies within
(b) Restrictions to run with the land as follows:
(i) No building shall at any time be erected on the Premises unless
such building shall be set back 50 feet from abutting public roadways and
not less than 40 feet from other property boundaries.
(ii) All buildings erected on the property shall be of masonry
construction or its equivalent. All walls facing public roadways and the
first bay on each side of such walls shall be finished with face brick,
natural stone, architecturally treated concrete panels, e.g. stucco, modern
metal paneling or glass. Other walls shall be faced with common brick,
concrete block, or concrete panel construction or its equivalent.
(iii) All areas in the setbacks required by these restrictions shall be
used either for open landscaped and green areas, driveways or for service
access to the building or as a paved parking area subject to applicable
law. The said landscaped and green areas shall be properly maintained in a
slightly and attractive condition.
(iv) Water tower, water tanks, stand pipes, penthouses, elevators or
elevator equipment, stairways, ventilating fans or similar equipment
required to operate and maintain the building, fire or parapet walls,
skylight, tanks, cooling or other towers, wireless radio or television
masts, flagpoles, chimneys, smoke stacks, gravity flow storage and mixing
towers or similar structures may exceed a height of fifty (50) feet from
the established building grade only with the written approval of the
Landlord.
(v) In addition to such easements as shall have been reserved by
Landlord as provided herein, Landlord excepts and reserves for itself non-
exclusive easements under and through the above designated set-back areas
for constructing, erecting, maintaining and operating facilities, including
wires and conduits for lighting and power, telephone wires, gas and water
lines, railroad tracks, sanitary and storm sewer lines and drains, all of
which facilities are hereinafter referred to as Utilities, and the Landlord
may grant and convey easements to others for such purposes. All contracts
for the installation and maintenance of such Utilities shall provide, inter
alia, that the surface of the Premises shall be restored in harmony to its
condition existing prior to work performed thereon, and so as not to
interfere with Tenant's operations.
(vi) Outdoor storage areas shall be effectively screened from streets
upon which the Premises may have frontage by a wall, fence, shrubs, hedges
or other foliage, all of which shall be properly maintained in a sightly
and attractive condition.
(vii) Neither the Premises nor any portion thereof shall be used or
maintained as a dumping ground for rubbish, trash, garbage or other waste,
which shall be kept in sanitary containers and regularly taken away from
the Premises. All equipment for the storage or disposal of such material
shall be kept in a clean and sanitary condition and shall be effectively
screened from streets upon which the Premises may have frontage by a wall,
fence, shrubs, hedges or other foliage all of which shall be properly
maintained in a sightly and attractive condition.
(viii) The Premises shall not be used in any manner which will permit
dust, noxides, odors, fumes or harmful airborne particles or gases which
might contaminate, damage or injure persons or property to emanate or be
emitted from any structure or facility on the Premises.
(ix) The Premises shall not be used in any manner which will permit
solid or liquid contaminates to be put upon the land either under the
building(s) or outside of the building(s). No underground storage tanks,
wells, cisterns, pipes or other similar structures shall be constructed
without prior written approval of the Landlord. No pumping of underground
water shall be permitted.
(x) Upon any breach by the Tenant of any of the foregoing covenants or
conditions, Landlord shall have a remedy of injunctive relief in addition
to all other remedies available to Landlord under applicable law. It is
understood, however, that the breach of any of the foregoing covenants,
conditions and restrictions shall not defeat or render invalid the lien of
any mortgage on the Premises made in good faith and for value; provided,
however, that any breach or continuance thereof may be enjoined, abated or
remedied by the proper arbitration proceedings as aforesaid and provided
further, that each and all of the foregoing covenants, conditions and
restrictions shall at all times remain in full force and effect against
said Premises or any part thereof, title to which is obtained by
foreclosure of any such mortgage.
(xi) Reference in these restrictions and conditions to Landlord or
Tenant shall include their respective heirs, executors, administrators,
successors and assigns.
(c) Such facts as an accurate survey may disclose provided there is
nothing revealed thereby which would prohibit the use and occupancy by Tenant in
accordance with the provisions of the Lease.
(d) Lien of Construction mortgage, if any, encumbering the premises used
for the purpose of financing construction of the Building on the Demised
Premises, provided that at the Commencement Date an institutional permanent loan
commitment has been issued to and accepted by Landlord; or subject to mortgage
liens which are in compliance with Article XVIII "Subordination" of the Lease.
(e) Easements as shown on Exhibit "A".
<PAGE>
Drawings under this Letter of Credit cannot be effected before
Very truly yours,
APPROPRIATE BANK
APPROPRIATE SIGNATURE
<PAGE>
EXHIBIT D
TO:
RE: LOCATION:
AREA OF ROOF: SQUARE FEET
EFFECTIVE DATE:
Dear Sir:
The undersigned certifies that they have applied the roof on the building at the
above named location in a good and workmanlike manner, and do hereby guarantee
that, subject to the conditions herein set forth, they will, at their own cost
and expense, make or cause to be made such repairs of injury to or failure of
the said roof as may be necessary to maintain said roof in a watertight
condition during the period of five years from the "effective date" above
mentioned.
This guarantee shall not include damages caused by fire, hurricane, lightning,
tornado, hail, or other unusual phenomena of the elements, nor shall the
undersigned be liable for any defects caused by the act of any third party.
This guarantee is made with further conditions as follows:
a. The undersigned will be notified promptly in writing, if such repairs
are required, and the undersigned agrees to make such repairs within
five (5) working days after receiving such notice.
b. Nothing in this guarantee shall render the undersigned liable in any
respect for any damage to said building or any contents thereof.
c. The undersigned shall not be liable for any damage to said roof due to
settlement, failure or cracking of the roof deck, walls or foundations
of said building.
d. This guarantee runs to the owner named above, and shall be transferable
to any future owners, or tenants of said building provided only if we
are informed of same in writing.
Very truly yours,
___________________________________
<PAGE>
EXHIBIT E
---------
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of ________,
198, by and between
(hereinafter called "Mortgagee"),
ISAAC HELLER, an individual, with his principal office at 205 Mill Road,
Edison, New Jersey 08817 (hereinafter called "Lessor") and UNITED STATIONERS
SUPPLY CO., an Illinois Corporation, having its principal office at 2200 East
Golf Road, Des Plaines, Illinois 60016 (hereinafter called "Lessee");
W I T N E S S E T H:
WHEREAS, Lessee has by a written lease dated __________________,
(hereinafter called the "Lease") leased from Lessor all or part of certain real
estate and improvements thereon located in the Township of Edison, New Jersey,
as more particularly described in Exhibit A attached hereto (the "Demised
Premises"); and
WHEREAS, Lessor is encumbering the Demised Premises as security for a
loan in the original principal amount of from Mortgagee to Lessor
(the "Mortgage"); and
WHEREAS, Lessee, Lessor, and Mortgagee have agreed to the following
with respect to their mutual rights and obligations pursuant to the Lease and
the Mortgage;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by each party to the other and the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto do hereby covenant and agree as follows:
(1) Lessee's interest in the Lease and all rights of Lessee thereunder
shall be and are hereby declared subject and subordinate to the Mortgage upon
the Demised Premises and its terms, and the term "Mortgage as used herein shall
also include any amendment, supplement, modification, renewal or replacement
thereof.
(2) In the event of any foreclosure of the Mortgage or any conveyance
in lieu of foreclosure, provided that the Lessee shall not then be in default
beyond any grace period under the Lease, Lessee shall not be made a party in
any action or proceeding to remove or evict Lessee or to disturb its
possession, nor shall the leasehold estate of Lessee created by the Lease be
affected in any way, and the Lease shall continue in full force and effect as a
direct lease between Lessee and Mortgagee.
(3) After the receipt by Lessee of notice from Mortgagee of any
foreclosure of the Mortgage or any conveyance in lieu of foreclosure, Lessee
will thereafter attorn to and recognize Mortgagee as its substitute Lessor, and
having thus attorned, Lessee's possession shall not thereafter be disturbed
provided, and so long as, Lessee shall continue to timely pay all rentals under
the Lease and otherwise observe and perform the covenants, terms and conditions
of the Lease.
(4) Lessee shall not prepay any of the rents under the Lease more than
one month in advance except with the prior written consent of Mortgagee.
(5) In no event shall Mortgagee be liable for any act or omission of
the Lessor, nor shall Mortgagee be subject to any offsets or deficiencies which
Lessee may be entitled to assert against the Lessor as a result of any act or
omissions of Lessor occurring prior to Mortgagee's obtaining possession of the
premises.
(6) No conveyance of Lessor's interest in the Demised Premises or any
part thereof to Lessee shall, insofar as Mortgagee is concerned, cause the fee
estate and leasehold estate created by the Lease to merge, rather said estates
shall remain separate and distinct and the Lease shall continue in full force
and effect notwithstanding the vesting of the leasehold and fee estates in any
single person or entity by reason of such conveyance or otherwise.
(7) The Lease may not be amended, altered, or terminated without the
prior written consent of Mortgagee.
<PAGE>
(8) This Agreement and its terms shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
including without limitation, any purchaser at any foreclosure sale.
IN WITNESS WHEREOF, this Agreement has been fully executed under seal
on the day and year first above written.
By: ____________________________________
By: ____________________________________
________________________________________
ISAAC HELLER, Lessor
UNITED STATIONERS SUPPLY CO., Lessee
By: ____________________________________
By: ____________________________________
<PAGE>
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE, dated the 21st of April, 1992, between:
---- ------
ISAAC HELLER, having an office at 205 Mill Road, Edison,
New Jersey 08817, hereinafter referred to as;
"LANDLORD"
and
UNITED STATIONERS SUPPLY CO., having an office at 2200
East Golf Road, Des Plaines, Illinois 60016, hereinafter
referred to as;
"TENANT".
W I T N E S S E T H:
WHEREAS, Isaac Heller and United Stationers Supply Co. entered into a
certain Agreement of Lease dated April 17, 1989 ("Lease") with respect to
certain real property premises located in the Township of Edison, County of
Middlesex, State of New Jersey ("Demised Premises") more particularly shown,
identified, and described in said Lease; and
WHEREAS, pursuant to Section 2.01(a) of the Lease, Tenant is currently
in its Initial Term, which Initial Term commenced on June 12, 1989 and is due
to expire on June 30, 1992; and
WHEREAS, the parties hereto desire to amend certain provisions of said
Lease so as to extend the Initial Term under the terms and conditions set forth
in this Amendment To Lease.
NOW THEREFORE, in consideration of the terms and conditions contained
herein together with other good and valuable consideration, the parties hereto
agree as follows:
1. The Initial Term of this Lease is hereby extended an additional
three (3) years commencing July 1, 1992 and shall terminate on June 30, 1995.
2. Section 5.01 of the Lease is hereby amended by deleting this
section in its entirety and replacing same with the following:
"Section 5.01 Rent During Initial Term. Landlord reserves and Tenant
covenants to pay to Landlord during the Initial Term of this Lease without
demand or notice, and without any setoff or deduction, a net basic rental
(herein called Basic Rent) as follows:
6/12/89 - 6/30/90 - $519,390.30 per year ($43,282.53 per month)
7/ 1/90 - 6/30/91 - $532,708.00 per year ($44,392.33 per month)
7/ 1/91 - 6/30/92 - $546,025.70 per year ($45,502.14 per month)
7/ 1/92 - 9/30/92 - $440,004.00 per year ($36,667.00 per month)
10/ 1/92 - 6/30/95 - $461,820.00 per year ($38,485.00 per month)
Such annual Basic Rent shall be paid monthly in installments in the amounts
set forth above, in advance, on the first day of each and every month."
-21-
<PAGE>
3. Section 5.03 of the Lease is hereby amended by deleting this
Section in its entirety and replacing same with the following:
"SECTION 5.03. RENT DURING REMOVAL TERM(S).
(a) In the event the Tenant shall exercise the first option to renew
this Lease as provided for in Section 2.04, the annual Basic Rent during the
two (2) year first renewal period shall be as follows:
7/1/95 - 6/30/97 - $512,731.45 per year ($42,727.62 per month).
(b) In the event that Tenant shall exercise the second and/or third
renewal options provided for in Section 2.04, the annual Basic Rent during each
such renewal period shall be adjusted for the applicable term thereof by
multiplying $532,708.00 by the "Index Change" herein after defined, provided,
however, that the Basic Rent during any such renewal period(s) shall not be
less than the Basic Rent paid for the immediately preceding period."
4. Section 26.18 to the Lease is hereby amended by adding the
following new paragraph:
"Notwithstanding the foregoing, the parties hereto acknowledge that
Tenant has advised Landlord that it has dealt with McCollom Realty Ltd., a real
estate brokerage firm ("Broker"), regarding current market rentals for the
period July 1, 1992 through June 30, 1995. In consideration for Tenant's
extending the Initial Term as set forth herein, Landlord hereby agrees that
Landlord will pay said Broker pursuant to an Agreement entered into between
Landlord and said Broker."
5. Section 26.29 of the Lease is hereby amended by deleting this
Section in its entirety and replacing same with the following:
"SECTION 26.29. ENVIRONMENTAL CONVENANTS.
(a) Tenant covenants not to discharge any "Hazardous Substances" or
"Wastes" (as said terms are defined in ECRA and/or Spill Compensation and
Control Act) upon the Premises or any adjacent lands. In the event of any such
discharge by Tenant, its agents, employees, contractors, licensees or anyone
acting under its authority or right, Tenant shall immediately notify Landlord,
and shall, at Tenant's sole cost and expense, immediately take any and all
actions required by law.
(b) Tenant agrees to conduct any and all environmental testing and
sampling required by ECRA not more than six months, or less than two months,
before the earlier of (i) the anticipated termination date of this Lease, or
(ii) the date on which Tenant intends to "close, terminate or transfer
operations" at the Premises (as those terms are defined in ECRA), or (iii) the
commencement of an assignment or sublease of all or a portion of the Premises,
or (iv) the termination of any such assignment or sublease. Tenant shall notify
Landlord at least seven days in advance of any such testing or sampling and
permit Landlord or its representatives to observe all testing and sampling
activities. Tenant shall provide to the Landlord, within seven days from
Landlord's request the following:
(1) the name, address and telephone number and primary contact
name of Tenant's environmental testing or sampling
consultants or contractors; and
(2) written authorization to such consultant or contractor to
communicate freely with Landlord or its environmental
consultants and to provide to Landlord or its environmental
consultants, copies of all written materials relating to the
Premises.
(c) Tenant agrees to remove and clean up any Hazardous Substances or
Wastes caused by Tenant, its agents, employees, contractors, licensees or
anyone acting under its authority or right, prior to the cessation of operation
or termination of this Lease. In the event that the clean-up is not completed
prior to the termination date of this Lease, Tenant shall be deemed to be a
Hold Over in accordance with Section 26.12 and all the obligations of Tenant
under the Lease shall continue until such completion, including, but not
limited to, the Tenant's obligation to pay rent; provided, however, that
Tenant's rights under the Lease shall be limited to a right of access for the
sole and limited purpose of completing the required clean-up.
(d) Landlord shall have the right to inspect the Premises and
surrounding lands and waters and to conduct environmental surveys and testing
of any nature whatsoever (collectively "Inspection"), at any time. Landlord's
right to conduct Inspection shall include, without limitation, a right of
access to all portions of the Premises for testing and a right to inspect all
of Tenant's raw materials, processes, work in process, finished products,
machinery, waste disposal procedures, waste disposal equipment and waste
materials, and the right to remove samples of any of the foregoing for
analysis. Landlord shall pay the cost of such Inspection unless any one or more
of the following conditions are applicable, in which event the entire cost and
expense of the Inspection shall be borne by the Tenant:
(1) the Inspection occurs within six months prior to, or
within a reasonable time after, (i) the termination
date of the Lease or the closure, termination or
transfer of operations at the Premises and Tenant has
failed to provide such testing as required in
subsection (b) above; (ii) the assignment or sublease
of all or a portion of the Premises by Tenant and
Tenant has failed to provide such testing as required
in subsection (b) above; or (iii) the termination of
any such assignment or sublease and Tenant or Subtenant
has failed to provide such testing as required in
subsection (b) above; or
<PAGE>
(2) the Inspection is required by any governmental
authority having jurisdiction ("Environmental
Regulator") and is related to Tenant's use of or
operations at the Premises; or
(3) the Inspection reveals any unlawful environmental
contamination of or discharge on the Premises caused by
Tenant, its Agents, invitees, employees, contractors,
licensees or anyone acting under its authority or
right; or
(4) the Inspection is the result of or in response to any
discharge, spill or contamination of the Premises, or
any clean-up of any of the foregoing caused by Tenant,
its agents, invitees, employees, contractors, licensees
or anyone acting under its authority or right.
As used herein, the costs and expenses of Inspection includes all
costs directly or indirectly related to such Inspection, or as may be required
by any Environmental Regulator in the formulation of a clean-up plan or
otherwise.
(e) Landlord shall have the right of injunctive relief of enforce any
and all of Tenant's obligations under this Section.
(f) Landlord shall have the right to remedy, at Tenant's sole cost
and expense, which shall be due from Tenant upon demand as additional rent, any
environmental contamination revealed by any Inspection or clean-up required by
any Environmental Regulator caused by Tenant, its Agents, invitees, employees,
contractors, licensees or anyone acting under its authority or right.
(g) All rights and remedies of the Landlord under this Section are
cumulative and in addition to any other rights or remedies provided to Landlord
elsewhere in this Lease or pursuant to applicable law. In the event of any
conflict between the provisions of this Section and the other provisions of
this Lease, the provision which gives the greater protection to the Landlord
shall control.
(h) Notwithstanding anything to the contrary contained in this Lease,
Landlord shall indemnify and hold Tenant and its employees harmless from any
loss, liability, suits, expenses, including but not limited to reasonable
attorneys fees and expenses, and costs, including but not limited to any
clean-up costs and related remedial investigations and feasibility studies,
arising out of or related to Hazardous Substances or Waste existing on the
Demised Premises prior to the Commencement Date or any Hazardous Substances or
Waste not caused by Tenant, its agents, invitees, employees, contractors,
licensees or anyone acting under its authority or right."
6. Except as modified herein, all of the terms and conditions as set
forth in the Agreement of Lease, as amended, shall remain in full force and
effect throughout the Term.
IN WITNESS WHEREOF, the parties hereunto set their hands and seals or
caused these premises to be duly executed by their proper corporate officers
the day and year first written above.
WITNESS: LANDLORD
/s/ Ellen M. Carpenter /s/ Isaac Heller
- ----------------------- --------------------------------
ATTEST: UNITED STATIONERS SUPPLY CO.
/s/ Joan M. Heffernan /s/ BY: Otis H Heller
- ----------------------- --------------------------------
Vice President
<PAGE>
[LOGO OF I. HELLER GOES HERE]
I. Heller 205 Mill Road
Edison, N.J. 08817
(908) 287-4880
FAX (908) 287-5033
February 22, 1995
United Stationers Supply Company
2200 East Gulf Road
Des Plaines, Illinois 60016
RE: Lease dated April 17, 1989 as amended
by Amendment to Lease dated April 21, 1992
133,177 Square Foot Building, Edison, New Jersey
------------------------------------------------
Gentlemen:
This letter shall serve as a Second Amendment to the above referenced Lease.
In consideration of the terms and conditions contained herein together with
other good and valuable consideration, the parties hereto agree to amend the
Lease as follows:
1. Notwithstanding the provisions of Section 2.04 of the Lease, by their
signatures below, Landlord and Tenant hereby acknowledge and agree that
Tenant hereby exercises a right of renewal for a renewal period of
three (3) years ("First Renewal Period") commencing July 1, 1995 and
continuing through June 30, 1998 under the terms and conditions set
forth in this Second Amendment to Lease.
2. Landlord and Tenant hereby acknowledge that Tenant shall have two (2)
remaining renewal options of two (2) years each.
3. Notwithstanding the provisions of Section 5.03(a) of the Lease, as
stated in Paragraph 3 of the Amendment to Lease, it is hereby agreed
that Basic Rent for the First Renewal Period (7/1/95 - 6/30/98) shall
be as follows:
7/1/95 - 6/30/98 $461,820.00/yr payable $38,485.00/mo
4. Except as modified herein, all of the terms and conditions of said
Lease shall remain in full force and effect throughout the Term of this
Lease and any extensions thereof.
Ingenuity in distribution center
side location and construction.
<PAGE>
United Stationers Supply Company
February 22, 1995
Page - 2
Please indicate your agreement and acceptance of the foregoing by signing
all four (4) copies of this letter where indicated below, and return same to
us. Two fully executed copies will be returned to you for your files. Thank you
for your courtesy and cooperation in this matter.
Very truly yours,
/s/ Isaac Heller
- -----------------------
ISAAC HELLER, LANDLORD
ACCEPTED AND AGREED:
UNITED STATIONERS SUPPLY CO,
TENANT
by: /s/ Otis H Heller
------------------------
Vice President
<PAGE>
EXHIBIT 10.40
[LOGO OF WESTBELT BUSINESS PARK APPEARS HERE]
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into between WESTBELT BUSINESS PARK
----------------------
JOINT VENTURE, an Ohio joint venture partnership, 2777 Stemmons Freeway,
- ------------------------------------------------------------------------
Dallas, Texas 75207
- -------------------
________________________________________________________________________________
hereafter referred to as "Lessor" and BOISE CASCADE CORPORATION, a Delaware
-------------------------------------
corporation.
- -----------
One Jefferson Square, Boise, Idaho 83728
- --------------------------------------------------------------------------------
hereafter referred to as "Lessee":
WITNESSETH:
1. LEASED PREMISES: In consideration of the rents, terms, provisions and
covenants of this Lease Agreement, Lessor hereby leases, lets and demises to
Lessee the following described premises (referred to as "leased premises" and
containing approximately one hundred twenty-six thousand six hundred sixty-five
------------------------------------------------------
(126,665)
- ---------
square feet) situated in Park Distribution Center Building A
-------------------------------------------------------
(sometimes referred to as "the building"): Situated in the City of Columbus,
County of Franklin, State of Ohio, and further described as:
1630 Westbelt Drive
Columbus, Ohio 43228
as outlined in red on the floor plan of the building attached hereto and made a
part hereof as Exhibit "A".
2. TERM: Subject to and upon the conditions set forth below, the term of
this Lease shall commence on (xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
--------------------------------------------------
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
- --------------------------------------------------------------------------------
the "completion date" as defined in paragraph 11 herein which Lessor shall use
its best efforts to establish as June 1, 1984 as to the warehouse portion of
------------
the leased premises, as shown on Exhibit "A", and July 1, 1984 as to the office
portion of the leased premises, as shown on Exhibit "A" and shall end no later
than September 30, 1989. Upon the completion date as specified in paragraph 11
herein, the parties shall execute an Amendment setting forth the termination
date of the Lease, which shall be no later than September 30, 1989.
3. LEASE RENT AND SECURITY DEPOSIT: Lessee agrees to pay the monthly rent
for the leased premises in the amount of Twenty-Nine Thousand Five Hundred
Fifty-Five Dollars ($29.555.00), which amount shall be payable to Lessor on the
first day of each calendar month, c/o Vantage Properties, Inc., P. O. Box 28248,
Columbus, Ohio 43228, with such rent commencing on December 1, 1984, or five (5)
months after the completion date, whichever is later (in either instance, the
"Rental Commencement Date"); provided, however, that Lessee agrees to pay to
Lessor the amount of Twenty-Seven Thousand Seven Hundred Dollars ($27,700.00)
per month for the period commencing with the later of November 1, 1984 or five
(5) months after the completion of the warehouse portion of the leased premises,
and ending with the day before the Rental Commencement Date. Provided, however,
that in the event the Rental Commencement Date is other than on the first day of
a month, the rent shall be prorated for the remainder of the month based on a
30-day month.
(c) The base rental set forth in the preceding subparagraph (a) shall be
subject to escalation of operating expenses as otherwise provided in this Lease.
(d) Other remedies for nonpayment of rent notwithstanding, if the monthly
rental payment is not received by Lessor on or before the tenth day of the month
for which rent is due, a service charge of five percent of all past due amounts
owed on such date shall become due and payable in addition to the regular rent
owed under this Lease.
1
<PAGE>
(e) In the event the operating expenses (as defined below) of Lessor upon
the building and/or project of which the leased premises are a part shall, in
any calendar year during the term of this Lease, exceed the sum of $____________
per square foot. Lessee agrees to pay as additional rental Lessee's pro rata
share of the excess operating expenses. Lessor may, within nine months following
the close of any calendar year for which additional rental is due under this
paragraph, invoice Lessee for the excess operating expenses. The invoice shall
include in reasonable detail all computations of the additional rental, and
Lessee agrees to make payment of the additional rental to Lessor within ten days
following receipt of the invoice. In the year in which this Lease terminates,
Lessor, in lieu of waiting until the close of the calendar year in order to
determine any excess operating expenses, has the option to invoice Lessee for
Lessee's pro rata share of the operating expenses based upon the previous year's
excess operating expenses: Lessor shall invoice Lessee under this option within
thirty days prior to the termination of the Lease or at any time thereafter once
the calendar year has closed, however, Lessor shall make any necessary
adjustment to Lessee's pro rata share of the operating expenses based on the
actual expenses. Lessee shall have the right, at its own expense and at a
reasonable time, to audit Lessor's books relevant to the additional rentals due
under this paragraph.
(f) The term "operating expenses" as used above (See Addendum item A.)
includes all expenses incurred with respect to the maintenance and operation of
the building of which the leased premises are a part, including but not limited
to maintenance and repair costs, water, sewer, security, trash and snow removal,
landscaping, wages and fringe benefits payable to employees of Lessor whose
duties are connected with the operation and maintenance of the building amounts
paid to contractors or subcontractors for work or services performed in
connection with the operation and maintenance of the building, all services,
supplies, repairs, replacements or other expenses for maintaining and operating
the building including common area and parking area. The term "operating
expenses" also includes all real property taxes and installments of special
assessments, including special assessments due to deed restrictions and/or
owners' associations, which accrue against the building of which the leased
premises are a part during the term of this Lease as well as all insurance
premiums Lessor is required to pay or deems necessary to pay, including public
liability insurance, with respect to the building. The term "operating expenses"
does not include any capital improvement to the building of which the leased
premises are a part, nor shall it include repairs, restoration or other work
occasioned by fire, wind, storm or other casualty income and franchise taxes of
Lessor, expenses incurred in leasing to or procuring of tenants, leasing
commissions, advertising, expenses, expenses for the renovating of space for new
tenants, interest or principal payments on any mortgage or other indebtedness of
lessor, compensation paid to any employee of Lessor above the grade of building
superintendent nor depreciation allowance or expenses.
4. SIGNS: Lessee shall have the right to erect signs requested by Lessee and
approvedin good taste only on the (or such other location as may be requested by
Lessee and approved by Lessor) subject to all applicable laws, deed restriction
and regulations. See Addendum Item B. The composition and location of such sign
shall be subject to approval of Lessor for the purposes of maintaining
architectural continuity and quality of design. No signs or other objects shall
be erected which are attached to the roof of the building and no signs shall be
attached to the building or canopy at right angles suspended by guy wires, but
shall be attached flush to the canopy in a safe and secure manner. All such
signs erected shall advertise Lessee's business only and no revenue producing
advertising shall be erected on the leased premises without specific written
permission of Lessor. Lessee shall not paint any signs directly on the walls of
the building or otherwise deface, damage or overload the building. Lessee shall
have the right to place lettering upon the entrance doors or upon the plate
glass windows of the leased premises: provided, however, that the lettering
shall not exceed six inches in height and shall be subject to the approval of
Lessor. See Addendum Item C. No other signs shall be displayed on the leased
premises without the prior written consent of Lessor. Lessee shall remove all
signs at the termination of this Lease, at Lessee's sole risk and expense and
shall in a workmanlike manner properly repair any damage and close any holes
caused by the removal of Lessee's signs.
5. USAGE: Lessee warrants and represents to Lessor that the leased premises
shall be used and occupied only for the purposes of general office and
----------------------------
distribution See Addendum item D
- --------------------------------------------------------------------------------
________________________________________________________________________________
Lessee shall occupy the leased premises, conduct its business and control its
agents, employees, invitees and visitors in such a way as is lawful, reputable
and will not create any nuisance or otherwise interfere with, annoy or disturb
any other tenant in its normal business operations or Lessor in its management
of the building.
6. INSURANCE: Lessee shall not permit the leased premises to be used in any
way which would, be extra hazardous on account of fire or otherwise which would
in any way increase or render void the fire insurance on leasehold improvements
or contents in the building belonging to other tenants in the building. Lessee
warrants to Lessor that the insurance questionnaire (filled out by Lessee,
signed and presented to Lessor prior to the execution of this Lease Agreement)
accurately reflects Lessee's original intended use of the leased premises. The
insurance questionnaire is made a part of this Lease Agreement by reference as
though fully copied and recorded herein. If at any time during the term of this
Lease the State Board of Insurance or other insurance authority disallows any of
Lessor's sprinkler credits or imposes an additional penalty or surcharge in
Lessor's insurance premiums because of Lessee's original or subsequent placement
or use of storage racks or bins, method of storage or nature of Lessee's
inventory or any other act of Lessee, Lessee agrees to pay as additional rental
the increase (between fire walls) in Lessor's insurance premiums. If an increase
in the fire and extended coverage premiums paid by Lessor for the building in
which Lessee occupies space is caused by Lessee's use or occupancy of the leased
premises, or if Lessee vacates the leased premises and causes an increase, then
Lessee shall pay as additional rental the amount of such increase to Lessor.
7. REPAIRS AND MAINTENANCE: (a) Unless otherwise expressly provided, Lessor
shall not be required to make any improvements, replacement or repairs of any
kind or character on the leased premises during the term of this Lease except
such repairs as are set forth in this subparagraph. Lessor: shall at its expense
maintain only the roof, foundation soundness of the floors and exterior walls
(excluding all windows, window glass, plate glass, all doors and pest control
and extermination) of the building in good repair and condition except for
reasonable wear and tear See Addendum Item E Lessee shall repair and pay for any
damage caused by Lessee's negligence or default. Lessee shall immediately give
written notice to Lessor of the need for repairs, and Lessor shall proceed
promptly, after having had a reasonable opportunity, to make the repairs. Lessor
shall not be liable to Lessee, except as expressly provided in this Lease, for
any damage or inconvenience. Lessee shall not be entitled to any abatement or
reduction of rent by reason of any repairs, alternations or additions made by
Lessor under this Lease, see Addendum item F.
(b) Lessee shall, at its own risk and expense, maintain all other parts of
the buildings and other improvements on the leased premises in good repair and
condition (including all necessary replacement), including, but not limited to,
downspouts, dock bumpers, damage to the floors caused by Lessee's use, regular
mowing of any grass, trimming, weed removal, regular removal of debris See
Addendum item G. However, in a multi-occupancy building, Lessor reserves the
right to perform lawn maintenance and Lessee agrees to pay Lessor for lawn
maintenance on a pro rata basis Lessor shall repaint the exterior doors or other
exposed parts of the building which reasonably require periodic repainting to
prevent deterioration. Lessee shall take good care of all the property and its
fixture, including all landscaping, and suffer no waste??? Should Lessee neglect
to keep and maintain the leased premises, then Lessor shall have the right, but
not the obligation to have the work done and any reasonable costs therefor shall
be charged to Lessee as additional rental and shall become payable by Lease with
the payment of the rental next due. At the termination of this Lease Agreement,
Lessee shall deliver the leased premises "broom clean" in the same good order
and condition as existed at the commencement date or completion date of this
Lease ordinary wear, natural deterioration beyond the control of Lessee, damage
by fire, tornado or other casualty excepted.
2
<PAGE>
8. UTILITY SERVICE. Lessor shall provide the normal utility service
connections into the leased premises. Lessee shall pay the cost of all utility
services, including, but not limited to, initial connection charges, all charges
for gas, water and electricity used on the leased premises, and for all electric
light lamps or tubes. Lessee shall pay all costs caused by Lessee introducing
excessive pollutants into the sanitary sewer system, including permits, fees and
charges levied by any governmental subdivision for any pollutants or solids
other than ordinary human waste. Lessee shall be responsible for the
installation and maintenance of any dilution tanks, holding tanks, settling
tanks, sewer sampling devices, and traps, grease traps or similar devices as may
be required by the governmental subdivision for Lessee's use of the sanitary
sewer system. If the leased premises are in a multi-occupancy building, Lessee
shall pay all surcharges levied due to Lessee's use of sanitary sewer or waste
removal services insofar as such surcharges affect Lessor or other tenants in
the building. Lessee shall pay all charges for pest control and extermination.
Lessor shall not be required to pay for any services, supplies or upkeep in
connection with the leased premises. However, in a multi-occupancy building
Lessor. See Addendum item H.
10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS: Lessee shall comply with
all laws, ordinances, orders, rules and regulations of state, federal, municipal
or other agencies or bodies having jurisdiction relating to the use, and
occupancy of the leased premises. Lessee will comply with the rules of the
building adopted by Lessor, which are set forth on a schedule attached to this
Lease. Lessor shall have the right at all times to amend the rules and
regulations of the building in any reasonable manner as may be deemed advisable
for the safety, care and cleanliness, and for the preservation of good order, of
the leased premises. All amendments in the rules and regulations of the building
will be sent by Lessor to Lessee in writing and shall thereafter be earned out
and observed by Lessee.
11. LESSOR IMPROVEMENTS: See Addendum item I.
12. ALTERATIONS AND IMPROVEMENTS: Lessee shall not make or allow to be made
any alterations or to the leased premises without first obtaining the written
consent of Lessor. Any alterations, to the leased premises made by Lessee shall
at once become the property of Lessor and shall be surrendered to Lessor upon
the termination of this Lease; provided, however, this clause shall not apply to
moveable equipment or furniture owned by Lessee which may be removed by Lessee
at the end of the term of this Lease if Lessee is not then in default and if
such equipment and furniture is not then subject to any other rights, liens and
interests of Lessor. See Addendum item J.
13. CONDEMNATION: (a) If, during the term (or any extension or renewal) of
this Lease, all or a substantial part of the leased premises are taken for any
public or quasi-public use under any governmental law, ordinance or regulation,
or by right of eminent domain or by private purchase in lieu thereof, and the
taking would prevent or materially interfere with the use of the leased premises
for the purpose for which they are then being used, this Lease shall terminate
and the rent shall be abated during the unexpired portion of this Lease
effective on the date physical possession is taken by the condemning authority.
See Addendum item K.
(b) In the event a portion of the leased premises shall be taken for any
public or any quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain or by private sale in lieu thereof,
and this Lease is not terminated as provided in the subparagraph above. Lessor
may, at Lessor's sole risk and expense, restore and reconstruct the building and
other improvements situated on the leased premises to the extent necessary to
make it reasonably tenantable. The rent payable under this Lease during the
unexpired portion of the term shall be adjusted to such an extent as may be fair
and reasonable under the circumstances. See Addendum item L.
14. FIRE AND CASUALTY: (a) If the leased premises should be totally
destroyed by fire, tornado or other casualty, or if the leased premises should
be so damaged so that rebuilding or repairs cannot reasonably be completed
within one hundred and twenty (120) working days after the date of written
notification by Lessee to Lessor of the destruction, this Lease shall terminate
and the rent shall be abated for the unexpired portion of the Lease, effective
as of the date of the written notification.
(b) If the leased premises should be partially damaged by fire, tornado or
other casualty, and rebuilding or repairs can reasonably be completed within one
hundred and twenty (120) working days from the date of written notification by
Lessee to Lessor of the destruction, this Lease shall not terminate, but Lessor
may at its sole risk and expense proceed with reasonable diligence to rebuild or
repair the building or other improvements to substantially the condition in
which they existed prior to the damage. If the leased premises are to be rebuilt
or repaired and are untenantable in whole or in part following the damage, and
the damage or destruction was not caused or contributed to by act or negligence
of Lessee, its agents, employees, invitees or those for whom Lessee is
responsible, the rent payable under this Lease during the period for which the
leased premises are untenantable shall be adjusted to such an extent as may be
fair and reasonable under the circumstances. In the event that Lessor fails to
complete the necessary repairs or rebuilding within one hundred and twenty (120)
working days from the date of written notification by Lessee to Lessor of the
destruction, Lessee may at its option terminate this Lease by delivering written
notice of termination to Lessor, whereupon all rights and obligations under the
Lease shall cease to exist; See Addendum item M
15. CASUALTY INSURANCE: Lessor shall at all times during the terms of this
Lease, at its expense, maintain a policy or policies of insurance with the
premiums paid in advance, issued by and binding upon some solvent insurance
company, insuring the building against loss or damage by fire, explosion or
other hazards and contingencies for the full insurable value; provided, that
Lessor shall not be obligated in any way or manner to insure any personal
property (including, but not limited to, any furniture, machinery, goods or
supplies) of Lessee or which Lessee may have upon or within the leased premises
or any fixtures installed by or paid for by Lessee upon or within the leased
premises or any additional improvements which Lessee may construct on the leased
premises.
16. WAIVER OF SUBROGATION: Anything in this Lease to the contrary
notwithstanding, Lessor and Lessee hereby waive and release each other of and
from any and all rights of recovery, claim, action or cause of action, against
each other, their agents, officers and employees, for any loss or damage that
may occur to the leased premises, improvements to the building of which the
leased premises are a part, or personal property (building contents) within the
building, by reason of fire or the elements, or other peril regardless of cause
or origin, including negligence of Lessor or Lessee and their agents, officers
and employees. Because this paragraph will preclude the assignment of any claim
mentioned in it by way of subrogation (or otherwise) to an insurance company (or
any other person), each party to this Lease agrees immediately to give to each
insurance company which has issued to it policies of fire and extended coverage
insurance, written notice of the terms of the mutual waivers contained in this
paragraph, and to have the insurance policies properly endorsed, if necessary,
to prevent the invalidation of the insurance coverages by reason of the mutual
waivers contained in this paragraph.
3
<PAGE>
17. HOLD HARMLESS. Unless caused by the sole negligence or misconduct by
Lessor. Lessor shall not be liable to Lessee's employees, agents, invitees,
licensees or visitors, or to any other person, for any injury to person or
damage to property on or about the leased premises caused by the negligence or
misconduct of Lessee, its agents, servants or employees, or of any other person
entering upon the leased premises under express or implied invitation by Lessee,
or caused by the buildings and improvements located on the leased premises
becoming out of repair, or caused by leakage of gas, oil, water or steam or by
electricity emanating from the leased premises, or due to any other cause.
Lessee agrees to indemnify and hold harmless Lessor of and from any loss,
attorney's fees, expenses or claims arising out of any such damage or injury not
caused by the sole negligence of the Lessor. Any liability insurance which may
be carried by Lessor or Lessee with respect to the leased premises shall be for
the sole benefit of the party carrying the insurance and under its sole control.
18. QUIET ENJOYMENT. Lessor warrants that it has full right to execute and
to perform this Lease and to grant the estate demised, and, that Lessee, upon
payment of the required rents and performing the terms, conditions, covenants
and agreements contained in this Lease, shall peaceably and quietly have, hold
and enjoy the leased premises during the full term of this Lease as well as any
extension or renewal; thereof.
19. LESSOR'S RIGHT OF ENTRY: Lessor shall have the right, at all reasonable
hours after providing Lessee with 24 hour notice, to enter the leased premises
for the following: inspection; cleaning or making repairs; alterations or
additions as Lessor may deem necessary or desirable for the uniform and
efficient operation of the leased premises; determining Lessee's use of the
leased premises, or determining if an act of default under this Lease has
occurred, provided however, Lessor may enter the leased premises without notice
to Lessee in the event of an emergency.
20. ASSIGNMENT OR SUBLEASE: Lessor shall have the right to transfer and
assign, in whole or in part, its rights and obligations in the building and
property that are the subject of this Lease. Lessee shall not assign this Lease
or sublet all or any part of the leased premises without the prior written
consent of Lessor. Lessor shall have the option, upon receipt from Lessee of
written request for Lessor's consent to subletting or assignment, to cancel this
Lease or the part of the Lease which pertains to the part of the leased premises
to be subleased as of the date the requested subletting or assignment is to be
effective. The option shall be exercised, if at all, within fifteen (15) days
following Lessor's receipt of written notice by delivery to Lessee or written
notice of Lessor's intention to exercise the option See Addendum item X. In the
event of any assignment or subletting. Lessee shall nevertheless at all times,
remain fully responsible and liable for the payment of the rent and for
compliance with all of its other obligations under the terms, provisions and
covenants of this Lease. Upon the occurrence of an "event of default" as defined
below, if all or any part of the leased premises are then assigned or sublet,
Lessor, in addition to any other remedies provided by this Lease or provided by
law, may, at its option, collect directly from the assignee or subtenant all
rents becoming due to Lessee by reason of the assignment or sublease. Any
collection directly by Lessor from the assignee or subtenant shall not be
construed to constitute a notation or release of Lessee from the further
performance of its obligations under this Lease.
21. HOLDING OVER: In the event of holding over by Lessee after the
expiration or termination of this Lease, the hold over shall be as a tenant at
will and all of the terms and provisions of this Lease shall be applicable
during that period, except that Lessee shall pay Lessor as rental for the period
of such hold over an amount equal to 125% the rent which would have been payable
by Lessee had the hold over period been a part of the prior term of this Lease.
Lessee agrees to vacate and deliver the leased premises to Lessor upon Lessee's
receipt of notice from Lessor to vacate. The rental payable during the hold over
period shall be payable to Lessor on demand. No holding over by Lessee without
consent of Lessor, shall operate to extend this Lease except as otherwise
expressly provided.
22. DEFAULT BY LESSEE. The following shall be deemed to be events of default
by Lessee under this Lease:
(a) Lessee shall fail to pay any installment of the rent required to be paid
under this Lease, and the failure continues for a period of ten (10) days:
(b) Lessee shall abandon any substantial portion of the leased premises:
(c) Lessee shall fail to comply with any term, provision or covenant of this
Lease, other than the payment of rent, and the failure is not cured within
thirty (30) days after written notice to lessee; See Addendum item N
(d) Lessee shall file a petition or be adjudged bankrupt or insolvent under
the National Bankruptcy Act, as amended or any similar law or statute of the
United States or any state; or that a receiver or trustee shall be appointed for
all or substantially all of the assets of Lessee; or that Lessee shall make a
transfer in fraud of creditors or shall make an assignment for the benefit of
creditors.
23. REMEDIES FOR LESSEE'S DEFAULT: Upon the occurrence of any event of
default set forth in this Lease Agreement, Lessor shall have the option to
pursue any one or more of the following remedies after providing Lessee with 15
days prior written notice.
(a) Terminate this Lease, in which event Lessee shall immediately surrender
the leased premises to Lessor, and if Lessee fails to surrender the leased
premises, Lessor may, without prejudice to any other remedy which it may have
for possession or arrearages in rent, enter upon and take possession of the
leased premises Lessee agrees to pay on demand the amount of all loss and damage
which Lessor may suffer by reason of the termination of the Lease under this
subparagraph, whether through inability to relet the leased premises on
satisfactory terms or otherwise.
(b) Enter upon and take possession of the leased premises and relet the
leased premises on behalf of Lessee and receive directly the rent by reason of
the reletting. Lessee agrees to pay Lessor on demand any deficiency that may
arise by reason of any reletting of the leased premises.
(c) Enter upon the leased premises and do whatever Lessee is obligated to do
under the terms of this Lease. Lessee agrees to reimburse Lessor on demand for
any expenses which Lessor may incur in effecting compliance with Lessee's
obligations under this Lease; further, Lessee agrees that Lessor shall not be
liable for any damages resulting to Lessee from effecting compliance with
Lessee's obligations under this subparagraph not caused by the negligence of
Lessor.
24. WAIVER OF DEFAULT OR REMEDY: Failure of Lessor to declare an event of
default immediately upon its occurrence, or delay in taking any action in
connection with an event of default, shall not constitute a waiver of the
default, but Lessor shall have the right after providing Lessee with 15 days'
prior written notice to declare the default while the default remains incurred,
and take such action as is lawful or authorized under this Lease. Pursuit of any
one or more of the remedies set forth in paragraph 23 above shall not preclude
pursuit of any one or more of the other remedies provided in paragraph 23,
provided elsewhere in this Lease or provided by law, nor shall pursuit of any
remedy provided constitute a forfeiture or waiver of any rent or damages
accruing to Lessor by reason of the violation of any of the terms, provisions or
covenants of this Lease. Failure by Lessor to enforce one or more of the
remedies provided upon an event of default shall not be deemed or construed to
constitute a waiver of the default or of any other violation or breach of any of
the terms, provisions and covenants contained in this Lease.
25. ACTS OF GOD: Lessor and Lessee shall not be required to perform any
covenant or obligation in this Lease (except for the payment of rent by Lessee),
or be liable in damages to the other, so long as the performance or non-
performance of the covenant or obligation is delayed, caused by or prevented by
an act of God or force majeure.
26. ATTORNEY'S FEES. In the event Lessee defaults in the performance of any
of the terms, covenants, agreements or conditions contained in this Lease and
Lessor places the enforcement of all or any part of this Lease, the collection
of any rent due or to become due, or recovery of the possession of the leased
premises in the hands of an attorney, Lessee agrees to pay Lessor reasonable
attorney's fees for the services of the attorney, whether suit is actually filed
or not. See Addendum item P
4
<PAGE>
27. RIGHTS OF MORTGAGEE: Lessee accepts this Lease subject and subordinate
to any recorded mortgage, deed of trust presently existing upon the leased
premises. Lessor is hereby irrevocably vested with full power and authority to
subordinate Lessee's interest under this Lease to any reasonable mortgage, deed
of trust hereafter placed on the leased premises, and Lessee agrees upon demand
to execute additional instruments subordinating this Lease as Lessor may
require. If the interests of Lessor under this Lease shall be transferred by
reason of foreclosure or other proceedings for enforcement of any mortgage on
the leased premises. Lessee shall be bound to the transferee (sometimes called
the "Purchaser") under the terms, covenants and conditions of this Lease for the
balance of the term remaining, and any extensions or renewals, with the same
force and effect as if the Purchaser were Lessor under this Lease, and Lessee
agrees to attorn to the Purchaser, including the mortgagee under any such
mortgage if it be the Purchaser, as its lessor, the attornment to be effective
and self-operative without the execution of any further instruments upon the
Purchaser succeeding to the interest of Lessor under this Lease. The respective
rights and obligations of Lessee and the Purchaser upon the attornment, to the
extent of the then remaining balance of the term of this Lease, and any
extensions and renewals, shall be and are the same as those set forth in this
Lease. See Addendum item O.
28. DEFINITIONS: These definitions apply to the terms defined as those terms
are used throughout this Lease.
(a) "Abandon" means the vacating of all or a substantial portion of the
leased premises by Lessee, whether or not Lessee is in default of the rental
payments due under this Lease.
(b) An "act of God" or "force majeure" is defined for purpose of this Lease
Agreement as strikes, lockouts, sitdowns, material or labor restrictions by any
governmental authority, riots, floods, washouts, explosions, earthquakes, fire,
storms, acts of the public enemy, wars, insurrections and any other cause not
reasonably within the control of Lessor or Lessee and which by the exercise of
due diligence Lessor is Lessee is unable, wholly or in part, to prevent or
overcome.
(e) "Real property tax" means all city, state, and county taxes and
assessments including special taxing, district taxes or assessments.
29. SUCCESSORS: This Lease shall be binding and inure to the benefit of
Lessor and Lessee and their respective heirs, personal representatives,
successors and assigns.
30. EXTRINSIC EVIDENCE: It is expressly agreed by Lessee, as a material
consideration for the execution of this Lease Agreement, that this Lease with
the specific references to written extrinsic documents, is the entire agreement
of the parties; that there are, and were, no verbal representations,
understandings, stipulations, agreements or promises pertaining to this Lease
Agreement or the expressly mentioned written extrinsic documents not
incorporated in writing in this Lease Agreement. It is likewise agreed that this
Lease may not be altered, waived, amended or extended except by an instrument in
writing, signed by both Lessor and Lessee.
31. NOTICE: (a) All rent and other payments required to be made by Lessee
shall be payable to Lessor at the address set forth below, or any other address
Lessor may specify from time to time by written notice delivered to Lessee.
(b) All payments required to be made by Lessor to Lessee shall be payable to
Lessee at the address set forth below, or at any other address within the United
States as Lessee may specify from time to time by written notice.
(c) Any notice or document required or permitted to be delivered by this
Lease shall be deemed to be delivered (whether or not actually received) when
deposited in the United States Mail, postage prepaid, certified mail, return
receipt requested, addressed to the parties at the respective addresses set out
below: See Addendum item Q.
LESSOR:
WESTBELT BUSINESS PARK JOINT VENTURE
c/o VANTAGE PROPERTIES, INC., MANAGING PARTNER
P.O. Box 28248
Columbus, Ohio 43228
32. RENT TAX: If applicable in the jurisdiction where the leased premises
are situated, Lessee shall pay and be liable for all rental, sales and use taxes
or other similar taxes, if any, levied or imposed upon rentals by any City,
State, County or other governmental body having authority, such payments to be
in addition to all other payments required to be paid to Lessor by Lessee under
the terms of this Lease. Any such payments shall be paid concurrently with the
payment of the rent upon which the tax is based as set forth above.
33. ESTOPPEL CERTIFICATES' Lessee agrees to furnish promptly, from time to
time, upon request of Lessor or Lessor's mortgagee, a statement certifying that
Lessee is in possession of the leased premises; the leased premises are
acceptable, the Lease is in full force and effect; the Lease is unmodified See
Addendum item R. Lessee claims no present charge, lien, or claim of offset
against rent, the rent is paid for the current month, but is not paid and will
not be paid for more than one month in advance: there is no existing default by
reason of some act or omission by Lessor See Addendum item S and such other
matters as may be reasonably required by Lessor or Lessor's mortgagee.
34. OTHER PROVISIONS: See Addendum items T, U, V and W, and Y.
5
<PAGE>
Signed at Columbus Ohio, this 10th day of May, 1984.
------------- ---- --- --
WITNESSES: LESSOR:
WESTBELT BUSINESS PARK JOINT VENTURE,
AN OHIO JOINT VENTURE PARTNERSHIP
BY: VANTAGE PROPERTIES, INC.,
MANAGING PARTNER
[SIGNATURE NOT LEGIBLE] By /s/ Ronald A. Huff
- --------------------------------- ------------------------------------
Ronald A. Huff
/s/ Catherine A. Zitko Title Vice President
- --------------------------------- ---------------------------------
WITNESSES: LESSEE:
BOISE CASCADE CORPORATION,
A DELAWARE CORPORATION
[SIGNATURE NOT LEGIBLE] By [SIGNATURE NOT LEGIBLE]
- --------------------------------- ------------------------------------
[SIGNATURE NOT LEGIBLE] Title V. P.
- --------------------------------- ---------------------------------
[SIGNATURE NOT LEGIBLE]
ACKNOWLEDGEMENTS
State of Illinois
County of Cook
Dated this 20 day of April, 1984.
--
/s/ Linda M. Hicks
- ---------------------------
Linda M. Hicks, Notary
Commission expires: 2/21/87
6
<PAGE>
BUILDING RULES AND REGULATIONS
1. Lessor agrees to furnish Lessee two keys without charge. Additional keys
will be furnished at a nominal charge.
2. No Lessee shall at any time occupy any part of the Building as sleeping or
lodging quarters.
3. Lessor will not be responsible for lost or stolen personal property,
equipment, money or jewelry from Lessee's area or public rooms regardless of
whether such loss occurs when area is locked against entry or not.
4. No birds, fowl, or animals shall be brought into or kept in or about the
building.
5. The water closets and other water fixtures shall not be used for any purpose
other than those for which they were constructed and any damage resulting to
them from misuse, or the defacing or injury of any part of the Building
shall be borne by the person who shall occasion it. No person shall waste
water by interfering with the faucets or otherwise.
6. No person shall disturb the occupants of the Building by the use of any
musical instruments, the making of unseemly noises causing objectionable
odors, or any unreasonable use.
It is Lessor's desire to maintain in the Building the highest standard of
dignity and good care???? consistent with comfort and convenience for Lessees.
Any action or condition not meeting this high standard should be reported
directly to Lessor. Your cooperation will be mutually beneficial and sincerely
appreciated. The Lessor reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to time be
needful, for the safety, care and cleanliness of the lease premises, and for the
preservation of good order therein.
7
<PAGE>
A C K N O W L E D G E M E N T S
-------------------------------
State of Ohio
County of Franklin
The foregoing instrument was acknowledged before me this 10th day of
----
May, 1984, by Ronald A. Huff, Vice President of Vantage Properties, Inc., a
- ---
Texas corporation, on behalf of the Corporation and on behalf of Westbelt
Business Park Joint Venture.
My Commission Expires: 5.26.88 /s/ Catherine A. Zitko
------- ------------------------------
NOTARY PUBLIC
[NOTARY PUBLIC SEAL APPEARS HERE]
State of [ILLEGIBLE]
---------------
County of [ILLEGIBLE]
--------------
The foregoing instrument was acknowledged before me this 20 day of
--
April, 1984, by /s/ E. Thomas Edquist, of Boise Cascade Corporation, a Delaware
- ----- ---------------------
corporation, on behalf of the Corporation.
My Commission Expires: 2/21/87 /s/ Linda M. Hicks
------- ------------------------------
NOTARY PUBLIC
<PAGE>
ADDENDUM TO THAT CERTAIN LEASE AGREEMENT
BETWEEN WESTBELT BUSINESS PARK JOINT VENTURE
AND BOISE CASCADE CORPORATION
EXECUTED May 10, 1984
------
A. Shall include operating expenses attributable to the building under
generally accepted accounting principles consistently applied from year to year
with respect to buildings similar to the building subject to this Lease and
B. The signs shall be approximately 4 feet by 8 feet, basically the same
in appearance as those pictured in Exhibit B, attached hereto and incorporated
by this reference.
C. Lessee shall have the right to erect other signs on the building
approximately 1 foot by 2 feet, to indicate loading, shipping, receiving and
other appropriate instructions.
D. And receiving, storing, shipping and selling products, materials and
merchandise made and/or distributed by Lessee, and for such other lawful
purposes as may be incidental thereto.
E. Such expenses shall be excluded from the term "operating expenses."
F. Provided, however, that if Lessor fails to complete any repairs,
alterations or additions within 60 days after the date of Lessee's notice (or
such longer period of time in the event that such repairs, alterations or
additions cannot be completed within such 60-day period, provided that Lessor
has
<PAGE>
commenced such repairs, alterations or additions and is diligently pursuing the
same) and, in Lessee's reasonable opinion, such failure substantially interferes
with Lessee's operations under this Lease, the Lessee may, at Lessee's option,
cause such repairs, alterations or additions to be completed and deduct the cost
therefore from the rent payments to be made under this Lease or be entitled to a
proportionate abatement or reduction of rent for the loss of the use of the
leased premises.
G. In the event the leased premises constitute a portion of a multiple
occupancy building, Lessor shall be responsible for coordinating any repairs and
other maintenance of any rail tracks serving or to serve the building, and if
Lessee uses such rail tracks, Lessee shall reimburse Lessor, from time to time,
upon demand, as additional rent, its proportionate share of the cost of such
repairs and maintenance and of any other sum specified in any agreement to which
Lessor is a party respecting such tracks.
H. Agrees to separately meter all utilities.
I. Lessor shall commence and complete the construction of the improvements
on the leased premises. Should the cost of completing the improvements exceed
$370,000, Lessor shall complete the construction, and Lessee shall pay for any
excess cost over $370,000, so long as Lessor causes the improvements to be made
in accordance with the floor plans and specifications in an efficient and timely
manner. Lessee shall provide Lessor with specifications and floor plans for the
improvements upon the
-2-
<PAGE>
execution of this Lease, and such specifications and floor plans shall be agreed
to by the parties and made a part of this Lease. Lessor shall use its best
efforts to complete the construction of the improvements to the warehouse
portion of the leased premises by June 1, 1984, and to the office portion of the
leased premises by July 1, 1984. Upon Lessor's completion of the improvements,
Lessor and Lessee shall inspect the premises and shall prepare a punch list of
items, if any, not completed in accordance with the specifications and floor
plans. All items listed shall be completed by Lessor as soon thereafter as
possible. The "completion date" shall be the date upon which all the
improvements have been constructed and shall have been substantially completed
in accordance with the floor plans and specifications and accepted by Lessee by
a written letter of acceptance to Lessor. Lessee shall deliver the letter of
acceptance to Lessor when the improvements are substantially completed in
accordance with the floor plans and specifications. Should the improvements not
be substantially completed by Lessor and accepted by Lessee within 60 days after
June 1, 1984, with reference to the warehouse portion of the leased premises, or
within 90 days after July 1, 1984, with reference to the office portion of the
leased premises, Lessee, at its option, shall have the right to terminate this
Lease and shall not be obligated to make payment for any improvements. The
improvements shall be deemed to be substantially completed when all essential
facilities and improvements have been constructed or installed by Lessor
-3-
<PAGE>
and the leased premises are ready for use by Lessee for its intended purposes.
If any dispute arises between Lessor and Lessee as to the time of substantial
completion or the written acceptance of the improvements by Lessee, Lessor and
Lessee shall appoint a mutually acceptable, independent architect who shall
certify whether the improvements have been substantially completed in accordance
with the floor plans and specifications. The fees for such architect's services
shall be divided equally between Lessor and Lessee.
J. Lessee may, without the consent of Lessor, but at Lessee's own cost and
expense and in a good workmanlike manner, make such minor alterations or erect,
remove or alter partitions, lighting fixtures and dock levelers, or erect such
shelves, bins, machinery and trade fixtures as Lessee may deem advisable without
altering the basic character of the building or improvements. All shelves, bins,
machinery, trade fixtures and light fixtures in the bin areas of the leased
premises installed by Lessee may be removed by Lessee prior to the termination
of this Lease if Lessee so elects, provided that Lessee is not in default under
the terms of this Lease and further provided that Lessee shall repair any damage
done to the leased premises as a result of such removal.
K. In the event of any such taking, Lessor and Lessee shall each be
entitled to receive and retain such separate awards and/or a portion of lump sum
awards as may be allocated
-4-
<PAGE>
to their respective interests by the condemning authority or any court of
competent jurisdiction in any condemnation proceedings.
L. In the event of any such taking, Lessor and Lessee shall each be
entitled to receive and retain such separate awards and/or a portion of lump sum
awards as may be allocated to their respective interests by the condemning
authority or any court of competent jurisdiction in any condemnation proceeding.
Further, should Lessor's restoration and reconstruction of the building and
other improvements continue for longer than 90 days after the date physical
possession is taken by the condemning authority, and in Lessee's reasonable
opinion substantially interferes with Lessee's operations under this Lease,
Lessee may, at its option, terminate this Lease.
M. And rent shall be abated for the unexpired portion of the Lease,
effective as of the date Lessee notified Lessor of the destruction.
N. Or if the cure cannot be completed within 30 days, the cure has been
commenced within 30 days and Lessee diligently thereafter completes the cure.
O. Provided, however, that Lessor shall procure from any mortgagee a
nondisturbance agreement providing, in substance, that so long as Lessee shall
faithfully discharge the obligations on its part to be kept and performed under
the terms of this Lease, Lessee's tenancy will not be disturbed nor this Lease
affected by any default under such mortgage, and Lessee agrees
-5-
<PAGE>
that this Lease shall remain in full force and effect even though default in the
mortgage may occur.
P. In the event Lessor defaults in the performance of any of the terms,
covenants, agreements or conditions contained in this Lease, and Lessee places
the enforcement of all or any part of this Lease in the hands of an attorney,
Lessor agrees to pay Lessee reasonable attorneys' fees for the services of an
attorney, whether suit is actually filed or not.
Q. To Lessee: Boise Cascade Office Products Division
Attention Vice President, General Manager
---------
800 West Bryn Mawr Avenue
Itasca, IL 60143
Copy to: Boise Cascade Corporation
Attention General Counsel
---------
One Jefferson Square
Boise, ID 83728
R. Or if there have been modifications, that the Lease is in full force
and effect as modified and identifying such modifications.
S. Or if Lessee has knowledge of any default, a statement of the nature
thereof.
T. Wherever the consent of either party is required under the terms of
this Lease, such consent shall not be unreasonably withheld.
U. Provided that Lessee is not in default, Lessee shall have the option to
renew this Lease for an additional term of 60 months at the same terms and
conditions upon providing Lessor with 120 days' prior written notice to the
expiration of this Lease. In the event Lessee exercises this option to renew,
the rent shall be as follows: Lessee shall pay
-6-
<PAGE>
no rent for the first three months of the renewal term, and rent thereafter
shall be $36,944 per month. In the event Lessee does not exercise its option to
renew, Lessee agrees to pay Lessor $158,894, as the unamortized portion of the
leasehold improvements remaining at the termination of this Lease, and such
payment shall be made within 30 days after the termination of this Lease. In the
event Lessee exercises the renewal option, at the end of the renewal term,
Lessee may exercise a second option to renew provided that Lessee is not in
default, at the same terms and conditions for a period of 60 months upon
providing Lessor with written notice 120 days prior to the expiration of the
renewal term; however, the rent during the second option shall be the fair
market rental based on the then prevailing rental rates for properties of
equivalent quality, size, utility and location as the leased premises with the
length of the lease term and credit-standing of Lessee to be taken into account,
and the $.38 per square foot for operating expenses under paragraph 3(e) of this
Lease shall be appropriately adjusted to reflect the actual expenses incurred by
Lessor during the year prior to commencement of such renewal option. In the
event Lessee exercises its second renewal option in accordance with the
provisions of this paragraph, but Lessor and Lessee cannot in good faith agree
to the fair market rental for the second option period at least 30 days prior to
the expiration of the first renewal term, the second renewal option contained
herein shall become null and void.
-7-
<PAGE>
V. Pursuant to the provisions of this paragraph, Lessor hereby grants to
Lessee the right to lease approximately 46,060 square feet in the building (the
"Adjacent Space" as outlined in yellow in Exhibit A), provided Lessee is not in
default of the Lease and the Lease is in full force and effect. Lessor agrees to
offer the Adjacent Space to Lessee for lease at least one time during the period
commencing 42 months and ending 78 months following the completion date of this
Lease.
Lessor shall deliver to Lessee, in writing, notice that Lessor is
offering Lessee the Adjacent Space. Lessee shall have 30 days from the receipt
of such notice to notify Lessor in writing of its intent to lease all of the
Adjacent Space. In the event Lessor has received no notice from Lessee by the
end of the 30-day period, Lessee shall be deemed to have refused the offer. In
the event Lessee does elect to lease all of the Adjacent Space and so notifies
Lessor, then Lessor and Lessee shall execute an amendment to this Lease
pertaining to the Adjacent Space containing substantially the same terms and
conditions then existing under this Lease, with the term for the Adjacent Space
to coincide with the remaining term of this Lease, including any renewal terms.
Provided, however, that the rental for the Adjacent Space shall be as agreed
upon by Lessor and Lessee.
W. In addition to the rights granted in paragraph V, Lessor does hereby
grant to Lessee the right of first offer to lease additional space in the
building for a term coincident
-8-
<PAGE>
with the then remaining term of the Lease and renewal options consistent with
the Lease, provided Lessee is not in default under this Lease and the Lease is
in full force and effect. At any time during the term of this Lease, or any
renewal term, should additional space in the building become available, Lessor
shall notify Lessee in writing of the availability of such additional space.
Lessee shall have 15 days from the receipt of any such notice to notify Lessor
in writing of Lessee's desire to negotiate with Lessor regarding such space and
Lessor shall not, during such 15-day period, enter into any lease with a third
party for such space. A Lessee does not notify Lessor of Lessee's desire to
negotiate with Lessor regarding such space within the 15 day period, Lessor may
thereafter enter into a lease for such space with a third party. If Lessee
notifies Lessor of Lessee's desire to negotiate and Lessor and Lessee do not
reach an agreement regarding such space within 30 days after Lessee notifies
Lessor, then Lessor may thereafter enter into a lease for such space with a
third party. In the event that Lessor enters into a lease with Lessee for such
space, such lease shall contain substantially the same terms and conditions as
contained in this Lease, except for those terms dealing with rental and other
financial items. It is specifically understood by both parties that nothing
contained in this paragraph shall relieve Lessor of its obligation to offer the
Adjacent Space to Lessee under paragraph V hereof.
X. Lessor must either cancel this Lease, or the part of the Lease which
pertains to the part of the leased premises to be subleased, as of the date the
requested subletting or assignment is to be effective, or consent to Lessee's
assignment or subletting.
Y. The rental reserved hereunder for the primary term and first renewal
term of this Lease includes the amortization of $230,668.50 in leasehold
improvements over a ten-year period at
-9-
<PAGE>
16% interest per annum. In the event that this Lease is terminated during the
primary term or first renewal term on account of a default by Lessee, Lessee
shall pay to Lessor the unamortized principal portion of the leasehold
improvements remaining at the termination of this Lease, and such payment shall
be made within 30 days after the termination of this Lease.
-10-
<PAGE>
[DIAGRAM APPEARS HERE]
<PAGE>
R E N E W A L O F L E A S E
This Renewal Agreement is made and entered into between MLH Income Realty
Partnership V, a New York Limited Partnership, hereinafter referred to as
"Lessor", and Boise Cascade Office Products Corporation, a Delaware Corporation,
hereinafter referred to as "Lessee", for and in consideration of One Dollar
($1.00) and other good and valuable consideration, receipt of which is hereby
acknowledged.
W I T N E S S E T H:
1. Lessor and Lessee hereby confirm and ratify, except as modified below,
all of the terms, conditions and covenants in the certain written Lease
Agreement dated May 10, 1984 and Addendum, as modified by Amendment to Lease
dated September, 1985 and by Second Amendment to Lease dated March 19, 1986,
between MLH Realty Partnership V, as Lessor, and Boise Cascade Office Products
Corporation, as Lessee, for the rental of the following described property: 1634
Westbelt Drive, Columbus, Ohio 43228, consisting of approximately 126,665 square
feet.
2. Lessee warrants that Lessee has accepted and is now in possession of
the demised premises and that the Lease Agreement is valid and presently in full
force and effect.
3. Effective as of October 1, 1989 (the "Effective Date"), the term of
this Lease Agreement shall be extended for sixty (60) months (the "Extended
Term") and the expiration date set forth in paragraph 2 is hereby changed from
September 30, 1989 to September 30, 1994.
4. As of the Effective Date, the monthly rental payments set forth in
paragraph 3(a) of the Lease Agreement shall be changed from $29,555.00 per month
to $36,944.00 per month. Notwithstanding the foregoing, and provided Lessee is
not in default, Lessee shall not be obligated to pay the first three
installments of monthly rent due during the Extended Term.
5. All other terms and conditions of the Lease Agreement dated May 10,
1984 and Addendum attached thereto and made a part thereof, shall remain the
same.
Signed at 2 Broadway, NY, NY, this 23rd day of May, 1989.
------------------ ---- ---
Signed and Acknowledged in LESSOR:
the presence of:
MLH Income Realty Partnership V,
a New York Limited Partnership
[SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
- -------------------------- --------------------------
__________________________ Title: V.P
(Witnesses as to Lessor) -----------------------
LESSEE:
Boise Cascade Office Products
Corporation,
a Delaware Corporation
[SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
- -------------------------- ---------------------------
[SIGNATURE NOT LEGIBLE] Title: V.P.
- -------------------------- ------------------------
(Witnesses as to Lessee)
<PAGE>
A C K N O W L E D G E M E N T S
-------------------------------
STATE OF [ILLINOIS]
-------------
COUNTY OF [ILLEGIBLE]
------------
The foregoing instrument was acknowledged before me this 27 day of
--
April, 1989, by E. J. Edguist, the Vice President of Boise Cascade Office
- ----- ------------- --------------
Products Corporation, a Delaware Corporation, on behalf of the corporation.
/s/ Joanne DeVries
---------------------------
NOTARY PUBLIC
My Commission Expires: 6/27/90
-------
________________________________
"OFFICIAL SEAL"
Joanne deVries
Notary Public State of Illinois
My Commission expires 6/27/90
_______________________________
STATE OF New York )
COUNTY OF New York )
The foregoing instrument was acknowledged before me this 23rd day of
----
May, 1989, by Lawrence T Kwiat, the authorized representative of the
- --- ---------------- ------------------------- ---
Managing General Partner of MLH Income Realty Partnership V, a New York
- ---------------------------
Limited Partnership, on behalf of the partnership.
/s/ Karen A Calabrese
---------------------------
NOTARY PUBLIC
My Commission Expires: 2/28/91
-------
KAREN A. CALABRESE
Notary Public State of New York
No. 24-4823056
Qualified in Kings County
Commission expires 2/28/91
<PAGE>
SECOND AMENDMENT TO LEASE
-------------------------
BY THIS AMENDMENT, dated March 19, 1986, to the Lease dated May 10, 1984,
as amended in September 1985 by Amendment to Lease ("Lease"), between MLH INCOME
REALTY PARTNERSHIP V, successor in interest to Westbelt Business Park Joint
Venture ("Lessor"), and BOISE CASCADE OFFICE PRODUCTS CORPORATION, Successor in
Interest to Boise Cascade Corporation ("Lessee"), for 126,665 square feet of
space in Park Distribution Center Building A, Westbelt Business Park, Columbus,
Ohio, Lessor and Lessee agree as follows:
1. The commencement date of the Lease shall be September 30, 1984, and the
Lease termination date shall be September 30, 1989.
2. All other provisions of the Lease, as amended, not affected by this
Amendment, including but not limited to Paragraphs U and V of the Addendum to
the Lease, shall remain valid and effective.
IN WITNESS WHEREOF, the parties have caused this Second Amendment to Lease
to be signed as of the date first set forth above.
LESSEE: LESSOR:
BOISE CASCADE OFFICE PRODUCTS MLH INCOME REALTY PARTNERSHIP V
CORPORATION By: MLH Property Manager V Inc.
By [SIGNATURE NOT LEGIBLE] By [SIGNATURE NOT LEGIBLE]
-------------------------- ----------------------------
Vice President Title [ILLEGIBLE]
-------------------------
<PAGE>
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE (this "Amendment") is made as of this _____
day of August, 1994 by and between MLH INCOME REALTY PARTNERSHIP V, a New York
limited partnership having an address at World Financial Center, South Tower,
New York, New York 10080-6112 ("Landlord") and ASSOCIATED STATIONERS, INC., a
Delaware corporation having an address at 1075 Hawthorn Drive, Itasca, Illinois
60143 ("Tenant").
WITNESSETH:
----------
WHEREAS, Westbelt Business Park Joint Venture, as predecessor-in-interest
to Landlord, and Boise Cascade Corporation, as predecessor-in-interest to Tenant
entered into that certain Lease Agreement dated May 10, 1984, as amended by
Addendum dated May 10, 1984, Amendment to Lease dated September, 1985, Second
Amendment to Lease dated March 19, 1986, Renewal of Lease dated May 23, 1989 and
Consent Letter dated December 9, 1991 (collectively, the "Lease") with respect
to premises consisting of approximately 126,665 rentable square feet in the
building (the "Building") located at 1634 Westbelt Drive, Columbus, Ohio, as
more particularly described in the Lease; and
WHEREAS, Landlord and Tenant desire to amend the Lease with respect to an
extension of the term of the Lease and as otherwise provided in this Amendment;
and
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the receipt and sufficiency of which are hereby acknowledged, Landlord and
Tenant agree as follows:
1. The provisions of this Amendment shall supersede any inconsistent
provisions contained in the Lease, whether such inconsistent provisions are
contained in the printed portion of the Lease or any addendum, rider or exhibit
annexed thereto. All capitalized items not otherwise defined herein shall have
the respective meanings ascribed to them in Lease.
2. Termination Date. The term of the Lease is hereby extended and shall
----------------
end on August 31, 1999, unless sooner terminated as provided in the Lease or by
applicable law.
3. Base Rent. Effective from and after July 1, 1994 (the "Effective
---------
Date"), Paragraph 3 of the Lease shall be amended so that base rent shall be
$348,328.80 per annum ($29,027.40 per month). Landlord acknowledges that Tenant
has paid rent in the amount of $36,944 for each of the months of July and
August, 1994, and therefore has overpaid rent in the amount of $15,833.20, which
amount shall be credited against Tenant's rent obligations for the month of
November, 1994. Notwithstanding anything to the contrary contained herein,
provided that Tenant shall not be in default under the terms of the Lease as
amended hereby, Tenant shall not be obligated to pay base rent in the amount of
$29,027.40 per month for the months of September and October, 1994. The
foregoing rental concession shall be null and void "ab initio" if Landlord at
any time terminates the Lease or re-enters or repossesses the Premises on
account of any default of Tenant under the Lease, and Landlord shall be entitled
to recover from Tenant, in addition to all other amounts Landlord is entitled to
recover, the amount of all rental concessions.
4. Operating Expenses. Paragraph 3(e) of the Lease is hereby amended by
------------------
deleting the $0.38 expense stop set forth therein and substituting $0.00 in lieu
thereof, it being the intent of Landlord and Tenant that Tenant pay its pro rata
share of all operating expense for the Building.
5. Use. The Premises shall be used for the warehousing and distribution
---
of paper and office and related products and incidental lawful uses.
6. Landlord's Work
---------------
A. Landlord shall perform or cause to be performed certain
improvements to be mutually agreed upon by Landlord and Tenant (the
"Improvements") to the Premises in a building standard manner using building
standard materials as more particularly set fourth on Exhibit "D" attached
hereto and made a part hereof. Landlord agrees to perform any portion of the
Improvement work which materially interferes with Tenant's conduct of business
in the Premises on weekends or after normal business hours.
B. Tenant acknowledges and agrees that it is presently in possession
of the Premises, that it has made a full and complete inspection of the
Premises, and is familiar with the condition thereof
1
<PAGE>
and, except for the Improvements, shall and does accept possession of the
Premises in its present "as-is" condition as suitable for Tenant's intended use
and occupancy thereof. Upon Tenant's continued occupancy of the Premises, it
shall be conclusively presumed that same has been so accepted by Tenant, is in
satisfactory condition, and complies fully with Landlord's covenants and
obligations. Tenant acknowledges that Landlord shall have no obligation to
perform any tenant improvement work of any kind in connection with Tenant's
occupancy of the Premises and Tenant, at Tenant's sole cost and expense, shall
perform all necessary or desirable work in connection with preparing the
Premises for its occupancy in accordance with the Lease and any and all costs of
same shall be paid by Tenant in full and Tenant shall provide Landlord with
reasonable evidence of such payment within five (5) days after Landlord's
request therefor.
C. In the event Landlord fails to substantially complete the
Improvements on or before September 30, 1994 (unless such failure is due to an
act or omission of Tenant, its agents or employees or force majeure), then
Tenant shall have the right to send a notice to Landlord specifying the
portion(s) of the Improvements (the "Incomplete Items") which have not been
substantially completed. If Landlord fails to substantially complete the
Incomplete Items within twenty (20) days after the giving of such notice, Tenant
shall have the right to perform the Incomplete Items and thereafter send
Landlord a statement of costs incurred for the Incomplete Items, together with
evidence thereof. Landlord shall promptly reimburse Tenant for the reasonable
cost of performing the Incomplete Items, and in the event fails to do so within
thirty (30) days after rendition of Tenant's statement. Tenant may deduct the
reasonable cost of performing the Incomplete Items from the next installment of
rent coming due under the Lease.
7. Extension Option
----------------
A. Provided that the Lease is in full force and effect, without the
occurrence of an event of default thereunder or any defaults or breaches under
any of the terms, covenants or conditions in the Lease on Tenant's part to
observe or perform on the date that Tenant exercises the option granted herein
or on the expiration date of the Lease, Tenant shall have the option (the
"Extension Option"), to extend the term of the Lease for an extension term (the
"Extension Term") of five (5) year(s) commencing on the day next succeeding the
expiration date of the Lease and ending on the day which shall be the fifth
(5th) anniversary of said expiration date, both dates inclusive, in accordance
with and subject to the terms, covenants and conditions hereinafter set forth.
Tenant shall exercise the Extension Option by sending a written notice thereof
(the "Extension Notice") to the Landlord by certified mail, return receipt
requested or nationally recognized overnight courier service on or before the
date which is 180 days prior to the expiration date, time being of the essence.
If Tenant shall send the Extension Notice within the time and in the manner
hereinabove provided, the term of the Lease shall be deemed extended for the
Extension Term upon the terms, covenants and conditions hereinafter contained.
If Tenant shall fail to send the Extension Notice within the time and in the
manner hereinabove provided, the Extension Option shall cease and terminate, and
Tenant shall have no further option to extend the term of this Lease.
B. The Extension Term shall be upon, and subject to, all of the
terms, covenants and conditions provided in the Lease for the initial term
hereof, without any further right of extension, except that:
(a) any terms, covenants, or conditions in the Lease that are expressly or
by their nature inapplicable to the Extension Term (including, without
limitation, paragraph 6 of this Amendment) shall not apply during the
Extension Term; and
(b) the basic annual rental payable by Tenant during the Extension Term
(the "Extension Rent"), subject to adjustment as otherwise in the
Lease provided, shall be an amount equal to the fair market rental
value of the leased premises to be prevailing as of the commencement
of the Extension Term on the basis of a new five (5) year letting of
the leased premises determined in accordance with paragraph C below.
C. (i) Within thirty (30) days after receipt by Landlord of Tenant's
Extension Notice, Landlord shall submit to Tenant Landlord's determination of
the fair market rental value of the Premises. If Tenant does not notify Landlord
in writing within ten (10) days of Tenant's receipt of Landlord's determination
that Tenant objects to such determination of the fair market rental value,
Tenant shall be deemed to have accepted such determination of the fair market
value and such determination shall be deemed to be fair market value for the
purpose of determining Extension Rent for the Extension Term. If Tenant so
notifies Landlord that Tenant objects to Landlord's determination, Landlord and
Tenant shall endeavor to reach an agreement as to the fair market rental value
of the Premises for the Extension Term. If Tenant and Landlord are unable to
reach agreement within sixty (60) days after Tenant gives the Extension Notice,
then Landlord and Tenant shall each, within twenty (20) days after the
expiration of
2
<PAGE>
such sixty (60) day period, select an MAI appraiser (the "Appraisers"). The two
appraisers so selected shall, within forty-five (45) days of such selection,
jointly attempt to determine and agree on the fair market rental value of the
Premises for the Extension Term. If the Appraisers cannot agree on such fair
market rental value, within said forty-five (45) day period, each Appraiser
within such period shall make an independent appraisal of such rental value and
deliver the same to Landlord and Tenant. If either Appraiser fails to deliver
its appraisal within such forty-five (45) day period then the appraisal of the
single Appraiser shall be deemed to be such fair market rental value for
purposes of determining the Extension Rent for the Extension Term. Within ten
(10) days of Landlord's and Tenant's receipt of the last appraisal, the two
Appraisers shall select (by written notice to Landlord and Tenant) another MAI
appraiser (the "Third Appraiser") whose sole responsibility shall be to select,
within ten (10) days, which of the two original appraisals more closely
approximates such fair market rental value, which appraisal shall be deemed to
be the fair market value for purpose of determining Extension Rent. The
determinations of the Appraisers or Third Appraiser, as the case may be, shall
be in writing and shall be binding on both Landlord and Tenant. In determining
such fair market rental value, each of such appraisers shall take into
consideration the rental rate per square foot in comparable buildings in
Columbus, Ohio the size, term, and location of the Building, the existence age
and condition of the tenant improvements then in the Premises, and the terms and
conditions of this Lease.
(ii) The Appraisers and the Third Appraiser shall have at least
ten (10) years experience in appraising the value of leasehold interests in real
estate and shall be familiar with then current rental values in comparable
buildings located in Columbus, Ohio. Duplicate original counterparts of the
determinations of each of the Appraisers and the Third Appraiser, as the case
may be, shall be sent promptly to both Landlord and Tenant by certified mail,
return receipt requested or nationally recognized overnight carrier. The cost
and expense of the Third Appraiser (including fees) or determination shall be
borne equally by Landlord and Tenant. Landlord and Tenant shall each bear the
cost of its respective Appraiser.
D. If the Lease is extended as hereinbefore expressly provided, then
Landlord shall have no obligations or duties to paint or otherwise prepare or
repair the leased premises, or perform any work or make any installations, in
connection with the Extension Term. When used in subparagraph A above, the term
"Tenant" shall mean only the named tenant in the Lease, or, to the extent
permitted under the Lease, a successor by merger, consolidation or sale of
substantially all of the assets of Tenant, and no other assignee, subtenant or
successor thereof.
E. Tenant acknowledges that it shall have no further rights under
Paragraph U of the Addendum dated May 10, 1984.
8. Right of First Refusal
----------------------
A. Provided that the Lease is then in full force and effect, and
provided further that Tenant is not then in breach or default under any of the
terms, covenants or conditions in the Lease as amended hereby on Tenant's part
to observe or perform, if Landlord intends to lease the space consisting of
approximately 79,325 rentable square feet as indicated on Exhibit "A" (the
"Refusal Space") to a third-party tenant, Landlord shall give Tenant written
notice (the "Refusal Space Notice") of such intention. During the five (5)
business day period commencing on the date Landlord gives the Refusal Space
Notice to Tenant, Tenant shall have the option (the "Refusal Space Option") to
lease the Refusal Space from Landlord, upon the terms and conditions set forth
in the Refusal Space Notice by giving to Landlord written notice by U.S.
certified mail, return receipt requested or nationally recognized overnight
courier service (the "Exercise Notice"), of Tenant's exercise of the Refusal
Space Option.
B. If Tenant fails to give the Exercise Notice to Landlord within
said five (5) business day period, time being of the essence, or if Tenant fails
for any reason to duly execute and deliver to Landlord a lease agreement (or
lease amendment) with respect to the Refusal Space in form and content
satisfactory to Landlord, within fifteen (15) days after Tenant gives the
Exercise Notice to Landlord, time being of the essence, the Refusal Space Option
shall be deemed revoked and of no further force and effect and Landlord may
thereafter proceed with the leasing of the Refusal Space to any third-party
tenant upon terms and conditions satisfactory to said Tenant and Landlord.
C. Notwithstanding anything contained in this Lease to the contrary,
if on the date Landlord gives the Refusal Space Notice to Tenant or on the date
Tenant gives the Exercise Notice to Landlord, the Lease is not in full force and
effect or Tenant is in breach or default under any of the terms, covenants and
conditions in the Lease on Tenant's part to observe or perform then, in addition
to all of Landlord's rights and remedies, the Refusal Space Option shall be
deemed revoked and of no further force and effect, and Landlord may thereafter
proceed with the leasing of the Refusal Space to any tenant and upon any terms
and conditions.
3
<PAGE>
D. The Refusal Space Option shall apply only to the first (1st)
actual leasing of the Refusal Space immediately succeeding the initial letting
of the Refusal Space (or, if the Refusal Space is currently leased, the existing
letting). If the Refusal Space is initially leased to more than one (1) tenant,
then each portion thereof so leased shall constitute a "Refusal Space" and the
Refusal Space Option shall apply only to the first (1st) actual leasing of each
such Refusal Spaces (or, if the Refusal Space is currently leased, the existing
letting). Tenant expressly agrees that the Refusal Space Option is subject to
the then existing occupancies of, and any rights of first refusal or expansion
of any tenant with respect, to the Refusal Space.
E. Tenant acknowledges that it shall have no further rights under
Paragraph V or W of the Addendum dated May 10, 1984.
9. Insurance. The Insurance Rider attached hereto as Exhibit "B" is
---------
hereby incorporated into and made a part of the Lease. Tenant agrees to comply
with all of the terms, conditions, and provisions of the Insurance Rider.
10. Hazardous Materials. The Hazardous Materials Rider attached hereto as
-------------------
Exhibit "C" is hereby incorporated into and made a part of the Lease. Tenant
agrees to comply with all of the terms, conditions and provisions of the
Hazardous Materials Rider.
11. Broker. Tenant represents and warrants that is has had no dealings,
------
communications or negotiations with any broker or agent in connection with this
Amendment except Grubb & Ellis and Carey Leggett Realty (collectively, "Leasing
Broker") and National Realty (the "Former Broker"). Tenant hereby agrees to
indemnify Landlord from any and against all loss, claim, expense, damage,
liability or cost and expenses (including without limitation attorneys' fees)
resulting from a breach of the foregoing representation and warranty. Landlord
shall pay Leasing Broker a commission pursuant to a separate written agreement.
Landlord represents that the Former Broker is not entitled to receive a
commission in connection with this Amendment, and shall indemnify Tenant from
and against any claim for a commission by the Former Broker.
12. Tax Status. Tenant represents that it is not a tax-exempt
----------
organization as defined in Section 401 or Section 501 of the Internal Revenue
Code or a foreign entity not subject to the U.S. taxation.
13. Notices.
-------
A. Landlord's address for all purposes under the Lease shall be:
MLH Income Realty Partnership V
World Financial Center - South Tower
New York, New York 10080-6112
Attn: Senior Vice President - Portfolio Management
with a copy sent concurrently to:
MLH Income Realty Partnership V
World Financial Center - South Tower
New York, New York 10080-6112
Attn: Sr. Vice President - Legal Department
B. Tenant's address for all purposes under the Lease shall be:
Associated Stationers, Inc.
1634 Westbelt Drive
Columbus, Ohio 43228
Attn: General Manager
with a copy sent concurrently to:
Associated Stationers, Inc.
1075 Hawthorne Drive
Itasca, Illinois 60143
Attn: Vice President-Distribution and Operations
4
<PAGE>
14. Exculpation. Notwithstanding anything contained in the Lease to the
-----------
contrary, Tenant agrees that it shall look solely to the estate and property of
the Landlord in the land and building comprising the Property of which the
Premises are a part for the collection of any judgment (or any other judicial
process) requiring the payment of money by Landlord in the event of any default
or breach by Landlord with respect to any of the terms, covenants and conditions
of this Lease to be observed and performed by Landlord and no other property or
estates of Landlord or any of its agents, employees, partners, (general or
limited), affiliates, shareholders or joint venturers shall be subject to levy,
execution or other enforcement procedures for the satisfaction of Tenant's
remedies. In the event of any sale of this Lease or the Property or a lease
thereof by Landlord, Landlord shall be entirely freed, relieved and released of
all covenants and obligations of Landlord hereunder.
15. This Amendment shall not constitute an agreement by Landlord and shall
not be binding upon Landlord unless and until this Amendment shall be executed
by Landlord and Tenant, and shall be delivered by Landlord to Tenant.
16. This Amendment shall not be changed orally, and shall be binding upon
and inure to the benefit of Landlord and Tenant, their respective heirs,
successors and, as permitted their assigns. Tenant hereby confirms that it has
assumed the performance of all of the terms, covenants and conditions of the
Lease and agrees to perform all of the terms, covenants and conditions of the
Lease with the same effect as though Tenant had executed the Lease as the tenant
originally named therein.
17. Except as herein expressly amended or modified the terms and
conditions of the Lease are hereby ratified and confirmed and shall remain in
full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Fifth Amendment
as of the date first written above.
LANDLORD:
MLH INCOME REALTY PARTNERSHIP V
WITNESS: By: MLH Property Managers Inc.
Managing General Partner
[SIGNATURE NOT LEGIBLE] By: [SIGNATURE NOT LEGIBLE]
- ----------------------- ---------------------------
Vice President
(Print Name)
TENANT:
WITNESS/ATTEST: ASSOCIATED STATIONERS, INC.
/S/ Duane Ratay By: /S/ Daniel H. Bushell
- ----------------------- ---------------------------
Name: Daniel H. Bushell
-------------------------
Duane Ratay Title: Chief Financial Officer
- ----------------------- ------------------------
(Print Name)
5
<PAGE>
EXHIBIT "A"
[DIAGRAM APPEARS HERE]
<PAGE>
EXHIBIT "B"
INSURANCE RIDER
---------------
1. Notwithstanding anything to the contrary set forth in this Lease.
Tenant covenants and agrees that during the term of this Lease (and any renewal
or extension thereof), Tenant, at its sole cost and expense, shall obtain,
maintain and keep in full force and effect:
(a) Comprehensive General Liability Insurance including Blanket
Contractual, Personal Injury, Broad Form Property Damage, Products Liability,
Completed Operations, Fire Legal Liability, Host Liquor Law Liability (and if
Tenant shall be operating a restaurant, tavern or other establishment which
sells or dispenses any drink or beverage containing alcohol, Dram Shop
Liability) and Owned, Non-owned and Hired automobile coverages, naming Landlord
and Tenant, any mortgagee of the Building and any landlord under a ground lease
of the property on which the Building is located, and any other designee of
Landlord, as insureds, with minimum limits of $1,000,000 combined single limit
for property damage and bodily injury per occurrence for any and all claims for
injury or damage to persons or property or for the loss of life or of property
occurring upon, in or about the Premises and the public portions of the Building
arising out of or in connection with any act or omission of Tenant, its
employees, agents, contractors, customers, and invitees.
(b) All Risk insurance including without limitation sprinkler leakage and
flood and earthquake (if flood and earthquake exposure exists) and vandalism and
malicious mischief on a 100% replacement cost basis covering all contents,
merchandise, inventory, equipment, floor coverings, fixtures and improvements
and such other portions of the Premises which Landlord is not responsible for
restoring. Tenant shall apply all insurance proceeds attributable to any of the
foregoing items to the repair and restoration thereof unless this Lease shall be
terminated due to the occurrence of the casualty. In addition, Tenant shall
obtain and keep in full force and effect during the term of this Lease business
interruption insurance with all risk perils and such other insurance in such
amounts as Landlord shall reasonably require.
(c) Workers' Compensation insurance as required by law and Employers'
Liability coverage for a minimum of $100,000 per occurrence.
2. Tenant covenants to comply with any and all rules and regulations
applicable to the Premises issued by the Board of Fire Underwriters or by any
other body hereinafter constituted exercising similar functions and insurance
companies writing policies covering the Premises. Tenant shall pay all costs,
expenses, claims, fines, penalties and damages imposed because of failure of
Tenant to comply with this Section (2) and agrees to indemnify Landlord from all
liability (including without limitation attorney's fees) with reference thereto.
Tenant shall, at its own cost and expense, procure and maintain each and every
permit, license, certificate or other authorization and any renewals, extensions
or continuances of the same required in connection with lawful and proper use of
the Premises for Tenant's business. Tenant agrees to pay upon demand as
additional rent under this Lease any increase in the amount of insurance
premiums payable by Landlord for its insurance on the Building and/or the
underlying property ("Landlord's Insurance") over and above the rate now in
force that may be caused by Tenant's use or occupancy of the Premises or any act
or omission of Tenant, its agents, employees, contractors or invitees. If as
result of any such act or omission, all or any part of Landlord's Insurance
shall be cancelled or suspended, then Tenant shall indemnity Landlord against
any liability, cost or expense which would have been covered thereunder. All
insurance obtained by Tenant hereunder shall be under primary policies and
Landlord's Insurance shall be excess and noncontributory.
3. Tenant shall deposit a policy or policies of all such insurance, or an
approved certificate evidencing such insurance issued by duly authorized agents
of the carriers in question, with Landlord at least ten (10) days before the
Commencement Date and renewals of such policies and at least thirty (30) days
prior to the expiration of any existing policies. All such policies shall
provide that such insurance shall not be modified, cancelled, reduced or allowed
to lapse except upon thirty (30) days prior written notice to Landlord and all
other additional insureds.
4. All such policies shall (a) be written in form and substance
satisfactory to Landlord by an insurance company licensed and authorized to do
business in the state in which the Building is located and otherwise
satisfactory to Landlord in all respects, (b) contain a provision or endorsement
that (i) no act or omission of Tenant shall affect or limit the obligation of
the insurer to pay the amount of the loss sustained, (ii) all of Tenant's
indemnity obligations under this Lease are insured and (iii) Tenant shall be
solely responsible for the payment of all premiums and that Landlord shall have
no obligation to pay
7
<PAGE>
same notwithstanding that Landlord is or may be named as an insured. Tenant's
failure to provide and keep in force the aforementioned insurance shall be
regarded as a material default hereunder, entitling Landlord to exercise any or
all of the remedies in the event of a default under this Lease. Carrying the
prescribed insurance shall in no way be construed as either a limitation or
satisfaction of the hold harmless or indemnity agreements contained in this
Lease. In the event Tenant shall not obtain any of the insurance required to be
obtained hereunder, Landlord shall have the right to obtain such insurance on
Tenant's behalf and Tenant shall pay to Landlord the cost thereof upon demand as
additional rent. Landlord shall have the further right to review annually the
form, substance and limits of all of Tenant's insurance required hereunder and
Tenant shall adjust its insurance and/or increase the limits thereof as Landlord
shall deem reasonably necessary provided such adjustment or increase is
consistent with the standards of landlords of comparable buildings in Columbus,
Ohio.
5. Landlord and Tenant shall obtain in all policies of insurance
respectively maintained by them with respect to the Building and/or the Premises
a waiver by the insurer of all right of subrogation against the other in
connection with property insurance. So long as both Landlord's and Tenant's
policies then in force include such mutual waiver of subrogation, Landlord and
Tenant, to the fullest extent permitted by law, each waive all right of recovery
against the other for and agree to release the other from liability from loss or
damage to the extent such loss or damage is covered by valid and collectible
insurance in effect at the time of such loss or damage. If such waiver of
subrogation shall not be obtainable or shall be obtainable only at a premium
over that chargeable without such waiver, the party undertaking to obtain such
waiver shall notify the other thereof in writing, and the latter shall have ten
(10) days in which either to (i) procure on behalf of the notifying party
insurance with such waiver from a company or companies reasonably satisfactory
to the notifying party or (ii) agree to pay such additional premium (in Tenant's
case in the proportion which the rentable area of the Premises bears to the area
covered by the insurance policy of Landlord in question).
8
<PAGE>
EXHIBIT "C"
HAZARDOUS MATERIALS RIDER - INDUSTRIAL
--------------------------------------
(1) Tenant's Covenants Regarding Hazardous Materials.
------------------------------------------------
(A) Compliance with Environmental Laws. Tenant shall at all times
----------------------------------
and in all respects comply with all federal, state and local laws, ordinances
and regulations, including, but not limited to, the Federal Water Pollution
Control Act (33 U.S.C. (S)1251, et seq.), Resource Conservation & Recovery Act
(42 U.S.C. (S)6901, et seq.), Safe Drinking Water Act (42 U.S.C. (S)3000f, et
seq.), Toxic Substances Control Act (15 U.S.C. (S)2601, et seq.), the Clean Air
Act (42 U.S.C. (S)7401, et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. (S)9601, et seq.) and other comparable
local, state and federal laws, currently in force or enacted in the future
(collectively, "Hazardous Materials Laws") relating to industrial hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
presence, disposal or transportation of any oil, petroleum products, flammable
explosives, asbestos, urea formaldehyde, radioactive materials or waste, or
other hazardous, toxic, contaminated or polluting materials, substances or
wastes, including, without limitations, any "hazardous substances," "hazardous
wastes," "hazardous materials" or "toxic substances" under any such laws,
ordinances or regulations (collectively, "Hazardous Materials").
(B) Hazardous Materials Handling. Tenant shall at its own expense
----------------------------
procure, maintain in effect and comply with all conditions of any and all
permits, licenses and other governmental and regulatory approvals required for
Tenant's use of the Premises, including, without limitation, discharge of
(appropriately treated) materials or wastes into or through any sanitary sewer
serving the Premises. Except as discharged into the sanitary sewer in strict
accordance and conformity with all applicable Hazardous Materials Laws, Tenant
shall cause any and all Hazardous Materials removed from the Premises to be
removed and transported solely by duly licensed haulers to duly licensed
facilities for final disposal of such materials and wastes. Tenant shall in all
respects handle, treat, deal with and manage any and all Hazardous Materials in,
or under or about the Premises in total conformity with all applicable Hazardous
Materials Laws and prudent industry practices regarding management of such
Hazardous Materials. All reporting obligations imposed by Hazardous Materials
Laws are strictly the responsibility of Tenant. Upon expiration or earlier
termination of the term of the Lease, Tenant shall cause all Hazardous Materials
to be removed from the Premises and transported for use, storage or disposal in
accordance and compliance with all applicable Hazardous Materials Laws. Tenant
shall not take any remedial action in response to the presence of any Hazardous
Materials in or about the Premises or any Building, nor enter into any
settlement agreement, consent decree or other compromise in respect to any
claims relating to any Hazardous Materials in any way connected with the
Premises or Building, without first notifying Landlord of Tenant's intention to
do so and affording Landlord ample opportunity to appear, intervene or otherwise
appropriately assert and protect Landlord's interest with respect thereto. In
addition, at Landlord's request, Tenant shall remove any tanks or fixtures which
contain or contained, or are contaminated with Hazardous Materials.
(C) Notices. Tenant shall immediately notify Landlord in writing of:
-------
(i) any enforcement, cleanup, removal or other governmental or regulatory action
of which Tenant or its agents or employees has knowledge, instituted, completed
or threatened pursuant to any Hazardous Materials Laws in connection with the
Premises or Tenant's use thereof; (ii) any claim made or threatened by any
person against Tenant, the Premises or Building relating to damage,
contribution, cost recovery compensation, loss or injury resulting from or
claimed to result from any Hazardous Materials in connection with the Premises
or Tenant's use thereof; and (iii) any reports made to any environmental agency
of which Tenant or its agents or employees has knowledge, arising out of or in
connection with any Hazardous Materials in, on or removed from the Premises or
Building, including any complaints, notices, warnings, reports or asserted
violations in connection therewith. Tenant shall also supply to Landlord as
promptly as possible, and in any event within five (5) business days after
Tenant first receives or sends the same, with copies of all claims, reports,
complaints, notices, warnings or asserted violations relating in any way to the
Premises, Building or Tenant's use thereof. Tenant shall promptly deliver to
Landlord copies of hazardous waste manifests reflecting the legal and proper
disposal of all Hazardous Materials removed from the Premises.
(2) Indemnification of Landlord. Tenant shall indemnify, defend (by
---------------------------
counsel acceptable to Landlord), protect, and hold Landlord, and each of
Landlord's partners, employees, agents, attorneys, successors and assigns, free
and harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorney's fees) for death of or
injury to any person or damage to any property whatsoever (including water
tables and atmosphere), arising from or caused in
9
<PAGE>
whole or in part, directly or indirectly, be (A) the presence in, on, under or
about the Premises or Building or discharge in or from the Premises or Building
of any Hazardous Materials or Tenant's use, analysis, storage, transportation,
disposal, release, threatened release, discharge or generation of Hazardous
Materials to, in, on, under, about or from the Premises or Building, except to
the extent such Hazardous Materials were present in the Premises prior to the
initial commencement date of the Lease (June 1, 1984), or (B) Tenant's failure
to comply with any Hazardous Materials Law whether knowingly or unknowingly, the
standard herein being one of strict liability. Tenant's obligations hereunder
shall include, without limitation, and whether foreseeable or unforeseeable, all
costs of any required or necessary repair, cleanup or detoxification or
decontamination of the Premises or Building, and the preparation and
implementation of any closure, remedial action or other required plans in
connection therewith, and shall survive the expiration or earlier termination of
the term of the Lease. For purposes of the release and indemnity provision
hereof, any acts or omissions of Tenant, or by employees, agents, assignees,
contractors or subcontractors of Tenant or others acting for or on behalf of
Tenant (whether or not they are negligent, intentional, willful or unlawful)
shall be strictly attributable to Tenant.
(3) Environmental Audit: Right of Entry. Landlord shall have the right to
-----------------------------------
require Tenant to undertake and submit to Landlord a periodic environmental
audit from an environmental company approved by Landlord, which audit shall
cover Tenant's compliance with this Rider. Landlord may not require an audit
more often than once every two years unless Landlord has reasonable cause to
believe that Tenant has violated the terms or conditions of this Rider Tenant
shall promptly comply with all requirements of any such audit and cure all
matters raised therein at Tenant's sole cost.
(4) Indemnification of Tenant. Landlord shall indemnify, defend (by
-------------------------
counsel reasonably acceptable to Tenant), protect, and hold Tenant free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including reasonable attorney's fees) for death
of or injury to any person or damage to any property whatsoever (including water
tables and atmosphere), arising from or caused in whole or in part, directly or
indirectly, be (A) the presence in, on, under or about the Premises or Building
or discharge in or from the Premises or Building of any Hazardous Materials to
the extent caused by Landlord, its agents or employees, or (B) Landlord's
failure to comply with any Hazardous Materials Law.
10
<PAGE>
EXHIBIT "D"
IMPROVEMENTS
------------
1) Removal of all existing carpet throughout the office area including all
necessary furniture relocation.
2) Install new carpet throughout the office area. Carpet will be direct glue
down and shall be Shaw 22 oz. or equivalent. Color and style to be selected
by tenant.
3) Repaint all walls throughout the office area with Sherwin Williams Promar
or equivalent. Color and style to be selected by tenant.
4) Wash down and clean all existing wall covering throughout the office area.
5a) Existing concrete floor to be patched and repaired in selected places.
5b) Ashford Formula sealer or equivalent will be used to reseal aisles and
staging areas.
6) Two existing exterior wall mounted lights located over the north entry will
be replaced with "Hubbel" 400 watt metal halide flood lights and three will
be added as indicated on the diagram provided in the Koll Management
Services letter dated April 29, 1994, addressed to Duane Ratay.
7) The concrete dolly pad will be completely replaced from the main entry
south to door #7.
8) Replace the existing ceiling tiles throughout the office area.
9) Install a hand rail along the steps leading from the front door to the
parking lot.
11
<PAGE>
EXHIBIT 10.41
LEASE
A. Lessor:
Name: Propco, Inc.
-------------------------------------------------------------
_______________________________________________________________________
Address: 5000 S. E. 25th Avenue
Portland, Oregon 97202
B. Lessee:
Name: Crown Zellerbach Corporation
-------------------------------------------------------------
[_] Sole proprietorship
[_] Partnership composed of ___________________________________________
___________________________________________________________________
[x] A Nevada corporation qualified to do business in Oregon.
------
Address: One Bush Street
ATTN: Real Estate Dept.
San Francisco, California 94104
C. Date of execution of Lease Jan. 9, 1981
D. Address of premises 4455 S.E. 24th Avenue
Portland, Oregon
E. Legal description a portion of Block 6,
SPANTON'S ADDITION,
Multnomah County, Oregon
F. Commencement date of Lease: Sept. 1, 1981 See Schedule A
G. Expiration date of Lease: June 30, 1991 See Schedule A
H. Initial rental: $ 19,631.00 per month. See Schedule A
---------
J. Lease deposit: $ None
----
K. Rental adjustments: For the second 5-year period of the basic lease, the
rent will be based on of the increase of the CPI, all items, using September
1981 as base year, Seattle, Wash.
L. Lessee's use of premises: Office and Warehouse (Uniform Building Code B2
Occupancy)
M. Additional provisions regarding repairs: Lessor shall be responsible for
maintenance of concrete floors major settlements should occur to said
floors. Lessee shall be responsible for all maintenance of the concrete
floors except where major settlements occur.
N. Liability insurance coverages to be provided by Lessee:
Injury to one person: $ One Million
-----------
Injuries arising out of a single occurrence: $ Two Million
-----------
Property damage: $ One Million
-----------
P. Term of payment for business interruption: None
----
Q. Permitted period for display of Lessor's signs: 180 days
R. Liquidated damages for holding over: $ double the latest rent, prorated
----------------------
on a daily basis.
S. Additional terms and conditions:
See Schedule A
Notwithstanding the provisions of paragraph 17 & 19 herein, should the
partial destruction or taking of the property substantially destroy the
value of the property to the Lessee, and should Lessor be unable to restore
the premises to meet Lessee's needs within 180 day of such destruction or
taking then Lessee may terminate this lease at the end of such 180 day
period.
Option Period: See Schedule A CROWN ZELLERBACH CORPORATION
By: PROPCO, INC. BY: /S/ W. J. Zellerbach
--------------------------- -------------------------------------
Title:[SIGNATURE NOT LEGIBLE] Title: W. J. Zellerbach
---------------------- --------------------------------
"Lessor" Senior Vice President "Lessee"
<PAGE>
THIS AGREEMENT AND LEASE was made and entered into by and between the
"Lessor" identified at Paragraph A. above and the "Lessee" identified at
Paragraph B. above on the date set forth at Paragraph C. above.
Lessor does hereby lease, demise and let unto Lessee the premises located
and described in Paragraphs D. and E. above for a term commencing at 12:01 a.m.
on the date set forth at Paragraph F. above and expiring at midnight on the date
set forth at Paragraph G. above.
1. TENANT'S ACCEPTANCE OF PROPERTY. The Lessee accepts the building,
improvements, and personalty on the leased premises (all of which are
hereinafter referred to as "the Leased Property",) in their present state and
without any representation or warranty by the Lessor as to the condition of such
property or as to the use which may be made thereof except that Lessor warrants
that the premises upon delivery shall comply with all statute codes &
regulations of the Federal, State or local government units. The Lessee
acknowledges that the Leased Property, the title thereto, the streets,
sidewalks, driveways, parking areas, curbs, utilities, and structures adjoining
the same, any subsurface conditions thereof, and the present use and non-uses
thereof have been examined by the Tenant. The Lessor shall not be responsible
for any latent defect or change of condition in the Leased Property, and the
rent hereunder shall in no case be withheld or diminished on account of any
defect in the Leased Property, any change in the condition thereof, any damage
occurring thereto, or the existence with respect thereto of any violations of
the laws or regulations of any governmental authority except as may be otherwise
specifically provided herein. The obligation of the Lessee to pay the full rent
herein reserved shall not be affected by any future act or omission on the part
of the Lessor with respect to the tenantability of the Leased Property, or the
building of which it is a part, except as otherwise specifically provided
herein. The taking of possession of the Leased Property by the Lessee shall be
conclusive evidence that the Lessee accepts the same "as is" and that the Leased
Property and the building and land of which the same form a part were in good
condition at the time possession was taken.
2. RENTAL. The initial rental to be paid by the Lessee to the Lessor is the
sum set forth at Paragraph H. above, said sum to be due and payable monthly
commencing on the commencement date set forth at Paragraph F. above and paid
monthly thereafter on the first day of each month during the term hereof.
3. LEASE DEPOSIT. Concurrently with the execution of this Lease, the
Lessee has deposited with the Lessor the sum set forth at Paragraph J. above as
security for the performance by the Lessee of all the conditions required to be
performed by the Lessee under this Lease.
4. RENT REVISION. At the time or times, and in accordance with the terms
set forth in Paragraph K. above, the rental set forth in Paragraph H. above
shall be adjusted for the remaining term of the Lease.
5. USE OF PREMISES.
(i) The Lessee shall use the Leased Property for the conduct of the
business described at Paragraph L. above and for no other purposes whatsoever
without the Lessor's prior written consent.
(ii) The Lessee will not make any unlawful, improper or offensive use
of the Leased Property; he will not suffer any strip or waste thereof; he will
not permit any objectionable noise or odor to escape or to be emitted from the
Leased Property or do anything or permit anything to be done upon or about the
Leased Property in any way tending to create a nuisance.
(iii) The Lessee will not allow the Leased Property at any time to fall
into such a state of repair or disorder as to increase the fire hazard thereon;
he shall not install any power machinery on the Leased Property except under the
supervision and with written consent of the Lessor; he shall not store gasoline
or other highly combustible materials on the Leased Property in such a way or
for such a purpose that the fire insurance rate on the building in which the
Leased Property is located is thereby increased or that would prevent the Lessor
from taking advantage of any rulings of the Insurance Rating Bureau of the state
in which the Leased Property is situated which would allow the Lessor to obtain
reduced premium rates for long term fire insurance policies.
(iv) The Lessee shall comply at the Lessee's own expense with all laws
and regulations of any municipal, county, state, federal or other public
authority respecting the use of the Leased Property except Lessor shall repair
all pre-existing violations.
(v) The Lessee will not overload the floors of the Leased Property in
such a way as to cause any undue or serious stress or strain upon the building
in which the Leased Property is located, or any part thereof, and the Lessor
shall have the right, at any time, to call upon any competent engineer or
architect whom the Lessor may choose, to decide whether or not the floors of the
Leased Property, or any part thereof, are being overloaded so as to cause any
undue or serious stress or strain on said building, or any part thereof, and the
decision of said engineer or architect shall be final and binding upon the
Lessee; and in the event that the engineer or architect so called upon shall
decide that in his opinion the stress or strain is such as to endanger or injure
said building, or any part thereof, then and in that event the Lessee agrees
immediately to relieve said stress or strain either by reinforcing the building
or by lightening the load which causes such stress or strain in a manner
satisfactory to the Lessor.
6. UTILITIES. The Lessee shall pay for all heat, light, water, power,
garbage and other services or utilities used in the Leased Property during the
term of this Lease.
7. REPAIRS AND IMPROVEMENTS.
(i) The Lessor shall not be required to make any repairs, alterations,
additions or improvements to or upon the Leased Property during the term of this
Lease, except only those hereinafter specifically provided for; the Lessee
hereby agrees to maintain and keep the Leased Property including, but not
limited to, all interior and exterior doors, heating, ventilating and cooling
systems, interior wiring, plumbing and drain pipes to sewers or septic tank, in
good order and repair during the entire term of this Lease at the Lessee's own
cost and expense, and to replace all glass which may be broken or damaged during
the term hereof in the windows and doors of the Leased Property with glass of as
good or better quality as that now in use; the Lessee hereby agrees to keep and
maintain the sidewalks, driveways and parking areas immediately adjoining the
Leased Property in a safe and orderly condition.
(ii) Except as otherwise provided in Paragraph M. above, the Lessor
agrees to maintain in good order and repair during the term of this Lease the
exterior walls, roof, gutters, downspouts and foundations of the building in
which the Leased Property is situated. It is understood and agreed that the
Lessor reserves and at any and all times shall have the right to alter, repair
or improve the building of which the Leased Property is a part, or to add
thereto, and for that purpose at any time may erect scaffolding and all other
necessary structures upon the Leased Property, and the Lessor and Lessor's
representatives, contractors and workman for the aforedescribed purposes may,
upon reasonable advance notice, enter in or about the Leased Property with such
materials and equipment as Lessor may deem necessary therefor, and Lessee waives
any claim to damages, including loss of business resulting therefrom.
8. RIGHT OF ENTRY. It shall be lawful for the Lessor, his agents and
representatives, at any reasonable time to enter into or upon the Leased
Property for the purpose of examining into the condition thereof, or any other
lawful purpose. If during the last month of the term the Lessee shall have
removed all, or substantially all, of the Lessee's property from the Leased
Property, the Lessor may immediately enter and alter, renovate, and redecorate
the Leased Property, without elimination or abatement of rent and without
liability to the Lessee for any compensation, and such acts shall have no effect
upon this Lease.
9. RIGHTS OF ASSIGNMENT. The Lessee will not assign, transfer, pledge,
hypothecate, surrender or dispose of this Lease, or any interest herein, or
permit any other person or persons whomsoever to occupy the Leased Property
without the written consent of the Lessor being first obtained in writing
provided that such consent will not be unreasonably withheld. This Lease is
personal to the Lessee. Lessee's interest, in whole or in part, cannot be sold,
assigned, transferred, seized or taken by operation at law, or under or by
virtue of any execution or legal process, attachment or proceedings instituted
against the Lessee, or under or by virtue of any bankruptcy of insolvency
proceedings had in regard to the Lease or in any other manner, except as above
mentioned. Subject to the foregoing, all rights, remedies and liabilities herein
given to or imposed upon either of the parties hereto, shall extend to, inure to
the benefit of, and bind, as the circumstances may require, the heirs, personal
representatives, successors and, so far as this Lease is assignable by the terms
hereof, the assigns of such parties.
10. LIENS. The Lessee will not permit any lien of any kind, type or
description to be placed or imposed upon the Leased Property or any part
thereof.
11. ICE, SNOW, AND DEBRIS. If the Leased Property is located at street
level, then at all times Lessee shall keep the sidewalks, curbs, driveways, and
parking areas immediately adjoining the building (whether or not they are
included herein as Leased Property), in front thereof free and clear of ice,
snow, rubbish, debris and obstruction; and if the Lessee occupies the entire
building, he will not permit rubbish, debris, ice or snow to accumulate on the
roof of said building so as to stop up or obstruct gutters or downspouts or
cause damage to said roof.
12. ADVERTISING SIGNS. The Lessee will not use the outside walls of
the Leased Property, or allow signs or devices of any kind to be attached
thereto or suspended therefrom, for advertising or displaying the name or
business of the Lessee or for any purpose whatsoever without the written consent
of the Lessor.
13. INSURANCE COVERAGES. The Lessee shall, at all times during the
term hereof, at his own expense, maintain, keep in effect, furnish and deliver
to the Lessor insurance policies (or certificates evidencing same,) in form and
with an insurer satisfactory to the Lessor insuring:
(i) Both the Lessor and the Lessee against all liability for damage to
personal property in or about said Leased Property. The amount of said liability
insurance shall be not less than the amount set forth in Paragraph N. above.
(ii) The Lessor against the damage or destruction of the Leased
Property by fire or other casualty under a standard fire insurance policy with
standard special or extended form coverage endorsement to 90% of the full,
current replacement value.
(iii) The renewal forms of each such policy or certificate shall be
delivered to the Lessor no less than 30 days prior to the expiration of the
current policy. Each such policy shall provide that it cannot be cancelled as to
the Lessor with less than 15 days notice to it.
<PAGE>
14. INDEMNIFICATION. The Lessee agrees to and shall indemnify and hold
the Lessor harmless against any and all claims and demands arising from, (i) the
negligence of the Lessee his officers, agents, invitees and/or employees; (ii) a
failure by the Lessee to perform any covenant required to be performed by the
Lessee ??? ? hereunder; (iii) any accident, injury, or damage ???? shall happen
in or about the Leased Property or appurtenances, or on or under the adjoining
streets, sidewalks, driveways, parking ???? or curbs, or resulting from the
condition, maintenance, or operation of the Leased Property or of the adjoining
streets, sidewalks, driveways, parking areas, or curbs; (iv) the Lessee's
failure to comply with any requirements of any governmental authority; and (v)
any mechanic's lien, or security agreement, filed against the Leased Property as
a result of the acts of the Lessee. The Lessee shall at his own expense defend
the Lessor against any and all suits or actions arising out of the
aforedescribed acts or claimed acts, and all appeals therefrom and shall satisfy
and discharge any judgment which may be awarded against Lessor, including but
not limited to, the Lessor's attorney's fees, in any such suit or action.
15. TAXES AND ASSESSMENTS. The Lessee shall pay all real property
taxes, assessments (general and special) and other public charges levied,
assessed or otherwise imposed upon the Leased Property, all promptly before the
same or any part thereof become past due; provided, however, that any municipal,
county or state assessments over $2,000.00 total which become or may become a
lien on the premises, may be bonded by the Lessee as provided by law, and the
Lessee shall pay all installments of principal and interest on such bonds during
his tenancy, but shall be released from all obligation for payment of
installments becoming due after the end of the lease term herein reserved
without proration. The Lessee shall also pay promptly, when due, all taxes
levied against his own personal property and all taxes, assessments and other
public charges whatsoever arising in respect to, and because of, the Lessee's
occupancy, use or possession of the Leased Property. Such real property taxes
for years in which the commencement and expiration of the term of this Lease
shall fall shall be appropriately pro-rated and adjusted between the Lessor and
the Lessee. The Lessee shall furnish to the Lessor, within 30 days after the
date any amount is payable by the Lessee, as provided in this Paragraph, copies
of official receipts of the appropriate taxing authority or other proof
satisfactory to the Lessor evidencing payment.
16. LESSEE'S ALTERATIONS AND IMPROVEMENTS. No alteration, addition, or
improvement to the Leased Property shall be made by the Lessee without the
written consent of the Lessor. Any alteration, addition, or improvement made by
the Lessee after such consent shall have been given, and any fixtures installed
as part thereof, (except Lessee's movable trade fixtures), shall, at the
Lessor's option, become the property of the Lessor upon the expiration or other
sooner termination of this Lease; provided, however, that the Lessor shall have
the right to require the Lessee to remove such fixtures at the Lessee's cost
upon such termination of this Lease.
17. DAMAGE BY CASUALTY OR FIRE AND DUTY TO REPAIR. If all or any part
of the Leased Property is damaged or destroyed by fire or other casualty subject
to coverage under the standard fire insurance policy with standard special or
extended form coverage endorsement applicable to the Leased Property, the Lessor
shall, except as otherwise provided herein, repair and rebuild the Leased
Property with reasonable diligence. If there is a substantial interference with
the operation of the Lessee's business in the Leased Property, the then
applicable rental shall be equitably apportioned for the duration of such
repairs. Notwithstanding the foregoing provisions, if at any time within
eighteen months prior to the end of the initial or any renewal term, and
provided the Lessee shall not have served upon the Lessor notice of renewal or
extension as herein provided, the Leased Property is completely destroyed or so
damaged by fire or other casualty covered by insurance as to render it unfit for
the use as set forth at Paragraph L. above, the Lessor may terminate this Lease
on 30 days' written notice to the Lessee. If all or any substantial part of the
Leased Property is damaged or destroyed by casualty which is not subject to
coverage under the standard fire insurance policy with standard special or
extended form coverage endorsement applicable to the Leased Property, or if
subject to such coverage, the loss is, in fact, not covered to within 90% of
replacement, the Lessor may terminate this Lease upon 30 days' written notice to
the Lessee. If the Lessor shall terminate this Lease as provided herein, all
rent shall be apportioned to the date of termination and all insurance proceeds
shall belong to the Lessor. Except to the extent provided for in this Paragraph,
neither the rent payable by the Lessee nor any of the Lessee's other obligations
under any provision of this Lease shall be affected by any damage to or
destruction of the Leased Property by any cause whatsoever, and the Lessee
hereby expressly waives any and all additional rights it might otherwise have
under any law or statute.
18. WAIVER OF SUBROGATION RIGHTS. Neither the Lessor nor the Lessee shall
be liable to the other for loss arising out of damage to, or destruction of, the
Leased Property or the contents thereof, when such loss is caused by any of the
perils which are or could be included within or insured against by a standard
fire insurance policy with standard extended or special form coverage
endorsement, including sprinkler leakage insurance and business interruption
insurance, if any. All such claims for any and all loss, however caused, hereby
are waived. Said absence of liability shall exist whether or not the damage or
destruction is caused by the negligence of either Lessor or Lessee or by any of
their respective agents, servants or employees. Neither the Lessor nor the
Lessee shall have any interest or claim in the other's insurance policy or
policies, or the proceeds thereof, unless specifically covered therein as a
joint assured and notwithstanding any provision hereof requiring the Lessee to
furnish such coverages on behalf of the Lessor. If the Lessee, at any time, is
unable to obtain inclusion of any of the matters set forth above and any of its
policies, the Lessee shall, at its own expense, have the Lessor named in such
policies as one of the insureds.
19. EMINENT DOMAIN.
(i) If the whole of the Leased Property shall be taken for any public
or any quasi-public use under any statue or by right of eminent domain, or by
private purchase in lieu thereof, then this Lease shall automatically terminate
as of the date that title shall be taken. If any part of the Leased Property
shall be so taken as to render the remainder thereof unusable for the purposes
for which the Leased Property was leased, as set forth in Paragraph L., then the
Lessor and the Lessee shall each have the right to terminate this Lease on 30
days' notice to the other given not later than the date of such taking. In the
event that this Lease shall terminate or be terminated, the rental shall, if and
as necessary, be equitably adjusted.
(ii) If a part of the Leased Property shall be taken as provided in
Subparagraph (i) above, without so rendering the remainder of the Leased
Property unusable, then the Lessor shall rebuild and restore the Leased Property
with reasonable diligence, and if there is a substantial interference with the
operation of the Lessee's business in the Leased Property the then applicable
rental shall be equitably apportioned for the duration of such rebuilding and
restoration; provided, however, that the cost of such work shall not exceed the
proceeds of its condemnation award; and provided, further, that if such taking
occurs within 18 months prior to the end of the initial or any renewal term, the
Lessor may upon 30 days' notice given to the Lessee on or before the date of
such taking elect not to so rebuild or restore the Leased Property.
(iii) All compensation awarded or paid upon such a total or partial
taking of the Leased Property shall belong to and be the property of the Lessor
without any participation by the Lessee; provided, however, that nothing
contained herein shall be construed to preclude the Lessee from prosecuting any
claim directly against the condemning authority in such condemnation proceedings
for loss of business, or depreciation to, damage to, or cost of removal of, or
for the value of stock, trade fixtures, furniture, and other personal property
belonging to the Lessee; provided, further, however, that no such claim shall
diminish or otherwise adversely affect the Lessor's award or the award of any
fee mortgagee.
20. LESSOR'S SIGNS. During the periods specified in Paragraph Q. above,
the Lessor may post on the Leased Property, including the windows thereof, signs
of moderate size notifying the public that the premises are "for sale" or "for
rent" or "for lease."
21. SURRENDER UPON TERMINATION. At the expiration of this term of the
Lease or upon any sooner termination hereof, the Lessee will quit and deliver up
said Leased Property and all future erections or additions to or upon the same,
broom clean, to the Lessor or those having Lessor's estate in the premises,
peaceably, quietly, and in as good order and condition, reasonable use and wear
thereof, damage or loss excused pursuant to the terms hereof excepted, as the
same are now in or hereafter may be put in by the Lessor and Lessee.
22. LIQUIDATED DAMAGES. In the event that the Lessee shall fail to
deliver up the Leased Property as above agreed, he shall become liable for the
payment, at the option of the Lessor, of a sum for each and every day which he
holds possession and fails to deliver over possession in the amount set forth at
Paragraph R. above. The Lessor by availing itself of the rights and privileges
granted by this provision and the acceptance of said liquidated rental shall not
be deemed to have waived any of the rights and privileges granted in other parts
of this Lease, (including, but not limited to, the continuing charge of rental,)
but the rights granted under this provision shall be considered, in any event,
as in addition to, and not in exclusion of, such rights and privileges.
23. HOLDING OVER. In the event the Lessee for any reason shall hold over
after the expiration of this Lease, such holding over shall not be deemed to
operate as a renewal or extension of this Lease, but shall only create a tenancy
from month-to-month which may be terminated at will at any time by the Lessor.
24. ATTORNEY'S FEES AND COURT COSTS. In case suit, action, or arbitration
is instituted to enforce compliance with any of the terms, covenants or
conditions of this Lease, or to collect the rental which may become due
hereunder, or any portion thereof or to enforce any right of Lessor while Lessee
is holding over after expiration hereof, the losing party agrees to pay such sum
as the trial court or arbitrators may adjudge reasonable as attorney's fees to
be allowed the prevailing party in such suit, action, or arbitration and in the
event any appeal is taken from any judgment or decree in such suit or action,
the losing party agrees to pay such further sum as the appellate court shall
adjudge reasonable as prevailing party's attorney's fees on such appeal. The
Lessee agrees to pay and discharge all Lessor's costs and expenses, including
Lessor's reasonable attorney's fees, that shall arise from enforcing any
provision or covenants of this Lease even though no suit, action, or arbitration
is instituted if this Lease or Lessor's rights arising hereunder are placed in
Lessor's attorney's hands for collection or enforcement.
<PAGE>
25. WAIVER. Any waiver by the Lessor of any breach of any covenant herein
contained to be kept and performed by the Lessee shall not be deemed or
considered as a continuing waiver, and shall not operate to bar or prevent the
Lessor from declaring a forfeiture for any succeeding breach, either of the same
condition or covenant or otherwise.
26. NOTICES. Any notice required by the terms of this Lease to be given by
one party to the other or desired so to be given, shall be sufficient if in
writing contained in a sealed envelope, deposited in the U.S. Registered or
Certified Mails with postage fully prepaid, and if intended for the Lessor, then
if addressed to said Lessor at the address set forth in Paragraph A. above and
if intended for the Lessee, then if addressed to the Lessee at the address set
forth for it in Paragraph B. above.
27. DELAY OF POSSESSION. If the Lessor for any reason cannot deliver
possession of the Leased Property to the Lessee at the commencement of the Lease
term, this Lease shall not be void or voidable, nor shall the Lessor be liable
to the Lessee for any loss or damage resulting therefrom, but there shall be an
abatement of rent for the period between the commencement of the Lease term and
the time when the Lessor does deliver possession.
28. QUIET ENJOYMENT. The Lessee, upon the payment of the rent herein
reserved and upon the performance of, and subject to the provisions of this
Lease, shall at all times during the Lease term and during any extension or
renewal term peaceably and quietly enjoy the Leased Property without any
disturbance from the Lessor or from any other person claiming through the
Lessor.
29. PERFORMANCE OF LESSEE'S OBLIGATIONS. If the Lessee shall be in
default hereunder, the Lessor may cure such default on behalf of the Lessee, in
which event the Lessee shall reimburse the Lessor for all sums paid to effect
such cure, together with interest at the highest legal rate. In order to collect
such reimbursement the Lessor shall have all the remedies available under this
Lease for a default in the payment of rent.
30. ARBITRATION. In the event of any controversy between the parties over
the application of Paragraphs 17., 19., or 27. hereof, the same shall be settled
by arbitration at Portland, Oregon in accordance with the then existing rules of
the American Arbitration Association, and judgment upon the award rendered may
be entered in any court having jurisdiction thereof.
31. DEFAULT.
(i) The Lessor may give the Lessee five days' notice of intention to
terminate this Lease in any of the following circumstances:
1. If the Lessee shall be in default in the performance of any
covenant of the Lease (other than the covenants for the payment of basic rent or
additional rent) and if such is not cured within 15 days after written notice
thereof given by the Lessor; or, if such default shall be of such nature that it
cannot be cured completely within such 15-day period, if the Lessee shall not
have promptly commenced the cure within such 15-day period or shall not
thereafter proceed with reasonable diligence and in good faith to remedy such
default.
2. If the Lessee shall be adjudicated a bankrupt, make a general
assignment for the benefit of creditors, or take the benefit of any insolvency
act, or if a permanent receiver or trustee in bankruptcy shall be appointed for
the Lessee's property and such appointment is not vacated within 90 days. For
these purposes the "Lessee" shall mean the tenant then in possession of the
Leased Property.
3. If the Leased Property becomes vacant or deserted for a
period of 30 days.
4. If this Lease shall be assigned or the Leased Property sublet
other than in accordance with the terms of this Lease and such default is not
cured within 15 days after notice.
(ii) The Lessor may give the Lessee 10 days' notice of intention to
terminate this Lease if the Lessee shall be in default in the payment of the
initial rent or any additional rent.
(iii) If the Lessor shall give the notice of intention to terminate
provided above, then at the expiration of such period this Lease shall terminate
as completely as if that were the date herein definitely fixed for the
expiration of the term of this Lease, and the Lessee shall then surrender the
Leased Property to the Lessor. If this Lease shall so terminate, it shall be
lawful for the Lessor, at its option, without formal demand or notice of any
kind, to re-enter the Leased Property by a forceable entry and detainer action
or by any other means, including force, and to remove the Lessee and his
possessions therefrom without being liable for any damages therefor. Upon the
termination of this Lease, as herein provided, the Lessor shall have the right,
at its election, to terminate any sublease then in effect, without the consent
of the sublessee concerned.
(iv) The Lessee shall remain liable for all its obligations under
this Lease despite the Lessor's re-entry, and the Lessor may re-rent or use the
Leased Property as agent for the Lessee, if the Lessor so elects. The Lessor
waives any legal requirement for notice of intention to re-enter and any right
of redemption.
(v) If this Lease shall terminate as provided in this Paragraph the
Lessor shall have the right, at its election at any time, to recover from the
Lessee the amount by which the rent and charges equivalent to rent reserved
herein for the balance of the term shall exceed the reasonable rental value of
the Leased Property for the same period.
32. MISCELLANEOUS PROVISIONS.
(i) Time is of the essence of this Lease with respect of performance
by the Lessee to his obligations hereunder.
(ii) In construing this Lease, masculine or feminine pronouns shall
be substituted for those neuter in form and vice versa, and plural terms shall
be substituted for singular and singular for plural in any place in which the
context requires.
(iii) If there is more than one party tenant, the covenants of the
Lessee shall be the joint and several obligations of each such party, and, if
the Lessee is a partnership, the covenants of the Lessee shall be the joint and
several obligations of each of the partners and the obligations of the firm.
(iv) The parties agree to execute and deliver any instruments in
writing necessary to carry out any agreement, term, condition, or assurance in
this Lease whenever occasion shall arise and request for such instruments shall
be made.
(v) The specified remedies to which the Lessor may resort under the
terms of this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress, as provided herein or by law, to which the
Lessor may be lawfully entitled in case of any breach or threatened breach by
the Lessee of any provision or provisions of this Lease.
(vi) The captions of this Lease are inserted only as a matter of
convenience and for reference and in no way define, limit, or describe the scope
or intent of this Lease, nor in any way affect this Lease.
(vii) This Lease, together with any written agreements which shall
have been executed simultaneously herewith, contains the entire agreement and
understanding between the parties. There are no oral understandings, terms, or
conditions, and neither party has relied upon any representation, express or
implied, not contained in this Lease or the simultaneous writings heretofore
referred to. All prior understandings, terms, or conditions are deemed merged in
this Lease. This Lease cannot be changed or supplemented orally.
(viii) If any provision of this Lease shall be declared invalid or
unenforceable, the remainder of this Lease shall continue in full force and
effect.
33. ADDITIONAL TERMS AND CONDITIONS. Additional terms and conditions
of this Lease are set forth at Paragraph S. above (and attached) and have the
same force and effect as if printed here; provided, however, that in the event
that any provisions of Paragraph S. conflict with any other provision hereof,
and both may not be given effect, Paragraph S. shall control.
IN WITNESS WHEREOF, the Lessor identified at Paragraph A. above and the
Lessee identified at Paragraph B. above have executed this instrument in
duplicate, the day and year set forth at Paragraph C. above, any corporate
signature being by authority of the board of directors of such corporation.
<PAGE>
SCHEDULE A
Lessor: Propco, Inc.
Lessee: Crown Zellerbach Corporation
Location: 4455 S.E. 24th Avenue
Portland, Oregon
Commencement Date of Lease:
- --------------------------
The Lease shall commence upon substantial completion of both the office and
warehouse space. The Lessee shall have access to the warehouse area upon
completion of the warehouse space. The office area will be completed
approximately 30 days after the warehouse space is complete. During this period
between when the warehouse is complete and when the office is completed, the
Lessee shall be permitted to install racks and shelving in preparation for
stocking merchandise. The waiver of subrogation provision of the lease shall be
applicable commencing with Lessee's initial occupancy.
If the date of Substantial Completion is other than July 1, 1981, then the
Commencement Date of Lease shall be adjusted accordingly.
Expiration Date of Lease:
- -------------------------
Expiration shall be 10 years after Commencement Date as defined above.
Initial Rental:
- ---------------
<TABLE>
<S> <C>
shell: 62,850 sq. ft. @ 0.29 = $18,227.00 *
office: 3,000 sq. ft. @ 0.30 = 900.00
27' clearance: 251.00
Storage above office: 210.00
Fuel pump across street: 43.00
----------
$19,631.00/mth
</TABLE>
* The 29 cent per square foot shall be applied to the entire gross square
footage of the building shell, including the office area, the shipping dock
area and the receiving dock area. The actual lump sum monthly rent shall be
calculated from the final approved plans and specifications.
The above rental figure is subject to increase if 35' candle lighting is
required in rack or shelving areas.
Option Period: The Lessee shall have the option to extend this Lease an
- --------------
additional 5 years beyond the original 10 year period. The
rental during the option period will be based on 50% of the
increase of the CPI, all items, using September, 1981, as base
year. Option must be exercised not later than 180 days prior to
expiration.
CROWN ZELLERBACH CORPORATION
BY: Propco, Inc. BY: W. J. Zellerbach
---------------------------- -------------------------------
W. J. Zellerbach
TITLE:[SIGNATURE NOT LEGIBLE] TITLE: Senior Vice President
------------------------- ----------------------------
"Lessor" "Lessee"
<PAGE>
ADDENDUM NO. 1 1/29/82
<PAGE>
PROPCO, INC.
5000 S.E. 25th ave.
Portland, Oregon 97202
A D D E N D U M NO. 1
- - - - - - - - ------
TO LEASE
--------
DATED JANUARY 9, 1981
---------------------
BY AND BETWEEN
--------------
LESSOR: PROPCO, INC., an Oregon Corporation
- -------
AND
LESSEE: CROWN ZELLERBACH CORPORATION, a Nevada Corporation
- ------
qualified to do business in Oregon
THE LEASE dated January 9, 1981, by and between PROPCO, INC., "Lessor", and
CROWN ZELLERBACH CORPORATION, "Lessee", shall be amended to include the
following under ITEM "E" Legal Description of the Lease:
1. ITEM "E" - LEGAL DESCRIPTION is amended to include: The South 35-1/2
feet of Lot 18 and the North 24-1/2 feet of Lot 19, Block 3, SPANTON'S
ADDITION TO THE CITY OF PORTLAND, in the City of Portland, Multnomah
County, Oregon.
All other terms and conditions of LEASE dated January 9, 1981, remains the same.
By:[SIGNATURE NOT LEGIBLE] By: /S/ W. J. Zellerbach
-------------------------- --------------------------------------
PROPCO, INC. (LESSOR) CROWN ZELLERBACH CORPORATION (LESSEE)
W. J. Zellerbach, Sr. Vice-President
Dated 1-22-82 Dated 1/29/82
------------------ ----------------------------
<PAGE>
ASSIGNMENT & ASSUMPTION OR LEASE 10/15/85
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE
----------------------------------
THIS AGREEMENT made as of the 15th day of October, 1985, between CROWN
ZELLERBACH CORPORATION, a Nevada corporation whose principal office is located
at One Bush Street, San Francisco, California 94104 ("Assignor"), and STATIONERS
DISTRIBUTING COMPANY, INC., a Delaware corporation whose principal office is
located at 3300 W. Bolt Street, Fort Worth, Texas 76110 ("Assignee").
WITNESSETH
----------
WHEREAS, Assignor is the Lessee under that certain Lease dated January
9, 1981, as amended on January 28, 1982, between Propco, Inc., an Oregon
corporation, as Landlord, and Crown Zellerbach Corporation, as Lessee,
concerning Premises located at 4455 S.E. 24th Avenue, Portland, Oregon (the
"Lease"); and
WHEREAS, Assignor desires to assign the Lease to Assignee so that
Assignee may have the benefit of the use of the property subject to the Lease;
and
WHEREAS, such assignment shall be effective as of the close of business
October 31, 1985, the date of the closing of the sale of the Stationers
Distributing Company Division of Crown Zellerbach Corporation to Assignee.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged:
<PAGE>
2
1. Assignor hereby assigns and transfers all of its rights, title and
interest as tenant, in, to and under the Lease including but not limited to any
security of Assignor held by landlord under the Lease, to Assignee, its
successors and assigns from and after the effective date of this assignment for
the remainder of the term of the Lease, subject to the rental, terms, covenants
and conditions of the Lease and including without limitation any and all renewal
and purchase options.
2. From and after the effective date of this assignment, Assignee
hereby assumes the performance of all of the terms, covenants and conditions
arising out of the Lease herein assigned by Assignor to Assignee and agrees to
pay the rent reserved by the Lease in accordance with the terms thereof until
the termination of the Lease and will well and truly perform all the terms,
covenants and conditions of the Lease herein assigned and hereinafter arising,
all with full force and effect as if Assignee had signed the Lease originally as
tenant named therein. Assignee does not assume any liability under the Lease
arising as a result of any act, omission or occurrence happening prior to the
effective date hereof.
3. Assignee hereby agrees that the obligations herein assumed by
Assignee shall inure to the landlord named in the Lease and to its successors
and assigns.
<PAGE>
3
4. Assignee agrees to indemnify, defend and hold Assignor harmless from
and against any and all claims, demands, liabilities, lawsuits, and all expenses
associated therewith (including reasonable attorneys' fees and other costs of
litigation) arising out of the failure by Assignee to comply with any provision
of the lease assigned hereunder or arising out of any activity by Lessee, its
agents, employees, or invitees, on or about the premises. In the event Assignee
fails to comply with any of its obligations under the lease, Assignor may
perform such obligation on behalf of Assignee and Assignee shall be liable to
Assignor for all reasonable costs Assignor incurs in fulfilling such obligation.
5. Assignor and Assignee each agrees to execute and deliver to the
other party, if the other party so requests, such further instruments as may be
reasonably
<PAGE>
4
required to complete or further evidence either the foregoing assignment or the
foregoing assumption.
IN WITNESS WHEREOF, Assignor and Assignee have executed this instrument
as of the date first set forth above.
ASSIGNOR: CROWN ZELLERBACH CORPORATION
By: [SIGNATURE NOT LEGIBLE]
---------------------------------
Title:
ASSIGNEE: STATIONERS DISTRIBUTING COMPANY, INC.
By: /s/ Joseph Loredo
----------------------------------
Title: Vice President
<PAGE>
5
STATE OF CALIFORNIA)
: ss.
CITY & COUNTY OF SAN FRANCISCO )
This instrument was acknowledged before me on October 21, 1985 by F. J.
Stabbert as Senior Vice President of Crown Zellerbach Corporation, a Nevada
corporation.
[OFFICIAL SEAL APPEARS HERE] /S/ Madeline Cravotta
----------------------------
Notary Public
My commission expires: 5/6/88
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
This instrument was acknowledged before me on October 18, 1985 by Joseph
Loredo as Vice President of Stationers Distributing Company, Inc., a Delaware
corporation.
/S/ Renalto C. Giallorenzi
-----------------------------
Notary Public
[Seal]
My commission expires:
March 30,1986
<PAGE>
ADDENDUM No. 2 1/20/86
<PAGE>
ADDENDUM NO. 2
--------------
TO LEASE
--------
DATED JANUARY 9, 1981
---------------------
BY AND BETWEEN
--------------
LESSOR: PROPCO, INC. an Oregon Corporation
- -------
LESSEE (ASSIGNEE): STATIONERS DISTRIBUTING COMPANY, INC.
- ------------------
an Delaware Corporation qualified
to do business in Oregon
The LEASE dated January 9, 1981, by and between PROPCO, INC., "LESSOR", and
STATIONERS DISTRIBUTING COMPANY, INC. "LESSEE" (ASSIGNEE), shall be amended to
read the following:
LESSOR, agrees to make tenant improvements for a total sum of One Hundred
Seven Thousand Two Hundred Sixty Six Dollars and Fifty Cents ($107,266.50) as
approved by STATIONERS DISTRIBUTING COMPANY, INC., in letter to PROPCO, INC.
dated January 7, 1986 (copy attached). It is understood and agreed that
STATIONERS DISTRIBUTING COMPANY, INC., will reimburse PROPCO, INC., the total
sum of $107,266.50 amortized over a term of ten and one-half (10.5) years based
on a eleven per cent (11%) interest rate and including a ten per cent (10%)
developers fee, monthly payments are to be made as set forth:
First three (3) year (Beginning 3-1-86 to 2-1-89) monthly payment will
be $1,200.00 per month plus initial rent due and payable on the first day of
each month.
Monthly payment after first (3) years (Beginning 3-1-89 for the
duration of lease) will be $1,605.02 per month plus initial rent at that time,
due and payable on the first day of each month.
Should LESSEE (ASSIGNEE), exercise their OPTION 180 days prior to expiration
of LEASE (March 1, 1991) to extend the existing LEASE for an additional (5)
year term the monthly payments of $1,605.02 will continue in addition to
monthly rental. If LESSEE (ASSIGNEE) does not exercise their OPTION, then a
BALLOON PAYMENT in the amount of $75,424.87 will be due and payable August 31,
1991.
All other terms and conditions of LEASE dated January 9, 1981, remains the
same.
BY:SIGNATURE NOT LEGIBLE] BY:[SIGNATURE NOT LEGIBLE]
----------------------------- -----------------------------
"LESSOR" "LESSEE" (ASSIGNEE)
DATED: 1-22-86 DATED: 1-20-86
-------------------------- --------------------------
<PAGE>
Addendum No. 3 4/20/87
<PAGE>
ADDENDUM NO. 3
TO LEASE
DATED JANUARY 9, 1981
BY AND BETWEEN
LESSOR: PROPCO, INC., AN OREGON CORPORATION
- -------
LESSEE (ASSIGNEE): STATIONERS DISTRIBUTING COMPANY, INC.,
- ------ ---------- A DELAWARE CORPORATION QUALIFIED TO DO
BUSINESS IN OREGON
THE LEASE DATED JANUARY 9, 1981, BY AND BETWEEN PROPCO, INC., "LESSOR," AND
STATIONERS DISTRIBUTING COMPANY, INC., "LESSEE," (ASSIGNEE), SHALL BE AMENDED TO
READ AS FOLLOWS:
COMMENCING MARCH 1, 1987, AND CONTINUING UNTIL JANUARY 31, 1994, LESSEE
SHALL PAY TO LESSOR ON THE FIRST DAY OF EACH MONTH RENT ACCORDING TO THE
FOLLOWING SCHEDULE:
3/01/87 - 8/31/88 $18,725.00 PER MONTH
9/01/88 - 8/31/91 $19,500.00 PER MONTH
9/01/91 - 1/31/94 $20,100.00 PER MONTH
COMMENCING FEBRUARY 1, 1994, AND CONTINUING UNTIL FEBRUARY 28, 1997, LESSEE
SHALL PAY TO LESSOR RENT EQUAL TO THAT WHICH IS THEN CUSTOMARILY BEING PAID BY
SIMILAR TENANTS FOR SIMILAR SPACE IN PORTLAND, OREGON, BUT NOT TO BE LESSER THAN
$18,725.00 PER MONTH. IF THE PARTIES CANNOT AGREE UPON THE RENT FOR THIS THREE
YEAR PERIOD, THE PARTIES WILL SUBMIT THE ISSUE TO BINDING ARBITRATION IN
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
THE MONTHLY RENT PROVIDED IN THIS AMENDMENT NO. 3 SHALL BE IN LIEU OF THE
RENT AND TENANT IMPROVEMENT PAYMENTS PREVIOUSLY AGREED TO BE PAID BY LESSEE TO
LESSOR.
LESSEE SHALL BE RESPONSIBLE FOR ALL ROOF MAINTENANCE AND REPAIRS INCLUDING
LEAKS, PROVIDED, HOWEVER, THAT FOR ANY SINGLE REPAIR JOB COSTING IN EXCESS OF
$10,000.00 LESSOR SHALL BE RESPONSIBLE FOR THAT PORTION OF SUCH COST EXCEEDING
$10,000.00. HOWEVER, THE AGGREGATE OF ALL LESSEE'S ROOF REPAIR EXPENSE SHALL NOT
EXCEED $20,000.00 OVER THE LIFE OF THE LEASE.
ALL OTHER TERMS AND CONDITIONS OF THE LEASE DATED JANUARY 9, 1981, AS
AMENDED REMAIN THE SAME.
PROPCO, INC. STATIONERS DISTRIBUTING COMPANY, INC.
BY:[SIGNATURE NOT LEGIBLE] BY:[SIGNATURE NOT LEGIBLE]
----------------------- -------------------------
"LESSOR" "LESSEE" (ASSIGNEE)
DATED: 4.23.87 DATED: 4.20.87
-------------------- -----------------------
<PAGE>
EXHIBIT 10.42
LEASE AGREEMENT
by and between
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
A DELAWARE LIMITED PARTNERSHIP
as LANDLORD
and
STATIONERS DISTRIBUTING COMPANY, INC.
as TENANT
Premises: Plauche Street and Beven Street, New Orleans, LA
Harbor Avenue, Memphis, TN
Highpoint Drive, San Antonio, TX
Dated as of: December 20, 1988
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
Parties.................................................. 1
1. Demise of Premises....................................... 1
2. Certain Definitions...................................... 1
3. Title and Condition...................................... 7
4. Use of Leased Premises; Quiet Enjoyment.................. 8
5. Term..................................................... 9
6. Rent..................................................... 11
7. Net Lease; Non-Terminability............................. 12
8. Payment of Impositions; Compliance with Law.............. 13
9. Liens; Recording and Title............................... 15
10. Indemnification.......................................... 15
11. Maintenance and Repair................................... 16
12. Alterations and Improvements............................. 18
13. Condemnation............................................. 19
14. Insurance................................................ 22
15. Restoration; Reduction of Rent........................... 27
16. Procedures Upon Purchase................................. 29
17. Assignment and Subletting................................ 30
18. Permitted Contests....................................... 32
19. Conditional Limitations; Default Provision............... 33
20. Additional Rights of Landlord............................ 38
21. Notices.................................................. 39
22. Estoppel Certificate..................................... 40
23. Surrender................................................ 40
24. Risk of Loss............................................. 41
25. No Merger of Title....................................... 41
26. Books and Records........................................ 41
27. Determination of Value................................... 42
28. Financing................................................ 44
29. Non-Recourse as to Landlord.............................. 44
30. Substitution and Exchange of Property.................... 45
31. Financial Covenant....................................... 46
32. Subordination............................................ 47
33. First Refusal Right...................................... 47
34. Miscellaneous............................................ 49
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Allocation of Acquisition Cost
Exhibit "F" - Percentage Allocation
</TABLE>
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<PAGE>
LEASE AGREEMENT, made as of this 20th day of December, 1988, between
CORPORATE PROPERTY ASSOCIATES 8 L.P., A DELAWARE LIMITED PARTNERSHIP
("Landlord"), a Delaware limited partnership with an address c/o W. P. Carey &
Co., Inc., 689 Fifth Avenue, New York, New York 10022, and STATIONERS
DISTRIBUTING COMPANY, INC. ("Tenant"), a Delaware corporation with an address
at 4055 International Plaza, Suite 450, Fort Worth, Texas 76109.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant,
------------------
and Tenant hereby takes and leases from Landlord, for the term or terms and
upon the provisions hereinafter specified, the following described property
(hereinafter referred to individually as the "New Orleans Premises", the
"Memphis Premises" and the "San Antonio Premises" [each of which Premises shall
include the portions of items (a), (b) and (c) of this Paragraph 1 located
thereon or therein or appertaining thereto] and collectively as the "Leased
Premises"): (a) the premises described in Exhibit "A" attached hereto and made
a part hereof, together with the easements, rights and appurtenances thereunto
belonging or appertaining (collectively, the "Land"); (b) the buildings,
structures and other improvements now or hereafter constructed on the Land
(collectively, the "Improvements"); and (c) the machinery and equipment
described in Exhibit "B" attached hereto and made a part hereof and installed
in and upon the Improvements, together with all additions and accessions
thereto, substitutions therefor and replacements thereof permitted by this
Lease (collectively, the "Equipment").
2. Certain Definitions.
-------------------
"Acquisition Cost" shall mean $4,630,000.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 6(b).
"Adjoining Property" shall mean all sidewalks, curbs and vault
spaces adjoining any of the Leased Premises.
"Affected Premises" shall mean the Affected Premises as defined
in Paragraph 13(b) or Paragraph 14(i), as the case may be, and as the context
requires.
"Affiliate" shall mean any Person in controlling, control of or
under common control with Tenant.
"Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals or removals of and all
substitutions or replacements for any of the Improvements or Equipment, both
interior and exterior structural and non-structural, and ordinary and
extraordinary.
<PAGE>
"Applicable Final Date" shall mean the Applicable Final Date as
defined in Paragraph 27.
"Applicable Initial Date" shall mean the Applicable Initial Date
as defined in Paragraph 27.
"Applicable Provision" shall mean the Applicable Provision as
defined in Paragraph 27.
"Assignment" shall mean an assignment of rents and leases from
Landlord to Lender securing Landlord's obligation to repay the Loan and/or any
subsequent assignment of rents covering any of the Leased Premises from Landlord
to Lender, as the same may from time to time be amended, supplemented or
modified, securing repayment of the Loan.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6(a).
"Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6(a).
"Casualty Offer Amount" shall mean the Casualty Offer Amount as
defined in Paragraph 14(i).
"Casualty Termination Date" shall mean the Casualty Termination
Date as defined in Paragraph 14(i).
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Default Offer Amount" shall mean the Default Offer Amount as
defined in Paragraph 19(b)(v).
"Default Rate" shall mean the Default Rate as defined in
Paragraph 6(b).
"Delay Period" shall mean the Delay Period as defined in
Paragraph 27.
"Environmental Laws" shall mean all federal, state or local laws,
ordinances, rules, regulations or written policies, now or hereafter existing,
which govern or otherwise relate to the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of any Hazardous
Substance, including the laws, ordinances, regulations and written policies
provided pursuant to or under (i) Toxic Substances Control Act, 15 U.S.C.
(s)(s)2601 et seq., (ii) National Historic Preservation Act, 16 U.S.C. (s)(s)470
-- ---
et .seq., (iii) Coastal Zone Management Act of 1972,
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<PAGE>
16 U.S.C. (s)(s)1451 et seq., (iv) Rivers and Harbors Act of 1899, 33 U.S.C.
-- ---
(s)(s)401 et seq., (v) Clean Water Act, 42 U.S.C. (s)(s)1251 et seq., (vi) Flood
-- --- -- ---
Disaster Protection Act, 42 U.S.C. (s)(s)4321 et seq., (vii) National
-- ---
Environmental Policy Act, 42 U.S.C. (s)(s)4321 et seq., (viii) Resource
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Conservation and Recovery Act of 1976, 42 U.S.C. (s)(s)6901 et seq., (ix) Clean
-- ---
Air Act, 42 U.S.C. (s)(s)7401 et seq. and (x) Comprehensive Environmental
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Response Compensation and Liability Act, 42 U.S.C. (s)(s)9601 et seq.
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("CERCLA").
------
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 19(a).
"Exchange" shall mean Exchange as defined in Paragraph 32.
"Exchange Date" shall mean Exchange Date as defined in Paragraph
32.
"Existing Property" shall mean Existing Property as defined in
Paragraph 32.
"Fair Market Value" shall mean the higher of (a) the fair market
value of the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, as affected and encumbered by this Lease and assuming that the
Term has been extended for all extension periods, if any, provided for herein.
Fair Market Value, for all purposes of this Lease, shall be determined in
accordance with the procedure specified in Paragraph 27.
"Guarantor" shall mean SDC Distributing Corp., a Delaware
corporation.
"Guaranty" shall mean the Guaranty of even date herewith from
Guarantor to Landlord.
"Hazardous Substances" shall mean (i) any flammable substances,
radioactive materials, hazardous materials, hazardous wastes, toxic substances,
pollutants, pollution or any related materials or substances specified in any of
the Environmental Laws (including any "hazardous substance" as defined in
CERCLA) and (ii) asbestos and polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in Paragraph
8(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Land" shall mean the Land as defined in Paragraph 1.
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<PAGE>
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation or requirement,
even if unforeseen or extraordinary, of every duly constituted governmental
authority, court or agency .
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean all present and future Laws
(including but not limited to Environmental Laws) and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to Tenant or to any of the Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any Person or entity which may, after the
date hereof, make a Loan to Landlord.
"Loan" shall mean one or more loans of not more than $2,500,000
which may be made by Lender to Landlord after the date hereof, secured by a
Mortgage and an Assignment and evidenced by a Note.
"Memphis Premises" shall mean the Memphis Premises as defined in
Paragraph 1.
"Mortgage" shall mean any mortgage or deed of trust encumbering
the Leased Premises from Landlord to Lender, as the same may from time to time
be amended, supplemented or modified.
"Net Award" shall mean the entire award payable to Landlord by
reason of a Condemnation, less any reasonable out-of-pocket expenses and
reasonable attorney's fees, if applicable incurred by Landlord and Lender in
collecting such award.
"Net Proceeds" shall mean the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent payable to Landlord or Lender),
(iv) and (v) of Paragraph 14(a), less any reasonable out-of-pocket expenses and
reasonable attorney's fees, if applicable incurred by Landlord and Lender in
collecting such proceeds.
"New Orleans Premises" shall mean the New Orleans Premises as
defined in Paragraph 1.
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<PAGE>
"Note" shall mean a promissory note evidencing Landlord's
obligation to repay the Loan, which Note may be secured by the Mortgage and the
Assignment, as the same may from time to time be amended, supplemented or
modified.
"Offer Amount" shall mean the Termination Offer Amount, the
Casualty Offer Amount, the Transfer Offer Amount, the Default Offer Amount or
the Purchase Price, as the case may be, and as the context requires.
"Option Purchase Date" shall mean the Option Purchase Date as
defined in Paragraph 28.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements, listed on Exhibit
"C" attached hereto and made a part hereof.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prime Rate" shall mean the average of the interest rates per
annum quoted by Bank of America NT & SA, San Francisco, CA, The Chase Manhattan
Bank, N.A., New York, NY, Chemical Bank, New York, NY, Citibank, N.A., New York,
NY, and Morgan Guaranty Trust Company, New York, NY, as their respective prime
rates, such average to change effective as of the effective date of any change
in any of the aforesaid prime rates. The Prime Rate shall be the average of such
publicly announced prime rates even though one or more of the aforesaid banks
may actually charge interest on some of its loans at lower rates; and if any of
the aforesaid banks has more than one prime rate of interest in effect
simultaneously, the prime rate of such bank for the purposes of this definition
shall be deemed to be the highest of such prime rates then simultaneously in
effect for such bank. If three or more of the aforesaid banks cease to have a
publicly announced prime rate, then, for so long as three or more of the
aforesaid banks cease to have a publicly announced prime rate, the Prime Rate
shall be the average per annum discount rate from time to time on ninety-one
(91) day bills issued by the United States Treasury (the so-called "Treasury
bills") at the most recent auction or, if no such ninety-one (91) day bills are
then being issued, Treasury bills then being issued for the period of time
closest to ninety-one (91) days.
"Purchase Price" shall mean the Purchase Price as defined in
Paragraph 28.
"Remaining Sum" shall mean the Remaining Sum as defined in
Paragraph 15(a).
"Rent" shall mean Basic Rent and Additional Rent.
"Replaced Equipment" shall mean the Replaced Equipment as defined
in Paragraph 11(d) .
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<PAGE>
"Replacement Equipment" shall mean the Replacement Equipment as
defined in Paragraph 11(d).
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Affected Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of a Remaining Sum is finally determined or the date on which Landlord's
right to retain the Remaining Sum is finally determined.
"San Antonio Premises" shall mean the San Antonio Premises as
defined in Paragraph 1.
"Selected Premises" shall mean the Selected Premises as defined
in Paragraph 19(b)(v).
"Set-Off" shall mean a Set-Off as defined in Paragraph 7(a).
"Site Assessments" shall mean the Site Assessments as defined in
Paragraph 8(d).
"Site Reviewers" shall mean the Site Reviewers as defined in
Paragraph 8(d).
"State" shall mean the State of Louisiana, the State of Tennessee
and/or the State of Texas, as applicable.
"Substitute Property" shall mean the Substitute Premises as
defined in Paragraph 32.
"Taking" shall mean any taking of any of the Leased Premises in
or by condemnation or other eminent domain proceedings pursuant to any Law,
general or special, or by reason of any agreement with any condemnor in
settlement of or under threat of any such condemnation or other eminent domain
proceeding, or by any other means, or any de facto condemnation.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Date" shall mean the Termination Date as defined in
Paragraph 13(b).
"Termination Offer Amount" shall mean the Termination Offer
Amount as defined in Paragraph 13(b).
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<PAGE>
"Transfer Offer Amount" shall mean Transfer Offer Amount as
defined in Paragraph 17.
"Transfer Purchase Date" shall mean Transfer Purchase Date as
defined in Paragraph 17.
3. Title and Condition.
-------------------
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and the Assignment, (ii) the rights of any parties in possession of any
of the Leased Premises, (iii) the existing state of title of the Leased
Premises, including the Permitted Encumbrances, as of the commencement of the
Term, (iv) any state of facts which an accurate survey or physical inspection of
the Leased Premises might show, (v) all Legal Requirements, including any
existing violation of any thereof, and (vi) the condition of the Leased Premises
as of the commencement of the Term, without representation or warranty by
Landlord; it being understood and agreed, however, that the recital of the
Permitted Encumbrances herein shall not be construed as a revival of any thereof
which for any reason may have expired or terminated.
(b) Tenant acknowledges that the Leased Premises are in
satisfactory condition and repair at the inception of this Lease. LANDLORD HAS
NOT MADE AND WILL NOT MAKE ANY INSPECTION OF ANY OF THE LEASED PREMISES.
LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
-----
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL
LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE
-------------------------------------------------------
OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE
- ----------
EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v)
VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix)
CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii)
---------------
DURABILITY OR (xiv) OPERATION; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO
ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT
AND ARE SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF
THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED; AND THE FOREGOING PROVISIONS ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT
TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR
ARISING OTHERWISE.
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<PAGE>
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby,
and acknowledges that title is in Landlord and that Tenant has only the right of
possession and use of the Leased Premises (and a right of first refusal) as
provided in this Lease. Tenant further acknowledges that to its knowledge (i)
the Improvements conform to all Legal Requirements and all requirements of the
carriers of all insurance on any of the Leased Premises, (ii) all easements
necessary or appropriate for the use or operation of the Leased Premises have
been obtained, (iii) all contractors and subcontractors who have performed work
on or supplied materials to the Leased Premises have been fully paid, and all
materials and supplies have been fully paid for, (iv) the Improvements have been
fully completed in a workmanlike manner, and (v) all Equipment necessary for the
use or operation of the Leased Premises has been installed and all Equipment in
the Leased Premises is presently operative.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties and indemnities, express or
implied, and similar rights which Landlord may have against any manufacturer,
seller, engineer, contractor or builder in respect of any of the Leased
Premises, including any rights and remedies existing under contract or pursuant
to the Uniform Commercial Code. Such assignment shall remain in effect until the
termination of this Lease, and upon the termination of this Lease, such
assignment shall cease and all the said warranties, guaranties, indemnities and
other rights shall automatically revert to Landlord unless Tenant shall have
acquired the Premises in which event the assignment shall continue in effect.
4. Use of Leased Premises: Quiet Enjoyment.
---------------------------------------
(a) Tenant may occupy and use the Leased Premises for any lawful
purpose, provided that no Alterations may be made and no additional Improvements
may be constructed except in accordance with Paragraph 12, no Equipment may be
removed from the Leased Premises except in accordance with Paragraphs 11(d),
13(d) and 14(h), and such use will not otherwise violate any provision of this
Lease. Tenant shall not permit any unlawful occupation, business or trade to be
conducted on any of the Leased Premises or any use to be made thereof contrary
to any applicable Legal Requirement then in effect. Tenant shall not use or
occupy or permit any of the Leased Premises to be used or occupied, nor do or
permit anything to be done in or on any of the Leased Premises, in a manner
which would (i) violate any certificate of occupancy affecting any of the Leased
Premises, (ii) make void or voidable any insurance then in force with respect to
any of the Leased Premises, (iii) make it difficult or impossible to obtain fire
or
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<PAGE>
other insurance which Tenant is required to furnish hereunder, (iv) cause
structural injury to any of the Improvements, or (v) constitute a public or
private nuisance or waste.
(b) Subject to the other provisions of this Lease, so long as no
Event of Default exists hereunder, Landlord covenants to do no act to disturb
the peaceful and quiet occupation and enjoyment of the Leased Premises by
Tenant, provided that Landlord may enter upon and examine any of the Leased
Premises at reasonable times and upon five (5) days advance notice to Tenant
(except in the event of an emergency or upon the occurrence of an Event of
Default in either of which events no notice shall be required) and may take such
action with respect to the Leased Premises as is permitted by any provision
hereof.
5. Term. Subject to the provisions hereof, Tenant shall have and hold
----
the Leased Premises for an initial term (such term, as extended or renewed in
accordance with the provisions hereof, being called the "Term") commencing on
the date hereof and ending on the last day of the one hundred and eightieth
(180th) calendar month next following the date hereof. If all Rent and all other
sums due hereunder shall not have been fully paid by the end of the Term,
Landlord may, at its option, extend the Term until all said sums shall have been
fully paid.
Provided this Lease shall not have been terminated pursuant to any
provision hereof, the initial Term shall be deemed to be automatically extended
for an additional period of five (5) years unless Tenant shall notify Landlord
in writing at least eighteen (18) months prior to the expiration of the initial
Term that Tenant is terminating this Lease as of the end of the initial Term
provided, however, that Tenant shall have a period equal to the shorter of (a)
six (6) months following the date of the notice of intention to terminate or (b)
sixty (60) days following the date on which Landlord notifies Tenant that it has
entered into a letter of intent with a third party to lease any of the Selected
Premises to notify Landlord that it is rescinding its notice to terminate this
Lease and in the event Tenant so rescinds its notice to terminate, this Lease
and the Term shall be automatically extended for an additional period of five
(5) years. If the initial Term is automatically extended as aforesaid and this
Lease has not been terminated pursuant to any provision hereof prior to the
expiration of the first extension period, the Term shall be further
automatically extended for an additional consecutive period of five (5) years
unless Tenant shall notify Landlord in writing at least eighteen (18) months
prior to the expiration of the first extension period that Tenant is terminating
this Lease as of the end of the first extension period provided, however, that
Tenant shall have a period equal to the shorter of (a) six (6) months following
the date of the notice of intention to terminate or (b) sixty (60) days
following the date on which Landlord notifies Tenant that it has entered into a
letter of intent with a third party to lease any of the Selected Premises to
notify Landlord that it is rescinding its notice to
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<PAGE>
terminate this Lease and in the event Tenant so rescinds its notice to terminate
this Lease and the Term shall be automatically extended for an additional period
of five (5) years. If the Term is automatically extended as aforesaid and this
Lease has not been terminated pursuant to any provision hereof prior to the
expiration of the second extension period, the Term shall be further
automatically extended for an additional consecutive period of five (5) years
unless Tenant shall notify Landlord in writing at least eighteen (18) months
prior to the expiration of the second extension period that Tenant is
terminating this Lease as of the end of the second extension period provided,
however, that Tenant shall have a period equal to the shorter of (a) six (6)
months following the date of the notice of intention to terminate or (b) sixty
(60) days following the date on which Landlord notifies Tenant that it has
entered into a letter of intent with a third party to lease any of the Selected
Premises to notify Landlord that it is rescinding its notice to terminate this
Lease and in the event Tenant so rescinds its notice to terminate this Lease and
the Term shall be automatically extended for an additional period of five (5)
years. If the Term is automatically extended as aforesaid and this Lease has not
been terminated pursuant to any provision hereof prior to the expiration of the
third extension period, the Term shall be further automatically extended for an
additional consecutive period of five (5) years unless Tenant shall notify
Landlord in writing at least eighteen (18) months prior to the expiration of the
third extension period that Tenant is terminating this Lease as of the end of
the third extension period provided, however, that Tenant shall have a period
equal to the shorter of (a) six (6) months following the date of the notice of
intention to terminate or (b) sixty (60) days following the date on which
landlord notifies Tenant that it has entered into a letter of intent with a
third party to lease any of the Selected Premises to notify Landlord that it is
rescinding its notice to terminate this Lease and in the event Tenant so
rescinds its notice to terminate this Lease and the Term shall be automatically
extended for an additional period of five (5) years.
In the absence of such notice of termination by Tenant to Landlord and
in the absence of any termination of this Lease pursuant to any other provision
hereof, the Term shall be automatically extended for the applicable extension
period specified above and no instrument of extension or renewal need be
executed. Any such extension of the Term shall be subject to and continue in
full force and effect all of the provisions of this Lease except that the Basic
Rent payable during each extension period shall be as provided in Exhibit "C"
attached hereto and made a part hereof.
In the event that Tenant exercises its option not to extend or not to
further extend the Term, as hereinabove provided or upon the occurrence of an
Event of Default hereunder, then Landlord shall have the right during the
remainder of the Term then in effect to (a) advertise the availability of the
Leased
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Premises for sale or for reletting and to erect upon the Leased Premises signs
indicating such availability provided that such signs shall not unreasonably
interfere with the use of the Leased Premises by Tenant, and (b) show the Leased
Premises to prospective purchasers or tenants at such reasonable times during
normal business hours as Landlord may select.
6. Rent.
----
(a) Tenant shall pay to Landlord, as annual rent for the Leased
Premises during the Term the amounts determined in accordance with the schedule
set forth in Exhibit "D" attached hereto and made a part hereof ("Basic Rent"),
commencing on the first day of the first month next following the date hereof
and continuing on the first day of each month thereafter during the Term (the
said days being called the "Basic Rent Payment Dates"), and shall pay the same
at Landlord's address set forth above, or at such other places or to such other
Persons as Landlord from time to time may designate to Tenant in writing. Each
rental payment shall be made to Landlord on or before the applicable Basic Rent
Payment Date in immediately available funds which at the time of such payment
shall be legal tender for the payment of public or private debts in the United
States of America. Pro rata Basic Rent for the period from the date hereof
through the last day of the month hereof shall be paid on the date hereof.
Landlord may, at Landlord's option, by written notice to Tenant, require Tenant
to pay installments of Basic Rent directly to one or more Persons in addition to
Landlord, in such proportions as Landlord may select; and Tenant agrees to make
such "split" payments of Basic Rent in the amounts, to the payees and in the
manner specified by Landlord in any such notice, provided, however, that Tenant
shall not be required to make more than two (2) "split" payments.
(b) Tenant shall pay and discharge when the same shall become
due, as additional rent, all other amounts and obligations which Tenant assumes
or agrees to pay or discharge pursuant to this Lease (except that amounts
payable as liquidated damages pursuant to Paragraph 19(b) (iv) shall not
constitute additional rent), together with every fine, penalty, interest and
cost which may be added for non-payment or late payment thereof. If any
installment of Basic Rent is not paid on or before the due date therefor, Tenant
shall pay to Landlord, as additional rent, an amount equal to three percent (3%)
of the amount of such installment, provided, however, that with respect to the
first three (3) late payments in any twelve (12) month period (the first such
period to commence on the first Basic Rent Payment Date following the date of
this Lease) such late payment charge shall not be payable until two (2) business
days following receipt of notice by Tenant that such payment has not been
received. From the date of occurrence of any Event of Default until all Events
of Default are fully cured, Tenant shall pay to Landlord on demand, as
additional rent, a sum equal to any additional sums which might be payable by
Landlord to any lender under any note occasioned by
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the occurrence of an Event of Default under this Lease. The requirements of
Paragraph 19(g) regarding notice and grace periods need not be satisfied prior
to the imposition of Additional Rent (as hereinafter defined) under foregoing
provisions of this Paragraph 6(b). In addition, upon the occurrence of an Event
of Default, Tenant shall pay to Landlord on demand, as additional rent, interest
at the rate (the "Default Rate") of three percent (3%) per annum over the Prime
Rate on the following sums until paid in full: (i) all overdue installments of
Basic Rent in excess of the payments due under any note for the same period from
the respective due dates thereof, (ii) all overdue amounts of additional rent
relating to obligations which Landlord shall have paid on behalf of Tenant, from
the date of payment thereof by Landlord, and (iii) on all other overdue amounts
of additional rent from the date Landlord demands payment. All the foregoing
additional rent is herein sometimes called "Additional Rent". In the event of
any failure by Tenant to pay or discharge any Additional Rent, Landlord shall
have all rights, powers and remedies provided herein, by law or otherwise, in
the event of non-payment of Basic Rent.
7. Net Lease: Non-Terminability.
----------------------------
(a) This is a net lease and all Rent and all other sums payable
hereunder by Tenant shall be paid without notice or demand, and without set-off,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense (collectively, a "Set-Off").
(b) This Lease shall not terminate, Tenant shall not have any
right to terminate this Lease during the Term (except as otherwise expressly
provided herein), Tenant shall not be entitled to any Set-Off of or to any Rent
or any other sums payable under this Lease (except as otherwise expressly
provided herein), and the obligations of Tenant under this Lease shall not be
affected by any interference with Tenant's use of any of the Leased Premises for
any reason, including the following: (i) any damage to or destruction of any of
the Leased Premises by any cause whatsoever, (ii) any Condemnation, (iii) the
prohibition, limitation or restriction of Tenant's use of any of the Leased
Premises, (iv) any eviction by paramount title or otherwise as long as the same
does not constitute a breach of Paragraph 4(b) hereof, (v) Tenant's acquisition
of ownership of any of the Leased Premises other than pursuant to an express
provision of this Lease, (vi) any default on the part of Landlord hereunder or
under any other agreement as long as the same does not constitute a breach of
Paragraph 4(b) hereof, (vii) any latent or other defect in, or any theft or loss
of, any of the Leased Premises, (viii) the breach of any warranty of any seller
or manufacturer of any of the Equipment, or (ix) any other cause, whether
similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding. It is the intention of the parties hereto that the
obligations of Tenant hereunder shall be separate and independent covenants and
agreements, that all Rent and all
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other sums payable by Tenant hereunder shall continue to be payable in all
events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and that
the obligations of Tenant hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated pursuant to an
express provision of this Lease. The obligation to pay rent or amounts equal
thereto shall not be affected by any collection of rents by any governmental
body pursuant to a tax lien or otherwise, even though such obligation results in
a double payment of Rent.
(c) Tenant agrees that it shall remain obligated under this
Lease in accordance with its provisions and that, except as otherwise expressly
provided herein, it shall not take any action to terminate, rescind or avoid
this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding-up or other
proceeding affecting Landlord, (ii) the exercise of any remedy, including
foreclosure, under the Mortgage or the Assignment, or (iii) any action with
respect to this Lease (including the disaffirmance hereof) which may be taken by
Landlord, any trustee, receiver or liquidator of Landlord or any court under the
Federal Bankruptcy Code or otherwise.
(d) Tenant waives all rights which may now or hereafter be
conferred by law (i) to quit, terminate or surrender this Lease or any of the
Leased Premises, or (ii) to any Set-Off of or to any rent or any other sums
payable under this Lease, except as otherwise expressly provided herein.
8. Payment of Impositions: Compliance with Law.
-------------------------------------------
(a) Subject to the provisions of Paragraph 18 hereof (relating
to contests) and the exclusions specified in the following paragraph of this
Paragraph 8(a), Tenant shall, before interest or penalties are due thereon, pay
and discharge all taxes of every kind and nature (including real and Personal
property, franchise, withholding, profits and gross receipts taxes), all charges
for any easement or agreement maintained for the benefit of any of the Leased
Premises, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges, all charges for utility and
communication services relating to any of the Leased Premises, all ground rents,
and all other public charges whether of a like or different nature, even if
unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii)
any of the Leased Premises, (iii) Landlord as a result of or arising in respect
of the acquisition, ownership, occupancy, leasing, use, possession or sale of
any of the Leased Premises, any activity conducted on the Leased Premises, or
Rent (including without limitation, any gross income tax or excise tax levied by
any governmental body on or with respect to such Rent), or (iv) Lender by reason
of the Note or Mortgage and which (as to this clause (iv)) Landlord has agreed
to pay (collectively, the "Impositions").
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Nothing in this Lease shall obligate Tenant to pay (A) Federal, State
or local income, excess profits, or other taxes, if any, of Landlord or Lender,
determined on the basis of their net income, (B) any estate, inheritance,
succession, gift or similar tax, or (C) any capital gains tax imposed on
Landlord by the State or municipality in which the Leased Premises are located
in connection with the sale of any of the Leased Premises or any Federal capital
gains tax, unless the taxes referred to in clause (A) above are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
any of the Leased Premises which, if such other tax, assessment or other charge
were in effect, would be payable by Tenant. In the event that any assessment
against any of the Leased Premises may be paid in installments, Tenant shall
have the option to pay such assessment in installments; and, in such event,
Tenant shall be liable only for those installments which become due and payable
during the Term. Tenant shall prepare and file all tax reports required by
governmental authorities which relate to the Impositions. Tenant shall deliver
to Landlord, within ten (10) days of receipt thereof, copies of all settlements
and notices pertaining to the Impositions which may be issued by any
governmental authority and, within ninety (90) days after the end of each
calendar year of the Term, receipts for payments of all Impositions made during
such year.
(b) Tenant shall promptly comply with and conform to all of the
Legal Requirements, subject to the provisions of Paragraph 18 hereof.
(c) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any spill of any Hazardous Substance
affecting the Leased Premises or in connection with the deposit, storage,
placement or use of any Hazardous Substance at, upon, under or within the Leased
Premises or any real estate contiguous thereto, Landlord may, at its sole
option, upon prior written notice to Tenant, take any and all actions as
Landlord shall deem reasonably necessary or advisable in order to cure such
noncompliance. Any amounts so paid, together with interest thereon at the
Default Rate from the date of payment by Landlord, shall be immediately due and
payable by Tenant to Landlord. Nothing contained herein shall obligate Landlord
to cure such noncompliance or release Tenant from any of its obligations
hereunder.
(d) Tenant shall notify Landlord immediately after becoming
aware thereof of any violation of or noncompliance with any of the covenants
contained in this Paragraph hereof and shall forward to Landlord immediately
upon receipt thereof copies of all orders, reports, notices, permits,
applications or other communications relating to any such violation or
noncompliance or any other matter relating in any fashion to any Environmental
Law as it may affect or relate to the Leased Premises.
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<PAGE>
(e) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party thereto which are identical to the covenants contained in
Paragraphs 8(c) and 8(d).
9. Liens: Recording and Title.
--------------------------
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain, and shall promptly discharge or remove, any lien on
any of the Leased Premises or on any Rent or any other sums payable by Tenant
under this Lease, other than the Mortgage, the Assignment, the Permitted
Encumbrances and any mortgage, lien, encumbrance or other charge created by or
resulting solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN
THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING ANY OF THE LEASED PREMISES
THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD
IN AND TO ANY OF THE LEASED PREMISES.
(b) Tenant shall execute, deliver and record, file or register
from time to time all such instruments as may be required by any present or
future Law in order to evidence the respective interests of Landlord and Tenant
in any of the Leased Premises, and shall cause this Lease, or a memorandum of
this Lease, and any supplement hereto or to such other instrument, if any, as
may be appropriate, to be recorded, filed or registered and re-recorded, refiled
or re-registered in such manner and in such places as may be required by any
present or future Law in order to publish notice and protect the validity or
priority of this Lease.
(c) Nothing in this Lease and no action or inaction by Landlord
shall be deemed or construed to mean that Landlord has granted to Tenant any
right, power or permission to do any act or to make any agreement which may
create, give rise to, or be the foundation for, any right, title, interest or
lien in or upon the estate of Landlord in any of the Leased Premises.
10. Indemnification. Tenant agrees to pay, protect, indemnify, save
---------------
and hold harmless Landlord and all other Persons described in Paragraph 29 from
and against any and all liabilities, losses, damages, penalties, costs, expenses
(including all reasonable attorneys' fees and expenses), causes of action,
suits, claims, demands or judgments of any nature whatsoever, howsoever caused
from any of the following (except for an affirmative act or omission of Landlord
unless such act or omission is otherwise the obligation of Tenant under this
Lease or unless arising from an internal conflict among the partners of Landlord
or Persons described in Paragraph 29 that is not related to Tenant's performance
under this Lease): (a) any matter pertaining to any of the Leased Premises or
Adjoining Property or
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<PAGE>
the ownership, use, non-use, occupancy, operation, condition, design,
construction, maintenance, repair or rebuilding of any of the Leased Premises or
Adjoining Property, (b) any injury to or death of any Person or any loss of or
damage to any property in any manner arising from the Leased Premises or
Adjoining Property or from any matter described in clause (a) above, or
connected therewith or occurring thereon, whether or not Landlord has or should
have knowledge or notice of the defect or condition, if any, causing or
contributing to said injury, death, loss, damage or other claim, (c) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance, (d)
any other cause pertaining to this Lease or any of the Leased Premises or
Adjoining Property or the transaction of which this Lease forms a part, or (e)
the alleged deposit, storage, disposal, burial, dumping, injecting, spilling,
leaking or other use, placement or release in, on, or affecting the Leased
Premises of a Hazardous Substance or otherwise arising from any other alleged
violation of any of the Environmental Laws including (i) liability for costs of
removal or remedial action incurred by the United States Government or the
State, or response costs incurred by any other Person or entity, or damages from
injury to or destruction or loss of natural resources, including the reasonable
costs of assessing such injury, destruction or loss, incurred pursuant to
Section 107 of CERCLA, or any successor Section or Act; (ii) liability for costs
and expenses of abatement, correction or clean-up, fines, damages, response
costs or penalties which arise from the provisions of any of the other
Environmental Laws; and (iii) liability for personal injury or property damage
arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of an abnormally dangerous activity. In case any action or proceeding is brought
against Landlord or any other Person described in Paragraph 29 by reason of any
such claim, Tenant covenants upon notice from Landlord to resist and defend such
action or proceeding by counsel reasonable satisfactory to Landlord, and
Landlord or such other Person will cooperate and assist in the defense of such
action or proceeding if requested to do so by Tenant.
The obligations of Tenant under this Paragraph 10 shall survive any
termination of this Lease.
11. Maintenance and Repair.
----------------------
(a) Tenant shall at all times, including any Requisition period,
maintain the Leased Premises and the Adjoining Property in good repair and
condition and, in the case of the Equipment, in good mechanical condition,
except for ordinary wear and tear, and shall promptly make all repairs
(substantially equivalent in quality and workmanship to the original work) of
every kind and nature, whether foreseen or unforeseen, which may be required to
be made upon or in connection with any of the Leased Premises in order to keep
and maintain the Land and
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<PAGE>
Improvements in as good repair and condition as they were on the date hereof,
and the Equipment in as good mechanical condition as it was on the later of the
date hereof or the date of its installation, except for ordinary wear and tear,
in accordance with the better of the practices generally recognized as then
acceptable within the Tenant's industry and in conformity with all legal
requirements and insurance requirements. Tenant shall do or cause others to do
all shoring of the Leased Premises or Adjoining Property or of foundations and
walls of the Improvements and every other act necessary or appropriate for the
preservation and safety thereof, by reason of or in connection with any
excavation or other building operation upon any of the Leased Premises or
Adjoining Property, whether or not Landlord shall, by any Legal Requirement, be
required to take such action or be liable for failure to do so. Landlord shall
not be required to make any Alteration, whether foreseen or unforeseen, or to
maintain any of the Leased Premises or Adjoining Property in any way, and Tenant
hereby expressly waives any right which may be provided for in any Law now or
hereafter in effect to make Alterations at the expense of Landlord. Any
Alteration made by Tenant pursuant to this subparagraph (a) or pursuant to
subparagraph (b) of this Paragraph 11 shall be made in conformity with the
provisions of Paragraph 12.
(b) Except for the Permitted Encumbrances, in the event that any
Improvement, now or hereafter constructed, shall encroach upon any property,
street or right-of-way (including the Adjoining Property) adjoining any of the
Leased Premises, shall violate the provisions of any restrictive covenant
affecting any of the Leased Premises, shall hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject, or shall impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance, obstruction
or impairment, whether the same shall affect Landlord, Tenant or both, or (ii)
take such reasonable action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
(c) Landlord shall have the right (but no obligation), upon at
least five (5) days prior notice to Tenant (or without notice in case of
emergency), to enter upon any of the Leased Premises for the purpose of making
any Alterations which may be necessary by reason of Tenant's failure to comply
with the provisions of subparagraphs (a) and (b) of this Paragraph 11. Except in
case of emergency, the right of entry shall be exercised at reasonable times and
at reasonable hours and upon at least five (5) days prior notice. The cost of
any such entry, together with the reasonable and actual cost of all such
Alterations, shall be Additional Rent; and Tenant shall pay the same to
Landlord, together with interest thereon at the Default Rate from the time
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of payment by Landlord until paid by Tenant, immediately upon written demand
therefor and upon submission of evidence of Landlord's payment of such costs.
(d) Tenant shall, from time to time, to the extent necessary or
commercially reasonable, replace with other operational equipment or parts (the
"Replacement Equipment") any of the Equipment (the "Replaced Equipment") which
shall have (i) become worn out, obsolete or unusable for the purpose for which
it is intended, (ii) been taken by a Condemnation as provided in Paragraph
13(d), or (iii) been lost, stolen, damaged or destroyed as provided in Paragraph
14(h); provided, however, that the Replacement Equipment shall (A) be in good
operating condition, (B) have a value and useful life at least equal to the
value and estimated useful life of the Replaced Equipment immediately prior to
the time that the Replaced Equipment had become so worn out, or unusable, so
taken, or so lost, stolen, damaged or destroyed, and (C) be suitable for a use
which is the same or similar to that of the Replaced Equipment. Tenant shall
repair at its sole cost and expense all damage to the Leased Premises caused by
the removal of Replaced Equipment or other Personal property of Tenant or the
installation of Replacement Equipment. All Replacement Equipment shall become
the property of Landlord, shall be free and clear of all liens and rights of
others and shall become a part of the Equipment to the same extent as the
Replaced Equipment had been. If so requested by Landlord in writing, Tenant
shall promptly cause to be executed and delivered to Landlord an invoice, bill
of sale or other appropriate instrument evidencing the transfer or assignment to
Landlord of all estate, right, title and interest (other than the leasehold
estate created hereby) of Tenant or any other Person in and to the Replacement
Equipment, free from all liens and other exceptions to title; and Tenant shall
pay all taxes, fees, costs and other expenses that may become payable as a
result thereof. At the expiration of the Term or the sooner termination of this
Lease, all Equipment shall be in good operating condition, ordinary wear and
tear excepted.
12. Alterations and Improvements. Except with respect to the
----------------------------
maintenance and repair required to be performed by Tenant pursuant to in
Paragraph 11 and otherwise as provided in this Paragraph 12, Tenant shall not
with respect to any of Memphis Premises, the New Orleans Premises or the
Antonio Premises (a) make any Alterations the cost of which exceeds $250,000
for any single alteration or $500,000 in the aggregate over the Term, (b)
construct upon the Land any additional Improvements or (c) install equipment in
the Improvements or accessions to the Equipment, without the prior written
approval of Landlord, which approval shall not be unreasonably withheld or
delayed. In addition, Tenant shall not do any other act which, in the sole
opinion of Landlord, would tend to impair the value of the Leased Premises.
Tenant agrees that (i) the market value of the Leased Premises shall not be
lessened by any such Alteration, construction or installation, or its
usefulness impaired, (ii) all such Alterations, construction and installations
shall be
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performed in a good and workmanlike manner, (iii) all such Alterations,
construction and installations shall be expeditiously completed in compliance
with all Legal Requirements, (iv) all work done in connection with any such
Alteration, construction or installation shall comply with the requirements of
all insurance policies required to be maintained by Tenant hereunder, (v) Tenant
shall promptly pay all costs and expenses of any such Alteration, construction
or installation and shall discharge or remove all liens filed against any of the
Leased Premises arising out of the same, (vi) Tenant shall procure and pay for
all permits and licenses required in connection with any such Alteration,
construction or installation, (vii) all such Alterations, construction and
installations shall be the property of Landlord and shall be subject to this
Lease, and (viii) Tenant shall comply, to the extent requested by Landlord, with
the provisions of clauses (i) through (iv) of Paragraph 15(a).
Notwithstanding the foregoing, Tenant shall be permitted to construct
additional Improvements upon the Land in order to expand the existing facilities
so long as (a) Landlord receives prior written notice of Tenant's intention to
construct such Improvements and (b) Tenant complies fully with all of the
provisions of this Paragraph 12, including, but not limited to, subparagraphs
(i) through (viii) herein.
13. Condemnation.
------------
(a) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord thereof and, so long as an Event of Default has not
occurred and is continuing, Tenant shall have the right on behalf of Tenant,
Landlord and Lender to negotiate the settlement in any Condemnation proceeding
and/or threat thereof and to contest the Condemnation and/or the amount of the
Net Award therefor, all at Tenant's expense; provided, however, that if an Event
of Default has occurred and is continuing Tenant shall have no right to
participate in any such proceedings, negotiation or contest. Lender shall be
entitled to participate with Tenant in any such proceeding, negotiation and/or
contest, all at Tenant's expense, provided, however, that so long as an Event of
Default has not occurred and is continuing counsel selected by Tenant shall
represent Tenant, Landlord and Lender in any such proceeding, negotiation and/or
contest. Subject to the provisions of this Paragraph 13, Tenant hereby
irrevocably assigns to Landlord any award or payment to which Tenant is or may
be entitled by reason of any Condemnation, whether the same shall be paid or
payable for Tenant's leasehold interest hereunder or otherwise; but nothing in
this Lease shall impair Tenant's right to any award or payment on account of
Tenant's trade fixtures, equipment or other tangible property which is not part
of the Equipment, moving expenses or loss of business, if available, to the
extent that and so long as (i) Tenant shall have the right to make, and does
make, a separate claim therefor against the condemnor and (ii) such claim does
not in any way reduce either the amount of the award otherwise payable to
Landlord for the
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Condemnation of Landlord's fee interest in the Leased Premises or the amount of
the award (if any) otherwise payable for the Condemnation of Tenant's leasehold
interest hereunder.
(b) If (i) the entire "New Orleans Premises", the entire
"Memphis Premises" or the entire "San Antonio Premises" or (ii) any substantial
portion of the "New Orleans Premises", the Memphis Premises" or the "San Antonio
Premises", which portion Tenant determines, in good faith, to be sufficient to
render the remaining portion thereof uneconomic for the use of Tenant or any
other tenant to which such premises might reasonably be leased, shall be taken
by a Taking or under threat thereof, (any one or all of which is affected by a
taking described in (i) or (ii) being hereinafter referred to as the "Affected
Premises") then Tenant shall, not later than thirty (30) days after Landlord
gives Tenant notice that Landlord has received a Condemnation Notice or Tenant
otherwise receives a Condemnation Notice, give notice to Landlord of its
intention to terminate this Lease as to the Affected Premises on the first Basic
Rent Payment Date (the "Termination Date") occurring after the date on which the
Landlord rejects Tenant's offer to purchase the Affected Premises.
Such notice of intention to terminate shall contain (A) an irrevocable
offer of Tenant to purchase the remaining portion of the Affected Premises, if
any, on the Termination Date for the purchase price (the "Termination Offer
Amount") specified in the next sentence and (B) in the event that less than the
entire Affected Premises shall have been taken or be under threat thereof, a
certificate of Tenant, signed by the president or a vice president thereof,
stating that, in Tenant's good faith judgment, the portion of the Affected
Premises so taken or under threat thereof is sufficient to fulfill the
conditions set forth in clause (ii) of the first subparagraph of this Paragraph
13(b) and certifying that Tenant will forever abandon operations on the
remainder of the Affected Premises. The Termination Offer Amount shall be the
greater of (1) the Fair Market Value of the Affected Premises as of the date
immediately prior to the Condemnation Notice or (2) the sum of that portion of
the Acquisition Cost applicable to the Affected Premises, as set forth in
Exhibit "E" attached hereto and made a part hereof, and one-half of any
prepayment penalty or premium up to a maximum payment by Tenant of Fifty
Thousand Dollars ($50,000) which may be payable under a Note or Mortgage.
Promptly upon the delivery to Landlord of such notice of intention to terminate,
Landlord and Tenant shall commence to determine such Fair Market Value in
accordance with the procedure specified in Paragraph 27.
Tenant agrees that no rejection of an offer hereunder shall be
effective for any purpose unless consented to by Lender. If Landlord shall
reject such offer by notice to Tenant, containing the written consent of Lender
to such rejection, not later than the twentieth (20th) day following the
determination of Fair Market Value, then upon (x) payment of all Rent and any
other charges due and unpaid under this Lease as of the Termination Date
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and (y) compliance by Tenant with all other obligations and liabilities under
this Lease which have arisen on or prior to the Termination Date, this Lease
shall terminate on the Termination Date as to the Affected Premises and Tenant
shall promptly vacate and have no further right, title or interest in or to any
of the Affected Premises.
Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the twentieth (20th) day following the determination of
Fair Market Value, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Termination Offer Amount on the Termination Date and, provided all Rent and
other sums due and unpaid hereunder are paid in full, Landlord shall convey to
Tenant the remaining portion of the Affected Premises, if any, in accordance
with the provisions of Paragraph 16 and Landlord shall assign to Tenant its
entire interest in and to the Net Award including any part thereof that has not
been received by Landlord and/or deliver to Tenant or credit against the
Termination Offer Amount such Net Award including any part thereof which shall
have been received by Landlord.
(c) In the event of any Taking of any of the Land or
Improvements which does not result in a termination of this Lease as to any or
all of the "New Orleans Premises", the "Memphis Premises", or the "San Antonio
Premises", the Term shall, notwithstanding the Taking, continue and there shall
be no abatement or reduction of Rent or any other sums payable by Tenant
hereunder, except as expressly provided in Paragraph 15(b). Promptly after such
Taking, Tenant, as required in Paragraph 11(a), shall commence and diligently
continue to restore the Improvements as nearly as possible to their value,
condition and character immediately prior to such Taking, in accordance with the
provisions of Paragraph 12. Landlord shall make the Net Award available to
Tenant as and when received by Landlord for restoration in accordance with and
subject to the provisions of Paragraph 15(a).
In the event of a Requisition of any of the Land or Improvements, if
Landlord is required to pay the Net Award of such Requisition to Lender in
accordance with the provisions of the Note and the Mortgage and the debt service
payments due under the Note are thereafter reduced by virtue of such payment of
the Net Award to Lender, then each installment of Basic Rent payable on or after
the effective date of such reduction in debt service shall be reduced in the
same amount and for the same period as payments are reduced under the Note. In
the event that the Net Award of a Requisition of any of the Land or Improvements
is retained by Landlord, Landlord shall apply such Net Award, to the extent
received, to the installments of Basic Rent thereafter payable until such Net
Award has been applied in full or until the Term
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hereof has expired, whichever first occurs. Upon the expiration of the Term, any
portion of such Net Award which shall not have been previously credited to
Tenant shall be retained by Landlord.
(d) If any of the Equipment shall be taken by a Condemnation
other than a Condemnation which falls within the provisions of Paragraph 13(b),
the Term shall nevertheless continue and there shall be no abatement or
reduction of Rent or any other sums payable by Tenant hereunder. Tenant shall,
whether or not the Net Award is sufficient for the purpose, promptly replace the
Equipment so taken, in accordance with the provisions of Paragraph 11(d), and
the Net Award of such a Condemnation made for the loss of the replaced Equipment
only shall thereupon be payable to Tenant. The remainder of the Net Award shall
be applied as hereinabove provided.
(e) Except as specifically provided in subparagraph (a) of this
Paragraph 13, no agreement with any condemnor in settlement of or under threat
of any Condemnation shall be made by Tenant without the written consent of
Landlord and Lender.
14. Insurance.
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(a) Tenant shall maintain at its sole cost and expense the
following insurance on or in connection with the Leased Premises:
(i) Insurance against loss or damage to the Improvements
and Equipment by fire and other risks from time to time included under standard
extended and additional extended coverage policies, including vandalism and
malicious mischief, sprinkler, plate glass and flood insurance, to the extent
any of the Leased Premises are in a flood zone, in amounts not less than the
actual replacement value of the Improvements and Equipment, excluding footings
and foundations and other parts of the Improvements which are not insurable (or,
in the case of plate glass insurance, the replacement cost of all plate glass in
the Leased Premises). Such policies shall contain replacement cost endorsements.
(ii) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about any of the
Leased Premises or the Adjoining Property, in an amount not less than $1,000,000
primary combined single limit for bodily injury or death and/or property damage,
each occurrence with a general aggregate limit of $2,000,000, combined single
limit, not less than $20,000,000 umbrella combined single limit; provided,
however, that Landlord shall have the right to determine such other limits as
may be reasonable and customary for transactions and properties of this size and
type. Policies for such insurance shall be for the mutual benefit of Landlord,
Tenant and Lender.
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(iii) Worker's compensation insurance covering all fulltime
employees of Tenant employed in connection with any work done on or about any of
the Leased Premises for which claims for death or bodily injury could be
asserted against Landlord, Tenant or any of the Leased Premises, or, in lieu of
such worker's compensation insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) To the extent that the Improvements include at any time
Equipment or any other equipment on or in the Leased Premises which by reason of
its use or existence is capable of bursting, erupting, or exploding, boiler and
pressure vessel insurance on any such Equipment, in an amount not less than
$5,000,000 for damage to property, bodily injury or death resulting from such
perils.
(v) Such other insurance, including business interruption
insurance which would provide an amount necessary to pay Rent for at least one
(1) year, on or in connection with any of the Leased Premises as Landlord or
Lender may reasonably require, which at the time is prudent for Tenant's
industry and is commonly obtained in connection with properties similar to the
Leased Premises.
(b) The insurance required by Paragraph 14(a) shall be written
by companies of recognized financial standing which are approved by Landlord,
which approval shall not be unreasonably withheld, and are authorized to do an
insurance business in the State. The insurance policies (i) shall be for such
terms as Landlord may reasonably approve, (ii) shall be in amounts sufficient at
all times to satisfy any coinsurance requirements thereof, and (iii) shall
(except for the worker's compensation insurance referred to in Paragraph
14(a)(iii) hereof) name Landlord, Tenant and Lender as insured parties, as their
respective interests may appear. If said insurance or any part thereof shall
expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become unsatisfactory to Landlord, Tenant shall promptly
obtain new or additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv) and
(v) of Paragraph 14(a) shall contain standard non-contributory mortgagee clauses
in favor of and reasonably acceptable to Lender. Each policy required by any
provision of Paragraph 14(a), except clause (iii) thereof, shall provide that it
may not be cancelled except after thirty (30) days' prior notice to Landlord and
Lender except for the non-payment of premiums which shall require at least ten
(10) days notice of cancellation. Each such policy shall also provide that any
loss otherwise payable thereunder shall be payable notwithstanding (i)
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any act or omission of Landlord or Tenant which might, absent such provision,
result in a forfeiture of all or a part of such insurance payment, (ii) the
occupation or use of any of the Leased Premises for purposes more hazardous than
those permitted by the provisions of such policy, (iii) any foreclosure or other
action or proceeding taken by Lender pursuant to any provision of the Mortgage
upon the happening of an event of default therein, or (iv) any change in title
to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due in installments or
otherwise all premiums for the insurance required by this Paragraph 14, shall
renew or replace each policy and deliver to Landlord evidence of the payment of
the full premium or next succeeding installment, as the case may be, therefor at
least twenty (20) days prior to the expiration date of such policy, and shall
promptly deliver to Landlord all original policies; and in the event of Tenant's
failure to comply with any of the foregoing requirements, Landlord shall be
entitled, but not obligated, to procure such insurance. Any sums expended by
Landlord in procuring such insurance shall be Additional Rent and shall be
repaid by Tenant, together with interest thereon at the Default Rate from the
time of payment by Landlord until fully paid by Tenant, immediately upon written
demand therefor by Landlord.
(e) Tenant shall have the replacement cost and insurable value of
the Improvements determined from time to time as required by the replacement
cost endorsements and shall deliver to Landlord the new replacement cost
endorsement or certificate evidencing such endorsement promptly upon Tenant's
receipt thereof. If, at any time, a replacement cost endorsement is not
available, Tenant shall have the replacement cost and insurable value of the
Improvements determined at least once a year by the underwriter of fire
insurance on the Leased Premises or, if such underwriter will not act, by a
qualified appraiser satisfactory to Landlord, and shall deliver to Landlord such
determination promptly upon receipt.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 14 and (ii) all
requirements of the insurers thereunder, applicable to Landlord, Tenant or any
of the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates structural changes or improvements or results in
interference with the use or enjoyment of any of the Leased Premises. Tenant
shall not use any of the Leased Premises in any manner which would permit the
insurer to cancel or increase the premium for any insurance policy.
(g) In the event of any loss, Tenant shall give Landlord and
Lender immediate notice thereof. So long as an Event of Default has not occurred
and is continuing, Tenant is hereby
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authorized to adjust and compromise, in its discretion, all claims under any of
the insurance policies required by this Paragraph 14 (except public liability
insurance claims payable to a person other than Tenant, Landlord or Lender) and
to execute and deliver of behalf of Landlord and Lender all necessary proofs of
loss, receipts, vouchers and release required by the insurers; and Landlord
agrees to sign, upon the request of Tenant, all such proofs of loss, receipt,
vouchers and releases. However, if Lender so elects, Lender shall adjust and
compromise any and all such claims. Any adjustment, settlement or compromise of
any such claim shall be subject to the prior written approval of Lender unless
Tenant receives a prior written waiver from Lender, and Lender shall have the
right to prosecute or contest, or to require Tenant to prosecute or contest, any
such claim, adjustment, settlement or compromise, all at Tenant's expense. All
proceeds of any insurance required under clauses (i) (in excess of One Hundred
Thousand Dollars ($100,000), (ii), (except proceeds payable to a person other
than Tenant, Landlord or Lender), (iv) and (v) of Paragraph 14(a) shall be
payable to Landlord and Lender. Each insurer is hereby authorized and directed
to make payment under said policies, including return of unearned premiums,
directly to Landlord and Lender instead of to Landlord and Tenant jointly
(except for a casualty loss payment of less than One Hundred Thousand Dollars
($100,000) which shall be paid directly to Tenant); and Tenant hereby appoints
each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft
therefor.
In the event of any casualty (whether or not insured against)
resulting in damage to any of the Improvements which does not result in a
termination of this Lease, the Term shall, notwithstanding such casualty,
continue and there shall be no abatement or reduction of Rent or any other sums
payable by Tenant hereunder, except as expressly provided in Paragraph 15(b).
Promptly after such casualty, Tenant, as required in Paragraph 11(a), shall
commence and diligently continue to restore the Improvements as nearly as
possible to their value, condition and character immediately prior to such
damage, subject to and in accordance with the provisions of Paragraph 12.
Landlord shall make such Net Proceeds available to Tenant as and when received
by Landlord for restoration by Tenant in accordance with and subject to the
provisions of Paragraph 15(a).
In the event of any loss of any of the Equipment in a casualty
which does not result in a termination of this Lease, the Term shall
nevertheless continue and there shall be no abatement or reduction of Rent or
any other sums payable by Tenant hereunder. Tenant shall, whether or not the Net
Proceeds are sufficient for the purpose, promptly repair or replace such
Equipment, subject to and in accordance with the provisions of Paragraph 11(d),
and the Net Proceeds paid for the loss of such Equipment only shall thereupon be
payable to Tenant. The remainder of the Net Proceeds shall be applied as
hereinabove provided.
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(h) If (a) the entire "New Orleans Premises", the entire "Memphis
Premises" or the entire "San Antonio Premises" or (b) a substantial portion of
the "New Orleans Premises", the "Memphis Premises" and the "San Antonio
Premises", shall be damaged or destroyed by fire or other casualty and, in
Tenant's good faith judgment, it is uneconomical to replace, repair or restore
the Affected Premises within one hundred and fifty (150) days of the date of
such casualty for continued use and occupancy by Tenant or any other tenant to
which the Affected Premises might reasonably be leased (any one or all of which
is affected by a fire or casualty described in (a) or (b) being hereinafter
referred to as the "Affected Premises"), then Tenant shall, not later than
twenty (20) days after such occurrence, give notice to Landlord of its intention
to terminate this Lease as to the Affected Premises on the first Basic Rent
Payment Date (the "Casualty Termination Date") which occurs after the date on
which Landlord rejects Tenant's offer to purchase the Affected Premises.
Such notice shall contain (A) an irrevocable offer of Tenant to
purchase the Affected Premises on the Casualty Termination Date for the purchase
price (the "Casualty Offer Amount") specified in the next sentence and (B) a
certificate of Tenant, signed by the president or a vice president of Tenant,
stating that, in Tenant's good faith judgment, the portion of the Affected
Premises so damaged or destroyed is sufficient to render the Affected Premises
uneconomical for restoration for continued use and occupancy by Tenant or any
other Tenant to which the Affected Premises might be leased and certifying that
Tenant will not restore the Affected Premises for the use to which such Premises
was devoted prior to such damage or destruction. The Casualty Offer Amount shall
be the greater of (1) the Fair Market Value of the Affected Premises as of the
date immediately prior to such casualty or (2) the sum of that portion of the
Acquisition Cost applicable to the Affected Premises, as set forth in Exhibit
"E", and one-half (1/2) of any prepayment penalty or premium up to a maximum
payment by Tenant of Fifty Thousand Dollars ($50,000.00) which may be payable
under a Note or Mortgage. Promptly upon the delivery of such notice from Tenant
to Landlord, Landlord and Tenant shall commence to determine such Fair Market
Value in accordance with the procedure specified in Paragraph 27.
No rejection of an offer hereunder shall be effective for any
purpose unless consented to by Lender. If Landlord shall reject such offer by
notice to Tenant, containing the written consent of Lender to such rejection,
not later than the twentieth (20th) day following the determination of Fair
Market Value, then upon (x) payment of all Rent and any other charges due and
unpaid under this Lease as of the Casualty Termination Date and (y) compliance
by Tenant with all other obligations and liabilities under this Lease which have
arisen on or prior to the Casualty Termination Date, this Lease shall terminate
on the Casualty Termination Date as to the Affected Premises and Tenant shall
promptly vacate and have no further right, title or interest in or to any of the
Affected Premises.
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Unless Landlord shall have rejected such offer by the foregoing
notice to Tenant not later than the twentieth (20th) day prior to the Casualty
Termination Date, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Casualty Offer Amount on the Casualty Termination Date and, provided an Event of
Default does not then exist, Landlord shall convey to Tenant the Affected
Premises in accordance with the provisions of Paragraph 16 and, provided all
Rent and other sums due and unpaid under this Lease are paid in full, Landlord
shall assign to Tenant its entire interest in and to the Net Proceeds including
any part thereof that has not been received by Landlord and/or deliver to Tenant
or credit against the Casualty Offer Amount such Net Proceeds including any part
thereof which shall have been received by Landlord.
(i) Tenant shall not carry separate insurance concurrent in form
or contributing in the event of loss with that required in this Paragraph 14
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 14. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
therefor.
15. Restoration: Reduction of Rent.
------------------------------
(a) If (on the basis of a cost breakdown provided by Tenant) the
cost of restoration is reasonably estimated by Landlord to be One Hundred
Thousand Dollars ($100,000) or less, then, so long as an Event of Default has
not occurred and is continuing, such amount shall be disbursed to Tenant from
the Net Proceeds or a Net Award, and Tenant shall promptly restore the Affected
Premises in accordance with and subject to Paragraph 12 of this Lease. Net
Proceeds or a Net Award which are for restoration of the Land or Improvements
the cost of which is reasonably estimated of Landlord to be in excess of One
Hundred Thousand Dollars ($100,000) shall be disbursed to Tenant only in
accordance with the following conditions:
(i) prior to commencement of restoration, the architects,
contracts, contractors, plans and specifications for the restoration shall have
been approved by Landlord, which approval shall not be unreasonably withheld or
delayed; Landlord shall be provided with mechanics' lien insurance (if
available) and acceptable performance and payment bonds which insure
satisfactory completion of the restoration, are in an amount and form and have a
surety acceptable to Landlord, and name Landlord and Lender as additional dual
obligees; and appropriate waivers of mechanics' and materialmen's liens shall
have been filed;
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(ii) at the time of any disbursement, no Event of Default shall
exist and no mechanics' or materialmen's liens shall have been filed against any
of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time in an amount
not exceeding the cost of the work completed since the last disbursement, upon
receipt of (A) satisfactory evidence, including architects' certificates, of the
stage of completion, of the estimated cost of completion and of performance of
the work to date in a good and workmanlike manner in accordance with the
contracts, plans and specifications, (B) waivers of liens for work covered by
the prior disbursement, (C) contractors' and subcontractors' sworn statements as
to completed work for which payment is requested, (D) a satisfactory bringdown
of title insurance, and (E) other evidence of cost and payment so that Landlord
can verify that the amounts disbursed from time to time are represented by work
that is completed, in place and free and clear of mechanics' and materialmen's
lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of Tenant,
describing the work for which payment is requested, stating the cost incurred in
connection therewith, stating that Tenant has not previously received payment
for such work and, upon completion of the work, also stating that the work has
been fully completed and complies with the applicable requirements of this
Lease;
(v) Landlord may retain ten percent (10%) of the restoration
fund until the restoration is fifty percent (50%) completed;
(vi) the restoration fund may not be commingled with Landlord's
other funds and shall bear interest which shall be added to the restoration
fund;
(vii) at all times the undisbursed balance of the restoration
fund held by Landlord shall be not less than the cost of completing the
restoration work free and clear of all liens; and
(viii) such other reasonable conditions as Landlord may impose.
In addition, prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord, exceeds the amount of
the Net Proceeds or the Net Award available for such restoration, the amount of
such excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be
added to the restoration fund. Any sum which remains in the restoration fund
upon completion of restoration (the "Remaining Sum") shall be refunded to
Tenant, unless such sum is required to be applied by
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Landlord to reduce principal outstanding under the Note, in which event it shall
be paid by Landlord to Lender to reduce principal outstanding under the Note.
For purposes of determining the source of funds with respect to the disposition
of funds remaining after the completion of restoration, the Net Proceeds or the
Net Award shall be deemed to be disbursed prior to any amount added by Tenant.
(b) In the event that there is a Remaining Sum upon completion of
restoration which is paid by Landlord to Lender, as aforesaid, then each
installment of Basic Rent payable on or after the effective date of such
reduction in debt service shall be reduced in the same amount and for the same
period as payments are reduced under the Note.
16. Procedures Upon Purchase.
------------------------
(a) In the event of the purchase of any of the Leased Premises by
Tenant pursuant to any provision of this Lease, Landlord need not transfer and
convey to Tenant or its designee any better title thereto than that which was
transferred and conveyed to Landlord, and Tenant shall accept such title,
subject, however, to all Permitted Exceptions and to all liens, exceptions and
restrictions on, against or relating to any of the Leased Premises which were
created with the concurrence of Tenant or as a result of a default by Tenant
under this Lease and to all applicable Laws, but free of the lien of and
security interest created by the Mortgage and the Assignment and liens,
exceptions and restrictions on, against or relating to the Leased Premises which
have been created by or resulted solely from acts of Landlord without the
concurrence of Tenant.
(b) Upon the date fixed for any such purchase of any of the
Leased Premises pursuant to any provision of this Lease, Tenant shall pay to
Landlord or to any Person to whom Landlord directs payment, at its address set
forth above, or at any other place designated by Landlord, the Offer Amount
therefor specified herein, in federal or other immediately available funds which
at the time of such payment shall be legal tender for the payment of public or
private debts in the United States of America, less any credits of the Net Award
or Net Proceeds allowed against the Offer Amount pursuant to the provisions of
Paragraphs 13(b) or 14(i), and Landlord shall thereupon deliver to Tenant (i) a
special warranty deed in form satisfactory to Landlord's counsel which describes
any of the Leased Premises then being sold to Tenant and conveys and transfers
the title thereto which is described in Paragraph 16(a), (ii) such other
instruments as shall be necessary to transfer to Tenant or its designee any
other property (or rights to any Net Proceeds or Net Award not yet received by
Landlord) then required to be sold by Landlord pursuant to this Lease and (iii)
any Net Award or Net Proceeds received by Landlord, nor credited to Tenant
against the Offer Amount and required to be delivered by Landlord to Tenant
pursuant to this Lease. Tenant shall pay all reasonable charges incident
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to such conveyance and transfer, including Landlord's reasonable counsel fees,
escrow fees, recording fees, title insurance or guarantee premiums and all
applicable federal, state and local taxes which may be incurred or imposed by
said deed and other instruments (excluding, however, any capital gains or net
income tax payable by Landlord as a result of said transfer). Tenant agrees,
upon the request and direction of Landlord, to pay a portion of the Offer Amount
as a brokerage commission to Landlord or one of its Affiliates who Tenant
acknowledges shall be deemed the broker of record in connection with the
transfer of the Leased Premises. Upon the completion of such purchase, but not
prior thereto (whether or not any delay in the completion of or any failure to
complete such purchase shall be the fault of Landlord), Tenant may elect to
terminate this Lease and all obligations hereunder (including the obligations to
pay Rent) with respect to any of the Leased Premises conveyed to Tenant, except
any obligations and liabilities of Tenant, actual or contingent, under this
Lease, which arose on or prior to such date of purchase. In the event that the
completion of such purchase shall be delayed for more than ninety (90) days
solely as a result of acts or omissions of Tenant, then the Offer Amount payable
by Tenant upon the purchase of any of the Leased Premises pursuant to any
provisions of this Lease shall, at Landlord's sole option, be determined as of
the actual date of such purchase by Tenant, provided that Tenant shall have paid
to Landlord all Rent due and payable hereunder to and including such date. Any
prepaid Basic Rent or other prepaid sums paid to Landlord shall be prorated as
of the date the purchase is completed, and the prorated unapplied balance shall
be deducted from the Offer Amount due to Landlord.
No apportionment of any Impositions shall be made upon such purchase,
Tenant being liable for payment thereof during the Term as Tenant and being
liable thereafter as owner.
17. Assignment and Subletting. Tenant may not assign this Lease at any
-------------------------
time to any other party without the prior written consent of Landlord; provided,
however, that upon prior notice to Landlord, Tenant shall have the right to
assign this Lease to any party which, immediately following such assignment,
complies both with the provisions of Paragraph 31 of this Lease and with the
provisions of this Paragraph 17. Tenant may sublet any of the Leased Premises at
any other time to any other party without the prior written consent of Landlord.
Each sublease of any of the Leased Premises shall be subject and subordinate to
the provisions of this Lease. If Tenant assigns all its rights and interest
under this Lease, the assignee under such assignment shall expressly assume all
the obligations of Tenant hereunder, including obligations, actual or
contingent, of Tenant which may have arisen on or prior to the date of such
assignment, by a written instrument delivered to Landord at the time of such
assignment. No assignment other than as specifically permitted by this Paragraph
and Paragraph 31 and no sublease made as permitted
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by this Paragraph shall affect or reduce any of the obligations of Tenant
hereunder; and all such obligations shall continue in full force and effect as
obligations of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease shall impose any
obligations on Landlord under this Lease. Tenant shall, within ten (10) days
after the execution and delivery of any such assignment, deliver a duplicate
original copy thereof in recordable form to Landlord, and within ten (10) days
after the execution and delivery of any such sublease, Tenant shall deliver a
duplicate original copy thereof to Landlord.
In the event Tenant desires to assign its interest in this Lease or
effect a Change in Control (as defined in Paragraph 31) and such assignment or
Change of Control would cause a breach of Paragraph 31 and such anticipatory
breach is not waived in writing by Landlord within ten (10) days after receipt
of notice from Tenant, then Tenant shall, not later than sixty (60) days prior
to such occurrence, make an irrevocable offer to purchase the Leased Premises on
the first Basic Rent Payment Date (the "Transfer Purchase Date") which occurs
after the date on which Landlord accepts Tenant's offer to purchase the Leased
Premises for the purchase price (the "Transfer Offer Amount") specified in the
next sentence. The Transfer Offer Amount shall be the greater of (1) the Fair
Market Value of the Leased Premises as of the date immediately prior to such
assignment or Change in Control or (2) the Acquisition Cost and any prepayment
penalty or premium which may be payable under a Note or Mortgage. Promptly upon
the deliver of such notice from Tenant to Landlord, Landlord and Tenant shall
commence to determine such Fair market Value in accordance with the procedure
specified in Paragraph 27.
No rejection of an offer hereunder shall be effective for any purpose
unless consented to by Lender. If Landlord shall reject such offer by notice to
Tenant, containing the written consent of Lender to such rejection, not later
than the twentieth (20th) day following the determination of Fair Market Value,
then the breach of Paragraph 31 shall be deemed waived by Landlord, subject,
however, to the terms of this Paragraph 17 and this Lease shall continue in full
force and effect.
Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the twentieth (20th) day following the determination of
Fair Market Value, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Transfer Offer Amount on the Transfer Purchase Date and, provided all Rent and
other sums due hereunder are paid in full, Landlord shall convey to Tenant the
Leased Premises in accordance with the provisions of Paragraph 16.
Upon the occurrence of an Event of Default under this Lease, Landlord
shall have the right immediately or at any time thereafter to collect and enjoy
all rents and other sums of money
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payable under any sublease of any of the Leased Premises, and Tenant hereby
irrevocably and unconditionally assigns such rents and money to Landlord, which
assignment may be exercised upon and after (but not before) the occurrence of an
Event of Default. Tenant shall not mortgage or pledge this Lease, and any such
mortgage or pledge made in violation of this Paragraph shall be void.
18. Permitted Contests. Tenant shall not be required to (a) pay any
------------------
Imposition, (b) comply with any Legal Requirement, (c) discharge or remove any
lien referred to in Paragraph 9 or 12, or (d) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment referred to in
Paragraph 11(b), so long as Tenant shall contest, in good faith and at its
expense, the existence, the amount or the validity thereof, the amount of the
damages caused thereby, or the extent of its or Landlord's liability therefor,
by appropriate proceedings which shall operate during the pendency thereof to
prevent (i) the collection of, or other realization upon, the Imposition, lien
or claim so contested, (ii) the sale, forfeiture or loss of any of the Leased
Premises or any rent to satisfy the same or to pay any damages caused by the
violation of any such Legal Requirement or by any such encroachment, violation,
hindrance, obstruction or impairment, (iii) any interference with the use or
occupancy of any of the Leased Premises, (iv) any interference with the payment
of any Rent, and (v) the cancellation of any fire or other insurance policy. If
the contested amount is in excess of Twenty Thousand Dollars ($20,000.00),
Tenant shall provide Landlord security which is reasonably satisfactory to
Landlord, to assure the payment, compliance, discharge, removal and/or other
action, including all costs, attorneys' fees, interest and penalties that may be
or become due in connection therewith. While any proceedings which comply with
the requirements of this Paragraph 18 are pending and the required security is
held by Landlord, Landlord shall not have the right to pay, remove or cause to
be discharged the Imposition, lien or claim thereby being contested. Tenant
further agrees that each such contest shall be promptly and diligently
prosecuted to a final conclusion, except that Tenant shall, so long as the
conditions of the first sentence of this Paragraph are at all times complied
with, have the right to attempt to settle or compromise such contest through
negotiations. Tenant shall pay, and save Landlord harmless against, any and all
losses, judgments, decrees and costs (including all reasonable attorneys' fees
and expenses) in connection with any such contest and shall, promptly after the
final determination of such contest, fully pay and discharge the amounts which
shall be levied, assessed, charged or imposed or be determined to be payable
therein or in connection therewith, together with all penalties, fines,
interest, costs and expenses thereof or in connection therewith, and perform all
acts the performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord to the risk of any civil or criminal
liability.
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19. Conditional Limitations; Default Provision.
------------------------------------------
(a) The occurrence of any one or more of the following events
which continue for a period equal to the greater of (i) any grace period
specified in this subparagraph 19(a) or in subparagraph 19(g) hereof or (ii) two
(2) days less than (any applicable grace period, if any, given to Landlord for
such) default under any Note and Mortgage shall constitute an Event of Default
under this Lease: (i) a failure by Tenant to make (regardless of the pendency of
any bankruptcy, reorganization, receivership, insolvency or other proceedings,
in law, in equity, or before any administrative tribunal, which have or might
have the effect of preventing Tenant from complying with the provisions of this
Lease) any payment of Rent or other sum herein required to be paid by Tenant;
(ii) a failure by Tenant duly to perform and observe, or a violation or breach
of, any other provision or covenant hereof not otherwise specifically mentioned
in this Paragraph 19(a); (iii) any representation or warranty made by Tenant
herein or in the Assignment or in any certificate, demand or request made
pursuant hereto or thereto proves to be incorrect, now or hereafter, in any
material respect; (iv) Tenant shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a receiver or trustee for
itself or for any of the Leased Premises, (C) file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state or
any jurisdiction, or (D) make a general assignment for the benefit of creditors;
(v) a court shall enter an order, judgment or decree appointing, without the
consent of Tenant, a receiver or trustee for it or for any of the Leased
Premises or approving a petition filed against Tenant which seeks relief under
the bankruptcy or other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain in force,
undischarged or unstayed, sixty (60) days after it is entered; (vi) any
Improvement is substantially damaged or destroyed by an uninsured casualty and
Tenant fails to commence promptly thereafter to restore the Leased Premises to
its condition immediately prior to such casualty or fails to proceed actively,
diligently and in good faith with such restoration and to continue such
restoration until the Leased Premises have been fully restored; (vii) any of the
Leased Premises shall have been vacated or abandoned; (viii) Tenant shall be
liquidated or dissolved or shall begin proceedings towards its liquidation or
dissolution; (ix) the estate or interest of Tenant in any of the Leased Premises
shall be levied upon or attached in any proceeding and such estate or interest
is about to be sold or transferred or such proceeding shall not be vacated or
discharged within sixty (60) days after it is commenced; or (x) a failure by
Guarantor duly to perform and observe any provision under the Guaranty, or a
violation or breach of any covenant made by Guarantor under the Guaranty.
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(b) If an Event of Default shall have occurred, Landlord shall
have the right at its option, then or at any time thereafter to do any one or
more of the following without demand upon or notice to Tenant (except as
otherwise provided in subparagraph (g) of this Paragraph 19):
(i) Landlord shall give Tenant ten (10) days written notice
of Landlord's intention to terminate this Lease on a date specified in such
notice. Upon the date therein specified, the Term, the estate hereby granted and
all rights of Tenant hereunder, shall expire and terminate as if such date were
the date herein before fixed for the expiration of the Term, but Tenant shall
remain liable for all its obligations hereunder, including its liability for
Rent, as hereinafter provided.
(ii) Landlord may, whether or not the Term of this Lease
shall have been terminated pursuant to clause (i) above, (A) give Tenant notice
to surrender any of the Leased Premises to Landlord immediately or on a date
specified in such notice, at which time Tenant shall surrender and deliver
possession of the Leased Premises or the specified portion thereof to Landlord
or (B) re-enter and repossess any of the Leased Premises, with or without legal
process, by peaceably entering the Leased Premises and changing locks or by
summary proceedings, ejectment or any other lawful means or procedure. Upon or
at any time after taking possession of any of the Leased Premises, Landlord may,
by peaceable means or legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any such entry,
repossession or removal. No such entry or repossession shall be construed as an
election by Landlord to terminate this Lease unless Landlord gives a written
notice of such intention to Tenant pursuant to clause (i) above.
(iii) After repossession of any of the Leased Premises
pursuant to clause (ii) above, whether or not this Lease shall have been
terminated pursuant to clause (i) above, Landlord shall have the right (but
shall be under no obligation) to relet any of the Leased Premises to such tenant
or tenants, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term), for such rent,
on such conditions (which may include concessions or free rent) and for such
uses as Landlord, in its absolute discretion, may determine; and Landlord may
collect and receive any rents payable by reason of such reletting. Landlord
shall have no duty to mitigate damages and shall not be responsible or liable
for any failure to relet any of the Leased Premises or for any failure to
collect any rent due upon any such reletting. Landlord may make such Alterations
as Landlord, in its sole discretion, may deem advisable. Tenant agrees to pay
Landlord, as Additional Rent, immediately upon demand, all expenses incurred by
Landlord in obtaining possession, in performing Alterations and in reletting any
of the Leased Premises, including fees and commissions of attorneys, architects,
agents and brokers.
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(iv) Unless Landlord shall have exercised its remedy under
Paragraph 19(b) (v) (as to the entire Leased Premises) or 19(b)(vi) hereof and
shall have received all sums due thereunder, Landlord may, upon written demand
to Tenant, recover from Tenant, and Tenant shall pay to Landlord, as and for
liquidated and agreed final damages for Tenant's default and in lieu of all
current damages beyond the date of such demand (it being agreed that it would be
impracticable or extremely difficult to fix the actual damages), an amount equal
to the present value of the excess, if any, of (A) all Rent from the date of
such demand to the date on which the then Term is scheduled to expire hereunder
in the absence of any earlier termination, re-entry or repossession over (B) the
then fair market rental value of the Leased Premises for the same period;
provided, however, that in the event Landlord shall have exercised its remedy
under Paragraph 19(6) (v) to require the purchase of less than the entire Leased
Premises and shall have received all sums due in connection therewith, the Rent
referred to in clause (A) above shall be that portion of the Rent which is
attributable to that portion of the Leased Premises which is not sold to Tenant
pursuant to said Paragraph 19(b) (v) and the fair rental value referred to in
clause (B) above shall be the fair rental value of such unsold remainder of the
Leased Premises. The present value of such excess shall be determined by
discounting the Rent and such fair market rental value at the rate per annum
which is the lower of the then Prime Rate or nine percent (9%) per annum. If any
Law shall validly limit the amount of such liquidated final damages to less than
the amount above agreed upon, Landlord shall be entitled to the maximum amount
allowable under such Law.
(v) Unless Landlord shall have exercised its remedy under
Paragraph 19(b) (iv) or 19(b)(vi) hereof and shall have received all sums due
thereunder, Landlord may, upon notice to Tenant, require Tenant to make an
irrevocable offer to purchase, for the purchase price (the "Default Offer
Amount") specified in the next two sentences, either (A) the entire Leased
Premises or (B) any one or more of the New Orleans Premises, the San Antonio
Premises and the Memphis Premises (such entire Leased Premises or any one or
more of the New Orleans Premises, the San Antonio Premises and the Memphis
Premises, as applicable, being hereinafter referred to as the "Selected
Premises"), as Landlord in its sole discretion may select. The Default Offer
Amount shall be the greater of (1) the then Fair Market Value of the Selected
Premises, (2) the sum of that portion (determined in accordance with the
percentages set forth in Exhibit "F") of the unpaid balance of the Note and
Mortgage covering any of the Selected Premises, all interest accrued thereon,
and prepayment penalties payable in connection therewith and all other sums due
thereunder as of the date of such purchase, or (3) an amount equal to the sum of
the Acquisition Cost with respect to the Selected Premises and any prepayment
penalty payable under the Loan with respect to the Selected Premises. Upon such
notice by Landlord to Tenant, Tenant shall be deemed to have made such offer,
and the Fair Market Value
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of the Selected Premises shall be determined in accordance with the procedure
set forth in Paragraph 27 hereof. Within thirty (30) days after such
determination of the Fair Market Value, Landlord shall accept or reject such
offer. If Landlord accepts such offer, then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the Default Offer Amount and
purchase the Selected Premises in accordance with Paragraph 16 hereof. Any
rejection by Landlord of such offer shall have no effect on any other provision
of this Lease.
(vi) Unless Landlord shall have exercised its remedy under
Paragraph 19(b)(iv) or 19(b)(v) (as to the entire Leased Premises) hereof and
shall have received all sums due thereunder or shall have repossessed and relet
the Leased Premises, Landlord may declare by notice to Tenant the entire Basic
Rent (in the amount of Basic Rent then in effect) discounted at the rate per
annum which is the lower of the then Prime Rate or nine percent (9%) per annum
for the remainder of the then current Term, to be immediately due and payable.
In that event, Tenant shall immediately pay to Landlord all such Basic Rent, all
accrued Rent then due and unpaid, all other sums which are then due or which
would have been due hereunder but for the aforesaid Event of Default and all
sums which arise or become due by reason of such Event of Default (including any
attorneys' fees and costs). Upon receipt of all such accelerated Basic Rent and
other sums, this Lease shall remain in full force and effect and Tenant shall
have the right to possession of the Leased Premises from the date Landlord
receives the accelerated Basic Rent and all the other said sums to the end of
the Term then in effect (or that would be in effect but for the Event of
Default) pursuant and subject to all the provisions of this Lease, including the
obligation to pay all increases in Basic Rent and all Additional Rent and other
sums that subsequently become due, except that (A) no Basic Rent which has been
prepaid hereunder shall be due thereafter during the said Term, (B) Tenant shall
have no option to extend or renew the then current Term and (C) Tenant shall
have no further rights, if any, under Paragraph 28. Notwithstanding the
foregoing, in the event Landlord shall have exercised its remedy under Paragraph
19(b)(v) to require the purchase of less than the entire Leased Premises and
shall have received all sums due in connection therewith, the Basic Rent to be
accelerated pursuant to this Paragraph 19(b) (vi) shall be that portion of the
Basic Rent which is attributable to that portion of the Leased Premises which is
not sold to Tenant pursuant to said Paragraph 19(b)(v) and Tenant's right to
possession pursuant to this Lease shall extend only to such unsold remainder of
the Leased Premises.
(vii) Landlord may exercise any other right or remedy now or
hereafter existing by Law or in equity.
(c) No expiration or termination of this Lease pursuant to
Paragraph 19(b)(i) or any other provision of this Lease, by operation of law or
otherwise, before the expiration date provided in Paragraph 5 or if applicable
the termination date
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provided in Paragraph 13(b), 14(i) or 28, no repossession of any of the Leased
Premises pursuant to Paragraph 19(b)(ii) or otherwise, nor any reletting of any
of the Leased Premises pursuant to Paragraph (19)(b)(iii) shall relieve Tenant
of any of its liabilities and obligations hereunder, including the liability for
Rent, all of which shall survive such expiration, termination, repossession or
reletting.
(d) In the event of any expiration or termination of this Lease
or repossession of any of the Leased Premises by reason of the occurrence of an
Event of Default, and provided that Landlord has not exercised its remedy under
Paragraph 19(b)(iv), 19(b)(v) (as to the entire Leased Premises) or 19(b)(vi) or
has not received all sums due thereunder, Tenant shall pay to Landlord all Rent
and all other sums required to be paid by Tenant to and including the date of
such expiration, termination or repossession and, thereafter, Tenant shall,
until the end of what would have been the Term in the absence of such
expiration, termination or repossession, and whether or not any of the Leased
Premises shall have been relet, be liable to Landlord for, and shall pay to
Landlord, as liquidated and agreed current damages (i) Basic Rent, Additional
Rent and all other sums which would be payable under this Lease by Tenant in the
absence of such expiration, termination or repossession, less (ii) the net
proceeds, if any, of any reletting pursuant to Paragraph 19(b)(iii), after
deducting from such proceeds all of Landlord's expenses in connection with such
reletting (including all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, employees' expenses, costs of Alterations and
expenses of preparation for reletting) provided, however, that in the event
--------- -------
Landlord has exercised its remedy under Paragraph 19(b)(v) to require the
purchase of less than the entire Leased Premises and has received all sums due
in connection therewith, the Rent hereinabove in this Paragraph 19(d) referred
to shall mean that portion of the Rent which is applicable to that portion of
the Leased Premises which is not sold to Tenant pursuant to said Paragraph
19(b)(v). Tenant hereby agrees to be and remain liable for all sums aforesaid;
and Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by limitation had there been no such Event of Default.
(e) The words "enter," "re-enter," or "re-entry," as used in this
Paragraph 19 are not restricted to their technical meaning.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY.
(g) Except as otherwise hereinafter in this Paragraph 19(g)
provided, before an Event of Default shall exist under this Paragraph 19,
Landlord shall have given Tenant notice
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thereof and Tenant shall have failed to cure the default within the applicable
grace period stated below. If the default consists of a failure to pay Rent, the
applicable grace period shall be two (2) business days from the date such notice
is given. If the default consists of the failure to provide any insurance
required pursuant to Paragraph 14, the applicable grace period shall be seven
(7) days from the date on which the notice is given, but Landlord shall not be
obligated to give notice of, or allow any grace period for, any such default
more than twice within any twelve (12) month period. If the default consists of
something other than the failure to provide any such insurance, the applicable
grace period shall be twenty (20) days from the date on which the notice is
given or, if the default cannot be cured within the said twenty-day period and
delay in the exercise of a remedy would not (in Landlord's reasonable judgment)
cause any material adverse harm to Landlord or any of the Leased Premises, the
grace period shall be extended for the period required to cure the default (but
such grace period, including any extension, shall not in the aggregate exceed
sixty (60) days), provided that Tenant shall commence to cure the default within
the said twenty-day period and shall actively, diligently and in good faith
proceed with and continue the curing of the default until it shall be fully
cured. However, no notice or grace period shall be required in any one or more
of the following events: (i) substantial damage to any of the Leased Premises
will, in Landlord's reasonable judgment, probably occur unless a remedy is
exercised promptly; (ii) the occurrence of a default under clause (iii), (iv),
(v), (viii), or (ix) of subparagraph (a) of this Paragraph 19; or (iii) the
default is such that any delay in the exercise of a remedy by Landlord could
reasonably be expected to cause irreparable harm to Landlord.
20. Additional Rights of Landlord.
-----------------------------
(a) No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to any other right or
remedy given hereunder or now or hereafer existing by Law or in equity. Upon the
occurrence of any Event of Default, Landlord shall have the right (but no
obligation) to perform any act required of Tenant hereunder, whether as agent
for Tenant or otherwise; and the cost thereof shall be Additional Rent hereunder
and shall be paid by Tenant to Landlord, together with interest thereon at the
Default Rate from the date such cost is incurred until it shall be fully paid by
Tenant, immediately upon demand. Tenant agrees that Tenant shall be liable to
Landlord for any and all damages suffered or incurred by Landlord in connection
with any Event of Default and Tenant further agrees that Landlord shall be
entitled to exercise any and all remedies existing at law or in equity for the
recovery thereof. Tenant acknowledges that time is of the essence in the
performance of its obligations under this Lease. No failure of Landlord (i) to
insist at any time upon the strict performance of any provision of this Lease or
(ii) to exercise any
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option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any
Rent or other sum due hereunder with knowledge of the breach of any provision
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver by Landlord of any provision of this Lease shall be deemed to have been
made unless expressed in a writing signed by Landlord. In addition to the other
remedies provided in this Lease, Landlord shall be entitled, to the extent
permitted by applicable Law, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the provisions of this Lease, or to
specific performance of any of the provisions of this Lease.
(b) Tenant hereby waives and surrenders, for itself and all those
claiming under it, including creditors of all kinds, (i) any right and privilege
which it or any of them may have under any present or future Law to redeem any
of the Leased Premises or to have a continuance of this Lease after termination
of this Lease or of Tenant's right of occupancy or possession pursuant to any
court order or any provision hereof, and (ii) the benefits of any present or
future Law which exempts property from liability for debt or for distress for
rent.
(c) Tenant shall pay to Landlord, as Additional Rent, all the
expenses incurred by Landlord in connection with any Event of Default or the
exercise of any remedy by reason of an Event of Default or otherwise in
connection with the enforcement of this Lease, including reasonable attorneys'
fees and expenses. If Landlord shall be made a party to any litigation commenced
against Tenant or any litigation pertaining to this Lease or any of the Leased
Premises (except litigation among the partners of Landlord or other Persons
described in Paragraph 29 which does not arise out of any act or omission of
Tenant under this Lease), then, at the option of Landlord, Tenant, at its
expense, shall provide Landlord with counsel approved by Landlord and, in any
event, Tenant shall pay all costs and reasonable attorneys' fees incurred or
paid by Landlord in connection with such litigation; provided, however, that if
in a non-appealable decision, a court of competent jurisdiction determines that
Landlord was the sole cause of litigation pertaining to this Lease or any of the
Leased Premises then all costs and fees incurred by Tenant in connection with
such litigation shall be refunded to Tenant.
21. Notices. All notices, demands, requests, consents, approvals,
-------
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given for all purposes when delivered in Person or
by Federal Express or other 24-hour delivery service or five (5) business days
after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, addressed to the other party at
its address stated above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay,
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1600 Avenue of the Arts Building, Philadelphia, PA 19107, Attention: Chairman,
Real Estate Department. For the purposes of this Paragraph, any party may
substitute its address by giving fifteen (15) days' notice to the other party,
in the manner provided above.
22. Estoppel Certificate. Tenant shall, at any time and from time to
--------------------
time, but not more than three (3) times in any calendar year, upon not less than
ten (10) days' prior written request by Landlord, execute, acknowledge and
deliver to Landlord a statement in writing, executed by the president or a vice
president of Tenant, certifying (a) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that this Lease is in
full force and effect as modified, and setting forth such modifications), (b)
the dates to which Basic Rent, Additional Rent and all other sums payable
hereunder have been paid, (c) that, to the knowledge of the signer of such
certificate, no default by either Landlord or Tenant exists hereunder or
specifying each such default of which the signer may have knowledge, and (d)
that, to the knowledge of the signer of such certificate, there are no
proceedings pending or threatened against Tenant before or by any court or
administrative agency which, if adversely decided, would materially and
adversely affect the financial condition and operations of Tenant or, if any
such proceedings are pending or threatened to said signer's knowledge,
specifying and describing the same. It is intended that any such statements by
Tenant may be relied upon by Lender, Landlord or their assignees or by any
prospective purchaser or mortgagee of the Leased Premises.
Landlord shall, at any time and from time to time but not more
often than twice in any twelve (12) month period upon not less than ten (10)
days' prior written request by Tenant, execute, acknowledge and deliver to
Tenant a statement in writing, executed by a general partner of landlord
certifying (a) that this Lease in unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications), (b) the dates to which Basic
Rent, Additional Rent and all other sums payable hereunder have been paid, (c)
that, to the knowledge of the signer of such certificate, no default by Tenant
exists hereunder of specifying each such default of which the signer may have
knowledge. It is intended that nay such statements by Landlord may be relied
upon by Tenant, its lenders or its permitted assignees.
23. Surrender. Upon the expiration or earlier termination of this
---------
Lease, Tenant shall peaceably leave and surrender the Leased Premises (except
for any portion thereof with respect to which this Lease has previously
terminated or with respect to which Tenant has purchased) to Landlord in the
same condition in which the Leased Premises were originally received from
Landlord at the commencement of this Lease, except as repaired, rebuilt,
restored, altered, replaced or added to as
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permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Tenant shall remove from the Leased Premises on or prior to such
expiration or earlier termination all property which is owned by Tenant or third
parties other than Landlord and Tenant; and Tenant, at its expense, shall, on or
prior to such expiration or earlier termination, repair any damage caused by
such removal. Property not so removed shall become the property of Landlord;
Landlord may thereafter cause such property to be removed from the Leased
Premises; and the cost of removing and disposing of such property and repairing
any damage to any of the Leased Premises caused by such removal shall be borne
by Tenant. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
upon the expiration or earlier termination of this Lease.
24. Risk of Loss. The risk of loss or of decrease in the enjoyment
------------
and beneficial use of any of the Leased Premises in consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosure, attachments, levies or executions,
is assumed by Tenant, and Landlord shall in no event be answerable or
accountable therefor. Except as otherwise specifically provided in this Lease,
none of the events mentioned in this Paragraph shall entitle Tenant to any
abatement of Rent.
25. No Merger of Title. There shall be no merger of this Lease nor of
------------------
the leasehold estate created by this Lease with the fee estate in or ownership
of any of the Leased Premises by reason of the fact that the same Person may
acquire or hold or own, directly or indirectly, (a) the leasehold estate created
by this Lease or any part thereof or interest therein or any interest of Tenant
in this Lease, and (b) the fee estate or ownership of any of the Leased Premises
or any interest in such fee estate or ownership; and no such merger shall occur
unless and until all Persons having any interest in (i) this Lease as Tenant or
the leasehold estate created by this Lease and (ii) this Lease as Landlord or
the fee estate in or ownership of the Leased Premises or any part thereof sought
to be merged shall join in a written instrument effecting such merger and shall
duly record the same.
26. Books and Records. Tenant shall permit Landlord and Lender by
-----------------
their respective agents, accountants and attorneys, to visit and inspect the
Leased Premises and to discuss the finances and business with the officers of
Tenant, at such reasonable times as may be requested by Landlord, and, upon the
occurrence of an Event of Default, to examine the records and books of account
Tenant, at such reasonable times as may be requested by Landlord.
Tenant shall deliver to Landlord and to Lender (i) within thirty (30)
days of the end of each calendar month the monthly management reports of Tenant
for the prior calendar month and (ii) within ninety (90) days of the close of
each fiscal year annual audited financial statements of Tenant prepared by
independent
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certified public accountants satisfactory to Landlord, and such other relevant
financial data as Landlord may reasonably require pertaining to Tenant or to the
Leased Premises. Tenant shall also furnish to Landlord all filings, if any, of
Form 10-K, Form 10-Q and other required filings with the Securities and Exchange
Commission pursuant to the provisions of the Securities Exchange Act of 1934, as
amended, or any other Law. All financial statements of Tenant shall be prepared
in accordance with generally accepted accounting principles consistently applied
and the annual statements hereinabove referred to shall be accompanied by an
unqualified opinion of said accountants and by the affidavit of the president or
a vice president of Tenant dated within five (5) days of the delivery of such
statement, (a) stating that the affiant knows of no Event of Default or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder, or, if any such event
has occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (b) except as otherwise specified, with respect to Tenant stating
that Tenant has fulfilled all of its obligations under this Lease which are
required to be fulfilled on or prior to the date of such affidavit.
27. Determination of Value.
----------------------
(a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such Fair
Market Value within fifteen (15) days after the date (the "Applicable Initial
Date") on which (A) Tenant provides Landlord with notice of its intention not to
extend or to terminate this Lease as to the Affected Premises pursuant to
Paragraph 13(b) or Paragraph 14(h) hereof or (B) Landlord provides Tenant with
notice of its intention to require Tenant to make an offer to purchase the
Selected Premises pursuant to Paragraph 19(b)(v) hereof, as applicable. Upon
reaching such agreement, the parties shall execute an agreement setting forth
the amount of such Fair Market Value.
(ii) If the parties shall not have signed such agreement
setting forth the amount of such agreed Fair Market Value within fifteen (15)
days after the Applicable Initial Date, Tenant shall within ten (10) days after
the Applicable Initial Date select an appraiser and notify Landlord in writing
of the name, address and qualifications of such appraiser. Within ten (10) days
thereafter, Landlord shall select an appraiser and notify Tenant of the name,
address and qualifications of such appraiser. The appraiser selected by Tenant
and the appraiser selected by Landlord shall endeavor to agree upon the Fair
Market Value of the Leased Premises or the Affected Premises or the
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Selected Premises, as applicable, as of the date specified in the particular
provision of this Lease (the "Applicable Provision") pursuant to which the
determination of Fair Market Value is being made. If the said two appraisers
shall agree upon such Fair Market Value, the amount of such Fair Market Value as
agreed to by the said two appraisers shall be binding and conclusive.
(iii) If the appraiser selected by Tenant and the appraiser
selected by Landlord shall be unable to agree upon such Fair Market Value within
twenty (20) days after the selection of an appraiser by Landlord, then the said
two appraisers shall select a third appraiser to make the determination of such
Fair Market Value and the determination of such third appraiser shall be binding
and conclusive upon Landlord and Tenant.
(iv) In the event the appraiser selected by Tenant and the
appraiser selected by Landlord shall be unable to agree upon the designation of
a third appraiser within ten (10) days after the expiration of the twenty (20)
day period referred to in clause (iii) above or in the event the third appraiser
so selected does not make a determination of the Fair Market Value of the Leased
Premises or the Affected Premises or the Selected Premises within twenty (20)
days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto, be
appointed by the President or Chairman of the American Arbitration Association
in Philadelphia, Pennsylvania. The determination of Fair Market Value made by
the third appraiser appointed pursuant hereto shall be made within twenty (20)
days after such appointment. Fair Market Value shall be the average of the
determination of Fair Market Value made by the third appraiser and the
determination of Fair Market Value made by the appraiser whose determination of
Fair Market Value is nearest to that of the third appraiser. Such average shall
be binding and conclusive upon Landlord and Tenant.
(v) All appraisers selected or appointed pursuant to this
Paragraph 27(a) shall be independent qualified appraisers. Such appraisers shall
have no right, power or authority to alter or modify the provisions of this
Lease and in determining the Fair Market Value of the Leased Premises or the
Leased Premises or the Selected Premises, as applicable, such appraisers shall
utilize the definition of Fair Market Value hereinabove set forth above.
(b) The cost of the appraiser selected by Tenant shall be paid by
Tenant and the cost of the appraiser selected by Landlord shall be paid by
Landlord; the cost of a third appraisal, if required, will be split equally
between Landlord and Tenant.
(c) If, by virtue of any delay in the appointment of a third
appraiser pursuant to Paragraph 27(a)(iv) above or of any delay by such
appointed third appraiser to determine such Fair Market Value, the Fair Market
Value of the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, is not
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determined by such appointed third appraiser within one hundred forty (140) days
after the Applicable Initial Date, then the date (the "Applicable Final Date")
on which the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, would otherwise be sold to Tenant or on which this Lease would
otherwise terminate, as specified in the Applicable Provision, shall be extended
the same number of days (the "Delay Period") by which the total period so
required for the binding and conclusive determination of Fair Market Value
exceeds one hundred forty (140) days and all relevant defined terms used in the
Applicable Provision shall be deemed amended accordingly, anything to the
contrary in the Applicable Provision notwithstanding. In addition, any time
period which is afforded Landlord under the Applicable Provision within which to
accept or reject an offer by Tenant shall likewise be extended by the number of
days equal to the Delay Period.
28. Financing.
---------
(a) Tenant shall pay, within three (3) business days of written
demand therefor, all out of pocket costs (including but not limited to closing
costs, title charges, commitment or application fees, and attorneys' fees), not
to exceed $50,000 in the aggregate (other than the principal of the Note and
interest thereon at the contract rate of interest specified therein), imposed
upon Landlord by Lender pursuant to the initial Loan to Landlord evidenced by a
Note and secured by a Mortgage constituting a first lien on the Leased Premises
provided that Landlord obtains such Loan no later than the fourth (4th)
anniversary of the initial Basic Rent Payment Date.
(b) In the event that Landlord desires to obtain a Loan to be
secured any of the Leased Premises, Tenant shall negotiate in good faith with
Landlord concerning any request made by the proposed mortgagee for changes or
modifications in this Lease. Tenant shall not unreasonably withhold or delay its
consent to such financing, and Tenant hereby agrees that Tenant shall provide
any other consent or statement and shall execute any and all other documents
that any proposed mortgagee requires in connection with such financing, so long
as the same do not materially adversely affect any right, benefit or privilege
of Tenant under this Lease or increase the Rent or other obligations of Tenant
hereunder.
29. Non-Recourse as to Landlord. Anything contained herein to the
---------------------------
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord or any general partner of Landlord (or any legal representative, heir,
estate, successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or
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<PAGE>
other entity) of Landlord or any general partner of Landlord, either directly or
through Landlord or its general partners or any predecessor or successor
partnership or corporation (or other entity) of Landlord or any general partner
of Landlord, or (d) any other Person or entity (including Eighth Carey Corporate
Property, Inc., W. P. Carey & Co. Inc., Carey Corporate Property Management,
Inc., Clark & Pendleton Realty Corp. or any Person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof).
30. Substitution and Exchange of Property. If the Board of Directors
-------------------------------------
of Tenant determines, in good faith, that any one or more of the New Orleans
Premises, the San Antonio Premises or the Memphis Premises (any one or more of
which that is determined to be uneconomically viable as provided hereunder being
hereinafter referred to as the "Existing Property") is no longer economically
viable for Tenant's continued use and operation for any reason, including, but
not limited to, unprofitability, obsolescence or change in zoning regulations;
then Tenant shall have the right, during the Term of this Lease or any renewal
hereof, to convey to Landlord a substitute property (the "Substitute Property")
and lease the Substitute Property back from Landlord on the terms and conditions
provided herein in exchange for the conveyance to Tenant of the Existing
Property and the termination of the Lease with respect to such Existing Property
(the "Exchange"), upon the terms and conditions set forth herein. In the event
that Tenant elects to exercise such right, Tenant shall give written notice to
Landlord and Lender, which notice shall contain (i) a resolution of Board of
Directors of Tenant stating that the Existing Property is no longer economically
viable and setting forth in reasonable detail the reasons for such
determination; (ii) a description and MAI Appraisal of the Substitute Property;
(iii) such relevant data as Landlord may request demonstrating the economic
viability of the Substitute Property; (iv) Tenant's offer to convey the
Substitute Property to Landlord and lease back the Substitute property in
exchange for Landlord conveying the Existing Property to Tenant and terminating
the Lease with respect to the Existing Property; and (v) notice to Landlord of
Tenant's intention to affect the Exchange on the first Basic Rent Payment Date
occurring at least ninety (90) days after the date on which Landlord receives
such notice (the "Exchange Date").
Landlord (if Landlord obtains the written consent of Lender) shall
accept or reject Tenant's offer of the Substitute Property not later than the
thirtieth (30th) day prior to the Exchange Date; and Landlord shall accept such
offer if Landlord (in its reasonable discretion) receives and approves all items
listed in the foregoing paragraph. If Landlord, with the written consent of
Lender, has accepted Tenant's offer and if on the Exchange Date all conditions
and requirements imposed by Landlord and Lender in connection with the
acceptance of Tenant's offer of substitution have been satisfied, including, but
not limited to, (i) the approval of Landlord, Lender and their respective
counsel
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<PAGE>
of all documents relating to the Exchange; (ii) all installments of annual Basic
Rent, Additional Rent and all other charges due and unpaid hereunder having been
paid in full by Tenant; (iii) Tenant's compliance with all other obligations and
liabilities, actual or contingent, under this Lease which have arisen on or
prior to the Exchange Date and Tenant not then being in default hereunder; (iv)
delivery to Landlord and Lender, respectively, of ALTA "owner" and "mortgagee"
title insurance policies insuring Landlord's fee title to the Substitute
Property and Lender's first lien thereon; and (v) Tenant's conveyance of the
Substitute Property to Landlord, the lease back of the Substitute Property to
Tenant, and the mortgaging of the Substitute Property to Lender; then the
Existing Property shall be conveyed to Tenant in accordance with the provisions
of Paragraph 16(a) and all obligations hereunder with respect to the Existing
Property shall terminate, except for any obligations or liabilities of Tenant,
actual or contingent, arising prior to such conveyance.
Tenant shall pay all charges incident to the Exchange, regardless of
whether or not the Exchange occurs, including, but not limited to, Landlord's
and lender's counsel fees, escrow fees, recording fees, brokerage fees, title
insurance and all federal, state and local taxes which may be incurred or
imposed by reason of such conveyance and transfer and/or by delivery of any deed
or other instrument.
31. Financial Covenant. Tenant shall not sell, assign or transfer its
------------------
interest in this Lease and shall not permit a Change in Control of Tenant to an
entity which, immediately following such sale, transfer, assignment or Change in
Control has a Tangible Net Worth of less than $18,996,000 or a secured debt to
equity ratio of greater than 4:1.
"Tangible Net Worth" as used herein shall mean as of any date the
excess of (A) the aggregate gross book value of all assets of Tenant or any
other entity, as the case may be, as of such date (excluding all franchises,
licenses, permits, drawings, patents, patent applications, copyrights,
trademarks, trade names, goodwill, experimental or organizational expenses and
all other assets which, in accordance with generally accepted accounting
principles, are deemed intangible) over (B) the aggregate of all liabilities of
Tenant or such other entity as of such date, all computed in accordance with
generally accepted accounting principles.
"Change in Control" as used herein shall mean as of any date (i) a
sale of all or substantially all of the Tenant's assets to any Person or related
group of Persons as an entirety or substantially as an entirety in one
transaction or series of transactions, (ii) the merger or consolidation of the
Tenant with or into another corporation or the merger of another corporation
into the Tenant or the sale of the stock of Tenant with the effect that
Guarantor holds less than 51% of the total voting power
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<PAGE>
entitled to vote in the election of directors, managers or trustees of the
surviving corporation of such merger or consolidation (any nonvoting common
stock now outstanding or issued after the date hereof of the surviving
corporation having terms substantially similar to the Tenant's nonvoting common
stock shall be considered voting stock for purposes of this provision) or holds
less than 51% of the total voting power entitled to vote in the election of
directors, managers or trustees of Tenant following such sale or (iii) the
liquidation or dissolution of the Tenant.
32. Subordination. Tenant agrees that this Lease and its interest
-------------
hereunder shall be subordinate to any mortgage, deed of trust, and/or other
security instrument hereafter placed upon the Leased Premises by the Landlord,
and to any and all advances made or to be made thereunder, to the interest
thereon, and all renewals, replacements and extensions thereof provided that any
such instrument (or separate instrument in recordable form duly executed by the
holder of any such mortgage, deed of trust or security instrument and delivered
to Tenant) shall provide for the recognition of this Lease and the non-
disturbance of all of Tenant's rights hereunder until such time as Landlord
shall have the right to terminate this Lease pursuant to any applicable
provisions of Paragraph 19 hereof.
33. First Refusal Right.
-------------------
(a) Except as otherwise provided in subparagraph (c) below, if
Landlord should desire to sell or shall receive an offer for its interest in any
one or more of the Memphis Premises, the New Orleans Premises and/or the San
Antonio Premises (any one or more of which Landlord desires to sell or for which
Landlord receives an offer being hereinafter referred to as the "Sale Premises")
prior to the tenth (10th) anniversary of the initial Basic Rent Payment Date as
subject to this Lease, then subject to the limitation set forth in subparagraph
(d) below Landlord first shall be required (i) either to obtain a bona fide
written offer to purchase the Sale Premises acceptable to Landlord or to enter a
contract for sale of the Sale Premises to Landlord or to enter a contract for
sale of the Sale Premises conditioned upon Tenant's failure to exercise its
right under this subparagraph (a), and (ii) to give written notice to Tenant of
the offer (and Landlord's willingness to accept the same) or contract for sale
accompanied by a copy of the executed offer or contract together with the name
and business address of the prospective purchaser ("Third Party Purchaser"). For
a period of fifteen (15) business days following receipt of such notice and
provided that Basic Rent shall be current at the time of the exercise of such
right of first refusal, Tenant shall have the right and option, exercisable by
written notice to landlord given within said fifteen (15) business days period
to purchase Landlord's interest in the Sale Premises at the purchase price and
upon the terms and conditions set forth in such written offer or agreement,
subject in addition, to the provisions of Paragraph 16(a) hereof. The closing
date for the purchase shall
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<PAGE>
be the later to occur of (i) ninety (90) days from the date of Tenant's notice
to Landlord or (ii) the closing date provided in the applicable contract of sale
or offer to purchase. If at the expiration (15) day period, Tenant shall have
failed to exercise the aforesaid option, Landlord's interest in the Sale
Premises may be sold for the consideration, to the Third Party Purchaser, and
upon the terms and conditions set forth in the original offer or agreement of
sale provided the sale is consummated with a period of one hundred eighty (180)
days after the giving of the original notice to Tenant pursuant to subparagraph
(a)(ii) above.
(b) If Tenant does not exercise its option to purchase any Sale
Premises, then Tenant agrees that (i) the Lease is bifurcated with respect to
remaining Leased Premises and the Sale Premises; (ii) Tenant will attorn to any
Third Party Purchaser as Landlord with respect to the Sale Premises purchased so
long as the third Party Purchaser assumes the obligations of Landlord under the
Lease; and (iii) the terms of the Lease will remain in full force and effect
with respect to the Sale Premises except that the Basic Rent will be that
percentage of the then Basic Rent which is allocated to the Sale Premises as set
forth on Exhibit "F" attached hereto and made a part hereof. At the request of
Landlord, Tenant will promptly execute such documents confirming (i) that, if
the sale occurs after the fifth (5th) anniversary of the initial Basic Rent
Payment Date its option to purchase the Sale Premises is null and void, (ii) the
agreements referred to above and (iii) such other agreements as Landlord may
reasonably request provided that such do not increase the liabilities and
obligations of Tenant hereunder.
(c) The provisions of subparagraph (a) shall not apply to or
prohibit -(i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the leased private power of sale under or judicial
foreclosure of nay mortgage, deed of trust or other security instrument or
devise to which Landlord's interest in the Leased Premises is now or hereafter
subject, (iii) any transfer or Landlord's interest in the Leased Premises to a
mortgagee, beneficiary under deed of trust or other holder of a security
interest therein by deed in lieu of foreclosure, or (iv) any transfer of the
Leased Premises to an Affiliate of Landlord or (v) to any governmental or quasi-
governmental agency with power of condemnation.
(d) If Landlord elects to sell any one or more of the Memphis
Premises, New Orleans Premises or Tulsa Premises prior to the fifth (5th)
anniversary of the initial Basic Rent Payment Date and Tenant does not elect to
purchase such Sale Premises, Tenant shall have one (1) additional first refusal
right for the initial offer or contract of sale with respect to such Sale
Premises which occurs during the period which commences with the fifth (5th)
anniversary of the initial Basic Rent Payment Date and terminates on the one
hundred twenty-seventh (127th) Basic Rent Payment Date. Notwithstanding anything
to the contrary set forth
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<PAGE>
in this Paragraph 33, the first of first refusal granted by this Paragraph
33 shall terminate and be null and void with respect to the Leased Premises
upon the earlier to occur of (i) the one-hundred twenty seventh (127th) Basic
Rent Payment Date or (ii) the termination of this Lease.
34. Miscellaneous. The paragraph headings in this Lease are used only
-------------
for convenience in finding the subject matters and are not part of this Lease or
to be used in determining the intent of the parties or otherwise interpreting
this Lease. As used in this Lease, the singular shall include the plural as the
context requires and the following words and phrases shall have the following
meanings: (a) "including" shall mean "including but not limited to"; (b)
"provisions" shall mean "provisions, terms, agreements, covenants and/or
conditions"; (c) "lien" shall mean "lien, charge, encumbrance, title retention
agreement, pledge, security interest, mortgage and/or deed of trust"; (d)
"obligation" shall mean "obligation, duty, agreement, liability, covenant and/or
condition"; (e) "any of the Leased Premises" shall mean "the Leased Premises or
any part thereof or interest therein"; (f) "any of the Land" shall mean "the
Land or any part thereof or interest therein"; (g) "any of the Improvements"
shall mean "the Improvements or any part thereof or interest therein"; (h) "any
of the Equipment" shall mean "the Equipment or any part thereof or interest
therein"; and (i) "any of the Adjoining Property" shall mean "the Adjoining
Property or any part thereof or interest therein". Any act which Landlord is
permitted to perform under this Lease may be performed at any time and from time
to time by Landlord or any Person or entity designated by Landlord. Any act
which Tenant is required to perform under this Lease shall be performed at
Tenant's sole cost and expense. Each appointment of Landlord as attorney-in-fact
for Tenant under this Lease is irrevocable and coupled with an interest.
Landlord shall in no event be construed for any purpose to be a partner, joint
venturer or associate of Tenant or of any subtenant, operator, concessionaire or
licensee of Tenant with respect to any of the Leased Premises or otherwise in
the conduct of their respective businesses. This Lease and any documents which
may be executed by Tenant on or about the effective date hereof at Landlord's
request constitute the entire agreement between the parties and supersede all
prior understandings and agreements, whether written or oral, between the
parties hereto relating to the Leased Premises and the transactions provided for
herein. This Lease may be modified, amended, discharged or waived only by an
agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought. The covenants of this
Lease shall run with the land and bind Tenant, the heirs, distributees, Personal
representatives, successors and assigns of Tenant, and all present and
subsequent encumbrancers and subtenants of any of the Leased Premises, and shall
inure to the benefit of Landlord, its successors and assigns. In the event there
is more than one Tenant, the obligations of each shall be joint and several. In
the event any one or more of the provisions contained in this Lease shall for
any reason be held to be
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<PAGE>
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein. This Lease shall be governed by and construed
according to the Laws of the State of Louisiana with respect to the New Orleans
Premises, the State of Texas with respect to the San Antonio Premises and the
State of Tennessee with respect to the Memphis Premises.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
CORPORATE PROPERTY ASSOCIATES 8,L.P.,
A DELAWARE LIMITED PARTNERSHIP
By Eighth Carey Corporate Property,
Inc., a General Partner
By /s/ H. Cabot Lodge III
------------------------------
H. Cabot Lodge III
Senior Vice President
Attest: [SIGNATURE NOT LEGIBLE]
--------------------------
Assistant Secretary
TENANT:
STATIONERS DISTRIBUTING COMPANY, INC.
By /s/ David R. Smith
-----------------------------------
David R. Smith,
Chairman
Attest: [SIGNATURE NOT LEGIBLE]
-------------------------------
___________ Secretary
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<PAGE>
EXHIBIT "A"
LOUISIANA PROPERTY
TRACT I
-------
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon and all the rights, ways, privileges, servitudes, appurtenances and
advantages thereunto belonging, or in anywise appertaining, designated as PARCEL
------
1F-B6, said parcel being situated in ELMWOOD INDUSTRIAL PARK, according to a
- ------ ------------------------
plan of resubdivision of J.J. Krebs & Sons, Inc., C.E. & S., dated June 9, 1977,
approved by Ordinance No. 13026 of the Jefferson Parish Council, dated September
12, 1977, filed for record September 13, 1977, and recorded in COB 905, folio
321, which Parcel 1F-B6 is composed of a portion of original Lot 1-F, Elmwood
Industrial Park (which includes all or a portion of resubdivided Parcel 1-F-B,
created by Ordinance No. 12675, recorded in COB 882, folio 820), and according
to said resubdivison plan dated June 9, 1977, said property is more fully
described as follows:
Parcel 1F-B6 commences at the most northerly corner of Plauche Industrial Park,
being the point of intersection of the southerly right of way line of Edwards
Avenue along Plauche Industrial Park, and the westerly right of way line of
Plauche Street, thence North 47 degrees 54 minutes 41 seconds West, a distance
of 48.50 feet to a point on Edwards Avenue; thence South 42 degrees 6 minutes 4
seconds West, a distance of 708.63 feet to a point; thence South 55 degrees 24
minutes 35 seconds West, a distance of 193.94 feet; thence South 73 degrees 24
minutes 17 seconds West, a distance of 56.18 feet to the northerly most corner
of the property herein described, being the point of beginning;
Thence from said point of beginning, South 47 degrees 53 minutes 49 seconds
East, a distance of 98.21 feet to a point on the westerly right of way line of
Beven Street;
Thence along said westerly right of way line of Beven Street, South 42 degrees
06 minutes 04 seconds West, a distance of 99.32 feet to a point on the westerly
right of way line of Beven Street:
<PAGE>
Thence North 47 degrees 54 minutes 41 seconds West, a distance of 158.62 feet to
a point:
Thence North 73 degrees 24 minutes 17 seconds East, a distance of 116.28 feet to
the point of beginning.
Containing an area of 12,755.84 square feet.
TRACT II
--------
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon and all the rights, ways, privileges, servitudes, appurtenances and
advantages thereunto belonging, or in anywise appertaining, designated as PARCEL
------
14-A, said parcel being situated principally in PLAUCHE INDUSTRIAL PARK, AND
- ----- ----------------------------
ALSO IN ELMWOOD INDUSTRIAL PARK, according to a plan of resubdivision of J.J.
- --------------------------------
Krebs & Sons, Inc., C.E. & S., dated September 13, 1976, revised February 8,
1977, approved by Ordinance No. 12783 of the Jefferson Parish Council, dated
March 17, 1977, filed for record March 28, 1977, and recorded in COB 888, folio
74, which Parcel 14-A is composed of all of former Lot 14, Square 2, Plauche
Industrial Park, and a portion of original Lot 1-F Elmwood Industrial Park, and
according to said resubdivision plan, and the subdivision plan of J.J. Krebs &
Sons, Inc., dated May 15, 1975, showing Squares 1 and 2 of Plauche Industrial
Park, said property is more fully described as follows:
Commencing at the most northerly corner of Plauche Industrial Park, being
the point of intersection of the southerly right of way line of Edwards Avenue
along Plauche Industrial Park, and the westerly right of way line of Plauche
Street, thence South 42 degrees 6 minutes 4 seconds West, as distance of 627.20
feet along the westerly right of way line of Plauche Street to a point, being
the northerly corner of former Lot 14, Square 2, Plauche Industrial Park, for
the point of beginning.
Thence South 47 degrees 53 minutes 49 seconds East along Plauche Street right of
way a distance of 284.18 feet to a point and corner:
Thence South 42 degrees 6 minutes 4 seconds West a distance of 330 feet to a
point and corner:
Thence North 47 degrees 53 minutes 49 seconds West a distance of 365.68 feet to
a point and corner on the center line of a 20 foot railroad servitude:
<PAGE>
Thence following the center line of said 20 foot railroad servitude, along a
curve to the left having a radius of 501.95 feet, an arc distance of 244.60 feet
to a point:
Thence continue along the center line of said 20 foot railroad servitude North
42 degrees 1 minute 1 second East, a distance of 94.88 feet to a point and
corner on the southerly right of way line of Plauche Street extended:
Thence South 47 degrees 53 minutes 49 seconds East, a distance of 23.56 feet to
a Plauche Street corner, being the point of beginning:
Containing an area of 105,940.80 square feet.
<PAGE>
TEXAS PROPERTY
Lot 1, Block 1, New City Block 16837, NACOGDOCHES ROAD BUSINESS PARK
SUBIDIVISION, UNIT 1, in the City of San Antonio, Bexar County, Texas, according
to plat thereof recorded in Volume 8600, Page 202, Deed and Plat Records of
Bexar County, Texas, being more particularly described as follows:
BEGINNING: at a 1/2" iron pin set in the Northeast R.O.W. line of Highpoint
Drive at the West corner of said Lot 11, said point being South
34 deg. 50 min., 00 sec., West, 69.19' from the curve return at
the intersection with Crosspoint Drive;
THENCE: North 55 deg., 10 min., 00 sec., East, 355.45' to a point in the
center of a Mo-pac Railroad Spur Tract for the North corner of
said Lot 1:
THENCE: along the Southwesterly line of the Mo-pac Railroad Spur Tract
R.O.W., South 34 deg., 28 min., 31 sec., East, 389.82' to a 1/2"
iron pin set at an angle point and South 36 deg., 21 min., 13 sec.,
East, 95.22' to a 1/2" iron pin set at the East corner of said Lot
1;
THENCE: South 55 deg., 10 min., 00 sec., West, 355.54' to a 1/2" iron pin
set in the Northeast R.O.W. line of Highland Drive at the South
corner of said Lot 1;
THENCE: along the Northeast R.O.W. line Highpoint Drive, North 34 deg., 50
min., 00 sec., East, 485.0' to the Point of Beginning and
containing 3.944 acres of land.
<PAGE>
EXHIBIT "B"
FIXTURES AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances
of every kind and nature whatsoever, including all electrical, anti-pollution,
heating, lighting (including hanging fluorescent lighting and outside yard
lights), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, power, plumbing, lifting, cleaning, fire prevention, fire
extinguishing and ventilating systems, devices and machinery and all engines,
pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors,
conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors (including fiberglass roll-up doors and rail doors),
windows, loading platforms (including sunken interior truck docks), lavatory
facilities, stairwells, fencing (including cyclone fencing), rail siding and
switches, flagpoles, passenger and freight elevators and garage units, but
excluding all Personal property and all trade fixtures, machinery, appliances,
office, manufacturing and warehouse equipment, movable partitions and other
barriers which are not necessary to the operation, as buildings, of the
buildings which constitute part of the Leased Premises, whether or not such
items are affixed to the Leased Premises, and which can be removed without
material damage to the Leased Premises.
<PAGE>
EXHIBIT C
---------
The matters set forth on those certain commitments issued by Lawyers
Title Insurance Corporation, nos. 296595, 36999/C1061CCBF213032 and BF-042778.
<PAGE>
EXHIBIT "D"
BASIC RENT PAYMENTS
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2, 3
----------
and 4 below, Basic Rent payable in respect of the Term shall be $523,600 per
annum, payable monthly in advance on each Basic Rent Payment Date, in equal
monthly installments of $43,633.33 each.
2. CPI Adjustments to Basic Rent. Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items, (1982-
84=100) ("CPI") or the successor index that most closely approximates the CPI.
If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted from the CPI adjustment be less than the
Basic Rent in effect for the five (5) year period immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted to
----------------------------------
reflect changes in the CPI until the fifth (5th) anniversary of the Basic Rent
Payment Date on which the first monthly installment of Basic Rent shall be due
and payable (the "First Full Basic Rent Payment Date"). As of the fifth (5th)
anniversary of the First Full Basic Rent Payment Date and thereafter on the
tenth (10th) and, if the term is extended, on the fifteenth (15), twentieth
(20th), twenty-fifth (25), and thirtieth (30th), anniversaries of the First Full
Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent five (5) year period immediately preceding each
of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").
4. Method of Adjustment for CPI Adjustment.
---------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date (subject to adjustment as provided in the following
subparagraph 4(b)) shall be multiplied by a fraction, the numerator of which
shall be the difference between (i) the average CPI for the three
<PAGE>
(3) most recent calendar months (the "Prior Months") ending prior to such Basic
Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. The Beginning CPI shall
mean the average CPI for the three (3) calendar months corresponding to the
Prior Months, but occurring five (5) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing five (5) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic Rent
payable under this Lease until the next succeeding Basic Rent Adjustment Date
shall be the Basic Rent in effect after the adjustment provided for as of such
Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to Tenant
on or before the thirtieth (30th) day preceding each Basic Rent Adjustment Date.
<PAGE>
EXHIBIT "E"
ALLOCATION OF ACQUISITION COST
------------------------------
<TABLE>
<S> <C>
New Orleans Premises: $1,640,000
Memphis Premises: $1,420,000
San Antonio Premises: $1,570,000
Entire Leased Premises $4,630,000
</TABLE>
<PAGE>
EXHIBIT "F"
PERCENTAGE ALLOCATION
---------------------
<TABLE>
<S> <C>
New Orleans Premises: 35.42%
Memphis Premises: 30.67%
San Antonio Premises: 33.91%
</TABLE>
<PAGE>
[DIAGRAM APPEAR HERE]
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement ("First Amendment") made this
---------------
29th day of March, 1995, by and between CORPORATE PROPERTY ASSOCIATES 8, L.P., a
- ----
Delaware limited partnership ("Landlord") and UNITED STATIONERS SUPPLY CO.
--------
("Tenant") successor-in-interest to Stationers Distributing Company, Inc.
------
("Original Tenant").
---------------
WHEREAS, Landlord and Original Tenant entered into a Lease Agreement
dated as of December 20, 1988 (the "Lease") pursuant to which Landlord leased to
-----
Original Tenant certain premises located in New Orleans, Louisiana, Memphis,
Tennessee and San Antonio, Texas; and
WHEREAS, Tenant is the successor-in-interest to Original Tenant
pursuant to a Merger which occurred on or about July 1, 1992; and
WHEREAS, Landlord and Tenant desire to amend the Lease as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged Landlord and Tenant covenant and
agree as follows:
<PAGE>
1. Paragraph 2. Certain Definitions is hereby amended in the
-------------------
following respects:
(a) the definition of "Guarantor" is hereby deleted and the
following is inserted in lieu thereof:
"Guarantor" shall mean United Stationers, Inc., a Delaware
Corporation.
(b) the term "Guaranty" is hereby deleted and the following is
inserted in lieu thereof:
"Guaranty" shall mean the Guaranty of even date with the First
Amendment from Guarantor to Landlord."
2. The first sentence of Paragraph 5. Term is hereby deleted in its
----
entirety and the following is inserted in lieu thereof:
"Subject to the provisions hereof, Tenant shall have
and hold the Leased Premises for an initial Term (such
Term as extended or renewed in accordance with the
provisions hereof being called the "Term") commencing on
December 20, 1988 and ending on March 31, 2010."
3. The last sentence of Paragraph 17. Assignment and Subletting is
-------------------------
hereby deleted in its entirety and the following is inserted in lieu thereof:
"Tenant shall have the right to mortgage or pledge
this Lease and in connection with
-2-
<PAGE>
any such mortgage or pledge Landlord agrees that it
will enter into an Estoppel and Consent substantially
in the form of the Estoppel and Consent of even date
herewith among Landlord, Tenant and Bank of America
National Trust and Savings Association, as Trustee
under that certain Pooling and Servicing Agreement
dated as of July 1, 1992 for RTC Commercial Mortgage
Pass-Through Certificates Series 1992-C5 with such
modifications as are acceptable to Landlord in its
reasonable discretion."
4. Clause (iv) of Subparagraph (c) of Paragraph 33. First Refusal Right
-------------------
is hereby deleted in its entirety and the following is inserted in lieu thereof:
"(iv) any transfer of the Leased Premises to any
Person, controlling, in control of, or under common
control with Landlord, or any Person and its affiliates
to whom Landlord sells all or substantially all of its
assets, provided that the purchaser of all or substantially
all of the assets of Landlord is an entity for which W.P.
Carey & Co., Inc., W.P. Carey Incorporated or their
affiliates or successors provide investment advice or
management services."
5. The following is hereby added as Paragraph 35. Tax Treatment
-------------
Reporting; Useful Life.
- ----------------------
"Landlord and Tenant each acknowledge that each
shall treat this transaction as a true lease for state
law purposes and shall report this transaction as a Lease
for Federal income tax purposes. For Federal income tax
purposes each shall report this Lease as a true lease
with Landlord as the owner of the Leased Premises and
Equipment and Tenant as the lessee of such Leased Premises
and Equipment including: (1) treating Landlord as the owner
of the property eligible to claim depreciation deductions
under Section 167 or
-3-
<PAGE>
168 of the Internal Revenue Code of 1986 (the "Code")
----
with respect to the Leased Premises and Equipment,
(2) Tenant reporting its Rent payments as rent expense
under Section 162 of the Code, and (3) Landlord reporting
the Rent payments as rental income.
6. Exhibit D Basic Rent Payments is hereby deleted in its entirety
-------------------
from the Lease and Exhibit D Basic Rent Payments attached to this First
-------------------
Amendment is hereby incorporated in the Lease as is fully set forth therein.
7. Except as specifically amended hereby the terms and conditions of
the Lease shall remain in full force and effect and binding upon Landlord and
Tenant and their respective successors and assigns.
8. From and after the date hereof, the term "Lease" shall mean the
Lease as amended by this First Amendment.
WITNESS the due execution hereof the day and year first above written.
LANDLORD:
CORPORATE PROPERTY ASSOCIATES 8,
L.P.
By: Eighth Carey Corporate, Inc.
By: [SIGNATURE NOT LEGIBLE]
------------------------
Title:_____________________
-4-
<PAGE>
TENANT:
UNITED STATIONERS SUPPLY CO.
By: /s/ David Bushell
----------------------------
Title: /s/ Daniel H Bushell
-------------------------
-5-
<PAGE>
CONSENT
-------
Bank of America National Trust and Savings Association, as Trustee
under that certain Pooling and Servicing Agreement dated as of July 1, 1992 for
RTC Commercial Mortgage Pass-Through Certificates Series 1992-C5 hereby consents
to the within First Amendment to Lesse.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS TRUSTEE
UNDER THAT CERTAIN POOLING AND
SERVICING AGREEMENT DATED AS OF JULY
1, 1992 FOR RTC COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES SERIES
1992-C5
By:/s/Michael Green [SEAL]
----------------------------
Name: Michael Green
-----------------------------
Title: Vice President
----------------------------
/s/ Gloria S Castillo
---------------------------
Gloria S Castillo
Assistant Secretary
-8-
<PAGE>
EXHIBIT "D"
BASIC RENT PAYMENTS
1. Basic Rent. Basic Rent payable for the period from December 20,
----------
1988 to and including December 31, 1993 was $523,600 per annum, payable monthly
in advance on each Basic Rent Payment Date, in equal monthly installments of
$43,633.33 each. Following the first adjustment provided for in Paragraphs 2, 3
and 4 below, Basic Rent for the period from January 1, 1994 to and including
March 28, 1995 was $635,283 per annum payable in monthly installments of
$52,940.25. Subject to the adjustments provided for in Paragraphs 2, 3 and 4
below, Basic Rent from March 29, 1995 through the balance of the Term shall be
$812,500 per annum, payable monthly in advance on each Basic Rent Payment Date,
in equal monthly installments of $67,708.33.
2. CPI Adjustments to Basic Rent. Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items, (1982-
84=100) ("CPI") or the successor index that most closely approximates the CPI.
---
If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted from the CPI adjustment be less than the
Basic Rent in effect for the five (5) year immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. As of January 1, 1999, January
----------------------------------
1, 2004, January 1, 2009, and if the Term is extended, January 1, 2014, January
1, 2019 and January 1, 2024, Basic Rent shall be adjusted to reflect increases
in the CPI during the most recent five (5) year period immediately preceding
each of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").
--------------------------
4. Method of Adjustment for CPI Adjustment.
---------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date (subject to adjustment as provided in the following
subparagraph 4(b)) shall be multiplied by a fraction, the numerator of which
shall be the difference between (i) the average CPI for the three
<PAGE>
(3) most recent calendar months (the "Prior Months") ending prior to such Basic
------------
Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. The Beginning CPI shall
mean the average CPI for the three (3) calendar months corresponding to the
Prior Months, but occurring five (5) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing five (5) year period.
By way of example:
Second Basic Rent Adjustment Date: January 1, 1999
Basic Rent in Effect: $812,500
Assume Average CPI for Prior Months - 145.20
Assume Beginning CPI - 119.67
812.500 x 145.20-119.67
-------------
119.67
812.500 x .2133=$173,336.05
Basic Rent as of January 1, 1999=$985,836.05
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date .
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the thirtieth (30th) day preceding each Basic Rent
Adjustment Date.
-2-
<PAGE>
EXHIBIT 10.43
LEASE AGREEMENT
---------------
LESSOR: GULF UNITED CORPORATION
LESSEE: CROWN ZELLERBACH CORPORATION
WHEREAS, GULF UNITED CORPORATION, a corporation organized and existing
under the laws of the State of Florida and having its Principal Office at 1301
Gulf Life Drive, Jacksonville, Florida 32207, is the owner of certain property
located in the City of Nashville, State of Tennessee, and more particularly
--------- ---------
described herein; and, identified as Exhibit A.
WHEREAS CROWN ZELLERBACH CORPORATION, a corporation organized and
----------------------------
existing under the laws of the State of Nevada and doing business in the City
------
of Nashville, State of Tennessee, desires to lease said property upon the terms
--------- ---------
and conditions hereinafter stated;
NOW, THEREFORE, this Lease Agreement is entered into by and between
GULF UNITED CORPORATION, hereinafter referred to as Lessor, and CROWN
- ----------------------- -----
ZELLERBACH CORPORATION, hereinafter referred to as Lessee.
- ----------------------
W I T N E S S E T H
- - - - - - - - - -
1. Premises. Lessor, for and in consideration of the rents,
--------
covenants, agreements and conditions herein contained, all of which are to be
paid, kept and performed by the Lessee, does hereby lease unto the Lessee, and
the Lessee does hereby agree to accept and to take the premises hereunder
described upon the terms and conditions herein contained, being certain property
located in the City of Nashville, State of Tennessee, together with all
--------- ---------
improvements thereon, said property being fully described in Exhibit "A" to this
Lease Agreement, which is attached hereto and incorporated herein by reference.
TO HAVE AND TO HOLD said premises, with the appurtenances thereunto
belonging, unto the Lessee, upon the covenants, conditions, agreement and ????
hereinafter set out
<PAGE>
3. Rent. The Lessee agrees to pay the Lessor, or its designated
----
agents, a monthly rental during the initial term of $6,000.00 Dollars in
---------
advance, beginning on the 1st day of Sept., 1981, and payable on the 1st
-----------
day of the month and on the 1st day of each successive month thereafter thru
August, 1986.
- ------------
4. Taxes and Assessments. Lessee will pay all taxes, special
---------------------
assessments, payments in lieu of taxes, etc., which may be levied against the
demised premises or which may accrue and constitute a lien against the same
during the entire term of this lease. Lessee will make all such payments not
less that fifteen (15) days before the same become delinquent, and furnish
copies of paid receipts to Lessor upon request, or the Lessor may pay such
bills, and submit paid receipts to Lessee and will be re-imbursed within fifteen
(15) days of submitting the bill to Lessee. If Lessee disputes the amount or
validity of any tax covered by this paragraph it may pay under protest or
withhold payment, whichever is proper under local law, and challenge it in a
manner consistent with local law. In such event Lessor shall cooperate with
Lessee in such a challenge provided that Lessee shall bear the cost of any such
challenge and shall hold Lessor harmless from and against any liabilities or
expenses resulting from such challenge.
5. Use. Lessee covenants and agrees that it will make no unlawful
---
use of the demised premises or any portion thereof, that it will comply with, at
all times, at its own cost and expense, all laws, orders, regulations, rules,
ordinances and requirements of any governmental authority or unit having
jurisdiction thereof covering the use, operation, maintenance, repair or
alteration of the demised premises or any portion thereof, including not only
existing laws, ordinances or regulations, but all which may become effective
during the term of this lease. Notwithstanding the above, Lessor will be
responsible for and agrees to make any repair or alteration of the premises
required by any governmental agency which resulted from a condition of the
premises which was a violation of any law, order, regulation, rule, ordinance or
requirement of any governmental authority at the time the lease commenced.
6. Care of Premises. The Lessee will, at its own expense, keep and
----------------
maintain the interior and exterior and structural parts of the devised premises
in good repair and in tenantable condition during the term of this lease and
will make all necessary improvements to said interior and to the exterior
maintaining in good repair and order the roof and the structural parts of the
premises including that part of the premises designated as a parking area.
Lessee shall not be required to make any changes or alterations in the demised
premises, except as herein agreed upon or as may be required as a result of the
occupancy of the premises by the Lessee provided that no buildings or additions
shall be added to the demised premises without the Lessee obtaining the prior
written consent of Lessor.
7. ????
<PAGE>
the event Lessee wishes to contest any such claim, it shall secure Lessor
against any loss therefrom by the execution of a surety bond or deliver to
Lessor other securities satisfactory to Lessor, which surety bond shall be null
and void and which securities shall be returned to Lessee upon the satisfactory
disposition of any such claim.
8. Acceptance of Premises. By accepting possession of the premises,
----------------------
Lessee agrees that they are in good repair and condition and constructed
according to the agreement between the parties, and the Lessee assumes all risk
of damages to its property on the premises occurring by reason of water,
bursting of pipes, or from plumbing, electric system, gas, water system,
sewerage, or defects occurring from any cause whatever, and to keep the exterior
walls and foundation and roof in good repair. Notwithstanding the above, Lessee
will not be deemed to have accepted and will not be required to repair any
condition which on the date of the lease commencement, constituted a violation
of any law, statute, ordinance, code, or any other requirement of law.
9. Liability. Lessee shall save Lessor free and harmless from all
---------
liability for injury to any person or persons, firm or corporation, or for the
resultant effect of any injury to any person or persons, firm or corporation,
occurring on the demised premises, or arising out of any accident or other
occurrence on the demised premises, causing injuries to any person or persons
whomsoever or damage to the person or property of any person or persons, firm or
corporation whatsoever. This indemnity shall not cover liability or injury
caused by the negligence of the Lessor, its employees or agents.
10. Insurance. Lessee agrees to purchase and pay the premiums for
---------
an insurance policy issued by an insurance company authorized to do business in
the State of Tennessee and acceptable to Lessor with a minimum limit of fire and
extended coverage of $600,000, unless the Lessor advises Lessee that the
coverage be increased to cover current insurable value, and public liability of
a flat $500,000 covering the use and occupancy of said demised premises and said
policy shall include the Lessor as an additional insured with a certificate
thereof to be furnished to the Lessor.
<PAGE>
party be liable to the insurer thereof. It is the intention of the parties that
the right of recovery against the other party to the extent of the insurance
coverage and the right of subrogation by the insurer to the extent of the
insurance coverage be expressly waived. In the event the premises are damaged by
any cause, whether or not covered by any insurance referred to herein, and such
damage is repairable within a one hundred and eighty (180) day period, Lessor
shall repair such damage and Lessee's rent shall be abated during such period to
the extent that such damage lessens the habitability of the premises. In the
event any such damage is not repairable within a one hundred and eighty (180)
day period, Lessee may at its option cancel this lease or it may require Lessor
to repair the premises, in which case the lease shall continue in full force and
effect with Lessee's rent being abated during the repair period to the extent
that the damage lesses the habitability of the premises.
13. Breach or Default. In the event of a breach by the Lessee of any
-----------------
of the following terms and conditions of this Lease Agreement, Lessor shall have
the right, at its option, to either annul and terminate this Lease upon thirty
(30) days written notice sent by registered mail to Lessee (except the payment
of the monthly rent concerning which ten (10) days written notice shall be
required) and, thereupon, to re-enter and take possession of the demised
premises or parts or parcels thereof from time to time as agent of the Lessee,
and such re-entry and/or re-letting shall not discharge Lessee from any
liability or obligation hereunder, except that net rents collected as a result
of such re-letting shall be a credit on the Lessee's liability for rents payable
and other sums due under the terms of this Lease.
(a) If the Lessee should fail to pay any one or more of said monthly
installments of rent at and when the same shall become due and such default
shall continue for as much as ten (10) days after ten (10) days written notice,
(b) In the event an execution or other legal process is levied upon
the interest of the Lessee in this Lease, unless such execution or other levy be
discharged of record within thirty (30) days;
(c) In the event a voluntary petition in bankruptcy is filed by the
Lessee or the Lessee is adjudged bankrupt;
(d) In the event the Lessee makes an assignment of the demised
premises herein and/or the Lessee's property thereon for the benefit of
creditors;
(e) In the event of the appointment of a receiver, whether bankruptcy
or otherwise, of Lessee's property, provided such appointment be not vacated or
set aside within thirty (30) days; and,
(f) In the event any plan for reorganization of Lessee is filed
<PAGE>
Nothing in the preceding paragraph shall be construed to require the
Lessor to re-enter and re-let in such events, nor shall anything therein be
construed to waive or postpone the right of Lessor to sue for rents, whether
matured by acceleration or otherwise; but, on the contrary, Lessor is hereby
given the right to sue for all rents due and payable or thereafter to become due
and payable for the full term of this lease at any time in the event of a breach
by Lessee as encumbered in the preceding paragraphs.
Upon the termination of the Lease or re-entry upon the demised premises
for any one or more of the causes as set forth in paragraphs (a) through (f)
inclusive above, the rents hereunder for the entire rental period herein fixed
and any other indebtedness of Lessee to Lessor payable under any of the
provisions hereof shall be and become immediately due and payable, without
regard to whether or not possession of the premises shall have been surrendered
to or taken by Lessor.
14. Ownership. Lessor covenants with Lessee that it has a good title
---------
to the demised premises and/or has a valid right to execute this Lease Agreement
and warrants peaceable and quiet possession to the Lessee.
15. Surrender. At the expiration of the Lease or any renewal
---------
thereof, Lessee will vacate and surrender the premises in as good a state and
condition as they were in when entered into, together with all permanent
alterations and permanent additions made by Lessee during the term, reasonable
wear and tear, damage by fire, casualty, act of war or act of God and acts of
abutting owners excepted. Notwithstanding the above, Lessee may remove any
additions or alterations it has made to the premises provided that Lessee
repairs any damage to the premises caused by such removal.
16. Renting Upon Default. In the event Lessee shall be in default
--------------------
in the performance of any of the conditions of the Lease Agreement and shall
have failed to make good said default within thirty (30) days after being called
upon so to do by written notice from Lessor, or its agent, (except the payment
of the monthly rents stipulated to be paid, concerning which ten (10) days
written notice shall be required, it being due and payable without notice on the
1st day of each and every calendar month) Lessor may immediately, or at any time
thereafter, perform the same for the account of the Lessee and any amount paid
or any expenses or liability incurred by the
<PAGE>
or option but the same shall continue and remain in full force and effect. The
receipt by the Lessor or rent, in whole or in part or any other payment due
hereunder, with knowledge of the breach of any such covenant or condition, shall
not be deemed as a waiver of such breach and no waiver by the Lessor of any
provision hereof shall be deemed to have been made unless expressed in writing
and signed by Lessor.
18. Notices. All notices required under this Lease shall be deemed
-------
to be properly served if delivered in writing personally or sent by registered
mail to Lessor, Gulf United Corporation c/o GULFCO Capital Management, Inc.,
1301 Gulf Life Drive, Jacksonville, Florida, or to Lessee at the leased
premises, or to any other address designated by a party for such purpose. The
date of service of notice by mail will be the date of deposit in a United States
Post Office, properly addressed with prepaid postage.
19. Binding Clause. The provisions, covenants and conditions of this
--------------
Lease shall bind and inure to the benefit of the parties hereto and their
respective legal representatives, successors, and assigns.
20. Surviving Lease. This lease shall be the only surviving lease on
---------------
subject property. Any other leases, written or verbal, are immediately canceled
by execution of this lease.
21. Renewal Option. Lessee shall have the right to extend the term of
--------------
this lease for two successive five (5) year renewal options. Lessee must notify
Lessor, in writing, certified mail, within one hundred and twenty (120) days of
the expiration date of the primary term, of his desire to exercise the first
renewal option. If Lessee desires to exercise the second successive renewal
option, then he must again notify the lessor within one hundred and twenty (120)
days of the expiration date of the first renewal option of his desire to
exercise the second five (5) year renewal period. Failure by Lessee to
appropriately notify Lessor as set forth herein shall terminate any rights
Lessee shall have to such renewal options. Furthermore, should Lessee default
under any terms and requirement of this lease, such default shall negate
Lessee's rights to any options, both renewal and purchase options granted under
this lease, at Lessor's sole option. Rental schedule for the
<PAGE>
at $117,500.00 per year payable monthly at $9,791.66 per month. It is understood
that the terms of this lease, both the primary term and the renewal options
require that the Lessee maintain the building, pay taxes and insurance, with the
intent being that this is to be an absolute net lease to the Lessor.
Notwithstanding anything to the contrary contained herein, Lessor agrees that
should the tenant find that it is incurring roof repairs which exceed $1,500.00,
then Lessor agrees to share on a 50/50 basis with the tenant for such repairs,
over $1,500.00. However, should major repairs be demanded by Lessee, Lessor
shall have the right to have the roof inspected by the necessary roofing
companies and engineers and determine, from their written reports and
inspections, whether major work is necessary or not. It is Lessor's intent to
assist the Lessee in all matters of a reasonable repair nature in connection
with the roof, reasonable wear and tear being excluded as a result of
replacement or reimbursement.
22. Purchase Option. Lessee is herewith granted the option to
---------------
purchase the property leased herein at a price of $1,200,000.00. This option to
purchase shall commence upon the landlord's final payment under its bond
financing and remain in effect for a period of three (3) months thereafter.
After Lessee has been notified by Lessor that it has made the final payment
under its bond financing, Lessee shall have the right to exercise this option to
purchase at any time during said three (3) month period. In the event the option
to purchase is exercised, Lessor will provide a general warranty deed and will
warrant good and unencumbered title rather than pay for a title insurance
policy. Furthermore, inasmuch as this lease and purchase option agreement has
been negotiated by Charles W. Hawkins, III, of Charles Hawkins Company, Inc.,
Lessor agrees to pay a real estate brokerage commission of 21/2 percent of the
purchase price to Charles W. Hawkins, III, upon the closing of the $1,200,000.00
sale. Such sale, however, must be all cash and any modifications in the terms of
the all cash sale shall then re-open negotiations. There will be no other sales
commissions, leasing commissions, or management fees due Charles W. Hawkins,
III, or Charles Hawkins Company, Inc., as a result of this sale or lease.
<PAGE>
standings or agreements not expressly included herein; and no variation or
alteration of the terms hereof shall be binding upon either party unless the
same be reduced to writing and executed by the respective authorized officer of
the parties.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the 17 day of August, 1981
GULF UNITED CORPORATION
By: [SIGNATURE NOT LEGIBLE]
------------------------------
Senior Vice President
ATTEST
By: [SIGNATURE NOT LEGIBLE]
------------------------------
Assistant Secretary
CROWN ZELLERBACH CORPORATION
By: /S/ W. J. Zellerbach
------------------------------
W. J. Zellerbach
Senior Vice President
ATTEST
By: /S/ J. K. Cadagan
-----------------------------
J. K. Cadagan
Assistant Secretary
<PAGE>
STATE OF CALIFORNIA
CITY AND
COUNTY OF SAN FRANCISCO
I, GERALDINE D. COHEN, a Notary Public, certify that W. J. ZELLERBACH
----------------
personally came before me this day and acknowledged that he is SENIOR VICE
-----------
PRESIDENT of CROWN ZELLERBACH CORPORATION, a corporation, and that, by
- --------- ----------------------------
authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its SENIOR VICE PRESIDENT, sealed with
---------------------
its corporate seal, and attested by J. K. CADAGAN, as its ASSISTANT SECRETARY.
------------- -------------------
WITNESS my hand and notarial seal this 6th day of August, 1981.
--- ------
/S/ Geraldine D. Cohen
[OFFICIAL SEAL APPEARS HERE] ---------------------------------
Notary Public
My Commission Expires:
STATE OF FLORIDA
COUNTY OF DUVAL
I, MYRA E. MASTERS, a Notary Public, certify that A. J. Toole III
---------------
personally came before me this day and acknowledged that he is SENIOR VICE
-----------
PRES of GULF UNITED CORPORATION, a corporation, and that, by authority duly
- ---- -----------------------
given and as the act of the corporation, the foregoing instrument was signed
in its name by its SENIOR VICE PRES., sealed with its corporate seal, and
----------------
attested by LAURA M. YORES, as its ASSISTANT SECRETARY.
-------------- -------------------
WITNESS my hand and notorial seal this 7th
<PAGE>
EXHIBIT A
[MAP APPEARS HERE]
<PAGE>
AMENDMENT TO LEASE 4/ /85
<PAGE>
AMENDMENT TO LEASE AGREEMENT
THIS AGREEMENT made and entered into by and between Charles W. Hawkins,
III, Trustee, hereinafter referred to as "Lessor", and Crown Zellerbach
Corporation, hereinafter referred to as "Lessee."
WITNESSETH:
WHEREAS, Gulf United Corporation as Lessor and Crown Zellerbach Corporation
as Lessee entered into a lease agreement dated August 17, 1981;
WHEREAS, Lessor herein purchased the demised premises as described in
Exhibit A attached to said lease agreement from Gulf United Corporation and
became the successor Lessor to Gulf United Corporation subject to all the terms
and provisions of said lease agreement;
WHEREAS, Lessee desires additional space and Lessor agrees to construct and
provide same; and
WHEREAS, the parties desire to amend said lease agreement regarding the
improvements to be made by Lessor and occupied by Lessee.
NOW, THEREFORE, for and in consideration of the premises and the mutual
benefits to be derived by the parties, it is hereby agreed that the following
sections of said lease agreement are hereby amended as indicated:
1. Upon execution of this agreement Lessor shall proceed expeditiously to
construct, in a good and workmanlike manner, improvements consisting of
approximately 18,000 square feet adjoining the existing improvements located on
the demised premises, in accordance with plans and specifications attached
hereto, known as Exhibit B. The improvements shall be completed within four (4)
months, except that Lessor shall be allowed additional reasonable time for
delays caused by acts of God or for other reasons beyond the control of Lessor.
In addition, Lessor shall proceed to make repairs to the existing building as
shown in Exhibit C.
2. Upon occupancy of the improvements by Lessee or upon completion of the
improvements in a condition suitable for occupancy by
<PAGE>
by Lessee, whichever shall occur first, the terms of section 2 of the lease
agreement shall become inoperative, and a new lease term shall commence and
shall continue for a period of ten (10) years, and in the event the new lease
term commences on other than the first day of a month, plus the number of days
remaining the month in which the new lease term commenced;
3. Upon commencement of the initial term, the terms of section 3 of the
lease agreement shall become inoperative, and Lessee thereafter agrees to pay to
Lessor, or its designated agent, a monthly rental in advance on the first day of
each succeeding month in an amount of $9,929.17, with rent during the first
month of the new term to be prorated based on the old and new rents in the event
that the new term should commence on other than the first day of the month.
On September 1, 1986 the monthly rents shall increase to $11,125.00 and on
September 1, 1991 the monthly rent shall increase to $13,883.33 until
termination of the lease.
6. Upon the commencement of the new term the provisions of section 6 of
the lease shall be deleted and replaced with the following:
Lessor shall, at its own expense, maintain in good repair the roof,
foundations and exterior walls (not including doors, windows and
floors); however Lessor shall not be obligated to make any repairs of
those portions of the premises that it is obligated to maintain unless
it shall be notified in writing by Lessee, and Lessor shall then have a
reasonable period of time to make such repairs; provided, however that
Lessee and not Lessor shall be responsible for making any such repairs
occasioned by the acts of Lessee, its employees, or invitees. Lessor
shall not be liable for any damage or loss occasioned by Lessor's
failure to repair portions of the premises which it had covenanted to
maintain unless it shall have failed to repair the defect within a
reasonable time following written demand of Lessee to make the repair.
Lessee shall at its own expense keep and maintain in good repair the
entire leased premises, other than those portions for which Lessor
shall be responsible as set out above, including interior walls,
floors, ceilings, ducts, utilities, air conditioning, heating,
lighting, plate glass, plumbing, sprinkler system, and electric wiring,
and also including the loading dock and any parking, landscaped or
other area exclusively used by Lessee. Upon receiving notice of any
defect that is the responsibility of Lessee to maintain, Lessee agrees
to proceed diligently to make repairs.
<PAGE>
10. Upon commencement of the new term of the lease the provisions of
section 10 of the lease agreement shall be deleted and replaced with the
following:
Insurance. Lessee agrees to purchase and pay the premiums for an insurance
---------
policy issued by an insurance company authorized to do business in the
State of Tennessee and acceptable to Lessor with a minimum limit of fire
and extended coverage of $900,000, and on each renewal date, but no more
than yearly, Lessee shall obtain coverage in an amount of the replacement
cost of the improvements located on the demised premises; and in addition
agrees to carry public liability insurance of a flat $1,000,000 covering
the use and occupancy of said demised premises and said policy shall
include the Lessor as an additional insured with a certificate thereof to
be furnished to the Lessor.
21. Upon the commencement of the new term all of the provisions of section
21 shall be deleted.
22. As Lessee no longer has a purchase option, section 22 of the lease
agreement is hereby deleted.
All other terms and provisions of the lease agreement shall continue to
remain in full force and effect after commencement of and during the new lease
term.
This lease agreement has been negotiated through Chas. Hawkins Co., Inc.
and Lessee shall pay to it on a semi-annual basis in advance a real estate
brokerage commission of six percent (6%) of the rents to be paid hereunder.
<PAGE>
IN WITNESS WHEREOF the parties have set their hands this _______________
day of April, 1985.
/S/ Charles W. Hawkins, III
----------------------------------
CHARLES W. HAWKINS, III
TRUSTEE
CROWN ZELLERBACH CORPORATION
By: /S/ F. J. Stabbart
-----------------------------
F. J. Stabbart, Sr.Vice President
ATTEST:
BY: [SIGNATURE NOT LEGIBLE]
------------------------
STATE OF TENNESSEE
COUNTY OF DAVIDSON
Personally appeared before me Leslie Hawkins Davis a Notary Public in and
--------------------
for the State and County aforesaid, the within named Charles W. Hawkins, III,
with whom I am personally acquainted, and who acknowledged that he executed the
foregoing instrument for the purposes therein contained.
WITNESS my hand and official seal at office this 25th day of April, 1985.
----
/S/ Leslie Hawkins Davis
-------------------------------
Notary Public
My commission expires: 1-19-88
-------------------------------
STATE OF CALIFORNIA )
CITY & COUNTY OF SAN FRANCISCO )
Before me, Michael S. Conner, a Notary Public of the state and county
-----------------
aforesaid, personally appeared F. J. Stabbart, with whom I am personally
--------------
acquainted, and who, upon oath, acknowledged him self to be the Sr. Vice
--- --------
President of the within named Crown Zellerbach Corporation, a corporation,
- ---------
and that he as such Sr. Vice President being authorized so to do, executed
-- ------------------
the foregoing instrument for the purpose therein contained, by signing the
name of the corporation by him self as such Sr. Vice President.
--- ------------------
Witness my hand and seal at office this 15th day of April, 1985.
----
/S/ Michael S. Conner
[OFFICIAL SEAL APPEARS HERE] -------------------------------
Notary Public
My commission expires: _______________________________
<PAGE>
EXHIBIT "C"
Replace roof.
Repair and paint exterior walls.
Replace all overhead warehouse gas heaters.
Re-seal warehouse floor.
Remodel restrooms.
Re-carpet office.
In conjunction with minor office repairs, to be specified, install window
in facility manager's officer.
INITIALS
--------
________
________
<PAGE>
ASSIGNMENT AND ASSUMPTION 10/15/95
<PAGE>
October 18, 1985
CROWN ZELLERBACH CORPORATION
One Bush Street, Room 910
San Francisco, California 94104
STATIONERS DISTRIBUTING COMPANY, INC.
3300 W. Bolt Street
Ft. Worth, Texas 76110
Attention: Real Estate Department
Re: August 17, 1981 Lease of
1920 Nolensville Road, Nashville, Tennessee
-------------------------------------------
Gentlemen:
With respect to the above-captioned lease, as amended (the "Lease"), I, the
undersigned lessor, do hereby consent to the Assignment and Assumption of Lease
attached hereto and by this reference made a part hereof. Such assignment shall
be effective as of the date set forth therein for the remainder of the term of
the Lease, together with the renewal periods and options, if any, provided for
therein. Nothing herein contained shall be construed, unless the Lease provides
otherwise, as a release of the lessee under the Lease of any obligations, duties
or covenants set forth in the Lease.
Provided that assignee performs all of lessee's obligations under the Lease from
and after the aforementioned effective date (except obligations, if any, which
relate to the assignor), the lessor agrees not to disturb assignee's right to
possession of the premises demised under the Lease.
Except as herein expressly provided to the contrary, any further assignment or
sublease shall be subject to the requirements, if any, of the Lease.
Very truly yours,
/S/ Charles W. Hawkins III
---------------------------
Charles W. Hawkins, III,
Trustee
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE
----------------------------------
THIS AGREEMENT made as of the 15th day of October, 1985, between CROWN
ZELLERBACH CORPORATION, a Nevada corporation whose principal office is located
at One Bush Street, San Francisco, California 94104 ("Assignor"), and STATIONERS
DISTRIBUTING COMPANY, INC., a Delaware corporation whose principal office is
located at 3300 W. Bolt Street, Fort Worth, Texas 76110 ("Assignee").
WITNESSETH
----------
WHEREAS, Assignor is the Lessee under that certain Lease dated August
17, 1981, as amended as of April 1985, between Charles W. Hawkins, III, as
Landlord, and Crown Zellerbach Corporation, as Lessee, concerning Premises
located at 1920 Nolensville Road, Nashville, Tennessee (the "Lease"); and
WHEREAS, Assignor desires to assign the Lease to Assignee so that
Assignee may have the benefit of the use of the property subject to the Lease;
and
WHEREAS, such assignment shall be effective as of the close of business
October 31, 1985, the date of the closing of the sale of the Stationers
Distributing Company Division of Crown Zellerbach Corporation to Assignee.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged:
<PAGE>
2
1. Assignor hereby assigns and transfers all of its rights, title and
interest as tenant, in, to and under the Lease including but not limited to any
security of Assignor held by landlord under the Lease, to Assignee, its
successors and assigns from and after the effective date of this assignment for
the remainder of the term of the Lease, subject to the rental, terms, covenants
and conditions of the Lease and including without limitation any and all renewal
and purchase options.
2. From and after the effective date of this assignment, Assignee
hereby assumes the performance of all of the terms, covenants and conditions
arising out of the Lease herein assigned by Assignor to Assignee and agrees to
pay the rent reserved by the Lease in accordance with the terms thereof until
the termination of the Lease and will well and truly perform all the terms,
covenants and conditions of the Lease herein assigned and hereinafter arising,
all with full force and effect as if Assignee had signed the Lease originally as
tenant named therein. Assignee does not assume any liability under the Lease
arising as a result of any act, omission or occurrence happening prior to the
effective date hereof.
3. Assignee hereby agrees that the obligations herein assumed by
Assignee shall inure to the landlord named in the Lease and to its successors
and assigns.
<PAGE>
3
4. Assignee agrees to indemnify, defend and hold Assignor harmless
from and against any and all claims, demands, liabilities, lawsuits, and all
expenses associated therewith (including reasonable attorneys' fees and other
costs of litigation) arising out of the failure by Assignee to comply with any
provision of the lease assigned hereunder or arising out of any activity by
Lessee, its agents, employees, or invitees, on or about the premises. In the
event Assignee fails to comply with any of its obligations under the lease,
Assignor may perform such obligation on behalf of Assignee and Assignee shall be
liable to Assignor for all reasonable costs Assignor incurs in fulfilling such
obligation.
5. Assignor and Assignee each agrees to execute and deliver to the
other party, if the other party so requests, such further instruments as may be
reasonably
<PAGE>
4
required to complete or further evidence either the foregoing assignment or the
foregoing assumption.
IN WITNESS WHEREOF, Assignor and Assignee have executed this instrument
as of the date first set forth above.
ASSIGNOR: CROWN ZELLERBACH CORPORATION
By: [SIGNATURE NOT LEGIBLE]
-----------------------------------
Title:
ASSIGNEE: STATIONERS DISTRIBUTING COMPANY, INC.
By: /S/ Joseph Loredo
-----------------------------------
Title: Vice President
<PAGE>
5
STATE OF CALIFORNIA)
: ss.
CITY AND COUNTY OF San Francisco)
Before me, a Notary Public in and for said State and County, duly
commissioned and qualified, personally appeared F. J. Stabbert, with whom I am
personally acquainted, or proved to me on the basis of satisfactory evidence,
and who, upon oath, acknowledged himself to be the Senior Vice President of
Crown Zellerbach Corporation, the within named bargainor and a Nevada
corporation, and that he as such Senior Vice President, being authorized to do
so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such Senior Vice President.
Witness my hand and seal this 21st day of October, 1985.
/S/ Madeline Cravotta
-----------------------------
Notary Public
[OFFICIAL SEAL APPEARS HERE]
My commission expires: 5/6/88
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK)
Before me, a Notary Public in and for said State and County, duly
commissioned and qualified, personally appeared Joseph Loredo, with whom I am
personally acquainted, or proved to me on the basis of satisfactory evidence,
and who, upon oath, acknowledged himself to be the Vice President of Stationers
Distributing Company, Inc., the within named bargainor and a Delaware
corporation, and that he as such Vice President, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such Vice President. Witness my hand
and seal this 18th day of October, 1985.
/S/ Renato C. Giallorenzi
-----------------------------
Notary Public
[Seal]
My commission expires:
<PAGE>
[LETTERHEAD OF CHAS. HAWKINS CO., INC. APPEARS HERE]
October 28, 1985
Mr. William G. Moore
Andlinger & Co., Inc.
303 South Broadway
Tarrytown, N. Y. 10591
Mr. Malcolm McCulloch
Crown Zellerbach Corp.
One Bush Street
San Francisco, Ca. 94101
Mr. Rob Hicks
Stationers Distributing Co., Inc.
3300 W. Bolt Street
Ft. Worth, Texas 76110
RE: August 17, 1981 Lease of
1920 Nolensville Road, Nashville,
Tennessee
Gentlemen:
Under separate cover by Federal Express I forwarded to you this past Friday,
October 25, 1985, the acknowledgement of the Assignment of subject lease.
Let me express my best wishes for a successful transfer of the Stationers
Distributing Company. If I can be of any further assistance please call.
Most Sincerely,
/S/ Charles W. Hawkins
Charles W. Hawkins III
CWH:11
<PAGE>
EXHIBIT 10.44
OFFICE PRODUCTS DIVISION BOISE CASCADE
800 West Bryn Mawr Avenue E. Thomas Edquist
Itasca, Illinois 60143 Vice President and
312/773-5001 Division General Manager
September 14, 1987
CERTIFIED MAIL
- --------------
RETURN RECEIPT REQUESTED
- ------------------------
Messrs. Gilliam O. Traughber
and J. T. Crain
c/o Capital City Realty Company
P.O. Box 40156
Nashville, TN 37204
Subject: Lease Agreement Dated March 31, 1978 (Lease), Between Gilliam O.
Traughber and J. T. Crain (Lessors) and Boise Cascade Office Products
Corporation (Lessee) for Premises Located at 724 Massman Drive,
Nashville, Tennessee
Gentlemen:
The first renewal term of the subject Lease is scheduled to terminate on April
30, 1988.
Paragraph 4, Term, of the Lease grants Boise Cascade an option to renew this
----
Lease for an additional five-year term commencing May 1, 1988, and terminating
April 30, 1993. Paragraph 5, Rental, of the Lease provides that the monthly
------
rental payment during this second renewal term shall be $7,560.
Boise Cascade hereby exercises its option to renew this Lease for an additional
five-year term commencing May 1, 1988, and with an adjusted monthly rental
payment of $7,560.
Very truly yours,
BOISE CASCADE CORPORATION
/S/ E. Thomas Edquist
E. Thomas Edquist
ETE/L37257B
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT
--------------------------------------------
THIS AGREEMENT is made and entered into this 13th day of March, 1986, by
and between BOISE CASCADE CORPORATION, a Delaware corporation ("Boise Cascade"),
and BOISE CASCADE OFFICE PRODUCTS CORPORATION, a Delaware corporation ("BCOPC").
W I T N E S S E T H:
WHEREAS, Boise Cascade and BCOPC have entered into an Indenture of Transfer
and Assumption of Liabilities agreement ("Indenture"); and
WHEREAS, Boise Cascade is a party to the lease described in Section 1
herein ("Lease"); and
WHEREAS, the terms of the Indenture require Boise Cascade to assign the
Lease to BCOPC and BCOPC to assume the Lease and perform Boise Cascade's duties
and obligations pursuant to the Lease.
NOW, THEREFORE, Boise Cascade and BCOPC do hereby agree as follows:
1. Lease. The term "Lease" shall mean the Lease between Boise
-----
Cascade and Gilliam O. Traughber and J. T. Crain, Joint Venturers, dated March
31, 1978, as amended by Amendment to Lease dated October 28, 1985.
2. Assignment. Boise Cascade hereby assigns, transfers and delivers
----------
to BCOPC all of Boise Cascade's right, title and interest as Lessee under the
Lease.
3. Assumption. BCOPC hereby accepts the assignment of the Lease and all
----------
of Boise Cascade's right, title and interest thereunder and assumes and agrees
to be bound by all of Boise Cascade's
<PAGE>
duties, obligations, covenants and agreements thereunder. BCOPC agrees to
perform, fulfill and discharge all such duties, obligations, covenants and
agreements under the Lease.
4. Further Assurances. Each party agrees that it will, at the request
------------------
of the other, make, execute and deliver all such further instruments,
assignments, transfers and assurances and do such further acts and things as may
be necessary and appropriate to give effect to the provisions set forth herein.
5. Boise Cascade Liability. Nothing in this Agreement is intended to
-----------------------
or shall have the effect of releasing Boise Cascade from its liabilities and
obligations under the Lease.
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
of Lease Agreement to be executed the day and year first above written.
BOISE CASCADE CORPORATION
By [SIGNATURE NOT LEGIBLE]
--------------------------------------
Vice President
BOISE CASCADE OFFICE PRODUCTS CORPORATION
By [SIGNATURE NOT LEGIBLE]
--------------------------------------
Vice President
-2-
<PAGE>
AMENDMENT TO LEASE
------------------
By this Amendment dated October 28, 1985, to the Lease dated March 31,
--
1978, between BOISE CASCADE CORPORATION ("Lessee") and GILLIAM O. TRAUGHBER AND
J. T. CRAIN, Joint Venturers ("Lessors"), Lessor and Lessee hereby agree as
follows:
1. That Paragraph 13 of the Lease be amended by the addition of the
following three lines:
Notwithstanding the foregoing, Lessee may assign the lease or sublease
the premises to any subsidiary organization or affiliate which is owned, in
whole or in part, and controlled by Lessee without obtaining the prior consent
provided for above. No such assignment or sublease shall excuse or release
Lessee from any of its duties or obligations (including its obligation in
respect of future rentals) under this Lease. Lessee shall notify Lessors of any
such assignment or sublease within 20 days of the making thereof.
2. All other provisions of the Lease not affected by this Amendment
remain valid and effective.
IN WITNESS WHEREOF, the parties have caused this agreement to be signed as
of the date first set forth above.
LESSEE LESSORS
BOISE CASCADE CORPORATION JANE TRAUGHBER AND
J. T. CRAIN, Joint Venturers
By [SIGNATURE NOT LEGIBLE] By J.T. Crain
------------------------ -------------------------
Title VICE PRESIDENT Title Partner
--------------------- ----------------------
By Jane Spain Traughber,[ILLEGIBLE]
-------------------------
Title Partner
----------------------
<PAGE>
OFFICE PRODUCTS DIVISION BOISE CASCADE
800 West Bryn Mawr Avenue E. Thomas Edquist
Itasca, Illinois 60143 Vice President and
312/773-5001 Division General Manager
November 9, 1982
CERTIFIED MAIL
- --------------
RETURN RECEIPT REQUESTED
- ------------------------
Messrs. Gilliam O. Traughber
and J. T. Crain
c/o Capital City Realty Company
P.O. Box 40156
Nashville, TN 37204
SUBJECT: Lease Agreement Dated March 31, 1978 (Lease), Between Gilliam O.
Traughber and J. T. Crain (Lessors) and Boise Cascade Corporation
(Lessee) for Premises Located at 724 Massman Drive, Nashville,
Tennessee
Gentlemen:
The primary term of the subject Lease commenced May 1, 1978, and is scheduled to
terminate on April 30, 1983. The monthly rental payment during the primary term
is $5,400.
Paragraph 4, Term, of the Lease grants Boise Cascade an option to renew this
----
Lease for an additional five-year term commencing May 1, 1983, and terminating
April 30, 1988. Paragraph 5, Rental, of the Lease provides that the monthly
------
rental payment during this first renewal term shall be $6,480.
Boise Cascade hereby exercises its option to renew this Lease for an additional
five-year term commencing May 1, 1983, and terminating April 30, 1988, with an
adjusted monthly rental payment of $6,480.
Please call John Turkaly at (312) 773-5053 if you have any questions or require
additional information on this notice.
Very truly yours,
BOISE CASCADE CORPORATION
/S/ E. Thomas Edquist
E. Thomas Edquist
ETE/np
cc: John Turkaly
<PAGE>
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT made as of this 31st day of March, 1978, between
GILLIAM O. TRAUGHBER and J. T. CRAIN, Joint Venturers, (hereinafter referred to
as "Lessors"), and BOISE CASCADE CORPORATION, a Delaware corporation,
(hereinafter referred to as "Lessee");
The words "Lessors" and "Lessee" as used herein shall be considered in the
masculine, feminine, neuter, singular or plural sense, as the context may
require, and shall be deemed to apply not only to the original parties, but
shall also include their heirs, assigns, representatives or successors in
interest, as the case may be.
W I T N E S S E T H:
1. Premises. Lessors do hereby demise unto Lessee, and Lessee hereby
--------
leases from Lessors, for term specified herein, the following described property
located in Davidson County, Tennessee, to wit:
Forty-eight Thousand (48,000) square feet of space located in a
warehouse building on Section 17 of the Revised Plan of Metropolitan
Industrial Park as of record in Book 4470, page 112, Register's Office
for said County, to which reference is made.
Said forty-eight thousand (48,000) square feet of space consists of an
area of 240 feet by 200 feet and is located in the southerly portion
of said building outlined in red on the plat attached hereto as
Exhibit A (hereinafter called the "Premises").
<PAGE>
Lessee shall have the right to reasonable use of the parking area on
the southwest portion of the property adjacent to the front portion of
the Premises which area is outlined in blue on Exhibit A.
Further, Lessee shall have the right to use the area to the south of
the Lessors' warehouse building for parking or recreational purposes
which area is outlined in blue on Exhibit A. Lessors, prior to May 1,
1978, shall level the said area. Lessee shall, at its own expense,
gravel and/or pave the area, as it determines is advisable for its
purposes. It is understood that Lessee's rights of use of said area is
subject to the easement rights of the Tennessee Valley Authority and
Colonial Pipeline Company.
2. Title. Lessors warrant that they have good title to the Premises,
-----
agree to defend the same, and agree that Lessee shall have the right to redeem
the title thereto for Lessors by payment of any mortgage, taxes or other liens
on the above described land and warehouse, in the event of default by Lessors
and to be subrogated to the rights of the holder thereof.
3. Quiet Enjoyment. Lessors covenant that Lessee shall have and hold
---------------
and enjoy the Premises for and during the term hereby granted, or as later may
be extended, without any hindrance or interruption whatsoever by Lessors, or by
any other person.
4. Term. It is understood and agreed that from the date of execution
----
of this Lease until May 1, 1978, Lessee shall have the right to occupy the
Premises for the purposes of preparing the Premises for use as an office
products warehouse and that Lessee shall not be liable for any rents or
proration of taxes and insurance therefor; provided
-2-
<PAGE>
however, if Lessee occupies the Premises during said period for purposes other
than preparing the Premises for use as an office products warehouse then Lessee
shall be liable to Lessors for rent and proration of taxes and insurance during
the period so occupied for said purposes. The amount of said rents and
prorations shall be the proportionate amount of rents and proration of taxes and
insurance as those due during the Primary Term (hereafter defined) of this
Lease.
The term of this Lease shall be for five years, commencing on the 1st
day of May, 1978, and ending on the 30th day of April, 1983; said term to be
known as the "Primary Term" hereunder.
In the event the Lessee is not in default of this Lease at the
termination of the Primary Term, the Lessee shall have the option to renew this
Lease for an additional five years beginning on the 1st day of May, 1983, and
ending on the 30th day of April, 1988; said term shall be known as the "First
Renewal Term." Lessee shall give Lessor written notice of Lessee's intention to
renew no later than December 1, 1982.
In the event the Lessee has exercised its option to lease the Premises
for the First Renewal Term, and provided Lessee is not in default at the
termination date of said First Renewal Term, the Lessee shall have the option to
renew this Lease for an additional five years beginning on the 1st day of May,
1988, and ending on the 30th day of
-3-
<PAGE>
April, 1993; said term shall be known as the "Second Renewal Term." Lessee shall
give Lessor written notice of Lessee's intention to renew no later than December
1, 1987.
In the event the Lessee has exercised its option to lease the Premises
for the First and Second Renewal Terms, and provided Lessee in not in default at
the termination date of said Second Renewal Term, the Lessee shall have the
option to renew this Lease for an additional five years beginning on the 1st day
of May, 1993, and ending on the 30th day of April, 1998; said term shall be
known as the "Third Renewal Term." Lessee shall give Lessor written notice of
Lessee's intention to renew no later than December 1, 1992.
In the event the Lessee elects to exercise the options to renew this
Lease, such renewal shall be upon the same terms and conditions set forth herein
except as to the amount of rental which shall be the amount set forth in
Paragraph 5 hereof.
Commencing 90 days prior to the termination of this Lease, the Lessors
shall be permitted to label and advertise the Premises for rent.
5. Rental. Lessee covenants and agrees to pay to Lessors as rental for
------
the Premises during the Primary Term of the Lease the sum of Sixty-four
Thousand, Eight Hundred and No/100 ($64,800.00) Dollars per annum, payable in
monthly installments of Five Thousand, Four Hundred and No/100
-4-
<PAGE>
($5,400.00) Dollars in advance on the first day of each and every month of the
Primary Term.
In the event Lessee exercises its option to extend the term of this
Lease for the First Renewal Term, the Lessee covenants and agrees to pay the
Lessors as its rental for the Premises during the First Renewal Term the sum of
Seventy-seven Thousand, Seven Hundred Sixty and No/100 ($77,760.00) Dollars per
annum, payable in monthly installments of Six Thousand, Four Hundred Eighty and
No/100 ($6,480.00) Dollars in advance on the first day of each and every month
of the First Renewal Term.
In the event Lessee exercises its option to extend the term of this
Lease for the Second Renewal Term, the Lessee covenants and agrees to pay the
Lessors as its rental for the Premises during the Second Renewal Term the sum of
Ninety Thousand Seven Hundred Twenty and No/100 ($90,720.00) Dollars per annum,
payable in monthly installments of Seven Thousand, Five Hundred Sixty and No/100
($7,560.00) Dollars in advance on the first day-of each and every month of the
Second Renewal Term.
In the event Lessee exercises its option to extend the term of this
Lease for the Third Renewal Term, the Lessee covenants and agrees to pay the
Lessors as its rental for the Premises during the Third Renewal Term the sum of
One Hundred Three Thousand, Six Hundred Eighty and No/100 ($103,680.00) Dollars
per annum, payable in monthly install-
-5-
<PAGE>
ments of Eight Thousand, Six Hundred Forty and No/100 ($8,640.00) Dollars in
advance on the first day of each and every month of the Third Renewal Term.
All said payments shall be made to Lessors c/o Capital City Realty
Company, P.O. Box 40156, Nashville, Tennessee 37204, or such other place as
Lessor or their assignees may designate in writing.
6. Additional Rental. In addition to the payment of rents as above
-----------------
provided, Lessee covenants and agrees to pay and discharge 47.06% of any
increase in taxes assessed against the 102,000 square foot warehouse of which
the Premises are a part and the 5.2 acre tract on which said warehouse is
located in excess of those paid by Lessor for the year 1977, and 47.06% of any
increase in the cost of fire and extended coverage insurance on said warehouse
building which Lessor is required to carry by the terms of this Lease over the
amount being paid by Lessor on the date of this Lease. Any of said increases
shall be paid by Lessee to Lessors on the first day of December of each year
during the term of this Lease, beginning December 1, 1978. In the event the term
or renewal term of the Lease is less than a calendar year, Lessee shall pay 1/12
of said increase for each calendar month of said term.
In the event that any improvements are made to any part of the
warehouse or the land upon which it is located other than the Premises or in the
event there shall be any
-6-
<PAGE>
change in the use of any part of the warehouse or the land upon which it is
located other than the Premises, which shall cause an increase in taxes or
insurance, Lessee shall not be liable for any part of such increase.
In addition thereto, it is understood and agreed that Lessee shall pay
all increases in taxes and insurance which occur because of Lessee's use of or
improvements to the Premises including any increases resulting from the
construction of the improvements described in Exhibit B.
7. Utilities. Lessee shall assume and pay for all utilities used by it
---------
in the Premises.
8. Improvements by Lessor. Lessor between the date of this Lease and
----------------------
May 31, 1978, shall construct the improvements on the Premises described in the
specifications attached hereto as Exhibit B. In addition, Lessor shall repair
the roof and outside walls, all overhead doors, and the electrical and plumbing
systems prior to May 15, 1978. Lessor warrants and represents that all
improvements and repairs specified herein will be done in a workmanlike manner
and shall be free from defects in material and workmanship.
Upon completion of the improvements described in Exhibit B, Lessor and
Lessee shall inspect the Premises and shall prepare a punch list of items, if
any, not completed to Lessee's reasonable satisfaction. All items listed shall
be completed by Lessor as soon thereafter as possible.
-7-
<PAGE>
Lessee shall pay Lessor for the improvements provided for in Exhibit
B, the amount of $122,570.00. Such amount shall not be considered rent and
-----------
such improvements shall be the property of Lessee until the expiration of this
Lease. Payment of the above noted amount shall be made as follows: 1) one half
of said amount thirty days after commencement of construction of the
improvements and 2) the remainder upon completion of the improvements. Lessee
may withhold from the final payment a reasonable amount for any items listed on
the punch list which shall be paid to Lessors when such items are finally
completed.
In the event Lessors do not complete the repairs and improvements by
May 31, 1978, Lessee shall be entitled to a credit against rents due hereunder
in the amount of one-thirtieth of monthly rental, plus a prorata portion of the
cost of insurance and taxes for each day after May 31, 1978, until such repairs
and improvements are completed. Except for abatement of the rent, insurance and
taxes as provided in the immediately preceeding sentence, Lessors shall not be
liable for any damages resulting from delay in completion of the repairs and
improvements caused by governmental regulations, labor disputes, strikes, war,
riots, insurrection, civil commotion, mobilization, explosion, fire, flood,
accident, storm or any act of God, or other cause beyond Lessors' control. If
Lessors claim excuse for
-8-
<PAGE>
nonperformance under this paragraph, they must give notice in writing to Lessee.
If such delay resulting from the causes specified herein shall last more than
two weeks, Lessee, at its election, may complete the improvements and deduct the
cost thereof paid by Lessee shall be deducted from the amount specified in this
Paragraph 8, to be paid by Lessee to Lessors for construction of the
improvements.
Lessor shall indemnify and hold Lessee harmless from the injury to or
death of any person or damage to the property of any person including the
parties hereto arising out of or resulting from Lessors making the improvements
or repairs required by this Paragraph 8. Any insurance required to be carried by
Lessee by this Lease shall not apply to any such loss or damage.
9. Repair. Lessor shall keep and maintain the roof, exterior walls,
------
downspouts and the warehouse (except the parts of the warehouse to be maintained
by Lessee), in good condition and repair. Lessee agrees to maintain the interior
of the Premises (including all loading docks and doors and other extension doors
and windows) and the parking area used by Lessee in as good condition as they
are in at the time of Lessor's completion of the improvements and repairs
provided for in Paragraph 8 hereof reasonable wear and tear and damage by fire
or other casualty excepted. Except for Lessor's warranty provided for in
Paragraph 8 hereof, Lessor
-9-
<PAGE>
makes no other representation or warranty concerning the condition of the
interior of the Premises. Subject to Lessee's obligations hereunder to maintain
the Premises and Lessee's obligations under Paragraph 10 hereof, Lessor shall
keep and maintain the warehouse and the land upon which it is located in
compliance with all federal, state and local laws, rules and regulations.
10. Nuisance and Compliance with Laws. Lessee shall not use or permit
---------------------------------
others to use the Premises in any manner which would create a nuisance and shall
conduct its business on the Premises in compliance with all federal, state and
local laws, rules and regulations.
11. Improvements By Lessee. It is contemplated between the parties that
----------------------
Lessee shall use the Premises in the conduct of its office products business and
that, in connection therewith, certain additional modifications, improvements,
fixtures and/or temporary installations may be hereafter made by Lessee. Lessee
is expressly granted, with prior written notice to Lessors, the right to
remodel, alter and change the improvements on the Premises, at its expense, to
conform with its requirements. Lessee shall not injure any existing improvements
and Lessee shall not, without Lessors' prior written consent, construct any
improvements which require significant structural modification to the Premises.
All repairs and remodeling shall be done in compliance with
-10-
<PAGE>
the applicable building codes and zoning requirements. Except as may be herein
set out, all permanent buildings and other similar permanent improvements,
including, but not limited to light fixtures, air conditioning or heating units
requiring duct work, electrical wiring and plumbing, erected or placed upon the
Premises by Lessee during the term of this Lease, upon its termination for any
cause, shall become the property of Lessors. Lessee's machinery, equipment,
tools and trade fixtures placed upon the Premises by Lessee shall remain the
property of Lessee. Such property may be removed from the Premises by Lessee at
the expiration of this Lease, provided that, Lessee has fulfilled its covenant
for the payment of rent. Lessee shall not by its acts create any material or
workmen's liens against the Premises and shall hold Lessors harmless from any
said liens and for Lessors' reasonable cost and expenses in defending any claims
or suits arising out of said liens or in discharging same.
Any damage to the Premises resulting from removal of Lessee's property
from the Premises shall be repaired by Lessee at its sole expense.
12. Signs. Lessee shall have the right, with Lessors' prior written
-----
consent, which shall not be unreasonably withheld, to erect signs on the
Premises to advertise its business, provided that, all such signs comply with
all statutes or ordinances.
-11-
<PAGE>
13. Assignment. Lessee may not assign or sublet any part or the whole
----------
of the Premises without the prior written consent of the Lessors, which consent
shall not be unreasonably withheld.
14. Destruction of Premises. It is agreed that should the Premises or
-----------------------
improvements thereon be wholly or partially destroyed or damaged by fire, storm,
explosion, other casualty or act of God during the term of this Lease, or any
renewal terms, and the Premises or improvements thereon can reasonably be
expected to be repaired and put in substantially the same condition as they were
prior to the loss within 90 days after such loss occurs, then Lessors shall
rebuild or repair the Premises to the condition as existed immediately prior to
such loss. Provided that Lessor's shall not be required to reconstruct any of
the improvements described in Exhibit B unless Lessee shall agree to pay the
cost thereof. If such improvements are constructed by Lessors they shall be the
property of Lessee until termination of this Lease. Lessors agree to complete
any such repairs within 120 days of the date of loss and in the event such
repairs are so completed this Lease shall continue in full force and effect,
except that the rental herein provided for shall be fairly and justly abated
until the Premises have been restored, made tenable and put into proper
condition for use and occupancy by Lessee. If the damage cannot be reasonably
expected to
-12-
<PAGE>
be repaired within 90 days or is not in fact repaired within 120 days of the
date of loss, then Lessee may terminate this Lease.
15. Lessors Fire Insurance. During the term of this Lease, the Lessor,
----------------------
at its own cost and expense, shall keep the Premises and building of which the
Premises are a part, excluding the improvements described in Exhibit B, insured
against loss or damage by fire, lightning, and extended coverage including
vandalism, malicious mischief, and sprinkler leakage. Upon the execution of this
Lease, Lessor shall provide a certificate of insurance from its insurer to
evidence the coverage to the Lessee. Such certificate shall contain a provision
for a ten-day notice to Lessee prior to cancellation, reduction of coverage or
other material change in the policy.
Lessor agrees to indemnify and hold Lessee harmless from, and to
obtain a statement from Lessors' insurer that will protect Lessee from, all
demands, claims, causes of action of judgments, and all reasonable expense
incurred in investigation or resisting the same including attorney fees, for
loss arising out of fire or other casualty or sprinkler leakage damage to the
Premises and building of which the Premises are a part or any personal property
of Lessor, located therein. Lessee also agrees to indemnify and hold Lessor
harmless from all demands, claims, causes of
-13-
<PAGE>
action or judgments, and all reasonable expenses incurred in investigation or
resisting the same including attorney fees, for loss arising out of fire or
other casualty or sprinkler leakage damage to the improvements described in
Exhibit B, and any stock, furniture, fixtures, equipment, or merchandise of
Lessee located in the Premises.
16. Lessee's General Liability Insurance. Lessee shall at all times
------------------------------------
during the term of the Lease, at its own cost and expense, maintain
comprehensive general liability insurance with bodily injury limits of not less
than Five Hundred Thousand Dollars ($500,000) and property damage insurance in
an amount of not less than Three Hundred Thousand Dollars ($300,000) per
occurrence for damage to property of others from accidents occurring on or about
the Premises or arising out of Lessee's use thereof. A certificate of such
insurance shall be delivered to Lessor and Lessor shall be named on said
policies as an additional insured as respects the Premises. The certificate
shall also contain provisions for a ten-day notice to Lessors prior to
cancellation, reduction of coverage, or other material change in the policy.
Lessee further covenants with Lessor to protect, indemnify, and hold
Lessor harmless from and against any and all claims, demands, and causes of
action, including attorney fees, of any nature whatsoever for injury or death of
persons
-14-
<PAGE>
or loss of or damage to property occurring on the Premises or in any manner
growing out of or connected with Lessee's use and occupancy of the Premises
except damage or injury occasioned by the sole negligence of Lessor, its agents,
servants, or employees, any damage or injury resulting from Lessors'
construction of improvements or making the repairs required by Paragraph 8
hereof, and except damages or injuries covered by the insurance required to be
carried by Lessor under this Lease. Nothing in this paragraph shall be deemed to
or construed as to require Lessee to indemnify Lessor for any cost, damage,
liability, or expense, including any attorney fees, arising from or attributable
to any claim for which liability is, or is sought to be, established for any
injury or death to any employee of Lessee in excess of any applicable coverage
under the workers' compensation laws of any state, proximately or concurrently
caused by a negligent act, ommission, or failure to act, on the part of the
Lessor.
17. Bankruptcy. In the event any petition in bankruptcy or for
----------
reorganization is filed in any federal or state bankruptcy court by or against
the Lessee or any sublessee or assignee, or in the event any receiver is
appointed for the Lessee or its property or for any sublessee or assignee for
its or their properties, which petition in bankruptcy or receivership has not
been dismissed, denied, discharged or set aside within 60 days from and after
said date of said
-15-
<PAGE>
filing of said petition or said appointment of receiver, then Lessors shall have
the right to terminate this Lease, as provided for in Paragraph 21 hereof, and
shall have each and all of the rights against the Lessee, as is provided for in
said paragraph, as in the case of a failure by Lessee to pay the rent.
18. Abandonment. In the event Lessee abandons the Premises and leaves
-----------
the same untended, except with the written consent of Lessors, this Lease shall
be terminated as provided in Paragraph 21, at the option of Lessors if, in their
opinion, the said property is or will be adversely affected thereby. Lessors
shall give Lessee 30 days prior written notice of their intention to so
terminate.
19. Lessors' Right of Access. Lessors, their agents and representatives,
------------------------
shall have the right to enter upon the Premises at all reasonable times for the
purpose of inspecting the same and making repairs required to be made by
Lessors.
20. Eminent Domain. If the whole or any part of the Premises shall be
--------------
taken by any public authority under the power of eminent domain, then the term
of this Lease shall cease on the part so taken from the day the possession of
that part shall be acquired for any public purpose, and the rent shall be paid
up to that day and the rent thereafter shall be reduced in proportion to the
amount of the Premises taken. If more than 25% of the Premises are taken or in
the
-16-
<PAGE>
event Lessee reasonably determines that it is unable to effectively and fully
conduct its business from the remaining part of the Premises, the Lessee shall
have the right to cancel this Lease. All damages awarded for such taking shall
belong to and be the property of Lessors, whether such damage shall be awarded
as compensation for diminution in value to the leasehold or to the fee of the
property herein leased; provided, however, that the Lessors shall not be
entitled to any portion of the award made to the Lessee for loss of business,
moving expenses, or for any trade fixtures or other property of Lessee located
thereon.
21. Termination. It is agreed by all of the parties that if Lessee
-----------
fails to pay any one of the aforesaid rent installments or reimbursements set
out herein for taxes and insurance costs within 30 days from and after the due
date, or in case the Lessee breaches or fails to perform and comply with any of
its undertakings, agreements and covenants contained in this Lease, Lessors may
continue the Lease and recover damages for such breach or failure, or at their
option may elect to terminate this Lease at any time within 30 days after the
discovery by them of any such breach or failure, upon giving 30 days notice to
Lessee setting out said breach or failure. If Lessee fails to pay in full all
past due rent installments and fails to commence proceedings to remedy any other
breaches set out in said notice within
-17-
<PAGE>
said 30 days, then, and only then, shall such termination be effective. Upon
termination Lessors may enter and take possession of the Premises and may, with
or without entry and repossession rerent the Premises or any portion or portions
thereof for such term or terms and to such tenants as in the discretion of
Lessors would be suitable and proper and to hold Lessee responsible and liable
for any loss and expense including legal expenses that may occur in rerenting or
attempting to rerent. Lessee shall also be liable for any damages to the
Premises done or suffered to be done by Lessee. Any curing of any such breach or
failure within the said 30-day period shall reinstate the Lease in full force
and effect.
In the event of a breach or default by Lessee or termination of the
Lease by election of Lessors upon default of Lessee, as provided in this
Agreement, Lessors shall have the right to demand and receive from Lessee their
damages and their loss and expenses, including legal expenses, monthly without
awaiting the expiration of the term of the Lease. The damages and each month's
loss and expenses shall be and constitute a separate claim and demand and right
or cause of action. In case of such termination by election of Lessors, as
provided above, the Lessee agrees to pay to Lessors within ten days after the
date of notice of termination an amount equal to the rent accrued hereunder to
that
-18-
<PAGE>
date and not theretofore paid, and also all damages to the improvements done or
suffered to be done by Lessee, and further agrees to pay to Lessors, on or
before the tenth day of each month thereafter, the deficit accruing monthly
following the date of termination, to wit: The difference, between the amount to
be paid as rent, as herein provided, plus any expense incurred by Lessors in
rerenting and/or attempting to rerent and the amount of rent which shall be
collected and received by Lessors from the Premises for each preceding calendar
month during the residue of the term herein provided. The amount, if any, in
excess of Lessors' costs plus the rent reserved herein collected by Lessors in
rerenting the Premises shall be paid to Lessee at the expiration of the term of
this Lease.
22. Holding Over. If upon termination of this Lease, by forfeiture or
------------
otherwise, Lessee continues in possession, the continued occupancy of the
Premises shall be considered as a rental from month to month, and a continued
occupancy after said termination shall not be considered as a renewal of this
Lease.
23. Other Improvements. Lessors agree, at their expense, to construct
------------------
and complete by May 1, 1978, a solid concrete block wall at the north side of
the Premises, between the Premises and the remainder of the warehouse building.
Said concrete wall shall extend from the front to
-19-
<PAGE>
the rear of the building and shall extend from the wall to the ceiling of said
building.
24. Additional Space. It is agreed that if at any time after May 1,
----------------
1981, this Lease is then in full force and effect and Lessors have additional
space in the warehouse adjacent to the Premises available for lease, then Lessee
shall have a right of first refusal to lease said additional space. Said right
of first refusal shall be extended by the Lessors and exercised by Lessee as
follows: The Lessors shall first give the Lessee written notice that they have
said additional space for lease, that they have a prospective tenant to lease
the portion or all of said space, setting out the terms and conditions of said
prospective lease. Thereafter, within 15 days from said notice, Lessee may by
written notice enter into a lease with Lessors for the leasing of said
additional space on the same terms and conditions as set forth in Lessors'
notice to Lessee. In the event Lessee fails to exercise its right of first
refusal within said 15-day period, then Lessors may lease said additional space
to the said prospective tenant without the consent of the Lessee.
25. Attorneys' Fees. In the event either party shall institute any
---------------
action for the breach or default of the other party, the prevailing party shall
be entitled to recover its attorneys' fees and costs.
-20-
<PAGE>
26. Rail Shipments. Lessee agrees to report to Lessors annually,
--------------
beginning May 1, 1979, all carload railroad freight deliveries made to the
leased Premises during the year prior to said report date. Said reports shall
contain the number of carloads delivered to Lessee and date of same. In the
event that Lessee is unable to obtain rail services to the Premises, Lessee may
terminate this Lease.
27. Notice. Notice, as called for under this Lease, is to be in writing
------
and shall be conclusively presumed effective upon its being placed in the United
States Mail registered or certified mail with sufficient postage to carry it to
its destination, and addressed:
To Lessee: Boise Cascade Corporation
Office Products Division
800 West Bryn Mawr Avenue
Itasca, Illinois 60143
Attention: General Manager
Copy to: Boise Cascade Corporation
Legal Department
P.O. Box 50
Boise, Idaho 83728
-21-
<PAGE>
To Lessors: Gilliam O. Traughber and
J. T. Crain
c/o Capital City Realty Company
P.O. Box 40156
Nashville, Tennessee 37204
Either party may change its address written above by written notice to the other
party.
28. Waiver. The failure of either party to insist in any one or more
------
instances upon a strict performance of any of the covenants of this Lease shall
not be construed as a waiver or a relinquishment for the future with respect to
any subsequent breach of any such covenant.
29. Agents Commissions. It is understood and agreed that any agents'
------------------
commissions in connection with this Lease shall be paid by the Lessors.
30. Successors and Assigns. It is understood and agreed that this
----------------------
Lease and all of its provisions shall be binding upon each of the parties
hereto, their heirs, representatives, assigns and successors.
31. Entire Agreement. This instrument, which shall not be recorded,
----------------
and a short form lease for recording, which contains no additional terms and
conditions not herein set out, shall contain the entire agreement between the
parties, all oral understandings and agreements having been embodied
-22-
<PAGE>
herein, and the parties agree that there are no collateral understandings or
agreements not expressly included herein. No variation or alteration of the
terms hereof shall be binding upon either party unless the same be reduced to
writing and executed by an authorized officers of both parties. This
instrument, and the short form lease referred to above, in their entirety,
shall be binding upon the successors and assigns of the parties, and shall
inure to the benefit of the successors and assigns of Lessors and Lessee.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
LESSORS: LESSEE:
GILLIAM O. TRAUGHBER AND BOISE CASCADE CORPORATION
J. T. CRAIN, JOINT VENTURERS
By _________________________
___________________________ Vice President
Gilliam O. Traughber
__________________________
J. T. Crain
-23-
<PAGE>
EXHIBIT A
[FLOOR PLAN FOR PROPOSED WAREHOUSE APPEARS HERE]
<PAGE>
EXHIBIT B
SPECIFICATIONS
--------------
BOISE CASCADE
-------------
OFFICES AND ALTERATIONS
-----------------------
MASSMAN DRIVE
-------------
NASHVILLE, TENNESSEE
--------------------
J. E. CRAIN & SON, INC., GENERAL CONTRACTORS
--------------------------------------------
MARCH 23, 1978
--------------
===========================================================================
GENERAL
- -------
Work shall generally consist of constructing approximately 5000 square feet
of office space, adding a personnel door and W/C area in warehouse and adding
lighting, electrical outlets and 2 drinking fountains in the warehouse. Work
under this contract does not include exterior grading, paving, asphalt ramps,
dock levelers or masonry party wall.
Where "Lessee" is used in these specifications this shall refer to Boise
Cascade Office Products Division.
PERMITS, INSURANCE & TAXES
- --------------------------
Contractor shall apply and pay for all necessary permits and fees. He shall
maintain insurance coverage as provided for under the General Conditions of the
Contract.
CARPENTRY AND MILLWORK
- ----------------------
Unless otherwise shown, all partitions shall be constructed of #2 Southern
Yellow Pine wood. Plates in contact with concrete floors shall be wolmanized.
Furnish and install counters with formica tops where shown.
Wood door to be hollow core flush wood.
CONCRETE WORK
- -------------
Pour concrete steps and landings where shown. Finish to be light brushed.
<PAGE>
-2-
MASONRY
- -------
Construct 8" concrete block foundations on concrete footings for steps and
landings. Apply textured finish to match existing masonry foundations.
HANDRAILS
- ---------
1 1/2" steel pipe, smooth welded joints.
TOILET PARTITIONS & URINAL SCREENS
- ----------------------------------
Sanymetal Academy baked enamel or equal with roll-type paper holder. Where
shown, furnish standard doors and standard hardware. Colors to be selected by
Lessee. Furnish handicapped rails for one partition in each restroom.
METAL DOOR & FRAME
- ------------------
Amweld Series 1100 unless otherwise shown, factory primed.
INSULATION
- ----------
Install full-thick fiberglas batts in all partitions separating office wing
from warehouse and in toilet walls, 2" batts in furred exterior masonry walls
and full-thick batts above all ceilings.
DRY WALL
- --------
1/2" smooth finished gypsum dry wall with taped and filled joints.
ALUMINUM & GLAZING
- ------------------
Office Entrance - Pittsburgh or equal narrow-stile aluminum door and tubular
framed sidelight in standard aluminum finish, glazed with 1/4" clear safety
plate glass. Furnish aluminum threshold, push-pull bars and concealed overhead
closer.
Windows - Fixed aluminum sash, 1/4" clear plate glass.
Mirrors - 16"x24" aluminum framed over all lavatories.
Glaze half glass doors.
<PAGE>
-3-
ACOUSTIC CEILINGS
- -----------------
2'x4' Armstrong Minaboard or equal in exposed white tee grid.
PANELLING
- ---------
Type 1 - Allow purchase price of .50c per square foot.
Type 2 - Allow purchase price of .30c per square foot.
All panelling shall be pre-finished.
CARPET
- ------
Allow purchase and installation price of $10.00 per square yard for carpet
and base. Carpet is based on all carpet being one pattern and color.
COMPOSITION FLOORS
- ------------------
Sheet Vinyl - .090 Ga. Brigantine.
Vinyl Asbestos - Armstrong 3/32 Excelon or equal.
Rubber Base - 4" Black, top-set.
CERAMIC TILE
- ------------
Thin-set with ceramic tile base.
TRIM HARDWARE
- -------------
Exterior Doors - Heavy-duty bronze with key in knob lock set, closer and
threshold strip, primed butts.
Interior Doors - Standard-duty bronze passage except as noted, primed butts.
Door #8 - Closer, key in knob lockset.
Door #9 - Push plate, pull-handle, closer.
Door #10 - Push plate, pull-handle, closer.
Door #11 - Push plate, pull-handle, closer.
<PAGE>
-4-
TRIM HARDWARE (CONT'D.)
- -------------
Door #12 - Push plate, pull-handle, closer.
Door #15 - Push plate, pull-handle, closer.
Door #16 - Closer, key in knob lockset.
All closers to be heavy-duty.
SPRINKLER
- ---------
Install approved sprinkler system in all spaces in the office wing. Run
piping concealed above ceilings with chrome pendant heads. Sprinkler heads and
piping, if required for Lessee's bin storage area are not included.
PLUMBING
- -------
Rough-in for and furnish all fixtures shown.
Run hot and cold water lines to all lavatories and sinks.
Fixtures (White colored Amstan or equal)
Handicapped Water Closet - 2108.058, #10 Olsonite seat.
Other Water Closets - 2109.056, #10 Olsonite seat.
Urinal - 6540.017 with #180 Sloan flush valve.
Handicapped Lavatory - 9141.011 with 4470 valve.
Other Lavatories - 0321.026 with N530 valve.
Service Sink - 7692.049 with 7798044 trap and 8340242 valve.
Stainless Steel Sink - #3322 Dayton with N4340 valve.
Drinking Fountains - Furnished by Lessee.
Water Heater - State Stove RE-52-D
HEAT AND AIR CONDITIONING
- -------------------------
All spaces in the office wing to be supplied from a central system HAC unit.
<PAGE>
-5-
HEAT AND AIR CONDITIONING (CONT'D.)
- -------------------------
Run insulated ducts above ceiling and provide ceiling diffusers in all
spaces except Corridor and Space 11.
Run concealed overhead return air duct for General Office area.
Design Criteria
- ---------------
Cooling - 75 degrees F. at 95 degrees F. outside.
Heating - 70 degrees F. at 0 degrees F. outside.
HAC Unit - Trane BH-150 with air-cooled condenser RAUA 15 or approved equal.
Do all gas piping and control wiring. Power wiring shall be done by the
Electrical Contractor.
Furnish and install exhaust fans in toilets and Lunch Room.
PAINTING
- --------
Exterior Metal (Primed) - 2 coats exterior house paint.
Exterior Wood - 1 coat primer, 2 coats exterior house paint.
Interior Metal (Primed) - 2 coats enamel.
Interior Wood - 1 coat undercoat, 2 coats enamel.
Drywall (Except Toilets) - 2 coats Latex.
Toilet Walls - 2 coats enamel.
ELECTRICAL
- ----------
Service - 600 Amp, 120-208V. overhead drop.
Furnish all fixtures, outlets, raceways and switches shown.
All wiring to be run in conduit.
Run conduit for telephones to top of partitions for wiring by utility
company.
Do all power wiring for H.V.A.C. equipment and exhaust fans which will be
furnished by others.
<PAGE>
-6-
CODES
- -----
All work shall comply with applicable local, state and federal codes and
regulations.
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PLOT PLAN & FLOOR PLAN APPEARS HERE]
<PAGE>
[FLOOR PLAN APPEARS HERE]
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PLAN APPEARS HERE]
<PAGE>
[PROPOSED WAREHOUSE PLAN APPEARS HERE]
<PAGE>
ASSIGNMENT, ASSUMPTION, AND CONSENT AGREEMENT
---------------------------------------------
THIS ASSIGNMENT, ASSUMPTION AND CONSENT AGREEMENT is made and entered
into this 31st day of January, 1992, by and between BOISE CASCADE OFFICE
---- ------- -
PRODUCTS CORPORATION ("BCOP"), ASSOCIATED STATIONERS, INC. ("Purchaser"),
and GILDA TRAUGHBER BOWMAN, WILLIAM TRAUGHBER, GILLIAM O. TRAUGHBER, III,
HUNTER SHORT, J.T. CRAIN, individuals holding as tenants-in-common
(collectively, the "Lessor").
W I T N E S S E T H:
WHEREAS, BCOP and Purchaser have entered into an Amended and Restated
Purchase and Sale Agreement dated of even date herewith (the "Purchase
Agreement"), pursuant to which BCOP has agreed to sell to Purchaser
substantially all of the assets of BCOP's wholesale office products business;
and
WHEREAS, BCOP and Lessor are parties to the Lease Agreement dated March
31, 1978, and amended September 14, 1987 (collectively, the "Lease"); and
WHEREAS, pursuant to Sections 2 and 5 of the Purchase Agreement, BCOP
has agreed to assign to Purchaser and Purchaser has agreed to assume the Lease
and perform BCOP's duties and obligations pursuant to the Lease.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein and not specifically
-----------
defined shall have the same meanings ascribed to them in the Purchase Agreement.
<PAGE>
2. ASSIGNMENT. BCOP hereby assigns transfers, and delivers to
----------
Purchaser all of BCOP's right, title, and interest under the Lease.
3. ASSUMPTION. Purchaser hereby accepts the assignment of the Lease
----------
and all of BCOP's right, title, and interest thereunder and assumes and
agrees to be bound by all of BCOP's duties, obligations, covenants, and
agreements thereunder and to be subject to all of the conditions therein, with
the same force and effect as if Purchaser had executed the original Lease.
Purchaser agrees to perform, fulfill, and discharge all such duties,
obligations, covenants, and agreements under the Lease.
4. BCOP OBLIGATION. Nothing in this Agreement is intended to or shall
---------------
have the effect of releasing BCOP from its liabilities under the Lease, or
any renewal term or terms set forth in the Lease on the date hereof.
5. FURTHER ASSURANCES. Each party hereby promises to deliver upon
------------------
request of the other party all such additional assignments, assumptions, and
other documents which may be reasonably necessary and convenient to accomplish
the intent of this Agreement.
6. CONSENT. Subject to the terms hereof, Lessor hereby consents to
-------
the assignment of the Lease by BCOP to Purchaser. Nothing herein shall be
construed to waive or release any right which Lessor has under the Lease to
prohibit further assignments, sublettings or encumbrances of the applicable
premises without Lessor's consent. Notwithstanding anything to the contrary in
the Lease, Lessor hereby agrees that Purchaser shall have the
-2-
<PAGE>
benefit of any options, exceptions, renewals, and other rights originally
granted to BCOP.
7. EFFECT. This Assignment Agreement will not be effective until the
------
Closing of the Purchase Agreement. Unless previously signed by BCOP and
Purchaser, Lessors' consent to this assignment shall not be effective beyond
February 14, 1992.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date set forth above.
ASSOCIATED STATIONERS, INC. BOISE CASCADE OFFICE PRODUCTS
CORPORATION
By _______________________ By ____________________________
Title ____________________ Title _________________________
GILDA TRAUGHBER BOWMAN,
WILLIAM TRAUGHBER,
GILLIAM O. TRAUGHBER, III,
J.T. CRAIN, and HUNTER SHORT,
individuals holding as
tenants-in-common
By /s/ Gilda Traughber Bowman
-------------------------
GILDA TRAUGHBER BOWMAN
By /s/ William Traughber
-------------------------
WILLIAM TRAUGHBER
By /s/ Gilliam O. Traughber, III
-------------------------
GILLIAM O. TRAUGHBER, III
By /s/ Hunter Short
-------------------------
HUNTER SHORT
By /s/ J.T Crain
-------------------------
J.T. CRAIN
-3-
<PAGE>
STATE OF TENNESSEE )
) ss.
COUNTY OF ______________________ )
Personally appeared before me, GILDA TRAUGHBER BOWMAN, with whom I am
personally acquainted and who acknowledged that she executed the within
instrument for the purposes therein contained.
Witness my hand, at office, this 29 day of Jan , 1992.
---- --------
___________________________________
NOTARY PUBLIC FOR TENNESSEE
My Commission Expires: 07/23/94
------------
STATE OF TENNESSEE )
) ss.
COUNTY OF ______________________ )
Personally appeared before me, WILLIAM TRAUGHBER, with whom I am personally
acquainted and who acknowledged that he executed the within instrument for the
purposes therein contained.
Witness my hand, at office, this 29 day of Jan , 1992.
---- --------
__________________________________
NOTARY PUBLIC FOR TENNESSEE
My Commission Expires: 07/23/94
-----------
STATE OF TENNESSEE )
) ss.
COUNTY OF ______________________ )
Personally appeared before me, GILLIAM O. TRAUGHBER, III, with whom I am
personally acquainted and who acknowledged that he executed the within
instrument for the purposes therein contained.
Witness my hand, at office, this 29 day of Jan , 1992.
---- --------
_________________________________
NOTARY PUBLIC FOR TENNESSEE
My Commission Expires: 07/23/94
----------
-4-
<PAGE>
STATE OF TENNESSEE )
) ss.
COUNTY OF ______________________ )
Personally appeared before me, HUNTER SHORT, with whom I am personally
acquainted and who acknowledged that he executed the within instrument for the
purposes therein contained.
Witness my hand, at office, this 29 day of Jan , 1992.
---- --------
_________________________________
NOTARY PUBLIC FOR TENNESSEE
My Commission Expires: 07/23/94
----------
STATE OF TENNESSEE )
) ss.
COUNTY OF __________________ )
Personally appeared before me, J. T. CRAIN, with whom I am personally
acquainted and who acknowledged that he executed the within instrument for the
purposes therein contained.
Witness my hand, at office, this 29 day of Jan 1992.
------ -------
_________________________________
NOTARY PUBLIC FOR TENNESSEE
My Commission Expires: 07/23/94
----------
-5-
<PAGE>
STATE OF ILLINOIS )
)
COUNTY OF COOK )
I, Suzette Sabanov , a Notary Public in and for the county
---------------------------
and state aforesaid, do hereby certify that Michael D. Rowsey, the President of
Associated Stationers, Inc., personally known to me to be the same person whose
name is subscribed to the foregoing instrument as such President, appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his free and voluntary act and as the free and voluntary act of
said corporation, for the uses and purposes therein set forth.
Given under my hand and notarial seal this 30th day of January, 1992.
--------------------------------
"OFFICIAL SEAL"
Suzette Sabanov /s/ Suzette Sabanov
Notary Public State of Illinois ----------------------------
Commission Expires 11/07/94 Notary Public
--------------------------------
My commission expires:
_________________________
<PAGE>
STATE OF ILLINOIS )
)
COUNTY OF COOK )
I, /s/ SUZETTE SABANOV , a Notary Public in and for the county
---------------------------
and state aforesaid, do hereby certify that ______________________________, the
________________ President of Boise Cascade Office Products Corporation,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such President, appeared before me this day in person
and acknowledged that he signed and delivered said instrument as his free and
voluntary act and as the free and voluntary act of said corporation, for the
uses and purposes therein set forth.
Given under my hand and notarial seal this 30th day of January, 1992.
---------------------------------
"OFFICIAL SEAL"
Suzette Sabanov /s/ Suzette Sabanov
Notary Public State of Illinois -----------------------------
Commission Expires 11/07/94 Notary Public
---------------------------------
My commission expires:
_________________________
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Forty-eight thousand square feet of space located in a warehouse building on
land in Davidson County, Tennessee, being Lot No. 22 on the Revised
Metropolitan Industrial Park, Section 17 as of record in Book 4470, page 112,
Register's Office for Davidson County, Tennessee, to which reference is made.
Being the same property conveyed to J. T. Crain, Jane S. Traughber and
Hunter Short by Quitclaim Deed from Frederick E. Cowden, Jr., Trustee, of
record in Book 7010, page 505, Register's Office of Davidson County, Tennessee.
Said Jane S. Traughber having since died devising her interest to her children
by Will of record in Book 171, page 249, Probate Office, Davidson County,
Tennessee.
<PAGE>
ASSOCIATED Stationers
November 17, 1992
CERTIFIED MAIL
- --------------
RETURN RECEIPT REQUESTED
- ------------------------
Messrs. J. T. Crain, Hunter Short
and Jane S. Traughber
2323 21ST Avenue South
Suite 200
Nashville, TN 37212-4968
Subject: Lease Agreement Dated March 31, 1978 (Lease), Between
Gilliam O. Traughber and J. T. Crain (Lessors) and Boise
Cascade Office Products Corporation (Lessee) for Premises
Located at 724 Massman Drive, Nashville, Tennessee
Gentlemen:
The second renewal term of the subject Lease is scheduled to terminate on
April 30, 1993.
Paragraph 4, Term, of the Lease grants Boise Cascade, now Associated
----
Stationers, Inc. an option to renew this Lease for an additional five-year
term commencing May 1, 1993, and terminating April 30, 1998. Paragraph 5,
Rental, of the Lease provides that the monthly rental payment during the
- ------
third renewal term shall be $8,640.
Associated Stationers hereby exercises its option to renew this Lease for an
additional five-year term commencing May 1, 1993, and terminating April 30,
1998, with an adjusted monthly payment of $8,640.
Very truly yours,
ASSOCIATED STATIONERS, INC.
/s/ Randall L. Teesdale
Sr. Distribution Services Manager
cc: Beverly A. Ogle
Philip J. Simborg
<PAGE>
NASHVILLE #1
HUNTER B. SHORT
ATTORNEY AT LAW
2323 21ST AVENUE, SOUTH
SUITE 200
NASHVILLE, TENNESSEE 37212-4968
(615) 298-3300
December 1, 1992 FAX (615) 383-9215
Mr. Randall L. Teesdale
1075 Hawthorne Drive
Itasca, Illinois 60143
RE: 724 Massman Drive
Nashville, Tennessee
Dear Mr. Teesdale:
Your letter of November 17, 1992, is hereby acknowledged.
The Lessors acknowledge the extension of the lease dated March 31, 1978, on
the 48,000 square feet of space at the above address.
I am also enclosing a proposed lease concerning the extension of the lease
of September 1, 1989, concerning the 18,000 square feet. If it meets with your
approval, please sign two copies of same and return to me for execution by the
"Landlords."
Yours very truly,
/s/ Hunter Short
Hunter Short
Enclosure
/chc
<PAGE>
EXHIBIT 10.45
. BRANCH: DALLAS/MOCKINGBIRD . Build-out Amortization Yes ___ No x
-------------------------- ---
. Expenses/Responsibility:
. PROPERTY ADDRESS: (Lessor=L - Stationers=S)
613-621 Mockingbird Lane Amount
---------------------------------- ---------------------
Dallas, Texas 75247 Per month Per Year L/S
---------------------------------- --------------------- ---
200439-02 Electric $ 91.00 $ 1,092.00 L
---------------------------------- -------- --------- ---
__________________________________ Water $ 194.44 $ 2,333.28 L
. LESSOR: DALWARE II ASSOCIATES -------- --------- ---
-------------------------- Gas $________ $_________ ___
__________________________________ Janitor $________ $_________ ___
Address 1499 Regal Row, Suite 302 Maintenance $ 120.80 $ 1,449.60 L
--------------------------- -------- --------- ---
Dallas, Texas 75247 Waste Mgt. $________ $_________ ___
---------------------------------- Security $________ $_________ ___
Phone 214/630-6500 Spur track $________ $_________ ___
---------------------------- Landscaping $ 143.97 $ 1,727.64 L
Fax 214/951-7326 -------- --------- ---
------------------------------ Tax escrow $2,996.87 $35,962.44 L
. BROKER: RICHARD CROW/TRAMMELL CROW -------- --------- ---
-------------------------- Insurance $ 117.49 $ 1,409.88 L
__________________________________ -------- --------- ---
Address 1499 Regal Row, Suite 302 . Estimated Expenses
---------------------------- Collected each mo. Yes x No _____
Dallas, Texas 75247 -----
---------------------------------- . Landlord expense cap. Yes ___ No x
Phone 214/630-6500 -----
---------------------------- Amount: $ ________________
Fax 214/951-7326 . Repairs/Responsibility:
------------------------------ (Lessor=L - Stationers=S)
. Office Park? Yes x No _______ L S
----- --- ---
. Multi-tenant Bldg. Yes ____ No x Roof__________________ x ___
---- ---
. Square Feet - Warehouse __________ Foundation____________ x ___
- Office ____________________ ---
- Total 99,289 Structure_____________ x ___
-------------------- ---
. Lease Effective Date 1-1-89 Common Areas__________ x ___
------------- ---
. Option to Renew - Yes ____ No x Paving/Parking________ ___ ___
----- Grounds_______________ ___ ___
- Notice Requirement Spur track____________ ___ ___
Terms:________________ ___ ___
. Original Lease - Yes x No _____ ____________________________________
----- ____________________________________
. Extended/Amended Yes ____ No x ____________________________________
------ ____________________________________
. Lease expiration date 12-31-98 ____________________________________
------------ ____________________________________
. Notice/vacate req'd? Yes ___ No x . Insurance Expenses
--- (Lessor=L - Stationers=S)
Date: ________________ L S
Security Deposit? Yes ____ No x --- ---
----- Fire__________________ x ___
- Amount $ ___________________ ---
. Current Rent Amount Property______________ x ___
$26,808.03 /mo $321,696.36 /yr. ---
---------- ----------- Contents______________ ___ x
$ 3.24 /per sq. ft./per yr. ---
---------- Workers Comp._________ ___ x
. Future Rent Escalations: ---
Begin End Amt Per Rent Per General Liability_____ ___ x
Date Date Month Year ---
------ ------- -------------------- . Hold Harmless Agreement?
1-1-89 5-31-91 $26,808.03 $321,696.36 Yes x No _____
------ ------ --------- ---------- -----
6-1-91 5-31-96 $28,049.14 $336,589.68 . Lease Assignability?
------ ------- --------- ---------- Lessor____________ Yes x No _____
6-1-96 5-31-99 $29,373.00 $352,476.00 -----
------ ------- --------- ---------- Stationers________ Yes x No _____
______ _______ $_________ $__________ -----
______ _______ $_________ $__________ . Comments: With Lessor's prior
______ _______ $_________ $__________ ----------------------------
______ _______ $_________ $__________ written consent.
. Relocation Clause? Yes x No ____ -------------------------------------
--- _____________________________________
Terms: If Lessee executes a lease _____________________________________
---------------------------- _____________________________________
agreement for at least _____________________________________
----------------------------------
200,000 square feet.
----------------------------------
__________________________________
__________________________________
. Right of 1st refusal Yes ___ No x
---
Terms: ___________________________
__________________________________
__________________________________
__________________________________
__________________________________
<PAGE>
STANDARD INDUSTRIAL LEASE AGREEMENT 99,289 Square Feet
-----------------------------------
TRAMMELL CROW COMPANY 613-621 Mockingbird Lane
-----------------------------------
COMMERCIAL 86-MOD NE Dallas, Texas 75247
-----------------------------------
200439-02
-----------------------------------
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between DALWARE II
ASSOCIATES hereinafter referred to as "Lessor", and STATIONERS DISTRIBUTING
COMPANY, INC. hereinafter referred to as "Lessee";
WITNESSETH:
1. PREMISES AND TERM. In consideration of the mutual obligations of
Lessor and Lessee set forth herein, Lessor leases to Lessee, and Lessee hereby
takes from Lessor the Premises situated within the County of Dallas, State of
Texas, more particularly described on EXHIBIT "A" attached hereto and
incorporated herein by reference, (the "Premises"), together with all rights,
privileges, easements, appurtenances, and amenities belonging to or in any way
pertaining to the Premises, to have and to hold, subject to the terms,
covenants and conditions in this Lease. The term of this Lease shall commence
on the commencement date hereinafter set forth and shall end on the last day of
the month that is one hundred twenty five (125) months after the commencement
date.
A. EXISTING BUILDING. If no improvements are to be constructed to the
Premises, the commencement date shall be January 1, 1989. Lessee acknowledges
that (i) it has inspected and accepts the Premises, (ii) the buildings and
improvements comprising the same are suitable for the purpose for which the
Premises are leased, (iii) the Premises are in good and satisfactory condition,
and (iv) no representations as to the repair of the Premises, nor promises to
alter, remodel or improve the Premises have been made by Lessor (unless
otherwise expressly set forth in this Lease).
2. BASE RENT, SECURITY DEPOSIT AND ESCROW PAYMENTS.
A. Lessee agrees to pay to Lessor rent for the Premises, in advance,
without demand, deduction or set off, at the rate of (SEE RIDER ONE) Dollars
($__________ ) per month during the term hereof. One such monthly installment,
plus the other monthly charges set forth in Paragraph 2C below shall be due and
payable on the date hereof and a like monthly installment shall be due and
payable on or before the first day of each calendar month succeeding the
commencement date, except that all payments due hereunder for any fractional
calendar month shall be prorated.
B. In addition, Lessee agrees to deposit with Lessor on the date hereof
the sum of None
--------------------------------------------------------------
Dollars ($___________), which shall be held by Lessor, without obligation for
interest, as security for the performance of Lessee's obligations under this
lease, it being expressly understood and agreed that this deposit is not an
advance rental deposit or a measure of Lessor's damages in case of Lessee's
default. Upon each occurrence of an event of default, Lessor may use all or part
of the deposit to pay past due rent or other payments due Lessor under this
Lease, and the cost of any other damage, injury, expense or liability caused by
such event of default without prejudice to any other remedy provided herein or
provided by law. On demand, Lessee shall pay Lessor the amount that will restore
the security deposit to its original amount. The security deposit shall be
deemed the property of Lessor, but any remaining balance of such deposit shall
be returned by Lessor to Lessee when Lessee's obligations under this Lease have
been fulfilled.
C. Lessee agrees to pay its proportionate share (as defined in
Paragraph 22B below) of (i) Taxes (hereinafter defined) payable by Lessor
pursuant to Paragraph 3A below, (ii) the cost of utilities payable pursuant to
Paragraph 8 below, (iii) the cost of maintaining insurance pursuant to
Paragraph 9 below and (iv) the cost of any maintenance performed by Lessor in
accordance with Paragraph 4B below. During each month of the term of this
Lease, on the same day that rent is due hereunder, Lessee shall escrow with
Lessor an amount equal to 1/12 of the estimated annual cost of its
proportionate share of such items. Lessee authorizes Lessor to use the funds
deposited with Lessor under this Paragraph 2C to pay such costs. The initial
monthly escrow payments are based upon the estimated amounts for year in
question, and shall be increased or decreased annually to reflect the projected
actual cost of all such items. If the Lessee's total escrow payments are less
than Lessee's actual proportionate share of all such items, Lessee shall pay
the difference to Lessor within thirty (30) days after demand. If the total
escrow payments of Lessee are more than Lessee's actual proportionate share of
all such items, Lessor shall refund such excess within thirty (30) days. The
amount of the monthly rental and the initial monthly escrow payments are as
follows:
<TABLE>
<S> <C>
(1) Base Rent as set forth in Paragraph 2A......... $SEE RIDER ONE
-----------
(2) Tax Escrow Payment............................. $ 2,996.87
-----------
(3) Insurance Escrow Payment....................... $ 117.49
-----------
(4) Utility charge (Water 194.44) (Elec. 91.00).... $ 285.44
-----------
(5) Maintenance charge............................. $ 120.80
-----------
(6) Other (Landscaping)............................ $ 143.97
-----------
Monthly Payment Total......................... $----------
===========
</TABLE>
FORM 86-MOD NE
1
<PAGE>
3. TAXES.
A. Lessor agrees to pay all taxes, assessments and governmental charges of
any kind and nature and all assessments due to deed restrictions and/or owner or
community associations (collectively referred to herein as "Taxes") that accrue
against the Premises, and/or the land and/or improvements of which the Premises
are a part. If at any time during the term of this Lease, there shall be levied,
assessed or imposed on Lessor a capital levy or other tax directly on the rents
received therefrom and/or a franchise tax, assessment, levy or charge measured
by or based, in whole or in part, upon such rents from the Premises and/or the
land and improvements of which the Premises are a part, then all such taxes,
assessments, levies or charges, or the part, thereof so measured or based, shall
be deemed to be included within the term "Taxes" for the purposes hereof. The
Lessor shall have the right to employ a tax consulting firm to attempt to assure
a fair tax burden on the building and grounds within the applicable taxing
jurisdiction. Lessee agrees to pay its proportionate share of the cost of such
consultant.
B. Lessee shall be liable for all taxes levied or assessed against any
personal property or fixtures placed in the Premises. If any such taxes are
levied or assessed against Lessor or Lessor's property and (i) Lessor pays the
same or (ii) the assessed value of Lessor's property is increased by inclusion
of such personal property and fixtures and Lessor pays the increased taxes,
then, upon demand Lessee shall pay to Lessor such taxes.
4. LESSOR'S REPAIRS.
A. Lessor, at its own cost and expense, shall maintain the roof,
foundation and the structural soundness of the exterior walls of the building
of which the Premises are a part in good repair, reasonable wear and tear
excluded. The term "walls" as used herein shall not include windows, glass or
plate glass, doors, special store fronts or office entries. Lessee shall
immediately give Lessor written notice of defect or need for repairs, after
which Lessor shall have reasonable opportunity to repair same or cure such
defect.
B. Lessor reserves the right to perform the paving, common area and
landscape replacement and maintenance, exterior painting, common sewage line
plumbing and any other items that are otherwise Lessee's obligations under
Paragraph 5A, in which event, Lessee shall be liable for its proportionate
share of the cost and expense of such repair, replacement, maintenance and
other such items.
5. LESSEE'S REPAIRS.
A. Lessee, at its own cost and expense, shall (i) maintain all parts of
the Premises and grounds surrounding the Premises (except those for which Lessor
is expressly responsible hereunder) in good condition, (ii) promptly make all
necessary repairs and replacements, (iii) keep the parking areas, driveways and
alleys surrounding the Premises in a clean and sanitary condition, and (iv)
maintain any spur track servicing the Premises. Tenant agrees to sign a joint
maintenance agreement with the railroad company servicing the Premises if
requested by the railroad company. Lessor shall have the right to coordinate all
repairs and maintenance of any rail tracks serving or intended to serve the
Premises and, if Lessee uses such rail tracks, Lessee shall reimburse Lessor
from time to time, upon demand, for its proportionate share of the costs of such
repairs and maintenance and any other sums specified in any agreement respecting
such tracks to which Lessor is a party.
B. Lessee and its employees, customers and licensees shall have the
exclusive rights to use any parking areas that have been designated for such
use by Lessor in writing, subject to rights of ingress and egress of other
lessees. Lessor shall not be responsible for enforcing Lessee's parking rights
against any third parties. Lessee agrees not to use more spaces than so
provided.
6. ALTERATIONS. Lessee shall not make any alterations, additions or
improvements to the Premises without the prior written consent of Lessor.
Lessee, at its own cost and expense, may erect such shelves, bins, machinery
and trade fixtures as it desires provided that (a) such items do not alter the
basic character of the Premises or the building and/or improvements of which
the Premises are a part; (b) such items do not overload or damage the same; (c)
such items may be removed without material injury to the Premises; and (d) the
construction, erection or installation thereof complies with all applicable
governmental laws, ordinances, regulations and with Lessor's specifications and
requirements. All alterations, additions, improvements and partitions erected
by Lessee shall be and remain the property of Lessee during the term of this
Lease. All shelves, bins, machinery and trade fixtures installed by Lessee
shall be removed on or before the earlier to occur of the date of termination
of this Lease or vacating the Premises, at which time Lessee shall restore the
Premises to their original condition. All alterations, installations, removals
and restoration shall be performed in a good and workmanlike manner so as not
to damage or alter the primary structure or structural qualities of the
buildings and other improvements situated on the Premises or of which the
Premises are a part.
7. SIGNS. Any signage Lessee desires for the Premises shall be subject
to Lessor's written approval. Lessee shall repair, paint, and/or replace the
building facia surface to which its signs are attached upon vacation of the
Premises, or the removal or alteration of its signage. Lessee shall not, (i)
make any changes to the exterior of the Premises, (ii) install any exterior
lights, decorations, balloons, flags, pennants, banners or painting or (iii)
erect or install any signs, windows or door lettering, placards, decorations or
advertising media of any type which can be viewed from the exterior of the
Premises, without Lessor's prior written consent. All signs, decorations,
advertising media, blinds, draperies and other window treatment or bars or
other security installations visible from outside the Premises shall conform in
all respects to the criteria established by Lessor. See Rider One, Para. 31
8. UTILITIES. Lessor agrees to provide water and electricity service to
the Premises. Lessee shall pay for all water, gas, heat, light, power,
telephone, sewer, sprinkler charges and other utilities and services used on or
at the Premises, together with any taxes, penalties, surcharges or the like
pertaining to the Lessee's use of the Premises, and any maintenance charges for
utilities. Lessor shall have the right to cause any of said services to be
separately metered to Lessee, at Lessee's expense. Lessee shall pay its pro rata
share, as reasonably determined by Lessor, of all charges for jointly metered
utilities. Lessor shall not be liable for any interruption or failure of utility
service on the Premises unless due to Lessor's negligence.
9. INSURANCE.
A. Lessor shall maintain insurance covering the buildings situated on
the Premises or of which the Premises are a part in an amount not less than
eighty percent (80%) of the "replacement cost" thereof insuring against the
perils of Fire, Lightning, Extended Coverage, Vandalism and Malicious Mischief.
Lessee shall maintain insurance on Lessee's improvements to the Premises and
all contents of the Premises.
B. Lessee, at its own expense, shall maintain during the term of this
Lease a policy or policies of worker's compensation and comprehensive general
liability insurance, including personal injury and property damage, with
contractual liability endorsement, in the amount of Five Hundred Thousand
Dollars ($500,000.00) for
FORM 86-MOD NE
2
<PAGE>
property damage and One Million Dollars ($1,000,000.00) per occurrence for
personal injuries or deaths of persons occurring in or about the Premises. Said
policies shall (i) name Lessor as an additional insured and insure Lessor's
contingent liability under this Lease (except for the worker's compensation
policy, which instead shall include waiver of subrogation endorsement in favor
of Lessor), (ii) be issued by an insurance company which is acceptable to
Lessor, and (iii) provide that said insurance shall not be cancelled unless
thirty (30) days prior written notice shall have been given to Lessor. Said
policy or policies or certificates thereof shall be delivered to Lessor by
Lessee upon commencement of the term of the Lease and upon each renewal of said
insurance.
C. Lessee will not permit the Premises to be used for any purpose or in
any manner that would (i) void the insurance thereon, (ii) increase the
insurance risk, or (iii) cause the disallowance of any sprinkler credits,
including without limitation, use of the Premises for the receipt, storage or
handling of any product, material or merchandise that is explosive or highly
inflammable. If any increase in the cost of any insurance on the Premises or the
building of which the Premises are a part is caused by Lessee's use of the
Premises, or because Lessee vacates the Premises, then Lessee shall pay the
amount of such increase to Lessor.
10. FIRE AND CASUALTY DAMAGE.
A. If the Premises or the building of which the Premises are a part
should be damaged or destroyed by fire or other peril, Lessee immediately shall
give written notice to Lessor. If the buildings situated upon the Premises or
of which the Premises are a part should be totally destroyed by any peril
covered by the insurance to be provided by Lessor under Paragraph 9A above, or
if they should be so damaged thereby that, in Lessor's estimation, rebuilding
or repairs cannot be completed within one hundred eighty (180) days after the
date of such damage, this Lease shall terminate and the rent shall be abated
during the unexpired portion of this Lease, effective upon the date of the
occurrence of such damage.
B. If the buildings situated upon the Premises or of which the Premises
are a part, should be damaged by any peril covered by the insurance to be
provided by Lessor under Paragraph 9A above, and in Lessor's estimation,
rebuilding or repairs can be substantially completed within one hundred eighty
(180) days after the date of such damage, this Lease shall not terminate, and
Lessor shall restore the Premises to substantially its previous condition,
except that Lessor shall not be required to rebuild, repair or replace any part
of the partitions, fixtures, additions and other improvements that may have been
constructed, erected or installed in, or about the Premises or for the benefit
of, or by or for Lessee.* If such repairs and rebuilding have not been
substantially completed within one hundred eighty (180) days after the date of
such damage, Lessee, as Lessee's exclusive remedy, may terminate this Lease by
delivering written notice of termination to Lessor in which event the rights and
obligations hereunder shall cease and terminate. *See Rider One, Para. 32.
C. Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Lessor shall have the right to terminate this Lease by delivering written
notice of termination to Lessee within fifteen (15) days after such requirement
is made known by any such holder, whereupon all rights and obligations
hereunder shall cease and terminate.
D. Anything in this Lease to the contrary notwithstanding, Lessor and
Lessee hereby waive and release each other of and from any and all rights of
recovery, claim, action or cause of action, against each other, their agents,
officers and employees, for any loss or damage that may occur to the Premises,
improvements to the building of which the Premises are a part, or personal
property (building contents) within the building and/or Premises, for any
reason regardless of cause or origin. Each party to this Lease agrees
immediately after execution of this Lease to give each insurance company, which
has issued to it policies of fire and extended coverage insurance, written
notice of the terms of the mutual waivers contained in this subparagraph, and
if necessary, to have the insurance policies properly endorsed.
11. LIABILITY AND INDEMNIFICATION. Except for any claims, rights of
recovery and causes of action that Lessee has released, Lessor shall hold
Lessee harmless and defend Lessee against any and all claims or liability for
any injury or damage to any person in, on or about the Premises or any part
thereof and/or the building of which the Premises are a part, when such injury
or damage shall be caused by the act, neglect, fault of, or omission of any
duty with respect to the same by Lessor, its agents, servants and employees.
Except for any claims, rights of recovery and causes of action that Lessor has
released, Lessee shall hold Lessor harmless from and defend Lessor against any
and all claims or liability for any injury or damage (i) to any person or
property whatsoever occurring in, on or about the Premises or any part thereof
and/or of the building of which the Premises are a part, including without
limitation elevators, stairways, passageways or hallways, the use of which
Lessee may have in accordance with this Lease, when such injury or damage shall
be caused by the act, neglect, fault of, or omission of any duty with respect
to the same by Lessee, its agents, servants, employees, or invitees (ii)
arising from the conduct of management of any work done by the Lessee in or
about the Premises, (iii) arising from transactions of the Lessee, and (iv) all
costs, counsel fees, expenses and liabilities incurred in connection with any
such claim or action or proceeding brought thereon. The provisions of this
Paragraph 11 shall survive the expiration or termination of this Lease with
respect to any claims or liability occurring prior to such expiration or
termination.
12. USE. The Premises shall be used only for the purpose of receiving,
storing, shipping and selling (other than retail) products, materials and
merchandise made and/or distributed by Lessee and for such other lawful
purposes as may be incidental thereto. Outside storage, including without
limitation, storage of trucks and other vehicles, is prohibited without
Lessor's prior written consent. Lessee shall comply with all governmental laws,
ordinances and regulations applicable to the use of the Premises, and promptly
shall comply with all governmental orders and directives for the correction,
prevention and abatement of nuisances in or upon, or connected with, the
Premises, all at Lessee's sole expense. Lessee shall not permit any
objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to
emanate from the Premises, nor take any other action that would constitute a
nuisance or would disturb, unreasonably interefere with, or endanger Lessor or
any other lessees of the building in which the Premises are a part.
13. INSPECTION. Lessor and Lessor's agents and representatives shall
have the right to enter the Premises at any reasonable time during business
hours, to inspect the Premises and to make such repairs as may be required or
permitted pursuant to this Lease. During the period that is six (6) months
prior to the end of the Lease term, upon telephonic notice to Lessee, Lessor
and Lessor's representatives may enter the Premises during business hours for
the purpose of showing the Premises. In addition, Lessor shall have the right
to erect a suitable sign on the Premises stating the Premises are available.
Lessee shall notify Lessor in writing at least thirty (30) days prior to
vacating the Premises and shall arrange to meet with Lessor for a joint
inspection of the Premises prior to vacating. If Lessee fails to give such
notice or to arrange for such inspection, then Lessor's inspection of the
Premises shall be deemed correct for the purpose of determining Lessee's
responsibility for repairs and restoration of the Premises.
14. ASSIGNMENT AND SUBLETTING.
A. Lessee shall not have the right to assign, sublet, transfer or
encumber this Lease, or any interest therein, without the prior written consent
of Lessor which shall not be unreasonably withheld. Any attempted assignment,
subletting, transfer or encumbrance by Lessee in violation of the terms and
covenants of this Paragraph shall be void. Notwithstanding the foregoing.
FORM 86-MOD NE
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Lessee shall have the right to assign this Lease to any affiliate (as such term
is defined in the Securities Act of 1933) provided that such assignment is in
form satisfactory to Lessor. Any assignee, sublessee or transferee of Lessee's
interest in this Lease (all such assignees, sublessees and transferees being
hereinafter referred to as "Transferees"), by assuming Lessee's obligations
hereunder, shall assume liability to Lessor for all amounts paid to persons
other than Lessor by such Transferees in contravention of this Paragraph. No
assignment, subletting or other transfer, whether consented to by Lessor or not
or permitted hereunder shall relieve Lessee of its liability hereunder. If an
event of default occurs while the Premises or any part thereof are assigned or
sublet, then Lessor, in addition to any other remedies herein provided, or
provided by law, may collect directly from such Transferee all rents payable to
the Lessee and apply such rent against any sums due Lessor hereunder. No such
collection shall be construed to constitute a novation or a release of Lessee
from the further performance of Lessee's obligations hereunder.
B. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. (S) 101 et. seq., (the "Bankruptcy
Code"), any and all monies or other consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Lessor, shall be and remain the exclusive property of Lessor and shall not
constitute property of Lessee or of the estate of Lessee within the meaning of
the Bankruptcy Code. Any and all monies or other considerations constituting
Lessor's property under the preceding sentence not paid or delivered to Lessor
shall be held in trust for the benefit of Lessor and be promptly paid or
delivered to Lessor.
C. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, shall be deemed, without further act or deed,
to have assumed all of the obligations arising under this Lease on and after the
date of such assignment. Any such assignee shall upon demand execute and deliver
to Lessor an instrument confirming such assumption.
15. CONDEMNATION. If more than twenty-five (25%) of the Premises are 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 and the taking prevents or materially interferes with the use of the
Premises for the purpose for which they were leased to Lessee, this Lease shall
terminate and the rent shall be abated during the unexpired portion of this
Lease, effective on the date of such taking. If less than twenty-five (25%) of
the Premises are taken for any public or quasi-public use under any governmental
law, ordinance or regulation, or by right of eminent domain, or by private
purchase in lieu thereof, this Lease shall not terminate, but the rent payable
hereunder during the unexpired portion of this Lease shall be reduced to such
extent as may be fair and reasonable under all of the circumstances. All
compensation awarded in connection with or as a result of any of the foregoing
proceedings shall be the property of Lessor and Lessee hereby assigns any
interest in any such award to Lessor; provided, however, Lessor shall have no
interest in any award made to Lessee for loss of business or goodwill or for the
taking of Lessee's fixtures and improvements, if a separate award for such items
is made to Lessee.
16. HOLDING OVER. At the termination of this Lease by its expiration or
otherwise, Lessee immediately shall deliver possession to Lessor with all
repairs and maintenance required herein to be performed by Lessee completed. If,
for any reason, Lessee retains possession of the Premises after the expiration
or termination of this Lease, unless the parties hereto otherwise agree in
writing, such possession shall be subject to termination by either Lessor or
Lessee at any time upon not less than ten (10) days advance written notice, and
all of the other terms and provisions of this Lease shall be applicable during
such period, except that Lessee shall pay Lessor from time to time, upon demand,
as rental for the period of such possession, an amount equal to double the rent
in effect on the termination date, computed on a daily basis for each day of
such period. No holding over by Lessee, whether with or without consent of
Lessor shall operate to extend this Lease except as otherwise expressly
provided. The preceding provisions of this Paragraph 16 shall not be construed
as consent for Lessee to retain possession of the Premises in the absence of
written consent thereto by Lessor.
17. QUIET ENJOYMENT. Lessor covenants that on or before the commencement
date it will have good title to the Premises, free and clear of all liens and
encumbrances, excepting only the lien for current taxes not yet due, such
mortgage or mortgages as are permitted by the terms of this Lease, zoning
ordinances and other building and fire ordinances and governmental regulations
relating to the use of such property, and easements, restrictions and other
conditions of record. If this Lease is a sublease, then Lessee agrees to take
the Premises subject to the provisions of the prior Leases. Lessor represents
that it has the authority to enter into this Lease and that so long as Lessee
pays all amounts due hereunder and performs all other covenants and agreements
herein set forth, Lessee shall peaceably and quietly have hold and enjoy the
Premises for the term hereof without hindrance or molestation from Lessor,
subject to the terms and provisions of this Lease.
18. EVENTS OF DEFAULT. The following events (herein individually referred
to as "event of default") each shall be deemed to be events of nonperformance by
Lessee under this Lease:
A. Lessee shall fail to pay any installment of the rent herein reserved
when due, or any other payment or reimbursement to Lessor required herein
when due, and such failure shall continue for a period of five (5) days
from the date such payment was due.
B. The Lessee or any guarantor of the Lessee's obligations hereunder
shall (i) become insolvent; (ii) admit in writing its inability to pay its
debts; (iii) make a general assignment for the benefit of creditors; (iv)
commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as a debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or of any substantial part of its property; or (v) take any
action to authorize or in contemplation of any of the actions set forth
above in this Paragraph.
C. Any case, proceeding or other action against the Lessee or any
guarantor of the Lessee's obligations hereunder shall be commenced seeking
(i) to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent; (ii) reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors; (iii) appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property,
and such case, proceeding or other action (a) results in the entry of an
order for relief against it which it is not fully stayed within seven (7)
business days after the entry thereof or (b) shall remain undismissed for a
period of forty-five (45) days.
D. Lessee shall (i) vacate all or a substantial portion of the Premises
or (ii) fail to continuously operate its business at the Premises for the
permitted use set forth herein, whether or not Lessee is in default of the
rental payments due under this Lease.
E. Lessee shall fail to discharge any lien placed upon the Premises in
violation of Paragraph 21 hereof within twenty (20) days after any such
lien or encumbrance is filed against the Premises.
F. Lessee shall fail to comply with any term, provision or covenant of
this Lease (other than those listed in this Paragraph 18), and shall not
cure such failure within twenty (20) days after written notice thereof to
Lessee.
FORM 86-MOD NE
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19. REMEDIES.
A. Upon each occurrence of an event of default, Lessor shall have the
option to pursue any one or more of the following remedies without any notice
or demand:
(1) Terminate this Lease; and/or
(2) Enter upon and take possession of the Premises without terminating
this Lease; and/or
(3) Alter all locks and other security devices at the Premises with or
without terminating this Lease;
and in any such event Lessee immediately shall surrender the Premises to Lessor,
and if Lessee fails so to do, Lessor, without waiving any other remedy it may
have, may enter upon and take possession of the Premises and expel or remove
Lessee and any other person who may be occupying such Premises or any part
thereof, without being liable for prosecution or any claim of damages therefor.
B. If Lessor terminates this Lease, at Lessor's option, Lessee shall be
liable for and shall pay to Lessor, the sum of all rental and other payments
owed to Lessor hereunder accrued to the date of such termination, plus, as
liquidated damages, an amount equal to (1) the present value of the total rental
and other payments owed hereunder for the remaining portion of the Lease term,
calculated as if such term expired on the date set forth in Paragraph 1, less
(2) the then present fair market rental value of the Premises for such period,
which because of the difficulty of ascertaining such value, Lessor and Lessee
stipulate and agree, shall in no event be deemed to exceed seventy-five percent
(75%) of the rental amount set forth in Paragraph 2 above.
C. If Lessor repossesses the Premises without terminating the Lease,
Lessee, at Lessor's option, shall be liable for and shall pay Lessor on demand
all rental and other payments owed to Lessor hereunder, accrued to the date of
such repossession, plus all amounts required to be paid by Lessee to Lessor
until the date of expiration of the term as stated in Paragraph 1, diminished
by all amounts received by Lessor through reletting the Premises during such
remaining term (but only to the extent of the rent herein reserved). Actions to
collect amounts due by Lessee to Lessor under this subparagraph may be brought
from time to time, on one or more occasions, without the necessity of Lessor's
waiting until expiration of the Lease term.
D. Upon an event of default, in addition to any sum provided to be paid
herein, Lessee also shall be liable for and shall pay to Lessor (i) brokers'
fees incurred by Lessor in connection with reletting the whole or any part of
the Premises; (ii) the costs of removing and storing Lessee's or other
occupant's property; (iii) the costs of repairing, altering, remodeling or
otherwise putting the Premises into condition acceptable to a new Lessee or
Lessees; and (iv) all reasonable expenses incurred by Lessor in enforcing or
defending Lessor's rights and/or remedies. If either party hereto institute any
action or proceeding to enforce any provision hereof by reason of any alleged
breach of any provision of this Lease, the prevailing party shall be entitled to
receive from the losing party all reasonable attorneys' fees and all court costs
in connection with such proceeding.
E. In the event Lessee fails to make any payment due hereunder when
payment is due, to help defray the additional cost to Lessor for processing
such late payments, Lessee shall pay to Lessor on demand a late charge in an
amount equal to five percent (5%) of such installment; and the failure to pay
such amount within ten (10) days after demand therefor shall be an additional
event of default hereunder. The provision for such late charge shall be in
addition to all of Lessor's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Lessor's remedies
in any manner.
F. Exercise by Lessor of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises by Lessor, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Lessor and Lessee. Lessee and Lessor further agree that forbearance by Lessor
to enforce its rights pursuant to the Lease at law or in equity, shall not be a
waiver of Lessor's right to enforce one or more of its rights in connection
with any subsequent default.
G. In the event of termination and/or repossession of the Premises for
an event of default, Lessor shall use reasonable efforts to relet the Premises
and to collect rental after reletting; provided, that, Lessee shall not be
entitled to credit or reimbursement of any proceeds in excess of the rental
owed hereunder. Lessor may relet the whole or any portion of the Premises for
any period, to any Lessee and for any use and purpose.
H. If Lessor fails to perform any of its obligations hereunder within
thirty (30) days after written notice from Lessee specifying such failure,
Lessee's exclusive remedy shall be an action for damages and/or possession.
Unless and until Lessor fails to so cure any default after such notice, Lessee
shall not have any remedy or cause of action by reason thereof. All obligations
of Lessor hereunder will be construed as covenants, not conditions; and all
such obligations will be binding upon Lessor only during the period of its
possession of the Premises and not thereafter. The term "Lessor" 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 covenants and obligations of the
Lessor thereafter accruing, but such covenants and obligations shall be binding
during the Lease term upon each new owner for the duration of such owner's
ownership. Notwithstanding any other provision hereof, Lessor shall not have
any personal liability hereunder. In the event of any breach or default by
Lessor in any term or provision of this Lease, Lessee agrees to look solely to
the equity or interest then owned by Lessor in the Premises or of the building
of which the Premises are a part; however, in no event, shall any deficiency
judgment or any money judgment of any kind be sought or obtained against any
party Lessor.
I. If Lessor repossesses the Premises pursuant to the authority herein
granted, then Lessor shall have the right to (i) keep in place and use or (ii)
remove and store all of the furniture, fixtures and equipment at the Premises,
including that which is owned by or leased to Lessee at all times prior to any
foreclosure thereon by Lessor or repossession thereof by any Lessor thereof or
third party having a lien thereon. Lessor also shall have the right to
relinquish possession of all or any portion of such furniture, fixtures,
equipment and other property to any person ("Claimant") who presents to Lessor
a copy of any instrument represented by Claimant to have been executed by
Lessee (or any predecessor of Lessee) granting Claimant the right under various
circumstances to take possession of such furniture, fixtures, equipment or
other property, without the necessity on the part of Lessor to inquire into the
authenticity or legality of said instrument. The rights of Lessor herein stated
shall be in addition to any and all other rights that Lessor has or may
hereafter have at law or in equity; and Lessee stipulates and agrees that the
rights herein granted Lessor are commercially reasonable.
J. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as rent, shall constitute rent for the purposes of
Section 502(b) (7) of the Bankruptcy Code, 11 U.S.C. (S) 502(b) (7).
K. This is a contract under which applicable law excuses Lessor from
accepting performance from (or rendering performance to) any person or entity
other than Lessee within the meaning of Sections 365(c) and 365(e) (2) of the
Bankruptcy Code, 11 U.S.C. (S)(S) 365(c) and 365(e) (2).
20. MORTGAGES. Lessee accepts this Lease subject and subordinate to
any mortgages and/or deeds of trust now or at any time hereafter constituting a
lien or charge upon the Premises or the improvements situated thereon or the
building of which the Premises are a part, provided, however, that if the
mortgages, trustee, or holder of any such mortgage or deed of trust elects to
have Lessee's interest in this Lease superior to any such
FORM 86-MOD NE
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instrument, then by notice to Lessee from such mortgagee, trustee or holder,
this Lease shall be deemed superior to such lien, whether this Lease was
executed before or after said mortgage or deed of trust. Lessee, at any time
hereafter on demand, shall execute any instruments, release-or other documents
that may be required by any mortgagee for the purpose of subjecting and
subordinating this Lease to the lien of any such mortgage.
21. MECHANIC'S LIENS. Lessee has no authority, express or implied, to
create or place any lien or encumbrance of any kind or nature whatsoever upon,
or in any manner to bind the interest of Lessor or Lessee in the Premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Lessee, including those who may furnish materials or perform labor
for any construction or repairs. Lessee covenants and agrees that it will pay
or cause to be paid all sums legally due and payable by it on account of any
labor performed or materials furnished in connection with any work performed on
the Premises and that it will save and hold Lessor harmless from any and all
loss, cost or expense based on or arising out of asserted claims or liens
against the leasehold estate or against the right, title and interest of the
Lessor in the Premises or under the terms of this Lease. Lessee agrees to give
Lessor immediate written notice of the placing of any lien or encumbrance
against the Premises.
22. MISCELLANEOUS.
A. Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.
B. In the event the Premises constitute a portion of a multiple
occupancy building, Lessee's "proportionate share", as used in this Lease,
shall mean a fraction, the numerator of which is the space contained in the
Premises and the denominator of which is the entire space contained in the
building.
C. The terms, provisions and covenants and conditions contained in this
Lease shall run with the land and shall apply to, inure to the benefit of, and
be binding upon, the parties hereto and upon their respective heirs, executors,
personal representatives, legal representatives, successors and assigns, except
as otherwise herein expressly provided. Lessor shall have the right to transfer
and assign, in whole or in part, its rights and obligations in the building and
property that are the subject of this Lease. Each party agrees to furnish to the
other, promptly upon demand, a corporate resolution, proof of due authorization
by partners, or other appropriate documentation evidencing the due authorization
of such party to enter into this Lease.
D. Lessor shall not be held responsible for delays in the performance
of its obligations hereunder when caused by material shortages, acts of God or
labor disputes.
E. Lessee agrees, from time to time, within ten (10) days after request of
Lessor, to deliver to Lessor, or Lessor's designee, a Certificate of Occupancy
and an estoppel certificate stating that this Lease is in full force and effect,
the date to which rent has been paid, the unexpired term of this Lease and such
other factual matters pertaining to this Lease as may be requested by Lessor. It
is understood and agreed that Lessee's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Lessor's execution
of this Lease.
F. This Lease constitutes the entire understanding and agreement of the
Lessor and Lessee with respect to the subject matter of this Lease, and contains
all of the covenants and agreements of Lessor and Lessee with respect thereto.
Lessor and Lessee each acknowledge that no representations, inducements,
promises or agreements, oral or written, have been made by Lessor or Lessee, or
anyone acting on behalf of Lessor or Lessee, which are not contained herein, and
any prior agreements, promises, negotiations, or representations not expressly
set forth in this Lease are of no force or effect. This Lease may not be
altered, changed or amended except by an instrument in writing signed by both
parties hereto.
G. All obligations of Lessee hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation, all payment obligations with respect to taxes and insurance and all
obligations concerning the condition and repair of the Premises. Upon the
expiration or earlier termination of the term hereof, and prior to Lessee
vacating the Premises, Lessee shall pay to Lessor any amount reasonably
estimated by Lessor as necessary to put the Premises, including without
limitation, all heating and air conditioning systems and equipment therein, in
good condition and repair, reasonable wear and tear excluded. Lessee shall also,
prior to vacating the Premises, pay to Lessor the amount, as estimated by
Lessor, of Lessee's obligation hereunder for real estate taxes and insurance
premiums for the year in which the Lease expires or terminates. All such amounts
shall be used and held by Lessor for payment of such obligations of Lessee
hereunder, with Lessee being liable for any additional costs therefor upon
demand by Lessor, or with any excess to be returned to Lessee after all such
obligations have been determined and satisfied as the case may be. Any security
deposit held by Lessor shall be credited against the amount due from Lessee
under this Paragraph 22G.
H. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there be added, as a
part of this Lease, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable.
I. All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on
which all parties hereto have executed this Lease.
J. Lessee represents and warrants that it has dealt with no broker, agent
or other person in connection with this transaction or that no broker, agent or
other person brought about this transaction, other than as may be referenced in
a separate written agreement executed by Lessee, and Lessee agrees to indemnify
and hold Lessor harmless from and against any claims by any other broker, agent
or other person claiming a commission or other form of compensation by virtue of
having dealt with Lessee with regard to this leasing transaction.
K. If and when included within the term "Lessor", as used in this
instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address for the receipt of notices
and payments to Lessor. If and when included within the term "Lessee", as used
in this instrument, there is more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Lessee. All parties
included within the terms "Lessor" and "Lessee", respectively shall be bound by
notices given in accordance with the provisions of Paragraph 24 hereof to the
same effect as if each had received such notice.
23. ADDITIONAL PROVISIONS. See Exhibit attached hereto and incorporated by
reference herein.
24. NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending mailing or delivering of notice or the making of any payment by
Lessor to Lessee or with reference to the sending, mailing or delivering of any
notice or the
FORM 86-MOD NE
6
<PAGE>
making of any payment by Lessee, Lessor shall be deemed to be complied ????
and if the following steps are taken:
(a) All rent and other payments required to be made by Lessee to
Lessor hereunder shall be payable to Lessor at the address for Lessor set
forth below or at such other address as Lessor may specify from time to
time by written notice delivered in accordance herewith. Lessee's
obligation to pay rent and any other amounts to Lessor under the terms of
this Lease shall not be deemed satisfied until such rent and other amounts
have been actually received by Lessor. In addition to base rental due
hereunder, all sums of money and all payments due Lessor hereunder shall be
deemed to be additional rental owed to Lessor.
(b) All payments required to be made by Lessor to Lessee hereunder
shall be payable to Lessee at the address set forth below, or at such other
address within the continental United States as Lessee may specify from
time to time by written notice delivered in accordance herewith.
(c) Any written notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered whether actually
received or not when deposited in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith.
25. LESSOR'S LIEN. In addition to any statutory lien for rent in Lessor's
favor, Lessor shall have and Lessee hereby grants to Lessor a continuing
security interest for all rentals and other sums of money become due hereunder
from Lessee, upon all goods, wares, equipment, fixtures, furniture, inventory,
and other personal property of Lessee situated on the Premises subject to this
Lease, and such property shall not be removed therefrom without the consent of
Lessor until all arrearages in rent as well as any and all other sums of money
then due to Lessor hereunder shall first have been paid and discharged. Upon a
default hereunder by Lessee in addition to all other rights and remedies, Lessor
shall have all rights and remedies under the Uniform Commercial Code, including
without limitation, the right to sell the property described in this Paragraph
at public or private sale upon five (5) days notice by Lessor. Lessee hereby
agrees to execute such other instruments, necessary or desirable under
applicable law to perfect the security interest hereby created.
EXECUTED BY LESSOR, this 7 day of May, 1988
DALWARE II ASSOCIATES (By Trammell Crow
Company No. 49, General Partner)
-------------------------------------------
Attest/Witness
__________________________ By ________________________________________
J. MARC MYERS
Title:____________________ Title: Managing General Partner
------------------------------------
ADDRESS:
DALWARE II ASSOCIATES (By Trammell Crow
-------------------------------------------
Company No. 49, General Partner)
1499 Regal Row, Suite 302
-------------------------------------------
Dallas, Texas 75247
-------------------------------------------
___________________________________________
EXECUTED BY LESSEE, this 3 day of Nov., 1988.
Attest/Witness STATIONERS DISTRIBUTING COMPANY, INC.
-------------------------------------------
_______________ By ________________________________________
Title: Admin. Asst. Title: UP & CFO
----------- -------------------------------------------
ADDRESS:
STATIONERS DISTRIBUTING COMPANY, INC.
-------------------------------------------
613-21 Mockingbird Lane
-------------------------------------------
Dallas, Texas 75247
-------------------------------------------
___________________________________________
FORM 86-MOD NE
7
<PAGE>
RIDER ONE
---------
26. The monthly base rental referred to in Paragraph 2.A. shall be as
follows for the primary term of this Lease Agreement:
<TABLE>
<S> <C>
Months 1 - 29 $26,808.03
Months 30 - 89 $28,049.14
Months 90 - 125 $29,373.00
</TABLE>
27. The existing leases between Stationers Distributing Company, Inc.
and Dalware II Associates for the 99,289 sq. ft. on Mockingbird Lane
will be terminated upon commencement of this Lease.
28. Provided that Lessee is not in default of the terms of this Lease
Agreement, it is hereby agreed and understood that in the event Lessee
requires additional warehouse space in Dallas County and Lessor and
Lessee executed a new Lease Agreement for a minimum of 200,000 square
feet, this Lease shall be cancelled as of the commencement date of the
new Lease covering the larger space. It is understood that upon the
commencement date of the new Lease, Lessee shall deliver the herein
demised premises to the Lessor in the condition required by this Lease
Agreement. Upon such cancellation, Lessor and Lessee shall be released
from any further obligations or liabilities accrued under this Lease
prior to the comencement date of such new Lease.
29. Prior to December 10, 1988, Lessor agrees to perform the
improvements listed below (See Exhibit "B"):
Improvements to Current Space
-----------------------------
- Remodel 1st floor office
- Enclose and finish 2nd floor office
- Add 45 double bulb lights to warehouse
- Enclose take-out area with counter
<PAGE>
RIDER 1, PARAGRAPH 30. HAZARDOUS WASTE. The term "Hazardous
Substances," as used in this lease 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 any "Environmental Law,"
which term 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. Lessee
hereby agrees that (i) no activity will be conducted on the premises
that will produce any Hazardous Substance, except for such
activities that are part of the ordinary course of Lessee's business
activities (the "Permitted Activities") provided said Permitted
Activities are conducted in accordance with all Environmental Laws
and have been approved in advance in writing by Lessor; Lessee 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 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 Lessee's business
(the "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 Lessor; Lessee 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 a dump;
(iv) Lessee will not install any underground tanks of any type; (v)
Lessee 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) Lessee 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 cleanup procedures
shall be diligently undertaken pursuant to all Environmental Laws.
Lessor or Lessor's representative shall have the right but not the
obligation to enter the premises for the purpose of inspecting the
storage, use and disposal of Permitted Materials to ensure
compliance with all Environmental Laws. Should it be determined, in
Lessor's sole opinion, that said Permitted Materials are being
improperly stored, used, or disposed of, then Lessee shall
immediately take such corrective action as requested by Lessor.
Should Lessee fail to take such corrective action within 24 hours,
Lessor shall have the right to perform such work and Lessee shall
promptly reimburse Lessor for any and all costs associated with said
work. If at any time during or after the term of the lease, the
premises is found to be so contaminated or subject to said
conditions, Lessee shall diligently institute proper and thorough
cleanup procedures at Lessee's sole cost, and Lessee agrees to
indemnify and hold Lessor 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
Lessee. The foregoing indemnification and the responsibilities of
Lessee shall survive the termination or expiration of this Lease.
Permitted Materials (if none, enter "None"):
31. All signs presently existing are deemed to be approved and
additional signage of a like or similar nature is approved by Landlord
for the side of the building facing Irving Blvd.
32. Lessor shall, however, be required to give Lessee notice of
Lessor's intent to rebuild or repair within ten (10) days of the
damaging event or Lessee shall have the right to terminate the lease.
If Lessor elects to repair or rebuild Lessor shall provide comparable
temporary space to Lessee during such periods all at Lessor's expense.
<PAGE>
EXHIBIT A-1
[STREET MAP OF PLAT OF LOTS 1 AND 2]
<PAGE>
EXHIBIT "A"
<PAGE>
RIDER ONE
---------
26. The monthly base rental referred to in Paragraph 2.A. shall be as
follows for the primary term of this Lease Agreement:
Months 1 - 29 $26,808.03
Months 30 - 89 $28,049.14
Months 90 - 125 $29,373.00
27. The existing leases between Stationers Distributing Company, Inc.
and Dalware II Associates for the 99,289 sq. ft. on Mockingbird Lane
will be terminated upon commencement of this Lease.
28. Provided that Lessee is not in default of the terms of this Lease
Agreement, it is hereby agreed and understood that in the event Lessee
requires additional warehouse space in Dallas County and Lessor and
Lessee executed a new Lease Agreement for a minimum of 200,000 square
feet, this Lease shall be cancelled as of the commencement date of the
new Lease covering the larger space. It is understood that upon the
commencement date of the new Lease, Lessee shall deliver the herein
demised premises to the Lessor in the condition required by this Lease
Agreement. Upon such cancellation, Lessor and Lessee shall be released
from any further obligations or liabilities accrued under this Lease
prior to the commencement date of such new Lease.
29. Prior to December 10, 1988, Lessor agrees to perform the
improvements listed below (See Exhibit "B"):
Improvements to Current Space
-----------------------------
- Remodel 1st floor office
- Enclose and finish 2nd floor office
- Add 45 double bulb lights to warehouse
- Enclose take-out area with counter
<PAGE>
STANDARD INDUSTRIAL SUBLEASE AGREEMENT 44,770 SQUARE FEET
TRAMMELL CROW COMPANY 621 W. MOCKINGBIRD LANE
COMMERCIAL 91 DALLAS, TEXAS 75247
#200899-03
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT, made and entered into by and between UNITED
STATIONERS SUPPLY CO., hereinafter referred to as "Sublessor", and REHRIG
PACIFIC COMPANY, hereinafter referred to as "Sublessee";
W I T N E S S E T H:
1. PREMISES AND TERM.
A. In consideration of the mutual obligations of Sublessor and Sublessee
set forth herein, Sublessor leases to Sublessee, and Sublessee hereby takes from
Sublessor the approximately 44,770 square feet more particularly outlined on the
floor plan attached as EXHIBIT "A-1" (the "Premises"), which Premises are part
of that approximately 127,789 square foot building (the "Building") located on
the real property situated within the County of Dallas, State of Texas, which
real property is more particularly described on EXHIBIT "A" attached hereto and
incorporated herein by reference (the "Land"), together with all rights,
privileges, easements, appurtenances, and amenities belonging to or in any way
pertaining to the Premises, to have and to hold, subject to the terms, covenants
and conditions in this Sublease.
B. The term of this Sublease shall commence on JUNE 1, 1993 (the
"Commencement Date"). The term of this Sublease shall end on the last day of
the calendar month that is 72 full months after the Commencement Date.
2. BASE RENT, SECURITY DEPOSIT AND ESCROW PAYMENTS.
A. Sublessee agrees to pay to Sublessor base rent for the Premises, in
advance, without demand, deduction or set off, at the rate of FOUR THOUSAND
FIVE HUNDRED SIXTY SIX & 54/100 Dollars ($4,566.54*) per month during the term
hereof. One such monthly installment, plus the other monthly charges set forth
in Paragraph 2.C. below shall be due and payable on the date hereof and a like
monthly installment shall be due and payable on or before the first day of each
calendar month succeeding the Commencement Date, except that all payments due
hereunder for any fractional calendar month shall be prorated. * SEE RIDER ONE,
PARAGRAPH 26
B. In addition, Sublessee agrees to deposit with Sublessor on the date
hereof the sum of TEN THOUSAND & 00/100 Dollars ($10,000.00), which shall be
held by Sublessor as security for the performance of Sublessee's obligations
under this Sublease, it being expressly understood and agreed that this deposit
is not an advance rental deposit or a measure of Sublessor's damages in case of
Sublessee's default. Upon each occurrence of an event of default, Sublessor may
use all or part of the deposit to pay past due rent or other payments due
Sublessor under this Sublease, and the cost of any other damage, injury,
expense or liability caused by such event of default without prejudice to any
other remedy provided herein or provided by law. On demand, Sublessee shall pay
Sublessor the amount that will restore the security deposit to its original
amount.
C. Sublessee agrees to pay as additional rent, its proportionate share
(as defined in Paragraph 22.B. below) of (1) Taxes (hereinafter defined)
payable by Sublessor pursuant to Paragraph 3.A. below, (2) the cost of any
jointly metered utilities payable pursuant to Paragraph 8. below, (3) the cost
of maintaining insurance, and (4) the cost of repairs, replacement, replacement
reserve for capital items and other operating expenses to the extent required
by the Master Lease. During each month of the term of this Sublease, on the
same day that base rent is due hereunder, Sublessee shall escrow with Sublessor
an amount equal to 1/12 of the estimated annual cost of its proportionate share
of such items. Sublessee authorizes Sublessor to use the funds deposited with
Sublessor under this Paragraph 2.C. to pay such costs. The initial monthly
escrow payments are based upon the estimated amounts for the year in question,
and shall be increased or decreased annually to reflect the projected actual
cost of all such items. If the Sublessee's total escrow payments are less than
Sublessee's actual proportionate share of all such items, Sublessee shall pay
the difference to Sublessor within ten (10) days after demand. If the total
escrow payments of Sublessee are more than Sublessee's actual proportionate
share of all such items, Sublessor shall retain such excess and credit
1
<PAGE>
it against Sublessee's next annual escrow payments. Sublessee shall on
request be given an accounting for the foregoing payments and allocations
within two (2) weeks of the request. The amount of the monthly rental and the
initial monthly escrow payments are as follows:
<TABLE>
<S> <C>
(a) Base Rent as set forth in Paragraph 2.A...... $4,566.54*
(b) Taxes as set forth in Paragraph 2.C.(1)..... $1,977.34
(c) Insurance, Commonly Metered Utilities,
if any, and Operating Expenses as set forth
in Paragraphs 2.C.(2), (3) & (4) ..... $ 671.54
Monthly Payment Total.......... $7,215.42
</TABLE>
*SEE RIDER ONE, PARAGRAPH 26
3. TAXES.
A. Sublessor agrees to pay its proportionate share of all taxes,
assessments and/or governmental charges of any kind and nature (collectively
referred to herein as "Taxes") that accrue against the Premises, the Land
and/or the Building which are assessed for and applicable to a period within
the lease term. If at any time during the term of this Sublease, there shall be
levied, assessed or imposed on Sublessor a capital levy or other tax other than
an income tax directly on the rents received therefrom and/or a franchise tax,
assessment, levy or charge measured by or based, in whole or in part upon such
rents from the Premises, the Land and/or the Building, then all such taxes,
assessments, levies or charges, or the part, thereof so measured or based,
shall be deemed to be included within the term "Taxes" for the purposes hereof.
The Sublessor shall have the right to employ a tax consulting firm to attempt
to assure a fair tax burden on the building and grounds within the applicable
taxing jurisdiction. Sublessee agrees to pay its proportionate share of the
reasonable cost of such consultant.
B. Sublessee shall be liable for all taxes levied or assessed against
any personal property or fixtures placed in the Premises by Sublessee. If any
such taxes are levied or assessed against Sublessor or Sublessor's property and
(1) Sublessor pays the same or (2) the assessed value of Sublessor's property
is increased by inclusion of such personal property and fixtures and Sublessor
pays the increased taxes, then, upon demand Sublessee shall pay to Sublessor
such taxes. In addition, if the Building is a multi tenant Building and the
cost of any improvements constructed to the Sublessee's Premises is
disproportionately higher than the cost of improvements constructed to the
premises of other tenants of the Building, then upon demand Sublessee shall pay
the amount of Taxes attributable to such disproportionately more expensive
improvements in addition to its proportionate share of Taxes payable in
accordance with Paragraph 2.
4. SUBLESSOR'S REPAIRS.
A. Sublessee understands and agrees that this Sublease is intended to
be a "net" lease, and as such, Sublessor's maintenance, repair and replacement
obligations are limited to those set forth in this Paragraph 4 A. Sublessor, at
its own cost and expense, shall be responsible only for roof membrane and
replacement and for repair and replacement of only the foundation, and the
structural members of the exterior walls of the Building. The terms "roof" and
"walls" as used herein shall not include skylights, windows, glass or plate
glass, doors, special store fronts or office entries. Sublessee shall
immediately give Sublessor written notice of defect or need for repairs, after
which Sublessor shall have reasonable opportunity to repair same or cure such
defect. Sublessor's liability with respect to any defects, repairs, replacement
or maintenance for which Sublessor is responsible hereunder shall be limited to
the cost of such repairs or maintenance or the curing of such defect.
B. Sublessor reserves the right to perform the Sublessee's
maintenance, repair and replacement obligations and any other items that are
otherwise Sublessee's obligations under Paragraph 5.B, in which event,
Sublessee shall be liable for the cost and expense of such repair, replacement,
maintenance and other such items.
5. SUBLESSEE'S MAINTENANCE AND REPAIR OBLIGATIONS.
A. Sublessee, at its own cost and expense, shall maintain all parts of
the Premises (except those for which Sublessor is expressly responsible
hereunder) in good condition, reasonable wear and tear excepted, and promptly
make all necessary repairs and replacements to the Premises.
B. In addition to Sublessee's obligations under the preceding
subparagraph A., if Sublessee is the only occupant of the Building, unless
Sublessor and Sublessee otherwise agree, Sublessee is responsible for causing
the parking areas, driveways, alleys and grounds surrounding the Premises
(except those for which Sublessor is expressly responsible hereunder) to be
maintained in a good, neat, clean and sanitary condition, consistent with the
operation of a first class office/warehouse building, which includes without
limitation, prompt maintenance, repairs and replacements 1) of any drill or
spur track servicing the Premises, 2) of the parking area associated with the
Building, 3) of all grass, shrubbery and other landscape treatments surrounding
the Building, 4) of the exterior of the Building (including painting), 5) of
sprinkler systems, sewage lines, and 6) of any other maintenance, repair or
replacement items normally associated with the foregoing. In addition,
Sublessee shall repair and pay for any damage caused by the negligence of
Sublessee, or Sublessee's employees, agents or invitees, or caused by
Sublessee's default hereunder.
C. In the event that the Sublessee is not the sole occupant of the
Building, then subject to payment by Sublessee, Lessor shall perform the
maintenance, repair, and replacement obligations set forth in the foregoing
Subparagraph B. Sublessee shall be liable for its Proportionate Share of the
cost and expense of such repair, replacement, replacement reserve, maintenance
and other such items. The amount of Sublessee's rental obligation set forth in
Paragraph 2.A. above does not include the cost of such items, and Lessor's
performance of repair, replacement, maintenance and other items, is not a
condition to payment of such rental obligations.
2
<PAGE>
D. Sublessee agrees to pay its Proportionate Share of the cost of (1)
operation, maintenance and/or landscaping of any property or facility that is
operated, maintained or landscaped by any property owner or community owner
association that is named in any restrictive covenants or deed restrictions to
which the Premises are subject, and which are actually billed to the Building,
and (2) operating and maintaining any property, facilities or services provided
for the common use of Sublessee and other lessees of the Building, which costs
shall include, without limitation, maintenance and repair costs, sewer,
landscaping, trash and security (if furnished by Sublessor), amounts paid to
contractors or subcontractors for work or services performed in connection with
the operation and maintenance of the Building, all service, supplies, repairs,
replacements or other expenses for maintaining and operating the Building, and
any other facilities or services provided for the common use of Sublessee and
other lessees of the Building.
E. Sublessee shall enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor for servicing all
hot water, heating and air conditioning systems and equipment within the
Premises, with a contractor approved by Sublessor. Sublessee shall be
responsible for all costs and expenses required thereunder.
F. Sublessee agrees to sign a joint maintenance agreement with the
railroad company servicing the Premises if requested by the railroad company.
Lessor shall have the right to coordinate all repairs and maintenance of any
rail tracks serving or intended to serve the Premises and, if Lessee uses such
rail tracks, Sublessee shall reimburse Sublessor from time to time, upon
demand, for its Proportionate Share of the costs of such repairs and
maintenance and any other sums specified in any agreement respecting such
tracks to which Sublessor is a party.
Notwithstanding any provision of this Sublease, Sublessee shall not be
responsible for any capital improvements or replacements as defined by GAAP
(Generally accepted accounting principles), except to the extent capital
improvements have been damaged by Sublessee or its agents or invitees.
6. ALTERATIONS. Sublessee shall not make any alterations, additions or
improvements to the Premises without the prior written consent of Sublessor.
Sublessee, at its own cost and expense, may erect such shelves, bins, machinery
and trade fixtures as it desires provided that (a) such items do not alter the
basic character of the Premises or the Building; (b) such items do not overload
or damage the same; (c) such items may be removed without injury to the
Premises; and (d) the construction, erection or installation thereof complies
with all applicable governmental laws, ordinances, regulations and with
Sublessor's specifications and requirements. All shelves, bins, machinery and
trade fixtures installed by Sublessee shall be removed on or before the earlier
to occur of the date of termination of this Sublease or vacating the Premises,
at which time Sublessee shall restore the Premises to their original condition.
All installations, removals and restoration shall be performed in a good and
workmanlike manner so as not to damage or alter the primary structure or
structural qualities of the Building or the Premises.
7. SIGNS. Any signage, decorations, advertising media, blinds,
draperies, window treatments, bars, and security installations Sublessee
desires for the Premises shall be subject to Sublessor's prior written approval
and shall be submitted to Sublessor prior to the Commencement Date. Sublessee
shall repair, paint, and/or replace the building facia surface to which its
signs are attached upon vacation of the Premises, or the removal or alteration
of its signage, all of which shall be accomplished at Sublessee's sole cost and
expense. Sublessee shall not, (i) make any changes to the exterior of the
Premises, (ii) install any exterior lights, decorations, balloons, flags,
pennants, banners or painting, or (3) erect or install any signs, windows or
door lettering, decals, window and storefront stickers, placards, decorations
or advertising media of any type that can be viewed from the exterior of the
Premises, without Sublessor's prior written consent.
8. UTILITIES. Sublessee shall obtain and pay for all water, gas, heat,
light, power, telephone, sewer, sprinkler charges and other utilities and
services used on or at the Premises, together with any taxes, penalties,
surcharges or the like pertaining to the Sublessee's use of the Premises, and
any maintenance charges for utilities. Sublessor shall have the right to cause
any of said services to be separately metered to Sublessee, at Sublessee's
expense. Sublessee shall pay its pro rata share, as reasonably determined by
Sublessor, of all charges for jointly metered utilities. Sublessor shall not be
liable for any interruption or failure of utility service on the Premises.
9. INSURANCE.
A. Lessor shall maintain insurance covering the Building and the
Premises in an amount not less than eighty percent (80%) of the "replacement
cost" thereof insuring against the perils and costs of Fire, Lightning,
Extended Coverage, Vandalism and Malicious Mischief, Liability and Rental
Interruption and such other insurance as Lessor shall deem necessary.
B. Sublessee, at its own expense, shall maintain during the term of
this Sublease (1) a policy or policies of worker's compensation and
comprehensive general liability insurance (with contractual liability
endorsement), including personal injury and property damage in the amount of
Five Hundred Thousand Dollars ($500,000.00) per occurrence for property damage
and One Million Dollars ($1,000,000.00) per occurrence for personal injuries or
deaths of persons occurring in or about the Premises and (2) fire and extended
coverage insurance covering the replacement cost of (a) all alterations,
additions, partitions and improvements installed or placed on the Premises, (b)
all of Sublessee's personal property contained within the Premises and (c)
business interruption insurance insuring loss of profits in the event of an
insured peril damaging the Premises. Said policies shall (i) name Sublessor,
A.C.S.S. Dallas Industrial, Inc., Trammell Crow Company, and Trammell Crow
Dallas Industrial, Inc. as additional insureds, (ii) be issued by an insurance
company which is acceptable to Sublessor, (iii) provide that said insurance
shall not be cancelled unless thirty (30) days prior written notice shall have
been given to Sublessor, (iv) shall be delivered to Sublessor by Sublessee upon
commencement of the term of the Sublease and upon each renewal of said
insurance, and (v) shall provide primary coverage to Sublessor when any policy
issued to Sublessor is similar or duplicate in coverage, and Sublessor's policy
shall be excess over Sublessee's policies.
C. Sublessee will not permit the Premises to be used for any purpose
or in any manner that would (1) void the insurance thereon, (2) increase the
insurance risk, or (3) cause the disallowance of any sprinkler credits.
Sublessee shall pay any increase in the cost of any insurance on the Premises
or the Building, which is caused by Sublessee's use of the Premises, or because
Sublessee vacates the Premises.
3
<PAGE>
10. FIRE AND CASUALTY DAMAGE.
A. Sublessee immediately shall give written notice to Sublessor if the
Premises or the Building are damaged or destroyed. If the Premises or the
Building should be totally destroyed or so damaged by an insured peril and in
Sublessor's estimation, rebuilding or repairs cannot be completed within one
hundred eighty (180) days after the date of Sublessor's actual knowledge of
such damage, this Sublease shall terminate and the rent shall be abated during
the unexpired portion of this Sublease, effective upon the date of the
occurrence of such damage.
B. If the Building or the Premises should be damaged by any insured
peril, and in Lessor's estimation, rebuilding or repairs can be substantially
completed within one hundred eighty (180) days after the date of Lessor's
actual knowledge of such damage, this Sublease shall not terminate, and Lessor
shall restore the Premises to substantially its previous condition, except that
Lessor shall not be required to rebuild, repair or replace any part of the
partitions, fixtures, additions and other improvements required to be covered
by Sublessee's insurance pursuant to Paragraph 9.B. above. Effective upon the
date of the occurrence of such damage and ending upon substantial completion
(as defined in Paragraph 1.B. above), if the Premises are untenantable in whole
or part during such period, the rent shall be reduced to such extent as may be
fair and reasonable under all of the circumstances. If such repairs and
rebuilding have not been substantially completed within one hundred eighty
(180) days after the date of such damage, Sublessee, as Sublessee's exclusive
remedy, may terminate this Sublease by delivering written notice of termination
to Lessor in which event the rights and obligations hereunder shall cease and
terminate.
D. Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Sublessor shall have the right to terminate this Sublease by delivering
written notice of termination to Sublessee within fifteen (15) days after such
requirement is made known by any such holder, whereupon all rights and
obligations hereunder shall cease and terminate.
E. Anything in this Sublease to the contrary notwithstanding except as
set forth in Paragraph 10.C. above, to the extent of a recovery of loss
proceeds under the policies of insurance described in this Sublease, Sublessor
and Sublessee hereby waive and release each other and any related parties and
affiliates of and from any and all rights of recovery, claim, action or cause
of action, against each other, their agents, officers and employees, for any
loss or damage that may occur to the Premises, the Building, or personal
property within the Building and/or Premises arising from or caused by fire or
other casualty or hazard covered or required to be covered by hazard insurance
under this Sublease. Upon execution of this Sublease, Sublessor and Sublessee
shall notify their respective insurance companies of the mutual waivers
contained herein and, if available, shall cause each policy described in this
Sublease to be so endorsed.
11. LIABILITY AND INDEMNIFICATION.
A. Sublessor shall hold Sublessee harmless and defend Sublessee
against any and all claims, actions, damages or liability (including without
limitation, all costs, attorneys fees and expenses incurred in connection
therewith) in connection with any loss, injury or damage to any person or
property occurring in, on or about or arising out of all or part of the
Premises and/or the Building or the use or occupancy thereof, or the conduct or
operation of Sublessor's business, when such injury or damage shall be caused
by the act, neglect, fault of, or omission of, any duty with respect to the
same by Sublessor, its agents, servants and employees (unless the indemnified
loss is caused wholly or in part by Sublessee's breach of this Sublease or its
negligence, in which event this indemnity shall not apply to the allocable
share of such loss resulting from Sublessee's breach of this Sublease or its
negligence).
B. Sublessee shall indemnify, protect, hold harmless and defend
Sublessor, its agents, employees, contractors, customers, partners, directors,
officers and any affiliates (as defined in the Securities Act of 1933)
(collectively, the "Sublessor Affiliates") against any and all obligations,
suits, losses, judgments, claims, actions, damages or liability (including
without limitation, all costs, attorneys fees and expenses incurred in
connection therewith) in connection with any loss, injury or damage to any
person or property occurring in, on or about or arising out of all or part of
the Premises and/or the Building or the use or occupancy thereof, or the
conduct or operation of Sublessee's business, when such injury or damage 1.
shall be caused by the act, neglect, fault of, or omission of, any duty with
respect to the same by Sublessee, its agents, servants and employees, and/or 2.
arises from a breach, violation or non-performance of any term, provision,
covenant or agreement of Sublessee hereunder, or a breach or violation by
Sublessee of any court order or any law, regulation, or ordinance of any
federal, state or local authority (collectively, the "Losses"), except to the
extent if the Losses are caused wholly or in part by Sublessor's breach of this
Sub-Lease or the negligence of Sublessor and/or Sublessor Affiliates, or
contractors. If any claim is made against Sublessor or Sublessor's Affiliates,
Sublessee, at its sole cost and expense, shall defend any such claim, suit or
proceeding by or through attorneys satisfactory to Sublessor.
C. The provisions of this Paragraph shall survive the expiration or
termination of this Sublease with respect to any claims or liability occurring
prior to such expiration or termination. The indemnification provided by this
Paragraph is subject to Sublessee's and Sublessor's waiver of recovery in the
preceding Paragraph 10. to the extent of either Sublessee's or Sublessor's
recovery of loss proceeds under policies of insurance described in Paragraph 10.
12. USE.
A. The Premises shall be used only for the purpose of, manufacturing,
recycling receiving, storing, shipping and selling (other than retail)
products, materials and merchandise made and/or distributed by Sublessee and
for such other lawful purposes as may be incidental thereto. Sublessee shall
not use the Premises for the receipt, storage or handling of any product,
material or merchandise that is explosive or highly inflammable or hazardous.
Outside storage, including without limitation, storage of
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trucks and other vehicles, is prohibited without Sublessor's prior written
consent. Sublessee shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises, and promptly shall comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or connected with, the Premises, all at
Sublessee's sole expense. Sublessee shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the
Premises, nor take any other action that would constitute a nuisance or would
disturb, unreasonably interfere with, or endanger Sublessor or any other
lessees of the Building.
B. Sublessee and its employees, customers and licensees shall have the
non-exclusive rights to use any parking areas associated with the Premises that
have been designated for such use by Sublessor, subject to (1) all reasonable
rules and regulations promulgated by Sublessor and (2) rights of ingress and
egress of other lessees. Sublessor shall not be responsible for enforcing
Sublessee's parking rights against any third parties.
13. INSPECTION. Sublessor and Sublessor's agents and representatives
shall have the right to enter the Premises at any reasonable time during
business hours, to inspect the Premises and to make such repairs as may be
required or permitted pursuant to this Sublease. During the period that is
twelve (12) months prior to the end of the Sublease term, Sublessor and
Sublessor's representatives may enter the Premises during business hours for
the purpose of showing the Premises. In addition, Sublessor shall have the
right to erect a suitable sign on the Premises stating the Premises are
available. Sublessee shall notify Sublessor in writing at least thirty (30)
days prior to vacating the Premises and shall arrange to meet with Sublessor
for a joint inspection of the Premises prior to vacating. If Sublessee fails to
give such notice or to arrange for such inspection, then Sublessor's inspection
of the Premises shall be deemed correct for the purpose of determining
Sublessee's responsibility for repairs and restoration of the Premises.
14. ASSIGNMENT AND SUBLETTING.
A. Sublessee shall not have the right to sublet all or part of the
Premises or to assign, transfer or encumber this Sublease, or any interest
therein, without the prior written consent of Sublessor, which consent shall
not be unreasonably withheld or delayed. Any attempted assignment, subletting,
transfer or encumbrance by Sublessee in violation of the terms and covenants of
this Paragraph shall be void. No assignment, subletting or other transfer,
whether consented to by Sublessor or not, or permitted hereunder, shall relieve
Sublessee of its liability hereunder. If an event of default occurs while the
Premises or any part thereof are assigned or sublet, then Sublessor, in
addition to any other remedies herein provided, or provided by law, may collect
directly from such assignee, sublessee or transferee all rents payable to the
Sublessee and apply such rent against any sums due Sublessor hereunder. No such
collection shall be construed to constitute a novation or a release of
Sublessee from the further performance of Sublessee's obligations hereunder.
B. Upon the occurrence of an assignment or subletting, whether
consented to by Sublessor, or mandated by judicial intervention, Sublessee
hereby assigns, transfers and conveys all rents or other sums received by
Sublessee under any such assignment or sublease, which are in excess of the
rents and other sums payable by Sublessee under this Sublease, and agrees to
pay such amounts within ten (10) days after receipt.
C. If this Sublease is assigned to any person or entity pursuant to
the provisions of the Bankruptcy Code, 11 U.S.C. (S) 101 et. seq., (the
"Bankruptcy Code"), any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Sublessor, shall be and remain the exclusive property of Sublessor
and shall not constitute property of Sublessee or of the estate of Sublessee
within the meaning of the Bankruptcy Code. Any and all monies or other
considerations constituting Sublessor's property under the preceding sentence
not paid or delivered to Sublessor shall be held in trust for the benefit of
Sublessor and be promptly paid or delivered to Sublessor.
D. Any person or entity to which this Sublease is assigned pursuant to
the provisions of the Bankruptcy Code, shall be deemed, without further act or
deed, to have assumed all of the obligations arising under this Sublease on and
after the date of such assignment. Any such assignee shall upon demand execute
and deliver to Sublessor an instrument confirming such assumption.
15. CONDEMNATION. If more than fifty percent (50%) of the Premises are
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 and the taking prevents or materially interferes with the use of the
Premises for the purpose for which they were leased to Sublessee, this Sublease
shall terminate and the rent shall be abated during the unexpired portion of
this Sublease, effective on the date of such taking. If less than fifty percent
(50%) of the Premises are taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain, or by
private purchase in lieu thereof, this Sublease shall not terminate, but the
rent payable hereunder during the unexpired portion of this Sublease shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances. All compensation awarded in connection with or as a result of
any of the foregoing proceedings shall be the property of Sublessor and
Sublessee hereby assigns any interest in any such award to Sublessor; provided,
however, Sublessor shall have no interest in any award made to Sublessee for
loss of business or goodwill or for the taking of Sublessee's fixtures and
improvements, if a separate award for such items is made to Sublessee.
16. HOLDING OVER. At the termination of this Sublease by its expiration
or otherwise, Sublessee immediately shall deliver possession to Sublessor with
all repairs and maintenance required herein to be performed by Sublessee
completed. If, for any reason, Sublessee retains possession of the Premises
after the expiration or termination of this Sublease or fails to complete any
repairs required hereby, unless the parties hereto otherwise agree in writing,
such possession shall be subject to termination by either Sublessor or Sublessee
at any time upon not less than ten (10) days advance written notice, and all of
the other terms and provisions of this Sublease shall be applicable during such
period, except that Sublessee shall pay Sublessor from time to time, upon
demand, as rental for the period of such possession, an amount equal to one
hundred twenty five percent (125%) of the rent in effect on the termination
date, computed on a monthly basis for any day of each calendar month of such
period. No holding over by Sublessee, whether with or without consent of
Sublessor, shall operate to extend this Sublease except as
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otherwise expressly provided. The preceding provisions of this Paragraph 16.
shall not be construed as consent for Sublessee to retain possession of the
Premises in the absence of written consent thereto by Sublessor.
17. QUIET ENJOYMENT. Sublessor covenants that on or before the
Commencement Date it will have good title to the Premises, free and clear of
all liens and encumbrances, excepting only the lien for current taxes not yet
due, such mortgage or mortgages as are permitted by the terms of this Sublease,
zoning ordinances and other building and fire ordinances and governmental
regulations relating to the use of such property, and easements, restrictions
and other conditions of record. If this Sublease is a sublease, then Sublessee
agrees to take the Premises subject to the provisions of the prior lease.
Sublessor represents that it has the authority to enter into this Sublease and
that so long as Sublessee pays all amounts due hereunder and performs all other
covenants and agreements herein set forth, Sublessee shall peaceably and
quietly have, hold and enjoy the Premises for the term hereof without hindrance
or molestation from Sublessor, subject to the terms and provisions of this
Sublease. Sublessor shall maintain in effect the Master Lease and will timely
perform the obligations of Lessee thereunder.
18. EVENTS OF DEFAULT. The following events (herein individually referred
to as "event of default") each shall be deemed to be events of nonperformance by
Sublessee under this Sublease:
A. Sublessee shall fail to pay any installment of the rent herein
reserved when due, or any other payment or reimbursement to Sublessor required
herein when due or any payment or reimbursement required under any other lease
with Sublessor, and such failure shall continue for a period of five (5) days
from the date such payment was due.
B. Sublessee shall fail to pay any amounts owed to contractors or
subcontractors for work or services performed in connection with the operation,
construction, management and maintenance of the Building as provided herein,
and such failure shall continue for a period of five (5) days from the date
such payment was due.
C. The Sublessee or any guarantor of the Sublessee's obligations
hereunder shall (i) become insolvent; (ii) admit in writing its inability to
pay its debts; (iii) make a general assignment for the benefit of creditors;
(iv) commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as a debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property; or (v) take any action
to authorize or in contemplation of any of the actions set forth above in this
Paragraph.
D. Any case, proceeding or other action against the Sublessee or any
guarantor of the Sublessee's obligations hereunder shall be commenced seeking
(i) to have an order for relief entered against it as debtor or to adjudicate
it a bankrupt or insolvent; (ii) reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors; (iii)
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its property, and such case, proceeding
or other action (a) results in the entry of an order for relief against it
which it is not fully stayed within seven (7) business days after the entry
thereof or (b) shall remain undismissed for a period of forty-five (45) days.
E. Sublessee shall (i) vacate all or a substantial portion of the
Premises or (ii) fail to continuously operate its business at the Premises for
the permitted use set forth herein, whether or not Sublessee is in default of
the rental payments due under this Sublease.
F. Sublessee shall fail to discharge any lien placed upon the Premises
in violation of Paragraph 21. hereof within twenty (20) days after any such
lien or encumbrance is filed against the Premises.
G. Sublessee shall fail to comply with any term, provision or covenant
of this Sublease (other than those listed in this Paragraph 18.), and shall not
cure such failure within twenty (20) days after written notice thereof to
Sublessee.
19. REMEDIES.
A. Upon each occurrence of an event of default, and after Sublessor
has given Sublessee five (5) days notice, Sublessor shall have the option to
pursue any one or more of the following remedies without any notice or demand:
(1) Terminate this Sublease; and/or
(2) Enter upon and take possession of the Premises without
terminating this Sublease; and/or
(3) Alter all locks and other security devices at the Premises with
or without terminating this Sublease, deny access to Sublessee, and pursue, at
Sublessor's option, one or more remedies pursuant to this Sublease, Sublessee
hereby specifically waiving any state or federal law to the contrary. This
provision shall control over any conflicting provisions of the Texas Property
Code or any successor statute governing the right of landlords to change the
door locks of commercial tenants.
B. Upon the occurrence of any event of default Sublessee immediately
shall surrender the Premises to Sublessor, and if Sublessee fails so to do,
Sublessor, without waiving any other remedy it may have, may enter upon and
take possession of the Premises and expel or remove Sublessee and any other
person who may be occupying such Premises or any part thereof, without being
liable for prosecution or any claim of damages therefor.
C. If Sublessor repossesses the Premises with or without terminating
the Sublease, Sublessee, at Sublessor's option, shall be liable for and shall
pay Sublessor on demand all rental and other payments owed to Sublessor
hereunder, accrued to the date of such repossession, plus all amounts required
to be paid by Sublessee to Sublessor until the date of expiration of the term
as stated in Paragraph 1. Actions to collect amounts due by Sublessee to
Sublessor under this subparagraph may
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be brought from time to time, on one or more occasions, without the necessity of
Sublessor's waiting until expiration of the Sublease term.
D. Upon an event unamortized portion of default, in addition to any sum
provided to be paid herein, Sublessee also shall be liable for and shall pay to
Sublessor (1) unamortized portion of any brokerage fees incurred by Sublessor in
connection with the execution of this Sublease; (2) brokers' fees incurred by
Sublessor in connection with any reletting of the whole or any part of the
Premises; for the unexpire term of the Sublease (3) the costs of removing and
storing Sublessee's or other occupant's property; (4) the costs of repairing,
altering, remodeling or otherwise putting the Premises into condition existing
upon Sublessee's occupancy, normal wear & tear excepted (5) all reasonable
expenses incurred by Sublessor in enforcing or defending Sublessor's rights
and/or remedies. If either party hereto institute any action or proceeding to
enforce any provision hereof by reason of any alleged breach of any provision of
this Sublease, the prevailing party shall be entitled to receive from the losing
party all reasonable attorneys' fees and all court costs in connection with such
proceeding.
E. In the event Sublessee fails to make any payment due hereunder when
payment is due, to help defray the additional cost to Sublessor for processing
such late payments, Sublessee shall pay to Sublessor on demand a late charge in
an amount equal to five percent (5%) of such installment; and the failure to
pay such amount within ten (10) days after demand therefor shall be an
additional event of default hereunder. The provision for such late charge shall
be in addition to all of Sublessor's other rights and remedies hereunder or at
law and shall not be construed as liquidated damages or as limiting Sublessor's
remedies in any manner.
F. Exercise by Sublessor of any one or more remedies hereunder granted
or otherwise available, including without limitation, the institution by
Sublessor, its agents or attorneys of a forcible detainer or ejectment action
to re-enter the Premises shall not be construed to be an election to terminate
this Sublease or relieve Sublessee of its obligation to pay rent hereunder and
shall not be deemed to be an acceptance of surrender of the Premises by
Sublessor, whether by agreement or by operation of law, it being understood
that such surrender can be effected only by the written agreement of Sublessor
and Sublessee. Sublessee and Sublessor further agree that forbearance by
Sublessor to enforce its rights pursuant to the Sublease at law or in equity,
shall not be a waiver of Sublessor's right to enforce one or more of its rights
in connection with any subsequent default.
G. In the event of or repossession of the Premises for an event of
default, Sublessor shall use reasonable efforts to relet the Premises;
provided, that, Sublessee shall not be entitled to credit or reimbursement of
any proceeds in excess of the rental owed hereunder. Sublessor may relet the
whole or any portion of the Premises for any period, to any lessee and for any
use and purpose.
H. If Sublessor fails to commence to perform any of its obligations
hereunder within thirty (30) days after written notice from Sublessee
specifying such failure, Sublessee's exclusive remedy shall be an action for
damages. Unless and until Sublessor fails to so cure said default after such
notice, Sublessee shall not have any remedy or cause of action by reason
thereof. All obligations of Sublessor hereunder will be binding upon Sublessor
only during the term of the Master Lease and not thereafter. The term
"Sublessor" shall mean only Master Lessee 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 covenants and
obligations of the Sublessor thereafter accruing, but such covenants and
obligations shall be binding during the Sublease term upon each new owner for
the duration of such owner's ownership.
I. If Sublessor repossesses the Premises pursuant to the authority
herein granted; then Sublessor shall have the right to (i) keep in place or
(ii) remove and store all of the furniture, fixtures and equipment at the
Premises, including that which is owned by or leased to Sublessee at all times
prior to any foreclosure thereon by Sublessor or repossession thereof by any
Sublessor thereof or third party having a lien thereon. Sublessor also shall
have the right to relinquish possession of all or any portion of such
furniture, fixtures, equipment and other property to any person ("Claimant")
who presents to Sublessor a copy of any instrument represented by Claimant to
have been executed by Sublessee (or any predecessor of Sublessee) granting
Claimant the right under various circumstances to take possession of such
furniture, fixtures, equipment or other property, with the necessity on the
part of Sublessor to reasonably inquire into the authenticity or legality of
said instrument. Sublessor may, at its sole option and without prejudice to, or
waiver of any rights it may have i) escort Sublessee to the Premises to
retrieve any personal belongings of Sublessee and/or its employees not covered
by the Sublessor's lien and security interest described in Paragraph 25.
hereof, or ii) obtain a list from Sublessee of the personal property of
Sublessee and/or its employees that is not covered by the Sublessor's lien and
security interest described in Paragraph 25. hereof, and make such property
available to Sublessee and or Sublessee's employees; provided, however,
Sublessee first shall pay in cash all costs and estimated expenses to be
incurred in connection with the removal of such property and making it
available. The rights of Sublessor herein stated shall be in addition to any
and all other rights that Sublessor has or may hereafter have at law or in
equity, and Sublessee stipulates and agrees that the rights herein granted
Sublessor are commercially reasonable.
J. Notwithstanding anything in this Sublease to the contrary, all
amounts payable by Sublessee to or on behalf of Sublessor under this Sublease,
whether or not expressly denominated as rent, shall constitute rent.
K. This is a contract under which applicable law excuses Sublessor from
accepting performance from (or rendering performance to) any person or entity
other than Sublessee.
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20. MORTGAGES. Sublessee accepts this Sublease subject and subordinate
to any mortgages and/or deeds of trust now or at any time hereafter
constituting a lien or charge upon the Premises or the improvements situated
thereon or the building of which the Premises are a part, provided, however,
that if the mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Sublessee's interest in this Sublease superior to any such
instrument, then by notice to Sublessee from such mortgagee, trustee or holder,
this Sublease shall be deemed superior to such lien, whether this Sublease was
executed before or after said mortgage or deed of trust. Sublessee agrees to
attorn to any mortgagee, trustee under a deed of trust or purchaser at a
foreclosure sale or trustee's sale as Sublessor under this Sublease. Sublessee,
at any time hereafter, within ten (10) days after demand, shall execute any
reasonable instruments, releases or other documents that may be required by any
mortgagee for the purpose of subjecting and subordinating this Sublease to the
lien of any such mortgage. If Sublessee fails to execute the same within such
ten (10) day period, Sublessor is hereby authorized to execute the same as
attorney-in-fact for Sublessee.
21. MECHANIC'S LIENS. Sublessee has no authority, express or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever
upon, or in any manner to bind the interest of Sublessor or Sublessee in the
Premises or to charge the rentals payable hereunder for any claim in favor of
any person dealing with Sublessee, including those who may furnish materials or
perform labor for any construction or repairs. Sublessee covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises and that it will save and hold Sublessor
harmless from any and all loss, cost or expense based on or arising out of
asserted claims or liens against the leasehold estate or against the right,
title and interest of the Sublessor in the Premises or under the terms of this
Sublease. Sublessee agrees to give Sublessor immediate written notice of the
placing of any lien or encumbrance against the Premises.
22. MISCELLANEOUS.
A. Words of any gender used in this Sublease shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural, unless the context otherwise requires. The
captions inserted in this Sublease are for convenience only and in no way
define, limit or otherwise describe the scope or intent of this Sublease, or
any provision hereof, or in any way affect the interpretation of this Sublease.
B. In the event the Premises constitute a portion of a multiple
occupancy building, Sublessee's "proportionate share", as used in this
Sublease, shall mean a fraction, the numerator of which is the space contained
in the Premises and the denominator of which is the entire space contained in
the Building.
C. The terms, provisions and covenants and conditions contained in
this Sublease shall run with the land and shall apply to, inure to the benefit
of, and be binding upon, the parties hereto and upon their respective heirs,
executors, personal representatives, legal representatives, successors and
assigns, except as otherwise herein expressly provided. Sublessor shall have
the right to transfer and assign, in whole or in part, its rights and
obligations in the Building and property that are the subject of this Sublease.
Each party agrees to furnish to the other, promptly upon demand, a corporate
resolution, proof of due authorization by partners, or other appropriate
documentation evidencing the due authorization of such party to enter into this
Sublease.
D. Sublessor and Sublessee shall not be held responsible for delays in
the performance of its obligations hereunder when caused by material shortages,
acts of God or labor disputes. With the exception of any rental payment or any
payment or reimbursement required herein when due.
E. Sublessee agrees, from time to time, within ten (10) days after
request of Sublessor, to deliver to Sublessor, or Sublessor's designee, a
Certificate of Occupancy, financial statements and an estoppel certificate
stating that this Sublease is in full force and effect, the date to which rent
has been paid, the unexpired term of this Sublease and such other factual
matters pertaining to this Sublease as may be requested by Sublessor. It is
understood and agreed that Sublessee's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Sublessor's
execution of this Sublease. If Sublessee fails to execute the same within such
ten (10) day period, Sublessor is hereby authorized to execute the same as
attorney-in-fact for Sublessee.
F. This Sublease constitutes the entire understanding and agreement of
the Sublessor and Sublessee with respect to the subject matter of this
Sublease, and contains all of the covenants and agreements of Sublessor and
Sublessee with respect thereto. Sublessor and Sublessee each acknowledge that
no representations, inducements, promises or agreements, oral or written, have
been made by Sublessor or Sublessee, or anyone acting on behalf of Sublessor or
Sublessee, which are not contained herein, and any prior agreements, promises,
negotiations, or representations not expressly set forth in this Sublease are
of no force or effect. This Sublease may not be altered, changed or amended
except by an instrument in writing signed by both parties hereto.
G. All obligations of Sublessee hereunder not fully performed as of
the expiration or earlier termination of the term of this Sublease shall
survive the expiration or earlier termination of the term hereof, including
without limitation, all payment obligations with respect to taxes and insurance
and all obligations concerning the condition and repair of the Premises. Upon
the expiration or earlier termination of the term hereof, and prior to
Sublessee vacating the Premises, Sublessee shall pay to Sublessor any amount
reasonably estimated by Sublessor as necessary to put the Premises, including
without limitation, all heating and air conditioning systems and equipment
therein, in good condition and repair, reasonable wear and tear excluded.
Sublessee shall also, prior to vacating the Premises, pay to Sublessor the
amount, as estimated by Sublessor, of Sublessee's obligation hereunder for real
estate taxes and insurance premiums for the year in which the Sublease expires
or terminates. All such amounts shall be used and held by Sublessor for payment
of such obligations of Sublessee hereunder, with Sublessee being liable for any
additional costs therefor upon demand by Sublessor, or with any excess to be
returned to Sublessee after all such obligations have been determined and
satisfied as the case may be. Any security deposit held by Sublessor shall be
credited against the amount due for Sublessee under this Paragraph 22.G.
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I. If any clause or provision of this Sublease is illegal, unenforceable
under present or future laws effective during the term of this Sublease, then
and in that event, it is the intention of the parties hereto that the remainder
of this Sublease shall not be affected thereby, and it is also the intention of
the parties to this Sublease that in lieu of each clause or provision of this
Sublease that is illegal, invalid or unenforceable, there be added, as a part of
this Sublease, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable.
J. All references in this Sublease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on
which all parties hereto have executed this Sublease.
K. Sublessee represents and warrants that it has dealt with no broker,
agent or other person in connection with this transaction other than Cassie
Wright of Kelley, Lundeen & Crawford or that no broker, agent or other person
brought about this transaction, other than as may be referenced in a separate
written agreement executed by Sublessee, and delivered to Sublessor prior to
execution of this Sublease, and Sublessee agrees to indemnify and hold
Sublessor harmless from and against any claims by any other broker, agent or
other persons claiming a commission or other form of compensation by virtue of
having dealt with Sublessee with regard to this leasing transaction.
L. If and when included within the term "Sublessor", as used in this
instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address for the receipt of notices
and payments to Sublessor. If and when included within the term "Sublessee", as
used in this instrument, there is more than one person, firm or corporation,
all shall jointly arrange among themselves for their joint execution of a
notice specifying some individual at some specific address within the
continental United States for the receipt of notices and payments to Sublessee.
All parties included within the terms "Sublessor" and "Sublessee",
respectively, shall be bound by notices given in accordance with the provisions
of Paragraph 23. hereof to the same effect as if each had received such notice.
M. SUBLESSEE ACKNOWLEDGES THAT (1) IT HAS INSPECTED AND ACCEPTS THE
PREMISES IN AN "AS IS, WHERE IS" CONDITION, (2) THE BUILDINGS AND IMPROVEMENTS
COMPRISING THE SAME ARE SUITABLE FOR THE PURPOSE FOR WHICH THE PREMISES ARE
SubleaseD AND Sublessor HAS MADE NO WARRANTY, REPRESENTATION, COVENANT, OR
AGREEMENT WITH RESPECT TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OF THE PREMISES, (3) THE PREMISES ARE IN GOOD AND SATISFACTORY
CONDITION, (4) NO REPRESENTATIONS AS TO THE REPAIR OF THE PREMISES, NOR
PROMISES TO ALTER, REMODEL OR IMPROVE THE PREMISES HAVE BEEN MADE BY Sublessor
(UNLESS AND EXCEPT AS MAY BE SET FORTH IN EXHIBIT B ATTACHED TO THIS Sublease,
IF ONE SHALL BE ATTACHED, OR AS IS OTHERWISE EXPRESSLY SET FORTH IN THIS
Sublease), AND (5) THERE ARE NO REPRESENTATIONS OR WARRANTIES, EXPRESSED,
IMPLIED OR STATUTORY, THAT EXTEND BEYOND THE DESCRIPTION OF THE PREMISES.
N. Sublessor and Sublessee agree that the terms and conditions of this
Sublease are confidential and the parties hereto agree not to disclose the
terms of this Sublease to any third party.
23. NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with
reference to the sending, mailing or delivering of notice or the making of any
payment by Sublessor to Sublessee or with reference to the sending, mailing or
delivering of any notice or the making of any payment by Sublessee to Sublessor
shall be deemed to be complied with when and if the following steps are taken:
A. All rent and other payments required to be made by Sublessee to
Sublessor hereunder shall be payable to Sublessor at the address for Sublessor
set forth below or at such other address as Sublessor may specify from time to
time by written notice delivered in accordance herewith. Sublessee's obligation
to pay rent and any other amounts to Sublessor under the terms of this Sublease
shall not be deemed satisfied until such rent and other amounts have been
actually received by Sublessor. In addition to base rental due hereunder, all
sums of money and all payments due Sublessor hereunder shall be deemed to be
additional rental owed to Sublessor.
B. All payments required to be made by Sublessor to Sublessee
hereunder shall be payable to Sublessee at the address set forth below, or
at such other address within the continental United States as Sublessee may
specify from time to time by written notice delivered in accordance herewith.
9
<PAGE>
C. Any written notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered upon the earlier to occur of (1)
tender of delivery (in the case of a hand-delivered notice) or (2) deposit in
the United States Mail, postage prepaid, Certified or Registered Mail, addressed
to the parties hereto at the respective addresses set out below, or at such
other address as they have theretofore specified by written notice delivered in
accordance herewith.
24. HAZARDOUS WASTE. The term "Hazardous Substances", as used in this
Sublease shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the removal of which is required or the use of which is
restricted, prohibited or penalized by any "Environmental Law", which term
shall mean any federal, state or local law or ordinance relating to pollution
or protection of the environment. Sublessee hereby agrees that (i) no activity
will be conducted on the Premises that will produce any Hazardous Substances,
except for such activities that are part of the ordinary course of Sublessee's
business activities (the "Permitted Activities") provided said Permitted
Activities are conducted in accordance with all Environmental Laws and have
been approved in advance in writing by Sublessor; (ii) the Premises will not be
used in any manner for the storage of any Hazardous Substances except for any
temporary storage of such materials that are used in the ordinary course of
Sublessee's business (the "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 Sublessor; iii no
portion of the Premises will be used as a landfill or a dump; (iv) Sublessee
will not install any underground tanks of any type; (v) Sublessee will not
allow any surface or surface conditions to exist or come into existence that
constitute, or with the passage of time may constitute a public or private
nuisance; (vi) Sublessee will not permit any Hazardous Substances to be brought
onto the Premises, except for the Permitted Materials, and if so brought or
found located thereon, the same shall be immediately removed, with proper
disposal, and all required cleanup procedures shall be diligently undertaken
pursuant to all Environmental Laws. If at any time during or after the term of
the Sublease, the Premises is found to be so contaminated or subject to said
conditions, Sublessee agrees to indemnify and hold Sublessor 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
Sublessee. The foregoing indemnification shall survive the termination or
expiration of this Sublease.
EXECUTED BY SUBLESSOR, this 12th day of July, 1993.
---- ----
UNITED STATIONERS SUPPLY CO. ___________________________
---------------------------
By: /s/ Otis H. Halleen By: ____________________________
------------------------
OTIS H. HALLEEN
Title: Vice President Title: ____________________________
------------------------
By: ____________________________
Title: ____________________________
ADDRESS: ADDRESS:
2200 East Golf Road
- ---------------------------- ___________________________________
Des Plaines, IL 60016-1267 ___________________________________
- ----------------------------
___________________________________
10
<PAGE>
RIDER ONE
REHRIG PACIFIC COMPANY
26. Notwithstanding the language in Paragraph 2.A. of this Sublease
Agreement, the monthly base rental shall be as follows:
Months Base Rent
------ ---------
1 - 3 $ 0.00
4 - 12 $4,566.54
13 - 24 $6,088.72
25 - 36 $7,610.90
37 - 72 $9,513.63
27. If, during the original term of this Sublease, all or part of the
space consisting of approximately 54,519 square feet which is outlined
in red on Exhibit "C" to this Sublease which Exhibit is attached
hereto and incorporated herein by reference (the "Additional Space")
shall become available for sublease, after the initial sublease of
such space to third parties, and provided that Sublessee is not then
in default hereunder and has not assigned this Sublease or sublet the
premises (or a part hereof), Sublessee shall have the first right and
option to sublease the Additional Space. When the Additional Space
becomes available, or at Sublessor's option, up to six (6) months
prior to the date that the Additional Space is scheduled to become
available, Sublessor shall first offer, in writing, to sublease such
space to Sublessee upon the same terms and conditions and at the same
rental rate, as would be offered by Sublessor to third parties. If
within two (2) days after Sublessor delivers Sublessee such written
offer, Sublessor does not receive notice in writing that Sublessee
elects to sublease all (and not part) of the Additional Space so
offered and within three (3) days thereafter Sublessee does not
execute a Sublease with non financial terms in a form substantially
identical to this Sublease on the Additional Space, the Sublessee's
right to Sublease the Additional Space shall terminate and Sublessee
shall have no further rights pursuant to this paragraph.
28. Sublessee and Sublessor agree that Sublessee will only occupy the
26,862 square foot area outlined in red on Exhibit "D" to this
Sublease which Exhibit is attached hereto and incorporated herein by
reference during the first twelve (12) months of the Sublease. In the
event that Sublessee uses any part of the 8,954 square feet of the
additional space (the "First Additional Space") outlined in yellow on
Exhibit "D" of this Sublease, Sublessee agrees that Sublessee shall
immediately be liable for rent for the First Additional Space through
the twenty-fourth (24th) month of the Sublease. Sublessee agrees that
Sublessee's base monthly rental shall increase by $1,512.18 upon
Sublessee's occupancy of the First Additional Space. In the event that
Sublessee uses any part of the 8,954 square feet of the additional
space (the "Second Additional Space") outlined in blue on Exhibit "D"
of this Sublease, Sublessee agrees that Sublessee shall immediately be
liable for rent for the Second Additional Space through the twenty-
fourth (24th) month of the Sublease. Sublessee agrees base monthly
rental shall increase by $1,522.18 upon Sublessee's occupancy of the
Second Additional Space.
29. In the event Sublessee has not already expanded into the First
Additional Space or Second Additional Space as shown on Exhibit "D",
Sublessee and Sublessor agree that Sublessee will only occupy the
35,816 square foot area which includes the area outlined in red on
Exhibit "D" (26,862 square feet) and the First Additional Space (8,954
square feet) outlined in yellow on Exhibit "D", during the second
twelve (12) months of the Sublease. In the event that Sublessee uses
any part of the 8,954 square feet of the Second Additional Space
outlined in blue on Exhibit "D" of this Sublease, Sublessee agrees
that Sublessee shall immediately be liable for rent for the Second
Additional Space through the twenty-fourth (24th) month of the
Sublease. Sublessee agrees base monthly rental shall increase by
$1,522.18 upon Sublessee's occupancy of the Second Additional Space.
<PAGE>
ADDRESS: ADDRESS:
2200 East Golf Road
- -------------------------- ___________________________________
Des Plaines, IL 60016-1267 ___________________________________
- --------------------------
___________________________________
EXECUTED BY SUBLESSEE, this ___ day of _________, 19 .
REHRIG PACIFIC COMPANY
----------------------- ____________________________
By: [SIGNATURE NOT LEGIBLE] By: ____________________________
-----------------------
Title: President Title: ____________________________
-----------------------
By: ____________________________
Title: ____________________________
ADDRESS: ADDRESS:
621 W. Mockingbird Lane
- -------------------------- ___________________________________
Dallas, Texas 75247 ___________________________________
- --------------------------
___________________________________
By its execution below, Lessor (i) acknowledges that the Master Lease is in
all respects current, (ii) consents to this Sublease, (iii) agrees to give
Sublessee twenty (20) days notice and opportunity to cure any default by
Sublessor of the Master Lease provided Sublessee is not then in default of this
Sublease, and (iv) if the Master Lease is ever terminated for any reason or if
a default thereunder by Sublessor remains uncured, agrees to treat this
Sublease as a lease directly between Lessor and Sublessee.
EXECUTED BY LANDLORD, this 2nd day of July, 1993
--- ----
A.C.S.S. DALLAS INDUSTRIAL, INC. ____________________________
--------------------------------
By: Kennedy Associates Real Estate Counsel, Inc.
Its Investment Manager
By: /s/ David E. Wexler By: ____________________________
------------------------
David E. Wexler
Title: Vice President Title: ____________________________
----------------------
By: ____________________________
Title: ____________________________
ADDRESS: ADDRESS:
2400 Financial Center Bldg.
- ----------------------------- ___________________________________
Seattle, WA 98161 ___________________________________
- ---------------------------
___________________________________
11
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
-----------------
Being 44,770 square feet located in Building II of the Mockingbird Distribution
Center and as shown in Exhibit "B" attached hereto and more particularly
described as follows:
Description of an 8.939 acre tract of land in City of Dallas Block No. 7698 and
in the James McLaughlin Survey, Abstract No. 845, Dallas County, Texas; said
8.939 acre tract of land being a part of that certain lot, tract, or parcel of
land conveyed to Irving Boulevard Industrial Acres, Inc., by deed recorded in
Volume 3561, Page 128, Deed Records, Dallas County, Texas; said 8.939 acre tract
being more particularly described as follows:
BEGINNING, at the most easterly northeast corner of the herein described tract;
- ---------
said beginning point being in the west line of Mockingbird Lane (formerly known
as Westmoreland Road), a distance of 740.69 feet from the intersection of said
Mockingbird Lane west line and the south line of Halifax Street (60-foot width);
THENCE, S 00 degrees 05'30" W, with said Mockingbird Lane west line, a distance
- ------
of 302.50 feet to a point for corner in the north line of a 4.220 acre tract of
land conveyed to Bradley Wayne by deed filed on December 31, 1968, Deed Records,
Dallas County, Texas;
THENCE, N 89 degrees 31'00" W, with said Wayne tract north line, and said line
- ------
extended, at 624.36 feet pass the northwest corner of said Wayne tract, in all a
distance of 710.36 feet to a point for corner;
THENCE, N 00 degrees 05'30" E, a distance of 51.16 feet to a point for corner;
- ------
THENCE, N 89 degrees 31'00" W, a distance of 200.00 feet to a point for corner
- ------
in the east line of property owned by United States Cold Storage Corporation;
THENCE, with said line of said United States Cold Storage Corporation property,
- ------
the following courses and distance to-wit;
N 00 degrees 05'30" E, a distance of 129.45 feet to a point for
corner;
Thence, N 89 degrees 54'30" W, a distance of 1.00 feet to a point for
------
corner
Thence, N 00 degrees 05'30" E, a distance of 466.68 feet to a point for
------
corner; said point being in the south line of property owned by the Chicago,
Rock Island, and Pacific Railroad;
THENCE, S 89 degrees 31'00" E, with said Railroad tract south line and the south
- ------
line of property owned by Pangean Corporation, a distance of 360.00 feet to a
point for corner;
THENCE, S 00 degrees 05'30" W, a distance of 344.78 feet to a point for corner;
- ------
THENCE, S 89 degrees 31'00" E, a distance of 551,36 feet to the PLACE OF
- ------
BEGINNING;
CONTAINING; 389,388.741 square feet, or 8.939 acres of land.
- ----------
<PAGE>
EXHIBIT "C"
[MAP OF TRAMMELL CROW COMPANY]
<PAGE>
EXHIBIT "D"
[MAP OF TRAMMELL CROW COMPAY]
<PAGE>
EXHIBIT 10.46
. BRANCH: DALLAS-IRVING BLVD. . Build-out Amortization Yes___ No x
----------------------------- -----
. Expenses/Responsibility:
. PROPERTY ADDRESS: (Lessor=L - Stationers=S)
Irving Blvd., Dallas, TX Amount L/S
------------------------------------ --------------------- ---
Per month Per year
. LESSOR: Central East Dallas Electric $ 54.06 $ 648.72 L
---------------------------- --------- -------- ---
Development Limited Partnership Water $ 115.49 $1,385.88 L
------------------------------------ --------- -------- ---
Address 1499 Regal Row, Suite 302 Gas $_________ ________ ___
----------------------------
Dallas, Texas 75247 Janitor $_________ $________ ___
------------------------------------
Phone 214/630-6500 Fax 214/951-7326 Maintenance $ 71.75 $ 861.00 L
------------ ------------- --------- -------- ---
Waste Mgt. $_________ $________ ___
. BROKER: RICHARD CROW/ Security $_________ $________ ___
----------------------------
TRAMMELL CROW Spur track $_________ $________ ___
------------------------------------
Address 1499 Regal Row, Suite 302 Landscaping $ 85.51 $1,026.12 L
---------------------------- --------- -------- ---
Dallas, Texas 75247 Tax escrow $1,780.06 $21,370.72 L
------------------------------------ --------- --------- ---
Phone 214/630-6500 Fax 214/951-7326 Insurance $ 69.79 $ 837.48 L
------------ ------------- --------- --------- ---
. Office Park? Yes x No ______ . Estimated Expenses
-----
. Multi-tenant Bldg.Yes _____No x Collected each mo. Yes x No ______
------ -----
. Square Feet - Warehouse ____________ . Landlord expense cap. Yes ___ No x
------
- Office _______________ Amount: $________________
- Total 60,575 sq.ft. . Repairs/Responsibility:
---------------
. Lease Effective Date-Ten (10) years (Lessor=L - Stationers=S)
---------------
after lease effective date. L S
------------------------------------ ----- -----
. Option to Renew - Yes ____ No x Roof____________________ x _____
------ -----
- Notice Requirement Foundation______________ x _____
-----
. Original Lease - Yes x No ______ Structure_______________ x _____
----- -----
. Extended/Amended Yes ____ No x Common Areas____________ _____ _____
-------
. Lease expiration date-Lse. Effective Paving/Parking__________ _____ _____
--------------
Upon Landlord's notice of sub- Grounds_________________ _____ _____
------------------------------------
stantial completion Spur track______________ _____ _____
------------------------------------
. Notice/vacate req'd? Yes ____ No x Terms:_______________________________
----
Date: ________________ _____________________________________
. Security Deposit? Yes _____ No x _____________________________________
-----
- Amount $________________________ _____________________________________
. Current Rent Amount _____________________________________
$ 14,110.36 /mo $ 169,324.32/yr. _____________________________________
------------- -----------
$ 2.795 /per sq.ft./per yr. . Insurance Expenses
--------------
. Future Rent Escalations: (Lessor=L - Stationers=S)
Begin End Amt. of Rent L S
----- -----
Date Date Month Year Fire_________________ x _____
------ ------ ------- ------ -----
_____________ $14,110.36 $169,324.32 Property_____________ x _____
--------- ---------- -----
_____________ $14,601.82 $175,221.84 Contents_____________ _____ x
--------- ---------- -----
_____________ $15,093.27 $181,119.24 Workers Comp.________ _____ x
--------- ---------- -----
_____________ $15,584.73 $187,016.76 General Liability____ _____ x
--------- ---------- -----
_____________ $16,125.33 $193,503.96 . Hold Harmless Agreement?
--------- ----------
_____________ $17,465.79 $209,589.48 Yes x No ____
--------- ---------- -----
_____________ $_________ $__________ . Lease Assignability?
. Relocation Clause? Yes x No ____ Lessor_____________ Yes x No ____
----- -----
Terms: If Lessee executed a Lease Stationers_________ Yes x No
----------------------------- ----- ____
Agreement for at least 200,000 . Comments: With Lessor's Prior
----------------------------------- -----------------------------
square feet. written consent.
----------------------------------- --------------------------------------
___________________________________ ______________________________________
___________________________________ ______________________________________
. Right of 1st refusal Yes ___ No x ______________________________________
----
Terms: ______________________________________
___________________________________
<PAGE>
AMENDMENT to be attached to and form a part of lease (which together with any
amendments, modifications and extensions thereof is hereinafter called the
Lease), made the 7th day of November 1988
Between
CENTRAL EAST DALLAS DEVELOPMENT LIMITED PARTNERSHIP
as Lessor
and
STATIONERS DISTRIBUTING COMPANY, INC.
as Lessee
covering the premises known as
Irving Blvd.
Dallas, Texas
WITNESSETH that the Lease is hereby amended to include an additional 1,600
square feet of space. The total square footage shall increase from 58,975 square
feet to 60,575 square feet. Landlord and Tenant shall comply with all the
provisions of the covenants and agreements contained in the original Lease
Agreement, except that the monthly rental as defined in Paragraph 2-A during the
lease term shall be as follows:
<TABLE>
<S> <C>
Months 1 - 12 $14,110.36
Months 13 - 24 $14,601.82
Months 25 - 36 $15,093.27
Months 37 - 48 $15,584.73
Months 49 - 60 $16,125.33
Months 61 - 120 $17,465.79
</TABLE>
IN WITNESS WHEREOF, the parties hereto have signed and sealed this amendment
this 12 day of January , 1989.
---- ---------
Witness: CENTRAL EAST DALLAS DEVELOPMENT
LIMITED PARTNERSHIP
(BY: CROW CENTRAL DALLAS #1, INC.)
Lessor
[SIGNATURE NOT LEGIBLE] By: /s/ J. Marc Myers
- ------------------------------- -------------------------------
J. Marc Myers,
President
Witness: STATIONERS DISTRIBUTING COMPANY, INC.
Lessee
/s/ John Bryant By: [SIGNATURE NOT LEGIBLE]
- ------------------------------- -------------------------------
<PAGE>
STANDARD INDUSTRIAL LEASE AGREEMENT 60,575 square feet
-----------------------------------
TRAMMELL CROW COMPANY Irving Blvd.
-----------------------------------
COMMERCIAL 86-MOD NE Dallas, Texas
-----------------------------------
___________________________________
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between CENTRAL EAST
DALLAS DEVELOPMENT LIMITED PARTNERSHIP hereinafter referred to as "Lessor", and
STATIONERS DISTRIBUTING COMPANY, INC. hereinafter referred to as "Lessee";
WITNESSETH:
1. PREMISES AND TERM. In consideration of the mutual obligations of Lessor
and Lessee set forth herein, Lessor leases to Lessee, and Lessee hereby takes
from Lessor the Premises situated within the County of Dallas, State of Texas,
more particularly described on EXHIBIT "A" attached hereto and incorporated
herein by reference, (the "Premises"), together with all rights, privileges,
easements, appurtenances, and amenities belonging to or in any way pertaining to
the Premises, to have and to hold, subject to the terms, covenants and
conditions in this Lease. The term of this Lease shall commence on the
commencement date hereinafter set forth and shall end on the last day of the
month that is one hundred twenty (120) months after the commencement date.
B. BUILDING TO BE CONSTRUCTED OR SHELL SPACE. If the Premises or part
thereof are to be constructed, the commencement date shall be deemed to be the
date upon which the Premises and other improvements to be erected in accordance
with the plans and specifications described on Exhibit "B" attached hereto and
incorporated herein by reference (the "Plans") have been substantially completed
plus fifteen (15) days after notice of substantial completion has been received
by Lessee. As used herein, the term "substantially completed" shall mean, that
in the opinion of the architect or space planner that prepared the Plans, such
improvements have been completed in accordance with the Plans and the Premises
are in good and satisfactory condition, subject only to completion of minor
punch list items. As soon as such improvements have been substantially
completed, Lessor shall notify Lessee in writing that the commencement date will
occur. Within ten (10) days thereafter, Lessee shall submit to Lessor in writing
a punch list of items needing completion or correction. Lessor shall use its
best efforts to complete such items within thirty (30) days after the receipt of
such notice. Delays in construction of such improvements caused by Lessee, its
employees, agents or contractors shall not cause the commencement date to be
extended beyond the date set forth above. Lessee may begin move-in at the time
of substantial completion. See Rider One, Para. 30.
2. BASE RENT, SECURITY DEPOSIT AND ESCROW PAYMENTS.
A. Lessee agrees to pay to Lessor rent for the Premises, in advance,
without demand, deduction or set off, at the rate of SEE RIDER ONE Dollars
($____________) per month during the term hereof. One such monthly installment,
plus the other monthly charges set forth in Paragraph 2C below shall be due and
payable on the date hereof and a like monthly installment shall be due and
payable on or before the first day of each calendar month succeeding the
commencement date, except that all payments due hereunder for any fractional
calendar month shall be prorated.
B. In addition, Lessee agrees to deposit with Lessor on the date hereof
the sum of None Dollars ($ ______________), which shall be held
-----------------------
by Lessor, without obligation for interest, as security for the performance of
Lessee's obligations under this lease, it being expressly understood and agreed
that this deposit is not an advance rental deposit or a measure of Lessor's
damages in case of Lessee's default. Upon each occurrence of an event of
default, Lessor may use all or part of the deposit to pay past due rent or other
payments due Lessor under this Lease, and the cost of any other damage, injury,
expense or liability caused by such event of default without prejudice to any
other remedy provided herein or provided by law. On demand, Lessee shall pay
Lessor the amount that will restore the security deposit to its original amount.
The security deposit shall be deemed the property of Lessor, but any remaining
balance of such deposit shall be returned by Lessor to Lessee when Lessee's
obligations under this Lease have been fulfilled .
C. Lessee agrees to pay its proportionate share (as defined in Paragraph
22B below) of (i) Taxes (hereinafter defined) payable by Lessor pursuant to
Paragraph 3A below, (ii) the cost of utilities payable pursuant to Paragraph 8
below, (iii) the cost of maintaining insurance pursuant to Paragraph 9 below and
(iv) the cost of any maintenance performed by Lessor in accordance with
Paragraph 4B below. During each month of the term of this Lease, on the same day
that rent is due hereunder, Lessee shall escrow with Lessor an amount equal to
1/12 of the estimated annual cost of its proportionate share of such items.
Lessee authorizes Lessor to use the funds deposited with Lessor under this
Paragraph 2C to pay such costs. The initial monthly escrow payments are based
upon the estimated amounts for the year in question, and shall be increased or
decreased annually to reflect the projected actual cost of all such items. If
the Lessee's total escrow payments are less than Lessee's actual proportionate
share of all such items, Lessee shall pay the difference to Lessor within thirty
(30) days after demand. If the total escrow payments of Lessee are more than
Lessee's actual proportionate share of all such items, Lessor shall refund such
excess within thirty (30) days. The amount of the monthly rental and the initial
monthly escrow payments are as follows:
<TABLE>
<S> <C>
(1) Base Rent as set forth in Paragraph 2A.......................... $ SEE RIDER ONE
--------------
(2) Tax Escrow Payment.............................................. $ 1780.06
--------------
(3) Insurance Escrow Payment........................................ $ 69.79
--------------
(4) Utility charge (Water 115.49) (Elec. 54.06)..................... $ 169.55
--------------
(5) Maintenance charge.............................................. $ 71.75
--------------
(6) Other (Landscaping)............................................. $ 85.51
--------------
Monthly Payment Total......................................... $ ------------
==============
</TABLE>
1
<PAGE>
3. TAXES.
A. Lessor agrees to pay all taxes, assessments and governmental charges of
any kind and nature and all assessments due to deed restrictions and/or owner or
community associations (collectively referred to herein as "Taxes") that accrue
against the Premises, and/or the land and/or improvements of which the Premises
are a part. If at any time during the term of this Lease, there shall be levied,
assessed or imposed on Lessor a capital levy or other tax directly on the rents
received therefrom and/or a franchise tax, assessment, levy or charge measured
by or based, in whole or in part, upon such rents from the Premises and/or the
land and improvements of which the Premises are a part, then all such taxes,
assessments, levies or charges, or the part, thereof so measured or based, shall
be deemed to be included within the term "Taxes" for the purposes hereof. The
Lessor shall have the right to employ a tax consulting firm to attempt to assure
a fair tax burden on the building and grounds within the applicable taxing
jurisdiction. Lessee agrees to pay its proportionate share of the cost of such
consultant.
B. Lessee shall be liable for all taxes levied or assessed against any
personal property or fixtures placed in the Premises. If any such taxes are
levied or assessed against Lessor or Lessor's property and (i) Lessor pays the
same or (ii) the assessed value of Lessor's property is increased by inclusion
of such personal property and fixtures and Lessor pays the increased taxes,
then, upon demand Lessee shall pay to Lessor such taxes.
4. LESSOR'S REPAIRS.
A. Lessor, at its own cost and expense, shall maintain the roof,
foundation and the structural soundness of the exterior walls of the building of
which the Premises are a part in good repair, reasonable wear and tear excluded.
The term "walls" as used herein shall not include windows, glass or plate glass,
doors, special store fronts or office entries. Lessee shall immediately give
Lessor written notice of defect or need for repairs, after which Lessor shall
have reasonable opportunity to repair same or cure such defect.
B. Lessor reserves the right to perform the paving, common area and
landscape replacement and maintenance, exterior painting, common sewage line
plumbing and any other items that are otherwise Lessee's obligations under
Paragraph 5A, in which event, Lessee shall be liable for its proportionate share
of the cost and expense of such repair, replacement, maintenance and other such
items.
5. LESSEE'S REPAIRS.
A. Lessee, at its own cost and expense, shall (i) maintain all parts of
the Premises and grounds surrounding the Premises (except those for which Lessor
is expressly responsible hereunder) in good condition, (ii) promptly make all
necessary repairs and replacements, (iii) keep the parking areas, driveways and
alleys surrounding the Premises in a clean and sanitary condition, and (iv)
maintain any spur track servicing the Premises. Tenant agrees to sign a joint
maintenance agreement with the railroad company servicing the Premises if
requested by the railroad company. Lessor shall have the right to coordinate all
repairs and maintenance of any rail tracks serving or intended to serve the
Premises and, if Lessee uses such rail tracks, Lessee shall reimburse Lessor
from time to time, upon demand, for its proportionate share of the costs of such
repairs and maintenance and any other sums specified in any agreement respecting
such tracks to which Lessor is a party.
B. Lessee and its employees, customers and licensees shall have the
exclusive rights to use any parking areas that have been designated for such use
by Lessor in writing, subject to rights of ingress and egress of other lessees.
Lessor shall not be responsible for enforcing Lessee's parking rights against
any third parties. Lessee agrees not to use more spaces than so provided.
C. Lessee, at its own cost and expense, shall enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
approved by Lessor for servicing all hot water, heating and air conditioning
systems and equipment within the Premises. The service contract must include all
services suggested by the equipment manufacturer in its operations/maintenance
manual and must become effective within thirty (30) days of the date Lessee
takes possession of the Premises.
6. ALTERATIONS. Lessee shall not make any alterations, additions or
improvements to the Premises without the prior written consent of Lessor.
Lessee, at its own cost and expense, may erect such shelves, bins, machinery and
trade fixtures as it desires provided that (a) such items do not alter the basic
character of the Premises or the building and/or improvements of which the
Premises are a part; (b) such items do not overload or damage the same; (c) such
items may be removed without material injury to the Premises; and (d) the
construction, erection or installation thereof complies with all applicable
governmental laws, ordinances, regulations and with Lessor's specifications and
requirements. All alterations, additions, improvements and partitions erected by
Lessee shall be and remain the property of Lessee during the term of this Lease.
All shelves, bins, machinery and trade fixtures installed by Lessee shall be
removed on or before the earlier to occur of the date of termination of this
Lease or vacating the Premises, at which time Lessee shall restore the Premises
to their original condition. All alterations, installations, removals and
restoration shall be performed in a good and workmanlike manner so as not to
damage or alter the primary structure or structural qualities of the buildings
and other improvements situated on the Premises or of which the Premises are a
part.
7. SIGNS. Any signage Lessee desires for the Premises shall be subject to
Lessor's written approval. Lessee shall repair, paint, and/or replace the
building facia surface to which its signs are attached upon vacation of the
Premises, or the removal or alteration of its signage. Lessee shall not, (i)
make any changes to the exterior of the Premises, (ii) install any exterior
lights, decorations, balloons, flags, pennants, banners or painting, or (iii)
erect or install any signs, windows or door lettering, placards, decorations or
advertising media of any type which can be viewed from the exterior of the
Premises, without Lessor's prior written consent. All signs, decorations,
advertising media, blinds, draperies and other window treatment or bars or other
security installations visible from outside the Premises shall conform in all
respects to the criteria established by Lessor. See Rider One, Para 31.
8. UTILITIES. Lessor agrees to provide water and electricity service to
the Premises. Lessee shall pay for all water, gas, heat, light, power,
telephone, sewer, sprinkler charges and other utilities and services used on or
at the Premises, together with any taxes, penalties, surcharges or the like
pertaining to the Lessee's use of the Premises, and any maintenance charges for
utilities. Lessor shall have the right to cause any of said services to be
separately metered to Lessee, at Lessee's expense. Lessee shall pay its pro rata
share, as reasonably determined by Lessor, of all charges for jointly metered
utilities. Lessor shall not be liable for any interruption or failure of utility
service on the Premises, unless due to Lessor's negligence.
9. INSURANCE.
A. Lessor shall maintain insurance covering the buildings situated on the
Premises or of which the Premises are a part in an amount not less than eighty
percent (80%) of the "replacement cost" thereof insuring against the perils of
Fire, Lightning, Extended Coverage, Vandalism and Malicious Mischief. Lessee
shall maintain insurance on Lessee's improvements to the Premises and all
contents of the Premises.
B. Lessee, at its own expense, shall maintain during the term of this
Lease a policy or policies of worker's compensation and comprehensive general
liability insurance, including personal injury and property damage, with
contractual liability endorsement, in the amount of Five Hundred Thousand
Dollars ($500,000.00) for
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property damage and One million Dollars ($1,000,000.00) per occurrence for
personal injuries or deaths of persons occurring in or about the Premises. Said
policies shall (i) name Lessor as an additional insured and insure Lessor
contingent liability under this Lease (except for the worker's compensation
policy, which instead shall include waiver of subrogation endorsement in favor
of Lessor), (ii) be issued by an insurance company which is acceptable to
Lessor, and (iii) provide that said insurance shall not be canceled unless
thirty (30) days prior written notice shall have been given to Lessor. Said
policy or policies or certificates thereof shall be delivered to Lessor by
Lessee upon commencement of the term of the Lease and upon each renewal of said
insurance.
C. Lessee will not permit the Premises to be used for any purpose or in
any manner that would (i) void the insurance thereon, (ii) increase the
insurance risk, or (iii) cause the disallowance of any sprinkler credits,
including without limitation, use of the Premises for the receipt, storage or
handling of any product, material or merchandise that is explosive or highly
inflammable. If any increase in the cost of any insurance on the Premises or the
building of which the Premises are a part is caused by Lessee's use of the
Premises, or because Lessee vacates the Premises, then Lessee shall pay the
amount of such increase to Lessor.
10. FIRE AND CASUALTY DAMAGE.
A. If the Premises or the building of which the Premises are a part should
be damaged or destroyed by fire or other peril, Lessee immediately shall give
written notice to Lessor. If the buildings situated upon the Premises or of
which the Premises are a part should be totally destroyed by any peril covered
by the insurance to be provided by Lessor under Paragraph 9A above, or if they
should be so damaged thereby that, in Lessor's estimation, rebuilding or repairs
cannot be completed within one hundred eighty (180) days after the date of such
damage, this Lease shall terminate and the rent shall be abated during the
unexpired portion of this Lease, effective upon the date of the occurrence of
such damage.
B. If the buildings situated upon the Premises or of which the Premises
are a part, should be damaged by any peril covered by the insurance to be
provided by Lessor under Paragraph 9A above, and in Lessor's estimation,
rebuilding or repairs can be substantially completed within one hundred eighty
(180) days after the date of such damage, this Lease shall not terminate, and
Lessor shall restore the Premises to substantially its previous condition,
except that Lessor shall not be required to rebuild, repair or replace any part
of the partitions, fixtures, additions and other improvements that may have been
constructed, erected or installed in, or about the Premises or for the benefit
of, or by or for Lessee.*If such repairs and rebuilding have not been
substantially completed within one hundred eighty (180) days after the date of
such damage, Lessee, as Lessee's exclusive remedy, may terminate this Lease by
delivering written notice of termination to Lessor in which event the rights and
obligations hereunder shall cease and terminate. *See Rider One, Para 32.
C. Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Lessor shall have the right to terminate this Lease by delivering written
notice of termination to Lessee within fifteen (15) days after such requirement
is made known by any such holder, whereupon all rights and obligations hereunder
shall cease and terminate.
D. Anything in this Lease to the contrary notwithstanding, Lessor and
Lessee hereby waive and release each other of and from any and all rights of
recovery, claim, action or cause of action, against each other, their agents
officers and employees, for any loss or damage that may occur to the Premises,
improvements to the building of which the Premises are a part, or personal
property (building contents) within the building and/or Premises, for any reason
regardless of cause or origin. Each party to this Lease agrees immediately after
execution of this Lease to give each insurance company, which has issued to it
policies of fire and extended coverage insurance, written notice of the terms of
the mutual waivers contained in this subparagraph, and if necessary, to have the
insurance policies properly endorsed.
11. LIABILITY AND INDEMNIFICATION. Except for any claims, rights of
recovery and causes of action that Lessee has released, Lessor shall hold Lessee
harmless and defend Lessee against any and all claims or liability for any
injury or damage to any person in, on or about the Premises or any part thereof
and/or the building of which the Premises are a part, when such injury or damage
shall be caused by the act, neglect, fault of, or omission of any duty with
respect to the same by Lessor, its agents, servants and employees. Except for
any claims, rights of recovery and causes of action that Lessor has released,
Lessee shall hold Lessor harmless from and defend Lessor against any and all
claims or liability for any injury or damage (i) to any person or property
whatsoever occurring in, on or about the Premises or any part thereof and/or of
the building of which the Premises are a part, including without limitation
elevators, stairways, passageways or hallways, the use of which Lessee may have
in accordance with this Lease, when such injury or damage shall be caused by the
act, neglect, fault of, or omission of any duty with respect to the same by
Lessee, its agents, servants, employees, or invitees (ii) arising from the
conduct of management of any work done by the Lessee in or about the Premises,
(iii) arising from transactions of the Lessee, and (iv) all costs, counsel fees,
expenses and liabilities incurred in connection with any such claim or action or
proceeding brought thereon. The provisions of this Paragraph 11 shall survive
the expiration or termination of this Lease with respect to any claims or
liability occurring prior to such expiration or termination.
12. USE. The Premises shall be used only for the purpose of receiving,
storing, shipping and selling (other than retail) products, materials and
merchandise made and/or distributed by Lessee and for such other lawful purposes
as may be incidental thereto. Outside storage, including without limitation,
storage of trucks and other vehicles, is prohibited without Lessor's prior
written consent. Lessee shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises, and promptly shall comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in or upon, or connected with, the Premises, all at
Lessee's sole expense. Lessee shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor
take any other action that would constitute a nuisance or would disturb,
unreasonably interefere with, or endanger Lessor or any other lessees of the
building in which the Premises are a part.
13. INSPECTION. Lessor and Lessor's agents and representatives shall have
the right to enter the Premises at any reasonable time during business hours, to
inspect the Premises and to make such repairs as may be required or permitted
pursuant to this Lease. During the period that is six (6) months prior to the
end of the Lease term, upon telephonic notice to Lessee, Lessor and Lessor's
representatives may enter the Premises during business hours for the purpose of
showing the Premises. In addition, Lessor shall have the right to erect a
suitable sign on the Premises stating the Premises are available. Lessee shall
notify Lessor in writing at least thirty (30) days prior to vacating the
Premises and shall arrange to meet with Lessor for a joint inspection of the
Premises prior to vacating. If Lessee fails to give such notice or to arrange
for such inspection, then Lessor's inspection of the Premises shall be deemed
correct for the purpose of determining Lessee's responsibility for repairs and
restoration of the Premises.
14. ASSIGNMENT AND SUBLETTING.
A. Lessee shall not have the right to assign, sublet, transfer or encumber
this Lease, or any interest therein, without the prior written consent of Lessor
which shall not be unreasonably withheld. Any attempted assignment, subletting,
transfer or encumbrance by Lessee in violation of the terms and covenants of
this Paragraph shall be void. Notwithstanding the foregoing,
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Lessee shall have the right to assign this Lease to any affiliate (as such term
is defined in the Securities Act of 1933) provided that such assignment is in
form satisfactory to Lessor. Any assignee, sublessee or transferee of Lessee's
interest in this Lease (all such assignees, sublessees and transferees being
hereinafter referred to as "Transferees"), by assuming Lessee's obligations
hereunder, shall assume liability to Lessor for all amounts paid to persons
other than Lessor by such Transferees in contravention of this Paragraph. No
assignment, subletting or other transfer, whether consented to by Lessor or not
or permitted hereunder shall relieve Lessee of its liability hereunder. If an
event of default occurs while the Premises or any part thereof are assigned or
sublet, then Lessor, in addition to any other remedies herein provided, or
provided by law, may collect directly from such Transferee all rents payable to
the Lessee and apply such rent against any sums due Lessor hereunder. No such
collection shall be construed to constitute a novation or a release of Lessee
from the further performance of Lessee's obligations hereunder.
B. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. 101 et. seq., (the "Bankruptcy
Code"), any and all monies or other consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Lessor, shall be and remain the exclusive property of Lessor and shall not
constitute property of Lessee or of the estate of Lessee within the meaning of
the Bankruptcy Code. Any and all monies or other considerations constituting
Lessor's property under the preceding sentence not paid or delivered to Lessor
shall be held in trust for the benefit of Lessor and be promptly paid or
delivered to Lessor.
C. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, shall be deemed, without further act or deed,
to have assumed all of the obligations arising under this Lease on and after the
date of such assignment. Any such assignee shall upon demand execute and deliver
to Lessor an instrument confirming such assumption.
15. CONDEMNATION. If more than twenty-five (25%) of the Premises are 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 and the taking prevents or materially interferes with the use of the
Premises for the purpose for which they were leased to Lessee, this Lease shall
terminate and the rent shall be abated during the unexpired portion of this
Lease, effective on the date of such taking. If less than twenty five (25%) of
the Premises are taken for any public or quasi-public use under any governmental
law, ordinance or regulation, or by right of eminent domain, or by private
purchase in lieu thereof, this Lease shall not terminate, but the rent payable
hereunder during the unexpired portion of this Lease shall be reduced to such
extent as may be fair and reasonable under all of the circumstances. All
compensation awarded in connection with or as a result of any of the foregoing
proceedings shall be the property of Lessor and Lessee hereby assigns any
interest in any such award to Lessor; provided, however, Lessor shall have no
interest in any award made to Lessee for loss of business or goodwill or for the
taking of Lessee's fixtures and improvements, if a separate award for such items
is made to Lessee.
16. HOLDING OVER. At the termination of this Lesse by its expiration or
otherwise, Lessee immediately shall deliver possession to Lessor with all
repairs and maintenance required herein to be performed by Lessee completed. If,
for any reason, Lessee retains possession of the Premises after the expiration
or termination of this Lease, unless the parties hereto otherwise agree in
writing, such possession shall be subject to termination by either Lessor or
Lessee at any time upon not less than ten (10) days advance written notice, and
all of the other terms and provisions of this Lease shall be applicable during
such period, except that Lessee shall pay Lessor from time to time, upon demand,
as rental for the period of such possession, an amount equal to double the rent
in effect on the termination date, computed on a daily basis for each day of
such period. No holding over by Lessee, whether with or without consent of
Lessor shall operate to extend this Lease except as otherwise expressly
provided. The preceding provisions of this Paragraph 16 shall not be construed
as consent for Lessee to retain possession of the Premises in the absence of
written consent thereto by Lessor.
17. QUIET ENJOYMENT. Lessor covenants that on or before the commencement
date it will have good title to the Premises, free and clear of all liens and
encumbrances, excepting only the lien for current taxes not yet due, such
mortgage or mortgages as are permitted by the terms of this Lease, zoning
ordinances and other building and fire ordinances and governmental regulations
relating to the use of such property, and easements, restrictions and other
conditions of record. If this Lease is a sublease, then Lessee agrees to take
the Premises subject to the provisions of the prior Leases. Lessor represents
that it has the authority to enter into this Lease and that so long as Lessee
pays all amounts due hereunder and performs all other covenants and agreements
herein set forth, Lessee shall peaceably and quietly have, hold and enjoy the
Premises for the term hereof without hindrance or molestation from Lessor,
subject to the terms and provisions of this Lease.
18. EVENTS OF DEFAULT. The following events (herein individually referred
to as "event of default") each shall be deemed to be events of nonperformance by
Lessee under this Lease:
A. Lessee shall fail to pay any installment of the rent herein
reserved when due, or any other payment or reimbursement to Lessor required
herein when due, and such failure shall continue for a period of five (5)
days from the date such payment was due.
B. The Lessee or any guarantor of the Lessee's obligations hereunder
shall (i) become insolvent; (ii) admit in writing its inability to pay its
debts; (iii) make a general assignment for the benefit of creditors; (iv)
commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as a debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or of any substantial part of its property; or (v) take any
action to authorize or in contemplation of any of the actions set forth
above in this Paragraph.
C. Any case, proceeding or other action against the Lessee or any
guarantor of the Lessee's obligations hereunder shall be commenced seeking
(i) to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent; (ii) reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts
under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors; (iii) appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property,
and such case, proceeding or other action (a) results in the entry of an
order for relief against it which it is not fully stayed within seven (7)
business days after the entry thereof or (b) shall remain undismissed for a
period of forty-five (45) days.
D. Lessee shall (i) vacate all or a substantial portion of the
Premises or (ii) fail to continuously operate its business at the Premises
for the permitted use set forth herein, whether or not Lessee is in default
of the rental payments due under this Lease.
E. Lessee shall fail to discharge any lien placed upon the Premises in
violation of Paragraph 21 hereof within twenty (20) days after any such
lien or encumbrance is filed against the Premises.
F. Lessee shall fail to comply with any term, provision or covenant of
this Lease (other than those listed in this Paragraph 18), and shall not
cure such failure within twenty (20) days after written notice thereof to
Lessee.
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19. REMEDIES.
A. Upon each occurrence of an event of default, Lessor shall have the
option to pursue any one or more of the following remedies without any notice or
demand:
(1) Terminate this Lease; and/or
(2) Enter upon and take possession of the Premises without terminating
this Lease; and/or
(3) Alter all locks and other security devices at the Premises with or
without terminating this Lease;
and in any such event Lessee immediately shall surrender the Premises to Lessor,
and if Lessee fails so to do, Lessor, without waiving any other remedy it may
have, may enter upon and take possession of the Premises and expel or remove
Lessee and any other person who may be occupying such Premises or any part
thereof, without being liable for prosecution or any claim of damages therefor.
B. If Lessor terminates this Lease, at Lessor's option, Lessee shall be
liable for and shall pay to Lessor, the sum of all rental and other payments
owed to Lessor hereunder accrued to the date of such termination, plus, as
liquidated damages, an amount equal to (1) the present value of the total rental
and other payments owed hereunder for the remaining portion of the Lease term,
calculated as if such term expired on the date set forth in Paragraph 1, less
(2) the then present fair market rental value of the Premises for such period,
which because of the difficulty of ascertaining such value, Lessor and Lessee
stipulate and agree, shall in no event be deemed to exceed seventy-five percent
(75%) of the rental amount set forth in Paragraph 2 above.
C. If Lessor repossesses the Premises without terminating the Lease,
Lessee, at Lessor's option, shall be liable for and shall pay Lessor on demand
all rental and other payments owed to Lessor hereunder, accrued to the date of
such repossession, plus all amounts required to be paid by Lessee to Lessor
until the date of expiration of the term as stated in Paragraph 1, diminished by
all amounts received by Lessor through reletting the Premises during such
remaining term (but only to the extent of the rent herein reserved). Actions to
collect amounts due by Lessee to Lessor under this subparagraph may be brought
from time to time, on one or more occasions, without the necessity of Lessor's
waiting until expiration of the Lease term.
D. Upon an event of default, in addition to any sum provided to be paid
herein, Lessee also shall be liable for and shall pay to Lessor (i) brokers'
fees incurred by Lessor in connection with reletting the whole or any part of
the Premises; (ii) the costs of removing and storing Lessee's or other
occupant's property; (iii) the costs of repairing, altering, remodeling or
otherwise putting the Premises into condition acceptable to a new Lessee or
Lessees; and (iv) all reasonable expenses incurred by Lessor in enforcing or
defending Lessor's rights and/or remedies. If either party hereto institute any
action or proceeding to enforce any provision hereof by reason of any alleged
breach of any provision of this Lease, the prevailing party shall be entitled to
receive from the losing party all reasonable attorneys' fees and all court costs
in connection with such proceeding.
E. In the event Lessee fails to make any payment due hereunder when
payment is due, to help defray the additional cost to Lessor for processing such
late payments, Lessee shall pay to Lessor on demand a late charge in an amount
equal to five percent (5%) of such installment; and the failure to pay such
amount within ten (10) days after demand therefor shall be an additional event
of default hereunder. The provision for such late charge shall be in addition to
all of Lessor's other rights and remedies hereunder or at law and shall not be
construed as liquidated damages or as limiting Lessor's remedies in any manner.
F. Exercise by Lessor of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises by Lessor, whether by agreement or by operation of law, it being
understood that such surrender can be effected only by the written agreement of
Lessor and Lessee. Lessee and Lessor further agree that forbearance by Lessor to
enforce its rights pursuant to the Lease at law or in equity, shall not be a
waiver of Lessor's right to enforce one or more of its rights in connection with
any subsequent default.
G. In the event of termination and/or repossession of the Premises for an
event of default, Lessor shall use reasonable efforts to relet the Premises and
to collect rental after reletting; provided, that, Lessee shall not be entitled
to credit or reimbursement of any proceeds in excess of the rental owed
hereunder. Lessor may relet the whole or any portion of the Premises for any
period, to any Lessee and for any use and purpose.
H. If Lessor fails to perform any of its obligations hereunder within
thirty (30) days after written notice from Lessee specifying such failure,
Lessee's exclusive remedy shall be an action for damages and/or possess. Unless
and until Lessor fails to so cure any default after such notice, Lessee shall
not have any remedy or cause of action by reason thereof. All obligations of
Lessor hereunder will be construed as covenants, not conditions; and all such
obligations will be binding upon Lessor only during the period of its possession
of the Premises and not thereafter. The term "Lessor" 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 covenants and obligations of the Lessor thereafter
accruing, but such covenants and obligations shall be binding during the Lease
term upon each new owner for the duration of such owner's ownership.
Notwithstanding any other provision hereof, Lessor shall not have any personal
liability hereunder. In the event of any breach or default by Lessor in any term
or provision of this Lease, Lessee agrees to look solely to the equity or
interest then owned by Lessor in the Premises or of the building of which the
Premises are a part; however, in no event, shall any deficiency judgment or any
money judgment of any kind be sought or obtained against any party Lessor.
I. If Lessor repossesses the Premises pursuant to the authority herein
granted, then Lessor shall have the right to (i) keep in place and use or (ii)
remove and store all of the furniture, fixtures and equipment at the Premises,
including that which is owned by or leased to Lessee at all times prior to any
foreclosure thereon by Lessor or repossession thereof by any Lessor thereof or
third party having a lien thereon. Lessor also shall have the right to
relinquish possession of all or any portion of such furniture, fixtures,
equipment and other property to any person ("Claimant") who presents to Lessor a
copy of any instrument represented by Claimant to have been executed by Lessee
(or any predecessor of Lessee) granting Claimant the right under various
circumstances to take possession of such furniture, fixtures, equipment or other
property, without the necessity on the part of Lessor to inquire into the
authenticity or legality of said instrument. The rights of Lessor herein stated
shall be in addition to any and all other rights that Lessor has or may
hereafter have at law or in equity; and Lessee stipulates and agrees that the
rights herein granted Lessor are commercially reasonable.
J. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as rent, shall constitute rent for the purposes of Section
502 (b) (7) of the Bankruptcy Code, 11 U.S.C. (s) 502 (b) (7).
K. This is a contract under which applicable law excuses Lessor from
accepting performance from (or rendering performance to) any person or entity
other than Lessee within the meaning of Sections 365 (c) and 365 (e) (2) of the
Bankruptcy Code, 11 U.S.C. (s) 365 (c) and 365 (e) (2).
20. MORTGAGES. Lessee accepts this Lease subject and subordinate to any
mortgages and/or deeds of trust now or at any time hereafter constituting a lien
or charge upon the Premises or the improvements situated thereon or the building
of which the Premises are a part, provided, however, that if the mortgagee,
trustee, or holder of any such mortgage or deed of trust elects to have Lessee's
interest in this Lease superior to any such
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instrument, then by notice to Lessee from such mortgagee, trustee or holder,
this Lease shall be deemed superior to such lien, whether this Lease was
executed before or after said mortgage or deed of trust. Lessee, at any time
hereafter on demand, shall execute any instruments, releases or other documents
that may be required by any mortgagee for the purpose of subjecting and
subordinating this Lease to the lien of any such mortgage.
21. MECHANIC'S LIENS. Lessee has no authority, express or implied, to
create or place any lien or encumbrance of any kind or nature whatsoever upon,
or in any manner to bind the interest of Lessor or Lessee in the Premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Lessee, including those who may furnish materials or perform labor
for any construction or repairs. Lessee covenants and agrees that it will pay or
cause to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises and that it will save and hold Lessor harmless from any and all loss,
cost or expense based on or arising out of asserted claims or liens against the
leasehold estate or against the right, title and interest of the Lessor in the
Premises or under the terms of this Lease. Lessee agrees to give Lessor
immediate written notice of the placing of any lien or encumbrance against the
Premises.
22. MISCELLANEOUS.
A. Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.
B. In the event the Premises constitute a portion of a multiple occupancy
building, Lessee's "proportionate share", as used in this Lease, shall mean a
fraction, the numerator of which is the space contained in the Premises and the
denominator of which is the entire space contained in the building.
C. The terms, provisions and covenants and conditions contained in this
Lease shall run with the land and shall apply to, inure to the benefit of and be
binding upon, the parties hereto and upon their respective heirs, executors,
personal representatives, legal representatives, successors and assigns, except
as otherwise herein expressly provided. Lessor shall have the right to transfer
and assign, in whole or in part, its rights and obligations in the building and
property that are the subject of this Lease. Each party agrees to furnish to the
other, promptly upon demand, a corporate resolution, proof of due authorization
by partners, or other appropriate documentation evidencing the due authorization
of such party to enter into this Lease.
D. Lessor shall not be held responsible for delays in the performance of
its obligations hereunder when caused by material shortages, acts of God or
labor disputes.
E. Lessee agrees, from time to time, within ten (10) days after request of
Lessor, to deliver to Lessor, or Lessor's designee, a Certificate of Occupancy
and an estoppel certificate stating that this Lease is in full force and effect,
the date to which rent has been paid, the unexpired term of this Lease and such
other factual matters pertaining to this Lease as may be requested by Lessor. It
is understood and agreed that Lessee's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Lessor's execution
of this Lease.
F. This Lease constitutes the entire understanding and agreement of the
Lessor and Lessee with respect to the subject matter of this Lease, and contains
all of the covenants and agreements of Lessor and Lessee with respect thereto.
Lessor and Lessee each acknowledge that no representations, inducements,
promises or agreements, oral or written, have been made by Lessor or Lessee, or
anyone acting on behalf of Lessor or Lessee, which are not contained herein, and
any prior agreements, promises, negotiations, or representations not expressly
set forth in this Lease are of no force or effect. This Lease may not be
altered, changed or amended except by an instrument in writing signed by both
parties hereto.
G. All obligations of Lessee hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation, all payment obligations with respect to taxes and insurance and all
obligations concerning the condition and repair of the Premises. Upon the
expiration or earlier termination of the term hereof, and prior to Lessee
vacating the Premises, Lessee shall pay to Lessor any amount reasonably
estimated by Lessor as necessary to put the Premises, including without
limitation, all heating and air conditioning systems and equipment therein, in
good condition and repair, reasonable wear and tear excluded. Lessee shall also,
prior to vacating the Premises, pay to Lessor the amount, as estimated by
Lessor, of Lessee's obligation hereunder for real estate taxes and insurance
premiums for the year in which the Lease expires or terminates. All such amounts
shall be used and held by Lessor for payment of such obligations of Lessee
hereunder, with Lessee being liable for any additional costs therefor upon
demand by Lessor, or with any excess to be returned to Lessee after all such
obligations have been determined and satisfied as the case may be. Any security
deposit held by Lessor shall be credited against the amount due from Lessee
under this Paragraph 22G.
H. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid or unenforceable, there be added, as a
part of this Lease, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable.
I. All references in this Lease to "the date hereof" or similar references
shall be deemed to refer to the last date, in point of time, on which all
parties hereto have executed this Lease.
J. Lessee represents and warrants that it has dealt with no broker, agent
or other person in connection with this transaction or that no broker, agent or
other person brought about this transaction, other than as may be referenced in
a separate written agreement executed by Lessee, and Lessee agrees to indemnify
and hold Lessor harmless from and against any claims by any other broker, agent
or other person claiming a commission or other form of compensation by virtue of
having dealt with Lessee with regard to this leasing transaction.
K. If and when included within the term "Lessor", as used in this
instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address for the receipt of notices
and payments to Lessor. If and when included within the term "Lessee", as used
in this instrument, there is more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Lessee. All parties
included within the terms "Lessor" and "Lessee", respectively shall be bound by
notices given in accordance with the provisions of Paragraph 24 hereof to the
same effect as if each had received such notice.
23. ADDITIONAL PROVISIONS. See Exhibit attached hereto and incorporated by
reference herein.
24. NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivering of any notice or the making of any payment
by Jessor to Lessee or with reference to the sending, mailing or delivering of
any notice or the
6
<PAGE>
making of any payment by Lessee to Lessor shall be deemed to be complied with
when and if the following steps are taken:
(a) All rent and other payments required to be made by Lessee to
Lessor hereunder shall be payable to Lessor at the address for Lessor set
forth below or at such other address as Lessor may specify from time to
time by written notice delivered in accordance herewith. Lessee's
obligation to pay rent and any other amounts to Lessor under the terms of
this Lease shall not be deemed satisfied until such rent and other amounts
have been actually received by Lessor. In addition to base rental due
hereunder, all sums of money and all payments due Lessor hereunder shall be
deemed to be additional rental owed to Lessor.
(b) All payments required to be made by Lessor to Lessee hereunder
shall be payable to Lessee at the address set forth below, or at such other
address within the continental United States as Lessee may specify from
time to time by written notice delivered in accordance herewith.
(c) Any written notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered whether actually
received or not when deposited in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith.
25. LESSOR'S LIEN. In addition to any statutory lien for rent in Lessor's
favor, Lessor shall have and Lessee hereby grants to Lessor a continuing
security interest for all rentals and other sums of money become due hereunder
from Lessee, upon all goods, wares, equipment, fixtures, furniture, inventory,
and other personal property of Lessee situated on the Premises subject to this
Lease, and such property shall not be removed therefrom without the consent of
Lessor until all arrearages in rent as well as any and all other sums of money
then due to Lessor hereunder shall first have been paid and discharged. Upon a
default hereunder by Lessee in addition to all other rights and remedies, Lessor
shall have all rights and remedies under the Uniform Commercial Code, including
without limitation, the right to sell the property described in this Paragraph
at public or private sale upon five (5) days notice by Lessor. Lessee hereby
agrees to execute such other instruments, necessary or desirable under
applicable law to perfect the security interest hereby created.
EXECUTED BY LESSOR, this 7 day of Nov, 1988.
CENTRAL EAST DALLAS DEVELOPMENT
Witness LIMITED PARTNERSHIP (BY: CROW CENTRAL DALLAS
---------------------------------------
[SIGNATURE NOT LEGIBLE] #1, INC.)
- -------------------------------- By /s/ J. Marc Myers
-------------------------------------
J. Marc Myers
Title: ________________________ Title: President
---------------------------------------
ADDRESS:
CENTRAL EAST DALLAS DEVELOPMENT
---------------------------------------
LIMITED PARTNERSHIP
1499 Regal Row, Suite 302
---------------------------------------
Dallas, Texas 75247
---------------------------------------
_______________________________________
EXECUTED BY LESSEE, this 3 day of Nov., 1988.
STATIONERS DISTRIBUTING COMPANY, INC.
Attest/Witness ---------------------------------------
/s/ John Bryant By [SIGNATURE NOT LEGIBLE]
- ------------------------------- ------------------------------------
Title: Admin. Asst. Title: ________________________________
-------------------------
ADDRESS:
STATIONERS DISTRIBUTING COMPANY, INC.
---------------------------------------
_______________________________________
_______________________________________
_______________________________________
7
<PAGE>
RIDER ONE
---------
26. The monthly base rental referred to in Paragraph 2.A. shall be as
follows for the primary term of this Lease Agreement:
<TABLE>
<S> <C>
Months 1 - 12 $13,711.69
Months 13 - 24 $14,203.15
Months 25 - 36 $14,694.60
Months 37 - 48 $15,186.06
Months 49 - 60 $15,726.66
Months 61 - 120 $17,004.46.
</TABLE>
27. This lease is subject to satisfactory purchase and financing of the
land for the building and satisfactory financing of the building
improvements by January 31, 1989. If Lessor is unable to satisfactorily
purchase and finance the land and finance the improvements by January 31,
1989, this lease will be terminated and of no further force and effect and
neither the Lessor or Lessee will have any liability to the other party.
28. Provided that Lessee is not in default of the terms of this Lease
Agreement, it is hereby agreed and understood that in the event Lessee
requires additional warehouse space in Dallas County and Lessor and Lessee
executed a new Lease Agreement for a minimum of 200,000 square feet, this
Lease shall be cancelled as of the commencement date of the new Lease
covering the larger space. It is understood that upon the commencement date
of the new Lease, Lessee shall deliver the herein demised premises to the
Lessor in the condition required by this Lease Agreement. Upon such
cancellation, Lessor and Lessee shall be released from any further
obligations or liabilities accrued under this Lease prior to the
commencement date of such new Lease.
<PAGE>
RIDER 1, PARAGRAPH 29. HAZARDOUS WASTE. The term "Hazardous Substances, "as
used in this lease 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 any "Environmental
Law," which term 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. Lessee hereby agrees that (i) no activity will
be conducted on the premises that will produce any Hazardous Substance, except
for such activities that are part of the ordinary course of Lessee's business
activities (the "Permitted Activities") provided said Permitted Activities are
conducted in accordance with all Environmental Laws and have been approved in
advance in writing by Lessor; Lessee 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 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 Lessee's business (the
"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 Lessor; Lessee 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 a dump; (iv) Lessee will not install any underground tanks of any type; (v)
Lessee 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) Lessee 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 cleanup procedures shall be
diligently undertaken pursuant to all Environmental Laws. Lessor or Lessor's
representative shall have the right but not the obligation to enter the premises
for the purpose of inspecting the storage, use and disposal of Permitted
Materials to ensure compliance with all Environmental Laws. Should it be
determined, in Lessor's sole opinion, that said Permitted Materials are being
improperly stored, used, or disposed of, then Lessee shall immediately take such
corrective action as requested by Lessor. Should Lessee fail to take such
corrective action within 24 hours, Lessor shall have the right to perform such
work and Lessee shall promptly reimburse Lessor for any and all costs associated
with said work. If at any time during or after the term of the lease, the
premises is found to be so contaminated or subject to said conditions, Lessee
shall diligently institute proper and thorough cleanup procedures at Lessee's
sole cost, and Lessee agrees to indemnify and hold Lessor 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 Lessee.
The foregoing indemnification and the responsibilities of Lessee shall survive
the termination or expiration of this Lease.
Permitted Materials (if none, enter "None"):
30. The existing leases between Stationers Distributing Company, Inc. and
Crow-Jack No. II for the 37,519 square foot facility on LaReunion Parkway and
Dalware II Associates for the 7,631 square foot facility shall terminate fifteen
(15) days after Lessee's receipt of notice of substantial completion. If Lessee
is unable to vacate these two (2) premises within such fifteen-day period,
Lessee may retain possession for an additional thirty-day period with the rent
abated.
31. All signs presently existing are deemed to be approved and additional
signage of a like or similar nature is approved by Landlord for the side of the
building facing Irving Blvd.
32. Lessor shall, however, be required to give Lessee notice of Lessor's
intent to rebuild or repair within ten (10) days of the damaging event or Lessee
shall have the right to terminate the lease. If Lessor elects to repair or
rebuild Lessor shall provide comparable temporary space to Lessee during such
periods all at Lessor's expense.
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
-----------------
Being 99,289 square feet located in Building II of the Mockingbird Distribution
Center and as shown in Exhibit A-1 attached hereto and more particularly
described as follows:
Description of an 8.939 acre tract of land in City of Dallas Block No. 7698 and
in the James McLaughlin Survey, Abstract No. 845, Dallas County, Texas; said
8.939 acre tract of land being a part of that certain lot, tract, or parcel of
land conveyed to Irving Boulevard Industrial Acres, Inc., by deed recorded in
Volume 3561, Page 128, Deed Records, Dallas County, Texas; said 8.939 acre tract
being more particularly described as follows:
BEGINNING, at the most easterly northeast corner of the herein described tract;
- ---------
said beginning point being in the west line of Mockingbird Lane (formerly known
as Westmoreland Road), a distance of 740.69 feet from the intersection of said
Mockingbird Lane west line and the south line of Halifax Street (60-foot width);
THENCE, S 00 degrees 05'30" W, with said Mockingbird Lane west line, a distance
- ------
of 302.50 feet to a point for corner in the north line of a 4.220 acre tract of
land conveyed to Bradley Wayne by deed filed on December 31, 1968, Deed Records,
Dallas County, Texas;
THENCE, N 89 degrees 31'00" W, with said Wayne tract north line, and said line
- ------
extended, at 624.36 feet pass the northwest corner of said Wayne tract, in all a
distance of 710.36 feet to a point for corner;
THENCE, N 00 degrees 05'30" E, a distance of 51.16 feet to a point for corner;
- ------
THENCE, N 89 degrees 31'00" W, a distance of 200.00 feet to a point for corner
- ------
in the east line of property owned by United States Cold Storage Corporation;
THENCE, with said line of said United States Cold Storage Corporation property,
- ------
the following courses and distance to-wit;
N 00 degrees 05'30" E, a distance of 129.45 feet to a point for
corner;
Thence, N 89 degrees 54'30" W, a distance of 1.00 feet to a point for
------
corner
Thence, N 00 degrees 05'30" E, a distance of 466.68 feet to a point for
------
corner; said point being in the south line of property owned by the Chicago,
Rock Island, and Pacific Railroad;
THENCE, S 89 degrees 31'00" E, with said Railroad tract south line and the south
- ------
line of property owned by Pangean Corporation, a distance of 360.00 feet to a
point for corner;
THENCE, S 00 degrees 05'30" W, a distance of 344.78 feet to a point for corner;
- ------
THENCE, S 89 degrees 31'00" E, a distance of 551,36 feet to the PLACE OF
- ------
BEGINNING;
CONTAINING; 389,388.741 square feet, or 8.939 acres of land.
- ----------
<PAGE>
EXHIBIT A-1
[PLAN OF LOTS 1 AND 2 APPEARS HERE]
<PAGE>
EXHIBIT 10.47
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") is executed on this the 17 day of
--
MARCH, 1989, by and between SPECIAL ASSET MANAGEMENT COMPANY OF TEXAS, INC., a
- -----
corporation incorporated under the laws of the State of Texas (the "Landlord")
and, STATIONERS DISTRIBUTING COMPANY, INC., a corporation organized under the
laws of the state of Delaware (the "Tenant");
Section 1
---------
PREMISES
Landlord hereby leases unto Tenant and Tenant hereby leases from
Landlord, subject to the terms of this Lease, the real property located at 2155
Silber Road, Houston, Texas, more particularly described in Exhibit "A" attached
hereto and made a part hereof together with all improvements, easements, rights
and appurtenances in connection therewith and all improvements now or hereafter
located thereon. The building thereon is outlined in red on Exhibit "B" attached
hereto and made a part hereof (the "Building"). The real property, including
access, loading and parking areas, and the Building are collectively referred to
as the "Premises." The parking and loading areas are outlined in blue on Exhibit
"B". It is the parties' intention that this Lease include all property described
in Exhibit "A" but in no event, less area than the improvements, parking and
loading areas shown on Exhibit "B".
Section 2
---------
TERM
2.1 COMMENCEMENT. The term of this Lease shall commence (the
------------------
"Commencement Date") upon the latter of (i) July 1, 1989, (ii) three (3) days
after delivery to Tenant of a certificate of substantial completion of the
leasehold repairs and improvements constructed in accordance with the
requirements of Section 4 issued by Landlord, or (iii) Tenant's occupancy of the
Building and Premises. Substantial completion shall be deemed to have occurred
notwithstanding a requirement to complete "punchlist" or improvements.
The estimated Commencement Date is July 1, 1989, but Tenant may occupy
and take possession of the Building any time after the execution hereof. If
Tenant shall not have received possession by July 1, 1989, Tenant may elect to
terminate this Lease by giving Landlord written notice of such election not
later than July 5, 1989, provided, however, said July 1, 1989, and July 5, 1989,
dates shall be extended by a number of days
-1-
<PAGE>
equal to (i) the number of days of delay caused by Force Majeure, as provided in
Section 20 hereof, and (ii) the number of days of delay caused by the Tenant
("Tenant Delay") in approving or not approving plans, creating change orders, or
otherwise.
2.2 TERM. The term of this Lease shall continue for the sixty (60)
----------
full calender months plus the first partial calendar month, if any, following
the Commencement Date.
Section 3
---------
RENT
3.1 MONTHLY RENT. The consideration for the sixty (60) full months of
-----------------
this Lease (exclusive of Additional Rental, as hereinafter set forth, and
exclusive of Total Monthly Rental for the first partial calendar month, if any,
following the Commencement Date) shall be based on an average rate of $.194 per
square foot per month accruing as follows:
<TABLE>
<CAPTION>
RATE PER SQ. FOOT
-----------------
YR. PERIOD PER MO. PER YR.
------- -------
<S> <C> <C> <C>
1 7-1-89 thru 2-28-90 (8 Mo.) $ .14 $ --
3-1-90 thru 6-30-90 (4 Mo.) .18 1. 84
2 .19 2. 28
3 .19 2. 28
4 .22 2. 64
5 .22 2. 64
- ------- ------- --------
Average $ .194 $ 2. 328
</TABLE>
Tenant agrees to pay to Landlord on the first (1st) day of the commencement of
the term of this Lease and the first (1st) day of every calendar month
thereafter for the first full sixty (60) months of the term of this Lease, in
lawful money of the United States of America, without deduction or offset, prior
notice or demand, except as hereinafter provided, the amounts described above
calculated upon a total square footage area of 95,600 square feet as the "Total
Monthly Rental", which Total Monthly Rental represents part of the total
consideration for this Lease.
3.2 ADDITIONAL RENTAL. Tenant shall also be obligated to pay directly
----------------------
as "Additional Rental" hereunder the amount set forth below of "Property Taxes"
and "All-Risk Insurance", and, if applicable, "Common Area Maintenance" and
"Rail Spur Maintenance" (as such terms are hereinafter defined) with respect to
each
-2-
<PAGE>
calendar year of the Lease Term:
(i) Property Taxes; All-Risk Insurance.
(a) The term "Property Taxes" for the purposes of this Lease
mean all general and special taxes, including all assessments
for local improvements, and all other general and special,
ordinary and extraordinary, governmental charges assessed,
levied, charged, or imposed upon the Premises or Building
during the term of the Lease, or any holdover or renewal
period, by any political or governmental body, or subdivision
thereof, having jurisdiction over the Premises or Building;
excluding, however, franchise, estate, inheritance, succession,
capital levy, transfer, income or excess profits taxes imposed
upon Landlord. In the event that any political body, or
subdivision thereof, or any governmental authority having
jurisdiction over the Premises or Building imposes a tax,
assessment, or charge either upon or against or measured by the
rentals payable by Tenant to Landlord or upon or against the
occupation of renting land and/or buildings, either by way of
substitution for the taxes and assessments levied against the
Premises or Building, such tax, assessment, or charge shall not
be deemed to constitute a Property Tax for purposes of this
Lease.
(b) Tenant shall pay directly to the appropriate taxing
authority, before the same become delinquent, all Property
Taxes levied or assessed against the Premises or Building.
(c) Tenant shall maintain Texas standard "all-risk" insurance
covering the Building in the amount of at least eighty percent
(80%) of the full insurable value thereof, excluding cost of
land, foundation, and footings. (the "All-Risk Insurance").
(d) Landlord will also maintain Texas
-3-
<PAGE>
standard "all-risk" insurance covering the Building and/or
Premises to the extent Landlord is required to maintain same.
(ii) General Repairs, Maintenance and Alterations.
(a) Landlord will at Landlord's expense during the entire term
of this Lease, maintain and repair the roof, roof trusses and
structure, foundations, outside walls, interior stress bearing
walls and columns, structural members, railspur, gutters,
downspouts, concealed and underground plumbing and electrical
and exterior fencing of the Premises in good condition and
repair. Landlord, at its sole expense, shall also keep and
maintain and replace, if necessary, the heating, ventilation
and air conditioning systems which service the Building in good
working condition to provide a safe comfortable environment for
a period of one (1) year from the Commencement Date.
(b) Except for the foregoing, Tenant at Tenant's expense,
shall maintain the interior of the Premises, in good condition
and repair, reasonable use and wear excepted. Tenant shall
maintain or repair and replace, if necessary the existing
heating and air conditioning systems servicing the Building
after the first year of the lease term to the extent required
to maintain the same or similar level of operation as in
existence on July 1, 1990. Except as provided in Paragraph 14.6
below, Tenant hereby waives any right to make repairs at
Landlord's expense. Tenant shall pay for the replacement of
doors or windows upon the Premises which are cracked or broken
by Tenant, except in the event that such loss or damage is
covered by Landlord's policy of fire insurance with extended
coverage endorsement in which case the same shall be repaired
or replaced out of the proceeds from said insurance.
-4-
<PAGE>
Landlord and Tenant shall cause an inspection of the Premises
to be made immediately prior to the commencement of the initial
term at a mutually agreeable time by their respective
representatives to determine and record the condition of the
Premises. These representatives shall prepare and sign a
statement indicating any damage or deterioration existing at
the time of the inspection. Tenant shall not be responsible to
return any item on said statement to Landlord in a condition
better than its condition on the date of the inspection
indicated on said statement. Landlord specifically agrees to
promptly undertake appropriate repairs, if any are needed, to
the Building heating, ventilation, air conditioning system
(HVAC), the electrical system and wiring (including computer
requirements), roof, doors, floor, security system (including
security lighting), interior lighting and sprinklers upon
execution of this Lease Agreement.
(iii) Common Area Maintenance.
(a) While both parties intend this Lease to be a triple net
lease, excluding roof and structure, should common area
maintenance be required then, "Common Area Maintenance" means
and includes the reasonable costs of operating and maintenance
of the common areas within the Site related only to cleaning,
sweeping, security, if any, upkeep and utilities for exterior
lighting and upkeep and repair for parking lots, driveways, and
sidewalks which may be incurred by Landlord for the mutual
benefit of Tenant and adjacent Tenants who use and enjoy common
areas and access. It does not include any maintenance or upkeep
which Tenant elects to undertake or any specially required
repair or maintenance peculiar to any one particular tenant.
(b) Tenant shall pay to Landlord the
-5-
<PAGE>
percentage of the costs of Common Area Maintenance allocated to
Tenant based upon the square footage contained in Tenant's
building as relates to that of other tenants.
(c) For each month during the term of this Lease, Tenant shall
pay one-twelfth of the estimated annual Common Area Maintenance
at the same time and same place as the payment of Total Monthly
Rental for such month. The amount of the annual Common Area
Maintenance estimate shall be determined by Landlord, such
estimate to be subject to adjustment from time-to-time on
written notice to Tenant. One-twelfth of the annual Common Area
Maintenance as estimated as of the date of this Lease is Three
Hundred Fifty_______________and No/100 Dollars ($350.00). In no
event shall the Common Area Maintenance be in excess of $.01
per square foot per month. Upon determination by Landlord of
the actual Common Area Maintenance for each year, an
appropriate cash adjustment shall be made between Landlord and
Tenant within thirty (30) days after request by either party if
the actual Common Area Maintenance differs from the estimated
basis, upon which Tenant has paid its proportionate share.
(iv) RAIL SPUR MAINTENANCE.
(a) "Rail Spur Maintenance" means and includes the costs of
maintenance, repair and replacement of the railroad spur, if
any, located adjacent to the Building as shown on Exhibit "B"
which may be incurred by Landlord.
(b) The Tenant's amount of Rail Spur Maintenance shall be
computed by the ratio that the number of railroad cars making
deliveries to Tenant during any month bears to the total number
of railroad cars using the spur track during the same time
period; provided that if rail service is not charged on a per
car basis, Landlord may charge
-6-
<PAGE>
for rail service on the basis of the number of tenants
served by the rail spur.
(c) The Tenant shall pay its amount of Rail Spur
Maintenance within ten (10) days after receipt of
statements from Landlord.
(d) In no event shall Tenant be charged or assessed
Rail Spur Maintenance unless Tenant is actually using
the adjacent railroad spur.
3.3 PARTIAL MONTH. If the term shall commence upon a day other than
-------------------
the first (1st) day of a calendar month, then Tenant shall pay upon such
Commencement Date one-thirtieth (1/30th) of the Total Monthly Rental as set
forth in Section 3.1 hereof, if any, for each day of such fractional calendar
month.
3.4 INTEREST ON LATE PAYMENTS. In the event that Tenant fails to pay
-------------------------------
any installation of Total Monthly Rental when such installment is due, or
Additional Rental within ten (10) days after accrual thereof or billing
therefor, the total amount then due shall bear interest at the maximum rate then
permitted by law until paid after Landlord has given Tenant five (5) days
written notice of its obligation and/or delinquency, provided however Landlord
must only give one (1) written notice per year for such obligation and/or
delinquency.
SECTION 4
---------
LEASEHOLD IMPROVEMENTS
In the event that Landlord shall, by agreement between the parties
hereto, undertake to construct leasehold improvements within the Premises, such
leasehold improvements shall be built in accordance with preliminary
specifications to be agreed to by each party, copies of which plans and
specifications together with a floor plan showing their approximate location
within the Premises shall then be initialled and considered to be a part of this
Lease for all intents and purposes. Such plans and specifications must be agreed
to, if at all, prior to commencement of construction of the Premises.
Landlord warrants that the heating and air conditioning equipment
installed by Landlord in the Premises shall be free from defects in workmanship
and material for a period of one (1) calendar year from the date on which the
term of this Lease commences. After the expiration of said one (1) year, any
unexpired manufacturers' warranties shall be assigned to Tenant.
Upon execution hereof, Landlord will commence the following repairs and
improvements at Landlord's sole cost and
-7-
<PAGE>
expense, all of which shall be completed as soon as practicable but in no event,
not later than June 23, 1989.
(a) Painting of all offices located in yellow on
Exhibit "B" with paint of a color, grade and quality to
be approved by Tenant;
(b) Re-carpeting of front offices located in yellow on
Exhibit "B" with carpet of a color, grade and quality
similar to L. D. Brinkman 2048, Federal Gray with a
base pad in private office and 4" inch vinyl base;
(c) Clean warehouse office floor;
(d) Install four (4) exterior doors off fire escape
exits located on side of Building facing the railroad
spuras indicated in green on Exhibit "B"; and
(e) Repair, if requested by Tenant, the Building
heating, ventilation, air conditioning system (HVAC),
electrical system and wiring (including any wiring
requirements for Tenant's computers), roof, doors,
security system (including security lighting), interior
lighting and sprinklers.
Section 5
---------
USE
5.1 PRESCRIBED USE. Tenant shall use the Premises for offices and
--------------------
warehouse and reasonably related activities.
5.2 NUISANCE. Neither Landlord nor Tenant shall commit, or suffer to
--------------
be committed, upon the Premises, any nuisance or thing which may disturb the
quiet enjoyment of Tenant or any other lessee of any person or business within a
reasonable distance from the Premises.
5.3 COMPLIANCE WITH LAWS. Tenant shall, at Tenant's sole cost and
--------------------------
expense, comply with all laws, ordinances, orders, rules and regulations
promulgated by all federal, state, county, municipal bodies and agencies having
jurisdiction, which laws, ordinances, orders, rules and regulations relate to
the business of Tenant.
5.4 DANGEROUS GOODS AND ACTIVITIES. Tenant hereby
------------------------------------
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<PAGE>
agrees not to engage in any activity or store upon the Premises such goods or
equipment which would render the insurance described in Section 3.2(i) hereof
void or increase the premiums.
SECTION 6
---------
UTILITIES
Tenant shall be responsible for and promptly pay all charges incurred
for all utility services to the Premises, including, but not limited to water,
natural gas, sanitary sewer, electricity and telephone. Tenant shall also
provide all replacement light bulbs and tubes after the Commencement Date of
this Lease. In no event shall Landlord be liable for any interruption or failure
of utility service to the Premises.
SECTION 7
---------
MAINTENANCE
7.1 LANDLORD'S OBLIGATIONS.
----------------------------
(i) Landlord shall, at its sole expense, maintain the
structural soundness of the roof, roof trusses and structure of
the exterior walls and of the foundation of the Premises, the
interior stress bearing walls and columns, reasonable wear and
tear and events covered by the destruction provisions hereof
excepted. The phrase "exterior walls" shall not include windows
or glass or plate glass, doors, window mullions or gaskets, or
signs; the phrase "reasonable wear and tear" shall include
minor cracking in the walls or foundation caused by the
elements, or otherwise, which affects neither the structural
integrity nor safety of the Premises. Provided, however, that
Landlord shall not be responsible for the following: (a) damage
to the roof, exterior walls, and/or foundation resulting from
the negligent act or acts, or omissions of Tenant, or Tenant's
employees, contractors, agents, vendors, materialmen,
suppliers, customers, invitees or concessionaires; and (b) the
upkeep or repair of any air conditioning, heating, ventilation
or refrigeration systems used or required for the Premises
except as provided in Section 4 of this Lease.
(ii) Subject to the Rail Spur Maintenance provisions of
Section 3.2 (iv) hereof, Landlord shall also maintain the
railroad spur
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<PAGE>
adjacent to the Building as shown in Exhibit "B".
7.2 TENANT'S OBLIGATIONS.
--------------------------
(i) Tenant, at Tenant's sole cost and expense, shall
maintain and repair all other parts of the Premises, including
but not limited to, the following items: all glass, including
windows of glass or plate glass, window mullions and gaskets;
doors and attached hardware; special store fronts; interior
walls, cabinets, millwork, paneling and other finish work;
floor and floor coverings; heating, ventilation, refrigeration
and air conditioning systems and related mechanical equipment;
dock boards, dock levelers, and/or dock bumpers; overhead truck
doors; downspouts of roof gutters attached to exterior of
Premises for damage caused by Tenant's operation; plumbing
fixtures and above ground, non-concealed plumbing; electrical
facilities and electrical fixtures; and all other fixtures and
trade fixtures. It is specifically agreed by Tenant that the
cleaning or policing of the driveway area immediately adjoining
the dock area of the Premises shall be the responsibility of
Tenant. Tenant shall also be responsible for the cleaning and
sweeping of Tenant's parking spaces as designated by Landlord
pursuant to the terms of Section 21. Tenant shall be
responsible for disposal of its trash and will maintain
adequate receptacles for such disposal. Replacement and repair
parts, materials, and equipment shall be of quality equivalent
to those initially installed within the Premises; repair and
maintenance work shall be done in accordance with the then
existing federal, state and local laws, regulations and
ordinances pertaining thereto.
(ii) Tenant shall maintain all landscaping, exterior
lighting, site concrete and paving including driveway and
parking area surfaces (subject, however, to the limitations of
Section 7.2(i) hereof), pedestrian walks and other common areas.
7.3 SURRENDER OF POSSESSION. Upon any termination of this Lease,
-----------------------------
Tenant shall surrender the Premises in a condition and repair similar to their
original condition, reasonable wear
-10-
<PAGE>
and tear, events of destruction, and modifications, alterations and improvements
for office facilities, storage, lighting and sprinklers excepted.
SECTION 8
---------
INSURANCE
8.1 INDEMNIFICATION OF LANDLORD. Tenant will indemnify Landlord and
---------------------------------
save it harmless from and against any and all claims, actions, damages,
liability and expense in connection with the loss of life, personal injury,
and/or damage to property arising from or out of (i) any occurrence in, upon or
at the Premises, including occurrences caused by the sole or contributory
negligence of Tenant or its respective agents, customers, invitees,
concessionaires, contractors, servants, vendors, materialmen or suppliers, or
(ii) any occurrence elsewhere on the Premises occasioned wholly or in part by
any act or omission caused by the Tenant or its agents, customers, invitees,
concessionaires, contractors, servants, vendors, materialmen or suppliers. In
case the Landlord shall be made a party to any litigation commenced by or
against the Tenant for any of the above reasons, then Tenant shall protect and
hold the Landlord harmless and pay all reasonably required costs, penalties,
charges, damages, expenses and reasonable attorneys' fees paid by the Landlord.
It is understood that the provisions of this section 8.1 shall not be applicable
to any such claims, actions, liabilities, or expenses, arising out of any act or
omission of Landlord, its agents, materialmen, vendors or suppliers.
8.2 INDEMNIFICATION OF TENANT. Landlord will indemnify Tenant and save
-------------------------------
it harmless from and against any and all claims, actions, damages, liability and
expenses in connection with the loss of life, bodily and personal injury, and/or
damage to property arising from or out of (i) any occurrence in, upon or at the
Premises, including occurrences caused by the sole or contributory negligence of
Landlord, its agents, customers, invitees, concessionaires, contractors,
servants, vendors, materialmen or suppliers, or (ii) any occurrence elsewhere on
the Premises occasioned wholly or in part by any act or omission caused by the
Landlord or its agents, customers, invitees, concessionaires, contractors,
servants, vendors, materialmen or suppliers, or (iii) any occurrence occasioned
by the violation of any law, regulation or ordinance by Landlord or its agents,
customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers. In case the Tenant shall be made a party to any
litigation commenced by or against the Landlord for any of the above reasons,
then Landlord shall protect and hold the Tenant harmless and pay all costs,
penalties, charges, damages, expenses and attorneys' fees paid by the Tenant. It
is understood that the provisions of this Section
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<PAGE>
8.2 shall not be applicable to any such claims, actions, liabilities, or
expenses, arising out of any act or omission of Tenant, its agents, materialmen,
vendors or suppliers.
8.3 WAIVER OF SUBROGATION. Anything in this Lease to the contrary
---------------------------
notwithstanding, Landlord and Tenant each hereby waives any and all right to
recovery, claim, action or cause of action, against the other, its agents,
directors, officers or employees, for any loss or damage that may occur to the
Premises, or any improvements thereto, or the Building, or any improvements
thereto, or any personal property of such party therein, by reason of fire, the
elements, or any other cause which could be insured against under the terms of
insurance policies referred to in Section 3.2(i) hereof, regardless of cause or
origin, including negligence of the other party hereto, its agents, directors,
officers of employees, and covenants that no insurer shall hold any right of
subrogation against such other party.
8.4 PUBLIC LIABILITY AND PROPERTY DAMAGE. Bodily injury liability
------------------------------------------
insurance and property damage liability insurance will be carried and maintained
by Tenant, at Tenant's sole cost and expense, after the date of delivery of the
Premises from Landlord to Tenant in the following amounts:
<TABLE>
<S> <C>
Bodily Injury or Death, per occurrence: $1,000,000
Property Damage: $1,000,000
</TABLE>
All such bodily injury liability insurance and property damage liability
insurance shall specifically make reference to the indemnity agreement in
Section 8.1 hereof.
8.5 POLICY FORM. All policies of insurance provided for herein to be
-----------------
carried by Tenant shall be issued by insurance companies certified to do
business by the State of Texas and its insurance regulatory bodies and shall be
issued in the names of both Landlord and Tenant. Executed copies of such
policies of insurance or certificates thereof shall be delivered to the Landlord
within ten (10) days after delivery of possession of the Premises and thereafter
within thirty (30) days prior to the expiration of such policy. As often as any
such policy shall expire or terminate, renewal or additional policies shall be
procured and maintained by the Tenant in like manner and to like extent. All
policies of insurance delivered to Landlord must contain a provision that the
company writing said policy will give to the Landlord at least twenty (20) days
notice in writing in advance of any cancellation or lapse or the effective date
of any reduction in the amounts of insurance. All public liability and property
damage policies shall be written as primary policies, not contributing with and
not in excess of coverage which the Landlord may carry, if any. Notwithstanding
the foregoing, any insurance coverage required to be carried by Tenant hereunder
may be carried in whole or in part (i) under any
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<PAGE>
plan of self-insurance which Tenant may from time-to-time have in force and
effect so long as Tenant or any assignee of this Lease who is liable hereunder
shall have a net worth of $25,000,000.00 or more, or (ii) under a "blanket"
policy or policies covering other properties of Tenant and its subsidiaries,
controlling or affiliated corporations, or of any assignee of this Lease. The
scope and extent of the insurance protection afforded Landlord pursuant to this
article shall not be diminished as a result of any rights of self-insurance as
hereinabove provided.
SECTION 9
---------
ALTERATIONS AND FIXTURES
9.1 PRIOR CONSENT. Tenant shall not make any alterations,
-------------------
improvements, modifications, or additions to the Premises without first having
obtained the written consent of Landlord; provided, however, planned
modifications and improvements, including minor modification or improvements to
the office facilities, the sprinkler and lighting systems and the installation
of normal trade fixtures, shelves, machinery, racks and apparatus are hereby
specifically approved. Tenant shall notify Landlord upon completion of any other
alterations, improvements, modifications, or additions and Landlord may inspect
same for workmanship and compliance with the approved plans and specifications.
Any alteration, improvement, modification, or fixture which is installed by
either Landlord or Tenant on the Premises and which is in any manner attached to
the floors, walls, or ceilings shall remain upon the Premises when the Premises
are surrendered by Tenant except as described hereinbelow.
9.2 TRADE FIXTURES. Notwithstanding anything in this Section 9 to the
--------------------
contrary, all normal trade fixtures, equipment, shelves, machinery, signs and
furniture installed in the Premises at the cost of Tenant, may be removed by
Tenant on or before the termination date of this Lease provided (i) Tenant is
not in default under this Lease, (ii) removal shall be done in a workmanlike
manner so as not to damage the fundamental structural integrity of the Building,
and (iii) Tenant shall repair all damage to the Premises resulting from the
removal thereof.
9.3 MECHANICS' LIEN. Neither Landlord nor Tenant will create or permit
---------------------
to be created or to remain any lien (including but not limited to, the liens of
mechanics, laborers, artisans, or materialmen for work or materials alleged to
be done or furnished in connection with the Premises), encumbrance or other
charge upon the Premises or any part thereof, upon Landlord's interest therein,
or upon Tenant's leasehold interest; provided that Tenant shall not be required
------------------
to discharge any such liens, encumbrances or charges as may be placed upon the
Premises by the act of Landlord.
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<PAGE>
SECTION 10
----------
GRAPHICS AND ARCHITECTURAL CONTROL
10.1 Tenant may place reasonable signage on the Building all at
Tenant's own cost and expense and Tenant shall remain liable for the upkeep and
maintenance thereof but Tenant shall obtain Landlord's approval thereof prior to
installation. Such approval by Landlord will not be unreasonably withheld.
10.2 Landlord agrees it will not alter or change the name of the
Building, Premises or street address thereof without first obtaining the prior
written consent of Tenant or in the alternative, by paying directly all costs,
expenses, fees and charges incurred by Tenant due to such change in name or
address.
SECTION 11
----------
ASSIGNMENT AND SUBLETTING
In the event Tenant should desire to assign this Lease or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice of such
desire and Landlord shall then have a period of twenty (20) days following
receipt of such notice within which to notify Tenant in writing that Landlord
does not approve of such assignment or subletting. If Landlord should fail to
notify Tenant in writing of such disapproval within the twenty (20) day period,
Landlord shall be deemed to have elected to permit such assignment or
subletting. Landlord shall not unreasonably withhold its consent to any such
assignment or subletting. No assignment or subletting by Tenant shall relieve
Tenant of any obligations under this Lease.
SECTION 12
----------
RIGHT OF ACCESS
Landlord shall have the right to enter the Premises under ordinary
circumstances during normal business hours upon twenty-four (24) hours prior
written notice to Tenant, to examine the same and to make such repairs,
alterations, improvements, or additions as Landlord may deem necessary or
desirable to comply with this Lease, Landlord shall be allowed to take all
materials into and upon the Premises that may be required therefor without the
same constituting an eviction of Tenant, actual or constructive, and the rent
shall in no way abate while such repairs, alterations, improvements or additions
are being made, by reason of loss or interruption of business of Tenant unless
such repairs, alterations, improvements or additions restrict or interfere with
Tenant's use of a portion of the Building. In that event, the rent should abate
as to that portion of the Building wherein the use thereof is restricted.
Landlord shall
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<PAGE>
make reasonable efforts not to interfere with the normal business operations of
Tenant. In any event of an emergency, no prior written notice on the part of the
Landlord will be required to enter the Building and Premises. During the three
(3) months prior to the expiration of the term of this Lease, Landlord may
exhibit with twenty-four (24) hour notice the Premises to prospective lessees or
purchasers during normal business hours and place upon the Premises the usual
notices "For Sale or For Rent", and Tenant shall permit the same to remain.
SECTION 13
----------
HOLDING OVER
Should Tenant remain in possession of the Premises, or any part
thereof, after termination of this Lease (whether by the expiration of the term
of this Lease or otherwise) without the execution of a new lease by Landlord and
Tenant, Tenant, at the option of Landlord, shall become a tenant from month-to-
month of the Premises, or part thereof occupied, at one and one-half the Total
Monthly Rent for the first month and at two times the Total Monthly Rental
thereafter, and under all other terms, conditions, provisions and obligations of
this Lease insofar as the same are applicable to a tenancy from month-to-month.
SECTION 14
----------
DEFAULTS AND REMEDIES
14.1 Events of Default by Tenant. The occurrence of one or more of the
----------------------------------
following events shall constitute a default pursuant to the terms of this Lease:
(i) the failure of Tenant to pay the Monthly Rental when due and such failure
continues for a period of fifteen (15) days after written notice by Landlord;
(ii) the failure of Tenant to comply with or to observe any terms, provisions,
or conditions of this Lease performable by and obligatory upon Tenant, within
thirty (30) days after written notice by Landlord; (iii) the assignment of this
Lease or subleasing of the Premises by Tenant without the prior written approval
of Landlord; (iv) the taking of Tenant's leasehold estate by execution or other
process of law; (v) the judicial declaration of Tenant as a bankrupt or
insolvent according to law or an assignment of a substantial part of Tenant's
property for the benefit of creditors; (vi) the appointment of a receiver,
guardian, conservator, trustee in involuntary bankruptcy or similar officer by a
court of competent jurisdiction to take charge of a substantial part of
Tenant's property; (vii) the filing of a petition for involuntary or voluntary
reorganization or arrangement or bankruptcy of Tenant pursuant to any provision
of the Bankruptcy Code without subsequent dismissal thereof within sixty (60)
days.
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<PAGE>
14.2 LANDLORD'S REMEDIES. Upon the occurrence of any event of default
--------------------------
enumerated in Section 14.1 hereof, Landlord shall have the option of (i)
terminating this Lease by written notice thereof to Tenant, or (ii) continuing
this Lease in full force and effect, or (iii) curing the default of Tenant, or
(iv) pursuing any other remedy to which it may be entitled by law.
(i) In the event Landlord shall elect to terminate this
Lease, upon written notice to Tenant, this Lease shall be ended
as to Tenant and all persons holding under Tenant, and all of
Tenant's rights shall be forfeited and lapsed, as fully as if
this Lease had expired by lapse of time. In such event, Tenant
shall be required immediately to vacate the Premises and there
shall immediately become due and payable the amount by which
(a) the present value (determined using a discount rate of ten
per cent (10%) per annum) of the total rent and other benefits
which would have accrued to Landlord under this Lease for the
remainder of the Lease term if the terms and provisions of this
Lease had been fully complied with by Tenant exceeds (b) the
total fair market rental value (determined using a discount
rate of ten (10%) percent per annum) of the Premises for the
balance of the Lease term (it being the intention of both
parties hereto that Landlord shall receive the benefit of its
bargain); and the Landlord shall at once have all the rights of
re-entry upon the Premises, without becoming liable for
damages, or guilty of trespass. In addition to the sum
immediately due from Tenant under the foregoing provision,
there shall be recoverable from Tenant: (a) the cost of
restoring the Premises to good condition, normal wear and tear
excepted, (b) all accrued, unpaid sums, plus interest at the
maximum rate then permitted by law and late charges, if in
arrears, under the terms of this Lease up to the date of
termination, (c) Landlord's cost of recovering possession of
the Premises, and (d) rent and sums accruing subsequent to the
date of termination pursuant to the holdover provisions of
Section 13.
(ii) In the event that Landlord shall elect to continue
this Lease in full force and effect, Tenant shall continue to
be liable for all rents. Landlord shall nevertheless have all
the rights of re-entry upon the Premises without becoming
liable for damages, or guilty of a trespass and Landlord may
relet the Premises, or any part thereof, to a substitute tenant
or tenant, for a period of time equal to or lesser or greater
than the remainder of the Lease term on whatever terms and
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<PAGE>
conditions Landlord, at Landlord's sole discretion, deems advisable.
Against the rents and sums due from Tenant to Landlord during the
remainder of the term, credit shall be given Tenant in the net amount
of rent received from the new tenant after deduction by Landlord for:
(a) the costs incurred by Landlord in reletting the Premises
(including, without limitation, remodeling costs, brokerage fees, legal
fees, and the like), (b) the accrued sums, plus interest and late
charges if in arrears, under the terms of this Lease, (c) Landlord's
cost of recovering possession of the Premises, and (d) the cost of
storing any of Tenant's property left on the Premises after re-entry.
Notwithstanding any provision in this Section 14.2 (ii) to the
contrary, upon the default of any substitute tenant or upon the
expiration of the Lease term of such substitute tenant before
the expiration of the Lease term hereof, Landlord may, at
Landlord's election, either relet to still another substitute
tenant, or terminate this Lease and exercise its rights under
Section 14.2(i) hereof.
14.3 ATTORNEYS' FEES. In the event either party hereto defaults in the
----------------------
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and the other party hereto places the enforcement of this Lease,
or any part thereof, or the collection of any rent or charge due, or to become
due, or the recovery or the possession of the Premises, in the hands of
attorneys, or files suit upon the same, the party in default agrees to pay the
reasonable attorneys' fees of the nondefaulting party.
14.4 WAIVER. Failure on the part of Landlord or Tenant to complain of
-------------
any action or non-action on the part of Landlord or Tenant, no matter how long
the same may continue, shall never be deemed to be a waiver by either party of
any of his rights hereunder. Further, it is covenanted and agreed that no waiver
at any time of any of the provisions hereof by either party shall be construed
as a waiver of any of the other provisions hereof and that a waiver at any time
of any of the provisions hereof shall not be construed as a waiver at any
subsequent time of the same provisions.
14.5 LANDLORD'S DEFAULT. The failure of Landlord to comply with or
-------------------------
observe any terms, provisions, or conditions of this Lease performable by and
obligatory upon Landlord shall constitute a default.
14.6 TENANT'S REMEDIES. Upon the occurrence of an event of default,
------------------------
Tenant shall have the option of (i) curing the default of Landlord and
offsetting any and all costs of curing
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<PAGE>
same and any losses or damages related thereto against the Total Monthly
Rental or (ii) pursuing any other remedy to which it may be entitled by law.
Notwithstanding any provision in this Lease to the contrary, in the event
Landlord shall breach or fail to perform any obligation or duty to repair or
maintain the building or any mechanical equipment therein, the Tenant shall
give the Landlord written notice of any such failure or breach, and in the
event Landlord shall fail to begin to cure such failure or breach within two
(2) days of written notice thereof, then Tenant may undertake the performance
of such obligation, in which event Tenant may thereafter recover such actual
costs incurred in performing such obligations as a setoff against its rental
obligations. In the event Tenant undertakes the performance of Landlord's
duties or obligations as aforesaid, the right of setoff provided for in this
paragraph must be asserted, if at all, within 45 days following Tenant's
performance, and in no event shall Tenant have the right of offset more than
Fifteen Thousand Dollars ($15,000.00) against its rental and payment
obligations hereunder and any amounts asserted by Tenant in excess of Fifteen
Thousand Dollars ($15,000.00) must be pursued against Landlord by Tenant's
other legal remedies. Landlord shall have thirty (30) days to cure any other
type of default.
Section 15
----------
SUBORDINATION
15.1 SUBORDINATION. This Lease shall be subject and subordinate to
--------------------
any mortgages or deeds of trust that may have been placed or may be
hereafter placed upon the Premises by Landlord and to any advances to be made
thereunder, and to any interest thereon, and all renewals, replacements and
extensions thereof. Provided however, that any mortgagee or trustee may elect
by written notification to give the rights and interests of Tenant under this
Lease priority over the lien of its mortgage or deed of trust. Landlord will
use reasonable efforts to obtain any Lender's approval of this Lease. Tenant
shall, in the event any proceedings are brought for foreclosure of the
Premises, or the power of sale under any mortgage made by Landlord covering the
Premises is exercised, attorn to the purchaser by Landlord covering the
Premises is exercised, attorn to the purchaser (at the option of said
purchaser, and not otherwise) upon any such foreclosure or sale and recognize
such purchaser as the Landlord under this Lease.
15.2 NECESSARY INSTRUMENTS. Although Section 15.1 hereof is self-
----------------------------
executing, Tenant shall execute and deliver instruments that may be
reasonably required by Landlord's mortgagees for the purpose of evidencing the
subordination of this Lease within ten (10) days of written notice by Landlord
or such mortgagee or its trustee, the language thereof to be agreed
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<PAGE>
upon by the parties hereto.
Section 16
----------
ESTOPPEL CERTIFICATES
Tenant agrees within ten (10) days following request by Landlord to
execute and deliver to Landlord reasonably required documents (including an
estoppel certificate) (a) certifying that this Lease is unmodified and in full
force and effect, or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect and the
date to which the rent and other charges are paid in advance, if any, and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of Landlord hereunder, or so specifying such defaults, if any, (as
are claimed), evidencing the status of the Lease. Tenant's failure to deliver
an estoppel certificate within such time shall be conclusive upon Tenant (i)
that this Lease is in full force and effect, without modification except as may
be represented by Landlord, (ii) that to the Tenant's knowledge there are no
uncured defaults in Landlord's performance; and (iii) that no rent has been
paid in advance except as set forth in this Lease.
Section 17
----------
DESTRUCTION
17.1 LANDLORD'S OBLIGATIONS. (i) In the event the Premises shall be
-----------------------------
damaged by fire or other casualty, but shall not be rendered untenantable in
whole or in part, regardless of the time remaining in the term of this Lease.
Landlord shall, at its own expense, cause such damage to be repaired, and the
rent shall not be abated. (ii) If the Premises shall be rendered partially
untenantable, unless the damage occurs within the last one (1) year of the term
of this Lease, Landlord shall, at its own expense, cause the damage to be
repaired, and the Total Monthly Rental shall be abated proportionately as to the
portion of the Premises rendered untenantable. If, however, the damage occurs
within the last one (1) year of the term of this Lease, and Landlord elects not
to repair same, either party may terminate this Lease by giving the other party
written notice of termination within thirty (30) days from the date of such
occurrence, and in the event of such termination, rent shall be adjusted as of
the date of such occurrence. (iii) If the Premises shall be rendered wholly
untenantable by reason of such occurrence, regardless of the time remaining in
the term of this Lease, Landlord may at its own cost and expense cause such
damage to be repaired, and the Total Monthly Rental shall abate until the
Premises have been restored and rendered tenantable, or Landlord may at its
election terminate this Lease by giving Tenant written notice of termination
within thirty (30) days from
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<PAGE>
the date of said occurrence, and in the event of such termination, rent
shall be adjusted as of the date of such occurrence. (iv) If the Building shall
be damaged to such an extent that Landlord shall determine that the repairs
shall not be made or that demolition of the building is appropriate, then
notwithstanding anything to the contrary contained above, and whether or not
the Premises have been damaged, Landlord or Tenant may terminate this Lease by
giving the other party written notice of termination, in which event rent shall
be adjusted as of the date of termination. (v) If Landlord has not initiated
repair or restoration within thirty (30) days of the event of the casualty,
Tenant shall have the right to terminate this Lease by written notice to
Landlord at any time within thirty (30) days after said thirty (30) days.
17.2 SCOPE OF LANDLORD'S OBLIGATIONS. In the event Landlord elects
--------------------------------------
or shall be obligated to repair or to restore any damage or destruction
aforesaid, the scope of the work shall be limited to the original basic Building
and Standard Leasehold Improvements, and time of completion shall be subject to
the provisions of Section 20, ("Force Majeure"). If Landlord notifies Tenant
within thirty (30) days after the casualty that the insurance proceeds are
inadequate to restore the Building and the standard leasehold improvements as
aforesaid, Tenant shall have the right to terminate this Lease by giving written
notice to Landlord within thirty (30) days after Landlord's notice to Tenant.
Section 18
----------
EMINENT DOMAIN
18.1 TOTAL TAKING. In the event of a taking of the Premises or damage
-------------------
related to the exercise of the power of eminent domain by any agency, authority,
public utility, person, or corporation or entity empowered to condemn property
("Taking") of the entire Premises or so much thereof as to prevent or
substantially impair their use by Tenant during the Lease term (i) the rights of
Tenant under the Lease and the leasehold estate of Tenant in and to the Premises
shall cease and terminate as of the date upon which title to the Premises, or a
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor ("Date of Taking"), (ii) Landlord shall refund to Tenant any prepaid
rent, (iii) Tenant shall pay to Landlord any rent or charges due Landlord under
the Lease, each prorated as of the Date of Taking (iv) Tenant shall receive from
the Award those portions of the Award attributable to relocation of Tenant,
improvements to the Premises made and paid for by Tenant and trade fixtures,
equipment, and furniture of Tenant, and (v) the remainder of the Award shall be
paid to and be the property of Landlord.
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<PAGE>
18.2 PARTIAL TAKING. In the event of a Taking of only a part of the
---------------------
Premises which does not constitute a "Total Taking" during the Lease term
(i) the rights of Tenant under the Lease and the leasehold estate of Tenant in
and to the portion of the Premises taken shall cease and terminate as of the
Date of Taking, (ii) from and after the Date of Taking the Total Monthly Rent
shall be the product obtained by multiplying (a) the Total Monthly Rent by (b)
the quotient obtained by dividing the total square feet of the Premises after
the Taking by the total square feet of the Premises prior to the Taking, (iii)
Tenant shall receive from the Award those portions of the Award attributable to
improvements to the Premises made and paid for by Tenant and trade fixtures,
equipment, and furniture of Tenant, and (iv) the remainder of the Award shall
be paid to and be the property of Landlord. Landlord, from his portion of the
Award, shall restore the remainder of the Premises, as nearly as possible, to
one architectural unit, and (v) if Landlord has not initiated repair or
restoration within ninety (90) days of the Partial Taking, Tenant shall have
the right to terminate this Lease by written notice to Landlord within thirty
(30) days after said ninety (90) days.
SECTION 19
----------
FORCE MAJEURE
In the event Landlord shall be delayed, hindered or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor disputes, labor troubles, inability to procure materials,
failure of power, restrictive governmental laws or regulations, riots,
insurrection, war or other cause not within the reasonable control of Landlord,
then the performance of such act shall be excused for the period of the delay
and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay.
SECTION 20
----------
PARKING
Tenant shall have the use of the parking spaces and loading dock areas
located on the Premises and designated on Exhibit "B". Tenant agrees that it
will employ its best efforts to prevent the use by Tenant's employees and
visitors of parking spaces allocated to other tenants. Landlord represents that
it now has access and will retain access to the Building and Premises for the
-------
use and benefit of Tenant, its employees, agents, licensees and invitees.
- -------------------------
-21-
<PAGE>
SECTION 21
----------
INTERPRETATIVE PROVISIONS
21.1 NOTICE. Any notice, request, approval, consent or other
-------------
communication required or contemplated by this Lease must be in writing, and
may, unless otherwise in this Lease expressly provided, by given or be served by
depositing the same in the United States Postal Service, post-paid and certified
and addressed to the party to be notified, with return receipt requested, or by
delivering the same in person to such party (or, in the case of a corporate
party, to an officer of such party), or by prepaid telegram, when appropriate,
addressed to the party to be notified. Notice deposited in the mail in the
manner hereinabove described shall be effective from and after two (2) days
(exclusive of Saturdays, Sundays and postal holidays) after such deposit. Notice
given in any other manner shall be effective only if and when delivered to the
party to be notified to such party or at such party's address for purposes of
notice as set forth herein. For purposes of notice the addresses of the parties
shall, until changed as herein provided, be as follows:
For Landlord: Special Asset Management
Company of Texas, Inc.
Attn: Robert G. Radermacher
c/o Pittsburgh National Bank
5th Avenue and Wood Street
Pittsburgh, Pennsylvania 15265
For Tenant: Stationers Distributing
Company, Inc.
Attn: B. Neal Perky or
Robert Hicks
P.O. Box 11220
Fort Worth, Texas 76110
However, the parties hereto shall have the right from time to time to change
their respective addresses by giving at least fifteen (15) days written notice
to the other party.
21.2 CAPTIONS. The title captions appearing in this Lease are
---------------
inserted and included solely for convenience and shall never be considered
or given any effect in construing this Lease, or any provision or provisions
hereof, or in connection with the duties, obligations or liabilities of the
respective parties hereto or in ascertaining intent, if any question of intent
exists.
21.3 ENTIRE CONTRACT; AMENDMENT. It is expressly agreed by Tenant,
---------------------------------
as a material consideration for the execution of this Lease, that this
Lease, including written extrinsic
-22-
<PAGE>
documents referred to herein is the entire agreement of the parties, and
that there are, and have been, no verbal representations, understandings,
stipulations, agreements or promises pertaining to this Lease or the expressly
mentioned written extrinsic documents not incorporated in writing in this
Lease. It is likewise agreed that this Lease may not be altered, amended or
extended except by an instrument in writing signed by both Landlord and Tenant.
21.4 SEVERABILITY. If any term or provision of this Lease, or the
-------------------
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 of 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 enforced to the fullest
extent permitted by law.
21.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
-----------------------------
11 and 16 of this Lease, all covenants and obligations as contained within
this Lease shall bind and extend and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon Tenant, its successors and
assigns.
21.6 PERSONAL PRONOUNS. All personal pronouns used in this Lease
------------------------
shall include the other genders, whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural (and vice versa)
whenever and as often as may be appropriate.
21.7 SHORT FORM LEASE. Tenant agrees not to record this Lease, but
-----------------------
each party hereto agrees, on request of the other, to execute a Short Form
Lease in form recordable and complying with applicable Texas laws. In no event
shall such document set forth the rental or other charges payable by Tenant
under this Lease; and any such document shall expressly state that it is
executed pursuant to the provisions contained in this Lease, and is not
intended to vary the terms and conditions of this Lease.
21.8 LEGAL INTERPRETATION. This Lease and the rights and obligations
---------------------------
of the parties hereto shall be interpreted, construed and enforced in
accordance with the laws of the State of Texas.
21.9 ACCEPTANCE OF PAYMENTS UNDER PROTEST. The acceptance by Landlord
-------------------------------------------
of payments by Tenant under protest shall not be deemed an acknowledgement
by landlord, or a validation of, any contention or reservation of rights by
Tenant.
21.10 RENEWAL OPTION. Tenant shall have the right and option to renew
----------------------
this Lease for one (1) additional five (5) year
-23-
<PAGE>
term by delivering written notice of the exercise thereof to Landlord at
least 180 days prior to the expiration of the primary lease term, provided that
at the time of the commencement of any such extended lease term Tenant is not
in default hereunder. Upon the delivery of said notice and subject to the
conditions set forth in the preceding sentence, and upon the execution by
Landlord and Tenant of an extension agreement containing such terms and
provisions which are consistent with the provisions of this paragraph, this
Lease shall be extended upon the same terms, covenants and conditions as
provided in this Lease except as follows:
(i) The Total Monthly Rent shall be established between
Landlord and Tenant at the market rate in effect at
that time. If both parties are unable to agree to
a market rate and both parties consent to be bound,
then the method described in the following
subparagraph may be used to determine the market rate.
(ii) In the event this Lease provides for the payment of
rental at "the prevailing rental rate" or at the "the
market rate" (the "Market Rate") during any extension
or renewal thereof, and Landlord and Tenant are unable
to agree upon the Market Rate, Landlord and Tenant shall
each promptly appoint a real estate appraiser who is a
member of the American Institute of Real Estate Appraisers
(or its equivalent) to assist in the determination of the
Market Rate, and the two appraisers shall appoint a third
appraiser who is also a member of the American Institute
of Real Estate Appraisers (or its equivalent). The
determination of the Market Rate by the agreement of any
two of such three appraisers shall be accepted by and
binding upon Landlord and Tenant as the Market Rate,
which rate shall thereafter be payable until further
adjustment as provided hereunder. Landlord and Tenant
will use all reasonable diligence to cause their
appointed appraisers to perform in good faith and in a
timely manner in order to make the determination of the
Market Rate on or before the date on which the Market
Rate is to become effective. In the event
-24-
<PAGE>
such appraisers shall not make such determination prior to
the date on which the Market Rate is to become effective,
this Lease shall nevertheless continue in full force and
effect until such determination is made, and the rental for
such period shall be payable at the rate otherwise payable
hereunder. Upon the determination by such appraisers of the
Market Rate, the payment of the Market Rate shall commence
on the first day of the month following the date of such
determinations, and in addition to such monthly installment
of rental, Tenant shall pay to Landlord the increase in the
rental payable hereunder, if any, applicable to the period
from the date on which the Market Rate was scheduled to
become effective to the payment of the first installment at
the Market Rate. Landlord and Tenant shall each bear the
costs and fees of their respective appraisers and shall
share equally the cost of the third appraiser.
22.11 This lease is contingent upon Landlord and McKesson Corporation
executing a termination of lease agreement.
22.12 Landlord must relocate the tenant of the fenced area next to the
building by March 22, 1989, and if unable to do so, Landlord must provide
Tenant additional comparable parking or, Tenant may terminate this lease. If
Tenant should terminate this lease, the Landlord requires written notice of
Termination of Tenant by March 31, 1989.
EXECUTED IN MULTIPLE ORIGINAL COUNTERPARTS, which constitute but one
and the same instrument, as of the day and year first above written.
"LANDLORD"
ATTEST: SPECIAL ASSET MANAGEMENT COMPANY OF TEXAS,
By: [SIGNITURE NOT LEGIBLE] By:/s/Robert G. Rudermacher
------------------------------ ----------------------------------
Secretary , Title: AVP
ATTEST:
By: By: [SIGNITURE NOT LEGIBLE]
------------------------------ ---------------------------------------
Secretary , Title: VP
-25-
<PAGE>
"TENANT"
ATTEST: STATIONERS DISTRIBUTING
COMPANY, INC.
By: [SIGNITURE NOT LEGIBLE] By: [SIGNITURE NOT LEGIBLE]
---------------------------------- ------------------------------
Secretary , Title:
Vice President & Chief
Financial Officer
ATTEST:
By:__________________________________ By: [SIGNITURE NOT LEGIBLE]
Secretary ------------------------------
, Title:
[SIGNITURE NOT LEGIBLE]
-26-
<PAGE>
EXHIBIT A
All that certain 3.6736 acres of land out of a 31.015 acre tract of land
described in a deed dated January 24, 1977 from Longhemp Corp. to I.D.S. Realty
Trust filed in the official public records at County Clerk File No. F-037766
out of the John Flowers Survey. A-240, Harris County, Texas and being more
particularly described by metes and bounds as follows:
BEGINNING at a 1- " pinched-top pipe found marking the northwest corner
of the above mentioned 31.015 acre tract, said pipe located in the
southwesterly right-of-way line of the H. 4T. C. R. R. (100' wide);
THENCE S 490 40' 00" E - 366.23', along said southwesterly right-of-way
line, to a point for corner;
THENCE S 00 12' 00" W - 453.48' to a point for corner;
THENCE N 89 48' 00" W - 280.00' to a point for corner, located in the
most westerly line of the above mentioned 31.015 acre tract;
THENCE N 00 12' 00" E - 689.54', along said westerly line, to the
POINT OF BEGINNING and containing 3.6736 acres of land, more or less.
<PAGE>
SILBER - BUILDING A
2155 Silber Rd.
[DIAGRAM OF BUILDING APPEARS HERE]
Exhibit "B"
<PAGE>
Houston, TX (2155 Silber Road) - Renewal Agreement
<PAGE>
March 15, 1994
Mr. Otis H. Halleen
United Stationers Supply Co.
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Re: Renewal Agreement for the Lease Agreement at 2155 Silber Road; Houston,
Texas
Dear Mr. Halleen:
In regard to the Lease Agreement (hereinafter referred to as the "Lease
Agreement") dated March 17, 1989 by and between Special Asset Management Company
of Texas, Inc., a Texas Corporation (hereinafter referred to as "Prior
Landlord") and United Stationers Supply Co., an Illinois corporation, as
successor-in-interest, by reason of merger, to Stationers Distributing Company,
Inc., a Delaware corporation (hereinafter referred to as "Tenant") for 95,600
square feet located at 2155 Silber Road, Houston, Texas, it is hereby agreed
-------
that the Lease Agreement shall be amended to the following terms and conditions:
1. It is acknowledged and agreed by Tenant that all of Prior Landlord's
rights and interest in the Lease Agreement and the premises have been assigned
to teachers Insurance and Annuity Association of New York, a New York
corporation (hereinafter referred to as "Landlord").
2. The lease term shall be extended and renewed for a further term of
twenty-four (24) months commencing on July 1, 1994 and ending on June 30, 1996.
3. The monthly rent outlined in Paragraph 3.1 of the Lease Agreement shall
be $21,032.00, or $.22/sf/month for the twenty-four (24) month lease term
outlined herein.
4. The common area maintenance reimbursement paid by tenant as additional
rental to Landlord outlined in Paragraph 3.2(iii) of the Lease Agreement shall
be $964.00 per month.
5. Tenant agrees to accept the premises in its "as is", "where is"
condition.
6. It is agreed and acknowledged that Mike Boyd of Boyd, Page and
Associates is the broker of record (hereinafter referred to as "Broker") and
has represented Tenant in this lease renewal transaction. In consideration for
the execution of this Lease Renewal, it is agreed that Broker shall be paid a
commission of 4% of the base rental consideration outlined in No. 3 of this
Renewal Agreement. Such commission payment shall be made to Broker by Landlord
within fifteen (15) days from the date of the execution of this Lease and shall
be in the form of a lump sum payment. Tenant hereby agrees to indemnify and
hold Landlord harmless from and against any claim by any other broker, agent or
other person claiming a commission or other form of compensation by virtue of
having dealt with Tenant with regard to this lease transaction.
Except as provided herein, all terms and conditions of the above Lease
Agreement remain unamended and in full force and effect.
ACCEPTED AND AGREED: LANDLORD ACCEPTED AND AGREED: TENANT
TEACHERS INSURANCE AND ANNUITY UNITED STATIONERS SUPPLY CO.
ASSOCIATION, AN ILLINOIS CORPORATION
A NEW YORK CORPORATION
By: __________________________ By: /s/ Otis H. Halleen
------------------------------
Its: _________________________ Its: Vice President
------------------------------
Date: ________________________ Date: 4/15/94
-----------------------------
<PAGE>
March 15, 1994
Mr. Otis H. Halleen
United Stationers Supply Co.
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Re: Renewal Agreement for the Lease Agreement at 2155 Silber Road; Houston,
Texas
Dear Mr. Halleen:
In regard to the Lease Agreement (hereinafter referred to as the "Lease
Agreement") dated March 17, 1989 by and between Special Asset Management
Company of Texas, Inc., a Texas Corporation (hereinafter referred to as "Prior
Landlord") and United Stationers Supply Co., an Illinois corporation, as
successor-in-interest, by reason of merger, to Stationers Distributing Company,
Inc., a Delaware corporation (hereinafter referred to as "Tenant") for 95,600
square feet located at 2155 Silber Road, Houston,
-------
Texas, it is hereby agreed that the Lease Agreement shall be amended to the
following terms and conditions:
1. It is acknowledged and agreed by Tenant that all of Prior Landlord's
rights and interest in the Lease Agreement and the premises have been assigned
to teachers Insurance and Annuity Association of New York, a New York
corporation (hereinafter referred to as "Landlord").
2. The lease term shall be extended and renewed for a further term of
twenty-four (24) months commencing on July 1, 1994 and ending on June 30, 1996.
3. The monthly rent outlined in Paragraph 3.1 of the Lease Agreement shall
be $21,032.00, or $.22/sf/month for the twenty-four (24) month lease term
outlined herein.
4. The common area maintenance reimbursement paid by tenant as additional
rental to Landlord outlined in Paragraph 3.2(iii) of the Lease Agreement shall
be $964.00 per month.
5. Tenant agrees to accept the premises in its "as is", "where is"
condition.
6. It is agreed and acknowledged that Mike Boyd of Boyd, Page and
Associates is the broker of record (hereinafter referred to as "Broker") and
has represented Tenant in this lease renewal transaction. In consideration for
the execution of this Lease Renewal, it is agreed that Broker shall be paid a
commission of 4% of the base rental consideration outlined in No. 3 of this
Renewal Agreement. Such commission payment shall be made to Broker by Landlord
within fifteen (15) days from the date of the execution of this Lease and shall
be in the form of a lump sum payment. Tenant hereby agrees to indemnify and
hold Landlord harmless from and against any claim by any other broker, agent or
other person claiming a commission or other form of compensation by virtue of
having dealt with Tenant with regard to this lease transaction.
Except as provided herein, all terms and conditions of the above Lease
Agreement remain unamended and in full force and effect.
ACCEPTED AND AGREED: LANDLORD ACCEPTED AND AGREED: TENANT
TEACHERS INSURANCE AND ANNUITY UNITED STATIONERS SUPPLY CO.
ASSOCIATION, AN ILLINOIS CORPORATION
A NEW YORK CORPORATION
By: __________________________ By: /s/ Otis H Halleen
-------------------------------
Its: _________________________ Its: Vice President
------------------------------
Date: ________________________ Date: 4/15/94
-----------------------------
<PAGE>
Houston, TX (2155 Silber Road) - First Amendment to Lease Agreement
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment To Lease Agreement (the "First Amendment") is
executed as of the 7th day of December, 1989, by and between Special Asset
--- --------
Management Company of Texas, Inc., a Texas corporation ("the Landlord") and
Stationers Distributing Company, Inc., a Delaware corporation ("the Tenant").
W I T N E S S E T H
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
(the "Lease Agreement") executed as of March 17, 1989;
WHEREAS, Landlord and Tenant desire to amend the Lease Agreement upon
the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the recitals above and other
valuable considerations, the receipt and sufficiency of which are hereby
acknowledge by Landlord and Tenant, Landlord and Tenant agree as follows:
-1-
<PAGE>
1. From and after the date of this First Amendment, Section 14.6
----
Tenant Remedies; shall be amended to read as follows:
- ---------------
14.6 Tenant's Remedies. Upon the occurrence of an event of default, Tenant
- ----------------------
shall have the option of (i) curing the default of Landlord and offsetting
any and all costs of curing same and any losses or damages related thereto
against the Total Monthly Rental or (ii) pursuing any other remedy to which it
may be entitled by law. Notwithstanding any provision in this Lease to the
contrary, in the event Landlord shall breach or fail to perform any obligation
or duty to repair or maintain the building or any mechanical equipment therein,
and such failure creates an emergency situation that interferes with Tenant's
ability to conduct business and/or creates a possibility of danger to Tenant's
employees or a possibility of damage to Tenant's inventory, then the Tenant
shall give the Landlord and Landlord's first mortgagee written notice of any
such failure or breach, and in the event Landlord or Landlord's first mortgagee
shall fail to begin to cure such failure or breach within two (2) days of
written notice thereof, then Tenant may undertake the performance of such
obligation in the same workmanship manner as if Landlord was doing such work,
in which event Tenant may thereafter recover such actual cost incurred in
performing such obligations as a setoff against its rental obligations. In the
event Tenant undertakes the performance of Landlord's duties or obligations as
aforesaid, the right to setoff provided for in this paragraph must be asserted,
if at all, within 45 days following Tenant's work, and in no event shall Tenant
have the right to offset more than Fifteen Thousand Dollars ($15,000.00)
against its rental and payment obligations hereunder and any amounts asserted
by Tenant in excess of Fifteen Thousand Dollars ($15,000.00) must be pursued
against Landlord, if at all, through presentation to Landlord or, if necessary
through an independant cause of action. Landlord and Landlord's first mortgagee
shall have thirty (30) days to cure any type of default, other than an
emergency. It is understood that Landlord's first mortgagee shall not have the
obligation to cure any default by Landlord, but such mortgagee may effect a
cure of such default if it elects to do so.
2. Except as modified by letter dated April 24, 1989 regarding the
notice provision change of address for Stationers, and as herein expressly
modified, the Lease Agreement and all exhibits attached thereto shall remain in
full force and effect.
3. This First Amendment and the Lease Agreement shall be governed by
the laws of the State of Texas and is fully performable in Harris County, Texas.
-2-
<PAGE>
This First Amendment has been fully executed as of the day and year first
written above.
LANDLORD:
Special Asset Management Company of Texas, Inc.,
a Texas corporation
By: /s/ Robert G Radermacher
------------------------------------------
Name: Robert G. Radermacher
------------------------------------------
Title: Assistant Vice President
------------------------------------------
TENANT:
Stationers Distributing Company, Inc.,
a Delaware corporation
By: /s/ B. Neal Perkey
------------------------------------------
B. Neal Perkey
Name: Vice President - Finance
------------------------------------------
Chief Financial Officer
Title: Treasurer & Assistant Secretary
-------------------------------------------
-3-
<PAGE>
EXHIBIT 10.48
Owner: Shadrall
Prop. No. 725
Location: Lubbock, TX
Subtenant: Stationers
________________________________________________________________________________
SUBLEASE
________________________________________________________________________________
SUBLEASE executed this 9th day of January, 1992, between SHADRALL
---
ASSOCIATES, a New York general partnership, of 430 Lexington Street, Auburndale,
Massachusetts 02166 (the "Sublandlord"), and STATIONERS DISTRIBUTING COMPANY,
INC., a Delaware corporation, of 4055 International Plaza, Suite 500, Ft. Worth,
Texas 76109 (the "Subtenant").
For and in consideration of the mutual promises, covenants and conditions
herein contained and the rent reserved by Sublandlord to be paid by Subtenant to
Sublandlord, Sublandlord hereby leases to Subtenant and Subtenant hereby rents
from Sublandlord the Demised Premises, as hereinafter defined, for the term, at
the rentals and upon the terms and conditions set forth below.
Sublandlord, as the successor to T. G. & Y. Stores Co., is actually the
tenant under a certain Lease with Dewey Jernigan and Billye Sue Jernigan, dated
December 29, 1964 (the "Lease"). Notwithstanding the existence of the Lease, the
parties hereto agree that to the fullest extent possible, their rights and
obligations shall be governed by this Sublease.
ARTICLE 1 - DEFINITION OF CERTAIN TERMS.
SECTION 1.01 - DEFINITIONS: As used in this Sublease, the following terms
shall have the meanings set forth below:
(a) "Additional Rent" shall mean and include any amounts other than Base
Rent required to be paid by Subtenant to Sublandlord pursuant to any of the
provisions of this Sublease.
(b) "Alterations" shall mean and include all improvements, changes,
alterations and betterments to the Demised Premises.
(c) "Commencement Date" shall mean March 1, 1992.
(d) "Common Areas" shall mean those portions of the Property excluding
the Demised Premises, other parts of the building in which the Demised Premises
are located, other buildings
<PAGE>
now existing or hereinafter constructed, all as depicted upon the Site Plan or
amendments thereto.
(e) "Common Area Costs" are as set forth in Section 4.01.
(f) "Demised Premises" are located on the Property, have the street
address of 205 Slaton Road, Lubbock, Texas, and shall be further defined as (i)
the portion of the buildings located at the Property marked "Stationers" on the
Site Plan of the Property attached hereto as Exhibit B (the "Site Plan"), which
has, for purposes of this Sublease, an approximate gross leasable area of 58,725
square feet, and (ii) any and all leasehold improvements permanently affixed or
attached at any time by Sublandlord, Subtenant or a previous occupant in that
part of the building comprising the Demised Premises, including, without
limitation, any heating, ventilation and air conditioning units or electrical
systems.
The Demised Premises, for purposes of this Sublease, shall extend to the
exterior face of all walls, or to the building line where there is no wall, or
to the center line of those walls separating the Demised Premises from other
premises in the building on which the Demised Premises are located, to the
interior face of the roof, and to the subflooring and foundation, reserving to
Sublandlord the right to install, maintain, use, repair and replace pipes,
ducts, conduits and wires leading through the Demised Premises in locations
which will not interfere with Subtenant's use thereof and serving other parts of
said building.
(g) "Environmental Laws" shall mean all laws referred to in subparagraph
(i) of this Section; each Environmental Law is a Legal Requirement.
(h) "Force Majeure" shall mean causes beyond the reasonable control of
Subtenant or Sublandlord, as the case may be, including but not limited to "acts
of God", fire and other casualties, earthquakes and floods, strikes, lock-outs,
protests, riots, insurrection, war, nuclear disaster, unavailability of
materials, acts of governmental authority, including courts, or acts or conduct
of the other party to this Sublease, its employees or agents, in violation of
this Sublease. Such causes shall not include financial difficulties or inability
to obtain financing.
(i) "Hazardous Materials" shall mean any hazardous, poisonous, toxic or
infectious substance, material, gas, waste or asbestos which is or becomes
regulated by any governmental authority of the United States Government, the
State of Texas or any of their agencies, or which has been identified as a
toxic, cancer causing or otherwise hazardous substance.
(j) "Legal Requirements" shall mean (i) all present and future laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments, departments, commissions, boards and courts, and
rules and regulations of any insurance rating organization or any other body
exercising similar functions, foreseen or unforeseen, ordinary as well as
extraordinary, which may be applicable to the Demised Premises and Property or
to the use or manner of use of the Demised Premises by the owners, tenants, or
occupants thereof; (ii) the reasonable requirements of all companies providing
public liability, fire and other policies
-2-
<PAGE>
of insurance at any time in force with respect to the Property or the Demised
Premises; (iii) the provisions of any covenants, conditions, restrictions,
easements or agreements or record governing the Property; and (iv) the
reasonable and customary requirements of any Mortgage.
(k) "Mortgage" shall mean any mortgage, deed of trust or security
agreement now or hereafter encumbering or creating a lien on any portion of the
Property, as the same may be consolidated, renewed, replaced, extended or
modified, excluding security interests encumbering Subtenant's leasehold
interest only.
(l) "Mortgagee" shall mean the holder or holders of any Mortgage or the
beneficiary or beneficiaries under any deed of trust constituting a Mortgage.
(m) "Personalty" shall mean and include any and all personal property,
inventory, goods, stock of merchandise, chattels, trade fixtures, furniture,
furnishings and equipment, storage racks, conveyor systems and other machinery
or equipment which can be removed without non-repairable damage to the Demised
Premises (excluding those items included within the definition of Demised
Premises as set forth in Subsection 1.01(f)(ii), which items are and shall
remain the property of Sublandlord from and after the time they are installed),
owned by Subtenant or any subtenant, concessionaire or licensee and now or
hereafter located on or used in connection with the Demised Premises.
(n) "Property" shall mean that certain parcel of land at 205 Slaton Road,
Lubbock, Texas, described in Exhibit A, together with all buildings and
improvements thereon now and in the future, and shall include the Common Areas.
(o) "Pro Rata Share" shall mean, as to any item to which it refers, that
portion of the entire cost of the applicable item that is obtained by
multiplying the entire cost of the applicable item by a fraction, the numerator
of which is the gross leasable area of the Demised Premises and the denominator
of which is the gross leasable area of all buildings at the Property actually
constructed and completed. At the Commencement Date of this Sublease,
Subtenant's Pro Rata Share is 37.93%. Pro Rata Share shall be equitably adjusted
for Lease Years which do not conform to the billing periods for which a Pro Rata
Share is being billed or collected.
(p) "Real Estate Taxes" shall mean any form of real property tax, excise
or assessment, whether general or special (but not any federal or state net
income, gift, franchise, inheritance or estate taxes), or documentary transfer
tax on the making of this Sublease, imposed now or in the future by any
authority having the direct or indirect power to tax, including, but not limited
to, any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof, levied against or with
respect to the land and buildings comprising the Property, or any legal or
equitable interest of Sublandlord in the Demised Premises or in the Property. In
the event a taxing authority shall impose taxes in lieu of real property taxes
described above, such taxes shall be deemed included within the definition of
Real Estate Taxes.
-3-
<PAGE>
(q) "Rent" or "rents" shall mean the Base Rent, Additional Rent and all
other monetary sums required to be paid by the Subtenant pursuant to the terms
of this Sublease.
(r) "Rent Commencement Date" shall mean March 1, 1992.
(s) "Repair" or "repairs" shall include, but not be limited to,
maintenance, repair, replacement and restorations, all of the foregoing being of
an extent and quality equal to the original work and materials.
(t) "Sublandlord" shall mean Shadrall Associates and any purchasers,
successors or assigns of the Property or any assignee of their interest under
this Sublease.
(u) "Sublandlord's Work" shall be as defined in Section 2.01(c) and
depicted in Exhibit C.
(v) "Sublease Term" or "Term" shall be as defined in Section 2.01(a).
(w) "Sublease Year" shall refer to a period of 365 days (366 in any leap
year) commencing on the Commencement Date or an anniversary of the Commencement
Date. In the event the Commencement Date is other than the first day of a month,
each Sublease Year shall commence on the first day of the first full calendar
month following the Commencement Date (provided that any additional days between
the Commencement Date and the beginning of the first Sublease Year shall be
included within the first Sublease Year).
(x) "Subtenant" shall mean the party named as Subtenant above and any
party or parties succeeding to the interest in the Demised Premises of such
named party in accordance with the provisions of this Sublease.
ARTICLE 2 - TERM OF SUBLEASE; QUIET ENJOYMENT; USE OF PREMISES.
SECTION 2.01 - TERM; QUIET ENJOYMENT:
(a) The term of this Sublease shall commence on the Commencement Date and
shall end at 11:59 p.m., on April 27, 1998, unless such term shall be sooner
terminated as herein provided. The term of this Sublease is referred to herein
as the "Sublease Term".
(b) Sublandlord covenants that so long as Subtenant shall fully and
timely perform the agreements, terms, covenants and conditions hereof, Subtenant
shall and may peaceably and quietly have, hold and enjoy the Demised Premises
for the Sublease Term without disturbance by or from Sublandlord or anyone
claiming under Sublandlord, subject to all Mortgages and other matters to which
this Sublease is or may become subordinate and to the provisions contained
herein. Other than as to the due performance of Sublandlord's Work and the
ongoing agreements, covenants and maintenance obligations of the Sublandlord
under this Lease, Subtenant takes the Demised Premises in strictly "AS IS"
condition, as to title, permitted uses
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and physical condition, there being no representations or warranties by
Sublandlord concerning the title to or condition of the Demised Premises, except
as expressly provided in this Sublease. Subtenant agrees that Subtenant is the
present occupant of the Demised Premises and has been given ample opportunity to
make such investigation of the Demised Premises and Legal Requirements
applicable to the Demised Premises and business conducted thereat. If for any
reason, the Lease of Sublandlord's right to possession of the Demised Premises
thereunder is terminated, this Sublease shall likewise terminate. Sublandlord
warrants, represents, covenants and agrees with Subtenant that the Sublandlord
has the full right and power to enter this Sublease, that the Lease has not been
amended (other than by an amendment dated April 24, 1969), that true and correct
copies of the Lease and amendment have been provided to Subtenant, and that
Sublandlord will not voluntarily terminate the Lease or cause the Lease or its
rights thereunder to terminate. Sublandlord is not obligated hereby to elect to
extend the Lease for any period past the expiration of the Sublease Term.
Sublandlord further warrants, represents, covenants and agrees with Subtenant
that the Lease is in full force and effect, that Sublandlord will perform all of
its obligations under the Lease to the end that the Lease shall remain in full
force and effect throughout the Sublease Term, and that the term of the Lease
has been extended through the end of the Sublease Term.
(c) Sublandlord is performing at its cost the improvement of the Demised
Premises and the Property, the specifications of which are set forth in Exhibit
C hereto ("Sublandlord's Work"). In performing said Sublandlord's Work,
Sublandlord agrees that same shall be done in an expeditious, good and
workmanlike manner, using new, first quality materials. For purposes hereof,
substantial completion of Sublandlord's Work shall occur by the Commencement
Date, unless delayed by Force Majeure, in which case Sublandlord's Work shall be
substantially completed as soon after the Commencement Date as reasonably
possible. All punch-list items will be completed by Sublandlord as soon as
reasonably possible after substantial completion.
SECTION 2.02 - USE OF DEMISED PREMISES; SIGNAGE:
(a) Subtenant covenants and agrees that Subtenant will use or permit the
use of the Demised Premises only for warehousing and distribution of stationery
and office furniture, equipment and supplies, with offices incidental to such
use. Subtenant may use the Demised Premises for other lawful, non-retail uses
which are no more hazardous than Subtenant's present use nor inconsistent with
the designed or intended use of the Property or its present use by other
tenants, with the prior written consent of the Sublandlord, which shall not be
unreasonably withheld. Notwithstanding the foregoing, Subtenant will in no event
use or occupy the Demised Premises or allow the Demised Premises to be used or
occupied (i) for any unlawful or immoral purpose, and will not suffer any
unlawful or immoral act to be done or any unlawful or immoral condition to exist
on the Demised Premises; (ii) for any business or purpose deemed extra hazardous
on account of fire or otherwise; (iii) in violation of any Legal Requirement;
(iv) so as to commit or permit to be committed any waste thereon; (v) for the
conduct of distress, auction, fire, liquidation, going-out-of-business or
bankruptcy sales, or for any retail sales of any nature.
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(b) Sublandlord may erect and maintain such suitable signs as it may deem
appropriate to advertise and/or identify the Property and other tenants in the
Property. Subject to the approval of the appropriate municipal authority,
Subtenant, with the Sublandlord's written approval as to location, design,
specifications, wording, size and type, which approval Sublandlord agrees not to
unreasonably withhold, may erect and maintain signs on the exterior of the
Demised Premises so as to identify Subtenant's place of business. All signs
shall comply with all Legal Requirements. All of Subtenant's existing signs are
hereby approved. Subtenant shall keep insured and shall maintain the signs its
installs or has installed in good condition and repair at all times. Subtenant
shall remove all its signs at the end of the Sublease Term, repairing any damage
caused thereby.
(c) Subtenant covenants and agrees that Subtenant and its successors,
assigns, subtenants, licensees, concessionaires and occupants and their agents,
employees, contractors, and invitees (other than Sublandlord and its agents,
employees, contractors, licensees and invitees), shall not, at any time during
the Term, cause or permit any Hazardous Materials to be brought, upon, stored,
manufactured, blended, handled, or used in, on, or about the Demised Premises
for any purpose.
(d) Subtenant shall have no liability to Sublandlord or Sublandlord's
agents, employees, contractors, licensees or invitees, for any Hazardous
Materials coming in, on or about the Demised Premises unless caused by an act or
omission of Subtenant, its successors, assigns, subtenants, licensees,
concessionaires and occupants, and their agents, employees, contractors, and
invitees (other than Sublandlord and its agents, employees, contractors,
licensees and invitees). Sublandlord covenants and agrees with Subtenant that
Sublandlord will not cause or permit any Hazardous Materials to be brought upon,
stored, blended, handled, or used in, about or on the Property, other than in
conformity to all Legal Requirements.
In the event that:
(i) Sublandlord shall breach the terms of the preceding sentence;
or
(ii) should there be any violation of Environmental Laws on,
emanating from, or pertaining to the Property not caused or
contributed to by Subtenant, its successors, assigns,
subtenants, licensees, concessionaires and occupants, and
their agents, employees, contractors and invitees (other than
Sublandlord and its agents, employees, contractors, licensees
and invitees);
and should Subtenant thereby be threatened with present or immediately
impending action, suit, proceeding or assessment of liability, Subtenant
may terminate this Lease on Sixty (60) days notice to Sublandlord, unless
such threat is fully abated within the Sixty (60) day period, or if such
threat cannot be abated within such Sixty (60) day period, Sublandlord
shall have in good faith have commenced such performance within such Sixty
(60) day period and diligently proceeds therewith to complete abatement.
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ARTICLE 3 - RENT.
SECTION 3.0-1: Subtenant shall pay to Sublandlord or such other party as
Sublandlord may from time to time designate by notice to Subtenant, in legal
tender of the United States, without deduction, abatement or setoff, except as
provided in this Sublease, at the address of Sublandlord specified herein or
furnished pursuant to the terms hereof:
(a) Base Rent. For the first four (4) Sublease Years, the Subtenant shall
pay net rental ("Base Rent") for the Demised Premises in the amount of
$98,658.00 per year, payable in equal monthly installments of $8,221.50. For the
fifth (5) Sublease Year through the end of the Term, the annual Base Rent shall
be the amount of $105,705.00, payable in equal monthly installments of
$8,808.75.
The Base Rent shall commence on the Rent Commencement Date. It shall be
paid in equal monthly installments in advance on the first day of each calendar
month during the Sublease Term.
(b) Additional Rent. In addition to Base Rent, Subtenant shall pay to
Sublandlord as Additional Rent all other sums owing from Subtenant to
Sublandlord as provided in this Sublease, commencing with the Commencement Date.
(c) Subtenant Tax Contribution. Subtenant covenants and agrees to pay
promptly when due all taxes imposed upon its business operations and its
Personalty. In addition, Subtenant shall pay to Sublandlord, as Additional Rent,
Subtenant's Pro Rata Share of the amount by which the Real Estate Taxes assessed
against the Property in subsequent real estate tax years exceed the Real Estate
Taxes in the 1992 real estate tax year. Payments due by Subtenant to Sublandlord
hereunder shall be based on Sublandlord's written certification of the amount
due for that Sublease Year or tax year. Any payments due by Subtenant to
Sublandlord hereunder shall be made within 30 days after Subtenant's receipt of
Sublandlord's written certification of the amount due, but in no event shall
said Subtenant's payment be due more than 30 days, nor less than 20 days, prior
to the last date when said taxes are due to the taxing authority without
imposition of interest or penalty.
Sublandlord shall hereafter have the fist right to protest tax assessments
of the Property or the Demised Premises, and shall have Ten (10) days after
receipt of notice of the new or proposed tax assessment to make its election. If
Sublandlord shall not elect to make the protest or review within Ten (10) days
of receipt of notice, Sublandlord shall notify Subtenant and any other tenants
in writing and provide copies of all tax bills or assessment notices.
Thereafter, any tenant may elect in writing to Sublandlord within Ten (10) days
to protest the tax assessment. The protest shall be at the tenants' sole cost
and expense, and Subtenant agrees to cooperate with the other tenants desirous
of prosecuting said protest or review.
(d) Partial Year or Month. In the event that the Rent Commencement Date
is on a date other than the first day of a month, the payment owing for Base
Rent for such partial month
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shall be the monthly Base Rent multiplied by a fraction, the numerator of which
is the number of days in such partial month that this Sublease is in effect and
the denominator of which is the number of days in such partial month. This
payment shall be due on the Rent Commencement Date. In the event the last day of
the Sublease Term is on a date other than the last day of a month, a similar
proration of Base Rent shall be made for such month.
(e) Lien for Rent. To the fullest and broadest extent permissible under
Texas law, the Sublandlord shall have a lien and security interest upon the
assets and properties of the Subtenant now or hereafter located at or upon the
Demised Premises to secure the payment of any Base Rent, Additional Rent or
other sums due hereunder. Subtenant will join with Sublandlord in filing any
financing statement necessary or desirable to evidence said lien or security
interest. Said lien, as well as any lien provided Sublandlord by law, shall be
subordinate to any lien granted by Subtenant to secure financing obtained by it,
provided however, that Sublandlord's lien described in this subparagraph shall
never be more junior than a second lien position. Sublandlord agrees to execute
subordinations or other instruments when necessary to reflect the terms or
conditions of this Section 3.01(e) or as necessary to release the lien hereof at
the termination of the Sublease.
SECTION 3.02 - LATE AND PARTIAL PAYMENTS: Should Subtenant fail to pay
when due or within 5 days after the due date any installment of Rent, then
Subtenant shall pay to Sublandlord on demand, in addition to amounts owing and
unpaid, interest at the lower of 18% per annum or the highest rate permitted by
applicable law from the due date until the required payment(s) are made.
Sublandlord may apply any partial payments as Sublandlord deems appropriate. No
assessment or acceptance by Sublandlord of any late charge for overdue payments
shall be construed or interpreted as a waiver or abandonment of any claim for
breach or default by Sublandlord under this Sublease.
ARTICLE 4 - COMMON AREAS.
SECTION 4.01 - COMMON AREA MAINTENANCE: The Common Areas shall be subject
to the exclusive, reasonable control and management of Sublandlord. However,
Subtenant and its agents, employees, licensees and invitees shall have the non-
exclusive right to use the parking areas, driveways and other Common Areas of
the Property, subject to exclusive rights in other tenants depicted on the Site
Plan. At such time as Sublandlord repairs and resurfaces the Common Areas so
that they are in good repair and in clean and serviceable condition for their
intended purposes in such manner as Sublandlord, in its reasonable discretion,
shall determine, Subtenant shall pay to Sublandlord a Pro Rata Share of
Sublandlord's costs of future maintenance, repair, landscaping, plowing and
lighting of the Common Areas, all at levels determined by Sublandlord in its
reasonable discretion, but in no event shall Subtenant's Pro Rata Share of
Common Area Costs exceed $1,000 per Lease Year.
Sublandlord may close temporarily all or part of the Common Areas as
reasonably required to make repairs or changes, to prevent the acquisition of
public rights in such areas or to discourage non-customer parking, in which
event Sublandlord shall not be subject to liability
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therefor, nor shall any such action be deemed an actual or constructive eviction
of Subtenant. For purposes of this subparagraph, "temporary" shall mean not more
than forty-five (45) consecutive days. Sublandlord shall not alter the parking
areas, loading areas, driveways or other Common Areas of the Property in a
manner which would materially impair the use, enjoyment or operation of the
Demised Premises by the Subtenant.
Subtenant shall not conduct business or advertise in the Common Areas or
impair the enjoyment of any of the Common Areas by other tenants. Sublandlord
may adopt and amend reasonable Rules and Regulations governing use of the Common
Areas.
SECTION 4.02 - SITE PLAN: The site analysis figures and Common Area detail
drawings in the Site Plan do not constitute a representation or warranty by
Sublandlord that the figures or Common Area detail drawings are accurate or that
the design of the Common Areas will not be modified in minor respects from that
shown on the Site Plan. The site analysis figures and Common Area detail
drawings are provided only to give a sense of the Property's layout. The parties
agree that Subtenant has inspected the Property and satisfied itself of the
Property's suitability for Subtenant's intended use.
ARTICLE 5 - INSURANCE.
SECTION 5.01 - INSURANCE REQUIRED:
(a) During the Sublease Term, Subtenant, at its sole cost and expense,
shall provide and keep in force:
(i) commercial general liability insurance with the broad form
endorsement, including, but not limited to, personal injury and contractual
liability coverage of at least $3,000,000.00 combined single limit for both
bodily injury and property damage resulting from a single occurrence,
occurring in and around the Demised Premises or the Common Areas and any
exterior signs maintained by Subtenant, and automobile liability insurance
with limits of not less than $3,000,000.00 combined single limit for both
bodily injury and property damage resulting from one occurrence, with
deductible amounts for each such coverage not to exceed $5,000.00.
(ii) workmen's compensation insurance at legally required levels and
employer's liability insurance at limits of not less than $3,000,000.00 per
accident for the benefit of all employees entering upon the Demised
Premises or the Property or any portion thereof as a result of or in
connection with their employment by Subtenant;
(iii) "All Risk" casualty insurance against loss or damage by fire
and other perils, vandalism and malicious mischief in an amount equal to
100% of the replacement cost of the trade fixtures, equipment, furnishings,
records and other merchandise of Subtenant in the Demised Premises; and
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(iv) at all times during which construction is being performed upon
the Demised Premises by Subtenant or its contractors, "All Risk" builders
risk insurance with limits of coverage not less than 100% of full
replacement cost of Subtenant's leasehold improvements, and owner's and
contractor's protective insurance and independent contractor's insurance
with coverage of at least $3,000,000.00 for a single occurrence, and for
property damage.
(b) Sublandlord shall obtain casualty and other appropriate and customary
insurance covering loss, injury and damage in, on and to the Demised Premises,
the remainder of the building containing the Demised Premises, and the Common
Areas but excluding the insurance described in Section 5.01(a) above,
foundations and items Subtenant is required to insure. Said casualty insurance
against loss or damage by fire and other perils, vandalism and malicious
mischief shall be in an amount covering 100% of the replacement cost of the
buildings and shall include, but not be limited to, "All Risk" casualty
insurance and earthquake coverage, and may be in the form of a general coverage
or blanket policy covering the building containing the Demised Premises and
other properties;
(c) Sublandlord may obtain insurance protecting the Sublandlord against
the loss of rent income hereunder, including (to the extent obtainable) loss of
both Base Rent and Additional Rent, for a period of not more than one (1) year.
(d) if the Demised Premises are now or hereafter designated a flood
hazard area by the U. S. Department of Housing and Urban Development ("HUD") for
which flood hazard insurance is obtainable, Sublandlord shall maintain flood
hazard insurance in the maximum amount obtainable, but not more than the
replacement cost of the building containing the Demised Premises (less
foundations).
(e) Subtenant shall reimburse and pay to Sublandlord as Additional Rent
its Pro Rata Share of the increase in the cost and expense of the insurance
described above in Sections 5(b), (c) or (d) over the cost for the policy period
of said insurance which ends June 30, 1992, such payment to be made within 30
days of the billing of the same by Sublandlord to Subtenant, but nevertheless,
need not be paid by Subtenant more than 20 days prior to the date Sublandlord is
obligated to pay same to the insurer.
SECTION 5.02 - POLICY TERMS AND BENEFICIARIES: All insurance provided by
Subtenant shall name Sublandlord, the owner of the Property and each Mortgagee
as additional named insureds, as their respective interests may appear. No
policy may contain a deductible amount greater than that which has been approved
by Sublandlord in writing, unless otherwise specified herein. No later than the
Commencement Date and 20 days prior to the expiration date of any prior
insurance policy, Subtenant shall deliver to Sublandlord copies of all policies
required hereunder or certificates evidencing the existence and amount of such
insurance, issued by an insurer or insurers satisfactory to Sublandlord in its
sole discretion, licensed to do business in the State of Texas, and rated A or
better as to policy holder rating and X or better as to financial rating in the
most current issue of Best's Key Rating Guide. Subtenant shall procure policies
for
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all insurance at least 20 days before the expiration of prior policies. Each
insurance policy required to be maintained by Subtenant under Section 5.01(a)
shall, to the extent available, contain the following provisions: (i) the
agreement of the insurer to give Sublandlord, owner and each Mortgagee at least
20 days notice by registered mail prior to cancellation, change in coverage or
any other material change in such policy; (ii) waiver of subrogation rights
against Sublandlord and Subtenant; (iii) agreement that such policy is primary
and non-contributing with any insurance that may be carried by Sublandlord; (iv)
a statement that the insurance shall not be invalidated should any insured waive
in writing prior to a loss any or all right of recovery against any party for
loss occurring to the property described in the insurance policy; and (v) a
statement that no act or omission of Subtenant shall affect or limit the
obligation of the insurance company to pay the amount of any loss sustained.
Each policy maintained by Sublandlord under this Sections 5.01(b), (c) or (d)
shall, to the extent available, contain the following provisions: (i) the
agreement of the insurer to give Subtenant, owner and each Mortgagee at least 20
days notice by registered mail prior to cancellation, change in coverage or any
other material change in such policy; (ii) waiver of subrogation rights against
Sublandlord and Subtenant; (iii) a statement that the insurance shall not be
invalidated should any insured waive in writing prior to a loss any or all right
of recovery against any party for loss occurring to the property described in
the insurance policy; and (iv) a statement that no act or omission of
Sublandlord shall affect or limit the obligation of the insurance company to pay
the amount of any loss sustained. Subtenant's insurance may be in the form of a
general coverage or blanket policy covering the Demised Premises and other
premises, provided that Sublandlord and each owner and Mortgagee are
specifically named therein as additional named insureds.
Subtenant shall pay all of any increase in premiums for the casualty or
public liability insurance which is a result of the type of services rendered by
Subtenant or its activities in the Demised Premises, whether or not Sublandlord
has consented to the same. In the event either party's use or occupancy, or the
use or occupancy of their tenants or subtenants, causes any increase of
insurance premiums on the Property or any part thereof above previous rates for
the Property, Subtenant or Sublandlord, as the case may be, shall pay such
additional premium within 30 days of being invoiced therefor.
In the event either party fails at any time during the term of this
Sublease to obtain and keep in force required insurance or to provide
satisfactory evidence thereof, then, after ten (10) days prior written notice to
the party failing to maintain the insurance, the other party shall have the
right but not the duty to procure such insurance, and the party failing to
obtain said insurance shall pay to the procuring party the costs and expenses
thereof upon demand. The amounts of the foregoing insurance shall in no event be
less than the amount reasonably required by any Mortgagee of Sublandlord, and
the limits of insurance shall not limit either party's liability under this
Sublease. Subtenant and Sublandlord hereby waive any right of subrogation
against the other party hereto.
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ARTICLE 6 - PERSONAL PROPERTY OF SUBTENANT.
SECTION 6.01 - SUBTENANT'S PROPERTY: All Personalty shall remain the
property of Subtenant. Sublandlord shall under no circumstances whatsoever be
responsible for any loss or damage occurring to any Personalty, unless said loss
or damage was not insurable against by Subtenant and was caused by Sublandlord's
failure to make repairs hereunder within a reasonable time after receipt of
written notice of the need for repairs has been received by Sublandlord.
SECTION 6.02 - REMOVAL: Upon the expiration or earlier termination of this
Sublease, Subtenant shall remove any and all Personalty and repair any damage to
the Demised Premises caused thereby. Subtenant shall not remove any plumbing or
electrical fixtures or equipment, heating or air conditioning equipment, floor
or wall coverings, paneling, tile or other materials on the walls, floors or
ceilings, any fixtures or appurtenances included within the definition of
Demised Premises or any fixtures or machinery that were furnished or paid for by
Sublandlord, all of which shall be deemed to constitute a part of Sublandlord's
estate. However, Subtenant shall be entitled to remove those storage racks
installed by it in the 35,100 square foot portion of the Demised Premises
depicted on the Site Plan upon the expiration or earlier termination of this
Sublease. The Demised Premises and the immediate areas in front of, behind and
adjacent to it shall be left in a broom-clean condition. If Subtenant shall fail
to so remove its Personalty at the termination of this Sublease, such Personalty
not removed by Subtenant shall be deemed abandoned by Subtenant, and, at the
option of Sublandlord, (i) shall become the property of Sublandlord or (ii) may
be disposed of without accountability in such manner as Sublandlord may see fit,
and Subtenant shall pay to Sublandlord the cost and expense of removal and
repair of all damage to the Demised Premises which is caused by such removal.
ARTICLE 7 - MAINTENANCE; REPAIR; UTILITIES.
SECTION 7.01 - REPAIRS AND MAINTENANCE: Sublandlord shall, at its sole
expense and after notice from Subtenant of need for repair or replacement,
promptly make all repairs and replacements to the roof, trusses, foundation,
structural elements and components of any buildings containing the Demised
Premises, to utility lines and auxiliary water mains up to the exterior walls of
the Demised Premises and to the Common Areas of the Property. Except as
hereinbefore provided, Subtenant shall, at its sole cost, promptly make all
repairs and replacements to the Demised Premises necessary to keep the same
clean and in good condition and repair, including, but not limited to, all of
the building's exterior walls, all exterior and interior lighting facilities,
exterior and interior doors and windows, loading docks, the air conditioning,
heating, water heating, plumbing and electrical equipment systems and
installations, all glass and show windows, moldings and bulkheads, all
partitions, floor surfaces and subsurfaces, ceilings, fixtures, equipment and
appurtenances thereto. Subtenant shall at its expense maintain and operate all
of its interior and exterior signs previously or hereafter installed by or for
Subtenant, and shall keep the surfaces of the building outside the Demised
Premises, including signs, in good, sightly and clean condition. Any damage
caused to the exterior walls to which any sign installed by Subtenant may be
attached, including but not limited to rust stains and structural cracking of
the facia caused by such signs, shall be repaired by Subtenant at its
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own cost. Subtenant shall make such other non-structural repairs and
replacements in and to the Demised Premises promptly as needed. In addition to
the foregoing, Subtenant shall repair and maintain the fire sprinkling system,
fire extinguishers and other fire preventive equipment in the Demised Premises
in accordance with all present Legal Requirements. Tenant shall not, however, be
required to replace or up-grade the fire sprinkling system to comply with future
Legal Requirements, unless the replacement or up-grading is required as a result
of the type of use of the Demised Premises being made by Subtenant.
Except as expressly provided in this Sublease, Sublandlord shall have no
obligation to repair any part of the Demised Premises.
SECTION 7.02 - UTILITIES: Subtenant shall promptly pay the appropriate
utility company for all electrical, natural gas and telephone utility services
rendered or furnished to the Demised Premises. Subtenant shall pay to
Sublandlord, as Additional Rent, Subtenant's Pro Rata Share of other utilities
used by the Demised Premises not invoiced to Subtenant by the appropriate
utility company or other provider, including, without limitation, fire
protection, water and sewer charges from and after the Commencement Date.
SECTION 7.03 - PESTS: Sublandlord agrees that during the continuance of
this Sublease, the remainder of the building, if any, not hereby leased to
Subtenant, shall not be used in any manner or for any purpose which is harmful
or deleterious to the goods or business of the Subtenant, other than in a minor
or immaterial way. Should any of Subtenant's merchandise become contaminated or
infested by a pest condition originating or emanating from outside the Demised
Premises, Subtenant shall give Sublandlord written notice thereof, and
Sublandlord shall have Fourteen (14) days following receipt of notice to
investigate and correct the contamination or infestation problem. Should
Sublandlord fail to correct the contamination or infestation problem as
aforesaid, Subtenant may do so, and Sublandlord shall compensate Subtenant all
the reasonable costs and expenses directly related to the correction of the
problem, but in no event (except as provided in Section 21.01 hereof) shall any
sum due to Subtenant be off-set or deducted from Base Rent, Additional Rent or
any other sum due Sublandlord under this Sublease.
ARTICLE 8 - CONSTRUCTION OF ALTERATIONS.
SECTION 8.01 - SUBTENANT LEASEHOLD ALTERATIONS:
(a) Except for the due performance of Sublandlord's Work and
Sublandlord's ongoing agreements, covenants and maintenance obligations under
this Sublease, Subtenant hereby takes possession of the Demised Premises in
strictly "AS IS" condition, regardless of whether the Demised Premises are
satisfactory for Subtenant's purposes. Subtenant expressly agrees that this
Sublease is not conditioned on Subtenant being able to make any Alterations, but
the terms of this sentence shall be inapplicable to any future Alterations to
which Sublandlord shall have consented.
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(b) Subtenant may make Alterations to the Demised Premises only with the
prior written consent of Sublandlord, which consent may be withheld by the
Sublandlord for any reason or for no reason. Notwithstanding the preceding
sentence, however, Subtenant shall have the right, at its sole expense and
liability, to place or install in or on the Demised Premises any trade fixtures,
storage racks, conveyor systems, or other machinery or equipment, to paint or
decorate all or any part of the Demised Premises as it may elect, and, upon
termination of this Sublease or prior thereto, to remove said fixtures, storage
racks, conveyor systems, machinery and equipment without regard to how fastened
to the Demised Premises, provided, however, that any damage caused to the
Demised Premises by any such installation, use or removal shall be repaired by
Subtenant at its own expense, and provided further that, if requested by
Sublandlord, Subtenant shall, at its own expense, paint over and obliterate any
signs painted on the Demised Premises and remove any trade fixtures of Subtenant
attached thereto and repair any damage to the Demised Premises in connection
therewith; all provided that no such installation, use or removal shall violate
any Legal Requirement, and shall be done and performed in a good and workmanlike
manner.
(c) All Alterations which are consented to by the Sublandlord or
permitted hereunder are subject to the following requirements:
(i) All Alterations shall be performed so as not to materially
interfere with the use by the other tenants of the Property of their
premises in the Property and, once commenced, shall proceed in good faith
and promptly to completion;
(ii) No Alterations shall be undertaken until Subtenant shall have
procured all required permits and authorizations of all municipal
departments;
(iii) Any Alterations, when completed, shall be of such a character
as not to reduce the value of the Demised Premises below its value
immediately before such Improvements or Alterations;
(iv) Any Alterations shall be made in a good and workmanlike manner
and in compliance with all applicable permits, authorizations, Legal
Requirements and provisions of this Sublease;
(v) At least Thirty (30) days before the commencement of any
Alterations, Subtenant shall notify Sublandlord of its intention to
commence the same so that Sublandlord may post or record notices of non-
responsibility.
SECTION 8.02 - OWNERSHIP AND MAINTENANCE: All Alterations, including,
without limitation, all lighting fixtures, intercom systems, installations,
fixtures (other than trade fixtures or Personalty), are and shall be deemed to
be and immediately become part of the realty and the sole and absolute property
of Sublandlord. Notwithstanding the foregoing, Subtenant shall maintain
insurance coverage with respect to same, unless same are insured by
Sublandlord's insurance, and shall maintain, repair and replace same, all as
more particularly provided for in
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this Sublease. If Sublandlord's insurance covers Alterations made by Subtenant,
Subtenant shall reimburse Sublandlord for the additional cost thereby
occasioned. Alternatively, at the time the Sublease Term ends or otherwise
terminates for any reason, the Sublandlord may elect to have the Subtenant
remove any Alterations and return the Demised Premises to their former
condition, which shall be fully completed within Thirty (30) days of the end or
other termination of the Sublease Term.
SECTION 8.03 - CONSTRUCTION BY SUBLANDLORD: Sublandlord hereby reserves
the right at any time to construct buildings on the Common Areas of the
Property, or to enlarge the building of which the Demised Premises are a part,
subject to Section 4.01 hereof, and provided that such construction shall not
materially interfere with Subtenant's use of, access to, or parking for, the
Demised Premises.
SECTION 8.04 - NO LIABILITY: Sublandlord's approval rights as provided for
herein are solely for Sublandlord's benefit and shall not give rise to any
liability whatsoever on the part of Sublandlord not otherwise arising or created
under the Sublease.
ARTICLE 9 - COMPLIANCE WITH LEGAL REQUIREMENTS.
SECTION 9.01: This Sublease is subject to all Legal Requirements now or
hereafter applicable to the Property. Subtenant shall promptly and fully comply
with all presently existing Legal Requirements. Subtenant shall comply with all
future Legal Requirements regulating or governing the use of the Demised
Premises or which require Alterations to the Demised Premises because of
Subtenant's use of the Demised Premises. Compliance with any other future Legal
Requirements which require any Alterations to the Demised Premises shall be the
responsibility of Sublandlord, up to the aggregate maximum sum during the
Sublease Term of $5,000.00. If at any time, compliance with future Legal
Requirements would obligate Sublandlord to expend more than the aggregate total
of $5,000.00 for the Sublease Term, then Sublandlord shall instead be entitled
to terminate this Sublease upon Sixty (60) days written notice to Subtenant,
unless within that period, Subtenant obligates itself to pay for all amounts in
excess of the aggregate sum $5,000.00 hereinbefore described.
Notwithstanding any previous portion of this Section 9.01 to the contrary,
however, Subtenant shall have no responsibility for any non-compliance of the
Demised Premises with any Environmental Laws except as expressly set forth in
Section 2.02(c) or Article 20 hereof.
ARTICLE 10 - DISCHARGE OF LIENS.
SECTION 10.01: Subtenant shall not permit any claim of lien resulting from
Subtenant's action to be filed by any person under any (i) mechanics' lien
statute, (ii) materialmen's lien statute, (iii) lien imposed under any
Environmental Law or (iv) other liens against the Demised Premises or the
Property. If any such claim of lien shall be filed against the Demised Premises
or the Property, Subtenant shall cause the lien to be discharged; provided,
however, that Subtenant may contest any such lien, so long as the enforcement
thereof is stayed and the lien
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is removed of record by means of a bond or any other lawful means. If Subtenant
shall fail to cause said lien to be released of record within 10 days after
notice to Subtenant from Sublandlord, then Sublandlord may, but shall not be
obligated to, discharge the same by deposit or bonding. Any amount paid by
Sublandlord and all costs and expenses incurred by Sublandlord in connection
therewith shall constitute Additional Rent and shall be paid by Subtenant to
Sublandlord on demand, along with interest at the lower of 18% per annum or the
highest rate then permissible under applicable law.
Notwithstanding anything contained in this Section 10.1 to the contrary,
however, Subtenant shall have no responsibility or liability for the non-
compliance of the Demised Premises with any Environmental Law, except as
expressly set forth under Section 2.02(c) or Article 20 hereof.
Nothing herein shall be deemed to subject Sublandlord's estate in the
Demised Premises to any lien or liability under any law relating to liens.
Subtenant shall indemnify Sublandlord from and against all liabilities, damages,
losses, costs and expenses resulting from any lien filed against the Demised
Premises claimed to have resulted from Subtenant's actions.
ARTICLE 11 - DAMAGE OR DESTRUCTION
SECTION 11.01 - ELECTION TO TERMINATE SUBLEASE: In the event the Demised
Premises shall be damaged by fire or other casualty, then:
(a) if the damage exceeds 15% of the replacement cost of the Demised
Premises, the Sublandlord shall have the right to terminate this Sublease as
herein provided;
(b) if the damage exceeds 35% of the replacement cost of the Demised
Premises, the Subtenant shall have the right to terminate this Sublease as
herein provided; or
(c) if the damage exceeds 25% of the replacement cost of the Demised
Premises and occurs during the final year of the Sublease Term, the Subtenant
shall have the right to terminate this Sublease as herein provided.
Upon the occurrence of the damage described above, the Sublandlord or the
Subtenant (as the case may be) shall have the option, which shall be exercised
within 60 days following such damage, of terminating this Sublease, effective 30
days after the date of giving notice thereof. If Subtenant is in default under
this Sublease at the time of making an election to terminate the Sublease under
Sections 11.01(b) or (c), then as a condition of making a valid election to
terminate, Subtenant must, prior to the effective date of the termination of the
Sublease, cure all defaults, except those which are rendered both unnecessary
and non-detrimental to Sublandlord because of the occurrence of the damage to
the Demised Premises (e.g. minor defacing to the Demised Premises not affecting
any insurance recovery relating to the Demised Premises).
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If this Sublease is terminated under the preceding paragraph, neither
Sublandlord nor Subtenant shall be obligated to repair, restore or reconstruct
the Demised Premises and Sublandlord shall be entitled to retain all insurance
recovered under policies described in Sections 5.01(a)(iv), 5.01(b), 5.01(c) or
5.01(d) as a result of the damage to the Demised Premises.
SECTION 11.02 - REPAIR: If this Sublease shall not be terminated as
provided in Section 11.01 above, this Sublease shall continue in full force and
effect, and Sublandlord shall, within Thirty (30) days after satisfaction of the
insurance award and solely to the extent thereof (after deducting Sublandlord's
costs and attorneys' fees of collecting the award), proceed with the repair or
restoration of the Demised Premises and, with all reasonable dispatch, return
the Demised Premises to substantially the same condition they were immediately
preceding the damage or destruction. If the net proceeds of insurance are
inadequate to fully restore the Demised Premises substantially the same
condition as preceding the damage or destruction, Sublandlord shall, within
Thirty (30) days of receipt of the net insurance proceeds, notify Subtenant of
Sublandlord's election to either (a) contribute any sums in excess of the net
insurance award which are required to restore the Demised Premises to
substantially the same condition as prior to the damage or destruction, or (b)
to terminate this Lease after Thirty (30) days from the date of notice, unless
within that Thirty (30) day period, Subtenant agrees in writing to contribute
any sums in excess of the net insurance award which are required to restore the
Demised Premises to substantially the same condition as prior to the damage or
destruction.
If any of the Demised Premises shall be rendered unusable on account of
such damage, Base Rent shall be abated for the portion of the Demised Premises
as rendered unusable until the same is again usable by Subtenant, and Additional
Rent shall likewise be abated [but only to the extent Sublandlord is compensated
for loss of Additional Rent by the insurance referred to in Section 5.01(c)].
Upon Sublandlord's substantial completion thereof, Subtenant shall promptly
repair or replace all of its Personalty damaged or destroyed, including, but not
limited to, its trade fixtures and furniture, if (and to the extent) not covered
by Landlord's insurance under Section 5.01(b), (c) or (d).
Notwithstanding any provision herein to the contrary, Subtenant, at
Sublandlord's option, shall be responsible for all damages resulting from, and
shall make all repairs and replacements necessitated by, any uninsured damage
caused by the negligent or intentional tortious acts or omissions of Subtenant
and its agents, employees, invitees and contractors, which damage is not
customarily insured against under policies of the type described in Sections
5.01(a), (b), (c) or (d).
SECTION 11.03 - WAIVER OF SUBROGATION: In the event the Demised Premises,
any part or parts of the Property or the fixtures or merchandise therein are
damaged or destroyed by fire or other casualty that is covered by insurance of
Subtenant, Sublandlord or the tenants, subtenants, concessionaires or licensees
of Subtenant or Sublandlord, regardless of cause or origin, including
negligence, then the rights, if any, of any party against the other, or against
the employees, agents, subtenants, concessionaires or licensees of any party,
with respect to such damage or destruction and with respect to any loss
resulting therefrom, including the interruption of the business of any of the
parties, are hereby waived to the extent of any recovery under said insurance.
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SECTION 11.04 - COMMON AREAS: Notwithstanding anything to the contrary
contained herein, the party required to insure the Common Areas pursuant to
Article 5 shall be responsible for the repair, restoration and reconstruction
thereof pursuant to this Article.
ARTICLE 12 - CONDEMNATION.
SECTION 12.01 - ENTIRE PROPERTY: If the whole of the Demised Premises
shall permanently be taken or damaged by any competent authority, this Sublease
shall terminate as of the date physical possession of the Demised Premises is
taken or damaged or immediate possession is ordered. Base Rent, Additional Rent,
and all other charges payable hereunder shall be apportioned and paid up to said
date.
SECTION 12.02 - PARTIAL TAKING:
(a) If there is a taking of or damage to less than the entire Demised
Premises, this Sublease shall terminate as of the date physical possession of
the Demised Premises is taken or damaged or immediate possession is ordered as
to the portion of the Demised Premises so taken or damaged, and the Base Rent,
Additional Rent and all other charges payable by Subtenant hereunder allocable
to the portion taken or damaged shall be prorated to the date of such
termination. With respect to that portion of the Demised Premises not taken or
damaged, this Sublease shall continue in effect and the Base Rent shall be
reduced proportionately.
(b) Sublandlord shall, as promptly as possible after the receipt of the
award or compensation for the partial taking and to the extent possible from
said award (after deducting Sublandlord's costs and attorneys' fees of
collecting the award) restore, repair and replace that portion of the Demised
Premises not so taken or damaged to a complete architectural unit or units for
the use and occupancy of Subtenant and, as nearly as possible, to the condition
existing prior to the taking or damaging.
(c) Notwithstanding the foregoing, Sublandlord or Subtenant may elect,
within 30 days after the taking or damaging, to terminate the Sublease if so
much of the ground floor area of the Demised Premises is taken or damaged that
Subtenant cannot reasonably operate as contemplated by this Sublease, or if so
much of the Common Areas is taken or damaged such that Subtenant cannot
reasonably continue to do business at the Demised Premises due to lack of access
or available parking and/or loading areas, upon written notice to the other,
which notice shall specify a termination date at least 30 days and not more than
90 days from the date thereof, after which Base Rent, Additional Rent and all
other charges payable by Subtenant hereunder abate. In such even, Sublandlord
shall not be obligated to repair, restore or reconstruct the Demised Premises.
SECTION 12.03 - ALLOCATION OF AWARD: The entire award or compensation,
including interest, whether for a total or partial taking or damaging or for a
diminution in the value of Subtenant's leasehold or Sublandlord's leasehold or
other interest, shall belong to and be the property of Sublandlord, and
Subtenant hereby assigns to Sublandlord all of Subtenant's interest
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in any award. Subtenant shall have the right to prove in separate proceedings
(or in the same proceeding, if separate proceedings cannot be brought under
Federal or Texas law, as the case may be) and to receive any separate award
which may be made for damage to or condemnation of Subtenant's equipment, trade
fixtures, furniture and furnishings, and for relocation costs.
SECTION 12.04 - TEMPORARY TAKING: If there is a taking or damaging of the
temporary use of the Demised Premises, Subtenant shall give prompt notice
thereof to Sublandlord. Unless the temporary taking shall exceed Sixty (60)
consecutive days and materially interfere with Subtenant's access to or use of
the Demised Premises or Common Areas, the Sublease Term shall not be reduced or
affected in any way by such temporary taking or damaging, but the Base Rent
shall be abated for such time as such taking renders any of the Demised Premises
unusable by Subtenant in proportion to that amount so rendered unusable, and
Additional Rent shall likewise be abated (but only to the extent Sublandlord is
compensated for loss of Additional Rent by the insurance referred to in Section
5.01(c). If the temporary taking shall exceed Sixty (60) consecutive days and
materially interfere with Subtenant's access to or use of the Demised Premises
or Common Areas, Subtenant shall be entitled to terminate this Sublease upon
Thirty (30) days written notice to Subtenant.
Sublandlord shall be entitled to and shall receive the entire award for
such taking or damaging during the Sublease Term (whether paid by way of
damages, rent or otherwise). At the termination of any such use or occupation of
the Demised Premises during the Sublease Term, Sublandlord shall, as promptly as
possible after the receipt of the award or compensation for the partial taking
and to the extent possible from said award (after deducting Sublandlord's costs
and attorneys' fees of collecting the award), repair and restore the Demised
Premises as nearly as reasonably possible to its condition immediately prior to
such taking or damaging.
Sublandlord shall be entitled to claim, sue for and recover from the
governmental authority all damages and awards arising out of the failure of the
governmental authority to repair and restore the Demised Premises at the
expiration of such temporary taking or damaging. Any recovery or sum received as
an award or compensation for physical damage to the Demised Premises caused by
and during the temporary taking or damaging shall be paid to the Sublandlord.
SECTION 12.05 - DEFINITIONS: As used in this Article 12, (i) the term
"taking or damaging" shall mean any taking of or damage to all or any part of
the Demised Premises or the Property or any interest therein because of the
exercise of the power of eminent domain, whether by condemnation proceedings or
otherwise, including acts or omissions constituting inverse condemnation, or any
transfer of any part of the Demised Premises or the Property or any interest
therein made in avoidance of the power of eminent domain; and (ii) the "award"
shall include, without limitation, all monies awarded for the taking or damaging
of the Demised Premises or the Property and all estates or interests therein
occurring before or after the commencement of litigation proceedings.
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SECTION 12.06 - WAIVER: Each party waives the provisions of any law or
statute which otherwise allows either party to petition a court to terminate
this Sublease in the event of a partial taking of the Demised Premises, and
elects to be governed by the terms of this Sublease.
ARTICLE 13 - SUBTENANT'S DEFAULT; SUBLANDLORD'S REMEDIES.
SECTION 13.01 - EVENTS OF DEFAULT: Each of the following events shall be a
default by Subtenant and breach of this Sublease:
(a) If Subtenant fails to pay Sublandlord any Base Rent, Additional Rent
or other charges required to be paid by Subtenant under this Sublease within 5
days after receipt of written notice to Subtenant of such default, which notice
shall be in lieu of and not in addition to any notice required by law; provided,
however, that notice shall not be required more than twice each Sublease Year
for failure to pay any sum.
(b) If Subtenant fails to perform any of the agreements, terms, covenants
or conditions of this Sublease to be performed by Subtenant other than the
payment of Base Rent or Additional Rent or other charges, and such non-
performance continues for a period of 30 days after receipt of written notice by
Sublandlord to Subtenant, which notice shall be in lieu of and not in addition
to any notice required by law, or if such performance cannot be completed within
such 30 day period, Subtenant shall not in good faith have commenced such
performance within such 30 day period and diligently proceeded therewith to
completion.
(c) If a levy under execution or attachment shall be made against
Subtenant of all or substantially all of Subtenant's property in or at the
Demised Premises and such execution or attachment shall not be satisfied,
stayed, vacated or removed by payment, court order, bonding or otherwise within
a period of 30 days after entry of such execution or attachment.
(d) The filing of an involuntary petition against Subtenant under the
Bankruptcy Code or any other state or federal law relating to bankruptcy or
insolvency that is not dismissed within 90 days after being filed or the making
or entry of a decree or order by a court or determination by any regulatory or
governmental agency, if any, having jurisdiction over Subtenant (i) that
Subtenant is a bankrupt or is insolvent, or (ii) approving as properly filed a
petition seeking reorganization of Subtenant under the Bankruptcy Code or any
other state or federal law relating to bankruptcy or insolvency, or (iii)
appointing a receiver or liquidator or trustee in bankruptcy or insolvency of
Subtenant or of its property or any substantial portion of its property, or (iv)
constituting the winding up or liquidation of the affairs of Subtenant.
(e) If Subtenant shall (i) institute proceedings to be adjudged a
voluntary bankrupt, or (ii) consent to the filing of a bankruptcy proceeding
against it, or (iii) file a petition or answer or consent seeking reorganization
or readjustment under the Bankruptcy Code or any other state or federal law, or
otherwise invoke any law for the aid of debtors, or consent to the filing of any
such petition, or (iv) consent to the appointment of a receiver or liquidator or
trustee in bankruptcy or insolvency of it or of its property, or (v) make an
assignment for the benefit of
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the creditors, or (vi) admit in writing its inability to pay its debts generally
as they become due, or (vii) take any corporate action in furtherance of any of
the aforesaid purposes or (viii) be unable to meet current obligations as they
mature, even though its assets may greatly exceed its liabilities.
SECTION 13.02 - REMEDIES: Upon default by Subtenant under this Sublease,
Sublandlord may, at its option, take any or all of the following actions:
(a) Elect not to terminate this Sublease or Subtenant's right to
possession of the Demised Premises, and enforce all of Sublandlord's rights and
remedies under this Sublease, including the right to recover the rent as it
becomes due and payable by Subtenant. No acts by Sublandlord to maintain,
preserve or re-let the Demised Premises, or to appoint a receiver to protect
Sublandlord's interest under this Sublease, or to remove property or store it at
a public warehouse or elsewhere at the cost of and for the account of Subtenant,
or otherwise, shall constitute an election to terminate this Sublease or
Subtenant's right of possession unless written notice of such intention is given
by Sublandlord to Subtenant. Sublandlord may elect to terminate this Sublease
upon a re-letting of the Demised Premises or at any other time after electing
the remedy provided by this Subsection, in which event the rent shall cease to
accrue and the damages provided by subsection (b) shall become available to
Sublandlord.
During the period Subtenant is in default, Sublandlord may enter the
Demised Premises and re-let them, or any part of them, to third parties for
Subtenant's account. Re-letting may be for a period shorter or longer than the
remaining term of this Sublease. Subtenant shall pay to Sublandlord the rent due
under this Sublease on the dates the rent is due, plus the amounts necessary to
compensate Sublandlord as specified in subparagraphs (i) through (iii) below,
less the rent Sublandlord receives from any re-letting. If Sublandlord re-lets
the Demised Premises as provided in this subsection, rent that Sublandlord
receives from re-letting shall be applied to the payment of: (i) first, all
costs incurred by Sublandlord for re-letting as described in subparagraph (c);
(ii) second, rent due and unpaid under this Sublease; and (iii) finally, any
indebtedness from Subtenant to Sublandlord other than rent due from Subtenant.
After deducting the payments referred to in this subsection, any sum remaining
from the rent Sublandlord receives from re-letting shall be held by Sublandlord
and applied in payment of future rent as rent becomes due under this Sublease.
If, on the date rent is due under this Sublease, the rent received from the re-
letting and applied to rent due is less than the rent due on that date,
Subtenant shall pay to Sublandlord the remaining rent due.
(b) Terminate this Sublease and all rights of Subtenant and any
subtenants, licensees or concessionaires hereunder by giving written notice of
such intention to terminate. In the event that Sublandlord shall elect to
terminate this Sublease as provided in this subsection, then Sublandlord recover
from Subtenant:
(i) The worth at the time of award of any unpaid rent which has
been earned at the time of such termination;
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(ii) The worth at the time of award of the amount by which the
unpaid rent that would have been earned hereunder after termination until
the time of award exceeds the amount of such rental loss that the Subtenant
proves could have been reasonably avoided;
(iii) 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 such rental loss that Subtenant proves could have been reasonably
avoided;
(iv) Any other amount necessary to compensate Sublandlord for all
the detriment proximately caused by Subtenant's failure to perform its
obligations under this Sublease and which, in the ordinary course of
events, would be likely to foreseeably result from that failure to perform;
and
(v) At Sublandlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by the laws
of the State of Texas.
As used in subparts (i) and (ii) of this subsection (b), the "worth at the
time of award" is computed by allowing interest at the lower of 18% per annum or
the highest rate then permitted by law. As used in subpart (iii) of this
subsection (b), the "worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of Boston at the time of
award plus one percent.
(c) Upon the occurrence of a breach or default occasioning the remedies
referred to in Section 13.02(a) or 13.02(b), the Sublandlord shall be entitled
to its reasonable expenses incurred in preparing and offering the Demised
Premises for re-rent, including (but not limited to) reasonable costs of
cleaning, remodeling, painting, resurfacing of parking areas and walks,
reasonable broker's commissions and fees, free rent, advertising and marketing
costs and reasonable attorneys' fees.
(d) Take any and all other action and pursue all other rights and
remedies provided at law, in equity (including moving to enjoin a breach or
threatened breach) or under this Sublease. Efforts by Sublandlord to mitigate
the damages caused by Subtenant's default shall not constitute a waiver of
Sublandlord's right to recover damages hereunder.
SECTION 13.03 - BANKRUPTCY: Nothing in this Article 13 shall limit or
prejudice the right of Sublandlord to prove or obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding an amount equal to the maximum allowed by a statute or rule of law
governing such proceedings and in effect at the time when such damages are to be
proved, whether or not such amount is greater, equal to or less than the amount
of the damages referred to in any of the preceding sections.
SECTION 13.04: The rights of Sublandlord as contained in this Article 13
shall survive any termination of this Sublease.
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ARTICLE 14 - SUBTENANT'S NOTICE TO SUBLANDLORD OF DEFAULTS.
SECTION 14.01: Sublandlord shall not be in default of this Sublease for
failure to perform any of the agreements, terms, covenants or conditions of this
Sublease to be performed by Sublandlord unless such non-performance continues
for a period of 30 days after notice by Subtenant to Sublandlord or, if such
performance cannot be completed within such 30 day period, Sublandlord shall not
in good faith have commenced such performance within such 30 day period and
diligently proceeded therewith to completion.
ARTICLE 15 - ASSIGNMENTS AND SUBLEASES.
SECTION 15.01 - RESTRICTIONS ON ASSIGNMENT AND SUBLETTING: Subtenant shall
not assign this Sublease or sublet the Demised Premises by operation of law or
otherwise, without the prior written consent of Sublandlord, which Sublandlord
agrees not to unreasonably withhold, provided (i) the permitted use of the
Demised Premises will not change, except as to the type of products or goods
being warehoused, (ii) the proposed use shall be no more dangerous or hazardous
in nature that Subtenant's use and shall be consistent and compatible with the
use then being made of the Property by the remaining tenants; (iii) the proposed
assignee or subtenant is creditworthy and has sufficient net worth to perform
all of the terms and conditions of the Sublease; (iv) the proposed assignee or
subtenant has sufficient business skill and experience to perform the business
being conducted at the Demised Premises to the same level of competence and
responsibility as Subtenant, and (v) Subtenant shall supply to Sublandlord the
information required by Section 15.02(a) regarding the subtenant or assignee,
within the time therein provided. No reference in this Lease to assignees,
subtenants or licensees of Subtenant shall imply that Tenant has a right to
assign or sublease under this Sublease which is not limited by the requirement
of Sublandlord's consent. Sublandlord shall not be obligated under any
circumstances to consent to an assignment or subletting of less than all or
substantially all of the Demised Premises .
SECTION 15.02 - NOTICE OF OFFER; RIGHT TO TERMINATE:
(a) Whenever Subtenant has obtained an offer to assign this Sublease or
to sublease the Demised Premises, which Subtenant desires to accept, Subtenant
shall provide to Sublandlord written notice thereof (a "Notice of Offer"),
containing the name and address of said proposed assignee or sublessee, the rent
offered, the proposed use by the proposed assignee or sublessee, the proposed
effective date of the assignment or subletting, and any other business terms
which are material to the offer and which differ from the provisions of this
Sublease ("Notice of Offer"). Subtenant shall also provide to Sublandlord
financial statement and business experience resume for the immediately preceding
three (3) years of the proposed assignee or sublessee (or such lesser period as
the business has been in existence) and such other information concerning such
proposed assignee or sublessee as Sublandlord may reasonably request. The Notice
of Offer shall be received by Sublandlord no less than Sixty (60) days prior to
the effective date of the proposed assignment or sublease.
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(b) Within Twenty (20) days after receiving a Notice of Offer for the
proposed assignment of this Sublease or the subletting of the Demised Premises
(other than to (i) a parent, wholly-owned subsidiary or affiliate of Subtenant,
or (ii) a person or entity acquiring Subtenant through a purchase of a majority
of its stock or substantially all of its assets and as a going concern)
Sublandlord shall be entitled to terminate this Sublease by written notice to
Subtenant ("Termination Notice"), and such termination shall be effective as of
the proposed effective date of the proposed assignment or sublease, after which
Subtenant shall have no further liability under this Sublease, other than for
defaults of Subtenant then existing or for liabilities which survive the term of
the Sublease according to the provisions of Sections 13.04, 16.02, 20.3, 21.03
and 25.02. If Sublandlord has the right hereunder to terminate this Sublease but
does not elect to do so, Sublandlord shall notify Subtenant that Sublandlord
either consents or declines to consent to the proposed assignment or subletting,
and in such case, Sublandlord's consent shall not be unreasonably withheld. If
Sublandlord does not provide a Termination Notice or notice of its refusal to
consent to the proposed assignment or subletting within Twenty (20) days after
receiving a Notice of Offer, Sublandlord shall be deemed to have consented to
the proposed assignment or subletting, on the same terms as disclosed to
Sublandlord and for that specific occasion only.
(c) Any consent by Sublandlord to any assignment or sublease, or to the
operation of a concessionaire or licensee, shall not constitute a waiver of the
necessity for consent to any subsuquent assignment or sublease. Anything herein
contained to the contrary notwithstanding, Subtenant shall not enter into any
assignment or subletting if same would violate any of the terms of this Sublease
or any Legal Requirement.
(d) Upon occasions of a proposed assignment or subletting for which
Sublandlord's consent is required hereunder (meaning an assignment or subletting
to a person or entity other than one described in Section 15.02(b)(i) or (ii)
above, Subtenant (i) shall pay the Sublandlord its reasonable costs and expenses
and reasonable attorneys' fees incurred in investigating and approving or
disapproving the assignment or sublease and (ii) if applicable, shall pay
Sublandlord monthly on the date specified in Section 3.01(a) an amount equal to
75% of the excess (after deducting reasonable broker's and legal fees, costs of
Alterations and improvements made in conformity to this Sublease, and any
transfer taxes or other direct assignment or subletting expenses) of all rentals
and other monetary compensation from the assignee or subtenant to the Subtenant
over the Base Rent due to the Sublandlord from the Subtenant hereunder.
SECTION 15.03 - LIABILITY CONTINUES: Subtenant shall be responsible for
and be liable to Sublandlord for all acts, omissions and breaches or defaults of
Sublease on the part of any assignee or subtenant of Subtenant in the Demised
Premises. Any violation of any of the terms, provisions or conditions of this
Sublease, whether by act or omission, by any assignee or subtenant shall
constitute a breach of this Sublease by Subtenant. Permission is hereby granted
to Subtenant to bring proceedings to enforce the terms, provisions and
conditions of this Sublease against assignees and subtenants in Subtenant's own
name or in the name of Sublandlord, provided, however, that Sublandlord incurs
no cost or expense thereby or liability or obligation in connection therewith,
and Subtenant shall indemnify, defend and hold Sublandlord harmless
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from any such costs, liabilities and expenses. Notwithstanding anything to the
contrary in this Sublease, no assignment or subletting, with or without consent,
shall release Subtenant from any of its obligations and liabilities under this
Sublease.
ARTICLE 16 - TERMINATION OF SUBLEASE; SURRENDER.
SECTION 16.01:
(a) On the last day of the Sublease Term or upon any earlier termination
of this Sublease, or upon any lawful re-entry by Sublandlord upon the Demised
Premises pursuant to Article 13, Subtenant shall (i) surrender and deliver the
Demised Premises free and clear of all subtenancies, occupancies, liens and
encumbrances created by Subtenant to the possession and use of Sublandlord
without delay and in good order, condition and repair, reasonable wear and tear
and damage by casualty, condemnation or Acts of God excepted, and (ii) promptly
surrender all keys for the Demised Premises to Sublandlord at the place then
fixed for the payment of rent and inform Sublandlord of all combinations and
access codes on locks, safes and vaults, if any and other than those to be
removed by Subtenant, in the Demised Premises.
(b) In the event Subtenant remains in possession of the Demised Premises
after the expiration of the Sublease Term, whether or not with the consent or
acquiescence of Sublandlord, and without the execution of a new Sublease,
Subtenant shall be deemed to be occupying the Demised Premises on a month to
month tenancy only. Upon notice given by Sublandlord to Subtenant, Rent during
this month to month tenancy shall be payable monthly in advance in an amount
equal to 150% of the Base Rent and other charges due and payable immediately
prior to the expiration of the Sublease Term without prejudice to Sublandlord's
right to any damages which Sublandlord may suffer if Subtenant fails to vacate
upon the expiration of the Sublease Term or the earlier termination of this
Sublease. The terms of such month to month tenancy shall be otherwise the same
as the terms, conditions, covenants, provisions and obligations contained in
this Sublease.
SECTION 16.02: The provisions of this Article 16 shall survive any
termination of this Sublease.
ARTICLE 17 - PARTY'S RIGHT TO PERFORM OTHER'S COVENANTS.
SECTION 17.01: If Subtenant, at any time after the lapse of 30 days from
the receipt of written notice from Sublandlord, shall fail to make any payment
or perform any other act on its part to be made or performed, then Sublandlord,
without waiving Subtenant's default, may (but shall be under no obligation to)
make any payment or perform any other act on Subtenant's part to be made or
performed as provided in this Sublease. All sums paid by Sublandlord and all
reasonable costs and expenses incurred by Sublandlord in connection with the
performance of any such act, including, without limitation, reasonable
attorneys' fees, shall constitute Additional Rent and shall be paid by Subtenant
to Sublandlord within Thirty (30) days after receipt of an invoice. Sublandlord
in its sole discretion may, without any liability whatsoever to the Subtenant
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or any person or entity claiming through or under the Subtenant, cease the
performance of any act commenced hereunder, at any time. There shall be no
warranty, either express or implied, with respect to any such act performed by
Sublandlord.
In case of a situation which the Sublandlord reasonably believes to be an
emergency, the Sublandlord may avail itself of its rights under this Section
17.01 immediately, giving notice to Subtenant within 48 hours thereafter.
SECTION 17.02: If Sublandlord, at any time after the lapse of Thirty (30)
days from the receipt of written notice from Subtenant, shall fail to make any
payment or perform any act on its part to be made or performed, then Subtenant,
without waiving Sublandlord's default, may (but shall be under no obligation to)
make any payment or perform any other act on Sublandlord's part to be made or
performed as provided in this Sublease. All sums paid by Subtenant and all
reasonable costs and expenses incurred by Subtenant in connection with the
performance of any such act, including, without limitation, reasonable
attorneys' fees, shall be paid by Sublandlord to Subtenant within 30 days after
receipt of an invoice, but in no event (except as otherwise permitted in Section
21.01) shall any sums so incurred by Subtenant be offset or deducted from Base
Rent, Additional Rent or any other monetary sum due to Subtenant. There shall be
no warranty, either express or implied, with respect to any such act performed
by Subtenant.
In case of a situation which the Subtenant reasonably believes to be an
emergency, the Subtenant may avail itself of its rights under this Section 17.02
immediately, giving notice to Sublandlord within 48 hours thereafter.
ARTICLE 18 - INSPECTION BY SUBLANDLORD.
SECTION 18.01: Subtenant will permit Sublandlord and its authorized
representatives to enter the Demised Premises upon reasonable notice at all
reasonable times for the purpose of (i) inspecting the same, (ii) making any
necessary repairs and performing any work contemplated in this Sublease,
including, without limitation, Articles 7 and 17, which entry may be made at any
time in the event of an emergency, (iii) showing the same to prospective
purchasers or Mortgagees, (iv) showing the same to prospective tenants, and (v)
conducting any environmental testing, sampling, borings, and analyses it deems
necessary; such testing shall be at Subtenant's expense if Subtenant has
breached its Hazardous Materials covenant contained in Section 2.02(c) of this
Sublease or if Hazardous Materials are present in the Demised Premises or the
soil or surface or ground water in, on, under, about or near the Demised
Premises due to acts or omissions of Subtenant or its successors, assigns,
subtenants, licensees, concessionaires or occupants of the Demised Premises or
their agents, contractors, employees and invitees (other than Sublandlord or its
successors, assigns, subtenants, licensees, concessionaires or occupants of the
Demised Premises or their agents, contractors, employees and invitees). For
purpose of the preceding sentence, an "omission" giving rise to liability
thereunder to Subtenant for acts or omissions of Subtenant or its successors,
assigns, subtenants, licensees, concessionaires or
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occupants of the Demised Premises or their agents, contractors, employees and
invitees shall mean an "omission" as would give liability under the Texas law of
negligence.
ARTICLE 19 - SUBORDINATION; ATTORNMENT.
SECTION 19.01: Upon satisfaction of the provisions of Section 19.03, this
Sublease and the rights of Subtenant shall, at Sublandlord's option, be at all
times subject and subordinate to any Mortgage (as same may be renewed, replaced,
modified, extended or consolidated) hereinafter encumbering the Property or
Sublandlord's interest therein. Subtenant agrees to attorn to any Mortgagee,
purchaser in a foreclosure sale or grantee of a deed in lieu of foreclosure. Any
Mortgagee may at any time elect to cause this Sublease to have priority over its
Mortgage by executing unilaterally an instrument subordinating its Mortgage to
this Sublease, or accepting a Mortgage containing a clause providing for such
subordination. Subtenant shall within 15 days after request, execute,
acknowledge and deliver any and all instruments customary and reasonably
necessary to ratify or confirm the foregoing.
SECTION 19.02: Until it shall enter and take possession of the Demised
Premises for the purpose of foreclosure, the holder of a mortgage shall have
only such rights of Sublandlord as are necessary to preserve the integrity of
this Sublease as security. Upon entry and taking possession of the Demised
Premises for the purpose of foreclosure such holder shall have all the rights of
Sublandlord, but only for so long as the holder of said mortgage shall be in
possession of the Demised Premises. No such holder of a mortgage shall be liable
either as mortgagee or as assignee, to perform, or be liable in damages for
failure to perform, any of the obligations of Sublandlord unless and until such
holder shall enter and take possession of the Premises for the purpose of
foreclosure. Upon entry for the purpose of foreclosure, such holder shall be
liable to perform all of the obligations of landlord, subject to and with the
benefit of the provisions of this Article 19, provided that a discontinuance of
any foreclosure proceeding shall be deemed a conveyance under said provisions to
the owner of the equity of the Demised Premises. No Base Rent, Additional Rent
or any other charge shall be paid more than 30 days prior to the due dates
thereof and payments made in violation of this provision shall (except to the
extent that such payments are actually received by a mortgagee in possession or
in the process of foreclosing its mortgage) be a nullity as against such
mortgagee and Subtenant shall be liable for the amount of such payments to such
mortgagee. The covenants and agreements contained in this Sublease with respect
to the rights, powers and benefits of a mortgagee (particularly, without
limitation thereby, the covenants and agreements contained in this Article 19)
constitute a continuing offer to any person, corporation or other entity, which
by accepting a mortgage subject to this lease assumes the obligations herein set
forth with respect to such mortgagee; such mortgagee is hereby constituted a
party of this Sublease as an obligee hereunder to the same extent as though its
name was written herein as such; and such mortgagee shall be entitled to enforce
such provisions in its own name. Subtenant agrees on request of Sublandlord to
execute and deliver from time to time any agreement which may be customary and
reasonably necessary to implement the provisions of these Sections 19.01 and
19.02.
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SECTION 19.03: Unless and until Sublandlord shall obtain from any future
Mortgagee of the owner's or Sublandlord's rights in the Property or Demised
Premises an agreement which in substance provides that, in return for
subordinating and attorning to said Mortgagee, Subtenant shall not be disturbed
in its possession of the Demised Premises or in the exercise of any of its
rights under this Sublease in the event of a foreclosure under said Mortgage,
provided Subtenant complies with the terms and conditions of the Sublease,
Subtenant shall not be obligated to subordinate and attorn as provided in
Section 19.01.
ARTICLE 20 - INDEMNIFICATION.
SECTION 20.01: Subtenant shall indemnify, defend and hold Sublandlord
harmless from and against any and all actions, claims, demands, penalties,
liabilities or costs (including reasonable attorneys' fees) incurred in
connection with any loss, damage or injury to persons or property occurring in
or on the Demised Premises (and in the event of any claims under Environmental
Laws resulting from a breach by Subtenant or anyone claiming under or through
Subtenant of Subtenant's covenant in Section 2.02(c) of this Sublease, this
shall also include any loss, damage or injury to persons or property under,
about or near the Demised Premises), which arises under the operations or
activities of Subtenant and its subtenants, concessionaires, licensees or
occupants of the Demised Premises or any of their contractors, agents, employees
or invitees, or arises out of Subtenant's and their use of the Demised Premises,
or caused by the acts or negligence of Subtenant, its subtenants,
concessionaires, licensees or occupants and their contractors, agents, employees
or invitees.
SECTION 20.02: The obligation of Subtenant to indemnify, defend, and hold
harmless Sublandlord for claims under Environmental Laws which arise from a
breach by Subtenant of its covenants under Section 2.02(c), includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work reasonably
required by Sublandlord or any Mortgagee, or required by any federal, state or
local governmental agency or political subdivision because of any Hazardous
Materials occurring or present in the Demised Premises, the soil or surface or
ground water in, on, under, about or near the Demised Premises, diminution in
value of the Demised Premises, the Common Areas or the Property, damages for the
loss or restriction on use of rentable or useable space or of any amenity of the
Demised Premises or the Common Areas, damages arising from any adverse impact on
marketing of space in the Demised Premises or the Property, and sums paid in
settlement of claims, penalties, attorneys' fees, court costs, consultant and
laboratory fees and expert's fees. Without limiting the foregoing, if any
Hazardous Materials are found in the soil or surface or ground water in, on,
under, about or near the Demised Premises the introduction of which is caused or
contributed to by Subtenant, its employees, successors, assigns, licensees or
invitees, Subtenant shall promptly take all actions reasonably required by
Sublandlord or Mortgagee or required by governmental agencies, at Subtenant's
sole expense, necessary to return the Demised Premises to the condition existing
prior to the introduction of Hazardous Materials in, on, under, about or near
the Demised Premises, in accordance with Legal Requirements; any action
undertaken by Subtenant shall be subject to Sublandlord's prior approval of such
actions, which approval shall not be unreasonably withheld.
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SECTION 20.03: The provisions of this Article 20 shall survive any
termination of this Sublease as to matters or occurrences which preceded the
termination.
ARTICLE 21 - SUBLANDLORD EXCULPATION.
SECTION 21.01 - LIMITATION OF LIABILITY: Notwithstanding anything to the
contrary in this Sublease, any judgment obtained by Subtenant against
Sublandlord shall be satisfied only out of Sublandlord's interest in the
Property and the rents receivable by Sublandlord therefrom, including those
receivable from Subtenant. Neither Sublandlord nor any of its general or limited
partners, officers, directors, shareholders, trustees, beneficiaries or
employees shall have any personal liability for any matter in connection with
this Sublease or its obligations as Sublandlord of the Demised Premises, except
as provided above. Subtenant shall not seek to enforce any personal or
deficiency judgment against Sublandlord or any of its general or limited
partners, officers, directors, shareholders, beneficiaries or employees, and
none of their property, except the Property and the rents receivable therefrom,
shall be available to satisfy any judgment hereunder.
SECTION 21.02 - SALE OF DEMISED PREMISES: In the event of any sale or
transfer of Sublandlord's interest in the Demised Premises, the seller,
transferor or assignor shall be and hereby is entirely freed and relieved of all
agreements, covenants and obligations of Sublandlord thereafter accruing
hereunder, and it shall be deemed and construed without further agreement
between the parties or their successors in interest or between the parties and
the purchaser, transferee or assignee in any such sale, transfer or assignment
that such purchaser, transferee or assignee has assumed and agreed to carry out
any and all agreements, covenants and obligations of Sublandlord hereunder.
SECTION 21.03: The provisions of this Article 21 shall survive any
termination of this Sublease.
ARTICLE 22 - NOTICES.
SECTION 22.01: Whenever it is provided herein that notice, notification,
demand, request or approval is required, the same shall be in writing and, any
law or statute to the contrary notwithstanding, it shall be effective for any
purpose if given or served by intracity messenger service or overnight courier
service such as Federal Express or by mailing by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows: (a) If by
Sublandlord, to Subtenant at the address set forth on the first page of this
Sublease, or to such other address as Subtenant may from time to time designate
by notice given to Sublandlord; and (b) If by Subtenant, to Sublandlord at the
address set forth in the first page, or at such other address as Sublandlord may
from time to time designate by notice given to Subtenant. Every notice, demand,
request, approval or other communication hereunder by intracity messenger
service or overnight courier service shall be deemed to have been given or
served at the earlier of actual receipt or one day after first attempted
delivery. Every notice, demand, request, approval or other communication
hereunder by registered or certified mail, return receipt
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requested, shall be deemed to have been given or served at the earlier of actual
receipt or Three (3) days after deposit with the U. S. Postal Service, postage
and necessary fees prepaid.
SECTION 22.02: If any notice is given to Sublandlord by a governmental
agency pursuant to the Environmental Laws, or if any action is required by a
governmental agency pursuant to Environmental Laws in a period or time which is
less than thirty (30) days, then the notice and time periods provided for in
Sections 13.01(b), 17.01 and 17.02 shall be reduced to a time period equal to
the statutory time less two (2) days; the provision of this Section shall
prevail over the time periods provided for in Sections 13.01(b), 17.01 and
17.02.
ARTICLE 23 - CERTIFICATES - FINANCIAL STATEMENTS.
SECTION 23.01: Each party (the "Certifying Party") shall from time to
time, within 15 days after receipt of written request therefor, execute,
acknowledge and deliver to the requesting party (the "Requesting Party") or any
existing or proposed Mortgagee or purchaser or assignee of the Demised Premises
or of any Mortgage, without charge, a duly executed recordable certificate
prepared by the Requesting Party certifying all of the following to the best of
the knowledge of the Certifying Party: (i) that this Sublease is valid,
subsisting, in full force and effect and unmodified (or, if modified, that the
Sublease as modified is valid, subsisting and in full force and effect and
stating with specificity all modifications); (ii) the dates to which the rent
and other charges have been paid; (iii) the Sublease Term; (iv) that all
conditions to Subtenant's possession of the Demised Premises and commencement of
the Sublease Term have been satisfied, if accurate, and if not, stating those
conditions which have not been satisfied: (v) that the Requesting Party is not
in default under any provisions of this Sublease, if accurate, and if not,
stating any defaults; (vi) that there are no offsets or defenses which the
Certifying Party then has against Requesting Party (or if there are any offsets
or defenses then claimed, stating the nature of same with specificity); and
(vii) such other information as may be reasonably requested. It is intended that
any such statement delivered pursuant to this Article may be relied upon by the
parties for whom it is intended.
SECTION 23.02: Subtenant, in writing to Sublandlord, within (15) days
after receipt or request therefor, shall execute, acknowledge and deliver to
Sublandlord or any existing or proposed Martgagee or purchaser or assignee of
the Demised Premises or any Mortgage, without charge, a certificate stating, to
the best of Subtenant's knowledge, that: (i) Subtenant, its subtenants,
concessionaires, licensees, occupants and their contractors, agents, employees
and invitees, have complied with the requirements of Environmental Laws imposed
upon them under the Sublease, (ii) Subtenant, its subtenants, concessionaires,
licensees, occupants and their contractors, agents, employees and invitees have
not disposed of Hazardous Materials on, in, under, about or near the Demised
Premises, (iii) Subtenant, its subtenants, concessionaires, licensees, occupants
and their contractors, agents, employees and invitees have not released
Hazardous Materials on, in, under, about or near the Demised Premises, and (iv)
no soil or surface or ground water contamination has occurred during the
Sublease Term on, in, under, about or near the Demised Premises. At any time
during the Sublease Term, Subtenant shall, if requested by Sublandlord, promptly
remove any and all equipment, materials and other items
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(except for any of the foregoing not installed or placed upon the Property or
Demised Premises by Subtenant, its subtenants, concessionaires, licensees,
occupants and their contractors, agents, employees and invitees) which may
cause, contribute to or result in Hazardous Material contamination of the
Demised Premises (the soil or surface or ground water in, on, under, about or
near the Demised Premises), and investigate, remedy and clean up any Hazardous
Material contamination caused or contributed to by Subtenant, its subtenants,
concessionaires, licensees, occupants and their contractors, agents, employees
and invitees, if Sublandlord or any governmental agency reasonably suspects
contamination is present or has occurred. Subtenant shall promptly (and in all
events not later than two (2) business days after acquiring the knowledge)
notify Sublandlord of any release of Hazardous Materials on, in, under, about or
near the Demised Premises and known to Subtenant, specifying the nature and
quantity of the release, the location of the release, and the measures taken to
contain and clean up the release and ensure that future releases do not occur.
Likewise, Sublandlord shall promptly (and in all events not later than two
(2) business days after acquiring the knowledge) notify Subtenant of any release
of Hazardous Materials on, in, under, about the Property and known to
Sublandlord, specifying the nature and quantity of the release and the location
of the release.
SECTION 23.03: Subtenant hereby certifies that the business activities
which it intends to conduct in the Demised Premises do not use any Hazardous
Materials, and are in full compliance with Environmental Laws.
SECTION 23.04: At least annually during the term which Subtenant occupies
the Demised Premises, Subtenant shall, upon Sublandlord's written request,
furnish to Sublandlord at no cost within 120 days Subtenant's audited year-end
balance sheet and income statement, for the year most recently available.
ARTICLE 24 - INTENTIONALLY OMITTED.
ARTICLE 25 - BROKERS.
SECTION 25.01 - WARRANTY: Subtenant and Sublandlord each represents and
warrants that it has dealt with no broker, agent or finder on account of this
Sublease except Sublandlord's brokers Westar Commercial Realty, 7200 Quaker,
Lubbock, Texas and Reitz, Alexander & Bruner, 512 Main Street, Fort Worth,
Texas, whose fees shall be paid by Sublandlord, and each agrees, subject to the
limitations set forth in Article 21 hereof, to defend, indemnify and hold
harmless the other from and against and all claims, damages and costs, including
attorneys' fees, in connection with any claim for brokerage, finder's or similar
fees, or compensation related to this Sublease, which may be made or alleged as
a result of acts or omissions of the indemnifying party.
SECTION 25.02: The provisions of this Article 25 shall survive any
termination of this Sublease.
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ARTICLE 26 - MISCELLANEOUS PROVISIONS.
SECTION 26.01 - INVALIDITY OF CERTAIN PROVISIONS: If any term or provision
of this Sublease or the application thereof to any person or circumstance shall,
to any extent be invalid or unenforceable, the remainder of this Sublease, 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 Sublease shall be valid and be
enforced to the fullest extent permitted by law.
SECTION 26.02 - CAPTIONS AND TABLE OF CONTENTS: The captions and table of
contents appearing in this Sublease are for convenience and reference only and
in no way define, limit or describe the scope or intent of this Sublease, or in
any way affect this Sublease.
SECTION 26.03 - INDEPENDENT OPERATION: Nothing in this Sublease shall
cause Sublandlord in any way to be construed as a partner, joint venturer or an
associate of Subtenant in the operation of the Demised Premises or subject
Sublandlord to any obligations, losses, charges or expenses (except as expressly
set forth herein) connected with or arising from the operation or use of the
Demised Premises.
SECTION 26.04 - TIME OF THE ESSENCE: Time is of the essence of this
Sublease as to each of the terms, conditions, obligations and performances
contained herein or required hereunder of which time is a factor.
SECTION 26.05 - WAIVER: No failure by either party to insist upon the
strict performance of any covenant, agreement, term or condition of this
Sublease or to exercise any right or remedy following a breach or default
thereof, no forbearance by either party to enforce one or more of the remedies
herein provided upon an event of default, and no acceptance of full or partial
rent during the continuance of any such breach or default, shall constitute a
waiver of any such breach or default or of such covenant, agreement, term or
condition. No covenant, agreement, term or condition of this Sublease to be
performed or complied with and no breach or default thereof shall be waived,
altered or modified except by a written instrument. No waiver of any breach or
default shall affect or alter this Sublease, but each and every covenant,
agreement, term and condition of this Sublease shall continue in full force and
effect with respect to any other then existing or subsequent breach or default
thereof. The maintenance of any action or proceeding to recover possession of
the Demised Premises or any installment or installments of Base Rent or any
other monies that may be due or become due from Subtenant to Sublandlord shall
not preclude Sublandlord from thereafter instituting and maintaining subsequent
actions or proceedings for the recovery of possession of the Demised Premises or
of Base Rent or any other monies that may be due or become due from Subtenant,
including all expenses, court costs and attorneys' fees and disbursements
incurred by Sublandlord. An entry or re-entry by Sublandlord shall not be deemed
to absolve or discharge Subtenant from liability hereunder.
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SECTION 26.06 - COUNTERPARTS: This Sublease may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
shall be constitute one and the same instrument.
SECTION 26.07 - SHORT FORM SUBLEASE: Sublandlord and Subtenant agree that
if either party so desires, they will execute a Short Form Sublease setting
forth the existence of this Sublease and the Sublease Term, which may be
recorded. The party so requesting such Short Form Sublease shall pay the
recording charges and documentary transfer taxes associated therewith.
SECTION 26.08 - COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES: The
agreements, terms, covenants and conditions herein shall bind and inure to the
benefit of Sublandlord and Subtenant and their respective heirs, personal
representatives, successors and permitted assigns; provided that this section
shall not constitute a permission or authorization by Sublandlord to Subtenant
to assign or in any way transfer its interest in this Sublease.
SECTION 26.09 - INTEGRATION; NO ORAL MODIFICATIONS: Subtenant hereby
acknowledges that except as and to the extent specifically provided for in this
Sublease, neither Sublandlord, nor any of its agents, representatives or
employees, have made any representations, warranties, agreements or promises,
and none shall be implied by law. This Sublease is intended by the parties to be
a final expression and a complete and exclusive statement of the agreement of
the parties regarding the subject matter hereof, and all negotiations between
the parties are merged herein. This Sublease cannot be changed, modified or
terminated orally, but may be amended only by an instrument in writing executed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
SECTION 26.10 - GENDER; NUMBER: The use of the neuter pronoun in any
reference to Sublandlord or Subtenant shall be deemed to include any individual
landlord or tenant, and the use herein of the words "successors and assigns" or
"successors or assigns" of Sublandlord or Subtenant shall be deemed to include
the heirs, legal representatives and assigns of any individual landlord or
tenant. The use of the plural shall include the singular, and the use of the
singular shall include the plural, as the context may require or permit.
SECTION 26.11 - RIGHTS AND REMEDIES CUMULATIVE: Each right and remedy of
Sublandlord and Subtenant provided for in this Sublease shall be cumulative and
shall be in addition to every other right or remedy provided for in this
Sublease or now or hereafter existing at law or in equity. The exercise or
beginning of the exercise by Sublandlord or Subtenant of any one or more rights
or remedies shall not preclude the simultaneous or later exercise by Sublandlord
or Subtenant of any or all other rights or remedies, nor shall it constitute a
forfeiture or waiver of any amounts owed to Sublandlord or Subtenant.
SECTION 26.12 - COVENANTS INDEPENDENT: Each and every covenant and
agreement contained in this Sublease shall be deemed separate and independent
and not dependent upon any other provisions of this Sublease, and the damages
for failure to perform the same shall be
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deemed in addition to and separate and independent of the damages accruing by
reason of the breach of any other covenant contained in this Sublease.
SECTION 26.13 - AUTHORITY AND STATUS: If Subtenant is a corporation, the
person(s) signing this Sublease on behalf of Subtenant warrant that such
person(s) are authorized to execute this Sublease on behalf of Subtenant, that
no other signature is required, and that this Sublease shall be binding on
Subtenant. Subtenant's corporate status is in good standing. Subtenant shall
continuously keep its corporate status throughout the Sublease Term in good
standing, active and current with the state of its incorporation and shall be
and remain licensed to do business in the state in which the Property is
located. The person signing this Sublease on behalf of Sublandlord warrants that
he is authorized to execute this Sublease on behalf of Sublandlord, that no
other signature is required, and that this Sublease shall be binding on
Sublandlord, when executed by both parties. From and after the time the
Subtenant enters into possession of any part of the Demised Premises, it shall
conclusively be presumed that the person(s) executing this Sublease on both
parties' behalf did so with full and proper authority.
SECTION 26.14 - COST OF PERFORMANCE: Whenever it is indicated in this
Sublease that Sublandlord or Subtenant may, shall or will perform any act, then
such act shall be performed at the sole cost and expense of the performing party
unless otherwise specifically indicated to the contrary.
SECTION 26.15 - ATTORNEYS' FEES: If either party becomes a party to any
litigation concerning this Sublease, the Demised Premises, or the building or
other improvements of which the Demised Premises form a part, by reason of any
act or omission of the other party or its authorized representatives, the party
that causes the other party to become involved in the litigation shall be liable
to that party for reasonable attorneys' fees, court costs, investigation
expenses, discovery costs, and costs of appeal incurred by it in the litigation.
If either party commences an action against the other party arising out of or in
connection with this Sublease, the prevailing party shall be entitled to have
and recover from the losing party reasonable attorneys' fees, court costs,
investigation expenses, discovery costs and costs of appeal.
SECTION 26.16 - NO OFFER: The delivery of an unsigned copy of this
Sublease to Subtenant shall not constitute an offer to Sublease the Demised
Premises or grant any rights to Subtenant as a result thereof, and this Sublease
shall not be binding on Sublandlord or Subtenant until executed by Sublandlord
and Subtenant and delivered.
SECTION 26.17 - REASONABLENESS; CONSTRUCTION: This Sublease shall be
construed fairly as between both Sublandlord and Subtenant and without regard to
which party drafted the same. To the extent that there are certain provisions of
this Sublease in which Sublandlord may withhold its consent "for any reason
whatsoever" and other provisions which prohibit certain assignments and
subleases or allow Sublandlord in certain circumstances to terminate this
Sublease in lieu of, or share profit upon, an assignment or subletting of all or
any portion of the Demised Premises or a cessation of business therein, such
specific provisions, which may be viewed as allowing Sublandlord to deviate from
a standard of reasonableness which is imposed
-34-
<PAGE>
on Sublandlord and Subtenant in connection with other provisions of this
Sublease, have been lengthily negotiated and bargained for and represent a
material part of the consideration to be received by each party. The parties
specifically acknowledge and agree:
1. Both Sublandlord and Subtenant are sophisticated parties;
2. Neither party has unequal bargaining power;
3. Subtenant, as of the date of execution of this Sublease, is a
corporation, and Sublandlord is a general partnership representing sophisticated
business persons, real estate investors and developers;
4. Each party has been represented by counsel of their own choosing who
have advised the parties;
5. The parties, bearing in mind the rights, duties and obligations of the
parties to honor the implied covenants of good faith and fair dealing, have
specifically bargained for and agreed that it is the intent of the parties that
Sublandlord, except where provided in this Sublease that it shall not
unreasonably withhold its consent, may exercise its consent authority pursuant
to a subjective standard of sole discretion, and further that it is the intent
of the parties that no person interpreting this Sublease shall have the right to
impose any standard on, or restriction of, Sublandlord's rights, except where
specifically stated to the contrary, (i) to withhold consent for any reason
whatsoever, or (ii) which restrict or condition Sublandlord's consent on payment
being made to Sublandlord, or (iii) which provide for Sublandlord to terminate
this Sublease, or (iv) which prohibit certain assignments and subleases; and
6. The parties acknowledge that the provisions in favor of Sublandlord
may constitute a restraint on alienation; however, the parties agree that if
they are restraints, then they are reasonable restraints on alienation.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Sublease under
seal as of the day and year first above written.
SUBLANDLORD: SHADRALL ASSOCIATES,
a New York general partnership
By its managing general partner:
Shadrall Corp.,
a Massachusetts corporation
By: /s/ Joseph J. Dempsey, Jr.,
-----------------------------------
Joseph J. Dempsey, Jr.,
President
SUBTENANT: Stationers Distributing Company, Inc.
By: /s/ B Neal Perkey
------------------------------------
Name: B NEAL PERKEY
----------------------------------
Its: Vice President & CEO
-36-
<PAGE>
EXHIBIT A
SUBLEASE OF SHADRALL ASSOCIATES
TO STATIONERS DISTRIBUTING COMPANY, INC.
LEGAL DESCRIPTION OF PROPERTY
All of lot 13A of a Replat of Lots 6, 7, part of 8, part of Lot 12, and all
of Lots 13 and 14 of the Soash-White Industrial Addition to the City of Lubbock,
Lubbock County, State of Texas, as shown on said Replat, recorded in Volume
1024, Page 674, Deed Records of Lubbock County, Texas, subject to rights of the
City of Lubbock to underground water as described in a water-rights deed from
Paul B. Rumph, Administrator to the City of Lubbock, dated May 8, 1950, recorded
in Volume 408, Page 410, Deed Records of Lubbock County, Texas.
-37-
<PAGE>
EXHIBIT B
SUBLEASE OF SHADRALL ASSOCIATES
TO STATIONERS DISTRIBUTING COMPANY, INC.
SITE PLAN OF DEMISED PREMISES
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<PAGE>
EXHIBIT C
SUBLEASE OF SHADRALL ASSOCIATES
TO STATIONERS DISTRIBUTING COMPANY, INC.
DESCRIPTION OF SUBLANDLORD'S WORK
1. Replace dock levelers/bumpers
2. Install dock pads/seals
3. Remove parking lot median
4. Install dock lights
5. Upgrade warehouse lighting
ALL ACCORDING TO THE FOUR (4) PAGES OF SPECIFICATIONS WHICH FOLLOW THIS PAGE.
THE FOREGOING WORK SHALL NOT EXCEED THE SUM OF $60,000 IN COST TO SUBLANDLORD.
ANY EXCESS AMOUNT OVER $60,000 FOR THE SPECIFIED WORK, TOGETHER WITH ANY UP-
GRADES OR ADDITIONAL WORK REQUESTED BY SUBTENANT AND APPROVED BY SUBLANDLORD,
SHALL BE REIMBURSED BY SUBTENANT TO SUBLANDLORD WITHIN FOURTEEN (14) DAYS OF
BEING INVOICED FOR SAME; PROVIDED, HOWEVER, THE ATTACHED BIDS SHALL BE ACCEPTED
BY SUBLANDLORD AND SUBLANDLORD SHALL NOT AUTHORIZE ANY UPGRADES OR CHANGES
WITHOUT SUBTENANT'S WRITTEN APPROVAL. IF ANY OF THE ATTACHED BIDS SHOULD BE
CHANGED OR WITHDRAWN, SUBLANDLORD SHALL OBTAIN A SUBSTITUTE BID WHICH IS
APPROVED BY SUBTENANT IN WRITING PRIOR TO THE COMMENCEMENT OF THAT PORTION OF
THE WORK.
<PAGE>
[MAP APPEARS HERE]
<PAGE>
EXHIBIT 10.49
LEASE AGREEMENT
by and between
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
A DELAWARE LIMITED PARTNERSHIP
as LANDLORD
and
STATIONERS DISTRIBUTING COMPANY, INC.
as TENANT
Premises: Plauche Street and Beven Street, New Orleans, LA
Harbor Avenue, Memphis, TN
Highpoint Drive, San Antonio, TX
Dated as of: December 20, 1988
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties........................................................ 1
1. Demise of Premises............................................. 1
2. Certain Definitions............................................ 1
3. Title and Condition............................................ 7
4. Use of Leased Premises; Quiet Enjoyment........................ 8
5. Term........................................................... 9
6. Rent........................................................... 11
7. Net Lease; Non-Terminability................................... 12
8. Payment of Impositions; Compliance with Law.................... 13
9. Liens; Recording and Title..................................... 15
10. Indemnification................................................ 15
11. Maintenance and Repair......................................... 16
12. Alterations and Improvements................................... 18
13. Condemnation................................................... 19
14. Insurance...................................................... 22
15. Restoration; Reduction of Rent................................. 27
16. Procedures Upon Purchase....................................... 29
17. Assignment and Subletting...................................... 30
18. Permitted Contests............................................. 32
19. Conditional Limitations; Default Provision..................... 33
20. Additional Rights of Landlord.................................. 38
21. Notices........................................................ 39
22. Estoppel Certificate........................................... 40
23. Surrender...................................................... 40
24. Risk of Loss................................................... 41
25. No Merger of Title............................................. 41
26. Books and Records.............................................. 41
27. Determination of Value......................................... 42
28. Financing...................................................... 44
29. Non-Recourse as to Landlord.................................... 44
30. Substitution and Exchange of Property.......................... 45
31. Financial Covenant............................................. 46
32. Subordination.................................................. 47
33. First Refusal Right............................................ 47
34. Miscellaneous.................................................. 49
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Allocation of Acquisition Cost
Exhibit "F" - Percentage Allocation
</TABLE>
-i-
<PAGE>
LEASE AGREEMENT, made as of this 20th day of December, 1988, between
CORPORATE PROPERTY ASSOCIATES 8 L.P., A DELAWARE LIMITED PARTNERSHIP
("Landlord"), a Delaware limited partnership with an address c/o W. P. Carey &
Co., Inc., 689 Fifth Avenue, New York, New York 10022, and STATIONERS
DISTRIBUTING COMPANY, INC. ("Tenant"), a Delaware corporation with an address at
4055 International Plaza, Suite 450, Fort Worth, Texas 76109.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. DEMISE OF PREMISES. Landlord hereby demises and lets to Tenant,
------------------
and Tenant hereby takes and leases from Landlord, for the term or terms and upon
the provisions hereinafter specified, the following described property
(hereinafter referred to individually as the "New Orleans Premises", the
"Memphis Premises" and the "San Antonio Premises" [each of which Premises shall
include the portions of items (a), (b) and (c) of this Paragraph 1 located
thereon or therein or appertaining thereto] and collectively as the "Leased
Premises"): (a) the premises described in Exhibit "A" attached hereto and made a
part hereof, together with the easements, rights and appurtenances thereunto
belonging or appertaining (collectively, the "Land"); (b) the buildings,
structures and other improvements now or hereafter constructed on the Land
(collectively, the "Improvements"); and (c) the machinery and equipment
described in Exhibit "B" attached hereto and made a part hereof and installed in
and upon the Improvements, together with all additions and accessions thereto,
substitutions therefor and replacements thereof permitted by this Lease
(collectively, the "Equipment").
2. CERTAIN DEFINITIONS.
-------------------
"Acquisition Cost" shall mean $4,630,000.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 6(b).
"Adjoining Property" shall mean all sidewalks, curbs and vault
spaces adjoining any of the Leased Premises.
"Affected Premises" shall mean the Affected Premises as defined in
Paragraph 13(b) or Paragraph 14(i), as the case may be, and as the context
requires.
"Affiliate" shall mean any Person in controlling, control of or
under common control with Tenant.
"Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals or removals of and all
substitutions or replacements for any of the Improvements or Equipment, both
interior and exterior, structural and non-structural, and ordinary and
extraordinary.
<PAGE>
"Applicable Final Date" shall mean the Applicable Final Date as
defined in Paragraph 27.
"Applicable Initial Date" shall mean the Applicable Initial Date
as defined in Paragraph 27.
"Applicable Provision" shall mean the Applicable Provision as
defined in Paragraph 27.
"Assignment" shall mean an assignment of rents and leases from
Landlord to Lender securing Landlord's obligation to repay the Loan and/or any
subsequent assignment of rents covering any of the Leased Premises from Landlord
to Lender, as the same may from time to time be amended, supplemented or
modified, securing repayment of the Loan.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6(a).
"Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates
as defined in Paragraph 6(a).
"Casualty Offer Amount" shall mean the Casualty Offer Amount as
defined in Paragraph 14(i).
"Casualty Termination Date" shall mean the Casualty Termination
Date as defined in Paragraph 14(i).
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Default Offer Amount" shall mean the Default Offer Amount as
defined in Paragraph 19(b) (v).
"Default Rate" shall mean the Default Rate as defined in Paragraph
6(b).
"Delay Period" shall mean the Delay Period as defined in Paragraph
27.
"Environmental Laws" shall mean all federal, state or local laws,
ordinances, rules, regulations or written policies, now or hereafter existing,
which govern or otherwise relate to the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of any Hazardous
Substance, including the laws, ordinances, regulations and written policies
provided pursuant to or under (i) Toxic Substances Control Act, 15 U.S.C.
(s)(s)2601 et seq., (ii) National Historic Preservation Act, 16 U.S.C.
-- ---
(s)(s)470 et. seq., (iii) Coastal Zone Management Act of 1972,
-- ---
-2-
<PAGE>
16 U.S.C. (s)(s)1451 et seq., (iv) Rivers and Harbors Act of 1899, 33 U.S.C.
-- ---
(s)(s)401 et seq., (v) Clean Water Act, 42 U.S.C. (s)(s)1251 et seq., (vi) Flood
-- --- -- ---
Disaster Protection Act, 42 U.S.C. (s)(s)4321 et seq., (vii) National
-- ---
Environmental Policy Act, 42 U.S.C. (s)(s)4321 et seq., (viii) Resource
-- ---
Conservation and Recovery Act of 1976, 42 U.S.C. (s)(s)6901 et seq., (ix) Clean
-- ---
Air Act, 42 U.S.C. (s)(s)7401 et seq. and (x) Comprehensive Environmental
-- ---
Response Compensation and Liability Act, 42 U.S.C. (s)(s)9601 et seq.
-- ---
("CERCLA").
------
"Equipment" shall mean the Equipment as defined in Paragraph 1.
"Event of Default" shall mean an Event of Default as defined in
Paragraph 19(a).
"Exchange" shall mean Exchange as defined in Paragraph 32.
"Exchange Date" shall mean Exchange Date as defined in Paragraph
32.
"Existing Property" shall mean Existing Property as defined in
Paragraph 32.
"Fair Market Value" shall mean the higher of (a) the fair market
value of the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, as affected and encumbered by this Lease and assuming that the
Term has been extended for all extension periods, if any, provided for herein.
Fair Market Value, for all purposes of this Lease, shall be determined in
accordance with the procedure specified in Paragraph 27.
"Guarantor" shall mean SDC Distributing Corp., a Delaware
corporation.
"Guaranty" shall mean the Guaranty of even date herewith from
Guarantor to Landlord.
"Hazardous Substances" shall mean (i) any flammable substances,
radioactive materials, hazardous materials, hazardous wastes, toxic substances,
pollutants, pollution or any related materials or substances specified in any of
the Environmental Laws (including any "hazardous substance" as defined in
CERCLA) and (ii) asbestos and polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in Paragraph
8(a).
"Improvements" shall mean the Improvements as defined in Paragraph
1.
"Land" shall mean the Land as defined in Paragraph 1.
-3-
<PAGE>
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation or requirement,
even if unforeseen or extraordinary, of every duly constituted governmental
authority, court or agency.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean all present and future Laws
(including but not limited to Environmental Laws) and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to Tenant or to any of the Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any Person or entity which may, after the date
hereof, make a Loan to Landlord.
"Loan" shall mean one or more loans of not more than $2,500,000
which may be made by Lender to Landlord after the date hereof, secured by a
Mortgage and an Assignment and evidenced by a Note.
"Memphis Premises" shall mean the Memphis Premises as defined in
Paragraph 1.
"Mortgage" shall mean any mortgage or deed of trust encumbering
the Leased Premises from Landlord to Lender, as the same may from time to time
be amended, supplemented or modified.
"Net Award" shall mean the entire award payable to Landlord by
reason of a Condemnation, less any reasonable out-of-pocket expenses and
reasonable attorney's fees, if applicable incurred by Landlord and Lender in
collecting such award.
"Net Proceeds" shall mean the entire proceeds of any insurance
required under clauses (i), (ii) (to the extent payable to Landlord or Lender),
(iv) and (v) of Paragraph 14(a), less any reasonable out-of-pocket expenses and
reasonable attorney's fees, if applicable incurred by Landlord and Lender in
collecting such proceeds.
"New Orleans Premises" shall mean the New Orleans Premises as
defined in Paragraph 1.
-4-
<PAGE>
"Note" shall mean a promissory note evidencing Landlord's
obligation to repay the Loan, which Note may be secured by the Mortgage and the
Assignment, as the same may from time to time be amended, supplemented or
modified.
"Offer Amount" shall mean the Termination Offer Amount, the
Casualty Offer Amount, the Transfer Offer Amount, the Default Offer Amount or
the Purchase Price, as the case may be, and as the context requires.
"Option Purchase Date" shall mean the Option Purchase Date as
defined in Paragraph 28.
"Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions and easements, listed on Exhibit "C" attached
hereto and made a part hereof.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prime Rate" shall mean the average of the interest rates per
annum quoted by Bank of America NT & SA, San Francisco, CA, The Chase Manhattan
Bank, N.A., New York, NY, Chemical Bank, New York, NY, Citibank, N.A., New York,
NY, and Morgan Guaranty Trust Company, New York, NY, as their respective prime
rates, such average to change effective as of the effective date of any change
in any of the aforesaid prime rates. The Prime Rate shall be the average of such
publicly announced prime rates even though one or more of the aforesaid banks
may actually charge interest on some of its loans at lower rates; and if any of
the aforesaid banks has more than one prime rate of interest in effect
simultaneously, the prime rate of such bank for the purposes of this definition
shall be deemed to be the highest of such prime rates then simultaneously in
effect for such bank. If three or more of the aforesaid banks cease to have a
publicly announced prime rate, then, for so long as three or more of the
aforesaid banks cease to have a publicly announced prime rate, the Prime Rate
shall be the average per annum discount rate from time to time on ninety-one
(91) day bills issued by the United States Treasury (the so-called "Treasury
bills") at the most recent auction or, if no such ninety-one (91) day bills are
then being issued, Treasury bills then being issued for the period of time
closest to ninety-one (91) days.
"Purchase Price" shall mean the Purchase Price as defined in
Paragraph 28.
"Remaining Sum" shall mean the Remaining Sum as defined in
Paragraph 15(a).
"Rent" shall mean Basic Rent and Additional Rent.
"Replaced Equipment" shall mean the Replaced Equipment as defined
in Paragraph 11(d).
-5-
<PAGE>
"Replacement Equipment" shall mean the Replacement Equipment as
defined in Paragraph 11(d).
"Requisition" shall mean any temporary requisition or confiscation
of the use or occupancy of any of the Affected Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of a Remaining Sum is finally determined or the date on which Landlord's
right to retain the Remaining Sum is finally determined.
"San Antonio Premises" shall mean the San Antonio Premises as
defined in Paragraph 1.
"Selected Premises" shall mean the Selected Premises as defined in
Paragraph 19(b)(v).
"Set-Off" shall mean a Set-Off as defined in Paragraph 7(a).
"Site Assessments" shall mean the Site Assessments as defined in
Paragraph 8(d).
"Site Reviewers" shall mean the Site Reviewers as defined in
Paragraph 8(d).
"State" shall mean the State of Louisiana, the State of Tennessee
and/or the State of Texas, as applicable.
"Substitute Property" shall mean the Substitute Premises as
defined in Paragraph 32.
"Taking" shall mean any taking of any of the Leased Premises in or
by condemnation or other eminent domain proceedings pursuant to any Law, general
or special, or by reason of any agreement with any condemnor in settlement of or
under threat of any such condemnation or other eminent domain proceeding, or by
any other means, or any de facto condemnation.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Date" shall mean the Termination Date as defined in
Paragraph 13(b).
"Termination Offer Amount" shall mean the Termination Offer Amount
as defined in Paragraph 13(b).
-6-
<PAGE>
"Transfer Offer Amount" shall mean Transfer Offer Amount as
defined in Paragraph 17.
"Transfer Purchase Date" shall mean Transfer Purchase Date as
defined in Paragraph 17.
3. TITLE AND CONDITION.
-------------------
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and the Assignment, (ii) the rights of any parties in possession of any
of the Leased Premises, (iii) the existing state of title of the Leased
Premises, including the Permitted Encumbrances, as of the commencement of the
Term, (iv) any state of facts which an accurate survey or physical inspection of
the Leased Premises might show, (v) all Legal Requirements, including any
existing violation of any thereof, and (vi) the condition of the Leased Premises
as of the commencement of the Term, without representation or warranty by
Landlord; it being understood and agreed, however, that the recital of the
Permitted Encumbrances herein shall not be construed as a revival of any thereof
which for any reason may have expired or terminated.
(b) Tenant acknowledges that the Leased Premises are in
satisfactory condition and repair at the inception of this Lease. LANDLORD HAS
NOT MADE AND WILL NOT MAKE ANY INSPECTION OF ANY OF THE LEASED PREMISES.
LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED
PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
-----
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL
LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE
-------------------------------------------------------
OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE
- ----------
EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v)
VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix)
CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii)
---------------
DURABILITY OR (xiv) OPERATION; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY
TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO
ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT
AND ARE SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF
THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT
HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED; AND THE FOREGOING PROVISIONS ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT
TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR
ARISING OTHERWISE.
-7-
<PAGE>
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby,
and acknowledges that title is in Landlord and that Tenant has only the right of
possession and use of the Leased Premises (and a right of first refusal) as
provided in this Lease. Tenant further acknowledges that to its knowledge (i)
the Improvements conform to all Legal Requirements and all requirements of the
carriers of all insurance on any of the Leased Premises, (ii) all easements
necessary or appropriate for the use or operation of the Leased Premises have
been obtained, (iii) all contractors and subcontractors who have performed work
on or supplied materials to the Leased Premises have been fully paid, and all
materials and supplies have been fully paid for, (iv) the Improvements have been
fully completed in a workmanlike manner, and (v) all Equipment necessary for the
use or operation of the Leased Premises has been installed and all Equipment in
the Leased Premises is presently operative.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties and indemnities, express or
implied, and similar rights which Landlord may have against any manufacturer,
seller, engineer, contractor or builder in respect of any of the Leased
Premises, including any rights and remedies existing under contract or pursuant
to the Uniform Commercial Code. Such assignment shall remain in effect until the
termination of this Lease, and upon the termination of this Lease, such
assignment shall cease and all the said warranties, guaranties, indemnities and
other rights shall automatically revert to Landlord unless Tenant shall have
acquired the Premises in which event the assignment shall continue in effect.
4. USE OF LEASED PREMISES; QUIET ENJOYMENT.
---------------------------------------
(a) Tenant may occupy and use the Leased Premises for any lawful
purpose, provided that no Alterations may be made and no additional Improvements
may be constructed except in accordance with Paragraph 12, no Equipment may be
removed from the Leased Premises except in accordance with paragraphs 11(d),
13(d) and 14(h), and such use will not otherwise violate any provision of this
Lease. Tenant shall not permit any unlawful occupation, business or trade to be
conducted on any of the Leased Premises or any use to be made thereof contrary
to any applicable Legal Requirement then in effect. Tenant shall not use or
occupy or permit any of the Leased Premises to be used or occupied, nor do or
permit anything to be done in or on any of the Leased Premises, in a manner
which would (i) violate any certificate of occupancy affecting any of the Leased
Premises, (ii) make void or voidable any insurance then in force with respect to
any of the Leased Premises, (iii) make it difficult or impossible to obtain fire
or
-8-
<PAGE>
other insurance which Tenant is required to furnish hereunder, (iv) cause
structural injury to any of the Improvements, or (v) constitute a public or
private nuisance or waste.
(b) Subject to the other provisions of this Lease, so long as no Event
of Default exists hereunder, Landlord covenants to do no act to disturb the
peaceful and quiet occupation and enjoyment of the Leased Premises by Tenant,
provided that Landlord may enter upon and examine any of the Leased Premises at
reasonable times and upon five (5) days advance notice to Tenant (except in the
event of an emergency or upon the occurrence of an Event of Default in either of
which events no notice shall be required) and may take such action with respect
to the Leased Premises as is permitted by any provision hereof.
5. TERM. Subject to the provisions hereof, Tenant shall have and hold
----
the Leased Premises for an initial term (such term, as extended or renewed in
accordance with the provisions hereof, being called the "Term") commencing on
the date hereof and ending on the last day of the one hundred and eightieth
(180th) calendar month next following the date hereof. If all Rent and all other
sums due hereunder shall not have been fully paid by the end of the Term,
Landlord may, at its option, extend the Term until all said sums shall have been
fully paid.
Provided this Lease shall not have been terminated pursuant to any
provision hereof, the initial Term shall be deemed to be automatically extended
for an additional period of five (5) years unless Tenant shall notify Landlord
in writing at least eighteen (18) months prior to the expiration of the initial
Term that Tenant is terminating this Lease as of the end of the initial Term
provided, however, that Tenant shall have a period equal to the shorter of (a)
six (6) months following the date of the notice of intention to terminate or (b)
sixty (60) days following the date on which Landlord notifies Tenant that it has
entered into a letter of intent with a third party to lease any of the Selected
Premises to notify Landlord that it is rescinding its notice to terminate this
Lease and in the event Tenant so rescinds its notice to terminate, this Lease
and the Term shall be automatically extended for an additional period of five
(5) years. If the initial Term is automatically extended as aforesaid and this
Lease has not been terminated pursuant to any provision hereof prior to the
expiration of the first extension period, the Term shall be further
automatically extended for an additional consecutive period of five (5) years
unless Tenant shall notify Landlord in writing at least eighteen (18) months
prior to the expiration of the first extension period that Tenant is terminating
this Lease as of the end of the first extension period provided, however, that
Tenant shall have a period equal to the shorter of (a) six (6) months following
the date of the notice of intention to terminate or (b) sixty (60) days
following the date on which Landlord notifies Tenant that it has entered into a
letter of intent with a third party to lease any of the Selected Premises to
notify Landlord that it is rescinding its notice to
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terminate this Lease and in the event Tenant so rescinds its notice to terminate
this Lease and the Term shall be automatically extended for an additional period
of five (5) years. If the Term is automatically extended as aforesaid and this
Lease has not been terminated pursuant to any provision hereof prior to the
expiration of the second extension period, the Term shall be further
automatically extended for an additional consecutive period of five (5) years
unless Tenant shall notify Landlord in writing at least eighteen (18) months
prior to the expiration of the second extension period that Tenant is
terminating this Lease as of the end of the second extension period provided,
however, that Tenant shall have a period equal to the shorter of (a) six (6)
months following the date of the notice of intention to terminate or (b) sixty
(60) days following the date on which Landlord notifies Tenant that it has
entered into a letter of intent with a third party to lease any of the Selected
Premises to notify Landlord that it is rescinding its notice to terminate this
Lease and in the event Tenant so rescinds its notice to terminate this Lease and
the Term shall be automatically extended for an additional period of five (5)
years. If the Term is automatically extended as aforesaid and this Lease has not
been terminated pursuant to any provision hereof prior to the expiration of the
third extension period, the Term shall be further automatically extended for an
additional consecutive period of five (5) years unless Tenant shall notify
Landlord in writing at least eighteen (18) months prior to the expiration of the
third extension period that Tenant is terminating this Lease as of the end of
the third extension period provided, however, that Tenant shall have a period
equal to the shorter of (a) six (6) months following the date of the notice of
intention to terminate or (b) sixty (60) days following the date on which
Landlord notifies Tenant that it has entered into a letter of intent with a
third party to lease any of the Selected Premises to notify Landlord that it is
rescinding its notice to terminate this Lease and in the event Tenant so
rescinds its notice to terminate this Lease and the Term shall be automatically
extended for an additional period of five (5) years.
In the absence of such notice of termination by Tenant to Landlord and
in the absence of any termination of this Lease pursuant to any other provision
hereof, the Term shall be automatically extended for the applicable extension
period specified above and no instrument of extension or renewal need be
executed. Any such extension of the Term shall be subject to and continue in
full force and effect all of the provisions of this Lease except that the Basic
Rent payable during each extension period shall be as provided in Exhibit "C"
attached hereto and made a part hereof.
In the event that Tenant exercises its option not to extend or not to
further extend the Term, as hereinabove provided or upon the occurrence of an
Event of Default hereunder, then Landlord shall have the right during the
remainder of the Term then in effect to (a) advertise the availability of the
Leased
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Premises for sale or for reletting and to erect upon the Leased Premises signs
indicating such availability provided that such signs shall not unreasonably
interfere with the use of the Leased Premises by Tenant, and (b) show the Leased
Premises to prospective purchasers or tenants at such reasonable times during
normal business hours as Landlord may select.
6. RENT.
----
(a) Tenant shall pay to Landlord, as annual rent for the Leased
Premises during the Term the amounts determined in accordance with the schedule
set forth in Exhibit "D" attached hereto and made a part hereof ("Basic Rent"),
commencing on the first day of the first month next following the date hereof
and continuing on the first day of each month thereafter during the Term (the
said days being called the "Basic Rent Payment Dates"), and shall pay the same
at Landlord's address set forth above, or at such other places or to such other
Persons as Landlord from time to time may designate to Tenant in writing. Each
rental payment shall be made to Landlord on or before the applicable Basic Rent
Payment Date in immediately available funds which at the time of such payment
shall be legal tender for the payment of public or private debts in the United
States of America. Pro rata Basic Rent for the period from the date hereof
through the last day of the month hereof shall be paid on the date hereof.
Landlord may, at Landlord's option, by written notice to Tenant, require Tenant
to pay installments of Basic Rent directly to one or more Persons in addition to
Landlord, in such proportions as Landlord may select; and Tenant agrees to make
such "split" payments of Basic Rent in the amounts, to the payees and in the
manner specified by Landlord in any such notice, provided, however, that Tenant
shall not be required to make more than two (2) "split" payments.
(b) Tenant shall pay and discharge when the same shall become
due, as additional rent, all other amounts and obligations which Tenant assumes
or agrees to pay or discharge pursuant to this Lease (except that amounts
payable as liquidated damages pursuant to Paragraph 19(b) (iv) shall not
constitute additional rent), together with every fine, penalty, interest and
cost which may be added for non-payment or late payment thereof. If any
installment of Basic Rent is not paid on or before the due date therefor, Tenant
shall pay to Landlord, as additional rent, an amount equal to three percent (3%)
of the amount of such installment, provided, however, that with respect to the
first three (3) late payments in any twelve (12) month period (the first such
period to commence on the first Basic Rent Payment Date following the date of
this Lease) such late payment charge shall not be payable until two (2) business
days following receipt of notice by Tenant that such payment has not been
received. From the date of occurrence of any Event of Default until all Events
of Default are fully cured, Tenant shall pay to Landlord on demand, as
additional rent, a sum equal to any additional sums which might be payable by
Landlord to any lender under any note occasioned by
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the occurrence of an Event of Default under this Lease. The requirements of
Paragraph 19(g) regarding notice and grace periods need not be satisfied prior
to the imposition of Additional Rent (as hereinafter defined) under foregoing
provisions of this Paragraph 6(b). In addition, upon the occurrence of an Event
of Default, Tenant shall pay to Landlord on demand, as additional rent, interest
at the rate (the "Default Rate") of three percent (3%) per annum over the Prime
Rate on the following sums until paid in full: (i) all overdue installments of
Basic Rent in excess of the payments due under any note for the same period from
the respective due dates thereof, (ii) all overdue amounts of additional rent
relating to obligations which Landlord shall have paid on behalf of Tenant, from
the date of payment thereof by Landlord, and (iii) on all other overdue amounts
of additional rent from the date Landlord demands payment. All the foregoing
additional rent is herein sometimes called "Additional Rent". In the event of
any failure by Tenant to pay or discharge any Additional Rent, Landlord shall
have all rights, powers and remedies provided herein, by law or otherwise, in
the event of non-payment of Basic Rent.
7. NET LEASE: NON-TERMINABILITY.
----------------------------
(a) This is a net lease and all Rent and all other sums payable
hereunder by Tenant shall be paid without notice or demand, and without set-off,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense (collectively, a "Set-Off").
(b) This Lease shall not terminate, Tenant shall not have any
right to terminate this Lease during the Term (except as otherwise expressly
provided herein), Tenant shall not be entitled to any Set-Off of or to any Rent
or any other sums payable under this Lease (except as otherwise expressly
provided herein), and the obligations of Tenant under this Lease shall not be
affected by any interference with Tenant's use of any of the Leased Premises for
any reason, including the following: (i) any damage to or destruction of any of
the Leased Premises by any cause whatsoever, (ii) any Condemnation, (iii) the
prohibition, limitation or restriction of Tenant's use of any of the Leased
Premises, (iv) any eviction by paramount title or otherwise as long as the same
does not constitute a breach of Paragraph 4(b) hereof, (v) Tenant's acquisition
of ownership of any of the Leased Premises other than pursuant to an express
provision of this Lease, (vi) any default on the part of Landlord hereunder or
under any other agreement as long as the same does not constitute a breach of
Paragraph 4(b) hereof, (vii) any latent or other defect in, or any theft or loss
of, any of the Leased Premises, (viii) the breach of any warranty of any seller
or manufacturer of any of the Equipment, or (ix) any other cause, whether
similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding. It is the intention of the parties hereto that the
obligations of Tenant hereunder shall be separate and independent covenants and
agreements, that all Rent and all
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other sums payable by Tenant hereunder shall continue to be payable in all
events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and that
the obligations of Tenant hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated pursuant to an
express provision of this Lease. The obligation to pay Rent or amounts equal
thereto shall not be affected by any collection of rents by any governmental
body pursuant to a tax lien or otherwise, even though such obligation results in
a double payment of Rent.
(c) Tenant agrees that it shall remain obligated under this Lease
in accordance with its provisions and that, except as otherwise expressly
provided herein, it shall not take any action to terminate, rescind or avoid
this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding-up or other
proceeding affecting Landlord, (ii) the exercise of any remedy, including
foreclosure, under the Mortgage or the Assignment, or (iii) any action with
respect to this Lease (including the disaffirmance hereof) which may be taken by
Landlord, any trustee, receiver or liquidator of Landlord or any court under the
Federal Bankruptcy Code or otherwise.
(d) Tenant waives all rights which may now or hereafter be
conferred by law (i) to quit, terminate or surrender this Lease or any of the
Leased Premises, or (ii) to any Set-Off of or to any Rent or any other sums
payable under this Lease, except as otherwise expressly provided herein.
8. PAYMENT OF IMPOSITIONS; COMPLIANCE WITH LAW.
-------------------------------------------
(a) Subject to the provisions of Paragraph 18 hereof (relating to
contests) and the exclusions specified in the following paragraph of this
Paragraph 8(a), Tenant shall, before interest or penalties are due thereon, pay
and discharge all taxes of every kind and nature (including real and Personal
property, franchise, withholding, profits and gross receipts taxes), all charges
for any easement or agreement maintained for the benefit of any of the Leased
Premises, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges, all charges for utility and
communication services relating to any of the Leased Premises, all ground rents,
and all other public charges whether of a like or different nature, even if
unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii)
any of the Leased Premises, (iii) Landlord as a result of or arising in respect
of the acquisition, ownership, occupancy, leasing, use, possession or sale of
any of the Leased Premises, any activity conducted on the Leased Premises, or
Rent (including without limitation, any gross income tax or excise tax levied by
any governmental body on or with respect to such Rent), or (iv) Lender by reason
of the Note or Mortgage and which (as to this clause (iv)) Landlord has agreed
to pay (collectively, the "Impositions").
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<PAGE>
Nothing in this Lease shall obligate Tenant to pay (A) Federal, State
or local income, excess profits, or other taxes, if any, of Landlord or Lender,
determined on the basis of their net income, (B) any estate, inheritance,
succession, gift or similar tax, or (C) any capital gains tax imposed on
Landlord by the State or municipality in which the Leased Premises are located
in connection with the sale of any of the Leased Premises or any Federal capital
gains tax, unless the taxes referred to in clause (A) above are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
any of the Leased Premises which, if such other tax, assessment or other charge
were in effect, would be payable by Tenant. In the event that any assessment
against any of the Leased Premises may be paid in installments, Tenant shall
have the option to pay such assessment in installments; and, in such event,
Tenant shall be liable only for those installments which become due and payable
during the Term. Tenant shall prepare and file all tax reports required by
governmental authorities which relate to the Impositions. Tenant shall deliver
to Landlord, within ten (10) days of receipt thereof, copies of all settlements
and notices pertaining to the Impositions which may be issued by any
governmental authority and, within ninety (90) days after the end of each
calendar year of the Term, receipts for payments of all Impositions made during
such year.
(b) Tenant shall promptly comply with and conform to all of the
Legal Requirements, subject to the provisions of Paragraph 18 hereof.
(c) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any spill of any Hazardous Substance
affecting the Leased Premises or in connection with the deposit, storage,
placement or use of any Hazardous Substance at, upon, under or within the Leased
Premises or any real estate contiguous thereto, Landlord may, at its sole
option, upon prior written notice to Tenant, take any and all actions as
Landlord shall deem reasonably necessary or advisable in order to cure such
noncompliance. Any amounts so paid, together with interest thereon at the
Default Rate from the date of payment by Landlord, shall be immediately due and
payable by Tenant to Landlord. Nothing contained herein shall obligate Landlord
to cure such noncompliance or release Tenant from any of its obligations
hereunder.
(d) Tenant shall notify Landlord immediately after becoming aware
thereof of any violation of or noncompliance with any of the covenants contained
in this Paragraph hereof and shall forward to Landlord immediately upon receipt
thereof copies of all orders, reports, notices, permits, applications or other
communications relating to any such violation or noncompliance or any other
matter relating in any fashion to any Environmental Law as it may affect or
relate to the Leased Premises.
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<PAGE>
(e) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party thereto which are identical to the covenants contained in
Paragraphs 8(c) and 8(d).
9. LIENS: RECORDING AND TITLE.
--------------------------
(a) Tenant shall not, directly or indirectly, create or permit to
be created or to remain, and shall promptly discharge or remove, any lien on any
of the Leased Premises or on any Rent or any other sums payable by Tenant under
this Lease, other than the Mortgage, the Assignment, the Permitted Encumbrances
and any mortgage, lien, encumbrance or other charge created by or resulting
solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT
LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR
TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING ANY OF THE LEASED PREMISES
THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD
IN AND TO ANY OF THE LEASED PREMISES.
(b) Tenant shall execute, deliver and record, file or register
from time to time all such instruments as may be required by any present or
future Law in order to evidence the respective interests of Landlord and Tenant
in any of the Leased Premises, and shall cause this Lease, or a memorandum of
this Lease, and any supplement hereto or to such other instrument, if any, as
may be appropriate, to be recorded, filed or registered and re-recorded, refiled
or re-registered in such manner and in such places as may be required by any
present or future Law in order to publish notice and protect the validity or
priority of this Lease.
(c) Nothing in this Lease and no action or inaction by Landlord
shall be deemed or construed to mean that Landlord has granted to Tenant any
right, power or permission to do any act or to make any agreement which may
create, give rise to, or be the foundation for, any right, title, interest or
lien in or upon the estate of Landlord in any of the Leased Premises.
10. INDEMNIFICATION. Tenant agrees to pay, protect, indemnify, save
---------------
and hold harmless Landlord and all other Persons described in Paragraph 29 from
and against any and all liabilities, losses, damages, penalties, costs, expenses
(including all reasonable attorneys' fees and expenses), causes of action,
suits, claims, demands or judgments of any nature whatsoever, howsoever caused
from any of the following (except for an affirmative act or omission of Landlord
unless such act or omission is otherwise the obligation of Tenant under this
Lease or unless arising from an internal conflict among the partners of Landlord
or Persons described in Paragraph 29 that is not related to Tenant's performance
under this Lease): (a) any matter pertaining to any of the Leased Premises or
Adjoining Property or
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the ownership, use, non-use, occupancy, operation, condition, design,
construction, maintenance, repair or rebuilding of any of the Leased Premises or
Adjoining Property, (b) any injury to or death of any Person or any loss of or
damage to any property in any manner arising from the Leased Premises or
Adjoining Property or from any matter described in clause (a) above, or
connected therewith or occurring thereon, whether or not Landlord has or should
have knowledge or notice of the defect or condition, if any, causing or
contributing to said injury, death, loss, damage or other claim, (c) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance, (d)
any other cause pertaining to this Lease or any of the Leased Premises or
Adjoining Property or the transaction of which this Lease forms a part, or (e)
the alleged deposit, storage, disposal, burial, dumping, injecting, spilling,
leaking or other use, placement or release in, on, or affecting the Leased
Premises of a Hazardous Substance or otherwise arising from any other alleged
violation of any of the Environmental Laws including (i) liability for costs of
removal or remedial action incurred by the United States Government or the
State, or response costs incurred by any other Person or entity, or damages from
injury to or destruction or loss of natural resources, including the reasonable
costs of assessing such injury, destruction or loss, incurred pursuant to
Section 107 of CERCLA, or any successor Section or Act; (ii) liability for costs
and expenses of abatement, correction or clean-up, fines, damages, response
costs or penalties which arise from the provisions of any of the other
Environmental Laws; and (iii) liability for personal injury or property damage
arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of an abnormally dangerous activity. In case any action or proceeding is brought
against Landlord or any other Person described in Paragraph 29 by reason of any
such claim, Tenant covenants upon notice from Landlord to resist and defend such
action or proceeding by counsel reasonable satisfactory to Landlord, and
Landlord or such other Person will cooperate and assist in the defense of such
action or proceeding if requested to do so by Tenant.
The obligations of Tenant under this Paragraph 10 shall survive any
termination of this Lease.
11. MAINTENANCE AND REPAIR.
----------------------
(a) Tenant shall at all times, including any Requisition period,
maintain the Leased Premises and the Adjoining Property in good repair and
condition and, in the case of the Equipment, in good mechanical condition,
except for ordinary wear and tear, shall promptly make all repairs
(substantially equivalent in quality and workmanship to the original work) of
every kind and nature, whether foreseen or unforeseen, which may be required to
be made upon or in connection with any of the Leased Premises in order to keep
and maintain the Land and
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<PAGE>
Improvements in as good repair and condition as they were on the date hereof,
and the Equipment in as good mechanical condition as it was on the later of the
date hereof or the date of its installation, except for ordinary wear and tear,
in accordance with the better of the practices generally recognized as then
acceptable within the Tenant's industry and in conformity with all legal
requirements and insurance requirements. Tenant shall do or cause others to do
all shoring of the Leased Premises or Adjoining Property or of foundations and
walls of the Improvements and every other act necessary or appropriate for the
preservation and safety thereof, by reason of or in connection with any
excavation or other building operation upon any of the Leased Premises or
Adjoining Property, whether or not Landlord shall, by any Legal Requirement, be
required to take such action or be liable for failure to do so. Landlord shall
not be required to make any Alteration, whether foreseen or unforeseen, or to
maintain any of the Leased Premises or Adjoining Property in any way, and Tenant
hereby expressly waives any right which may be provided for in any Law now or
hereafter in effect to make Alterations at the expense of Landlord. Any
Alteration made by Tenant pursuant to this subparagraph (a) or pursuant to
subparagraph (b) of this Paragraph 11 shall be made in conformity with the
provisions of Paragraph 12.
(b) Except for the Permitted Encumbrances, in the event that any
Improvement, now or hereafter constructed, shall encroach upon any property,
street or right-of-way (including the Adjoining Property) adjoining any of the
Leased Premises, shall violate the provisions of any restrictive covenant
affecting any of the Leased Premises, shall hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject, or shall impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (i)
obtain valid and effective waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance, obstruction
or impairment, whether the same shall affect Landlord, Tenant or both, or (ii)
take such reasonable action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end all such violations or
impairments, including, if necessary, making Alterations.
(c) Landlord shall have the right (but no obligation), upon at
least five (5) days prior notice to Tenant (or without notice in case of
emergency), to enter upon any of the Leased Premises for the purpose of making
any Alterations which may be necessary by reason of Tenant's failure to comply
with the provisions of subparagraphs (a) and (b) of this Paragraph 11. Except in
case of emergency, the right of entry shall be exercised at reasonable times and
at reasonable hours and upon at least five (5) days prior notice. The cost of
any such entry, together with the reasonable and actual cost of all such
Alterations, shall be Additional Rent; and Tenant shall pay the same to
Landlord, together with interest thereon at the Default Rate from the time
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of payment by Landlord until paid by Tenant, immediately upon written demand
therefor and upon submission of evidence of Landlord's payment of such costs.
(d) Tenant shall, from time to time, to the extent necessary or
commercially reasonable, replace with other operational equipment or parts (the
"Replacement Equipment") any of the Equipment (the "Replaced Equipment") which
shall have (i) become worn out, obsolete or unusable for the purpose for which
it is intended, (ii) been taken by a Condemnation as provided in Paragraph
13(d), or (iii) been lost, stolen, damaged or destroyed as provided in Paragraph
14(h); provided, however, that the Replacement Equipment shall (A) be in good
operating condition, (B) have a value and useful life at least equal to the
value and estimated useful life of the Replaced Equipment immediately prior to
the time that the Replaced Equipment had become so worn out, or unusable, so
taken, or so lost, stolen, damaged or destroyed, and (C) be suitable for a use
which is the same or similar to that of the Replaced Equipment. Tenant shall
repair at its sole cost and expense all damage to the Leased Premises caused by
the removal of Replaced Equipment or other Personal property of Tenant or the
installation of Replacement Equipment. All Replacement Equipment shall become
the property of Landlord, shall be free and clear of all liens and rights of
others and shall become a part of the Equipment to the same extent as the
Replaced Equipment had been. If so requested by Landlord in writing, Tenant
shall promptly cause to be executed and delivered to Landlord an invoice, bill
of sale or other appropriate instrument evidencing the transfer or assignment to
Landlord of all estate, right, title and interest (other than the leasehold
estate created hereby) of Tenant or any other Person in and to the Replacement
Equipment, free from all liens and other exceptions to title; and Tenant shall
pay all taxes, fees, costs and other expenses that may become payable as a
result thereof. At the expiration of the Term or the sooner termination of this
Lease, all Equipment shall be in good operating condition, ordinary wear and
tear excepted.
12. ALTERATIONS AND IMPROVEMENTS. Except with respect to the
----------------------------
maintenance and repair required to be performed by Tenant pursuant to in
Paragraph 11 and otherwise as provided in this Paragraph 12, Tenant shall not
with respect to any of Memphis Premises, the New Orleans Premises or the San
Antonio Premises (a) make any Alterations the cost of which exceeds $250,000 for
any single alteration or $500,000 in the aggregate over the Term, (b) construct
upon the Land any additional Improvements or (c) install equipment in the
Improvements or accessions to the Equipment, without the prior written approval
of Landlord, which approval shall not be unreasonably withheld or delayed. In
addition, Tenant shall not do any other act which, in the sole opinion of
Landlord, would tend to impair the value of the Leased Premises. Tenant agrees
that (i) the market value of the Leased Premises shall not be lessened by any
such Alteration, construction or installation, or its usefulness impaired, (ii)
all such Alterations, construction and installations shall be
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performed in a good and workmanlike manner, (iii) all such Alterations,
construction and installations shall be expeditiously completed in compliance
with all Legal Requirements, (iv) all work done in connection with any such
Alteration, construction or installation shall comply with the requirements of
all insurance policies required to be maintained by Tenant hereunder, (v) Tenant
shall promptly pay all costs and expenses of any such Alteration, construction
or installation and shall discharge or remove all liens filed against any of the
Leased Premises arising out of the same, (vi) Tenant shall procure and pay for
all permits and licenses required in connection with any such Alteration,
construction or installation shall be the property of Landlord and shall be
subject to this Lease, and (viii) Tenant shall comply, to the extent requested
by Landlord, with the provisions of clauses (i) through (iv) of Paragraph 15(a).
Notwithstanding the foregoing, Tenant shall be permitted to construct
additional Improvements upon the Land in order to expand the existing facilities
so long as (a) Landlord receives prior written notice of Tenant's intention to
construct such Improvements and (b) Tenant complies fully with all of the
provisions of this Paragraph 12, including, but not limited to, subparagraphs
(i) through (viii) herein.
13. Condemnation.
------------
(a) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord thereof and, so long as an Event of Default has not
occurred and is continuing, Tenant shall have the right on behalf of Tenant,
Landlord and Lender to negotiate the settlement in any Condemnation proceeding
and/or threat thereof and to contest the Condemnation and/or the amount of the
Net Award therefor, all at Tenant's expense; provided, however, that if an Event
of Default has occurred and is continuing Tenant shall have no right to
participate in any such proceedings, negotiation or contest. Lender shall be
entitled to participate with Tenant in any such proceeding, negotiation and/or
contest, all at Tenant's expense, provided, however, that so long as an Event of
Default has not occurred and is continuing counsel selected by Tenant shall
represent Tenant, Landlord and Lender in any such proceeding, negotiation and/or
contest. Subject to the provisions of this Paragraph 13, Tenant hereby
irrevocably assigns to Landlord any award or payment to which Tenant is or may
be entitled by reason of any Condemnation, whether the same shall be paid or
payable for Tenant's leasehold interest hereunder or otherwise; but nothing in
this Lease shall impair Tenant's right to any award or payment on account of
Tenant's trade fixtures, equipment or other tangible property which is not part
of the Equipment, moving expenses or loss of business, if available, to the
extent that and so long as (i) Tenant shall have the right to make, and does
make, a separate claim therefor against the condemnor and (ii) such claim does
not in any way reduce either the amount of the award otherwise payable to
Landlord for the
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Condemnation of Landlord's fee interest in the Leased Premises or the amount of
the award (if any) otherwise payable for the Condemnation of Tenant's leasehold
interest hereunder.
(b) If (i) the entire "New Orleans Premises", the entire "Memphis
Premises" or the entire "San Antonio Premises" or (ii) any substantial portion
of the "New Orleans Premises", the Memphis Premises" or the "San Antonio
Premises", which portion Tenant determines, in good faith, to be sufficient to
render the remaining portion thereof uneconomic for the use of Tenant or any
other tenant to which such premises might reasonably be leased, shall be taken
by a Taking or under threat thereof, (any one or all of which is affected by a
taking described in (i) or (ii) being hereinafter referred to as the "Affected
Premises") then Tenant shall, not later than thirty (30) days after Landlord
gives Tenant notice that Landlord has received a Condemnation Notice or Tenant
otherwise receives a Condemnation Notice, give notice to Landlord of its
intention to terminate this Lease as to the Affected Premises on the first Basic
Rent Payment Date (the "Termination Date") occuring after the date on which the
Landlord rejects Tenant's offer to purchase the Affected Premises.
Such notice of intention to terminate shall contain (A) an irrevocable
offer of Tenant to purchase the remaining portion of the Affected Premises, if
any, on the Termination Date for the purchase price (the "Termination Offer
Amount") specified in the next sentence and (B) in the event that less than the
entire Affected Premises shall have been taken or be under threat thereof, a
certificate of Tenant, signed by the president or a vice president thereof,
stating that, in Tenant's good faith judgment, the portion of the Affected
Premises so taken or under threat thereof is sufficient to fulfill the
conditions set forth in clause (ii) of the first subparagraph of this Paragraph
13(b) and certifying that Tenant will forever abandon operations on the
remainder of the Affected Premises. The Termination Offer Amount shall be the
greater of (1) the Fair Market Value of the Affected Premises as of the date
immediately prior to the Condemnation Notice or (2) the sum of that portion of
the Acquisition Cost applicable to the Affected Premises, as set forth in
Exhibit "E" attached hereto and made a part hereof, and one-half of any
prepayment penalty or premium up to a maximum payment by Tenant of Fifty
Thousand Dollars ($50,000) which may be payable under a Note or Mortgage.
Promptly upon the delivery to Landlord of such notice of intention to terminate,
Landlord and Tenant shall commence to determine such Fair Market Value in
accordance with the procedure specified in Paragraph 27.
Tenant agrees that no rejection of an offer hereunder shall be
effective for any purpose unless consented to by Lender. If Landlord shall
reject such offer by notice to Tenant, containing the written consent of Lender
to such rejection, not later than the twentieth (20th) day following the
determination of Fair Market Value, then upon (x) payment of all Rent and any
other charges due and unpaid under this Lease as of the Termination Date
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and (y) compliance by Tenant with all other obligations and liabilities under
this Lease which have arisen on or prior to the Termination Date, this Lease
shall terminate on the Termination Date as to the Affected Premises and Tenant
shall promptly vacate and have no further right, title or interest in or to any
of the Affected Premises.
Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the twentieth (20th) day following the determination of
Fair Market Value, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Termination Offer Amount on the Termination Date and, provided all Rent and
other sums due and unpaid hereunder are paid in full, Landlord shall convey to
Tenant the remaining portion of the Affected Premises, if any, in accordance
with the provisions of Paragraph 16 and Landlord shall assign to Tenant its
entire interest in and to the Net Award including any part thereof that has not
been received by Landlord and/or deliver to Tenant or credit against the
Termination Offer Amount such Net Award including any part thereof which shall
have been received by Landlord.
(c) In the event of any Taking of any of the Land or Improvements
which does not result in a termination of this Lease as to any or all of the
"New Orleans Premises", the "Memphis Premises", or the "San Antonio Premises",
the Term shall, notwithstanding the Taking, continue and there shall be no
abatement or reduction of Rent or any other sums payable by Tenant hereunder,
except as expressly provided in Paragraph 15(b). Promptly after such Taking,
Tenant, as required in Paragraph 11(a), shall commence and diligently continue
to restore the Improvements as nearly as possible to their value, condition and
character immediately prior to such Taking, in accordance with the provisions of
Paragraph 12. Landlord shall make the Net Award available to Tenant as and when
received by Landlord for restoration in accordance with and subject to the
provisions of Paragraph 15(a).
In the event of a Requisition of any of the Land or Improvements, if
Landlord is required to pay the Net Award of such Requisition to Lender in
accordance with the provisions of the Note and the Mortgage and the debt service
payments due under the Note are thereafter reduced by virtue of such payment of
the Net Award to Lender, then each installment of Basic Rent payable on or after
the effective date of such reduction in debt service shall be reduced in the
same amount and for the same period as payments are reduced under the Note. In
the event that the Net Award of a Requisition of any of the Land or Improvements
is retained by Landlord, Landlord shall apply such Net Award, to the extent
received, to the installments of Basic Rent thereafter payable until such Net
Award has been applied in full or until the Term
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hereof has expired, whichever first occurs. Upon the expiration of the Term, any
portion of such Net Award which shall not have been previously credited to
Tenant shall be retained by Landlord.
(d) If any of the Equipment shall be taken by a Condemnation
other than a Condemnation which falls within the provisions of Paragraph 13(b),
the Term shall nevertheless continue and there shall be no abatement or
reduction of Rent or any other sums payable by Tenant hereunder. Tenant shall,
whether or not the Net Award is sufficient for the purpose, promptly replace the
Equipment so taken, in accordance with the provisions of Paragraph 11(d), and
the Net Award of such a Condemnation made for the loss of the replaced Equipment
only shall thereupon be payable to Tenant. The remainder of the Net Award shall
be applied as hereinabove provided.
(e) Except as specifically provided in subparagraph (a) of this
Paragraph 13, no agreement with any condemnor in settlement of or under threat
of any Condemnation shall be made by Tenant without the written consent of
Landlord and Lender.
14. INSURANCE.
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(a) Tenant shall maintain at its sole cost and expense the
following insurance on or in connection with the Leased Premises:
(i) Insurance against loss or damage to the Improvements and
Equipment by fire and other risks from time to time included under standard
extended and additional extended coverage policies, including vandalism and
malicious mischief, sprinkler, plate glass and flood insurance, to the extent
any of the Leased Premises are in a flood zone, in amounts not less than the
actual replacement value of the Improvements and Equipment, excluding footings
and foundations and other parts of the Improvements which are not insurable (or,
in the case of plate glass insurance, the replacement cost of all plate glass in
the Leased Premises). Such policies shall contain replacement cost endorsements.
(ii) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in or about any of the
Leased Premises or the Adjoining Property, in an amount not less than $1,000,000
primary combined single limit for bodily injury or death and/or property damage,
each occurrence with a general aggregate limit of $2,000,000, combined single
limit, not less than $20,000,000 umbrella combined single limit; provided,
however, that Landlord shall have the right to determine such other limits as
may be reasonable and customary for transactions and properties of this size and
type. Policies for such insurance shall be for the mutual benefit of Landlord,
Tenant and Lender.
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(iii) Worker's compensation insurance covering all fulltime
employees of Tenant employed in connection with any work done on or about any of
the Leased Premises for which claims for death or bodily injury could be
asserted against Landlord, Tenant or any of the Leased Premises, or, in lieu of
such worker's compensation insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State.
(iv) To the extent that the Improvements include at any time
Equipment or any other equipment on or in the Leased Premises which by reason of
its use or existence is capable of bursting, erupting, or exploding, boiler and
pressure vessel insurance on any such Equipment, in an amount not less than
$5,000,000 for damage to property, bodily injury or death resulting from such
perils.
(v) Such other insurance, including business interruption
insurance which would provide an amount necessary to pay Rent for at least one
(1) year, on or in connection with any of the Leased Premises as Landlord or
Lender may reasonably require, which at the time is prudent for Tenant's
industry and is commonly obtained in connection with properties similar to the
Leased Premises.
(b) The insurance required by Paragraph 14(a) shall be written by
companies of recognized financial standing which are approved by Landlord, which
approval shall not be unreasonably withheld, and are authorized to do an
insurance business in the State. The insurance policies (i) shall be for such
terms as Landlord may reasonably approve, (ii) shall be in amounts sufficient at
all times to satisfy any coinsurance requirements thereof, and (iii) shall
(except for the worker's compensation insurance referred to in Paragraph
14(a)(iii) hereof) name Landlord, Tenant and Lender as insured parties, as their
respective interests may appear. If said insurance or any part thereof shall
expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become unsatisfactory to Landlord, Tenant shall promptly
obtain new or additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv) and
(v) of Paragraph 14(a) shall contain standard non-contributory mortgagee clauses
in favor of and reasonably acceptable to Lender. Each policy required by any
provision of Paragraph 14(a), except clause (iii) thereof, shall provide that it
may not be cancelled except after thirty (30) days' prior notice to Landlord and
Lender except for the non-payment of premiums which shall require at least ten
(10) days notice of cancellation. Each such policy shall also provide that any
loss otherwise payable thereunder shall be payable notwithstanding (i)
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any act or omission of Landlord or Tenant which might, absent such provision,
result in a forfeiture of all or a part of such insurance payment, (ii) the
occupation or use of any of the Leased Premises for purposes more hazardous than
those permitted by the provisions of such policy, (iii) any foreclosure or other
action or proceeding taken by Lender pursuant to any provision of the Mortgage
upon the happening of an event of default therein, or (iv) any change in title
to or ownership of any of the Leased Premises.
(d) Tenant shall pay as they become due in installments or
otherwise all premiums for the insurance required by this Paragraph 14, shall
renew or replace each policy and deliver to Landlord evidence of the payment of
the full premium or next succeeding installment, as the case may be, therefor at
least twenty (20) days prior to the expiration date of such policy, and shall
promptly deliver to Landlord all original policies; and in the event of Tenant's
failure to comply with any of the foregoing requirements, Landlord shall be
entitled, but not obligated, to procure such insurance. Any sums expended by
Landlord in procuring such insurance shall be Additional Rent and shall be
repaid by Tenant, together with interest thereon at the Default Rate from the
time of payment by Landlord until fully paid by Tenant, immediately upon written
demand therefor by Landlord.
(e) Tenant shall have the replacement cost and insurable value of
the Improvements determined from time to time as required by the replacement
cost endorsements and shall deliver to Landlord the new replacement cost
endorsement or certificate evidencing such endorsement promptly upon Tenant's
receipt thereof. If, at any time, a replacement cost endorsement is not
available, Tenant shall have the replacement cost and insurable value of the
Improvements determined at least once a year by the underwriter of fire
insurance on the Leased Premises or, if such underwriter will not act, by a
qualified appraiser satisfactory to Landlord, and shall deliver to Landlord such
determination promptly upon receipt.
(f) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 14 and (ii) all
requirements of the insurers thereunder, applicable to Landlord, Tenant or any
of the Leased Premises or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Leased Premises, even
if such compliance necessitates structural changes or improvements or results in
interference with the use or enjoyment of any of the Leased Premises. Tenant
shall not use any of the Leased Premises in any manner which would permit the
insurer to cancel or increase the premium for any insurance policy.
(g) In the event of any loss, Tenant shall give Landlord and
Lender immediate notice thereof. So long as an Event of Default has not occurred
and is continuing, Tenant is hereby
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authorized to adjust and compromise, in its discretion, all claims under any of
the insurance policies required by this Paragraph 14 (except public liability
insurance claims payable to a person other than Tenant, Landlord or Lender) and
to execute and deliver of behalf of Landlord and Lender all necessary proofs of
loss, receipts, vouchers and release required by the insurers; and Landlord
agrees to sign, upon the request of Tenant, all such proofs of loss, receipts,
vouchers and releases. However, if Lender so elects, Lender shall adjust and
compromise any and all such claims. Any adjustment, settlement or compromise of
any such claim shall be subject to the prior written approval of Lender unless
Tenant receives a prior written waiver from Lender, and Lender shall have the
right to prosecute or contest, or to require Tenant to prosecute or contest, any
such claim, adjustment, settlement or compromise, all at Tenant's expense. All
proceeds of any insurance required under clauses (i) (in excess of One Hundred
Thousand Dollars ($100,000), (ii), (except proceeds payable to a person other
than Tenant, Landlord or Lender), (iv) and (v) of Paragraph 14(a) shall be
payable to Landlord and Lender. Each insurer is hereby authorized and directed
to make payment under said policies, including return of unearned
premiums, directly to Landlord and Lender instead of to Landlord and Tenant
jointly (except for a casualty loss payment of less than One Hundred Thousand
Dollars ($100,000) which shall be paid directly to Tenant); and Tenant hereby
appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse
any draft therefor.
In the event of any casualty (whether or not insured against)
resulting in damage to any of the Improvements which does not result in a
termination of this Lease, the Term shall, notwithstanding such casualty,
continue and there shall be no abatement or reduction of Rent or any other sums
payable by Tenant hereunder, except as expressly provided in Paragraph 15(b).
Promptly after such casualty, Tenant, as required in Paragraph 11(a), shall
commence and diligently continue to restore the Improvements as nearly as
possible to their value, condition and character immediately prior to such
damage, subject to and in accordance with the provisions of Paragraph 12.
Landlord shall make such Net Proceeds available to Tenant as and when received
by Landlord for restoration by Tenant in accordance with and subject to the
provisions of Paragraph 15(a).
In the event of any loss of any of the Equipment in a casualty
which does not result in a termination of this Lease, the Term shall
nevertheless continue and there shall be no abatement or reduction of Rent or
any other sums payable by Tenant hereunder. Tenant shall, whether or not the Net
Proceeds are sufficient for the purpose, promptly repair or replace such
Equipment, subject to and in accordance with the provisions of Paragraph 11(d),
and the Net Proceeds paid for the loss of such Equipment only shall thereupon be
payable to Tenant. The remainder of the Net Proceeds shall be applied as
hereinabove provided.
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(h) If (a) the entire "New Orleans Premises", the entire "Memphis
Premises" or the entire "San Antonio Premises" or (b) a substantial portion of
the "New Orleans Premises", the "Memphis Premises" and the "San Antonio
Premises", shall be damaged or destroyed by fire or other casualty and, in
Tenant's good faith judgment, it is uneconomical to replace, repair or restore
the Affected Premises within one hundred and fifty (150) days of the date of
such casualty for continued use and occupancy by Tenant or any other tenant to
which the Affected Premises might reasonably be leased (any one or all of which
is affected by a fire or casualty described in (a) or (b) being hereinafter
referred to as the "Affected Premises"), then Tenant shall, not later than
twenty (20) days after such occurrence, give notice to Landlord of its intention
to terminate this Lease as to the Affected Premises on the first Basic Rent
Payment Date (the "Casualty Termination Date") which occurs after the date on
which Landlord rejects Tenant's offer to purchase the Affected Premises.
Such notice shall contain (A) an irrevocable offer of Tenant to
purchase the Affected Premises on the Casualty Termination Date for the purchase
price (the "Casualty Offer Amount") specified in the next sentence and (B) a
certificate of Tenant, signed by the president or a vice president of Tenant,
stating that, in Tenant's good faith judgment, the portion of the Affected
Premises so damaged or destroyed is sufficient to render the Affected Premises
uneconomical for restoration for continued use and occupancy by Tenant or any
other tenant to which the Affected Premises might be leased and certifying that
Tenant will not restore the Affected Premises for the use to which such Premises
was devoted prior to such damage or destruction. The Casualty Offer Amount shall
be the greater of (1) the Fair Market Value of the Affected Premises as of the
date immediately prior to such casualty or (2) the sum of that portion of the
Acquisition Cost applicable to the Affected Premises, as set forth in Exhibit
"E", and one-half (1/2) of any prepayment penalty or premium up to a maximum
payment by Tenant of Fifty Thousand Dollars ($50,000.00) which may be payable
under a Note or Mortgage. Promptly upon the delivery of such notice from Tenant
to Landlord, Landlord and Tenant shall commence to determine such Fair Market
Value in accordance with the procedure specified in Paragraph 27.
No rejection of an offer hereunder shall be effective for any
purpose unless consented to by Lender. If Landlord shall reject such offer by
notice to Tenant, containing the written consent of Lender to such rejection,
not later than the twentieth (20th) day following the determination of Fair
Market Value, then upon (x) payment of all Rent and any other charges due and
unpaid under this Lease as of the Casualty Termination Date and (y) compliance
by Tenant with all other obligations and liabilities under this Lease which have
arisen on or prior to the Casualty Termination Date, this Lease shall terminate
on the Casualty Termination Date as to the Affected Premises and Tenant shall
promptly vacate and have no further right, title or interest in or to any of the
Affected Premises.
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Unless Landlord shall have rejected such offer by the foregoing
notice to Tenant not later than the twentieth (20th) day prior to the Casualty
Termination Date, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Casualty Offer Amount on the Casualty Termination Date and, provided an Event of
Default does not then exist, Landlord shall convey to Tenant the Affected
Premises in accordance with the provisions of Paragraph 16 and, provided all
Rent and other sums due and unpaid under this Lease are paid in full, Landlord
shall assign to Tenant its entire interest in and to the Net Proceeds including
any part thereof that has not been received by Landlord and/or deliver to Tenant
or credit against the Casualty Offer Amount such Net Proceeds including any part
thereof which shall have been received by Landlord.
(i) Tenant shall not carry separate insurance concurrent in form
or contributing in the event of loss with that required in this Paragraph 14
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 14. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
therefor.
15. RESTORATION; REDUCTION OF RENT.
------------------------------
(a) If (on the basis of a cost breakdown provided by Tenant) the
cost of restoration is reasonably estimated by Landlord to be One Hundred
Thousand Dollars ($100,000) or less, then, so long as an Event of Default has
not occurred and is continuing, such amount shall be disbursed to Tenant from
the Net Proceeds or a Net Award, and Tenant shall promptly restore the Affected
Premises in accordance with and subject to Paragraph 12 of this Lease. Net
Proceeds or a Net Award which are for restoration of the Land or Improvements
the cost of which is reasonably estimated of Landlord to be in excess of One
Hundred Thousand Dollars ($100,000) shall be disbursed to Tenant only in
accordance with the following conditions:
(i) prior to commencement of restoration, the architects,
contracts, contractors, plans and specifications for the restoration shall have
been approved by Landlord, which approval shall not be unreasonably withheld or
delayed; Landlord shall be provided with mechanics' lien insurance (if
available) and acceptable performance and payment bonds which insure
satisfactory completion of the restoration, are in an amount and form and have a
surety acceptable to Landlord, and name Landlord and Lender as additional dual
obligees; and appropriate waivers of mechanics' and materialmen's liens shall
have been filed;
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(ii) at the time of any disbursement, no Event of Default
shall exist and no mechanics' or materialmen's liens shall have been filed
against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last disbursement,
upon receipt of (A) satisfactory evidence, including architects' certificates,
of the stage of completion, of the estimated cost of completion and of
performance of the work to date in a good and workmanlike manner in accordance
with the contracts, plans and specifications, (B) waivers of liens for work
covered by the prior disbursement, (C) contractors' and subcontractors' sworn
statements as to completed work for which payment is requested, (D) a
satisfactory bringdown of title insurance, and (E) other evidence of cost and
payment so that Landlord can verify that the amounts disbursed from time to time
are represented by work that is completed, in place and free and clear of
mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of Tenant,
describing the work for which payment is requested, stating the cost incurred in
connection therewith, stating that Tenant has not previously received payment
for such work and, upon completion of the work, also stating that the work has
been fully completed and complies with the applicable requirements of this
Lease;
(v) Landlord may retain ten percent (10%) of the restoration
fund until the restoration is fifty percent (50%) completed;
(vi) the restoration fund may not be commingled with
Landlord's other funds and shall bear interest which shall be added to the
restoration fund;
(vii) at all times the undisbursed balance of the restoration
fund held by Landlord shall be not less than the cost of completing the
restoration work free and clear of all liens; and
(viii) such other reasonable conditions as Landlord may impose.
In addition, prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Landlord, exceeds the amount of
the Net Proceeds or the Net Award available for such restoration, the amount of
such excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be
added to the restoration fund. Any sum which remains in the restoration fund
upon completion of restoration (the "Remaining Sum") shall be refunded to
Tenant, unless such sum is required to be applied by
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Landlord to reduce principal outstanding under the Note, in which event it shall
be paid by Landlord to Lender to reduce principal outstanding under the Note.
For purposes of determining the source of funds with respect to the disposition
of funds remaining after the completion of restoration, the Net Proceeds or the
Net Award shall be deemed to be disbursed prior to any amount added by Tenant.
(b) In the event that there is a Remaining Sum upon completion of
restoration which is paid by Landlord to Lender, as aforesaid, then each
installment of Basic Rent payable on or after the effective date of such
reduction in debt service shall be reduced in the same amount and for the same
period as payments are reduced under the Note.
16. PROCEDURES UPON PURCHASE.
------------------------
(a) In the event of the purchase of any of the Leased Premises by
Tenant pursuant to any provision of this Lease, Landlord need not transfer and
convey to Tenant or its designee any better title thereto than that which was
transferred and conveyed to Landlord, and Tenant shall accept such title,
subject, however, to all Permitted Exceptions and to all liens, exceptions and
restrictions on, against or relating to any of the Leased Premises which were
created with the concurrence of Tenant or as a result of a default by Tenant
under this Lease and to all applicable Laws, but free of the lien of and
security interest created by the Mortgage and the Assignment and liens,
exceptions and restrictions on, against or relating to the Leased Premises which
have been created by or resulted solely from acts of Landlord without the
concurrence of Tenant.
(b) Upon the date fixed for any such purchase of any of the
Leased Premises pursuant to any provision of this Lease, Tenant shall pay to
Landlord or to any Person to whom Landlord directs payment, at its address set
forth above, or at any other place designated by Landlord, the Offer Amount
therefor specified herein, in federal or other immediately available funds which
at the time of such payment shall be legal tender for the payment of public or
private debts in the United States of America, less any credits of the Net Award
or Net Proceeds allowed against the Offer Amount pursuant to the provisions of
Paragraphs 13(b) or 14(i), and Landlord shall thereupon deliver to Tenant (i) a
special warranty deed in form satisfactory to Landlord's counsel which describes
any of the Leased Premises then being sold to Tenant and conveys and transfers
the title thereto which is described in Paragraph 16(a), (ii) such other
instruments as shall be necessary to transfer to Tenant or its designee any
other property (or rights to any Net Proceeds or Net Award not yet received by
Landlord) then required to be sold by Landlord pursuant to this Lease and (iii)
any Net Award or Net Proceeds received by Landlord, not credited to Tenant
against the Offer Amount and required to be delivered by Landlord to Tenant
pursuant to this Lease. Tenant shall pay all reasonable charges incident
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to such conveyance and transfer, including Landlord's reasonable counsel fees,
escrow fees, recording fees, title insurance or guarantee premiums and all
applicable federal, state and local taxes which may be incurred or imposed by
reason of such conveyance and transfer and/or by reason of the delivery of said
deed and other instruments (excluding, however, any capital gains or net income
tax payable by Landlord as a result of said transfer). Tenant agrees, upon the
request and direction of Landlord, to pay a portion of the Offer Amount as a
brokerage commission to Landlord or one of its Affiliates who Tenant
acknowledges shall be deemed the broker of record in connection with the
transfer of the Leased Premises. Upon the completion of such purchase, but not
prior thereto (whether or not any delay in the completion of or any failure to
complete such purchase shall be the fault of Landlord), Tenant may elect to
terminate this Lease and all obligations hereunder (including the obligations to
pay Rent) with respect to any of the Leased Premises conveyed to Tenant, except
any obligations and liabilities of Tenant, actual or contingent, under this
Lease, which arose on or prior to such date of purchase. In the event that the
completion of such purchase shall be delayed for more than ninety (90) days
solely as a result of acts or omissions of Tenant, then the Offer Amount payable
by Tenant upon the purchase of any of the Leased Premises pursuant to any
provisions of this Lease shall, at Landlord's sole option, be determined as of
the actual date of such purchase by Tenant, provided that Tenant shall have paid
to Landlord all Rent due and payable hereunder to and including such date. Any
prepaid Basic Rent or other prepaid sums paid to Landlord shall be prorated as
of the date the purchase is completed, and the prorated unapplied balance shall
be deducted from the Offer Amount due to Landlord.
No apportionment of any Impositions shall be made upon such purchase,
Tenant being liable for payment thereof during the Term as Tenant and being
liable thereafter as owner.
17. ASSIGNMENT AND SUBLETTING. Tenant may not assign this Lease at
-------------------------
any time to any other party without the prior written consent of Landlord;
provided, however, that upon prior notice to Landlord, Tenant will have the
right to assign this Lease to any party which, immediately following such
assignment, complies both with the provisions of Paragraph 31 of this Lease and
with the provisions of this Paragraph 17. Tenant may sublet any of the Leased
Premises at any other time to any other party without the prior written consent
of Landlord. Each sublease of any of the Leased Premises shall be subject and
subordinate to the provisions of this Lease. If Tenant assigns all its rights
and interest under this Lease, the assignee under such assignment shall
expressly assume all the obligations of Tenant hereunder, including obligations,
actual or contingent, of Tenant which may have arisen on or prior to the date of
such assignment, by a written instrument delivered to Landlord at the time of
such assignment. No assignment other than as specifically permitted by this
Paragraph and Paragraph 31 and no sublease made as permitted
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by this Paragraph shall affect or reduce any of the obligations of Tenant
hereunder; and all such obligations shall continue in full force and effect as
obligations of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease shall impose any
obligations on Landlord under this Lease. Tenant shall, within ten (10) days
after the execution and delivery of any such assignment, deliver a duplicate
original copy thereof in recordable form to Landlord, and within ten (10) days
after the execution and delivery of any such sublease, Tenant shall deliver a
duplicate original copy thereof to Landlord.
In the event Tenant desires to assign its interest in this Lease or
effect a Change in Control (as defined in Paragraph 31) and such assignment or
Change of Control would cause a breach of Paragraph 31 and such anticipatory
breach is not waived in writing by Landlord within ten (10) days after receipt
of notice from Tenant, then Tenant shall, not later than sixty (60) days prior
to such occurrence, make an irrevocable offer to purchase the Leased Premises on
the first Basic Rent Payment Date (the "Transfer Purchase Date") which occurs
after the date on which Landlord accepts Tenant's offer to purchase the Leased
Premises for the purchase price (the "Transfer Offer Amount") specified in the
next sentence. The Transfer Offer Amount shall be the greater of (1) the Fair
Market Value of the Leased Premises as of the date immediately prior to such
assignment or Change in Control or (2) the Acquisition Cost and any prepayment
penalty or premium which may be payable under a Note or Mortgage. Promptly upon
the deliver of such notice from Tenant to Landlord, Landlord and Tenant shall
commence to determine such Fair market Value in accordance with the procedure
specified in Paragraph 27.
No rejection of an offer hereunder shall be effective for any purpose
unless consented to by Lender. If Landlord shall reject such offer by notice to
Tenant, containing the written consent of Lender to such rejection, not later
than the twentieth (20th) day following the determination of Fair Market Value,
then the breach of Paragraph 31 shall be deemed waived by Landlord, subject,
however, to the terms of this Paragraph 17 and this Lease shall continue in full
force and effect.
Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the twentieth (20th) day following the determination of
Fair Market Value, Landlord shall be conclusively presumed to have accepted such
offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the
Transfer Offer Amount on the Transfer Purchase Date and, provided all Rent and
other sums due hereunder are paid in full, Landlord shall convey to Tenant the
Leased Premises in accordance with the provisions of Paragraph 16.
Upon the occurrence of an Event of Default under this Lease, Landlord
shall have the right immediately or at any time thereafter to collect and enjoy
all rents and other sums of money
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payable under any sublease of any of the Leased Premises, and Tenant hereby
irrevocably and unconditionally assigns such rents and money to Landlord, which
assignment may be exercised upon and after (but not before) the occurrence of an
Event of Default. Tenant shall not mortgage or pledge this Lease, and any such
mortgage or pledge made in violation of this Paragraph shall be void.
18. PERMITTED CONTESTS. Tenant shall not be required to (a) pay any
------------------
Imposition, (b) comply with any Legal Requirement, (c) discharge or remove any
lien referred to in Paragraph 9 or 12, or (d) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment referred to in
Paragraph 11(b), so long as Tenant shall contest, in good faith and at its
expense, the existence, the amount or the validity thereof, the amount of the
damages caused thereby, or the extent of its or Landlord's liability therefor,
by appropriate proceedings which shall operate during the pendency thereof to
prevent (i) the collection of, or other realization upon, the Imposition, lien
or claim so contested, (ii) the sale, forfeiture or loss of any of the Leased
Premises or any Rent to satisfy the same or to pay any damages caused by the
violation of any such Legal Requirement or by any such encroachment, violation,
hindrance, obstruction or impairment, (iii) any interference with the use or
occupancy of any of the Leased Premises, (iv) any interference with the payment
of any Rent, and (v) the cancellation of any fire or other insurance policy. If
the contested amount is in excess of Twenty Thousand Dollars ($20,000.00),
Tenant shall provide Landlord security which is reasonably satisfactory to
Landlord, to assure the payment, compliance, discharge, removal and/or other
action, including all costs, attorneys' fees, interest and penalties that may be
or become due in connection therewith. While any proceedings which comply with
the requirements of this Paragraph 18 are pending and the required security is
held by Landlord, Landlord shall not have the right to pay, remove or cause to
be discharged the Imposition, lien or claim thereby being contested. Tenant
further agrees that each such contest shall be promptly and diligently
prosecuted to a final conclusion, except that Tenant shall, so long as the
conditions of the first sentence of this Paragraph are at all times complied
with, have the right to attempt to settle or compromise such contest through
negotiations. Tenant shall pay, and save Landlord harmless against, any and all
losses, judgments, decrees and costs (including all reasonable attorneys' fees
and expenses) in connection with any such contest and shall, promptly after the
final determination of such contest, fully pay and discharge the amounts which
shall be levied, assessed, charged or imposed or be determined to be payable
therein or in connection therewith, together with all penalties, fines,
interest, costs and expenses thereof or in connection therewith, and perform all
acts the performance of which shall be ordered or decreed as a result thereof.
No such contest shall subject Landlord to the risk of any civil or criminal
liability.
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19. CONDITIONAL LIMITATIONS; DEFAULT PROVISION.
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(a) The occurrence of any one or more of the following events
which continue for a period equal to the greater of (i) any grace period
specified in this subparagraph 19(a) or in subparagraph 19(g) hereof or (ii) two
(2) days less than any applicable grace period, if any, given to Landlord for
such default under any Note and Mortgage shall constitute an Event of Default
under this Lease: (i) a failure by Tenant to make (regardless of the pendency of
any bankruptcy, reorganization, receivership, insolvency or other proceedings,
in law, in equity, or before any administrative tribunal, which have or might
have the effect of preventing Tenant from complying with the provisions of this
Lease) any payment of Rent or other sum herein required to be paid by Tenant;
(ii) a failure by Tenant duly to perform and observe, or a violation or breach
of, any other provision or covenant hereof not otherwise specifically mentioned
in this Paragraph 19(a); (iii) any representation or warranty made by Tenant
herein or in the Assignment or in any certificate, demand or request made
pursuant hereto or thereto proves to be incorrect, now or hereafter, in any
material respect; (iv) Tenant shall (A) voluntarily be adjudicated a bankrupt or
insolvent, (B) seek or consent to the appointment of a receiver or trustee for
itself or for any of the Leased Premises, (C) file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state or
any jurisdiction, or (D) make a general assignment for the benefit of creditors;
(v) a court shall enter an order, judgment or decree appointing, without the
consent of Tenant, a receiver or trustee for it or for any of the Leased
Premises or approving a petition filed against Tenant which seeks relief under
the bankruptcy or other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain in force,
undischarged or unstayed, sixty (60) days after it is entered; (vi) any
Improvement is substantially damaged or destroyed by an uninsured casualty and
Tenant fails to commence promptly thereafter to restore the Leased Premises to
its condition immediately prior to such casualty or fails to proceed actively,
diligently and in good faith with such restoration and to continue such
restoration until the Leased Premises have been fully restored; (vii) any of the
Leased Premises shall have been vacated or abandoned; (viii) Tenant shall be
liquidated or dissolved or shall begin proceedings towards its liquidation or
dissolution; (ix) the estate or interest of Tenant in any of the Leased Premises
shall be levied upon or attached in any proceeding and such estate or interest
is about to be sold or transferred or such proceeding shall not be vacated or
discharged within sixty (60) days after it is commenced; or (x) a failure by
Guarantor duly to perform and observe any provision under the Guaranty, or a
violation or breach of any covenant made by Guarantor under the Guaranty.
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(b) If an Event of Default shall have occurred, Landlord shall
have the right at its option, then or at any time thereafter to do any one or
more of the following without demand upon notice to Tenant (except as otherwise
provided in subparagraph (g) of this Paragraph 19):
(i) Landlord shall give Tenant ten (10) days written
notice of Landlord's intention to terminate this Lease on a date specified in
such notice. Upon the date therein specified, the Term, the estate hereby
granted and all rights of Tenant hereunder, shall expire and terminate as if
such date were the date herein before fixed for the expiration of the Term, but
Tenant shall remain liable for all its obligations hereunder, including its
liability for Rent, as hereinafter provided.
(ii) Landlord may, whether or not the Term of this Lease
shall have been terminated pursuant to clause (i) above, (A) give Tenant notice
to surrender any of the Leased Premises to Landlord immediately or on a date
specified in such notice, at which time Tenant shall surrender and deliver
possession of the Leased Premises or the specified portion thereof to Landlord
or (B) re-enter and repossess any of the Leased Premises, with or without legal
process, by peaceably entering the Leased Premises and changing locks or by
summary proceedings, ejectment or any other lawful means or procedure. Upon or
at any time after taking possession of any of the Leased Premises, Landlord may,
by peaceable means or legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any such entry,
repossession or removal. No such entry or repossession shall be construed as an
election by Landlord to terminate this Lease unless Landlord gives a written
notice of such intention to Tenant pursuant to clause (i) above.
(iii) After repossession of any of the Leased Premises
pursuant to clause (ii) above, whether or not this Lease shall have been
terminated pursuant to clause (i) above, Landlord shall have the right (but
shall be under no obligation) to relet any of the Leased Premises to such tenant
or tenants, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term), for such rent,
on such conditions (which may include concessions or free rent) and for such
uses as Landlord, in its absolute discretion, may determine; and Landlord may
collect and receive any rents payable by reason of such reletting. Landlord
shall have no duty to mitigate damages and shall not be responsible or liable
for any failure to relet any of the Leased Premises or for any failure to
collect any rent due upon any such reletting. Landlord may make such Alterations
as Landlord, in its sole discretion, may deem advisable. Tenant agrees to pay
Landlord, as Additional Rent, immediately upon demand, all expenses incurred by
Landlord in obtaining possession, in performing Alterations and in reletting any
of the Leased Premises, including fees and commissions of attorneys, architects,
agents and brokers.
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(iv) Unless Landlord shall have exercised its remedy under
Paragraph 19(b)(v) (as to the entire Leased Premises) or 19(b)(vi) hereof and
shall have received all sums due thereunder, Landlord may, upon written demand
to Tenant, recover from Tenant, and Tenant shall pay to Landlord, as and for
liquidated and agreed final damages for Tenant's default and in lieu of all
current damages beyond the date of such demand (it being agreed that it would be
impracticable or extremely difficult to fix the actual damages), an amount equal
to the present value of the excess, if any, of (A) all Rent from the date of
such demand to the date on which the then Term is scheduled to expire hereunder
in the absence of any earlier termination, re-entry or repossession over (B) the
then fair market rental value of the Leased Premises for the same period;
provided, however, that in the event Landlord shall have exercised its remedy
under Paragraph 19(6)(v) to require the purchase of less than the entire Leased
Premises and shall have received all sums due in connection therewith, the Rent
referred to in clause (A) above shall be that portion of the Rent which is
attributable to that portion of the Leased Premises which is not sold to Tenant
pursuant to said Paragraph 19(b)(v) and the fair rental value referred to in
clause (B) above shall be the fair rental value of such unsold remainder of the
Leased Premises. The present value of such excess shall be determined by
discounting the Rent and such fair market rental value at the rate per annum
which is the lower of the then Prime Rate or nine percent (9%) per annum. If any
Law shall validly limit the amount of such liquidated final damages to less than
the amount above agreed upon, Landlord shall be entitled to the maximum amount
allowable under such Law.
(v) Unless Landlord shall have exercised its remedy under
Paragraph 19(b)(iv) or 19(b)(vi) hereof and shall have received all sums due
thereunder, Landlord may, upon notice to Tenant, require Tenant to make an
irrevocable offer to purchase, for the purchase price (the "Default Offer
Amount") specified in the next two sentences, either (A) the entire Leased
Premises or (B) any one or more of the New Orleans Premises, the San Antonio
Premises and the Memphis Premises (such entire Leased Premises or any one or
more of the New Orleans Premises, the San Antonio Premises and the Memphis
Premises, as applicable, being hereinafter referred to as the "Selected
Premises"), as Landlord in its sole discretion may select. The Default Offer
Amount shall be the greater of (1) the then Fair Market Value of the Selected
Premises, (2) the sum of that portion (determined in accordance with the
percentages set forth in Exhibit "F") of the unpaid balance of the Note and
Mortgage covering any of the Selected Premises, all interest accrued thereon,
and prepayment penalties payable in connection therewith and all other sums due
thereunder as of the date of such purchase, or (3) an amount equal to the sum of
the Acquisition Cost with respect to the Selected Premises and any prepayment
penalty payable under the Loan with respect to the Selected Premises. Upon such
notice by Landlord to Tenant, Tenant shall be deemed to have made such offer,
and the Fair Market Value
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of the Selected Premises shall be determined in accordance with the procedure
set forth in Paragraph 27 hereof. Within thirty (30) days after such
determination of the Fair Market Value, Landlord shall accept or reject such
offer. If Landlord accepts such offer, then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the Default Offer Amount and
purchase the Selected Premises in accordance with Paragraph 16 hereof. Any
rejection by Landlord of such offer shall have no effect on any other provision
of this Lease.
(vi) Unless Landlord shall have exercised its remedy under
Paragraph 19(b)(vi) or 19(b)(v) (as to the entire Leased Premises) hereof and
shall have received all sums due thereunder or shall have repossessed and relet
the Leased Premises, Landlord may declare by notice to Tenant the entire Basic
Rent (in the amount of Basic Rent then in effect) discounted at the rate per
annum which is the lower of the then Prime Rate or nine percent (9%) per annum
for the remainder of the then current Term, to be immediately due and payable.
In that event, Tenant shall immediately pay to Landlord all such Basic Rent, all
accrued Rent then due and unpaid, all other sums which are then due or which
would have been due hereunder but for the aforesaid Event of Default and all
sums which arise or become due by reason of such Event of Default (including any
attorneys' fees and costs). Upon receipt of all such accelerated Basic Rent and
other sums, this Lease shall remain in full force and effect and Tenant shall
have the right to possession of the Leased Premises from the date Landlord
receives the accelerated Basic Rent and all the other said sums to the end of
the Term then in effect (or that would be in effect but for the Event of
Default) pursuant and subject to all the provisions of this Lease, including the
obligation to pay all increases in Basic Rent and all Additional Rent and other
sums that subsequently become due, except that (A) no Basic Rent which has been
prepaid hereunder shall be due thereafter during the said Term, (B) Tenant shall
have no option to extend or renew the then current Term and (C) Tenant shall
have no further rights, if any, under Paragraph 28. Notwithstanding the
foregoing, in the event Landlord shall have exercised its remedy under Paragraph
19(b)(v) to require the purchase of less than the entire Leased Premises and
shall have received all sums due in connection therewith, the Basic Rent to be
accelerated pursuant to this Paragraph 19(b)(vi) shall be that portion of the
Basic Rent which is attributable to that portion of the Leased Premises which is
not sold to Tenant pursuant to said Paragraph 19(b)(v) and Tenant's right to
possession pursuant to this Lease shall extend only to such unsold remainder of
the Leased Premises.
(vii) Landlord may exercise any other right or remedy now or
hereafter existing by Law or in equity.
(c) No expiration or termination of this Lease pursuant to
Paragraph 19(b)(i) or any other provision of this Lease, by operation of law or
otherwise, before the expiration date provided in Paragraph 5 or if applicable
the termination date
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provided in Paragraph 13(b), 14(i) or 28, no repossession of any of the Leased
Premises pursuant to Paragraph 19(b)(ii) or otherwise, nor any reletting of any
of the Leased Premises pursuant to Paragraph (19)(b)(iii) shall relieve Tenant
of any of its liabilities and obligations hereunder, including the liability for
Rent, all of which shall survive such expiration, termination, repossession or
reletting.
(d) In the event of any expiration or termination of this Lease
or repossession of any of the Leased Premises by reason of the occurrence of an
Event of Default, and provided that Landlord has not exercised its remedy under
Paragraph 19(b)(iv), 19(b)(v) (as to the entire Leased Premises) or 19(b)(vi) or
has not received all sums due thereunder, Tenant shall pay to Landlord all Rent
and all other sums required to be paid by Tenant to and including the date of
such expiration, termination or repossession and, thereafter, Tenant shall,
until the end of what would have been the Term in the absence of such
expiration, termination or repossession, and whether or not any of the Leased
Premises shall have been relet, be liable to Landlord for, and shall pay to
Landlord, as liquidated and agreed current damages (i) Basic Rent, Additional
Rent and all other sums which would be payable under this Lease by Tenant in the
absence of such expiration, termination or repossession, less (ii) the net
proceeds, if any, of any reletting pursuant to Paragraph 19(b)(iii), after
deducting from such proceeds all of Landlord's expenses in connection with such
reletting (including all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, employees' expenses, costs of Alterations and
expenses of preparation for reletting) provided, however, that in the event
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Landlord has exercised its remedy under Paragraph 19(b)(v) to require the
purchase of less than the entire Leased Premises and has received all sums due
in connection therewith, the Rent hereinabove in this Paragraph 19(d) referred
to shall mean that portion of the Rent which is applicable to that portion of
the Leased Premises which is not sold to Tenant pursuant to said Paragraph
19(b)(v). Tenant hereby agrees to be and remain liable for all sums aforesaid;
and Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by limitation had there been no such Event of Default.
(e) The words "enter," "re-enter," or "re-entry," as used in this
Paragraph 19 are not restricted to their technical meaning.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, TENANT WAIVES ANY RIGHT TO A TRIAL BY JURY.
(g) Except as otherwise hereinafter in this Paragraph 19(g)
provided, before an Event of Default shall exist under this Paragraph 19,
Landlord shall have given Tenant notice
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thereof and Tenant shall have failed to cure the default within the applicable
grace period stated below. If the default consists of a failure to pay Rent, the
applicable grace period shall be two (2) business days from the date such notice
is given. If the default consists of the failure to provide any insurance
required pursuant to Paragraph 14, the applicable grace period shall be seven
(7) days from the date on which the notice is given, but Landlord shall not be
obligated to give notice of, or allow any grace period for, any such default
more than twice within any twelve (12) month period. If the default consists of
something other than the failure to provide any such insurance, the applicable
grace period shall be twenty (20) days from the date on which the notice is
given or, if the default cannot be cured within the said twenty-day period and
delay in the exercise of a remedy would not (in Landlord's reasonable judgment)
cause any material adverse harm to Landlord or any of the Leased Premises, the
grace period shall be extended for the period required to cure the default (but
such grace period, including any extension, shall not in the aggregate exceed
sixty (60) days), provided that Tenant shall commence to cure the default within
the said twenty-day period and shall actively, diligently and in good faith
proceed with and continue the curing of the default until it shall be fully
cured. However, no notice or grace period shall be required in any one or more
of the following events: (i) substantial damage to any of the Leased Premises
will, in Landlord's reasonable judgment, probably occur unless a remedy is
exercised promptly; (ii) the occurrence of a default under clause (iii), (iv),
(v), (viii), or (ix) of subparagraph (a) of this Paragraph 19; or (iii) the
default is such that any delay in the exercise of a remedy by Landlord could
reasonably be expected to cause irreparable harm to Landlord.
20. Additional Rights of Landlord.
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(a) No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to any other right or
remedy given hereunder or now or hereafter existing by Law or in equity. Upon
the occurrence of any Event of Default, Landlord shall have the right (but no
obligation) to perform any act required of Tenant hereunder, whether as agent
for Tenant or otherwise; and the cost thereof shall be Additional Rent hereunder
and shall be paid by Tenant to Landlord, together with interest thereon at the
Default Rate from the date such cost is incurred until it shall be fully paid by
Tenant, immediately upon demand. Tenant agrees that Tenant shall be liable to
Landlord for any and all damages suffered or incurred by Landlord in connection
with any Event of Default and Tenant further agrees that Landlord shall be
entitled to exercise any and all remedies existing at law or in equity for the
recovery thereof. Tenant acknowledges that time is of the essence in the
performance of its obligations under this Lease. No failure of Landlord (i) to
insist at any time upon the strict performance of any provision of this Lease or
(ii) to exercise any
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option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any
Rent or other sum due hereunder with knowledge of the breach of any provision
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver by Landlord of any provision of this Lease shall be deemed to have been
made unless expressed in a writing signed by Landlord. In addition to the other
remedies provided in this Lease, Landlord shall be entitled, to the extent
permitted by applicable Law, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the provisions of this Lease, or to
specific performance of any of the provisions of this Lease.
(b) Tenant hereby waives and surrenders, for itself and all those
claiming under it, including creditors of all kinds, (i) any right and privilege
which it or any of them may have under any present or future Law to redeem any
of the Leased Premises or to have a continuance of this Lease after termination
of this Lease or of Tenant's right of occupancy or possession pursuant to any
court order or any provision hereof, and (ii) the benefits of any present or
future Law which exempts property from liability for debt or for distress for
rent.
(c) Tenant shall pay to Landlord, as Additional Rent, all the
expenses incurred by Landlord in connection with any Event of Default or the
exercise of any remedy by reason of an Event of Default or otherwise in
connection with the enforcement of this Lease, including reasonable attorneys'
fees and expenses. If Landlord shall be made a party to any litigation commenced
against Tenant or any litigation pertaining to this Lease or any of the Leased
Premises (except litigation among the partners of Landlord or other Persons
described in Paragraph 29 which does not arise out of any act or omission of
Tenant under this Lease), then, at the option of Landlord, Tenant, at its
expense, shall provide Landlord with counsel approved by Landlord and, in any
event, Tenant shall pay all costs and reasonable attorneys' fees incurred or
paid by Landlord in connection with such litigation; provided, however, that if
in a non-appealable decision, a court of competent jurisdiction determines that
Landlord was the sole cause of litigation pertaining to this Lease or any of the
Leased Premises then all costs and fees incurred by Tenant in connection with
such litigation shall be refunded to Tenant.
21. NOTICES. All notices, demands, requests, consents, approvals,
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offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given for all purposes when delivered in Person or
by Federal Express or other 24-hour delivery service or five (5) business days
after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, addressed to the other party at
its address stated above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay,
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1600 Avenue of the Arts Building, Philadelphia, PA 19107, Attention: Chairman,
Real Estate Department. For the purposes of this Paragraph, any party may
substitute its address by giving fifteen (15) days' notice to the other party,
in the manner provided above.
22. ESTOPPEL CERTIFICATE. Tenant shall, at any time and from time to
--------------------
time, but not more than three (3) times in any calendar year, upon not less than
ten (10) days' prior written request by Landlord, execute, acknowledge and
deliver to Landlord a statement in writing, executed by the president or a vice
president of Tenant, certifying (a) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that this Lease is in
full force and effect as modified, and setting forth such modifications), (b)
the dates to which Basic Rent, Additional Rent and all other sums payable
hereunder have been paid, (c) that, to the knowledge of the signer of such
certificate, no default by either Landlord or Tenant exists hereunder or
specifying each such default of which the signer may have knowledge, and (d)
that, to the knowledge of the signer of such certificate, there are no
proceedings pending or threatened against Tenant before or by any court or
administrative agency which, if adversely decided, would materially and
adversely affect the financial condition and operations of Tenant or, if any
such proceedings are pending or threatened to said signer's knowledge,
specifying and describing the same. It is intended that any such statements by
Tenant may be relied upon by Lender, Landlord or their assignees or by any
prospective purchaser or mortgagee of the Leased Premises.
Landlord shall, at any time and from time to time but not more
often than twice in any twelve (12) month period upon not less than ten (10)
days' prior written request by Tenant, execute, acknowledge and deliver to
Tenant a statement in writing, executed by a general partner of landlord
certifying (a) that this Lease in unmodified and in full force and effect (or,
if there have been modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications), (b) the dates to which Basic
Rent, Additional Rent and all other sums payable hereunder have been paid, (c)
that, to the knowledge of the signer of such certificate, no default by Tenant
exists hereunder of specifying each such default of which the signer may have
knowledge. It is intended that nay such statements by Landlord may be relied
upon by Tenant, its lenders or its permitted assignees.
23. SURRENDER. Upon the expiration or earlier termination of this
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Lease, Tenant shall peaceably leave and surrender the Leased Premises (except
for any portion thereof with respect to which this Lease has previously
terminated or with respect to which Tenant has purchased) to Landlord in the
same condition in which the Leased Premises were originally received from
Landlord at the commencement of this Lease, except as repaired, rebuilt,
restored, altered, replaced or added to as
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permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Tenant shall remove from the Leased Premises on or prior to such
expiration or earlier termination all property which is owned by Tenant or third
parties other than Landlord and Tenant; and Tenant, at its expense, shall, on or
prior to such expiration or earlier termination, repair any damage caused by
such removal. Property not so removed shall become the property of Landlord;
Landlord may thereafter cause such property to be removed from the Leased
Premises; and the cost of removing and disposing of such property and repairing
any damage to any of the Leased Premises caused by such removal shall be borne
by Tenant. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
upon the expiration or earlier termination of this Lease.
24. RISK OF LOSS. The risk of loss or of decrease in the enjoyment
------------
and beneficial use of any of the Leased Premises in consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosure, attachments, levies or executions,
is assumed by Tenant, and Landlord shall in no event be answerable or
accountable therefor. Except as otherwise specifically provided in this Lease,
none of the events mentioned in this Paragraph shall entitle Tenant to any
abatement of Rent.
25. No Merger of Title. There shall be no merger of this Lease nor of
------------------
the leasehold estate created by this Lease with the fee estate in or ownership
of any of the Leased Premises by reason of the fact that the same Person may
acquire or hold or own, directly or indirectly, (a) the leasehold estate created
by this Lease or any part thereof or interest therein or any interest of Tenant
in this Lease, and (b) the fee estate or ownership of any of the Leased Premises
or any interest in such fee estate or ownership; and no such merger shall occur
unless and until all Persons having any interest in (i) this Lease as Tenant or
the leasehold estate created by this Lease and (ii) this Lease as Landlord or
the fee estate in or ownership of the Leased Premises or any part thereof sought
to be merged shall join in a written instrument effecting such merger and shall
duly record the same.
26. BOOKS AND RECORDS. Tenant shall permit Landlord and Lender by
-----------------
their respective agents, accountants and attorneys, to visit and inspect the
Leased Premises and to discuss the finances and business with the officers of
Tenant, at such reasonable times as may be requested by Landlord, and, upon the
occurrence of an Event of Default, to examine the records and books of account
Tenant, at such reasonable times as may be requested by Landlord.
Tenant shall deliver to Landlord and to Lender (i) within thirty (30)
days of the end of each calendar month the monthly management reports of Tenant
for the prior calendar month and (ii) within ninety (90) days of the close of
each fiscal year annual audited financial statements of Tenant prepared by
independent
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certified public accountants satisfactory to Landlord, and such other relevant
financial data as Landlord may reasonably require pertaining to Tenant or to the
Leased Premises. Tenant shall also furnish to Landlord all filings, if any, of
Form 10-K, Form 10-Q and other required filings with the Securities and Exchange
Commission pursuant to the provisions of the Securities Exchange Act of 1934, as
amended, or any other Law. All financial statements of Tenant shall be prepared
in accordance with generally accepted accounting principles consistently applied
and the annual statements hereinabove referred to shall be accompanied by an
unqualified opinion of said accountants and by the affidavit of the president or
a vice president of Tenant dated within five (5) days of the delivery of such
statement, (a) stating that the affiant knows of no Event of Default or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder, or, if any such event
has occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (b) except as otherwise specified, with respect to Tenant stating
that Tenant has fulfilled all of its obligations under this Lease which are
required to be fulfilled on or prior to the date of such affidavit.
27. DETERMINATION OF VALUE.
----------------------
(a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such
Fair Market Value within fifteen (15) days after the date (the "Applicable
Initial Date") on which (A) Tenant provides Landlord with notice of its
intention not to extend or to terminate this Lease as to the Affected Premises
pursuant to Paragraph 13(b) or Paragraph 14(h) hereof or (B) Landlord provides
Tenant with notice of its intention to require Tenant to make an offer to
purchase the Selected Premises pursuant to Paragraph 19(b)(v) hereof, as
applicable. Upon reaching such agreement, the parties shall execute an agreement
setting forth the amount of such Fair Market Value.
(ii) If the parties shall not have signed such agreement
setting forth the amount of such agreed Fair Market Value within fifteen (15)
days after the Applicable Initial Date, Tenant shall within ten (10) days after
the Applicable Initial Date select an appraiser and notify Landlord in writing
of the name, address and qualifications of such appraiser. Within ten (10) days
thereafter, Landlord shall select an appraiser and notify Tenant of the name,
address and qualifications of such appraiser. The appraiser selected by Tenant
and the appraiser selected by Landlord shall endeavor to agree upon the Fair
Market Value of the Leased Premises or the Affected Premises or the
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Selected Premises, as applicable, as of the date specified in the particular
provision of this Lease (the "Applicable Provision") pursuant to which the
determination of Fair Market Value is being made. If the said two appraisers
shall agree upon such Fair Market Value, the amount of such Fair Market Value as
agreed to by the said two appraisers shall be binding and conclusive.
(iii) If the appraiser selected by Tenant and the appraiser
selected by Landlord shall be unable to agree upon such Fair Market Value within
twenty (20) days after the selection of an appraiser by Landlord, then the said
two appraisers shall select a third appraiser to make the determination of such
Fair Market Value and the determination of such third appraiser shall be binding
and conclusive upon Landlord and Tenant.
(iv) In the event the appraiser selected by Tenant and the
appraiser selected by Landlord shall be unable to agree upon the designation of
a third appraiser within ten (10) days after the expiration of the twenty (20)
day period referred to in clause (iii) above or in the event the third appraiser
so selected does not make a determination of the Fair Market Value of the Leased
Premises or the Affected Premises or the Selected Premises within twenty (20)
days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto, be
appointed by the President or Chairman of the American Arbitration Association
in Philadelphia, Pennsylvania. The determination of Fair Market Value made by
the third appraiser appointed pursuant hereto shall be made within twenty (20)
days after such appointment. Fair Market Value shall be the average of the
determination of Fair Market Value made by the third appraiser and the
determination of Fair Market Value made by the appraiser whose determination of
Fair Market Value is nearest to that of the third appraiser. Such average shall
be binding and conclusive upon Landlord and Tenant.
(v) All appraisers selected or appointed pursuant to this
Paragraph 27(a) shall be independent qualified appraisers. Such appraisers shall
have no right, power or authority to alter or modify the provisions of this
Lease and in determining the Fair Market Value of the Leased Premises or the
Leased Premises or the Selected Premises, as applicable, such appraisers shall
utilize the definition of Fair Market Value hereinabove set forth above.
(b) The cost of the appraiser selected by Tenant shall be paid by
Tenant and the cost of the appraiser selected by Landlord shall be paid by
Landlord; the cost of a third appraisal, if required, will be split equally
between Landlord and Tenant.
(c) If, by virtue of any delay in the appointment of a third
appraiser pursuant to Paragraph 27(a)(iv) above or of any delay by such
appointed third appraiser to determine such Fair Market Value, the Fair Market
Value of the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, is not
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determined by such appointed third appraiser within one hundred forty (140) days
after the Applicable Initial Date, then the date (the "Applicable Final Date")
on which the Leased Premises or the Affected Premises or the Selected Premises,
as applicable, would otherwise be sold to Tenant or on which this Lease would
otherwise terminate, as specified in the Applicable Provision, shall be extended
the same number of days (the "Delay Period") by which the total period so
required for the binding and conclusive determination of Fair Market Value
exceeds one hundred forty (140) days and all relevant defined terms used in the
Applicable Provision shall be deemed amended accordingly, anything to the
contrary in the Applicable Provision notwithstanding. In addition, any time
period which is afforded Landlord under the Applicable Provision within which to
accept or reject an offer by Tenant shall likewise be extended by the number of
days equal to the Delay Period.
28. FINANCING.
---------
(a) Tenant shall pay, within three (3) business days of written
demand therefor, all out of pocket costs (including but not limited to closing
costs, title charges, commitment or application fees, and attorneys' fees), not
to exceed $50,000 in the aggregate (other than the principal of the Note and
interest thereon at the contract rate of interest specified therein), imposed
upon Landlord by Lender pursuant to the initial Loan to Landlord evidenced by a
Note and secured by a Mortgage constituting a first lien on the Leased Premises
provided that Landlord obtains such Loan no later than the fourth (4th)
anniversary of the initial Basic Rent Payment Date.
(b) In the event that Landlord desires to obtain a Loan to be
secured any of the Leased Premises, Tenant shall negotiate in good faith with
Landlord concerning any request made by the proposed mortgagee for changes or
modifications in this Lease. Tenant shall not unreasonably withhold or delay its
consent to such financing, and Tenant hereby agrees that Tenant shall provide
any other consent or statement and shall execute any and all other documents
that any proposed mortgagee requires in connection with such financing, so long
as the same do not materially adversely affect any right, benefit or privilege
of Tenant under this Lease or increase the Rent or other obligations of Tenant
hereunder.
29. NON-RECOURSE AS TO LANDLORD. Anything contained herein to the
---------------------------
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord or any general partner of Landlord (or any legal representative, heir,
estate, successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or
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<PAGE>
other entity) of Landlord or any general partner of Landlord, either directly or
through Landlord or its general partners or any predecessor or successor
partnership or corporation (or other entity) of Landlord or any general partner
of Landlord, or (d) any other Person or entity (including Eighth Carey Corporate
Property, Inc., W. P. Carey & Co. Inc., Carey Corporate Property Management,
Inc., Clark & Pendleton Realty Corp. or any Person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof).
30. SUBSTITUTION AND EXCHANGE OF PROPERTY. If the Board of Directors
-------------------------------------
of Tenant determines, in good faith, that any one or more of the New Orleans
Premises, the San Antonio Premises or the Memphis Premises (any one or more of
which that is determined to be uneconomically viable as provided hereunder being
hereinafter referred to as the "Existing Property") is no longer economically
viable for Tenant's continued use and operation for any reason, including, but
not limited to, unprofitability, obsolescence or change in zoning regulations;
then Tenant shall have the right, during the Term of this Lease or any renewal
hereof, to convey to Landlord a substitute property (the "Substitute Property")
and lease the Substitute Property back from Landlord on the terms and conditions
provided herein in exchange for the conveyance to Tenant of the Existing
Property and the termination of the Lease with respect to such Existing Property
(the "Exchange"), upon the terms and conditions set forth herein. In the event
that Tenant elects to exercise such right, Tenant shall give written notice to
Landlord and Lender, which notice shall contain (i) a resolution of Board of
Directors of Tenant stating that the Existing Property is no longer economically
viable and setting forth in reasonable detail the reasons for such
determination; (ii) a description and MAI Appraisal of the Substitute Property;
(iii) such relevant data as Landlord may request demonstrating the economic
viability of the Substitute Property; (iv) Tenant's offer to convey the
Substitute Property to Landlord and lease back the Substitute property in
exchange for Landlord conveying the Existing Property to Tenant and terminating
the Lease with respect to the Existing Property; and (v) notice to Landlord of
Tenant's intention to affect the Exchange on the first Basic Rent Payment Date
occurring at least ninety (90) days after the date on which Landlord receives
such notice (the "Exchange Date").
Landlord (if Landlord obtains the written consent of Lender) shall
accept or reject Tenant's offer of the Substitute Property not later than the
thirtieth (30th) day prior to the Exchange Date; and Landlord shall accept such
offer if Landlord (in its reasonable discretion) receives and approves all items
listed in the foregoing paragraph. If Landlord, with the written consent of
Lender, has accepted Tenant's offer and if on the Exchange Date all conditions
and requirements imposed by Landlord and Lender in connection with the
acceptance of Tenant's offer of substitution have been satisfied, including, but
not limited to, (i) the approval of Landlord, Lender and their respective
counsel
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of all documents relating to the Exchange; (ii) all installments of annual Basic
Rent, Additional Rent and all other charges due and unpaid hereunder having been
paid in full by Tenant; (iii) Tenant's compliance with all other obligations and
liabilities, actual or contingent, under this Lease which have arisen on or
prior to the Exchange Date and Tenant not then being in default hereunder; (iv)
delivery to Landlord and Lender, respectively, of ALTA "owner" and "mortgagee"
title insurance policies insuring Landlord's fee title to the Substitute
Property and Lender's first lien thereon; and (v) Tenant's conveyance of the
Substitute Property to Landlord, the lease back of the Substitute Property to
Tenant, and the mortgaging of the Substitute Property to Lender; then the
Existing Property shall be conveyed to Tenant in accordance with the provisions
of Paragraph 16(a) and all obligations hereunder with respect to the Existing
Property shall terminate, except for any obligations or liabilities of Tenant,
actual or contingent, arising prior to such conveyance.
Tenant shall pay all charges incident to the Exchange, regardless of
whether or not the Exchange occurs, including, but not limited to, Landlord's
and lender's counsel fees, escrow fees, recording fees, brokerage fees, title
insurance and all federal, state and local taxes which may be incurred or
imposed by reason of such conveyance and transfer and/or by delivery of any deed
or other instrument.
31. FINANCIAL COVENANT. Tenant shall not sell, assign or transfer its
------------------
interest in this Lease and shall not permit a Change in Control of Tenant to an
entity which, immediately following such sale, transfer, assignment or Change in
Control has a Tangible Net Worth of less than $18,996,000 or a secured debt to
equity ratio of greater than 4:1.
"Tangible Net Worth" as used herein shall mean as of any date the
excess of (A) the aggregate gross book value of all assets of Tenant or any
other entity, as the case may be, as of such date (excluding all franchises,
licenses, permits, drawings, patents, patent applications, copyrights,
trademarks, trade names, goodwill, experimental or organizational expenses and
all other assets which, in accordance with generally accepted accounting
principles, are deemed intangible) over (B) the aggregate of all liabilities of
Tenant or such other entity as of such date, all computed in accordance with
generally accepted accounting principles.
"Change in Control" as used herein shall mean as of any date (i) a
sale of all or substantially all of the Tenant's assets to any Person or related
group of Persons as an entirety or substantially as an entirety in one
transaction or series of transactions, (ii) the merger or consolidation of the
Tenant with or into another corporation or the merger of another corporation
into the Tenant or the sale of the stock of Tenant with the effect that
Guarantor holds less than 51% of the total voting power
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entitled to vote in the election of directors, managers or trustees of the
surviving corporation of such merger or consolidation (any nonvoting common
stock now outstanding or issued after the date hereof of the surviving
corporation having terms substantially similar to the Tenant's nonvoting common
stock shall be considered voting stock for purposes of this provision) or holds
less than 51% of the total voting power entitled to vote in the election of
directors, managers or trustees of Tenant following such sale or (iii) the
liquidation or dissolution of the Tenant.
32. SUBORDINATION. Tenant agrees that this Lease and its interest
-------------
hereunder shall be subordinate to any mortgage, deed of trust, and/or other
security instrument hereafter placed upon the Leased Premises by the Landlord,
and to any and all advances made or to be made thereunder, to the interest
thereon, and all renewals, replacements and extensions thereof provided that any
such instrument (or separate instrument in recordable form duly executed by the
holder of any such mortgage, deed of trust or security instrument and delivered
to Tenant) shall provide for the recognition of this Lease and the non-
disturbance of all of Tenant's rights hereunder until such time as Landlord
shall have the right to terminate this Lease pursuant to any applicable
provisions of Paragraph 19 hereof.
33. FIRST REFUSAL RIGHT.
-------------------
(a) Except as otherwise provided in subparagraph (c) below, if
Landlord should desire to sell or shall receive an offer for its interest in any
one or more of the Memphis Premises, the New Orleans Premises and/or the San
Antonio Premises (any one or more of which Landlord desires to sell or for which
Landlord receives an offer being hereinafter referred to as the "Sale Premises")
prior to the tenth (10th) anniversary of the initial Basic Rent Payment Date as
subject to this Lease, then subject to the limitation set forth in subparagraph
(d) below Landlord first shall be required (i) either to obtain a bona fide
written offer to purchase the Sale Premises acceptable to Landlord or to enter a
contract for sale of the Sale Premises to Landlord or to enter a contract for
sale of the Sale Premises conditioned upon Tenant's failure to exercise its
right under this subparagraph (a), and (ii) to give written notice to Tenant of
the offer (and Landlord's willingness to accept the same) or contract for sale
accompanied by a copy of the executed offer or contract together with the name
and business address of the prospective purchaser ("Third Party Purchaser"). For
a period of fifteen (15) business days following receipt of such notice and
provided that Basic Rent shall be current at the time of the exercise of such
right of first refusal, Tenant shall have the right and option, exercisable by
written notice to landlord given within said fifteen (15) business days period
to purchase Landlord's interest in the Sale Premises at the purchase price and
upon the terms and conditions set forth in such written offer or agreement,
subject in addition, to the provisions of Paragraph 16(a) hereof. The closing
date for the purchase shall
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be the later to occur of (i) ninety (90) days from the date of Tenant's notice
to Landlord or (ii) the closing date provided in the applicable contract of sale
or offer to purchase. If at the expiration of the aforesaid fifteen (15) day
period, Tenant shall have failed to exercise the aforesaid option, Landlord's
interest in the Sale Premises may be sold for the consideration, to the Third
Party Purchaser, and upon the terms and conditions set forth in the original
offer or agreement of sale provided the sale is consummated with a period of one
hundred eighty (180) days after the giving of the original notice to Tenant
pursuant to subparagraph (a) (ii) above.
(b) If Tenant does not exercise its option to purchase any Sale
Premises, then Tenant agrees that (i) the Lease is bifurcated with respect to
remaining Leased Premises and the Sale Premises; (ii) Tenant will attorn to any
Third Party Purchaser as Landlord with respect to the Sale Premises purchased so
long as the third Party Purchaser assumes the obligations of Landlord under the
Lease; and (iii) the terms of the Lease will remain in full force and effect
with respect to the Sale Premises except that the Basic Rent will be that
percentage of the then Basic Rent which is allocated to the Sale Premises as set
forth on Exhibit "E" attached hereto and made a part hereof. At the request of
Landlord, Tenant will promptly execute such documents confirming (i) that, if
the sale occurs after the fifth (5th) anniversary of the initial Basic Rent
Payment Date its option to purchase the Sale Premises is null and void, (ii) the
agreements referred to above and (iii) such other agreements as Landlord may
reasonably request provided that such do not increase the liabilities and
obligations of Tenant hereunder.
(c) The provisions of subparagraph (a) shall not apply to or
prohibit -(i) any mortgaging, subjection to deed of trust or other hypothecation
of Landlord's interest in the leased private power of sale under or judicial
foreclosure of nay mortgage, deed of trust or other security instrument or
devise to which Landlord's interest in the Leased Premises is now or hereafter
subject, (iii) any transfer or Landlord's interest in the Leased Premises to a
mortgagee, beneficiary under deed of trust or other holder of a security
interest therein by deed in lieu of foreclosure, or (iv) any transfer of the
Leased Premises to an Affiliate of Landlord or (v) to any governmental or quasi-
governmental agency with power of condemnation.
(d) If Landlord elects to sell any one or more of the Memphis
Premises, New Orleans Premises or Tulsa Premises prior to the fifth (5th)
anniversary of the initial Basic Rent Payment Date and Tenant does not elect to
purchase such Sale Premises, Tenant shall have one (1) additional first refusal
right for the initial offer or contract of sale with respect to such Sale
Premises which occurs during the period which commences with the fifth (5th)
anniversary of the initial Basic Rent Payment Date and terminates on the one
hundred twenty-seventh (127th) Basic Rent Payment Date. Notwithstanding anything
to the contrary set forth
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in this Paragraph 33, the first of first refusal granted by this Paragraph 33
shall terminate and be null and void with respect to the Leased Premises upon
the earlier to occur of (i) the one-hundred twenty seventh (127th) Basic Rent
Payment Date or (ii) the termination of this Lease.
34. MISCELLANEOUS. The paragraph headings in this Lease are used only
-------------
for convenience in finding the subject matters and are not part of this Lease or
to be used in determining the intent of the parties or otherwise interpreting
this Lease. As used in this Lease, the singular shall include the plural as the
context requires and the following words and phrases shall have the following
meanings: (a) "including" shall mean "including but not limited to"; (b)
"provisions" shall mean "provisions, terms, agreements, covenants and/or
conditions"; (c) "lien" shall mean "lien, charge, encumbrance, title retention
agreement, pledge, security interest, mortgage and/or deed of trust"; (d)
"obligation" shall mean "obligation, duty, agreement, liability, covenant and/or
condition"; (e) "any of the Leased Premises" shall mean "the Leased Premises or
any part thereof or interest therein"; (f) "any of the Land" shall mean "the
Land or any part thereof or interest therein"; (g) "any of the Improvements"
shall mean "the Improvements or any part thereof or interest therein"; (h) "any
of the Equipment" shall mean "the Equipment or any part thereof or interest
therein"; and (i) "any of the Adjoining Property" shall mean "the Adjoining
Property or any part thereof or interest therein". Any act which Landlord is
permitted to perform under this Lease may be performed at any time and from time
to time by Landlord or any Person or entity designated by Landlord. Any act
which Tenant is required to perform under this Lease shall be performed at
Tenant's sole cost and expense. Each appointment of Landlord as attorney-in-fact
for Tenant under this Lease is irrevocable and coupled with an interest.
Landlord shall in no event be construed for any purpose to be a partner, joint
venturer or associate of Tenant or of any subtenant, operator, concessionaire or
licensee of Tenant with respect to any of the Leased Premises or otherwise in
the conduct of their respective businesses. This Lease and any documents which
may be executed by Tenant on or about the effective date hereof at Landlord's
request constitute the entire agreement between the parties and supersede all
prior understandings and agreements, whether written or oral, between the
parties hereto relating to the Leased Premises and the transactions provided for
herein. This Lease may be modified, amended, discharged or waived only by an
agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought. The covenants of this
Lease shall run with the land and bind Tenant, the heirs, distributees, Personal
representatives, successors and assigns of Tenant, and all present and
subsequent encumbrancers and subtenants of any of the Leased Premises, and shall
inure to the benefit of Landlord, its successors and assigns. In the event there
is more than one Tenant, the obligations of each shall be joint and several. In
the event any one or more of the provisions contained in this Lease shall for
any reason be held to be
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invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein. This Lease shall be governed by and construed
according to the Laws of the State of Louisiana with respect to the New Orleans
Premises, the State of Texas with respect to the San Antonio Premises and the
State of Tennessee with respect to the Memphis Premises.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
CORPORATE PROPERTY ASSOCIATES 8, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By Eighth Carey Corporate Property,
Inc., a General Partner
By /s/ H. Cabot Lodge III
-------------------------------------
H. Cabot Lodge III
Senior Vice President
Attest: [SIGNATURE NOT LEGIBLE]
--------------------------------
Assistant Secretary
TENANT:
STATIONERS DISTRIBUTING COMPANY, INC.
By /s/ David R. Smith
----------------------------------------
David R. Smith,
Chairman
Attest: [SIGNATURE NOT LEGIBLE]
-----------------------------------
____________ Secretary
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EXHIBIT "A"
LOUISIANA PROPERTY
TRACT I
-------
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon and all the rights, ways, privileges, servitudes, appurtenances and
advantages thereunto belonging, or in anywise appertaining, designated as PARCEL
------
1F-B6, said parcel being situated in ELMWOOD INDUSTRIAL PARK, according to a
- ----- ------------------------
plan of resubdivision of J.J. Krebs & Sons, Inc., C.E. & S., dated June 9, 1977,
approved by Ordinance No. 13026 of the Jefferson Parish Council, dated September
12, 1977, filed for record September 13, 1977, and recorded in COB 905, folio
321, which Parcel 1F-B6 is composed of a portion of original Lot 1-F, Elmwood
Industrial Park (which includes all or a portion of resubdivided Parcel 1-F-B,
created by Ordinance No. 12675, recorded in COB 882, folio 820), and according
to said resubdivision plan dated June 9, 1977, said property is more fully
described as follows:
Parcel 1F-B6 commences at the most northerly corner of Plauche Industrial Park,
being the point of intersection of the southerly right of way line of Edwards
Avenue along Plauche Industrial Park, and the westerly right of way line of
Plauche Street, thence North 47 degrees 54 minutes 41 seconds West, a distance
of 48.50 feet to a point on Edwards Avenue; thence South 42 degrees 6 minutes 4
seconds West, a distance of 708.63 feet to a point; thence South 55 degrees 24
minutes 35 seconds West, a distance of 193.94 feet; thence South 73 degrees 24
minutes 17 seconds West, a distance of 56.18 feet to the northerly most corner
of the property herein described, being the point of beginning;
Thence from said point of beginning, South 47 degrees 53 minutes 49 seconds
East, a distance of 98.21 feet to a point on the westerly right of way line of
Beven Street;
Thence along said westerly right of way line of Beven Street, South 42 degrees
06 minutes 04 seconds West, a distance of 99.32 feet to a point on the westerly
right of way line of Beven Street;
<PAGE>
Thence North 47 degrees 54 minutes 41 seconds West, a distance of 158.62 feet to
a point;
Thence North 73 degrees 24 minutes 17 seconds East, a distance of 116.28 feet to
the point of beginning.
Containing an area of 12,755.84 square feet.
TRACT II
--------
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon and all the rights, ways, privileges, servitudes, appurtenances and
advantages thereunto belonging, or in anywise appertaining, designated as PARCEL
------
14-A, said parcel being situated principally in PLAUCHE INDUSTRIAL PARK, AND
- ---- ----------------------------
ALSO IN ELMWOOD INDUSTRIAL PARK, according to a plan of resubdivision of J.J.
- --------------------------------
Krebs & Sons, Inc., C.E. & S., dated September 13, 1976, revised February 8,
1977, approved by Ordinance No. 12783 of the Jefferson Parish Council, dated
March 17, 1977, filed for record March 28, 1977, and recorded in COB 888, folio
74, which Parcel 14-A is composed of all of former Lot 14, Square 2, Plauche
Industrial Park, and a portion of original Lot 1-F Elmwood Industrial Park, and
according to said resubdivision plan, and the subdivision plan of J.J. Krebs &
Sons, Inc., dated May 15, 1975, showing Squares 1 and 2 of Plauche Industrial
Park, said property is more fully described as follows:
Commencing at the most northerly corner of Plauche Industrial Park, being the
point of intersection of the southerly right of way line of Edwards Avenue along
Plauche Industrial Park, and the westerly right of way line of Plauche Street,
thence South 42 degrees 6 minutes 4 seconds West, as distance of 627.20 feet
along the westerly right of way line of Plauche Street to a point, being the
northerly corner of former Lot 14, Square 2, Plauche Industrial Park, for the
point of beginning.
Thence South 47 degrees 53 minutes 49 seconds East along Plauche Street right of
way a distance of 284.18 feet to a point and corner;
Thence South 42 degrees 6 minutes 4 seconds West a distance of 330 feet to a
point and corner;
Thence North 47 degrees 53 minutes 49 seconds West a distance of 365.68 feet to
a point and corner on the center line of a 20 foot railroad servitude;
<PAGE>
Thence following the center line of said 20 foot railroad servitude, along a
curve to the left having a radius of 501.95 feet, an arc distance of 244.60 feet
to a point;
Thence continue along the center line of said 20 foot railroad servitude North
42 degrees 1 minute 1 second East, a distance of 94.88 feet to a point and
corner on the southerly right of way line of Plauche Street extended;
Thence South 47 degrees 53 minutes 49 seconds East, a distance of 23.56 feet to
a Plauche Street corner, being the point of beginning;
Containing an area of 105,940.80 square feet.
<PAGE>
TENNESSEE PROPERTY
Being Lots 359, 360, and 361 in the Resubdivision of Lot "A" Second Addition to
Memphis and Shelby County Port Commission Industrial Subdivision as recorded in
Plat Book 25, Page 56, in the Register's Office of Shelby County, Tennessee, and
being more particularly described as follows:
Beginning at a point in the southeast line of Harbor Avenue 756.0 feet northeast
of the centerline of Pier Street as measured along the southeast line of Harbor
Avenue; thence North 65 degrees 13 minutes 18 seconds East along the southeast
line of Harbor Avenue a distance of 299.60 feet to a point; thence South 24
degrees 42 minutes 51 seconds East a distance of 515.92 feet to a point in the
northwest line of a railroad right-of-way; thence South 65 degrees 10 minutes 40
seconds West along the northwest line of said railroad right-of-way a distance
of 299.97 feet to a point; thence North 24 degrees 40 minutes 23 seconds West a
distance of 516.15 feet to the point of beginning.
The above described property is improved with a one story concrete building
known as 2483 Harbor Avenue.
The above described property has an area of 154,700 square feet or 3,551 acres.
<PAGE>
TEXAS PROPERTY
Lot 1, Block 1, New City Block 16837, NACOGDOCHES ROAD BUSINESS PARK
SUBDIVISION, UNIT 1, in the City of San Antonio, Bexar County, Texas, according
to plat thereof recorded in Volume 8600, Page 202, Deed and Plat Records of
Bexar County, Texas, being more particularly described as follows:
BEGINNING: at a 1/2" iron pin set in the Northeast R.O.W. line of Highpoint
Drive at the West corner of said Lot 11, said point being South 34
deg. 50 min., 00 sec., West, 69.19' from the curve return at the
intersection with Crosspoint Drive;
THENCE: North 55 deg., 10 min., 00 sec., East, 355.45' to a point in the
center of a Mo-pac Railroad Spur Tract for the North corner of said
Lot 1:
THENCE: along the Southwesterly line of the Mo-pac Railroad Spur Tract
R.O.W., South 34 deg., 28 min., 31 sec., East, 389.82' to a 1/2"
iron pin set at an angle point and South 36 deg., 21 min., 13 sec.,
East, 95.22' to a 1/2" iron pin set at the East corner of said Lot
1;
THENCE: South 55 deg., 10 min., 00 sec., West, 355.54' to a 1/2" iron pin
set in the Northeast R.O.W. line of Highland Drive at the South
corner of said Lot 1;
THENCE: along the Northeast R.O.W. line Highpoint Drive, North 34 deg., 50
min., 00 sec., East, 485.0' to the Point of Beginning and containing
3.944 acres of land.
<PAGE>
EXHIBIT "B"
FIXTURES AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances
of every kind and nature whatsoever, including all electrical, anti-pollution,
heating, lighting (including hanging fluorescent lighting and outside yard
lights), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, power, plumbing, lifting, cleaning, fire prevention, fire
extinguishing and ventilating systems, devices and machinery and all engines,
pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors,
conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors (including fiberglass roll-up doors and rail doors),
windows, loading platforms (including sunken interior truck docks), lavatory
facilities, stairwells, fencing (including cyclone fencing), rail siding and
switches, flagpoles, passenger and freight elevators and garage units, but
excluding all Personal property and all trade fixtures, machinery, appliances,
office, manufacturing and warehouse equipment, movable partitions and other
barriers which are not necessary to the operation, as buildings, of the
buildings which constitute part of the Leased Premises, whether or not such
items are affixed to the Leased Premises, and which can be removed without
material damage to the Leased Premises.
<PAGE>
EXHIBIT C
---------
The matters set forth on those certain commitments issued by Lawyers
Title Insurance Corporation, nos. 296595, 36999/C1061CCBF213032 and BF-042778.
<PAGE>
EXHIBIT "D"
BASIC RENT PAYMENTS
1. BASIC RENT. Subject to the adjustments provided for in Paragraphs
----------
2, 3 and 4 below, Basic Rent payable in respect of the Term shall be $523,600
per annum, payable monthly in advance on each Basic Rent Payment Date, in equal
monthly installments of $43,633.33 each.
2. CPI ADJUSTMENTS TO BASIC RENT. Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items, (1982-
84=100) ("CPI") or the successor index that most closely approximates the CPI.
If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted from the CPI adjustment be less than the
Basic Rent in effect for the five (5) year period immediately preceding such
adjustment.
3. EFFECTIVE DATES OF CPI ADJUSTMENTS. Basic Rent shall not be adjusted
----------------------------------
to reflect changes in the CPI until the fifth (5th) anniversary of the Basic
Rent Payment Date on which the first monthly installment of Basic Rent shall be
due and payable (the "First Full Basic Rent Payment Date"). As of the fifth
(5th) anniversary of the First Full Basic Rent Payment Date and thereafter on
the tenth (10th) and, if the term is extended, on the fifteenth (15), twentieth
(20th), twenty-fifth (25), and thirtieth (30th), anniversaries of the First Full
Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent five (5) year period immediately preceding each
of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").
4. METHOD OF ADJUSTMENT FOR CPI ADJUSTMENT.
----------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date (subject to adjustment as provided in the following
subparagraph 4(b)) shall be multiplied by a fraction, the numerator of which
shall be the difference between (i) the average CPI for the three
<PAGE>
(3) most recent calendar months (the "Prior Months") ending prior to such Basic
Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. The Beginning CPI shall
mean the average CPI for the three (3) calendar months corresponding to the
Prior Months, but occurring five (5) years earlier. If the average CPI
determined in clause five (5) years earlier. If the average CPI determined in
clause (i) is the same or less than the Beginning CPI, the Basic Rent will
remain the same for the ensuring five (5) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic Rent
payable under this Lease until the next succeeding Basic Rent Adjustment Date
shall be the Basic Rent in effect after the adjustment provided for as much
Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to Tenant
on or before the thirtieth (30th) day preceding each Basic Rent Adjustment Date.
<PAGE>
EXHIBIT "E"
ALLOCATION OF ACQUISITION COST
------------------------------
<TABLE>
<S> <C>
New Orleans Premises: $1,640,000
Memphis Premises: $1,420,000
San Antonio Premises: $1,570,000
Entire Leased Premises $4,630,000
</TABLE>
<PAGE>
EXHIBIT "F"
PERCENTAGE ALLOCATION
---------------------
<TABLE>
<S> <C>
New Orleans Premises: 35.42%
Memphis Premises: 30.67%
San Antonio Premises: 33.91%
</TABLE>
<PAGE>
STATIONERS DISTRIBUTING COMPANY, INC.
SUMMARY LEASE AGREEMENT
Followup date:
. Branch __________ . Lease effective date 1-1-84
------------------
. Property Address: . Original Lease [x] Extended/Amended Lease [_]
[ILLEGIBLE] . Lease expiration date 12-31-83
- ---------------------- -----------------
[ILLEGIBLE] . Do we have a renewal option? Yes [x] No [_]
- ----------------------
[ILLEGIBLE] . If yes, date Lessor must be notified: [ILLEGIB]
- ---------------------- ---------
. Primary [x] Secondary [_] . Lessor Address:
. Sq ft. warehouse ___________ [ILLEGIBLE]
-----------------------------------------------
- office ___________ [ILLEGIBLE]
-----------------------------------------------
- total 63,098 [ILLEGIBLE]
----------- -----------------------------------------------
. Current Rent Amount [ILLEGIBLE]_______________________________________________
[ILLEGIBLE]/yr, 281 /$/sq-ft/yr
----------- ---
Will continue thru 12-31-93 (date)
--------
. Future Rent Escalators: . Cancellation Privilege? Yes [_] No x
Begin End Rent Amount . Is notice to vacate required? Yes [_] No [x]
Date Date 1 Mo 1 Yr Brief explanation if yes: [ILLEGIBLE]
---------------------------- ____________________
____________________________ ______________________________________________
____________________________ ______________________________________________
____________________________ ______________________________________________
____________________________ ______________________________________________
____________________________ ______________________________________________
. Expenses responsibility of . Side track agreement? Yes [x] No [_]
Stationers Lessor
---------- ------
Water X ______ .Certificate of insurance required by Lessor?
----------
Electric X ______ -Liability - Yes [X] No [_]
----------
Gas X ______ -Fire - Yes [X] No [_]
----------
Janitor X ______
----------
Repairs: .Do we sub-Let any space? Yes[_] No [X]
Inside X ______ If so, describe terms__________________________
----------
Outside X ______ _______________________________________________
----------
Fire Ins X ______ _______________________________________________
----------
_______________________________________________
. Other Pertinent Information:
SALE/LEASE BACK
- --------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
ESTIMATED SALE LEASEBACK
IMPACT ON MONTHLY EARNINGS
<TABLE>
<CAPTION>
1989 1989
RENT & (1) (2) ESTIMATED
PARENT ESTIMATED AUTHORIZED EARNINGS
1988 1989 EARNINGS INTEREST GAIN INCREASE/
------------------------------- -------------------------------- INCREASE/ EXPENSE ON (DECREASE)
RENT PARENT TOTAL RENT PARENT TOTAL (DECREASE) REDUCTION SALE SUB TOTAL
--------- --------- --------- --------- --------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Memphis 17,939 ( 4,479) 13,460 14,791 --- 14,791 ( 1,331) 1,920 --- 589
New Orleans 14,750 ( 2,320) 12,430 14,076 --- 14,076 ( 1,646) 1,000 --- ( 646)
San Antonio 15,775 ( 2,914) 12,861 14,766 --- 14,766 ( 1,905) 1,250 --- ( 655)
--------- --------- --------- --------- --------- --------- ---------- --------- --------- ---------
Sub Total 48,464 ( 9,713) 38,751 43,633 --- 43,633 ( 4,882) 4,170 --- ( 712)
Houston 17,040 ( 4,374) 12,666 12,500 --- 12,500 166 1,870 --- 2,036
Tulsa 12,054 ( 2,599) 9,455 11,000 --- 11,000 ( 1,545) 1,110 --- ( 435)
DFW (FW) 18,868 ( 9,865) 9,003 11,000 --- 11,000 ( 1,997) 4,230 --- 2,233
--------- --------- --------- --------- --------- --------- ---------- --------- --------- ---------
Sub Total 47,962 (16,838) 31,124 34,500 --- 34,500 ( 3,376) 7,210 --- 3,834
All Other Br.'s --- (69,875) (69,875) --- --- --- (69,875) 29,920 --- (39,955)
HQ --- --- --- --- (34,500) (34,500) 34,500 --- 21,313 55,813
--------- --------- --------- --------- --------- --------- ---------- --------- --------- ---------
Total Company 96,426 (96,426) --- 78,133 (34,500) 43,633 (43,633) 41,300 21,313 18,980
</TABLE>
(1) 4,630,000 - 500,000 = 4,130,000 x 12% = 495,600 / 12Mo.
= 41,300
(2) 4,630,000 - 500,000 = 4,130,000 - 293,742 = 3,836,258 /
15Yr. = 255,751 / 12Mo. = 21,313
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement ("First Amendment") made this
----- ---------
29th day of March, 1995, by and between CORPORATE PROPERTY ASSOCIATES 8,
- ----
L.P., a Delaware limited partnership ("Landlord") and UNITED STATIONERS
--------
SUPPLY CO. ("Tenant") successor-in-interest to Stationers Distributing
------
Company, Inc. ("Original Tenant").
---------------
WHEREAS, Landlord and Original Tenant entered into a Lease Agreement
dated as of December 20, 1988 (the "Lease") pursuant to which Landlord
-----
leased to Original Tenant certain premises located in New Orleans, Louisiana,
Memphis, Tennessee and San Antonio, Texas; and
WHEREAS, Tenant is the successor-in-interest to Original Tenant
pursuant to a Merger which occurred on or about July 1, 1992; and
WHEREAS, Landlord and Tenant desire to amend the Lease as hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged Landlord and Tenant covenant and
agree as follows:
<PAGE>
1. Paragraph 2. Certain Definitions is hereby amended in the
-------------------
following respects:
(a) the definition of "Guarantor" is hereby deleted and the
following is inserted in lieu thereof:
"Guarantor" shall mean United Stationers, Inc., a Delaware
Corporation.
(b) the term "Guaranty" is hereby deleted and the following is
inserted in lieu thereof:
"Guaranty shall mean the Guaranty of even date with the First
Amendment from Guarantor to Landlord."
2. The first sentence of Paragraph 5. Term is hereby deleted in its
----
entirety and the following is inserted in lieu thereof:
"Subject to the provisions hereof, Tenant shall have and hold the
Leased Premises for an initial Term (such Term as extended or renewed
in accordance with the provisions hereof being called the "Term")
commencing on December 20, 1988 and ending on March 31, 2010."
3. The last sentence of Paragraph 17. Assignment and Subletting is
-------------------------
hereby deleted in its entirety and the following is inserted in lieu thereof:
"Tenant shall have the right to mortgage or pledge this Lease and
in connection with
-2-
<PAGE>
any such mortgage or pledge Landlord agrees that it will enter into an
Estoppel and Consent substantially in the form of the Estoppel and
Consent of even date herewith among Landlord, Tenant and Bank of
America National Trust and Savings Association, as Trustee under that
certain Pooling and Servicing Agreement dated as of July 1, 1992 for
RTC Commercial Mortgage Pass-Through Certificates Series 1992-C5 with
such modifications as are acceptable to Landlord in its reasonable
discretion."
4. Clause (iv) of Subparagraph (c) of Paragraph 33. First Refusal
-------------
Right is hereby deleted in its entirety and the following is inserted in lieu
- -----
thereof:
"(iv) any transfer of the Leased Premises to any Person,
controlling, in control of, or under common control with Landlord, or
any Person and its affiliates to whom Landlord sells all or
substantially all of its assets, provided that the purchaser of all or
substantially all of the assets of Landlord is an entity for which W.P.
Carey & Co., Inc., W.P. Carey Incorporated or their affiliates or
successors provide investment advice or management services."
5. The following is hereby added as Paragraph 35. Tax Treatment
-------------
Reporting; Useful Life.
- ----------------------
"Landlord and Tenant each acknowledge that each shall treat this
transaction as a true lease for state law purposes and shall report
this transaction as a Lease for Federal income tax purposes. For
Federal income tax purposes each shall report this Lease as a true
lease with Landlord as the owner of the Leased Premises and Equipment
and Tenant as the lessee of such Leased Premises and Equipment
including: (1) treating Landlord as the owner of the property eligible
to claim depreciation deductions under Section 167 or
-3-
<PAGE>
168 of the Internal Revenue Code of 1986 (the "Code") with respect to
the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3)
Landlord reporting the Rent payments as rental income.
6. Exhibit D Basic Rent Payments is hereby deleted in its entirety
-------------------
from the Lease and Exhibit D Basic Rent Payments attached to this First
-------------------
Amendment is hereby incorporated in the Lease as is fully set forth therein.
7. Except as specifically amended hereby the terms and conditions of
the Lease shall remain in full force and effect and binding upon Landlord and
Tenant and their respective successors and assigns.
8. From and after the date hereof, the term "Lease" shall mean the
Lease as amended by this First Amendment.
WITNESS the due execution hereof the day and year first above written.
LANDLORD:
CORPORATE PROPERTY ASSOCIATES 8,
L.P.
By: Eighth Carey Corporate, Inc.
By: [SIGNATURE NOT LEGIBLE]
------------------------
Title: _____________________
-4-
<PAGE>
TENANT:
UNITED STATIONERS SUPPLY CO.
By: /s/ David H. Bushell
----------------------------
Title: David H. Bushell
-------------------------
-5-
<PAGE>
CONSENT
-------
Bank of America National Trust and Savings Association, as Trustee
under that certain Pooling and Servicing Agreement dated as of July 1, 1992 for
RTC Commercial Mortgage Pass-Through Certificates Series 1992-C5 hereby consents
to the within First Amendment to Lease.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS TRUSTEE UNDER
THAT CERTAIN POOLING AND SERVICING
AGREEMENT DATED AS OF JULY 1, 1992 FOR
RTC COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES SERIES 1992-C5
By: /s/ Michael Green (SEAL)
-------------------------
Name: Michael Green
-------------------------
Title: Vice President
------------------------
GLORIA S CASTILLO
ASSISTANT SECRETARY
-6-
<PAGE>
EXHIBIT "D"
BASIC RENT PAYMENTS
1. BASIC RENT. Basic Rent payable for the period from December 20,
----------
1988 to and including December 31, 1993 was $523,600 per annum, payable monthly
in advance on each Basic Rent Payment Date, in equal monthly installments of
$43,633.33 each. Following the first adjustment provided for in Paragraphs 2, 3
and 4 below, Basic Rent for the period from January 1, 1994 to and including
March 28, 1995 was $635,283 per annum payable in monthly installments of
$52,940.25. Subject to the adjustments provided for in Paragraphs 2, 3 and 4
below, Basic Rent from March 29, 1995 through the balance of the Term shall be
$812,500 per annum, payable monthly in advance on each Basic Rent Payment Date,
in equal monthly installments of $67,708.33.
2. CPI ADJUSTMENTS TO BASIC RENT. Basic Rent shall be subject to
-----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items, (1982-
84=100) ("CPI") or the successor index that most closely approximates the CPI.
---
If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted from the CPI adjustment be less than the
Basic Rent in effect for the five (5) year immediately preceding such
adjustment.
3. EFFECTIVE DATES OF CPI ADJUSTMENTS. As of January 1, 1999, January
----------------------------------
1, 2004, January 1, 2009, and if the Term is extended, January 1, 2014, January
1, 2019 and January 1, 2024, Basic Rent shall be adjusted to reflect increases
in the CPI during the most recent five (5) year period immediately preceding
each of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").
--------------------------
4. METHOD OF ADJUSTMENT FOR CPI ADJUSTMENT.
---------------------------------------
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date (subject to adjustment as provided in the following
subparagraph 4(b)) shall be multiplied by a fraction, the numerator of which
shall be the difference between (i) the average CPI for the three
<PAGE>
(3) most recent calendar months (the "Prior Months") ending prior to such
------------
Basic Rent Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. The Beginning CPI shall
mean the average CPI for the three (3) calendar months corresponding to the
Prior Months, but occurring five (5) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuing five (5) year period.
By way of example:
Second Basic Rent Adjustment Date: January 1, 1999
Basic Rent in Effect: $812,500
Assume Average CPI for Prior Months - 145.20
Assume Beginning CPI - 119.67
812.500 x 145.20-119.67
---------------
119.67
812.500 x .2133=$173,336.05
Basic Rent as of January 1, 1999=$985,836.05
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the thirtieth (30th) day preceding each Basic Rent
Adjustment Date.
-2-
<PAGE>
EXHIBIT 10.50
EXHIBIT A
---------
INDUSTRIAL LEASE
1. Parties. This Lease, dated, for reference purposes only, June 12, 1989,
------- -------
is made by and between Stationers Distributing Company, Inc., a Delaware
-------------------------------------------------
Corporation (herein called "Lessor") and Dual Asset Fund V, a partnership
- ----------- --------------------------------
(herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from
--------
Lessor for the term, at the rental,and upon all of the conditions set forth
herein, that certain real property situated in the County of Salt Lake, State of
---------
Utah, commonly known as Southwest Service Center and described as 2500 South 889
- ---- ------------------------ --------------
West, Salt Lake City, Utah 84119 consisting consisting of 5481 office, 48,843
- -------------------------------- -------------------
warehouse, 54,324 total square feet. Said real property including the land and
- -----------------------
all improvements therein, is herein called "the Premises" and crosshatched on
Exhibit "B" and legally described on Exhibit "C" attached hereto.
3. Term
----
3.1 Term. The term of this Lease shall be for five (5) years
--------------
commencing on October 1, 1989 and terminating on September 31, 1994 unless
--------------- ------------------
sooner terminated pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date,
-------------------
if for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extended the term hereof, but in such case, Lessee shall not be obligated to
pay rent until possession of the Premises is tendered to Lessee; provided,
however, that if Lessor shall not have delivered possession of the Premises
within sixty (60) days from said commencement date, Lessee may, at Lessee's
option, by notice in writing to Lessor within ten (10) days thereafter, cancel
this Lease, in which event the parties shall be discharged from all obligations
hereunder; provided further, however, that if such written notice of Lessee is
not received by Lessor within said ten (10) day period, Lessee's right to cancel
this Lease hereunder shall terminate and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to
----------------
said commencement date, such occupancy shall be subject to all provisions
hereof, such occupancy shall not advance the termination date, and Lessee shall
pay rent for such period at the initial monthly rates set forth below.
4. Rent. Lessee shall pay to Lessor an annual rent for the Premises,
----
the sum of One Hundred Twenty-six Thousand Six Hundred (_________________)
-------------------------------------------
payable in equal monthly payments of Ten Thousand Five Hundred & Fifty
---------------------------------
Dollars ($10,550.00, in advance, on the first day of each month of the term
- -------------------
hereof.
Rent for any period during the term hereof which is for less than one (1) month
shall be a pro rata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other persons or at such other places as Lessor may designate in writing.
If Lessor shall so request, in addition to any other payments required under
this Lease, Lessee shall pay a monthly advance installment, payable at the same
time as the monthly rent, as estimated by Lessor, for real property taxes,
insurance and maintenance expenses on the Premises for each and every calendar
year of the term of the lease which are payable by Lessee under the terms of
this Lease. Such fund shall be established to insure payment when due, before
delinquency, of any or all such real property taxes and insurance premiums. If
the amounts paid to Lessor by Lessee under the provisions of this paragraph are
insufficient to discharge the obligations of Lessee to pay such real property
taxes, insurance premiums and maintenance charges as the same become due, Lessee
shall pay to Lessor, upon Lessor's demand, such additional sums necessary to pay
such obligations. If amounts paid to Lessor by Lessee under the provisions of
this paragraph are in excess of Lessee's obligations then Lessor shall credit
the overpayment to Lessee's account. All monies paid to Lessor under this
paragraph may be intermingled with other monies of Lessor and shall not bear
interest. In the event of a default in the obligations of Lessee to perform
under this Lease, then any balance remaining from funds paid to Lessor under the
provisions of this paragraph may, at the option of Lessor, be applied to the
payment of any monetary default of Lessee in lieu of being applied to the
payment of real property tax and insurance premiums.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
----------------
hereof Zero Dollars ($ 0.00) as security for Lessee's faithful
---- ------
performance of Lessee's obligations hereunder. If Lessee fails to pay rent
or other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, Lessor may use, apply or retain all or any portion of
said deposit for the payment of any rent or other charge in default or for
which Lessor may suffer thereby. If Lessor so uses or applies all or any
portion of said deposit, Lessee shall, within ten (10) days after written
demand therefor, deposit cash with Lessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Lessee's failure to do
so shall be a material breach of this Lease. Lessor shall not be required to
keep said deposit, or so much thereof as has not theretofore been applied by
Lessor, shall be returned, without payment
1 6/9/89
<PAGE>
of interest or other increment for its use, to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest hereunder) at the expiration
of the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect to said
Security Deposit.
6. Use.
---
6.1 Use. The Premises shall be used and occupied only for
---
office products/warehouse distribution ____________________________________
- --------------------------------------
or any other use which is reasonably comparable and for no other purpose.
Lessee shall not make any other use of the Premises without Lessor's prior
written consent.
6.2 Compliance with Law. Lessee shall, at Lessee's expense, comply
-------------------
promptly with all applicable statutes, ordinances, rules, regulations, orders,
covenants and restrictions of record, and requirements in effect during the term
or any part of the term hereof, regulating the use by Lessee of the Premises.
Lessee shall not use or permit the use of the Premises in any manner that will
tend to create waste or a nuisance or, if there shall be more than one tenant in
the building containing the Premises, which shall tend to disturb such other
tenants.
6.3 Condition of Premises. Except as otherwise provided in this Lease,
---------------------
Lessee hereby accepts the Premises in their condition existing as of the Lease
commencement date or the date that Lessee takes possession of the Premises,
whichever is earlier, subject to all applicable restrictive covenants and
zoning, municipal, county and state laws, ordinances and regulations governing
and regulating the use of the Premises, and accepts this Lease subject thereto
and to all matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
------------------------------------
7.1 Lessee's Obligations. Lessee shall keep in good order, condition
--------------------
and repair the Premises and every part thereof which is not required to be
maintained by Lessor under paragraph 7.4 including, without limiting the
generality of the foregoing, all plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities and equipment within the Premises,
interior walls, interior ceilings, floors, windows, doors, plate glass and
skylights located within the Premises.
7.2 Surrender. On the last day of the term hereof, or on any sooner
---------
termination, Lessee shall surrender the Premises to Lessor in the same condition
as when received, ordinary wear and tear excepted, clean and free of debris.
Lessee shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, furnishings and equipment. Notwithstanding
anything to the contrary otherwise stated in this Lease, Lessee shall leave the
air lines, power panels, electrical distribution systems, lighting fixtures,
space heaters, air conditioning, plumbing and fencing on the Premises in good
operating condition.
7.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations
---------------
under this paragraph 7, or under any other paragraph of this Lease, Lessor may
at its option (but shall not be required to) enter upon the Premises after ten
(10) days' prior written notice to Lessee (except in the case of an emergency,
in which case no notice shall be required), perform such obligations on Lessee's
behalf and put the same in good order, condition and repair, and the cost
thereof together with interest thereon at the maximum rate then allowable by law
shall become due and payable as additional rental to Lessor together with
Lessee's next rental installment.
7.4 Lessor's Obligations. Lessor shall, at its expense, keep in good
--------------------
order, condition and repair the exterior walls and roof and all foundations on
the Premises. Lessor shall maintain in good condition and repair and be
responsible for all landscaping, drive-ways, parking lots, refuse collection,
fences and signs and all other maintenance items relating to the building in
which Premises is located, and Lessee shall pay its "pro rata share" of Lessor's
expense in connection therewith, including a reasonable management fee, within
ten (10) days from Lessor's demand therefor. The term "Lessee's pro rata share,"
whenever used herein, shall be a fraction, the numerator of which is the number
of square feet contained in the Premises and the denominator of which is the
number of square feet contained in the building comprising the complex (or
portion thereof) to which said expenses relate. Lessor may, at its option,
estimate the yearly maintenance cost of Lessee and bill Lessee for the estimated
amount as described in Paragraph 4. Lessee expressly waives the benefit of any
statute now or hereinafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease because of
Lessor's failure to keep the premises in good order, condition and repair.
2 6/9/89
<PAGE>
7.5 Alternations and Additions.
--------------------------
(a) Lessee shall not, without Lessor's prior written consent, make
any alterations, improvements, additions, or utility installations in, on, or
about the Premises. Lessee shall make no change or alteration to the interior of
the Premises nor the exterior of the building(s) on the Premises without
Lessor's prior written consent. Lessor may require that Lessee remove any or all
of said alterations, improvements, and additions at the expiration of the term,
and restore Premises to prior condition. Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, a lien and completion bond in an
amount equal to one and one-half (1-1/2) times the estimated cost of such
improvements, to insure Lessor against any liability for mechanic's and
materialmen's liens and to insure completion of the work. Should Lessee make any
alterations, improvements, additions or Utility Installations without the prior
approval of Lessor, Lessor may require that Lessee remove any or all of the same
and restore premises to original condition.
(b) Any alterations, improvements, or additions in or about the
Premises that Lessee shall desire to make and which require the consent of the
Lessor shall be presented to Lessor in written form, with proposed detailed
plans. If Lessor shall give its consent, the consent shall be deemed conditioned
upon Lessee acquiring a permit to do so from appropriate governmental agencies,
the furnishing of a copy thereof to Lessor prior to the commencement of the
work, and the compliance by Lessee of all conditions of said permit in a prompt
and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less then ten (10) days' notice prior to the commencement of any
work in the Premises, and Lessor shall have the right to post notices of
nonresponsibility in or on the Premises as provided by law. If Lessee shall, in
good faith, contest the validity of any such lien, claim or demand, the lessee
shall, at its sole expense, defend itself and Lessor against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises, upon the condition
that if to Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to such contested lien claim or demand
indemnifying Lessor against liability for the same and holding the Premises free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's attorneys' fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, all alterations,
improvements, and additions which may be made on the Premises, shall become the
property of Lessor and remain upon and be surrendered with the Premises at the
expiration of the term. Notwithstanding the provisions of this paragraph 7.5(d),
Lessee's machinery and equipment, other than that which his affixed to the
Premises so that it cannot be removed without material damage to the Premises,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.
8. Insurance Indemnity
-------------------
8.1 Liability Insurance. Lessee shall, at Lessee's expense, obtain and
-------------------
keep in- force during the term of this Lease a policy of combined single limit,
bodily injury and property damage insurance insuring Lessor and Lessee against
any liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than One Million Dollars ($500,000.00)
per occurrence. The policy shall insure performance by Lessee of the indemnity
provisions of this paragraph 8. The limits of said insurance shall not, however,
limit the liability of Lessee hereunder.
8.2 Property Insurance.
------------------
(a) Lessor shall obtain and keep in force during the term of this
Lease a policy or policies of insurance covering loss or damage to the Premises,
in the amount of the full replacement value thereof. Said insurance shall
provide for payment of loss thereunder to Lessor and/or to the holders of
mortgages or deeds of trust on the Premises. Lessee shall, as additional rent
for the Premises, pay its pro-rata cost of all insurance required hereunder.
(b) If the premises are part of a larger building, or if the
Premises are part of a group of buildings owned by Lessor which are adjacent to
the Premises, then Lessee shall pay for any increase in the property insurance
of such other building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(c) Lessor will not insure Lessee's fixtures, equipment or tenant
improvements unless the tenant improvements have become a part of the Premises
under paragraph 7 hereof. Lessee shall insure its fixtures, equipment and tenant
improvements.
3 6/9/89
<PAGE>
8.3 Insurance Policies. Lessee shall deliver to the other party
------------------
copies of policies of such insurance or certificates evidencing the existence
and amounts of such insurance with loss payable clauses as required by this
paragraph 8. No such policy shall be cancellable or subject to reduction of
coverage or other modification except after thirty (30) days prior written
notice to Lessor. Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies refereed to in paragraph 8.2 If Lessee does or
permits to be done anything which shall increase the cost of the insurance
policies referred to in paragraph 8.2, then Lessee shall forthwith upon Lessor's
demand reimburse Lessor for any additional premiums attributable to any act or
omission or operation of Lessee causing such increase in the cost of insurance.
8.4 Waiver of Subrogation. Lessee and Lessor each hereby release
---------------------
and relieve the other, and waive their entire right of recovery against the
other for loss or damage arising out of or incident to the perils insured
against under paragraph 8.3, which perils occur in, on or about the Premises,
whether due to the negligence of Lessor or Lessee or their agents, employees,
contractors and/or invitees. Lessee and Lessor shall, upon obtaining the
policies of insurance required hereunder, give notice to the insurance carrier
or carriers that the foregoing mutual waiver of subrogation is contained in this
Lease.
8.5 Indemnity. Lessee shall indemnify and hold harmless Lessor from
---------
and against any and all claims arising from Lessee's use of the Premises, or
from the conduct of Lessee's business or from any activity, work or other things
done, permitted or suffered by Lessee in or about the Premises or elsewhere and
shall further indemnify and hod harmless Lessor from and against any and all
claims arising from any breach of default in the performance of any obligation
on Lessee's part to be performed under the terms of this Lease, or arising from
any negligence of the Lessee, or any of Lessee's agents, contractors or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Lessor by reason of any such claim, Lessee upon notice from Lessor shall
defend the same at Lessee's expense by counsel satisfactory to Lessor. Lessee,
as a material part of the consideration to Lessor, hereby assumes all risks of
damage to property or injury to persons, in, upon or about the Premises arising
from any cause and Lessee hereby waives all claims in respect thereof against
Lessor.
8.6 Exemption of Lessor from Liability. Lessee hereby agrees that
----------------------------------
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee, Lessee's employees, invitees, customers or any other person in or about
the Premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, agents or contractors, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning, or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, 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
Lessee. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the building in which the premises are
located.
9. Damage or Destruction.
---------------------
9.1 Definitions.
-----------
(a) "Premises Partial Damage" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is less than
fifty percent (50%) of the then replacement cost of the Premises. "Premises
Building Partial Damage" shall herein mean damage or destruction to the building
of which the Premises are a part to the extent that the cost of repair is less
than fifty percent (50%) of the then replacement cost of such building as a
whole.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is fifty
percent (50%) or more of the then replacement cost of the Premises. "Premises
Building Total Destruction" shall herein mean damage or destruction to the
building of which the Premises are a part to the extent that the cost of repair
is fifty percent (50%) or more of the then replacement cost of such building as
a whole.
(c) "Insured Loss" shall herein mean damage or destruction which
was caused by an event required to be covered by the insurance described in
paragraph 8.
9.2 Partial Damage--Insured Loss. Subject to the provisions of
----------------------------
paragraphs 9.4, 9.5, and 9.6, if at any time during the term of this Lease there
is damage which is an Insured Loss and which falls into the classification of
Premises Partial Damage or Premises Building Partial Damage, then Lessor shall,
at Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements unless the same have become a part of the Premises pursuant
to paragraph 7.5 hereof, as soon as reasonably possible and this Lease shall
continue in full force and effect.
4 6/9/89
<PAGE>
9.3 Partial Damage--Uninsured Loss. Subject to the provisions of
------------------------------
paragraphs 9.4, 9.5, and 9.6, if at any time during the term of this Lease there
is damage which is not an Insured Loss and which falls within the classification
of Premises Partial Damage or Premises Building Partial Damage, unless caused by
a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), Lessor may at Lessor's option either (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after the date of the occurrence of such
damage of Lessor's intention to cancel and terminate this Lease, as of the date
of the occurrence of such damage. In the event Lessor elects to give such notice
of Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
ten (10) day period, this Lease shall be cancelled and terminated as of the date
of the occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this Lease
-----------------
there is damage, whether or not an Insured Loss (including destruction required
by any authorized public authority), which falls into the classification of
Premises Total Destruction or Premises Building Total Destruction, this Lease
shall automatically terminate as of the date of such total destruction.
9.5 Damage Near End of Term.
-----------------------
(a) If at any time during the last six (6) months of the term of
this Lease there is damage, whether or not an Insured Loss, which falls within
the classification of Premises Partial Damage, Lessor may, at Lessor's option,
cancel and terminate this Lease as of the date of occurrence of such damage by
giving written notice to Lessee of Lessor's election to do so within thirty (30)
days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that lessee has
an option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Lessee shall exercise such option, if it
is to be exercised at all, no later than twenty (20) days after the occurrence
of an Insured Loss falling within the classification of Premises Partial Damage
during the last six (6) months of the term of this Lease. If Lessee duly
exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage as soon as reasonably possible and this
Lease shall continue in full force and effect. If Lessee fails to exercise such
option during said twenty (20) day period, then Lessor may, at Lessor's option,
terminate and cancel this Lease as of the expiration of said twenty (20) day
period by giving written notice to Lessee of Lessor's election to do so within
ten (10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
------------------------------------
(a) In the event of damage described in paragraphs 9.2 or 9.3, and
Lessor or Lessee repairs or restores the Premises pursuant to the provisions of
this paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of rent, if any, Lessee shall have no claim against Lessor for any damage
suffered by reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this paragraph 9 and shall not commence such repair or
restoration within ninety (90) days after such obligations shall accrue, Lessee
may, at Lessee's option, cancel and terminate this Lease by giving Lessor
written notice of Lessee's election to do so at any time prior to the
commencement of such repair or restoration. In such event, this Lease shall
terminate as of the date of such notice.
9.7 Termination--Advance Payments. Upon termination of this Lease
-----------------------------
pursuant to this paragraph 9, and equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes
------
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
5 6/9/89
<PAGE>
10. Real Property Taxes.
-------------------
10.1 Payment of Taxes. Lessee shall pay the real property taxes,
----------------
as defined in paragraph 10.2, applicable to the Premises during the term of this
Lease. The tax bills with respect thereto shall be sent to Lessor, and Lessee
shall pay the full amount of said tax within ten (10) days from Lessor's demand
therefor. If the tax assessment includes the Premises and other real property,
the amount paid by Lessee shall be its pro rata share of said taxes. If any such
taxes paid by Lessee shall cover any period of time prior to or after the
expiration of the term hereof, Lessee's share of such taxes shall be equitably
pro rated to cover only the period of time within the tax fiscal year during
which this Lease shall be in effect. If Lessee shall fail to pay any such taxes,
Lessor shall have the right to pay the same, in which case Lessee shall repay
such amount to Lessor with Lessee's next rent installment together with interest
at the rate set forth in paragraph 18 hereof.
10.2 Definition of "Real Property Tax". As used herein, the term
---------------------------------
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary, or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Premises by any authority having
the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, as against any legal or equitable interest
of Lessor in the Premises or in the real property of which the Premises are a
part, as against Lessor's right to rent or other income therefrom, and as
against Lessor's business of leasing the Premises. The term "real property tax"
shall also include any tax, fee, levy, assessment or charge (i) in substitution
of, partially or totally, any tax, fee, levy, assessment or charge hereinabove
included within the definition of "real property tax," or (ii) the nature or
which was hereinbefore included within the definition of "real property tax," or
(iii) which is imposed as a result of a transfer, either partial or total, or
Lessor's interest in the Premises or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such transfer, or (iv) which is imposed by reason of this transaction, any
modification or changes hereto, or any transfers hereof.
10.3 Joint Assessment. If the Premises are not separately assessed,
----------------
Lessee's liability shall be an equitable proportion of property taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned in
the assessor's work sheets or such other information as may be reasonably
available. Lessor's reasonable determination thereof, in good faith, shall be
conclusive.
10.4 Personal Property Taxes.
-----------------------
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to
Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of
all charges jointly metered with other premises.
12. Assignment and Subletting.
-------------------------
12.1 Lessor's Consent Required. Lessee shall not voluntarily or by
-------------------------
operation of law assign, transfer, mortgage, sublet or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's prior written consent, which consent Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be void, and shall
constitute a breach of this Lease. Lessor shall be deemed to be reasonable in
requiring that it review and approve of the financial statements of any proposed
assignee or subtenant prior to consenting to such assignment or subletting. Any
such permitted assignment shall not, in any way, affect or limit the liability
of Lessee under the term of this Lease.
12.2 No Release of Lessee. Regardless of Lessor's consent, no
--------------------
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed to be a waiver by Lessor of any
provision hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment or subletting. In the event of default by
6 6/9/89
<PAGE>
any assignee of Lessee or any successor of Lessee in the performance of any of
the terms hereof, Lessor may proceed directly against Lessee without the
necessity of exhausting remedies against said assignee. Lessor may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Lessee, without notifying Lessee,
or any successor of Lessee, and without obtaining its or their consent thereto
and such actions shall not relieve Lessee of liability under this Lease.
13. Defaults; Remedies.
------------------
13.1 Defaults. The occurrence of any one or more of the
--------
following events shall constitute a material default and breach of this Lease by
Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes,
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in paragraph (b) above, where such failure shall
continue for a period of thirty (30) days after written notice hereof from
Lessor to Lessee; provided, however, that if the nature of Lessee's default is
such that more than thirty (30) days are reasonably required for its cure, then
Lessee shall not be deemed to be in default, if Lessee commenced such cure
within said thirty (30) day period and thereafter diligently prosecutes such
cure to completion.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. Sec. 101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. Provided, however, in the event that any provision of this paragraph
13.1(d) is contrary to any applicable law, such provision shall be of no force
or effect.
(e) The discovery by Lessor that any financial statement given
to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 Remedies. In the event of any such default or breach by
--------
Lessee, Lessor may at any time thereafter, with or without notice or demand
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event,
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and any real estate commission actually paid; and the worth at the time of award
by the court having jurisdiction thereof of the amount by which the unpaid rent
for the balance of the term after the time of such award exceeds the amount of
such rental loss for the same period that Lessee proves could be reasonably
avoided.
(b) Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event, Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located. Unpaid installments of rent and other unpaid monetary obligations
of Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate than allowable by law.
7 6/9/89
<PAGE>
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
-----------------
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance, then Lessor shall not be in
default if Lessor commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
------------
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to six percent (6%) of such overdue amount. The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any of
the other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any
other provision of this Lease to the contrary.
14. Condemnation. If the Premises or any portion thereof are taken
------------
under the power of eminent domain, or sold under the threat of the exercise of
said power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the building on the Premises, or more than twenty-five percent
(25%) of the land area of the Premises which is not occupied by any building, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing only within ten (10) days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If the Lessee
does not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and affect as to the portion of the Premises remaining,
except that the rent shall be reduced in the proportion that the floor area of
the building taken bears to the total floor area of the building situated on the
Premises. No reduction of rent shall occur if the only area taken is that which
does not have building located thereon. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment under
threat of the exercise of such power shall be property of Lessor, whether
such award shall be made as compensation for the exercise of such power shall be
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee may separately petition for an
award for loss of or damage to Lessee's leasehold, trade fixtures and removable
personal property, as long as such award shall not reduce the amount of the
award otherwise payable to Lessor hereunder. In the event hat this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of
severance damages received by Lessor in connection with such condemnation,
repair any damage to the Premises caused by such condemnation except tho the
extent that Lessee has been reimbursed therefor by the condemning authority.
15. Estoppel Certificate.
--------------------
(a) Lessee shall at any time upon not less than written
notice from Lessor execute, acknowledge and deliver to Lessor a statement in
writing (i) certifying that this Lease is unmodified force and effect (or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the date to which the
rent and other charges are paid in advance, if any, and (ii) acknowledging that
there are not, to Lessee's knowledge, any uncured defaults on the part of Lessor
hereunder, or specifying such defaults if any are claimed. Any such statement
may be conclusively relied upon by any prospective purchaser or encumbrancer of
the Premises.
(b) At Lessor's option, Lessee's failure to deliver such
statement within such time shall be a breach of this Lease or shall be
conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one (1)
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance or sell the
Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statement of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall include
the past three (3) years' financial statements of Lessee. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
16. Lessor's Liability. The term "Lessor" as used herein shall mean
------------------
only the owner or owners at the
8 6/9/89
<PAGE>
time in question of the fee title or a lessee's interest in a ground lease of
the Premises, and in the event of any transfer of such title or interest, Lessor
herein named (and in case of any subsequent transfers then the grantor shall be
relieved from and after the date of such transfer of all liability as respects
Lessor's obligation thereafter to be performed; provided that any funds in the
hands of Lessor or the then grantor at the time of such transfer, in which
Lessee has an interest, shall be delivered to the grantee. The obligations
contained in this Lease to be performed by Lessor shall, subject as aforesaid,
be binding on Lessor's successors and assigns, only during their respective
periods of ownership.
17. Severability. The invalidity of any provision of this Lease, as
------------
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
18. Interest on Past Due Obligations. Except as expressly herein
--------------------------------
provided, any amount due to Lessor not paid when the due shall bear interest at
the maximum rate, then at the rate that is five percent (5%) per annum greater
than the prime rate of interest quoted from time to time by First Interstate
Bank of Utah in Salt Lake City, Utah. Payment of such interest shall not excuse
or cure any default by Lessee under this Lease; provided, however, that interest
shall not be payable on late charges incurred by Lessee nor on any amounts upon
which late charges are paid by Lessee.
19. Time of Essence. Time is of the essence
---------------
20. Additional Rent. Any monetary obligations of Lessee to Lessor
---------------
under the terms of this Lease shall be deemed to be rent.
21. Incorporation of Prior Agreements; Amendments. This Lease
---------------------------------------------
contains all agreements of the parties with respect to any matter mentioned
herein. No prior agreement or understanding pertaining to any such matter shall
be effective. This Lease maybe modified in writing only, signed by the parties
in interest at the time of the modification. Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither Lessor or any employees or agents
of Lessor has made any oral or written warranties or representations to Lessee
relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lessee except as otherwise specifically stated into his Lease.
22. Notices. Any notice required or permitted to be given hereunder
-------
shall be in writing and may be given by personal delivery or by certified mail,
and if given personally or by mail, shall be deemed sufficiently given if
addressed to Lessee or to Lessor at the address noted below the signature of the
respective parties, as the case may be. Either party may by notice to the other
specify a different address for notice purposes except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.
23. Waivers. No waiver by Lessor or any provision hereof shall be
-------
deemed a waiver of any other provision hereof or of any subsequent breach of
Lessee of the same or any other provision. Lessor's consent to, or approval of,
any act shall not be deemed to render unnecessary the obtaining of Lessor's
consent to or approval of any subsequent act by Lessee. The acceptance of rent
hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof, other than the failure of Lessee to pay the particular
rent so accepted, regardless of Lessor's knowledge of such preceding breach at
the time of acceptance of such rent.
24. Holding Over. If Lessee, with Lessor's consent, remains in
------------
possession of the Premises or any part thereof after the expiration of the term
hereof, such occupancy shall be a tenancy from month to month upon all the
provisions of this Lease pertaining to the obligations of Lessee, but all
options an rights of first refusal, if any, granted under the terms of this
Lease shall be deemed terminated and be of no further effect during said month
to month tenancy.
25. Cumulative Remedies. No remedy or election hereunder shall be
-------------------
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
26. Covenants and Conditions. Each provision of this Lease
------------------------
performable by Lessee shall be deemed both a covenant and a condition.
27. Binding Effect; Choice of Law. Subject to any provisions hereof
-----------------------------
restricting assignment or subletting by Lessee and subject to the provisions of
paragraph 12, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the state
wherein the Premises are located.
28. Subordination.
-------------
9 6/9/89
<PAGE>
(a) This Lease, at Lessor's options, shall be subordinate to
any ground lease, mortgage, deed of trust, or any other hypothecation or
security now or hereafter placed upon the real property of which the Premises
are a part and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of the
Lease, unless this Lease is otherwise pursuant to its terms. If any mortgagee,
trustee, or ground lessor shall elect to have this Lease prior to the lien of
its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of
trust or ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to
effectuate an attornment, a subordination or to make this Lease prior to the
lien of any mortgage, deed of trust or ground lease, as the case may be.
Lessee's failure to execute such documents within ten (10) days after written
demand shall constitute a material default by Lessee hereunder, or, at Lessor's
option, Lessor shall execute such documents on behalf of Lessee as Lessee's
attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint
Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to
execute such documents in accordance with this paragraph 29(b).
29. Attorney's Fees. If either party or the broker named herein
---------------
brings an action to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled to
this reasonable attorney's fees to be paid by the losing party as fixed by the
court.
30. Lessor's Access. Lessor and Lessor's agent shall have the right
---------------
to enter the Premises at reasonable times for the purpose of inspecting the
same, showing the same to prospective purchasers, lenders or lessees, and making
such alterations, repairs, improvements, or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time, place on or about the premises any ordinary "For Sale"
signs and Lessor may at any time during the last one hundred twenty (120) days
of the term hereof place on or about the Premises any ordinary "For Lease"
signs, all without rebate or rent of liability to Lessee.
31. Signs. Lessee shall not place any sign upon the Premises without
-----
Lessor's prior written consent except that Lessee shall have the right, without
the prior permission of Lessor, to place ordinary and usual for rent or sublet
signs thereon.
32. Merger. The voluntary or other surrender of this Lease by Lessee,
------
or a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
any or all of such subtenancies.
33. Consents. Except for paragraph 32 hereof, wherever in this Lease
--------
the consent of one party is required to an act of the other party, such consent
shall not be unreasonably withheld.
34. Guarantor. In the event that there is a guarantor of this Lease,
---------
said guarantor shall have the same obligations as Lessee under this Lease.
35. Quiet Possession. Upon Lessee paying the rent for the Premises
----------------
and observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
executing is binding upon all parties holding an ownership interest in the
Premises.
36. Multiple Tenant Building. In the event that the Premises are part
------------------------
of a larger building or group of buildings then Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care, and cleanliness of the
building and grounds, the parking of vehicles and the preservation of good order
therein as well as for the convenience of other occupants and tenants of the
building. The violations of any such rules and regulations shall be deemed a
material breach of this Lease by Lessee.
37. Security Measures. Lessee hereby acknowledges that the rental
-----------------
payable to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of Lessee,
its agents and invitees from acts of third parties.
38. Easements. Lessor reserves to itself the right, from time to
---------
time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of Parcel Maps and
restrictions, so long as such easements, rights, dedications, Maps and
restrictions do not unreasonably
10 6/9/89
<PAGE>
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material breach of this Lease.
39. Performance Under Protest. If at any time a dispute shall arise
-------------------------
as to any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the right
on the part of said party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said party
to pay such sum or any part hereof, said party shall be entitled to recover such
sum or so much thereof as it was not legally required to say under the
provisions of this Lease.
40. Authority. If Lessee is a corporation, trust, or general or
---------
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation, trust
or partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
41. Conflict. Any conflict between the printed provisions of this
--------
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
42. Force Maejure. Notwithstanding any provision in this Lease to the
-------------
contrary, if either party otherwise herein specifically shall be delayed or
hindered in or prevented from the performance of any obligations hereunder
related to construction or repair of the Premises by reason of strikes,
walkouts, labor troubles, inability to procure materials, failure of power,
riots, insurrection, war or other reason of a like nature not the fault of the
party delayed in performing work or doing acts required under the terms of this
Lease, then performance of such act shall be excused for the period of delay and
the period for the performance of any such act shall be extended for a period
equivalent to the period of such delay.
43. Rider. Attached hereto is a Rider or Riders containing four (4)
-----
pages which constitutes a part of this Lease.
11 6/9/89
<PAGE>
LESSOR AND LESSEE HAVE CAREFULLY READ THIS LEASE AND EACH TERM AND PROVISION
CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND
VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
The parties hereto have executed this Lease at the place on the dates specified
immediately adjacent to their respective signatures.
LESSOR LESSEE
Dual Asset Fund V. a partnership Stationers Distribution Company, Inc.
- ------------------------------------ --------------------------------------
a Deleware corporation
--------------------------------------
By: Wallace Associates Incorporated By:___________________________________
---------------------------------
Its: General Partner Its: V. P. OPERATIONS
-------------------------------- ----------------------------------
By:_________________________________ By: /s/ Paula Bryant
-----------------------------------
Its: Vice President Its: Operations Admin. Asst
-------------------------------- ----------------------------------
STATE OF UTAH )
: ss. [NOTARY OF PUBLIC STATE OF TEXAS]
COUNTY OF SALT LAKE)
On the _______ day of ________, 198( ), personally appeared before me,_________
_______, who being by me duly sworn did say that he is the________________ of
_______________ and that the within and foregoing instrument was signed in
behalf of said entity.
My Commission Expires: ______________________
NOTARY PUBLIC
______________________ Residing at___________
STATE OF UTAH )
:ss.
COUNTY OF SALT LAKE)
On the ______ day of ___________, 198( ), personally appeared before me,
___________, who being by me duly sworn did say that he is the _______________
of ________________ and that the within and foregoing instrument was signed in
behalf of said entity.
My Commission Expires: ______________________
NOTARY PUBLIC
_____________________ Residing at__________________
12 6/9/89
<PAGE>
[PLOT PLAN APPEARS HERE]
<PAGE>
EXHIBIT "C"
-----------
All that part of the Southeast Quarter of Section twenty-three (23), Township
One South (TIS), Range One West (RIW), Salt Lake Base and Meridian, in the
County of Salt Lake and State of Utah, more particularly described as follows:
Commencing at the Southeast corner of said Section 23, as said corner was re-
established in 1959 by the County Engineer of Salt Lake County, Utah; thence
North 00 degrees 07' 00" East along the re-established East Line of the
Southeast quarter of said Section 23 a distance of 2624.67 feet to an
intersection with the extended Southerly line of West Twenty-fourth South
Street; thence South 89 degrees 26' 30" West along the extended Southerly line
and along the Southerly line of said West Twenty-fourth South Street a distance
of 1907.59 feet to an intersection with the Easterly line of South Eighth West
Street; thence South 00 degrees 33' 30" East along the Easterly line of said
South Eighth West Street a distance of 764.00 feet to the intersection of the
Easterly line of said South Eighth West Street with the Southerly line of West
Twenty-Fifth South Street, which intersection is the true place of beginning of
the metes and bounds description of the tract or parcel of land as being herein
described; thence North 89 degrees 26' 30" East at right angles to last
described course and along the Southerly line of said West Twenty-Fifth South
Street a distance of 550.00 feet to a point; thence South 00 degrees 33' 30"
East at right angles to last described course and parallel with the Easterly
line of said South Eighth West Street a distance of 219.00 feet to a point;
thence South 89 degrees 26' 30" West at right angles to last described course
and parallel with the Southerly line of said West Twenty-Fifth South Street a
distance of 550.00 feet to an intersection with the Easterly line of said South
Eight West Street; thence North 00 degrees 33' 30" West along the Easterly line
of said South Eighth West Street a distance of 219.00 feet to the true place of
beginning, said described tract or parcel of land containing an area of 120,450
square feet or 2.765 acres, more or less.
<PAGE>
WALLACE ASSOCIATES BUSINESS PROPERTIES GROUP
BUYER AGENCY DISCLOSURE
Buyer/Tenant: STATIONERS DIST INC.
-----------------------------------------------------------------
This will confirm that to the best of our knowledge, Wallace Associates
Business Properties Group is acting as a real estate broker in this transaction
and is:
______ representing solely the Seller/Owner in this transaction and shall
not be deemed to be, or have been, an agent or subagent of Buyer/Tenant;
OR
______ representing the Buyer/Tenant. Buyer/Tenant understands that
depending on the specific property Buyer/Tenant selects to purchase or
lease, Wallace Associates Business Properties Group may also represent
the Seller/Owner. Buyer/Tenant hereby authorizes Wallace Associates
Business Properties Group to represent and serve as agent for
Seller/Owner and Buyer/Tenant hereby waives any conflict of interest
which may arise as a result thereof.
BUYER/TENANT
By [SIGNATURE NOT LEGIBLE]
---------------------------
Title V. P. Operations
---------------------------
Dated 8/25/89
---------------------------
<PAGE>
ADDENDUM TO INDUSTRIAL LEASE
DATED June 12, 1989
-------
This Agreement is made and entered into this 12th day of June, 1989,
---- ----
by and between DUAL ASSET FUND V, a partnership, referred to in this Addendum as
Lessor, and STATIONERS DISTRIBUTING COMPANY, INC. referred to in this Addendum
as Lessee.
W I T N E S S E T H:
-------------------
WHEREAS, Lessee and Lessor have entered into an Industrial Lease referred
to as the Lease, a copy of which is attached hereto as Exhibit "A" and
incorporated herein by reference for all purposes; and,
WHEREAS, Lessee and Lessor desire to add an addendum thereby amending and
modifying this Lease;
NOW THEREFORE, for and in consideration of Ten and No/100 dollars ($10.00)
and other good and valuable consideration, in hand paid by Lessee to Lessor, the
receipt and sufficiency of which is hereby acknowledged, and the mutual
covenants contained herein, the parties agree as follows, to-wit:
Lessor and Lessee have executed the Lease and hereby adopt the terms
thereof subject to the following:
Paragraph 3.1 Term - The term of this Lease shall be for five (5) years
----
commencing on October 1, 1989 or on such date as the improvements commenced in
---------------
accordance with Paragraph 6.3 hereof shall have been substantially completed,
which ever is later and terminating on September 31, 1994 unless sooner
------------------
terminated pursuant to any provision hereof.
Paragraph 4 Rent - The following language shall amend the first sentence in
----
Paragraph 4. See Paragraph 4, Exhibit A.
------------------------------
Paragraph 5 Security Deposit - shall be deleted in its entirety.
----------------
-1-
<PAGE>
Paragraph 6 Use - the following language shall be added to
---
Paragraph 6.3 Condition of Premises: leased premises in "as is condition"
--------------------- ------------------------------------
Paragraph 7.1 Lessee's Obligations - The following language shall be added
--------------------
to the last sentence:
Lessor shall maintain the roof, roof trusses, skylights, and
structure, foundations, outside walls, interior stress-bearing
walls and columns, structural members, and railspur located on
the Premises at its sole cost and expense.
Paragraph 8.5 Indemnity - last sentence is amended to read:
---------
Lessee, as a material part of the consideration to Lessor,
hereby assumes all risks of damage to property or injury
to persons, in, upon or about the Premises arising from
any cause except Lessor's negligence and Lessee hereby
waives all claims in respect thereof against Lessor.
Paragraph 9.6 Abatement of Rent; Lessee's Remedies- Paragraph (b) shall be
------------------------------------
amended as follows:
-2-
<PAGE>
If Lessor shall be obligated to repair or restore the Premises
under the provisions of this paragraph 9, it must give notice
to Lessee within 10 days of the occurrence of its decision to
repair or not to repair, and if Lessor does not give ten-day
notice of its intention to repair or has not commenced such
repair or restoration and begun diligently to pursue such repair
or restoration within thirty (30) days after such obligations
shall accrue, Lessee may, at Lessee's option, cancel and terminate
this Lease by giving Lessor written notice of Lessee's election
to do so at any time prior to the commencement of such repair
or restoration. In such event, this Lease shall terminate as of
the date of such notice.
Paragraph 10.2 Definition of "Real Property Tax" - shall be amended to add
---------------------------------
at the end of the last sentence:
excluding however, franchise, estate, inheritance, succession,
capital levy, transfer, income or excess profits taxes imposed
upon Lessor.
Paragraph 13.2 Remedies - shall be amended in paragraph (a) line 4 to
--------
read :
Lessee's default including, but not limited to, the cost of
recovering possession of the Premises; less any credit for
rent actually received by Lessor upon reletting, . . .
Paragraph 13.3 Default by Lessor - shall be amended as follows:
-----------------
Lessor shall not be in default unless Lessor fails to perform
obligations required of Lessor within two (2) days for emergency
repairs (which shall include but not be limited to safety of the
Premises, damage to Lessee's merchandise, or interference with
Lessee's operations), and in no event later than thirty (30)
days for nonemergency repairs or obligations after written
notice by Lessee to Lessor and to the holder of any first
mortgage or deed of trust covering the Premises...
Paragraph 13.4 Late Charges - shall be amended to add at the end of the
------------
last sentence:
Accordingly, if more than two installments of rent or any
other sums due from Lessee shall not be received by
Lessor or Lessor's designee with ten (10) days after such
amount shall be due within any calendar year, then, without
any requirement for notice to Lessee,
-3-
<PAGE>
Lessee shall pay to Lessor a late charge equal to six percent (6%) of
such overdue amount. . . .
All other terms or the Industrial Lease shall remain in full force and
effect and are hereby ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Industrial
Lease the day and year first above written.
Lessor:
DUAL ASSET FUND V, a limited partnership
BY: Wallace Associates, Incorporated, its general part.
---------------------------------
By: R. Steven Romney
-------------------------------------
ITS: Vice President
---------------------------------
Lessee:
STATIONERS DISTRIBUTING COMPANY, INC.,
a Delaware corporation
BY: /s/ Richard Baker
---------------------------------
RICHARD BAKER
-------------------------------------
ITS: PRESIDENT
---------------------------------
[SIGNATURE NOT LEGIBLE]
V.P. OPERATIONS
-4-
<PAGE>
SECOND ADDENDUM TO INDUSTRIAL LEASE
DATED October 17, 1990
----------
This Agreement is made and entered into this 17th day of October, 1990, by
---- -------
and between DUAL ASSET FUND V, a partnership, referred to in this Addendum as
Lessor, and STATIONERS DISTRIBUTING COMPANY, INC. referred to in this Addendum
as Lessee.
W I T N E S S E T H:
WHEREAS, Lessee and Lessor have entered into an Industrial Lease referred
to as the Lease, a copy of which is attached hereto as Exhibit "A" and an
Addendum to the Lease, a copy of which is attached hereto as Exhibit "B", both
of which are incorporated herein by reference for all purposes; and,
WHEREAS, Lessee and Lessor desire to add an addendum thereby amending and
modifying this Lease;
NOW THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00)
and other good and valuable consideration, in hand paid by Lessee to Lessor, the
receipt and sufficiency of which is hereby acknowledged, and the mutual
covenants contained herein, the parties agree as follows, to-wit:
Lessor and Lessee have executed the Lease and Addendum to the Lease and
hereby adopt the terms thereof subject to the following:
That Exhibit "C" of the original lease, which specifies the legal
description of the real property, be replaced with Exhibit "A" of this Second
Addendum to the Lease. The legal description contained in Exhibit "A" of the
Second Addendum to the Lease specifies the correct legal description of the
real property.
All of the terms of the Industrial Lease and Addendum to the Industrial
Lease shall remain in full force and effect and are hereby ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Industrial
Lease the day and year first above written.
Lessor:
DUAL ASSET FUND V, a limited partnership
BY: WALLACE AND ASSOCIATES, INC.
-----------------------------------
By: R. Steven Romney
-----------------------------------
ITS: President
-----------------------------------
<PAGE>
Lessee:
STATIONERS DISTRIBUTING COMPANY, INC.
a Delaware Corporation
BY: By Paul Perkey
--------------------------------
Vice President & C.F.O.
--------------------------------
ITS: ________________________________
________________________________
<PAGE>
EXHIBIT A
BEGINNING AT A POINT WHICH IS NORTH 1627.75 FEET AND WEST, 1417.60 FEET
FROM THE SOUTHEAST CORNER OF SECTION 23, TOWNSHIP 1 SOUTH, RANGE 1 WEST, SALT
LAKE BASE AND MERIDIAN; AND RUNNING THENCE S89 26' 30"W, 475.00 FEET TO THE
EASTERLY RIGHT-OF-WAY LINE OF 900 WEST STREET; THENCE ALONG SAID EASTERLY LINE
OF 900 WEST STREET NOO 33' 30"W, 219.00 FEET TO THE SOUTHERLY RIGHT-OF-WAY
LINE OF 2500 SOUTH STREET; THENCE ALONG SAID SOUTHERLY RIGHT-OF-WAY LINE OF
2500 SOUTH STREET N89 26'30"E, 444.00 FEET; THENCE SOO 33' 30"E, 151.00 FEET;
THENCE N89 26'30"E, 31.00 FEET; THENCE SOO 33'30" E, 68.00 FEET TO THE POINT OF
BEGINNING. CONTAINS 2.281 ACRES OR 99,344 SQUARE FEET
SUBJECT TO A RIGHT-OF-WAY OVER THE FOLLOWING DESCRIBED PROPERTY:
BEGINNING AT A POINT WHICH IS NORTH, 1695.45 FEET AND WEST, 1449.26 FEET FROM
THE SOUTHEAST CORNER OF SECTION 23, TOWNSHIP 1 SOUTH, RANGE 1 WEST, SALT LAKE
BASE AND MERIDIAN; AND RUNNING THENCE S89 26' 30"W, 20.00 FEET; THENCE NOO
33' 30"W, 151.00 FEET; THENCE N89 26' 30"E, 20.00 FEET; THENCE SOO 33' 30"E,
151.00 FEET TO THE POINT OF BEGINNING.
TOGETHER WITH THE FOLLOWING EASEMENT: BEGINNING AT A POINT WHICH IS
NORTH, 1623.12 FEET AND WEST, 1892.58 FEET FROM THE SOUTHEAST CORNER OF SECTION
23, TOWNSHIP 1 SOUTH, RANGE 1 WEST, SALT LAKE BASE AND MERIDIAN; AND RUNNING
THENCE N89 26' 30"E, 475.00 FEET; THENCE SOO 33' 30"E, 1.13 FEET TO A POINT
ON THE MOST SOUTHERLY LINE OF A BRICK BUILDING EXTENDED; THENCE S89 35' 30"W,
313.999 FEET ALONG SAID SOUTHERLY LINE OF SAID BUILDING TO SAID BUILDING
CORNER; THENCE S89 33' 05"W, 161.00 FEET TO THE POINT OF BEGINNING. CONTAINS
250.57 SQUARE FEET
SITUATED IN SALT LAKE COUNTY, STATE OF UTAH.
<PAGE>
THIRD ADDENDUM TO INDUSTRIAL LEASE
MADE AS OF JANUARY 1, 1992
This Agreement is made and entered into as of this 1st day of January,
1992, by and between AMERICAL PROPERTIES, LTD., a Utah limited partnership, and
successor in interest to Dual Asset Fund V, as Lessor, and STATIONERS
DISTRIBUTING COMPANY, INC., referred to in this Addendum as Lessee.
W I T N E S S E T H:
-------------------
WHEREAS, Stationers, as Lessee, and Dual Asset Fund V, the predecessor
in interest of Lessor, entered into that certain Industrial Lease dated June
12, 1989 ("Lease"), as amended by Addendum to said Industrial Lease dated June
12, 1989, and Second Addendum to Industrial Lease dated October 17, 1990,
copies of which Lease and Addenda are attached hereto as Exhibits "A," "B," and
"C," respectively, (sometimes collectively referred to as the "Lease") and
incorporated herein by reference;
WHEREAS, Americal Properties, Ltd. succeeded to all right, title and
interest of Dual Asset Fund V, as Lessor under said Lease; and
WHEREAS, Lessee and Lessor desire to add the Third Addendum to the
Lease thereby amending and modifying the Lease;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, in hand paid by Lessee to Lessor, the
receipt and sufficiency of which is hereby acknowledged, and the mutual
covenants contained herein, the parties agree as follows, to-wit:
1. Lessor and Lessee acknowledge that the foregoing recitals are true
and correct and ratify the Lease, as amended, subject to the following, to wit:
2. Paragraph 3.1 Term - The following language shall supplement the
----
existing Paragraph 3.1 of the Lease, to wit:
The term of the existing Lease expires on September 30, 1994, and the
parties hereto now and do hereby agree to extend the existing Lease
term for an additional five (5) years, from October 1, 1994 through
September 30, 1999 ("Extended Term"). Accordingly, the term of the
Lease now expires September 30, 1999.
-1-
<PAGE>
CONSUMER PRICE INDEX
URBAN WAGE EARNERS AND CLERICAL WORKERS (CPI-W)
U.S. CITY AVERAGE
ALL ITEMS
(1982-84-100)
<TABLE>
<CAPTION>
YEAR JAN FEB MAR APR MAY JUN JUL AUG SPT OCT NOV DEC AVG
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1956 27.0 27.0 27.0 27.0 27.2 27.3 27.5 27.5 27.5 27.7 27.7 27.8 27.3
1957 27.8 27.9 28.0 28.1 28.1 28.3 28.4 28.5 28.5 28.5 28.6 28.6 28.3
1958 28.8 28.8 29.0 29.1 29.1 29.1 29.1 29.1 29.1 29.1 29.1 29.1 29.1
1959 29.1 29.1 29.1 29.1 29.2 29.3 29.4 29.3 29.4 29.5 29.5 29.5 29.3
1960 29.5 29.5 29.5 29.7 29.7 29.8 29.8 29.8 29.8 29.9 30.0 30.0 29.8
1961 30.0 30.0 30.0 30.0 30.0 30.0 30.1 30.1 30.2 30.2 30.2 30.2 30.1
1962 30.2 30.2 30.3 30.4 30.4 30.4 30.4 30.4 30.6 30.6 30.6 30.6 30.4
1963 30.6 30.6 30.7 30.7 30.7 30.8 30.9 30.9 30.9 31.0 31.0 31.1 30.8
1964 31.1 31.1 31.1 31.1 31.1 31.2 31.3 31.2 31.3 31.3 31.4 31.4 31.2
1965 31.4 31.4 31.5 31.6 31.6 31.8 31.8 31.8 31.8 31.9 31.9 32.0 31.7
1966 32.0 32.2 32.3 32.5 32.5 32.6 32.7 32.9 32.9 33.1 33.1 33.1 32.6
1967 33.1 33.1 33.2 33.3 33.4 33.5 33.6 33.7 33.8 33.9 34.0 34.1 33.6
1968 34.2 34.3 34.5 34.6 34.7 34.9 35.1 35.2 35.3 35.5 35.6 35.7 35.0
1969 35.8 36.0 36.3 36.5 36.6 36.8 37.0 37.2 37.3 37.5 37.7 37.9 36.9
1970 38.0 38.2 38.4 38.7 38.8 39.0 39.2 39.2 39.4 39.6 39.8 40.0 39.8
1971 40.0 40.1 40.2 40.4 40.6 40.8 40.9 41.0 41.0 41.1 41.2 41.3 40.7
1972 41.4 41.6 41.6 41.7 41.9 42.0 42.1 42.2 42.4 42.5 42.6 42.7 42.1
1973 42.9 43.2 43.6 43.9 44.1 44.4 44.5 45.4 ???? 45.9 46.2 46.5 44.7
1974 46.9 47.5 48.0 48.3 48.8 49.3 49.7 50.3 50.9 51.4 51.8 52.2 49.6
1975 52.4 52.8 53.0 53.2 53.5 53.9 54.5 54.7 54.9 55.3 55.6 55.8 54.1
1976 56.0 56.1 56.2 56.5 56.8 57.1 57.4 57.7 57.9 58.2 58.3 58.5 57.2
1977 58.9 59.5 59.8 60.3 60.6 61.0 61.3 61.5 61.8 61.9 62.2 62.5 60.9
1978 62.8 63.2 63.7 64.3 64.9 65.6 66.0 66.4 66.8 67.4 67.7 68.1 65.6
1979 68.7 69.5 70.3 71.1 71.9 72.8 73.7 74.4 75.1 75.7 76.4 77.2 73.1
1980 78.3 79.4 80.5 81.4 82.3 83.2 83.3 83.8 84.6 85.3 86.1 86.9 82.9
1981 87.5 88.5 88.0 89.6 90.3 91.1 92.2 92.8 93.7 93.9 94.1 94.4 91.4
1982 94.7 95.0 94.8 95.2 96.2 97.4 98.0 98.2 98.3 98.6 98.4 98.0 96.9
1983 98.1 98.1 98.4 99.0 99.5 99.8 100.1 100.5 101.0 101.2 101.2 101.2 99.8
1984 101.6 101.8 101.8 102.1 102.1 102.5 102.8 103.2 104.2 104.8 104.8 104.7 104.8
1985 104.9 105.4 105.9 105.3 106.7 107.0 107.1 107.3 107.6 107.9 108.3 108.6 106.9
1986 108.9 108.5 107.9 107.6 107.9 108.4 108.4 108.6 109.1 109.1 109.2 109.3 108.6
1987 110.0 110.5 111.0 111.6 111.9 112.4 112.7 113.3 113.8 114.1 114.3 114.2 112.5
1988 114.5 114.7 115.2 115.7 116.2 116.7 117.2 117.7 118.5 118.9 119.0 119.2 117.0
1989 119.7 120.2 120.8 121.8 122.5 122.8 123.2 123.2 123.6 124.2 124.4 124.6 122.6
1990 125.9 126.4 127.1 127.3 127.5 128.3 128.7 129.9 131.1
</TABLE>
<PAGE>
CONSUMER PRICE INDEX
ALL URBAN CONSUMERS - (CPI-W)
U.S. CITY AVERAGE
ALL ITEMS
(1982-84-100)
<TABLE>
<CAPTION>
YEAR JAN FEB MAR APR MAY JUNE JULY AUG SPT OCT NOV DEC AVG
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1956 26.8 26.8 26.8 26.9 27.0 ???? 27.4 27.3 27.4 27.5 27.5 27.6 27.2
1957 27.6 27.7 27.8 27.0 28.? ???? 28.3 28.3 28.3 28.3 28.4 28.4 28.1
1958 28.6 28.6 28.8 28.9 2??? 28.9 29.0 28.9 28.9 28.9 29.0 28.9 28.9
1959 29.0 28.9 28.9 29.0 29.0 29.1 29.2 29.2 29.3 29.4 29.4 29.4 29.1
1960 29.3 29.4 29.4 29.5 29.5 29.6 29.6 29.6 29.6 29.8 29.8 29.8 29.6
1961 29.8 29.8 29.8 29.8 29.8 29.8 30.0 29.9 30.0 30.0 30.0 30.0 29.9
1962 30.0 30.1 30.1 30.2 30.2 30.2 30.3 30.3 30.4 30.4 30.4 30.4 30.2
1963 30.4 30.4 30.5 30.5 30.5 30.6 30.7 30.7 30.7 30.8 30.8 30.9 30.6
1964 30.9 30.9 30.9 30.9 30.9 31.0 31.1 31.0 31.1 31.2 31.2 31.2 31.0
1965 31.2 31.2 31.3 31.4 31.4 31.6 31.6 31.6 31.6 31.7 31.7 31.8 31.5
1966 31.8 32.0 32.1 32.3 32.3 32.4 32.5 32.7 32.7 32.9 32.9 32.9 32.4
1967 32.9 32.9 33.0 33.1 33.2 33.3 33.4 33.5 33.6 33.7 33.8 33.9 33.4
1968 34.1 34.2 34.3 34.4 34.5 34.7 34.9 35.0 35.1 35.3 35.4 35.5 34.8
1969 35.6 35.8 36.1 36.3 36.4 36.6 36.8 37.0 37.1 37.3 37.5 37.7 36.7
1970 37.8 38.0 38.2 38.5 38.6 38.8 39.0 39.0 39.2 39.4 39.6 39.8 38.8
1971 39.8 39.9 40.0 40.1 40.3 40.6 40.7 40.8 40.8 40.9 40.9 41.1 40.5
1972 41.1 41.3 41.4 41.5 41.6 41.7 41.9 42.0 42.1 42.3 42.4 42.5 41.8
1973 42.6 42.9 43.3 43.6 43.9 44.2 44.3 45.1 45.2 45.6 45.9 46.2 44.4
1974 46.6 47.2 47.8 48.0 48.6 49.0 49.4 50.0 50.6 51.1 51.5 51.9 49.3
1975 52.1 52.5 52.7 52.9 53.2 53.6 54.2 54.3 54.6 54.9 55.3 55.5 53.8
1976 55.6 55.8 55.9 56.1 56.5 56.8 57.1 57.4 57.6 57.9 58.0 58.2 56.9
1977 58.5 59.1 59.6 60.0 60.3 60.7 61.0 61.2 61.4 61.6 61.9 62.1 60.6
1978 62.5 62.9 63.4 63.9 64.5 65.2 65.7 66.0 66.5 67.1 67.4 67.7 65.2
1979 68.3 69.1 69.8 70.6 71.5 72.3 73.1 73.8 74.6 75.2 75.9 76.7 72.6
1980 77.8 78.9 80.1 81.0 81.8 82.7 82.7 83.3 84.0 84.8 85.5 86.3 82.4
1981 87.0 87.9 88.5 89.1 89.8 90.6 91.6 92.3 93.2 93.4 93.7 94.0 90.9
1982 94.3 94.6 94.5 94.9 95.8 97.0 97.5 97.7 97.9 98.2 98.0 97.6 96.5
1983 97.8 97.9 97.9 98.6 99.2 99.6 99.9 100.2 100.7 101.0 101.2 101.3 99.5
1984 101.9 102.4 102.6 103.1 103.4 103.7 104.1 104.5 105.0 105.3 105.3 105.3 103.9
1985 105.5 106.0 106.4 106.9 107.3 107.6 107.6 108.0 108.3 108.7 109.0 109.3 107.6
1986 109.6 109.3 108.8 108.6 108.9 109.5 109.5 109.7 110.2 110.3 110.4 110.5 109.6
1987 111.2 111.6 112.1 112.7 113.1 113.5 113.8 114.4 115.0 115.3 115.4 115.4 113.6
1988 115.7 116.0 116.5 117.3 117.5 118.0 118.5 119.0 119.8 120.2 120.3 120.5 118.3
1989 121.1 121.6 122.3 123.1 123.8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 124.0
1990 127.4 128.0 128.7 128.9 129.2 129.9 130.4 131.6 132.7
</TABLE>
<PAGE>
EXHIBIT "C"
-----------
All that part of the Southeast Quarter of Section twenty-three (23),
Township One South (TIS), Range One West (RIW), Salt Lake Base and Meridian, in
the County of Salt Lake and State of Utah, more particularly described as
follows:
Commencing at the Southeast corner of said Section 23, as said corner was
re-established in 1959 by the County Engineer of Salt Lake County, Utah; thence
North 00 07' 00" East along the re-established East Line of the Southeast
quarter of said Section 23 a distance of 2624.67 feet to an intersection with
the extended Southerly line of West Twenty-fourth South Street; thence South
89 26' 30" West along the extended Southerly line and along the Southerly line
of said West Twenty-fourth South Street a distance of 1907.59 feet to an
intersection with the Easterly line of South Eighth West Street; thence South
00 33' 30" East along the Easterly line of said South Eighth West Street a
distance of 764.00 feet to the intersection of the Easterly line of said South
Eighth West Street with the Southerly line of West Twenty-Fifth South Street,
which intersection is the true place of beginning of the metes and bounds
description of the tract or parcel of land as being herein described; thence
North 89 26' 30" East at right angles to last described course and along the
Southerly line of said West Twenty-Fifth South Street a distance of 550.00 feet
to a point; thence South 00 33' 30" East at right angles to last described
course and parallel with the Easterly line of said South Eighth West Street a
distance of 219.00 feet to a point; thence South 89 26' 30" West at right
angles to last described course and parallel with the Southerly line of said
West Twenty-Fifth South Street a distance of 550.00 feet to an intersection
with the Easterly line of said South Eight West Street; thence North 00 33' 30"
West along the Easterly line of said South Eighth West Street a distance of
219.00 feet to the true place of beginning, said described tract or parcel of
land containing an area of 120,450 square feet or 2.765 acres, more or less.
<PAGE>
EXHIBIT 10.51
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") is executed on this the day of July,
1994, by and between BETTILYON MORTGAGE LOAN COMPANY, a corporation organized
under the laws of the State of UTAH (the "Landlord") and UNITED STATIONERS
----
SUPPLY CO., an Illinois corporation (the "Tenant");
SECTION 1
---------
PREMISES
Landlord hereby leases unto Tenant and Tenant hereby leases from
Landlord, subject to the terms of this Lease, (i) the property located at 890
West 2600 South, South Salt Lake City, Utah, consisting of a warehouse/office
premises containing approximately 17,140 square feet (the "890 Premises"), and
(ii) the property located at 888 West 2600 South, consisting of approximately
17,860 square feet (the "888 Premises"), all as more particularly described in
Exhibit "A" attached hereto and made a part hereof, together with all
improvements, easements, rights and appurtenances in connection therewith and
all improvements now or hereafter located thereon. The building thereon is
outlined in red on Exhibit "B" attached hereto and made a part hereof (the
"Building"). The two properties, including access, loading and parking areas,
and the Building are collectively referred to as the "Premises." It is the
parties' intention that this Lease includes all property described in Exhibit
"A" but in no event, less area than the improvements, parking and loading areas
shown on Exhibit "B".
SECTION 2
---------
TERM
2.1 COMMENCEMENT. The term of this Lease shall commence (the
------------------
"Commencement Date") on August 1, 1994 with respect to the 890 Premises,
and, with respect to the 888 Premises, 90 days after notification from Landlord
that the 888 Premises will be available for occupancy.
<PAGE>
2.2 TERM. The term of this Lease shall continue for sixty-two (62)
----------
months, until September 30, 1999.
SECTION 3
---------
RENT
3.1 MONTHLY RENT. The basic monthly rent for the sixty-two (62)
------------------
months of this Lease (exclusive of Additional Rental, as hereinafter set
forth, shall be twenty-five cents ($.25) per square foot per month.
Thus, the monthly rent for the 890 Premises shall be $4,285.00, and the
monthly rent for the 888 premises shall be $4,465.00.
Tenant agrees to pay to Landlord on the first (1st) day of the
commencement of the term of this Lease and the first (1st) day of every
calendar month thereafter for the first full sixty-two (62) months of the term
of this Lease, in lawful money of the United States of America, without
deduction, or offset, prior notice or demand, except as hereinafter provided,
the amounts described above calculated upon a total square footage area of
17,140 square feet for the 890 Premises effective August 1, 1994, and the
amount described above calculated upon a total square footage of 17,860 for the
888 Premises, effective the first day the the month following the 90 days after
notice that the premises will be available, as the "Total Monthly Rental",
which Total Monthly Rental represents part of the total consideration for this
Lease.
Commencing with the thirty-first (31st) month of this Lease, the rent
shall be adjusted by an amount equivalent to the percentage change in the
Consumer Price Index between the index for the month of July, 1994, and the
Index for the month of January, 1997.
3.2 ADDITIONAL RENTAL. Tenant shall also be obligated to pay directly
-----------------------
as "Additional Rental" hereunder the amount set forth below of "Property
Taxes" and "All-Risk Insurance", and, if applicable, and "Rail Spur
Maintenance" (as such terms are hereinafter defined) with respect to each
calendar year of the Lease Term:
2
<PAGE>
(i) PROPERTY TAXES; ALL-RISK INSURANCE.
(a) The term "Property Taxes" for the purposes of this Lease means all
general and special taxes, including all assessments for local
improvements, and all other general and special, ordinary and
extraordinary, governmental charges assessed, levied, charges, or imposed
upon the Premises or Building during the term of the Lease, or any holdover
or renewal period, by any political or governmental body, or subdivision
thereof, having jurisdiction over the Premises or Building; excluding,
however, franchise, inheritance, succession, capital levy, transfer, income
or excess profits taxes imposed upon Landlord. In the event that any
political body, or sub-division thereof, or any governmental authority
having jurisdiction over the Premises or Building imposes a tax,
assessment, or charge either upon or against or measured by the rentals
payable by Tenant to Landlord or upon or against the occupation of renting
land and/or buildings, either by way of substitution for the taxes and
assessments levied against the Premises or Building, such tax, assessment,
or charge shall not be deemed to constitute a Property Tax for purposes of
this Lease.
(b) Landlord shall pay directly to the appropriate taxing authority
and Tenant shall reimburse Landlord for 48.97% of all Property Taxes levied
or assessed for the 890 Premises, and 51.03% for the 888 Premises.
(c) Landlord shall maintain Utah standard "all-risk" insurance
covering the Building in the amount of at least eighty percent (80%) of the
full insurable value thereof, excluding cost of land, foundation, and
footings and Tenant shall reimburse Landlord for its prorata share of the
premium. (The "All-Risk Insurance").
(d) Landlord will also maintain Utah standard "all-risk" insurance
covering the Building and/or Premises to the extent Landlord is required to
maintain same.
(ii) GENERAL REPAIRS, MAINTENANCE AND ALTERATIONS.
(a) Except in the case of Tenant's negligence, causing
3
<PAGE>
damage to such items, Landlord will at Landlord's expense during the entire
term of this Lease, maintain and repair the roof, roof trusses and
structure, foundations, outside walls, interior stress bearing walls and
columns, structural members, gutters, downspouts, concealed and underground
plumbing and electrical of the Premises in good condition and repair.
Tenant, at its sole expense, shall maintain the heating, ventilation and
air conditioning systems which service the Premises. In the event
replacement of such heating and air conditioning equipment becomes
necessary, the Landlord and Tenant will negotiate in good faith and within
a reasonable period of time, the responsibility of payment. Replacement and
repair parts, materials, and equipment shall be of quality equivalent to
those initially installed within the Premises; repair and maintenance work
shall be done in accordance with the then existing federal, state and local
laws, regulations and ordinances pertaining thereto. Notwithstanding the
foregoing, however, Landlord shall have no obligation to make repairs to
the above-specified items if such repairs are necessitated solely by
actions of Tenant in damaging the item(s).
(b) PRESENCE OF HAZARDOUS SUBSTANCES. In the event that at any point in
---------------------------------
time the Premises or the Building are determined to contain hazardous
substances (as defined by applicable laws), unless such hazardous
substances were caused by tenant, Tenant shall have the right, by notice to
Landlord, to require Landlord to remove, at Landlord's sole cost and
expense, any and all such hazardous substances within one hundred twenty
------------------
(120) days following Landlord's receipt of such notice, and if Landlord
-----
shall fail to remove such hazardous substances within such time period,
Tenant shall have the right to remove, encapsulate, contain, or otherwise
dispose of such hazardous substances, and the cost incurred by Tenant in
connection therewith shall be reimbursed by Landlord to Tenant within
fifteen (15) business days after receipt by Landlord from Tenant of an
invoice documenting and evidencing such costs.
(c) Except for the foregoing, Tenant at Tenant's expense, shall
maintain the interior of the Premises in good condition and repair,
reasonable use and wear and damage or destruction by fire, act of God or
other casualty excepted. Tenant shall maintain or repair and replace if
replacement
4
<PAGE>
is necessary or desirable in Tenant's sole determination the existing
heating and air conditioning systems servicing the Building. Except as
provided in Paragraph 13.6 below, Tenant hereby waives any right to make
repairs at Landlord's expense.
Tenant shall pay for the replacement of doors or windows upon the Premises
which are cracked or broken by Tenant, except in the event that such loss
or damage is covered by Landlord's policy of fire insurance with extended
coverage endorsement in which case the same shall be repaired or replaced
out of the proceeds from said insurance. It is specifically agreed by
Tenant that the cleaning or policing of the driveway area immediately
adjoining the dock area of the Premises shall be the responsibility of
Tenant. Tenant shall be responsible for disposal of its trash and will
maintain adequate receptacles for such disposal. Replacement and repair
parts, materials, and equipment shall be of quality equivalent to those
initially installed within the Premises: repair and maintenance work shall
be done in accordance with the then existing federal, state and local laws,
regulations and ordinances pertaining thereto.
Landlord and Tenant shall cause an inspection of the 888 Premises to be
made immediately prior to the commencement of the term at a mutually
agreeable time by their respective representatives to determine and record
the condition of the Premises. These representatives shall prepare and sign
a statement indicating any damage or deterioration existing at the time of
the inspection.
Tenant shall not be responsible to return any item on said statement to
Landlord in a condition better than its condition on the date of the
inspection indicated on said statement. Tenant agrees to accept the 888
Premises in "as is" condition. However, if Tenant determines that the 888
Premises are not in reasonably usable condition, the Lease shall not be
effective as to the 888 Premises.
(iii) RAIL SPUR MAINTENANCE.
(a) "Rail Spur Maintenance" means and includes the costs of maintenance,
repair and replacement of the railroad spur, if any, located adjacent to
the Building
5
<PAGE>
as shown on Exhibit "A" which may be incurred by Landlord.
(b) The Tenant's amount of Rail Spur Maintenance shall be computed by
the ratio that the number of railroad cars making deliveries to Tenant
during any month bears to the total number of railroad cars using the spur
track during the same time period; provided that if rail service is not
charged on a per car basis, Landlord may charge for rail service on the
basis of the number of tenants served by the rail spur.
(c) The Tenant shall pay its amount of Rail Spur Maintenance within ten
(10) days after receipt of statements from Landlord.
(d) In no event shall Tenant be charged or assessed Rail Spur
Maintenance unless Tenant is actually using the adjacent railroad spur.
SECTION 4
---------
LEASEHOLD IMPROVEMENTS
In the event that Landlord shall, by agreement between the parties
hereto, undertake to construct leasehold improvements within the Premises, such
leasehold improvements shall be built in accordance with preliminary
specifications to be agreed to by each party, copies of which plans and
specifications together with a floor plan showing their approximate location
within the Premises shall then be initialled and considered to be a part of
this Lease for all intents and purposes. Such plans and specifications must be
agreed to, if at all, prior tocommencement of construction of the Premises.
SECTION 5
---------
USE
5.1 PRESCRIBED USE. Tenant shall use the Premises for offices and
--------------------
warehouse and reasonably related activities.
6
<PAGE>
5.2 NUISANCE. Neither Landlord nor Tenant shall permit, or suffer to
--------------
be committed, upon the Premises, any nuisance or thing which may disturb the
quiet enjoyment of Tenant or any other lessee of any person or business within
a reasonable distance from the Premises.
5.3 COMPLIANCE WITH LAWS. Tenant shall, at Tenant's sole cost and
--------------------------
expense, comply with all laws, ordinances, orders, rules and regulations
promulgated by all federal, state, county, municipal bodies and agencies having
jurisdiction, which laws, ordinances, orders, rules and regulations relate to
the business of Tenant.
5.4 DANGEROUS GOODS AND ACTIVITIES. Tenant hereby agrees not to
------------------------------------
engage in any activity or store upon the Premises such goods or equipment
which would render the insurance described in Section 3.2(i) hereof void.
SECTION 6
---------
UTILITIES
Tenant shall be responsible for and promptly pay all charges incurred
for all utility services to the Premises, including, but not limited to water,
natural gas, sanitary sewer, electricity and telephone. Tenant shall also
provide all replacement light bulbs and tubes after the Commencement Date of
this Lease. In no event shall Landlord be liable for any interruption or
failure of utility service to the Premises.
SECTION 7
---------
INSURANCE
7.1 INDEMNIFICATION OF LANDLORD. Tenant will indemnify Landlord and save
---------------------------------
it harmless from and against any and all claims, actions, damages, liability and
expense in connection with the loss of life, personal injury, and/or damage to
property arising from or out of (i) any occurrence in, upon or at the Premises,
however caused, including occurrences caused by the sole or contributory
negligence of Tenant or its respective
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agents, customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers, or (ii) any occurrence elsewhere on the Premises
occasioned wholly or in part by any act or omission caused by the Tenant or its
agents, customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers. In case the Landlord shall be made a party to any
litigation commenced by or against the Tenant for any of the above reasons, then
Tenant shall protect and hold the Landlord harmless and pay all reasonably
required costs, penalties, charges, damages, expenses and reasonable attorneys'
fees paid by the Landlord. It is understood that the provisions of this Section
7.1 shall not be applicable to any such claims actions, liabilities, or
expenses, arising out of any act or omission of Landlord, its agents,
materialmen, vendors or suppliers.
7.2 INDEMNIFICATION OF TENANT. Landlord will indemnify Tenant and save it
------------------------------
harmless from and against any and all claims, actions, damages, liability and
expenses in connection with the loss of life, bodily and personal injury, and/or
damage to property arising from or out of (i) any occurrence in, upon or at the
Premises, however caused, including occurrences caused by the sole or
contributory negligence of Landlord, its agents, customers, invitees,
concessionaires, contractors, servants, vendors, materialmen or suppliers, or
(ii) any occurrence elsewhere on the Premises occasioned wholly or in part by
any act or omission caused by the Landlord or its agents, customers, invitees,
concessionaires, contractors, servants, vendors, materialmen or suppliers, or
(iii) any occurrence occasioned by the violation of any law, regulation or
ordinance by Landlord or its agents, customers, invitees, concessionaires,
contractors, servants, vendors, materialmen or suppliers. In case the Tenant
shall be made a party to any litigation commenced by or against the Landlord for
any of the above reasons, then Landlord shall protect and hold the Tenant
harmless and pay all costs, penalties, charges, damages, expenses and attorneys'
fees paid by the Tenant. It is understood that the provisions of this Section
7.2 shall not be applicable to any such claims, actions, liabilities, or
expenses, arising out of any act or omission of Tenant, its agents, materialmen,
vendors or suppliers.
7.3 WAIVER OF SUBROGATION. Anything in this Lease to the contrary
---------------------------
notwithstanding, Landlord and Tenant each hereby waives any and all right to
recovery, claim, action or cause of action, against the other, its agents,
directors, officers or employees, for any loss or damage that may occur to the
Premises, or any
8
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improvements thereto, or the Building, or any improvements thereto, or any
personal property of such party therein, by reason of fire, the elements, or
any other cause which could be insured against under the terms of insurance
policies referred to in Section 3.2(i) hereof, regardless of cause or origin,
including negligence of the other party hereto, its agents, directors, officers
of employees, and covenants that no insurer shall hold any right of subrogation
against such other party.
7.4 PUBLIC LIABILITY AND PROPERTY DAMAGE. Bodily injury liability
------------------------------------------
insurance and property damage liability insurance will be carried and
maintained by Tenant, at Tenant's sole cost and expense, after the date of
delivery of the Premises from Landlord to Tenant in the following amounts:
Bodily Injury or Death, per occurrence: $1,000,000
Property Damage: $1,000,000
All such bodily injury liability insurance and property damage liability
insurance shall specifically make reference to the indemnity agreement in
Section 7.1 hereof.
7.5 POLICY FORM. All policies of insurance provided for herein to be
-----------------
carried by Tenant shall be issued by insurance companies certified to do
business by the State of Utah and its insurance regulatory bodies and shall be
issued in the names of both Landlord and Tenant. Executed copies of such
policies of insurance or certificates thereof shall be delivered to the
Landlord within ten (10) days after delivery of possession of the Premises and
thereafter within thirty (30) days prior to the expiration of such policy. As
often as any such policy shall expire or terminate, renewal or additional
policies shall be procured and maintained by the Tenant in like manner and to
like extent. All policies of insurance delivered to Landlord must contain a
provision that the company writing said policy will give to the Landlord at
least twenty (20) days notice in writing in advance of any cancellation or
lapse or the effective date of any reduction in the amounts of insurance. All
public liability and property damage policies shall be written as primary
policies, not contributing with and not in excess of coverage which the
Landlord may carry, if any. Notwithstanding the foregoing, any insurance
coverage required to be carried by Tenant hereunder may be carried in whole or
in part (i) under any plan of self-insurance which Tenant may from time-to-time
have in force and effect so long as Tenant or any assignee of this Lease who is
liable hereunder shall have a net worth of $25,000,000.00
9
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or more, or (ii) under a "blanket" policy or policies covering other properties
of Tenant and its subsidiaries, controlling or affiliated of the insurance
protection afforded Landlord pursuant to this article shall not be diminished as
a result of any rights of self-insurance as hereinabove provided.
7.6 RECIPROCAL INDEMNITY. Notwithstanding any other provisions of the
--------------------------
Lease to the contrary, Tenant shall not be required to indemnify and hold
Landlord harmless from any loss, cost, liability, damage or expense, including,
but not limited to, penalties, fines, attorneys' fees or costs (collectively
"Claims"), to any person, property or entity resulting from the acts or
omissions or willful misconduct of Landlord or its agents, contractors,
servants, employees or licensees, in connection with Landlord's activities in
the Building (except for damage to the Tenant Improvements and Tenant's personal
property, fixtures, furniture and equipment in the Premises, to the extent
Tenant is required to obtain the requisite insurance coverage pursuant to the
Lease), and Landlord hereby so indemnifies and holds Tenant harmless from any
such Claims, including but not limited to Claims arising from any noncompliance
of the Building and/or the Site with any laws relating to disabled access
(provided Tenant uses the Premises solely for commercial purposes and not as a
place of public accommodation), or Claims arising from the presence in the
Premises, the Building and/or the Site of hazardous substances, except to the
extent such hazardous substances were placed in or on the Premises, the Building
and/or the Site by Tenant (Landlord's indemnity hereunder will survive the
expiration of the term of, or any termination of the Lease). Provided, further,
to the extent any damage or repair obligation is covered by insurance obtained
by Landlord as part of Operating Expenses, but is not covered by insurance
obtained by Tenant, then Tenant shall be relieved of its indemnity obligation up
to the amount of the insurance proceeds which Landlord is entitled to receive.
Tenant's agreement to indemnify and hold Landlord harmless pursuant to this
Lease and the exclusion from Tenant's indemnity and Landlord's agreement to
indemnify and hold Tenant harmless pursuant to this provision are not intended
to and shall not relieve any insurance carrier of its obligations under policies
required to be carried by Landlord or Tenant, respectively, pursuant to the
Lease to the extent that such policies cover the results of such acts, omissions
or willful misconduct. If Landlord or Tenant has been or at any time hereafter
is granted the right to self insure or if either party breaches this agreement
by its failure to carry required insurance, such failure shall automatically be
deemed to be a covenant and
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agreement by Landlord or Tenant, respectively, to self-insure to the full extent
of such required coverage, with full waiver of subrogation.
SECTION 8
---------
ALTERATIONS AND FIXTURES
8.1 PRIOR CONSENT. Tenant shall not make any alterations, improvements
-------------------
modifications, having obtained the written consent of Landlord: provided,
however, planned modifications and improvements, including minor modification or
improvements to the office facilities, the sprinkler and lighting systems and
the installation of normal trade fixtures, shelves, machinery, racks and
apparatus are hereby specifically approved. Tenant shall notify Landlord upon
completion of any other alterations, improvements, modifications, or additions
and Landlord may inspect same for workmanship and compliance with the approved
plans and specifications. Any alteration, improvement, modification, or fixture
which is installed by either Landlord or Tenant on the Premises and which is in
any manner attached to the floors, walls, or ceilings shall remain upon the
Premises when the Premises are surrendered by Tenant except as described
hereinbelow.
8.2 TRADE FIXTURES. Notwithstanding anything in this Section 8 to the
--------------------
contrary, all normal trade fixtures, equipment, shelves, machinery, signs
and furniture installed in the Premises at the cost of Tenant, may be removed
by Tenant on or before the termination date of this Lease provided (i) Tenant
is not in default under this Lease, and (ii) removal shall be done in a
workmanlike manner so as not to damage the fundamental structural integrity of
the Building.
8.3 MECHANICS' LIEN. Neither Landlord nor Tenant will create or permit
--------------------
to be created or to remain any lien (including but not limited to, the liens
of mechanics, laborers, artisans, or materialmen for work or materials alleged
to be done or furnished in connection with the Premises), encumbrance or other
charge upon the Premises or any part thereof, upon Landlord's interest therein,
or upon Tenant's leasehold interest; provided that Tenant shall not be required
to discharge any such liens, encumbrances or charges as may be placed upon the
Premises by the act of Landlord.
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SECTION 9
---------
GRAPHICS AND ARCHITECTURAL CONTROL
9.01. Tenant may place reasonable signage on the Building all at Tenant's
-----
own cost and expense and Tenant shall retain liable for the upkeep and
maintenance thereof.
9.02. Landlord agrees it will not alter or change the name of the
-----
Building, Premises or street address thereof without first obtaining the prior
written consent of Tenant or in the alternative, by paying directly all costs,
expenses, fees and charges incurred by Tenant due to such change in name or
address.
SECTION 10
----------
ASSIGNMENT AND SUBLETTING
In the event Tenant should desire to assign this Lease or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice of such
desire and Landlord shall then have a period of twenty (20) days following
receipt of such notice within which to notify Tenant in writing that Landlord
does not approve of such assignment or subletting. If Landlord should fail to
notify Tenant in writing of such disapproval within the twenty (20) day period,
Landlord shall be deemed to have elected to permit such assignment or
subletting. Landlord shall not unreasonably withhold its consent to any such
assignment or subletting. No assignment or subletting by Tenant shall relieve
Tenant of any obligations under this Lease.
SECTION 11
----------
RIGHT OF ACCESS
Landlord shall have the right to enter the Premises under ordinary
circumstances during normal business hours upon twenty-four (24) hours prior
written notice to Tenant, to examine the same and to make such repairs,
alterations, improvements, or additions as Landlord may deem necessary or
desirable to comply with this Lease, Landlord shall be allowed to take all
materials into and upon the Premises that may be required therefor without the
same constituting an eviction of Tenant, actual or constructive, and the rent
shall in no way abate while such repairs, alterations, improvements or additions
are being made, by reason
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of loss or interruption of business of Tenant unless such repairs, alterations,
improvements or additions restrict or interfere with Tenant's use of a portion
of the Building. In that event, the rent should abate as to that portion of the
Building wherein the use thereof is restricted. Landlord shall take reasonable
efforts not to interfere with the normal business operations of Tenant. In any
event of an emergency, no prior written notice on the part of the Landlord will
be required to enter the Building and Premises. During the three (3) months
prior to the expiration of the term of this Lease, Landlord may exhibit with
twenty-four (24) hour notice the Premises to prospective lessees or purchasers
during normal business hours and place upon the Premises the usual notices "For
Sale or For Rent", and Tenant shall permit the same to remain.
SECTION 12
----------
HOLDING OVER
Upon any termination of this Lease, Tenant shall surrender the Premises in
a condition and repair similar to their original condition, reasonable wear and
tear, events of destruction, and modifications, alterations and improvements for
office facilities, storage, lighting and sprinklers excepted. Should Tenant
remain in possession of the Premises, or any part thereof, after termination of
this Lease (whether by the expiration of the term of this Lease or otherwise)
without the execution of a new lease by Landlord and Tenant, Tenant, at the
option of Landlord, shall become a tenant from month-to-month of the Premises,
or part thereof occupied, at one and one-half the Total Monthly Rent, and under
all other terms, conditions, provisions and obligations of this Lease insofar as
the same are applicable to a tenancy from month-to-month.
SECTION 13
----------
DEFAULTS AND REMEDIES
13.1 EVENTS OF DEFAULT BY TENANT. The occurrence of one or more of
----------------------------------
the following events shall constitute a default pursuant to the terms of
this Lease: (i) the failure of Tenant to comply with or to observe any terms,
provisions, or conditions of this Lease performable by and obligatory upon
Tenant, within thirty (30) days after written notice by Landlord; (ii) the
assignment of this Lease or subleasing of the Premises by Tenant without the
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<PAGE>
prior written approval of Landlord; or (iii) the taking of Tenant's
leasehold estate by execution or other process of law.
13.2 LANDLORD'S REMEDIES. Upon the occurrence of any event of default
--------------------------
enumerated in Section 13.1 hereof, Landlord shall have the option of (i)
terminating this Lease by written notice thereof to Tenant, or (ii) continuing
this Lease in full force and effect, or (iii) curing the default of Tenant, or
(iv) pursuing any other remedy to which it may be entitled by law.
(i) In the event Landlord shall elect to terminate this Lease, upon
written notice to Tenant, this Lease shall be ended as to Tenant and all
persons holding under Tenant, and all of Tenant's rights shall be forfeited
and lapsed, as fully as if this Lease had expired by lapse of time. In such
event, Tenant shall be required immediately to vacate the Premises and
there shall immediately become due and payable the amount by which (a) the
present value (determined using the then current Prime Rate per annum as
charged by Zion's Bank (Bank) of Utah) of the total rent and other benefits
which would have accrued to Landlord under this Lease for the remainder of
the Lease term if the terms and provisions of this Lease had been fully
complied with by Tenant exceeds (b) the total fair market rental value
(determined using the then current Prime Rate per annum as charged by
Zion's Bank (Bank) of Utah) of the Premises for the balance of the Lease
term (it being the intention of both parties hereto that Landlord shall
receive the benefit of its bargain); and the Landlord shall at once have
all the rights of re-entry upon the Premises, without becoming liable for
damages, or guilty of trespass. In addition to the sum immediately due from
Tenant under the foregoing provision, there shall be recoverable from
Tenant: (a) the cost of restoring the Premises to good condition, normal
wear and tear excepted, (b) all accrued, unpaid sums, plus interest at the
maximum rate then permitted by law and late charges, if in arrears, under
the terms of this Lease up to the date of termination, (c) Landlord's cost
of recovering possession of the Premises, and (d) rent and sums accruing
subsequent to the date of termination pursuant to the holdover provisions
of Section 12.
(ii) In the event that Landlord shall elect to continue
14
<PAGE>
this Lease in full force and effect, Tenant shall continue to be liable for
all rents. Landlord Premises without becoming liable for damages, or guilty
of a trespass and Landlord may relet the Premises, or any part thereof, to
a substitute tenant or tenant, for a period of time equal to or lesser or
greater than the remainder of the Lease term on whatever terms and
conditions Landlord, at Landlord's sole discretion, deems advisable.
Against the rents and sums due from Tenant to Landlord during the remainder
of the term, credit shall be given Tenant in the net amount of rent
received from the new tenant after deduction by Landlord for: (a) the costs
incurred by Landlord in reletting the Premises (including, without
limitation, remodeling costs, brokerage fees, legal fees, and the like),
(b) the accrued sums, plus interest and late charges if in arrears, under
the terms of this Lease, (c) Landlord's cost of recovering possession of
the Premises, and (d) the cost of storing any of Tenant's property left on
the Premises after re-entry. Notwithstanding any provision in this Section
13.2(ii) to the contrary, upon the default of any substitute tenant or upon
the expiration of the Lease term of such substitute tenant before the
expiration of the Lease term hereof, Landlord may, at Landlord's election,
either relet to still another substitute tenant, or terminate this Lease
and exercise its rights under Section 13.2(i) hereof.
13.3 ATTORNEYS' FEES. In the event either party hereto defaults in the
---------------------
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and the other party hereto places the enforcement of this Lease,
or any part thereof, or the or to become due, or the recovery or the possession
of the Premises, in the hands of attorneys, or files suit upon the same, the
party in default agrees to pay the reasonable attorneys' fees of the non-
defaulting party.
13.4 WAIVER. Failure on the part of Landlord or Tenant to complain of any
------------
action or non-action on the part of Landlord or Tenant, no matter how long the
same may continue, shall never be deemed to be a waiver by either party of any
of his rights hereunder. Further, it is covenanted and agreed that no waiver at
any time of any of the provisions hereof by either party shall be construed as a
waiver of any of the other provisions hereof and that a waiver at any time of
any of the provisions hereof shall not be construed as a waiver at any
subsequent time of the same
15
<PAGE>
provisions.
13.5 LANDLORD'S DEFAULT. The occurrence of one or more of the following
-------------------------
events shall constitute a default pursuant to the terms of this Lease: (i) the
failure of Landlord to comply with or observe any terms, provisions, or
conditions of this Lease performable by and obligatory upon Landlord within ten
(10) days after notice to Landlord; (ii) the assignment of this Lease by
Landlord without prior written notification to Tenant; or (iii) the taking of
Landlord's interest herein by execution or other process of law.
13.6 TENANT'S REMEDIES. Upon the occurrence of any event of default
------------------------
enumerated in Section 13.5 hereof, Tenant shall have the option of (i)
terminating this Lease by written notice thereof to Landlord, (ii) continuing
this Lease in full force and effect with the Fixed Rent abating until Landlord's
default has been cured; (iii) curing the default of Landlord and offsetting any
and all costs of curing same against the Total Monthly Rental or (iv) pursuing
any other remedy to which it may be entitled by law.
13.7 LANDLORD BANKRUPTCY PROCEEDING. In the event that the obligations of
-------------------------------------
Landlord under this Lease are not performed during the pendency of a bankruptcy
proceeding involving the Landlord as the debtor, or following the rejection of
this Lease in accordance with Section 365 of the United States Bankruptcy Code
and the election of the Tenant to remain in possession of the Premises in a
bankruptcy or insolvency proceeding involving the Landlord as the debtor, then
notwithstanding any provision of this Lease to the contrary, tenant shall have
the right to set off against rents next due and owing under this Lease (a) any
and all damages that it demonstrates to the Bankruptcy Court were caused by such
non-performance of the Landlord's obligations under this Lease by Landlord,
debtor-in-possession, or the bankruptcy trustee and (b) any and all damages
caused by the non-performance of the Landlord's obligations under this Lease
following any rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code.
SECTION 14
----------
SUBORDINATION
16
<PAGE>
14.1 SUBORDINATION. This Lease shall be subject and subordinate to any
--------------------
mortgages or deeds of trust that may have been placed or may be hereafter placed
upon the Premises by Landlord and to any advances to be made thereunder, and to
any interest thereon, and all renewals, replacements and extensions thereof.
Provided however, that any mortgagee or trustee may elect by written
notification to give the rights and interests of Tenant under this Lease
priority over the lien of its mortgage or deed of trust. In the event of
foreclosure or trustee's sale thereunder, the purchaser of Landlord's interest
shall become Landlord hereunder subject to all the terms, provisions and
obligations created hereby. Tenant shall, in the event any proceedings are
brought for foreclosure of the Premises, or the power of sale under any mortgage
made by Landlord covering the Premises is exercised, attorn to the purchaser (at
the option of said purchaser, and not otherwise) upon any such foreclosure or
sale and recognize such purchaser as the Landlord under this Lease.
14.2 NECESSARY INSTRUMENTS. Tenant shall execute and deliver instruments
----------------------------
that may be reasonably required by Landlord's mortgagees for the purpose of
evidencing the subordination of this Lease within ten (10) days of written
notice by Landlord or such mortgagee or its trustee, the language thereof to be
agreed upon by the parties hereto.
SECTION 15
----------
ESTOPPEL CERTIFICATES
Tenant agrees within ten (10) days following request by Landlord (i) to
execute and deliver to Landlord reasonably required documents (including an
estoppel certificate) (a) certifying that this Lease is unmodified and in full
force and effect, or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect and the
date to which the rent and other charges are paid in advance, if any, and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or so specifying such defaults, if any, as are
claimed, evidencing the status of the Lease.
SECTION 16
----------
17
<PAGE>
DESTRUCTION
16.1 LANDLORD'S OBLIGATIONS. (i) In the event the Premises shall be
-----------------------------
damaged by fire or other casualty, but shall not be rendered untenantable in
whole or in part, regardless of the time remaining in the term of this Lease,
Landlord shall, at its own expense, cause such damage to be repaired, and the
rent shall not be abated. (ii) If the Premises shall be reentered partially
untenantable, unless the damage occurs within the last one (1) year of the term
of this Lease, Landlord shall, at its own expense, cause the damage to be
repaired, and the Total Monthly Rental shall be abated proportionately as to the
portion of the Premises rendered untenantable. If, however, the damage occurs
within the last one (1) year of the term of this Lease, Landlord may, at its
option, cause such damage to be repaired or either party may terminate this
Lease by giving the other party written notice of termination within thirty (30)
days from the date of such occurrence, and in the event of such termination,
rent shall be adjusted as of the date of such occurrence. (iii) If the Premises
shall be rendered wholly untenantable by reason of such occurrence, regardless
of the time remaining in the term of this Lease, Landlord may at its own cost
and expense cause such damage to be repaired, and the Total Monthly Rental shall
abate until the Premises have been restored and reentered tenantable, or
Landlord may at its election terminate this Lease by giving Tenant written
notice of termination within thirty (30) days from the date of said occurrence,
and in the event of such termination, rent shall be adjusted as of the date of
such occurrence. (iv) If the Building shall be damaged to such an extent that
Landlord shall determine that the repairs shall not be made or that demolition
of the building is appropriate, then notwithstanding anything to the contrary
contained above, and whether or not the Premises have been damaged, Landlord or
Tenant may terminate this Lease by giving the other party written notice of
termination, in which event rent shall be adjusted as of the date of
termination. (v) If Landlord has not initiated repair or restoration within
thirty (30) days of the event of the casualty, Tenant shall have the right to
terminate this Lease by written notice to Landlord at any time within thirty
(30) days after said thirty (30) days.
16.2 SCOPE OF LANDLORD'S OBLIGATIONS. shall be obligated to repair or to
--------------------------------------
restore any damage or destruction aforesaid, Building and Standard Leasehold
Improvements, and time of completion shall be subject to the
18
<PAGE>
provisions of Section 20, ("Force Majeure"). If Landlord notifies Tenant within
thirty (30) days after the casualty that the insurance proceeds are inadequate
to restore the Building and the standard leasehold improvements as aforesaid,
Tenant shall have the right to terminate this Lease by giving written notice to
Landlord within thirty (30) days after Landlord's notice to Tenant.
SECTION 17
----------
EMINENT DOMAIN
17.1 TOTAL TAKING. In the event of a taking of the Premises or damage
-------------------
related to the exercise of the power of eminent domain by any agency, authority,
public utility, person, or corporation or entity empowered to condemn property
("Taking") of the entire Premises or so much thereof as to prevent or
substantially impair their use by Tenant during the Lease term (i) the rights of
Tenant under the Lease and the leasehold estate of Tenant in and to the Premises
shall cease and terminate as of the date upon which title to the Premises, or a
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor ("Date of Taking"), (ii) Landlord shall refund to Tenant any prepaid
rent, (iii) Tenant shall pay to Landlord any rent or charges due Landlord under
the Lease, each prorated as of the Date of Taking, (iv) Tenant shall receive
from the Award those portions of the Award attributable to relocation of Tenant,
improvements to the Premises made and paid for by Tenant and trade fixtures,
equipment, and furniture of Tenant, and (v) the remainder of the Award shall be
paid to and be the property of Landlord.
17.2 PARTIAL TAKING. In the event of a Taking of only a part of the Premise
--------------------
which does not constitute a "Total Taking" during the Lease term (i) the rights
of Tenant under the Lease and the leasehold estate of Tenant in and to the
portion of the Premises taken shall cease and terminate as of the Date of
Taking, (ii) from and after the Date of Taking the Total Monthly Rent shall be
the product obtained by multiplying (a) the Total Monthly Rent by (b) the
quotient obtained by dividing the total square feet of the Premises after the
Taking by the total square feet of the Premises prior to the Taking, (iii)
Tenant shall receive from the Award those portions of the Award attributable to
improvements to the Premises made and paid for by Tenant and trade fixtures,
19
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equipment, and furniture of Tenant, and (iv) the remainder of the Award shall be
paid to and be the property of Landlord. Landlord, from his portion of the
Award, shall restore the remainder of the Premises, as nearly as possible, to
one architectural unit, and (v) if Landlord has not initiated repair or
restoration within ninety (90) days of the Partial Taking, Tenant shall have the
right to terminate this Lease by written notice to Landlord within thirty (30)
days after said ninety (90) days.
SECTION 18
----------
FORCE MAJEURE
In the event Landlord shall be delayed, hindered or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor disputes, labor troubles, inability to procure materials,
failure of power, restrictive governmental laws or regulations, riots,
insurrection, war or other cause not within the reasonable control of Landlord,
then the performance of such act shall be excused for the period of the delay
and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay.
SECTION 19
----------
PARKING
Tenant shall have the use of the parking spaces and loading dock areas located
on the Premises. Tenant agrees that it will employ its best efforts to prevent
the use by Tenant's employees and visitors of parking spaces allocated to other
tenants. Landlord represents that it now has access and will retain access to
the Building and Premises for the use and benefit of Tenant, its employees,
agents, licensees and invitees.
SECTION 20
----------
INTERPRETATIVE PROVISIONS
20.1 NOTICE. Any notice, request, approval, consent or other communication
-------------
required or contemplated by this Lease must be in writing, and may, unless
otherwise in this Lease expressly provided, by given or be served by depositing
the same in the
20
<PAGE>
United States Postal Service, post-paid and certified and addressed to the party
to be notified, with return receipt requested, or by delivering the same in
person to such party (or, in the case of a corporate party, to an officer of
such party), or by prepaid telegram, when appropriate, addressed to the party to
be notified. Notice deposited in the mail in the manner hereinabove described
shall be effective from and after two (2) days (exclusive of Saturdays, Sundays
and postal holidays) after such deposit. Notice given in any other manner shall
be effective only if and when delivered to the party to be notified to such
party or at such party"s address for purposes of notice as set forth herein. For
purposes of notice the addresses of the parties shall, until changed as herein
provided, be as follows:
For Landlord: The Bettilyon Corporation
Attention: Bernard Bettilyon
333 West 21st Street
Salt Lake City, Utah 84115
For Tenant: United Stationers Supply Co.
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Attention: President
However, the parties hereto shall have the right from time to time to change
their respective addresses by giving at least fifteen (15) days written notice
to the other party.
20.2 CAPTIONS. The title captions appearing in this Lease are inserted and
---------------
included solely for convenience and shall never be considered or given any
effect in construing this Lease, or any provision or provisions hereof, or in
connection with the duties, obligations or liabilities of the respective parties
hereto or in ascertaining intent, if any question of intent exists.
20.3 ENTIRE CONTRACT; AMENDMENT. It is expressly agreed by Tenant, as a
---------------------------------
material consideration for the execution of this Lease, that this Lease,
including written extrinsic documents referred to herein is the entire agreement
of the parties, and that there are, and have been, no verbal representations,
understandings, stipulations, agreements or promises pertaining to this Lease or
the expressly mentioned written extrinsic documents not incorporated in writing
in this Lease. It is likewise agreed that this Lease may not be
21
<PAGE>
altered, amended or extended except by an instrument in writing signed by
both Landlord and Tenant.
20.4 SEVERABILITY. If any term or provision of this Lease, or the
-------------------
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 of 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 enforced to the fullest
extent permitted by law.
20.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 11
-----------------------------
and 16 of this Lease, all covenants and obligations as contained within this
Lease shall bind and extend and inure to the benefit of Landlord, its successors
and assigns, and shall be binding upon Tenant, its successors and assigns.
20.6 PERSONAL PRONOUNS. All personal pronouns used in this Lease
------------------------
shall include the other genders, whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural (and vice versa)
whenever and as often as may be appropriate.
20.7 SHORT FORM LEASE. Tenant agrees not to record this Lease, but each
-----------------------
party hereto agrees, on request of the other, to execute a Short Form Lease in
form recordable and complying with applicable Utah laws. In no event shall such
document set forth the rental or other charges payable by Tenant under this
Lease; and any such document shall expressly state that it is executed pursuant
to the provisions contained in this Lease, and is not intended to vary the terms
and conditions of this Lease.
20.8 LEGAL INTERPRETATION. This Lease and the rights and obligations of
---------------------------
the parties hereto shall be interpreted, construed and enforced in accordance
with the laws of the State of Utah.
20.9 ACCEPTANCE OF PAYMENTS UNDER PROTEST. The acceptance by Landlord
-------------------------------------------
of payments by Tenant under protest shall not be deemed an acknowledgement by
landlord, or a validation of, any contention or reservation of rights by Tenant.
20.10 RENEWAL OPTION. Tenant shall have the right and option to renew this
----------------------
Lease for one (1) additional five (5) year term by delivering written notice of
the exercise thereof to Landlord at
22
<PAGE>
least 60 days prior to the expiration of the primary lease term, provided
that at the time of the commencement of any such extended lease term Tenant is
not in default hereunder. Upon the delivery of said notice and subject to the
conditions set forth in the preceding sentence, and upon the execution by
Landlord and Tenant of an extension agreement containing such terms and
provisions which are consistent with the provisions of this paragraph, this
Lease shall be extended upon the same terms, covenants and conditions as
provided in this Lease except that the Total Monthly Rent shall be established
between Landlord and Tenant at the market rate in effect at that time. If the
parties are unable to agree to a market rate, the Lease shall terminate upon
the expiration thereof.
EXECUTED IN MULTIPLE ORIGINAL COUNTERPARTS, which constitute but one and
the same instrument, as of the day and year first above written.
"LANDLORD"
BETTILYON MORTGAGE LOAN COMPANY
By: [SIGNATURE NOT LEGIBLE]
-------------------------------
Its President
"TENANT"
UNITED STATIONERS SUPPLY CO.
By: /s/ Otis H. Halleen
-------------------------------
Its Vice President
23
<PAGE>
EXHIBIT 10.52
AGREEMENT OF LEASE
BETWEEN
THE ESTATE OF
JAMES CAMPBELL, DECEASED
LANDLORD
AND
UNITED STATIONERS SUPPLY CO.
-------------------------------------------------
TENANT
SOUTHCENTER SOUTH INDUSTRIAL PARK
BUILDING 255 WAREHOUSE BUILDING
TUKWILA, WASHINGTON
<PAGE>
AGREEMENT OF LEASE MADE as of 5th day of January, 1994 between The
---- ------- --
Estate of James Campbell, Deceased (the "Landlord") and UNITED STATIONERS
-------------------
SUPPLY CO. (the "Tenant"), having its address at 2200 East Golf Road, Des
- ---------- ------------------------
Plaines, IL 60016-1267.
- -----------------------
R E C I T A L
-------------
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord,
the Premises, for the Term, commencing on the Commencement Date, subject to the
terms, covenants, conditions and provisions of this Lease.
1. DEFINITIONS. Whenever used in this Lease, the following terms shall
-----------
have the meanings indicated below.
1.1 Additional Rent. The Common Area Rent, Tax Rent, and all other
---------------
amounts, except Fixed Rent, payable by Tenant under this Lease.
1.2 Broker. None.
------ ----
1.3 Building. The improvements known as Building 255 (the "Building")
-------- ------------
located at 18351 Cascade Avenue South, Tukwila, WA 98188 and consisting of
---------------------------------------------
approximately 103,237 square feet as shown on Exhibit A, plus the underlying
-------
land described in Exhibit B (Building Parcel) and any other parcels of land at
any time designated by Landlord to be added thereto (but only so long as such
designation remains unrevoked) which are, or are to be, used for or in
conjunction with the Building, including, but not limited to, parking areas,
landscaping and all improvements to any such parcels.
1.4 Commencement Date. April 1, 1994 or the date determined as
----------------- -------------
provided in Section 2.2.
1.5 Fixed Rent. $20,648.00 per month for each month of the Term.
---------- ---------
1.6 Floor Loading Limit. 250 pounds per square foot average areal
--------------------
storage load on the slab.
1.7 Governmental Authority. The United States, the State of
----------------------
Washington, and any political subdivision thereof or any local public or quasi-
public authority, agency, department, commission, board, bureau or
instrumentality of any of them including, with respect to matters pertaining to
insurance, rating bureaus or insurance carriers to the extent they have power to
impose conditions on the issuance of policies or the coverage thereof.
1.8 Governmental Requirements. Any law, ordinance, code, order, rule
-------------------------
or regulation of any Governmental Authority.
1.9 Landlord. The party named as Landlord herein until a sale,
--------
transfer or lease, and thereafter the Person or Persons, collectively, who
shall, for the time being, be liable for the obligations of Landlord under the
provisions of Section 6.3 of this Lease.
1.10 Necessary Approvals. Any permit, license, certificate or approval
-------------------
or other evidence of compliance with any Governmental Requirements necessary to
the lawful occupancy of the Premises and the issuance of the insurance required
to be carried hereunder for the Permitted Uses.
1.11 Notice Address.
--------------
Landlord: The Estate of James Campbell
Director, Mainland Operations/West
425 California Street, Suite 1000
San Francisco, California 94104
With copy to Managing Agent: Collier's Real Estate Services, Inc.
800 Fifth Avenue, Suite 3930
Seattle, Washington 98104
1.12 Office Park. Southcenter South Industrial Park as legally
-----------
described in the Protective Covenants.
1.13 Permitted Uses. Office and warehouse but specifically
--------------
excluding public warehousing, truck terminals, custom houses and container
terminals.
1.14 Person. A natural person, firm, partnership, association or
------
corporation, as the case may be.
1.15 Premises. Space in the Building consisting of approximately
--------
73,741 square feet as shown on Exhibit A.
- ------
1.16 Protective Covenants. Declaration of Protective Covenants
--------------------
for the Southcenter South Industrial Park, as may from time to time be
amended, recorded in the official records of King County, Washington.
-1-
<PAGE>
1.17 Rent. The Fixed Rent and the Additional Rent.
----
1.18 Security Deposit. None.
---------------- -----
1.19 Tenant's Pro Rata Share. 71.43 percent.
----------------------- -----
1.20 Term. Three (3) years.
---- ---------------
1.21 Common Areas. As defined in Section 4.1.
------------
Exhibit A - Floor Plan of Premises
Exhibit B - Building Parcel
Exhibit C - Tenant Improvements
Exhibit D - Right of First Refusal
2. CONSTRUCTION--COMMENCEMENT DATE.
-------------------------------
Section 2.1 Landlord's Work.
---------------
2.1.1 Landlord shall perform certain work in preparing the Premises
for occupancy by Tenant all as set forth in Exhibit C and in this section
("Tenant Improvements"). Landlord's approval of the plans, specifications and
working drawings for Tenant Improvements shall create no responsibility or
liability on Landlord's part for their completeness, design sufficiency or
compliance with Governmental Requirements.
2.1.2 If Tenant desires improvements beyond the Tenant Improvements
set forth in Exhibit C, and Landlord and Tenant agree as to further additional
work, Tenant shall, within five (5) days after written demand, pay to Landlord
as Additional Rent, the agreed upon cost and expense to Landlord of supplying
and installing such additional work, materials and installations (including
sales tax and design fees), plus ten (10%) percent of such cost and expense for
Landlord's overhead, less a credit equal to the cost to Landlord of materials
specified in Exhibit C (if any) for which substitutes were installed at Tenant's
request.
2.1.3 Landlord shall construct the Tenant Improvements, provided,
however, that Landlord shall have the right on an on-going basis to make any
changes required by any Governmental Authority. Said work shall be performed by
Landlord only once, it being understood that Landlord's obligation to perform
the work with respect to Tenant Improvements is a single, non-recurring
obligation.
2.1.4 Landlord shall give Tenant ten (10) days' written notice of the
anticipated date of substantial completion of the Tenant Improvements, and
Tenant shall have the right during said ten-day period to enter into the
Premises for the purpose of installing its property and equipment and preparing
the Premises for its occupancy, provided that (a) neither Tenant nor its agents
or employees shall interfere with any work being done by Landlord and its agents
and employees in any part of the Building, (b) Tenant shall comply with any
reasonable work schedule, rules and regulations proposed by Landlord, its agents
or employees, (c) the labor employed by Tenant shall be harmonious and
compatible with the labor employed by Landlord in the Building, it being agreed
that if in Landlord's judgment the labor is incompatible Tenant shall forthwith
upon Landlord's demand withdraw such labor from the Premises, (d) Tenant shall
procure and deliver to Landlord insurance as provided herein, (e) Tenant shall
hold Landlord harmless from and against any and all claims arising from or in
connection with any act or omission of Tenant or its agents or employees, (f)
Tenant, at Tenant's expense, shall comply with all Governmental Requirements,
which shall impose any duty upon Landlord or Tenant with respect to the use,
occupancy or alteration of the Premises, including the requirement, if any, to
obtain building permits for Tenant's installation, copies of which permits shall
be delivered prior to commencement of Tenant's installation; and (g) all the
terms, provisions and agreements of this Lease shall apply to said occupancy
except for the obligation to pay Rent.
Section 2.2 Commencement Date.
-----------------
2.2.1 The Commencement Date for all purposes under this Lease shall be
the earlier of the fixed Commencement Date set forth in Section 1 or the date
that Landlord notifies Tenant in writing that it has substantially completed the
Tenant Improvements. Within ten (10) days after the Commencement Date specified
in Landlord's notice, Landlord's representative and Tenant's representative
shall jointly examine the Premises and shall compile a list of any remaining
items of work which Landlord may be obligated to complete (said remaining items
being hereinafter referred to as "punch list items"). The taking of possession
of the Premises by Tenant shall be deemed an acceptance of the Premises, but
Landlord shall thereafter proceed expeditiously to complete the punch list
items.
2.2.2 Tenant waives any damages which may result from any delay in the
substantial completion of the work described in Section 2.1 or delivery of
possession of the Premises. If Tenant takes possession of the Premises prior
-2-
<PAGE>
to the Commencement Date, Tenant's obligation to pay Rent hereunder and to
observe and perform all other conditions and agreements hereunder with respect
to the Premises shall commence on such earlier date of taking possession of the
Premises. Notwithstanding the foregoing, Tenant shall not take possession of the
Premises prior to the Commencement Date without Landlord's written permission.
2.2.3 In the event that substantial completion of the Tenant
Improvements is delayed by reason of delays caused or occasioned by Tenant, this
Lease shall commence on the date that this Lease would have commenced had not
the completion of Tenant Improvements been so delayed by the Tenant, as
reasonably determined by Landlord.
2.2.4 The Tenant Improvements shall be deemed to have been
substantially completed (even though other work in and around the Building or
Office Park may not be completed and decorating or other minor details or
adjustments may not then have been completed) when a temporary or permanent
certificate of occupancy has been issued and parking is available. The taking of
possession of the Premises by Tenant shall be deemed an acceptance of the
Premises and substantial completion by Landlord of the Tenant Improvements.
Nothing herein contained shall be construed to release Landlord from its
obligations to complete the punchlist items.
2.2.5 Upon substantial completion of the Premises, Tenant and Landlord
shall promptly execute an instrument confirming the dates of commencement and
expiration of the Lease Term for the Premises.
Section 2.3 Building Under Construction. Landlord and Tenant
---------------------------
acknowledge that the Building or Tenant Improvements may presently be under
or is expected soon to be under construction and in the event the Building or
the Tenant Improvements with respect to the Premises are not substantially
completed within six (6) months after the fixed Commencement Date set forth in
Section 1 ("Final Completion Date"), then Tenant may, as Tenant's sole and
exclusive remedy for such failure to substantially complete the Building, or
the Tenant Improvements, cancel and terminate this Lease by written notice to
Landlord. The Final Completion Date shall be deemed extended by the matters set
forth in Section 10.9 and by any delays created or caused by Tenant.
Section 2.4 Ownership of Improvements. Except for Tenant's trade
-------------------------
fixtures, racks, conveyors, equipment and personal property, all installations,
alterations, additions, improvements, fixtures and other property which are now
or at any time hereafter attached to, or located upon the Premises, made or
installed by either party, including all pipes, ducts, conduits, wiring,
paneling, decorations, partitions, railings, mezzanine floors, galleries and the
like, shall be and remain the property of Landlord and shall remain upon and be
surrendered with the Premises as a part thereof at the expiration or sooner
termination of the Term. None of the foregoing shall be deemed to include any of
Tenant's furniture and personal property which is removable without damage to
the Premises.
3. RENT.
----
Section 3.1 Payment. All Rent shall be paid in lawful money of the
-------
United States which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, at the address of Landlord set forth
in this Lease or at such other place as Landlord in writing may designate,
without any set-off or deduction whatsoever and without any prior demand
therefor.
Section 3.2 Fixed Rent. Tenant shall pay the annual Fixed Rent in
----------
equal monthly installments in advance on the first day of each calendar month
included in the Term.
Section 3.3 Tax Rent.
--------
3.3.1 Definitions. In addition to the Fixed Rent, Tenant shall pay to
-----------
Landlord, Tenant's Pro Rata share of Real Property Taxes (sometimes referred to
herein as Tax Rent), utilizing the following definitions:
(a) "Real Property Taxes" shall mean real and personal property
taxes, LID's, assessments, and other governmental impositions and charges of
every kind and nature, now or hereafter imposed, including surcharges with
respect thereto, which may during the Term of this Lease be levied, assessed,
imposed, or otherwise become due and payable with respect to the Building,
including Tenant Improvements, and including the Building Parcel and all
improvements, fixtures, and equipment thereon, or the use, occupancy or
possession thereof; taxes on Property of Tenant (as described in subsection
3.3.4 which have not been paid by Tenant directly to the taxing authority; costs
and expenses, including costs of appraisers, attorneys and consultants incurred
in negotiating, reviewing or appealing any taxes; and any taxes levied or
assessed in addition to, in lieu of, or as a substitute for, in whole or part,
taxes now levied or assessed or any other tax upon owning, leasing or rents
receivable by Landlord from the Building, but not including any federal or state
income tax imposed on Landlord.
(b) "Calendar Year" shall mean the twelve-month period
commencing January 1 and ending December 31.
-3-
<PAGE>
(c) "Tenant's Share of Real Property Taxes" shall mean the
amount of Real Property Taxes payable during any Calendar Year by Landlord
multiplied by Tenant's Pro Rata Share.
3.3.2 Additional Rent for Estimated Tenant's Share of Real Property
-------------------------------------------------------------
Taxes. Prior to the commencement of each Calendar Year or portion thereof, or as
- -----
soon thereafter as practicable, Landlord shall furnish Tenant with a written
statement setting forth the estimate of Tenant's Share of Real Property Taxes
for such Calendar Year. One-twelfth (1/12) of such amount shall be Additional
Rent payable by Tenant with installments of Fixed Rent.
3.3.3 Actual Real Property Taxes. Within ninety (90) days after the
--------------------------
close of each Calendar Year or portion thereof, or as soon thereafter as
practicable, Landlord shall deliver to Tenant a written statement setting forth
the Tenant's Share of Real Property Taxes during the preceding Calendar Year. If
Tenant's Share of Real Property Taxes for any Calendar Year exceeds the
estimated Tenant's Share of Real Property Taxes determined as provided in the
preceding subsection 3.3.2, Tenant shall pay the amount of such excess to
Landlord as added Additional Rent within thirty (30) days after receipt of such
statement by Tenant. If such statement shows such amount to be less than the
amount paid by Tenant to Landlord pursuant to the preceding subsection 3.3.2,
then the amount of such overpayment shall be credited by Landlord to the next
due Rent payable by Tenant, or immediately refunded to Tenant if the Lease has
expired or otherwise terminated in accordance with the terms of the Lease,
except by reason of Tenant's default.
3.3.4 Personal Property Taxes. Tenant shall pay, prior to
-----------------------
delinquency, all Personal Property Taxes payable with respect to all Property of
Tenant located on the Premises or the Building and promptly upon request of
Landlord shall provide written proof of such payment. As used herein, "Property
of Tenant" shall include all improvements, fixtures and equipment which are paid
for or owned by Tenant. "Personal Property Taxes" shall include all property
taxes assessed against the Property of Tenant, whether assessed as real or
personal property.
3.3.5 Real Property Tax Proceedings. In the event Landlord shall
-----------------------------
obtain a tax refund as a result of Real Property Taxes reduction proceedings or
other proceedings of similar nature, then Tenant shall, provided Tenant is not
then in default, and after the final conclusion of all appeals or other
remedies, be entitled to the net refund of Real Property Taxes obtained based
upon Real Property Taxes paid by Tenant which is the subject of the refund. As
used herein, the term "net refund" means the refund plus interest, if any,
thereon, paid by the Governmental Authority less appraisal, engineering, expert
testimony, attorney, printing and filing fees and all other costs and expenses
of the proceeding. Tenant shall have the right to institute or participate in
any such proceedings with the consent of Landlord.
Section 3.4 Common Area Rent.
----------------
3.4.1 Definitions. In addition to the Fixed Rent, Tenant shall
-----------
pay to Landlord as Additional Rent, Tenant's Pro Rata Share of Common Area
Operating Costs (sometimes referred to herein as Common Area Rent), using the
following definitions:
(a) "Common Area Operating Costs" shall mean (1) the pro rata
portion, allocated on the basis of the ratio which the area of the Building
Parcel bears to the then area of the Office Park, of the expenses of the
operation, maintenance and repair of the Common Areas of the Office Park in
accordance with the Protective Covenants, (2) insurance premiums for insurance
carried by Landlord on the Building or the Building Parcel, (3) the cost of
landscape maintenance on the Building Parcel and periodic painting and repair of
the exterior of the surface of the Building, and (4) all expenses paid or
incurred by Landlord for maintaining, operating and repairing the Common Areas
(as defined in (b) through (e) of Section 4.1), the Building and the Building
Parcel and the equipment and personal property used in conjunction therewith,
including, without limitation, the costs of compliance with Governmental
Requirements, the costs of refuse collection, water, sewer, electricity, and
other utilities services, supplies and cleaning services, services of
independent contractors, compensation (including employment taxes and fringe
benefits) of all persons who perform duties in connection with the operation,
maintenance and repair of the Common Areas and its equipment, the maintenance
and repair of parking areas, curbs, landscaping, lighting and outdoor
facilities, licenses, permits and inspection fees, taxes, liability insurance
for the Office Park including the Building, customary management fees, legal and
accounting expenses and any other expense or charge whether or not hereinabove
described which in accordance with generally accepted accounting and management
practices would be considered an expense of maintaining, operating or repairing
the Common Areas, the Building or the Building Parcel, excluding:
(1) Costs of any special services rendered to individual
tenants (including Tenant) for which a special charge is made; and
(2) Real Property Taxes (as defined in Section 3.3 of this
Lease).
(3) Repairs required to be made by Landlord pursuant to
Section 6.1. See Rider attached.
-4-
<PAGE>
(b) "Calendar Year" shall mean the twelve-month period
commencing January 1 and ending December 31.
(c) "Actual Costs" shall mean the actual expenses paid or
incurred by Landlord for Common Area Operating Costs during any Calendar Year of
the term hereof.
(d) "Actual Costs Allocable to the Premises" shall mean Actual
Costs multiplied by Tenant's Pro Rata Share.
(e) "Estimated Costs Allocable to the Premises" shall mean
Landlord's estimate of Actual Costs Allocable to the Premises to be given by
Landlord to Tenant pursuant to subsection 3.4.2 below.
3.4.2 Additional Rent for Estimated Costs. Prior to the commencement
-----------------------------------
of each Calendar Year or portion thereof, or as soon thereafter as practicable,
Landlord shall furnish Tenant a written statement of the Estimated Costs
Allocable to the Premises for such Calendar Year, and a calculation of the
Additional Rent as follows: One-twelfth (1/12) of such amount shall be
Additional Rent payable by Tenant with installments of Fixed Rent.
3.4.3 Actual Costs. Within ninety (90) days after the close of each
------------
Calendar Year or portion thereof, or as soon thereafter as practicable, Landlord
shall deliver to Tenant a written statement setting forth the Actual Costs
Allocable to the Premises during the preceding Calendar Year. If such costs for
any Calendar Year exceed Estimated Costs Allocable to the Premises paid by
Tenant to Landlord pursuant to the preceding subsection 3.4.2, Tenant shall pay
the amount of such excess to Landlord as Additional Rent within 30 days after
receipt of such statement by Tenant. If such statement shows such costs to be
less than the amount paid by Tenant to Landlord pursuant to the preceding
subsection 3.4.2, then the amount of such overpayment by Tenant shall be
credited by Landlord to the next succeeding installment of Rent payable by
Tenant, or immediately refunded to Tenant if the Lease has expired and Tenant
vacating, or if the Lease has otherwise terminated in accordance with the terms
of the Lease, except for Tenant's default.
Section 3.5 Determinations. The determination of Actual and Estimated
--------------
Costs Allocable to the Premises and Tenant's Share of Real Property Taxes shall
be made by Landlord.
Section 3.6 End of Term. If this Lease shall terminate on a day other
-----------
than the last day of a Calendar Year, the amount of any adjustment between
Estimated and Actual Costs Allocable to the Premises and Tenant's Share of Real
Property Taxes with respect to the Calendar Year in which such termination
occurs shall be prorated on the basis which the number of days from commencement
of such Calendar Year to and including such termination date bears to 365; and
any amount payable by Landlord to Tenant or Tenant to Landlord with respect to
such adjustment shall be payable within thirty (30) days after delivery by
Landlord to Tenant of the statement of such adjustment with respect to such
Lease Year, which statement should be provided to Tenant within ninety (90) days
after Lease expiration.
Section 3.7 Base Rent. Notwithstanding anything to the contrary in
---------
this section, the Rent payable by Tenant shall in no event be less than the
Fixed Rent.
Section 3.8 Additional Rent. Unless another time shall be herein
---------------
expressly provided, Additional Rent shall be due and payable on demand or
together with the next succeeding installment of Fixed Rent, whichever shall
first occur; and Landlord shall have the same remedies for failure to pay the
Additional Rent as for a non-payment of Fixed Rent.
Section 3.9 Rent for a Partial Month. For any portion of a calendar
------------------------
month included at the beginning or end of the Term, Tenant shall pay 1/30th of
each monthly installment of Rent for each day of such portion, payable in
advance at the beginning of such portion.
Section 3.10 Interest. From and after ten (10) days after the due date
--------
of any payment of Rent, interest shall accrue thereon at the rate of the lesser
of 1-1/2% per month or the maximum rate permitted by law.
Section 3.11 Sales Tax. Tenant shall pay any sales, use, occupancy,
---------
value added (if the value added is not in lieu of Real Property Taxes as
described in Section 3.3) or similar tax now or hereafter levied or imposed in
connection with the Fixed or Additional Rent payable by Tenant, but not
including any federal, state or local income tax imposed upon Landlord.
4. COMMON AREAS.
------------
Section 4.1 Common Areas. Landlord hereby grants to Tenant a non-
------------
exclusive license in common with Landlord and with others to use for the
purposes permitted under this Lease: (a) the Common Areas of the Office Park as
defined in the Protective Covenants for ingress and egress to the Premises, (b)
the hallways, lobby, if any, and such public conveniences of the Building as may
from time to time be designated by Landlord, (c) the parking lot and parking
area serving the Building, (d) private streets and roads serving the Premises,
and (e) any other areas or improvements in or around the Building or Building
Parcel, including all exterior lighting, now or hereafter to be used
-5-
<PAGE>
in common by or for the common benefit of Landlord and the tenants of the
Building or other buildings. The items set forth in (a) through (e) above are
collectively referred to as "Common Areas." Notwithstanding any of the
provisions herein contained, Landlord shall retain a nonexclusive right to the
use of the Common Areas and all other parts of the Office Park exclusive of the
Premises. No schedule, exhibit, sketch, plan, drawing, rendering, brochure,
flyer, or the like shall be deemed to create a warranty, representation or
agreement on the part of Landlord that the Office Park or the Building will be
or will continue to be exactly as indicated thereon, and Landlord reserves the
right to (i) increase, reduce or change the number, type, size, location,
elevation, nature and use of any of the Common Areas in the Office Park, and
(ii) make changes, additions, alterations, or improvements in or to the Common
Areas or the Office Park (including additional buildings), and (iii) dedicate
all or any part of the Common Areas or the Office Park to any Governmental
Authority having jurisdiction provided no such action shall prevent or interfere
with Tenant's reasonable access to and use of the Premises. Tenant shall have no
rights with respect to the land or improvements below the exterior floor slab
level or above the interior surface of the ceiling of the Premises or air rights
or any easements, in, on, about, below or above the Premises.
Section 4.2 Parking. Tenant and its visitors, agents and employees
-------
shall be permitted to park in the parking lot serving the Building and located
on the Building Parcel, and Tenant understands that 1) the attached Exhibit A
represents that portion of the parking lot serving the Building allocated to
Tenant for parking and access. Landlord agrees not to reduce or substantially
change the parking areas for the Building as shown on Exhibit A and not to
reduce the number of parking spaces currently available to Tenant and that the
parking spaces shall not be reserved but on a first-in basis. Tenant and
Tenant's visitors, agents and employees shall park their passenger vehicles,
trucks or delivery vehicles only in the paved parking area serving the Building
and located on the Building Parcel and not in any other parts of the Office
Park, including any unpaved areas, railroad rights of way or easements or any
fire lanes or corridors. In addition, Tenant shall not, at any time, park or
permit the parking of any vehicles or visitor parking in any part of the parking
areas which are restricted or designated as driveways, loading area, access
areas, crosswalks, entrance areas, exit areas or in any other manner which would
in any way restrict and/or hamper the flow of traffic. In utilizing parking
areas and spaces, all Persons shall park at their own risk and it is
specifically understood and agreed that the Landlord shall not be liable in any
way for any injury to person or property or loss by theft or damage or otherwise
of said vehicle(s) or the contents thereof or from any other cause whatsoever.
Vehicles may be moved in order to permit Landlord to examine the parking areas
and spaces and to make such repairs, replacements and improvements as Landlord
may deem necessary and reasonably desirable in accordance with and subject to
the terms, conditions and covenants of this Lease.
4.2.1 Tenant agrees to use reasonable efforts to enforce all parking
requirements imposed by any Governmental Authority. Landlord reserves the right
to tow away any vehicle in violation of such Governmental Authority.
4.2.2 Use of the Common Areas and all parts of the Office Park shall
be subject to such reasonable rules and regulations including the right to
allocate the number of spaces available to each tenant or occupant of the
Building as Landlord may from time to time adopt on a uniform or
nondiscriminatory basis, including the establishment of validation systems,
barriers or gates, permits and stickers for parking and other systems as
Landlord may, from time to time adopt. In the event of an allocation of parking
spaces, Tenant shall be allocated Tenant's Pro Rata Share of the parking spaces
serving the Building.
5. UTILITIES SERVICE.
-----------------
Section 5.1 Utilities. Tenant shall be solely responsible and shall
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pay separately for all charges for fuel, heat, water, sewer service, refuse
collection, gas, electricity, telephone and for all other utilities used or
consumed in the Premises. It is understood that Landlord shall not be required
to provide any services or utilities to Tenant, and Tenant shall make any
necessary arrangements to have all of such services or utilities billed directly
to and paid directly by Tenant.
Section 5.2 Directory If Landlord constructs a Building directory,
---------
Tenant shall be allotted Tenant's Pro Rata Share of the available space on such
directory.
6. LANDLORD'S ADDITIONAL COVENANTS.
-------------------------------
Section 6.1 Repairs by Landlord. Landlord shall make necessary
-------------------
repairs to the exterior foundations and roof of the Building, and the plumbing,
electrical and other utility systems serving but which are located outside of
the Premises, and shall make necessary structural repairs to the exterior walls
of the Building (excluding, however, repairs to windows, doors, saddles and
plate glass), and the load-bearing walls and load-bearing columns, if any,
within the Premises, provided that Landlord shall not be obligated hereby to do
any work required to be done because of any damage caused by any act, omission
or negligence of Tenant and its invitees, licensees, their respective officers,
agents and employees or their customers. Landlord shall not be required to
commence any such repair until after notice from Tenant that the same is
necessary, which notice, except in the case of an emergency, shall be in writing
and shall allow Landlord ten (10) days in which to commence such repair. When
necessary by reason of accident or other cause occurring in the Building or in
the Premises or in order to make any repairs
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or alterations or improvements in or relating to the Building or the Premises,
Landlord reserves the right to interrupt the supply of electricity, water and
gas or any other utility and also to suspend the operation of the heating and
air conditioning system, where there shall be one installed in the Building,
until said repairs, alterations or improvements shall have been completed. There
shall be no abatement in Rent because of any such interruption or suspension,
however, Landlord shall pursue such work with reasonable continuity, diligence
and dispatch and in such a manner as (consistent with good practice) to cause a
minimum of interference with Tenant's use of the Premises. Landlord shall
maintain the landscaping on the Building Parcel and periodically paint and
repair the exterior surfaces of the Building and the cost thereof shall be a
Common Area Operating Cost as set forth in Section 3.4. In addition, Landlord,
at Landlord's discretion, may clean and maintain parking areas and entryways if
the Tenant fails to keep such areas clean and in good condition, and the cost
thereof shall be a Common Area Operating Cost as set forth in Section 3.4.
Section 6.2 Quiet Enjoyment. Provided that no Event of Default is
---------------
continuing after any notices required hereby, Landlord covenants that Tenant,
shall peacefully and quietly have, hold and enjoy the Premises throughout the
Term without hindrance, ejection or molestation by any Person lawfully claiming
under Landlord, subject to the other terms and provisions of this Lease and to
all mortgages and underlying leases of record to which this Lease is or may
become subject and subordinate.
Section 6.3 Landlord's Liability.
--------------------
6.3.1 In the event of a sale or transfer of all or any portion of the
Building or Building Parcel or an undivided interest therein, or in the event of
the making of a lease of all or substantially all of the Building or Building
Parcel (herein referred to as an "Overlease"), or in the event of a sale or
transfer of the Landlord's fee or leasehold estate in any such Overlease, the
grantor or transferor, as the case may be, shall thereafter be entirely relieved
of all terms, covenants and obligations thereafter to be performed by Landlord
under this Lease to the extent of the interest or portion so sold or
transferred, provided that (a) any amount then due and payable to Tenant or for
which Landlord or the then grantor or transferor would otherwise then be liable
to pay to Tenant (it being understood that the owner of an undivided interest in
the fee or any such Overlease shall be liable only for his or its proportionate
share of such amount) shall be paid to Tenant (b) the interest of the grantor or
transferor, as Landlord, in any funds then in the hands of Landlord or the then
grantor or transferor, in which Tenant has an interest, shall be transferred to
the then grantee or transferee and (c) written notice of such sale, transfer or
Overlease, shall be delivered to Tenant and (d) the grantee or transferee shall
assume in writing the obligations of Landlord hereunder. Upon the termination of
any such Overlease, the lessor thereunder shall become and remain liable as
Landlord hereunder only so long as there shall not be made another such
Overlease.
6.3.2 Tenant agrees that it shall look solely to the estate and
property of Landlord in the land and buildings comprising the Building and
Building Parcel (subject to prior rights, if any, of holders of superior
interests) for the collection of any judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or breach
by Landlord with respect to any of the terms, covenants and conditions of this
Lease to be observed or performed by Landlord; and no other assets of Landlord
or any Person having any interest in Landlord shall be subject to levy,
execution or other procedures for the satisfaction of Tenant's remedies.
6.3.3 Any liability which may arise as a consequence of the execution
of this Lease by or on behalf of the Landlord shall be a liability of the Estate
of James Campbell and not the personal liability of any trustee, corporate
officer of a trustee or employee of the Estate of James Campbell.
7. TENANT'S ADDITIONAL COVENANTS.
-----------------------------
Section 7.1 Affirmative Covenants. Tenant covenants, at its expense,
---------------------
at all times during the Term:
7.1.1 To use the Premises only for the Permitted Use and for no other
purpose and in no event shall Tenant permit the use of the Premises in violation
of any Governmental Requirements, in violation of any covenants and restrictions
affecting the Building and Building Parcel, including those set forth in the
Protective Covenants, or for any unlawful, or noxious or offensive purpose or in
such a manner as to constitute a nuisance.
7.1.2 To (a) store all trash and refuse in appropriate sealed and
covered containers either within the Building or in a concealed location
designated by Landlord and shall attend to the regular disposal and removal
thereof, (b) receive all deliveries, load and unload goods, merchandise,
supplies, fixtures, equipment, furniture and rubbish only through proper service
doors, and loading docks serving the Building, but in no event through the main
front entrance thereof, and (c) not change the exterior colors or architectural
treatment of the Premises or make any alterations or changes to the exterior of
the Building, or the grading, planting or landscaping of the exterior of the
Premises without Landlord's prior written approval. In
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addition, there shall be no outside storage of any kind permitted without
Landlord's written consent.
7.1.3 Except for repairs required to be made by Landlord, Tenant shall
take good care of the Premises and, at Tenant's sole cost and expense, shall
make all improvements, repairs and replacements, interior and exterior,
structural or nonstructural, foreseen or unforeseen as and when needed to
preserve the Premises in good working order and condition. Without affecting or
limiting Tenant's obligations set forth in this preceding sentence, Tenant, at
Tenant's sole cost and expense, shall provide (a) maintenance and repair of the
electrical, heating, plumbing, elevators, sprinkler and air conditioning systems
in the Premises; (b) generally keep and maintain the Premises, both interior and
exterior, in good repair and condition; (c) repair and maintain all exterior and
interior doors, windows, partitions, lighting, glass, floor surfaces and entry
ways. Tenant specifically acknowledges that the floor loading limit within the
Premises is as set forth in Section 1, and Tenant agrees not to load the floor
in excess of such limit. Before installing any heavy equipment or fixtures in
the Premises, Tenant shall submit the plans and specifications therefor to
Landlord for approval. Tenant shall at all times during the term of this Lease,
keep and maintain in full force and effect maintenance and repair contracts for
the benefit of Landlord and Tenant, providing for the service, maintenance, and
repair of the heating, ventilating and air conditioning, elevators and sprinkler
systems of the Premises.
7.1.4 To make all repairs, alterations, additions or replacements to
the Premises, including appurtenances, equipment, interior and exterior
facilities and fixtures related thereto, including any protective bollards
located on the Building Parcel, arising out of Tenant's use or occupancy of the
Premises or necessary to satisfy any Governmental Requirement; to keep the
Premises equipped with all safety appliances so required because of such use or
occupancy; and otherwise to comply with the orders and regulations of any
Governmental Authority except that Tenant shall not be under any obligation to
comply with any Governmental Requirement requiring any alteration of or addition
to the Premises unless such alteration or addition is required because of a
condition created by Tenant. Tenant acknowledges that Landlord may be required
or may desire to subdivide or plat the Building Parcel and grant easements
thereon, and Tenant agrees to consent to or join in such documents to the extent
reasonably required by Landlord.
7.1.5 To pay promptly when due the entire cost of any work to the
Premises, including equipment, facilities and fixtures therein, undertaken by
Tenant, so that the Premises and the Building shall, at all times, be free of
liens for labor and materials; to procure all Necessary Approvals before
undertaking such work; to do all such work in a good and workmanlike manner
acceptable to Landlord, employing materials of good quality; to perform such
work in such manner as to insure proper maintenance of good and harmonious labor
relationships; and to comply with any Governmental Requirements relating
thereto.
7.1.6 To indemnify and save Landlord harmless of and from all loss,
cost liability, damage and expense, including, but not limited to, attorneys'
fees, penalties and fines, incurred in connection with or arising from (a) any
default by Tenant in the observance or performance of any of the terms,
covenants or conditions of this Lease on Tenant's part to be observed or
performed, or (b) the use or occupancy or manner of use or occupancy of the
Premises, the Building, the Building Parcel or Office Park by Tenant or any
Person claiming through or under Tenant, or (c) acts, omissions or negligence of
Tenant or any such Person claiming through or under Tenant, or the contractors,
agents, servants, employees, visitors or licensees of Tenant or any Person
claiming through or under Tenant, in or about the Premises either prior to or
during the Term or any holdover period or renewal period thereafter, or (d) any
claims by any Persons, by reason of injury to Persons or damage to property
occasioned by any use, occupancy, act, omission or negligence referred to
herein.
7.1.7 To maintain with responsible companies approved by Landlord with
a Best's Insurance Guide rating of not less than A+15 (a) commercial general
liability insurance, with contractual liability endorsement covering the matters
set forth in subsections 7.1.6(b), (c) and (d) above, with a Combined Single
Limit per occurrence in an amount not less than $1,000,000 which insurance shall
name Landlord and its agents as an additional insured; (b) fire insurance, with
extended coverage, vandalism, malicious mischief and sprinkler leakage
endorsements covering all fixtures and equipment, stock in trade, furniture,
furnishings, improvements or betterments installed or made by Tenant in, on or
about the Premises to the extent of at least 100% of their replacement value,
without deduction for depreciation, but in any event in an amount sufficient to
prevent Tenant from becoming a co-insurer under provisions of applicable
policies. Tenant's insurance shall be in form satisfactory to Landlord and shall
provide that it shall not be subject to cancellation, termination or material
change, nor shall the policies therefor be surrendered for termination except
after at least thirty (30) days' prior written notice to Landlord and, upon
Landlord's request, to any mortgagee of Landlord. All policies required pursuant
to this paragraph or duly executed certificates for such policies shall be
deposited with Landlord not less than ten (10) days prior to the day Tenant is
expected to take occupancy and upon renewals of said policies not less than
fifteen (15) days prior to the expiration of the term of such coverage. Landlord
shall maintain, with insurance companies qualified to do business in the State
of Washington, all risk property insurance with extended coverage, vandalism,
malicious mischief, sprinkler leakage, rental insurance and such other
additional coverages as are
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<PAGE>
carried by prudent operators of similar property (including other similar
properties owned by Landlord) and in such amounts and with such deductibles as
Landlord deems appropriate, but at least to the extent of 80% of the replacement
cost of the Building or, if Landlord shall so elect, Landlord may self insure in
whole or part any of the foregoing coverages. The premiums for said policy, or,
if the policy is part of a blanket policy, the amount of the premium (including
any amount for the waiver of subrogation set forth below) allocable to the
Building, shall be a Common Area Operating Cost as set forth in Section 3.4. The
proceeds of said insurance maintained by Landlord shall be adjusted by and
payable solely to Landlord.
Notwithstanding anything to the contrary herein, Landlord and Tenant
mutually agree that with respect to any loss or damage to the real or personal
property of either on the Building Parcel, including the Building itself
(whether caused by the negligence of Landlord, Tenant or any other cause),
which is covered by insurance then being carried by them respectively, or
required to be carried, or as to any coverage which Landlord agrees need not be
carried, the party suffering a loss releases the other of and from any and all
claim with respect to such loss; and they further mutually agree that their
respective insurance companies shall have no right of subrogation against the
other on account thereof.
7.1.8 To pay on demand any increase in premiums that may be charged on
insurance carried by Landlord resulting from Tenant's use or occupancy of the
Premises.
7.1.9 Landlord and Landlord's agents and employees shall not be liable
for, and Tenant waives all claims for, loss or damage to Tenant's business or
damage to person or property sustained by Tenant resulting from any accident or
occurrence (unless caused by or resulting from Landlord's breach of its
obligations hereunder or the negligence of Landlord, its agents, servants or
employees other than accidents or occurrences against which the Tenant is
insured or required to be insured) or in or upon the Premises or the Building or
the Office Park, including, but not limited to, claims for damage resulting
from: (a) any equipment or appurtenances becoming out of repair; (b) injury done
or occasioned by wind; (c) any defect in or failure of plumbing, heating or air
conditioning or ventilation equipment, electric wiring or installation thereof,
gas, water, steam or other pipes, stairs, porches, railings or walks; (d) broken
glass; (e) the backing up of any pipe or downspout; (f) the bursting, leaking or
running of any tank, tub, washstand, water closet, waste pipe, drain or any
other pipe or tank in, upon or about the Building or the Premises; (g) the
escape of steam or hot water; (h) water, snow or ice being upon or coming
through the roof, skylight, trapdoor, stairs, doorways, show windows, walks or
any other place upon or near the Building or the Premises or otherwise; and (i)
any act, omission or negligence of other tenants, licensees or of any other
persons or occupants of the Building or Office Park.
7.1.10 To permit Landlord and its agents to have reasonable access in
and about the Premises including, without limitation, the right to enter the
Premises on twenty-four (24) hours prior notice (except in the case of
emergency) to examine the Premises or for the purpose of performing any
obligation of Landlord under this Lease or exercising any right or remedy
reserved to Landlord in this Lease; to erect, install, use and maintain in
concealed locations pipes, ducts and conduits in and through the Premises; to
exhibit the Premises to others; to make such repairs, alterations, improvements
or additions, or to perform such maintenance, as Landlord may deem necessary or
desirable provided that any such access, entry, repairs, alterations,
improvements shall not materially interfere with Tenant's business in the
Premises Landlord shall have the right, from time to time, to change the name,
number or designation by which the Building is commonly known. All parts (except
surfaces facing the interior of the Premises) of all walls, windows and doors
bounding the Premises (including exterior Building walls, core corridor walls,
doors and entrances) and the use thereof, as well as access thereto through the
Premises for the purposes of operation, maintenance, alteration and repair, are
hereby reserved to Landlord
7.1.11 To pay on demand Landlord's expenses, including reasonable
attorneys' fees, at trial and on appeal, or in arbitration or mediation,
incurred in successfully enforcing any obligation of the Tenant under this Lease
or incurred in any action or proceeding arising out of or pursuant to this
Lease.
7.1.12 Forthwith to cause to be discharged of record by payment and to
indemnify, defend and hold harmless Landlord from and against all liability and
expense arising from any mechanic's lien at any time filed against the Premises
or the Building Parcel for any work, labor, services or materials claimed to
have been performed at, or furnished to the Premises, for or on behalf of
Tenant, or anyone holding the Premises through or under Tenant. Nothing in this
Lease contained shall be construed as a consent on the part of Landlord to
subject Landlord's estate in the Premises, the Building or Building Parcel to
any lien or liability under applicable law.
7.1.13 Upon the expiration or other termination of the Term, to quit
and surrender the Premises to Landlord, broom clean, in good order and
condition, ordinary wear and tear and casualty not caused by Tenant, its agents,
servants, employees, visitors, or licensees excepted, and at Tenant's expense to
remove all property of Tenant and, at Landlord's option, any alteration,
addition and improvement made by Tenant and to repair all damages to the
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Premises caused by such removal and restore the Premises to the condition in
which they were prior to the installation of the articles so removed ordinary
wear and tear and casualty excluded. Any improvements or installations which are
required to be but are not so removed shall be deemed to have been abandoned by
Tenant and may be retained or disposed of by Landlord, as Landlord shall desire,
but Tenant shall be responsible for the cost of restoration of the Premises and
removal and disposal.
7.1.14 This Lease is and all of Tenant's rights hereunder are subject
and subordinate to any mortgages or deeds of trust that now exist or may
hereafter be placed upon the Building, the Building Parcel or any part thereof
and to any and all advances to be made thereunder, and to the interest thereon,
and to all renewals, replacements, amendments, modifications, consolidations and
extensions of any of the foregoing. Tenant agrees to execute such documents with
holders of such mortgages or deeds of trust confirming the foregoing
subordination as may be requested by Landlord. Any mortgagee or beneficiary
under any such mortgage or deed of trust may elect that this Lease shall have
priority over its mortgage or deed of trust and upon notification of such
election by such mortgagee or beneficiary to Tenant, this Lease shall be deemed
to have priority over said mortgage or deed of trust whether this Lease is dated
prior to or subsequent to the date of said mortgage or deed of trust. Tenant
agrees to execute any subordination or nondisturbance agreement with the holder
of any mortgage or deed of trust on the Building Parcel or Building confirming
the matters set forth in this section 7.1.14 and such other provisions as are
customary in connection with such subordination agreements.
7.1.15 To conform to all reasonable rules and regulations which
Landlord may make for the management and use of the Premises, requiring such
conformance by Tenant and Tenant's employees, agents, contractors, visitors,
servants, or licensees. Such rules and regulations shall be uniform and shall
not discriminate against Tenant.
7.1.16 In addition to and not in limitation of subsection 7.1.1,
Tenant shall, at its expense, comply with any existing or hereafter-enacted
environmental laws, regulations, administrative acts or rulings, including but
not limited to any laws governing the use, disposal or release of any Hazardous
Substance (as defined in subsection 7.2.5), affecting Tenant's operation at the
Premises ("Environmental Laws"). Tenant shall, at its expense, make all
submissions to, provide all information to, and comply with all requirements of
the appropriate governmental authority (the "Authority") under the Environmental
Laws. In addition, should the Authority determine that a cleanup plan be
prepared and that a cleanup be undertaken or any other action taken because of
any spills or discharges of hazardous substances or wastes at the Premises which
occur during the Lease term, Tenant shall at its expense prepare and submit the
approved plans. Tenant's obligations under this subsection 7.1.16 shall arise if
----------------------------------------------------------------
there is any closing, terminating or transferring of operations of an industrial
- --------------------------------------------------------------------------------
establishment at the Premises pursuant to the cleanup Laws. At no expense to
- ----------------------------------------------------------
Landlord, Tenant shall promptly provide all information requested by Landlord
for preparation of affidavits required by Landlord to determine the
applicability of the Environmental Laws to the Premises, and shall sign the
affidavits promptly when requested to do so by Landlord.
Tenant shall indemnify, defend, and hold harmless Landlord from all
fines, suits, procedures, claims, actions costs or liabilities of any kind
arising out of or in any way connected with any spills or discharges of
Hazardous Substances or wastes by Tenant at the Premises that occur during the
Term, including without limitation, a decrease in the value of the Premises,
damages due to loss or restriction of rentable or usable space, or any damages
due to adverse impacts or marketing of space, any and all sums paid for
settlement of claims, attorneys' fees, consultant and expert fees, or any costs
arising out of Tenant's failure to provide all information, make all submissions
and take all steps required by the Authority under the Environmental Laws or any
other environmental laws or regulations. Tenant's obligations and liabilities
under this paragraph shall survive termination or sooner expiration of this
Lease. Tenant's failure to abide by the terms of this subsection 7.1.16 shall be
restrainable by injunction.
Section 7.2 Negative Covenants. Tenant covenants at all times during
------------------
the Term and such further time as Tenant occupies the Premises or any part
thereof:
7.2.1 Not to make or perform, or permit the making or performance of,
any alterations, subdivisions, installations, decorations, improvements,
additions or other physical changes in or about the Premises including those
which are necessary to satisfy any Governmental Requirements (referred to
collectively as "alterations") without Landlord's prior written consent except
Tenant may move its equipment, furnishings and racks without prior consent
provided the floor loading limitations in this Lease are not violated. Landlord
agrees not unreasonably to withhold its consent to any interior nonstructural
alterations which do not adversely affect the Building's utility and mechanical
systems proposed to be made by Tenant to adapt the Premises for Tenant's
business purposes. Alterations shall be made only by contractors or mechanics
approved by Landlord. All business machines and mechanical equipment shall be
placed and maintained by Tenant in settings sufficient, in Landlord's judgment,
to absorb and prevent vibration, noise and annoyance to other tenants or
occupants of the Office Park. Tenant shall submit to Landlord detailed plans and
specifications for each proposed alteration and shall not commence any such
alteration without first obtaining Landlord's approval
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of such plans and specifications; all reports, and all permits, approvals and
certificates required by all Governmental Authorities shall be timely obtained
by Tenant and submitted to Landlord; all materials and equipment to be
incorporated in the Premises as a result of all alterations shall be new and
first quality; no such materials or equipment shall be subject to any lien,
encumbrance, chattel mortgage or title retention or security agreement. In the
event cost of an alteration exceeds the amount of three monthly installments of
Fixed Rent, Landlord shall have the right to require that Tenant obtain
performance and payment bonds from such surety companies and in such forms as
Landlord shall require in amounts at least equal to the cost of the proposed
work.
7.2.2 Not to assign, sell, mortgage, pledge, or in any manner,
voluntarily or involuntarily, transfer or permit the transfer of this Lease or
any interest therein, or sublet the Premises or parts thereof without Landlord's
prior written consent, which will not unreasonably be withheld. A transfer or
change in the owners of Tenant's stock or a change in the composition of any
noncorporate Tenant shall, unless such stock is publicly traded, be deemed an
assignment. Consent by Landlord to an assignment, subletting, concession or
license shall not be construed to relieve Tenant from obtaining the express
consent of Landlord to any further assignment, subletting, concession or
license, nor shall the collection of Rent by Landlord from any assignee,
subtenant or other occupant be deemed a waiver of this covenant or the
acceptance of the assignee, subtenant or occupant as Tenant or a release of
Tenant from the covenants in this Lease on Tenant's part to be performed. Tenant
and any assignee or subtenant shall be jointly and severally liable for the
obligations under this Lease.
After completion of the Tenant Improvements, the payment of any amounts
for Tenant Improvements, and the taking of the Premises for occupancy, Tenant
may, in writing, request Landlord's consent to an assignment of this Lease or a
subletting of all (but not less than all) of the Premises. Such request shall
include the name of the proposed assignee or subtenant, a copy of the proposed
agreements and instruments relating to the transaction, certified financial
statements of the proposed assignee or subtenant and such information as to the
financial responsibility, business and standing of the proposed assignee or
subtenant as Landlord may reasonably require. If Tenant submits such request and
information and Landlord refuses to consent to such assignment or sublease,
then, unless Tenant withdraws such request within ten (10) days after Landlord's
refusal, Landlord shall have the right, to be exercised in writing within thirty
(30) days after such failure to withdraw such request to cancel and terminate
all Tenant's obligations under this Lease as of the date set forth in Landlord's
notice of exercise of such option, which effective date of termination in
Landlord's notice shall be not less than sixty (60) nor more than one hundred
twenty (120) days following the service of such notice.
(a) In the event Landlord shall exercise such cancellation
right, Tenant shall surrender possession of the Premises, on the date set forth
in such notice in accordance with the provisions of this Lease relating to
surrender of the Premises at the expiration of the Term. In no event shall the
Premises be subdivided or partially sublet.
(b) In the event that Landlord shall not exercise its right to
cancel this Lease as above provided, the Landlord's consent to such request
shall not be unreasonably withheld provided such consent to sublease or
assignment is effected by a legal document in form and substance satisfactory to
Landlord and subsection (c) shall apply with respect to a possible adjustment of
Rent. In no event shall any assignment or subletting to which Landlord may have
consented release or relieve Tenant from its obligations fully to perform all of
the terms, covenants and conditions of the Lease on its part to be performed.
(c) If under the assignment or sublease consented to by
Landlord the net effective rent, additional rent, other charges, and/or
consideration, money or thing of value payable thereunder or payable in
connection with the transaction exceed the Rent provided in this Lease, Tenant
or, at Landlord's option, the sublessee or assignee shall pay said excess rent
or other consideration to Landlord as Additional Rent hereunder as and when the
same becomes due under said assignment or sublease.
(d) If Tenant is a corporation, Tenant shall have the right,
without the consent of Landlord, to assign its interest in this Lease to a
parent, subsidiary or affiliate of Tenant or any corporation which is a
successor to Tenant either by merger or consolidation, or in connection with the
transfer of all of the business and assets of the Tenant or a public offering of
Tenant's stock provided that the successor shall have a tangible net worth,
determined in accordance with generally accepted accounting principals, at least
equal to the tangible net worth of Tenant as of the date of this Lease. However,
no such assignment shall be valid unless, within ten (10) days prior to the
effective date thereof Tenant shall deliver to Landlord (1) a duplicate original
instrument of assignment in form and substance satisfactory to Landlord, duly
executed by Tenant, (2) an instrument in form and substance satisfactory to
Landlord, duly executed by the assignee, in which such assignee shall assume
observance and performance of and to be personally bound by, all terms,
covenants and conditions of this Lease on Tenant's part to be observed and
performed, and (3) evidence of compliance with the conditions of this paragraph.
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7.2.3 NOT TO AFFIX ANY SIGN TO THE PREMISES OR ITS WINDOWS, OR TO ANY
PART OF THE COMMON AREA OR THE BUILDING, UNLESS AND UNTIL THE SIGN HAS BEEN
APPROVED BY LANDLORD. TENANT'S EXISTING SIGNAGE IS HEREBY APPROVED.
7.2.4 Not to obstruct or encumber or use the Common Areas for any
purpose other than ingress and egress to and from the Premises. Tenant shall not
bring or keep or permit to be brought or kept, any inflammable, combustible or
explosive fluid, material, chemical or substance in or about the Premises.*
Tenant shall not commit or allow to be committed any waste upon the Premises, or
any public or private nuisance or other act or thing which disturbs the quiet
enjoyment of any other tenant in the Building or the Office Park. If any of
Tenant's machines or equipment should disturb the quiet enjoyment of any other
tenant in the Building, then Tenant shall provide adequate insulation, or take
such other action as may be necessary to eliminate the disturbance.
7.2.5 *Tenant shall not cause or permit any Hazardous Substance to be
generated, processed, stored, transported, handled or disposed of on, under, in
or through the Premises without first obtaining Landlord's written consent
which may be withheld in Landlord's absolute discretion. As used herein, the
term "Hazardous Substance" means any hazardous, toxic or dangerous substances,
waste or material, including any biological waste, which is or becomes
regulated under any federal, state or local statute, ordinance, rule,
regulation or other law now or hereafter in effect pertaining to environmental
protection, contamination or cleanup, including without limitation any
substance, waste or material which now or hereafter is designated as a
"Hazardous Substance" under the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. (s) (s) 9601, et seq.), or under the
------
Model Toxics Control Act (Revised Code of Washington (s) (s) 70.105D); without
limiting the foregoing, Hazardous Substances shall include, but not be limited
to, any substance which after being released into the environment and upon
exposure, ingestion, inhalation, or assimilation, either directly from the
environment or indirectly by ingestion through food chains, will or may
reasonably be anticipated to cause death, disease, behavior abnormalities,
cancer and/or genetic abnormalities.
* See Rider attached.
8. DESTRUCTION: CONDEMNATION.
-------------------------
Section 8.1 Damage or Destruction.
---------------------
8.1.1 Damage and Repair. In case of damage to the Premises or the
-----------------
Building by fire or other casualty, Tenant shall give immediate notice to
Landlord. If the Building is damaged by fire or any other cause to such extent
that the cost of restoration, as reasonably estimated by Landlord, will equal or
exceed 30% of the replacement value of the Building (exclusive of foundations)
just prior to the occurrence of the damage, or if insurance proceeds sufficient
for restoration are for any reason unavailable, then Landlord may no later than
the thirtieth (30th) day following the damage, give Tenant a notice of
Landlord's election to terminate this Lease. In the event of such an election,
this Lease shall be deemed to terminate effective as of the date of the damage.
Tenant shall surrender possession of the Premises within a reasonable time
thereafter, and the Rent and Additional Rent shall be apportioned as of the date
of said surrender and any Rent paid for any period beyond said date shall be
repaid to Tenant. If the cost of restoration as estimated by Landlord shall
amount to less than 30% of such replacement value of the Building and insurance
proceeds sufficient for restoration are available, or if despite the cost
Landlord does not elect to terminate this Lease, Landlord shall restore the
Building and the Premises (to the extent of improvements to the Premises
originally provided by Landlord hereunder) with reasonable promptness, subject
to delays beyond Landlord's control and delays in the making of insurance
adjustments by Landlord, and Tenant shall have no right to terminate this Lease
except as herein provided. To the extent that the Premises are rendered
untenantable, the Rent shall proportionately abate, except in the event such
damage resulted from or was contributed to, directly, or indirectly, by the act,
fault or neglect of Tenant, Tenant's contractors, agents, employees, invitees or
licensees, in which event Rent shall abate only to the extent Landlord receives
proceeds from Landlord's rental income insurance policy to compensate Landlord
for loss of rent.
8.1.2 Business Interruption. No damages, compensations or claim shall
---------------------
be payable by Landlord for inconvenience, loss of business or annoyance arising
from any repair or restoration of any portion of the Premises or of the
Building. Landlord shall use reasonable efforts repairs promptly.
8.1.3 Tenant Improvements. Landlord will not carry insurance of any
-------------------
kind on any improvements paid for by Tenant or on Tenant's furniture or
furnishings or on any fixtures, equipment, personal property, inventory,
improvements or appurtenances of Tenant under this Lease and Landlord shall not
be obligated to repair any damage thereto or replace the same.
Section 8.2 Eminent Domain.
--------------
8.2.1 Entire Taking. If all of the Premises or such portions of the
-------------
Building as may be required for the reasonable use of the Premises, are taken by
eminent domain, this Lease shall automatically terminate as of the date
-12-
<PAGE>
title vests in the condemning authority and all Rents, Additional Rents and
other payments shall be paid to that date.
8.2.2 Constructive Taking of Entire Premises. In the event of a
--------------------------------------
taking of a material part but less than all of the Building, where Landlord
shall reasonably determine that the remaining portions of the Premises cannot be
economically and effectively used by it (whether on account of physical,
economic, aesthetic or other reasons), Landlord shall forward a written notice
to Tenant of such determination not more than sixty (60) days after the date of
taking. The term of this Lease shall expire upon such date as Landlord shall
specify in such notice but not earlier than sixty (60) days after the date of
such notice.
8.2.3 Partial Taking. In case of taking of a part of the Premises,
--------------
or a portion of the Building not required for the reasonable use of the
Premises, then this Lease shall continue in full force and effect and the Rent
shall be equitably reduced based on the proportion by which the floor area of
the Premises is reduced, such Rent reduction to be effective as of the date
title to such portion vests in the condemning authority.
8.2.4 Termination by Landlord. In the event that title to a part of
-----------------------
the Building other than the Premises shall be so condemned or taken and if, in
the opinion of the Landlord, the Building should be restored in such a way as to
alter the Premises materially, the Landlord may terminate this Lease and the
term and estate hereby granted by notifying the Tenant of such termination
within sixty (60) days following the date of vesting of title, and this Lease
and the term and estate hereby granted shall expire on the date specified in the
notice of termination, not less than sixty (60) days after the giving of such
notice, as fully and completely as if such date were the date herein-before set
for the expiration of the term of this Lease, and the Rent hereunder shall be
apportioned as of such date.
8.2.5 Awards and Damages. Landlord reserves all rights to damages
------------------
to the Premises for any partial, constructive, or entire taking by eminent
domain, and Tenant hereby assigns to Landlord any right Tenant may have to such
damages or award, and Tenant shall make no claim against Landlord or the
condemning authority for damages for termination of the leasehold interest or
the value of such leasehold interest or interference with Tenant's business.
Tenant shall have the right, however, to claim and recover from the condemning
authority compensation for any loss to which Tenant may be put for Tenant's
moving expenses, business interruption or taking of Tenant's personal property
(not including Tenant's leasehold interest) provided that such damages may be
claimed only if they are awarded separately in the eminent domain proceedings
and not out of or as part of the damages recoverable by Landlord.
Tenant shall give prompt notice to Landlord in case of fire or other
damage to the Premises or the Building.
9. DEFAULTS AND REMEDIES.
---------------------
Section 9.1 Tenant Default. Upon the occurrence, at any time prior
--------------
to or during the Term, of any one or more of the following events (referred to
as "Events of Default"):
9.1.1 If Tenant shall default in the payment when due of any
installment of Fixed Rent or in the payment when due of any Additional Rent, and
such default shall continue for a period of ten (10) days; or
9.1.2 If Tenant shall default in the observance or performance of any
term, covenant or condition of this Lease on Tenant's part to be observed or
performed (other than covenants for the payment of Fixed Rent and Additional
Rent) and Tenant shall fail after written notice by Landlord of such default to
remedy such default within thirty (30) days or if said default is not capable of
being cured within said thirty (30) day period and Tenant shall not commence the
cure within said period or shall not thereafter diligently prosecute to
completion all steps necessary to remedy such default;
Then upon the occurrence, at any time prior to or during the Term, of
any one or more such Events of Default, Landlord at any time after the written
notice and grace periods described in Subsections (A) and (B) above, at
Landlord's option, may give to Tenant a five (5) days' notice of termination of
this Lease and, in the event such notice is given, this Lease and the Term shall
come to an end and expire upon the expiration of said five (5) days with the
same effect as if the date of expiration of said five (5) days were the
expiration date of the Term, but Tenant shall remain liable for damages as
provided herein, or Landlord may relet the Premises without terminating this
Lease, or Landlord may exercise any other right or remedy allowed by law or
provided herein.
9.1A See Rider attached.
-------------------------
Section 9.2 Remedies of Landlord.
--------------------
9.2.1 Summary Proceedings. Subject to notice and grace periods
-------------------
provided in Section 9.1 above an Event of Default has occurred, Landlord may
without notice, institute summary proceedings, terminate all services,
dispossess Tenant and the legal representative of Tenant or other occupants of
the Premises, and remove their effects and hold the Premises as if this Lease
had not been made, and Tenant shall remain liable for damages as provided in
subsection 9.2.2.
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<PAGE>
9.2.2 Landlord's Re-entry. Upon an Event of Default, subject to the
-------------------
notice and grace periods provided in Section 9.1 Landlord, in addition to any
other rights or remedies it may have, at its option, may enter the Premises or
any part thereof, either with or without process of law, and expel, remove or
put out Tenant or any other persons who may be thereon, together with all
personal property found therein; and Landlord may terminate this Lease, or it
may from time to time, without terminating this Lease and as agent of Tenant,
re-let the Premises or any part thereof for such term or terms (which may be
for a term less than or extending beyond the term hereof), and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to repair, renovate, remodel,
redecorate, alter and change the Premises, Tenant remaining liable for any
deficiency computed as hereinafter set forth. In the case of any default, re-
entry and/or dispossession by summary proceedings or otherwise, all Rent and
Additional Rent shall become due thereupon and be paid up to the time of such
re-entry or dispossession, together with such expenses as Landlord may incur in
connection with such default for attorneys fees, advertising expenses, brokerage
fees and/or putting the Premises in good order or preparing the same for re-
rental.
9.2.3 Re-letting the Premises. At the option of Landlord: (i) the
-----------------------
Rent shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or termination; (ii) Landlord may relet the Premises or any part
or parts thereof, either in the name of Landlord or otherwise, for a term which
may at Landlord's option be less than or exceed the period which would otherwise
have constituted the balance of the Term, and may grant reasonable concessions
of free rent; and (iii) Tenant or the legal representative of Tenant shall also
pay Landlord, as damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, for each month of the period which would
otherwise have constituted the balance of the Term, any deficiency between (x)
the sum of (a) one monthly installment of Fixed Rent, (b) the Tax Rent that
would have been payable for the month in question but for such reentry or
termination, and (c) the current monthly minimum Common Area Rent, and (y) the
net amount, if any, of the rents collected on account of the lease or leases of
the Premises for each month of the period which would otherwise have constituted
the balance of the Term. The reasonable refusal or failure of Landlord to relet
the Premises or any part of parts thereof shall not release or affect Tenant's
liability for damages provided Landlord shall have made the same effort and on
the same terms to relet the Premises as with respect to other vacant space in
the Office Park, however, Landlord shall not be required to prefer the reletting
of the Premises over any other space in the Office Park. In computing such
damages there shall be added to the said deficiency such reasonable expenses as
Landlord' may incur in connection with reletting, such as court costs, attorneys
fees and disbursements, brokerage and for the expenses of putting and keeping
the Premises in good order or for preparing the same for reletting as
hereinafter provided. Any such damages shall be paid in monthly installments by
Tenant on the rent day specified in this Lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Landlord to collect the deficiency for any subsequent or prior month
by a similar proceeding. Landlord, at Landlord's option, may make such
alterations, repairs, replacements and/or decorations in the Premises as
Landlord in Landlord's sole judgment considers advisable and necessary for the
purpose of reletting the Premises for the purpose of reletting the Premises to
another user of warehouse space; and the making of such alterations and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Except as expressly provided herein, Landlord shall in
no event be liable in any way whatsoever for failure to relet the Premises, or
in the event that the Premises are relet, for failure to collect the rent
thereof under such reletting.
9.2.4 Appointment of Receiver. If an Event of Default has occurred,
-----------------------
Landlord shall have the right to have a receiver appointed to collect rent and
conduct Tenant's business. Neither the filing of a petition for appointment of a
receiver nor the appointment itself shall constitute an election by Landlord to
terminate this Lease.
9.2.5 Waiver of Redemption Rights. Tenant, for itself, and on behalf
---------------------------
of any and all persons claiming through or under it, including creditors of all
kinds, does hereby waive and surrender all right and privilege which they or any
of them might have under or by reason of any present or future law, to redeem
the Premises or to have a continuance of this Lease for the term hereof, as it
may have been extended, after having been dispossessed or ejected therefrom by
process of law or under the terms of this Lease or after the termination of this
Lease as herein provided.
Section 9.3 Trial by Jury; Counter-Claim. Landlord and Tenant shall
----------------------------
and they hereby do waive trial by jury in any action, proceeding or counter-
claim brought by either of the parties hereto against the other on any matters
not relating to personal injury or property damage but otherwise arising out of
or in anyway connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises, and any emergency statutory or any
other statutory remedy.
Section 9.4 Holdover by Tenant. In the event Tenant remains in
------------------
possession of any portion of the Premises after the expiration of the Term as to
such portion and without the execution of a new lease, Tenant, at the option of
Landlord, shall be deemed to be occupying such portion of the Premises as
-14-
<PAGE>
a tenant from month to month, at a monthly rental equal to the sum of (a) twice
the monthly installment of Fixed Rent payable during the last month of the Term,
(b) the monthly installment of Tax Rent payable for the last month of the Term,
and (c) the Common Area Rent payable for such month, subject to all the other
conditions, provisions and obligations of this Lease insofar as the same are
applicable to a month-to-month tenancy. Tenant shall not and hereby waives the
right to interpose any counterclaim or counterclaims in a summary proceeding or
other action by Landlord based on holdover.
Section 9.5 Landlord's Right to Cure Defaults. Landlord may cure,
---------------------------------
after notice of default is served, any default by Tenant under this Lease, and
whenever Landlord so elects, all costs and expenses incurred by Landlord in
curing a default, including, without limitation, reasonable attorneys' fees,
together with interest on the amount of costs and expenses so incurred at the
rate provided in Section 3.10 hereof, shall be paid by Tenant to Landlord on
demand, and shall be recoverable as Additional Rent.
Section 9.6 Waiver of Default. No consent or waiver, express or
-----------------
implied, by Landlord or Tenant to or of any breach of any covenant, condition or
duty of the other shall be construed as a consent or waiver to or of any other
breach of the same or any other covenant, condition or duty of Landlord or
Tenant, unless in writing signed by the party against whom waiver is sought.
10. MISCELLANEOUS PROVISIONS.
------------------------
Section 10.1 Notices. Any notice or demand from Landlord to Tenant
-------
or from Tenant to Landlord shall be in writing and shall be deemed duly served
if mailed by Registered or certified mail, return receipt requested, addressed,
if to Tenant, at the Building, or to such other address as Tenant shall have
last designated by notice in writing to Landlord, and if to Landlord, at the
address of Landlord set forth herein or such other address as Landlord shall
have last designated by notice in writing to Tenant, with copy to Managing
Agent. Notice shall be deemed served when mailed.
Section 10.2 Brokerage. Tenant and Landlord warrant that they have
---------
had no dealings with any broker or agent in connection with this Lease other
than the Broker, if any, named herein and each covenants to pay, hold harmless
and indemnify the other from and against any and all cost, expense or liability
for any compensation, commissions and charges claimed by any other broker or
agent with respect to this Lease or the negotiation thereof with whom they had
dealings.
Section 10.3 Estoppel Certificates. Each of the parties agrees that
---------------------
it will, at any time and from time to time, within 10 business days following
written notice by the other party hereto specifying that it is given pursuant to
this section, execute, acknowledge and deliver to the party who gave such notice
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 the Rent and any other payments due hereunder from Tenant have been paid
in advance, if any, and stating whether or not to the best of knowledge of the
signer of such certificate the other party is in default in performance of any
covenant, agreement or condition contained in this Lease, and, if so, specifying
each such default of which the signer may have knowledge.
Section 10.4 Applicable Law and Construction. The laws of the State
-------------------------------
of Washington shall govern the validity, performance and enforcement of this
Lease. The invalidity or unenforceability of any provision of this Lease shall
not affect or impair any other provision. The submission of this document to
Tenant for examination does not constitute an offer to lease, or a reservation
of or option to lease, and becomes effective only upon execution and delivery
thereof by Landlord and Tenant. All negotiations, considerations,
representations and understandings between the parties are incorporated
-15-
<PAGE>
in this Lease. Landlord or Landlord's agents have made no representations or
promises with respect to the Building, the Office Park or the Premises, except
as herein expressly set forth. The headings of the several articles and sections
contained herein are for convenience only and do not define, limit or construe
the contents of such articles or sections. Whenever herein the singular number
is used, the same shall include the plural, and the neuter gender shall include
the masculine and feminine genders.
Section 10.5 Relationship of the Parties. Nothing contained herein
---------------------------
shall be deemed or construed by the parties hereto, or by any third party, as
creating the relationship of principal and agent or partnership or joint venture
between the parties hereto, it being understood and agreed that no provisions
herein, nor any acts of the parties hereto, shall be deemed to create any
relationship between the parties hereto other than the relationship of landlord
and tenant.
Section 10.6 Construction on Adjacent Premises or Buildings. If any
----------------------------------------------
excavation or other building construction shall be about to be made or shall be
made on any premises adjoining or above or below the Premises or on any other
portion of the Building, Tenant shall permit Landlord or the adjoining owner,
and their respective agents, employees, licensees and contractors, to enter the
Premises and to shore the foundations and/or walls thereof, and to erect
scaffolding and/or protective barricades around and about the Premises (but not
so as to preclude entry thereto) and to do any act or thing necessary for the
safety or preservation of the Premises. Tenant's obligations under this Lease
shall not be affected by any such construction or excavation work, shoring-up,
scaffolding or barricading. Landlord shall not be liable in any such case for
any inconvenience, disturbance, loss of business or any other annoyance arising
from any such construction, excavation, shoring-up, scaffolding or barricades,
but Landlord shall use its best efforts so that such work will cause as little
inconvenience, annoyance disturbance and cost to Tenant as possible consistent
with accepted construction practice in the vicinity and so that such work shall
be expeditiously completed.
Section 10.7 Recording. Tenant agrees not to record this Lease.
---------
Section 10.8 Binding Effect of Lease. The covenants, agreements
-----------------------
and obligations herein contained, except as herein otherwise specifically
provided shall extend to, bind and inure to the benefit of the parties hereto
and their respective personal representatives, heirs, successors and permitted
assigns. Each covenant, agreement, obligation or other provision herein
contained shall be deemed and construed as a separate and independent covenant
of the party bound by, undertaking or making the same, not dependent on any
other provision of this Lease unless otherwise expressly provided.
Section 10.9 Effect of Unavoidable Delays. The provisions of this
----------------------------
section shall be applicable if there shall occur, during the Term, or prior to
the commencement thereof, any (a) strike(s), lockout(s) or labor dispute(s); (b)
inability to obtain labor or materials, or reasonable substitutes therefor; or
(c) acts of God, governmental restrictions, regulations or controls, enemy or
hostile governmental action, civil commotion, fire or other casualty, or (d)
other conditions similar to those enumerated in this item beyond the reasonable
control of the party obligated to perform. If Landlord or Tenant shall, as the
result of any of the above-described events, fail punctually to perform any
obligation on its part to be performed under this Lease, then such failure shall
be excused and not be a breach of this Lease by the party in question, but only
to the extent occasioned by such event. If any right or option of either party
to take any action under or with respect to this Lease is conditioned upon the
same being exercised within any prescribed period of time or at or before a
named date, then such prescribed period of time and such named date shall be
deemed to be extended or delayed, as the case may be, for a period equal to the
period of delay occasioned by any above-described event. Notwithstanding
anything herein contained however, the provisions of this section shall not be
applicable to Tenant's obligations to pay Rent or its obligations to pay any
other sums, moneys, costs, charges or expenses required to be paid by Tenant
hereunder and time shall be of the essence with respect to timely payment
thereof.
Section 10.10 No Oral Changes. Neither this Lease nor any
---------------
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
Section 10.11 Executed Counterparts of Lease. This Lease may be
-------------------------------
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original; and all such counterparts shall
together constitute but one and the same Lease.
Section 10.12 Invalid Provisions. If any provision of this Lease
------------------
is held unlawful or invalid, then this Lease shall continue in full force and
effect but such unlawful or invalid provision shall be deemed omitted. If any
portion of Fixed or Additional Rent shall at any time be held to be higher than
the amount which the Landlord may lawfully reserve then the amount thereof shall
be reduced to the highest lawful amount.
Section 10.13 Entire Agreement. This Lease is the final and complete
----------------
expression of Landlord and Tenant relating in any manner to the leasing, use
-16-
<PAGE>
and occupancy of the Premises, to Tenant's use of the Building and other matters
set forth in this Lease. No prior agreement or understanding pertaining to the
same shall be valid or of any force or effect.
Section 10.14 Managing Agent. Landlord has advised Tenant that
--------------
it has appointed Collier's Real Estate Services, Inc. as managing agent of the
Building (said managing agent and any successor or substitute managing agent is
hereinafter referred to as Managing Agent) and as its agent for service of
process in the State of Washington. Tenant shall, until otherwise notified by
Landlord, make all payments of Rent to be made pursuant to this Lease to the
Managing Agent payable to the Landlord and direct all notices, inquiries or
other communications to The Estate of James Campbell, Director, Mainland
Operations/West, Suite 1000, 425 California Street, San Francisco, California
94104 with a copy to the Managing Agent at Collier's Real Estate Services, Inc.,
800 Fifth Avenue, Suite 3930, Seattle, Washington 98104.
IN WITNESS WHEREOF, Landlord and Tenant have hereunto executed this Lease
as of the day and year first above written.
LANDLORD: THE ESTATE OF JAMES CAMPBELL, DECEASED
/S/ Douglas C Morris By [SIGNATURE NOT LEGIBLE]
-------------------- ----------------------------------------
DOUGLAS C. MORRIS Its Roy S. ???
--------------
Senior ???? Manager Director Mainland Properties
TENANT: UNITED STATIONERS SUPPLY CO.
-------------------------------------------
By /S/ Otis H. Halleen
----------------------------------------
Its Vice President
------------------------------------
-17-
<PAGE>
LANDLORD'S CORPORATE ACKNOWLEDGEMENT
STATE OF CALIFORNIA }
County of San Francisco}
On this 26th day of August, 1994, before me personally appeared Douglas C.
Morris and Roy S. Robins, to me known to be the Senior Asset Manager and
Director of Mainland Properties/West, respectively, of the Trustees Under the
Will and of The Estate of James Campbell, Deceased; that they executed the
foregoing instrument which was signed by them as appearing before me in the
capacities above indicated (that is, as employees of The Estate of James
Campbell); that they acknowledged the said instrument to have been signed with
the authority of and as the free act and deed of the Trustees.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year first above written.
/S/ Maija Laine
-------------------------------------
[OFFICIAL SEAL APPEARS HERE] Maija Laine
Notary Public in and for the State of
California, residing in San Francisco
My commission expires September 6, 1997.
<PAGE>
STATE OF ____________________ )
) ss.
COUNTY OF ___________________ )
I certify that I know or have satisfactory evidence that____________is the
person who appeared before me, and said person acknowledged that said person
signed this instrument, on oath stated that said person was authorized to
execute the instrument and acknowledged it as the _________of ______________ a
______________, to be the free and voluntary act of such ______________ for the
uses and purpose mention in the instrument.
Dated this ______day of ___________________, 1993.
___________________________________
(Signature of Notary)
___________________________________
(Legibly Print or Stamp Name of Notary)
Notary public in and for the state
of________, residing at ___________
My appointment expires ____________
STATE OF ILLINOIS )
----------
) SS.
COUNTY OF COOK )
---------
I certify that I know or have satisfactory evidence that _________
OTIS H. HALLEEN is the person who appeared before me, and said person
- ---------------
acknowledged that said person signed this instrument, on oath stated that
said person was authorized to execute the instrument and acknowledged it as the
VICE-PRESIDENT of UNITED STATIONERS SUPPLY CO and ILLINOIS, CORPORATION,
- -------------- --------------------------- ---------------------
to be the free and voluntary act of such CORPORATION for the uses and purposes
-----------
mentioned in the instrument.
Dated this 26th day of MAY, 1994.
----
/S/ Joan M. Hefferman
-------------------------------------
[OFFICIAL SEAL APPEARS HERE]
_____________________________________
Notary public in and for the state of
ILLINOIS, residing at COOK COUNTY
-------- -----------
My appointment expires 4-21-97
-------
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<PAGE>
EXHIBIT A
---------
TO AGREEMENT OF LEASE
Floor Plan of Premises
SOUTHCENTER SOUTH INDUSTRIAL PARK
BUILDING 255 Tukwila, Washington
[FLOORPLAN APPEARS HERE]
The Estate of James Campbell
------
Page A-1 of 1 INITIAL at
------
<PAGE>
EXHIBIT B
--------
TO AGREEMENT OF LEASE
Building Parcel
That certain real property situated in the State of Washington, County of King,
and more particularly described as follows:
Lot 16 of Short Plat No. MF-78-19-SS according to the Short Plat Survey recorded
under King County Recording No. 780721-0798 being a correction of Short Plat
Survey recorded under King County Recording No. 780626-0695;
Situate in the City of Tukwila, County of King, State of Washington.
SUBJECT TO any and all easements, restrictions and encumbrances of record.
Page B-1 of 1
<PAGE>
EXHIBIT C
---------
TO AGREEMENT OF LEASE
Tenant Improvements
Landlord hereby leases to Tenant, and Tenant hereby accepts from Landlord, the
Premises in an "as-is" condition, without additional tenant improvements, except
as provided below:
1. Landlord shall, at Landlord's sole cost and expense, paint the interior
office walls a building standard color .
2. Landlord shall provide minor repair and refurbishment to the lunch room at
Landlord's sole cost and expense. The cost of such repair and
refurbishment shall not exceed $500.00.
Page C-1 of 1
<PAGE>
EXHIBIT D
---------
TO AGREEMENT OF LEASE
Right of First Refusal
Subject to the terms and conditions hereinafter stated, Landlord hereby
grants to Tenant a one-time right of first refusal to lease an additional 11,250
square feet adjacent to the Leased Premises as shown on Exhibit A ("Expansion
Premises").
The Expansion Premises are currently available for lease. In the event the
Landlord receives a bonafide offer to lease the Expansion Premises during the
term of this lease, Landlord agrees to notify Tenant in writing. Landlord's
written notification to Tenant of such bonafide offer to lease the Expansion
Premises will also include the Fixed Rent and other additional terms required by
Landlord to include the Expansion Premises as part of this lease agreement.
Tenant shall have three (3) business days to accept the Fixed Rent and other
additional terms stipulated in the Landlord's notification and to exercise in
writing the Right of First Refusal. If Tenant elects to lease the Expansion
Premises within three (3) business days, Landlord will prepare and deliver to
Tenant an Amendment to Lease and Tenant shall have ten (10) business days after
receipt to deliver to Landlord the Amendment to Lease, executed as required,
along with first month's rent. Failure to deliver the executed Amendment to
Lease and first month's rent within ten (10) business days of receipt shall
terminate the Tenant's rights and options hereunder.
Tenant's right to lease the Expansion Premises, as provided above, is based
upon the following additional terms and conditions:
(a) Tenant shall not then be in default under this Lease;
(b) The provisions of this Lease, except Term, Fixed Rent and Tenant's Pro
Rata Share shall apply to the Expansion Premises;
(c) The Fixed Rent for the Expansion Premises shall be the then current
"market rent" as determined by Landlord;
(d) The Commencement Date on the lease amendment for the Expansion
Premises will be upon Landlord's delivery of possession to the Tenant
and the Termination Date will coincide with the expiration of the
lease term for the Leased Premises;
(e) Tenant's Pro Rata Share shall be increased to 82.33%; and
(f) Tenant will occupy the Expansion Premises in an "as is" condition and
without additional Tenant Improvements Allowance or work by Landlord.
Page D-1 of 1
<PAGE>
RIDER TO LEASE
This Rider is attached to and made part of the Agreement of Lease between THE
ESTATE OF JAMES CAMPBELL, DECEASED, as Landlord, and UNITED STATIONERS SUPPLY
CO., as Tenant.
I. Notwithstanding anything to the contrary in Section 3.4.1 (a) of the Lease,
"Common Area Operating Expenses" shall not include:
(a) all costs and expenditures for which Landlord is reimbursed, whether
by insurance proceeds or otherwise, except through Additional Rent payments
by tenants:
(b) costs for repairs or other work occasioned by fire, windstorm or other
casualty for which insurance would at the time of such casualty customarily
be carried by a prudent Landlord in the City of Tukwila;
(c) costs of improvements to leasable space in the Office Park;
(d) costs of relocating any tenant;
(e) the amortization of capital expenditures (except any capital
expenditures made or installed for the purposes of reducing Common Area
Operating Expenses - and then only to the greater of (x) the extent of such
reductions actually achieved (without regard to the "useful life" of such
capital expenditure), or (y) the amortization of capital expenditures in
accordance with generally accepted accounting and management practices);
(f) depreciation and amortization;
(g) interest, points and fees, on debt or amortization on or for any
mortgages encumbering the property, or any part thereof, and all principal,
escrow deposits and other sums paid on or in respect to any indebtedness
(whether or not secured by a mortgage lien) and on any equity
participations of any lender, lessor or tenant, and all costs incurred in
connection with any financing, refinancing or syndication of the Office
Park or Building, or any part thereof;
(h) all costs relating to activities for the solicitation and execution of
leases of space in the Property, including but not 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;
(i) expenses incurred in enforcing obligations of other tenants of the
Office Park;
(j) costs of decorating, redecorating, or special cleaning of tenant
spaces not provided on a regular basis to all tenants of the Office Park;
(k) wages, salaries, fees and fringe benefits paid to executive personnel,
officers or partners of Landlord;
(m) Fines and/or penalties incurred due to noncompliance by Landlord or
the Office Park or any other tenant in the Office Park with any law,
governmental rule
1
<PAGE>
or regulation or directive of any governmental authority;
(n) The costs and expenses to Landlord in curing its defaults or
performing work expressly provided in the Lease to be borne at Landlord's
expense;
(o) the cost and expenses of correcting defects in equipment in, for or of
the Building, or in the construction of the Building or defects in any
other improvements on the Land (as distinguished from repairs thereof in
the ordinary course of business due to normal aging of the equipment,
Building or the other improvement);
(p) the cost of any work or service performed for any facility other than
the Office Park and the Office Park systems;
(q) Any costs included in Common Area Operating Expenses representing an
amount paid to a person, firm, corporation or other entity related to
Landlord, or Landlord's management company, which is in excess of the
amount which would have been paid in the absence of such relationship;
(r) taxes and assessments attributable to the tenant improvements of
tenants other than Tenant or the property of tenants other than Tenant if
such taxes or assessments are separately paid or separately billed or if
such taxes or assessments relate to, or are attributable to, improvements
that are above or over the Building's building standard improvements;
(s) any and all costs related to Hazardous Materials except to the extent
caused by Tenant.
II. Notwithstanding anything to the contrary in Section 7.2.4 and 7.2.5 of the
Lease, Tenant shall be permitted to bring upon the premises, and to store and
use, such products as may be necessary for Tenant to use to maintain the
Premises and to conduct its business, provided Tenant shall at all times comply
with all governmental laws regulating notice of and the use and handling of such
products.
III. Add as Section 9.1A of the Lease, the following:
"9.1A. In the event Landlord fails to perform any term or covenant of this
Lease on the Landlord's part to be observed or performed, and Landlord
shall fail after written notice by Tenant of such default to remedy such
default within thirty (30) days or, if such default is not reasonably
capable of being cured within said 30-day period and Landlord shall not
commence to cure within said period or shall not thereafter diligently
prosecute to completion steps necessary to remedy such default ("Event of
Default"), then Tenant, subject to the terms of this Lease, may initiate
legal proceedings to cause Landlord to perform such term or covenant or to
recover damages suffered thereby. In no event shall tenant have any right
to offset or deduct any amounts from the Rent or other amounts payable by
Tenant hereunder."
2
<PAGE>
Exhibit 21
----------
Subsidiaries of United
----------------------
United Stationers Supply Co., an Illinois corporation
Subsidiaries of the Company
---------------------------
United Stationers Hong Kong Limited, incorporated under the laws of Hong Kong
United Worldwide Limited, incorporated under the laws of Hong Kong
CJS/GT Corp., a Georgia corporation
United Business Computers, Inc., a Delaware corporation
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on the consolidated financial statements of United Stationers Inc. as of
August 31, 1993 and 1994 and for the years ended August 31, 1992, 1993 and 1994
and to the reference to our Firm under the caption "Experts" included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
July 25, 1995
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on the consolidated financial statements of Associated Holdings, Inc. as
of December 31, 1993 and 1994 and from inception, January 31, 1992, through
December 31, 1992 and for the years ended December 31, 1993 and 1994 and to the
reference to our Firm under the caption "Experts" included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
July 25, 1995
<PAGE>
Exhibit 23.4
CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated June 27, 1995, with respect to the consolidated
financial statements of United Stationers Inc. as of and for the seven months
ended March 31, 1995 included in Amendment No. 1 to the Registration Statement
(Form S-1 No. 33-59811) and related Offer for All Outstanding 12-3/4% Senior
Subordinated Notes due 2005 In Exchange for 12-3/4% Senior Subordinated Notes
due 2005 of United Stationers Supply Co.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
July 27, 1995
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP APPEARS HERE]
Exhibit 99
July 26, 1995
Mr. Daniel H. Bushell
Chief Financial Officer
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
Dear Dan:
Note 2 of Notes to Condensed Consolidated Financial Statements of United
Stationers Inc. as constituted after the Merger on March 30, 1995 (the
"Company") included in its Form 10-Q for the three months ended March 31, 1995
describes a change in the method of accounting for the cost of inventory from
the FIFO method to the LIFO method. You have advised us that you made this
change in contemplation of your acquisition of United Stationers Inc. (which was
accounted for as a "reverse acquisition") so that the Company's method of
accounting for the cost of inventory would conform to that of United Stationers
Inc. as constituted before its acquisition by the Company and that you believe
that the change is to a preferable method in your circumstances because after
this change, your method conformed to that of the company you acquired, and in
an inflationary environment, the LIFO method provides a better matching of
current inventory costs and current revenues, and earnings reported under the
LIFO method are more easily compared to that of other public companies in the
wholesale industry where this method is common.
There are no authoritative criteria for determining a `preferable' inventory
costing method based on the particular circumstances; however, we conclude that
the change in the method of accounting for the cost of inventory is to an
acceptable alternative method which, based on your business judgment to make
this change for the reasons cited above, is preferable in your circumstances. We
have not, however, conducted an audit in accordance with generally accepted
auditing standards of any financial statements of the Company as of any date or
for any period subsequent to December 31, 1994, and therefore we do not express
any opinion on any financial statements of the Company subsequent to that date.
Very truly yours,
/s/ Ernst & Young LLP
