SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _________________
Commission file number 0-22206
NIAGARA CORPORATION
-------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 59-3182820
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
667 MADISON AVENUE, NEW YORK, NEW YORK 10021
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 317-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.001 PER SHARE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS
BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO__.
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS
PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL
NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF
THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. YES X NO__.
AS OF MARCH 24, 2000, THE AGGREGATE MARKET VALUE OF THE VOTING
STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT WAS APPROXIMATELY $28,102,734
(ASSUMES THE REGISTRANT'S OFFICERS, DIRECTORS AND ALL STOCKHOLDERS
HOLDING 5% OF OUTSTANDING SHARES ARE AFFILIATES).
THERE WERE 8,738,246 SHARES OF THE REGISTRANT'S COMMON STOCK
OUTSTANDING AS OF MARCH 24, 2000.
DOCUMENTS INCORPORATED BY REFERENCE: THE ITEMS COMPRISING PART
III HEREOF (ITEMS 10, 11, 12 AND 13) ARE INCORPORATED BY REFERENCE FROM THE
REGISTRANT'S PROXY STATEMENT FOR ITS 2000 ANNUAL MEETING OF STOCKHOLDERS OR
WILL BE FILED BY AMENDMENT TO THIS FORM 10-K.
PART I
ITEM 1. BUSINESS.
CORPORATE HISTORY
Niagara Corporation ("Niagara") was organized on April 27, 1993
as a Delaware corporation under the name International Metals Acquisition
Corporation. When formed, its objective was to acquire an operating
business in the metals processing and distribution industry or in a
metals-related manufacturing industry. Between 1995 and 1999, Niagara
completed acquisitions of three cold finished steel bar producers in the
United States and one group of businesses in the United Kingdom engaged in
hot rolling, cold finishing and distributing steel bars. These acquisitions
were financed with proceeds from Niagara's initial public offering and bank
and subordinated debt financings. See Notes 2 and 3 to the Financial
Statements and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources." Since they
were acquired by Niagara, these businesses have invested more than $22
million in capital expenditures to modernize, improve and expand their
facilities, machinery and equipment.
On August 16, 1995, Niagara purchased for $10,744,045 in cash
all of the outstanding shares of Niagara Cold Drawn Corp., which
subsequently changed its name to Niagara LaSalle Corporation ("Niagara
LaSalle"). With plants in Buffalo, New York and Chattanooga, Tennessee,
Niagara LaSalle was an established cold finished steel bar producer in the
northeast and southeast regions of the United States.
On January 31, 1996, Niagara LaSalle purchased all of the
outstanding shares of Southwest Steel Company, Inc. ("Southwest"), the
leading cold drawn steel producer servicing the southwest region of the
United States. As consideration for such shares, Niagara LaSalle paid
$1,920,000 in cash and $1,156,773 principal amount of Niagara LaSalle
promissory notes guaranteed by Niagara. In connection with this
acquisition, Niagara LaSalle discharged $8,518,691 of Southwest
indebtedness and Niagara guaranteed $898,000 of Southwest indebtedness.
During 1996, Southwest completed construction of a new plant in Midlothian,
Texas and relocated its Tulsa, Oklahoma operations to this new facility. On
November 1, 1996, Southwest was merged into Niagara LaSalle. On November
24, 1997, Niagara LaSalle paid $525,000 to the former Southwest
stockholders in full satisfaction of all amounts owing under the $1,156,773
principal amount of promissory notes issued to such individuals in
connection with the acquisition.
On April 18, 1997, Niagara LaSalle purchased from Quanex
Corporation ("Quanex") all of the outstanding shares of LaSalle Steel
Company ("LaSalle," and together with Niagara LaSalle, "Niagara US"), which
has plants in Hammond and Griffith, Indiana. In consideration for the sale
of such shares, Niagara LaSalle paid Quanex $65,500,000 in cash at the
closing and an additional $1,371,000, which amount was paid on January 26,
1998, based on changes in LaSalle's stockholder's equity between October
31, 1996 and March 31, 1997. Niagara LaSalle also paid Quanex an amount
based on cash activity in the intercompany account between Quanex and
LaSalle from April 1 through April 18, 1997. The acquisition of LaSalle
gave Niagara LaSalle a strong market position in the midwest region of the
United States and broadened Niagara LaSalle's product range by adding
thermal treated and chrome plated bars. With this acquisition, Niagara US
became the largest independent producer of cold drawn steel bars in the
United States.
On May 21, 1999, Niagara LaSalle (UK) Limited ("Niagara UK," and
together with Niagara and Niagara US, the "Company"), a newly formed
English company and subsidiary of Niagara, purchased the equipment,
inventory and certain other assets of the eight steel bar businesses of
Glynwed Steels Limited ("Glynwed Steels"), an English company and a
subsidiary of Glynwed International plc ("Glynwed"). In consideration for
the sale of such assets, Niagara UK paid Glynwed Steels (pound)21,202,000
(approximately $34 million) in cash at the closing, (pound)3,015,500
(approximately $4.9 million) of which was returned to Niagara UK during the
third quarter of 1999 as an adjustment to reflect the value of the net
assets transferred. These businesses are engaged in hot rolling, cold
finishing and distribution and represent the largest independent steel bar
concern in the United Kingdom.
The Company has announced a restructuring plan for its hot
rolling operations in the United Kingdom. Under the plan, Niagara UK will
close its Ductile Hot Mill facility in Willenhall, transfer most of the
production from this facility to its W Wesson facility in Moxley (which has
been renamed Ductile Wesson), and invest approximately $1.6 million in its
remaining hot rolling businesses. The Company has also determined to
consolidate certain additional U.K. operations. These restructurings are
scheduled to be completed during 2000 and are expected to expand Niagara
UK's product range, improve its product quality and enhance its customer
service capabilities.
PRODUCTS
Niagara US
Following the acquisition of LaSalle, Niagara US became the
largest independent producer of cold drawn steel bars in the United States.
This acquisition brought to Niagara a technological leader in the
development of specialized cold drawn steel products. LaSalle, which has
obtained numerous foreign and domestic patents throughout its history,
pioneered the large drawbenches commonly used in cold finishing today and
developed the principle of stress-relieving cold finished steel bars.
The manufacture of cold drawn steel bars involves several steps.
Hot rolled steel bars are cleaned of mill scale by a process that involves
shotblasting the surface of the bars with hardened steel shot. After
shotblasting, the bars are mechanically drawn, or pulled, through a
tungsten carbide die containing an orifice one-sixteenth of an inch smaller
in cross-section than the size of the hot rolled bar. Drawing the hot
rolled steel bar in this manner elongates the bar and creates a quality
micro-finished surface. The bars are then cut to length and straightened.
As an additional step, bars may be turned and/or ground to very close
tolerance levels. This process produces steel bars with (i) a smooth and
shiny surface, (ii) uniform shape, with close size tolerance, (iii)
enhanced strength characteristics and (iv) improved machinability. These
characteristics are essential for many industrial applications.
Niagara US manufactures round bars, ranging from 1/4 inch to 6
inches in diameter, and rectangular, square and hexagonal bars in a variety
of sizes, the majority of which are drawn in sizes 1/4 inch to 6 inches
thick and up to 15 inches wide. The bars are produced in lengths from 10 to
20 feet, with most being 10 to 12 feet in length. Niagara US's products
include (i) cold drawn bars which are used in machining applications,
automotive and appliance shafts, screw machine parts and machinery guides,
(ii) turned, ground and polished bars which are used in precision shafting
and (iii) drawn, ground and polished bars which are used in chrome-plated
hydraulic cylinder shafts.
Niagara US employs a number of advanced processing techniques in
the manufacture of value-added steel bars including thermal treatment and
chrome plating. In addition to cold drawn bars, Niagara US's products
include (i) custom-cut bars shipped on a "just-in-time" basis which are
used in steering columns and shock absorbers, (ii) stress- relieved bars
which are used in high strength shafting, gears and drive mechanisms, (iii)
quench and tempered bars which are used in high strength bolting and high
impact rod cylinders and (iv) chrome-plated bars which are used in
hydraulic and pneumatic cylinders.
During 2000, Niagara US will add a new quench and tempering line
to its Hammond facility and a new continuous shape straightening and
weighing line to its Buffalo plant. Management expects this new equipment
to increase capacity and improve the quality and efficiency of Niagara US's
operations.
Niagara UK
With the acquisition of the eight U.K. steel bar businesses in
May 1999, Niagara UK became the largest independent steel bar producer in
the United Kingdom with hot rolling, cold finishing and distribution
operations. These operations represented 51%, 27% and 22%, respectively, of
Niagara UK's total revenues from unaffiliated customers for the period May
22 through December 31, 1999.
Niagara UK's hot rolling operations, which operate under the
names Gadd Dudley Port and Ductile Wesson, offers one of the most
comprehensive ranges of round, hexagon, flat, square and special profile
bars and sections to the manufacturing industry worldwide. These
engineering bars include value-added products that involve the use of
various alloys, customized equipment and special production procedures. The
manufacture of hot rolled steel involves several steps. Semi-finished steel
in the form of billets, blooms or slabs is heated in a furnace to between
1100 and 1200 degrees centigrade to make the steel suitable for reshaping.
The heated semi-finished product is then passed through up to 14 pairs of
large diameter, water-cooled iron rolls which create the size and shape of
bar desired. After cooling, the bars are straightened, tested for quality
and cut to desired length. Niagara UK's hot rolling facilities produce
round, hexagon and square bars up to 4 1/16 inches in diameter, rectangular
bars up to 20 inches wide and a variety of special shapes and sections for
the cold drawn, construction and engineering markets, among others.
Niagara UK's cold finishing operations, which operate under the
names GB Longmore, Midland Engineering Steels and W Wesson, represent the
largest independent cold drawn bar producer in the United Kingdom and one
of the largest producers of cold finished rectangular bars in Europe. These
operations produce cold drawn, machined and turned bars in sizes up to 16
inches in diameter for rounds, 6 1/4 inches for squares, 20 inches wide for
rectangles and up to 4 inches across for hexagons. These products are
available in a wide range of specifications including carbon alloy and are
generally sold in lengths varying from 10 to 20 feet. These cold finished
bars are predominantly used in machining applications, automotive and
appliance shafts, screw machine parts, hydraulic applications, machinery
guides and precision shafting.
Niagara UK's distribution operations operate under the name
Macreadys and represent one of the leading distributors in the U.K. of cold
finished and hot rolled engineering bars. Macreadys distributes throughout
the United Kingdom with warehousing at three sites and sales offices at an
additional five locations in the U.K.
CUSTOMERS
Niagara US sells its products primarily to steel service
centers, which accounted for approximately 75% of its sales during 1999,
with the balance of its sales to original equipment manufacturers ("OEMs")
and the screw machine industry. Steel service centers purchase and
warehouse large quantities of standardized steel products which are then
sold directly to OEMs. OEMs use cold drawn steel bars in a wide range of
products. Niagara US concentrates its sales efforts on steel service
centers, which purchase relatively standardized products on a regular
basis. By focusing on this market, Niagara US attempts to minimize the risk
of holding obsolete inventory.
Niagara US has approximately 650 active customers in the United
States and Canada and is not dependent upon any one geographical market.
For 1999, Niagara US's 10 largest customers (by tons shipped) represented
approximately 63% of its sales, and its 3 largest customers, Alro Steel
Corporation, Earle M. Jorgensen Co. and Joseph T. Ryerson and Sons, Inc.
represented approximately 45% of its sales. The loss of any of these three
largest customers would have a material adverse effect on Niagara US's
sales.
Niagara UK sells to a wide customer base in the United Kingdom,
Europe and the rest of the world. Its customer base includes original
equipment manufacturers, component manufacturers, other cold finishers and
a large number of steel service centers. The volume of individual orders
varies significantly. For example, 100,000 lbs is not unusual for the hot
rolling businesses and Macreadys fills orders as small as 20 lbs.
Niagara UK has approximately 10,500 active accounts. Its largest
account resulted in less than 5% of sales. Approximately 67% of its sales
during 1999 were within the U.K. with 16% to continental Europe and 17% to
the rest of the world. For 1999, Niagara UK's 10 largest customers
represented approximately 20% of its sales.
MARKETING
The Company markets its products through salaried in-house sales
personnel and sales representatives compensated on a commission-only basis.
RAW MATERIALS
The Company purchases raw materials from mini-mills and
integrated steel mills. Such materials consist of hot rolled steel bars and
coils and semi-finished billets, blooms or slabs for re-rolling. The cost
of products purchased from mini-mills is primarily dependent on the price
of scrap steel and energy. The cost of products purchased from integrated
steel mills is dependent on a number of factors including demand, the price
of scrap steel and the volume and price of foreign imports. Integrated
steel mills are more affected by demand levels and the level of foreign
imports than mini-mills. In both the U.S. and U.K., the Company obtains raw
material from domestic and foreign suppliers.
COMPETITION
The steel bar market is highly competitive, based on price,
product quality and customer service. Management's strategy is to seek to
remain competitive on price and surpass the Company's competitors in
product quality and customer service. The Company's principal competitors
in its home markets are other domestic companies and foreign exporters, and
in its foreign markets, local producers and other exporters. These
competitors include integrated producers, mini-mills and independent cold
drawn steel bar producers.
Management believes that, in the U.S., the ability to offer a
full line of cold finished bar products and the proximity of facilities to
major steel service center markets are key competitive factors in the
industry. Close geographic proximity to customers results in reduced
freight costs and faster delivery of customer orders. In the U.K.,
management has focused on smaller orders and orders which are more
difficult to produce such as special sections and rectangles. By
accumulating smaller orders into efficient production runs the Company can
reduce customer lead times, accept orders that larger producers cannot
accommodate and improve profit margins.
The Company competes in a narrow segment of the steel industry,
but its business is affected by conditions within the broader steel
industry and, in particular, the automotive, agricultural and machine tool
industries. Consequently, a significant downturn in any of these industries
or in the broader steel industry may result in a similar downturn in the
cold drawn steel bar market and have an adverse effect on the Company.
STRATEGY
Management's business strategy focuses on improving product
quality and customer service and on maintaining strict cost controls. In
the U.S., the Company offers a full line of cold finished products on a
national level. Through its U.K. operations, the Company offers, on a
worldwide basis, a full range of standard products and a comprehensive
range of special sections, flats (rectangles and squares) which typically
yield a higher margin. In addition, Niagara UK's distribution operations
represent one of the leading distributors of carbon, alloy and stainless
bars in the United Kingdom.
Management seeks to obtain a competitive advantage through the
Company's ability to supply customers on a timely basis with an extensive
range of sizes and shapes of high quality steel bars often at volumes that
are not attractive to larger steel processors. In this regard, the Company
maintains finished goods inventories of the most commonly ordered sizes and
shapes of cold finished bars and minimizes lead times for its hot rolled
bar customers by frequent rolling cycles from a comprehensive raw material
inventory.
In order to improve profitability, management has chosen to
specialize on higher margin and value-added products. Accordingly, the
Company has focused its capital investment on these product lines. In the
United States, the Company has implemented a system of inventory management
to supply more efficiently multiple locations of steel service center
companies. In the United Kingdom, the Company is in the process of
restructuring operations and consolidating management and administrative
functions in order to improve product range and quality, more efficiently
meet customer requirements and reduce costs.
In addition, the Company has invested in new equipment and added
to its information technology staff in order to improve customer service
and efficiency between its various operations. The Company's goal in this
regard is to fully integrate its information systems with those of its
suppliers and customers.
EMPLOYEES
As of December 31, 1999, the Company had 1,364 employees, 557
were located in the U.S. and 807 were located in the U.K. All of LaSalle's
183 hourly employees at its Hammond, Indiana facility as of such date were
covered by a collective bargaining agreement with The Progressive
Steelworker's of Hammond, Inc. which expires on July 18, 2001. All of
LaSalle's 21 hourly employees at its Griffith, Indiana facility as of such
date were covered by a collective bargaining agreement with the United
Steel Workers of America and its local affiliate which was due to expire on
February 19, 2000. On February 13, 2000, the hourly employees at LaSalle's
Griffith facility ratified a new 3-year collective bargaining agreement.
Of the 807 Niagara UK employees as of December 31, 1999, 453
were covered by collective bargaining agreements with the Iron and Steel
Trades Confederation (366 employees), the Transport and General Workers
Union (51 employees) and the General and Municipal Boilermakers Union (36
employees). These agreements extend indefinitely and contain compensation
provisions which are reviewed annually. The reviews take place at different
times throughout the year based on the facility and the status of the
employee. All other contract terms remain the same from year to year.
ITEM 2. PROPERTIES.
NIAGARA
Niagara utilizes approximately 5,000 square feet of space for
its headquarters in New York, New York under a lease expiring on December
31, 2007.
NIAGARA US
Niagara US operates manufacturing facilities in Buffalo, New
York; Chattanooga, Tennessee; Midlothian, Texas; and Hammond and Griffith,
Indiana. Niagara LaSalle owns the 207,000 square-foot Buffalo facility,
leases the 92,000 square-foot Chattanooga facility and owns the 115,000
square-foot Midlothian facility. LaSalle owns the 550,000 square-foot
Hammond facility and the 45,900 square-foot Griffith facility. The owned
facilities are mortgaged to the Company's lenders. The initial term of the
Chattanooga lease extends through November 30, 2009. Annual rent is
$189,996 through November 30, 2004 and $199,992 for the remainder of the
initial term. Niagara LaSalle has the option to extend the term of this
lease for an additional 10 years at specified rents and may terminate this
lease beginning on December 1, 2004 upon the payment of a termination fee
that varies with the date of termination.
NIAGARA UK
In connection with the acquisition of the U.K. steel bar
businesses, Niagara and Niagara UK entered into agreements with
subsidiaries of Glynwed calling for the lease or sublease by Niagara UK of
10 operating facilities in the West Midlands region of England and the
assignment of 5 sales office leases located throughout the United Kingdom.
Pursuant to these agreements, the initial term of the lease is 10 years for
9 of the operating facilities and 5 years for the remaining operating
facility (32,000 square-foot facility in Tipton) at aggregate rents of
(pound)50,000 (approximately $80,000) for the first two years;
(pound)850,000 (approximately $1.3 million) for years 3-6; and
(pound)1,000,000 (approximately $1.6 million) for years 7-10. The sales
office leases have various terms ranging to five years. Each operating
facility lease can be terminated by Niagara UK on one year's notice and
Niagara UK has the option to purchase any or all of the 7 primary operating
facilities (identified by an asterisk below) at prices fixed for 10 years
(which prices total (pound)9,468,000 (approximately $15.1 million)), or to
renew the leases with respect thereto for an additional term of 15 years at
commercial market rates.
Niagara UK's operating facilities consist of : 124,500 square
feet in Dudley (Gadd Dudley Port)*, 204,500 square feet in Moxley (Ductile
Wesson)*, 51,000 (Ductile Wesson) and 103,000 (GB Longmore) square feet in
Willenhall, 121,200 (Gadd Dudley Port)* and 32,000 (Midland Engineering
Steels) square feet in Tipton, 115,600 in Darlaston (GB Longmore)*, 88,700
square feet in Rugby (Macreadys)*, 15,500 square feet in Newport
(Macreadys)* and 28,800 square feet in Bolton (Macreadys)*. The sales
offices (Macreadys) range from 400 to 3,200 square feet and are located in
Waltham Cross, Medway, Southhampton, Leeds and Glasgow.
In connection with a restructuring plan for its hot rolling
operations, Niagara UK gave notice to terminate on February 18, 2001 its
lease of the 51,000 square-foot facility in Willenhall.
Management considers these manufacturing facilities, which
operated at approximately 70% of capacity in 1999, suitable for its current
operations.
ITEM 3. LEGAL PROCEEDINGS.
Niagara US and Niagara UK are subject to extensive environmental
laws and regulations concerning, among other matters, water and air
emissions and waste disposal. Under such laws, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), Niagara US and Niagara UK may be responsible for parts of the
costs required to remove or remediate previously disposed wastes or
hazardous substances at locations they own or operate or at locations owned
or operated by third parties where they, or a company from which they
acquired assets, arranged for the disposal of such materials. Claims for
such costs have been made against LaSalle with respect to five such
third-party sites. Management believes that, in four cases, the volumes of
the waste allegedly attributable to LaSalle and the share of costs for
which it may be liable are de minimis. At three of these sites, LaSalle has
entered into de minimis settlement agreements resolving the pending claims
of liability, one of which awaits further governmental approval. In
the fifth case, LaSalle has entered into an agreement with a group of other
companies alleged to be responsible for remediation of the site in an
effort to share proportionately the costs of remediation. LaSalle and this
group of companies have also signed an Administrative Order on Consent with
the United States Environmental Protection Agency and agreed to perform a
limited remediation at the site. LaSalle has received an insurance
settlement in an amount that largely covers the financial contributions it
has made for these sites through December 31, 1999. Because liability under
CERCLA and analogous state laws is generally joint and several, and because
further remediation work may be required at these sites, LaSalle may be
required to contribute additional funds. However, based on its volumetric
share of wastes disposed and the participation of other potentially liable
parties, management does not believe that LaSalle's share of the additional
costs will have a material adverse effect on the Company's financial
position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Niagara's Common Stock is traded on the Nasdaq National Market.
The following table sets forth the range of high and low sales prices by
quarter for 1998 and 1999.
HIGH LOW
1998
January 1 through March 31................ 10 1/8 7 7/8
April 1 through June 30................... 12 8 5/8
July 1 through September 30............... 10 5 3/4
October 1 through December 31............. 7 3/8 4 1/8
1999
January 1 through March 31................ 8 4 11/16
April 1 through June 30................... 8 5 1/4
July 1 through September 30............... 5 11/16 4 1/4
October 1 through December 31............. 5 3/8 3 1/2
As of March 24, 2000, there were 32 registered holders of
Niagara Common Stock.
Niagara has not declared or paid any dividends on its Common
Stock since its inception. The payment of dividends is conditioned on
Niagara's earnings, which are dependent on the earnings of its
subsidiaries, capital requirements and general financial condition.
Pursuant to its financing agreements, Niagara LaSalle and Niagara UK are
subject to restrictions on their ability to declare dividends to Niagara.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION -- Liquidity And Capital Resources."
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA.
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------
1995(1) 1996(2) 1997 (3) 1998 1999(4)
---- ---- ---- ---- ----
(in thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Net sales.............................. $ 17,035 $ 74,810 $ 204,962 $ 207,547 $ 264,222
Cost of products sold.................. 15,541 66,114 180,532 177,340 228,275
Gross profit........................... 1,493 8,695 24,430 30,207 35,947
Selling, general and administrative
expenses............................ 1,265 5,706 12,450 15,645 24,441
Interest income........................ 628 100 160 172 36
Other income........................... - 126 187 195 143
Interest expense....................... 272 1,536 5,874 4,154 5,631
Income taxes........................... 240 615 2,479 4,265 2,299
Extraordinary loss on early
extinguishment of debt.............. - -- 2,062 -- --
Net income ............................ 344 1,064 1,912 6,510 3,757
Net income per share (basic)
(before extraordinary loss)......... $ .10 $ .30 $ .94 $ .66 $ .40
Net income per share (diluted)
(before extraordinary loss)......... $ .10 $ .30 $ .78 $ .64 $ .40
Net income per share (basic)........... $ .10 $ .30 $ .45 $ .66 $ .40
Net income per share (diluted)......... $ .10 $ .30 $ .38 $ .64 $ .40
Weighted average common shares
outstanding (basic)................. 3,500 3,603 4,247 9,880 9,350
Weighted average common shares
outstanding (diluted)............... 3,500 3,603 5,095 10,250 9,357
--------------------------------------------------------------------------------------
AT DECEMBER 31,
--------------------------------------------------------------------------------------
1995 1996 1997 1998 1999
---- ----- ---- ---- ----
(in thousands)
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 2,187 $ 1,588 $ 13,207 $ 441 $ 2,234
Trade accounts receivable, net......... 4,239 5,953 21,660 13,360 53,126
Inventories............................ 14,744 14,446 35,190 30,132 59,442
Property, plant and equipment, net..... 12,745 21,649 89,163 89,749 102,984
Goodwill, net.......................... - 2,543 2,177 2,100 2,022
TOTAL ASSETS........................... 34,593 47,348 166,520 139,429 227,934
Trade accounts payable................. 4,787 4,110 20,985 14,107 50,191
Accrued expenses....................... 3,212 3,690 8,679 6,555 9,506
Current maturities of long-term debt... 733 1,662 3,498 4,797 6,411
Long-term debt, less current
maturities.......................... 6,969 18,075 59,184 41,572 87,388
Accrued pension and other
postretirement benefits............. - -- 14,537 10,303 8,023
Deferred income taxes.................. 3,914 3,805 5,726 7,357 9,849
TOTAL LIABILITIES...................... 20,131 31,822 114,524 84,898 171,473
STOCKHOLDERS' EQUITY .................. $ 14,462 $ 15,526 $ 51,996 $ 54,531 $ 56,461
- -------------------
(1) Includes the results of Niagara LaSalle for the period from August 17, 1995 to December 31, 1995.
(2) Includes the results of Southwest from February 1, 1996.
(3) Includes the results of LaSalle from April 1, 1997.
(4) Includes the results of Niagara UK from May 22, 1999.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA LASALLE (PREDECESSOR COMPANY)
YEAR ENDED DECEMBER 31, 1995(1)
--------------------------------------------
(in thousands)
STATEMENT OF OPERATIONS DATA:
<S> <C>
Net sales................................................. $ 50,506
Cost of products sold..................................... 44,386
Gross profit.............................................. 6,120
Selling, general and administrative
expenses............................................... 2,904
Employment expense-management options..................... 1,666
Operating income.......................................... 1,550
Other Income.............................................. 17
Interest expense.......................................... 771
Income before income taxes................................ 795
Income taxes.............................................. 270
Net income................................................ $ 525
AT AUGUST 16, 1995(2)
--------------------------------------------
(in thousands)
BALANCE SHEET DATA:
Current assets............................................ $ 18,257
Current liabilities....................................... 11,118
Working capital........................................... 7,139
Property plant and equipment, net ........................ 6,829
TOTAL ASSETS.............................................. 25,103
Long-term debt and capital lease
obligations (excluding current portion)................ 6,266
TOTAL LIABILITIES......................................... 18,584
REDEEMABLE PREFERRED STOCK................................ 251
STOCKHOLDERS' EQUITY...................................... $ 6,268
(1) Derived from combining results of operations prior to acquisition by Niagara (January 1 to August 16, 1995) with
results after such acquisition (August 17 to December 31, 1995).
(2) Acquisition date by Niagara.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
During the second half of 1998 and for all of 1999, the
Company's U.S. and U.K. operations experienced competitive pressures due to
a marked decline in prices and weakened demand for their products.
Management believes that such developments were due to overcapacity in the
industry and the continuation of low-priced imports, primarily from Asia
and Eastern European countries. Although demand for the Company's products
in the U.S. began to strengthen modestly during the second half of 1999,
prices in the U.S. remained weak during this period primarily due to
pressures from a domestic competitor. In addition, Niagara UK's export
business was negatively impacted as a result of the continued high value of
the British pound.
The results of operations for the year ended December 31, 1999
include the results of Niagara UK from May 22, 1999. The results of
operations for the year ended December 31, 1997 include the results of
LaSalle from April 1, 1997.
Year ended December 31, 1999 compared with December 31, 1998
Net sales for the year ended December 31, 1999 were
$264,221,888, representing an increase of $56,675,362, or 27.3%, over the
same period in 1998. This increase was attributable to the inclusion of
$77,789,863 of Niagara UK sales which was offset in part by a decrease in
sales from U.S. operations due to weakened demand for products and a
decline in prices.
Cost of products sold for the year ended December 31, 1999
increased by $50,934,752 to $228,274,501, representing an increase of 28.7%
over the same period in 1998. This increase was attributable to the
inclusion of $65,045,141 of Niagara UK's cost of products sold, which was
offset in part by reduced raw material costs as a result of the lower sales
volume, lower raw material prices and, to a lesser extent, reduced
operating costs in the U.S.
Gross margins for the year ended December 31, 1999 decreased by
0.9% over the same period in 1998 due to the decline in selling prices,
which was partially offset by a decrease in raw material prices and the
Company's greater emphasis on higher margin value-added products. If
adjusted for the effects of the curtailment of certain post retirement
welfare benefits and pension costs attributable to U.S. operations for
1998, gross margins for the year ended December 31, 1999 would have
improved by 0.6% over the same period in 1998.
Selling, general and administrative expenses for the year ended
December 31, 1999 increased by $8,796,088 to $24,440,790, or 9.3% of sales,
compared to 7.5% of sales for the same period in 1998. Both the increase in
dollar amount and increase as a percentage of sales were due to the
inclusion of $10,385,466 of Niagara UK's expenses for the period, which was
offset in part by reduced selling, general, administration expenses from
the Company's U.S. operations due to their decrease in sales and cost
reductions in the U.S.
Interest expense for the year ended December 31, 1999 increased
by $1,476,564 to $5,630,549. This increase was primarily due to increased
levels of borrowings attributable to the acquisition of the U.K. steel bar
businesses.
Net income for the year ended December 31, 1999 was $3,756,625,
a decrease of $2,753,481, or 42.3%, as compared to the net income for the
year ended December 31, 1998. This decrease resulted primarily from the
marked decline in prices and weakened demand for the Company's products
during the period. In addition, net income for the year ended December 31,
1998 included $3,019,000 as a result of a curtailment of certain post
retirement welfare benefits and pension costs attributable to U.S.
operations. Net income for the year ended December 31, 1999 included net
income of $388,742 for Niagara UK for the period May 22 through December
31, 1999.
On a pro forma basis, and as disclosed in Note 3(c) to the
Financial Statements, net loss for the year ended December 31, 1999 would
have been $2,122,086 compared to net income of $7,461,000 for the same
period in 1998. This decrease is attributable to reduced sales of
approximately $72,000,000 and an inventory adjustment of approximately
$5,700,000 to estimated net realizable value at Niagara UK during the first
quarter of 1999.
Year ended December 31, 1998 compared with December 31, 1997
Net sales for the year ended December 31, 1998 were
$207,546,526, an increase of $2,584,393, or 1.3%, over the same period in
1997. This increase was primarily due to the addition of sales of LaSalle
for the entire period in 1998 as compared to only the last three quarters
in 1997. Management estimates that sales were adversely affected by between
$15 and $20 million during the second half of 1998 due primarily to reduced
production at the Company's Hammond, Indiana facility during the nine-week
strike, lengthy training periods for permanent replacement workers at this
facility and the loss of market share during such period.
Cost of products sold for the year ended December 31, 1998 was
$177,339,749, a decrease of $3,192,474, or 1.8%, over the same period in
1997. This decrease was due primarily to the reduction in LaSalle's
postretirement benefit obligations (which reduced cost of products sold for
1998 by $3,320,000).
Gross margins for the year ended December 31, 1998 increased by
2.6% over the same period in 1997 due to the reduction in LaSalle's
postretirement benefit obligations and the continued greater emphasis on
higher margin value-added products. Gross margins for 1998 were adversely
affected by the reduced sales volume in the second half of the year
following the strike.
Selling, general and administrative expenses increased by
$3,195,197 to $15,644,702, or 7.5%, of sales in the year ended December 31,
1997 compared to 6.1% for the same period in 1997. This increase was due
primarily to the inclusion of LaSalle's selling, general and administrative
expenses for the full period in 1998 as compared to only the last three
quarters in 1997 (which was offset, in part, by a decrease in costs
resulting from the consolidation of selling and administration functions at
Niagara US), the additional administrative expenses associated with the
strike, and costs associated with the upgrade of the Company's computer
systems. These increases were partially offset by a reduction in expenses
relating to the reduction in LaSalle's postretirement benefit obligations
(which reduced selling, general and administrative expenses for 1998 by
$1,629,000). Selling, general and administrative expenses for 1998 were
adversely affected as a percentage of sales by the reduced sales volume in
the second half of the year following the strike.
Interest expense decreased by $1,720,209 to $4,153,985 primarily
due to reduced levels of borrowing.
Net income for the year ended December 31, 1998 was $6,510,106,
an increase of $4,597,788, or 240%, from the same period in 1997. This
increase was due primarily to the inclusion of LaSalle's results for the
full year in 1998 as compared to only the last three quarters in 1997,
the extraordinary loss in 1997 of $2,062,185 due to the early
extinguishment of debt and an increase in net income of $3,019,000 million
resulting from the curtailment of LaSalle's postretirement benefit
obligations. Net income for 1998 was also positively affected by interest
savings resulting from the reduction of debt following the redemption of
the Warrants in December 1997 and improved margins from the continued
emphasis on value-added products. Management estimates that net income for
the year ended December 31, 1998 was adversely affected by between $2.0 and
$2.6 million due to the effects of the strike. Net income for the year
ended December 31, 1998 increased by $4,812,654, or 284%, as compared to
pro-forma net income (see Note 3 to the 1998 Financial Statements) for the
year ended December 31, 1997. This increase resulted primarily from the
foregoing factors as well as the reduced earnings of LaSalle in the first
quarter of 1997 as compared to the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term liquidity requirement for day-to-day
operating expenses has been, and is expected to continue to be, funded by
cash provided by operations, borrowings under its revolving credit
facilities and advances under its invoice discounting agreement. The
Company's principal long-term liquidity requirement has been, and is
expected to continue to be, the funding of capital expenditures to
modernize, improve and expand its facilities, machinery and equipment.
Capital expenditures for the year ending December 31, 1999 were $5,180,444
compared to $6,859,081 for the same period in 1998. This decrease was
attributable to an increase in equipment leases by U.S. operations. The
Company anticipates spending approximately $6,000,000 for capital
expenditures during 2000.
Cash flows used by operating activities were $5,252,947 for the
year ended December 31, 1999 as compared to $14,676,621 provided by
operating activities for the year ended December 31, 1998. This $19,929,568
decrease, or 136% decline from the prior year, was largely attributable to
an increase in accounts receivable of $41,612,485 ($34,878,254 attributable
to Niagara UK) and inventories of $7,563,220, which was offset, in part, by
an increase in accounts payable and accrued expenses of $32,718,279
($29,504,069 attributable to Niagara UK). Cash and cash equivalents at
December 31, 1999 was $2,234,181, an increase of $1,793,527 as compared to
December 31, 1998.
On April 18, 1997 and in connection with the acquisition of
LaSalle, Niagara US entered into a revolving credit and term loan agreement
(the "Credit Agreement") with Manufacturers and Traders Trust Company
("M&T"), CIBC Inc., National City Bank, National Bank of Canada and the
Prudential Insurance Company of America, and Niagara LaSalle terminated its
previously existing credit agreements with M&T. The Credit Agreement
provides for a $50,000,000 four-year revolving credit facility and a
$40,000,000 eight-year term loan. The obligations of Niagara US under the
Credit Agreement are guaranteed by Niagara and secured by substantially all
of the assets and a pledge of all outstanding capital stock of Niagara US.
The acquisition of LaSalle and the refinancing of existing
Niagara LaSalle indebtedness was also financed pursuant to the issuance and
sale of $20,000,000 aggregate principal amount of 12.5% senior subordinated
notes of Niagara LaSalle due April 18, 2005 (the "Subordinated Notes"). In
connection with the subordinated debt portion of this financing, the
purchasers of the Subordinated Notes were issued 285,715 shares of Niagara
Common Stock.
Principal of the term loan under the Credit Agreement amortizes
in monthly installments that commenced on November 1, 1997 and end on April
1, 2004. The principal repayment installments on the term loan escalate
throughout its term. Interest on the term loan is payable in monthly
installments either at the LIBOR rate (for a period specified by Niagara US
from time to time) plus 210 basis points, or M&T's prime rate plus 50 basis
points. Revolving credit loans made pursuant to the Credit Agreement are
based on a percentage of eligible accounts receivable and inventory and
will mature on April 17, 2001. Interest on such loans is payable in monthly
installments and is either 175 basis points above the LIBOR rate (for a
period specified by Niagara US from time to time) or M&T's prime rate plus
25 basis points.
The Credit Agreement carries restrictions on, among other
things, indebtedness, liens, capital expenditures, dividends, asset
dispositions and changes in control of Niagara US, and requires minimum
levels of net worth through maturity. Also included in this agreement are
requirements regarding the ratio of consolidated current assets to
consolidated current liabilities and the ratio of net income before
interest, taxes, depreciation and amortization to cash interest expense.
Niagara US was in compliance with all of these requirements as of December
31, 1999.
On October 31, 1997, Niagara exercised its right to redeem on
December 9, 1997 (which date was extended to December 11, 1997) all of its
then outstanding and unexercised Redeemable Common Stock Purchase Warrants
("Warrants") at $.01 per Warrant. As a result of such action, the Warrants
could not be exercised after the redemption date. Each outstanding Warrant
entitled the holder to purchase from Niagara, prior to the exercise
deadline, one share of Niagara Common Stock at an exercise price of $5.50.
Of the 6,050,000 Warrants outstanding prior to the call for redemption,
6,042,990 were exercised resulting in $33,236,445 in gross proceeds to
Niagara and the issuance of 6,042,990 shares of Niagara Common Stock.
During the fourth quarter of 1997, the Company used approximately $21.8
million of such proceeds to prepay, at 107% plus accrued interest, the
Subordinated Notes. During the first quarter of 1998, the Company used
another $10 million of such proceeds to reduce the balance due under a
revolving credit facility.
On May 20, 1998, Niagara's Board of Directors authorized the
repurchase, from time to time, of up to one million shares of Niagara
Common Stock in open market and privately negotiated transactions. On
October 6, 1999, Niagara's Board authorized the repurchase of an additional
one million Niagara shares. Such repurchases are subject to market and
other conditions and are financed with internally generated funds or
borrowings under the Company's revolving credit facilities or advances under
Niagara UK's invoice discounting agreement. Shares of Niagara Common Stock
repurchased are held as treasury stock and are available for use in the
Company's benefit plans and for general corporate purposes. As of December
31, 1999, Niagara had repurchased 1,034,509 shares of its Common Stock at a
cost of $5,626,211, of which 548,629 shares were repurchased at a cost of
$2,726,246 during the year ended December 31, 1999.
On May 21, 1999 and in connection with the acquisition of the
steel bar businesses from Glynwed Steels, Niagara UK entered into a bank
facilities agreement (the "Facilities Agreement") with National Westminster
Bank plc ("National Westminster") providing for a (pound)10 million
(approximately $16 million) seven-year term loan and a (pound)9.8 million
(approximately $15.7 million) three-year revolving credit facility. The
obligations of Niagara UK under the Facilities Agreement are secured by
standby letters of credit issued by M&T to National Westminster
(respectively, the "Term Letter of Credit" and the "Revolving Letter of
Credit," and, together, the "Letters of Credit") and substantially all of
the assets of Niagara UK (for the benefit of M&T). Niagara UK's agreement
to reimburse M&T for drawdowns under the Letters of Credit is guaranteed by
Niagara and Niagara US, which guarantees are secured by substantially all
of the assets of Niagara US on a second priority basis. As consideration
for the issuance of the Letters of Credit, Niagara UK paid M&T a total of
(pound)178,400 (approximately $285,440) at the time of issuance and agreed
to pay further annual fees (in monthly installments) of 3% and 2.75% in
respect of the Revolving and Term Letters of Credit, respectively.
Principal of the term loan under the Facilities Agreement
amortizes in monthly installments commencing on May 31, 2000 and ending on
April 30, 2006. The principal repayment installments on the term loan
escalate throughout its term. Revolving credit loans made pursuant to the
Facilities Agreement are based upon a percentage of eligible inventory and
will mature on May 21, 2002. Interest of the term and revolving credit
loans under the Facilities Agreement accrue at the LIBOR rate (for periods
specified by Niagara UK from time to time) plus 15 basis points and is
payable at the conclusion of such interest periods.
The purchase of the U.K. steel bar businesses was also financed
pursuant to (i) a (pound)3.75 million (approximately $6 million) equity
investment by Niagara in Niagara UK (the "Equity Investment"), (ii) a
(pound)3.75 million (approximately $6 million) subordinated loan from
Niagara to Niagara UK which accrues interest at 7.5% per annum (the
"Subordinated Loan") and (iii) a (pound)2.5 million (approximately $4
million) non-interest bearing short-term loan from Niagara to Niagara UK
(the "Short-Term Loan"). The Equity Investment, the Subordinated Loan and
the Short-Term Loan were financed by borrowings under the Credit Agreement.
The Short-Term Loan was repaid during the third quarter of 1999.
On August 23, 1999, Niagara UK entered into a three-year Invoice
Discounting Agreement (the "Discount Agreement") with Lombard Natwest
Discounting Limited ("Lombard") providing for up to (pound)20 million
(approximately $32.2 million) of advances to Niagara UK based upon a
formula tied to the receivables purchased by Lombard. Interest on such
advances accrues at the National Westminster base rate plus 2.25%. The
obligations of Niagara UK under the Discount Agreement are guaranteed by
Niagara and secured by substantially all of the assets of Niagara UK. In
connection with the execution of the Discount Agreement, the Revolving
Letter of Credit and the revolving credit facility under the Facilities
Agreement were reduced to (pound)4.9 million (approximately $7.9 million)
and were further reduced to (pound)2.5 million (approximately $4.0 million)
as of December 31, 1999.
The Facilities and Discount Agreements carry restrictions on,
among other things, security interests, borrowed money, asset dispositions,
dividends, transactions with affiliates, capital expenditures, changes in
control and mergers and acquisitions. Also included in these agreements are
requirements regarding tangible net worth, the ratio of profit before
interest and taxes to interest and the ratio of current assets to current
liabilities. Niagara UK was in compliance with all of these requirements as
of December 31, 1999.
In connection with the execution of the Facilities and Discount
Agreements, Niagara and Niagara UK entered into intercreditor agreements
which, among other things (i) restrict the payment of dividends in respect
of the Niagara UK shares, (ii) prohibit the repayment of the Subordinated
Loan until after the discharge of all of Niagara UK's liabilities under the
Facilities and Discount Agreements and (iii) permit the repayment of the
Short-Term Loan upon demand unless payments of principal or interest under
these agreement are owing, certain financial covenants in these agreements
have not been met or an event of default thereunder has occurred and is
continuing.
At December 31, 1999, the Company had borrowed or been advanced
$45,347,552 under its revolving credit facilities and the Discount
Agreement and had approximately $26,000,000 in available credit thereunder,
and the outstanding balance of its term loans was $47,508,380. Working
capital of the Company at December 31, 1999 and 1998 was $55,019,020 and
$20,414,031, respectively.
YEAR 2000
The Company could be adversely affected if the information
technology or operating systems which it or its suppliers, customers or
service providers use do not properly accommodate the "Year 2000" dating
changes necessary to permit the recording of year dates for 2000 and later
years.
During the fourth quarter of 1999, the Company completed its
Year 2000 readiness program. Under this program, the Company's personnel,
together with outside consultants and engineers, assessed the Company's
information technology and operating systems for Year 2000 readiness.
Management took steps to correct any problems identified by this assessment
or to minimize the impact of any interruptions or performance degradations
caused by the Year 2000. In addition, the Company inquired into the Year
2000 readiness status of its suppliers, customers and essential service
providers and formulated contingency plans to prepare for any Year 2000
issues.
Since December 31, 1999, the Company has not experienced any
significant Year 2000 interruptions or performance degradations in any of
its internal systems. In addition, the Company has not experienced or been
notified of any such problems from its suppliers, customers or service
providers. However, because of the reliance on and involvement of a great
many third parties, and since it may take additional time for Year 2000
problems to emerge, disruptions in the Company's operations could still
occur which may have a material effect on the Company's results of
operations.
Total costs associated with the Company's Year 2000 readiness
program have not been material to the Company's results of operations.
Based on current conditions and assessments as well as third party
assurances, management does not expect that such costs will be material to
the Company's results of operations in the future.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which requires entities
to recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. SFAS No. 133, as amended
by SFAS No. 137, is effective for all fiscal years beginning after June 15,
2000. The Company does not presently enter into any transactions involving
derivative financial instruments and, accordingly, does not anticipate that
the new standard will have any effect on its financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risks include fluctuations in
interest rates, variability in interest rate spreads (i.e., prime to LIBOR
spreads) and exchange rate variability. The Company does not trade in
derivative financial instruments. Substantially all of the Company's
non-trade indebtedness relates to loans made pursuant to the Credit and
Facilities Agreements and advances under the Discount Agreement. Interest
on the term loan under the Credit Agreement accrues at either the LIBOR
rate (for a period specified by Niagara US from time to time) plus 210
basis points, or M&T's prime rate plus 50 basis points. Interest on
revolving credit loans made pursuant to such agreement accrues at either
175 basis points above the LIBOR rate (for a period specified by Niagara US
from time to time) or M&T's prime rate plus 25 basis points. Interest on
the term and revolving credit loans under the Facilities Agreement accrues
at the LIBOR rate (for a period specified by Niagara UK from time to time)
plus 15 basis points. Interest on advances under the Discount Agreement
accrues at National Westminster's base rate plus 2.25%. Management attempts
to reduce market risks associated with the fluctuations in interest rates
through the selection of LIBOR periods under the Credit and Facilities
Agreements and advance amounts under the Discount Agreement.
The Company sells its products primarily to customers in North
America and Europe. Niagara UK's revenues are generally collected in the
local currency of its customers. To reduce the Company's exposure to
fluctuations in exchange rates, Niagara UK purchases foreign exchange
contracts in amounts and with expiration dates in line with customer
orders. Revenues from sales by Niagara US are collected exclusively in U.S.
dollars.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. Some of the
statements in this Form 10-K, including, without limitation, those made
under "BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" may constitute forward-looking
statements. When used in this Form 10-K, the words "may," "will," "should,"
"could," "expects," "plans," "anticipates," "intends," " believes,"
"estimates," "predicts," "projects," "likely," or "continue" and other
similar expressions are intended to identify such forward-looking
statements. These statements involve known and unknown risks, uncertainties
and other factors, many of which are beyond the control of the Company,
that may cause the Company's actual results to be materially different from
those expressed or implied by such forward-looking statements or in future
filings by Niagara with the Securities and Exchange Commission, in the
Company's press releases and in oral statements made by authorized officers
of the Company. Such factors include, among other things:
o CYCLICALITY - The Company's products are used in the automotive,
agricultural and machine tool industries, among others. As a
result, demand for such products is closely tied to the economic
cycles that drive these businesses. For this reason, the
Company's financial performance has been, and will likely
continue to be, cyclical in nature.
o COMPETITION - There is excess world capacity for many of the
products produced by the Company. In addition, the Company's
largest competitors are vertically integrated with steelmaking,
hot rolling and cold drawing capabilities. This integration
could result in lower raw material costs to these competitors.
See "BUSINESS -- Competition."
O FOREIGN IMPORTS - The presence of low-priced imports of
competing products and low-priced manufactured products which
utilize the Company's products could affect the market for the
Company's products. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Results of
Operations."
o FOREIGN CURRENCY - Approximately 33% of Niagara UK's sales are
to customers outside of the United Kingdom. Revenues in respect
of such sales are generally collected in the local currency of
the customer. While Niagara UK purchases foreign exchange
contracts to reduce its exposure to fluctuations in exchange
rates, its export sales have been and will remain subject to the
value of the British pound in relation to the value of the local
currencies. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-- Results of
Operations" and "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK."
o EXPIRATION OF MANAGEMENT EMPLOYMENT CONTRACTS - Certain members
of management have employment contracts with the Company which
expire at various times within the next year. There is no
assurance that the Company will be able to retain these
individuals following such expiration dates.
o EXPIRATION OR REVIEW OF UNION CONTRACTS - LaSalle's hourly
employees at its Hammond and Griffith, Indiana facilities are
covered by collective bargaining agreements, which expire on
July 18, 2001 and February 19, 2003, respectively. There is no
assurance that LaSalle will be able to negotiate new agreements
on favorable economic terms. In addition, a large number of
Niagara UK's employees are covered by collective bargaining
agreements containing compensation provisions which are reviewed
annually. There is no assurance that Niagara UK will be able to
agree with the covered employees at the time of such review.
Accordingly, the Company may experience work stoppages or other
labor difficulties. See "BUSINESS-- Employees."
o ENVIRONMENTAL MATTERS - Niagara US and Niagara UK are subject to
extensive environmental laws and regulations concerning the
discharge of materials into the environment and the removal or
remediation of environmental contamination at locations owned or
operated by them or at locations owned or operated by third
parties where they, or a company from which they acquired
assets, arranged for the disposal of such materials. While the
costs of complying with the current regulations and the
Company's share of remediation expenses at locations where
Niagara's subsidiaries have been identified as a responsible
party have not adversely affected the Company in any material
respect, there is no assurance that substantial additional costs
will not be required as a result of more stringent regulations,
an increase in the Company's share of remediation costs or the
discovery of additional contamination at the Company's
facilities or at other locations for which the Company would be
responsible. See "LEGAL PROCEEDINGS."
o YEAR 2000 - The Company could be adversely affected if it
experiences a disruption in its operations due to its inability
or the inability of its suppliers, customers or service
providers to comply with the "Year 2000" dating changes
necessary to permit the recording of year dates for 2000 and
later years. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Year 2000."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants................. 18
Balance Sheets..................................................... 19
Statements of Operations........................................... 20
Statements of Stockholders' Equity................................. 21
Statements of Cash Flows........................................... 22
Notes to Financial Statements...................................... 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Niagara Corporation
New York, New York
We have audited the accompanying consolidated balance sheets of Niagara
Corporation and its subsidiaries (together, the "Company") as of December
31, 1998 and 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1999. 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 Niagara
Corporation and its subsidiaries as of December 31, 1998 and 1999, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity with generally
accepted accounting principles.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
New York, New York
February 18, 2000
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
BALANCE SHEETS
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1998 1999(a)
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT:
<S> <C> <C>
Cash and cash equivalents $ 440,654 $ 2,234,181
Trade accounts receivable, net of allowance for doubtful
accounts of $789,000 and $925,000 (Notes 6 and 12) 13,360,290 53,126,071
Accounts receivable - other (Note 9) - 2,255,687
Inventories (Notes 4 and 6) 30,131,877 59,441,872
Deferred income taxes (Note 11) 494,000 957,000
Other current assets (Note 7) 1,446,130 3,112,453
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 45,872,951 121,127,264
PROPERTY, PLANT AND EQUIPMENT, NET (NOTES 5, 6 AND 14) 89,748,881 102,983,882
GOODWILL, NET OF ACCUMULATED AMORTIZATION OF $222,545 AND
$300,077 (NOTE 3(a)) 2,099,593 2,022,061
DEFERRED FINANCING COSTS, NET OF ACCUMULATED AMORTIZATION OF
$184,480 AND $295,168 590,520 479,832
INTANGIBLE PENSION ASSET (NOTE 7) 526,000 474,000
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION OF $414,213
AND $581,444 591,075 847,260
- ----------------------------------------------------------------------------------------------------------------------------
$ 139,429,020 $ 227,934,299
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,106,608 $ 50,191,265
Accrued expenses (Note 3(c)) 6,555,103 9,506,238
Current maturities of long-term debt (Note 6) 4,797,209 6,410,741
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 25,458,920 66,108,244
OTHER:
Long-term debt, less current maturities (Note 6) 41,572,250 87,387,943
Accrued pension cost (Note 7) 4,664,337 2,690,987
Accrued other postretirement benefits (Note 7) 5,638,639 5,331,586
Deferred income taxes (Note 11) 7,357,000 9,849,000
Other noncurrent liabilities 207,331 105,261
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 84,898,477 $171,473,021
- ----------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTES 9, 10 AND 14)
STOCKHOLDERS' EQUITY (NOTES 2, 7, 8 AND 10):
Preferred stock, $.001 par value - 500,000 shares
authorized; none outstanding - -
Common stock, $.001 par value - 15,000,000 shares
authorized; 9,997,455 issued 9,998 9,998
Additional paid-in capital 50,111,675 50,111,675
Retained earnings 8,384,835 12,141,460
Accumulated other comprehensive loss (1,076,000) (175,644)
- ----------------------------------------------------------------------------------------------------------------------------
57,430,508 62,087,489
Treasury stock, at cost, 485,880 and 1,034,509 shares (2,899,965) (5,626,211)
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 54,530,543 $ 56,461,278
- ----------------------------------------------------------------------------------------------------------------------------
$ 139,429,020 $ 227,934,299
- -------------------
(a) Includes the balance sheet of Niagara UK.
- -----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997(a) 1998 1999(b)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES (NOTE 12) $204,962,133 $207,546,526 $264,221,888
COST OF PRODUCTS SOLD (NOTES 7 AND 13) 180,532,223 177,339,749 228,274,501
- ---------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 24,429,910 30,206,777 35,947,387
OPERATING EXPENSES:
Selling, general and administrative (Note 7) 12,449,505 15,644,702 24,440,790
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 11,980,405 14,562,075 11,506,597
INTEREST INCOME 160,048 172,076 36,172
INTEREST EXPENSE (5,874,194) (4,153,985) (5,630,549)
OTHER INCOME 187,244 194,940 143,405
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 6,453,503 10,775,106 6,055,625
INCOME TAXES (NOTE 11) 2,479,000 4,265,000 2,299,000
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY LOSS 3,974,503 6,510,106 3,756,625
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF
DEBT, NET OF INCOME TAX BENEFIT OF $1,264,000
(NOTE 18) (2,062,185) - -
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,912,318 $ 6,510,106 $ 3,756,625
- ---------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (BASIC):
Income before extraordinary loss $ .94 $ .66 $ .40
Extraordinary loss (.49) - -
- ---------------------------------------------------------------------------------------------------------------------------------
Net income per share (basic) $ .45 $ .66 $ .40
- ---------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (DILUTED):
Income before extraordinary loss $ .78 $ .64 $ .40
Extraordinary loss (.40) - -
- ---------------------------------------------------------------------------------------------------------------------------------
Net income per share (diluted) $ .38 $ .64 $ .40
- ---------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(NOTE 15):
Basic 4,246,925 9,879,528 9,350,189
Diluted 5,095,350 10,249,954 9,357,114
- ---------------------------------------------------------------------------------------------------------------------------------
-------------------
(a) Includes the results of LaSalle from April 1, 1997.
(b) Includes the results of Niagara UK from May 22, 1999.
- ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1997, 1998 and 1999
- -----------------------------------------------------------------------------------------------------------------------
Common stock
--------------------------------------------
Number of Additional
shares Amount paid-in capital
- ------------------------------------------------ --------------------- --------------------- ---------------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997 3,668,750 $3,669 $15,560,127
Shares issued (a) 285,715 286 1,321,146
Shares issued (b) 6,042,990 6,043 33,230,402
Net income for the year - - -
- ------------------------------------------------ --------------------- --------------------- ---------------------
BALANCE, DECEMBER 31, 1997 9,997,455 9,998 50,111,675
- ------------------------------------------------ --------------------- --------------------- ---------------------
Comprehensive income:
Net income for the year - - -
Minimum pension liability adjustment
($1,764,000, net of tax benefit of
$688,000) - - -
- ------------------------------------------------ --------------------- --------------------- ---------------------
TOTAL COMPREHENSIVE INCOME
- ------------------------------------------------ --------------------- --------------------- ---------------------
Purchase of treasury stock, at cost (c) - - -
- ------------------------------------------------ --------------------- --------------------- ---------------------
BALANCE, DECEMBER 31, 1998 9,997,455 9,998 50,111,675
- ------------------------------------------------ --------------------- --------------------- ---------------------
Comprehensive income:
Net income for the year - - -
Foreign currency translation adjustments
(Note 1) - - -
Minimum pension liability adjustment
($1,456,000, net of tax expense of
$568,000) - - -
- ------------------------------------------------ --------------------- --------------------- ---------------------
TOTAL COMPREHENSIVE INCOME
- ------------------------------------------------ --------------------- --------------------- ---------------------
Purchase of treasury stock, at cost (d) - - -
- ------------------------------------------------ --------------------- --------------------- ---------------------
BALANCE, DECEMBER 31, 1999 9,997,455 $9,998 $50,111,675
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
[chart continued]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1997, 1998 and 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated other Total
Retained earnings comprehensive Treasury stock, at stockholders'
(deficit) loss cost equity
- ------------------------------------------------ ---------------- ---------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $ (37,589) $ - $ - $15,526,207
Shares issued (a) - - - 1,321,432
Shares issued (b) - - - 33,236,445
Net income for the year 1,912,318 - - 1,912,318
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
BALANCE, DECEMBER 31, 1997 1,874,729 - - 51,996,402
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
Comprehensive income:
Net income for the year 6,510,106 - - 6,510,106
Minimum pension liability adjustment
($1,764,000, net of tax benefit of
$688,000) - (1,076,000) - (1,076,000)
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
TOTAL COMPREHENSIVE INCOME 5,434,106
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
Purchase of treasury stock, at cost (c) - - (2,899,965) (2,899,965)
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
BALANCE, DECEMBER 31, 1998 8,384,385 (1,076,000) (2,899,965) 54,530,543
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
Comprehensive income:
Net income for the year 3,756,625 - - 3,756,625
Foreign currency translation adjustments
(Note 1) - 12,356 - 12,356
Minimum pension liability adjustment
($1,456,000, net of tax expense of
$568,000) - 888,000 - 888,000
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
TOTAL COMPREHENSIVE INCOME 4,656,981
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
Purchase of treasury stock, at cost (d) - - (2,726,246) (2,726,246)
- ------------------------------------------------ ---------------- ---------------------- -------------------- -------------
BALANCE, DECEMBER 31, 1999 $12,141,460 $ (175,644) $(5,626,211) $56,461,278
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------------
(a) On April 18, 1997, Niagara issued 285,715 shares of its Common Stock in connection with the subordinated debt
portion of the financing for the acquisition of LaSalle (Notes 2 and 3(b)).
(b) Proceeds from exercise of Warrants during December 1997 (Note 2).
(c) During the year ended December 31, 1998, Niagara repurchased 485,880 shares of its Common Stock at a cost of
$2,899,965.
(d) During the year ended December 31, 1999, Niagara repurchased 548,629 shares of its Common Stock at a cost of
$2,726,246.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (NOTE 17)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
Year ended December 31, 1997(a) 1998 1999(b)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 1,912,318 $ 6,510,106 $ 3,756,625
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 5,533,603 6,615,662 8,144,210
Noncash portion of extraordinary loss 662,185 - -
Provision for doubtful accounts 88,905 61,151 135,778
Deferred income taxes 520,000 3,226,000 1,461,000
Accrued pension costs (566,100) 523,437 (740,350)
Accrued other postretirement benefits 150,000 (7,052,361) (307,053)
Loss on disposal and write-off of equipment - - 569,008
Miscellaneous (13,529) - -
Changes in assets and liabilities, net of effects from
purchases of LaSalle in 1997 and U.K. steel bar
businesses in 1999:
(Increase) decrease in accounts receivable 3,144,270 8,238,789 (39,356,798)
Increase in accounts receivable - other - - (2,255,687)
(Increase) decrease in inventories 3,433,310 5,057,691 (7,563,220)
(Increase) decrease in other current assets - 381,224 (1,391,323)
(Increase) decrease in other assets (1,868,179) 452,987 (423,416)
Increase (decrease) in accounts payable, accrued
expenses and other noncurrent liabilities (3,663,315) (9,338,065) 32,718,279
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
TOTAL ADJUSTMENTS 7,421,150 8,166,515 (9,009,572)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 9,333,468 14,676,621 (5,252,947)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of LaSalle, net of cash acquired (67,240,000) (1,371,000) -
Acquisition of U.K. steel bar businesses - - (32,514,281)
Proceeds from disposal of equipment - - 25,864
Acquisition of property and equipment (5,572,754) (6,859,081) (5,180,444)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (72,812,754) (8,230,081) (37,668,861)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from exercise of Warrants 33,236,445 - -
Proceeds from long-term debt 81,800,000 - 57,226,432
Repayment of long-term debt (38,372,928) (16,312,998) (9,797,207)
Financing costs (1,565,081) - -
Payments to acquire treasury stock - (2,899,965) (2,726,246)
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 75,098,436 (19,212,963) 44,702,979
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS - - 12,356
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,619,150 (12,766,423) 1,793,527
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,587,927 13,207,077 440,654
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 13,207,077 $ 440,654 $ 2,234,181
- ---------------------------------------------------------------------- ---------------- -------------------- ----------------
- -------------------
(a) Includes the cash flows of LaSalle from April 1, 1997.
(b) Includes the cash flows of Niagara UK from May 22, 1999.
- --------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
NOTES TO FINANCIAL STAEMENTS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. SUMMARY OF Organization and Business Operations
SIGNIFICANT
ACCOUNTING Niagara Corporation ("Niagara") was incorporated in Delaware on April
POLICIES 27, 1993 with the objective of acquiring an operating business in the
metals processing and distribution industry or in a metals-related
manufacturing industry.
Niagara consummated an initial public offering on August 20, 1993 and
raised net proceeds of $15,295,100. Since that date, it has made
acquisitions of three cold finished steel bar producers in the United
States and one group of businesses in the United Kingdom engaged in hot
rolling, cold finishing and distributing steel bars.
Niagara's subsidiaries, Niagara LaSalle Corporation ("Niagara LaSalle")
and LaSalle Steel Company ("LaSalle," and together with Niagara
LaSalle, "Niagara US") operate from five locations in the United
States. Niagara's subsidiary, Niagara LaSalle (UK) Limited ("Niagara
UK"), operates from ten locations in the United Kingdom. Niagara LaSalle
and LaSalle are Delaware corporations. Niagara UK is an English company.
Niagara's subsidiaries (together with Niagara, the "Company") produce cold
drawn and hot rolled steel bars for distribution primarily within North
America and Europe. The Company competes in a narrow segment of the steel
industry and its business is affected by conditions within the broader steel
industry and the automotive, agricultural and machine tool industries. It
grants trade credits to its customers consistent with industry practice.
Principles of Consolidation
The consolidated financial statements include the accounts of Niagara and
its subsidiaries, all of which are wholly-owned. All material intercompany
accounts and transactions have been eliminated.
Earnings Per Share
The Company follows Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share," which requires presentation of
basic earnings per share and diluted earnings per share by all entities
that have publicly traded common stock or potential common stock
issuances (options, warrants, convertible securities or contingent
stock arrangements). Basic earnings per share is computed by dividing
income available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted earnings per
share gives effect to all dilutive potential common shares outstanding
during the period. The computation of diluted earnings per share does
not assume conversion, exercise or contingent exercise of securities
that would have an antidilutive effect on earnings.
Foreign Currency Translation and Transactions
Niagara UK uses British pounds sterling ("(pound)") as its functional
currency and its accounts are translated to United States dollars in
conformity with SFAS No. 52, "Foreign Currency Translation." Assets and
liabilities have been translated at year-end exchange rates and the related
revenues and expenses have been translated at rates prevailing at the
transaction date, which approximates average rates for the period.
Translation adjustments arising from the use of different exchange rates
from period to period are included as accumulated other comprehensive income
within the Statements of Stockholders' Equity. Gains and losses resulting
from foreign currency transactions are included in other income within the
Statements of Operations.
Cash Equivalents
For purposes of the Statements of Cash Flows, the Company considers
cash equivalents to consist of all short-term highly liquid debt
instruments which are readily convertible into cash. Cash equivalent
investments were $20,098 and $20,972 at December 31, 1998 and 1999,
respectively.
Revenue Recognition
Revenue from the sale of products is recorded at the time the goods are
shipped. Net delivery costs are classified as a reduction of sales.
Inventories
Inventories are stated at the lower of cost or market, with cost being
determined using the last-in, first-out (LIFO) method for Niagara US
and the first-in, first-out ("FIFO") method for Niagara UK.
Property, Plant and Equipment
Property, plant and equipment is stated at cost.
Additions to property, plant and equipment are stated at cost and
include expenditures for new facilities and those costs which
substantially increase the useful lives of existing property, plant and
equipment. Maintenance, repairs and minor renewals are expensed as
incurred.
The Company provides for depreciation of property, plant and equipment
at rates designed to amortize such assets over their useful lives.
Depreciation is computed on the straight-line method using lives of 3
to 15 years on machinery and equipment and furniture and fixtures, and
10 to 20 years on buildings and improvements and leasehold
improvements.
Other Current Assets
Other current assets at December 31, 1998 included a $500,000 loan due
from a related party. This loan was repaid during 1999.
Intangible Assets
Niagara LaSalle has a power replacement agreement with the Power
Authority of New York which provides for low cost energy. This
agreement, which is included in other assets, is being amortized on a
straight-line basis over 10 years.
Deferred financing costs are being amortized on a straight-line basis
over the term of the related debt, which is seven years.
Goodwill represents the excess of the cost of purchased businesses over
the fair value of the net assets acquired. Amortization is computed
using the straight-line method over 30 years.
Evaluating Recoverability of Long-Lived Assets
The Company reviews the carrying values of its long-lived and
identifiable intangible assets for possible impairment whenever events
or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable. The Company assesses recoverability of
these assets by estimating future nondiscounted cash flows. Any
long-lived assets held for disposal are reported at the lower of their
carrying amounts or fair value less cost to sell. No impairments have
been recorded through December 31, 1999.
Income Taxes
Deferred income taxes are recognized for the tax consequences of
temporary differences between the financial reporting bases and the tax
bases of the Company's assets and liabilities in accordance with SFAS
No. 109. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation." SFAS No. 123 encourages entities to adopt
the fair value method in place of the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," for all arrangements under which employees receive
shares of stock or other equity instruments of the employer or the
employer incurs liabilities to employees in amounts based on the price
of its stock. The Company has not adopted the fair value method
encouraged by SFAS No. 123 and will continue to account for such
transactions in accordance with APB No. 25.
Comprehensive Income
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income,"
which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are required to
be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.
Comprehensive income is displayed in the Statements of Stockholders'
Equity.
Pension and Other Postretirement Benefits
The Company has adopted the provisions of SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," which
standardizes the disclosure requirements for pensions and other
postretirement benefits.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities,"
which requires entities to recognize all derivative financial
instruments as either assets or liabilities in the balance sheet and
measure these instruments at fair value. SFAS No. 133, as amended by
SFAS No. 137, is effective for all fiscal years beginning after June
15, 2000. The Company does not presently enter into any transactions
involving derivative financial instruments and, accordingly, does not
anticipate that the new standard will have any effect on its financial
statements.
2 . PUBLIC OFFERING On August 20, 1993, Niagara sold 2,875,000 units ("Units") in an
AND SUBSEQUENT initial public offering (the "Offering"). Each Unit consisted of one
COMMON STOCK ISSUANCES share of Niagara Common Stock, par value $.001 per share, and two
Redeemable Common Stock Purchase Warrants ("Warrants"). Each Warrant
entitled the holder to purchase from Niagara, until the close of
business on August 13, 2000, one share of Niagara Common Stock at an
exercise price of $5.50, subject to adjustment in certain
circumstances. The Warrants were redeemable at a price of $.01 per
Warrant upon 30 days' notice in the event that the last sale price of
the Common Stock was at least $10.00 per share for 20 consecutive
trading days ending on the third day prior to the date on which notice
of redemption was given.
On May 22, 1996, Niagara issued 168,750 shares of its Common Stock in
exchange for unit purchase options (the "Purchase Options") issued to the
underwriters of the Offering. The Purchase Options were exercisable until
August 13, 1998 for an aggregate of 250,000 units at $9.00 per unit
(subject, in each case, to certain antidilution adjustments), with each unit
consisting of one share of Niagara Common Stock and two warrants, with each
warrant exercisable for one share of Niagara Common Stock at $6.60.
On April 18, 1997, Niagara issued 285,715 shares of its Common Stock in
connection with the subordinated debt portion of the financing for the
acquisition of LaSalle (see Note 3(b)).
On October 31, 1997, Niagara exercised its right to redeem on December
9, 1997 (which date was extended to December 11, 1997) all of its then
outstanding and unexercised Warrants at $.01 per Warrant. As a result
of such action, the Warrants could not be exercised after the
redemption date. Of the 6,050,000 Warrants then outstanding, 6,042,990
were exercised prior to the exercise deadline, resulting in $33,236,445
in gross proceeds to Niagara and the issuance of 6,042,990 shares of
Niagara Common Stock.
3. ACQUISITIONS OF (a) Acquisition of Southwest
SOUTHWEST,
LASALLE AND THE U.K. On January 31, 1996, Niagara LaSalle purchased all of the
STEEL BAR outstanding shares of capital stock of Southwest Steel Company,
BUSINESSES Inc. ("Southwest"), a manufacturer of cold drawn steel bars, for
$1,920,000 in cash and $1,156,773 principal amount of promissory
notes guaranteed by Niagara. In connection with this
acquisition, Niagara LaSalle discharged $8,518,691 of Southwest
indebtedness and Niagara guaranteed $898,000 of Southwest
indebtedness to a former Southwest stockholder. The acquisition
was accounted for as a purchase and financed by a $12,000,000
term loan and the utilization of a portion of Niagara LaSalle's
revolving line of credit.
The Southwest purchase price, including certain transaction
expenses of $524,270, together with assumed liabilities of
$350,063, totaled $3,951,106. Southwest's stockholders' equity
at January 31, 1996 was $1,071,782. The $2,879,324 excess has
been allocated to goodwill and is being amortized on a
straight-line basis over 30 years.
Southwest's Tulsa, Oklahoma facilities were closed during 1996,
and its operations were moved to a new facility in Midlothian,
Texas. Southwest was merged into Niagara LaSalle on November 1,
1996.
On November 24, 1997, Niagara LaSalle paid $525,000 to the
former Southwest stockholders in full satisfaction of all
amounts owing under the $1,156,773 principal amount of
promissory notes issued to such individuals in connection with
the acquisition. The difference between the principal amount of
the promissory notes and the amount paid, after related
expenses, reduced the amount of goodwill recorded relating to
the acquisition of Southwest.
(b) Acquisition of LaSalle
On April 18, 1997, Niagara LaSalle purchased from Quanex
Corporation ("Quanex") all of the outstanding shares of capital
stock of LaSalle, one of the largest domestic producers of cold
drawn steel bars. In consideration for the sale of such shares,
Niagara LaSalle paid Quanex $65,500,000 in cash at the closing
and an additional $1,371,000, which amount was paid on January
26, 1998, based on changes in LaSalle's stockholder's equity
between October 31, 1996 and March 31, 1997. Niagara LaSalle
also paid Quanex an amount based on cash activity in the
intercompany account between Quanex and LaSalle from April 1,
1997 through April 18, 1997.
The financial statements include the results of LaSalle from
April 1, 1997. Accordingly, LaSalle's results are included in
the years ended December 31, 1998 and 1999, but are only
included from April 1, 1997 for the year ended December 31,
1997.
The acquisition of LaSalle was accounted for as a purchase. The
purchase price, including acquisition costs and other estimated
liabilities as of the acquisition date, was approximately
$68,000,000. The purchase price exceeded LaSalle's stockholder's
equity by approximately $56,000,000, and based on an appraisal,
the excess was primarily allocated to property, plant and
equipment.
The acquisition of LaSalle and the refinancing of existing Niagara
LaSalle indebtedness was financed pursuant to (i) a revolving credit
and term loan agreement with Niagara US (guaranteed by Niagara),
providing for a $50,000,000 three-year revolving credit facility
(which has been extended for an additional year) and a $40,000,000
eight-year term loan and (ii) the issuance and sale of $20,000,000
aggregate principal amount of 12.5% senior subordinated notes of
Niagara LaSalle due April 18, 2005 (the "Subordinated Notes"). In
connection with the subordinated debt portion of this financing, the
purchasers of the Subordinated Notes were issued 285,715 shares of
Niagara Common Stock (see Note 2). The fair value of these shares
($1,321,000) was charged to deferred debt issuance costs (see Note
18) and credited to equity.
(c) Acquisition of U.K. Steel Bar Businesses
On May 21, 1999, Niagara UK purchased the equipment, inventory
and certain other assets of the eight steel bar businesses of
Glynwed Steels Limited ("Gynwed Steels"), an English company and
a subsidiary of Glynwed International plc ("Glynwed"). In
consideration for the sale of such assets, Niagara UK paid
Glynwed Steels (pound)21,202,000 (approximately $34 million) in
cash at the closing, (pound)3,015,500 (approximately $4.9
million) of which was returned to Niagara UK during the third
quarter of 1999 as an adjustment to reflect the value of the net
assets transferred. These steel bar businesses, which are
engaged in hot rolling, cold finishing and distribution, consist
of the following unincorporated trading units: Ductile Wesson,
Gadd Dudley Port, GB Longmore, Macreadys, Midland Engineering
Steels and W Wesson.
The financial statements include the results of Niagara UK from May
22, 1999. The acquisition of the U.K. steel bar businesses was
accounted for as a purchase. The purchase price for these businesses
was approximately (pound) 21,275,500 (approximately $ 34.4 million)
which amount includes (pound)1,302,000 (approximately $2.1 million)
of acquisition costs and (pound) 1,787,000 (approximately $2.9
million) of estimated costs relating to the intended closure of
certain facilities and intended consolidation of certain operations.
Such estimated costs include approximately (pound)810,000
(approximately $1.3 million) of severance costs in respect of
approximately 90 employees, approximately (pound)470,000
(approximately $0.8 million) of fixed asset write-offs, and
approximately (pound)210,000 (approximately $0.4 million) of site
clearance costs. At December 31, 1999, approximately (pound)1,154,000
(approximately $1.9 million) of such estimated costs were included in
accrued expenses.
In connection with the acquisition of the U.K. steel bar businesses,
Niagara and Niagara UK entered into agreements with subsidiaries of
Glynwed providing for the lease or sublease by Niagara UK of 10
operating facilities and the assignment of 5 sales office leases.
Pursuant to these agreements, (i) the initial term of the lease is 10
years for 9 of the operating facilities and 5 years for the remaining
operating facility at aggregate rents of (pound)50,000 (approximately
$80,000) for the first two years; (pound)850,000 (approximately $1.3
million) for years 3-6; and (pound)1,000,000 (approximately $1.6
million) for years 7-10, (ii) each operating facility lease can be
terminated by Niagara UK on one year's notice and (iii) Niagara UK
has the option to purchase any or all of the 7 primary operating
facilities at prices fixed for 10 years (which prices total
(pound)9,468,000 (approximately $15.1 million)), or to renew the
leases with respect thereto for an additional term of 15 years at
commercial market rates.
The purchase of the U.K. steel bar businesses was financed by
(i) borrowings under a bank facilities agreement entered into on
May 21, 1999 by Niagara UK providing for a (pound)10 million
(approximately $16 million) seven-year term loan and a
(pound)9.8 million (approximately $15.7 million) three-year
revolving credit facility, (ii) a (pound)3.75 million
(approximately $6 million) equity investment by Niagara in
Niagara UK, (iii) a (pound)3.75 million (approximately $6
million) subordinated loan from Niagara to Niagara UK and (iv) a
(pound)2.5 million (approximately $4 million) short-term loan
from Niagara to Niagara UK. The equity investment and
subordinated and short-term loans were financed by borrowings
under a revolving credit and term loan agreement dated April 18,
1997, as amended, with Niagara US. (See Note 3(b)).
On August 23, 1999, Niagara UK entered into a three-year invoice
discounting agreement with Lombard Natwest Discounting Limited
providing for up to (pound)20 million (approximately $32.2
million) of advances to Niagara UK based upon a formula tied to
the receivables purchased by such institution. In connection
with the execution of this agreement, the revolving credit
facility under Niagara UK's bank facilities agreement was
reduced to (pound)4.9 million (approximately $7.9 million). This
facility was further reduced to (pound)2.5 (approximately $4.0
million) as of December 31, 1999.
Pro forma results of operations, assuming the acquisition of the
U.K. steel bar businesses had occurred on January 1, 1998, are
unaudited and detailed below. Pro forma adjustments primarily
include reductions in depreciation and amortization based on
changes in the useful lives of the assets acquired, additional
interest expense relating to the debt incurred in connection
with the acquisition, and changes in rent expense based on
property leases entered into in connection with the acquisition.
Year ended December 31, 1998 1999
------------------------------------------------------------------------
Net sales $396,573,526 $324,511,068
Net income (loss) 7,461,106 (2,122,086)
Net income (loss) per share
(basic) .76 (.23)
Net income (loss) per share
(diluted) .73 (.23)
========================================================================
4. INVENTORIES
Inventories consisted of the following at December 31, 1998 and 1999:
December 31, 1998 1999
------------------------------------------------------------------------
Raw materials $7,924,023 $25,231,191
Work-in-process 4,588,895 5,260,767
Finished goods 17,718,959 28,949,914
------------------------------------------------------------------------
$30,131,877 $59,441,872
========================================================================
At December 31, 1999, Niagara US inventories were $36,749,445
determined using the LIFO method and Niagara UK inventories were
$22,692,427 determined using the FIFO method.
5. PROPERTY, PLANT Property, plant and equipment consisted of the following at December
AND EQUIPMENT 31, 1998 and 1999:
December 31, 1998 1999
------------------------------------------------------------------------
Land, buildings and improvements $24,446,401 $24,606,004
Leasehold improvements 1,391,909 1,825,065
Machinery and equipment 75,597,659 94,364,513
Furniture and fixtures 1,684,028 3,348,343
------------------------------------------------------------------------
Total 103,119,997 124,143,925
Less: Accumulated depreciation
and amortization 13,371,116 21,160,043
------------------------------------------------------------------------
$89,748,881 $102,983,882
------------------------------------------------------------------------
6. LONG-TERM DEBT The long-term debt consisted of the following at December 31, 1998 and 1999:
December 31, 1998 1999
------------------------------------------------------------------------
Term note payable - bank, maturing in
monthly installments of
principal plus interest
through March 2004. From
November 1, 1997 through
April 1, 1998, the monthly
installments of principal
were $166,666. From May 1,
1998 through April 1,
1999, the monthly
installments of principal
were $333,333. From May 1,
1999 through April 1,
2000, the monthly
installments of principal
are $416,666. The monthly
principal payment is
adjusted annually each
subsequent May 1, with the
final installment due and
payable on April 1, 2004.
Interest is calculated at
either the LIBOR rate plus
210 basis points or the
bank's prime rate plus 50
basis points (effective
rate of 8.27% at December
31, 1999) $36,333,340 $31,666,680
Secured bank revolving line of credit
up to $50,000,000 due April
17, 2001, limited to a portion
of the value of eligible
accounts receivable and
inventories. Interest is
payable in monthly
installments at either the
LIBOR rate plus 175 basis
points or the bank's prime
rate plus 25 basis points
(effective rates of 8.75%
on $8,000,000, 7.93% on
$20,000,000 and 7.91% on
$2,500,000 at December 31,
1999) 9,000,000 30,500,000
Term note payable - bank(facilities
agreement) maturing in
monthly installments of
principal plus interest
from May 2000 through
April 2006. The monthly
installments of principal
are(pound)50,000 from May
2000 through April 2001,
(pound)85,000 from May
2001 through April
2002,(pound)125,000 from
May 2002 through April
2003,(pound)160,000 from
May 2003 through Aril
2004,(pound)200,000 from
May 2004 through April
2005, and(pound)213,333
from May 2005 through
April 2006. Interest is
calculated at the LIBOR
rate plus 15 basis points.
The note is secured by,
among other things, a
letter of credit for the
balance outstanding with a
fee of 275 basis points
(effective rate of 8.66%
at December 31, 1999) - 15,841,700
Secured invoice discounting agreement up
to(pound)20,000,000
($32,330,000) due August
23, 2002, limited to a
portion of the purchased
accounts receivable.
Interest is payable in
monthly installments at
the National Westminster
Bank base rate plus 225
basis points (effective
rate of 8.34% at December
31, 1999) - 14,847,552
Note payable - former Southwest stock-
holder maturing $64,143
annually on January 31,
through 2010, plus
interest at 8.5%,
guaranteed by Niagara
(Note 3(a)) 769,714 705,571
Note payable - former Southwest stock-
holder maturing $33,333
annually on April 17,
through 2005, plus
interest at 10% 233,334 200,001
Other notes payable 33,071 37,180
------------------------------------------------------------------------
46,369,459 93,798,684
Less: Current maturities of long-term
debt 4,797,209 6,410,741
------------------------------------------------------------------------
$41,572,250 $87,387,943
========================================================================
The obligations of Niagara US under the revolving credit and term loan
agreement are guaranteed by Niagara and secured by substantially all of
the assets and a pledge of all outstanding capital stock of Niagara US.
This credit agreement carries restrictions on, among other things,
indebtedness, liens, capital expenditures, dividends, asset
dispositions and changes in control of Niagara US, and requires minimum
levels of net worth through maturity. Also included in this agreement
are requirements regarding the ratio of consolidated current assets to
consolidated current liabilities and the ratio of net income before
interest, taxes, depreciation and amortization to cash interest
expense.
The obligations of Niagara UK under the facilities agreement are
secured by standby letters of credit and substantially all of the
assets of Niagara UK (for the benefit of the issuer of such letters of
credit). Niagara's UK's agreement to reimburse the issuer for drawdowns
under such letters of credit is guaranteed by Niagara and Niagara US,
which guarantees are secured by substantially all of the assets of
Niagara US on a second priority basis. The obligations of Niagara UK
under the invoice discounting agreement are guaranteed by Niagara and
secured by substantially all of the assets of Niagara UK. The
facilities and invoice discounting agreements carry restrictions on,
among other things, security interests, borrowed money, asset
dispositions, dividends, transactions with affiliates, capital
expenditures, changes in control and mergers and acquisitions. Also
included in these agreements are requirements regarding tangible net
worth, the ratio of profit before interest and taxes to interest and
the ratio of current assets to current liabilities.
Approximate maturities of long-term debt are as follows:
Year ended December 31,
------------------------------------------------------------------------
2000 $ 6,411,000
2001 38,724,000
2002 24,778,000
2003 11,642,000
2004 6,718,000
Thereafter 5,526,000
------------------------------------------------------------------------
$ 93,799,000
========================================================================
7. PENSION PLANS LaSalle sponsors two contributory defined benefit pension plans which
AND OTHER cover certain employees of LaSalle, as well as various retiree health
POSTRETIREMENT and welfare programs providing postretirement benefits for eligible
BENEFITS employees hired prior to certain specified dates.
LaSalle's benefit plans were revised in 1998 to effect several changes
in benefits. The net effect of these changes, primarily curtailments,
was to reduce expenses by an aggregate of $4,949,000 in the 1998
Statement of Operations (see Note 19). This reduction is reflected as a
reduction of (i) $3,320,000 to cost of products sold and (ii)
$1,629,000 to selling, general and administrative expenses.
The following tables provide a reconciliation of the changes in these
plans' benefit obligations and fair value of assets over the two-year
period ending December 31, 1999, and a statement of the funded status
as of December 31, 1998 and 1999:
</TABLE>
<TABLE>
<CAPTION>
Pension benefits Other benefits
---------------------------- --------------------------
1998 1999 1998 1999
- ---------------------------------------------------------------------------------------------
Reconciliation of benefit obligation
<S> <C> <C> <C> <C>
Obligation at January 1 $19,799,000 $23,651,000 $12,463,000 $5,483,000
Service cost 449,000 517,000 107,000 76,000
Interest cost 1,559,000 1,605,000 763,000 357,000
Plan amendments 899,000 - - -
Actuarial (gain) loss 1,398,000 (1,670,000) 191,000 1,153,000
Benefit payments (1,220,000) (1,656,000) (988,000) (721,000)
Curtailments (869,000) - (7,299,000) -
Termination benefits 1,636,000 - 246,000 -
- ---------------------------------------------------------------------------------------------
Obligation at December 31 $23,651,000 $22,447,000 $5,483,000 $6,348,000
=============================================================================================
Pension benefits Other benefits
--------------------------- --------------------------
1998 1999 1998 1999
- ---------------------------------------------------------------------------------------------
Reconciliation of fair value of plan
assets
Fair value of plan assets at January 1 $18,101,000 $19,310,00 $ - $ -
Actual return on plan assets 820,000 2,426,000 988,000 -
Employer contributions 1,609,000 1,030,000 - 721,000
Benefit payments (1,220,000) (1,656,000) (988,000) (721,000)
- ----------------------------------------------------------------------------------------------
Fair value of plan assets at $19,310,000 $21,110,000 $ - $ -
December 31
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Pension benefits Other benefits
------------------------------ -----------------------------
1998 1999 1998 1999
- ---------------------------------------------------------------------------------------------
Funded status
<S> <C> <C> <C> <C>
Funded status at December 31 $(4,341,000) $(1,337,000) $(5,483,000) $(6,348,000)
Unrecognized prior service cost 526,000 474,000 - -
Unrecognized (gain) loss 1,445,663 (765,987) (155,639) 1,016,414
- ---------------------------------------------------------------------------------------------
Net amount recognized $(2,369,337) $(1,628,987) $(5,638,639) $(5,331,586)
=============================================================================================
The following table provides the amounts recognized in the Company's
balance sheets at December 31, 1998 and 1999:
Pension benefits Other benefits
------------------------------- ----------------------------
1998 1999 1998 1999
- ---------------------------------------------------------------------------------------------
Prepaid benefit cost $ 5,000 $ 280,000 $ - $ -
Accrued benefit liability (4,664,337) (2,690,987) (5,638,639) (5,331,586)
Intangible asset 526,000 474,000 - -
Accumulated other comprehensive
income, pretax 1,764,000 308,000 - -
- ---------------------------------------------------------------------------------------------
Net amount recognized $(2,369,337) $ (1,628,987) $(5,638,639) $(5,331,586)
=============================================================================================
</TABLE>
LaSalle's hourly pension plan has an accumulated benefit obligation in
excess of plan assets. The plan's accumulated benefit obligation was
$15,613,000 and $14,727,000 at December 31, 1998 and 1999, respectively.
Plan assets for this plan were $10,870,000 and $11,951,000 at December 31,
1998 and 1999, respectively. LaSalle's plans for postretirement benefits
other than pensions have no plan assets. The aggregate benefit obligations
for such plans is $5,483,000 and $6,348,000 at December 31, 1998 and 1999,
respectively.
The following table provides the components of net periodic benefit cost
for LaSalle's plans for fiscal years 1998 and 1999:
<TABLE>
<CAPTION>
Pension benefits Other benefits
------------------------------ ---------------------------
1998 1999 1998 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service cost $ 449,000 $ 517,000 $ 107,000 $ 76,000
Interest cost 1,559,000 1,605,000 763,000 357,000
Expected return on plan assets (1,885,000) (1,912,000) - -
Amortization of prior service cost 24,000 52,000 - -
Amortization of unrecognized loss
(gain) - 25,000 - (19,000)
- ----------------------------------------------------------------------------------------------
Net periodic benefit cost 147,000 287,000 870,000 414,000
Curtailment/settlement/ termination
benefits loss (gain) 1,985,000 - (6,934,000) -
- ---------------------------------------------------------------------------------------------
Net periodic benefit cost after
curtailments and settlements $2,132,000 $287,000 $(6,064,000) $ 414,000
=============================================================================================
The amount included within other comprehensive income arising from a change
in the additional minimum pension liability was($1,076,000) (net of tax
benefit) and $888,000 (net of tax expense) for 1998 and 1999, respectively.
LaSalle provides certain health care and life insurance benefits for
eligible retired employees. Employees may become eligible for such benefits
if they reach the normal retirement age while working for LaSalle. LaSalle
continues to fund benefit costs on a pay as you go basis.
The assumptions used in the measurement of LaSalle's benefit obligation are
shown in the following table:
</TABLE>
<TABLE>
<CAPTION>
Pension benefits Other benefits
------------------------------ -------------------------
1998 1999 1998 1999
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average assumptions as
of December 31:
Discount rate:
Used for determination of
expense 7.50% 7.00% 7.50% 7.00%
Used for determination of
year-end liability 7.00% 7.75% 7.00% 7.75%
Expected return on plan assets 10.00% 10.00% N/A N/A
Rate of compensation increase -
hourly plan 3.00% 3.00% N/A N/A
Rate of compensation increase -
salaried plan 5.00% 5.00% N/A N/A
============================================================================================
</TABLE>
Because of changes effected during 1998 to health care benefits under
LaSalle's postretirement benefit plans, a zero percent health care cost
trend rate has been assumed since then.
Niagara LaSalle maintains a contributory salary deferral retirement plan
(401(k)) for all employees of Niagara and Niagara US other than those
subject to a collective bargaining agreement (the "Salaried 401(k) Plan").
Under the terms of this plan, participants may elect to defer up to 15% of
their earnings. This plan provides for a 100% match for the first 3% of
employee contributions and a 50% match for the next 2% of employee
contributions, and an additional employer contribution equal to 2% of
earnings. Niagara LaSalle also maintains a contributory salary deferral
retirement plan (401(k)) for employees of LaSalle who are subject to a
collective bargaining agreement. This plan provides for a 25% match of the
first 5% of employee contributions for all participants other than
employees at the Company's Hammond, Indiana facility hired after May 18,
1998 for whom the plan provides for the same employer match and additional
contribution provisions as the Salaried 401(k) Plan. All contributions
under these plans are subject to the limitations of Section 401 of the
Internal Revenue Code and the requirements of the Employee Retirement
Income Security Act of 1974. The funds are invested as directed by the
individual participants. Total expense related to these plans was
approximately $288,000, $622,000 and $656,000 for the years ended December
31, 1997, 1998 and 1999, respectively.
Niagara UK established a defined contribution group personal pension
arrangement for all of its employees effective October 1, 1999. (Between
May 21 and October 1, 1999 (the "Transitional Period"), employees of
Niagara UK were able to continue their participation in Glynwed's pension
plans on a transitional basis.) Under the terms of Niagara UK's plan,
participants may elect to contribute prescribed percentages of their
earnings based upon their age, position and whether they were previously
members of a Glynwed pension plan. Niagara UK's contributions to
participants' accounts under this plan are based upon the same factors. All
contributions are subject to the requirements of the U.K. Inland Revenue
and related pension laws. The funds are invested as directed by the
individual participants. For the period May 22 through December 31, 1999,
expenses in respect of this plan, together with Niagara UK's contributions
to Glynwed's pension plans during the Transitional Period (in respect of
Niagara UK employees), totaled approximately (pound)776,000 (approximately
$1,249,000).
<TABLE>
<CAPTION>
<S> <C> <C>
8. PREFERRED STOCK Niagara is authorized to issue 500,000 shares of Preferred Stock, par
value $.001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by its Board of
Directors.
9. LEASE Niagara leases office space under an operating lease expiring in
COMMITMENTS December 2007. Niagara US leases equipment and one operating facility
under operating leases expiring through November 2009. Niagara UK
leases equipment, ten operating facilities and five sales offices under
operating leases expiring through May 2009. At December 31, 1999,
future minimum payments under noncancellable operating leases were
approximately as follows:
------------------------------------------------------------------------
2000 $ 939,000
2001 1,756,000
2002 2,143,000
2003 1,965,000
2004 1,842,000
Thereafter 9,511,000
------------------------------------------------------------------------
Total minimum lease payments $ 18,156,000
========================================================================
Rent expense under operating leases was approximately $458,000,
$418,000 and $975,000 for the years ended December 31, 1997, 1998 and
1999, respectively.
Niagara LaSalle is negotiating an equipment lease with a finance
company. Upon execution of this lease, all purchase price installment
payments made by Niagara LaSalle to the equipment manufacturer
($2,255,687 as of December 31, 1999) will be reimbursed by the lessor
to Niagara LaSalle.
10. STOCK OPTION The Company has a stock option plan which provides that the
PLAN Compensation Committee of Niagara's Board of Directors may grant
options to the Company's officers, directors, employees and independent
contractors for up to 2,500,000 shares of Niagara Common Stock.
The Company applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for this plan.
Under APB Opinion 25, no compensation cost was recognized because the
exercise price of Niagara's employee stock options equaled the market
price of the underlying stock on the date of grant.
FASB Statement 123, "Accounting for Stock-Based Compensation," requires
that the Company provide pro forma information regarding net income and
earnings per share as if the compensation cost for the Company's stock
option plan had been determined in accordance with the fair value
method prescribed in such statement. The Company estimates the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model with the following weighted average assumptions
used for grants in 1997, 1998 and 1999: dividend yield of 0%; expected
volatility of 37.3% for 1997 and 1998 and 45.8% for 1999; average
risk-free interest rates of 6.6%, 4.5% and 4.7% for 1997, 1998 and
1999, respectively; expected lives of 10 years; and a discount due to
marketability and dilution of 22% in 1997 and 0% for 1998 and 1999.
Under the accounting provisions of FASB Statement 123, the Company's
net income and earnings per share would have been reduced to the pro
forma amounts indicated below:
</TABLE>
<TABLE>
<CAPTION>
1997 1998 1999
- ------------------------------ ---------------- ----------------------- -----------------------
Net income:
<S> <C> <C> <C>
As reported $1,912,318 $6,510,106 $3,756,625
Pro forma 1,494,881 6,037,295 3,238,140
Net income per share (basic):
As reported .45 .66 .40
Pro forma .35 .61 .35
Net income per share (diluted):
As reported .38 .64 .40
Pro forma .29 .59 .35
============================== ================ ======================= =======================
</TABLE>
A summary of the status of the Company's stock option plan as of December
31, 1997, 1998 and 1999, and changes during the years ending on those
dates, is presented below:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1998 December 31, 1999
----------------------- -------------------------- ------------------------
Weighted Weighted Weighted
average average average
exercise exercise exercise
Shares price Shares price Shares price
- ----------------- ----------------------- --------------------------- - ------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding
at beginning
of year 815,000 $5.66 1,190,000 $5.68 1,250,000 $5.61
Granted 375,000 5.72 85,000 5.50 890,000 5.88
Exercised - - - - - -
Cancelled and
reissued - - (25,000) (8.50) - -
- ----------------------------------------------------------------------------------------------------
Outstanding
at end of year 1,190,000 $5.68 1,250,000 $5.61 2,140,000 $5.72
================= ======================= =========================== = ========================
Options
exercisable at
year-end 485,332 $5.69 751,000 $5.64 1,203,000 $5.67
================= ======================= =========================== = ========================
Weighted
average fair
value of
options
granted
during the
year $2.78 $2.80 $3.19
================= ======================= =========================== = ========================
</TABLE>
<TABLE>
<CAPTION>
The following table summarizes information about stock options outstanding
at December 31, 1999.
Options outstanding Options exercisable
-------------------------------------------- ----------------------------
Weighted
Number average Weighted Number Weighted
Range of outstanding remaining average exercisable average
exercise at contractual exercise at exercise
prices 12/31/99 life price 12/31/99 price
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$5.50 to
$5.88 2,140,000 7.61 years $5.72 1,203,000 $5.67
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
11. INCOME TAXES The provision for federal and state income tax expense was comprised of
the following:
Year ended December 31, 1997 1998 1999
- --------------------------------------------------------------------------------------------------
Current:
<S> <C> <C> <C>
Federal $ 1,801,000 $887,000 $ 738,000
State 158,000 152,000 100,000
- --------------------------------------------------------------------------------------------------
1,959,000 1,039,000 838,000
- --------------------------------------------------------------------------------------------------
Deferred:
Federal 425,000 2,622,000 1,130,000
State 95,000 604,000 185,000
Foreign, U.K. - - 146,000
- ---------------------------------------------------------------------------------------------------
520,000 3,226,000 1,461,000
- --------------------------------------------------------------------------------------------------
Total income taxes $ 2,479,000 $4,265,000 $ 2,299,000
==================================================================================================
</TABLE>
At December 31, 1998 and 1999, deferred tax assets (liabilities) consisted
of the following:
<TABLE>
<CAPTION>
December 31, 1998 1999
- ---------------------------------------------- ---------------------------------------------
<S> <C> <C>
Federal alternative minimum tax
credit carryforwards $ 1,095,000 $ 1,894,000
Federal and state regular tax net
operating loss carryforwards 690,000 1,095,000
Postretirement benefit obligations 924,000 270,000
Accrued expenses deductible when
paid 843,000 723,000
Inventory reserves 837,000 1,261,000
Accrued minimum pension liability 688,000 120,000
New York State investment tax
credits 667,000 667,000
Allowance for doubtful accounts 305,000 325,000
Uniform capitalization in ending tax
inventory 81,000 87,000
Other 11,000 95,000
- ---------------------------------------------- ------------------------------------------------
Gross deferred tax assets 6,141,000 6,537,000
Valuation allowance for deferred tax
assets (667,000) (667,000)
- -----------------------------------------------------------------------------------------------
Net deferred tax assets 5,474,000 5,870,000
- ---------------------------------------------- ------------------------------------------------
Tax depreciation greater than book
depreciation of property,
plant and equipment (5,846,000) (8,459,000)
Pushdown adjustment for property,
plant, equipment and
intangibles (4,919,999) (4,644,000)
Pushdown adjustment for inventories (1,572,000) (1,513,000)
Other - (146,000)
- -----------------------------------------------------------------------------------------------
Gross deferred tax liabilities (12,337,000) (14,762,000)
- ---------------------------------------------- ------------------------------------------------
Net deferred tax liabilities $ (6,863,000) $ (8,892,000)
============================================== ================================================
Deferred taxes are included in the accompanying balance sheets as follows:
1998 1999
- ---------------------------------------------------------------------------------------------
Current asset for deferred income
taxes $ 494,000 $ 957,000
Noncurrent liability for deferred
income taxes (7,357,000) (9,849,000)
- ---------------------------------------------------------------------------------------------
Net deferred tax liabilities $ (6,863,000) $ (8,892,000)
=============================================================================================
</TABLE>
At December 31, 1999, the Company had available federal alternative minimum
tax credit carryforwards of approximately $1,894,000 which do not expire
and can be used to offset future years' regular tax to the extent it
exceeds alternative minimum tax.
At December 31, 1999, the Company had available net operating loss
carryforwards for regular federal and state income tax purposes of
approximately $1,500,000 and $7,000,000, respectively, expiring through
2019.
At December 31, 1999, Niagara LaSalle had New York state investment tax
credit carryforwards of approximately $667,000, which may be available to
offset certain future state income taxes. These credits expire through
2005. A valuation allowance has been provided for these tax credits.
A reconciliation of the statutory federal income tax rate and effective
rate as a percentage of pre-tax income was as follows:
<TABLE>
<CAPTION>
1997 1998 1999
---------------------------------------------------------------------
Amount % Amount % Amount %
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax at statutory rate $2,194,000 34.0% $3,664,000 34.0% $2,059,000 34.0%
State income taxes
net of federal
income tax benefit 167,000 2.6 481,000 4.5 206,000 3.4
Goodwill amortization 118,000 1.8 120,000 1.1 91,000 1.5
Other - - - - (57,000) (.9)
- ---------------------------------------------------------------------------------------------
Effective tax rate $2,479,000 38.4% $4,265,000 39.6% $2,299,000 38.0%
=============================================================================================
</TABLE>
No provision has been made for U.S. or additional U.K. taxes on $388,472 of
undistributed Niagara UK earnings as any such tax would be insignificant.
Such earnings could become subject to additional tax if they were remitted
as a dividend to Niagara. However, as discussed in Note 6, Niagara UK is
restricted under its bank facilities and invoice discounting agreements from
paying dividends to Niagara.
<TABLE>
<CAPTION>
<C> <C> <C>
12. MAJOR CUSTOMERS Sales to three customers in 1997 were approximately 27%, 8% and 6% of
total sales.
Sales to three customers in 1998 were approximately 21%, 9% and 9% of
total sales. Accounts receivable from these major customers represented
approximately 38% of aggregate accounts receivable at December 31,
1998.
Niagara US' sales to three customers in 1999 were approximately 23%,
12% and 10% of its total sales. It had accounts receivable from these
major customers representing approximately 43% of its aggregate
accounts receivable at December 31, 1999.
None of Niagara UK's customers exceeded 5% of its total sales.
13. MAJOR SUPPLIERS Niagara US had one supplier from which purchases were approximately 29%
of total purchases in 1998. It had two suppliers from which purchases
were approximately 43% of its total purchases in 1999.
Niagara UK had one supplier from which purchases were approximately 36%
of its total purchases in 1999.
14. COMMITMENTS AND Commitments
CONTINGENCIES
In addition to the equipment discussed in Note 9, the Company was
committed to purchase approximately $2,800,000 of machinery and
equipment at December 31, 1999.
Niagara and Niagara LaSalle have entered into employment contracts with
certain of their officers. These contracts, which expire in August
2000, March 2001 and January 2004, provide minimum salary levels, as
well as incentive bonuses and Niagara stock options. The aggregate
contract commitment for future minimum salaries at December 31, 1999,
excluding bonuses and stock options, was approximately $2,437,000.
At December 31, 1999, Niagara UK was a party to employment agreements
with 13 of its executives. These agreements provide for a notice
period, generally one year, prior to termination of the executive's
employment with Niagara UK. If Niagara UK terminates the executive's
employment prior to the expiration of such notice period, the agreement
provides that the executive will receive the compensation that would
have been paid for the remainder of the period.
Contingencies
Niagara US and Niagara UK are subject to environmental laws and
regulations concerning, among other matters, water and air emissions
and waste disposal. Under such laws, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), Niagara US and Niagara UK may be responsible for
parts of the costs required to remove or remediate previously disposed
wastes or hazardous substances at the locations they own or operate or
at the locations which they arranged for disposal of such materials.
The costs expended through December 31, 1999 have been largely covered
by insurance. Management believes any resolution of these matters will
not have a material adverse effect on the Company's financial position
or operations.
Under the Company's insurance programs, coverage is obtained for
catastrophic exposures as well as those risks required to be insured by
law or contract. In connection with these programs, Niagara US has
provided certain insurance carriers with irrevocable standby letters of
credit totaling $350,000 as of December 31, 1999. It is the policy of
the Company to retain a portion of certain expected losses which relate
primarily to workers' compensation, physical loss to property, business
interruption resulting from such loss and comprehensive general,
product, vehicle, medical and life benefits and liability. Provisions
for losses expected under these programs are recorded based upon the
Company's estimates of the aggregate liability, actual and estimated,
for claims. Such estimates utilize certain actuarial assumptions
followed in the insurance industry and are included in accrued
expenses.
15. EARNINGS PER The following table sets forth the calculation of weighted average
SHARE common shares outstanding for the calculation of basic and diluted
earnings per share:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997 1998 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average shares (for
basic earnings per share) 4,246,925 9,879,528 9,350,189
Effect of dilutive securities:
Employee stock option
equivalents 848,425 370,426 6,925
- --------------------------------------------------------------------------------------------------
Adjusted weighted average
shares (for diluted
earnings per share) 5,095,350 10,249,954 9,357,114
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
16. DISCLOSURE ABOUT The following methods and assumptions were used to estimate the fair
FAIR VALUE OF value of each class of financial instruments for which it is
FINANCIAL practicable to estimate that value.
INSTRUMENTS
The carrying amounts of cash, trade accounts receivable and current
liabilities approximate fair value because of the short maturity of
these instruments.
The carrying amount of debt approximates fair value because the
interest rates on these instruments fluctuate with market interest
rates or are based on current rates offered to the Company for debt
with similar terms and maturities.
17. SUPPLEMENTAL Interest paid during the years ended December 31, 1997, 1998 and 1999
CASH FLOW was approximately $5,637,000, $4,306,000 and $5,660,000, respectively.
INFORMATION
Income tax payments made during the years ended December 31, 1997, 1998
and 1999 totaled approximately $512,000, $2,194,000 and $1,011,000,
respectively.
As discussed in Note 3(b), Niagara LaSalle acquired all of the capital
stock of LaSalle for $68,183,000 in 1997. In connection with this
acquisition, net assets were acquired as follows:
------------------------------------------------------------------------
Fair value of assets acquired $ 110,351,000
Liabilities assumed (42,168,000)
------------------------------------------------------------------------
Net assets acquired $ 68,183,000
========================================================================
As discussed in Note 3(c), Niagara UK acquired certain assets of the
steel bar businesses of Glynwed Steels for approximately $34,391,000 in
1999. In connection with this acquisition, net assets were acquired as
follows:
------------------------------------------------------------------------
Fair value of assets acquired $ 38,437,000
Liabilities assumed (4,046,000)
------------------------------------------------------------------------
Net assets acquired $ 34,391,000
========================================================================
Noncash investing and financing activities consisted of the following:
</TABLE>
<TABLE>
<CAPTION>
1997 1998 1999
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Adjustment of minimum pension liability 275,000 (Note 7):
Prepaid benefit cost $ - $ 5,000 $ 275,000
Intangible asset - 526,000 (52,000)
Deferred tax asset - 688,000 (568,000)
Accumulated other comprehensive
income, net of tax - 1,076,000 (888,000)
- -------------------------------------------------------------------------------------------------
Accrued pension cost $ - $2,295,000 $(1,233,000)
=================================================================================================
Deferred debt issuance costs recorded
as additional paid-in capital
(Note 3(b)) $ 1,321,432 $ - $ -
=================================================================================================
Adjustments arising from satisfaction - of Southwest notes (Note 3(a)):
Decrease in goodwill $ 310,715 $ - $ -
Decrease in accounts
receivable 89,491 - -
Decrease in inventory 81,595 - -
- -------------------------------------------------------------------------------------------------
Decrease in long-term debt $ 481,801 $ - $ -
=================================================================================================
Investment in LaSalle financed by
amount due to Quanex Corporation $ 933,000 $ - $ -
=================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<C> <C> <C>
18. EXTRAORDINARY In 1997, Niagara LaSalle sold the Subordinated Notes. Net proceeds from
ITEM the sale, together with borrowings under the revolving credit and term
loan agreement, were used to finance the acquisition of LaSalle (see
Note 3(b)).
In December 1997, in connection with the prepayment of the Subordinated
Notes, the Company was required to write off unamortized debt issuance
costs and incur a prepayment charge in the aggregate amount of
approximately $3,326,000. The resultant one time, after-tax charge
amounted to approximately $2,062,000. The Subordinated Notes and
prepayment charge were paid by Niagara from the proceeds of the
Warrants exercised during the fourth quarter of 1997 (see Note 2).
19. 1998 ADJUSTMENTS On July 19, 1998, following a nine-week strike, the hourly workers at
LaSalle's Hammond, Indiana facility voted to accept a new three-year
collective bargaining agreement. Among other things, this agreement
provides for a curtailment of certain pension costs and other
postretirement benefits. The net effect of these curtailments was to
reduce the Company's obligations by $1,746,000 during the quarter ended
September 30, 1998 and $3,203,000 during the quarter ended December 31,
1998, for an aggregate reduction of $4,949,000 for 1998. This reduction
increased net income by $1,065,000 for the quarter ended September 30,
1998 and $1,954,000 for the quarter ended December 31, 1998, for an
aggregate increase to net income of $3,019,000 for 1998.
20. SEGMENTS AND Niagara operates in two reportable segments: (i) Niagara US which has
RELATED operations in the United States and (ii) Niagara UK which has
INFORMATION operations in the United Kingdom. Niagara operates these segments as
separate strategic business units and measures the segment performance
based on earnings before interest, taxes, depreciation and amortization
("EBITDA"). Niagara UK uses British pounds sterling as its functional
currency and its accounts are translated to United States dollars in
conformity with SFAS No. 52, "Foreign Currency Translation." Assets and
liabilities have been translated at year-end exchange rates and the
related revenues and expenses have been translated at rates prevailing
at the transaction date, which approximates average rates for the
period.
The following table sets forth certain performance and other
information by reportable segment. Performance information for Niagara
UK reflects the results from May 22, 1999.
Year ended December 31, 1999
------------------------------------------------------------------------
Niagara US Niagara UK
------------------------------------------------------------------------
Net sales $ 186,432,025 $ 77,789,863
Segment profit (EBITDA) 17,906,574 3,927,950
Depreciation and amortization 7,108,909 1,018,395
Interest expense 4,081,535 1,549,014
Segment assets 150,228,015 76,416,825
Acquisition of property and
equipment 4,029,562 717,726
========================================================================
Certain of the foregoing segment information (profit, depreciation and
amortization, assets, and acquisition of property and equipment) does
not include components attributable to Niagara or incurred by Niagara
on behalf of its operating subsidiaries. Prior to the acquisition of
the U.K. steel bar businesses, the Company had one segment as all of
its operations were in the United States.
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information required by Item 10 will be contained in, and is
incorporated herein by reference from, the section entitled "Election of
Directors" of the Registrant's Proxy Statement for its 2000 Annual Meeting
of Stockholders to be filed with the Commission (the "Proxy Statement"), or
will be filed by amendment to this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 will be contained in, and is
incorporated herein by reference from, the section entitled "Executive
Compensation" of the Proxy Statement, or will be filed by amendment to this
Form 10- K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required by Item 12 will be contained in, and is
incorporated herein by reference from, the section entitled "Security
Ownership of Directors and Executive Officers" of the Proxy Statement, or
will be filed by amendment to this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 will be contained in, and is
incorporated herein by reference from, the section entitled "Election of
Directors -- Certain Relationships and Related Transactions" of the Proxy
Statement, or will be filed by amendment to this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K.
(a) List of documents filed as a part of this Report:
1. Financial Statements. Financial Statements filed as part
of this Report on Form 10-K are listed in Item 8 on
page 17.
2. Financial Statement Schedules
Schedules I and II are filed as part of this Report on
Form 10-K beginning on page S-1 hereof.
(b) Reports on Form 8-K.
None.
<TABLE>
<CAPTION>
(C) EXHIBITS
<S> <C> <C>
+3.1 Registrant's Restated Certificate of Incorporation, as amended on May 16, 1996.
*3.2 Registrant's By-laws.
*4.1 Form of Common Stock Certificate.
!!!!!4.2 Revolving Credit and Term Loan Agreement, dated as of April 18, 1997, by and among Niagara
Cold Drawn Corp., LaSalle Steel Company, Manufacturers and Traders Trust Company
(individually and as Agent), CIBC Inc. and National City Bank (the "Credit Agreement").
+++4.3 First Amendment to the Credit Agreement, dated as of September 4, 1997.
+++4.4 Second Amendment to the Credit Agreement, effective as of December 31, 1997.
!!!4.5 Third Amendment to the Credit Agreement, effective May 15, 1998.
**4.6 Fourth Amendment to the Credit Agreement, effective as of December 1, 1998.
****4.7 Fifth Amendment to the Credit Agreement, effective as of May 21, 1999.
4.8 Sixth Amendment to the Credit Agreement, effective as of December 31, 1999.
!!!!!4.9 Stockholders Agreement, dated as of April 18, 1997,
among the Registrant, Niagara Cold Drawn Corp., Michael
J. Scharf, The Prudential Insurance Company of America,
The Equitable Life Assurance Society of the United
States and United States Fidelity and Guaranty Company.
**4.10 Amended and Restated Promissory Note, dated December 15, 1998, made by Gilbert D. Scharf in
favor of Niagara Corporation.
****4.11 Bank Facilities Agreement, dated May 21, 1999 between National Westminster Bank Plc and
Niagara LaSalle (UK) Limited.
****4.12 Intercreditor Agreement, dated May 21, 1999, between National Westminster Bank Plc, Niagara
Corporation and Niagara LaSalle (UK) Limited.
++++4.13 Invoice Discounting Agreement, dated August 23, 1999, between Niagara LaSalle (UK) Limited
and Lombard Natwest Discounting Limited.
++++4.14 Intercreditor Agreement, dated August 23, 1999, between Lombard Natwest Discounting Limited,
Niagara Corporation and Niagara LaSalle (UK) Limited.
++++4.15 Deed of Priority, dated August 23, 1999, between
Lombard Natwest Discounting Limited, National
Westminster Bank Plc, Manufacturers and Traders Trust
Company, Niagara LaSalle (UK) Limited and Niagara
Corporation.
***10.1 Employment Agreement, dated as of January 1, 1999, by and among Niagara Corporation, Niagara
LaSalle Corporation and Michael Scharf.
** 10.2 Employment Agreement, dated August 16, 1995, between International Metals Acquisition
Corporation, Niagara Cold Drawn Corp. and Frank Archer.
** 10.3 Employment Agreement, dated August 16, 1995, between International Metals Acquisition
Corporation, Niagara Cold Drawn Corp. and Raymond Rozanski.
!10.4 Amended and Restated Promissory Note made by Southwest Steel Company, Inc. in favor of the
Cohen Family Revocable Trust, u/t/a dated June 15, 1988, in the principal amount of $898,000,
dated January 31, 1996.
!10.5 Guaranty, made by the Registrant in favor of the Cohen
Family Revocable Trust, u/t/a dated June 15, 1988,
dated January 31, 1996.
!!10.6 International Metals Acquisition Corporation 1995 Stock Option Plan.
!!!!10.7 First Amendment to the International Metals Acquisition Corporation 1995 Stock Option Plan,
dated October 5, 1996.
++10.8 Second Amendment to the Niagara Corporation 1995 Stock Option Plan, dated June 8, 1998.
++10.9 Niagara Corporation Employee Stock Purchase Plan.
** 10.10 First Amendment to Lease, dated May 4, 1998, between Niagara LaSalle Corporation and North
American Royalties, Inc.
*****10.11 Sale of Business Agreement, dated April 16, 1999, between Glynwed Steels Limited, Glynwed
International plc, Niagara LaSalle (UK) Limited and Niagara Corporation
*****10.12 Property Agreement, dated April 16, 1999, between
Glynwed Property Management Limited, Glynwed Properties
Limited, Niagara LaSalle (UK) Limited, Niagara
Corporation and Glynwed International plc.
*****10.13 Agreement For Lease of Unit 6-8 Eagle Industrial
Estate, dated April 16, 1999, between Glynwed Property
Management Limited, Glynwed Properties Limited, Niagara
LaSalle (UK) Limited and Niagara Corporation.
10.14 Form of Niagara LaSalle (UK) Limited Lease.
10.15 Form of Niagara LaSalle (UK) Limited Side Deed.
10.16 Form of Niagara LaSalle (UK) Limited Option Agreement.
10.17 Form of Niagara LaSalle (UK) Limited Lease Renewal Deed.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
- --------------------------
+ Incorporated by reference to exhibit 3.1 filed with the
Registrant's Report on Form 10-Q for the quarter ended
June 30, 1996.
++ Incorporated by reference to Annexes to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders held on July
7, 1998.
+++ Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1997.
++++ Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-Q for the quarter ended
September 30, 1999.
* Incorporated by reference to exhibits filed with the
Registrant's Registration Statement on Form S-1, Registration
No. 33-64682.
** Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1998.
*** Incorporated by reference to exhibit 10.1 filed with the
Registrant's Report on Form 10-K/A for the fiscal year ended
December 31, 1998.
**** Incorporated by reference to exhibits filed with the Registrant's
Report on Form 8-K, dated June 4, 1999.
***** Incorporated by reference to exhibits filed with the Registrant's
Report on Form 8-K, dated April 27, 1999.
! Incorporated by reference to exhibits filed with the
Registrant's Report on Form 10-K for the year ended December
31, 1995.
!! Incorporated by reference to Annex A to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders held on May
16, 1996.
!!! Incorporated by reference to exhibit 4.8 to the Registrant's
Report on Form 10-Q for the quarter ended
June 30, 1998.
!!!! Incorporated by reference to exhibit 10.10 to the Registrant's
Report on Form 10-K for the fiscal year
ended December 31, 1996.
!!!!! Incorporated by reference to exhibits filed with the
Registrant's Report on Form 8-K, dated May 2, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized,
on the 30 th day of March, 2000.
NIAGARA CORPORATION
By: /s/ Michael Scharf
--------------------------------------
Michael Scharf
Chairman of the Board
Chief Executive Officer and President
</TABLE>
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
<S> <C> <C>
Chairman of the Board,
/s/ Michael Scharf President and Chief Executive March 30, 2000
---------------------------------------
Michael Scharf Officer
Vice President,
Chief Financial and
/s/ Raymond Rozanski Principal Accounting March 30, 2000
- ---------------------------------------
Raymond Rozanski Officer
/s/ Gilbert D. Scharf Secretary and Director March 30, 2000
- ---------------------------------------
Gilbert D. Scharf
/s/ Frank Archer Director March 30, 2000
- ---------------------------------------
Frank Archer
/s/ Gerald L. Cohn Director March 30, 2000
- ---------------------------------------
Gerald L. Cohn
/s/ Andrew R. Heyer Director March 30, 2000
- ---------------------------------------
Andrew R. Heyer
/s/ Douglas T. Tansill Director March 30, 2000
- ---------------------------------------
Douglas T. Tansill
</TABLE>
NIAGARA CORPORATION
AND SUBSIDIARIES
INDEX
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS S-2
FINANCIAL STATEMENT SCHEDULE I:
Condensed Financial Information of Registrant:
Balance Sheets S-3
Statements of Operations S-4
Statements of Stockholders' Equity S-5
Statements of Cash Flows S-6
Notes to Condensed Financial Statements S-7
FINANCIAL STATEMENT SCHEDULE II:
Valuation and Qualifying Accounts S-8
All other schedules have been omitted because they are
inapplicable or not required or the information is included in the
consolidated financial statements or the notes thereto.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Niagara Corporation
New York, New York
The audits referred to in our report dated February 18, 2000 relating to
the consolidated financial statements of Niagara Corporation and its
subsidiaries (together, the "Company"), which is contained in Item 8 of
Form 10-K, include the audits of the financial statement schedules listed
in the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based upon our
audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the information set forth therein.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
New York, New York
February 18, 2000
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------------
December 31, 1998 1999
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT:
<S> <C> <C>
Cash and cash equivalents $ 100,135 $ 601,931
Other current assets 1,267,247 492,256
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,367,382 1,094,187
PROPERTY AND EQUIPMENT, NET 136,550 552,800
INVESTMENT IN AND NET ADVANCES TO SUBSIDIARIES 53,289,297 61,687,562
OTHER ASSETS, NET 80,352 74,492
- --------------------------------------------------------------------------------------------------------------------------
$ 54,873,581 $ 63,409,041
==========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 343,038 $ 86,285
Advances from subsidiary - 6,861,478
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 343,038 $ 6,947,763
- ---------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (SEE NOTES 9, 10 AND
14 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
STOCKHOLDERS' EQUITY (SEE NOTES 2, 7, 8 AND 10 TO THE CONSOLIDATED
FINANCIAL STATEMENTS):
Preferred stock, $.001 par value - 500,000 - -
shares authorized, none outstanding
Common stock, $.001 par value - 15,000,000
shares authorized, 9,997,455 issued 9,998 9,998
Additional paid-in capital 50,111,675 50,111,675
Retained earnings 8,384,835 12,141,460
Accumulated other comprehensive loss (1,076,000) (175,644)
- --------------------------------------------------------------------------------------------------------------------------
57,430,508 62,087,489
Treasury stock, at cost, 485,880 and 1,034,509
shares (2,899,965) (5,626,211)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 54,530,543 $ 56,461,278
- --------------------------------------------------------------------------------------------------------------------------
$ 54,873,581 $ 63,409,041
==========================================================================================================================
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C>
Management fees from subsidiaries $ 1,125,000 $ 1,350,000 $ 1,838,175
(Note 2)
EXPENSES:
General and administrative expenses 1,217,817 2,405,744 2,069,283
- ----------------------------------------------------------------------------------------------------------------------------
(92,817) (1,055,744) (231,108)
OTHER INCOME:
Equity in net income of subsidiaries 1,910,600 7,040,774 3,880,171
Interest income 94,535 172,076 28,562
- -----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX RECOVERIES 1,912,318 6,157,106 3,677,625
- -----------------------------------------------------------------------------------------------------------------------------
INCOME TAX RECOVERIES - 353,000 79,000
NET INCOME $ 1,912,318 $ 6,510,106 $ 3,756,625
===========================================================================================================================
EARNINGS PER SHARE - BASIC:
Net income per share - basic $ .45 $ .66 $ .40
===========================================================================================================================
EARNINGS PER SHARE - DILUTED:
Net income per share - diluted $ .38 $ .64 $ .40
===========================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (SEE NOTE 15 TO THE CONSOLIDATED
FINANCIAL STATEMENTS):
Basic 4,246,925 9,879,528 9,350,189
Diluted 5,095,350 10,249,954 9,357,114
===========================================================================================================================
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1997, 1998 and 1999
- --------------------------------------------------------------------------------------------------------------------
Common stock
------------------------------ Retained
Number of Additional earnings
shares Amount paid-in capital (deficit)
- -------------------------------------------------- --------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 3,668,750 $ 3,669 $ 15,560,127 $ (37,589)
Shares issued (a) 285,715 286 1,321,146 -
Shares issued (b) 6,042,990 6,043 33,230,402 -
Net income for the year - - - 1,912,318
- --------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER31, 1997 9,997,455 9,998 50,111,675 1,874,729
- -------------------------------------------------- --------------- -------------- --------------- ---------------
Comprehensive income:
Net income for the year - - - 6,510,106
Minimum pension liability adjustment
($1,764,000, net of tax benefit of $688,000) - - - -
- --------------------------------------------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME
- --------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock, at cost (c) - - - -
BALANCE, DECEMBER31, 1998 9,997,455 9,998 50,111,675 8,384,835
- -------------------------------------------------- --------------- -------------- --------------- ---------------
Comprehensive income:
Net income for the year - - - 3,756,625
Foreign currency translation adjustments - - - -
Minimum pension liability adjustment
($1,456,000, net of tax expense of
$568,000) - - - -
TOTAL COMPREHENSIVE INCOME
Purchase of treasury stock, at cost (d) - - - -
- -------------------------------------------------- --------------- -------------- --------------- ---------------
BALANCE, DECEMBER 31, 1999 9,997,455 $ 9,998 $ 50,111,675 $ 12,141,460
================================================== =============== ============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
[CHART CONTINUED]
Years ended December 31, 1997, 1998 and 1999
Accumulated
other Total
comprehensive Treasury stock, Stockholders'
loss at cost Equity
- -------------------------------------------------- ------------------ ------------------ ---------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $ - $ - $ 15,526,207
Shares issued (a) - - 1,321,432
Shares issued (b) - - 33,236,445
Net income for the year - - 1,912,318
BALANCE, DECEMBER 31, 1997 - - 51,996,402
- -------------------------------------------------- ------------------ ------------------ ---------------
Comprehensive income:
Net income for the year - - 6,510,106
Minimum pension liability adjustment
($1,764,000, net of tax benefit of $688,000) (1,076,000) - (1,076,000)
TOTAL COMPREHENSIVE INCOME 5,434,106
Purchase of treasury stock, at cost (c) - (2,899,965) (2,899,965)
- -----------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 (1,076,000) (2,899,965) 54,530,543
- -------------------------------------------------- ------------------ ------------------ ---------------
Comprehensive income:
Net income for the year - - 3,756,625
Foreign currency translation adjustments 12,356 - 12,356
Minimum pension liability adjustment
($1,456,000, net of tax expense of
$568,000) 888,000 - 888,000
- ----------------------------------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME 4,656,981
- -----------------------------------------------------------------------------------------------------------
Purchase of treasury stock, at cost (d) - (2,726,246) (2,726,246)
- -------------------------------------------------- ------------------ ------------------ ---------------
BALANCE, DECEMBER 31, 1999 $ (175,644)$ (5,626,211) $ 56,461,278
================================================== ================== ================== ===============
- -------------------
(a) On April 18, 1997, Niagara Corporation issued 285,715 shares of its Common Stock in connection with the
subordinated debt portion of the financing for the acquisition of LaSalle.
(b) Proceeds from exercise of Warrants during December 1997.
(c) During the year ended December 31, 1998, Niagara Corporation repurchased 485,880 shares of its Common Stock at a
cost of $2,899,965.
(d) During the year ended December 31, 1999, Niagara Corporation repurchased 548,629 shares of its Common Stock at a
cost of $2,726,246.
=========================================================================================================================
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------------------
Year ended December31, 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 1,912,318 $ 6,510,106 $ 3,756,625
- -------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Amortization 19,622 18,204 16,906
Equity in net income of subsidiaries (1,910,600) (7,040,774) (3,880,171)
(Increase) decrease in other assets (1,824,065) 688,837 780,851
Increase (decrease) in accrued expenses 587,107 (1,246,787) (256,753)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS (3,127,936) (7,580,520) (3,339,167)
- ------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (1,215,618) (1,070,414) 417,458
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment - (137,140) (433,156)
Investment in subsidiaries (21,400,000) - (6,070,875)
Advances, subsidiaries, net 368,275 (8,152,429) 9,314,615
- ------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (21,031,725) (8,289,569) 2,810,584
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of Warrants 33,236,445 - -
Payments to acquire treasury stock - (2,899,965) (2,726,246)
- -------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 33,236,445 (2,899,965) (2,726,246)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 10,989,102 (12,259,948) 501,796
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,370,981 12,360,083 100,135
- -------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 12,360,083 $ 100,135 $ 601,931
===============================================================================================================================
See accompanying notes to condensed financial statements.
</TABLE>
NIAGARA CORPORATION AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO CONDENSED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. STATEMENT OF The accompanying condensed financial
ACCOUNTING POLICY statements have been prepared by Niagara
Corporation ("Niagara") pursuant to
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
these rules and regulations. It is,
therefore, suggested that these
condensed financial statements be
read in conjunction with the
consolidated financial statements and
notes thereto.
2. RESTRICTIONS ON Niagara's subsidiary, Niagara LaSalle
DISTRIBUTIONS Corporation ("Niagara LaSalle"), which
was acquired on August 16, 1995, has a
revolving line of credit and term
loan agreement with a bank which
contains certain restrictions on the
payment of dividends. Niagara LaSalle
is permitted, however, to pay
management fees to Niagara and, in
the years ended December 31, 1997,
1998 and 1999, $1,125,000, $1,350,000
and $1,350,000, respectively, of such
management fees were included as
revenues in the accompanying
condensed financial statements, but
have been eliminated in the
consolidated financial statements.
Niagara's subsidiary, Niagara LaSalle
(UK) Limited ("Niagara UK"), which
was formed to acquire the equipment,
inventory and certain other assets of
the steel bar businesses of Glynwed
Steels Limited, has bank facilities
and invoice discounting agreements
which contain certain restrictions on
the payment of dividends. Niagara UK
is permitted, however, to pay
management fees to Niagara and, in
the period May 22 through December
31, 1999, $488,175 ((pound)300,000)
of such management fees were included
as revenues in the accompanying
condensed financial statements but
have been eliminated in the
consolidated financial statements.
<TABLE>
<CAPTION>
NIAGARA CORPORATION
AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
- ---------------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1997, 1998 and 1999
- ---------------------------------------------------------------------------------------------------------------------------
Additions
----------------------------------
Balance at Charged to Balance at
beginning costs and end of
of year Other expenses Deductions year
- ---------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1999:
Allowance for doubtful
<S> <C> <C> <C> <C> <C>
accounts $789,000 $ - $136,000 $ - $925,000
===========================================================================================================================
DECEMBER 31, 1998
Allowance for doubtful
accounts $727,000 $ - $ 62,000 $ - $789,000
- ------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1997:
Allowance for doubtful
accounts $233,000 $397,000(1) $101,000 $4,000(2) $727,000
===========================================================================================================================
- -------------------
(1) Balance in allowance for doubtful accounts for LaSalle Steel Company at April 1, 1997.
(2) Accounts written off.
===========================================================================================================================
</TABLE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.8 Sixth Amendment for the Credit
Agreement, effective as of December 31, 1999.
10.14 Form of Niagara LaSalle (UK) Limited Lease.
10.15 Form of Niagara LaSalle (UK) Limited Side Deed.
10.16 Form of Niagara LaSalle (UK) Limited Option Agreement.
10.17 Form of Niagara LaSalle (UK) Limited Lease Renewal Deed.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
- ------------------------------------------------------------------------------
SIXTH AMENDMENT
TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
DATED AS OF APRIL 18, 1997, AS AMENDED
BY AND AMONG
NIAGARA LASALLE CORPORATION
(FORMERLY NIAGARA COLD DRAWN CORP.)
LASALLE STEEL COMPANY
AND
MANUFACTURERS AND TRADERS TRUST COMPANY
CIBC INC.
NATIONAL BANK OF CANADA
CITIZENS BUSINESS CREDIT COMPANY
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
AND
MANUFACTURERS AND TRADERS TRUST COMPANY, AS AGENT
------------------------------------------
Executed January 14, 2000
Effective as of December 31, 1999
- ------------------------------------------------------------------------------
WHEREAS, NIAGARA LASALLE CORPORATION (formerly NIAGARA
COLD DRAWN CORP.), a Delaware corporation, having its principal office at
110 Hopkins Street, Buffalo, New York ("NCDC"), LASALLE STEEL COMPANY, a
Delaware corporation, having its principal office at 1412 150th Street,
Hammond, Indiana ("LaSalle") (NCDC and LaSalle being collectively referred
to as the "Borrowers", and individually as a "Borrower"), MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York banking corporation having its principal
office at One M&T Plaza, Buffalo, New York ("M&T") and CIBC INC., a
Delaware banking corporation having its principal office at 425 Lexington
Avenue, New York, New York ("CIBC") and M&T, as administrative, collateral
and documentation agent (M&T to be referred to in such capacity as
"Agent"), are parties to a Revolving Credit and Term Loan Agreement dated
as of April 18, 1997 (the "Original Agreement"); and
WHEREAS, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey mutual insurance company having an office at One Gateway Center,
Newark, New Jersey ("Prudential") NATIONAL BANK OF CANADA, a Canadian
chartered bank having a domestic branch at 125 West 55th Street, New York,
New York ("NBC"), and CITIZENS BUSINESS CREDIT COMPANY ("Citizens"), having
an office at Six PPG Place, Suite 820, Pittsburgh, Pennsylvania, became
parties to the Original Agreement by assignment of portions of the credit
commitments of various parties thereto (M&T, CIBC, Citizens, Prudential and
NBC being collectively referred to herein as the "Banks", and individually
as a "Bank"); and
WHEREAS, the Original Agreement was amended by a First
Amendment dated as of September 4, 1997 (the "First Amendment") for the
purpose, among other things, of providing "Swingline Loans" (as described
in the First Amendment) under the credit facilities provided in the
Original Agreement; and
WHEREAS, the Original Agreement was further amended by a
Second Amendment dated as of December 31, 1997 (the "Second Amendment") for
the purpose, among other things, of permitting the Borrowers to apply the
"1993 Warrant Forced Exercise Net Proceeds Amount" to the repayment of the
outstanding and unpaid principal amount of the "Revolving Credit Note" (as
such terms are defined in the Original Agreement), and to revise the terms
of the Original Agreement with respect to dividends; and
WHEREAS, the Original Agreement was fruther amended with
a Third Amendment effective as of May 15, 1998 (the "Third Amendment") for
the purpose, among other things, of reducing the interest payable with
respect to "LIBOR Rate Loans" (as defined in the Original Agreement), and
to provide for the further reduction of the interest payable with respect
to LIBOR Rate Loans upon the conclusion of a new collective bargaining
agreement with LaSalle's hourly employees in Hammond, Indiana; and
WHEREAS, the Original Agreement was further amended by a
Fourth Amendment effective as of December 1, 1998 (the "Fourth Amendment")
for the purpose, among other things, of increasing by One Million Dollars
($1,000,000) the amount of permitted "Capital Expenditures" (as defined in
the Original Agreement) that may be made by the Borrowers in any "Fiscal
Year" (as defined in the Original Agreement); and
WHEREAS, the Original Agreement was further amended by a
Fifth Amendment effective as of May 21, 1999, to, among other things, (a)
waive the requirement for mandatory repayment of principal from "Excess
Cash Flow" (as defined in the Original Agreement) for the Fiscal Year ended
December 31, 1998, and (b) in connection with a proposed business
acquisition by a UK subsidiary of Niagara Corporation, permit the Borrowers
to provide guaranties to certain banks providing standby letters of credit
to support acquisition financing to such UK subsidiary; and
WHEREAS, the Borrowers have requested the agent and the
Banks to further amend the Original Agreement as heretofore amended (as
amended, the "Credit Agreement") for the purpose of: (a) reducing the
required ratio of Consolidated Current Assets to Consolidated Current
Liabilities, (b) changing the definition of "Majority Banks"; (c)
clarifying the requirement that the consent of the Majority Banks is
required in connection with any amendment or waiver of any provision of the
Credit Agreement; and (d) extending the termination date of the Revolving
Credit Commitment and the Revolving Credit Note to April 17, 2001.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. The definition of "Majority Banks" contained in
Subsection 1.1 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"Majority Banks": means at any time the Banks holding at
least eighty-ninety percent (89%) of the then aggregate
Revolving Credit Commitment and Term Loan Commitment,
provided, that if the Revolving Credit Commitment and the
Term Loan Commitment shall have been terminated in full,
"Majority Banks" shall mean the Banks holding, or holding
participation interests pursuant to Subsection 9.2(d) in,
at least eighty-nine percent (89%) of the aggregate of
the then outstanding and unpaid principal amounts of the
Notes."
2. The definition of "Revolving Credit Termination Date" contained
in Subsection 1.1 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"Revolving Credit Termination Date": means (a) with
respect to each Prime Revolver Loan, the date that is the
last day of the thirty (30) day period commencing with
such Prime Revolver Loan's Borrowing Date, but in no
event later than April 17, 2001, and (b) with respect to
the Revolving Credit Commitment and the Revolving Credit
Note, April 17, 2001."
3. Subsection 6.3(b) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"Permit, as of the last day of any calendar quarter, the
ratio of Consolidated Current Assets to Consolidated
Current Liabilities of the Borrowers to be less than 1.6
to 1.0; and"
4. Subsection 9.3 of the Credit Agreement is hereby amended
to read in its entirety as follows:
9.3 "Amendments, Waivers and Consents. No amendment or
waiver of any provision of this Agreement, the Revolving
Credit Note, the Term Loan Note or any other Loan
Document, nor consent to any departure by a Borrower,
Guarantor, or Subsidiary of a Borrower or Guarantor,
therefrom, shall in any event be effective unless the
same shall have been approved in writing by the Majority
Banks, and then such waiver or consent shall be effective
only in the specific instance and for the specific
purpose for which given."
5. This Sixth Amendment shall be effective as of December
31, 1999.
6. All capitalized terms used herein (including the
introductory recitations above), unless otherwise defined herein, have the
same meaning provided therefor in the Credit Agreement.
7. The amendments set forth herein are limited precisely as
written and shall not be deemed to (a) be a consent to or a waiver of any
other term or condition of the Credit Agreement or any of the documents
referred to therein, or (b) prejudice any right or rights which the Agent
or any Bank may now have or may have in the future under or in connection
with the Credit Agreement or any documents referred to therein. Whenever
the Credit Agreement is referred to in the Credit Agreement or in any of
the instruments, agreements or other documents or papers executed and
delivered in connection therewith, it shall be deemed to mean the Credit
Agreement as modified by all amendments thereto, including this Sixth
Amendment.
8. The Borrowers hereby represent and warrant, jointly and
severally, that upon giving effect to the terms and provisions of this
Sixth Amendment no default or Event of Default shall have occurred and be
continuing under the terms of the Credit Agreement.
9. This Sixth Amendment may be executed by one or more of
the parties to this Sixth Amendment on any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Sixth Amendment to be duly executed and delivered by their respective duly
authorized officers.
NIAGARA LASALLE CORPORATION
By: /s/ Raymond Rozanski
---------------------------------
Name: Raymond Rozanski
Title: Executive Vice President
LASALLE STEEL COMPANY
By: /s/ Raymond Rozanski
---------------------------------
Name: Raymond Rozanski
Title: Executive Vice President
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ Robert J. Kush
---------------------------------
Name: Robert J. Kush
Title: Vice President
CIBC INC.
By: /s/ William J. Koslo, Jr.
---------------------------------
Name: William J. Koslo, Jr
Title: Executive Director
CITIZENS BUSINESS CREDIT COMPANY
By: /s/ Ronald A. Donatelli
---------------------------------
Name: Ronald A. Donatelli
Title: Senior Vice President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ William C. Pappas
---------------------------------
Name: William C. Pappas
Title: Vice President
NATIONAL BANK OF CANADA
By: /s/ R. Uhrig
---------------------------------
Name: R. Uhrig
Title: Vice President
By: /s/ Michael R. Brace
---------------------------------
Name: Michael R. Brace
Title: Marketing Officer
MANUFACTURERS AND TRADERS
TRUST COMPANY, AS AGENT
By: /s/ Robert J. Kush
---------------------------------
Name: Robert J. Kush
Title: Vice President
ACKNOWLEDGMENT
By executing below, Niagara Corporation hereby consents and agrees to the
terms and conditions contained in this Sixth Amendment and hereby reaffirms
its obligations and liabilities pursuant to the terms of the Unconditional
and Continuing Guaranty Agreement by and between Niagara Corporation and
Manufacturers and Traders Trust Company, as Agent dated as of April 18,
1997:
NIAGARA CORPORATION
By: /s/ Raymond Rozanski
---------------------------
Name: Raymond Rozanski
Title: Vice President
AGREED FORM
DATED , 1999
[RELEVANT GLYNWED COMPANY - LEGAL OWNER] LIMITED
- and -
[RELEVANT GLYNWED COMPANY - BENEFICIAL OWNER] LIMITED
- and -
NIAGARA LASALLE (U.K). LIMITED
- and -
NIAGARA CORPORATION
L E A S E
of property known
as
[ ]
[GRAPHIC?OMITTED]
London
PY:296087.4
CONTENTS
CLAUSE PAGE
1. DEFINITIONS.......................................................1
2. INTERPRETATION....................................................3
3. LEASE.............................................................4
4. RENT..............................................................4
(1) Rent.....................................................4
(2) Rent payment dates.......................................5
5. TENANT'S COVENANTS................................................5
(1) Introduction.............................................5
(2) Rent.....................................................5
(3) Outgoings................................................5
(4) Repair...................................................6
(5) Redecoration.............................................6
(6) Party matters............................................7
(7) Entry by the Landlord....................................7
(8) Remedy breaches..........................................8
(9) Alterations..............................................8
(10) Signs....................................................8
(11) Use......................................................8
(12) Use obligations..........................................8
(13) Statutory requirements...................................9
(14) Notices.................................................10
(15) Planning Acts...........................................10
(16) Obstruction.............................................11
(17) Obstruction proceedings.................................11
(18) Acquisition of rights...................................12
(19) Costs...................................................12
(20) Indemnity...............................................12
(21) Notices for sale and re-letting.........................13
(22) Regulations.............................................14
(23) New guarantors..........................................14
(24) Freehold covenants......................................15
(25) Head Lease - [FOR EACH OF THE LONG
LEASEHOLD PROPERTIES ONLY...............................15
(25) Yield up................................................15
(26) Release of Landlord.....................................16
6. Landlord's Covenants.............................................16
(1) Introduction............................................16
(2) Quiet enjoyment.........................................16
7. ALIENATION.......................................................16
(1) Restrictions on alienation..............................16
(2) Assignment..............................................16
(3) Agreement as to circumstances...........................17
(4) Agreement as to conditions..............................17
(5) Further agreement.......................................18
(6) Underletting............................................18
(7) Covenants on underletting ..............................18
(8) Guarantee on underletting...............................19
(9) Form of underlease......................................19
(10) Underlease requirements ................................20
(11) Associated companies....................................20
(12) Charging................................................21
(13) Registration of dealings................................21
8. INSURANCE........................................................21
(1) Landlord's insurance obligations........................21
(2) Sum and risks insured...................................21
(3) Fees....................................................21
(4) Production of policy....................................22
(5) Reinstatement...........................................22
(6) Tenant's insurance obligations..........................22
(7) Vitiation...............................................23
(8) Increased premium.......................................23
(9) Irrecoverable reinstatement cost........................23
(10) Notice of damage........................................23
(11) Double insurance........................................23
(12) Relevant matters........................................24
(13) Fire authority requirements.............................24
(14) Cesser of rent..........................................24
(15) Prevention of reinstatement.............................25
(16) Completion of reinstatement.............................25
(17) Supervening event.......................................25
9. GUARANTOR'S COVENANT.............................................26
10. RE-ENTRY.........................................................26
11. VAT..............................................................27
12. GENERAL..........................................................28
(1) Interest and powers of recovery.........................28
(2) Interest on breach......................................28
(3) Disputes................................................28
(4) Compensation............................................28
(5) Joint and several liability.............................28
(6) Whole agreement.........................................29
(7) Representations.........................................29
(8) Rights of entry.........................................29
(9) Interpretation of covenants.............................29
(10) Tenant's possessions....................................29
(11) Other land..............................................30
(12) Head Lease and Charge - [FOR LEASES OF LONG LEASEHOLD
PROPERTIES ONLY]...............................30
(12) Charge - [FOR LEASES OF FREEHOLD PROPERTIES ONLY].......31
(13) Perpetuity period.......................................32
(14) Severance...............................................32
(15) Notices in writing......................................32
(16) Counterparts............................................32
13. RIGHT TO BREAK...................................................32
14. EXCLUSION AGREEMENT..............................................32
15. NOTICES..........................................................32
16. GOVERNING LAW AND JURISDICTION...................................33
SCHEDULES
1. The Property......................................................35
2. Rights granted to the Tenant......................................35
3. Rights reserved to the Landlord...................................35
4. Matters affecting the Property ...................................35
5. Guarantee provisions..............................................36
6. Authorised guarantee agreement....................................38
7. Schedule of Landlord's Fixtures and Fittings......................40
THIS LEASE is made on [ ], 1999
BETWEEN:
(1) [RELEVANT GLYNWED COMPANY - LEGAL OWNER] LIMITED (registered
number [ ]) whose registered office is at
[Headland House, New Coventry Road, Sheldon, Birmingham]
(the "LANDLORD");
(2) [RELEVANT GLYNWED COMPANY - BENEFICIAL OWNER] LIMITED (registered
number [ ]) whose registered office is
at Headland House, New Coventry Road, Sheldon, Birmingham
("GLYNWED"); and
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308) whose
registered office is at 1st Floor, Bouverie House, 154 Fleet
Street, London, EC4A 2DQ (the "TENANT"); and
(4) NIAGARA CORPORATION a corporation organised and existing under the
laws of the State of Delaware, whose principal office is at 667
Madison Avenue, New York 10021, USA (the "Guarantor").
This Lease is a new tenancy for the purposes of section 1 of Landlord and
Tenant (Covenants) Act 1995.
WHEREAS Glynwed are a party to this Lease as beneficial owner of the Property;
THIS DEED WITNESSES as follows:
2. DEFINITIONS
In this Lease:
"ASSIGN" includes entering into any form of equitable assignment
of the Property, but does not include entering into a contract for
the assignment or transfer of the Property, and "assignment" shall
be similarly construed;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on
which banks are generally open in London for normal business;
"CLEARING BANK" means a bank which is a member of CHAPS Clearing
Company Limited;
"CONDUITS" includes those for sewage, water, gas, electricity,
telecommunications and data processing;
"DEFAULT INTEREST RATE" means three per centum per annum above the
Interest Rate;
"END OF THE TERM" includes the expiry of the Term by effluxion of
time or the determination of the Term by forfeiture, surrender,
merger, notice or in any other way;
"FIXTURES AND FITTINGS" means the fixtures and fittings listed in
Schedule 7;
"GUARANTOR" includes the person named in this Lease as guarantor,
if any, and any other person who is for the time being a guarantor
in respect of the Tenant's obligations under this Lease and his
personal representatives and successors;
["HEAD LEASE" means the Lease under which the Landlord is for the
time being entitled to the reversion in part of the Property
immediately expectant on the End of the Term and every lease
(whether immediate or otherwise) out of which that lease was
created, all deeds varying any of the leases and all deeds
supplemental to those leases and all licences and consents granted
under any of those leases or under any deed of variation; [TO BE
INSERTED FOR LONG LEASEHOLD PROPERTIES ONLY].]
"INSURED RISKS" means fire, lightning, explosion, earthquake,
aircraft and other aerial devices and articles dropped from them,
escape of oil, impact by vehicles or animals, riot, civil
commotion, strikes and labour disturbances, storm, flood, bursting
and overflowing of water tanks, apparatus or pipes and other risks
against which the Landlord reasonably decides from time to time to
insure to the extent to which the risks mentioned in this
definition are insurable with the Landlord's insurers but shall
include loss or damage by acts of terrorism if and only to the
extent that the Landlord has insured against acts of terrorism;
"INTEREST RATE" means the base rate for the time being of National
Westminster Bank PLC or of another Clearing Bank designated from
time to time by the Landlord;
"LANDLORD" includes the person for the time being entitled to the
reversion immediately expectant on the End of the Term;
"LEASE" means this lease, all deeds varying this lease and all
licences and consents granted under this lease or under any deed
of variation and all deeds supplemental to this lease;
"PLANNING ACTS" means the Town and Country Planning Act 1990, the
Planning (Listed Building and Conservation Areas) Act 1990, the
Planning (Hazardous Substances) Act 1990, the Planning
(Consequential Provisions) Act 1990 and the Planning and
Compensation Act 1991;
"PROPERTY" means the property described in Schedule 1 and every
part of it and all additions and alterations to it and includes
(without limitation):
(a) every part of all buildings and other structures now or
during the Term on the property including walls, roofs,
foundations, load-bearing parts, doors, windows and
Conduits;
(b) roadways, footpaths, service roads, service areas, car
parks, loading bays and landscaped and open areas;
(c) the Fixtures and Fittings;
(d) electrical and mechanical installations, plant, equipment
and machinery including (without limitation) lifts,
heating plant, air conditioning plant and ventilation
plant and radiators;
(e) sanitary equipment including washbasins;
(f) boundary walls and fences; and
(g) any plate glass.
"QUARTER DAYS" means 25th March, 24th June, 29th September and
25th December in every year;
"RENT" includes all sums reserved as rent by this Lease;
"SCHEDULE OF CONDITION" means the schedule of condition prepared
by DTZ Debenham Thorpe [annexed to this Lease or to be prepared
pursuant to the terms of the property agreement (the "Property
Agreement") between Glynwed Property Management Limited, Glynwed
Properties Limited, Niagara LaSalle (U.K.) Limited, Niagara
Corporation and Glynwed International plc];
"TENANT" includes the Tenant's successors in title;
"TERM" means the term granted by this Lease as may be determined
in accordance with this Lease;
"TERM COMMENCEMENT DATE" means the date of commencement of the
Term specified in clause 3(1);
"VAT" means value added tax;
"VAT ACT 1994" means the Value Added Tax Act 1994;
"VAT GROUP" means two or more bodies corporate registered as a
group for VAT purposes under section 43 VAT Act 1994.
3. INTERPRETATION
(1) Where there are two or more persons included in the expressions
"the Landlord", "the Tenant" or "the Guarantor" each reference to
the Landlord, the Tenant or the Guarantor includes a separate
reference to each of those persons.
(2) Any reference, express or implied, to an enactment includes
references to:
(b) that enactment as amended, extended or applied by or
under any other enactment (before or after the execution
of this Lease);
(c) any enactment which that enactment re-enacts (with or
without modification);
(d) any subordinate legislation made (before or after the
execution of this Lease) under that enactment, as
amended, extended or applied as described in paragraph
(a) above or under any enactment referred to in paragraph
(b) above; and
(e) any consents, licences and permissions given (before or
after the execution of this Lease) under that enactment,
as amended, extended or applied as described in paragraph
(a) above or under any enactment referred to in paragraph
(b) above or under that subordinate legislation and any
conditions contained in those consents, licences and
permissions.
(f) Any reference, express or implied, to enactments
generally includes subordinate legislation and any
legislation of the European Union that is directly
applicable in the United Kingdom and includes existing
enactments and those that come into effect during the
Term.
(g) Sub-clauses (1) to (3) above apply unless the contrary
intention appears.
(h) The headings in this Lease do not affect its interpretation.
4. LEASE
(1) The Landlord and Glynwed lets the Property to the Tenant together
with the rights set out in Schedule 2 but except and reserving to
the Landlord the rights set out in Schedule 3 for the term of ten
years commencing on [ ] 1999 subject to all rights and covenants
affecting the Property including (without limitation) the matters
contained or referred to in Schedule 4 at a yearly rent
ascertained in accordance with clause 4.
(2) The rights granted to the Tenant are granted in common with the
Landlord, any person authorised by the Landlord and everyone else
having the like or similar rights.
(3) This Lease does not include any rights other than those set out in
Schedule 2.
(4) The rights excepted and reserved to the Landlord may be exercised
also by those authorised by the Landlord and by anyone else who is
or may become entitled to exercise them.
5. RENT
(1) RENT
The yearly rent shall be:
(b) until (but not including) the second anniversary of the
date of the Lease, a peppercorn (if demanded);
(c) from and including the second anniversary of the date of
the Lease until (but not including) the sixth anniversary
of the date of the Lease, the sum of(pound)[]; and
(d) from and including the sixth anniversary of the date of
the Lease until the expiration of the Term, the sum
of(pound)[].
(2) RENT PAYMENT DATES
The yearly rent is payable without any deduction, withholding or
set-off by equal quarterly payments in advance on the Quarter
Days.
5. TENANT'S COVENANTS
(1) INTRODUCTION
The Tenant covenants with the Landlord to comply with its
obligations set out in this clause and in clauses 7 and 8.
(2) RENT
The Tenant shall:
(e) pay the yearly rent to the Landlord at the times and in
the manner referred to in clause 4 without any deduction
and (if required by the Landlord) by banker's standing
order; and
(f) not exercise or seek to exercise any right or claim to
withhold rent or any right or claim to legal or equitable
set-off.
(3) OUTGOINGS
The Tenant shall:
(a) pay all present and future Outgoings assessed, charged or
imposed on, or payable in respect of the Property or
assessed, charged or imposed on, or payable by its owner
or occupier;
(b) pay the proportion properly attributable to the Property
of all Outgoings assessed, charged or imposed on or
payable in respect of the Property and other properties
or assessed, charged or imposed on or payable by the
owner or occupier of the Property and other properties;
(c) pay all charges for the supply to and consumption at the
Property of water, gas and electricity and all charges
for telecommunications (including equipment rents) and
observe and perform all regulations of the supply
authorities;
(d) where such charges as are referred to in paragraph (c)
are made in relation to the Property and other properties
or upon the owner or occupier of the Property and other
properties, pay the suppliers and indemnify the Landlord
against the proportion of those charges properly
attributable to the Property or its owner or occupier;
and
(e) if, during the first six years of the Term, the Landlord
loses rating relief because it has been allowed to the
Tenant or any person deriving title under the Tenant
during the Term, make good that loss to the Landlord.
In this sub-clause "OUTGOINGS" means rates, taxes, duties,
charges, assessments, impositions and outgoings whether
parliamentary, parochial, local or of any other description and
whether of the nature of capital or revenue and even though of a
wholly novel character save any arising out of the receipt of the
rent or any dealing with the reversionary interest and the
proportion referred to in paragraphs (b) and (d) shall be
determined by the Landlord acting properly and reasonably and
shall be conclusive save, in the case of manifest error or as to
questions of law.
(4) REPAIR
The Tenant shall:
(a) keep the Property in repair but shall not be obliged to
put or keep the Property in any better condition than it
is at present as evidenced by the Schedule of Condition
or repair damage caused by an Insured Risk save where:
(i) the damage is not insured because of an
exclusion, limitation or excess imposed by the
insurers; or
(ii) the insurance monies are irrecoverable because
of the act, default or omission of the Tenant,
any person deriving title under the Tenant or
anyone at the Property with the express or
implied authority of any of them save for any
acts or defaults of the Landlord or its agents
and workmen;
(b) where beyond economic repair, replace all the Landlord's
Fixtures and Fittings in the Property which become beyond
repair during the Term with those of no lesser quality;
(c) keep all windows and other glass in the Property (both
inside and outside) clean cleaning as frequently as is
appropriate to a property of this nature;
(d) keep any open area within the Property adequately
surfaced (where appropriate), in good condition and,
where landscaped, properly cultivated and free from
weeds;
(e) ensure that electrical circuits within the Property
comply with the then current regulations of the Institute
of Electrical Engineers or other amended standards or
recommended current codes of practice;
(f) notify the Landlord of all defects in the Property which
are relevant defects for the purpose of section 4 of the
Defective Premises Act 1972 save any identified in the
Schedule of Condition.
(5) REDECORATION
The Tenant shall redecorate the exterior of the Property in every
third year and in the last year of the Term but not more
frequently than once in any year and in the case of the interior
of the Property shall carry out such redecoration as is necessary
from time to time so as to ensure that there is no deterioration
in the state and condition of the Property as evidenced by the
Schedule of Condition and, in the case of decorations carried out
in the last year of the Term in colours first approved by the
Landlord such approval not to be unreasonably withheld or delayed,
save that nothing in this clause shall oblige the Tenant to
redecorate the Property to any better standard than it is at
present, as evidenced by the Schedule of Condition. The Tenant
shall also have all parts of the Property requiring treatment for
their preservation and protection treated in accordance with the
normal methods for preserving and protecting them. All works under
this sub-clause shall be carried out in a good and workmanlike
manner and with suitable, good quality materials.
In this sub-clause the "LAST YEAR OF THE TERM" means the period of
12 months ending at the End of the Term.
(6) PARTY MATTERS
The Tenant shall pay a fair proportion of all costs and expenses
payable in respect of repairing, lighting, cleansing and
maintaining anything used in common by the Property and any other
property save that where any such items are included in the
Schedule of Condition the Tenant shall not be liable to make any
such contribution to the extent that the contribution puts such
items in any better state of repair and condition than that
evidenced by the Schedule of Condition. The proportion shall
be determined by the Landlord acting properly and reasonably and
shall be conclusive save in the case of manifest error or as to
questions of law.
(7) ENTRY BY THE LANDLORD
The Tenant shall:
(a) permit the Landlord to enter the Property to examine its
condition and take inventories of Landlord's Fixtures and
Fittings (if any);
(b) permit the Landlord to enter the Property to exercise any
of the rights reserved to the Landlord by this Lease
subject to the Landlord;
(i) making good to the Tenant all damage to the
Property to the reasonable satisfaction of the
Tenant but not being obliged to compensate the
Tenant for any loss arising from interference
with the Tenant's business suffered by the
Tenant; and
(ii) causing as little disturbance to the Tenant as
reasonably possible.
(c) permit the Landlord to enter the Property and inspect and
measure the Property for all purposes connected with
insurance of the Property.
(d) furnish all information relevant for those purposes as
the Landlord or anyone having a right of entry under this
sub-clause may reasonably request.
Except in case of emergency the Landlord shall give the Tenant
reasonable prior notice before exercising the right of entry.
After notice or in case of emergency the Landlord may break into
the Property.
(8) REMEDY BREACHES
The Tenant shall remedy all breaches of covenant notified by the
Landlord to the Tenant which the Tenant is liable to remedy under
this Lease as soon as possible and in any event within two months
after service of the notice. If the Tenant fails to do so, the
Landlord may enter the Property and remedy the breach. All proper
costs and expenses incurred by the Landlord shall be paid by the
Tenant on demand.
(9) ALTERATIONS
The Tenant shall:
(a) not make any external or structural alteration or
addition to the Property nor make any non-structural
alteration to the Property without the prior consent of
the Landlord which shall not be unreasonably withheld or
delayed; and
(b) before the End of the Term, unless released by the
Landlord in writing but not otherwise, remove any
alteration or addition and make good all damage caused by
the removal.
(10) SIGNS
The Tenant shall:
(a) not display on the Property any signs visible from
outside the Property except those which are reasonably
necessary in connection with the business carried on at
the Property;
(b) not affix to the Property any external radio, television
or other aerial or satellite dish or any pole, mast, flag
or wire without the prior consent of the Landlord which
shall not be unreasonably withheld or delayed;
(c) at the End of the Term remove all signs and items
referred to in sub-clause (b) (including any erected
before the beginning of the Term) and make good all
damage caused by their removal.
In this sub-clause "SIGNS" includes signs, hoardings, posters,
placards, advertisements, bills, inscriptions and letters.
(11) USE
The Property shall not be used other than for any use being a use
within [Class B2/B8] Business in the schedule to the Town and
Country Planning (Use Classes) Order 1987 as that Order is in
force at the date of this Lease together with other proper
ancillary uses.
(12) USE OBLIGATIONS
The Tenant shall:
(a) use any open area within the Property only for the
purpose for which it is designed and not keep any caravan
or temporary building on it (other than any items
normally stored outside the buildings on the Property in
connection with the permitted use under this Lease);
(b) not leave the Property unoccupied for more than a month
without notifying the Landlord and providing the security
arrangements required by the Landlord's insurers;
(c) not do anything on the Property which may become a
nuisance, damage, danger, or material annoyance or
inconvenience to the Landlord or any nearby owner or
occupier the Landlord acknowledging that as far as it is
concerned the proper use of the Property within Class
[B2/B8] in the schedule to the Town & Country Planning
(Use Classes) Order 1987 together with proper ancillary
uses and use which is otherwise in accordance with the
provisions of this Lease would not itself constitute a
breach of this covenant;
(d) not allow to pass into the Conduits serving the Property
anything that may obstruct them or cause damage, danger
or pollution or anything poisonous or radioactive;
(e) not bring onto or keep in the Property anything
dangerous, inflammable, explosive, noxious or offensive
save where necessary and usual for the permitted use
under this Lease;
(f) not use the Property for any illegal or immoral purpose
or for any dangerous, noxious, noisy or offensive
occupation or in any manner so as to be offensive to the
occupiers of any nearby property;
(g) not use the Property for the holding of public meetings
or auction sales or as a residence or sleep at the
Property or keep any animal on it (other than a guard
dog);
(h) not overload the Property or its Conduits; and
(i) not obstruct any road or footpath within or serving the
Property and not do anything as a result of which
reasonable use of the road or footpath by others may be
impeded.
(13) STATUTORY REQUIREMENTS
The Tenant shall comply with every enactment and with the
requirements and recommendations of every authority relating to or
affecting the Property or its use or the employment of anyone at
the Property or any equipment or chattels in the Property and
whether applicable to the owner, landlord, tenant or occupier of
the Property.
In this sub-clause "authority" includes every government
department, local or other authority and court of competent
jurisdiction.
(14) NOTICES
The Tenant shall:
(a) give the Landlord a copy of every notice or order and of
every proposal for a notice or order issued to the
Tenant, its sub-tenants or any occupier of the Property
or left at the Property in each case relating to the
Property as soon as practicable after receipt;
(b) take all steps necessary to comply with every such notice
or order without delay; and
(c) at the request of the Landlord but at the joint cost of
the Landlord and the Tenant, make or join with the
Landlord in making such objections or representations in
respect of the notice, order or proposal as the Landlord
shall think fit.
(15) PLANNING ACTS
The Tenant shall:
(a) comply with the Planning Acts in relation to the
Property, any operations carried out at the Property and
its use and not commit any breach of planning control;
(b) obtain from the local planning authority planning
permission for the carrying out of any operation on the
Property or the institution or continuance of any use
which may constitute development within the meaning of
the Planning Acts;
(c) not make any application for planning permission without
the prior consent of the Landlord to the making of the
application such consent not to be unreasonably withheld
or delayed;
(d) forthwith after the grant or refusal of any application,
give the Landlord a copy of the permission or the
refusal;
(e) not make any alteration or addition to or change of use
of the Property (being an alteration or addition or
change of use which is prohibited by this Lease or for
which the consent of the Landlord must be obtained under
this Lease and for which a planning permission must be
obtained) before planning permission for it has been
produced to the Landlord and acknowledged by the Landlord
as satisfactory to it such acknowledgement not to be
unreasonably withheld or delayed but so that the Landlord
may refuse to express satisfaction with the planning
permission on the grounds that anything contained in it
or omitted from it in the opinion of the Landlord would
be or be likely to be prejudicial to the Landlord's
interest in the Property during the Term or after the End
of the Term;
(f) pay any charge imposed under the Planning Acts in respect
of the carrying out of any operation or the institution
or continuance of any use;
(g) unless the Landlord directs otherwise, carry out before
the End of the Term all works required to be carried out
as a condition of any planning permission which may have
been granted and implemented during the Term whether or
not the date by which the planning permission requires
those works to be carried out falls within the Term;
(h) pay to the Landlord on demand a fair proportion of any
compensation received by the Tenant because of a
restriction on the use of the Property under the Planning
Acts, any dispute as to the proportion to be referred to
arbitration;
(i) produce to the Landlord all drawings, documents and other
evidence required by the Landlord to satisfy itself that
this sub-clause has been complied with;
(j) not implement any planning permission (which contains a
requirement for works the cost of which exceed
(pound)50,000) without providing security where
reasonably required by the Landlord for compliance with
the conditions imposed by that permission;
(k) not serve any purchase notice under the Planning Acts
requiring any authority to purchase the Tenant's interest
in the Property without first offering to surrender this
Lease at the price which might reasonably be expected to
be obtained from the authority under the purchase notice,
any dispute as to the amount of the price to be referred
to arbitration;
(l) at the request of the Landlord and at the cost of the
Landlord to make or join in making any planning
application required by the Landlord and not make any
objection or adverse representation in respect of any
planning application made by or with the consent of the
Landlord.
In this sub-clause "OPERATION" and "DEVELOPMENT" each includes
works to any listed building which are prohibited by the Planning
Acts unless authorised by them and "planning permission" includes
listed building consent.
(16) OBSTRUCTION
The Tenant shall not:
(a) stop up, darken or obstruct any window in such a way as
could prejudice any rights or light or air to that window
or opening belonging to the Property; or
(b) give to any third party any acknowledgement that the
Tenant enjoys the access of light or air to any of the
windows or openings in the Property by the consent of a
third party; or
(c) pay to any third party any sum of money or enter into any
agreement with any third party for the purpose of
inducing or binding him to abstain from obstructing the
access of light or air to any window or opening.
(17) OBSTRUCTION PROCEEDINGS
If any of the owners or occupiers of nearby land or buildings do
or threaten to do anything which obstructs or may obstruct the
access of light or air to any of the windows or openings in the
Property, the Tenant shall:
(a) forthwith upon becoming aware of the same or when the
Tenant ought reasonably to be aware of the same notify
the same to the Landlord;
(b) permit the Landlord to bring proceedings in the name and
at the joint cost of the Landlord and the Tenant against
any of the owners or occupiers of the nearby land or
buildings in respect of the obstruction; and
(c) take all reasonable steps to prevent such obstruction.
(18) ACQUISITION OF RIGHTS
The Tenant shall not allow any easement to be acquired over the
Property. If any easement is acquired or attempted to be acquired,
the Tenant shall give notice of it to the Landlord as soon as
possible after becoming aware of the same or when the Tenant ought
reasonably to be aware of the same and at the request of the
Landlord but at the joint cost of the Landlord and the Tenant
adopt the course required by the Landlord for preventing the
acquisition of the easement.
(19) COSTS
The Tenant shall pay on an indemnity basis all proper costs and
expenses incurred by the Landlord:
(a) in or in contemplation of any proceedings relating to the
Property under the Law of Property Act 1925 sections 146
and 147, or the Leasehold Property (Repairs) Act 1938,
the preparation and service of any notice under those
sections or the taking of steps subsequent to such notice
notwithstanding that forfeiture is avoided otherwise than
by relief granted by the Court;
(b) in the preparation and service of any notice to repair or
any schedule of dilapidations at any time during the Term
or within three months after the End of the Term;
(c) in connection with the recovery of arrears of Rent or
other sums due to the Landlord under this Lease including
the levy or attempted levy of any distress; and
(d) in respect of any application for consent required by
this Lease whether or not the consent is granted
(including any inspection of works authorised by the
consent and of any re-instatement of those works)
provided such costs are reasonable.
Where the Landlord could recover the cost of services or advice
under the first part of this sub-clause if they were undertaken by
a third party but those services or that advice are provided by
the Landlord or by a company which is a member of the same group
as the Landlord (within the meaning of section 42 of the Landlord
and Tenant Act 1954), the Tenant shall pay to the Landlord or to
that company a reasonable sum (plus VAT if payable) for such
services or advice but not more than the amount payable by the
Tenant if those services or that advice had been provided by a
third party.
(20) INDEMNITY
The Tenant shall:
(a) pay and make good to the Landlord every loss and damage
incurred or sustained by the Landlord as a consequence of
every breach or non-observance of the covenants by the
Tenant in this Lease and indemnify the Landlord against
all actions, claims, liabilities, and proper costs and
expenses arising by reason of the breach; and
(b) indemnify and keep the Landlord indemnified from
liability in respect of all loss, damage, actions,
proceedings, claims, demands, proper costs, damages and
expenses in respect of any injury to or the death of any
person or damage to any property or in respect of the
infringement, disturbance or destruction of any right by
reason of or arising in any way directly or indirectly
out of:
(i) the state of repair or condition of the Property
to the extent to which the state of repair or
condition of the Property is the responsibility
of the Tenant under this Lease;
(ii) the act, omission or default of the Tenant, any
person deriving title under the Tenant or any
person at the Property with the express or
implied authority of any of them (other than the
Landlord its agents or workmen);
(iii) the construction or existence of any additions
or alterations to the Property made during the
Term;
(iv) the use of the Property during the Term;
(v) anything now or in the future attached to or on
the Property;
(vi) the use of vehicles on the Property;
(vii) the omission of the Tenant to give written
notice to the Landlord of any defects or items
requiring repair arising during the Term of
which the Tenant is aware or ought reasonably to
be aware save any contained in the Schedule of
Condition; and
(viii) any breach by the Tenant or by any person
deriving title under the Tenant of any covenant
by the Tenant or any condition contained in this
Lease.
(21) NOTICES FOR SALE AND RE-LETTING
The Tenant shall:
(a) permit the Landlord during the six months before the End
of the Term to affix to the Property a notice for
re-letting it;
(b) permit the Landlord at any time during the Term to affix
to the Property a notice of a usual size for dealing with
the Landlord's interest in the Property; and
(c) permit all persons with written authority from the
Landlord or the Landlord's agent to view the Property at
all reasonable times in connection with a sale and
re-letting and by appointment.
(22) REGULATIONS
The Tenant shall observe all reasonable regulations made by the
Landlord for the proper management of the Property.
(23) NEW GUARANTORS
If a guarantor's event of default occurs, the Tenant shall notify
the Landlord of the event within ten Business Days of its
occurrence. If the Landlord serves notice on the Tenant under this
sub-clause within thirty Business Days of service of the Tenant's
notice, the Tenant shall procure that guarantors acceptable to the
Landlord shall covenant by deed with the Landlord in the form set
out in schedule 5.
In this sub-clause a guarantor's event of default is any of the
following:
(a) in the case of a Guarantor who is an individual:
(i) the death of the individual;
(ii) the individual being regarded as a patient under
the Mental Health Act 1983 section 94;
(iii) an application being made for an interim order
in respect of the individual or an interim order
being made under the Insolvency Act 1986;
(iv) the making by the individual of a proposal for a
voluntary arrangement;
(v) a petition being presented for a bankruptcy
order to be made against the individual or a
bankruptcy order being made;
(b) in the case of a Guarantor which is a company:
(i) a proposal being made to the company and to its
creditors for a voluntary arrangement;
(ii) a petition being presented for an administration
order in respect of the company or an
administration order being made;
(iii) the company having an administrative or other
receiver or a manager appointed of the whole or
any part of its property;
(iv) the company passing a resolution for winding up
or a petition being presented for the winding up
of the company or a winding up order being made
or the company being dissolved other than (in
any such case) a voluntary winding up of a
solvent company for the purposes of amalgamation
or reconstruction;
(v) the company, having been registered as an
unlimited company, being re-registered as a
limited company without the previous consent of
the Landlord;
(c) in the case of a Guarantor who is an individual or which
is a company:
(i) the individual or the company entering into any
kind of composition, scheme of arrangement,
compromise or arrangement for the benefit of
creditors or any class of creditors or
permitting or suffering any distress or
execution to be levied on his goods;
(ii) there occurring in relation to the individual or
the company in any country or territory in which
he carries on business or to the jurisdiction of
whose courts he or any of his property is
subject any event which corresponds in that
country or territory with any of those mentioned
in paragraphs (a)(iii) to (v) or (b) above or
the individual or the company otherwise becoming
subject in any such country or territory to any
law relating to insolvency, bankruptcy or
winding up.
(24) FREEHOLD COVENANTS
The Tenant shall observe and perform the covenants contained or
referred to in Schedule 4 so far as they relate to the Property
and are still subsisting and capable of taking effect.
(25) HEAD LEASE - [FOR EACH OF THE LONG LEASEHOLD PROPERTIES ONLY
The Tenant shall:
(a) From the date of this Lease observe and perform the
covenants by the tenant contained in the Head Lease
except the covenants for payment of rent and for
insurance;
(b) not do or omit anything whereby the Head Lease may be
avoided or forfeited; and
(c) allow the Landlord to enter the Property and to perform
any of the covenants by the Tenant in the Head Lease
which may be necessary to prevent a forfeiture of the
Head Lease.]
(25) YIELD UP
The Tenant shall:
(a) yield up the Property (except tenant's or trade fixtures)
to the Landlord at the End of the Term with vacant
possession and in accordance with the Tenant's covenants
in this Lease; and
(b) make good to the reasonable satisfaction of the Landlord
all damage occasioned by the removal of any tenant's or
trade fixtures save that where the Tenant removes, as
tenant's fixtures, plant and machinery acquired pursuant
to the sale of business agreement (dated , 1999 between
Glynwed Steels Limited, Glynwed International plc,
Niagara LaSalle (UK) Limited and Niagara Corporation)
from the positions such plant and machinery were in at
the date of this Lease, the Tenant shall not be obliged
to fill in the holes made to accommodate such plant and
machinery.
(26) RELEASE OF LANDLORD
The Tenant agrees that if the Landlord or any former landlord
applies for release of a covenant under section 8 of the Landlord
and Tenant (Covenants) Act 1995 the Tenant shall not object
unreasonably to the release of the Landlord or the former
landlord.
6. LANDLORD'S COVENANTS
(1) INTRODUCTION
The Landlord covenants with the Tenant to comply with its
obligations set out in this clause and in clause 8.
(2) QUIET ENJOYMENT
The Tenant may peaceably and quietly hold and enjoy the Property
during the Term without any lawful interruption by the Landlord or
any person claiming under or in trust for the Landlord.
7. ALIENATION
(1) RESTRICTIONS ON ALIENATION
The Tenant shall not:
(a) save to the extent permitted by the following sub-clauses
of this clause, part with possession of the whole or any
part of the Property or part with or share occupation of
the whole or any part of the Property or permit
occupation by a licensee of the whole or any part of the
Property or hold on any trust the whole or any part of
the Property;
(b) if it is an unlimited company, incorporate itself as a
limited company without the prior consent of the
Landlord.
(2) ASSIGNMENT
The Tenant shall not:
(a) assign part of the Property;
(b) assign the whole of the Property without the prior
consent of the Landlord which, subject to sub-clauses (3)
and (4), shall not be unreasonably withheld or delayed.
(3) AGREEMENT AS TO CIRCUMSTANCES
The Landlord and the Tenant agree that the Landlord may withhold
its consent to an assignment if any one or more of the following
circumstances (which are specified for the purposes of section
19(1A) of the Landlord and Tenant Act 1927) exist:
(a) any Rent due (following demand if required under the
terms of this Lease) from the Tenant under this Lease is
unpaid;
(b) the Landlord reasonably determines that the proposed
assignee is not a person who is likely to be able to
comply with the covenants by the Tenant in this Lease
following completion of the assignment;
(c) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) has the benefit of state or diplomatic
immunity or the Landlord determines that it is likely to
acquire that immunity;
(d) the proposed assignee is a company which is a member of
the same group (within the meaning of section 42 of the
Landlord and Tenant Act 1954) as the Tenant;
(e) the Landlord reasonably determines that there is a
subsisting material breach of any of the tenant's
covenants by the Tenant or the conditions in this Lease.
(4) AGREEMENT AS TO CONDITIONS
The Landlord and the Tenant agree that the Landlord may grant
consent to an assignment subject to any one or more of the
following conditions (which are specified for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927):
(a) that before the assignment the Tenant enters into and
unconditionally delivers to the Landlord an authorised
guarantee agreement (as defined in section 16 of the
Landlord and Tenant (Covenants) Act 1995), such agreement
to be a deed and to contain the provisions in Schedule 6
or such other provisions as the Landlord shall first
notify to the Tenant, to be approved by the Tenant, such
approval not to be unreasonably withheld or delayed;
(b) that before the assignment any person (other than a
former Tenant) who at the time of the application for the
consent is guaranteeing the obligations and liabilities
of the Tenant under this Lease covenants by deed with the
Landlord that the Tenant shall perform its obligations
under the authorised guarantee agreement required under
paragraph (a), the deed to contain provisions equivalent
to those contained in paragraphs 1 to 4 and 9 of Schedule
5 and an obligation on the part of the covenantor (in the
event of default on the part of the Tenant) to perform
any obligation entered into by the Tenant in the
authorised guarantee agreement to take up a new lease,
and otherwise to be in such form as the Landlord
reasonably requires PROVIDED THAT if such person declines
to enter into this covenant, the Tenant shall procure
that there is paid to the Landlord a rent deposit equal
to two years of the annual rent payable under clause
4(1)(b) of this Lease;
(c) that before the assignment, if the Landlord reasonably
determines it to be necessary, one or more guarantors
acceptable to the Landlord, acting reasonably, covenant
by deed with the Landlord in the form set out in Schedule
5 (with "assignee" substituted for "Tenant" in paragraphs
1 to 9 inclusive and with such other provisions as the
Landlord reasonably requires) in respect of the period
ending on the date on which the assignee is released by
virtue of the Landlord and Tenant (Covenants) Act 1995;
(d) that before the assignment where reasonably required a
rent deposit is paid to the Landlord, such deposit to be
an amount equal to six months of the annual rent payable
under clause 4(1)(c) of this Lease or such greater amount
as is reasonable in the circumstances;
(e) that all Rent due (following demand if required under the
term of this Lease) from the Tenant under this Lease as
at the date of the assignment has been paid;
(f) that the assignment is completed within three months of
the date of the consent and that if it is not, the
consent shall be void but any of the guarantees referred
to in paragraphs (a) to (c) shall nevertheless remain in
full force and effect.
(5) FURTHER AGREEMENT
The Landlord and the Tenant agree that any power on the part of
the Landlord to determine any matter for the purposes of
sub-clauses (3) or (4) shall be exercised reasonably.
(6) UNDERLETTING
The Tenant shall not:
(a) underlet part of the Property; or
(b) underlet the whole of the Property without:
(i) complying with the provisions of sub-clauses (7)
to (11); and
(ii) the prior consent of the Landlord, which shall
not be unreasonably withheld.
(7) COVENANTS ON UNDERLETTING
The Tenant shall procure that any intended undertenant covenants
by deed with the Landlord:
(a) to pay the rent to be reserved by and the other sums to
be payable under the underlease and to perform and
observe, first, the covenants by the tenant and the
conditions to be contained in the underlease and,
secondly, the covenants by the Tenant and the conditions
contained in this Lease (except first the covenant to pay
rent and secondly any covenant in this Lease which is
inconsistent with the covenants in the underlease as
authorised under sub-clause (9)) throughout the period
during which the undertenant is bound by the covenants by
the tenant and conditions in the underlease;
(b) without prejudice to paragraph (a), not to assign the
underlet property without:
(i) first obtaining a deed of covenant from the
intended assignee in favour of the Landlord in
the same form (with the necessary changes) as
the deed referred to in this sub-clause,
including (without limitation) the covenants in
this paragraph (b); and
(ii) if the Landlord reasonably requires, first
obtaining a deed from one or more guarantors
acceptable to the Landlord, acting reasonably,
in favour of the Landlord guaranteeing the due
and punctual payment and performance of all the
obligations and liabilities of the intended
assignee under the deed referred to in
sub-paragraph (i), the deed to contain
provisions equivalent to those contained in
paragraphs 1 to 4 and 9 of Schedule 5 and
otherwise to be in such form as the Landlord
reasonably requires.
(8) GUARANTEE ON UNDERLETTING
If the Landlord reasonably requires, the Tenant shall procure
that, before the underlease is granted, one or more guarantors
acceptable to the Landlord, acting reasonably, guarantee (by way
of deed) to the Landlord, in respect of the period ending on the
date on which the undertenant is released by virtue of the
Landlord and Tenant (Covenants) Act 1995, the due and punctual
payment and performance of all the obligations and liabilities of
the intended undertenant, the guarantee to contain provisions
equivalent to those contained in paragraphs 1 to 4 and 9 of
Schedule 5 and otherwise to be in such form as the Landlord
reasonably requires.
(9) FORM OF UNDERLEASE
The Tenant shall procure that every underlease shall:
(a) contain the same covenants by the tenant and other terms
and conditions as are contained in this Lease subject
only to:
(i) such amendments as may be provided for in paragraphs
(b) to (e); and
(ii) such amendments as may reasonably be required by
the Tenant, having regard only to the duration
of the proposed underlease, and as may be
approved by the Landlord, such approval not to
be unreasonably withheld or delayed;
(b) not permit any assignment, underlease or other dealing or
disposal of the Property which is prohibited by the terms
of this Lease and prohibit any further underletting of
the whole or any part of the Property;
(c) provide that where the underlease requires the
undertenant to obtain the landlord's consent, the
undertenant shall be required to obtain also the consent
of the Landlord which shall not be unreasonably withheld
or delayed where such consent cannot be unreasonably
withheld or delayed under the terms of this Lease;
(d) contain a Landlord's break option upon the same terms as
the Tenant's break option set out in clause 13 of this
Lease and, in the licence to underlet a covenant from the
Tenant to the Landlord to exercise that break option in
the event that it exercises the Tenant's break option
contained in this Lease.
(e) contain provisions to ensure that the tenancy is excluded
from the provisions of sections 24 to 28 of the Landlord
and Tenant Act 1954.
(10) UNDERLEASE REQUIREMENTS
The Tenant shall:
(a) not grant any underlease at a fine or premium;
(b) not grant any underlease at a rent which at the time of
the grant of the underlease is less than the open market
rent of the Property;
(c) not accept the surrender of or vary the terms of any
underlease or release the undertenant from any covenant
or condition in the underlease without the prior consent
of the Landlord which, in the case only of a surrender,
shall not be unreasonably withheld;
(d) not waive any breach of any of the covenants on the part
of the undertenant and the conditions contained in any
underlease but take all such steps as are lawfully
available to the Tenant (including re-entry) to enforce
such covenants and conditions;
(e) procure that on any assignment of any underlease the
outgoing undertenant enters into an authorised guarantee
agreement and, where appropriate, guarantors enter into a
contractual guarantee in each case with the landlord
under the underlease in accordance with the provisions of
the underlease.
In paragraphs (c) to (e) of this sub-clause an underlease includes
any lease where, by virtue of the grant of this Lease, the Tenant
under this Lease becomes the holder of the immediate reversion to
that lease.
(11) ASSOCIATED COMPANIES
The Tenant may share the occupation of the whole or any part of
the Property with a company which is a member of the same group as
the Tenant (within the meaning of section 42 of the Landlord and
Tenant Act 1954) for so long as both companies remain members of
that group and provided that:
(a) no relationship of landlord and tenant is created between
the two companies and no security of tenure is conferred
upon the occupier; and
(b) within 15 Business Days of the commencement of the
sharing the Tenant gives to the Landlord notice of the
company sharing occupation and the address of its
registered office.
(12) CHARGING
The Tenant shall not:
(a) charge part of the Property; or
(b) charge the whole of the Property without the prior
consent of the Landlord, which shall not be unreasonably
withheld or delayed.
(13) REGISTRATION OF DEALINGS
Within 28 days of every assignment, transfer, underlease or charge
of the Property or the creation or transfer of any interest
derived out of the Term or any devolution of the interest of the
Tenant or any person deriving title under the Tenant, the Tenant
shall produce a certified copy of the assignment, transfer,
underlease or charge or (in the case of a devolution) the document
evidencing or under which the devolution arises and pay the
Landlord a registration fee of a reasonable amount, being not less
than (pound)25, in respect of each assignment, transfer,
underlease, charge or devolution.
8. INSURANCE
(1) LANDLORD'S INSURANCE OBLIGATIONS
Unless the insurance is vitiated by any act, default or omission
of the Tenant, any person deriving title under the Tenant or any
person at the Property with the express or implied authority of
any of them, the Landlord shall keep the Property (other than
plate glass and tenant's or trade fixtures) insured with insurers
or underwriters selected by the Landlord in accordance with the
provisions of this clause to the extent to which the Property is
insurable and subject to all exclusions, limitations and excesses
imposed by the insurers.
(2) SUM AND RISKS INSURED
The Property shall be insured in a sum not less than its full
reinstatement cost (as determined from time to time by the
Landlord) against loss or damage by the Insured Risks.
(3) FEES
The insurance shall extend to:
(a) architects' and other professional fees in relation to
the reinstatement of the Property;
(b) the costs of demolition and removal of debris; and
(c) loss of rent for the following three years of the Term.
(4) PRODUCTION OF POLICY
Whenever reasonably required to do so by the Tenant, the Landlord
shall produce to the Tenant at the Landlord's office a copy of the
insurance policy or other evidence of it and evidence of payment
of the last premium.
(5) REINSTATEMENT
Subject to sub-clause (15) if the Property is destroyed or damaged
by any of the Insured Risks, then unless the insurance is vitiated
by any act, default or omission of the Tenant, any person deriving
title under the Tenant or any person at the Property with the
express or implied authority of any of them, the Landlord shall
use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible; and
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all insurance monies received
by the Landlord (other than for fees and loss of rent) in
reinstating the Property making good any shortfall out of
its own money save where such shortfall:
(i) arises due to any default, act or omission of
the Tenant, its undertenant or any person at the
Property with the express or implied authority
of any of them; and
(ii) relates to excesses, exclusions or limitations.
In reinstating the Property, the Landlord may make such variations
to its design as the Landlord reasonably decides, so long as the
Tenant is provided with accommodation which is substantially the
same as that previously comprised in the Property.
(6) TENANT'S INSURANCE OBLIGATIONS
The Tenant shall pay to the Landlord on demand:
(a) every premium payable by the Landlord for insuring the
Property in accordance with its obligations in sub-clause
(1) and for effecting in relation to the Property
insurance in respect of liability to third parties
including members of the public and such other insurances
as the Landlord acting reasonably considers desirable;
(b) where the policy includes the Property and other
properties, the fair proportion properly attributable to
the Property of every premium payable by the Landlord for
insuring the Property and the other properties in
accordance with its obligations in sub-clause (1) and for
effecting (in relation to the Property and the other
properties) the other insurances referred to in
sub-paragraph (a), the proportion to be determined by the
Landlord acting reasonably whose determination shall be
conclusive save as to questions of law and save in the
case of manifest error;
(c) the amount of any excess deducted or deductible by the
insurers on any claim made by the Landlord; and
(d) all costs and expenses incurred by the Landlord in
obtaining a valuation of the Property for insurance
purposes but not more frequently than once every 12
months.
All sums payable by the Tenant under this paragraph shall be
reserved as rent.
(7) VITIATION
The Tenant shall not use the Property or carry on any business at
the Property or do or omit to do at the Property anything which
may make void or voidable any policy for the insurance of the
Property or any nearby property of the Landlord.
(8) INCREASED PREMIUM
The Tenant shall:
(a) not without the prior consent of the Landlord use the
Property or carry on any business at the Property other
than the business carried on at the Property prior to the
grant of this Lease or do or omit to do at the Property
anything which may increase the premium payable for the
insurance; and
(b) if consent is given, repay on demand to the Landlord any
increased insurance premium payable by the Landlord.
(9) IRRECOVERABLE REINSTATEMENT COST
If the Property is destroyed or damaged by any of the Insured
Risks and the insurance money under any insurance effected by the
Landlord is wholly or partly irrecoverable because of any act,
default or omission of the Tenant, any person deriving title under
the Tenant or any person at the Property with the express or
implied authority of any of them, the Tenant shall pay to the
Landlord on demand the whole or the appropriate proportion of the
cost of reinstating the Property. Any dispute as to the amount of
such proportion shall be referred to arbitration.
(10) NOTICE OF DAMAGE
If the Property is destroyed or damaged by any of the Insured
Risks, the Tenant shall give notice to the Landlord as soon as the
destruction or damage comes to the notice of the Tenant.
(11) DOUBLE INSURANCE
The Tenant shall not effect any insurance relating to the Property
against any of the Insured Risks save where the Landlord ceases
insurance of any particular risk in which case the Tenant may
effect its own insurance in respect of such risk or risks. If the
Tenant is entitled to the benefit of any insurance in respect of
the Property, the Tenant shall pay to the Landlord all monies
received by virtue of the insurance to enable the Landlord to
apply them in making good the loss or damage in respect of which
they have been received and subject to sub-clause (15) the
Landlord shall use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible; and
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all such monies received from
the Tenant in reinstating the Property. In reinstating
the Property the Landlord may make such variations to its
design as the Landlord reasonably decides, so long as the
Tenant is provided with accommodation which is
substantially the same as that previously comprised in
the Property.
(12) RELEVANT MATTERS
The Tenant:
(a) shall forthwith notify the Landlord in writing of any
relevant matter; and
(b) warrants that all relevant matters existing or arising as
regards NIAGARA LASALLE (U.K.) LIMITED and NIAGARA
CORPORATION on or before today's date or existing or
arising as regards any subsequent person becoming the
Tenant on or before the date of assignment or other
devolution of title have been notified to the Landlord in
writing prior to today's date or prior to execution of
the assignment or the date of the devolution, as the case
may be.
In this sub-clause "RELEVANT MATTER" means any matter that a
prudent insurer or underwriter might treat as material in deciding
whether or on what terms to insure or to continue to insure the
Property including (without limitation) the conviction, judgment
or finding of any court or tribunal relating to the Tenant or any
director, other officer or major shareholder of the Tenant of such
a nature that a prudent insurer or underwriter might treat as so
material.
(13) FIRE AUTHORITY REQUIREMENTS
The Tenant shall comply with all requirements and recommendations
of the appropriate authority and the Landlord's insurers about
means of escape from the Property in case of fire or other
emergency and about the provision and maintenance of fire
detection equipment, fire alarm equipment and fire fighting
equipment.
(14) CESSER OF RENT
If the Property or any part of it or the means of access to it is
destroyed or damaged by any of the Insured Risks so as to make the
Property unfit for occupation or use, the rent or a fair
proportion of it according to the nature and extent of the damage
sustained shall be suspended until the Property or the means of
access thereto has been reinstated and made fit for occupation and
use or until the end of three years from the date of the
destruction or damage, whichever first occurs. Any dispute as to
the amount of the proportion shall be referred to arbitration.
This sub-clause does not apply if and to the extent that the
insurance monies in respect of loss of rent are wholly or
partially irrecoverable solely or partly because of the act,
default or omission of the Tenant, any person deriving title under
the Tenant or any person at the Property with the express or
implied authority of any of them.
(15) PREVENTION OF REINSTATEMENT
The Landlord shall not be obliged to reinstate the Property in
accordance with sub-clauses (5) and/or (11) while prevented by a
supervening event. If the Landlord is unable to commence
reinstatement within twelve months from the date of destruction or
damage because of a supervening event and the Property or a
substantial part of it is unfit for occupation or use either party
may determine the Term by serving notice on the other at any time
within six months of the end of the twelve month period. On
service of the notice the Term shall cease but without prejudice
to any rights that either party may have against the other for
breach of any of the covenants by the other or the conditions in
this Lease and all insurance monies shall belong to the Landlord.
(16) COMPLETION OF REINSTATEMENT
If the Landlord is unable to complete reinstatement works within
three years from the date of damage or destruction so that the
Property or a substantial part of it will be unfit for occupation
or use at that date then, at the option of the Landlord, either
the Landlord may determine the Term or the rent or a fair
proportion of it, according to the nature and extent of the
damage, shall be suspended until such time as the Property or a
substantial part of it is fit for occupation and use.
The Landlord shall serve any notice to determine the Term on the
Tenant within three months of the end of the three year period. On
service of the notice the Term shall cease but without prejudice
to any rights that either party may have against the other for
breach of any of the covenants by the other or the conditions in
this Lease and all insurance monies shall belong to the Landlord.
If the Landlord does not serve a notice to determine this Lease in
accordance with the terms of this subclause the rent cesser will
automatically apply.
(17) SUPERVENING EVENT
In sub-clause (15) a supervening event means any of the following:
(a) inability of the Landlord to obtain the consents and
permissions referred to in sub-clauses (5) and/or (11)
despite using all reasonable endeavours to do so;
(b) grant of any of the consents or permissions subject to a
lawful condition with which it would be unreasonable to
expect the Landlord to comply or the Landlord being
requested as a precondition to obtaining any of the
consents or permissions to enter into an agreement with
the planning authority or any other authority containing
conditions with which it would be unreasonable to expect
the Landlord to comply;
(c) some defect in the site upon which reinstatement is to
take place so that it could not be undertaken or could be
undertaken only at a cost unacceptable to the Landlord;
(d) inability of the Landlord to obtain access to the site to
reinstate;
(e) prevention of reinstatement by any cause beyond the
control of the Landlord.
9. GUARANTOR'S COVENANT
The Guarantor covenants with the Landlord on the terms set out in
Schedule 5.
10. RE-ENTRY
(1) If an Event of Default occurs then notwithstanding the waiver of
any previous right of re-entry the Landlord may re-enter the
Property or any part of it when the Term shall cease but without
prejudice to any rights or remedies which may then have accrued to
the Landlord against the Tenant or any Guarantor in respect of any
antecedent breach of any of the covenants or obligations of the
Tenant or any Guarantor in this Lease (including the breach in
respect of which re-entry is made).
(2) In this clause an Event of Default is any one of the following:
(a) the Rent or any part of it is in arrear and unpaid for
twenty one Business Days after becoming payable (whether
formally demanded or not); or
(b) a breach by the Tenant of any of the covenants by the
Tenant in this Lease; or
(c) the Tenant (being a company) is deemed unable to pay its
debts under section 123 of the Insolvency Act 1986 or the
Tenant (being a company) passes a resolution for
winding-up or its directors of any of them present a
petition for winding-up or an order for the winding-up of
the Tenant is made (other than (in any such case) a
voluntary winding-up of a solvent company for the
purposes of amalgamation or reconstruction) or the Tenant
is dissolved; or
(d) the Tenant (being a company) has an administrative or
other receiver or a manager appointed of the whole or any
substantial part of its property or a petition is
presented for an administration order or an
administration order is made in respect of the Tenant ;
or
(e) the Tenant (being a company), being registered as an
unlimited company, is re-registered as a limited company
without the previous consent of the Landlord; or
(f) the Tenant (being an individual) presents a petition for
a bankruptcy order to be made against him or a bankruptcy
order is made against the Tenant ; or
(g) in relation to the Tenant (whether an individual or a
company) a proposal is made or the Tenant enters into any
kind of composition, scheme of arrangement, compromise or
arrangement for the benefit of creditors or any class of
creditors or permits or suffers any execution to be
levied on his goods; or
(h) there occurs in relation to the Tenant in any country or
territory in which any of them carries on business or to
the jurisdiction of whose courts any of them or any of
the property of any of them is subject any event which
corresponds in that country or territory with any of
those mentioned in paragraphs (c) to (g) above or the
Tenant otherwise becomes subject in any such country or
territory to any law relating to insolvency, bankruptcy
or winding up.
11. VAT
(1) If any VAT is chargeable on any supply under or pursuant to this
Lease, the Tenant shall pay by way of additional consideration the
amount of that VAT.
(2) Without limiting sub-clause (1) above, each sum reserved or
payable by the Tenant under this Lease is exclusive of VAT (if
any) and is accordingly to be construed as a reference to that sum
plus any VAT in respect of it, and where any sum is reserved as
rent, the VAT is also reserved as rent.
(3) If VAT is chargeable on any supply made by the Landlord to the
Tenant for which a sum is not reserved or payable under this
Lease, the Tenant shall pay that VAT to the Landlord against issue
of a VAT invoice.
(4) Where under this Lease the Tenant is obliged:
(a) to make any payment to the Landlord or any other person
(including, without limitation, by way of service charge,
indemnity or reimbursement) by reference to any amount
incurred or which will or may be incurred by the Landlord
or any other person; or
(b) otherwise to pay all or part of the consideration for any
supply made to the Landlord or any other person,
then without prejudice to sub-clauses (1) to (3) above, the Tenant
shall be obliged to pay an amount equivalent to any VAT in respect
of the amount or consideration except to the extent that the VAT
is recoverable by the Landlord or any other person as appropriate.
(5) For the purposes of sub-clause (4) above, VAT is recoverable by a
person, if that person (or any company treated as a member of the
same VAT group as that person) is entitled to credit for it as
input tax under sections 25 and 26 VAT Act 1994. For the avoidance
of doubt, VAT is not recoverable by a person only because he could
elect to waive exemption, but has not done so.
(6) Where for the purposes of this Lease it is necessary to calculate
or estimate the cost or value of anything, including any building,
structure, work, item, act or service, the cost or value shall be
calculated or estimated so as to include any VAT which will or may
be incurred in addition.
(7) This clause shall not affect the generality of clause 5(3) of this
Lease.
(8) The Landlord shall issue the Tenant with a proper VAT invoice in
respect of any supply by the Landlord to the Tenant.
12. GENERAL
(1) INTEREST AND POWERS OF RECOVERY
If any Rent or other sum payable under this Lease is not paid
within 14 days of the day on which it is due it shall bear
interest from the day on which it was due until the date of
payment at the Default Interest Rate compounded quarterly. Every
amount payable under this Lease shall be reserved as rent and
shall be recoverable as rent in arrear.
(2) INTEREST ON BREACH
Without prejudice to sub-clause (1) if:
(a) there is any breach by the Tenant (other than a trivial
breach) of its obligations under this Lease; and
(b) the Landlord serves notice on the Tenant that by reason
of that breach the Landlord will not for the time being
accept any sums (including the Rent) payable by the
Tenant under this Lease,
the Tenant shall pay to the Landlord on demand interest at the
Default Interest Rate on the sums due to the Landlord under this
Lease, in respect of the period from the date of service of the
notice, or from the date when the particular sum fell due
(whichever is the later), until whichever is the earlier of the
date of the acceptance by the Landlord of the sum due and the date
on which the breach is remedied.
(3) DISPUTES
In relation to disputes any statement in this Lease that any
dispute shall be referred to arbitration means that the dispute
shall be determined by a single arbitrator agreed by the Landlord
and the Tenant or, failing agreement, by a single arbitrator
appointed by the president or his deputy for the time being of the
Royal Institution of Chartered Surveyors in accordance with the
Arbitration Act 1996.
(4) COMPENSATION
Subject to the provisions of section 38(2) of the Landlord and
Tenant Act 1954 neither the Tenant nor any person deriving title
under the Tenant shall be entitled on quitting the Property to any
compensation under section 37 of that Act.
(5) JOINT AND SEVERAL LIABILITY
Where the Tenant or any Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible
in respect of every obligation undertaken by them under
this Lease; and
(b) the Landlord may release or compromise the liability of
any of those persons under this Lease or grant any time
or other indulgence without affecting the liability of
any other of them.
(6) WHOLE AGREEMENT
This Lease and the Property Agreement and the option agreement the
lease renewal deed and the side deed, (all of even date herewith
and made between the Landlord and the Tenant) contain the whole
agreement between the parties relating to the transaction
contemplated by this Lease and supersede all previous agreements
between the parties relating to the transaction.
(7) REPRESENTATIONS
The Tenant acknowledges that in agreeing to enter into this Lease
the Tenant has not relied on any representation, warranty,
collateral contract or other assurance save for any written
replies to the Tenant's solicitor's written enquiries before
contract. The Tenant waives all rights and remedies which, but for
this sub-clause, might otherwise be available to it in respect of
any representation, warranty, collateral contract or other
assurance (other than as stated above), but nothing in this sub-
clause shall limit or exclude any liability for fraud.
(8) RIGHTS OF ENTRY
All rights of entry exercisable by the Landlord extend to include
(without limitation) its employees, agents, surveyors, contractors
and licensees with or without plant, equipment, appliances and
materials.
(9) INTERPRETATION OF COVENANTS
Any covenant by the Tenant not to do or omit anything shall be
construed as though the covenant was in addition a covenant not to
permit or suffer to be done or omitted that thing.
(10) TENANT'S POSSESSIONS
(a) If after the Tenant has vacated the Property at the End
of the Term any of the Tenant's possessions remain on the
Property and the Tenant fails to remove them within ten
Business Days after being requested to do so by the
Landlord then:
(i) the Landlord may dispose of the possessions as agent
for the Tenant;
(ii) (if disposal is by sale) subject to paragraph
(c) the Landlord shall hold the proceeds of sale
after deducting the costs and expenses of
removal, storage and sale incurred by it to the
order of the Tenant;
(iii) if the Tenant fails to claim the proceeds of
sale within sixty Business Days of the date of
the sale, the Landlord may keep them;
(iv) the Tenant indemnifies the Landlord against:
(I) any liability incurred by the Landlord to
any third party whose possessions have
been sold by the Landlord in the mistaken
belief (which shall be presumed) that the
possessions belonged to the Tenant;
(II) any damage caused to the Property by the
possessions; and
(vi) all loss, damage, actions, proceedings, claims,
demands, costs, damages and expenses incurred or
suffered by or brought or awarded against the
Landlord as a result of the presence of the
possessions on the Property after the Tenant has
left it at the End of Term.
(b) For the avoidance of doubt it is agreed between the
parties that the Tenant may remove any tenant's fixtures
and fittings from the Property at any time during the
Term subject to making good any damage caused to the
Property by such removal (save as specified in clause
5(25)).
(11) OTHER LAND
Nothing contained in or implied by this Lease shall:
(a) impose or be deemed to impose any restriction on the use of
any land or buildings not comprised in this Lease; or
(b) give the Tenant:
(i) the benefit of or the right to enforce or to
have enforced or to prevent the release or
modification of any covenant, lease, condition
or stipulation entered into by any purchaser or
tenant from the Landlord in respect of any
property not comprised in this Lease; or
(ii) the right to prevent or restrict in any way the
development of any land not comprised in this
Lease; or
(c) release the Tenant from the covenants by the Tenant in
this Lease notwithstanding that the Landlord has waived
or released temporarily or permanently, revocably or
irrevocably or in any other way a similar covenant or
similar covenants affecting any property not comprised in
this Lease.
(12) HEAD LEASE AND CHARGE - [FOR LEASES OF LONG LEASEHOLD PROPERTIES ONLY]
Where there is a Head Lease or where the interest of the Landlord
or any head landlord is charged:
(a) any right exercisable by the Landlord shall be exercisable
by every head landlord and every Chargee;
(b) where the Tenant must obtain consent from the Landlord,
the Tenant must obtain consent from every head landlord
and every Chargee where the Head Lease or the Charge so
provide and nothing contained in this Lease shall be
construed as imposing on any head landlord or any Chargee
an obligation not to refuse consent unreasonably, save
that, where there is an obligation contained in any
Headlease or Charge for the head Landlord or Chargee not
to act unreasonably then at the request and cost of the
Tenant, the Landlord will use reasonable endeavours to
enforce any such obligation; or;
(c) where the Tenant must repay to the Landlord any expenses
incurred by the Landlord then if any expenses are
incurred by any head landlord or any Chargee arising
directly or indirectly out of any act, default, omission
or request of the Tenant or any person at the Property
with the express or implied authority of the Tenant, the
Tenant must repay those expenses also;
(g) any indemnities in favour of the Landlord shall be deemed
to incorporate indemnities in favour of every head landlord
and every Chargee;
(e) the Landlord shall use reasonable endeavours to enforce
the covenants on the part of the landlord under the Head
Lease at the request and cost of the Tenant and the
Tenant shall provide reasonable security to the Landlord
in respect of those costs;
In this sub-clause "CHARGE" means any mortgage or charge (fixed or
floating, legal or equitable) affecting the interest of the
Landlord or any head landlord in the Property and "Chargee" shall
be construed accordingly.
(12) CHARGE - [FOR LEASES OF FREEHOLD PROPERTIES ONLY]
Where the interest of the Landlord or any Head Landlord is charged:
(a) any right exercisable by the Landlord shall be
exercisable by every Chargee;
(b) where the Tenant must obtain consent from the Landlord,
the Tenant must obtain consent from every Chargee where
the Charge so provides and nothing contained in this
Lease shall be construed as imposing on any Chargee an
obligation not to refuse consent unreasonably, save that
where there is an obligation contained in any Charge for
the Chargee not to act unreasonably then, at the request
and cost of the Tenant, the Landlord will use reasonable
endeavours to enforce any such obligation;
(c) where the Tenant must repay to the Landlord any expenses
incurred by the Landlord then if any expenses are
incurred by any Chargee the Tenant must repay those
expenses also; and
(d) any indemnities in favour of the Landlord shall be deemed
to incorporate indemnities in favour of every Chargee.
In this sub-clause "CHARGE" means any mortgage or charge (fixed or
floating, legal or equitable) affecting the interest of the
Landlord or any Head Landlord in the Property and "Chargee" shall
be construed accordingly.
(13) PERPETUITY PERIOD
The perpetuity period applicable to this Lease is 80 years
beginning on the date of this Lease and whenever in this Lease
either the Landlord or the Tenant is granted a future interest it
must vest within that period and, if it has not, it will be void
for remoteness.
(14) SEVERANCE
To the extent that any provision of this Lease is rendered void by
section 25 of the Landlord and Tenant (Covenants) Act 1995, that
provision shall be severed from the remainder of this Lease which
shall remain in full force and effect. In this sub-clause
"provision" includes a clause, a sub-clause or a schedule or any
part of any of them.
(15) NOTICES IN WRITING
Every notice, consent, approval or direction given under this
Lease shall be in writing.
(16) COUNTERPARTS
This lease may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same lease and
any party may enter into this lease by executing a counterpart.
13. RIGHT TO BREAK
(1) The Tenant shall have the right at any time to give not less than
12 months' notice in writing to the Landlord to terminate this
Lease.
(2) If the Tenant gives notice to the Landlord pursuant to sub-clause
(1), this Lease shall terminate on the expiry of the notice
subject to the Tenant having paid the rents due under the Lease
and substantially complied with all its obligations in the Lease
down to that date in all material respects.
(3) Termination of this Lease shall not affect either party's rights
in connection with any breach by the other of their respective
obligations in this Lease which may have occurred before the date
on which this Lease terminates.
14. EXCLUSION AGREEMENT
Having been authorised to do so by an order of the Mayor's
and City of London Court made on 1999 under section
38(4) of the Landlord and Tenant Act 1954, the
Landlord and the Tenant agree that the provisions of sections
24 to 28 of that Act shall be excluded in relation to the tenancy
created by this Lease.
15. NOTICES
Where the Tenant under this Lease is NIAGARA LASALLE (U.K.)
LIMITED and NIAGARA CORPORATION the notice provisions set out in
sub-paragraph A. below shall apply to any notice or document
served under this Lease, such notice provisions being personal to
NIAGARA LASALLE (U.K.) LIMITED and NIAGARA CORPORATION. At any
other time the notice provisions set out in sub-paragraph B. below
shall apply.
A. (1) Any notice or other document to be served under this
agreement may be delivered or sent by post to the party to
be served as follows:
(a) to the Landlord at the address set out in this Lease;
(b) to the Tenant at:
Victoria Steel Works, Bull Lane, Moxley, Wednesbury,
West Midlands, WS10 8RS
marked for the attention of: Tony Bagshaw;
(c) to the Guarantor at the address set out in this
Lease,
or at such other address as it may have notified to the
other parties in accordance with this clause. Any notice
or other document sent by post shall be sent by prepaid
first class recorded delivery post (if within the United
Kingdom) or by prepaid registered airmail (if elsewhere).
(2) Any notice or other communication shall be deemed to have
been duly given:
(a) if delivered personally, when left at the address
referred to in subclause (1); or
(b) if sent by recorded mail other than airmail, two
days after posting it; or
(c) if sent by registered airmail, six days after
posting it,
provided always that a notice given in accordance with
the above but received on a day which is not a Business
Day or after business hours on a Business Day in the
place of receipt will only be deemed to be given on the
next Business Day in that place.
B. Any notice or other document served under this
Lease may be served in any way in which a notice
required or authorised to be served under
section 196 of the Law of Property Act 1925 may
be served.
16. GOVERNING LAW AND JURISDICTION
(1) This Lease is governed by and shall be construed in accordance
with English law.
(2) The Guarantor submits to the jurisdiction of the English courts
for all purposes relating to this Lease and the Guarantor appoints
the Tenant's solicitors (as shall from time to time be appointed
by the Tenant and notified in writing to the Landlord) as its
agent for service of process with respect thereto.
I N W I T N E S S of which this Lease has been executed as a deed and has
been delivered on the date which first appears on page 1.
SCHEDULE 1
THE PROPERTY
[ ]
SCHEDULE 2
RIGHTS GRANTED TO THE TENANT
1. All rights exercisable by the Landlord on a non-personal basis for
the benefit of the Property over other land and which are capable of
sub-demise.
SCHEDULE 3
RIGHTS RESERVED TO THE LANDLORD
1. The right at reasonable times and on reasonable notice (save in
emergency) to enter the Property to do anything comprised within
the Landlord's obligations in this Lease and to exercise any of
the rights granted to the Landlord by this Lease.
2. Such rights as are reserved to any superior landlord over the Property.
SCHEDULE 4
MATTERS AFFECTING THE PROPERTY
1. All those matters referred to in the Property and charges register
of title number [ ]
2. Any rights exercised by any third party over the Property.
[3. Rights specific to each Property -to be added]
SCHEDULE 5
GUARANTEE PROVISIONS
1. The Guarantor guarantees to the Landlord the due and punctual
payment and performance by the Tenant of all the obligations and
liabilities of the Tenant under this Lease and shall indemnify the
Landlord against all losses, damages, costs and expenses arising
or incurred by the Landlord as a result of the non-payment or
non-performance of those obligations or liabilities.
2. The obligations of the Guarantor under this Lease:
(a) constitute a direct, primary and unconditional liability
to pay on demand to the Landlord any sum which the Tenant
is liable to pay under this Lease and to perform on
demand by the Landlord any obligation of the Tenant under
this Lease without the need for any recourse on the part
of the Landlord against the Tenant;
(b) will not be affected by:
(i) any time or indulgence granted to the Tenant by
the Landlord;
(ii) any legal limitation, disability or other
circumstances relating to the Tenant or any
irregularity, unenforceability or invalidity of
any obligations of the Tenant under this Lease;
(iii) any licence or consent granted to the Tenant or
any variation in the terms of this Lease save as
provided in section 18 of the Landlord and
Tenant (Covenants) Act 1995;
(iv) the release of one or more of the parties
defined as the Guarantor (if more than one); or
(v) any other act, omission, matter, event or thing
whereby (but for this provision) the Guarantor
would be exonerated in whole or in part from the
guarantee other than a release by deed given by
the Landlord.
3. So long as this guarantee remains in force the Guarantor shall not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency
proceedings relating to the Tenant, claim or prove as
creditor in competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the obligations of the
Tenant under this Lease; or
(c) exercise any right of set-off against the Tenant.
4. If the Landlord brings proceedings against the Tenant, the
Guarantor shall be bound by any findings of fact, interim or final
award or interlocutory or final judgment made by an arbitrator or
the court in those proceedings.
5. If:
(a) the Tenant (being a company) enters into liquidation and
the liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown
disclaims this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease of
the Property for a term equivalent to the residue which would have
remained of the Term if there had been no disclaimer or forfeiture
at the same rents and subject to the same covenants and conditions
(including those as to the review of rent) as are reserved by and
contained in this Lease (with the exception of this Schedule).
6. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new lease
as from the date of disclaimer or forfeiture as if the new lease
had been granted on the date of disclaimer or forfeiture.
7. The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute and
deliver to the Landlord a counterpart of it.
8. If the Landlord does not require the Guarantor to take a Lease of
the Property, the Guarantor shall pay to the Landlord on demand a
sum equal to the rent that would have been payable under this
Lease but for the disclaimer or forfeiture in respect of the
period from the date of the disclaimer or forfeiture until the
date which is six months after the date of the disclaimer or
forfeiture or the date on which the property has been re-let by
the Landlord, whichever first occurs.
9. If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Tenant
under the Lease in respect of that VAT shall not be affected, and
the Landlord shall not be under any obligation to issue a VAT
invoice to the Guarantor in respect of that VAT.
SCHEDULE 6
AUTHORISED GUARANTEE AGREEMENT
1. The Guarantor guarantees to the Landlord the performance by the
Assignee throughout the Guarantee Period of each of the covenants
falling to be complied with by the Tenant under this Lease and
shall indemnify the Landlord against all losses, damages, costs
and expenses arising or incurred by the Landlord as a result of
such non-performance.
2. The obligations of the Guarantor under this guarantee will not be
affected by:
(a) any time or indulgence granted to the Assignee by the
Landlord;
(b) any legal limitation, disability or other circumstances
relating to the Assignee or any irregularity,
unenforceability or invalidity of any obligations of the
Assignee under this Lease;
(c) any licence or consent granted to the Assignee or any
variation in the terms of this Lease save as provided in
section 18 of the Act;
(d) the release of one or more of the parties defined as the
Guarantor (if more than one); or
(e) any other act, omission, matter, event or thing whereby
(but for this provision) the Guarantor would be
exonerated in whole or in part from the guarantee other
than a release under seal given by the Landlord.
3. The Guarantor is liable to the Landlord under this guarantee as
sole or principal debtor and the obligations of the Guarantor
under this guarantee constitute a direct, primary and
unconditional liability to pay on demand to the Landlord any sum
which the Assignee is liable to pay under this Lease and to
perform on demand by the Landlord any obligation of the Assignee
under this Lease without the need for any recourse on the part of
the Landlord against the Assignee. If the Landlord brings
proceedings against the Assignee, the Guarantor shall be bound by
any findings of fact, interim or final award or interlocutory or
final judgment made by an arbitrator or the court in those
proceedings.
4. If during the Guarantee Period the Assignee (being a company)
enters into liquidation and the liquidator disclaims this Lease,
or the Assignee (being a company) is dissolved and the Crown
disclaims this Lease, or the Assignee (being an individual)
becomes bankrupt and the trustee in bankruptcy disclaims this
Lease, then within six months after the disclaimer the Landlord
may require the Guarantor by notice to enter into a new lease of
the Property for a term equivalent to the residue which would have
remained of the term granted by this Lease if there had been no
disclaimer at the same rents and subject to the same covenants and
conditions (including as to the review of rent) as are reserved by
and contained in this Lease.
5. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor shall
be liable for all payments due under the new lease as from the
date of disclaimer as if the new lease had been granted on the
date of disclaimer.
6. The Guarantor shall pay the Landlord's costs of and accept the new
lease and shall execute and deliver to the Landlord a counterpart
of it.
7. If the Landlord does not require the Guarantor to take a new lease
of the Property the Guarantor shall pay to the Landlord on demand
a sum equal to the rents that would have been payable under this
Lease but for the disclaimer in respect of the period from the
date of the disclaimer until the date which is six months after
the date of the disclaimer or the date on which the Property has
been re-let by the Landlord, whichever first occurs.
8. During the Guarantee Period the Guarantor shall not:
(a) in the event of any bankruptcy, liquidation,
rehabilitation, moratorium or other insolvency
proceedings relating to the Assignee claim or prove as
creditor in competition with the Landlord; or
(b) be entitled to claim or participate in any security held
by the Landlord in respect of the Assignee's obligations
to the Landlord under this Lease; or
(c) exercise any right of set off against the Assignee.
9. To the extent that any provision of this guarantee does not
conform with section 16 of the Act, that provision shall be
severed from the remainder of this guarantee and this guarantee
shall have effect as if it excluded that provision.
10 If any VAT is payable by the Tenant to the Landlord under the
terms of the Lease, the Guarantor's obligation shall extend to
that VAT. If the Guarantor makes any payment in respect of VAT,
the Landlord's obligation to issue a VAT invoice to the Assignee
under the Lease in respect of that VAT shall not be affected, and
the Landlord shall not be under any obligation to issue a VAT
invoice to the Guarantor in respect of that VAT.
11. In this Schedule:
"ACT" means the Landlord and Tenant (Covenants) Act 1995;
"ASSIGNEE" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"GUARANTEE PERIOD" means the period ending on the date on which
the Assignee is released by virtue of the Landlord and Tenant
(Covenants) Act 1995.
SCHEDULE 7
SCHEDULE OF LANDLORD'S FIXTURES AND FITTINGS
So far as not the subject of any hiring agreement:
1. Heating system serving the offices (including boilers and
radiators).
2. Heating system serving the warehouse/factory (including boilers
and radiators).
3. Additional heaters (e.g. radiant heaters) serving the
factory/warehouse except where the same are portable or are
secondary heaters acquired for the particular purpose of the
business in which case they will be tenant's fittings.
4. Additional heater serving the offices except where the same are
portable or are secondary to heaters acquired for the particular
purpose of the business when they will be tenant's fittings.
5. Lighting at the offices including fluorescent and other light
fittings, bulbs and switches.
6. Lighting to the warehouse/factory including fluorescent and other
light fittings, bulbs and switches.
7. Security systems including burglar alarms, cameras etc.
8. Carpets in the office premises.
9. Demountable partitioning in the office premises.
10. Demountable partitioning in the warehouse/factory premises.
11. Built-in furniture e.g. reception desks.
12. Flooring in the warehouse/factory.
13. Air conditioning system to the offices.
14. Air conditioning system to the warehouse/factory.
15. Fire sprinkler systems.
16. Other fire equipment (e.g. extinguishers and blankets etc).
17. Crane/rails/runways and steel supports with the exception of the
gantry (which includes the motor and hoist) which will be tenant's
fittings.
18. Roller shutter blinds for the windows.
19. Roller shutter doors.
20. Kitchen units and sinks but kitchen appliances e.g. fridge,
cooker, microwave, ovens in so far as the same are not affixed to
the walls and they can be removed without causing damage will be
tenant's fittings.
21. Washroom fittings e.g. toilets, wash basins, towel rails, fitted
units etc.
22. Advertising hoardings in so far as they are not company signage.
23. Generators in so far as they provide the main Three Phase
electricity supply to the Property (as opposed to only providing a
back-up supply).
24. Lifts.
25. Weigh-bridge.
26. Incoming h.t. switch.
27. All equipment used or connected with the supply of the electricity
to the warehouse/factory and/or the offices plus that used for the
supply of Three Phase electricity. There is however to be excluded
any equipment which supplies additional specialised electricity
used solely for the purposes of the current business.
28. Portacabins used as offices.
29. Lighting towers.
There will be excluded (and accepted as tenant's fittings) the following:
30. Transformers and other equipment used for supplying any special or
particular electricity (which is supplied in addition to the
ordinary and Three Phase supplies) for the particular existing
business.
31. Hydraulic systems, pumps, taps, pipework fittings etc, in so far
as the same relate to the plant which will be deemed tenant's
trade fittings.
32. Lubricating oil tanks in so far as the same are used specifically
for the purposes of the existing business and can be removed
without causing damage.
33. Oxygen storage tanks in so far as the same are used specifically
for the existing business and the
same can be removed without causing damage.
34. Computer systems.
35. Other plant and equipment used for the existing business.
36. Telephone systems.
THE COMMON SEAL of [RELEVANT )
GLYNWED COMPANY - LEGAL OWNER] )
LIMITED was affixed in the )
presence of: )
Director
Secretary
THE COMMON SEAL of [RELEVANT )
GLYNWED COMPANY - BENEFICIAL )
OWNER] LIMITED was affixed in the )
Presence of: )
Director
Secretary
THE COMMON SEAL of )
NIAGARA LASALLE (U.K.) LIMITED )
was affixed in the )
presence of: )
Director
Secretary
EXECUTION CLAUSE FOR NIAGARA
CORPORATION
[EXECUTED BY:
ATTEST:]
AGREED FORM
DATED , 1999
[RELEVANT GLYNWED COMPANY] LIMITED
-and-
GLYNWED PROPERTIES LIMITED
-and-
NIAGARA LASALLE (UK) LIMITED
-and-
NIAGARA CORPORATION
------------------------------
SIDE DEED
relating to land and buildings
known as
[ ]
and lease dated [ ]
of that property
------------------------------
ALLEN & OVERY
London
PY:485163.3
CONTENTS
CLAUSE PAGE
1. DEFINITIONS............................................................1
2. INTERPRETATION.........................................................2
3. THIS DEED..............................................................3
4. VARIATIONS.............................................................3
5. GROUP COMPANIES........................................................3
6. GUARANTEE..............................................................5
7. TERMINATION............................................................5
8. ASSIGNMENTS............................................................5
9. NO SURRENDER...........................................................6
10. GENERAL................................................................6
11. NOTICES................................................................6
12. GOVERNING LAW AND JURISDICTION.........................................7
13. REGISTRATION...........................................................7
THIS DEED is made on [ ], 1999
BETWEEN:
(1) [RELEVANT GLYNWED COMPANY] LIMITED (registered number [ ]) whose
registered office is at Headland House, New Coventry Road, Sheldon,
Birmingham ("GLYNWED");
(2) GLYNWED PROPERTIES LIMITED (registered number 254047) whose
registered office is at Headland House, New Coventry Road, Sheldon,
Birmingham; and
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308) whose
registered office is at Bouverie House, 154 Fleet Street, London EC4A
2JD ("Niagara"); and
(4) NIAGARA CORPORATION a corporation organised and existing under the
Laws of the State of Delaware, whose principal office is at 667
Madison Avenue, New York 10021, USA (the "Guarantor".)
RECITALS
(A) This Deed is supplemental to the Lease by which the Property was
demised for the Term.
(B) Glynwed is the landlord under the Lease, Niagara is the Tenant under
the Lease and the Guarantor is the guarantor under the Lease.
(C) Glynwed Properties Limited is the beneficial owner of the Property
and has confirmed its consent to this Deed.
(D) The parties have agreed that the terms of the Lease shall be varied
in accordance with the terms of this Deed.
THIS DEED WITNESSES as follows:
2. DEFINITIONS
In this Deed:
[FOR LONG LEASEHOLD PROPERTIES ONLY - "CONSENT" means in relation to any
leasehold part of the Property the consent of any superior landlord
to the underletting of the leasehold part to Niagara Corporation and
the proposed undertenant (as joint tenants)];
"LANDLORD" means the person for the time being entitled to the reversion
immediately expectant on the determination of the Term;
"LEASE" means the lease of even date herewith and made between
Glynwed (1) Niagara (2) and the Guarantor (3) in respect of the
Property and includes all deeds and documents supplemental to it;
"LEASE RENEWAL DEED" means a deed of even dated herewith and made
between Glynwed (1), Niagara (2) and the Guarantor (3);
"OPTION DEED" means a deed of even dated herewith and made between
Glynwed (1), Niagara (2) and the Guarantor (3);
"PROPERTY" means [ ] as more particularly described in the
Lease;
"PROPERTY AGREEMENT" means an agreement between Glynwed Property
Management Limited (1), Glynwed Properties (2), Niagara LaSalle (UK)
Limited (3), Niagara Corporation (4) and Glynwed International Plc
(5);
"SALE OF BUSINESS AGREEMENT" means an agreement dated ,1999 and made
between Glynwed Steels Limited (1) Glynwed International plc (2)
Niagara LaSalle (UK) Limited (3) and Niagara Corporation (4)
including the schedules thereto;
"TENANT" means the person named as tenant in the Lease;
"TERM" means the term of years granted by the Lease.
3. INTERPRETATION
(1) Where there are two or more persons included in the expressions
"Glynwed", "Niagara" or "Guarantor" each reference to Glynwed or
Niagara or the Guarantor includes a separate reference to each of
those persons.
(2) Any reference, express or implied, to an enactment includes references
to:
(a) that enactment as amended, extended or applied by or under any
other enactment (before or after the execution of this Deed);
(b) any enactment which that enactment re-enacts (with or without
modification);
(c) any subordinate legislation made (before or after the execution
of this Deed) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above; and
(d) any consents, licences and permissions given (before or after
the execution of this Deed) under that enactment, as amended,
extended or applied as described in paragraph (a) above or
under any enactment referred to in paragraph (b) above or under
that subordinate legislation and any conditions contained in
those consents, licences and permissions.
(3) Any reference, express or implied, to enactments generally includes
subordinate legislation and any legislation of the European Union
that is directly applicable in the United Kingdom and includes
existing enactments and those that come into effect during the Term.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention appears.
(5) The headings in this Deed do not affect its interpretation.
4. THIS DEED
(1) The provisions of this Deed shall only apply while the Term of the
Lease is vested in Niagara and then only during the period commencing
on the date of the Lease and ending on the day before the date of the
first transfer/assignment of the Lease by Niagara after that date or
while Niagara is a guarantor of the obligations of the Tenant in the
Lease under an authorised guarantee agreement.
(2) For the avoidance of doubt, the provisions of this Deed shall not apply
to any renewal of the Lease.
5. VARIATIONS
The provisions of the Lease shall be varied in accordance with the
provisions set out in the Schedule to this Deed [To be inserted for
all the properties except Jubilee Works and Planetary Road - provided
that if at any time the Tenant fails to insure the Property pursuant
to the insurance provisions set out in paragraph 7 of the Schedule to
this Deed the Landlord may insure the Property in accordance with the
provisions set out in the Lease in accordance with the provisions of
paragraph 7(6) of the Schedule.]
6. GROUP COMPANIES
EITHER [To be inserted for all properties except Lower Church Lane,
Tipton and Jubilee Works]
Notwithstanding the provisions of sub-clause 7(3)(d) of the Lease, if
the Tenant wishes to assign the Lease to a company which is a member
of the same group as the Tenant (within the meaning of s-42 of the
Landlord and Tenant Act 1954) the following provisions shall apply:
(1) the Tenant shall give not less than one month's notice in
writing to the Landlord of its intention to do so, (giving
details of the proposed assignee) accompanied by a notice to
terminate the Lease pursuant to clause 12 of the Lease and
provided the two notices are served on the Landlord at the same
time, the notice period required under clause 12(1) of the
Lease shall be one month for the purpose of this clause;
(2) on the expiry of the Tenant's notice to terminate the Landlord
will grant a new lease of the Property to the group company as
notified to the Landlord pursuant to sub-clause (1), as tenant
and to the Guarantor as guarantor, on the same terms as the
Lease in all respects (excluding the duration of the term) for
the residue of the Term;
(3) on the expiry of the Tenant's notice to terminate the Landlord,
the Tenant and the Guarantor under the new lease will enter
into a new side deed, option deed and lease renewal deed in the
same form as this Deed, the Option Deed and the Lease Renewal
Deed respectively with such amendments as are necessary to
ensure that all those deeds are treated as replacing the
previous deeds and not, for example, starting any time periods
to run afresh;
(4) notwithstanding clause 7(4)(d) of the Lease, no rent deposit will
be payable on the grant of the new lease;
(5) the notice to terminate given by the Tenant pursuant to
sub-clause (1) above shall not be effective to terminate the
Lease until such time as the new lease referred to in
sub-clause (2) and the agreements referred to in sub-clause (3)
above are completed.
OR [For Lower Church Lane, Tipton and Jubilee Works only]
Notwithstanding the provisions of sub-clause 7(3)(d) of the Lease, if
the Tenant wishes to assign the Lease to a company which is in the
same group as the Tenant (within the meaning of section 42 of the
Landlord and Tenant Act 1954) the following provisions shall apply:
(1) the Tenant shall give not less than three months' notice in
writing to the Landlord of its intention to do so (giving
details of the proposed assignee) accompanied by a notice to
terminate the Lease pursuant to clause 12 of the Lease and
provided the two notices are served on the Landlord at the same
time the notice period required under clause 2(1) of the Lease
shall be 3 months for the purpose of this clause;
(2) on the expiry of the Tenant's notice to terminate the Landlord will
grant:
(a) a new lease of the Property to the group company, as
notified to the Landlord pursuant to sub-clause (1)
above, as tenant and to the Guarantor as guarantor, on
the same terms as the Lease in all respects (excluding
the duration of the term) for the residue of the Term;
(b) a new side deed, option deed and lease renewal deed in
the same form as this Deed, the Option Deed and the Lease
Renewal Deed respectively with such amendments as are
necessary to ensure that all those deeds are treated as
replacing the previous deeds and not, for example,
starting any time periods to run afresh;
provided that the Consent has been granted;
(3) if Consent has not been obtained prior to the expiry of the
Tenant's notices served pursuant to sub-clause (1) above the
notices shall be invalid and the Landlord shall not be obliged
to grant a new lease, side deed, option deed and lease renewal
deed and the Lease shall not be determined provided that if by
the expiry of the notice period under the Tenant's notices
Consent has not been formally granted but in principle approval
has been obtained from the superior landlord the notice period
shall be extended to the earlier of:
(a) the date Consent is refused in writing;
(b) the date 3 working days after Consent is granted;
(c) the date of the end of the Term under the Lease (howsoever
determined); and
(d) the date 6 months from the expiry of the notice period first
given under the Tenant's notices;
(4) notwithstanding clause 7(4)(d) of the Lease, no rent deposit will
be payable on the grant of the new lease;
(5) the Landlord shall use its reasonable endeavours to obtain the
Consent as quickly as possible and the costs of the Landlord,
any superior landlord and mortgagees of any of them (including
VAT) in connection with the application for such Consent shall
be borne by the Tenant.
7. GUARANTEE
In consideration of Glynwed entering into this Deed at the
Guarantor's request, the Guarantor guarantees to Glynwed the
obligations and liabilities of Niagara under this Deed such guarantee
to be on the same term as the guarantee provisions set out in clause
8 of the Property Agreement which is hereby incorporated into this
Deed subject to all necessary amendments to ensure that the guarantee
applies to this Deed.
8. TERMINATION
(1) This Deed shall terminate on the termination of the Lease
(through effluxion of time, forfeiture or otherwise) unless the
Tenant is granted relief from forfeiture but, notwithstanding
any such termination, the Tenant shall be under no greater
liability to the Landlord in relation to any period prior to
such termination than it would have been if the Deed had not
terminated.
(2) On the first assignment of the whole of the Property clause 4 (to
the extent of the variations set out in paragraphs 1 to 9 in the
Schedule to this Deed inclusive) and clause 5 shall cease to apply.
(3) On the second assignment of the whole of the Property clause 4
(to the extent of the variations set out in paragraphs 10 and
11 in the Schedule to this Deed) shall cease to apply.
(4) On an underletting of the whole of the Property clause 4 (to
the extent of the variations set out in paragraphs 1 to 9 in
the Schedule to this Deed inclusive) shall cease to apply.
9. ASSIGNMENTS
This Deed is not capable of assignment by Niagara and is personal to
it.
10. NO SURRENDER
This Deed is not intended to and does not effect any surrender of the
Lease or the grant of any new lease.
11. GENERAL
(1) DISPUTES
Any dispute regarding a provision of this Deed shall be determined by
a single arbitrator agreed by Glynwed and Niagara or, failing
agreement, by a single arbitrator appointed by the president or his
deputy for the time being of the Royal Institution of Chartered
Surveyors in accordance with the Arbitration Act 1996.
(2) JOINT AND SEVERAL LIABILITY
Where Niagara or Glynwed or the Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible in
respect of every obligation undertaken by them under this Deed;
and
(b) Glynwed may release or compromise the liability of any of those
persons under this Deed or grant any time or other indulgence
without affecting the liability of any other of them.
(3) NOTICES IN WRITING
Every notice, consent, approval or direction given under this Deed
shall be in writing.
(4) COUNTERPARTS
This Deed may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same Deed and any
party may enter into this Deed by executing a counterpart.
12. NOTICES
(1) Any notice or other document to be served under this agreement
may be delivered or sent by post or facsimile process to the
party to be served as follows:
(a) to Glynwed at the address set out in this Agreement marked
for the attention of the Company Secretary;
(b) to Niagara at:
Victoria Steel Works
Bull Lane
Moxley
Wednesbury
West Midlands WS10 8RS
marked for the attention of Tony Bagshaw;
(c) to the Guarantor at:
667 Madison Avenue
New York, 10021
USA
or at such other address as it may have notified to the other
party in accordance with this clause. Any notice or other
document sent by post shall be sent by prepaid first class
recorded delivery post (if within the United Kingdom) or by
prepaid registered airmail (if elsewhere).
(2) Any notice or other communication shall be deemed to have been
duly given:
(a) if delivered personally, when left at the address
referred to in subclause (1); or
(b) if sent by recorded mail other than airmail, two days
after posting it; or
(c) if sent by registered airmail, six days after posting it,
provided always that a notice given in accordance with the
above but received on a day which is not a Business Day or
after business hours on a Business Day in the place of receipt
will only be deemed to be given on the next Business Day in
that place.
13. GOVERNING LAW AND JURISDICTION
(1) This Deed is governed by and shall be construed in accordance with
English Law.
(2) The Guarantor submits to the jurisdiction of the English Courts for
all purposes relating to this Deed and appoints Niagara's solicitors,
Paisner & Co of Bouverie House, 154 Fleet Street, London EC4Y 2JD (or
such other solicitors as shall subsequently be notified by the
Guarantor to Glynwed as its agent for service of process with respect
thereto.
14. REGISTRATION
(1) Immediately following the date of this Deed, Glynwed shall place its
land certificates relating to the Property on deposit at HM Land
Registry to permit Niagara to note the provisions of this Deed on the
register of title for the Property.
[AND FOR BLACKBROOK ROAD, DUDLEY ONLY
(2) In relation to the part of the Property registered under title number
WM159185 for which Glynwed will apply for a replacement land
certificate the provisions of sub-clause (1) above shall only apply
once Glynwed or the Glynwed's solicitors have notified Niagara or
Niagara's solicitors of the replacement title number.]
IN WITNESS of which this Deed has been executed as a deed in writing and
has been delivered on the date which first appears on page 1.
SCHEDULE
The provisions of the Lease shall be varied as follows:
1. [For all the properties except Jubilee Works and Planetary Road - In
Clause 1 (Definitions) the definition of "Insured Risks" shall be
deleted and replaced with the following definition:
"INSURED RISKS" means all risks of physical loss or damage (including
but not limited to subsidence and theft) as is generally available
under an all risks policy from time to time available in the
insurance market.]
2. A new paragraph shall be inserted after sub-clause 5(3)(e) (outgoings)
as follows:
"provided that nothing contained in this sub-clause 5(3) shall oblige
the Tenant to pay for any charges which relate purely to the Tenant's
business and for which the seller under the Sale of Business
Agreement is responsible pursuant to the terms of that agreement".
3. [For all the properties except Jubilee Works and Planetary Road -
Sub-clause 5(4)(a) shall be amended so that the wording "or repair
damage caused by an Insured Risk save where: "shall be deleted from
the last line of the sub- paragraph (a) and sub- paragraphs
5(4)(a)(I) and (ii) shall be deleted.]
4. Sub-clause 7 (10)(a) (Underlease requirements) shall not apply.
5. Sub-clause 7 (10)(b) (Underlease requirements) shall be replaced with
the following words:
"(b) not grant any underlease at a rent which at the of grant of the
underlease is less than the rent then payable under this
Lease;"
6. In sub-clause 7 (10)(c), the words "accept the surrender of or" shall be
deleted from the first line.
7. [For all properties except Jubilee Works and Planetary Road - Clause 8
(Insurance) shall be deleted and replaced with the following new Clause 8:
"8. INSURANCE
(1) TENANT'S INSURANCE OBLIGATIONS
The Tenant shall keep the Property insured in the joint names
of the Landlord and the Tenant with insurers or underwriters of
repute in accordance with the provisions of this clause.
(2) SUM AND RISKS INSURED
The Property shall be insured in a sum not less than its full
reinstatement cost against loss or damage by the Insured Risks
and the insurance shall extend to architects and other
professional fees in relation to reinstatement of the Property
and the cost of demolition and removal of debris.
(3) INSURANCE UNAVAILABLE
The Tenant will immediately notify the Landlord if the Tenant
is unable to arrange insurance in compliance with the
provisions of this clause either in whole or in part.
(4) REINSTATEMENT
If the Property is destroyed or damaged by any of the Insured
Risks, then the Tenant shall use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible; and
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all insurance monies received
by the Tenant and an amount equal to any excess imposed
by the insurers in reinstating the Property making good
any shortfall out of its own money.
(5) FAILURE TO REINSTATE
(a) If reinstatement in accordance with sub-clause (4) has
not commenced within 9 months of the date of the
destruction or damage and provided the Tenant is not
prevented from commencing reinstatement because of a
supervening event (as defined in sub-clause (10) below)
and the Tenant does not within 10 working days of the
expiry of that 9 month period exercise the option
contained in the Option Deed or if the Tenant exercises
the option but subsequently fails to complete the
purchase in accordance with the Option Deed the Landlord
may at any time after the expiry of the 10 working days
or the failure to complete serve written notice on the
Tenant terminating the Lease with immediate effect and
the provisions of clause 12(3) of the Lease will apply to
such termination.
(b) If reinstatement by the Tenant has not been completed in
accordance with sub- clause (4) above by the date 3 years
from the date of destruction or damage of the Property
either party may at any time after the expiry of the 3
year period serve 10 days written notice on the other
terminating the Lease, such termination to take effect on
the expiry of the Landlord's written notice and the
provisions of clause 12(3) of the Lease will apply to
such termination.
On the termination of the Lease under sub-paragraphs (a)
or (b) of this sub- clause the Tenant shall pay all
insurance monies together with an amount equal to any
shortfall (save as set out in sub-clause 8(12)(a) below)
in the full reinstatement value of the Property and the
cost of architects and other professional fees or
demolition and removal of debris to the Landlord save to
the extent that the Tenant has properly applied any
portion of the insurance monies with the prior written
approval of the Landlord to the reinstatement of the
Property up to the date of termination of the Lease by
the Landlord. Any dispute as to the amount to be paid by
the Tenant shall be referred to arbitration.
Any Landlord's notice to terminate the Lease served under
this sub-clause shall not take effect if at any time
prior to the expiry of the notice the Tenant exercises
its option to purchase the freehold of the Property
pursuant to the Option Deed provided that if the Tenant
subsequently fails to complete the purchase in accordance
with the Option Deed the Landlord may at any time serve a
further notice on the Tenant terminating the Lease with
immediate effect and the provisions of clause 12(3) of
the Lease will apply to such termination.
(6) FAILURE TO INSURE
If the Tenant fails to insure in accordance with this clause 8
the Landlord may (but without prejudice to its other rights,
including its right of re-entry) insure in accordance with this
clause (but in its sole name or in the joint names of the
Landlord and Tenant, at the Landlord's option) and all premiums
paid by the Landlord and all incidental expenses will be
re-paid by the Tenant to the Landlord on demand.
(7) PRODUCTION OF POLICY
Whenever reasonably required to do so by the Landlord, the
Tenant shall produce to the Landlord a copy of the insurance
policy or other evidence of it and evidence of payment of the
last premium.
(8) NOTICE OF DAMAGE
If the Property is destroyed or damaged by any of the Insured
Risks, the Tenant shall give notice to the Landlord as soon as
the destruction or damage comes to the notice of the Tenant or
ought to have come to the notice of the Tenant and shall,
within 1 month of such destruction or damage, notify the
Landlord as to whether or not the Tenant wishes to proceed to
reinstate the Property. If the Tenant notifies the Landlord
that the Tenant does not wish to reinstate the Property then
all insurance monies shall belong to the Landlord free of any
interest of the Tenant and the Tenant will take all steps
necessary which are in the Tenant's control or ought reasonably
to be in its control to ensure that all insurance monies and an
amount equal to the any shortfall (save as set out in
sub-clause 8(12)(a) below) in the full reinstatement value of
the Property and the cost of the architects and other
professional fees in relation to the reinstatement of the
Property and the cost of demolition and removal of debris are
paid to the Landlord (including paying to the Landlord any
which are paid to the Tenant) and (subject to complying with
these obligations as to insurance monies) the Tenant will be
released from the Tenant's obligation to reinstate under
sub-clause (4) above and the Landlord may, with immediate
effect, reinstate the Property and this Lease will terminate on
the date 12 months after service of the Tenant's notice stating
that the Tenant does not wish to reinstate. If the Tenant
notifies the Landlord that it does wish to reinstate the
Property then the Tenant 's break option contained in clause 12
of the Lease shall be suspended until such time as the Property
is full reinstated by the Tenant in accordance with sub-clause
(4) above. Termination will not affect either party's rights in
connection with any breach by the other of their respective
obligations in this Lease which may have occurred before the
date on which this Lease terminates including (without
limitation) the Landlord's rights in relation to any breach of
the obligations contained in clause 8(2).
(9) PREVENTION OF REINSTATEMENT
The Tenant shall not be obliged to reinstate the Property in
accordance with sub-clause (4) while prevented by a supervening
event. If the Tenant is unable to commence reinstatement within
twelve months from the date of destruction or damage because of
a supervening event and the Property or a substantial part of
it is unfit for occupation either party may determine the Term
by serving notice on the other at any time within one month of
the end of the twelve month period. For the avoidance of doubt
any notice served by the Landlord under this sub-clause to
determine the Lease shall not take effect if at the time of
service the Tenant has exercised its option to purchase the
freehold of the Property pursuant to the Option Deed provided
that if the Tenant subsequently fails to complete the purchase
in accordance with the Option Deed the Landlord may at any time
serve a further notice on the Tenant terminating the Lease with
immediate effect. On service of a notice to terminate the Term
shall cease but without prejudice to any rights that the either
party may have against the other for breach of any of the
covenants by the Landlord or the Tenant or the conditions in
this Lease and the Tenant shall pay all insurance monies
together with an amount equal to any shortfall in the full
reinstatement value of the Property (save as set out in
sub-clause 8(12)(a) below) and the cost of architects and other
professional fees in relation to the reinstatement of the
Property and the cost of demolition and removal of debris to
the Landlord save to the extent that the Tenant has properly
applied any portion of the insurance monies with the prior
written approval not to be unreasonably withheld of the
Landlord to architects or other professional fees or debris
removal or demolition in attempting to reinstate the Property
up to the happening of the supervening event. Any dispute as to
the amount to be paid by the Tenant shall be referred to
arbitration.
(10) SUPERVENING EVENT
In sub-clause (5) and (9) a supervening event means any of the
following:
(a) inability of the Tenant to obtain the consents and
permissions referred to in sub-clause (4) despite using
all reasonable endeavours to do so;
(b) grant of any of the consents or permissions subject to a
lawful condition with which it would be unreasonable to
expect the Tenant to comply or the Tenant being requested
as a precondition to obtaining any of the consents or
permissions to enter into an agreement with the planning
authority or any other authority containing conditions
with which it would be unreasonable to expect the Tenant
to comply;
(c) some defect in the site upon which reinstatement is to
take place so that it could not be undertaken; and
(d) prevention of reinstatement by any cause beyond the
control of the Tenant.
(11) DOUBLE INSURANCE
Save as provided in this Deed, the Property Agreement and the
Sale of Business Agreement the Landlord shall not effect any
insurance relating to the Property against any of the Insured
Risks.
(12) VITIATION
(a) If the Landlord does or omits to do anything at the
Property which makes the Tenant's insurance policy void
or voidable the Landlord shall make up any shortfall in
the insurance proceeds out of its own money.
(b) The Landlord may, at any time, request that the Tenant
obtain and upon such a request the Tenant shall use
reasonable endeavours to obtain an insurance policy that
contains a non-vitiation provision provided that the
Landlord shall pay to the Tenant any increase in the
amount of premium attributable to the inclusion of the
non-vitiation provision.
8. A new sub-clause 11 (16) shall be added as follows:
"(16) PROVISO"
Nothing contained in this Lease shall:
(a) impose or be deemed to impose any obligation on the part of the
Tenant in relation to any matters to the extent that the Seller
(as defined in the Sale of Business Agreement) is liable under
the Sale of Business Agreement for such matter;
(b) impose or be deemed to impose any obligation on the part of the
Tenant in respect of which and to the extent that the Tenant's
liability is excluded under the Sale of Business Agreement;
(c) impose or be deemed to impose any obligation on the part of the
Tenant in relation to any matter in respect of which the Sale
of Business Agreement limits the Tenant's liability beyond the
extent to which the Tenant is liable under the Sale of Business
Agreement; and
(d) impose or be deemed to impose any obligation which shall reduce
the liability of the Seller to perform its obligations and
liabilities under the Sale of Business Agreement.
9. For the avoidance of doubt clauses 5(20) and 8(12) of the Lease shall
apply to the obligations of the Tenant under the Lease as varied by
this Deed.
10. Schedule 5 shall be deleted and replaced by the following:
"SCHEDULE 5
GUARANTEE
(1) In consideration of the mutual covenants contained in this Lease, the
Guarantor guarantees to the Landlord and shall procure the due and
punctual performance of each obligation of the Tenant under this
Lease and shall pay to the Landlord from time to time on demand,
or procure that the Tenant shall pay, any sum which the
Tenant is at any time liable to pay to the Landlord and which has not
been paid at the time the demand is made.
(2) The obligations of the Guarantor under subclause (1):
(a) constitute direct, primary, unconditional and irrevocable
obligations without the need for any recourse on the part of the
Landlord against the Tenant;
(b) shall not be affected or impaired by any concession, time or
indulgence granted by the Landlord or by any other dealing or
thing which would but for this sub-clause (2)(b) operate to
discharge or reduce that liability; and
(c) shall not be affected or impaired by anything (including any
legal limitation, disability or incapacity on the part of the
Tenant) which causes any of the obligations of the Tenant under
this Lease to be or become invalid or unenforceable.
(3) If any of the obligations of the Tenant under this agreement is or
becomes invalid or unenforceable the Guarantor shall perform and
discharge all such obligations as if they were primary obligations of
the Guarantor or shall procure that the Tenant performs and
discharges all such obligations.
(4) The guarantee set out in this clause shall extend to any costs,
charges and expenses incurred by the Landlord in enforcing or seeking
its enforcement.
(5) The Guarantor shall make any payments due from it under this clause
in full and, without any deduction or withholding in respect of any
claim whatsoever (whether by way of set-off, counterclaim or
otherwise).
(6) If the Landlord brings proceedings against the Tenant, the Guarantor
shall be bound by any findings of fact, interim or final award or
interlocutory or final judgment made by an arbitrator or the court in
those proceedings.
(7) If:
(a) the Tenant (being a company) enters into liquidation and the
liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown disclaims
this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the trustee
in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease of the
Property for a term equivalent to the residue which would have
remained of the Term if there had been no disclaimer or forfeiture at
the same rents and subject to
the same covenants and conditions (including those as to the review
of rent) as are reserved by and contained in this Lease (with the
exception of this Schedule).
(8) The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new lease as
from the date of disclaimer or forfeiture as if the new lease had
been granted on the date of disclaimer or forfeiture.
(9) The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute and
deliver to the Landlord a counterpart of it.
(10) If the Landlord does not require the Guarantor to take a Lease of the
Property, the Guarantor shall pay to the Landlord on demand a sum
equal to the rent that would have been payable under this Lease but
for the disclaimer or forfeiture in respect of the period from the
date of the disclaimer or forfeiture until the date which is six
months after the date of the disclaimer or forfeiture or the date on
which the property has been re-let by the Landlord, whichever first
occurs.
(11) If any VAT is payable by the Tenant to the Landlord under the terms
of the Lease, the Guarantor's obligation shall extend to that VAT. If
the Guarantor makes any payment in respect of VAT, the Landlord's
obligation to issue a VAT invoice to the Tenant under the Lease in
respect of that VAT shall not be affected, and the Landlord shall not
be under any obligation to issue a VAT invoice to the Guarantor in
respect of that VAT."
11. Schedule 6 shall be deleted and replaced by the following:
"SCHEDULE 6
AUTHORISED GUARANTEE AGREEMENT
1. The Guarantor guarantees to the Landlord and shall procure the due
and punctual performance by the Assignee throughout the Guarantee
Period of each obligation of the Tenant under this Lease and shall
pay to the Landlord from time to time on demand, or procure that the
Assignee shall pay, any sum which the Assignee under this Lease is at
any time liable to pay to the Landlord and which has not been paid at
the time the demand is made.
2. The obligations of the Guarantor under paragraph 1:
(a) constitute direct, primary, unconditional and irrevocable
obligations without the need for any recourse on the part of the
Landlord against the Assignee;
(b) shall not be affected or impaired by any concession, time or
indulgence granted by the Landlord or by any other dealing or
thing which would but for this paragraph (2)(b) operate to
discharge or reduce that liability; and
(c) shall not be affected or impaired by anything (including any
legal limitation, disability or incapacity on the part of the
Assignee) which causes any of the obligations of the Assignee
under this Lease to be or become invalid or unenforceable.
3. If any of the obligations of the Assignee under this Lease is or
becomes invalid or unenforceable the Guarantor shall perform and
discharge all such obligations as if they were primary obligations of
the Guarantor or shall procure that the Assignee performs and
discharges all such obligations.
4. The guarantee set out in this paragraph shall extend to any costs,
charges and expenses incurred by the Landlord in enforcing or seeking
its enforcement.
5. The Guarantor shall make any payments due from it under this
paragraph in full and, without any deduction or withholding in
respect of any claim whatsoever (whether by way of set-off,
counterclaim or otherwise).
6. If the Landlord brings proceedings against the Assignee, the
Guarantor shall be bound by any findings of fact, interim or final
award or interlocutory or final judgment made by an arbitrator or the
court in those proceedings.
7. If during the Guarantee Period the Assignee (being a company) enters
into liquidation and the liquidator disclaims this Lease, or the
Assignee (being a company) is dissolved and the Crown disclaims this
Lease, or the Assignee (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease, then within six months
after the disclaimer the Landlord may require the Guarantor by notice
to enter into a new lease of the Property for a term equivalent to
the residue which would have remained of the term granted by this
Lease if there had been no disclaimer at the same rents and subject
to the same covenants and conditions (including as to the review of
rent) as are reserved by and contained in this Lease.
8. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor shall be
liable for all payments due under the new lease as from the date of
disclaimer as if the new lease had been granted on the date of
disclaimer.
9. The Guarantor shall pay the Landlord's costs of and accept the new
lease and shall execute and deliver to the Landlord a counterpart of
it.
10. If the Landlord does not require the Guarantor to take a new lease of
the Property the Guarantor shall pay to the Landlord on demand a sum
equal to the rents that would have been payable under this Lease but
for the disclaimer in respect of the period from the date of the
disclaimer until the date which is six months after the date of the
disclaimer or the date on which the Property has been re-let by the
Landlord, whichever first occurs.
11. To the extent that any provision of this guarantee does not conform
with section 16 of the Act, that provision shall be severed from the
remainder of this guarantee and this guarantee shall have effect as
if it excluded that provision.
12. If any VAT is payable by the Tenant to the Landlord under the terms
of the Lease, the Guarantor's obligation shall extend to that VAT. If
the Guarantor makes any payment in respect of VAT, the Landlord's
obligation to issue a VAT invoice to the Assignee under the Lease in
respect of that VAT shall not be affected, and the Landlord shall not
be under any obligation to issue a VAT invoice to the Guarantor in
respect of that VAT.
13. In this Schedule:
"ACT" means the Landlord and Tenant (Covenants) Act 1995;
"ASSIGNEE" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"GUARANTEE PERIOD" means the period ending on the date on which the
Assignee is released by virtue of the Landlord and Tenant (Covenants)
Act 1995."
THE COMMON SEAL OF )
[RELEVANT GLYNWED )
COMPANY]LIMITED )
was affixed in the )
presence of: )
Director:
Secretary:
THE COMMON SEAL OF )
NIAGARA (UK) LIMITED )
was affixed in the )
presence of: )
Director:
Secretary:
THE COMMON SEAL OF )
GLYNWED PROPERTIES )
LIMITED was affixed in )
presence of: )
Director:
Secretary:
EXECUTED BY )
NIAGARA CORPORATION )
ATTEST:
AGREED FORM
DATED 1999
[RELEVANT GLYNWED COMPANY] LIMITED
and
GLYNWED PROPERTIES LIMITED
and
NIAGARA LASALLE (UK) LIMITED
and
NIAGARA CORPORATION
________________________________
OPTION AGREEMENT
relating to [freehold][leasehold]
property at
________________________________
ALLEN & OVERY
London
PY:296092.4
CONTENTS
CLAUSE PAGE
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. EXERCISE OF THE OPTION . . . . . . . . . . . . . . . . . . . . . . 4
4. REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. THE PARTIES' SOLICITORS . . . . . . . . . . . . . . . . . . . . . 6
7. ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8. VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . . . . . . . 9
SCHEDULES
1. The Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Purchase Document . . . . . . . . . . . . . . . . . . . . . . . . .
3. Terms of the sale . . . . . . . . . . . . . . . . . . . . . . . . .
THIS AGREEMENT is made on , 1999
BETWEEN:
(1) [RELEVANT GLYNWED COMPANY] LIMITED (registered number [ ])
whose registered office is at Headland House, New Coventry Road,
Sheldon, Birmingham (the "Seller");
(2) GLYNWED PROPERTIES LIMITED (registered number 254047) whose registered
office is at Headland House, New Coventry Road, Sheldon, Birmingham
("Glynwed"); and
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308) whose
registered office is at 1st Floor, Bouverie House, 154 Fleet Street,
London, EC4A 2DQ (the "Buyer"); and
(4) NIAGARA CORPORATION a corporation organised and existing under the
laws of the State of Delaware whose principal office is at 667 Madison
Avenue, New York, 10021, USA (the "GUARANTOR").
IT IS AGREED as follows:
2. INTERPRETATION
(1) In this agreement:-
"AGREED FORM" means, in relation to any document, the form of that
document which has been initialed for the purpose of identification by
the Seller's solicitors and the Buyer's solicitors with such changes
as the Seller and the Buyer may agree in writing before completion;
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on
which banks are generally open in London for normal business;
"BUYER" means the Buyer and its successors in title;
"BUYER'S GROUP" means the Buyer and its subsidiaries at the relevant
time;
"BUYER'S SOLICITORS" means Paisner & Co of Bouverie House, 154 Fleet
Street, London EC4A 2DQ;
"CLEARING BANK" means a bank which is a member of CHAPS Clearing
Company Limited;
"CONSENT" means in relation to each Leasehold Part (if any) the
consent of the Landlord and any superior landlord to the assignment or
transfer of the Leasehold Part to the Buyer;
"COVENANTS" means the covenants affecting and binding the Property,
including, without limitation, all covenants referred to the property
register and the charges register of the title to the Property where
the Property is registered (excluding financial charges) and (where
there are Leasehold Parts) the Leasehold Obligations;
[Paynes Lane only - "DEED OF GRANT" means in relation to the Red Land
the deed of grant annexed to this agreement marked "A" and in relation
to the Green Land the deed of grant annexed to this agreement marked
"B" and "DEEDS OF GRANT" means both of them;]
[Paynes Lane only - "GREEN LAND" means the part of the Property at
Paynes Lane, Rugby shown edged green on the plan attached to the Deeds
of Grant;]
"LANDLORD" means, in relation to each Leasehold Part (if any), the
person entitled to the reversion immediately expectant on the
determination of the term granted by the relevant Superior Lease;
"LEASE" means the lease of the Property of even date herewith and made
between the same parties as to this Agreement;
"LEASEHOLD OBLIGATIONS" means in relation to the Leasehold Parts (if
any), the covenants by the tenant and the conditions contained in the
Superior Leases;
"LEASEHOLD PARTS" means the leasehold parts of the Property specified
in Part 2 of Schedule 1 (if any) and "LEASEHOLD PART" means any of
them;
"LEASE RENEWAL DEED" means the deed in respect of the Property of even
date herewith and made between the same parties as to this Agreement;
"OPTION" means the option granted by the Seller to the Buyer in clause
2;
"PROPERTY" means the property specified in Part 1 and [(where
relevant) Part 2 of Schedule 1];
"PROPERTY AGREEMENT" means the agreement dated , 1999
between Glynwed Property Management Limited (1) Glynwed Properties
Limited (2) Niagara LaSalle (UK) Limited (3) Niagara Corporation (4)
and Glynwed International plc (5);
"PURCHASE DOCUMENT" means the document headed "Purchase Document"
signed by or on behalf of the Seller on the date of this agreement
which is in the form specified in Schedule 2;
[Paynes Lane only - "RED LAND" means the part of the Property at
Paynes Lane, Rugby shown edged red on the plan attached to the Deeds
of Grant;]
"RENTS" means, in relation to the Leasehold Parts, the rents
(including further or additional rents) reserved by the Superior
Leases;
"RIGHTS" means the rights of third parties affecting and binding the
Property, excluding financial charges but including, without
limitation, the rights specified in the property register and the
charges register of the title to the Property, where the title is
registered;
"SALE OF BUSINESS AGREEMENT" means the agreement dated
1999 between Glynwed Steels Limited (1)
Glynwed International plc (2) Niagara LaSalle (UK) Limited (3) and
Niagara Corporation (4);
"SELLER" means the Seller and its successors in title to the Property;
"SELLER'S GROUP" means Glynwed International plc and its subsidiaries
at the relevant time;
"SELLER'S SOLICITORS" means Allen & Overy or, on service of notice
under clause 5, the solicitor or firm of solicitors named in that
notice;
"SELLER'S SOLICITORS' ADDRESS" means One New Change, London EC4M 9QQ
or, on service of notice under clause 5, the address specified in that
notice;
"the SIDE DEED" means a deed in respect of the Property of even date
herewith and made between the same parties as to this Agreement;
"SUPERIOR LEASES" means in relation to the Leasehold Parts (if any),
the lease or leases under which it or they is or are held (as more
particularly described in Part 2 of Schedule 1) and includes every
deed varying the lease or leases and every licence granted under the
lease or leases and "Superior Lease" means any of them;
"VAT" means value added tax.
(2) In this agreement:
(a) references to a person include a body corporate and an
unincorporated association of persons;
(b) references to a natural person include his estate and personal
representatives; and
(3) Any reference, express or implied, to an enactment includes references
to:
(a) that enactment as amended, extended or applied by or under any
other enactment (before or after the signature of this
agreement);
(b) any enactment which that enactment re-enacts (with or without
modification); and
(c) any subordinate legislation made (before or after the signature
of this agreement) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention
appears.
(5) The headings in this agreement do not affect its interpretation.
3. OPTION
(1) In consideration of the Buyer today entering into the Lease the Seller
grants and Glynwed confirms its consent to the grant to the Buyer of
the option of purchasing the Property subject to the matters referred
to in paragraph 5 of Schedule 3 at a price of [SELLING PRICE FROM THE
PROPERTY AGREEMENT].
(2) The Option shall not be exercisable after the termination or after any
renewal of the Lease.
4. EXERCISE OF THE OPTION
(1) On the date of this agreement the Seller has signed the Purchase
Document and delivered it to the Buyer with the part of this agreement
signed by the Seller.
(2) The Buyer may exercise the Option by completing and signing the
Purchase Document and delivering it to the Seller's solicitors
accompanied by a bank draft issued by a Clearing Bank or a telegraphic
transfer in favour of the Seller's solicitors for the deposit of [10%
OF SELLING PRICE] so as to be received by the Seller's solicitors at
the Seller's solicitors' address not later than 2 p.m. on the date
which is three months before the date on which the term of the Lease
expires (such deposit to be held by the Seller's solicitors as
stakeholders).
(3) If the Option is exercised the Seller shall sell and the Buyer shall
purchase the Property at the price of [SELLING PRICE] and on the terms
specified in Schedule 3.
(4) Time shall be of the essence of the contract in respect of the periods
of time mentioned in sub-clause (2).
[(5) Paynes Lane, Rugby only - if the Option is exercised then the Seller
and the Buyer shall also complete the appropriate Deed of Grant in
respect of either the Red Land or the Green Land on the Completion
Date provided that no Deed of Grant shall be completed if the Buyer
exercises its option to purchase both the Red Land and the Green Land
on the same date]
[(6) Victoria Steel Works, Bull Lane, Moxley only - the transfer of the
Property shall contain the following provision:
"The Transferor hereby assigns to the Transferee absolutely the
benefit of the option to acquire the freehold reversion to the
Leasehold Part as is contained in the lease, particulars of which are
set out in Part 2 of Schedule 1 of this agreement]
5. REGISTRATION
(1) The Buyer shall submit a valid application for registration of this
Option against the Seller's title to the Property within ten days of
completion of this Option and will use all reasonable endeavours to
achieve such registration and will keep the Seller's solicitors
informed of progress on a regular basis and will send the Seller's
solicitors evidence of completion of the registration provided that if
such application for registration has not been submitted within six
months of the date of completion the Seller's solicitors may submit
the application, at the cost of the Buyer.
[(2) Blackbrook Road Dudley only.
In relation to the part of the Property registered under title number
WM159185 for which the Seller will apply for a replacement land
certificate, the provisions of sub-clause (1) above shall only apply
once the Seller or the Seller's solicitors have notified the Buyer's
solicitors of the replacement title number.]
(3) The Seller consents to the Buyer noting this agreement against title
number [ ] being the registered title to the
Property and shall forthwith lodge the Land Certificate relating to
the Property at the Land Registry to enable this to be done.
(4) If the Option is not exercised within the time period referred to in
clause 3 the Buyer shall procure forthwith the cancellation of any
registration at the Land Registry or the Land Charges Registry made by
or on behalf of the Buyer to protect the Option. The Buyer
irrevocably and by way of security appoints the Seller to be its
attorney to apply for and procure the cancellation but only in the
circumstances where the Buyer must cancel the registration under this
sub-clause and has failed to do so within one month of the date by
which it is obliged to do so.
6. GUARANTEE
In consideration of the Seller entering into this Agreement at the
Guarantor's request, the Guarantor guarantees to the Seller the
obligations and liabilities of the Buyer under this Agreement the
guarantee to be in the form of clause 8 of the Property Agreement with
the amendments necessary to ensure that the guarantee applies to this
Agreement.
7. THE PARTIES' SOLICITORS
At any time and from time to time either party may serve notice on the
other that:
(a) the party's solicitors' address has changed to another address in
England or Wales as specified in the notice; or
(b) the identity of the party's solicitors has changed to another
solicitor or firm of solicitors (not being an officer or employee
of the Seller or the Buyer or the Guarantor) with an address in
England or Wales both as specified in the notice.
8. ANNOUNCEMENTS
No party shall make, or permit any member of the Seller's Group or the
Buyer's Group (as the case may be) to make, any announcement
concerning the subject matter of this agreement or any ancillary
matter before, on or after exercise or expiry of the Option except:
(1) as required by law or by any regulatory body including in the
case of the Guarantor, the United States Securities and Exchange
Commission or the NASDAQ Stock Market and in the case of the
Seller, the London Stock Exchange; or
(2) without the written approval of the other party, such approval
not to be unreasonably withheld or delayed.
9. VAT
(1) If any VAT is chargeable in respect of any supply made by the Seller
under or pursuant to this agreement, the Buyer shall pay the amount of
that VAT to the Seller by way of additional consideration on
completion against issue of a proper VAT invoice by the Seller.
(2) Without limiting sub-clause (1) above, each amount stated as payable
by the Buyer under or pursuant to this agreement is exclusive of VAT
(if any) and is to be construed as a reference to that amount plus any
VAT in respect of it.
(3) For the avoidance of doubt, any VAT payable on the deposit shall be
paid by the Buyer to the Seller when the deposit is paid.
10. GENERAL
(1) Each of the obligations undertaken by any party under this agreement
(excluding any obligation fully performed on exercise or expiry of the
Option) shall continue in force after exercise or expiry of the
Option.
(2) The rights and obligations of the Buyer under this agreement may be
assigned to a permitted assignee of the Lease at the same time as a
permitted assignment of the Lease.
(3) Where the Buyer or the Seller or the Guarantor is more than one
person:
(a) those persons shall be jointly and severally responsible in
respect of every obligation undertaken by them under this
agreement; and
(b) the Seller may release or compromise the liability of any of
those persons under this agreement or grant any time or other
indulgence without affecting the liability of any other of them.
(4) This agreement may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same agreement,
and any party may enter into this agreement by executing a
counterpart.
(5) This agreement, the Lease, the Renewal Deed, the Side Deed and the
Property Agreement and any documents referred to in them contain the
whole agreement between the parties relating to the transaction
contemplated by this agreement and supersede all previous agreements
between the parties relating to this transaction.
(6) The Buyer acknowledges that in agreeing to enter into this agreement
the Buyer has not relied on any representation, warranty, or other
assurance except those set out in this agreement and relevant
warranties, representations or assurances contained or referred to in
the main Sale of Business Agreement and the Seller's solicitors'
written replies to the Buyer's solicitors' written enquiries before
contract but nothing in this sub-clause shall limit or exclude any
liability for fraud.
11. NOTICES
Where the Buyer is Niagara Lasalle (UK) Limited the notice provisions
set out in sub-paragraph A below shall apply to any notice served
under this Agreement, such notice provisions being personal to Niagara
Lasalle (UK) Limited. At any other time the notice provisions set out
in sub-paragraph B below shall apply.
A. (1) Any notice or other document to be served under this agreement
may be delivered or sent by post to the party to be served as
follows:
(a) to the Seller at the address set out in this Agreement
marked for the attention of the Company Secretary;
(b) to the Buyer at
Victoria Steel Works
Bull Lane
Moxley
Wednesbury
West Midlands WS10 8RS
marked for the attention of Tony Bagshaw;
(c) to the Guarantor at:
667 Madison Avenue
New York, 10021
USA
or at such other address as it may have notified to the other
party in accordance with this clause. Any notice or other
document sent by post shall be sent by prepaid first class
recorded delivery post (if within the United Kingdom) or by
prepaid registered airmail (if elsewhere).
(2) Any notice or other communication shall be deemed to have been
duly given:
(a) if delivered personally, when left at the address referred
to in subclause (1); or
(b) if sent by recorded mail other than airmail, two days after
posting it; or
(c) if sent by registered airmail, six days after posting it,
provided always that a notice given in accordance with the above
but received on a day which is not a Business Day or after
business hours on a Business Day in the place of receipt will
only be deemed to be given on the next Business Day in that
place.
B(1) Any notice or document to be served under this agreement shall be in
writing and may be delivered or sent by post or facsimile process to
the party to be served at its address appearing in this agreement or
at such other address or facsimile number as it may have notified to
the other parties in accordance with this clause. Any notice or other
document sent by post shall be sent by prepaid first class recorded
delivery post (if within the United Kingdom) or by prepaid airmail (if
elsewhere).
(2) Any notice or document (other than the Purchase Document) shall be
deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 am on the second working day after it was put
into the post, if sent within the United Kingdom, or at 10.00 am
(local time at the place of destination) on the fifth working day
after it was put into the post, if sent by airmail; or
(c) if sent by facsimile process, at the end of two hours after the
time of despatch, if despatched before 3.00 pm (local time at the
place of destination) on any working day, and in any other case
at 10.00 am (local time at the place of destination) on the next
working day after the date of despatch.
(3) In proving service of a notice or document (other than the Purchase
Document) it shall be enough to prove that delivery was made, or that
the envelope containing the notice or document was properly addressed
and posted as a prepaid first class recorded delivery letter or that
the facsimile message was properly addressed and despatched, as the
case may be.
12. GOVERNING LAW AND JURISDICTION
(1) This agreement is governed by and shall be construed in accordance
with English law.
(2) The Guarantor submits to the jurisdiction of the English courts for
all purposes relating to this agreement and appoints the Buyer's
solicitors, Paisner & Co of Bouverie House, 154 Fleet Street, London
EC4A 2DQ (or such other solicitors as shall subsequently be notified
in writing to the Seller) as its agent for service of process with
respect thereto.
AS WITNESS the hands of duly authorized representatives of the parties on
the date which appears first on page 1.
SCHEDULE 1
THE PROPERTY
PART 1 - FREEHOLD
[RELEVANT DESCRIPTION TO BE INSERTED FOR EACH PROPERTY]
PART 2 - LEASEHOLD
[RELEVANT DESCRIPTION TO BE INSERTED FOR EACH PROPERTY]
SCHEDULE 2
PURCHASE DOCUMENT
By this document [RELEVANT GLYNWED COMPANY] LIMITED (registered number [
]) whose registered office is at Headland House, New Coventry
Road, Sheldon, Birmingham (the "SELLER") irrevocably binds itself to sell
the property (the "PROPERTY") described in Schedule 1 of an option
agreement (the "AGREEMENT") made on 1999 between the
Seller, Niagara LaSalle (UK) Limited (registered number 3725308) whose
registered office is at [ ] (the "BUYER") and
Niagara Corporation a corporation organised and existing under the laws of
the State of Delaware whose principal office is at 667 Madison Avenue, New
York, 10021, USA (the "GUARANTOR") at the price specified in clause 2 of
the Agreement and on the terms specified in Schedule 3 of the Agreement
which are incorporated in this document provided that the Buyer exercises
the option to buy the Property granted by clause 2 of the Agreement
strictly in accordance with clause 3(2) of the Agreement.
Dated 1999
______________________________
Director duly authorised for
and on behalf of the Seller
Limited (registered number ) whose registered
office is at (being the person presently entitled to the benefit of the
option granted by clause 2 of the Agreement) gives notice of its exercise
of the option and agrees to buy the Property at the price and on the terms
set out above.
Dated 19
____________________________
Duly authorized for and
on behalf of the Buyer
SCHEDULE 3
TERMS OF THE SALE
1. INTERPRETATION AND SALE
(1) The terms of clause 1 of this Agreement are incorporated into this
schedule to the same effect as if set out in full.
(2) The Seller agrees to sell and the Buyer agrees to buy the Property at
the price specified in clause 2 of the Agreement.
(3) The Seller shall transfer the Property with full title guarantee.
(4) The transfer shall state that it is subject to every matter subject to
which the Property is sold by virtue of this agreement.
2. SUB-SALES
The Seller shall not be obliged to transfer the Property or any part
of it to any person other than the Buyer or a member of the Buyer's
Group, or an assignee of this Agreement or at a price divided between
different parts of the Property or in more than one parcel or by more
than one transfer.
3. TITLE
The Seller's title is registered with [ ] title under
title number [ ] in the [ ] District
Land Registry.
[OR]
Title shall be deduced and shall commence with a [conveyance on sale]
dated [ ] 19[ ] between [ ].
4. COVENANTS AND RIGHTS
The Property is sold subject to the Covenants and the Rights. The
Leasehold Parts are sold subject to the Rents and the Leasehold
Obligations. The Buyer shall not raise any enquiry, objection or
requisition in respect of the Covenants, the Rights, the Rents or the
Leasehold Obligations (save in respect of matters arising between the
date of this Agreement and the date of completion of the sale
contemplated by this Agreement).
5. VACANT POSSESSION
The Property is sold subject to the Lease and any other interest in
the Property created by the Buyer.
6. LICENCE TO ASSIGN
(1) This clause applies to each Leasehold Part in relation to which the
Consent must be obtained in order that it may be effectually and
lawfully assigned or transferred to the Buyer.
(2) The Seller and the Buyer shall each use reasonable endeavours to
obtain the Consent as soon as possible, but the Seller may not be
required to make any payment, charge any assets, enter into any
commitment, give any guarantee or provide any security. If the
Consent is not granted within three months of the application for
Consent being made, the Seller will at the reasonable request and at
the joint equal cost of the Buyer and the Seller commence proceedings,
including (without limitation), proceedings for a declaration that the
Consent is being unreasonably withheld provided that the Buyer shall
provide reasonable security for its share of the costs prior to
commencement of proceedings if reasonably required by the Seller.
(3) The Buyer shall:
(a) supply promptly to the Seller such information, including
accounts for the last three years and references, as may
reasonably be required by the Landlord or any superior landlord
in connection with the application for the Consent;
(b) comply with all reasonable requirements which, by the terms of
the Superior Lease or any superior lease, the Landlord or any
superior landlord is entitled to impose on a prospective assignee
of the Superior Lease as a condition of granting the Consent;
(c) if reasonably required by the Landlord or by any superior
landlord as a condition of granting the Consent, covenant
directly with the Landlord to pay the Rents and to observe and
perform the Lease Obligations and with each superior landlord to
observe and perform the covenants on the part of the tenant
(other than the covenant to pay rent) and the conditions
contained in the relevant superior lease;
(d) if reasonably required by the Landlord as a condition of granting
the Consent, provide such reasonable security for payment of the
Rents and observance and performance of the Lease Obligations as
the Landlord may reasonably require (including, without
limitation reasonable, guarantees and rent deposits).
(4) If the Consent has not been obtained by twelve months from the
Completion Date notwithstanding that the Buyer has taken all
reasonable steps to obtain the Consent, including court proceedings,
at any time after that date the Buyer shall have the right, at its
option, to either:
(a) simultaneously complete the purchase of the part of the Property
which is freehold and take an assignment of the Lease of the
Leasehold Part of the Property; or
(b) request the Seller to apply for the landlord of the Superior
Lease's consent to the grant of an underlease of the Leasehold
Part of the Property such underlease to be on the same terms as
the Superior Lease in all respects (excluding the duration of the
term and with the addition of guarantee provisions to be agreed
between the parties, acting reasonably) for the residue of the
term under the Superior Lease less one day, such underlease to be
granted to the Buyer as tenant and to be guaranteed by the
Guarantor. The provisions of sub-clauses (2) and (3) above shall
apply to any such application for consent and upon the grant of
such consent the Seller and Buyer shall simultaneously complete
the purchase of the freehold part of the Property and the
underlease of the Leasehold Part of the Property.
(5) If the Consent or the consent to underlet has not been obtained by the
end of the term under the Lease (howsoever determined) the Buyer shall
on that date have the right, at its option, to simultaneously complete
the purchase of the freehold part of the Property and either the
assignment of the Lease of the Leasehold Part of the Property or an
underlease of the Leasehold Part of the Property such underlease to be
on the same terms as set out in clause (4) above, but if the transfer
and either the assignment or underlease are not completed on that date
the Option will expire and the Buyer will lose its right to purchase
the Property and the Landlord shall not be obliged to continue its
application for the landlord's consent to the assignment or underlease
of the Leasehold Part of the Property and the Buyer shall vacate the
Property forthwith.
(6) The reasonable costs and expenses of the Landlord, any superior
landlord and the mortgagees of any of them (including VAT) in
connection with the application for the Consent (including the cost of
any court proceedings shall be borne equally by the Seller and the
Buyer, whether or not the Consent is granted.
7. TRANSFER
(1) The transfer to the Buyer shall be executed in duplicate. The
original and the duplicate of the transfer shall be stamped and the
duplicate denoted against the original by the Buyer's solicitors at
the expense of the Buyer. After stamping the Buyer's solicitors shall
forthwith return the duplicate to the Seller's solicitors.
(2) The transfer shall contain a covenant by the Buyer by way of indemnity
only and not further or otherwise with the Seller that the Buyer and
the persons deriving title under the Buyer will:
(a) observe and perform the Covenants and keep the Seller indemnified
from all proceedings, costs, claims and expenses on account of
any breach of any of the Covenants;
(b) in relation to the Leasehold Parts, a covenant that the Seller
shall not be liable under any of the covenants set out in section
3 or section 4 of the Law of Property (Miscellaneous Provisions)
Act 1994 for the consequences of any breach of the terms of the
Superior Leases concerning the condition of the Property; and
(c) henceforth pay the Rents and all amounts becoming due (whether
under the Superior Leases or by statute) in respect of value
added tax on the Rents and observe and perform the Lease
Obligations and keep the Seller indemnified from all proceedings,
proper costs, claims and expenses on account of any omission to
pay the Rents or the amounts in respect of value added tax on
them or any breach of any of the Lease Obligations.
(3) If on the date of the exercise of the Option the Buyer is Niagara
Lasalle (UK) Limited the Guarantor must be a party to the transfer as
Guarantor and the transfer will contain a guarantee by the Guarantor
with the Seller that the Buyer will perform its obligations under the
transfer, the guarantee to be in the form of clause 8 of the Property
Agreement with the amendments necessary for it to refer to those
obligations.
(4) The transfer shall state that it is subject to every matter subject to
which the Property is sold by virtue of this agreement.
8. COMPLETION
The sale shall be completed at or before 1.00 pm on the date which is
three months after the date the Option has been exercised (the
"Completion Date") at the offices of the Seller's solicitors or as
they may require. The Seller shall not be bound to complete otherwise
than on a working day and otherwise than between 9.30 am and 5.30 pm.
9. STANDARD CONDITIONS OF SALE
(1) Subject to the variations mentioned in sub-clause (2), the Standard
Conditions of Sale (Third Edition) (excluding Conditions
1.1.1(a)(ii), 1.2, 1.3, 1.4, 3.2.2, 3.2.3, , 5.1.1, 5.1.2, 5.2., 8.1.3
and 8.3) are incorporated in this agreement so far as they:
(a) apply to a sale by private treaty;
(b) relate to freehold or leasehold property as appropriate; and
(c) are not inconsistent with the other clauses of this agreement.
(2) The Standard Conditions of Sale (Third Edition) shall be varied as
follows:
(a) add at the end of condition 2.2.1:
"or by a direct credit to a bank account nominated by the
seller's solicitor. The deposit shall be paid by a method which
gives immediately available funds";
(b) in condition 3.1.2(d) replace "except those maintained by
H.M. Land Registry or its Land Charges Department or by Companies
House" by "except, first, mortgages and, secondly, any entries on
the register maintained by H.M. Land Registry not disclosed by
office copy entries supplied before the date of the Option by
the seller or his solicitors to the buyer or his solicitors";
(c) at the end of condition 3.1.2 add new paragraphs (f) and (g) as
follows:
"(f) overriding interests as defined in Land Registration Act
1925 Section 70(1) or (where the title to the Property is
not registered) matters which would be overriding interests
if the title were registered other than (in respect of those
parts of the property sold with vacant possession) those
referred to in Section 70(1)(g) of that Act;
(g) all matters disclosed or reasonably to be expected to be
disclosed by searches or as the result of enquiries, formal
or informal, and whether made in person, by writing or
orally by or for the buyer or which a prudent buyer ought to
make";
(d) delete the second part of condition 3.3.2(b);
(e) replace condition 3.4.2 by the following:
"The buyer will have no right of light or air over the retained
land, and the seller shall have the rights over the property
which a buyer of the retained land would have had if the seller
had sold the retained land to that buyer at the same time as he
sold the property to the buyer";
(f) in conditions 6.1.2 and 6.1.3 replace "2.00 pm" by "1.00 pm";
(g) replace condition 6.7 by the following:
"The money due on completion shall be paid by a method which
gives immediately available funds. If it is not so paid,
completion is to be treated, for the purposes only of conditions
6.3 and 7.3, as taking place on the first working day after the
date of payment when the money due on completion is immediately
available funds in the hands of the seller";
(h) add the following at the end of condition 6.8.2(b):
"or if the mortgagee has agreed to release the property from the
mortgage on completion";
(i) in condition 7.1.1 replace "or in the negotiations leading to it"
by "or in the seller's solicitors' written replies to the buyer's
solicitors' written pre-contract enquiries prior to the date of
the Option Agreement";
10. ANNOUNCEMENTS
No party shall make, or permit any member of the Seller's Group or the
Buyer's Group (as the case may be) to make, any announcement
concerning the subject matter of this agreement or any ancillary
matter before, on or after exercise or expiry of the Option except:
(1) as required by law or by any regulatory body including in the
case of the Guarantor, the United States Securities and Exchange
Commission or the NASDAQ Stock Market and in the case of the
Seller, the London Stock Exchange; or
(2) without the written approval of the other party, such approval
not to be unreasonably withheld or delayed.
11. VAT
(1) If any VAT is chargeable in respect of any supply made by the Seller
under or pursuant to this agreement, the Buyer shall pay the amount of
that VAT to the Seller by way of additional consideration on
completion against issue of a proper VAT invoice by the Seller.
(2) Without limiting sub-clause (1) above, each amount stated as payable
by the Buyer under or pursuant to this agreement is exclusive of VAT
(if any) and is to be construed as a reference to that amount plus any
VAT in respect of it.
(3) For the avoidance of doubt, any VAT payable on the deposit shall be
paid by the Buyer to the Seller when the deposit is paid.
12. GENERAL
(1) Each of the obligations undertaken by any party under this schedule to
the agreement (excluding any obligation fully performed on exercise or
expiry of the option) shall continue in force after exercise or expiry
of the option.
(2) The rights and obligations of the Buyer and the Guarantor under this
agreement may not be assigned without the prior written consent of the
Seller.
(3) Where the Buyer is more than one person:
(a) those persons shall be jointly and severally responsible in
respect of every obligation undertaken by them under this
agreement; and
(b) the Seller may release or compromise the liability of any of
those persons under this agreement or grant any time or other
indulgence without affecting the liability of any other of them.
(4) This agreement may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same agreement,
and any party may enter into this agreement by executing a
counterpart.
(5) This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transaction contemplated
by this agreement and supersede all previous agreements between the
parties relating to this transaction.
(6) The Buyer acknowledges that in agreeing to enter into this agreement
the Buyer has not relied on any representation, warranty, collateral
contract or other assurance except those set out in this agreement and
the Seller's solicitors' written replies to the Buyer's solicitors'
preliminary enquiries. The Buyer waives all rights and remedies
which, but for this sub-clause, might otherwise be available to it in
respect of any such representation, warranty, collateral contract or
other assurance, but nothing in this sub-clause shall limit or exclude
any liability for fraud.
13. NOTICES
Where the Buyer is Niagara LaSalle (UK) Limited and the Guarantor is
Niagara Corporation the notice provisions set out in sub-paragraph A
below shall apply to any notice served under this agreement, such
notice provisions being personal to Niagara Lasalle (UK) Limited and
Niagara Corporation. At any other time the notice provisions set out
in sub-paragraph B below shall apply.
A. (1) Any notice or other document to be served under this agreement
may be delivered or sent by post or facsimile process to the
party to be served as follows:
(a) to the Seller at the address set out in this Agreement
marked for the attention of the Company Secretary;
(b) to the Buyer at
Victoria Steel Works
Bull Lane
Moxley
Wednesbury
West Midlands WS10 8RS
marked for the attention of Tony Bagshaw;
(c) to the Guarantor at:
667 Madison Avenue
New York, 10021
USA
or at such other address as it may have notified to the other
party in accordance with this clause. Any notice or other
document sent by post shall be sent by prepaid first class
recorded delivery post (if within the United Kingdom) or by
prepaid registered airmail (if elsewhere).
(2) Any notice or other communication shall be deemed to have been
duly given:
(a) if delivered personally, when left at the address referred
to in subclause (1); or
(b) if sent by recorded mail other than airmail, two days after
posting it; or
(c) if sent by registered airmail, six days after posting it,
provided always that a notice given in accordance with the above
but received on a day which is not a Business Day or after
business hours on a Business Day in the place of receipt will
only be deemed to be given on the next Business Day in that
place.
B(1) Any notice or document to be served under this agreement (other than
the Purchase Document) shall be in writing and may be delivered or
sent by post or facsimile process to the party to be served at its
address appearing in this agreement or at such other address or
facsimile number as it may have notified to the other parties in
accordance with this clause. Any notice or other document sent by
post shall be sent by prepaid first class recorded delivery post (if
within the United Kingdom) or by prepaid airmail (if elsewhere).
(2) Any notice or document (other than the Purchase Document) shall be
deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 am on the second working day after it was put
into the post, if sent within the United Kingdom, or at 10.00 am
(local time at the place of destination) on the fifth working day
after it was put into the post, if sent by airmail; or
(c) if sent by facsimile process, at the end of two hours after the
time of despatch, if despatched before 3.00 pm (local time at the
place of destination) on any working day, and in any other case
at 10.00 am (local time at the place of destination) on the next
working day after the date of despatch.
(3) In proving service of a notice or document (other than the Purchase
Document) it shall be enough to prove that delivery was made, or that
the envelope containing the notice or document was properly addressed
and posted as a prepaid first class recorded delivery letter or that
the facsimile message was properly addressed and despatched, as the
case may be.
14. GOVERNING LAW AND JURISDICTION
(1) This agreement is governed by and shall be construed in accordance
with English law.
(2) The Guarantor submits to the jurisdiction of the English courts for
all purposes relating to this agreement and appoints the Buyer's
solicitors (or such other solicitors as shall subsequently be notified
in writing to the Seller) as its agent for service of process with
respect thereto.
Signed by [ )
for] the Seller in the )
presence of:- )
Signed by [ )
for] the Buyer in the )
presence of:- )
Signed by [ )
for] the Guarantor in the )
presence of: )
AGREED FORM
DATED , 1999
[RELEVANT GLYNWED COMPANY] LIMITED
-and-
GLYNWED PROPERTIES LIMITED
-and-
NIAGARA LASALLE (UK) LIMITED
-and-
NIAGARA CORPORATION
----------------------------
LEASE RENEWAL DEED
relating to land and buildings
known as
[ ]
and lease dated [ ]
of that property
----------------------------
ALLEN & OVERY
CONTENTS
CLAUSE PAGE
1. DEFINITIONS...................................................1
2. INTERPRETATION................................................2
3. OPTION TO RENEW...............................................3
4. [CONSENTS - for mixed freehold and long leasehold
properties only]..............................................5
5. GUARANTEE.....................................................6
6. TERMINATION...................................................6
7. NO SURRENDER..................................................6
8. GENERAL.......................................................7
9. NOTICES.......................................................7
10. GOVERNING LAW AND JURISDICTION................................9
11. REGISTRATION..................................................9
THIS DEED is made on [ ], 1999
BETWEEN:
(1) [RELEVANT GLYNWED COMPANY] LIMITED (registered number [ ]) whose
registered office is at [Headland House, New Coventry Road, Sheldon,
Birmingham] (the "GRANTOR"); and
(2) GLYNWED PROPERTIES LIMITED (registered number 254047) whose
registered office is at Headland House, New Coventry Road, Sheldon,
Birmingham ("GLYNWED");
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308) whose
registered office is at Bouverie House, 154 Fleet Street, London,
EC4A 2DQ (the "GRANTEE"); and
(4) NIAGARA CORPORATION a corporation organised and existing under the
Laws of the State of Delaware, whose principal office is at 667
Madison Avenue, New York 10021, USA (the "GUARANTOR".)
RECITALS
(A) This Deed is supplemental to the Lease by which the Property was
demised for the Term.
(B) The Grantor is the landlord under the Lease, the Grantee is the
tenant under the Lease and the Guarantor is the guarantor under the
Lease.
(C) Glynwed is the beneficial owner of the Property and has confirmed its
consent to this Deed.
(D) The parties have agreed that the Grantee shall be granted an option
to renew the Lease, in accordance with the terms of this Deed.
THIS DEED WITNESSES as follows:
1. DEFINITIONS
In this Deed:
[MIXED FREEHOLD AND LONG LEASEHOLD ONLY - "CONSENT"
means the consent of the Landlord and any superior landlord to the grant
of the New Lease;]
"GRANTOR" means the person for the time being entitled to the reversion
immediately expectant on the determination of the Term;
[MIXED FREEHOLD AND LONG LEASEHOLD ONLY - "LANDLORD" means the person
entitled to the reversion immediately expectant on the determination
of the term granted by the relevant superior lease;]
"LEASE" means the lease of even date herewith and made between
[RELEVANT GLYNWED COMPANY LIMITED] (1) and Niagara Lasalle (UK)
Limited (2) and Niagara Corporation (3) in respect of the Property
and includes all deeds and documents supplemental to it;
"NEW LEASE" means the lease to be granted on the terms set out in clause
3 below;
"PROPERTY" means [ ] as more particularly described in the Lease;
"GRANTEE" means the person in whom the Term of the Lease shall for the
time being be vested;
"SIDE DEED" means the Deed set out in Part II of the Schedule;
"TERM" means the term of years granted by the Lease.
2. INTERPRETATION
(1) Where there are two or more persons included in the expressions
"Grantor" or "Grantee" each reference to Grantor or Grantee includes
a separate reference to each of those persons.
(2) Any reference, express or implied, to an enactment includes references
to:
(a) that enactment as amended, extended or applied by or under any
other enactment (before or after the execution of this Deed);
(b) any enactment which that enactment re-enacts (with or without
modification);
(c) any subordinate legislation made (before or after the execution
of this Deed) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above; and
(d) any consents, licences and permissions given (before or after
the execution of this Deed) under that enactment, as amended,
extended or applied as described in paragraph (a) above or
under any enactment referred to in paragraph (b) above or under
that subordinate legislation and any conditions contained in
those consents, licences and permissions.
(3) Any reference, express or implied, to enactments generally includes
subordinate legislation and any legislation of the European Union
that is directly applicable in the United Kingdom and includes
existing enactments and those that come into effect during the Term.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention appears.
(5) The headings in this Deed do not affect its interpretation.
3. OPTION TO RENEW
(1) On the determination of the Lease at the end of the Term only and
subject to sub-clause (2), the Grantee shall have the right to the
grant of the New Lease of the Property for a term of 15 years
commencing on and including the day after the date of expiry of the
Term of the Lease at open market rent, determined by applying the
rent review provisions set out in the Schedule to this Deed such
lease to be excluded from Sections 24 to 28 of the Landlord and
Tenant Act 1954 and otherwise to be on the same terms as the Lease
excluding the rent payable and including the variations set out in
part 1 of the Schedule to this Deed and any other reasonable
provisions notified in writing by the Grantor to the Grantee for the
Grantee's approval, such approval not to be unreasonably withheld or
delayed.
(2) The Grantee's right to the grant of the New Lease of the Property is
subject to:
(a) The Grantee giving to the Grantor prior to the expiry of the
Lease not less than six months' notice of its intention to
exercise this right.
(b) the Grantee remedying any breach of any tenant's obligation in
the Lease relating to the state and condition of the Property
and paying all arrears of Rent (as defined in the Lease) prior
to the expiry of the Grantee's notice provided that one month
prior to the expiry of the Grantee's notice the Grantor has
notified the Grantee of any such breaches which remain
outstanding and which must be remedied prior to the expiry of
the Grantee's notice.
(c) If on the date of the grant of the new lease the Grantor is
[RELEVANT GLYNWED COMPANY] and the Grantee is Niagara
LaSalle (UK) Limited, the Guarantor must be a party to the New
Lease as guarantor.
[(d) FOR MIXED FREEHOLD AND LONG LEASEHOLD ONLY the
Consent to the grant of the New Lease being obtained pursuant
to the provisions set out in clause 4 below provided that if
the Consent has not been obtained by the end of the term under
the Lease (howsoever determined) the Grantee shall on that date
have the right, at its option, to complete the New Lease of the
Property but if it does not complete the New Lease on that date
the Grantee will lose its right to the grant of the New Lease
under this agreement and the Grantor shall not be obliged to
continue its application for the Consent.]
(3) Whilst during the term of the New Lease the Grantor is [RELEVANT
GLYNWED COMPANY] and the Grantee is Niagara LaSalle (UK) Limited the
insurance provisions to be contained in the New Lease shall be those
contained in the Side Deed and the Grantor, the Grantee and the
Guarantor shall complete the Side Deed simultaneously with the
completion of the New Lease.
(4) If on the date of expiry of the Grantee's notice to renew, the rent
payable under the New Lease and/or any other provisions notified to
the Grantee by the Grantor in accordance with subclause (1) above
have not been agreed between the parties (but without prejudice to
subclauses (2) above) the New Lease shall in any event be completed
and the following provisions (where applicable) shall apply:
(a) If the new rent has not been determined the rent payable under
the New Lease shall be the annual rent payable under the Lease
immediately prior to the end of the Term. Forthwith on the new
rent being ascertained the Tenant shall pay to the Landlord any
shortfall between the new rent and the rent which has been paid
under the New Lease together with interest at the Interest Rate
(as defined in the New Lease) on the shortfall from the date on
which the new rent would have been payable if ascertained
before the date of the New Lease, and the Grantor, the Grantee,
if appropriate, and the Guarantor shall enter into a deed of
variation of the New Lease to incorporate the new rent figure
in respect of which each party shall bear their own costs;
(b) forthwith, upon agreement of any outstanding lease provision
other than the new rent the parties shall enter into a deed of
variation of the New Lease to incorporate the agreed provision
and each party shall bear their own costs in respect of such
deed.
(5) Time shall be of the essence of the contract in respect of the
periods of time mentioned in sub-clause (2) and if the Grantee's
option to renew is not exercised or not exercised in accordance with
those time periods the Grantee shall forthwith vacate the Property at
the end of the Term.
4. [CONSENTS - FOR MIXED FREEHOLD AND LONG LEASEHOLD
PROPERTIES ONLY]
(1) This paragraph applies to any mixed freehold and leasehold Property
in relation to which leasehold Property the Consent must be obtained
in order that the Grantor may effectually and lawfully grant the New
Lease to the Grantee.
(2) The Grantor and the Grantee shall each use reasonable endeavours to
obtain Consent as soon as possible, but the Grantor may not be
required to make any payment, charge any assets, enter into any
commitment, give any guarantee or provide any security. If Consent is
not granted within 3 months of the application for consent being made
the Grantor will at the reasonable request but at the joint equal
cost of the Grantee and the Grantor commence proceedings for a
declaration that the Consent is being unreasonably withheld provided
that the Grantee shall provide reasonable security for its share of
the costs prior to commencement of proceedings if reasonably required
by the Grantor.
(3) The Grantee shall:
(a) supply promptly to the Grantor such information, including
accounts for the last three years and references for the
Grantee and any proposed guarantor as may be reasonably
required by the Landlord or any superior landlord in connection
with the application for the Consent;
(b) comply with all reasonable requirements which, pursuant to any
superior lease the Landlord or any superior landlord is
entitled to impose on a prospective undertenant of the Property
as a condition of granting Consent;
(c) if reasonably required by the Landlord or by any superior
landlord as a condition of granting Consent, covenant directly
with those persons to observe and perform the tenant's
covenants and the conditions to be contained in the New Lease
and the tenant's covenants (other than the covenant to pay
rent) and the conditions contained in any superior lease;
(d) if reasonably required by the Grantor or the Landlord as a
condition of granting the Consent, provide a guarantee from the
Guarantor in such form as the Landlord shall reasonably require
and/or a deposit of cash as security for the performance of
covenants as the Landlord shall reasonably require; and
(e) comply with all other reasonable requirements of the Landlord
and any superior landlord in relation to obtaining Consent.
(4) The reasonable costs and expenses of the Landlord, any superior
landlord and the mortgagees of any of them (including VAT) in
connection with the application for Consent (including the cost of
any court proceedings shall be borne jointly by the Grantor and the
Grantee in equal shares, whether or not the Consent is granted.
5. GUARANTEE
In consideration of the Grantor entering into this Deed at the
Guarantor's request, the Guarantor guarantees to the Grantor the
obligations and liabilities of the Grantee under this Deed such
guarantee to be on the same terms as the guarantee provisions set out
in clause 8 of the Property Agreement which is hereby incorporated
into this Deed subject to any necessary amendments to ensure that the
guarantee applies to this Deed.
6. TERMINATION
This Deed shall terminate on the termination of the Lease (through
effluxion of time, forfeiture or otherwise) unless the Tenant is
granted relief from forfeiture.
7. NO SURRENDER
This Deed is not intended to and does not effect any surrender of the
Lease or the grant of any new lease.
8. GENERAL
(1) DISPUTES
Any dispute regarding a provision of this Deed shall be determined by
a single arbitrator being either a surveyor with not less than 10
years experience in such matters or counsel of not less thin 10 years
call and experienced in such matters in either case acting as an
expert such arbitrator to be agreed by the Grantor and the Grantee
or, failing agreement, by a single arbitrator appointed by the
president or his deputy for the time being of the Royal Institution
of Chartered Surveyors in accordance with the Arbitration Act 1996 or
if appropriate bearing in mind the nature of the dispute the President
for the time being of the Law Society.
(2) JOINT AND SEVERAL LIABILITY
Where the Grantee, the Grantor or the Guarantor is more than one
person:
(a) those persons shall be jointly and severally responsible in
respect of every obligation undertaken by them under this Deed;
and
(b) The Grantor may release or compromise the liability of any of
those persons under this Deed or grant any time or other
indulgence without affecting the liability of any other of
them.
(3) NOTICES IN WRITING
Every notice, consent, approval or direction given under this Deed
shall be in writing.
(3) COUNTERPARTS
This Deed may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same Deed and any
party may enter into this Deed by executing a counterpart.
9. NOTICES
Where the Grantee is Niagara LaSalle (UK) Limited the notice
provisions set out in subparagraph A below shall apply to any notice
served under this Agreement, such notice provisions being personal to
Niagara LaSalle (UK) Limited. At any other time the notice provisions
set out in sub-paragraph B below shall apply.
A. (1) Any notice or other document to be served under this agreement may
be delivered or sent by post to the party to be served as follows:
(a) to the Grantor at the address set out in this Deed marked for
the attention of the Company Secretary;
(b) to the Grantee at
Victoria Steelworks
Bull Lane
Moxley
Wednesbury
West Midlands WS 10 8RS
marked for the attention of Tony Bagshaw
with a copy to Niagara Corporation at 667 Madison Avenue,
New York, 10021, USA;
(c) to the Guarantor at:
667 Madison Avenue
New York 10021
USA
or at such other address as it may have notified to the other
party in accordance with this clause. Any notice or other
document sent by post shall be sent by prepaid first class
recorded delivery post (if within the United Kingdom) or by
prepaid registered airmail (if elsewhere).
(2) Any notice or other communication shall be deemed to have been
duly given:
(a) if delivered personally, when left at the address referred to
in subclause (1); or
(b) if sent by recorded mail other than airmail, two days after
posting it; or
(c) if sent by registered airmail, six days after posting it,
provided always that a notice given in accordance with
the above but received on a day which is not a Business
Day or after business hours on a Business Day in the
place of receipt will only be deemed to be given on the
next Business Day in that place.
B. Any notice or other document served under this Deed may be served in
any way in which a notice required or authorised to be served under
section 196 of the Law of Property Act 1925 may be served.
10. GOVERNING LAW AND JURISDICTION
(1) This Deed is governed by and shall be construed in accordance with
English Law.
(2) The Guarantor submits to the jurisdiction of the English Courts for
all purposes relating to this Deed and appoints the Tenant's
solicitors, Paisner & Co of Bouverie House, 154 Fleet Street, London
EC4Y 2JD (or such other solicitors as shall subsequently be notified
in writing to the Grantor) as agent for service of process with
respect thereto.
11. REGISTRATION
(1) Immediately following the date of this Deed the Grantor shall place
its land certificates relating to the Property on deposit at HM Land
Registry to permit the Grantee to note the provisions of this Deed on
the registers of title for the Property.
[AND FOR BLACKBROOK ROAD, DUDLEY ONLY:
(2) In relation to the part of the Property registered under title number
WM 159185 for which the Grantor will apply for a replacement land
certificate, the provisions of sub-clause (1) above shall only apply
once the Seller or the Seller's solicitor notifies the Buyer or the
Buyer's solicitor of the replacement title number.]
IN WITNESS of which this Deed has been executed as a deed in writing arid
has been delivered on the date which first appears on page 1.
THE COMMON SEAL OF )
[RELEVANT GLYNWED )
COMPANY] LIMITED )
was affixed in the )
presence of: )
Director:
Secretary:
THE COMMON SEAL OF )
GLYNWED PROPERTIES )
LIMITED was affixed in the )
presence of: )
Director:
Secretary:
THE CONMMON SEAL OF )
NIAGARA LASALLE )
(UK) LIMITED was affixed in )
the presence of: )
Director:
Secretary:
[EXECUTION CLAUSE FOR
NIAGARA CORPORATION]
SCHEDULE
PART I
The provisions of the Lease shall be varied as follows:
1. In clause 1 (Definitions) the following definitions shall be inserted
after the definition of "Rent":
""REVIEW DATE" means [insert day and month of Lease] in the years 2014
and 2019;
"REVIEW PERIOD" means the period starting with any Review Date up to
the next Review Date or starting with the last Review Date for a
period of five years after the last Review Date;"
2. Clauses 4(1) and (2) (Rent) shall not apply and shall be replaced by the
following:
"(1) RENT
The yearly rent shall be:
(a) until the first Review Date the rent of [open market rent
ascertained in accordance with the provisions contained
in this Lease to be inserted]; and
(b) during each successive Review Period a rent equal to the
rent previously payable under this Lease (or the rent
which would be payable but for any abatement or
suspension of rent under this Lease) or the revised rent
ascertained in accordance with this clause, whichever is
the greater.
(2) RENT PAYMENT DATES
The yearly rent is payable without any deduction, withholding
or set- off by equal quarterly payments in advance on the
Quarter Days. The first payment (which is an apportioned sum)
is to be made on the date of this Lease in respect of the
period commencin], 2009 and ending on the day before the next
following Quarter Day.
(3) RENT REVIEW - METHOD
The revised rent for any Review Period may be agreed in writing
at any time between the Landlord and the Tenant or (in the
absence of agreement) determined not earlier than the relevant
Review Date by an independent valuer (acting as an expert and
not as an arbitrator) of recognised standing and having
experience in letting and valuing property of a like kind and
character to the Property.
(4) NOMINATION
The independent valuer may be nominated in the absence of
agreement by or on behalf of the president for the time being
of the Royal Institution of Chartered Surveyors on the
application of either the Landlord or the Tenant made not
earlier than three months before the relevant Review Date.
(5) RENT REVIEW - AMOUNT
(a) The revised rent to be determined by the valuer shall be
such as he shall decide is the yearly rent at which the
Property might reasonably be expected to be let at the
relevant Review Date:
(i) after the expiry of a rent free period or any
necessary rent period given for fitting-out
purposes only of such length and the giving of
other inducements (including, without limitation,
any, capital payment or contribution to fitting out
costs) given for fitting out purposes only as would
be negotiated in the open market between a willing
landlord and a willing tenant so that the yearly
rent is that payable after the expiry of any such
rent free period or concessionary rent period and
after the giving of any such inducement for the
fitting out purposes as referred to above; and
(ii) on the assumptions set out in sub-clause (6) but
disregarding the matters set out in sub-clause (7).
(b) On any rent review the Tenant shall not deduce as
comparable evidence the terms of any underlease of the
Property which it has granted, including rent.
(6) ASSUMPTIONS
The assumptions are that at the relevant Review Date:
(a) the Property:
(i) is available to let on the open market by a willing
landlord to a willing tenant by one lease without a
premium from either party and with vacant
possession for a term of 10 years commencing on the
relevant Review Date with the rent payable from
then;
(ii) is to be let as a whole on a lease which is to
contain the same terms as this Lease (other than
the amount of the rent referred to in sub-clause
(l)(a) but including the provisions for review of
that rent at the same intervals as those in this
Lease) the first Review Date in that lease being
the fifth anniversary of the relevant Review Date;
(iii) is fit and available for immediate occupation and
is fitted out at the incoming tenant's cost for the
incoming tenant's immediate use as authorised by
this Lease; and
(iv) may be used for any of the purposes permitted by this
Lease.
(b) all the covenants in this Lease by the Landlord and the
Tenant have been performed and observed;
(c) no work has been carried out to the Property which has
diminished the rental value and in case the Property has
been destroyed or damaged it has been fully restored.
(7) DISREGARDS
The matters to be disregarded are:
(a) any effect on rent of the fact that the Tenant, its
subtenants or their respective predecessors in title have
been in occupation of the Property;
(b) any goodwill attached to the Property by reason of the
carrying on at it of the business of the Tenant, its
subtenants or their predecessors in title in their
respective businesses; and
(c) any increase in rental value of the Property attributable
to the existence at the relevant Review Date of any
voluntary improvement to the Property carried out by the
Tenant, its subtenants or their respective predecessors
in title during the Term or during any earlier period of
occupation arising out of an agreement to grant the Term.
In this sub-clause a "VOLUNTARY IMPROVEMENT" is one carried out
with consent of the Landlord (where required) but not under an
obligation to the Landlord or its predecessors in title.
(8) VALUER
(a) The fees and expenses of the valuer including the cost of his
appointment shall be borne as he shall decide or in the absence
of any decision equally by the Landlord and the Tenant who
shall otherwise each bear their own costs.
(b) The valuer shall afford the Landlord and the Tenant an
opportunity to make representations to him.
(c) If the valuer dies, delays or becomes unwilling or incapable of
acting or if for any other reason the president for the time
being of the Royal Institution of Chartered Surveyors or the
person acting on his behalf thinks fit he may discharge the
valuer and appoint another in his place.
(9) MEMORANDUM
When the revised rent has been ascertained memoranda of it
shall be signed by or on behalf of the Landlord and the Tenant
and annexed to this Lease and the counterpart of it and the
Landlord and the Tenant shall bear their own costs in respect
of the memoranda.
(10) INTEREST
If the revised rent payable with effect from any Review Date
has not been agreed by that Review Date, rent shall continue to
be payable at the rate previously payable. Forthwith on the
revised rent being ascertained the Tenant shall pay to the
Landlord any shortfall between the rent and the revised rent
payable up to and on the preceding quarter day together with
interest at the Interest Rate compounded quarterly on each part
of the shortfall from the date or respective dates on which
each part would have been due for payment had the revised rent
been ascertained before the relevant Review Date until the date
of payment.
For the purpose of this clause the revised rent shall be deemed
to have been ascertained on the date when it has been agreed
between the Landlord and the Tenant or the date of the award of
the arbitrator or of the determination by the valuer.
(11) COSTS
If either the Landlord or the Tenant fails to pay any costs
awarded against it in the case of an arbitration or the
relevant part of the fees and expenses of the valuer under
sub-clause (9) within 15 Business Days of the same being
demanded by the arbitrator or the valuer the other shall be
entitled to pay the same and the amount so paid shall be repaid
on demand by the party chargeable and recoverable from that
party as a debt due.
(12) TIME NOT OF THE ESSENCE
Time shall not be of the essence for the purposes of this
clause."
3. Sub-clause 5(3)(e) (Outgoings) shall be amended by the deletion of
the words "during the first six years of the Term" from the first
line of that sub-clause.
4. Sub-clause 5(7)(c) (Entry by the Landlord) shall be amended by the
insertion of the words "and any person acting as valuer under clause
4" after the word "Landlord" in the first line and by the insertion
of the words "or the implementation of clause 4" at the end of the
sub-clause.
5. Clause 7 (Alienation) shall be deleted and replaced with the following
new clause 7:
"7 ALIENATION
(1) RESTRICTIONS ON ALIENATION
The Tenant shall not:
(a) save to the extent permitted by the following sub-clauses
of this clause, part with possession of the whole or any
part of the Property or part with or share occupation of
the whole or any part of the Property or permit
occupation by a licensee of the whole or any part of the
Property or hold on any trust the whole or any part of
the Property;
(b) if it is an unlimited company, incorporate itself as a
limited company without the prior consent of the
Landlord.
(2) ASSIGNMENT
The Tenant shall not:
(a) assign part of the Property;
(b) assign the whole of the Property without the prior
consent of the Landlord which, subject to sub-clauses (3)
and (4), shall not be unreasonably withheld or delayed.
(3) AGREEMENT AS TO CIRCUMSTANCES
The Landlord and the Tenant agree that the Landlord may
withhold its consent to an assignment if any one or more of the
following circumstances (which are specified for the purposes
of section 19(1A) of the Landlord and Tenant Act 1927) exist:
(a) any Rent due (following demand if required under the
terms of this Lease) from the Tenant under this Lease is
unpaid;
(b) the Landlord reasonably determines that the proposed
assignee is not a person who is likely to be able to
comply with the covenants by the Tenant in this Lease
following completion of the assignment;
(c) the proposed assignee or any proposed guarantor for it
(other than any guarantor under an authorised guarantee
agreement) has the benefit of state or diplomatic
immunity or the Landlord determines that it is likely to
acquire that immunity;
(d) the proposed assignee is a company which is a member of
the same group (within the meaning of section 42 of the
Landlord and Tenant Act 1954) as the Tenant;
(e) the Landlord reasonably determines that there is a
subsisting material breach of any of the tenant's
covenants by the Tenant or the conditions in this Lease.
(4) AGREEMENT AS TO CONDITIONS
The Landlord and the Tenant agree that the Landlord may grant
consent to an assignment subject to any one or more of the
following conditions (which are specified for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927):
(a) that before the assignment the Tenant enters into and
unconditionally delivers to the Landlord an authorised
guarantee agreement (as defined in section 16 of the
Landlord and Tenant (Covenants) Act 1995), such agreement
to be a deed and where the Tenant is NIAGARA LASALLE
(U.K.) LIMITED to contain the provisions in Part A of
Schedule 6 and at any other time to contain the
provisions in Part B of Schedule 6 or in either case such
other provisions as the Landlord shall first notify to
the Tenant, to be approved by the Tenant, such approval
not to be unreasonably withheld or delayed;
(b) that before the assignment any person (other than a
former Tenant) who at the time of the application for the
consent is guaranteeing the obligations and liabilities
of the Tenant under this Lease covenants by deed with the
Landlord that the Tenant shall perform its obligations
under the authorised guarantee agreement required under
paragraph (a), the deed to contain where that person is
NIAGARA CORPORATION provisions equivalent to those
contained in paragraphs 1 to 6 and 11 of Part A of
Schedule 5 and at any other time, provisions equivalent
to those contained in paragraphs 1 to 4 and 9 of Part B
of Schedule 5 and an obligation on the part of the
covenantor (in the event of default on the part of the
Tenant) to perform any obligation entered into by the
Tenant in the authorised guarantee agreement to take up a
new lease, and otherwise to be in such form as the
Landlord reasonably requires PROVIDED THAT if such person
declines to enter into this covenant, the Tenant shall
procure that there is paid to the Landlord a rent deposit
equal to two years of the annual rent payable under
clause 4(1)(b) of this Lease;
(c) that before the assignment, if the Landlord reasonably
determines it to be necessary, one or more guarantors
acceptable to the Landlord, acting reasonably, covenant
by deed with the Landlord in the form set out in Part B
of Schedule 5 (with "assignee" substituted for "Tenant"
in paragraphs 1 to 9 inclusive and with such other
provisions as the Landlord reasonably requires) in
respect of the period ending on the date on which the
assignee is released by virtue of the Landlord and Tenant
(Covenants) Act 1995;
(d) that before the assignment where reasonably required a
rent deposit is paid to the Landlord, such deposit to be
an amount equal to six months of the annual rent payable
under clause 4(l)(c) of this Lease or such greater amount
as is reasonable in the circumstances;
(e) that all Rent due (following demand if required under the
term of this Lease) from the Tenant under this Lease as
at the date of the assignment has been paid;
(f) that the assignment is completed within three months of
the date of the consent and that if it is not, the
consent shall be void but any of the guarantees referred
to in paragraphs (a) to (c) shall nevertheless remain in
full force and effect.
(5) FURTHER AGREEMENT
The Landlord and the Tenant agree that any power on the part of
the Landlord to determine any matter for the purposes of
sub-clauses (3) or (4) shall be exercised reasonably.
(6) UNDERLETTING
The Tenant shall not:
(a) underlet part of the Property; or
(b) underlet the whole of the Property without:
(i) complying with the provisions of sub-clauses (7) to
(11); and
(ii) the prior consent of the Landlord, which shall not be
unreasonably withheld.
(7) COVENANTS ON UNDERLETTING
The Tenant shall procure that any intended undertenant
covenants by deed with the Landlord:
(a) to pay the rent to be reserved by and the other sums to
be payable under the underlease and to perform and
observe, first, the covenants by the tenant and the
conditions to be contained in the underlease and,
secondly, the covenants by the Tenant and the conditions
contained in this Lease (except first the covenant to pay
rent and secondly any covenant in this Lease which is
inconsistent with the covenants in the underlease as
authorised under sub-clause (9)) throughout the period
during which the undertenant is bound by the covenants by
the tenant and conditions in the underlease;
(b) without prejudice to paragraph (a), not to assign the
underlet property without:
(i) first obtaining a deed of covenant from the
intended assignee in favour of the Landlord in the
same form (with the necessary changes) as the deed
referred to in this sub-clause, including (without
limitation) the covenants in this paragraph (b);
and
(ii) if the Landlord reasonably requires, first
obtaining a deed from one or more guarantors
acceptable to the Landlord, acting reasonably, in
favour of the Landlord guaranteeing the due and
punctual payment and performance of all the
obligations and liabilities of the intended
assignee under the deed referred to in sub-
paragraph (i), the deed to contain provisions
equivalent to those contained in paragraphs 1 to 4
and 9 of Part B of Schedule 5 and otherwise to be
in such form as the Landlord reasonably requires.
(8) GUARANTEE ON UNDERLETTING
If the Landlord reasonably requires, the Tenant shall procure
that, before the underlease is granted, one or more guarantors
acceptable to the Landlord, acting reasonably, guarantee (by
way of deed) to the Landlord, in respect of the period ending
on the date on which the undertenant is released by virtue of
the Landlord and Tenant (Covenants) Act 1995, the due and
punctual payment and performance of all the obligations and
liabilities of the intended undertenant, the guarantee to
contain provisions equivalent to those contained in paragraphs
1 to 4 and 9 of Part B of Schedule 5 and otherwise to be in
such form as the Landlord reasonably requires.
(9) FORM OF UNDERLEASE
The Tenant shall procure that every underlease shall:
(a) contain the same covenants by the tenant and other terms
and conditions as are contained in this Lease subject
only to:
(i) such amendments as may be provided for in
paragraphs (b) to (d); and
(ii) such amendments as may reasonably be required by
the Tenant, having regard only to the duration of
the proposed underlease, and as may be approved by
the Landlord, such approval not to be unreasonably
withheld or delayed;
(b) not permit any assignment, underlease or other dealing or
disposal of the Property which is prohibited by the terms
of this Lease and prohibit any further underletting of
the whole or any part of the Property;
(c) provide that where the underlease requires the
undertenant to obtain the landlord's consent, the
undertenant shall be required to obtain also the consent
of the Landlord which shall not be unreasonably withheld
or delayed where such consent cannot be unreasonably
withheld or delayed under the terms of this Lease;
(d) contain provisions to ensure that the tenancy is excluded
from the provisions of sections 24 to 28 of the Landlord
and Tenant Act 1954;
(e) contain provisions that require a review of the rent
payable under the underlease to open market rent in
accordance with the provisions and at the dates for
review of the rent payable under this Lease, but this
paragraph shall not prohibit an underlease of the
Property upon terms that require review of the rent
payable under the underlease at dates additional to the
dates for review of the rent payable under this Lease."
(10) UNDERLEASE REQUIREMENTS
The Tenant shall:
(a) not grant any underlease at a fine or premium;
(b) not grant any underlease at a rent which at the time of
the grant of the underlease is less than the open market
rent of the Property;
(c) not accept the surrender of or vary the terms of any
underlease or release the undertenant from any covenant
or condition in the underlease without the prior consent
of the Landlord which, in the case only of a surrender,
shall not be unreasonably withheld;
(d) not waive any breach of any of the covenants on the part
of the undertenant and the conditions contained in any
underlease but take all such steps as are lawfully
available to the Tenant (including re-entry) to enforce
such covenants and conditions;
(e) procure that on any assignment of any underlease the
outgoing undertenant enters into an authorised guarantee
agreement and, where appropriate, guarantors enter into a
contractual guarantee in each case with the landlord
under the underlease in accordance with the provisions of
the underlease;
(f) procure that the rent reserved by any underlease is
reviewed in accordance with the provisions of the
underlease but not agree any revised rent with the
undertenant without the prior consent of the Landlord
(such consent not to be unreasonably withheld or
delayed), and if on any rent review under any underlease
the revised rent is to be determined by an independent
third party, procure that any representations which the
Landlord may wish to make acting reasonably concerning
the revised rent are put forward to the third party at
the same time as the representations of the Tenant and as
though they were representations made by the Tenant.
In paragraphs (c) to (f) of this sub-clause an underlease
includes any lease where, by virtue of the grant of this Lease,
the Tenant under this Lease becomes the holder of the immediate
reversion to that lease.
(11) ASSOCIATED COMPANIES
The Tenant may share the occupation of the whole or any part of
the Property with a company which is a member of the same group
as the Tenant (within the meaning of section 42 of the Landlord
and Tenant Act 1954) for so long as both companies remain
members of that group and provided that:
(a) no relationship of landlord and tenant is created between
the two companies and no security of tenure is conferred
upon the occupier; and
(b) within 15 Business Days of the commencement of the
sharing the Tenant gives to the Landlord notice of the
company sharing occupation and the address of its
registered office.
(12) CHARGING
The Tenant shall not:
(a) charge part of the Property; or
(b) charge the whole of the Property without the prior
consent of the Landlord, which shall not be unreasonably
withheld or delayed.
(13) REGISTRATION OF DEALINGS
Within 28 days of every assignment, transfer, underlease or
charge of the Property or the creation or transfer of any
interest derived out of the Term or any devolution of the
interest of the Tenant or any person deriving title under the
Tenant, the Tenant shall produce a certified copy of the
assignment, transfer, underlease or charge or (in the case of a
devolution) the document evidencing or under which the
devolution arises and pay the Landlord a registration fee of a
reasonable amount, being not less than (pound)25, in respect of
each assignment, transfer, underlease, charge or devolution.
6. A new sub-clause 8(18) shall be added as follows:
(18) While Niagara LaSalle (UK) Limited is the Tenant, the Landlord
shall use reasonable endeavours to obtain from the insurers
confirmation that the insurer waives its rights of subrogation
against the Tenant.
7. Clause 9 (Guarantor's Covenant) shall be deleted and replaced with the
following new clause 9:
9. "GUARANTOR'S COVENANT
The Guarantor covenants with the Landlord where the Guarantor is
NIAGARA CORPORATION on the terms set out in Part A of Schedule 5 and
at any other time on the terms set out in Part B of Schedule 5."
8. Clause 12 (Right to Break) shall be deleted.
9. Schedule 5 shall be deleted and replaced with the following new
Schedule 5:
"SCHEDULE 5
GUARANTEE PROVISIONS
PART A
1. In consideration of the mutual covenants contained in this Lease, the
Guarantor guarantees to the Landlord and shall procure the due and
punctual performance of each obligation of the Tenant under this
Lease and shall pay to the Landlord from time to time on demand, or
procure that the Tenant shall pay, any sum which the Tenant is at any
time liable to pay to the Landlord under this Lease and which has not
been paid at the time the demand is made.
2. The obligations of the Guarantor under paragraph 1:
(a) constitute direct, primary, unconditional and irrevocable
obligations without the need for any recourse on the part of the
Landlord against the Tenant;
(b) shall not be affected or impaired by any concession, time or
indulgence granted by the Landlord or by any other dealing or
thing which would but for this paragraph (2)(b) operate to
discharge or reduce that liability; and
(c) shall not be affected or impaired by anything (including any
legal limitation, disability or incapacity on the part of the
Tenant) which causes any of the obligations of the Tenant under
this Lease to be or become invalid or unenforceable.
3. If any of the obligations of the Tenant under this Lease is or
becomes invalid or unenforceable the Guarantor shall perform and
discharge all such obligations as if they were primary obligations of
the Guarantor or shall procure that the Tenant performs and
discharges all such obligations.
4. The guarantee set out in this clause shall extend to any costs,
charges and expenses incurred by the Landlord in enforcing or seeking
its enforcement.
5. The Guarantor shall make any payments due from it under this clause
in full and, without any deduction or withholding in respect of any
claim whatsoever (whether by way of set-off, counterclaim or
otherwise).
6. If the Landlord brings proceedings against the Tenant, the Guarantor
shall be bound by any findings of fact, interim or final award or
interlocutory or final judgment made by an arbitrator or the court in
those proceedings.
7. If
(a) the Tenant (being a company) enters into liquidation and the
liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown disclaims
this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the trustee
in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease of the
Property for a term equivalent to the residue which would have
remained of the Term if there had been no disclaimer or forfeiture at
the same rents and subject to the same covenants and conditions
(including those as to the review of rent) as and reserved by and
contained in this Lease (with the exception of this Schedule).
8. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new lease as
from the date of disclaimer or forfeiture as if the new lease had
been granted on the date of disclaimer or forfeiture.
9. The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute and
deliver to the Landlord a counterpart of it.
10. If the Landlord does not require the Guarantor to take a Lease of the
Property, the Guarantor shall pay to the Landlord on demand a sum
equal to the rent that would have been payable under this Lease but
for the disclaimer or forfeiture in respect of the period from the
date of the disclaimer or forfeiture until the date which is six
months after the date of the disclaimer or forfeiture or the date on
which the property has been re-let by the Landlord, whichever first
occurs.
11. If any VAT is payable by the Tenant to the Landlord under the terms
of the Lease, the Guarantor's obligation shall extend to that VAT If
the Guarantor makes any payment in respect of VAT, the Landlord's
obligation to issue a VAT invoice to the Tenant under the Lease in
respect of that VAT shall not be affected, and the Landlord shall not
be under any obligation to issue a VAT invoice to the Guarantor in
respect of that VAT."
PART B
1. The Guarantor guarantees to the Landlord the due and punctual payment and
performance by the Tenant of all the obligations and liabilities of the
Tenant under this Lease and shall indemnify the Landlord against all
losses, damages, costs and expenses arising or incurred by the Landlord
as a result of the non-payment or non-performance of those obligations or
liabilities.
2. The obligations of the Guarantor under this Lease:
(a) constitute a direct, primary and unconditional liability to pay
on demand to the Landlord any sum which the Tenant is liable to
pay under this Lease and to perform on demand by the Landlord
any obligation of the Tenant under this Lease without the need
for any recourse on the part of the Landlord against the
Tenant;
(b) will not be affected by:
(i) any time or indulgence granted to the Tenant by the Landlord;
(ii) any legal limitation, disability or other circumstances
relating to the Tenant or any irregularity,
unenforceability or invalidity of any obligations of the
Tenant under this Lease;
(iii) any licence or consent granted to the Tenant or any
variation in the terms of this Lease save as provided in
section 18 of the Landlord and Tenant (Covenants) Act
1995;
(iv) the release of one or more of the parties defined as the
Guarantor (if more than one); or
(v) any other act, omission, matter, event or thing whereby
(but for this provision) the Guarantor would be
exonerated in whole or in part from the guarantee other
than a release by deed given by the Landlord.
3. So long as this guarantee remains in force the Guarantor shall not:
(a) in the event of any bankruptcy, liquidation, rehabilitation,
moratorium or other insolvency proceedings relating to the
Tenant, claim or prove as creditor in competition with the
Landlord; or
(b) be entitled to claim or participate in any security held by the
Landlord in respect of the obligations of the Tenant under this
Lease; or
(c) exercise any right of set-off against the Tenant.
4. If the Landlord brings proceedings against the Tenant, the Guarantor
shall be bound by any findings of fact, interim or final award or
interlocutory or final judgment made by an arbitrator or the court in
those proceedings.
5. If:
(a) the Tenant (being a company) enters into liquidation and the
liquidator disclaims this Lease; or
(b) the Tenant (being a company) is dissolved and the Crown disclaims
this Lease; or
(c) the Tenant (being an individual) becomes bankrupt and the trustee
in bankruptcy disclaims this Lease; or
(d) this Lease is forfeited,
then within six months after the disclaimer or forfeiture the
Landlord may require the Guarantor by notice to accept a lease of the
Property for a term equivalent to the residue which would have
remained of the Term if there had been no disclaimer or forfeiture at
the same rents and subject to the same covenants and conditions
(including those as to the review of rent) as are reserved by and
contained in this Lease (with the exception of this Schedule).
6. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer or forfeiture and the
Guarantor shall be liable for all payments due under the new lease as
from the date of disclaimer or forfeiture as if the new lease had
been granted on the date of disclaimer or forfeiture.
7. The Guarantor or his personal representatives shall pay the
Landlord's costs of and accept the new lease and shall execute and
deliver to the Landlord a counterpart of it.
8. If the Landlord does not require the Guarantor to take a Lease of the
Property, the Guarantor shall pay to the Landlord on demand a sum
equal to the rent that would have been payable under this Lease but
for the disclaimer or forfeiture in respect of the period from the
date of the disclaimer or forfeiture until the date which is six
months after the date of the disclaimer or forfeiture or the date on
which the property has been re-let by the Landlord, whichever first
occurs.
9. If any VAT is payable by the Tenant to the Landlord under the terms
of the Lease, the Guarantor's obligation shall extend to that VAT If
the Guarantor makes any payment in respect of VAT, the Landlord's
obligation to issue a VAT invoice to the Tenant under the Lease in
respect of that VAT shall not be affected, and the Landlord shall not
be under any obligation to issue a VAT invoice to the Guarantor in
respect of that VAT."
10. Schedule 6 shall be deleted and replaced with the following new
Schedule 6:
"SCHEDULE 6
AUTHORISED GUARANTEE AGREEMENT
PART A
1. The Guarantor guarantees to the Landlord and shall procure the due
and punctual performance by the Assignee throughout the Guarantee
Period of each obligation of the Assignee under this Lease and shall
pay to the Landlord from time to time on demand, or procure that the
Assignee shall pay, any sum which the Assignee is at any time liable
to pay to the Landlord under this Lease and which has not been paid
at the time the demand is made.
2. The obligations of the Guarantor under paragraph 1:
(a) constitute direct, primary, unconditional and irrevocable
obligations without the need for any recourse on the part of the
Landlord against the Assignee;
(b) shall not be affected or impaired by any concession, time or
indulgence granted by the Landlord or by any other dealing or
thing which would but for this paragraph (2)(b) operate to
discharge or reduce that liability; and
(c) shall not be affected or impaired by anything (including any
legal limitation, disability or incapacity on the part of the
Assignee) which causes any of the obligations of the Assignee
under this Lease to be or become invalid or unenforceable,
3. If any of the obligations of the Assignee under this Lease is or
becomes invalid or unenforceable the Guarantor shall perform and
discharge all such obligations as if they were primary obligations of
the Guarantor or shall procure that the Assignee performs and
discharges all such obligations.
4. The guarantee set out in this paragraph shall extend to any costs,
charges and expenses incurred by the Landlord in enforcing or seeking
its enforcement.
5. The Guarantor shall make any payments due from it under this
paragraph in full and, without any deduction or withholding in
respect of any claim whatsoever (whether by way of set-off,
counterclaim or otherwise).
6. If the Landlord brings proceedings against the Assignee, the
Guarantor shall be bound by any findings of fact, interim or final
award or interlocutory or final judgment made by an arbitrator or the
court in those proceedings.
7. If during the Guarantee Period the Assignee (being a company) enters
into liquidation and the liquidator disclaims this Lease, or the
Assignee (being a company) is dissolved and the Crown disclaims this
Lease, or the Assignee (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease, then within six months
after the disclaimer the Landlord may require the Guarantor by notice
to enter into a new lease of the Property for a term equivalent to
the residue which would have remained of the term granted by this
Lease if there had been no disclaimer at the same rents and subject
to the same covenants and conditions (including as to the review of
rent) as are reserved by and contained in this Lease.
8. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor shall be
liable for all payments due under the new lease as from the date of
disclaimer as if the new lease had been granted on the date of
disclaimer.
9. The Guarantor shall pay the Landlord's costs of and accept the new
lease and shall execute and deliver to the Landlord a counterpart of
it.
10. If the Landlord does not require the Guarantor to take a new lease of
the Property the Guarantor shall pay to the Landlord on demand a sum
equal to the rents that would have been payable under this Lease but
for the disclaimer in respect of the period from the date of the
disclaimer until the date which is six months after the date of the
disclaimer or the date on which the Property has been re-let by the
Landlord, whichever first occurs.
11. To the extent that any provision of this guarantee does not conform
with section 16 of the Act, that provision shall be severed from the
remainder of this guarantee and this guarantee shall have effect as
if it excluded that provision.
12. If any VAT is payable by the Tenant to the Landlord under the terms
of the Lease, the Guarantor's obligation shall extend to that VAT. If
the Guarantor makes any payment in respect of VAT, the Landlord's
obligation to issue a VAT invoice to the Assignee under the Lease in
respect of that VAT shall not be affected, and the Landlord shall not
be under any obligation to issue a VAT invoice to the Guarantor in
respect of that VAT.
13. In this Schedule:
"ACT" means the Landlord and Tenant (Covenants) Act 1995;
"ASSIGNEE" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"GUARANTEE PERIOD" means the period ending on the date on which the
Assignee is released by virtue of the Landlord and Tenant (Covenants)
Act 1995.
PART B
1. The Guarantor guarantees to the Landlord the performance by the
Assignee throughout the Guarantee Period of each of the covenants
falling to be complied with by the Tenant under this Lease and shall
indemnify the Landlord against all losses, damages, costs and
expenses arising or incurred by the Landlord as a result of such
non-performance.
2. The obligations of the Guarantor under this guarantee will not be
affected by:
(a) any time or indulgence granted to the Assignee by the Landlord;
(b) any legal limitation, disability or other circumstances
relating to the Assignee or any irregularity, unenforceability
or invalidity of any obligations of the Assignee under this
Lease;
(c) any licence or consent granted to the Assignee or any variation in
the terms of this Lease save as provided in section 18 of the Act;
(d) the release of one or more of the parties defined as the Guarantor
(if more than one); or
(e) any other act, omission, matter, event or thing whereby (but
for this provision) the Guarantor would be exonerated in whole
or in part from the guarantee other than a release under seal
given by the Landlord.
3. The Guarantor is liable to the Landlord under this guarantee as sole
or principal debtor and the obligations of the Guarantor under this
guarantee constitute a direct, primary and unconditional liability to
pay on demand to the Landlord any sum which the Assignee is liable to
pay under this Lease and to perform on demand by the Landlord any
obligation of the Assignee under this Lease without the need for any
recourse on the part of the Landlord against the Assignee. If the
Landlord brings proceedings against the Assignee, the Guarantor shall
be bound by any findings of fact, interim or final award or
interlocutory or final judgment made by an arbitrator or the court in
those proceedings.
4. If during the Guarantee Period the Assignee (being a company) enters
into liquidation and the liquidator disclaims this Lease, or the
Assignee (being a company) is dissolved and the Crown disclaims this
Lease, or the Assignee (being an individual) becomes bankrupt and the
trustee in bankruptcy disclaims this Lease, then within six months
after the disclaimer the Landlord may require the Guarantor by notice
to enter into a new lease of the Property for a term equivalent to
the residue which would have remained of the term granted by this
Lease if there had been no disclaimer at the same rents and subject
to the same covenants and conditions (including as to the review of
rent) as are reserved by and contained in this Lease.
5. The new lease and the rights and liabilities under it shall take
effect as from the date of the disclaimer and the Guarantor shall be
liable for all payments due under the new lease as from the date of
disclaimer as if the new lease had been granted on the date of
disclaimer.
6. The Guarantor shall pay the Landlord's costs of and accept the new
lease and shall execute and deliver to the Landlord a counterpart of
it.
7. If the Landlord does not require the Guarantor to take a new lease of
the Property the Guarantor shall pay to the Landlord on demand a sum
equal to the rents that would have been payable under this Lease but
for the disclaimer in respect of the period from the date of the
disclaimer until the date which is six months after the date of the
disclaimer or the date on which the Property has been re-let by the
Landlord, whichever first occurs.
8. During the Guarantee Period the Guarantor shall not:
(a) in the event of any bankruptcy, liquidation, rehabilitation,
moratorium or other insolvency proceedings relating to the
Assignee claim or prove as creditor in competition with the
Landlord; or
(b) be entitled to claim or participate in any security held by the
Landlord in respect of the Assignee's obligations to the Landlord
under this Lease; or
(c) exercise any right of set off against the Assignee.
9. To the extent that any provision of this guarantee does not conform
with section 16 of the Act, that provision shall be severed from the
remainder of this guarantee and this guarantee shall have effect as
if it excluded that provision.
10. If any VAT is payable by the Tenant to the Landlord under the terms
of the Lease, the Guarantor's obligation shall extend to that VAT. If
the Guarantor makes any payment in respect of VAT, the Landlord's
obligation to issue a VAT invoice to the Assignee under the Lease in
respect of that VAT shall not be affected, and the Landlord shall not
be under any obligation to issue a VAT invoice to the Guarantor in
respect of that VAT.
11. In this Schedule:
"ACT" means the Landlord and Tenant (Covenants) Act 1995;
"ASSIGNEE" means [insert name of assignee in respect of whom the
Tenant is entering into the authorised guarantee agreement];
"GUARANTEE PERIOD" means the period ending on the date on which the
Assignee is released by virtue of the Landlord and Tenant (Covenants)
Act 1995."
PART II
THE SIDE DEED
DATED , [ ]
[RELEVANT GLYNWED COMPANY] LIMITED
-and-
GLYNWED PROPERTIES LIMITED
-and-
NIAGARA LASALLE (UK) LIMITED
-and-
NIAGARA CORPORATION
----------------------------
SIDE DEED
relating to land and buildings
known as
[ ]
and lease dated [ ]
of that property
----------------------------
ALLEN & OVERY
London
THIS DEED is made on [ ], 1999
BETWEEN:
(1) [RELEVANT GLYNWED COMPANY] LIMITED (registered number [
]) whose registered office is at Headland House, New
Coventry Road, Sheldon, Birmingham ("GLYNWED");
[(2) INCLUDE IF APPLICABLE - GLYNWED PROPERTIES LIMITED
(registered number 254 047) whose registered office is at Headland House,
New Coventry Road, Sheldon, Birmingham; and]
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308)
whose registered office is at 1st Floor, Bouverie House, 154 Fleet Street,
London, EC4A 2DQ ("NIAGARA"); and
(4) NIAGARA CORPORATION a corporation organised and existing under the
Laws of the State of Delaware, whose principal office is at 667
Madison Avenue, New York 10021, USA (the "GUARANTOR".)
RECITALS
(A) This Deed is supplemental to the Lease by which the Property was
demised for the Term.
(B) Glynwed is the landlord under the Lease, Niagara is the tenant under
the Lease and the Guarantor is the guarantor under the Lease.
[(C) INCLUDE IF APPLICABLE - Glynwed Properties Limited is the beneficial
owner of the Property and has confirmed its consent to this Deed.]
(D) The parties have agreed that while Glynwed is the landlord under the
Lease and Niagara is the tenant under the Lease and occupies the
whole of the Property and the Guarantor is the guarantor under the
Lease, the terms of the Lease shall be varied in accordance with the
terms of this Deed.
THIS DEED WITNESSES as follows:
1. DEFINITIONS
In this Deed:
"LANDLORD" means Glynwed;
"LEASE" means the lease of even date herewith and made between
Glynwed (1) and Niagara (2) in respect of the Property and includes
all deeds and documents supplemental to it;
"PROPERTY" means [ ] as more particularly described in the Lease;
"TENANT" means Niagara;
"TERM" means the term of years granted by the Lease.
2. INTERPRETATI0N
(1) Where there are two or more persons included in the expressions
"Glynwed", "Niagara" or "Guarantor" each reference to Glynwed or
Niagara includes a separate reference to each of those persons.
(2) Any reference, express or implied, to an enactment includes references
to:
(a) that enactment as amended, extended or applied by or under any
other enactment (before or after the execution of this Deed);
(b) any enactment which that enactment re-enacts (with or without
modification);
(c) any subordinate legislation made (before or after the execution
of this Deed) under that enactment, as amended, extended or
applied as described in paragraph (a) above or under any
enactment referred to in paragraph (b) above; and
(d) any consents, licences and permissions given (before or after
the execution of this Deed) under that enactment, as amended,
extended or applied as described in paragraph (a) above or
under any enactment referred to in paragraph (b) above or under
that subordinate legislation and any conditions contained in
those consents, licences and permissions.
(3) Any reference, express or implied, to enactments generally includes
subordinate legislation and any legislation of the European Union
that is directly applicable in the United Kingdom and includes
existing enactments and those that come into effect during the Term.
(4) Sub-clauses (1) to (3) above apply unless the contrary intention appears.
(5) The headings in this Deed do not affect its interpretation.
3. THIS DEED
The provisions of this Deed shall only apply while title to the
reversion of the Lease is vested in Glynwed and while the Term of the
Lease is vested in Niagara and whilst Niagara is in occupation of the
Property and whilst the Guarantor is the guarantor under the Lease
and then only during the period commencing on the date of the Lease
and ending either on the date before the date of the first
transfer/assignment of the reversion of the Lease by Glynwed or on
the day before the date of the first transfer/assignment of the Lease
by Niagara, whichever is earlier.
4. VARIATIONS
The provisions of the Lease shall be varied in accordance with the
provisions set out in the Schedule to this Deed
5. UNDERLETTINGS
If Niagara underlet the whole of the Property, clause 4 (Variations)
of this Deed shall not apply.
6. GUARANTEE
In consideration of Glynwed entering into this Deed at the
Guarantor's request, the Guarantor guarantees to Glynwed the
obligations and liabilities of Niagara under this Deed, such
guarantee to be on the same terms as the guarantee set out in Clauses
1 - 6 and 11 of Part A of Schedule 5 to the Lease which is hereby
incorporated into this Deed subject to all necessary amendments to
ensure that the guarantee applies to this Deed.
7. TERMINATION
This Deed shall terminate on the happening of any one or more of the
following events:
(a) the termination of the Lease (through effluxion of time,
forfeiture or otherwise) unless the Tenant is granted relief
from forfeiture but notwithstanding any such termination the
Tenant shall be under no greater liability to the Landlord in
relation to any period prior to such termination than it would
have been if this Deed had not terminated;
(b) an assignrnent/transfer of the reversion in the Lease by Glynwed;
or
(c) an assignment or underletting of the whole or any part of the
Property by Niagara.
8. ASSIGNMENTS
This Deed is not capable of assignment by Niagara and is personal to
it.
9. NO SURRENDER
This Deed is not intended to and does not effect any surrender of the
Lease or the grant of any new lease.
10. GENERAL
(1) DISPUTES
Any dispute regarding a provision of this Deed shall be determined by
a single arbitrator agreed by Glynwed and Niagara or, failing
agreement, by a single arbitrator appointed by the president or his
deputy for the time being of the Royal Institution of Chartered
Surveyors in accordance with the Arbitration Act 1996.
(2) JOINT AND SEVERAL LIABILITY
Where Niagara or Glynwed or the Guarantor is more than one person:
(a) those persons shall be jointly and severally responsible in
respect of every obligation undertaken by them under this Deed;
and
(b) Glynwed may release or compromise the liability of any of those
persons under this Deed or grant any time or other indulgence
without affecting the liability of any other of them.
(3) NOTICES IN WRITING
Every notice, consent, approval or direction given under this Deed
shall be in writing.
(4) COUNTERPARTS
This Deed may be executed in any number of counterparts, all of
which, taken together, shall constitute one and the same Deed and any
party may enter into this Deed by executing a counterpart.
11. NOTICES
(1) Any notice or other document to be served under this agreement
may be delivered or sent by post to the party to be served as
follows:
(a) to Glynwed at the address set out in this Agreement marked
for the attention of the Company Secretary;
(b) to Niagara at:
Victoria Steel Works
Bull Lane
Moxley
Wednesbury
West Midlands WS10 8RS
marked for the attention of Tony Bagshaw
with a copy to Niagara Corporation at 667 Madison Avenue,
New York, 10021, USA;
(c) to the Guarantor at:
667 Madison Avenue, New York, 10021, USA
or at such other address as it may have notified to the other
party in accordance with this clause. Any notice or other
document sent by post shall be sent by prepaid first class
recorded delivery post (if within the United Kingdom) or by
prepaid registered airmail (if elsewhere).
(2) Any notice or other communication shall be deemed to have been
duly given:
(a) if delivered personally, when left at the address referred to
in subclause (1); or
(b) if sent by recorded mail other than airmail, two days after
posting it; or
(c) if sent by registered airmail, six days after posting it,
provided always that a notice given in accordance with
the above but received on a day which is not a Business
Day or after business hours on a Business Day in the
place of receipt will only be deemed to be given on the
next Business Day in that place.
12. GOVERNING LAW AND JURISDICTION
(1) This Deed is governed by and shall be construed in accordance with
English Law.
(2) The Guarantor submits to the jurisdiction of the English Courts for
all purposes relating to this Deed and appoints the Grantee's
solicitors, Paisner & Co of Bouverie House, 154 Fleet Street, London
EC4Y 2JD (or such other solicitors as shall be notified by the
Guarantor to Glynwed) as agent for service of process with respect
thereto.
IN WITNESS of which this Deed has been executed as a deed in writing and
has been delivered on the date which first appears on page 1.
SCHEDULE
The provisions of the Lease shall be varied as follows:
1. In Clause 1 (Definitions) the definition of "INSURED RISKS" shall be
deleted and replaced with the following definition:
"INSURED RISKS" means all risks of physical loss or damage (including
but not limited to subsidence and theft) as is generally available
under an all risks policy from time to time available in the
insurance market.
2. Sub-clause 5(4)(a) shall be amended so that the wording "or repair
damage caused by an Insured Risk save where: "shall be deleted from
the last line of the sub-paragraph (a) and sub-paragraphs 5(4)(a)(i)
and (ii) shall be deleted.
3. Clause 8 (Insurance) shall be deleted and replaced with the following new
Clause 8:
"8 INSURANCE
(1) TENANT'S INSURANCE OBLIGATIONS
The tenant shall keep the Property insured in the joint names
of the Landlord and the Tenant with insurers or underwriters of
repute in accordance with the provisions of this clause.
(2) SUM AND RISKS INSURED
The Property shall be insured in a sum not less than its full
reinstatement cost against loss or damage by the Insured Risks
and the insurance shall extend to architects and other
professional fees in relation to the reinstatement of the
Property and the cost of demolition and removal of debris.
(3) INSURANCE UNAVAILABLE
The Tenant will immediately notify the Landlord if the Tenant
is unable to arrange insurance in compliance with the
provisions of this clause either in whole or in part.
(4) REINSTATEMENT
If the Property is destroyed or damaged by any of the Insured
Risks, then the Tenant shall use reasonable endeavours to:
(a) obtain all consents and permissions necessary for
reinstatement as soon as reasonably possible; and
(b) subject to obtaining those consents and permissions, lay
out as soon as practicable all insurance monies received
by the Tenant and an amount equal to any excess imposed
by the insurers in reinstating the Property making good
any shortfall out of its own money save as set out in
sub-clause 8(12)(a) below."
(5) FAILURE TO REINSTATE
(a) If reinstatement in accordance with sub-clause (4) has
not commenced within 9 months of the date of the
destruction or damage and provided the Tenant is not
prevented from commencing reinstatement because of a
supervening event (as defined in sub-clause (10) below)
and the Tenant does not within 10 working days of the
expiry of that 9 month period exercise the option
contained in the Option Deed or if the Tenant exercises
the option but subsequently fails to complete the
purchase in accordance with the Option Deed the Landlord
may at any time after the expiry of the 10 working days
or the failure to complete serve written notice on the
Tenant terminating the Lease with immediate effect and
the provisions of clause 12(3) of the Lease will apply to
such termination.
(b) If reinstatement by the Tenant has not been completed in
accordance with sub-clause (4) above by the date 3 years
from the date of damage or destruction of the Property
either party may at any time after the expiry of the 3
year period serve 10 days written notice on the other
terminating the Lease, such termination to take effect on
the expiry of the Landlord's written notice and the
provision of clause 12(3) of the Lease will apply to such
termination.
On the termination of the Lease under sub-paragraph (a)
or (b) of this sub-clause the Tenant shall pay all
insurance monies together with an amount equal to any
shortfall in the full reinstatement value of the Property
(save as set out in sub- clause 8(12)(a) below) and the
cost of architects and other professional fees in
relation to the reinstatement of the Property and the
cost of demolition and removal of debris to the Landlord
save to the extent that the Tenant has properly applied
any portion of the insurance monies with the prior
written approval of the Landlord to the reinstatement of
the Property up to the date of termination of the Lease
by the Landlord. Any dispute as to the amount to be paid
by the Tenant shall be referred to arbitration.
Any Landlord's notice to terminate the Lease served under
this sub-clause shall not take effect if at any time
prior to the expiry of the notice the Tenant exercises
its option to purchase the freehold of the Property
pursuant to the Option Deed provided that if the Tenant
subsequently fails to complete the purchase in accordance
with the Option Deed the Landlord may at any time serve a
further notice on the Tenant terminating the Lease with
immediate effect and the provisions of clause 12(3) of
the Lease will apply to such termination.
(6) FAILURE TO INSURE
If the Tenant fails to insure in accordance with this clause 8
the Landlord may (but without prejudice to its other rights,
including its right of re-entry) insure in accordance with this
clause (but in its sole name or in the joint names of the
Landlord and Tenant, at the Landlord's option) and all premiums
paid by the Landlord and all incidental expenses will be
re-paid by the Tenant to the Landlord on demand.
(7) PRODUCTION OF POLICY
Whenever reasonably required to do so by the Landlord, the
Tenant shall produce to the Landlord a copy of the insurance
policy or other evidence of it and evidence of payment of the
last premium.
(8) NOTICE OF DAMAGE
If the Property is destroyed or damaged by any of the Insured
Risks, the Tenant shall give notice to the Landlord as soon as
the destruction or damage comes to the notice of the Tenant or
ought to have come to the notice of the Tenant and shall,
within 1 month of such destruction or damage, notify the
Landlord as to whether or not the Tenant wishes to proceed to
reinstate the Property. If the Tenant notifies the Landlord that
the Tenant does not wish to reinstate the Property then all
insurance monies shall belong to the Landlord free of any
interest of the Tenant and the Tenant will take all steps
necessary which are in the Tenant's control or ought reasonably
to be in its control to ensure that all insurance monies and an
amount equal to the any shortfall in the full reinstatement
value of the Property and the cost of the architects and other
professional fees in relation to the reinstatement of the
Property and the cost of demolition and removal of debris are
paid to the Landlord (including paying to the Landlord any
which are paid to the Tenant) and (subject to complying with
these obligations as to insurance monies) the Tenant will be
released from the Tenant's obligation to reinstate under
sub-clause (4) above and the Landlord may, with immediate
effect, reinstate the Property and this Lease will terminate on
the date 12 months after service of the Tenant's notice stating
that the Tenant does not wish to reinstate. If the Tenant
notifies the Landlord that it does wish to reinstate the
Property then the Tenant's break option contained in clause 12
of the Lease shall be suspended until such time as the Property
is full reinstated by the Tenant in accordance with sub-clause
(4) above. Termination will not affect either party's rights in
connection with any breach by the other of their respective
obligations in this Lease which may have occurred before the
date on which this Lease terminates including (without
limitation) the Landlord's rights in relation to any breach of
the obligations contained in clause 8(2).
(9) PREVENTION OF REINSTATEMENT
The Tenant shall not be obliged to reinstate the Property in
accordance with sub-clause (4) while prevented by a supervening
event. If the Tenant is unable to commence reinstatement within
twelve months from the date of destruction or damage because of
a supervening event and the Property or a substantial part of
it is unfit for occupation either the Landlord or the Tenant
may determine the Term by serving notice on the other at any
time within one month of the end of the twelve month period.
For the avoidance of doubt any notice served by the Landlord
under this sub-clause to determine the Lease shall not take
effect if at the time of service the Tenant has exercised its
option to purchase the freehold of the Property pursuant to the
Option Deed provided that if the Tenant subsequently fails to
complete the purchase in accordance with the Option Deed the
Landlord may at any time serve a further notice on the Tenant
terminating the Lease with immediate effect. On service of a
notice to terminate the Term shall cease but without prejudice
to any rights that either party may have against the other for
breach of any of the covenants by the Landlord or the Tenant or
the conditions in this Lease and the Tenant shall pay all
insurance monies together with an amount equal to any shortfall
in the full reinstatement value of the Property (save as set
out in sub-clause 8(l2)(a) below) and the cost of architects
and other professional fees in relation to the reinstatement of
the Property and the cost of demolition and removal of debris
to the Landlord save to the extent that the Tenant has properly
applied any portion of the insurance monies with the prior
written approval of the Landlord to the architects or other
professional fees or debris removal or demolition in attempting
to reinstate the Property up to the happening of the
supervening event. Any dispute as to the amount to be paid by
the Tenant shall be referred to arbitration.
(10) SUPERVENING EVENT
In sub-clause (5) and (9) a supervening event means any of the
following:
(a) inability of the Tenant to obtain the consents and permissions
referred to in sub-clause (4) despite using all reasonable
endeavours to do so;
(b) grant of any of the consents or permissions subject to a
lawful condition with which it would be unreasonable to
expect the Tenant to comply or the Tenant being requested
as a precondition to obtaining any of the consents or
permissions to enter into an agreement with the planning
authority or any other authority containing conditions
with which it would be unreasonable to expect the Tenant
to comply;
(c) some defect in the site upon which reinstatement is to take
place so that it could not be undertaken; and
(d) prevention of reinstatement by any cause beyond the control of
the Tenant.
(11) DOUBLE INSURANCE
Save as provided in this Deed the Property Agreement and the
Sale of Business Agreement the Landlord shall not effect any
insurance relating to the Property against any of the Insured
Risks.
(12) VITIATION
(a) If the Landlord does or omits to do anything at the
Property which makes the Tenant's insurance policy void
or voidable the Landlord shall make up any shortfall in
the insurance proceeds out of its own money.
(b) The Landlord may, at any time, request that the Tenant
obtain and upon such a request use reasonable endeavours
to obtain an insurance policy that contains a non-vitiation
provisions provided that the Landlord shall pay to the
Tenant any increase in the amount of premium attributable
to the inclusion of the non-vitiation provision.
THE COMMON SEAL OF )
[RELEVANT GLYNWED )
COMPANY LIMITED )
was affixed in the )
presence of: )
Director:
Secretary:
THE COMMON SEAL OF )
GLYNWED PROPERTIES )
LIMITED was affixed in the )
presence of: )
Director:
Secretary:
THE COMMON SEAL OF )
NIAGARA (UK) LIMITED )
was affixed in the )
presence of: )
Director:
Secretary:
[EXECUTION CLAUSE FOR
NIAGARA CORPORATION]
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Niagara LaSalle Corporation
LaSalle Steel Company
Niagara LaSalle (UK) Limited
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS OF NIAGARA
CORPORATION AND SUBSIDIARIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,234,181
<SECURITIES> 0
<RECEIVABLES> 54,051,071
<ALLOWANCES> 925,000
<INVENTORY> 59,441,872
<CURRENT-ASSETS> 121,127,264
<PP&E> 124,143,925
<DEPRECIATION> 21,160,043
<TOTAL-ASSETS> 227,934,299
<CURRENT-LIABILITIES> 66,108,244
<BONDS> 87,387,943
<COMMON> 9,998
0
0
<OTHER-SE> 56,451,280
<TOTAL-LIABILITY-AND-EQUITY> 227,934,299
<SALES> 264,221,888
<TOTAL-REVENUES> 264,221,888
<CGS> 228,274,501
<TOTAL-COSTS> 228,274,501
<OTHER-EXPENSES> 24,440,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,630,549
<INCOME-PRETAX> 6,055,625
<INCOME-TAX> 2,299,000
<INCOME-CONTINUING> 3,756,625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,756,725
<EPS-BASIC> .40
<EPS-DILUTED> .40
</TABLE>
