<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1997
[ ] 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 0-22378
MOVADO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-2595932
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
125 CHUBB AVENUE, LYNDHURST, NEW JERSEY 07071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (201) 460-4800
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 the number of shares outstanding of each of the Issuer's classes
of Common Stock, as of the latest practicable date.
As of August 29, 1997 the Registrant had 3,198,497 shares of Class A Common
Stock, par value $0.01 per share, outstanding and 4,347,827 shares of Common
Stock, par value $0.01 per share, outstanding.
================================================================================
<PAGE> 2
MOVADO GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JULY 31, 1997
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets at July 31, 1997, January 31, 1997 and
July 31, 1996...................................................... 3
Consolidated Statements of Income for the six months ended July 31,
1997 and 1996 and the three months ended July 31, 1997 and 1996.... 4
Consolidated Statements of Cash Flows for the six months ended July
31, 1997 and 1996.................................................. 5
Notes to Consolidated Financial Statements........................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 7
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.................. 11
Item 6. Exhibits and Reports on Form 8-K..................................... 11
Signatures................................................................................ 12
Exhibit Index............................................................................. 13
</TABLE>
2
<PAGE> 3
PART 1 -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JULY 31,
1997 1997 1996
-------- ----------- --------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash..................................................... $ 1,493 $ 4,885 $ 1,603
Trade receivables, net................................... 89,549 75,688 79,299
Inventories.............................................. 105,819 87,177 108,563
Other.................................................... 22,698 16,914 16,364
-------- -------- --------
Total current assets............................. 219,559 184,664 205,829
-------- -------- --------
Plant, property and equipment, net......................... 16,738 15,066 13,230
Other assets............................................... 10,005 8,713 8,531
-------- -------- --------
$246,302 $ 208,443 $227,590
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable to banks................................... $ 47,605 $ 7,778 $ 34,754
Current portion of long-term debt........................ 5,000 5,000 --
Accounts payable......................................... 21,822 25,297 19,243
Accrued liabilities...................................... 18,543 13,188 11,737
Deferred and current taxes payable....................... 6,615 6,711 7,517
-------- -------- --------
Total current liabilities........................ 99,585 57,974 73,251
-------- -------- --------
Long-term debt............................................. 40,000 40,000 40,000
Deferred and non-current foreign income taxes.............. 3,368 3,477 3,424
Other liabilities.......................................... 2,944 3,122 3,145
Shareholders' equity:
Preferred Stock, $0.01 par value, 5,000,000 shares
authorized; no shares issued.......................... -- -- --
Common Stock, $0.01 par value, 20,000,000 shares
authorized; 6,508,618, 6,459,761 and 6,428,122 shares
issued, respectively.................................. 65 65 64
Class A Common Stock, $0.01 par value, 10,000,000 shares
authorized; 4,810,495, 4,847,478 and 4,853,190 shares
issued and outstanding, respectively.................. 48 48 49
Capital in excess of par value........................... 34,451 34,450 34,215
Retained earnings........................................ 72,934 71,291 61,164
Cumulative translation adjustment........................ (6,965) (1,856) 12,406
Treasury Stock, 17,251 shares, at cost................... (128) (128) (128)
-------- -------- --------
100,405 103,870 107,770
-------- -------- --------
$246,302 $ 208,443 $227,590
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JULY 31, JULY 31,
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales........................................... $91,912 $81,764 $56,994 $50,751
Costs and expenses:
Cost of sales..................................... 39,785 36,784 24,768 23,121
Selling, general and administrative............... 47,050 41,128 27,717 23,944
------- ------- ------- -------
Operating income.................................... 5,077 3,852 4,509 3,686
Net interest expense................................ 2,283 2,123 1,368 1,281
------- ------- ------- -------
Income before income taxes.......................... 2,794 1,729 3,141 2,405
Provision for income taxes.......................... 699 519 786 722
------- ------- ------- -------
Net income.......................................... $ 2,095 $ 1,210 $ 2,355 $ 1,683
======= ======= ======= =======
Income per share.................................... $ 0.18 $ 0.11 $ 0.20 $ 0.15
======= ======= ======= =======
Shares used in per share computations............... 11,688 11,264 11,760 11,264
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY
31,
---------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................... $ 2,095 $ 1,210
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization..................................... 1,989 1,885
Deferred and non-current foreign income taxes..................... 117 (485)
Provision for losses on accounts receivable....................... 221 358
Changes in current assets and liabilities:
Trade receivables............................................... (14,966) (4,189)
Inventories..................................................... (21,259) (18,951)
Other current assets............................................ (8,585) (4,292)
Accounts payable................................................ (3,052) (1,706)
Accrued liabilities............................................. 5,588 2,409
Deferred and current taxes payable.............................. 197 (555)
Increase in other non-current assets.............................. (1,669) (584)
Decrease in other non-current liabilities......................... (22) (48)
-------- --------
Net cash used in operating activities................................ (39,346) (24,948)
-------- --------
Cash flows used for investing activities:
Capital expenditures................................................. (2,586) (2,332)
Goodwill, trademarks and other intangibles........................... (800) (76)
-------- --------
Net cash used in investing activities................................ (3,386) (2,408)
-------- --------
Cash flows from financing activities:
Net proceeds from current borrowings under lines of credit........... 40,056 25,750
Principal payments under capital leases.............................. (135) (269)
Exercise of stock options............................................ -- 16
Dividends paid....................................................... (455) (360)
-------- --------
Net cash provided by financing activities............................ 39,466 25,137
-------- --------
Effect of exchange rate changes on cash................................ (126) (7)
Net decrease in cash................................................... (3,392) (2,226)
Cash at beginning of period............................................ 4,885 3,829
-------- --------
Cash at end of period.................................................. $ 1,493 $ 1,603
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
MOVADO GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by Movado Group, Inc. (the "Company") in a manner consistent with that
used in the preparation of the financial statements included in the Company's
fiscal 1997 Annual Report filed on Form 10-K. In the opinion of management, the
accompanying financial statements reflect all adjustments, consisting of only
normal and recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for the periods presented. These
consolidated financial statements should be read in conjunction with the
aforementioned annual report.
NOTE 1 -- STOCK SPLIT
On April 3, 1997, the Company's Board of Directors approved a five-for-four
stock split of the Company's Common and Class A Common Stock. The stock split
became effective April 21, 1997. The accompanying financial statements contained
in this report have been retroactively adjusted to reflect the impact of the
stock split.
NOTE 2 -- RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 128, Earnings Per Share, which specifies the computation,
presentation and disclosure requirements for earnings per share. Management of
the Company believes that adoption of Statement No. 128 which is required for
the fiscal year ending January 31, 1998, will not have a material impact on the
Company's earnings per share calculation.
NOTE 3 -- INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JULY 31,
1997 1997 1996
-------- ----------- --------
<S> <C> <C> <C>
Finished goods............................. $ 66,678 $53,497 $ 63,187
Work-in-process and component parts........ 39,141 33,680 45,376
-------- ------- --------
$105,819 $87,177 $108,563
======== ======= ========
</TABLE>
NOTE 4 -- SUPPLEMENTAL CASH FLOW INFORMATION
The following is provided as supplemental information to the consolidated
statements of cash flows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JULY 31,
-------------------
1997 1996
------ ------
<S> <C> <C>
Cash paid during the period for:
Interest....................................... $2,539 $2,234
Income taxes................................... 505 1,755
Non-cash investing and financing activities:
Equipment acquired under capital leases........ $ 0 $ 21
</TABLE>
6
<PAGE> 7
MOVADO GROUP, INC.
NOTE 5 -- BANK CREDIT ARRANGEMENT
On July 23, 1997, the Company amended its revolving credit and working
capital lines with its domestic bank group to provide for a three year $90.0
million unsecured revolving line of credit and $16.6 million of uncommitted
working capital lines of credit. These new facilities replace the $20.0 million
revolving line of credit and $35.0 million domestic working capital line of
credit and certain of the Company's Swiss working capital lines.
NOTE 6 -- SUBSEQUENT EVENT
On September 10, 1997, the Company's Board of Directors declared a
three-for-two stock split of the Company's Common and Class A Common stock to be
distributed on September 29, 1997 to shareholders of record as of the close of
business on September 19, 1997. The accompanying financial statements contained
in this report have been retroactively adjusted to reflect the impact of the
stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Forward Looking Statements
Statements included under Management's Discussion and Analysis of Financial
Condition and Results of Operations, in this report, as well as statements in
future filings by the Company with the Securities and Exchange Commission
("SEC"), in the Company's press releases and oral statements made by or with the
approval of an authorized executive officer of the Company, which are not
historical in nature, are intended to be, and are hereby identified as, "forward
looking statements" for purposes of the safe harbor provided by Section 21E of
the Securities Exchange Act of 1934. The Company cautions readers that forward
looking statements include, without limitation, those relating to the Company's
future business prospects, revenues, working capital, liquidity, capital needs,
plans for future operations, effective tax rates, margins, interest costs, and
income, as well as assumptions relating to the foregoing. Forward looking
statements are subject to certain risks and uncertainties, some of which cannot
be predicted or quantified. Actual results and future events could differ
materially from those indicated in the forward looking statements due to several
important factors herein identified, among others, and other risks and factors
identified from time to time in the Company's reports filed with the SEC
including, without limitation, the following: general economic and business
conditions which may impact disposable income of consumers, competitive products
and pricing, ability to enforce intellectual property rights, and success of
hedging strategies in respect of currency exchange rate fluctuations.
Six months ended July 31, 1997 compared to six months ended July 31, 1996
Net Sales. Net sales increased 12.4% to $91.9 million from $81.8 million
for the six months ended July 31, 1997 and July 31, 1996, respectively. The
increase was attributable to a 10.0% increase in domestic sales and a 22.5%
increase in international sales. The growth of the domestic sales reflected
increases in the Company's Concord and Movado lines. The growth in international
sales relates to growth in unit sales volumes for Concord and Movado in the
Middle East, Concord in the Far East and for Movado in the Caribbean. The growth
in both domestic and international sales reflect new product introductions in
fiscal 1997 and 1998 for Concord which introduced the Veneto and LaScala lines,
and Movado which introduced the Vizio line. The increase in sales was partially
offset by decreases in sales of Piaget, Corum and ESQ brands. The sales decrease
in Piaget is due to the planned reduction in points of sale in order to create
greater exclusivity in the retail channel of the brand. The decrease in ESQ
sales is predominantly due to the opening orders for the expansion of the
brand's retail network, which occurred during the first half of the prior year.
Gross Margins. Gross profit for the six months ended July 31, 1997 was
$52.1 million (56.7% of net sales) as compared to $45.0 million (55.0% of net
sales) for the comparable prior year period. Margins were favorably impacted by
sales mix, particularly an increase in the proportion of sales of the Company's
higher
7
<PAGE> 8
MOVADO GROUP, INC.
margin Concord and Movado brands to total sales. The Company's margin also
benefited from increases in the U.S. dollar against the Swiss Franc which
occurred late in the previous year.
Operating Expenses. Operating expenses increased 14.4% for the six months
ended July 31, 1997 to 51.2% of net sales from 50.3% of net sales for the
comparable prior year period. The increase in operating expenses occurred
primarily from planned increases in marketing and advertising particularly in
the Company's Concord, Movado and ESQ brands. The increases in advertising and
marketing were partially offset by decreases in non-marketing related costs.
Interest Expense. Net interest expense, which consists primarily of
interest on the Company's $40,000,000 of 6.56% Senior Notes and borrowings
against its working capital and revolving lines of credit, was $2.3 million for
the six months ended July 31, 1997 as compared to $2.1 million for the
comparable prior year period. The higher interest expense is mainly due to
higher average borrowings for the six months ended July 31, 1997 as compared to
the comparable prior year period.
Income Taxes. The Company recorded a provision for income taxes of
$699,000 for the six months ended July 31, 1997 as compared to a provision of
$519,000 for the comparable prior year period. Taxes were provided at a 25%
effective rate which the Company believes will approximate the effective annual
rate for fiscal 1998; however, there can be no assurance of this as it is
dependent on a number of factors including: mix of foreign to domestic earnings,
local statutory tax rates and utilization of net operating losses. The 25%
effective rate differs from the United States statutory rate due to the mix of
earnings between the Company's U.S. and international operations, the most
significant of which are located in Switzerland. The Company's international
operations are generally subject to tax rates that are significantly lower than
U.S. statutory rates.
Three months ended July 31, 1997 compared to three months ended July 31,
1996
Net Sales. Net sales increased 12.3% to $57.0 million from $50.8 million
for the three months ended July 31, 1997 and July 31, 1996, respectively.
Domestic sales increased 8.6% which was predominantly due to a higher demand for
the Company's Concord and Movado brands. International sales increased 29.2%.
The increase in international sales is predominately due to increased sales in
the Caribbean, Far East and Middle East. The growth in both domestic and
international sales reflect new product introductions in fiscal 1997 and 1998
for Concord which introduced the Veneto and LaScala lines, and Movado which
introduced the Vizio line. The increase in sales was partially offset by
decreases in sales of Piaget, Corum and ESQ brands. The sales decrease in Piaget
is due to the planned reduction in points of sale in order to create greater
exclusiveness in the retail channel of the brand. The sales decrease in ESQ is
predominately due to the opening orders for the expansion of the brand's retail
network, which occurred during the first half of the prior year.
Gross Margins. Gross profit for the three months ended July 31, 1997 was
$32.2 million (56.5% of net sales) as compared to $27.6 million (54.4% of net
sales) for the comparable prior year period. The increase in margin is mainly
attributable to the Company continuing to experience a shift in overall sales
mix toward its higher margin Movado and Concord brands. The Company's margin
also benefited from increases in the U.S. dollar against the Swiss Franc which
occurred late in the previous year.
Operating Expenses. Operating expenses increased 15.8% for the three
months ended July 31, 1997 to 48.6% of net sales from 47.2% of net sales for the
comparable prior year period. The increase in operating expenses occurred
primarily from planned increases in marketing and advertising particularly in
the Company's Concord, Movado and ESQ brands. The increases in advertising and
marketing were partially offset by decreases in non-marketing related costs.
Interest Expense. Net interest expense, which consists primarily of
interest on the Company's $40,000,000 of 6.56% Senior Notes and borrowings
against its working capital and revolving lines of credit, was $1.4 million and
$1.3 million for the three months ended July 31, 1997 and 1996, respectively.
The higher interest expense is predominantly due to higher average borrowings
during the second quarter.
8
<PAGE> 9
MOVADO GROUP, INC.
Income Taxes. The Company recorded a provision for income taxes of
$786,000 for the three months ended July 31, 1997 as compared to a provision of
$722,000 for the comparable prior year period. Taxes were provided at a 25%
effective rate which the Company believes will approximate the effective annual
rate for fiscal 1998; however, there can be no assurance of this as it is
dependent on a number of factors including: mix of foreign to domestic earnings,
local statutory tax rates and utilization of net operating losses. The 25%
effective rate differs from the United States statutory rate due to the mix of
earnings between the Company's U.S. and international operations, the most
significant of which are located in Switzerland. The Company's international
operations are generally subject to tax rates that are significantly lower than
U.S. statutory rates.
Liquidity and Capital Resources
The Company's liquidity needs have been, and are expected to remain,
primarily a function of its seasonal working capital requirements which have
increased due to significant growth in domestic sales over the two previous
years. The Company's business is not capital intensive and liquidity needs for
capital investments have not been significant in relation to the Company's
overall financing requirements.
The Company has met its liquidity needs primarily through funds from
operations and bank borrowings under working capital lines of credit with
domestic and Swiss banks. The Company has also entered into a revolving credit
agreement with its domestic banks. Funds available under this agreement are in
addition to the Company's working capital lines. The Company's future
requirements for capital will relate not only to working capital requirements
for the expected continued growth of its existing brands, domestically and
internationally, but also funding new lines of business including the Spring
1998 launch of the Company's new Coach watch line and product line extensions
and retail boutiques for the Movado brand. In addition, the Company is required
to make a $5 million sinking fund payment on February 2, 1998 in connection with
its $40 million 6.56% Senior Notes.
In order to meet the increase in working capital requirements, the Company
amended its revolving credit and working capital lines with its domestic bank
group to provide for a three year $90.0 million unsecured revolving line of
credit and $16.6 million of uncommitted working capital lines of credit. These
new facilities replace the $20.0 million revolving line of credit and $35.0
million domestic working capital lines of credit and certain of the Company's
Swiss working capital lines. At July 31, 1997, the Company had an outstanding
balance of $52.6 million against these facilities.
The Company's debt to total capitalization ratio was 48.0% at July 31,
1997, as compared to 41.2% at July 31, 1996. The increase is predominantly due
to a $19.4 million decline in the cumulative translation adjustment due to the
strength of the U.S. dollar. In addition, the Company's seasonal borrowings
increased $12.9 million under its working capital credit agreements to fund the
growth in its business. Debt to total capitalization at January 31, 1997 was
33.7%. The increase in debt to total capitalization from January 31, 1997 is
predominantly due to an increase in loans payable to banks due to increases in
seasonal working capital requirements.
The Company's net working capital, consisting primarily of trade
receivables and inventories, amounted to $120.0 million at July 31, 1997, $132.6
million at July 31, 1996 and $126.7 million at January 31, 1997. The decrease in
the working capital from July 31, 1996 is primarily the result of the
reclassification of $5.0 million of the Company's long-term senior debt which is
payable February 2, 1998. The decrease in working capital from January 31, 1997
is primarily the result of an increase in liabilities, especially loans payable
to banks, in connection with seasonal working capital requirements.
Accounts receivable at July 31, 1997 were $89.5 million as compared to
$79.3 million at July 31, 1996 and $75.7 million at January 31, 1997. The
increase in the receivables was primarily the result of growth in the Company's
business.
Inventories at July 31, 1997 were $105.8 million as compared to $108.6
million at July 31, 1996 and $87.2 million at January 31, 1997. The inventory
balance at July 31, 1997 was relatively flat as compared to July 31,
9
<PAGE> 10
MOVADO GROUP, INC.
1996. The increase in inventories from January 31, 1997 reflects the seasonal
build, as well as the expansion of the Company's sales base and product line.
The Company's fiscal 1998 year-to-date capital expenditures approximate
$2.6 million compared to $2.3 million through July 31, 1996. Expenditures were
primarily related to improvements in the Company's management and sales
management information systems and costs incurred in connection with the
expansion of domestic distribution operations. The Company expects its annual
capital expenditures in fiscal year 1998 will exceed the average levels
experienced over the last three fiscal years due to planned improvements in
management information systems, expansion of its retail store network and the
expansion of distribution operations to support continued sales growth.
10
<PAGE> 11
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 10, 1997 the Company held its annual meeting of shareholders at the
offices of Simpson, Thacher & Bartlett located at 425 Lexington Avenue, New
York, New York.
The following matters were voted upon at the meeting:
(i) The election of the following Directors, constituting the entire
Board of Directors:
Margaret Hayes Adame
Michael Bush
Efraim Grinberg
Gedalio Grinberg
Donald Oresman
Leonard L. Silverstein
(ii) A proposal to ratify the selection of Price Waterhouse LLP as the
Company's independent public accountants for the fiscal year ending January
31, 1998;
(iii) Approval of an amendment to the Company's Certificate of
Incorporation to amend the definition of "Permitted Transferee" in respect
of the Company's Class A Common Stock.
With respect to the above referenced proposals that were voted on at the
annual shareholders meeting, the following votes were tabulated. There were no
broker nonvotes.
Proposal (i) on election of Directors:
<TABLE>
<CAPTION>
NOMINEE FOR AGAINST WITHHELD
-------------------------------------------------- ---------- --------- --------
<S> <C> <C> <C>
Margaret Hayes Adame.............................. 32,330,834 0 12,987
Michael Bush...................................... 32,330,834 0 12,987
Efraim Grinberg................................... 32,330,834 0 12,987
Gedalio Grinberg.................................. 32,330,834 0 12,987
Donald Oresman.................................... 32,330,834 0 12,987
Leonard L. Silverstein............................ 32,330,209 0 13,612
Proposal (ii) on ratification of appointment of
accountants..................................... 32,342,816 300 705
Proposal (iii) on approval of Amendment to
Certificate of Incorporation.................... 31,173,776 1,154,078 15,967
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 Amended and Restated Credit Agreement dated as of July 23, 1997 among the Registrant,
the Chase Manhattan Bank as Agent, Swingline Bank and Issuing Bank and Fleet Bank,
N.A. as Co-Agent and the other Lenders Signatory thereto.
10.2 Amendment to Amended and Restated Credit Agreement dated as of August 5, 1997 among
the Registrant, the Chase Manhattan Bank as Agent, Swingline Bank and Issuing Bank and
Fleet Bank, N.A. as Co-Agent and the other Lenders Signatory thereto.
10.3 Consent to Sublease dated as of June 18, 1997 among the Registrant, Meadowlands
Associates and Alexander and Alexander Consulting Group, Inc. ("ACCG"), and Sublease
Agreement entered into as of May 7, 1997 by and between the Registrant and AACG.
11 Computation of net income per share.
27 Financial schedules.
</TABLE>
(b) Reports on Form 8-K
None
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOVADO GROUP, INC.
(Registrant)
Dated: September 12, 1997 By: /s/ KENNETH J. ADAMS
------------------------------------
Kenneth J. Adams
Senior Vice President and
Chief Financial Officer
(Chief Financial Officer)
Dated: September 12, 1997 By: /s/ JOHN J. ROONEY
------------------------------------
John J. Rooney
Corporate Controller
(Principal Accounting Officer)
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.1 Amended and Restated Credit Agreement dated as of July 23, 1997 among the
Registrant, the Chase Manhattan Bank as Agent, Swingline Bank and Issuing Bank and
Fleet Bank, N.A. as Co-Agent and the other Lenders Signatory thereto.
10.2 Amendment to Amended and Restated Credit Agreement dated as of August 5, 1997 among
the Registrant, the Chase Manhattan Bank as Agent, Swingline Bank and Isuing Bank
and Fleet Bank, N.A. as Co-Agent and the other Lenders Signatory thereto.
10.3 Consent to Sublease dated as of June 18, 1997 among the Registrant, Meadowlands
Associates and Alexander and Alexander Consulting Group, Inc. ("AACG") and Sublease
Agreement entered into as of May 7, 1997 by and between the Registrant and AACG.
11 Computation of net income per share.
27 Financial schedules.
</TABLE>
13
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of July 23, 1997
among
MOVADO GROUP, INC.
and
the Lenders signatory hereto
and
THE CHASE MANHATTAN BANK,
as Agent, and as Swingline Bank,
and as Issuing Bank
and
FLEET BANK, N.A.,
as Co-Agent
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS....................................................................... 1
Section 1.01. Definitions.......................................................................... 1
Section 1.02. Accounting Terms..................................................................... 12
Section 1.03. Exchange Rates....................................................................... 12
Section 1.04. Prior Credit Agreement............................................................... 13
ARTICLE 2. THE LOANS........................................................................................... 13
Section 2.01. Syndicated Loans..................................................................... 13
Section 2.02. Making of Syndicated Loans........................................................... 13
Section 2.03. Borrowing Procedure as to Syndicated Loans........................................... 14
Section 2.04. Swingline Loans...................................................................... 15
Section 2.05. Refinancing by All Lenders of Swingline Loans........................................ 16
Section 2.06. Repayment of Loans................................................................... 16
Section 2.07. Certain Fees......................................................................... 17
Section 2.08. Interest on Loans.................................................................... 17
Section 2.09. Default Interest..................................................................... 18
Section 2.10. Termination and Reduction of Commitments............................................. 18
Section 2.11. Conversion and Continuation of Borrowings............................................ 19
Section 2.12. Optional Prepayment.................................................................. 20
Section 2.13. Mandatory Prepayments................................................................ 20
Section 2.14. Payments............................................................................. 21
Section 2.15. Purpose.............................................................................. 22
ARTICLE 3. LETTERS OF CREDIT................................................................................... 22
Section 3.01. Letters of Credit.................................................................... 22
Section 3.02. Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions................ 22
Section 3.03. Minimum Amount; Expiration Date...................................................... 23
Section 3.04. Participations....................................................................... 23
Section 3.05. Reimbursement........................................................................ 23
Section 3.06. Obligations Absolute................................................................. 23
Section 3.07. Disbursement Procedures.............................................................. 24
Section 3.08. Interim Interest..................................................................... 24
Section 3.09. Letter of Credit Fees................................................................ 25
Section 3.10. Resignation of the Issuing Bank...................................................... 25
Section 3.11. Not Fiduciary........................................................................ 25
Section 3.12. Purpose. ........................................................................... 26
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC................................................................... 26
Section 4.01. Alternate Rate of Interest........................................................... 26
Section 4.02. Reserve Requirement; Change in Circumstances......................................... 26
Section 4.03. Change in Legality................................................................... 28
Section 4.04. Indemnity............................................................................ 29
Section 4.05. Taxes................................................................................ 29
</TABLE>
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Section 4.06. Duty to Mitigate..................................................................... 30
Section 4.07. Replacement of Lenders............................................................... 31
ARTICLE 5. CONDITIONS PRECEDENT................................................................................ 31
Section 5.01. Documentary Conditions Precedent..................................................... 31
Section 5.02. Additional Conditions Precedent...................................................... 32
Section 5.03. Deemed Representations............................................................... 33
ARTICLE 6. REPRESENTATIONS AND WARRANTIES...................................................................... 33
Section 6.01. Incorporation, Good Standing and Due Qualification................................... 33
Section 6.02. Corporate Power and Authority; No Conflicts.......................................... 33
Section 6.03. Legally Enforceable Agreements....................................................... 33
Section 6.04. Litigation........................................................................... 33
Section 6.05. Financial Statements................................................................. 34
Section 6.06. Ownership and Liens.................................................................. 34
Section 6.07. Taxes................................................................................ 34
Section 6.08. ERISA................................................................................ 34
Section 6.09. Subsidiaries and Ownership of Stock.................................................. 35
Section 6.10. Credit Arrangements.................................................................. 35
Section 6.11. Operation of Business................................................................ 35
Section 6.12. Hazardous Materials.................................................................. 35
Section 6.13. No Default on Outstanding Judgments or Orders........................................ 37
Section 6.14. No Defaults on Other Agreements...................................................... 37
Section 6.15. Labor Disputes and Acts of God....................................................... 37
Section 6.16. Governmental Regulation.............................................................. 38
Section 6.17. Partnerships......................................................................... 38
Section 6.18. No Forfeiture........................................................................ 38
Section 6.19. Solvency............................................................................. 38
ARTICLE 7. AFFIRMATIVE COVENANTS............................................................................... 38
Section 7.01. Maintenance of Existence............................................................. 38
Section 7.02. Conduct of Business.................................................................. 39
Section 7.03. Maintenance of Properties............................................................ 39
Section 7.04. Maintenance of Records............................................................... 39
Section 7.05. Maintenance of Insurance............................................................. 39
Section 7.06. Compliance with Laws; Payment of Taxes............................................... 39
Section 7.07. Right of Inspection.................................................................. 39
Section 7.08. Reporting Requirements............................................................... 39
Section 7.09. Subsidiary Guarantee................................................................. 42
Section 7.10. Equal and Ratable Lien............................................................... 43
ARTICLE 8. NEGATIVE COVENANTS.................................................................................. 43
Section 8.01. Debt................................................................................. 43
Section 8.02. Guaranties, Etc...................................................................... 44
Section 8.03. Liens................................................................................ 45
Section 8.04. Leases............................................................................... 46
Section 8.05. Investments.......................................................................... 47
Section 8.06. Dividends............................................................................ 48
Section 8.07. Sale of Assets....................................................................... 48
Section 8.08. Stock of Subsidiaries, Etc........................................................... 49
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Section 8.09. Transactions with Affiliates......................................................... 49
Section 8.10. Mergers, Etc......................................................................... 49
Section 8.11. Acquisitions......................................................................... 50
Section 8.12. No Activities Leading to Forfeiture.................................................. 50
Section 8.13. No Material Change in Business....................................................... 50
Section 8.14. No Restriction....................................................................... 50
Section 8.15. Swap and Exchange Agreements......................................................... 50
Section 8.16. Certain Subsidiary Liabilities....................................................... 50
ARTICLE 9. FINANCIAL COVENANTS................................................................................. 51
Section 9.01. Tangible Net Worth................................................................... 51
Section 9.02. Debt Ratio........................................................................... 51
Section 9.03. Fixed Charge Coverage Ratio.......................................................... 51
Section 9.04. Leverage Ratio....................................................................... 52
Section 9.05. Capital Expenditures................................................................. 52
ARTICLE 10. EVENTS OF DEFAULT.................................................................................. 52
Section 10.01. Events of Default...................................................................... 52
ARTICLE 11. THE AGENT; RELATIONS AMONG LENDERS AND BORROWER.................................................... 54
Section 11.01. Appointment, Powers and Immunities of Agent............................................ 54
Section 11.02. Reliance by Agent...................................................................... 55
Section 11.03. Defaults............................................................................... 55
Section 11.04. Rights of Agent as a Lender............................................................ 55
Section 11.05. Indemnification of Agent............................................................... 56
Section 11.06. Documents.............................................................................. 56
Section 11.07. Non-Reliance on Agent and Other Lenders................................................ 56
Section 11.08. Failure of Agent to Act................................................................ 56
Section 11.09. Resignation or Removal of Agent........................................................ 56
Section 11.10. Amendments Concerning Agency Function.................................................. 57
Section 11.11. Liability of Agent..................................................................... 57
Section 11.12. Transfer of Agency Function............................................................ 57
Section 11.13. Non-Receipt of Funds by the Agent...................................................... 57
Section 11.14. Withholding Taxes...................................................................... 57
Section 11.15. Several Obligations and Rights of Lenders.............................................. 58
Section 11.16. Pro Rata Treatment of Syndicated Loans, Etc............................................ 58
Section 11.17. Sharing of Payments Among Lenders...................................................... 58
Section 11.18. Co-Agent............................................................................... 59
ARTICLE 12. MISCELLANEOUS...................................................................................... 59
Section 12.01. Amendments and Waivers................................................................. 59
Section 12.02. Usury.................................................................................. 60
Section 12.03. Expenses............................................................................... 60
Section 12.04. Survival............................................................................... 60
Section 12.05. Assignment; Participations............................................................. 60
Section 12.06. Notices................................................................................ 62
Section 12.07. Setoff................................................................................. 63
SECTION 12.08. JURISDICTION; IMMUNITIES............................................................... 63
Section 12.09. Table of Contents; Headings............................................................ 63
Section 12.10. Severability........................................................................... 63
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Section 12.11. Counterparts........................................................................... 64
Section 12.12. Integration............................................................................ 64
SECTION 12.13. GOVERNING LAW.......................................................................... 64
Section 12.14. Confidentiality........................................................................ 64
Section 12.15. Treatment of Certain Information....................................................... 64
Section 12.16. Judgment Currency...................................................................... 64
</TABLE>
EXHIBITS
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Exhibit A-1 Form of Syndicated Note
Exhibit A-2 Form of Swingline Note
Exhibit B Form of Authorization Letter
Exhibit C Form of Opinion of Counsel for Borrower and Guarantor
Exhibit D Form of Guarantee
Exhibit E Form of Assignment and Assumption Agreement
Exhibit F Form of Confidentiality Agreement
SCHEDULES
Schedule I Lenders and Amounts of Revolving Credit Commitments
Schedule II Subsidiaries of Borrower
Schedule III Credit Arrangements
Schedule IV Environmental Matters
</TABLE>
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<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 23, 1997 among
MOVADO GROUP, INC., a corporation organized under the laws of New York (the
"Borrower"); each of the lenders which is a signatory hereto (individually a
"Lender" and collectively the "Lenders"); THE CHASE MANHATTAN BANK, a New York
banking corporation, as agent for the Lenders (in such capacity, together with
its successors in such capacity, the "Agent"), and as swingline bank (in such
capacity, together with its successor in such capacity, the "Swingline Bank"),
and as issuing bank (in such capacity, together with its successors in such
capacity, the "Issuing Bank"); and FLEET BANK, N.A., a national banking
association, as co-agent for the Lenders (the "Co-Agent").
The Borrower desires that the Lenders, the Swingline Bank and the
Issuing Bank extend credit as provided herein, and the Lenders, the Swingline
Bank and the Issuing Bank are prepared to extend such credit. Accordingly, the
Borrower, the Lenders, the Swingline Bank, the Issuing Bank and the Agent agree
as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following terms have
the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"ABR Borrowing" means a Borrowing comprised of ABR Loans that are
Syndicated Loans or a Borrowing of an ABR Loan that is a Swingline Loan.
"ABR Loan" means any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article 2.
"Acquisition" is defined in Section 8.11.
"Adjusted LIBO Rate" means, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/32nd of 1%) equal to the product of (a) the LIBO Rate in effect for
such Interest Period and (b) Statutory Reserves.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"Agent Fees" is defined in Section 2.07.
"Aggregate Credit Exposure" means, at any time, the sum at such time of
(i) the aggregate of the Lenders' Syndicated Loan Exposures, (ii) the L/C
Exposure and (iii) the outstanding principal balance of all Swingline Loans.
"Aggregate Net Cash Proceeds" means, as to sales and mergers that are
Designated Sales, the aggregate cash proceeds received by the Borrower or a
Subsidiary (including cash proceeds subsequently received (as and when received)
in respect of non-cash consideration initially received), net of (a) selling
expenses (including reasonable broker's fees or commissions, transfer and
similar taxes, and the Borrower's good faith estimate of income taxes paid or
payable in connection with the receipt of such cash proceeds), and (b) amounts
provided as a reserve, in accordance with GAAP, against any liabilities under
indemnification obligations associated with such sales and mergers (provided
that, to the extent and at such time any such amounts are released from such
reserve, such amounts shall be included in Aggregate Net Cash Proceeds).
<PAGE> 7
"Agreement" means this Amended and Restated Credit Agreement, as
amended or supplemented from time to time. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, or (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Assignment and Assumption Agreement" is defined in Section 12.05.
"Authorization Letter" means the letter agreement executed by the
Borrower in the form of Exhibit B.
"Average Debt Coverage Ratio" for a period means the ratio of (i) the
average for such period of the sum of indebtedness for borrowed money,
indebtedness for the deferred purchase price of property or services (excluding
trade payables in the ordinary course of business; and excluding wages or other
compensation payable to employees of the Borrower or any of its Subsidiaries in
the ordinary course of business), obligations arising under acceptance
facilities, and obligations as lessee under Capital Leases, (in all cases) of
the Borrower and its Consolidated Subsidiaries on a consolidated basis, to (ii)
consolidated earnings before interest, taxes, depreciation and amortization of
the Borrower and its Consolidated Subsidiaries for such period.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means Movado Group, Inc., a New York corporation.
"Borrowing" means (in the case of Syndicated Loans) a group of
Syndicated Loans of a single Type made by the Lenders on a single date and as to
which a single Interest Period is in effect or (in the case of Swingline Loans)
a Swingline Loan made by the Swingline Bank on a single date.
"Borrowing Request" means a Syndicated Loan Borrowing Request or a
Swingline Loan Borrowing Request.
"Breakage Event" is defined in Section 4.04.
"Business Day" means any day other than a Saturday, Sunday or day on
which banks in New York City are authorized or required by law to close;
provided, however, that (a) when used in connection with a LIBOR Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market and (b) when used in
connection with a Swiss Franc Loan, the term "Business Day" shall also exclude
any day on which banks in London are required by law to remain closed.
"Capital Expenditures" means for any period, the dollar amount of gross
expenditures (including obligations under Capital Leases) made for fixed assets,
real property, plant and equipment, and all renewals, improvements and
replacements thereto (but not repairs thereof) incurred during such period, as
determined in accordance with GAAP.
2
<PAGE> 8
"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.
"Cash Collateral Account" is defined in Section 2.13.
"Closing Date" means the date this Agreement has been executed and
delivered by the Borrower, the Lenders, the Swingline Bank, the Issuing Bank and
the Agent.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment Fee" is defined in Section 2.07.
"Consolidated Capital Expenditures" means Capital Expenditures of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income" is defined in Section 9.01.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Borrower in accordance
with GAAP.
"Consolidated Tangible Net Worth" means Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "Controlling" and "Controlled" shall have meanings correlative thereto.
"Core Business" means the business of designing, manufacturing and
distributing watches, jewelry and other accessories (including the operation of
retail stores to distribute the same), other businesses related thereto, or
businesses that in the judgment of the board of directors of the Borrower are
derived from the exploitation by the Borrower of its trademarks, including the
operation of retail stores to distribute products utilizing the same.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price of
property or services (except trade payables in the ordinary course of business;
and except wages or other compensation payable to employees of such Person in
the ordinary course of business); (c) the face amount of any outstanding letters
of credit issued for the account of such Person; (d) obligations arising under
acceptance facilities; (e) (without duplication of other Debt) guaranties,
endorsements (other than for collection in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person, or otherwise to assure a creditor against
loss; (f) obligations secured by any Lien on property of such Person; and (g)
obligations of such Person as lessee under Capital Leases.
"Debt Ratio" is defined in Section 9.02.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
3
<PAGE> 9
"Default Rate" is defined in Section 2.09.
"Designated Sales" means (i) sales of assets of the Borrower or any
Subsidiary that are prohibited by Section 8.07 (excluding clause (f) thereof),
and (ii) sales of all the shares of capital stock of any Subsidiary that are
prohibited by Section 8.08 (excluding clause (c) thereof); and (iii) cash
mergers of a Subsidiary into another entity (that is, where the outstanding
shares of such Subsidiary are entirely converted to cash upon such merger) that
are prohibited by Section 8.10 (excluding clause (c) thereof), provided that
such sales and mergers shall be for fair market value and on an arms'-length
basis, and provided further that:
(a) in the case of such a sale or merger that is the Special
Transaction: 50% of the excess over $30,000,000 of the Aggregate Net
Cash Proceeds of such sale and merger shall (immediately upon receipt
by the Borrower or such Subsidiary) be applied to prepay the Swingline
Loans and the Syndicated Loans and to secure the L/C Exposure (in the
sequence and manner provided in Section 8.01(e)), and the Total
Revolving Credit Commitment shall be permanently reduced by an amount
equal to 50% of such excess over $30,000,000; and
(b) in the case of such sales and mergers that are not the
Special Transaction: 50% of the excess over $15,000,000 of the
Aggregate Net Cash Proceeds of all such sales and mergers shall
(immediately upon receipt by the Borrower or such Subsidiary) be
applied to reduce the Swingline Loans and the Syndicated Loans and to
secure the L/C Exposure (in the sequence and manner provided in Section
8.01(e)), and the total Revolving Credit Commitment shall be
permanently reduced by an amount equal to 50% of such excess over
$15,000,000; and
(c) in the case of each such sale and merger (whether or not
it is the Special Transaction): the Borrower shall provide to the Agent
at least 20 days before the effective date of such sale or merger, for
distribution to the Lenders, a pro-forma consolidated balance sheet and
income statement as to the Borrower and its Consolidated Subsidiaries
after giving effect to such sale or merger, together with a written
certification of the Borrower that such sale or merger will not result
in a Default, either immediately or (based upon the Borrower's
reasonable and good faith projections) at any time thereafter prior to
the Maturity Date.
"Dollar Equivalent" means, on any date of determination, with respect
to any amount in Swiss francs, the equivalent in dollars of such amount,
determined by the Agent pursuant to Section 1.03 using the Exchange Rate with
respect to Swiss francs then in effect.
"dollars" or "$" means lawful money of the United States of America.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
4
<PAGE> 10
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Event of Default" is defined in Section 10.01.
"Exchange Rate" means, on any day, with respect to Swiss francs, the
rate at which Swiss francs may be exchanged into dollars (and, for purposes of
Sections 2.02(e), 2.11(vii), 4.01(i), and 4.03(a)(ii), the rate at which dollars
may be exchanged into Swiss francs), as set forth at approximately 11:00 a.m.
London time, on such date on the Reuters World Currency Page for Swiss francs.
In the event that such rate does not appear on any Reuters World Currency Page,
the Exchange Rate shall be determined by reference to such other publicly
available service for displaying exchange rates as may be agreed upon by the
Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate
shall instead be the arithmetic average of the spot rates of exchange of the
Agent in the market where its foreign currency exchange operations in respect of
Swiss francs are then being conducted, at or about 11:00 a.m., local time, on
such date for the purchase of dollars (or Swiss francs, as the case may be) for
delivery two Business Days later; provided that if at the time of any such
determination, for any reason, no such spot rate is being quoted, the Agent may
use any reasonable method it deems appropriate to determine such rate, and such
determination shall be presumed correct absent manifest error.
"Excluded Taxes" means, with respect to the Agent, any Lender, the
Swingline Bank, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) (i)
income or franchise taxes imposed on (or measured by) its net income, and (ii)
any branch profits taxes or similar taxes imposed, and (b) in the case of a
Lender organized under the laws of a jurisdiction other than the United States
(a "foreign Lender"), any withholding tax that is imposed on amounts payable
hereunder to such foreign Lender to the extent such tax is in effect and would
apply as of the date such foreign Lender becomes a party to this Agreement or
designates a new Lending Office, or that is attributable to such foreign
Lender's failure to comply with Section 11.14.
"Facility Documents" means this Agreement, the Notes, the Authorization
Letter, and each Guarantee.
"Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Letter" means the Fee Letter dated the Closing Date between the
Borrower and the Agent.
5
<PAGE> 11
"Fees" means the Commitment Fees, the Agent Fees, the L/C Participation
Fees and the Issuing Bank Fees.
"Fixed Charge Coverage Ratio" is defined in Section 9.03.
"Forfeiture Proceeding" means any action or proceeding against the
Borrower or any of its Subsidiaries before any court, governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
the receipt of notice by any such party that any of them is a suspect in or a
target of any governmental investigation, which (if determined adversely to the
Borrower or such Subsidiary) would, in any one case or in the aggregate,
materially adversely affect the financial condition, operations or business of
the Borrower and its Subsidiaries taken as a whole or the ability of the
Borrower to perform its obligations under the Facility Documents to which it is
a party.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the date hereof, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 6.05.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Grinberg Group" means the group consisting of Gedalio Grinberg, his
spouse, each of their estates and their issue; and Efraim Grinberg, his spouse,
each of their estates and their issue; and every Person (other than an
individual) Controlled by any of the foregoing.
"Guarantee" means a guarantee executed and delivered by a Guarantor in
favor of the Lenders, the Swingline Bank, the Issuing Bank and the Agent in
substantially the form attached hereto as Exhibit D (including, without
limitation, the SwissAm Guarantee).
"Guarantors" means SwissAm and each other Subsidiary that becomes a
Guarantor pursuant to Section 7.09.
"Hazardous Material" is defined in Section 6.12.
"HLT" Classification" is defined in Section 4.07.
"Inactive Subsidiary" means a Subsidiary of the Borrower that has (and
only for so long as it has) assets of less than $1,000,000; provided, however,
that (i) there shall not be more than ten Inactive Subsidiaries at any time
during the term of this Agreement and (ii) the assets of all Inactive
Subsidiaries in the aggregate shall not exceed $4,000,000.
"including" is deemed to mean "including without limitation".
"Incremental TNW Amount" is defined in Section 9.01.
"Indemnified Taxes" means Taxes arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to,
this Agreement other than Excluded Taxes and Other Taxes.
6
<PAGE> 12
"Interest Payment Date" means, with respect to any Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a LIBOR Borrowing with an Interest Period of more than three
months' duration, each day that would have been an Interest Payment Date had
successive Interest Periods of three months' duration been applicable to such
Borrowing, and in addition, the date of any prepayment of such Borrowing or (as
to a Borrowing of Syndicated Loans) the date of any conversion of such Borrowing
to a Borrowing of a different Type.
"Interest Period" means
(a) as to any LIBOR Borrowing, the period commencing on the date of
such Borrowing and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 3 or 6 months thereafter, as the Borrower may
elect; and
(b) as to any ABR Borrowing, the period commencing on the date of such
Borrowing and ending on the earliest of (i) the next succeeding March
31, June 30, September 30 or December 31, (ii) the Maturity Date, and
(iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.11 or prepaid in accordance
with Section 2.11 or 2.12;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a LIBOR Borrowing only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"Issuing Bank" means The Chase Manhattan Bank and its successors.
"Issuing Bank Fees" is defined in Section 3.09.
"L/C Commitment" means the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Article 3.
"L/C Disbursement" means a payment or disbursement made by the Issuing
Bank pursuant to a Letter of Credit.
"L/C Exposure" means at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time that are denominated in
dollars, plus the Dollar Equivalent at such time of the aggregate undrawn amount
of all outstanding Letters of Credit at such time that are denominated in Swiss
francs, plus (b) the aggregate principal amount of all L/C Disbursements
denominated in dollars that have not yet been reimbursed at such time plus the
Dollar Equivalent at such time of the aggregate principal amount of all L/C
Disbursements denominated in Swiss francs that have not yet been reimbursed at
such time. The L/C Exposure of any Lender at any time means its Pro Rata
Percentage of the aggregate L/C Exposure at such time.
"L/C Participation Fee" is defined in Section 3.09.
"L/C Reimbursement Loans" means Syndicated Loans made pursuant to
Section 2.02(e), in order to reimburse the Issuing Bank for an L/C Disbursement.
7
<PAGE> 13
"Lenders" means (a) the financial institutions listed on Schedule I
(other than any such financial institution that has ceased to be a party hereto
pursuant to an Assignment and Assumption Agreement) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Assumption Agreement.
"Lending Office" means, for each Lender and for each Type of Loan, the
lending office of such Lender (or of an Affiliate of such Lender) designated as
such for such Type of Loan on its signature page hereof or such other office of
such Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to the Agent and the Borrower as the office by which its Loans of
such Type are to be made and maintained.
"Letter of Credit" means any letter of credit issued pursuant to
Article 3.
"Leverage Ratio" is defined in Section 9.04.
"LIBO Rate" means, with respect to any LIBOR Borrowing for any Interest
Period, the rate appearing on Page 3750 (or, in the case of a Swiss Franc
Borrowing, the rate appearing on the Page for Swiss francs) of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the
Agent, in consultation with the Borrower, from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits (or, in the
case of a Swiss Franc Borrowing, deposits in Swiss francs) in the London
interbank market) at approximately 11:00 a.m. London time, two Business Days
prior to the commencement of such Interest Period, as the rate for dollar
deposits (or, if applicable, Swiss francs) with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such LIBOR Borrowing for such
Interest Period shall be the rate at which the Agent is offered dollar deposits
of $5,000,000 (or, in the case of a Swiss Franc Borrowing, deposits in Swiss
francs in an amount the Dollar Equivalent of which is approximately equal to
$5,000,000) and for a maturity comparable to such Interest Period in immediately
available funds in the London interbank market at approximately 11:00 a.m.
London time, two Business Days prior to the commencement of such Interest
Period.
"LIBOR Borrowing" means a Borrowing comprised of LIBOR Loans.
"LIBOR Loan" means any Syndicated Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article 2.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loans" means Syndicated Loans and Swingline Loans.
"Margin", for a LIBOR Loan, means .75% per annum initially; provided,
however, that after the end of each fiscal quarter from and after July 31, 1997,
the Margin shall be subject to change as hereinafter provided. Where the Average
Debt Coverage Ratio for a period consisting of a fiscal quarter and the three
preceding fiscal quarters is within one of the ranges set forth below, the
Margin shall be the amount set forth opposite such range:
<TABLE>
<CAPTION>
Ranges Margin
<S> <C> <C>
</TABLE>
8
<PAGE> 14
<TABLE>
<CAPTION>
<S> <C> <C>
Greater than 3.35 1.35% per annum
Equal to or less than 1.0% per annum
3.35, but greater than 3.25
Equal to or less than .75% per annum
3.25, but greater than 2.50
Equal to or less than 2.50 .50% per annum;
</TABLE>
provided, however, that if an Event of Default exists, the Margin shall be 1.35%
per annum (which shall be exclusive of the 2% incremental increase represented
by the Default Rate). Each change in the Margin following the end of a fiscal
quarter shall become effective on the first day of the calendar month following
the delivery by the Borrower to the Agent of the financial statements for such
fiscal quarter required by Section 7.08(a) or (b) of this Agreement; no change
in the Margin shall be retroactive. (There is no Margin as to ABR Loans).
"Maturity Date" means the third anniversary of the Closing Date.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Notes" means the Syndicated Loan Notes and the Swingline Loan Note.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from Standard & Poor's Ratings Service or
from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $500,000,000; and
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<PAGE> 15
(d) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions which have a combined
capital and surplus and undivided profits of not less than $500,000,000.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, limited liability company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by the Agent as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective on the
date such change is publicly announced as being effective.
"Prior Credit Agreement" is defined in Section 1.04.
"Pro Rata Percentage" of any Lender at any time means the percentage of
the Total Revolving Credit Commitment represented by such Lender's Revolving
Credit Commitment (or, if such Commitments shall have expired or been terminated
by reason of an Event of Default, such percentage immediately prior to such
expiration or termination, giving effect to any assignments by or to such Lender
pursuant to Section 12.05.
"Prudential Notes" means the senior promissory notes of the Borrower in
the original aggregate principal amount of $40,000,000 issued pursuant to the
Note Agreement dated as of November 9, 1993 between the Borrower and The
Prudential Insurance Company of America.
"Reference Lender" means The Chase Manhattan Bank.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Release" is defined in Section 6.12.
"Required Lenders" means, at any time, Lenders having Syndicated Loans
outstanding, L/C Exposure and unused Revolving Credit Commitments representing
at least 56% of the sum of all Syndicated Loans outstanding, L/C Exposure and
unused Revolving Credit Commitments at such time.
"Required Payment" is defined in Section 11.13.
"Retail Rent Differential" is defined in Section 8.04.
"Revolving Credit Commitment" means, with respect to each Lender, the
commitment of such Lender to make Syndicated Loans hereunder as set forth on
Schedule I, or in the Assignment and Assumption Agreement pursuant to which such
Lender assumed its Revolving Credit Commitment, as applicable, as the same may
be (a) reduced from time to time pursuant to Section 2.10 and (b)
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<PAGE> 16
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 12.05.
"Special Transaction" means the first Designated Sale (which term shall
be construed, for the purpose of this definition of "Special Transaction" only,
to exclude clauses (a) and (b) of the definition of the term "Designated Sale")
to occur after the Closing Date as a result of which the Borrower or any of its
Subsidiaries transfers all or substantially all the assets and assigns all or
substantially all the liabilities relating entirely and exclusively to one and
the same brand of products theretofore included within the Core Business, so
long as such transfer and assignment is to any Person or Persons none of which
is an Affiliate of the Borrower.
"Statutory Reserves" means, with respect to dollars or any other
currency, a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the aggregate of
the maximum reserve, liquid asset or similar percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by any Governmental Authority of the jurisdiction of such currency
to which banks in such jurisdiction are subject for any category of deposits or
liabilities customarily used to fund loans in such currency or by reference to
which interest rates applicable to Loans in such currency are determined. Such
reserve, liquid asset or similar percentages shall, in the case of dollars,
include those imposed by the Board with respect to the Adjusted LIBO Rate for
Eurocurrency Liabilities (as defined in Regulation D of the Board). LIBOR Loans
shall be deemed to constitute Eurocurrency Liabilities and to be subject to such
reserve requirements without benefit of or credit from proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any other applicable law, rule or regulation. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Swingline Bank" means The Chase Manhattan Bank.
"Swingline Loan Borrowing Request" means a request by the Borrower for
a Swingline Loan in accordance with the terms of Section 2.05 in form
satisfactory to the Agent.
"Swingline Loan Note" is defined in Section 2.06.
"Swingline Loans" means the revolving loans made by the Swingline Bank
to the Borrower pursuant to Section 2.04. Each Swingline Loan shall be an ABR
Loan.
"Swiss Franc Borrowing" means a Borrowing comprised of Swiss Franc
Loans.
"Swiss Franc Equivalent" means, on any date of determination, with
respect to any amount in dollars, the equivalent in Swiss francs of such amount,
determined by the Agent using the Exchange Rate with respect to Swiss francs
then in effect as determined pursuant to Section 1.03.
"Swiss Franc Loan" means a Syndicated Loan denominated in Swiss francs.
"Swiss francs" means lawful money of Switzerland.
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<PAGE> 17
"SwissAm" means SwissAm Inc., a New Jersey corporation.
"SwissAm Guarantee" means the Guarantee executed and delivered by
SwissAm on the Closing Date in favor of the Lenders, the Swingline Bank, the
Issuing Bank and the Agent.
"Syndicated Loan Borrowing Request" means a request by the Borrower for
Syndicated Loans in accordance with the terms of Section 2.03 in form
satisfactory to the Agent.
"Syndicated Loan Exposure" means with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Syndicated
Loans of such Lender denominated in dollars, plus the Dollar Equivalent at such
time of the aggregate principal amount at such time of all outstanding
Syndicated Loans of such Lender that are Swiss Franc Loans.
"Syndicated Loan Note" is defined in Section 2.06.
"Syndicated Loans" means the revolving loans made by the Lenders to the
Borrower pursuant to Section 2.01 or (in the case of loans to refinance a
Swingline Loan) Section 2.05. Each Syndicated Loan shall be a LIBOR Loan or an
ABR Loan.
"Tangible Net Worth" of a Person means, at any date of determination
thereof, the excess of total assets of such Person over total liabilities of
such Person, excluding, however, (A) from the determination of total assets: (i)
all assets which would be classified as intangible assets under GAAP, including,
without limitation, goodwill (whether representing the excess of cost over book
value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, and deferred charges (including, without limitation,
unamortized debt discount and expense, organization cost, and research and
development costs); and (ii) any write-up in the book value of any asset since
January 31, 1997; and (B) any foreign exchange translation adjustment in the
cumulative amount that would be properly shown in the Shareholders' Equity
section of such Person's balance sheet prepared in accordance with GAAP.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Revolving Credit Commitment" means, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time.
"Type", when used in respect of any Syndicated Loan or Borrowing of
Syndicated Loans, shall refer to the Rate by reference to which interest on such
Loan or on the Loans comprising such Borrowing is determined and the currency in
which such Loan or the Loans comprising such Borrowing are denominated. For
purposes hereof, the term "Rate" shall include the Adjusted LIBO Rate and the
Alternate Base Rate, and the term "currency" shall include dollars and Swiss
francs.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
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<PAGE> 18
Section 1.02. Accounting Terms. All accounting terms used herein and not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with GAAP. If any change in GAAP, as in effect on the date hereof,
occurs after the date of this Agreement, compliance with all financial covenants
contained herein shall continue to be determined in accordance with GAAP as in
effect on the date hereof, except to the extent that the Borrower and the
Required Lenders otherwise agree in writing.
Section 1.03. Exchange Rates. For the purpose of calculating the amount of
Syndicated Loan Exposure as to Swiss Franc Loans, and for the purpose of the
calculation under Section 2.01(ii) of the Dollar Equivalent of Swiss Franc
Loans, the Exchange Rate shall be determined with respect to each Swiss Franc
Loan as of the Business Day which is two Business Days prior to the first day of
the current Interest Period for such Swiss Franc Loan, and such Exchange Rate
shall remain in effect (for such purposes, as to such Swiss Franc Loan) until
the last day of such Interest Period. For the purpose of calculating the amount
of the L/C Exposure as to Letters of Credit denominated in Swiss francs, the
Exchange Rate shall be determined with respect to each such Letter of Credit as
of the Business Day which is two Business Days prior to the date of issuance
thereof and such Exchange Rate shall remain in effect (for such purpose, as to
such Letter of Credit) for so long as such Letter of Credit remains outstanding,
except that as to each standby Letter of Credit denominated in Swiss francs that
is outstanding for more than six months, the Exchange Rate shall (for such
purpose, as to such Letter of Credit) be re-determined on each successive
semi-annual anniversary of the date of issuance of such Letter of Credit. For
all other purposes, the Exchange Rate shall be determined on a daily basis. The
Agent shall notify the Borrower of (i) the Exchange Rate determined under the
first sentence of this paragraph, promptly after the first day of the applicable
Interest Period, (ii) the Exchange Rate determined under the second sentence of
this paragraph, promptly after the date of issuance of the applicable Letter of
Credit (and, if such Letter of Credit is a standby Letter of Credit denominated
in Swiss francs that is outstanding more than 6 months, promptly after each
successive semi-annual anniversary of its date of issuance for so long as such
Letter of Credit is outstanding), and (ii) the Exchange Rate determined under
the third sentence of this paragraph, promptly after written request from the
Borrower from time to time.
Section 1.04. Prior Credit Agreement. This Agreement and the Notes issued
pursuant hereto amend, restate, supersede and replace in their entirety the
Credit Agreement dated as of January 31, 1996 (the "Prior Credit Agreement")
among the Borrower (under its former name, North American Watch Corporation),
the Banks signatory thereto, The Chase Manhattan Bank (National Association), as
agent, and NatWest Bank N.A., as co-agent, and the promissory notes issued
pursuant thereto.
ARTICLE 2. THE LOANS.
Section 2.01. Syndicated Loans. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, to make Syndicated Loans to the Borrower, at any time
and from time to time on or after the date hereof, and until the earlier of the
Maturity Date or the termination of the Revolving Credit Commitment of such
Lender in accordance with the terms hereof, in dollars or Swiss francs (as
specified in the Syndicated Loan Borrowing Requests with respect thereto), in an
aggregate principal amount at any time outstanding that will not result in:
(i) the sum of (a) such Lender's Syndicated
Loan Exposure, plus (b) such Lender's L/C Exposure, plus (c)
such Lender's Pro Rata Percentage of all outstanding
Swingline Loans exceeding such Lender's Revolving Credit
Commitment, or
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<PAGE> 19
(ii) the Dollar Equivalent of such Lender's
outstanding Swiss Franc Loans being in excess of such Lender's
Pro Rata Percentage of $30,000,000, or
(iii) the Aggregate Credit Exposure exceeding the
Total Revolving Credit Commitment.
Within the limits set forth in the preceding sentence and subject to the terms,
conditions and limitations set forth herein, the Borrower may borrow, pay or
prepay and reborrow Syndicated Loans.
Section 2.02. Making of Syndicated Loans. (a) Each Syndicated Loan shall be made
as part of a Borrowing consisting of Syndicated Loans made by the Lenders
ratably in accordance with their applicable Revolving Credit Commitments;
provided, however, that the failure of any Lender to make any Syndicated Loan
shall not in itself relieve any other Lender of its obligation to lend hereunder
(it being understood, however, that no Lender shall be responsible for the
failure of any other Lender to make any Syndicated Loan required to be made by
such other Lender). Except for Syndicated Loans that are L/C Reimbursement Loans
and Syndicated Loans that are made pursuant to Section 2.05(a) in order to
refinance Swingline Loans, the Syndicated Loans comprising any Borrowing shall
be in an aggregate principal amount that is an integral multiple of $500,000 and
not less than $1,000,000 (in the case of each ABR Borrowing) or $2,500,000 (in
the case of each LIBOR Borrowing of dollars) or the Swiss Franc Equivalent of
$1,250,000 (in the case of each Swiss Franc Borrowing).
(b) Subject to Sections 4.01 and 4.03, each Borrowing of
Syndicated Loans shall be comprised entirely of ABR Loans or LIBOR Loans as the
Borrower may request pursuant to Section 2.03. Each Swiss Franc Borrowing shall
be comprised entirely of LIBOR Loans. Each Lender may at its option make any
LIBOR Loan by causing any domestic or foreign branch or Affiliate of such Lender
to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Loan in accordance with the terms
of this Agreement. Borrowings of more than one Type may be outstanding at the
same time; provided, however, that the Borrower shall not be entitled to request
any Borrowing that, if made, would result in more than twelve LIBOR Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods or denominated in different currencies,
regardless of whether they commence on the same date, shall be considered
separate Borrowings.
(c) Except with respect to Syndicated Loans that are L/C
Reimbursement Loans, each Lender shall make each Syndicated Loan to be made by
it hereunder on the proposed date thereof by wire transfer of immediately
available funds to such account as the Agent may designate not later than 12:00
(noon), New York City time, in the case of fundings in dollars to an account in
New York City, or 11:00 a.m., local time, in the case of fundings in Swiss
francs to an account in London or Switzerland, and the Agent shall promptly
credit the amounts so received to an account in the name of the Borrower
maintained with the Agent in New York City or London (as the case may be) or to
another account designated by the Borrower in writing and approved by the Agent,
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
respective Lenders.
(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request any Borrowing of LIBOR
Loans if the Interest Period requested with respect thereto would end after the
Maturity Date.
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<PAGE> 20
(e) If the Issuing Bank shall not have received from the
Borrower the payment required to be made by Section 3.05 within the time
specified in such Section, the Issuing Bank will promptly notify the Agent of
the L/C Disbursement and the Agent will promptly notify each Lender of such L/C
Disbursement and its Pro Rata Percentage thereof and (if such L/C Disbursement
is made in Swiss francs) the Dollar Equivalent of such L/C Disbursement, based
on the Exchange Rate in effect on the date of such L/C Disbursement. Each Lender
shall pay by wire transfer of immediately available funds to the Agent not later
than 2:00 p.m., New York City time, on the date it receives such notice (or, if
such Lender shall have received such notice later than 12:00 (noon) New York
City time, on any day, then not later than 10:00 a.m., New York City time, on
the immediately following Business Day), an amount equal to such Lender's Pro
Rata Percentage of such L/C Disbursement (or the Dollar Equivalent thereof, as
provided in the preceding sentence); such payment shall constitute a Syndicated
Loan and an ABR Loan of such Lender, and such payment shall reduce the L/C
Exposure. The Agent will promptly pay to the Issuing Bank amounts so received by
it from the Lenders. The Agent will promptly pay to the Issuing Bank any amounts
received by it from the Borrower pursuant to Section 3.05 prior to the time that
any Lender makes any payment pursuant to this paragraph (e); any such amounts
received by the Agent thereafter will be promptly remitted by the Agent to the
Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear. If any Lender shall not have made its Pro Rata Percentage
of such L/C Disbursement available to the Agent as provided above, such Lender
and the Borrower severally agree to pay interest on such amount, for each day
from and including the date such amount is required to be paid in accordance
with this paragraph to but excluding the date such amount is paid, to the Agent
for the account of the Issuing Bank at (f) in the case of the Borrower, a rate
per annum equal to the Alternate Base Rate, and (g) in the case of such Lender,
for the first such day, the Federal Funds Effective Rate, and for each day
thereafter, the Alternate Base Rate.
Section 2.03. Borrowing Procedure as to Syndicated Loans. In order to request a
Borrowing of Syndicated Loans (other than a Borrowing of an L/C Reimbursement
Loan, as to which this Section 2.03 shall not apply), the Borrower shall hand
deliver or telecopy to the Agent a duly completed Syndicated Loan Borrowing
Request (a) in the case of a Swiss Franc Borrowing and in the case of a LIBOR
Borrowing denominated in dollars, not later than 11:00 a.m., New York City time
(or, if the Syndicated Loan Borrowing Request is delivered or telecopied to the
Agent in London, 10:00 a.m., London time), three Business Days before a proposed
Borrowing, and (b) in the case of an ABR Borrowing, not later than 12:00 noon,
New York City time, one Business Day before a proposed Borrowing. Each
Syndicated Loan Borrowing Request shall be irrevocable, shall be signed on
behalf of the Borrower, shall refer to this Agreement and shall specify the
following information: (a) that such Request relates to Syndicated Loans and not
a Swingline Loan; (b) whether the Borrowing then being requested is to be a
LIBOR Borrowing or an ABR Borrowing; (c) the date of such Borrowing (which shall
be a Business Day); (d) the number and location of the account to which funds
are to be disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (e) the amount of such Borrowing (which shall
be expressed in dollars, regardless of whether such Borrowing is a Swiss Franc
Borrowing); (f) whether such Borrowing is to be a Borrowing denominated in
dollars or a Swiss Franc Borrowing; and (g) if such Borrowing is to be a LIBOR
Borrowing, the Interest Period or Periods with respect thereto; provided,
however, that notwithstanding any contrary specification in any Syndicated Loan
Borrowing Request, each requested Borrowing of Syndicated Loans shall comply
with the requirements set forth in Section 2.02. If no election as to the
currency of any Borrowing is specified in any such notice, then the requested
Borrowing shall be denominated in dollars. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing if denominated in dollars or a LIBOR Borrowing if denominated
in Swiss francs. If no Interest Period with respect to any LIBOR Borrowing is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration. The Agent
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<PAGE> 21
shall promptly advise the Lenders of any notice given pursuant to this Section
2.03 (and the contents thereof), and of each Lender's portion of the requested
Borrowing and, in the case of any Swiss Franc Borrowing, of the Swiss Franc
equivalent of such Borrowing and the Exchange Rate utilized to determine such
amount.
Section 2.04. Swingline Loans. (a) Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, the Swingline
Bank agrees to make Swingline Loans to the Borrower, at any time and from time
to time on and after the date hereof until two Business Days before the Maturity
Date, in dollars, in an aggregate principal amount at any time outstanding that
will not result in:
(i) the aggregate principal amount of Swingline
Loans being in excess of $10,000,000, or
(ii) the Aggregate Credit Exposure exceeding the
Total Revolving Credit Commitment.
Within such limits, and subject to the terms, conditions and limitations set
forth herein, the Borrower may borrow, pay or prepay and reborrow Swingline
Loans from the Swingline Bank.
(b) The Swingline Loans shall be made in dollars and
maintained as ABR Loans.
(c) Each Borrowing of a Swingline Loan shall be in an
amount not less than $1,000,000 and shall be in integral multiples of $500,000.
(d) In order to request a Borrowing of a Swingline Loan,
the Borrower shall hand deliver or telecopy to the Agent a duly completed
Swingline Loan Borrowing Request not later than 11:00 a.m., New York City time,
on the Business Day on which the proposed Borrowing is to be made. Each
Swingline Loan Borrowing Request shall be irrevocable, shall be signed on behalf
of the Borrower, shall refer to this Agreement and shall state (i) that the
requested Borrowing is to be of a Swingline Loan, and (ii) the amount of such
Borrowing, and (iii) the date of such Borrowing (which is to be a Business Day).
The Agent shall promptly notify the Swingline Bank of such Swingline Loan
Borrowing Request. On the date so specified, the Swingline Bank shall make
available the amount of the Swingline Loan to be made by it on such date to the
Agent, in immediately available funds, at an account designated and maintained
by the Agent. The amount so received by the Agent shall, subject to the terms
and conditions of this Agreement, be made available to the Borrower by
depositing the same in an account of the Borrower maintained at the Agent.
Section 2.05. Refinancing by All Lenders of Swingline Loans. (a) At any time and
from time to time, on any Business Day, the Swingline Bank may in its sole
discretion give notice to the Lenders that one or more of the Swingline Loans
(the aggregate amount of which shall be specified in such notice) shall be
refinanced with a Borrowing of Syndicated Loans in dollars. Each Lender shall
pay by wire transfer of immediately available funds to the Agent not later than
2:00 p.m., New York City time, on the day it receives such notice (or, if such
Lender shall have received such notice later than 12:00 (noon), New York City
time on any day, then not later then 10:00 a.m. on the immediately following
Business Day) an amount equal to such Lender's Pro Rata Percentage of the
aggregate amount of such Syndicated Loans specified in such notice; such payment
shall constitute a Syndicated Loan and an ABR Loan of such Lender, and such
payment shall reduce (to the extent of such payment) the Swingline Loans
specified in such notice. The Agent shall promptly pay to the Swingline Bank
amounts so received by it from the Lenders. If any Lender shall not have made
its Pro Rata
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Percentage of such aggregate amount specified in such notice available to the
Agent as provided in the immediately preceding sentence, such Lender shall
(independently of and in addition to the Borrower's obligation to pay interest
on such amount) pay interest on its Pro Rata Percentage of such amount, for each
day from and including the date the same is required to be paid in accordance
with this paragraph to but excluding the date the same is paid, to the Agent for
the account of the Swingline Bank at (i) for the first such day, the Federal
Funds Effective Rate, and (ii) for each day thereafter, the Alternate Base Rate.
(b) By borrowing any Swingline Loan, the Borrower
irrevocably agrees to incur the Borrowing of Syndicated Loans with respect to
such Swingline Loan as provided in this Section if and when the Swingline Bank
elects in its discretion to require a refinancing thereof as provided in this
Section.
(c) Each Lender hereby irrevocably agrees to make a
Syndicated Loan in the amount and in the manner and on each date specified in
paragraph (a) of this Section, irrespective of whether or not a Default or Event
of Default exists or whether any condition specified in Article 5 is satisfied,
and notwithstanding that the amount of such Borrowing may not comply with the
minimum amount for Borrowings of Syndicated Loans otherwise specified herein.
(d) In the event that any Borrowing described in this
Section cannot for any reason be made on the date required in this Section
(including, without limitation, as a result of the commencement of a proceeding
under the Federal bankruptcy code with respect to the Borrower), then each
Lender shall forthwith purchase (as of the date that such Borrowing would
otherwise have occurred) from the Swingline Bank such participations in the
outstanding Swingline Loans as shall be necessary to cause the Lenders to share
in the outstanding Swingline Loans ratably in accordance with their respective
Pro Rata Percentages. Each Lender shall in addition pay to the Agent for the
account of the Swingline Bank interest on the amount of such obligation of such
Lender, for each day from and including the date such amount is required to be
paid in accordance with this paragraph to but excluding the date such amount is
paid, at (i) for the first such day, the Federal Funds Effective Rate, and (ii)
for each day thereafter, the Alternate Base Rate.
Section 2.06. Repayment of Loans. (a) The Borrower hereby unconditionally agrees
to pay to the Agent for the account of each Lender on the Maturity Date the then
unpaid principal amount of each Syndicated Loan. Such obligation in favor of
each Lender shall be evidenced by a promissory note in favor of such Lender in
substantially the form of Exhibit A-1 hereto (the "Syndicated Loan Note" of such
Lender).
(b) The Borrower hereby unconditionally agrees to pay to
the Agent for the account of the Swingline Bank the unpaid principal amount of
each Swingline Loan on the Maturity Date. Such obligation in favor of the
Swingline Bank shall be evidenced by a single promissory note in favor of the
Swingline Bank in the amount of $10,000,000 in substantially the form of Exhibit
A-2 hereto (the "Swingline Loan Note").
(c) Each Lender and the Swingline Bank shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender or the Swingline Bank resulting from
each Loan made by such Lender or the Swingline Bank from time to time, including
the amounts of principal and interest payable and paid to such Lender or the
Swingline Bank from time to time under this Agreement.
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(d) The Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof, the
Interest Period applicable thereto and whether such Loan is a Syndicated Loan or
a Swingline Loan, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender or the Swingline
Bank hereunder and (iii) the amount of any sum received by the Agent hereunder
from the Borrower or any Guarantor and each Lender's or the Swingline Bank's
share thereof.
(e) The entries made in the accounts maintained pursuant
to paragraphs (c) and (d) above shall be prima facie evidence of the existence
and amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Swingline Bank or the Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
the Borrower to repay the Loans in accordance with their terms.
Section 2.07. Certain Fees. (a) The Borrower agrees to pay to each Lender,
through the Agent, on the last day of March, June, September and December in
each year and on the date on which the Revolving Credit Commitment of such
Lender shall expire or be terminated as provided herein, a commitment fee (a
"Commitment Fee") equal to one-fifth of one percent (1/5 of 1%) per annum on the
average daily unused amount of the Revolving Credit Commitment of such Lender
during the preceding quarter (or other period commencing with the Closing Date
or ending with the Maturity Date or the date on which the Revolving Credit
Commitment of such Lender shall expire or be terminated). "Usage" of the
Revolving Credit Commitment of a Lender shall include the Syndicated Loans of
such Lender and such Lender's Pro Rata Percentage of the L/C Exposure, but shall
exclude Swingline Loans. All Commitment Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Commitment Fee due
to each Lender shall commence to accrue on the date of acceptance by the
Borrower of the Revolving Credit Commitment of such Lender and shall cease to
accrue on the date on which the Commitment of such Lender shall expire or be
terminated as provided herein,
(b) The Borrower agrees to pay to the Agent, for its own
account, the agency fees set forth in the Fee Letter at the times and in the
amounts specified therein (the "Agent Fees").
(c) The Commitment Fee and the Agent Fees shall be paid
on the dates due in immediately available funds to the Agent, for distribution,
if and as appropriate, among the Lenders. Once paid, none of such Fees shall be
refundable under any circumstances.
Section 2.08. Interest on Loans. (a) Subject to the provisions of Section 2.09,
the Loans comprising each ABR Borrowing (whether of Syndicated Loans or of a
Swingline Loan) shall bear interest at a rate per annum equal to the Alternate
Base Rate. Such interest shall be computed on the basis of the actual number of
days elapsed, over (if such interest is determined on the basis of the Prime
Rate) a year of 365 or 366 days, as the case may be, or (if such interest is
determined on the basis of the Federal Funds Effective Rate) a year of 360 days.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each LIBOR Borrowing shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 360 days) at a rate per annum
equal to the Adjusted LIBOR Rate for the Interest Period in effect for such
Borrowing plus the Margin in effect from time to time.
(c) Interest on each Loan shall be payable on the
Interest Payment Dates applicable to such Loan except as otherwise provided in
this Agreement. The applicable Alternate Base Rate or Adjusted LIBOR Rate for
each Interest Period or day within an Interest Period, as the
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case may be, shall be determined by the Agent, and such determination shall be
conclusive absent manifest error.
Section 2.09. Default Interest. If the Borrower shall default in the payment of
the principal of or interest on any Loan or any other amount becoming due under
this Agreement, at stated maturity, by acceleration or otherwise, or under any
other Facility Document, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount to but
excluding the date of actual payment (after as well as before judgment) at a
rate (the "Default Rate") equal to (a) in the case of overdue principal, the
rate otherwise applicable to such Loan pursuant to Section 2.08 plus 2.00% per
annum and (b) in all other cases, the Alternate Base Rate plus 2.00% per annum.
Section 2.10. Termination and Reduction of Commitments. (a) The Revolving Credit
Commitments and the L/C Commitment shall automatically expire and terminate on
the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
written or telecopy notice to the Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Revolving Credit Commitments; provided, however, that (i) each partial reduction
of the Revolving Credit Commitments shall be an integral multiple of $1,000,000
and in a minimum amount of $5,000,000 and (ii) the Total Revolving Credit
Commitment shall not be reduced to an amount that is less than the Aggregate
Credit Exposure at the time (after giving effect to any concurrent prepayment of
Loans).
(c) If a transaction occurs that is not permitted
pursuant to Section 8.07 or Section 8.08 or Section 8.10 other than as a
Designated Sale, then the Revolving Credit Commitments shall be reduced to the
extent provided in the definition of Designated Sales.
(d) If proceeds of the sale(s) of assets by the Borrower
or any of its Subsidiaries are applied to the complete or partial retirement of
the Prudential Notes (whether by prepayment or reacquisition by the Borrower or
such Subsidiary or otherwise), then (in addition to any reduction effected
pursuant to paragraph (c) of this Section) the Revolving Credit Commitments
shall be reduced by the percentage equivalent of a fraction whose numerator is
the amount of the Prudential Notes so retired and whose denominator is the
outstanding principal amount of the Prudential Notes immediately prior to such
retirement. The Borrower shall give the Agent and the Lenders seven (7) days'
prior written notice of any complete or partial retirement of the Prudential
Notes out of proceeds of any such sale(s) of assets.
(e) Each reduction in the Revolving Credit Commitments
hereunder shall be made ratably among the Lenders in accordance with their
respective Revolving Credit Commitments. The Borrower shall pay to the Agent for
the account of the applicable Lenders, on the date of each termination or
reduction, the Commitment Fees on the amount of the Revolving Credit Commitments
so terminated or reduced accrued to but excluding the date of such termination
or reduction.
Section 2.11. Conversion and Continuation of Borrowings. (a) The Borrower shall
have the right at any time upon prior irrevocable notice to the Agent (a) not
later than 12:00 (noon), New York City time, one Business Day prior to
conversion, to convert any LIBOR Borrowing in dollars into an ABR Borrowing, (b)
not later than 11:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing of Syndicated Loans
into a LIBOR Borrowing in dollars or to continue any LIBOR Borrowing as a LIBOR
Borrowing in the same currency for an additional Interest Period or Periods, and
(c) not later than 11:00 a.m., New York City time, three Business Days
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prior to conversion, to convert the Interest Period with respect to any LIBOR
Borrowing to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective principal
amounts of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of
any Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and
the Agent by recording for the account of such Lender the new Loan of
such Lender resulting from such conversion and reducing the Loan (or
portion thereof) of such Lender being converted by an equivalent
principal amount; accrued interest on any LIBOR Loan (or portion
thereof) being converted shall be paid by the Borrower at the time of
conversion;
(iv) if any LIBOR Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due the Lenders pursuant to Section
4.04;
(v) no ABR Borrowing may be converted into a LIBOR
Borrowing during the one-month period prior to the Maturity Date; and
no LIBOR Borrowing whose Interest Period ends during the one-month
period prior to the Maturity Date may be continued as a LIBOR Borrowing
for an additional Interest Period;
(vi) any portion of a LIBOR Borrowing that cannot be
continued as a LIBOR Borrowing by reason of the immediately preceding
clause shall at the end of the Interest Period in effect for such
Borrowing be automatically converted into an ABR Borrowing (if such
LIBOR Borrowing is in dollars) or be repaid by the Borrower (if such
LIBOR Borrowing is in Swiss francs); and
(vii) upon notice to the Borrower from the Agent given at
the request of the Required Lenders, after the occurrence and during
the continuance of a Default or Event of Default, (x) no outstanding
Loan may be converted into, or continued as, a LIBOR Loan, (y) unless
repaid, each LIBOR Borrowing (other than a Swiss Franc Borrowing) shall
be converted into an ABR Borrowing at the end of the Interest Period
applicable thereto and (z) unless repaid, each Swiss Franc Borrowing
shall be converted into an ABR Borrowing at the Exchange Rate
determined by the Agent on the last day of the Interest Period
applicable thereto.
Each notice pursuant to this Section shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a LIBOR Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day), and (iv) if such Borrowing is to be
converted to or continued as a LIBOR Borrowing, the Interest Period with respect
thereto. No such notice shall be given more than seven Business Days prior to
the effective date of the applicable conversion or continuation. If no Interest
Period is specified in any such notice with respect to any conversion to or
continuation as a LIBOR Borrowing,
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the Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Agent shall advise the Lenders of any notice given pursuant to
this Section and of each Lender's portion of any converted or continued
Borrowing. If the Borrower shall not have given notice in accordance with this
Section to continue any LIBOR Borrowing of Syndicated Loans into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing
(unless such Borrowing is a Swiss Franc Borrowing, in which case such Borrowing
shall become due and payable on the last day of such Interest Period).
(b) Each ABR Borrowing shall, if such ABR Borrowing
remains outstanding on the last day of an Interest Period, automatically be
continued into a new Interest Period. A Swingline Loan may not be converted into
a LIBOR Loan.
Section 2.12. Optional Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' (in the case of LIBOR Borrowings) or one Business
Day's (in the case of ABR Borrowings) prior written or telecopy notice to the
Agent before 11:00 a.m., New York City time (or, in the case of prepayment of a
Swiss Franc Borrowing in respect of which previous notices have been delivered
to the Agent in London, then to the Agent in London before 10:00 a.m. London
time); provided, however, that each partial prepayment shall be in an amount
that is an integral multiple of $500,000 and not less than $1,000,000 (or the
Swiss Franc Equivalent thereof).
(b) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing (or portion thereof)
to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to Section 4.04 but
otherwise without premium or penalty. All prepayments under this Section 2.12
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
Section 2.13. Mandatory Prepayments. (a) In the event of any termination of all
the Revolving Credit Commitments, the Borrower shall on the date of such
termination repay or prepay all its outstanding Borrowings and (if any L/C
Exposure exists) remit to the Agent for deposit in the Cash Collateral Account
cash in an amount equal to the L/C Exposure to secure the payment when due of
the reimbursement obligation of the Borrower in respect of the aggregate undrawn
face amount of Letters of Credit.
(b) In the event of any partial reduction of the
Revolving Credit Commitments, then (i) at or prior to the effective date of such
reduction, the Agent shall notify the Borrower and the Lenders of the Aggregate
Credit Exposure after giving effect thereto and (ii) if the Aggregate Credit
Exposure would exceed the Total Revolving Credit Commitment after giving effect
to such reduction, then on the date of such reduction the Borrower shall prepay
Borrowings in an amount sufficient to eliminate such excess and (if the
prepayment of Borrowings is not sufficient to eliminate such excess) remit to
the Agent for deposit in the Cash Collateral Account cash in the remaining
amount of such excess to secure the payment when due of the reimbursement
obligation of the Borrower in respect of the aggregate undrawn face amount of
Letters of Credit. Without limiting the generality of the reductions referred to
in this paragraph of the Revolving Credit Commitments, such reductions shall
include reductions referred to in paragraphs (c) and (d) of Section 2.10.
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(c) In addition, if on any day the Aggregate Credit
Exposure would exceed the Total Revolving Credit Commitment, then the Borrower
shall, within one Business Day, prepay Borrowings in an amount sufficient to
eliminate such excess.
(d) All prepayments of Borrowings under this Section
shall be subject to Section 4.04, but shall otherwise be without premium or
penalty.
(e) Amounts to be applied pursuant to this Section to the
prepayment of Loans shall be applied, as applicable, first to reduce outstanding
Swingline Loans, then to reduce outstanding Syndicated Loans that are ABR Loans.
Any amounts remaining after each such application shall (in respect of LIBOR
Loans) be applied to prepay LIBOR Loans immediately and/or, if elected by the
Borrower provided no Event of Default exists, be deposited in the Cash
Collateral Account, and (in respect of Letters of Credit) shall be deposited in
the Cash Collateral Account. In the case of such an immediate prepayment of
LIBOR Loans, the Borrower shall (unless an Event of Default exists) be entitled
to designate which LIBOR Borrowings are to be prepaid, by giving written notice
of such designation to the Agent at or before the remittance to the Agent of the
amounts to be applied in prepayment.
(f) The Agent shall apply any cash deposited in the Cash
Collateral Account (i) in respect of LIBOR Loans, to prepay LIBOR Loans on the
last day of their respective Interest Periods (or, at the direction of the
Borrower, on any earlier date) until all such outstanding Loans have been
prepaid or until all the allocable cash on deposit with respect to such Loans
has been exhausted; and (ii) in respect of L/C Exposure, to pay as and when the
same becomes due the reimbursement obligation of the Borrower in respect of
Letters of Credit. For purposes of this Agreement, the term "Cash Collateral
Account" shall mean an account established by the Borrower with the Agent and
over which the Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph.
The Agent will, at the request of the Borrower, invest amounts on deposit in the
Cash Collateral Account in Permitted Investments; provided, however, that (i)
the Agent shall not be required to make any investment that, in its sole
judgment, would require or cause the Agent to be in, or would result in any,
violation of any law, statute, rule or regulation, and (ii) the Agent shall have
no obligation to invest amounts on deposit in the Cash Collateral Account if a
Default or Event of Default shall have occurred and be continuing, and (iii) as
to amounts on deposit for the prepayment of LIBOR Borrowings, such Permitted
Investments shall mature prior to the last day of the applicable Interest
Periods of the LIBOR Borrowings to be prepaid. The Borrower shall indemnify the
Agent for any losses relating to the investments so that the amount available to
prepay LIBOR Borrowings on the last day of the applicable Interest Period, and
to pay L/C Exposure as and when the same becomes due, is not less than the
amount that would have been available had no investments been made pursuant
hereto. Other than any interest earned on such investments, the Cash Collateral
Account shall not bear interest. Interest or profits, if any, on such
investments shall be deposited in the Cash Collateral Account and reinvested and
disbursed as specified above. If the maturity of the Loans has been accelerated
pursuant to this Agreement, the Agent may, in its sole discretion apply all
amounts on deposit in the Cash Collateral Account to satisfy any of the amounts
due under this Agreement. The Borrower hereby grants to the Agent, for its
benefit and the benefit of the Issuing Bank and the Lenders, a security interest
in the Cash Collateral Account to secure all amounts due under this Agreement.
Section 2.14. Payments. (a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or reimbursement of any L/C
Disbursement or any Fees or other amounts) hereunder and under any Facility
Document not later than 1:00 p.m., local time at the place of
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payment, on the date when due in immediately available funds, without setoff,
defense or counterclaim. Each such payment (other than Issuing Bank Fees, which
shall be paid directly to the Issuing Bank) shall be made to the Agent at its
offices at 270 Park Avenue, New York, New York (or in the case of Swiss Franc
Loans, at its offices at Trinity Tower, 9 Thomas More Street, London England,
E19YT) or to such other address as the Agent may designate to the Borrower in
writing. Each such payment (other than principal of and interest on Swiss Franc
Loans and L/C Disbursements denominated in Swiss francs, which shall be made in
the Swiss francs) shall be made in dollars. The Agent, or any Lender for whose
account any such payment is to be made, may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower with the Agent or such Lender, as the
case may be, and any Lender so doing shall promptly notify the Agent; such
Lender or (if the Agent effects such debit) the Agent shall promptly after
effecting such debit give notice thereof to the Borrower as well, provided
however that a failure to give such notice to the Borrower shall not affect the
validity of such debit or place such Lender or the Agent under any liability to
the Borrower. The Borrower shall, at the time of making each payment under this
Agreement or the Notes, specify to the Agent the principal or other amount
payable by the Borrower under this Agreement or the Notes to which such payment
is to be applied (and in the event that it fails to so specify, or if a Default
or Event of Default has occurred and is continuing), the Agent may apply such
payment as it may elect in its sole discretion (subject to Section 11.16)).
(b) Whenever any payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder or under any
other Facility Document shall become due, or otherwise would occur, on a day
that is not a Business Day, such payment may, except as otherwise provided in
the definition of Interest Period, be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
Section 2.15. Purpose. The Borrower shall use the proceeds of the Loans for
working capital and general corporate purposes. Such proceeds shall not be used
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U. The proceeds of the
initial Borrowing shall be applied to pay in full all amounts (including
principal, interest and fees) owing on the Closing Date by the Borrower under
the Prior Credit Agreement, and also to make payments on certain other credit
facilities referred to on Schedule III hereto.
ARTICLE 3. LETTERS OF CREDIT
Section 3.01. Letters of Credit. Subject to the terms and conditions of this
Agreement, the Issuing Bank shall issue one or more standby or documentary
letters of credit (each a "Letter of Credit") denominated in dollars or Swiss
francs, for the account of the Borrower, in form acceptable to the Issuing Bank,
provided that, after giving effect to the issuance thereof:
(a) the L/C Exposure shall not exceed $15,000,000, and
(b) the Aggregate Credit Exposure shall not exceed the Total
Revolving Credit Commitment.
This Article shall not be construed to impose an obligation upon the Issuing
Bank to issue any Letter of Credit that is inconsistent with the terms and
conditions of this Agreement.
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Section 3.02. Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or telecopy to the Issuing Bank and the Agent (not later than two Business Days
in advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit (together with a completed
Letter of Credit application in the Issuing Bank's then standard form), or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with Section 3.03), the amount of such
Letter of Credit, the currency in which such Letter of Credit is to be
denominated (which shall be dollars or, subject to Section 4.03, Swiss francs),
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare such Letter of Credit.
Section 3.03. Minimum Amount; Expiration Date. (a) The stated amount of each
Letter of Credit shall not be less than $1,000,000 or such lesser amount as is
acceptable to the Issuing Bank.
(b) Each Letter of Credit shall expire by its terms not
later than the earlier of (A)(i) in the case of a documentary Letter of Credit,
180 days after the issuance thereof (unless the Issuing Bank agrees to a more
extended expiry date) or (ii) in the case of a standby Letter of Credit, one
year after the date of issuance thereof (subject to an "evergreen" provision, if
and to the extent acceptable to the Issuing Bank); or (B) the Maturity Date.
Section 3.04. Participations. By the issuance of each Letter of Credit and
without any further action on the part of the Issuing Bank or the Lenders, the
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Pro Rata Percentage of the aggregate amount available to be drawn under
such Letter of Credit, effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Agent, for the account of the Issuing
Bank, such Lender's Pro Rata Percentage of each L/C Disbursement made by the
Issuing Bank and not reimbursed by the Borrower forthwith on the date due as
provided in Section 2.02(e) in the same currency as such L/C Disbursement
(except as otherwise provided in Section 2.02(e)). Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. The Agent and the Issuing Bank shall be entitled to offset amounts
received for the account of a Lender under this Agreement or any of the other
Facility Documents against unpaid amounts due from such Lender to the Agent or
the Issuing Bank hereunder.
Section 3.05. Reimbursement. If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay to the Agent an amount
equal to such L/C Disbursement, in the same currency as such L/C Disbursement,
(if the Borrower is notified of such L/C Disbursement prior to 3:00 p.m. New
York City time on the date such L/C Disbursement is made) on the date such L/C
Disbursement is made or (otherwise) on the Business Day immediately following
the date on which such L/C Disbursement is made.
Section 3.06. Obligations Absolute. The Borrower's obligation to reimburse L/C
Disbursements as provided in Section 3.05 shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under any and all circumstances whatsoever, and irrespective of:
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(i) any lack of validity or enforceability of
any Letter of Credit or any Facility Document, or any term or
provision therein;
(ii) any amendment or waiver of or any consent to
departure from all or any of the provisions of any Letter of
Credit or any Facility Document;
(iii) the existence of any claim, setoff, defense
or other right that the Borrower, any other party
guaranteeing, or otherwise obligated with, the Borrower, any
Subsidiary or other Affiliate thereof or any other person may
at any time have against the beneficiary under any Letter of
Credit, the Issuing Bank, the Agent or any Lender or any other
person, whether in connection with this Agreement, any other
Facility Document or any other related or unrelated agreement
or transaction;
(iv) any draft or other document presented under
a Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter
of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit,
provided that such draft and other documents substantially
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of
any kind of the Issuing Bank, the Lenders, the Agent or any
other Person or any other event or circumstances whatsoever,
whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or
equitable discharge of the Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or willful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or willful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) the Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute willful
misconduct or gross negligence of the Issuing Bank.
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Section 3.07. Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall as promptly
as possible give telephonic notification, confirmed by telecopy, to the Agent
and the Borrower of such demand for payment and whether the Issuing Bank has
made or will make an L/C Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to any
such L/C Disbursement. The Agent shall promptly give each Lender notice thereof.
Section 3.08. Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(e), at the rate per annum that would
apply to such amount if such amount were an ABR Loan; provided, however, that if
such amount is denominated in Swiss francs, then the interest rate applicable
thereto shall be the rate determined by the Agent (which determination shall be
conclusive absent manifest error) to represent the cost to it of obtaining funds
in Swiss francs plus the Margin as to a Swiss Franc Loan.
Section 3.09. Letter of Credit Fees. The Borrower agrees to pay (i) to each
Lender, through the Agent, on the last day of March, June, September and
December of each year and on the date on which the Revolving Credit Commitment
of such Lender shall be terminated as provided herein, a fee (an "L/C
Participation Fee") calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof, or ending with the Maturity Date or the
date on which all Letters of Credit have been canceled or have expired and the
Revolving Credit Commitments of all Lenders have been terminated) at a rate
equal to .9375% per annum in respect of standby Letters of Credit and .1875% per
annum in respect of documentary Letters of Credit, and (ii) to the Issuing Bank
with respect to each Letter of Credit, a facing fee at a rate equal to .0625%
per annum in respect of each Letter of Credit (payable at the same times that
the L/C Participation Fee is payable) plus the standard issuance and drawing
fees specified from time to time by the Issuing Bank (the "Issuing Bank Fees").
All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis
of the actual number of days elapsed in a year of 360 days. The L/C
Participation Fee and the Issuing Bank Fees shall be paid on the dates due in
immediately available funds, (in the case of the L/C Participation Fee) to the
Agent for distribution as appropriate among the Lenders and (in the case of the
Issuing Bank Fees) directly to the Issuing Bank.
Section 3.10. Resignation of the Issuing Bank. The Issuing Bank may resign at
any time by giving 180 days' prior written notice to the Agent, the Lenders and
the Borrower. The Borrower shall have the right to appoint any Lender as
successor Issuing Bank, subject to the consent of the Required Lenders including
the appointed Lender (which consent of the appointed Lender shall be in such
Lender's sole discretion, and which consent of the other Required Lenders shall
not be unreasonably withheld). Upon the acceptance of any appointment as the
Issuing Bank hereunder by a Lender that shall agree to serve as successor
Issuing Bank, such successor shall succeed to and become vested with all the
interests, rights and obligations of the retiring Issuing Bank and the retiring
Issuing Bank shall be discharged from its obligations to issue additional
Letters of Credit hereunder. At the time such resignation shall become
effective, the Borrower shall pay all accrued and unpaid Issuing Bank Fees. The
acceptance of any appointment as the Issuing Bank hereunder by a successor
Lender shall
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be evidenced by an agreement entered into by such successor, in a form
satisfactory to the Borrower and the Agent, and from and after the effective
date of such agreement (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the resignation of the Issuing Bank hereunder, the
retiring Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement and the other
Facility Documents with respect to Letters of Credit issued by it prior to such
resignation, but shall not be required to issue additional Letters of Credit.
Section 3.11. Not Fiduciary. In no event shall the Issuing Bank be deemed a
fiduciary of the Lenders with respect to Letters of Credit. As between the
Issuing Bank (on the one hand) and the Lenders (on the other hand), the Issuing
Bank shall have in connection with the Letters of Credit all the rights and
protections that are afforded to the Agent in Article 11.
Section 3.12. Purpose. No Letter of Credit shall be used by the Borrower for the
purpose, whether immediate, incidental or ultimate, of buying or carrying
"margin stock" within the meaning of Regulation U.
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC.
Section 4.01. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a LIBOR Borrowing:
(a) the Agent determines (which determination,
if made on a reasonable and nondiscriminatory basis, shall be
conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate for
such Interest Period; or
(b) the Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of
making or maintaining their Loans included in such Borrowing
for such Interest Period; or
(c) in the case of a Swiss Franc Borrowing, the
Agent determines (which determination, if made on a reasonable
and nondiscriminatory basis, shall be conclusive absent
manifest error) that deposits in Swiss francs are not
generally available, or cannot be obtained by the Lenders, in
the London interbank market;
then the Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any request to convert any Borrowing to, or to
continue any Borrowing as, a LIBOR Borrowing shall be ineffective, and any LIBOR
Borrowing so requested to be continued shall be repaid on the last day of the
then current Interest Period with respect thereto or (at the option of the
Borrower, in the case of a LIBOR Borrowing in dollars) shall be converted to an
ABR Borrowing denominated in dollars in accordance with this Agreement on the
last day of the then current Interest Period with respect thereto, (ii) if any
Syndicated Loan Borrowing Request requests a LIBOR Borrowing (other than a Swiss
Franc Borrowing), such Borrowing shall be
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made as an ABR Borrowing and (iii) any request by any Borrower for a Swiss Franc
Borrowing shall be ineffective.
Section 4.02. Reserve Requirement; Change in Circumstances. (a) Notwithstanding
any other provision of this Agreement, if after the date of this Agreement any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the
Swingline Bank or the Issuing Bank of the principal of or interest on any LIBOR
Loan made by such Lender or any Fees or other amounts payable hereunder (other
than changes in respect of taxes imposed on the overall net income of such
Lender or the Swingline Bank or the Issuing Bank by the jurisdiction in which
such Lender or the Swingline Bank or the Issuing Bank has its principal office
or by any political subdivision or taxing authority therein), or shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended by any
Lender or the Swingline Bank or the Issuing Bank (except only such reserve
requirement which is reflected in the Adjusted LIBOR Rate) or shall impose on
such Lender or the Swingline Bank or the Issuing Bank or the London interbank
market (or other relevant interbank market) any other condition affecting this
Agreement or LIBOR Loans made by such Lender or any Letter of Credit or
participation therein, and the result of any of the foregoing shall be to
increase the cost to such Lender or the Swingline Bank or the Issuing Bank of
making or maintaining any LIBOR Loan or of issuing or maintaining any Letter of
Credit or purchasing or maintaining a participation therein or to reduce the
amount of any sum received or receivable by such Lender or the Swingline Bank or
the Issuing Bank hereunder in respect thereof (whether of principal, interest or
otherwise) by an amount deemed by such Lender or the Swingline Bank or the
Issuing Bank to be material, then the Borrower shall pay to such Lender or the
Swingline Bank or the Issuing Bank, as the case may be, upon demand such
additional amount or amounts as will compensate such Lender or the Swingline
Bank or the Issuing Bank, as the case may be, for such additional costs incurred
or reduction suffered. There shall be no duplication of payments in respect of
Indemnified Taxes and Other Taxes required to be made by this Section and by
Section 4.05.
(b) If any Lender or the Swingline Bank or the Issuing
Bank shall have determined that the adoption after the date hereof of any law,
rule, regulation, agreement or guideline regarding capital adequacy or any
change after the date hereof in any such law, rule, regulation, agreement or
guideline (whether or not such law, rule, regulation, agreement or guideline has
been adopted) or in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
the Swingline Bank or the Issuing Bank or any Lender's or the Swingline Bank's
or the Issuing Bank's holding company with any request or directive regarding
capital adequacy (whether or not having the force of law) of any Governmental
Authority has or would have the effect of reducing the rate of return on such
Lender's or the Swingline Bank's or the Issuing Bank's capital or on the capital
of such Lender's or the Swingline Bank's or the Issuing Bank's holding company,
if any, as a consequence of this Agreement or the Loans made or participation in
Letters of Credit purchased by such Lender pursuant hereto or the Letters of
Credit issued by the Swingline Bank or the Issuing Bank pursuant hereto to a
level below that which such Lender or the Swingline Bank or the Issuing Bank or
such Lender's or the Swingline Bank's or the Issuing Bank's holding company
could have achieved but for such applicability, adoption, change or compliance
(taking into consideration such Lender's or the Swingline Bank's or the Issuing
Bank's policies and the policies of such Lender's or the Swingline Bank's or the
Issuing Bank's holding company with respect to capital adequacy) by an amount
deemed by such Lender or the Swingline Bank or the Issuing Bank to be material,
then from time to time the Borrower shall pay to such Lender or the Swingline
Bank or the Issuing Bank, as the case
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may be, such additional amount or amounts as will compensate such Lender or the
Swingline Bank or the Issuing Bank or such Lender's or the Swingline Bank's or
the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Swingline Bank or
the Issuing Bank setting forth the amount or amounts necessary to compensate
such Lender or the Swingline Bank or the Issuing Bank or its holding company, as
applicable, as specified in paragraph (a) or (b) above shall be delivered to the
Borrower and shall (if the determination of such amount or amounts is made on a
reasonable and nondiscriminatory basis) be conclusive absent manifest error. The
Borrower shall pay such Lender or the Swingline Bank or the Issuing Bank the
amount shown as due on any such certificate delivered by it within 10 days after
its receipt of the same.
(d) Failure or delay on the part of any Lender or the
Swingline Bank or the Issuing Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital shall not constitute a waiver of such Lender's or the Swingline Bank or
the Issuing Bank's right to demand such compensation; provided however that if
any Lender or the Swingline Bank or the Issuing Bank demands such compensation
in respect of a period prior to the date on which written demand therefor is
given to the Borrower, then the obligation of the Borrower to pay such
compensation in respect of such period shall be limited to the three months
prior to the giving of such written demand, plus (if such demand results from a
retroactive change in the aforesaid law, regulation, interpretation,
administration, or guideline) the period of such retroactivity; however, such
limitation shall not apply in respect of the period from and after the giving of
such written demand). The protection of this Section shall be available to each
Lender and the Swingline Bank or the Issuing Bank regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
agreement, guideline or other change or condition that shall have occurred or
been imposed.
Section 4.03. Change in Legality. (a) Notwithstanding any other provision of
this Agreement, if, after the date hereof, (i) any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any LIBOR Loan or Swiss Franc Loan or to give
effect to its obligations as contemplated hereby with respect to any LIBOR Loan
or Swiss Franc Loan or participation in Letters of Credit denominated in Swiss
francs, or shall make it unlawful for the Issuing Bank to issue Letters of
Credit denominated in Swiss francs, or (ii) there shall have occurred any
imposition of or any change in exchange controls which would, in the judgment of
any Lender made on a reasonable and nondiscriminatory basis, make it
impracticable for such Lender to make Loans denominated in Swiss francs or to
participate or issue Letters of Credit to or for the account of, the Borrower,
denominated in Swiss francs, then, by written notice to the Borrower and to the
Agent:
(x) such Lender may declare that LIBOR Loans or Swiss
Franc Loans, as the case may be, will not thereafter (for the
duration of such unlawfulness) be made by such Lender
hereunder (or be continued for additional Interest Periods)
and ABR Loans will not thereafter (for such duration) be
converted into LIBOR Loans, whereupon any request for a LIBOR
Borrowing or Swiss Franc Borrowing, as the case may be (or to
convert an ABR Borrowing to a LIBOR Borrowing or to continue a
LIBOR Borrowing or Swiss Franc Borrowing, as the case may be,
for an additional Interest Period) shall, as to such Lender
only, be deemed a request for an ABR Loan or a Loan
denominated in dollars, as the case may be (or a request to
continue an ABR Loan as such for an additional Interest Period
or to convert a LIBOR Loan into an ABR Loan, as the case may
be), unless such declaration shall be subsequently withdrawn;
provided,
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however, that upon any such declaration by such Lender as to a
Swiss Franc Loan, the Borrower may repay the Swiss Franc
Loan(s) of such Lender on the last day of the then current
Interest Period with respect thereto (or such earlier date on
which any relevant notice pursuant to paragraph (b) below
becomes effective), in lieu of converting such Swiss Franc
Loan into an ABR Loan;
(y) such Lender may require that all outstanding
LIBOR Loans or Swiss Franc Loans, as the case may be, made by
it be converted to ABR Loans or Loans denominated in dollars,
as the case may be, in which event all such LIBOR Loans or
Swiss Franc Loans, as the case may be, shall be automatically
converted to ABR Loans or Loans denominated in dollars, as the
case may be, as of the effective date of such notice as
provided in paragraph (b) below and at the Exchange Rate at
the date of such conversion; provided, however, that as to any
Swiss Franc Loan of such Lender so required to be converted,
the Borrower may repay the same on the last day of the then
current Interest Period with respect thereto (or such earlier
date on which any relevant notice pursuant to paragraph (b)
below becomes effective), in lieu of converting such Swiss
Franc Loan into an ABR Loan; and
(z) in the case of any such change affecting the
Issuing Bank's ability to issue or any Lender's ability to
acquire participations in, Letters of Credit denominated in
Swiss francs, the Issuing Bank or such Lender may declare that
Letters of Credit will not thereafter be issued in Swiss
francs.
In the case of any conversion pursuant to the exercise by any Lender of its
rights under clause (x) or (y) above, all payments and prepayments of principal
that would otherwise have been applied to repay the LIBOR Loans or Swiss Franc
Loans, as the case may be, that would have been made by such Lender or the
converted LIBOR Loans or Swiss Franc Loans, as the case may be, of such Lender
shall instead be applied to repay the ABR Loans or Loans denominated in dollars,
as the case may be, made by such Lender in lieu of, or resulting from the
conversion of, such LIBOR Loans or Loans denominated in dollars, as the case may
be.
(b) For purposes of this Section, a notice to the
Borrower by any Lender shall be effective as to each LIBOR Loan made by such
Lender, if lawful, on the last day of the Interest Period then applicable to
such LIBOR Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
(c) If one or more of the Swiss Franc Loans of any
Lender is repaid by the Borrower pursuant to the proviso in clause (x) or (y)
above, and the making of such repayments results in such Lender having less than
its Pro Rata Percentage of all outstanding Syndicated Loans, such Lender shall
promptly purchase from the other Lenders, and the other Lenders shall promptly
sell to such Lender, participations in the Syndicated Loans denominated in
dollars of such other Lenders, to the end that the amounts of the Syndicated
Loans shall be held by Lenders as nearly as possible in accordance with their
respective Pro Rata Percentages.
Section 4.04. Indemnity. The Borrower shall indemnify each Lender against any
loss or expense that such Lender may sustain or incur as a consequence of (a)
any event, other than a default by such Lender in the performance of its
obligations hereunder, which results in (i) such Lender receiving or being
deemed to receive any amount on account of the principal of any LIBOR Loan prior
to the end of the Interest Period in effect therefor, (ii) the conversion of any
LIBOR Loan to an ABR Loan, or the conversion of the Interest Period with respect
to any LIBOR Loan, in each case other than on the last
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day of the Interest Period in effect therefor, or (iii) any LIBOR Loan to be
made by such Lender (including any LIBOR Loan to be made pursuant to a
conversion or continuation under Section 2.11) not being made after notice of
such Loan shall have been given by the Borrower hereunder (any of the events
referred to in this clause (a) being called a "Breakage Event") or (b) any
default in the making of payment or prepayment required to be made hereunder. In
the case of any Breakage Event, such loss shall include an amount equal to the
excess, as reasonably determined by such Lender, of (i) its cost of obtaining
funds for the LIBOR Loan that is the subject of such Breakage Event for the
period from the date of such Breakage Event to the last day of the Interest
Period in effect (or that would have been in effect) for such Loan over (ii) the
amount of interest likely to be realized by such Lender in redeploying the funds
released or not utilized by reason of such Breakage Event for such period. A
certificate of any Lender setting forth any amount or amounts which such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall (if the determination of such amount or amounts is made on a
reasonable and nondiscriminatory basis) be conclusive absent manifest error.
Section 4.05. Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that, if the Borrower shall
be required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Agent, Lender, Swingline Bank or Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions,
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Agent, each
Lender, the Swingline Bank and the Issuing Bank, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Agent, such Lender, the Swingline Bank or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Swingline Bank or the Issuing Bank, or by the Agent
on its own behalf or on behalf of a Lender or the Swingline Bank or the Issuing
Bank, shall (if there is a reasonable basis for such payment or liability, and
if the determination of the amount thereof is made on a reasonable basis) be
conclusive absent manifest error.
(d) After payment by the Borrower to the demanding
party of the amount demanded pursuant to paragraph (c) of this Section, the
Borrower shall be entitled to commence a legal proceeding against the applicable
Governmental Authority to recover the Indemnified Taxes or Other Taxes so paid
by the demanding party; and (after such payment by the Borrower to the demanding
party) the demanding party shall at the sole expense of the Borrower cooperate
with the Borrower as the Borrower may reasonably request with respect to such
legal proceeding, provided that the demanding party may do so without material
risk of liability.
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(e) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Agent written evidence thereof reasonably
satisfactory to the Agent.
(f) If the Borrower and a Lender (or, in the case of
a payment to the Agent, the Agent) (each, a "Payee") agree that an Indemnified
Tax paid by the Borrower under Section 4.05 (a) or (c) with respect to payments
by the Borrower to such Payee should more likely than not be refunded by the
relevant Governmental Authority under applicable law, such Payee shall, at the
expense of the Borrower, cooperate with the Borrower as the Borrower may
reasonably request in order to seek a refund of such Indemnified Tax, including
the execution by the Payee of such documents acceptable to the Payee as the
Borrower may reasonably request, provided that the Payee may do so without
material risk of liability, and provided further that no Payee shall be required
to disclose its tax returns or other information it deems confidential. If any
Payee receives a refund of any Indemnified Tax paid by the Borrower under
Section 4.05 (a) or (c) (including a refund received pursuant to the preceding
sentence) the amount of such refund received (together with any interest
received from the Governmental Authority thereon) shall be paid to the Borrower.
Section 4.06. Duty to Mitigate. If (i) any Lender or the Swingline Bank or the
Issuing Bank shall request compensation under Section 4.02, (ii) any Lender or
the Swingline Bank or the Issuing Bank delivers a notice described in Section
4.03 or (iii) the Borrower is required to pay any additional amount to any
Lender or the Swingline Bank or the Issuing Bank or any Governmental Authority
on account of any Lender or the Swingline Bank or the Issuing Bank, pursuant to
Section 4.05, then such Lender or the Swingline Bank or the Issuing Bank shall
use reasonable efforts (which shall not require such Lender or the Swingline
Bank or the Issuing Bank to incur an unreimbursed loss or unreimbursed cost or
expense or otherwise take any action inconsistent with its internal policies or
legal or regulatory restrictions or suffer any disadvantage or burden deemed by
it to be significant) (x) to file any certificate or document reasonably
requested in writing by the Borrower or (y) to assign its rights and delegate
and transfer its obligations hereunder to another of its offices, branches or
affiliates, if such filing or assignment would reduce its claims for
compensation under Section 4.02 or enable it to withdraw its notice pursuant to
Section 4.03 or would reduce amounts payable pursuant to Section 4.05, as the
case may be, in the future. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender or the Swingline Bank or the Issuing
Bank in connection with any such filing or assignment, delegation and transfer.
Section 4.07. Replacement of Lenders. If any Lender or the Swingline Bank or the
Issuing Bank requests compensation under Section 4.02, or if any Lender or the
Swingline Bank or the Issuing Bank delivers a notice described in Section 4.03,
or if the Borrower is required to pay any additional amount to any Lender, the
Swingline Bank, the Issuing Bank or any Governmental Authority for the account
of any Lender or the Swingline Bank or the Issuing Bank pursuant to Section
4.05, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender or
the Swingline Bank or the Issuing Bank, as the case may be, and the Agent,
require such Lender or the Swingline Bank or the Issuing Bank, as the case may
be, to assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 12.05, which restrictions shall apply, for
purposes of this Section, with reference to the Swingline Bank and the Issuing
Bank, as well as with reference to a Lender) all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) if the assignee is not a Lender, the Borrower
shall have received the prior written consent of the Agent (and the Swingline
Bank and the Issuing Bank), which consent shall not be unreasonably withheld;
and (ii) such Lender or the Swingline Bank or the Issuing Bank shall have
received payment of an amount equal to the
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outstanding principal of its Loans and unreimbursed L/C Disbursements and funded
participations in Swingline Loans, accrued interest thereon and accrued fees and
other amounts (including amounts under Sections 4.02, 4.03 and 4.05) payable to
it hereunder from the assignee or the Borrower, and (if the Issuing Bank is to
be the assignor) the Issuing Bank shall have received from the Borrower cash
collateral or other collateral satisfactory to it, having a value not less than
the aggregate undrawn face amount of all Letters of Credit that are outstanding,
as security for the reimbursement obligation of the Borrower in respect of such
Letters of Credit; and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 4.02 or payments required to be made
pursuant to Section 4.03 or 4.05, such assignment will result in a reduction in
such compensation or payments. A Lender, the Swingline Bank or the Issuing Bank
(as the case may be) shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender, the
Swingline Bank or the Issuing Bank (as the case may be) or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply. The interests, rights and obligations hereunder of a Lender that
serves as either or both of the Issuing Bank or the Swingline Bank hereunder
shall include its interests, rights and obligations in all such capacities.
ARTICLE 5. CONDITIONS PRECEDENT.
Section 5.01. Documentary Conditions Precedent. The execution and delivery of
this Agreement by the Lenders, the Agent, the Swingline Bank and the Issuing
Bank are subject to the condition precedent that the Agent shall have received
on or before the Closing Date each of the following, in form and substance
satisfactory to the Agent and its counsel:
(a) the Syndicated Notes and the Swingline Note, duly executed
by the Borrower;
(b) the Authorization Letter, duly executed by the Borrower;
(c) the SwissAm Guarantee, duly executed by SwissAm;
(d) a certificate of the Secretary or Assistant Secretary of
the Borrower, dated the Closing Date, attesting to (i) all corporate action
taken by the Borrower, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of the Facility Documents to
which it is a party and each other document to be delivered pursuant to this
Agreement, and (ii) a true and complete copy of its certificate of incorporation
and by-laws;
(e) a certificate of the Secretary or Assistant Secretary of
the Borrower, dated the Closing Date, certifying the names and true signatures
of the officers of the Borrower authorized to sign the Facility Documents to
which it is a party and the other documents to be delivered by the Borrower
under this Agreement;
(f) a certificate of a duly authorized officer of the
Borrower, dated the Closing Date, stating that the representations and
warranties in Article 6 are true and correct on such date as though made on and
as of such date and that no event has occurred and is continuing which
constitutes a Default or Event of Default;
(g) a certificate of the Secretary or Assistant Secretary of
SwissAm, dated the Closing Date, attesting to (i) all corporate action taken by
SwissAm, including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the SwissAm Guarantee, and (ii) a true
and complete copy of its certificate of incorporation and by-laws;
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(h) a certificate of the Secretary or Assistant Secretary of
SwissAm, dated the Closing Date, certifying the names and true signatures of the
officers of SwissAm authorized to sign the SwissAm Guarantee;
(i) a favorable opinion of counsel for the Borrower and
SwissAm, dated the Closing Date, in substantially the form of Exhibit C and as
to such other matters as the Agent, any Lender, the Swingline Bank or the
Issuing Bank may reasonably request; and
(j) such other approvals, opinions, certificates and documents
as the Agent may reasonably request.
Section 5.02. Additional Conditions Precedent. The obligations of the Lenders to
make any Syndicated Loans pursuant to a Borrowing which increases the amount of
Syndicated Loans outstanding hereunder (including the initial Borrowing), and of
the Swingline Bank to make any Swingline Loan (including the initial Borrowing),
and of the Issuing Bank to issue any Letter of Credit hereunder, shall be
subject to the further conditions precedent that on the date of such Syndicated
Loans or such Swingline Loan or such Letter of Credit (as the case may be, the
following statements shall be true:
(a) the representations and warranties contained in Article 6
are true and correct on and as of the date of such Syndicated Loans or
such Swingline Loan or such Letter of Credit (as the case may be) as
though made on and as of such date, except (i) for any change since the
date hereof with respect to Section 6.09 or Section 6.10 provided that
(x) the Borrower shall have given specific notice of such change to the
Lenders and the Agent in writing and (y) such change does not
constitute a Default or Event of Default; and (ii) that any
representation and warranty contained in Section 6.05 that specifically
relates to January 31, 1997 or April 30, 1997 shall be true and correct
as of January 31, 1997 or April 30, 1997 (as the case may be)
(b) no Default or Event of Default has occurred and is
continuing, or would result from such Syndicated Loans or such
Swingline Loans or such Letter of Credit.
Section 5.03. Deemed Representations. Each Borrowing Request and each acceptance
by the Borrower of the proceeds of such borrowing, and each request by the
Borrower for the issuance of a Letter of Credit and each issuance of a Letter of
Credit, shall constitute a representation and warranty by the Borrower that the
statements contained in Section 5.02 are true and correct both on the date of
such Borrowing Request or request for a Letter of Credit and, unless the
Borrower otherwise notifies the Agent prior to such Borrowing or issuance, as of
the date of such Borrowing or issuance.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 6.01. Incorporation, Good Standing and Due Qualification. Each of the
Borrower and its Subsidiaries is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged, and is duly qualified as a foreign corporation and in
good standing under the laws of each other jurisdiction in which the failure to
be so qualified would
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have a material adverse effect on the business, financial condition or
operations of the Borrower and its Subsidiaries taken as a whole.
Section 6.02. Corporate Power and Authority; No Conflicts. The execution,
delivery and performance by each of the Borrower and each Guarantor of the
Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c) violate
any provision of, or require any filing, registration, consent or approval
under, any law, rule, regulation (including, without limitation, Regulation U),
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Borrower or any Subsidiaries or Affiliates of
the Borrower; (d) result in a breach of or constitute a default or require any
consent under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower or such Guarantor is a party or by
which it or its properties may be bound or affected; (e) result in, or require,
the creation or imposition of any Lien upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower or such Guarantor; or
(f) cause the Borrower (or any Subsidiary or Affiliate of the Borrower, as the
case may be) to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
Section 6.03. Legally Enforceable Agreements. Each Facility Document to which
the Borrower or a Guarantor is a party is a legal, valid and binding obligation
of the Borrower or such Guarantor (as the case may be) enforceable against the
Borrower or such Guarantor (as the case may be) in accordance with its terms,
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law).
Section 6.04. Litigation. There are no actions, suits or proceedings pending or,
to the knowledge of the Borrower, threatened, against or affecting the Borrower
or any of its Subsidiaries before any court, governmental agency or arbitrator,
which (if determined adversely to the Borrower or such Subsidiary) would, in any
one case or in the aggregate, materially adversely affect the financial
condition, operations or business of the Borrower and its Subsidiaries taken as
a whole or the ability of the Borrower or any Guarantor to perform its
obligations under the Facility Documents to which it is a party.
Section 6.05. Financial Statements. The consolidated and consolidating balance
sheet of the Borrower and its Consolidated Subsidiaries as at January 31, 1997,
and the related consolidated and consolidating income statement and statements
of cash flows and changes in stockholders' equity of the Borrower and its
Consolidated Subsidiaries for the fiscal year then ended, and the accompanying
footnotes, together with the accompanying opinion of Price Waterhouse LLP,
independent certified public accountants, and the interim consolidated and
consolidating balance sheet of the Borrower and its Consolidated Subsidiaries as
at April 30, 1997, and the related consolidated and consolidating income
statement and statements of cash flows and changes in stockholders' equity for
the three-month period then ended, copies of which have been furnished to each
of the Lenders, are complete and correct in all material respects and fairly
present the financial condition of the Borrower and its Consolidated
Subsidiaries as at such dates and the results of the operations of the Borrower
and its Consolidated Subsidiaries for the periods covered by such statements,
all in accordance with GAAP consistently applied (subject to year end
adjustments in the case of the interim financial statements and except as
otherwise stated therein or in the notes thereto). There are no liabilities of
the Borrower or any of its Consolidated Subsidiaries, fixed or contingent, which
are material in relation to the consolidated financial condition of the Borrower
but are not reflected in the financial statements or
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in the notes thereto, other than liabilities arising in the ordinary course of
business since January 31, 1997. No information, exhibit or report furnished by
the Borrower to the Agent or any of the Lenders in connection with the
negotiation of this Agreement, when read together with the financial statements
referred to in this Section 6.05, contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not materially misleading. Since January 31, 1997, there has
been no material adverse change in the condition (financial or otherwise),
business or operations of the Borrower and the Consolidated Subsidiaries taken
as a whole.
Section 6.06. Ownership and Liens. Each of the Borrower and its Consolidated
Subsidiaries has title to, or valid leasehold interests in, all of its
properties and assets, real and personal, including the properties and assets,
and leasehold interests reflected in the financial statements referred to in
Section 6.05 (other than any properties or assets disposed of in the ordinary
course of business, and other than properties and assets that are not material
to the Borrower and its Subsidiaries taken as a whole), and none of the
properties and assets owned by the Borrower or any of its Subsidiaries and none
of its leasehold interests is subject to any Lien, except as disclosed in such
financial statements or as may be permitted hereunder.
Section 6.07. Taxes. Each of the Borrower and its Subsidiaries has filed all tax
returns (foreign, federal, state and local) required to be filed and has paid
all taxes, assessments and governmental charges and levies shown thereon to be
due, including interest and penalties, except for such taxes and other amounts
as are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP.
Section 6.08. ERISA. (a) No accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any Plan (other than a Multiemployer Plan). No liability to the
PBGC has been or is expected by the Borrower or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by the
Borrower, any Subsidiary or any ERISA Affiliate which is or would be materially
adverse to the business, financial condition or operations of the Borrower and
its Subsidiaries taken as a whole. Neither the Borrower, nor any Subsidiary nor
any ERISA Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to the business, financial condition or
operations of the Borrower and its Subsidiaries taken as a whole.
(b) Neither the Borrower nor any of its Subsidiaries has
breached the fiduciary rules of ERISA or engaged in any prohibited transaction
in connection with which the Borrower or any of its Subsidiaries or ERISA
Affiliates could be subjected to (in the case of any such breach) a suit for
damages or (in the case of any such prohibited transactions) with a civil
penalty assessed under Section 502(i) of ERISA or a tax imposed by Section 4975
of the Code, which suit, penalty or tax, in any case, would be materially
adverse to the business, financial condition or operations of the Borrower and
its Subsidiaries taken as a whole.
(c) There has been no reportable event (within the meaning of
Section 4043(b) of ERISA) or any other event or condition with respect to any
Plan (other than a Multiemployer Plan) which presents a risk of termination of
any such Plan by the PBGC under circumstances which in any case could result in
liability which would be materially adverse to the business, financial condition
or operations of the Borrower and its Subsidiaries taken as a whole.
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(d) The present value of all vested accrued benefits under all
Plans (other than Multiemployer Plans), determined as of the end of the
Borrower's most recently ended fiscal year on the basis of reasonable actuarial
assumptions, did not exceed the current value of the assets of such Plans
allocable to such vested accrued benefits. The terms "present value", "current
value", and "accrued benefit" have the meanings specified in Section 3 of ERISA.
(e) Neither the Borrower nor any of its Subsidiaries is or has
ever been obligated to contribute to any Multiemployer Plan.
Section 6.09. Subsidiaries and Ownership of Stock. Schedule II is a complete and
accurate list of the Subsidiaries of the Borrower, showing the jurisdiction of
incorporation or organization of each Subsidiary and showing the percentage of
the Borrower's ownership of the outstanding stock or other interest of each such
Subsidiary. All of the outstanding capital stock or other interest of each such
Subsidiary has been validly issued, is fully paid and nonassessable and is owned
by the Borrower free and clear of all Liens.
Section 6.10. Credit Arrangements. Schedule III is a complete and correct list
of all credit agreements, indentures, purchase agreements, guaranties, Capital
Leases and other investments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing
or for credit lines extended for the purchase of foreign-exchange contracts) in
respect of which the Borrower or any of its Subsidiaries is in any manner
directly or contingently obligated to pay money (excluding trade payables in the
ordinary course of business, and excluding other extensions of credit that do
not exceed $250,000 in the aggregate of all such other extensions of credit),
including all modifications thereof and amendments thereto; and the maximum
principal or face amounts of the credit in question, outstanding and which can
be outstanding, are correctly stated, and all Liens (if any) of any nature given
or agreed to be given as security therefor are correctly described or indicated
in such Schedule.
Section 6.11. Operation of Business. Each of the Borrower and its Subsidiaries
possesses all licenses, permits, franchises, patents, copyrights, trademarks and
trade names, or rights thereto, necessary in any material respect to conduct the
business substantially as now conducted of the Borrower and its Subsidiaries
taken as a whole, and neither the Borrower nor any of its Subsidiaries is in
violation of any valid rights of others with respect to any of the foregoing.
Section 6.12. Hazardous Materials. The Borrower and each of its Subsidiaries
have obtained all permits, licenses and other authorizations which are required
under all Environmental Laws, except to the extent failure to have any such
permit, license or authorization would not have a material adverse effect on the
consolidated financial condition, operations or business of the Borrower and its
Consolidated Subsidiaries taken as a whole. The Borrower and each of its
Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply would not have a material adverse effect
on the consolidated financial condition, operations or business of the Borrower
and its Consolidated Subsidiaries taken as a whole.
In addition, except as set forth in Schedule IV hereto:
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(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and, to the best of the Borrower's knowledge, no
investigation or review is pending or threatened by any governmental or other
entity with respect to any alleged failure by the Borrower or any of its
Subsidiaries to have any permit, license or authorization required under the
Environmental Laws in connection with the conduct of the business of the
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. Section 9601(22) ("Release"), of any substance
regulated under Environmental Laws ("Hazardous Materials") generated by the
Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries has
handled any Hazardous Material, other than as a generator, on any property now
or previously owned or leased by the Borrower or any of its Subsidiaries to an
extent that it has, or is reasonably expected to have, a material adverse effect
on the consolidated financial condition, operations or business taken as a whole
of the Borrower and its Consolidated Subsidiaries; and
(i) no polychlorinated biphenyl is present at any
property now or owned or leased by the Borrower or any of its
Subsidiaries;
(ii) no asbestos is present at any property now owned or
leased by the Borrower or any of its Subsidiaries;
(iii) there are no underground storage tanks for
Hazardous Materials, active or abandoned, at any property now owned or
leased by the Borrower or any of its Subsidiaries;
to the extent that any of the same has, or is reasonably expected to have, a
material adverse effect on the consolidated financial condition, operations or
business taken as a whole of the Borrower and its Consolidated Subsidiaries. No
Hazardous Materials have been Released, in a reportable quantity, where such a
quantity has been established by statute, ordinance, rule, regulation or order,
at, on or under any property now owned by the Borrower or any of its
Subsidiaries.
(c) Neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the Comprehensive Environmental Response and
Liability Information System as provided by 40 C.F.R. Section 300.5 ("CERCLIS")
or on any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which are reasonably expected to
lead to claims against the Borrower or any of its Subsidiaries for clean-up
costs, remedial work, damages to natural resources or for personal injury
claims, including, but not limited to, claims under CERCLA that would be
materially adverse to the business, financial condition or operations of the
Borrower and its Consolidated Subsidiaries taken as a whole.
(d) No Hazardous Material generated by the Borrower or any of
its Subsidiaries has been recycled, treated, stored, disposed of or Released by
the Borrower or any of its Subsidiaries at any location other than those listed
in Schedule III hereto.
(e) No oral or written notification of a Release of a
Hazardous material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now owned or leased by the Borrower or any of its
Subsidiaries is listed or proposed for listing on the National Priorities List
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promulgated pursuant to CERCLA, on CERCLIS or on any similar state list of sites
requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any
Environmental laws which have been imposed on any of the real property or
properties owned or leased by the Borrower or any of its Subsidiaries, and (to
the best of the Borrower's knowledge) no government actions have been taken or
are in process which could subject any of such properties to such Liens and
neither the Borrower nor any of its Subsidiaries would be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(g) There have been no environmental investigations, studies,
audits, test, reviews or other analyses conducted by or which are in the
possession of the Borrower or any of its Subsidiaries in relation to any
property or facility now or previously owned or leased by the Borrower or any of
its Subsidiaries which have not been made available to the Lenders, except to
the extent prepared to satisfy routine reporting obligations under the
Environmental Laws.
Section 6.13. No Default on Outstanding Judgments or Orders. Each of the
Borrower and its Subsidiaries has satisfied all judgments and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, except where any such
defaults in the aggregate would not result in a material adverse effect on the
business, financial condition or operations of the Borrower and its Subsidiaries
taken as a whole.
Section 6.14. No Defaults on Other Agreements. Neither the Borrower nor any of
its Subsidiaries is subject to any charter or corporate restriction which is
reasonably expected to have a material adverse effect on the business,
properties, assets, operations or conditions, financial or otherwise, of the
Borrower or any of its Subsidiaries, or the ability of the Borrower or any
Guarantor to carry out its obligations under the Facility Documents to which it
is a party. Neither the Borrower nor any of its Subsidiaries is a party to any
indenture, loan or credit agreement or any lease or other agreement or
instrument which is reasonably expected to have a material adverse effect on the
ability of the Borrower or any Guarantor to carry out its obligations under the
Facility Documents to which it is a party. The Borrower is not in default in any
respect under any of the Prudential Notes or under the note agreement pursuant
to which they were issued. Neither the Borrower nor any of its Subsidiaries is
in default in any material respect under any other agreement or instrument to
which the Borrower or such Subsidiary is a party, except where any such defaults
in the aggregate would not result in a material adverse affect on the business,
financial condition or operations of the Borrower and its Subsidiaries taken as
a whole.
Section 6.15. Labor Disputes and Acts of God. Neither the business nor the
properties of the Borrower or of any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), materially and adversely
affecting the business, financial condition or operations of the Borrower and
its Subsidiaries taken as a whole.
Section 6.16. Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Investment Company Act of 1940, the Interstate Commerce Act,
the Federal Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed or to obtain letters of credit as contemplated
hereby.
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Section 6.17. Partnerships. Neither the Borrower nor any of
its Subsidiaries is a partner in any partnership.
Section 6.18. No Forfeiture. No Forfeiture Proceeding is
pending.
Section 6.19. Solvency.
(a) The present fair saleable value of the assets of the
Borrower after giving effect to all the transactions contemplated by the
Facility Documents and the funding of all Commitments hereunder exceeds the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of the Borrower and its
Subsidiaries as they mature.
(b) The property of the Borrower does not constitute
unreasonably small capital for the Borrower to carry out its business as now
conducted and as presently proposed to be conducted including the capital needs
of the Borrower.
(c) The Borrower does not intend to, nor does it believe that
it will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Borrower, and
of amounts to be payable on or in respect of debt of the Borrower). The cash
available to the Borrower after taking into account all other anticipated uses
of the cash of the Borrower, is anticipated to be sufficient to pay all such
amounts on or in respect of debt of the Borrower when such amounts are required
to be paid.
(d) The Borrower does not believe that final judgments against
it in actions for money damages will be rendered at a time when, or in an amount
such that, the Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Borrower after
taking into account all other anticipated uses of the cash of the Borrower
(including the payments on or in respect of debt referred to in paragraph (c) of
this Section 6.19), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
ARTICLE 7. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid, or any Letter of
Credit shall remain outstanding, or any Lender shall have any Revolving Credit
Commitment under this Agreement, the Borrower shall:
Section 7.01. Maintenance of Existence. Preserve and
maintain (except as otherwise permitted by Section 8.07 or Section 8.08 or
Section 8.10), and cause each of its Subsidiaries (other than Inactive
Subsidiaries) to preserve and maintain (except as otherwise permitted by Section
8.07 or Section 8.08 or Section 8.10), its corporate existence and good standing
in the jurisdiction of its incorporation, and qualify and remain qualified, and
cause each of its Subsidiaries to qualify and remain qualified, as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the business, financial condition or
operations of the Borrower and its Subsidiaries taken as a whole.
Section 7.02. Conduct of Business. Continue, and cause each
of its Subsidiaries (other than Inactive Subsidiaries) to continue, to engage
primarily in the Core Business.
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Section 7.3. Maintenance of Properties. Maintain, keep
and preserve, and cause each of its Subsidiaries to maintain, keep and
preserve, all of the properties (tangible and intangible) necessary or useful in
the proper conduct of the business of the Borrower and its Subsidiaries in good
working order and condition (ordinary wear and tear excepted), except to the
extent that such properties are not material to the business, financial
condition or operations of the Borrower and its Subsidiaries taken as a whole.
Section 7.4. Maintenance of Records. Keep, and cause each
of its Subsidiaries to keep, adequate records and books of account, in which
complete entries will be made in compliance with then-current guidelines as to
generally accepted accounting principles, reflecting all financial transactions
of the Borrower and its Subsidiaries.
Section 7.5. Maintenance of Insurance. Maintain, and
cause each of its Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
Section 7.6. Compliance with Laws; Payment of Taxes. (a)
Comply, and cause each of its Subsidiaries to comply, with all applicable laws,
rules, regulations and orders, the noncompliance with which would materially
adversely affect the business, financial condition or operations of the Borrower
and its Subsidiaries taken as a whole; and
(b) Pay or discharge, and cause each of its Subsidiaries to
pay or discharge, before the same become delinquent all taxes, assessments and
governmental charges imposed upon the Borrower or any Subsidiary or any of their
respective properties; provided however that the Borrower shall not be required
to pay or discharge or cause to be paid or discharged, any such tax, assessment
or governmental charge the applicability or validity of which is being contested
by the Borrower or such Subsidiary in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with GAAP.
Section 7.07. Right of Inspection. At any reasonable time
and from time to time, permit the Agent or any Lender or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any of its Subsidiaries on at least one day's advance notice, and to discuss the
affairs, finances and accounts of the Borrower and any such Subsidiary with any
of their respective officers and directors and the Borrower's independent
accountants.
Section 7.08. Reporting Requirements. Furnish directly to
each of the Lenders:
(a) as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, a consolidated and
consolidating balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such fiscal year and a consolidated and consolidating income
statement and statements of cash flows and changes in stockholders' equity of
the Borrower and its Consolidated Subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the respective consolidated
and consolidating figures for the corresponding date and period in the prior
fiscal year and all prepared in accordance with GAAP and as to the consolidated
statements audited and accompanied by an opinion thereon acceptable to the Agent
and each of the Lenders by Price
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Waterhouse LLP or other independent accountants of national standing selected by
the Borrower and acceptable to the Required Lenders;
(b) as soon as available and in any event within 75 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, a consolidated and consolidating balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and a consolidated and
consolidating income statement and statements of cash flows and changes in
stockholders' equity, of the Borrower and its Consolidated Subsidiaries for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, all in reasonable detail and stating in comparative form the
respective consolidated and consolidating figures for the corresponding date and
period in the previous fiscal year and all prepared in accordance with GAAP and
certified by the chief financial officer of the Borrower (subject to year-end
adjustments);
(c) promptly upon receipt thereof, copies of any reports
submitted to the Borrower or any of its Subsidiaries by independent certified
public accountants in connection with examination of the financial statements of
the Borrower or any such Subsidiary made by such accountants;
(d) simultaneously with the delivery of the financial
statements referred to above, a certificate of the chief financial officer of
the Borrower (i) certifying that to the best of his knowledge no Default or
Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action which is proposed to be taken with respect thereto, and (ii) with
computations demonstrating compliance with the covenants contained in Article 9
and with the financial covenants contained in the note agreement between the
Borrower and The Prudential Insurance Company of America;
(e) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(f) promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any of its Subsidiaries which, if determined adversely
to the Borrower or such Subsidiary, would reasonably be expected to have a
material adverse effect on the financial condition, business, or operations of
the Borrower and its Subsidiaries taken as a whole;
(g) as soon as possible and in any event within 10 days after
the occurrence of each Default or Event of Default a written notice setting
forth the details of such Default or Event of Default and the action which is
proposed to be taken by the Borrower with respect thereto;
(h) as soon as possible, and in any event within ten days
after the Borrower receives notice from the PBGC or any other Person, or
otherwise acquires knowledge, that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan have occurred or exist, a
statement signed by a senior financial officer of the Borrower setting forth
details respecting such event or condition and the action, if any, which the
Borrower or its ERISA Affiliate proposes to take
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with respect thereto (and a copy of any report or notice required to be filed
with or given to PBGC by the Borrower or an ERISA Affiliate with respect to such
event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA, with respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event (provided that a failure
to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA including, without limitation, the failure to make
on or before its due date a required installment under Section 412(m)
of the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section
412(d) of the Code) and any request for a waiver under Section 412(d)
of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by the Borrower or
an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan, or the receipt by the Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or the
receipt of the Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days;
(vi) the adoption of an amendment to any Plan that pursuant
to a notification letter from the Internal Revenue Service under
Section 401(a)(29) of the Code or Section 307 of ERISA would result in
the loss of tax-exempt status of the trust of which such Plan is a part
if the Borrower or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions of said Sections;
(vii) any event or circumstance exists which may reasonably
be expected to constitute grounds for the Borrower or any ERISA
Affiliate to incur liability under Title IV of ERISA or under Sections
412(c)(11) or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement in an amount which is
material in relation to the financial condition of the Borrower.
(i) promptly after the request of any Lender, copies of each annual
report filed pursuant to Section 104 of ERISA with respect to each Plan
(including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103) and each
annual report filed with respect to each Plan under Section 4065 of ERISA;
provided, however, that in the case of a
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<PAGE> 49
Multiemployer Plan, such annual reports shall be furnished only if they are
available to the Borrower or an ERISA Affiliate;
(j) promptly after the furnishing thereof, copies of any statement
or report furnished to any other party pursuant to the terms of any indenture,
loan or credit or similar agreement and not otherwise required to be furnished
to the Lenders pursuant to any other clause of this Section 7.08;
(k) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which the Borrower or any of
its Subsidiaries sends to its stockholders, and copies of all regular, periodic
and special reports, and all registration statements which the Borrower or any
such Subsidiary files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange;
(l) promptly after the commencement thereof or promptly after the
Borrower knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding;
(m) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), (i) a consolidating balance sheet of
the Borrower and its domestic Subsidiaries, and a consolidating balance sheet of
the non-domestic Subsidiaries of the Borrower, as of the end of the applicable
fiscal year; and (ii) consolidating statements of income of the Borrower and its
domestic Subsidiaries for the year then ended, and consolidating statements of
income of the non-domestic Subsidiaries of the Borrower for the year then ended;
in each case, in a form sufficient to enable the Lenders to determine the
amounts owed by and paid by the Borrower and its domestic Subsidiaries to the
non-domestic Subsidiaries of the Borrower, and vice versa;
(n) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), a letter from the accounting firm
that audited such financial statements, addressed to the Agent, the Lenders, the
Swingline Bank and the Issuing Bank, acknowledging their reliance on such
financial statements, in compliance with N.J.S.A. 2A:53A-25 (which statute need
not be expressly referred to in such letter).
(o) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the Agent
or any Lender may from time to time reasonably request.
Section 7.09. Subsidiary Guarantee. Cause:
(a) each domestic Subsidiary of the Borrower whose assets
at any time represent ten percent (10%) or more of the total assets of
the Borrower and its Consolidated Subsidiaries, and
(b) each domestic Subsidiary of the Borrower that owns
any trademark, tradename, tradedress or patent as a result of a
transfer thereof by the Borrower or any of its Subsidiaries to such
domestic Subsidiary, and
(c) each other domestic Subsidiary of the Borrower, other
than domestic Subsidiaries whose combined assets represent less than
fifteen percent (15%) of the total assets of the Borrower and its
Consolidated Subsidiaries,
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to execute and deliver to the Agent a Guarantee, together with written evidence
satisfactory to the Agent that such Guarantee has been duly authorized by all
necessary action; the same shall be delivered to the Agent (in multiple
duplicate original copies, one for each Lender, the Swingline Bank, the Issuing
Bank and the Agent) within 30 days after the date on which (in the case of
clause (a)) the assets of such Subsidiary first represent 10% or more of the
total assets of the Borrower and its Consolidated Subsidiaries, or (in the case
of clause (b)) such Subsidiary acquires ownership of such trademark, tradename,
tradedress or patent, or (in the case of clause (c)) the 15% limit described in
clause (c) is exceeded.
Section 7.10. Equal and Ratable Lien. Make or cause to be
made, if any property (whether now owned or hereafter acquired) is subjected to
a Lien in violation of Section 8.03, effective provision satisfactory in form
and substance to the Required Lenders whereby the obligations of the Borrower
under this Agreement and the Notes will be secured by such Lien equally and
ratably with any and all other liabilities secured thereby. Such violation of
Section 8.03 shall be an Event of Default, whether or not any such provision is
made pursuant to this Section.
ARTICLE 8. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid, or any Letter of
Credit shall be outstanding, or any Lender shall have any Revolving Credit
Commitment under this Agreement, the Borrower shall not:
Section 8.01. Debt. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or suffer to
exist any Debt, except:
(a) Debt of the Borrower under this Agreement or the
Notes;
(b) The IBM Master Lease and Supplements thereto, the
Prudential Senior Notes, the mortgage and machinery lease in favor of
Cantonal Bank of Neuchatel, and the equipment leases described in
Schedule III, including renewals, extensions or refinancings thereof
(and including refinancings by institutions other than those
institutions identified on Schedule III), provided that the principal
amount thereof does not increase;
(c) Debt of the Borrower subordinated (on terms
satisfactory to the Agent and the Required Lenders) to the Borrower's
obligations under this Agreement and the Notes;
(d) Debt of the Borrower to any Guarantor or of any
Guarantor to the Borrower or any other Guarantor; and Debt of any
Subsidiary which is not a Guarantor to any other Subsidiary which is
not a Guarantor; (which Debt described in this clause (d) shall be
permitted under Section 8.05);
(e) Debt consisting of leases permitted under Section
8.04 or of guaranties permitted under Section 8.02(c);
(f) (i) other Debt of the Borrower or of any domestic
Subsidiary of the Borrower, provided that in no event shall the amount
thereof outstanding at any time exceed the sum of:
(A)
(i) $20,000,000 until the first anniversary of the Closing
Date, or
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(ii) $22,500,000 at any time from and after the
first anniversary of the Closing Date until the second
anniversary of the Closing Date, or
(iii) $25,000,000 from and after the second
anniversary of the Closing Date
as to the Borrower and its domestic Subsidiaries in the aggregate, plus
(B) up to $10,000,000 (as to the Borrower and its domestic Subsidiaries
in the aggregate) of indebtedness for money borrowed at any time
outstanding, having a maturity of not later than one year after the
incurrence thereof, owing to one or more of the Lenders independently
of this Agreement; and (ii) Debt of any non-domestic Subsidiary of the
Borrower, provided that in no event shall the amount thereof
outstanding at any time exceed $5,000,000 as to all non-domestic
Subsidiaries in the aggregate; and provided further that (as to all of
the Borrower and its domestic and non-domestic Subsidiaries in the
aggregate):
(x) the amount of outstanding Debt permitted by this
clause (f) consisting of liability in respect of letters of
credit (excluding Letters of Credit issued under this Agreement)
shall not exceed $3,000,000 at any time (whether such liability
is for outstanding letters of credit that have not yet been drawn
upon, or outstanding reimbursement obligations as to letters of
credit that have been drawn upon); and
(y) the amount of outstanding Debt permitted by this
clause (f) that is secured by a Lien permitted by Section 8.03(h)
shall not exceed $8,000,000 at any time; and
(g) Debt of the Borrower or any domestic Subsidiary of the
Borrower not otherwise permitted by this Section, provided that:
(i) 50% of the amount of the gross proceeds of such
Debt is (immediately upon the incurrence of such Debt) paid to
the Agent for application to the reduction of the outstanding
Swingline Loans and (if the outstanding amount of the
Swingline Loans is, or is thereby reduced to, zero) the
outstanding Syndicated Loans and (if the outstanding amount of
the Syndicated Loans is, or is thereby reduced to, zero) for
deposit with the Agent in the Cash Collateral Account as
security for the Borrower's reimbursement obligation in
respect of Letters of Credit; and
(ii) the Total Revolving Credit Commitment is
permanently reduced by an amount equal to 50% of the amount of
the gross proceeds of such Debt; and
(iii) the Borrower provides to Agent at least 20
days before the incurrence of such Debt, for distribution to
the Lenders, a pro-forma consolidated balance sheet and income
statement of the Borrower and its Consolidated Subsidiaries
after giving effect to the incurrence of such Debt, together
with a written certification of the Borrower that the
incurrence of such Debt will not result in a Default, either
immediately or (based upon the Borrower's reasonable and good
faith projections) at any time thereafter.
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The Borrower further covenants that any letter of credit in respect of which the
Borrower or any of its Subsidiaries become liable as permitted by this Section
will be for less than $1,000,000 (excluding Letters of Credit issued hereunder).
Section 8.02. Guaranties, Etc. Assume, guarantee, endorse or otherwise be
or become directly or contingently responsible or liable, or permit any of its
Subsidiaries to assume, guarantee, endorse or otherwise be or become directly or
indirectly responsible or liable (including, but not limited to, an agreement to
purchase any obligation, stock, assets, goods or services or to supply or
advance any funds, asset, goods or services, or an agreement to maintain or
cause such Person to maintain a minimum working capital or net worth or
otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except
(a) guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business;
(b) guaranties by Subsidiaries pursuant to Section 7.09;
(c) guaranties by the Borrower of ordinary rent
obligations incurred by any of its domestic Subsidiaries for the lease
of retail stores;
(d) guaranties by the Borrower of obligations incurred
by any of its domestic Subsidiaries in the ordinary course of business
other than for borrowed money, letters of credit or acceptance
financing;
(e) guaranties by the Borrower in favor of any of its
Subsidiaries, and guaranties by any Subsidiary of the Borrower in favor
of the Borrower or another Subsidiary of the Borrower, as to
obligations owing to the guaranteed party by a Subsidiary of the
Borrower or by the Borrower; provided, however, that in no event shall
the outstanding guaranty liability permitted by this clause (e) exceed
at any time $15,000,000 as to the Borrower and its Subsidiaries in the
aggregate;
(f) letters of credit permitted under Section 8.01
(including Letters of Credit issued hereunder); and
(g) other guaranties, provided however that in no event
shall the outstanding guaranty liability permitted by this clause (g)
exceed at any time $1,000,000 as to the Borrower and its Subsidiaries
in the aggregate.
Section 8.03. Liens. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired
(including, without limitation, any Lien upon any stock or other securities
issued by a Subsidiary), except:
(a) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and payable if
they are being contested in good faith by appropriate proceedings and
for which appropriate reserves are maintained;
(b) Liens imposed by law, such as mechanic's,
materialmen's, landlord's, warehousemen's and carrier's Liens, and
other similar Liens, securing obligations incurred in the ordinary
course of business which are not past due for more than 30 days, or
which are
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being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
(c) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation (other than ERISA);
(d) Liens, deposits or pledges to secure the performance
of bids, tenders, contracts (other than contracts for the payment of
money), leases (permitted under the terms of this Agreement), public or
statutory obligations, surety, stay, appeal, indemnity, performance or
other similar bonds, or other similar obligations arising in the
ordinary course of business;
(e) judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings;
(f) easements, rights-of-way, restrictions and other
similar encumbrances which, in the aggregate, do not materially
interfere with the occupation, use and enjoyment by the Borrower or any
such Subsidiary of the property or assets encumbered thereby in the
normal course of its business or materially impair the value of the
property subject thereto;
(g) Liens securing obligations of such a Subsidiary to
the Borrower;
(h) purchase money Liens on any property hereafter
acquired or the assumption of any Lien on property existing at the time
of such acquisition, or a Lien incurred in connection with any
conditional sale or other title retention agreement or a Capital Lease;
provided that:
(i) any property subject to any of the foregoing
is acquired by the Borrower or any such Subsidiary in the
ordinary course of its business and the Lien on any such
property is created contemporaneously with such acquisition;
(ii) the obligation secured by any Lien so
created, assumed or existing shall not exceed 95% of the
lesser of cost or fair market value as of the time of
acquisition of the property covered thereby to the Borrower or
such Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the
property so acquired and fixed improvements thereon;
(iv) the obligations secured by such Lien are
permitted by the provisions of Section 8.01(f)(y) and the
related expenditure is permitted under Section 9.05;
(i) Liens identified on Schedule III, including renewals,
extensions or refinancings thereof (and including refinancings by
institutions other than those institutions identified on Schedule II),
provided that the principal amount secured by such Liens does not
increase;
(j) other Liens, provided however that in no event shall
the outstanding liabilities secured by Liens permitted by this clause
(j) exceed at any time $1,000,000 as to the Borrower and its
Subsidiaries in the aggregate.
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Section 8.04. Leases. Create, incur, assume or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any obligation as
lessee for the rental or hire of any real or personal property, except:
(a) leases existing on the date of this Agreement and any
extensions or renewals thereof;
(b) Capital Leases permitted by Sections 8.01 and 8.03;
and
(c) other leases (excluding Capital Leases) that are, in
the judgment of the board of directors of the Borrower, appropriate for
the business objectives of the Borrower and its Subsidiaries, provided
however that (x) the Retail Rent Differential shall not exceed
$6,000,000 for any fiscal year of the Borrower after January 31, 1997,
and (y) the sum of the Retail Rent Differential for all fiscal years of
the Borrower after January 31, 1997 shall not exceed $18,000,000. The
term "Retail Rent Differential" for any fiscal year means the excess of
(i) the aggregate amount of rent paid by the Borrower and its
Subsidiaries for such year in respect of leases of retail stores
(excluding Capital Leases), over (ii) the aggregate amount of rent paid
by the Borrower and its Subsidiaries for the fiscal year ending January
31, 1997 in respect of leases of retail stores (excluding Capital
Leases). If the lease for any such retail store commenced during the
fiscal year ending January 31, 1997, the rent paid thereunder during
such fiscal year shall be deemed to be the rent payable thereunder on
an annualized basis, instead of the rent actually paid. If the lease
for any retail store terminated during the fiscal year ending January
31, 1997, the rent paid thereunder during such fiscal year shall be
deemed to be zero, instead of the actual rent paid.
Section 8.05. Investments. Make, or permit any of its Subsidiaries to make, any
loan or advance to any Person or purchase or otherwise acquire, or permit any
such Subsidiary to purchase or otherwise acquire, any capital stock, assets
(except as otherwise permitted by this Agreement), obligations or other
securities of, make any capital contribution to, or otherwise invest in, or
acquire any interest in, any Person, except:
(a) direct obligations of the United States of America or
any agency thereof with maturities of one year or less from the date of
acquisition;
(b) commercial paper of a domestic issuer rated at least
"A-1" by Standard & Poor's Corporation or "P-1" by Moody's Investors
Service, Inc.;
(c) certificates of deposit with maturities of one year
or less from the date of acquisition issued by any commercial bank
operating within the United States of America having capital and
surplus in excess of $200,000,000;
(d) for stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing
to the Borrower or any such Subsidiary;
(e) inventory purchased in the ordinary course of
business of the Borrower or such Subsidiary;
(f) any Acquisition permitted by Section 8.11;
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(g) investments in stocks of investment companies
registered under the Investment Company Act of 1940 which are no-load
money-market funds and which invest primarily in obligations of the
type described in clauses (a), (b) and (c) of this Section and which
are classified as current assets in accordance with GAAP, provided that
any such investment company shall have an aggregate net asset value of
not less than $50,000,000;
(h) advances to employees of the Borrower or any of its
Subsidiaries that do not exceed $500,000 outstanding at any time in the
aggregate as to all such employees of the Borrower and its
Subsidiaries;
(i) loans, advances, and other investments by any foreign
Subsidiary of the Borrower to or in any other foreign Subsidiary of the
Borrower that is wholly owned by the Borrower;
(j) loans and advances made by the Borrower or a domestic
Subsidiary of the Borrower in order to enable the recipient to pay
premiums payable in respect of any policy of life insurance issued on
the life of Gedalio Grinberg (either individually or together with his
spouse), provided that (w) such recipient is the owner of such policy,
and (x) subject to the recipient's retention of the incidents of such
ownership, such recipient collaterally assigns its rights in the policy
to the Borrower or such Subsidiary, on a first-priority basis, as
security for the repayment of such loans and advances, and (y) such
recipient agrees to apply, and does apply, the proceeds of such policy
payable upon the death of the insured(s), to the repayment in full of
such loans and advances before such proceeds are applied to any other
liability or are otherwise disposed of, and (z) the aggregate amount of
such loans and advances made in any fiscal year of the Borrower does
not exceed $1,500,000;
(k) other investments of up to $10,000,000 in the
aggregate as to all of the Borrower and its Subsidiaries;
(l) as permitted under Sections 8.07(c) and 8.07(d); and
(m) Permitted Investments made by the Agent for the
account of the Borrower pursuant to Section 2.13(f).
Section 8.06. Dividends. Declare or pay any dividends (other than dividends
payable solely in shares of its common stock), purchase, redeem, retire or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of the Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any shares of its capital stock, or permit any of its Subsidiaries to
do any of the foregoing, or permit any of its Subsidiaries to purchase or
otherwise acquire for value any stock of the Borrower or another such Subsidiary
(except as permitted by Section 8.08(b)), except that the Borrower may pay
dividends or acquire its stock (or both), provided that:
(x) no Default or Event of Default exists either immediately
prior to such payment or acquisition, or after giving effect to such
payment or acquisition; and
(y) the aggregate amount expended by the Borrower for all such
dividends and acquisitions does not exceed the sum of (i) $5,000,000,
plus (ii) 50% of the cumulative net
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income of the Borrower for its fiscal year ending January 31, 1997 and
each subsequent fiscal year that shall have ended prior to the payment
of such dividend or the acquisition of such stock (which net income for
any year shall be adjusted to exclude non-recurring gains, except to
the extent that the Borrower shall have received actual cash
representing such gain in such year), less (iii) 100% of the cumulative
net loss (if any) of the Borrower for its fiscal year ending January
31, 1997 and each subsequent fiscal year that shall have ended prior to
the payment of such dividend or the acquisition of such stock;
and except that any Subsidiary may pay dividends or make distributions to the
Borrower and to any wholly-owned Subsidiary of the Borrower.
Section 8.07. Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease, assign, transfer or
otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests), except:
(a) for inventory disposed of in the ordinary course of
business;
(b) the sale or other disposition of assets no longer
used or useful in the conduct of its business;
(c) that any such Subsidiary may sell, lease, assign,
transfer or otherwise dispose of its assets to the Borrower or to
another Subsidiary that shall have previously executed and delivered a
Guarantee pursuant to Section 7.09;
(d) that any foreign Subsidiary of the Borrower may sell,
lease, assign, transfer or otherwise dispose of its assets to another
foreign Subsidiary of the Borrower that is wholly owned by the
Borrower;
(e) as contemplated under Section 8.08(a) or (b); and
(f) for Designated Sales.
In no event shall any disposition of assets by the Borrower or any Subsidiary be
for less than fair market value.
Section 8.08. Stock of Subsidiaries, Etc. Sell or otherwise dispose of, or
permit any of its Subsidiaries to sell or otherwise dispose of, any shares of
capital stock of any of its Subsidiaries, except:
(a) for a sale of all or substantially all of the stock
of any Subsidiary for less than $3,000,000 where (i) the sales proceeds
are made available to the Borrower and (ii) such proceeds represent the
fair value of such Subsidiary;
(b) the shares of any foreign Subsidiary of the Borrower
may be sold to another foreign Subsidiary of the Borrower that is
wholly owned by the Borrower; and
(c) for Designated Sales;
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or permit any such Subsidiary to issue any additional shares of its capital
stock, except directors' qualifying shares.
Section 8.09. Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate or permit any of its Subsidiaries
to enter into any transaction, including, without limitation, the purchase, sale
or exchange of property or the rendering of any service, with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower's or such Subsidiary's business (including without limitation
direct and indirect promotional and advertising efforts of the Borrower,
consistent with past practice) and upon fair and reasonable terms that are
(except for loans and advances permitted by clauses (h) and (j) of Section 8.05)
no less favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
Section 8.10. Mergers, Etc. Merge or consolidate with, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter acquired)
to, any Person, or acquire all or substantially all of the assets or of a line
of business of any Person (or enter into any agreement to do any of the
foregoing), or permit any of its Subsidiaries to do so, except:
(a) for Acquisitions that are permitted pursuant to
Section 8.11;
(b) sales of assets that are permitted pursuant to
clauses (c) and (d) of Section 8.07 and clauses (a) and (b) of Section
8.08; and
(c) for Designated Sales.
Section 8.11. Acquisitions. Make any Acquisition unless:
(i) no Default or Event of Default exists either
immediately prior to such Acquisition or after giving effect to such
Acquisition; and
(ii) such Acquisition is approved by the board of
directors of the corporation (if any) which is the subject of such
Acquisition, or is recommended by such board to the shareholders of
such corporation; and
(iii) if the principal business of the corporation or other
entity which is the subject of such Acquisition is not in the Core
Business, then the aggregate amount expended by the Borrower or any
Subsidiary for such Acquisition, and for all other Acquisitions where
the principal business of the corporation or other entity which is the
subject thereof is not in the Core Business, is not more than
$10,000,000.
As used herein, the term "Acquisition" means any transaction pursuant to which
the Borrower or any of its Subsidiaries (a) acquires equity securities (or
warrants, options or other rights to acquire such securities) of any corporation
or other entity other than the Borrower or any corporation which is not then a
Subsidiary of the Borrower, pursuant to a solicitation of tenders therefor, or
in one or more negotiated block, market or other transactions not involving a
tender offer, or a combination of any of the foregoing, or (b) makes any
corporation or other entity a Subsidiary of the Borrower, or causes any such
corporation or other entity to be merged into the Borrower or any of its
Subsidiaries, in any case pursuant to a merger, purchase of securities or of
assets or any reorganization providing for the delivery or issuance to the
holders of the then outstanding securities of such corporation or other
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entity, in exchange for such securities, of cash or securities of the Borrower
or any of its Subsidiaries, or a combination thereof, or (c) purchases all or
substantially all of the assets or of any line of business of any corporation or
other entity.
Section 8.12. No Activities Leading to Forfeiture. Engage in, or permit any of
its Subsidiaries to engage in, the conduct of any business or activity which
would reasonably be expected to result in a Forfeiture Proceeding.
Section 8.13. No Material Change in Business. Make or permit any of its
Subsidiaries (other than an Inactive Subsidiary) to make a material change in
the nature of its business such that it is no longer primarily engaged in the
Core Business.
Section 8.14. No Restriction. Agree, or permit any of its Subsidiaries to
agree, to any restriction on the right of any Subsidiary to pay to the Borrower
any dividends or repayments of loan advances.
Section 8.15. Swap and Exchange Agreements. Enter into, or permit any of its
Subsidiaries to enter into, any interest-rate swap, cap, floor, collar or other
similar agreement, or any foreign exchange contract, currency swap agreement or
other similar agreement, except for the purpose of hedging its risk in the
ordinary course of business.
Section 8.16. Certain Subsidiary Liabilities. Permit any domestic Subsidiary of
the Borrower that acquires ownership of any trademark, tradename, tradedress or
patent from the Borrower or any other Subsidiary to be liable for total
liabilities in excess of $750,000, excluding liabilities to the Borrower or to
any Guarantor and excluding its liability under its Guarantee.
ARTICLE 9. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid, or any Letter of
Credit shall remain outstanding, or any Lender shall have any Revolving Credit
Commitment under this Agreement:
Section 9.01. Tangible Net Worth. The Borrower shall at all times from and
after the Closing Date maintain a Consolidated Tangible Net Worth of not less
than the sum of $85,000,000 plus the Incremental TNW Amount.
As of any date of determination, the "Incremental TNW Amount" shall be
an amount equal to the product of (a) Consolidated Net Income for each fiscal
year of the Borrower ended after the Closing Date and on or before such date of
determination, if Consolidated Net Income for such fiscal year is a positive
number, multiplied by (b) 50%.
The term "Consolidated Net Income" for any fiscal year of the Borrower
means the consolidated net income (loss) of the Borrower and its Consolidated
Subsidiaries for such fiscal year, determined in accordance with GAAP and after
provisions for minority interests, but not including in the computation of the
foregoing any of the following:
(i) extraordinary gains and extraordinary losses;
(ii) any portion of the net income of any Subsidiary which
for any reason is unavailable to pay dividends to the Borrower by
reason of legal or contractual restrictions;
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(iii) any aggregate net gain (in excess of net losses)
exceeding $200,000 in any fiscal year arising from the sale, exchange
or other disposition of capital assets (such term to include all fixed
assets, whether tangible or intangible, all inventory sold in
conjunction with the disposition of fixed assets, and all securities);
(iv) any write-up of any asset;
(v) any gain or loss arising from the acquisition of any
securities of the Borrower or any Subsidiary;
(vi) net income or gain (net of any loss) resulting from
discontinuing or disposing of operations, or prior period adjustments;
and
(vii) the income (loss) of any Person accrued prior to the
date it becomes a Subsidiary.
Section 9.02. Debt Ratio. The Borrower shall not permit the Debt Ratio to
exceed either (a) 50% as of the end of each fiscal year of the Borrower, or (b)
65% at all other times.
The term "Debt Ratio" means, as of any date of determination, the ratio
of (x) consolidated indebtedness for borrowed money and Capital Leases of the
Borrower and its Consolidated Subsidiaries as of such date, to (y) the sum of
Consolidated Tangible Net Worth as of such date plus consolidated indebtedness
for borrowed money and Capital Leases of the Borrower and its Consolidated
Subsidiaries as of such date.
Section 9.03. Fixed Charge Coverage Ratio. The Borrower shall maintain, as of
the last day of each fiscal quarter of the Borrower (the "determination date"),
a Fixed Charge Coverage Ratio for the period consisting of such quarter and the
three preceding fiscal quarters in excess of:
<TABLE>
<S> <C>
As to each determination date to 1.15 to 1.0
and including January 31, 1998:
As to each determination date 1.20 to 1.0
thereafter to and including January
31, 1999:
As to each determination date 1.25 to 1.0.
thereafter:
</TABLE>
The term "Fixed Charge Coverage Ratio" for any period means the ratio
of (x) consolidated earnings before interest, taxes, depreciation and
amortization, less Consolidated Capital Expenditures, of the Borrower and its
Consolidated Subsidiaries for such period, to (b) cash taxes paid, plus cash
interest paid, plus scheduled principal payments made, (in each case) during
such period by the Borrower and its Consolidated Subsidiaries on a consolidated
basis; provided, however, that if such a principal payment is scheduled to be
made on a non-Business Day and is instead actually made on the next succeeding
Business Day, and if a determination date occurs on such non-Business Day or on
any subsequent non-Business Day prior to such next succeeding Business Day, then
such principal payment will be deemed to have been made on such determination
date. Without limiting the generality of the immediately preceding proviso, the
annual principal payment on the Prudential Notes
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scheduled to be made on January 31, 1998 (which is a Sunday and a determination
date) will, if such payment is made on February 1, 1998, be deemed to have been
made on January 31, 1998.
Section 9.04. Leverage Ratio. The Borrower shall not permit the Leverage Ratio
to exceed either (a) 1.40 to 1.0 as of the end of each fiscal year or (b) 1.75
to 1.0 at any other time.
The term "Leverage Ratio" means as of any date of determination the
ratio of (a) consolidated total liabilities (excluding deferred tax liabilities)
of the Borrower and its Consolidated Subsidiaries as of such date, to (b)
Consolidated Tangible Net Worth as of such date.
Section 9.05. Capital Expenditures. The Borrower shall not permit Consolidated
Capital Expenditures to exceed $10,000,000 during any fiscal year (on a
noncumulative basis); nor shall the Borrower permit Consolidated Capital
Expenditures to exceed $30,000,000 during the period from the Closing Date until
the Maturity Date.
ARTICLE 10. EVENTS OF DEFAULT.
Section 10.01. Events of Default. Any of the following events shall be an
"Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any Note
as and when due and payable; or (ii) fail to pay interest on any Note or any fee
or other amount due hereunder as and when due and payable and such failure shall
continue for three days;
(b) any representation or warranty made or deemed made by the
Borrower or a Guarantor in this Agreement or in any other Facility Document or
which is contained in any certificate, document, opinion, financial or other
statement furnished at any time under or in connection with any Facility
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) the Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.15 or Section 3.12, or Articles 8
or 9; or (ii) fail to perform or observe any term, covenant or agreement on its
part to be performed or observed (other than the obligations specifically
referred to elsewhere in this Section 10.01) in any Facility Document and (in
the case of a failure referred to in this clause (ii)), such failure shall
continue for 30 consecutive days;
(d) the Borrower or any of its Subsidiaries shall: (i) fail to pay
any indebtedness, including but not limited to indebtedness for borrowed money
(other than the payment obligations described in (a) above), of the Borrower or
such Subsidiary, as the case may be, or any interest or premium thereon, when
due (whether by installment, scheduled maturity, required prepayment,
acceleration, demand or otherwise); or (ii) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness, when required to be
performed or observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, after the giving of notice or
passage of time, or both, the maturity of such indebtedness, provided that (in
the case of both (i) and (ii)) the aggregate principal amount of such
indebtedness as to which such failure to pay has occurred (and not merely the
installment or other portion thereof not paid), or as to which the maturity is
or is permitted to be accelerated by reason of such failure to perform or
observe, shall be $1,000,000 or more; or any such indebtedness whose principal
amount is $1,000,000 or more shall be declared to be due and payable,
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or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) the Borrower or any of its Subsidiaries: (i) shall generally
not, or be unable to, or shall admit in writing its inability to, pay its debts
as such debts become due; or (ii) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (iii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement or
readjustment of debt law or statute, or (except in the case of an Inactive
Subsidiary) any dissolution or liquidation law or statute, of any jurisdiction
whether now or hereafter in effect; or (iv) shall have had any such petition or
application filed or any such proceeding shall have been commenced, against it,
in which an adjudication or appointment is made or order for relief is entered,
or which petition, application or proceeding remains undismissed or unstayed for
a period of 30 days or more; or shall be the subject of any proceeding under
which its assets may be subject to seizure, forfeiture or divestiture (other
than a proceeding in respect of a Lien permitted under Section 8.03 (a)); or (v)
by any act or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or order for relief
or the appointment of a custodian, receiver or trustee for all or any
substantial part of its property; or (vi) shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period of 30 days or
more;
(f) one or more judgments, decrees or orders for the payment of
money in excess of $1,000,000 in the aggregate shall be rendered against the
Borrower or any of its Subsidiaries and such judgments, decrees or orders shall
continue unsatisfied and in effect for a period of 60 consecutive days without
being vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) any event or condition shall occur or exist with respect to
any Plan or Multiemployer Plan concerning which the Borrower is under an
obligation to furnish a report to the Lenders in accordance with Section 7.08(h)
hereof and as a result of such event or condition, together with all other such
events or conditions, the Borrower or any ERISA Affiliate has incurred or in the
opinion of the Required Lenders is reasonably likely to incur a liability to a
Plan, a Multiemployer Plan, the PBGC, or a Section 4042 Trustee (or any
combination of the foregoing) which is material in relation to the financial
position of the Borrower and its Subsidiaries, on a consolidated basis;
(h) the Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material;
(i) if at any time the capital stock of the Borrower owned by the
Grinberg Group represents less than 25% of the voting power of (x) all
outstanding capital stock of the Borrower and (y) all outstanding securities and
rights that are then convertible into or exchangeable for capital stock of the
Borrower or upon the exercise of which capital stock of the Borrower will be
issued in respect of such securities or rights;
(j) there is a seizure by or forfeiture in favor of any
governmental authority of any property of the Borrower or any of its
Subsidiaries having a value in excess of $1,000,000, other than by an eminent
domain proceeding where the Borrower or such Subsidiary receives reasonable
compensation therefor; or
(k) any Guarantee shall at any time after its execution and
delivery and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability
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thereof shall be contested by the Guarantor thereunder, or such Guarantor shall
deny it has any further liability or obligation thereunder or shall fail to
perform its obligations thereunder.
Section 10.02. Remedies. If any Event of Default shall occur and be continuing,
the Agent may or, upon request of the Required Lenders, shall by notice to the
Borrower, do any or all of the following: (a) declare the Revolving Credit
Commitments to be terminated, whereupon the same shall forthwith terminate; (b)
declare the outstanding principal of the Notes, all interest thereon and all
other amounts payable under this Agreement or the Notes to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower (provided that, in the case of an Event of Default referred to in
Section 10.01(e) as to the Borrower, the Revolving Credit Commitments shall be
immediately terminated, and the Notes, all interest thereon and all other
amounts payable under this Agreement shall be immediately due and payable
without any notice and without presentment, demand, protest or other formalities
of any kind, all of which are hereby expressly waived by the Borrower); and (c)
direct the Borrower immediately to pay (and the Borrower agrees that upon
receipt of such a notice, or upon the occurrence of an Event of Default referred
to in Section 10.01(e) as to the Borrower, the Borrower will immediately pay) to
the Agent such additional amount of cash as is equal to the L/C Exposure, to be
held by the Agent in the Cash Collateral Account as security for the Borrower's
reimbursement obligation in respect of Letters of Credit.
ARTICLE 11. THE AGENT; RELATIONS AMONG LENDERS AND BORROWER.
Section 11.01. Appointment, Powers and Immunities of Agent. Each Lender (in its
capacity as Lender and, as applicable, Swingline Bank and Issuing Bank) hereby
irrevocably (but subject to removal by the Required Lenders pursuant to Section
11.09) appoints and authorizes the Agent to act as its agent hereunder and under
any other Facility Document with such powers as are specifically delegated to
the Agent by the terms of this Agreement and any other Facility Document,
together with such other powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and any other Facility Document, and shall not by reason of this
Agreement be a trustee for any Lender. The Agent shall not be responsible to the
Lenders for any recitals, statements, representations or warranties made by the
Borrower or any officer or official of the Borrower or any other Person
contained in this Agreement or any other Facility Document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other Facility Document, or
for the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Facility Document or any other
document or instrument referred to or provided for herein or therein, for the
perfection or priority of any collateral security for the Loans or the
reimbursement obligations in respect of Letters of Credit or for any failure by
the Borrower to perform any of its obligations hereunder or thereunder. The
Agent may employ agents and attorneys-in-fact and shall not be responsible,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Facility Document
or in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct. The Borrower shall pay any fee agreed to by
the Borrower and the Agent with respect to the Agent's services hereunder.
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Section 11.02. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent may deem and treat each Lender as
the holder of the Loans made by it and its participations in Letters of Credit
for all purposes hereof unless and until an Assignment and Assumption Agreement
shall have been furnished to the Agent in accordance with Section 12.05, but the
Agent shall not be required to deal with any Person who has acquired a
participation in any Loan or any such participation from a Lender. As to any
matters not expressly provided for by this Agreement or any other Facility
Document, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders
and any other holder of all or any portion of any Loan or any such
participation.
Section 11.03. Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on the Loans to the extent the same is required to be
paid to the Agent for the account of the Lenders) unless the Agent has received
notice from a Lender or the Borrower specifying such Default or Event of Default
and stating that such notice is a "Notice of Default." In the event that the
Agent receives such a notice of the occurrence of a Default or Event of Default,
the Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such non-payment). The Agent shall (subject to
Section 11.08) take such action with respect to such Default or Event of Default
which is continuing as shall be directed by the Required Lenders; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders; and provided further that the Agent shall not be required to take
any such action which it determines to be contrary to law.
Section 11.04. Rights of Agent as a Lender. With respect to its Revolving
Credit Commitment and the Loans made by it and the Letters of Credit, the Agent
in its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its capacity as a Lender. The
Agent and its Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to (on a secured or unsecured basis), and
generally engage in any kind of banking, trust or other business with, the
Borrower (and any of its Affiliates) as if it were not acting as the Agent, and
the Agent may accept fees and other consideration from the Borrower for services
in connection with this Agreement or otherwise without having to account for the
same to the Lenders. Although the Agent and its Affiliates may in the course of
such relationships and relationships with other Persons acquire information
about the Borrower, its Affiliates and such other Persons, the Agent shall have
no duty to disclose such information to the Lenders.
Section 11.05. Indemnification of Agent. The Lenders agree to indemnify the
Agent (to the extent not reimbursed under Section 12.03 or under the applicable
provisions of any other Facility Document, but without limiting the obligations
of the Borrower under Section 12.03 or such provisions), ratably in accordance
with their respective Pro Rata Percentages, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement, any other Facility Document or any other documents
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contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which the
Borrower is obligated to pay under Section 12.03 or under the applicable
provisions of any other Facility Document but excluding, unless a Default or
Event of Default has occurred, normal administrative costs and expenses incident
to the performance of its agency duties hereunder) or the enforcement of any of
the terms hereof or thereof or of any such other documents or instruments;
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the party to be
indemnified.
Section 11.06. Documents. The Agent will forward to each Lender, promptly after
the Agent's receipt thereof, a copy of each report, notice or other document
required by this Agreement or any other Facility Document to be delivered to the
Agent for such Lender.
Section 11.07. Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and its Subsidiaries and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other
Facility Document. The Agent shall not be required to keep itself informed as to
the performance or observance by the Borrower of this Agreement or any other
Facility Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any Subsidiary.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any Subsidiary (or any of their Affiliates) which may come into the
possession of the Agent or any of its Affiliates. The Agent shall not be
required to file this Agreement, any other Facility Document or any document or
instrument referred to herein or therein, for record or give notice of this
Agreement, any other Facility Document or any document or instrument referred to
herein or therein, to anyone.
Section 11.08. Failure of Agent to Act. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder unless it shall have received further assurances
(which may include cash collateral) of the indemnification obligations of the
Lenders under Section 11.05 in respect of any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
Section 11.09. Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower, and the
Agent may be removed at any time for cause by Lenders having Syndicated Loans
outstanding, L/C Exposure and unused Revolving Credit Commitments representing
at least 66_% of the sum of all Syndicated Loans outstanding, L/C Exposure and
unused Revolving Credit Commitments; provided that the Borrower and the other
Lenders shall be promptly notified thereof. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent,
subject (unless an Event of Default exists) to the approval of the Borrower,
which approval shall not be unreasonably withheld. If no successor Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, subject
(unless an Event of Default exists) to the approval of the Borrower, which
approval shall not
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be unreasonably withheld, which shall be a bank which has an office in New York,
New York. The Required Lenders or the retiring Agent, as the case may be, shall
upon the appointment of a successor Agent promptly so notify the Borrower and
the other Lenders. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 11.10. Amendments Concerning Agency Function. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Facility Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
Section 11.11. Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Lender to perform its obligations hereunder or to any Lender on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Facility Document.
Section 11.12. Transfer of Agency Function. Without the consent of the
Borrower or any Lender, the Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever located,
provided that the Agent shall promptly notify the Borrower and the Lenders
thereof.
Section 11.13. Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Lender or the Borrower (either one as appropriate
being the "Payor") prior to the date on which such Lender is to make payment
hereunder to the Agent of the proceeds of a Loan or the Borrower is to make
payment to the Agent, as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment (and, if such recipient is
the Borrower and the Payor Lender fails to pay the amount thereof to the Agent
forthwith upon demand, the Borrower) shall, on demand, repay to the Agent the
amount made available to it together with interest thereon for the period from
the date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to (i) in the case of the
Borrower, the interest rate applicable at such time to the applicable Loan, and
(ii) in the case of such Lender, a rate determined by the Agent to represent its
cost of overnight or short-term funds in the relevant currency (which
determination shall be conclusive absent manifest error). If a Lender makes a
Required Payment to the Agent pursuant to the immediately preceding sentence and
the Borrower shall have repaid such amount to the Agent pursuant to such
sentence, the Agent shall promptly return to the Borrower any amount (including
interest) paid by the Borrower to the Agent pursuant to such sentence.
Section 11.14. Withholding Taxes. Each Lender represents to the Agent
and the Borrower that it is entitled to receive any payments to be made to it
hereunder without the withholding of
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any tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Lender's exemption from the withholding of any tax imposed by any jurisdiction
or to enable the Agent to comply with any applicable laws or regulations
relating thereto. Without limiting the effect of the foregoing, if any Lender is
not created or organized under the laws of the United States of America or any
state thereof, in the event that the payment of interest by the Borrower is
treated for U.S. income tax purposes as derived in whole or in part from sources
from within the U.S., such Lender will furnish to the Agent Form 4224 or Form
1001 of the Internal Revenue Service, or such other forms, certifications,
statements or documents, duly executed and completed by such Lender as evidence
of such Lender's exemption from the withholding of U.S. tax with respect
thereto. The Agent shall not be obligated to make any payments hereunder to such
Lender in respect of any Loan or reimbursement of a drawing under a Letter of
Credit or such Lender's Revolving Credit Commitment until such Lender shall have
furnished to the Agent the requested form, certification, statement or document.
Section 11.15. Several Obligations and Rights of Lenders. The failure
of any Lender to make any Loan to be made by it on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan on such
date, but no Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender. No Lender shall be responsible for
any failure of the Swingline Bank to make a Swingline Loan required to be made
hereunder, or for any failure of the Issuing Bank to issue a Letter of Credit
required to be issued hereunder. The amounts payable at any time hereunder to
each Lender, the Swingline Bank and the Issuing Bank shall be a separate and
independent debt, and each of them shall be entitled to protect and enforce its
rights arising out of this Agreement, and it shall not be necessary for any
other of them to be joined as an additional party in any proceeding for such
purpose.
Section 11.16. Pro Rata Treatment of Syndicated Loans, Etc. Except to
the extent otherwise expressly provided: (a) each Borrowing of Loans pursuant to
Section 2.01 shall be made from the Lenders, each reduction or termination of
the amount of the Revolving Credit Commitments under Section 2.10 shall be
applied to the Revolving Credit Commitments of the Lenders, and each payment of
Commitment Fees accruing under Section 2.07 shall be made for the account of the
Lenders, pro rata according to the amounts of their respective unused Revolving
Credit Commitments; (b) each conversion under Section 2.11 of Syndicated Loans
of a particular Type (but not conversions provided for by Article 4), shall be
made pro rata among the Lenders holding Syndicated Loans of such Type according
to the respective principal amounts of such Syndicated Loans by such Lenders;
(c) each prepayment and payment of principal of or interest on Syndicated Loans
of a particular Type and a particular Interest Period shall be made to the Agent
for the account of the Lenders holding Syndicated Loans of such Type and
Interest Period pro rata in accordance with the respective unpaid principal
amounts of such Syndicated Loans of such Interest Period held by such Lenders;
and (d) each payment of L/C Participation Fees accruing under Section 3.09 shall
be made for the account of the Lenders, pro rata according to their respective
Pro Rata Percentages of the average daily aggregate L/C Exposure (excluding the
portion thereof attributable to unreimbursed L/C Disbursements).
Section 11.17. Sharing of Payments Among Lenders. If a Lender shall
obtain payment of any principal of or interest on any Syndicated Loan made by
it, or of any reimbursement obligation of the Borrower as to Letters of Credit,
through the exercise of any right of setoff, banker's lien, counterclaim, or by
any other means it shall promptly purchase from the other Lenders participations
in (or, if and to the extent specified by such Lender, direct interests in) the
Loans made by the other Lenders and Letters of Credit in such amounts, and make
such other adjustments from time to time as shall be equitable to the end that
all the Lenders shall share the benefit of such payment (net of any expenses
which may be incurred by such Lender in obtaining or preserving such benefit)
pro rata in accordance with the unpaid principal and interest on the Loans and
Letter of Credit participations held
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by each of them. To such end the Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored. The Borrower agrees that any
Lender so purchasing a participation (or direct interest) in the Loans made by
other Lenders or Letters of Credit may exercise all rights of setoff, banker's
lien, counterclaim or similar rights with respect to such participation (or
direct interest). Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness of the Borrower.
Section 11.18. Co-Agent. The Co-Agent shall have only such powers and
duties as may be hereafter delegated to it by the Agent (with the written
approval of the Borrower and the Lenders) and accepted by the Co-Agent. With
respect to each function undertaken by it pursuant to any power or duty so
delegated, the Co-Agent shall enjoy all the benefits and protections conferred
on the Agent in this Article 11 and elsewhere in this Agreement (including,
without limitation, all immunities, indemnifications, rights and other
protective provisions) with the same effect as if the Co-Agent were included in
the definition of "Agent". The Co-Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, and the Co-Agent may be removed
at any time with or without cause by the Required Lenders. The Co-Agent shall
not be entitled to any agency fee for serving as Co-Agent hereunder, except as
may be hereafter agreed to in a separate written agreement between the Borrower
and the Co-Agent (and no such agreement shall reduce the amount of the agency
fee payable to the Agent or require the Agent to share such fee with the
Co-Agent).
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ARTICLE 12. MISCELLANEOUS.
Section 12.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the Agent and
the Required Lenders, or by the Borrower and the Agent acting with the consent
of the Required Lenders, and any provision of this Agreement may be waived by
the Required Lenders or by the Agent acting with the consent of the Required
Lenders; provided that no amendment, modification or waiver shall, unless by an
instrument signed by all of the Lenders or by the Agent acting with the consent
of all of the Lenders: (a) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of the Revolving Credit
Commitments, (b) extend the date fixed for the payment of principal of or
interest on any Loan or any fees payable hereunder, (c) reduce the amount of any
payment of principal thereof or the rate at which interest is payable thereon or
any fee payable hereunder, (d) alter the terms of this Section 12.01, (e) amend
the definition of the term "Required Lenders", (f) waive the condition precedent
set forth in Section 5.02(a)(ii), (g) release collateral in any material amount,
(h) release guarantees in any material amount, (i) permit any Liens not
permitted by Section 8.03, (j) change the several nature of the obligations of
the Lenders under this Agreement, (k) increase the $10,000,000 maximum aggregate
limitation on Swingline Loans, or the $15,000,000 maximum aggregate limitation
on the L/C Exposure, or the maximum aggregate limitation on Swiss Franc Loans of
the Swiss Franc Equivalent of $30,000,000, (l) add any further non-United Stated
currency (beyond Swiss francs) as a currency on which Loans may be made under
this Agreement, or (m) add any further Person (beyond the Borrower) as a Person
that may borrow from the Lenders under this Agreement; and provided, further,
that any amendment of Article 11 hereof or any amendment which increases the
obligations of the Agent hereunder shall require the consent of the Agent; and
provided further that any amendment which increases the obligations of the
Swingline Bank hereunder shall require the consent of the Swingline Bank; and
provided further that any amendment which increases the obligations of the
Issuing Bank hereunder shall require the consent of the Issuing Bank. No failure
on the part of the Agent or any Lender or the Swingline Bank or the Issuing Bank
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 12.02. Usury. Anything herein to the contrary notwithstanding,
the obligations of the Borrower under this Agreement and the Notes shall be
subject to the limitation that payments of interest shall not be required to the
extent that receipt thereof would be contrary to provisions of law applicable to
a Lender limiting rates of interest which may be charged or collected by such
Lender.
Section 12.03. Expenses. The Borrower shall (i) pay all reasonable
costs, expenses and charges of the Agent (including reasonable fees and charges
of external legal counsel for the Agent) incurred in connection with the
preparation of this Agreement and the other Facility Documents, any waiver or
consent hereunder or thereunder, and any amendment hereto or thereto, and (ii)
reimburse the Agent, the Lenders, the Swingline Bank and the Issuing Bank on
demand for all reasonable costs, expenses, and charges (including reasonable
fees and charges of external legal counsel for the Agent, any Lender, the
Swingline Bank or the Issuing Bank and costs allocated by their respective
internal legal departments) incurred by any of them in connection with the
performance or enforcement of this Agreement, the other Facility Documents or
any Letter of Credit. The Borrower agrees to indemnify the Agent, each Lender,
the Swingline Bank and the Issuing Bank and their respective directors,
officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims, damages or expenses incurred by any of them
arising out of or by reason of any investigation or litigation or
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other proceedings (including any threatened investigation or litigation or other
proceedings) relating to any actual or proposed use by the Borrower or any
Subsidiary of the proceeds of the Loans or any Letter of Credit, including
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
Section 12.04. Survival. The obligations of the Borrower under Article
4 and Section 12.03 shall survive the repayment of the Loans and the expiration
of the Letters of Credit and the termination of the Revolving Credit
Commitments.
Section 12.05. Assignment; Participations. (a) This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrower, the Agent, the
Co-Agent, the Lenders, the Swingline Bank, the Issuing Bank and their respective
successors and assigns, except that the Borrower may not assign or transfer its
rights or obligations hereunder.
(b) After first obtaining the approval of the Agent, the
Swingline Bank, the Issuing Bank and (provided no Event of Default exists as a
result of the commencement of a case with respect to the Borrower under the
Federal Bankruptcy Code) the Borrower, which approval will not be unreasonably
withheld, each Lender may assign to one or more banks, finance companies,
insurance or other financial institutions all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Revolving
Credit Commitment and the Syndicated Loans owing to it and its participations in
Letters of Credit); provided, however, that (i) each such assignment shall be of
a constant, and not a varying, percentage of the assigning Lender's rights and
obligations under this Agreement and the assignment shall cover the same
percentage of such Lender's Revolving Credit Commitment and Syndicated Loans and
participations in Letters of Credit; (ii) unless the Agent and the Borrower
otherwise consent, the aggregate amount of the Revolving Credit Commitment of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the effective date of the Assignment and Assumption Agreement with respect
to such assignment) shall in no event be less than Five Million Dollars
($5,000,000) and shall be an integral multiple of One Million Dollars
($1,000,000); (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its approval and acceptance, an Assignment and
Assumption Agreement in substantially the form attached hereto as Exhibit E with
such changes therein (if any) as the Agent may approve (the "Assignment and
Assumption Agreement"); and (iv) the Agent shall receive from the assignor a
processing fee of Five Thousand Dollars ($5,000). Without restricting the right
of the Agent, the Swingline Bank, the Issuing Bank or (provided no Event of
Default exists as a result of the commencement of a case with respect to the
Borrower under the Federal Bankruptcy Code) the Borrower to reasonably object to
any bank, finance company, insurance or other financial institution becoming an
assignee of an interest of a Lender hereunder, each proposed assignee must be an
existing Lender or a bank, finance company, insurance or other financial
institution which (i) has (or, in the case of a bank which is a subsidiary, such
bank's parent has) a rating of its senior unsecured debt obligations of not less
than Baa-1 by Moody's Investors Services, Inc. or a comparable rating by a
rating agency acceptable to the Agent and (ii) has total assets in excess of Ten
Billion Dollars ($10,000,000,000). Upon such execution, delivery, approval and
acceptance, and on the effective date specified in the applicable Assignment and
Assumption Agreement, (a) the assignee thereunder shall become a party hereto
and a "Lender" for purposes hereof and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Assumption Agreement, shall have the rights and obligations of a Lender
hereunder and (b) the Lender-assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Assumption Agreement, relinquish its rights and be released from
its obligations under this Agreement.
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(c) By executing and delivering an Assignment and Assumption Agreement,
the Lender-assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Assumption Agreement, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or any other Facility Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other Facility Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or any Subsidiary or the performance or observance by the Borrower or
any Subsidiary of any of their respective obligations under any Facility
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements referred to in Section
7.08(a) and (b) and such other Facility Documents and other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption Agreement; (iv) such
assignee will, independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Facility Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain a copy of each Assignment and Assumption
Agreement delivered to and accepted by it and shall record the names and
addresses of each Lender and the Revolving Credit Commitment of, and principal
amount of the Syndicated Loans owing to, and the amount of participations in
Letters of Credit of, such Lender from time to time. The Borrower, the Agent and
the Lenders may treat each Person whose name is so recorded as a Lender
hereunder for all purposes of this Agreement.
(e) Upon its receipt of an Assignment and Assumption Agreement executed
by an assigning Lender and an assignee and consented to by the Borrower (except
that no such consent of the Borrower shall be required if an Event of Default
exists as a result of the commencement of a case with respect to the Borrower
under the Federal Bankruptcy Code), the Swingline Bank and the Issuing Bank, the
Agent shall, if such Assignment and Assumption Agreement has been properly
completed and is in substantially the form of Exhibit E, (i) accept such
Assignment and Assumption Agreement, (ii) record the information contained
therein and (iii) give prompt notice thereof to the Borrower and the Lenders.
Upon request, the Borrower shall execute and deliver to the Agent an appropriate
promissory note in favor of each assignee evidencing such assignee's Pro Rata
Percentage of the Total Revolving Credit Commitment. If the Lender-assignor
shall have assigned its entire Revolving Credit Commitment and Syndicated Loans,
the original promissory note evidencing such Revolving Credit Commitment and
Syndicated Loans shall be canceled and returned to the Borrower.
(f) Each Lender may sell participations to one or more banks, finance
companies, insurance or other financial institutions in or to all or a portion
of its rights and obligations under this Agreement (including without limitation
all or a portion of its Revolving Credit Commitment and the Syndicated Loans
owing to it); provided, however, that (i) such Lender's obligations under this
Agreement (including without limitation its Revolving Credit Commitment and its
participations in
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Letters of Credit) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such participant shall have no rights under any of the Facility Documents,
(iv) the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and with regard to any and all payments to be
made under this Agreement and its Note, and (v) the agreement executed by such
Lender in favor of the participant shall not give the participant the right to
require such Lender to take or omit to take any action hereunder except action
directly relating to (i) the extension of a payment date with respect to any
portion of the principal of or interest on any amount outstanding hereunder
allocated to such participant, (ii) the reduction of the principal amount
outstanding hereunder allocated to such participant or (iii) the reduction of
the rate of interest payable on such amount or any amount of fees payable
hereunder to a rate or amount, as the case may be, below that which the
participant is entitled to receive under its agreement with such Lender.
(g) The Borrower will use reasonable efforts to cooperate with the
Agent and Lenders in connection with the assignment of interests under this
Agreement or the sale of participations herein.
(h) No Lender shall be permitted to assign or sell all or any portion
of its rights and obligations under this Agreement to the Borrower or any
Affiliate of the Borrower.
(i) Any Lender that proposes to sell any assignment or participation
hereunder may furnish any information concerning the Borrower and its Affiliates
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall require any such prospective assignee or such participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of such
information, as provided in Section 12.14.
(j) In addition to the assignments and participations permitted under
the foregoing provisions of this Section, any Lender may (without any need to
comply with any of the formal or procedural requirements of this Section) assign
and pledge all or any portion of its Revolving Credit Commitment and Loans to
(i) any affiliate of such Lender or (ii) any Federal Reserve Bank as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank.
No such assignment shall release the assigning Lender from its obligations
hereunder.
Section 12.06. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the Agent by
telephone, confirmed by telecopy or other writing, and to the Lenders and to the
Borrower by ordinary or certified mail or telecopy, addressed to such party at
its address on its signature page of this Agreement. Notices shall be effective:
(a) if given by mail, 72 hours after deposit in the mails with postage prepaid,
addressed as aforesaid; and (b) if given by telecopy, when the telecopy is
transmitted as aforesaid, provided that receipt of such telecopy is confirmed;
provided however that notices to the Agent and the Lenders and the Swingline
Bank and the Issuing Bank under Articles 2 and 3 shall be effective upon
receipt.
Section 12.07. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a
Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances (general or special, time or demand, provisional or final) held
by it for the account of the Borrower at any of such Lender's offices, in
dollars or in any other currency, against any amount payable by the Borrower to
such Lender under this Agreement or such Lender's Note
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which is not paid when due (regardless of whether such balances are then due to
the Borrower), in which case it shall promptly notify the Borrower and the Agent
thereof; provided that such Lender's failure to give such notice shall not
affect the validity thereof or place such Lender under any liability to the
Borrower. Payments by the Borrower hereunder shall be made without setoff or
counterclaim.
Section 12.08. JURISDICTION; IMMUNITIES. (a) THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES
FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER FACILITY DOCUMENT
OR ANY LETTER OF CREDIT, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES OF SUCH PROCESS TO THE BORROWER AT ITS ADDRESS SPECIFIED IN SECTION
12.06. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER
FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN
ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE
BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT
SHALL BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING
IN NEW YORK COUNTY. THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.
(b) Nothing in this Section 12.08 shall affect the right of the Agent
or any Lender to serve legal process in any other manner permitted by law or
affect the right of the Agent or any Lender to bring any action or proceeding
against the Borrower or its property in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the Notes.
Section 12.09. Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 12.10. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.11. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
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Section 12.12. Integration. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 12.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 12.14. Confidentiality. Each Lender (in its capacity as Lender
and, as applicable, as Swingline Bank and Issuing Bank) and the Agent agrees (on
behalf of itself and each of its Affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement which is identified by
the Borrower as being confidential at the time the same is delivered to the
Lenders or the Agent, provided that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Lenders or the Agent, (iii) to
bank examiners, auditors or accountants, (iv) in connection with any litigation
to which any one or more of the Lenders is a party or (v) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and delivers
to the respective Lender a Confidentiality Agreement in substantially the form
of Exhibit F hereto; and provided finally that in no event shall any Lender or
the Agent be obligated or required to return any materials furnished by the
Borrower.
Section 12.15. Treatment of Certain Information. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by each Lender or by one or more of their
respective subsidiaries or Affiliates and (b) acknowledges that information
delivered to each Lender by the Borrower may be provided to each such subsidiary
and Affiliate.
Section 12.16. Judgment Currency. 12.(w) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of the Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "Applicable
Creditor") shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum is stated to be due
hereunder (the "Agreement Currency"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Borrower agrees, as a
separate obligation and notwithstanding any judgment to indemnify the Applicable
Creditor against such loss. The obligations of the Borrower contained in this
Section shall survive the termination of this Agreement and the payment of all
other amounts owing hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWER:
MOVADO GROUP, INC.
By: /s/ John J. Rooney
--------------------------------
Name: John J. Rooney
Title: Corporate Controller
Address for Notices:
Movado Group, Inc.
125 Chubb Avenue
Lyndhurst, NJ 07071
Attention: Chief Financial Officer
Telecopier No.: 201-460-3768
with a simultaneous copy to:
Movado Group, Inc.
125 Chubb Avenue
Lyndhurst, NJ 07071
Attention: General Counsel
Telecopier No.: 201-460-4857
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AGENT:
THE CHASE MANHATTAN BANK
By: /s/ Eileen McEvoy Higgins
--------------------------------
Name: Eileen McEvoy Higgins
Title: Vice President
Address for Notices:
The Chase Manhattan Bank
New York Agency
1 Chase Manhattan Plaza
New York, New York 10081
Telecopier No.: 212-552-5650
with a simultaneous copy to:
The Chase Manhattan Bank
East 36 Midland Avenue
Paramus, New Jersey 07652
Attention: Ms. Eileen McEvoy Higgins
Telecopier No.: 201-599-6824
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CO-AGENT:
FLEET BANK, N.A.
By: /s/ Michael J. Merlo
--------------------------------
Name: Michael J. Merlo
Title: Vice President
Address for Notices:
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Attention: Mr. Michael Merlo
Telecopier No.: 212-703-1724
71
<PAGE> 77
LENDER, SWINGLINE BANK AND
LETTER OF CREDIT BANK:
THE CHASE MANHATTAN BANK
By: /s/ Eileen McEvoy Higgins
--------------------------------
Name: Eileen McEvoy Higgins
Title: Vice President
Lending Office
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Address for Notices:
The Chase Manhattan Bank
East 36 Midland Avenue
Paramus, New Jersey 07652
Attention: Ms. Eileen McEvoy Higgins
Telecopier No.: 201-599-6824
72
<PAGE> 78
LENDER:
FLEET BANK, N.A.
By: /s/ Michael J. Merlo
--------------------------------
Name: Michael J. Merlo
Title: Vice President
Lending Office and Address for Notices:
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Attention: Mr. Michael Merlo
Telecopier No.: 212-703-1724
73
<PAGE> 79
LENDER:
MARINE MIDLAND BANK
By: /s/ John S. Wamboldt
--------------------------------
Name: John S. Wamboldt
Title: Vice President
Lending Office and Address for Notices:
Marine Midland Bank
534 Broad Hollow Road
Melville, New York 11747
Attention: Mr. John Wamboldt
Telecopier No.: 516-752-4340
74
<PAGE> 80
LENDER:
THE BANK OF NEW YORK
By: /s/ Linda Mae Coppa
--------------------------------
Name: Linda Mae Coppa
Title: Vice President
Lending Office and Address for Notices:
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424
Attention: Ms. Linda Mae Coppa
Telecopier No.: 973-357-7705
75
<PAGE> 81
EXHIBIT A-1
[Form of Syndicated Loan Note]
PROMISSORY NOTE
July 23, 1997
MOVADO GROUP, INC., a New York corporation (the "Borrower"), for value
received, hereby promises to pay to the order of THE CHASE MANHATTAN BANK (the
"Lender"), at the office of The Chase Manhattan Bank (the "Agent") described in
the Credit Agreement (as such term is hereinafter defined), for the account of
the appropriate Lending Office of the Lender, the amount of the Syndicated Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, in
immediately available funds, on the dates, in the currency and in the manner
provided in the Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
at said office for the account of such Lending Office at the rates of interest
provided in the Credit Agreement, on the dates, in the currency and in the
manner provided in the Credit Agreement.
The date and amount of each Type of Syndicated Loan made by the Lender
to the Borrower under the Credit Agreement, and whether such Loan is a LIBOR
Loan or an ABR Loan, and the currency in which such Loan shall have been made,
and the date and amount of each payment of principal thereof, shall be recorded
by the Lender on its books and, prior to any transfer of this Note (or, at the
discretion of the Lender, at any other time), endorsed by the Lender on the
schedule attached hereto or any continuation thereof.
This is one of the Syndicated Notes referred to in that certain Amended
and Restated Credit Agreement (as amended from time to time, the "Credit
Agreement") dated the date hereof among the Borrower, the Lenders signatory
thereto (including the Lender), The Chase Manhattan Bank as Agent, as Swingline
Bank and as Issuing Bank, and Fleet Bank, N.A., as Co-Agent. This Note evidences
the Syndicated Loans made by the Lender thereunder. All capitalized terms not
defined herein shall have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
the principal of this Note upon the occurrence of certain Events of Default
specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
MOVADO GROUP, INC.
By:/s/ John J. Rooney
------------------------------
Name: John J. Rooney
Title: Corporate Controller
<PAGE> 82
<TABLE>
<CAPTION>
Amount LIBOR Amount of Balance Notation
Date of Loan or ABR Currency Payment Outstanding By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
-2-
<PAGE> 83
EXHIBIT A-1
[Form of Syndicated Loan Note]
PROMISSORY NOTE
July 23, 1997
MOVADO GROUP, INC., a New York corporation (the "Borrower"), for value
received, hereby promises to pay to the order of FLEET BANK, N.A. (the
"Lender"), at the office of The Chase Manhattan Bank (the "Agent") described in
the Credit Agreement (as such term is hereinafter defined), for the account of
the appropriate Lending Office of the Lender, the amount of the Syndicated Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, in
immediately available funds, on the dates, in the currency and in the manner
provided in the Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
at said office for the account of such Lending Office at the rates of interest
provided in the Credit Agreement, on the dates, in the currency and in the
manner provided in the Credit Agreement.
The date and amount of each Type of Syndicated Loan made by the Lender
to the Borrower under the Credit Agreement, and whether such Loan is a LIBOR
Loan or an ABR Loan, and the currency in which such Loan shall have been made,
and the date and amount of each payment of principal thereof, shall be recorded
by the Lender on its books and, prior to any transfer of this Note (or, at the
discretion of the Lender, at any other time), endorsed by the Lender on the
schedule attached hereto or any continuation thereof.
This is one of the Syndicated Notes referred to in that certain Amended
and Restated Credit Agreement (as amended from time to time, the "Credit
Agreement") dated the date hereof among the Borrower, the Lenders signatory
thereto (including the Lender), The Chase Manhattan Bank as Agent, as Swingline
Bank and as Issuing Bank, and Fleet Bank, N.A., as Co-Agent. This Note evidences
the Syndicated Loans made by the Lender thereunder. All capitalized terms not
defined herein shall have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
the principal of this Note upon the occurrence of certain Events of Default
specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
MOVADO GROUP, INC.
By: /s/ John J. Rooney
-------------------------------
Name: John J. Rooney
Title: Corporate Controller
<PAGE> 84
<TABLE>
<CAPTION>
Amount LIBOR Amount of Balance Notation
Date of Loan or ABR Currency Payment Outstanding By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
-2-
<PAGE> 85
EXHIBIT A-1
[Form of Syndicated Loan Note]
PROMISSORY NOTE
July 23, 1997
MOVADO GROUP, INC., a New York corporation (the "Borrower"), for value
received, hereby promises to pay to the order of MARINE MIDLAND BANK (the
"Lender"), at the office of The Chase Manhattan Bank (the "Agent") described in
the Credit Agreement (as such term is hereinafter defined), for the account of
the appropriate Lending Office of the Lender, the amount of the Syndicated Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, in
immediately available funds, on the dates, in the currency and in the manner
provided in the Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
at said office for the account of such Lending Office at the rates of interest
provided in the Credit Agreement, on the dates, in the currency and in the
manner provided in the Credit Agreement.
The date and amount of each Type of Syndicated Loan made by the Lender
to the Borrower under the Credit Agreement, and whether such Loan is a LIBOR
Loan or an ABR Loan, and the currency in which such Loan shall have been made,
and the date and amount of each payment of principal thereof, shall be recorded
by the Lender on its books and, prior to any transfer of this Note (or, at the
discretion of the Lender, at any other time), endorsed by the Lender on the
schedule attached hereto or any continuation thereof.
This is one of the Syndicated Notes referred to in that certain Amended
and Restated Credit Agreement (as amended from time to time, the "Credit
Agreement") dated the date hereof among the Borrower, the Lenders signatory
thereto (including the Lender), The Chase Manhattan Bank as Agent, as Swingline
Bank and as Issuing Bank, and Fleet Bank, N.A., as Co-Agent. This Note evidences
the Syndicated Loans made by the Lender thereunder. All capitalized terms not
defined herein shall have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
the principal of this Note upon the occurrence of certain Events of Default
specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
MOVADO GROUP, INC.
By: /s/ John J. Rooney
------------------------------
Name: John J. Rooney
Title: Corporate Controller
<PAGE> 86
<TABLE>
<CAPTION>
Amount LIBOR Amount of Balance Notation
Date of Loan or ABR Currency Payment Outstanding By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
-2-
<PAGE> 87
EXHIBIT A-1
[Form of Syndicated Loan Note]
PROMISSORY NOTE
July 23, 1997
MOVADO GROUP, INC., a New York corporation (the "Borrower"), for value
received, hereby promises to pay to the order of THE BANK OF NEW YORK (the
"Lender"), at the office of The Chase Manhattan Bank (the "Agent") described in
the Credit Agreement (as such term is hereinafter defined), for the account of
the appropriate Lending Office of the Lender, the amount of the Syndicated Loans
made by the Lender to the Borrower pursuant to the Credit Agreement, in
immediately available funds, on the dates, in the currency and in the manner
provided in the Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
at said office for the account of such Lending Office at the rates of interest
provided in the Credit Agreement, on the dates, in the currency and in the
manner provided in the Credit Agreement.
The date and amount of each Type of Syndicated Loan made by the Lender
to the Borrower under the Credit Agreement, and whether such Loan is a LIBOR
Loan or an ABR Loan, and the currency in which such Loan shall have been made,
and the date and amount of each payment of principal thereof, shall be recorded
by the Lender on its books and, prior to any transfer of this Note (or, at the
discretion of the Lender, at any other time), endorsed by the Lender on the
schedule attached hereto or any continuation thereof.
This is one of the Syndicated Notes referred to in that certain Amended
and Restated Credit Agreement (as amended from time to time, the "Credit
Agreement") dated the date hereof among the Borrower, the Lenders signatory
thereto (including the Lender), The Chase Manhattan Bank as Agent, as Swingline
Bank and as Issuing Bank, and Fleet Bank, N.A., as Co-Agent. This Note evidences
the Syndicated Loans made by the Lender thereunder. All capitalized terms not
defined herein shall have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
the principal of this Note upon the occurrence of certain Events of Default
specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
MOVADO GROUP, INC.
By: /s/ John J. Rooney
------------------------------
Name: John J. Rooney
Title: Corporate Controller
<PAGE> 88
<TABLE>
<CAPTION>
Amount LIBOR Amount of Balance Notation
Date of Loan or ABR Currency Payment Outstanding By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
-2-
<PAGE> 89
EXHIBIT A-2
[Form of Swingline Loan Note]
PROMISSORY NOTE
$10,000,000 July 23, 1997
MOVADO GROUP, INC., a New York corporation (the "Borrower"), for value
received, hereby promises to pay to the order of THE CHASE MANHATTAN BANK (the
"Swingline Bank"), at the office of The Chase Manhattan Bank (the "Agent")
described in the Credit Agreement (as such term is hereinafter defined), for the
account of the appropriate Lending Office of the Swingline Bank, the principal
sum of Ten Million Dollars or, if less, the amount of the Swingline Loans made
by the Swingline Bank to the Borrower pursuant to the Credit Agreement, in
lawful money of the United States, in immediately available funds, on the dates
and in the manner provided in the Credit Agreement. The Borrower also promises
to pay interest on the unpaid principal balance hereof, for the period such
balance is outstanding, at said office for the account of such Lending Office in
lawful money of the United States at the rates of interest provided in the
Credit Agreement, on the dates and in the manner provided in the Credit
Agreement.
The date and amount of each Swingline Loan made by the Swingline Bank
to the Borrower under the Credit Agreement, and each payment of principal
thereof, shall be recorded by the Swingline Bank on its books and, prior to any
transfer of this Note (or, at the discretion of the Swingline Bank, at any other
time), endorsed by the Swingline Bank on the schedule attached hereto or any
continuation thereof.
This is the Swingline Note referred to in that certain Amended and
Restated Credit Agreement (as amended from time to time, the "Credit Agreement")
dated the date hereof among the Borrower, the Lenders signatory thereto, The
Chase Manhattan Bank as Agent, as Swingline Bank and as Issuing Bank, and Fleet
Bank, N.A., as Co-Agent. This Note evidences the Swingline Loans made by the
Swingline Bank thereunder. All capitalized terms not defined herein shall have
the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
the principal of this Note upon the occurrence of certain Events of Default
specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
MOVADO GROUP, INC.
By: /s/ John J. Rooney
-------------------------------
Name: John J. Rooney
Title: Corporate Controller
<PAGE> 90
<TABLE>
<CAPTION>
Amount LIBOR Amount of Balance Notation
Date of Loan or ABR Currency Payment Outstanding By
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
-2-
<PAGE> 91
EXHIBIT B
July 23, 1997
The Chase Manhattan Bank, as
Agent and as Swingline Bank and
as Issuing Bank
New York Agency
1 Chase Manhattan Plaza
New York, New York 10081
Re: The Amended and Restated Credit Agreement dated as of the date hereof
(which, as the same may hereafter be amended, will be called herein the
"Credit Agreement") among Movado Group, Inc., the Lenders signatory
thereto, The Chase Manhattan Bank, as Agent, and as Swingline Bank and
as Issuing Bank, and Fleet Bank, N.A., as Co-Agent
Ladies and Gentlemen:
In connection with the captioned Credit Agreement, we hereby designate
any one of the following persons to give to you instructions, including notices
required pursuant to the Agreement, orally or by telephone or teleprocess:
NAME
Howard Regenbogen
Kenneth Adams
John Rooney
Frank Kimick
William Edelmann
Instructions may be honored on the oral, telephonic or teleprocess
instructions of anyone purporting to be any one of the above designated persons.
We will furnish you with confirmation of each such instruction either by telex
(whether tested or untested) or in writing signed by any person designated above
(including any telecopy which appears to bear the signature of any person
designated above) on the same day that the instruction is provided to you but
your responsibility with respect to any instruction shall not be affected by
your failure to receive such confirmation or by its contents. Transactions that
are the subject of such instructions are to be processed through Movado Group,
Inc. DDA Account #0381130798 at the Agent or Account #505.101.340 of Concord
Watch Company S.A. at Swiss Bank Corporation of Bienne Switzerland, or such
other account as may be mutually agreed to by you and us (our agreement as to
such other account to be evidenced by a writing signed by two of the
above-designated persons).
You shall be fully protected in, and shall incur no liability to us
for, acting upon any instructions which you in good faith believe to have been
given by any person designated above, and in no event shall you be liable for
special, consequential or punitive damages. In addition, we agree to hold you
and your agents harmless from any and all liability, loss and expense arising
directly or indirectly out of instructions that we provide to you in connection
with the Credit Agreement except for liability, loss or expense occasioned by
the gross negligence or willful misconduct of you or your agents.
<PAGE> 92
Upon notice to us, you may, at your option, refuse to execute any
instruction, or part thereof, without incurring any responsibility for any loss,
liability or expense arising out of such refusal if you in good faith believe
that the person delivering the instruction is not one of the persons designated
above or if the instruction is not accompanied by an authentication method that
we have agreed to in writing.
We will promptly notify you in writing of any change in the persons
designated above and, until you have actually received such written notice and
have had a reasonable opportunity to act upon it, you are authorized to act upon
instructions, even though the person delivering them may no longer be
authorized.
Very truly yours,
MOVADO GROUP, INC.
By: /s/ John J. Rooney
-----------------------------
Name: John J. Rooney
Title: Corporate Controller
-2-
<PAGE> 93
EXHIBIT C
Timothy F. Michno, Esq.
630 Fifth Avenue
New York, NY 10019
July 23, 1997
To each of the Lenders, the Swingline
Bank, the Issuing Bank and the Agent
that are parties to the Credit
Agreement hereinafter referred to
Ladies and Gentlemen:
I have acted as counsel to Movado Group, Inc., a New York corporation
(the "Borrower"), in connection with the that certain Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of the date hereof among the
Borrower, the Lenders signatory thereto, The Chase Manhattan Bank as Agent, as
Swingline Bank and as Issuing Bank, and Fleet Bank, N. A., as Co-Agent. We have
also acted as counsel to SwissAm, Inc., a New Jersey corporation, in connection
with the SwissAm Guarantee. Except as otherwise defined herein, all terms used
herein and defined in the Credit Agreement shall have the meanings assigned to
them therein.
In connection with this opinion, I have examined executed copies of the
Facility Documents and such other documents, records, agreements and
certificates as we have deemed appropriate. I have also reviewed such matters of
law as I have considered relevant for the purpose of this opinion.
Based upon the foregoing, I are of the opinion that:
1. Each of the Borrower and SwissAm is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of New York
(in the case of the Borrower) or New Jersey (in the case of SwissAm), has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged and is duly qualified as a foreign corporation and in
good standing under the laws of each other jurisdiction in which the failure to
be so qualified would have a material adverse effect on the business, financial
condition or operations of the Borrower and its Subsidiaries taken as a whole.
2. The execution, delivery and performance by each of the Borrower and
SwissAm of the Facility Documents to which it is a party have been duly
authorized by all necessary corporate action and do not: (a) require any consent
or approval of its stockholders; (b) contravene its charter or by-laws; (c)
violate any provision of, or require any filing, registration, consent or
approval under, any law, rule, regulation (including, without limitation,
Regulation U), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Borrower or SwissAm; (d) result
in a breach of or constitute a default or require any consent under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower or SwissAm is a party or by which it or its
properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the properties now owned
or hereafter acquired by the Borrower or SwissAm; or (f) cause the Borrower or
any Subsidiary to be in default under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument.
<PAGE> 94
3. (a) Each Facility Document to which the Borrower is a party is
a legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
(b) The SwissAm Guarantee is a legal, valid and binding
obligation of SwissAm, enforceable against SwissAm in accordance with its terms,
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally.
4. To the best of our knowledge (after due inquiry), there are no
pending or threatened actions, suits or proceedings against or affecting the
Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, properties or business of the
Borrower or of any such Subsidiary or the ability of the Borrower or SwissAm to
perform its obligations under the Facility Documents.
The opinions expressed herein are for the sole benefit of the Lenders,
the Agent, the Swingline Bank, the Issuing Bank and their respective successors
and assigns, and may be relied upon by such Persons, but may not be relied upon
in any manner by any other Person without our prior written consent. The
opinions expressed herein are as of the date hereof, and we make no undertaking
to supplement such opinions as facts and circumstances come to our attention or
changes in law occur which could affect such opinions.
Very truly yours,
Timothy F. Michno
-2-
<PAGE> 95
EXHIBIT D
GUARANTEE
REFERENCE IS HEREBY MADE to the Amended and Restated Credit Agreement
dated July 23, 1997 (which, as the same has heretofore been or may hereafter be
amended from time to time, will be called herein the "Credit Agreement") among
Movado Group, Inc., a New York corporation (the "Borrower"), the Lenders
signatory thereto, The Chase Manhattan Bank, as Agent, as Swingline Bank and as
Issuing Bank, and Fleet Bank, N.A., as Co-Agent. All capitalized terms used
herein and not defined shall have the respective meanings ascribed to them in
the Credit Agreement.
WHEREAS, the Credit Agreement provides for the extension of credit by
the Lenders, the Swingline Bank and the Issuing Bank (all of which, together
with the Agent, will be called herein the "Creditors") to the Borrower; and
WHEREAS, all the obligations and liabilities (whether now existing or
hereafter arising) of the Borrower to any or all of the Creditors under the
Credit Agreement or any of the other Facility Documents (whether for principal,
interest, fees, reimbursement obligations, indemnification obligations, costs of
enforcement or otherwise) will be called herein the "Obligations"; and
WHEREAS, the Guarantor has obtained and expects to obtain substantial
economic benefit from the extension of credit by the Creditors to the Borrower
under the Credit Agreement; and
WHEREAS, the execution and delivery of this guaranty by the Guarantor
is required pursuant to the terms of the Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and to induce the Creditors to extend credit to
the Borrower under the Facility Documents, the Guarantor hereby agrees with the
Creditors as follows:
The Guarantor hereby unconditionally guarantees to the
Creditors that the Borrower will promptly pay, perform and observe all the
Obligations, and that all sums stated to be payable in, or which become payable
under, the Facility Documents by the Borrower will be promptly paid in full when
due, whether at stated maturity or earlier by reason of acceleration or
otherwise, and, in the case of one or more extensions of time of payment or
performance or renewals of any Obligation, that the same will be promptly paid
or performed (as the case may be) when due according to such extension or
renewal, whether at stated maturity or earlier by reason of acceleration or
otherwise, irrespective of the validity, regularity, or enforceability of any of
the Facility Documents and irrespective of any present or future law or order of
any government (whether of right or in fact and whether the Creditors shall have
consented thereto) or of any agency thereof purporting to reduce, amend,
restructure or otherwise affect any Obligation of the Borrower or other obligor
or to vary the terms of payment; provided, however, that the liability of the
Guarantor hereunder with respect to the Obligations shall not exceed at any time
90% of Adjusted Net Worth (as hereinafter defined). The term "Adjusted Net
Worth" means the current Net Worth of the Guarantor, plus (as and when Net Worth
increases) any increase in such amount of Net Worth after the date hereof
(without any decrease for any reduction after the date hereof in current Net
Worth as so increased). The term "Net Worth" means the amount of all assets of
the Guarantor, at a fair valuation, less the total liabilities of the Guarantor
(including contingent liabilities other than the liabilities of the Guarantor
under this guaranty).
The Guarantor agrees that, as among the Guarantors, the
Creditors, the Obligations may be declared to be due and payable for purposes of
this guaranty notwithstanding any stay, injunction or other prohibition which
may prevent, delay or vitiate any such declaration as against the
<PAGE> 96
Borrower and that, in the event of any such declaration (or attempted
declaration), such Obligations (whether or not due and payable by the Borrower)
shall forthwith become due and payable by the Guarantor for purposes of this
guaranty. The Guarantor further guarantees that all payments made by the
Borrower to the Creditors of any Obligation will, when made, be final and agrees
that if any such payment is recovered from, or repaid by, any Creditor in whole
or in part in any bankruptcy, insolvency or similar proceeding instituted by or
against the Borrower, this guaranty shall continue to be fully applicable to
such Obligation to the same extent as though the payment so recovered or repaid
had never been originally made on such Obligation.
3. This is a guaranty of payment and not of collection only.
4. The Guarantor hereby consents that from time to time, without
notice to or further consent of the Guarantor, the payment, performance or
observance of any or all of the Obligations may be waived or the time of payment
or performance thereof extended or accelerated, or renewed in whole or in part,
or the terms of the Facility Documents or any part thereof may be changed
(including, without limitation, an increase or decrease in the Total Revolving
Credit Commitment or any Lender's Revolving Credit Commitment or rate of
interest thereon) and any collateral therefor may be exchanged, surrendered or
otherwise dealt with as the Agent may determine, and any of the acts mentioned
in the Facility Documents may be done, all without affecting the liability of
the Guarantor hereunder. The Guarantor hereby waives presentment of any
instrument, demand of payment, protest and notice of non-payment or protest
thereof or of any exchange, sale, surrender or other handling or disposition of
such collateral, and any requirement that any Creditor exhaust any right, power
or remedy or proceed against the Borrower under the Facility Documents or
against any other person under any other guaranty of, or security for, any of
the Obligations. The Guarantor hereby further waives any defense whatsoever
which might constitute a defense available to, or discharge of, the Borrower or
a guarantor. No payment by the Guarantor pursuant to any provision hereunder
shall entitle the Guarantor, by subrogation to the rights of any Creditor or
otherwise, to any payment by the Borrower (or out of the property of the
Borrower) except after payment in full of all sums (including interest, costs
and expenses) which may be or become payable by the Borrower to the Creditors at
any time or from time to time.
5. This guaranty shall be a continuing guaranty, and any other
guarantor, and any other party liable upon or in respect of any Obligation
hereby guaranteed may be released without affecting the liability of any
Guarantor. The liability of the Guarantor hereunder shall be joint and several
with the liability of any other guarantor or other party upon or in respect of
the Obligations.
6. Any Creditor may assign its rights and powers hereunder, with
all or any of the Obligations, and, in the event of such assignment, the
assignee hereof or of such rights and powers, shall have the same rights and
remedies as if originally named herein.
7. Notice of acceptance of this guaranty and of the incurring of
any and all of the Obligations of the Borrower pursuant to the Facility
Documents is hereby waived. THIS GUARANTY AND ALL RIGHTS, OBLIGATIONS AND
LIABILITIES ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF NEW YORK. Unless the context otherwise requires, all
terms used herein which are defined in the Uniform Commercial Code shall have
the meanings therein stated.
8. The Guarantor agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim any Creditor
may otherwise have, each of the Creditors shall be entitled, at its option, to
setoff and apply balances (general or special, time or demand, provisional or
final) held by it for account of the Guarantor at any of its offices in dollars
or in any other currency, against any
-2-
<PAGE> 97
amounts owing hereunder that are not paid when due (regardless of whether such
balances are then due to the Guarantor), in which case it shall promptly notify
the Guarantor thereof; provided however that any failure to give such notice
shall not affect the validity thereof.
9. No provision of this guaranty may be modified or waived
without the prior written consent of the Agent and the Required Lenders.
10. Without limiting the rights of any Creditor under any other
agreement, any financial accommodation (including, without limitation, interest
accruing at the agreed to contract rate after the commencement of any
bankruptcy, reorganization or similar proceeding) extended by the Guarantor to
or for the account of the Borrower, or in respect of which the Borrower may be
liable to the Guarantor in any capacity, is hereby subordinated to all the
Obligations, and such financial accommodation of the Guarantor to the Borrower,
if the Agent so requests, shall be collected, enforced and received by the
Guarantor as trustee for the Creditors and be paid over to the Agent on account
of the Obligations but without reducing or affecting in any manner the liability
of such Guarantor, or any other Guarantor, under the other provisions of this
guaranty.
11. The Guarantor hereby irrevocably submits to the jurisdiction
of any New York State or Federal court sitting in New York City in any action or
proceeding arising out of or relating to this guaranty, and the Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. The Guarantor
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Guarantor at its
address specified on the signature page hereof. The Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this paragraph shall affect the rights of the
Creditors to serve legal process in any other manner permitted by law or affect
the rights of the Creditors to bring any action or proceeding against the
Guarantor or any of its property in the courts of any other jurisdiction. To the
extent that the Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether from service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, the Guarantor hereby
irrevocably waives such immunity in respect of its Obligations under this
guaranty. The Guarantor hereby expressly waives any and every right to a trial
by jury in any action on or related to this guaranty, the Obligations or the
enforcement of either or all of the same, and does further expressly waive any
and every right to interpose any counterclaim in any such action or proceeding.
The Guarantor agrees to reimburse the Creditors on demand for all reasonable
costs, expenses, and charges (including, without limitation, reasonable
attorneys' fees) incurred by the Agent or the Lenders in connection with any
enforcement of this guaranty.
12. The rights, powers and remedies granted to the Creditors
herein shall be cumulative and in addition to any rights, powers and remedies to
which the Creditors may be entitled either by operation of law or pursuant to
the Facility Documents or any other document or instrument delivered or from
time to time to be delivered to the Agent or any Lender in connection with the
Facility Documents.
-3-
<PAGE> 98
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed by its proper officer(s) this 23rd day of July, 1997.
WITNESS: SWISSAM, INC.
/s/ John J. Rooney By: /s/ David R. Phalen
- -------------------------- ---------------------------------
Name: John J. Rooney Name: David R. Phalen
Title: President
Address of Guarantor:
-------------------------------------
-------------------------------------
-------------------------------------
-4-
<PAGE> 99
EXHIBIT E
ASSIGNMENT AND ASSUMPTION AGREEMENT
Dated as of ____________, 199__
Reference is made to the Amended and Restated Credit Agreement
dated July ___, 1997 (which, as the same has been or may have been amended, will
be called herein the "Credit Agreement"), among Movado Group, Inc., a New York
corporation (the "Borrower"), the Lenders signatory thereto, The Chase Manhattan
Bank, as Agent, as Swingline Bank and as Issuing Bank, and Fleet Bank, N.A., as
Co-Agent. Terms defined in the Credit Agreement and used herein without
definition shall have the respective meanings ascribed to such terms in the
Credit Agreement.
[Name of assigning bank] ("Assignor") and [name of assignee]
("Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, a
_____ percent (___%) interest in all of the Assignor's rights and obligations
under the Credit Agreement as of the Assignment Date (as hereinafter defined),
including without limitation (a) the Assignor's Revolving Credit Commitment
(including, without limitation, the Assignor's obligation to make Syndicated
Loans and to participate in Letters of Credit) and (b) the Assignor's
outstanding Syndicated Loans.
2. (a) The Assignor represents to the Assignee that as
of the date hereof, before giving effect to the assignment contemplated hereby,
its Revolving Credit Commitment is $__________ and the aggregate outstanding
principal amount of its Syndicated Loans (including the aggregate outstanding
principal amount of its Syndicated Loans denominated in dollars, plus the Dollar
Equivalent of its Swiss Franc Loans) equals $__________; and that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim.
(b) Except as expressly provided in subsection (a) of
this Section, the Assignor makes no representation or warranty in connection
with this Assignment and Assumption Agreement. Without limiting the generality
of the immediately preceding sentence: the Assignee makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Facility Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other Facility Document or any other instrument or document furnished pursuant
thereto; and the Assignee makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
Subsidiary or the performance or observance by the Borrower or any Subsidiary of
any of their respective obligations under any Facility Document or any other
instrument or document furnished pursuant to the Credit Agreement.
3. The Assignee represents and warrants that it is
legally authorized to enter into this Agreement. The Assignee also acknowledges,
agrees and confirms that (a) it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements referred to in
Sections 7.08(a) and (b) of the Credit Agreement, and such other Facility
Documents and other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Assumption Agreement; and (b) it will independently and without reliance upon
the Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; and
(c) it appoints and authorizes the Agent
<PAGE> 100
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Facility Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; and (d) it agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Credit Agreement are required to
be performed by it as a Lender.
4. The effective date for this Assignment and Assumption
Agreement shall be ___________, 199__ (the "Assignment Date"), provided that
this agreement shall have been executed and delivered by the Assignor and the
Assignee and consented to by the Agent and the Borrower (except that the consent
of the Borrower shall not be required if an Event of Default exists as a result
of the commencement of a case with respect to the Borrower under the Federal
Bankruptcy Code). Following the execution of this Assignment and Assumption
Agreement, each such party shall deliver its duly executed counterpart hereof to
the Agent for acceptance and recording in the record maintained by the Agent
pursuant to Section 12.05(d) of the Credit Agreement.
5. Upon such acceptance and recording, and from and
after the Assignment Date, (i) the Assignee shall become a party to the Credit
Agreement and a "Lender" for purposes thereof, and to the extent provided in
this Assignment and Assumption Agreement, shall have the rights and obligations
of a Lender thereunder, and (ii) the Assignor shall, with respect to that
portion of its interest under the Credit Agreement assigned hereunder,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. Upon such acceptance and recording, and from and
after the Assignment Date, the Agent shall make all payments in respect of the
rights and interests assigned hereby (including payments of principal, interest,
fees and other amounts) to the Assignee. Each of the Assignor and the Assignee
hereby agree that if it receives any amount under any Facility Document which is
for the account of the other of them, it shall receive the same for the account
of such other party to the extent of such other party's interest therein and
shall promptly pay the same to such other party.
7. This Assignment and Assumption Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without reference to conflict of laws).
8. This Assignment and Assumption Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, this Agreement has been executed
as of the day first above written.
[Assignor]
By: ______________________________________
Name:
Title:
-2-
<PAGE> 101
[Assignee]
By: ______________________________________
Name:
Title:
Consented to:
MOVADO GROUP, INC.
By:______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, AS AGENT,
AS SWINGLINE BANK AND AS ISSUING BANK
By:______________________________________
Name:
Title:
-3-
<PAGE> 102
EXHIBIT F
CONFIDENTIALITY AGREEMENT
__________________, 199____
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Amended and Restated Credit Agreement dated July ___, 1997
(which, as the same may hereafter be amended, will be called
herein the "Credit Agreement") among Movado Group, Inc., the
Lenders signatory thereto, The Chase Manhattan Bank, as Agent,
as Swingline Bank and as Issuing Bank, and Fleet Bank, N.A.,
as Co-Agent
Dear _____________:
As a Lender, party to the Credit Agreement, we have agreed
with Movado Group, Inc. (the "Borrower") pursuant to Section 12.14 of the Credit
Agreement to use reasonable precautions to keep confidential, except as
otherwise provided therein, all non-public information identified by the
Borrower as being confidential at the time the same is delivered to us pursuant
to the Credit Agreement.
As provided in said Section 12.14, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Lender], with certain of such non-public
information subject to the execution and delivery by you, prior to receiving
such non-public information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return to
us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on
behalf of yourself and each of your affiliates, directors, officers, employees
and representatives) that (A) such information will not be used by you except in
connection with the proposed [participation] [assignment] mentioned above and
(B) you shall use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in accordance with safe and
sound banking practices, to keep such information confidential, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to your
counsel or to counsel for any of the Lenders or the Agent, (iii) to bank
examiners, auditors or accountants, (iv) in connection with any litigation to
which you or any one or more of the Lenders is a party; and provided that in no
event shall you be obligated to return any materials furnished to you pursuant
to this Confidentiality Agreement.
Would you please indicate your agreement to the foregoing by
signing at the place provided below the enclosed copy of this Confidentiality
Agreement.
Very truly yours,
[Insert Name of Lender]
By:_____________________________________
<PAGE> 103
The foregoing is agreed to
as of the date of this letter.
[Insert name of prospective
participant or assignee]
By:________________________________
-2-
<PAGE> 104
SCHEDULE I
Lenders and Their Revolving Credit Commitments
<TABLE>
<CAPTION>
Lender's Revolving Lender's Pro
Name of Lender Credit Commitment Rata Percentage
- -------------- ----------------- ---------------
<S> <C> <C>
The Chase Manhattan Bank $20,250,000 25.7143%
Fleet Bank, N.A $20,250,000 25.7143%
Marine Midland Bank $20,250,000 25.7143%
The Bank of New York $18,000,000 22.8571%
----------- --------
Total Revolving Credit Commitment $78,750,000 100%
</TABLE>
<PAGE> 105
SCHEDULE II
Subsidiaries of Movado Group, Inc. (the "Company")
All issued and outstanding shares of each of the following subsidiaries
are wholly owned, directly or indirectly, by the Company except for statutorily
required nominee shares in the case of the Hong Kong subsidiaries:
NEW JERSEY:
EWC Marketing Corp. (inactive)
SwissAm Inc.
DELAWARE:
Movado International, Ltd. (inactive)
SWITZERLAND:
Concord Watch Company, S.A.
Movado Watch Company, S.A.
N.A. Trading, Ltd.
Montres Movado Bienne, S.A.
Grandjean, S.A.
CANADA:
Movado Group of Canada, Ltd.
GERMANY:
Movado Deutschland GmbH
Concord Deutschland GmbH
SINGAPORE:
Swissam Pte. Ltd.
HONG KONG:
SwissAm Ltd.
SwissAm Products Ltd.
JAPAN:
Concord Movado Japan Co., Ltd.
<PAGE> 106
SCHEDULE III
MOVADO GROUP, INC.
BANK CREDIT LINES
<TABLE>
<CAPTION>
OUTSTANDING OUTSTANDING
CREDIT LINE 1/31/97 4/30/97
----------- ----------- -----------
<S> <C> <C> <C>
DOMESTIC
Working Capital Lines
Chase Manhattan $12,500,000 $ 0 $ 6,350,000
Fleet 12,500,000 0 9,850,000
Marine Midland 10,000,000 0 7,750,000
Bank of New York 0 0 0
----------- ----------- -----------
35,000,000 0 23,950,000
----------- ----------- -----------
Long Term Revolver
Chase Manhattan Bank (as agent) $20,000,000 $ 5,000,000 $ 5,000,000
Total Domestic Line $55,000,000 $ 5,000,000 $28,950,000
FOREIGN SFR SFR SFR
Concord S.A
Cantonal Bank 4,000,000 6,000,000 4,000,000
Swiss Bank 8,000,000 2,000,000 4,000,000
Union Bank 4,000,000 3,000,000 3,000,000
Cantonal Bank Gold Acct (Unsecured) 0 0 0
----------- ----------- -----------
16,000,000 11,000,000 11,000,000
Grandjean S.A SFR SFR SFR
Union Bank 300,000 0 0
Cantonal Bank 1,400,000 0 0
Swiss Bank 100,000 0 0
Cantonal bank-Gold (Unsecured) 0 0 0
Popular 200,000 0 0
----------- ----------- -----------
2,000,000 0 0
Total SFR 18,000,000 11,000,000 11,000,000
Spot rate 1.47 1.42 1.47
Converted to US Dollar $12,215,813 $ 7,746,479 $ 7,465,219
----------- ----------- -----------
Consolidated Total US Dollar $67,215,813 $12,746,479 $36,415,219
=========== =========== ===========
</TABLE>
Concurrent with the closing of this Agreement, the Domestic Working Capital
Lines will be revised to the following credit limits:
<TABLE>
<S> <C>
Chase Manhattan $ 0
Fleet 3,333,333
Marine Midland 3,333,333
Bank of New York 10,000,000
-----------
$16,666,666
===========
</TABLE>
<PAGE> 107
SCHEDULE III
MOVADO GROUP, INC.
SCHEDULE OF CAPITAL LEASES & OTHER LONG TERM OBLIGATIONS
BALANCES AS OF JULY 15, 1997
<TABLE>
<CAPTION>
TOTAL OUTSTANDING
UNITED STATES BALANCE
<S> <C> <C>
IBM MASTER LEASE 21,406
1 SUPPLEMENT NO. 1 0
2 SUPPLEMENT NO. 2 0
3 SUPPLEMENT NO. 3 0
4 SUPPLEMENT NO. 4 0
5 SUPPLEMENT NO. 5 0
6 SUPPLEMENT NO. 6 2,790
7 SUPPLEMENT NO. 7 692
8 SUPPLEMENT NO. 8 45,686
9 SUPPLEMENT NO. 9 0
10 SUPPLEMENT NO. 10 0
11 SUPPLEMENT NO. 11 498
12 SUPPLEMENT NO. 12 0
13 SUPPLEMENT NO. 13 0
14 SUPPLEMENT NO. 14 1,906
15 SUPPLEMENT NO. 15 89,427
16 SUPPLEMENT NO. 16 1,682
17 SUPPLEMENT NO. 17 1,065
18 SUPPLEMENT NO. 18 526
19 SUPPLEMENT NO. 19 520
20 SUPPLEMENT NO. 20 606
21 SUPPLEMENT NO. 21 618
22 SUPPLEMENT NO. 22 606
23 SUPPLEMENT NO. 23 39,774
24 SUPPLEMENT NO. 24 6,489
25 SUPPLEMENT NO. 25 5,946
26 SUPPLEMENT NO. 26 82,369
27 SUPPLEMENT NO. 27 927
28 SUPPLEMENT NO. 28 14,739
----------
$ 318,334
==========
PRUDENTIAL SENIOR NOTES $40,000,000
GRANDJEAN
Cantonal Bank of Neuchatel - Mortgage $ 352,901
Cantonal Bank of Neuchatel - Machinery lease $ 115,372
</TABLE>
<PAGE> 108
SCHEDULE III
MOVADO GROUP, INC.
OUTSTANDING LETTERS OF CREDIT
JULY 16, 1997
<TABLE>
<CAPTION>
Bank Face Amount Holder/Description Maturity
<S> <C> <C> <C>
Marine 178,900,000 Rent Deposit September 29, 1997
Marine 200,000,000 Rent Deposit February 21, 1998
Marine 150,000,000 Nuclear Regulatory Commission November 30, 1997
Marine 23,818,000 Rent Deposit July 30, 1998
Chase 112,530,000 Canadian payroll April 26, 1998
</TABLE>
<PAGE> 109
SCHEDULE III
Certain equipment leases of the Borrower provide that the lessor has a security
interest in the equipment. These liens are listed on Appendix A to this Schedule
III. In addition, S.A. Ancienne Fabrique Georges Paiget et Cie. has security
interest in certain trademarks of the Borrower used in connection with the
Borrower's distribution of Piaget watches. In addition, the Borrower has a
security interest in certain property of SwissAm to secure amounts owing by
SwissAm to the Borrower.
<PAGE> 110
APPENDIX A TO SCHEDULE III
EQUIPMENT LEASE/LIEN REFERRED TO IN THE UCC-1 FINANCING STATEMENT NAMING
BORROWER (AS LESSEE) AND IBM CREDIT CORPORATION (AS LESSOR) AND FILED WITH THE
SECRETARY OF STATE OF NEW JERSEY ON MAY 9, 1997 AS INSTRUMENT NO. 1766303.
CONSIGNMENT FILINGS MADE NAMING THE BORROWER (AS DEBTOR) AND PIAGET
(INTERNATIONAL) S.A. (AS SECURED PARTY) AS TO CERTAIN IDENTIFIED GOODS CONSIGNED
BY PIAGET WITH THE BORROWER (INCLUDING ACCOUNTS AND OTHER INTANGIBLES AND
PROCEEDS ARISING OUT OF OR WITH RESPECT TO SUCH CONSIGNED GOODS) FILED WITH (i)
THE SECRETARY OF STATE OF NEW JERSEY ON AUGUST 28, 1996 AS INSTRUMENT NO.
1719250, AND (ii) THE SECRETARY OF STATE OF NEW YORK ON AUGUST 28, 1996 AS
FILING NUMBER 171813.
<PAGE> 111
SCHEDULE IV
Tritium, acetone, benzene and isopropytal are stored by Borrower at 125 Chubb
Avenue, Lyndhurst, New Jersey in accordance with applicable Environmental Laws.
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
This AMENDMENT, dated as of the 5th day of August, 1997, among MOVADO
GROUP, INC., A New York corporation (the "Borrower"); each of the Lenders which
is a signatory hereto; THE CHASE MANHATTAN BANK, as Agent, as Swingline Bank and
as Issuing Bank; FLEET BANK, N.A., as Co-Agent; and CREDIT SUISSE FIRST BOSTON
(the "New Lender").
Preliminary Statement
A. Reference is made to the Amended and Restated Credit Agreement dated as
of July 23, 1997 (the "Credit Agreement") among the Borrower, the Lenders
signatory thereto. The Chase Manhattan Bank as Agent, as Swingline Bank and as
Issuing Bank, and Fleet Bank, N.A. as Co-Agent. All capitalized terms used
herein and not defined shall have the respective meanings ascribed to them in
the Credit Agreement.
B. The Borrower has requested that the Total Revolving Credit Commitment be
increased from $78,750,000 to $90,000,000, and that the New Lender become a
party to the Credit Agreement as a "Lender", and that certain other changes be
made to the Credit Agreement.
NOW, THEREFORE, for ten dollars and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
hereto agree as follows:
ARTICLE 1. PARTICULAR AMENDMENTS
Section 1.1 Increase. Schedule I to the Credit Agreement is hereby amended,
effective as of August 26, 1997, to read as follows:
SCHEDULE I
Lenders and Their Revolving Credit Commitments
<TABLE>
<CAPTION>
Revolving Credit Lender's Pro-Rata
Name of Lender Commitment Percentage
-------------- --------------- -----------------
<S> <C> <C>
The Chase Manhattan Bank $20,250,000 22.5%
Fleet Bank, N.A. $20,250,000 22.5%
Marine Midland Bank $20,250,000 22.5%
The Bank of New York $18,000,000 20.0%
Credit Suisse First Boston $11,250,000 12.5%
----------- -----
TOTAL REVOLVING CREDIT $90,000,000 100%
COMMITMENT-
</TABLE>
Section 1.2 New Lender. (a) The parties hereto agree that the New Lender is
hereby made a party to the Credit Agreement as a "Lender" thereunder, effective
as of August 26, 1997, with all the rights and duties of a Lender thereunder.
(b) Simultaneously herewith, the Borrower shall execute and
deliver to the Agent, for the account of the New Lender, a Syndicated Loan
Note in favor of the New Lender evidencing Syndicated Loans to be made by the
New Lender on and after August 26, 1997 pursuant to the Revolving Credit
Commitment of the New Lender.
<PAGE> 2
(c) The New Lender represents and warrants that it is legally authorized
to enter into this Agreement. The New Lender also acknowledges, agrees and
confirms that (i) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements referred to in Section 7.08 (a)
and (b) of the Credit Agreement, and such other Facility Documents and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Amendment; and (ii) it will
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; and (iii) it appoints and authorizes the Agent to take
such action as Agent on its behalf and to exercise such powers under the Credit
Agreement and the other Facility Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(iv) it agrees that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender.
(d) The Lending Office of the New Lender, and its address for notices
for purposes of Section 12.06 of the Credit Agreement, are as follows:
Credit Suisse First Boston
11 Madison Avenue, 9th Floor
New York, NY 10010-3629
Attention: Mr. Karl Studer
Telecopier No.: 212-325-8326
Section 1.2 Telephone Instructions. Subject to the terms of the
Authorization Letter, the Agent and the Issuing Bank agree that they will
accept from the Borrower by telephone (provided that the same is confirmed by
telecopy promptly, and in all events on the same day as such telephone
communication) any Borrowing Request, any notice of prepayment referred to in
Section 2.12 of the Credit Agreement and any notice as to a Letter of Credit
referred to in Section 3.02 of the Credit Agreement.
Section 1.03 Lenders to Pay Interest Based on Federal Funds Rate
Only. (a) The last sentence of Section 2.02(e) of the Credit Agreement is
hereby amended to read as follows:
"If any Lender shall not have made its Pro Rata Percentage of such L/C
Disbursement available to the Agent as provided above, such Lender and
the Borrower severally agree to pay interest on such amount, for each
day from and including the date such amount is required to be paid in
accordance with this paragraph to but excluding the date such amount is
paid, to the Agent for the account of the Issuing Bank at (i) in the
case of the Borrower, a rate per annum equal to the Alternate Base Rate,
and (ii) in the case of such Lender, a rate per annum equal to, for the
first such day, the Federal Funds Effective Rate and, for each day
thereafter, one percent per annum in excess of the Federal Funds
Effective Rate.
(b) The last sentence of Section 2.05(a) of the Credit Agreement is
hereby amended to read as follows:
"If any Lender shall not have made its Pro Rata Percentage of such
aggregate amount specified in such notice available to the Agent as
provided in the immediately proceeding sentence, such Lender shall
(independently of and in addition to the Borrower's obligation to pay
2
<PAGE> 3
interest on such amount) pay interest on its Pro Rata Percentage
of such amount for each day from and including the date the same
is required to be paid in accordance with this paragraph to but
excluding the date the same is paid, to the Agent for the
account of the Swingline Bank at (i) for the first such day, the
Federal Funds Effective Rate, and (ii) for each day thereafter,
one percent per annum in excess of the Federal Funds Effective
Rate."
(c) The last sentence of Section 2.05(d) of the Credit
Agreement is hereby amended to read as follows:
"Each Lender shall in addition pay to the Agent for the account
of the Swingline Bank interest on the amount of such obligation
of such Lender for each day from and including the date such
amount is required to be paid in accordance with this paragraph
to but excluding the date such amount is paid, at (i) for the
first such day, the Federal Funds Effective Rate, and (ii) for
each day thereafter, one percent per annum in excess of the
Federal Funds Effective Rate."
Section 1.4 Account for Swiss Franc Loans. Pursuant to the Letter of
Direction as to Swiss Franc Loans dated July 23, 1997 from the Borrower to the
Agent, the Borrower requested the Agent to disburse the proceeds of Swiss Franc
Loans to a bank account in the name of Concord Watch Company, S.A. (a
Subsidiary of the Borrower) at Swiss Bank Corporation of Biene, Switzerland.
The Borrower agreed in such Letter that it would, within 60 days, open an
account in its own name at such bank (or at another banking institution), to
which the proceeds of Swiss Franc Loans would thereafter be disbursed. The
Borrower has requested relief from such requirement that such account be opened
in its own name. Accordingly, such Letter is hereby amended by deleting (in the
third paragraph thereof) the phrase "within the next 60 days" and substituting
therefor the phrase "within 10 days after the request by the Agent."
ARTICLE II. MATTERS GENERALLY
Section 2.1 Representations and Warranties. The Borrower hereby
represents and warrants that:
(a) All the representations and warranties set forth in the
Credit Agreement are true and complete on and as of the date
hereof (with the same effect as though made on and as of such
date).
(b) No Default or Event of Default exists.
(c) The Borrower has no offset or defense with respect to any of
its obligations under the Credit Agreement or any of the Notes
or any other Facility Document, and no claim or counterclaim
against any Lender, the Swingline Bank, the Issuing Bank, the
Agent or the Co-Agent whatsoever (any such offset, defense,
claim or counterclaim as may now exist being hereby irrevocably
waived by the Borrower).
(d) This Amendment and the Syndicated Loan Note in favor of the
New Lender being executed and delivered simultaneously herewith
have been duly authorized, executed and delivered by the
Borrower.
3
<PAGE> 4
Section 2.2 Guarantor Consent. SwissAm shall execute this Amendment in
the space provided below to indicate its consent to the terms of this Amendment.
Section 2.3 Expenses. The Borrower shall pay all reasonable expenses
incurred by the Agent in connection with the transaction contemplated by this
Amendment, including (without limitation) the fees and disbursements of
counsel for the Agent.
Section 2.4 Continuing Effect. Except as otherwise expressly provided
in this Amendment, all the terms and conditions of the Credit Agreement shall
continue in full force and effect. All the Facility Documents also shall
continue in full force and effect.
Section 2.5 Entire Agreement. This Amendment (together with the
Syndicated Loan Note in favor of the New Lender being executed and delivered
simultaneously herewith) constitutes the entire agreement of the parties hereto
with respect to an amendment of the Credit Agreement pertaining to the subject
matter hereof, and it (together with such Note) supersedes and replaces all
prior and contemporaneous agreements, discussions and understandings (whether
written or oral) with respect to such amendment.
Section 2.6 Counterparts. This Amendment may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement.
Section 2.7 Effectiveness. This Amendment shall not become effective
unless and until it shall have been executed and delivered by all the parties
hereto (which execution and delivery may be evidenced by telecopies).
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
MOVADO GROUP, INC.
By: /s/ John J. Rooney
------------------------------
Name (Print): John J. Rooney
Title: Corp. Controller
THE CHASE MANHATTAN BANK, as Agent,
as Lender, as Swingline Bank and as
Issuing Bank
By:
-------------------------------
Eileen McEvoy Higgins
Vice President
4
<PAGE> 5
Section 2.2 Guarantor Consent. SwissAm shall execute this Amendment in
the space provided below to indicate its consent to the terms of this Amendment.
Section 2.3 Expenses. The Borrower shall pay all reasonable expenses
incurred by the Agent in connection with the transaction contemplated by this
Amendment, including (without limitation) the fees and disbursements of counsel
for the Agent.
Section 2.4 Continuing Effect. Except as otherwise expressly provided
in this Amendment, all the terms and conditions of the Credit Agreement shall
continue in full force and effect. All the Facility Documents also shall
continue in full force and effect.
Section 2.5 Entire Agreement. This Amendment (together with the
Syndicated Loan Note in favor of the New Lender being executed and delivered
simultaneously herewith) constitutes the entire agreement on the parties hereto
with respect to an amendment of the Credit Agreement pertaining to the subject
matter hereof, and it (together with such Note) supersedes and replaces all
prior and contemporaneous agreements, discussions and understandings (whether
written or oral) with respect to such amendment.
Section 2.6 Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
Section 2.7 Effectiveness. This Amendment shall not become effective
unless and until it shall have been executed and delivered by all the parties
hereto (which execution and delivery may be evidenced by telecopies).
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
MOVADO GROUP, INC.
By:
-----------------------------------
Name (Print):
Title:
THE CHASE MANHATTAN BANK, as Agent, as
Lender, as Swingline Bank and as Issuing
Bank
By: /s/ Eileen McEvoy Higgins
-----------------------------------
Eileen McEvoy Higgins
Vice President
4
<PAGE> 6
FLEET BANK, N.A., as Co-Agent and as
Lender
By: /s/ Michael Merlo
-----------------------
Michael J. Merlo
Vice President
MARINE MIDLAND BANK
By:
-----------------------
John S. Wamboldt
Vice President
THE BANK OF NEW YORK
BY:
-----------------------
Linda Mae Coppa
Vice President
CREDIT SUISSE FIRST BOSTON
BY:
----------------------
Name (Print):
Title:
CONSENTED TO:
SWISSAM INC., as Guarantor
By:
----------------------
Name (Print):
Title:
5
<PAGE> 7
FLEET BANK, N.A., as Co-Agent and as
Lender
By:
-----------------------
Michael J. Merlo
Vice President
MARINE MIDLAND BANK
By: /s/ John S. Wamboldt
-----------------------
John S. Wamboldt
Vice President
THE BANK OF NEW YORK
BY:
-----------------------
Linda Mae Coppa
Vice President
CREDIT SUISSE FIRST BOSTON
BY:
----------------------
Name (Print):
Title:
CONSENTED TO:
SWISSAM INC., as Guarantor
By:
----------------------
Name (Print):
Title:
5
<PAGE> 8
FLEET BANK, N.A., as Co-Agent and as
Lender
By:
-----------------------
Michael J. Merlo
Vice President
MARINE MIDLAND BANK
By:
-----------------------
John S. Wamboldt
Vice President
THE BANK OF NEW YORK
BY: /s/ Linda Mae Coppa
-----------------------
Linda Mae Coppa
Vice President
CREDIT SUISSE FIRST BOSTON
BY:
----------------------
Name (Print):
Title:
CONSENTED TO:
SWISSAM INC., as Guarantor
By:
----------------------
Name (Print):
Title:
5
<PAGE> 9
FLEET BANK, N.A., as Co-Agent and as
Lender
By:
-----------------------
Michael J. Merlo
Vice President
MARINE MIDLAND BANK
By:
-----------------------
John S. Wamboldt
Vice President
THE BANK OF NEW YORK
BY:
-----------------------
Linda Mae Coppa
Vice President
CREDIT SUISSE FIRST BOSTON
BY: /s/ Karl M Studer
----------------------
Name (Print): Karl M. Studer
Title: Director
MARTIN P. LASANCE
ASSOCIATE
CONSENTED TO:
SWISSAM INC., as Guarantor
By:
----------------------
Name (Print):
Title:
5
<PAGE> 10
FLEET BANK, N.A., as Co-Agent and as
Lender
By:
-----------------------
Michael J. Merlo
Vice President
MARINE MIDLAND BANK
By:
-----------------------
John S. Wamboldt
Vice President
THE BANK OF NEW YORK
BY:
-----------------------
Linda Mae Coppa
Vice President
CREDIT SUISSE FIRST BOSTON
BY:
----------------------
Name (Print):
Title:
CONSENTED TO:
SWISSAM INC., as Guarantor
By: /s/ David R. Phalen
----------------------
Name (Print): David R. Phalen
Title:
5
<PAGE> 1
EXHIBIT 10.3
CONSENT TO SUBLEASE
This CONSENT TO SUBLEASE ("Consent"), dated as of the 18th day of June,
1997 is being entered among MEADOWLANDS ASSOCIATES, a New Jersey limited
partnership, having an office c/o Bellemead Management Co., Inc. at 280
Corporate Center, 4 Becker Farm Road, Third Floor, Roseland, New Jersey
07068-3788 ("Landlord"), ALEXANDER & ALEXANDER CONSULTING GROUP, INC., a New
Jersey corporation, having an office at 125 Chubb Avenue, Lyndhurst, New Jersey
("Tenant") and MOVADO GROUP, INC. a New York corporation, having an office at
125 Chubb Avenue, Lyndhurst, New Jersey 07071 ("Subtenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a certain lease dated as of
October 7, 1986 (said lease as the same was or may hereafter be amended is
hereinafter called the "Lease") for a portion ("Premises") of the building
("Building") known as and located at 125 Chubb Avenue, Lyndhurst, New Jersey;
and
WHEREAS, Subtenant desires to sublet from Tenant a portion ("Sublet
Space") of the Premises in accordance with that certain sublease ("Sublease")
between Tenant, as sublessor and Subtenant, as sublessee, a copy of which is
attached hereto as Exhibit A;
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, it is mutually covenanted
and agreed as follows:
A. Unless otherwise defined, all terms contained in this Consent shall,
for the purposes hereof, have the same meaning ascribed to them in the Lease.
B. Landlord consents to the subletting of the Sublet Space by Tenant to
Subtenant, upon and expressly subject to the following terms and conditions, to
each of which Tenant and Subtenant expressly agree:
1. Nothing herein contained shall be construed to modify, waive, impair
or affect any of the covenants, agreements, terms, provisions, or conditions
contained in the Lease (except as herein expressly provided), or to waive any
breach thereof, or any rights of Landlord against any person, firm, association
or corporation liable or responsible for the performance thereof, or to enlarge
or increase Landlord's obligations or decrease Landlord's rights under the
Lease, and all covenants, agreements, terms, provisions and conditions of the
Lease are hereby mutually declared to be in full force and effect.
2. Unless and except as otherwise specifically provided in the Lease or
this Consent, the provisions of Articles 11 and 48 of the Lease shall apply to
any further subletting or assignment of all or any part of the Premises. In
such event, Landlord shall retain its rights under Articles 11 and 48 of the
Lease.
3. Tenant shall be and remain liable and responsible for the due
keeping, performance and observance of all the covenants, agreements, terms,
provisions and conditions set forth in the Lease on the part of the Tenant to
be kept, performed and observed and for the payment of the Minimum Rent,
Adjusted Minimum Rent and additional rent and all other sums now and/or
hereafter becoming payable thereunder, expressly including as such (but not
limited to) adjustments of rent, and any and all charges for any additional
electric energy, property, material, labor, utility or other similar or
dissimilar services or materials rendered, supplied or furnished by Landlord,
in or in connection with, the Premises or any part thereof, whether for or at
the request of Tenant or Subtenant.
<PAGE> 2
4. The Sublease shall be subject and subordinate at all times to the
Lease and to all of the covenants, agreements, terms, provisions and conditions
of the Lease and to this Consent, and neither Tenant nor Subtenant shall do or
permit anything to be done in connection with the Subtenant's occupancy of the
Sublet Space, or any part thereof, which would violate any of said covenants,
agreements, terms, provisions and conditions.
5. Tenant and Subtenant agree that Landlord is not responsible for the
payment of any commissions or fees in connection with this transaction and each
agrees to indemnify, defend and hold Landlord, its partners, directors or
officers and their affiliates and/or subsidiaries harmless from and against any
claims, liability, losses or expenses, including attorneys' fees, court costs
and disbursements incurred by Landlord during settlement, at trial or on
appeal, in connection with any claims for commission by any broker or agent in
connection with this transaction.)
6. Upon the expiration, or any earlier termination of the term of the
Lease or in case of the surrender of the Lease by Tenant to Landlord, the
Sublease and the term and estate thereby granted shall expire and come to an
end as of the effective date of such expiration, termination or surrender, and
Subtenant shall vacate the Sublet Space on or before such date. In case of the
failure of Subtenant to so vacate, Landlord shall be entitled to all the rights
and remedies which are available to a landlord against a tenant holding over
after the expiration of a term and Tenant shall remain primarily liable for any
damages suffered by Landlord. Upon the expiration or any earlier termination of
the term of the Lease or in case of the surrender of the Lease by Tenant to
Landlord, Subtenant shall, at the request of Landlord, attorn to and accept
Landlord as sublandlord under the Sublease for the balance of the term of the
Sublease and be bound to perform all of the obligations imposed by the Sublease
upon Subtenant, except that Subtenant shall pay Landlord for the remainder of
the term of the Sublease rent at fair market value to be reasonably determined
in good faith by Landlord, considering applicable market conditions. Such
attornment shall be evidenced by an agreement in form and substance
satisfactory to Landlord which Subtenant shall execute and deliver within five
(5) days after request by Landlord. Subtenant waives the provisions of any law
now or hereafter in effect which may give Subtenant any right of election to
terminate the Sublease of to surrender possession of the Sublet Space in the
event any proceeding is brought by Landlord to terminate the Lease.
7. Subtenant agrees that if Subtenant, at Landlord's sole discretion,
should become a direct tenant of Landlord for the Premises or any part thereof
upon the expiration or earlier termination of the Lease, Landlord shall not (a)
be liable for any previous act or omission of Tenant under the Sublease, (b) be
subject to any offset or credit which shall theretofore have accrued to
Subtenant against Tenant, (c) have any obligation whatsoever with respect to
any security deposited under the Sublease, (d) be bound by any previous
prepayment of rent or any other advance payment of monies due under the
Sublease, and (e) be responsible for the payment of any commission or fees in
connection with a direct lease between Landlord and Subtenant. Subtenant agrees
to indemnify, defend and hold Landlord, its partners, directors or officers and
their affiliates and/or subsidiaries harmless from and against any claims,
liability, losses or expenses, including attorneys' fees, court costs and
disbursements incurred by Landlord during settlement, at trial or on appeal, in
connection with any such direct lease.
8. In case of the violation by Tenant or Subtenant of any of the
covenants, agreements, terms, provisions and conditions hereof, Landlord may
give written notice of such violation to Tenant and/or Subtenant (such notice
to be delivered personally or by mail addressed to said parties at the
Premises), and if such violation
2
<PAGE> 3
shall not be discontinued or corrected within a reasonable time as specified in
such notice, Landlord may, in addition to Landlord's other remedies, revoke
this Consent. Reference in this Consent to any particular remedy shall not
preclude Landlord from any other remedy in law or in equity.
9. No alterations, additions (electrical or otherwise), or physical
changes shall be made in the Premises, or any part thereof, except pursuant to
the covenants, agreements, provisions, terms and conditions of the Lease.
10. Tenant and Subtenant agree that (i) a copy of the Sublease has
been furnished to Landlord; (ii) Landlord is not a party to the Sublease and is
not bound by the provisions thereof; and (iii) notwithstanding the foregoing,
the Sublease will not be modified or amended in any way without the prior
written consent of Landlord.
11. Tenant and Subtenant jointly and severally represent and agree
that Subtenant is financially responsible, of good reputation, and engaged in
a business which is in keeping with the standards of Landlord in those respects
for the Building and its occupancy.
12. Tenant agrees to pay over to Landlord from time to time upon
Landlord's request fifty percent (50%) of all consideration payable by
Subtenant to Tenant to the extent required by Section 48.4 of the Lease. Tenant
and Subtenant represent and warrant to Landlord that no compensation of any
kind other than as set forth in the Sublease has been or will be paid by
Subtenant to Tenant in connection with the Sublease. Tenant and Subtenant agree
to provide sworn statements to Landlord within five (5) days after Landlord's
request therefor showing the rent actually charged by Tenant to Subtenant and
in connection therewith Landlord shall be authorized to examine, copy and audit
all pertinent books and records of Tenant and Subtenant which Tenant and
Subtenant agree to produce at their sole cost and expense at the request of
Landlord. If Landlord's review of any of said books or records discloses that
compensation other than as set forth in the Sublease has been paid by Subtenant
to Tenant, Tenant shall promptly pay fifty percent (50%) thereof to Landlord
together with interest at the highest rate allowed under law and the cost of
Landlord's review.
13. Tenant agrees that it is solely responsible for obtaining all
permits and approvals required by any governmental or quasi-governmental agency
for any work or otherwise required in connection with the Sublease. Upon
execution of the Consent, Tenant shall pay to Landlord $3,000.00, as
additional rent, pursuant to Section 48.9 of the Lease. Tenant hereby agrees
that said $3,000.00 charge is fair and reasonable.
14. If Tenant breaches any of the terms and provisions of the Lease,
Landlord may elect, under N.J.S.A. 2A:42-4, as same may be amended, to receive
directly from Subtenant all sums due or payable to Tenant by Subtenant pursuant
to the Sublease, and upon receipt of Landlord's notice, Subtenant shall
thereafter pay to Landlord any and all sums becoming due or payable under the
Sublease and Tenant shall receive from Landlord a corresponding credit for such
sums against any payments then due or thereafter becoming due from Tenant.
Neither the giving of such written notice nor the receipt of such direct
payments shall cause Landlord to assume any of Tenant's duties, obligations
and/or liabilities under the Sublease, nor shall such event impose upon
Landlord the duty or obligation to honor the Sublease nor subsequently to
accept Subtenant's attornment pursuant to Sections 6 and 7 hereof.
15. Tenant and Subtenant agree that if Subtenant breaches any term
of the Sublease, Landlord may, at its option and for its own sole benefit,
exercise against Subtenant all or any of the rights and remedies that Tenant
has against Subtenant at law, in equity or
3
<PAGE> 4
under the Sublease. Tenant acknowledges that the exercise by Landlord of all or
any of the foregoing rights and remedies against Subtenant shall not preclude
Landlord from pursuing any right or remedy against Tenant. The exercise by
Landlord against Subtenant of any or all of Tenant's rights and remedies shall
neither cause Landlord to assume any of Tenant's duties, obligations and/or
liabilities under the Sublease nor impose upon Landlord the duty or obligation
to honor the Sublease nor subsequently to accept Subtenant's attornment
pursuant to Sections 6 and 7 hereof.
16. Tenant agrees to hold any and all payments due under the Sublease
as a trust fund to be applied first to the satisfaction of all of Tenant's
obligations under the Lease and hereunder before using any part thereof for any
other purpose.
17. This Consent may not be changed orally, but only by an agreement
in writing signed by the party against whom enforcement of any change is sought.
18. This Consent shall not be binding upon Landlord unless and until
it is signed by Landlord.
19. Alexander & Alexander Services Inc. ("Guarantor") executed a
Guaranty dated October 7, 1986 in favor of Landlord. By executing this Consent,
Guarantor confirms and ratifies, pursuant to Paragraph 2.(f) of the Guaranty,
that the obligations of Guarantor under the Guaranty shall continue to apply to
all of the terms and provisions of the Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Consent to be
duly executed as of the 18th day of June, 1997.
LANDLORD:
WITNESSED BY: MEADOWLANDS ASSOCIATES
By: ARC Meadowlands Associates,
General Partner
By: ARC Meadowlands, Inc.,
/s/ Michael Melager General Partner
- --------------------------
Name: M. Melager By: /s/ M. Futterman
-------------------- -----------------
(Please Print) Michael Futterman
President
AGENT FOR LANDLORD:
ATTESTED BY: BELLEMEAD MANAGEMENT CO., INC.
/s/ Marc Leonard Ripp By: /s/ Samuel Ketive
- ------------------------- ---------------------------
Marc Leonard Ripp Samuel Ketive
Assistant Secretary Senior Vice President
APPLY CORPORATE SEAL HERE
TENANT:
ATTESTED BY: ALEXANDER & ALEXANDER CONSULTING
GROUP, INC.
/s/ Arlene Jeschke By: /s/ Jerome S. Hanner
- ------------------------- ---------------------------
Name: Arlene Jeschke Name: Jerome S. Hanner
------------------ --------------------
(Please Print) (Please Print)
Title: Assistant Secretary Title: Vice President
--------------------
(Please Print)
APPLY CORPORATE SEAL HERE
4
<PAGE> 5
SUBTENANT:
ATTESTED BY: MOVADO GROUP, INC.
/s/ Timothy F. Michno By: /s/ Efraim Grinberg
- ------------------------- ---------------------------
Name: Timothy F. Michno Name: Efraim Grinberg
------------------ --------------------
(Please Print) (Please Print)
Title: Corporate Secretary Title: President
--------------------
(Please Print)
GUARANTOR:
ATTESTED BY: ALEXANDER & ALEXANDER SERVICES INC.
/s/ Arlene Jeschke By: /s/ Jerome S. Hanner
- ------------------------- ---------------------------
Name: Arlene Jeschke Name: Jerome S. Hanner
------------------ --------------------
(Please Print) (Please Print)
Title: Assistant Secretary Title: Vice President
--------------------
(Please Print)
APPLY CORPORATE SEAL HERE
5
<PAGE> 6
EXHIBIT A
SUBLEASE AGREEMENT
This SUBLEASE AGREEMENT ("Sublease") is made and entered into as of the
7th day of May, 1997 by and between Alexander & Alexander Consulting Group,
Inc., a New Jersey corporation ("Sublandlord") and Movado Group, Inc., a New
York Corporation ("Subtenant").
WHEREAS, Meadowlands Associates, a New Jersey Limited Partnership as
landlord ("Landlord"), and Sublandlord as tenant ("Tenant"), entered into a
Lease dated October 7, 1986 as modified pursuant to the First Amendment of
Lease dated October 27, 1986 and the Second Amendment of Lease dated December
28, 1993 collectively known as ("Master Lease") whereby Landlord leased
portions of the second floor and the fifth floor containing 74,303 rentable
square feet ("Master Premises") of the building located at 125 Chubb Avenue,
Lyndhurst, New Jersey (the "Building"), as more particularly described in the
Master Lease, upon the terms and conditions contained therein. All capitalized
terms used herein shall have the same meaning ascribed to them in the Master
Lease unless otherwise defined herein. A copy of the Master Lease is attached
hereto as Exhibit "A" and made a part hereof.
WHEREAS, Sublandlord and Subtenant are desirous of entering into a
sublease for a portion of the Master Premises on the fifth floor shown
cross-hatched in black on the demising plan annexed hereto as Exhibit "B" and
made a part hereof ("Sublease Premises") on the terms and conditions hereafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually
covenant and agree as follows:
1. Demised Premises. Sublandlord hereby subleases and demises
to Subtenant and Subtenant hereby hires and subleases from Sublandlord the
Sublease Premises (which the parties stipulate contain 17,862 rentable square
feet), upon and subject to the terms, covenants and conditions hereinafter set
forth. The Parties agree that the Licensed Area (as defined in section 21 and
as set forth on Exhibit "C" hereto) contains 625 rentable square feet. For the
duration of Sublandlord's use of the Licensed Area, notwithstanding anything to
the contrary contained herein, the Base Rental shall be $22,986.67/month.
Page 1
<PAGE> 7
2. Lease Term.
(a) Lease Term. The term of this Sublease ("Term") shall be for a
term, commencing May 1, 1997, or on any later date upon which Landlord consents
to such Sublease and Sublandlord vacates the Sublease Premises (except the
Computer Room, as hereinafter defined) and notifies Subtenant ("Sublease
Commencement Date") and ending, unless sooner terminated as provided herein, on
July 30, 1999 ("Sublease Expiration Date").
3. Use. The Sublease Premises shall be used and occupied by Subtenant
for executive and administrative office use in compliance with the Master Lease
and for no other purpose.
4. Subrental.
(a) Base Rental. Subject to Section 1 and provided that Landlord has
consented to this Sublease, beginning with the Sublease Commencement Date and
thereafter during the Term of this Sublease and ending on the Sublease
Expiration Date, subtenant shall pay to Sublandlord $23,816.00/Month
($16.00/RSF/Annum) in monthly installments of base rent ("Base Rental").
The first monthly installment of Base Rental shall be paid by
Subtenant upon the execution of this Sublease. Base Rental and additional rent
(including without limitation, late fees) shall hereinafter be collectively
referred to as "Rent." Notwithstanding the above, Subtenant shall have the Base
Rental abated for the first 45 days of the Term from the Sublease Commencement
Date.
(b) Prorations. If the Sublease Commencement Date is not the first
(1st) day of a month, or if the Sublease Expiration Date is not the last day
of a month, a prorated installment of monthly Rent based on a thirty (30) day
month shall be paid for the fractional month during which the Term commenced
or terminated.
(c) Additional Rent. Beginning with the Sublease Commencement Date
and continuing to the Sublease Expiration Date, Subtenant shall pay to
Sublandlord as additional rent for this subletting all special or after-hours
cleaning, heating, ventilating, air-conditioning, elevator and other Building
charges incurred at the request of, or on behalf of, Subtenant, or with respect
to the Sublease Premises and all other additional expenses, costs and charges
payable to Landlord in connection with Subtenant's use of the Sublease Premises.
Page 2
<PAGE> 8
(d) Operating Expenses. Beginning with the Sublease Commencement Date and
thereafter during the Term of this Sublease, Subtenant shall pay to Sublandlord
as additional rent for this subletting an amount equal to 6.41% ("Subtenant's
Share") of the excess of Building Operating Costs (as set forth in Article 36 of
the Master Lease) for the Building for 1998 and any subsequent calendar year
over the total amount of Building Operating Costs for the Building incurred by
Landlord during calendar year 1997 ("Base Year") pursuant to the terms and
conditions of the Master Lease. Subtenant's Share is a percentage which reflects
the ratio of the rentable square feet in the Sublease Premises to the rentable
square feet in the Building.
(e) Real Estate Taxes. Beginning with the Sublease Commencement Date and
thereafter during the Term of this Sublease, Subtenant shall pay to Sublandlord
as additional rent for this subletting 6.41% ("Subtenant's Share") of the excess
of Real Estate Taxes (as set forth in Article 36 of the Master Lease) for the
Building for 1998 and any subsequent calendar year over the total amount of Real
Estate Taxes for the Building incurred by Landlord during the Base Year pursuant
to the terms and conditions of the Master Lease. Subtenant's Share is a
percentage which reflects the ratio of the rentable square feet in the Sublease
Premises to the square feet in the Building.
(f) Payment of Rent. Except as otherwise specifically provided in this
Sublease, Base Rental shall be payable in lawful money without demand, and
without offset, counterclaim, or set off in monthly installments, in advance, on
the first day of each and every month during the Term of this Sublease.
Additional rent shall be paid to Sublandlord within twenty (20) days after
receipt of a statement setting out such additional rent amounts then due, such
payments to be made in both monthly estimated installments and annual
adjustments. All of said Rent is to be paid to Sublandlord at its office at the
address set forth in Section 11 herein, or at such other place or to such agent
and at such place as Sublandlord may designate by notice to Subtenant. Any
additional rent payable (including electric unless paid directly to the utility
company) on account of items which are not payable monthly by Sublandlord to
Landlord under the Master Lease is to be paid to Sublandlord as and when such
items are payable by Sublandlord to Landlord under the Master Lease unless a
different time for payment is elsewhere stated herein. Upon written request
therefor, Sublandlord agrees to provide Subtenant with copies of any statements
or invoices received by Sublandlord from Landlord pursuant to the terms of the
Master Lease.
(g) Late Charge. Subtenant shall pay to Sublandlord an administrative
charge at an annual interest rate equal to the prime rate
Page 3
<PAGE> 9
charged by Citibank, N.A., plus two percent (2%) ("Interest Rate") on all
past-due amounts of Rent payable hereunder, such charge to accrue from the date
upon which such amount was due until paid.
5. Parking. Subtenant shall have the right, during the Term of this
Sublease to use up to 45 spaces in the parking areas serving the Building. All
such parking privileges shall be subject to the terms and conditions set forth
in Article 43 of the Master Lease.
6. Incorporation of Terms of Master Lease.
(a) This Sublease is subject and subordinate to the Master Lease.
Subject to the modifications set forth in this Sublease, the terms of the Master
Lease are incorporated herein by reference, and shall, as between Sublandlord
and Subtenant (as if they were Landlord and Tenant, respectively, under the
Master Lease) constitute the terms of this Sublease except to the extent that
they are inapplicable to, inconsistent with, or modified by, the terms of this
Sublease. In the event of any inconsistencies between the terms and provisions
of the Master Lease and the terms and provisions of this Sublease, the terms and
provisions of this Sublease shall govern. Subtenant acknowledges that it has
reviewed the Master Lease and is familiar with the terms and conditions thereof.
(b) For the purposes of incorporation herein, the terms of the Master
Lease are subject to the following additional modifications:
(i) In all provisions of the Master Lease (under the terms
thereof and without regard to modifications thereof for purposes of
incorporation into this Sublease) requiring the approval or consent of Landlord,
Subtenant shall be required to obtain the approval or consent of both
Sublandlord and Landlord.
(ii) In all provisions of the Master Lease requiring Tenant to
submit, exhibit to, supply or provide Landlord with evidence, certificates, or
any other matter or thing, Subtenant shall be required to submit, exhibit to,
supply or provide, as the case may be, the same to both Landlord and
Sublandlord. In any such instance, Sublandlord shall determine if such
evidence, certificate or other matter or thing shall be satisfactory.
(iii) Sublandlord shall have no obligation to restore or rebuild
any portion of the Sublease Premises after any destruction or taking by eminent
domain.
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<PAGE> 10
(c) The following provisions of the Master Lease are specifically
excluded in their entirety: Article 33, Article 38, Article 46 (Broker),
Article 60, Article 61 and Article 62.
(d) Sublandlord affirms that so long as Subtenant is not in default
beyond any applicable grace periods, Sublandlord shall not exercise its rights
under second amendment, Article 11.
(e) Sublandlord represents that the Master Lease is (and will be on
the Sublease Commencement Date) in full force and effect, without modification,
and Sublandlord is not in default thereunder, nor is Landlord, and Sublandlord
has received no notice of default thereunder which remains uncured. Sublandlord
represents that it has not made any claims upon the Landlord.
7. Subtenant's Obligations. Subtenant covenants and agrees that all
obligations of Sublandlord under the Master Lease shall be done or performed by
Subtenant with respect to the Sublease Premises, except as otherwise provided by
this Sublease, and Subtenant's obligations shall run to Sublandlord and Landlord
as Sublandlord may determine to be appropriate or be required by the respective
interests of Sublandlord and Landlord. Subtenant agrees to indemnify
Sublandlord, and hold it harmless, from and against any and all claims, damages,
losses, expenses and liabilities (including reasonable attorneys' fees) incurred
as a result of the non-performance, non-observance or non-payment of any of
Subtenant's obligations under this Sublease. If Subtenant makes any payment to
Sublandlord pursuant to this indemnity, Subtenant shall be subrogated to the
rights of Sublandlord concerning said payment. Subtenant shall not do, nor
permit to be done, any act or thing which is a default under this Sublease or
the Master Lease.
8. Sublandlord's Obligations. Sublandlord agrees that Subtenant shall be
entitled to receive all services and repairs to be provided by Landlord to
Sublandlord under the Master Lease. Subtenant shall look solely to Landlord for
all such services and shall not, under any circumstances, seek nor require
Sublandlord to perform any of such services, nor shall Subtenant make any claim
upon Sublandlord for any damages which may arise by reason of Landlord's default
under the Master Lease. Any condition resulting from a default by Landlord shall
not constitute as between Sublandlord and Subtenant an eviction, actual or
constructive, of Subtenant unless such condition constitutes an eviction, actual
or reconstructive, as between Sublandlord and Landlord and no such default shall
excuse Subtenant from the performance or observance of any of its obligations to
be performed or observed under this Sublease, or entitle Subtenant to receive
any reduction in or abatement of the Rent provided for in tis Sublease unless
such default
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excuses Sublandlord from the performance or observation of any of its
obligations under the Master Lease or entitles Sublandlord to receive any
reduction or abatement of Minimum Rent under the Master Lease. In furtherance of
the foregoing, Subtenant does hereby waive any cause of action and any right to
bring any action against Sublandlord by reason of any act or omission of
Landlord under the Master Lease. Sublandlord covenants and agrees with
Subtenant that Sublandlord will pay all fixed rent and additional rent payable
by Sublandlord pursuant to the Master Lease and perform all other obligations
of Sublandlord under the Master Lease with respect to the balance of the Master
Premises outside of the Sublease Premise to the extent that failure to perform
the same would adversely affect Subtenant's use or occupancy of the Sublease
Premises.
(a) If Landlord shall fail to observe or perform any of the
terms, covenants, conditions or agreements of the Master Lease, Subtenant, at
its sole cost and expense, shall be entitled to take or commence such actions as
are appropriate to enforce Landlord's observance or performance. Sublandlord
agrees to cooperate with Subtenant in the prosection of said actions provided,
however, that Subtenant hereby indemnifies and holds harmless Sublandlord from
any claim, liability or expense incurred by or threatened against Sublandlord by
reason of any such action taken by Subtenant (other than liability or expense
caused by Sublandlord's actions or omissions).
9. Default by Subtenant. In the event Subtenant shall be default of any
covenant of, or shall fail to honor any obligation under, this Sublease,
Sublandlord shall have available to it against Subtenant all of the remedies
available (a) to Landlord under the Master Lease in the event of a similar
default on the part of Sublandlord thereunder or (b) at law.
10. Quiet Enjoyment. So long as Subtenant pays all of the Rent due
hereunder and performs all of Subtenant's other obligations hereunder, Subtenant
shall have the right to peaceably and quietly have, hold and enjoy the Sublease
Premises.
11. Notices. Anything contained in any provision of this Sublease to the
contrary notwithstanding (other than the payment of Rent, as to which Subtenant
shall have the right to cure within the period of time set out in Section 4
hereof, Subtenant agrees, with respect to the Sublease Premises, to comply with
and remedy any default in this Sublease or the Master Lease which, under the
terms of this Sublease, is Subtenant's obligation to cure, within the period
allowed to Sublandlord under the Master Lease even if such time period is
shorter than the period otherwise allowed therein due to the fact that notice of
default from Sublandlord to Subtenant is given after the corresponding notice of
default from Landlord to Sublandlord; provided that
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Sublandlord shall have forwarded to Subtenant, promptly upon receipt thereof by
Sublandlord, a copy of each notice of default received by Sublandlord in its
capacity as Tenant under the Master Lease. Subtenant agrees to forward to
Sublandlord, promptly upon receipt thereof, copies of any notices received by
Subtenant from Landlord or from any governmental authorities. All notices,
demands and requests shall be in writing and shall be sent either by hand
delivery or by a nationally recognized overnight courier service (e.g., Federal
Express), in either case return receipt requested, to the address of the
appropriate party. Notices, demands and requests so sent shall be deemed given
when the same are received. Notices to Sublandlord shall be sent to the
attention of:
Alexander & Alexander Inc.
10461 Mill Run Circle
Owings Mills, Maryland 21117-5500
Attn: William F. Mulroy
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Patrick G. Moran
Notices to Subtenant shall be sent to the attention of:
Movado Group, Inc.
125 Chubb Avenue
Lyndhurst, New Jersey 07071
Attn: Richard Buonocure
Copy to: General Counsel
12. Broker. Sublandlord and Subtenant represent and warrant to each
other that, with the exception of LaSalle Partners ("Broker"), no brokers were
involved in connection with the negotiation or consummation of this Sublease.
Sublandlord agrees to pay a commission of the Broker pursuant to a separate
agreement. Each party agrees to indemnify the other, and hold it harmless, from
and against any and all claims, damages, losses, expenses and liabilities
(including reasonable attorneys' fees) incurred by said party as a result of a
breach of this representation and warranty by the other party.
13. Condition of Premises. Subtenant acknowledges that it is
subleasing the Sublease Premises "as-is" on the date hereof and that
Sublandlord is not making any representation or warranty concerning the
condition of the Sublease Premises and that Sublandlord is not obligated to
perform any work to prepare the Sublease Premises for Subtenant's
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occupancy provided, however, that the Sublandlord shall, at its expense,
promptly repair any damage to the Sublease Premises arising out of any act or
omission of Sublandlord or its employees, agents, officers, directors,
representatives or contractors prior to the Sublease Commencement Date.
Subtenant acknowledges that it is not authorized to make or do any alterations
or improvements in or to the Sublease Premises except as permitted by the
provisions of this Sublease and the Master Lease and that it must deliver the
Sublease Premises to Sublandlord on the Sublease Expiration Date in same
condition as they existed on the Sublease Commencement Date unless Landlord has
waived its right to require removal of such alterations and improvements made by
Subtenant.
14. Consent of Landlord. Article 48 of the Master Lease requires
Sublandlord to obtain the written consent of Landlord to this Sublease.
Sublandlord shall solicit Landlord's consent to this Sublease promptly
following the execution and delivery of this Sublease by Sublandlord and
Subtenant. In the event Landlord's written consent to this Sublease has not
been obtained within ninety (90) days after the execution hereof, then this
Sublease may be terminated by either party hereto upon notice to the other, and
upon such termination neither party hereto shall have any further rights
against or obligations to the other party hereto. Neither Sublandlord nor
Subtenant shall be obligated to incur any cost or expense in obtaining
Landlord's consent, Subtenant agrees to execute the attornment agreement
described in Section 48.5 of the Master Lease if Landlord so requests.
15. Termination of the Lease. If for any reason the term of the
Master Lease shall terminate prior to the Sublease Expiration Date, this
Sublease shall automatically be terminated and Sublandlord shall not be liable
to Subtenant by reason thereof unless said termination shall have been caused
by the default of Sublandlord under the Master Lease, and said Sublandlord
default was not as a result of a Subtenant default thereunder.
16. Assignment and Subletting.
(a) Independent of and in addition to any provisions of the
Master Lease, including without limitation the obligation to obtain Landlord's
consent to any assignment, it is understood and agreed that Subtenant shall
have no right to sublet the Sublease Premises or any portion thereof or any
right or privilege appurtenant thereto; provided, however, that Subtenant shall
have the right to assign this Sublease or any interest therein, and to suffer
or permit any other person to occupy or use the Sublease Premises, only upon
the prior written consent of Sublandlord and Landlord, which consent shall not
be unreasonably withheld. Any assignment by Subtenant without Sublandlord's
prior written consent shall be void and shall, at the option of Sublandlord,
terminate this Sublease.
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(b) Subtenant shall advise Sublandlord by notice of (i) Subtenant's
intent to assign this Sublease, (ii) the name of the proposed assignee and
evidence reasonably satisfactory to Sublandlord that such proposed assignee is
comparable in reputation, stature and financial condition to tenants then
leasing comparable space in comparable buildings, and (iii) the terms of the
proposed assignment. Sublandlord shall, within thirty (30) days of receipt of
such notice, and any additional information requested by Landlord concerning the
proposed assignee's financial responsibility, elect one of the following:
(i) Consent of such proposed assignment;
(ii) Refuse such consent, which refusal shall be on
reasonable ground; or
(iii) Elect to terminate the Sublease.
(c) In the event that Sublandlord shall consent to an assignment
under the provisions of this Section 16, Subtenant shall pay Sublandlord's
reasonable processing costs and reasonable attorneys' fees incurred in giving
such consent. Notwithstanding any permitted assignment, Subtenant shall at all
times remain directly, primarily and fully responsible and liable for all
payments owed by Subtenant under the Sublease and for compliance with all
obligations under the terms, provisions and covenants of the Sublease. If for
any proposed assignment, Subtenant receives Rent or other consideration, either
initially or over the term of the assignment, in excess of the Rent required by
this Sublease, after a deduction for the following: (a) any brokerage
commission paid by Subtenant in connection therewith and (b) any reasonable
attorneys' fees in connection with preparing and negotiating an assignment
document ("Profit"), Subtenant shall pay to Sublandlord as additional Rent,
fifty percent (50%) of such Profit or other consideration received by Subtenant
within five (5) days of its receipt by Subtenant or, in the event the assignee
makes payment directly to Sublandlord, Sublandlord shall refund fifty percent
(50%) of the Profit to Subtenant after deducting (a) and (b) above.
(d) Occupancy of all or part of the Sublease Premises by parent,
subsidiary, or affiliated companies of Subtenant shall not be deemed an
assignment or subletting provided that such parent, subsidiary or affiliated
companies were not formed as a subterfuge to avoid the obligation of this
Section. If Subtenant is a corporation, unincorporated association, trust or
general or limited partnership, then the sale, assignment, transfer or
hypothecation of any shares, partnership interest, or other ownership interest
of such entity or the dissolution, merger, consolidation, or other
reorganization
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of such entity, or the sale, assignment, transfer or hypothecation of the
assets of such entity, shall not be deemed an assignment or sublease subject to
the provisions of this Section.
19. Limitation of Estate. Subtenant's estate shall in all
respects be limited to, and be construed in a fashion consistent with, the
estate granted to Sublandlord by Landlord. In the event Sublandlord is
prevented from performing any of its obligations under this Sublease by a
breach by Landlord of a term of the Master Lease, then Sublandlord's sole
obligation in regard to its obligation under this Sublease shall be to use
reasonable efforts in diligently pursuing the correction or cure by Landlord of
Landlord's breach.
20. Security Deposit.
(a) For the period commencing on the date hereof and
continuing until the Sublease Expiration Date, Subtenant shall maintain in
effect an irrevocable, standby letter of credit from a bank satisfactory to
Sublandlord, naming Sublandlord as beneficiary in the sum of $23,816.00 as
security for the due and faithful payment as herein provided of the rent,
additional rent, charges and damages payable by Subtenant under this Sublease
or pursuant to law or for the due and faithful keeping, observance and
performance of all other covenants, agreements, terms, provisions and
conditions of this Sublease on the part of Subtenant to be kept, observed and
performed. If, at any time, Subtenant shall be in default beyond any applicable
notice and cure period in the payment of any such monies or in the keeping,
observance or performance of any such other covenant, agreement term,
provision or condition or such letter of credit if not renewed within 30 days
prior to its stated expiration date, Sublandlord may draw upon such letter of
credit by presenting a sight draft and a statement certifying that such a
default or failure to renew has occurred and, at its election, either hold such
amount as security or apply such amount to the payment of any such monies or to
the payment of the costs incurred by Sublandlord in curing such default, as the
case may be. If, as a result of any such application of all or any part of such
security, the amount of such letter of credit shall be less than $23,816.00
Subtenant shall forthwith deposit with Sublandlord cash in an amount equal to
the deficiency.
(b) On the Sublease Expiration Date, provided Subtenant is
not then in default beyond any applicable notice and cure periods under the
terms of this Sublease, the full amount of any cash security deposit (to the
extent not otherwise applied in accordance with the provisions hereof) plus
(subject to the Service Charge deduction) any interest earned thereon shall be
returned to Subtenant along with the letter of credit. In the event Subtenant is
in default on the Sublease Expiration Date, such date shall be extended by the
applicable notice and cure period, it being understood that if
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Subtenant does not then timely cure any such default. Subtenant's right to have
the cash security deposit returned shall be waived and Sublandlord may retain
such cash security deposit and may draw upon the letter of credit and retain
the proceeds thereof.
21. Sublandlord License. In accordance with the terms contained in this
Section 21, from the date hereof until August 1, 1997 or such earlier date as
Sublandlord shall vacate such space, Sublandlord shall have the right and
license to enter upon and use that portion of the Sublease Premises delineated
by cross hatching in Exhibit "C" hereto which prior to the date hereof was used
by Sublandlord as a location for certain computer equipment (the "Licensed
Area"). Sublandlord shall have the right to use the computer equipment located
therein on the date hereof. Sublandlord shall have the right to access, enter
upon and use the Licensed Area during normal business hours and Subtenant shall
provide card keys for such unrestricted access to the Licensed Area provided,
however, that in the event of an emergency Sublandlord shall give prior notice
to Subtenant's Director of Security at pager number 1 (800) 759-7243 x
16046115. Sublandlord will defend indemnify and hold Subtenant harmless from
any and all claims, liability, damage, cost, expense (including reasonable
attorney fees) arising out of or in connection with any act or omission of
Sublandlord during Sublandlord's use of the Licensed Area.
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22. Entire Agreement. It is understood and acknowledged that
there are no oral agreements between the parties hereto affecting this
Sublease and this Sublease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if
any, between the parties hereto or displayed by Sublandlord to Subtenant
with respect to the subject matter thereof, and none thereof shall be
used to interpret or construe this Sublease. This Sublease, the exhibits
and schedules attached hereto and that certain letter agreement dated as
of the date herewith pursuant to which Sublandlord grants Subtenant the
right to use certain furniture and equipment in the Sublease Premises,
contain all of the terms, covenants, conditions, warranties and
agreements of the parties relating in any manner to the rental, use and
occupancy of the Sublease Premises and shall be considered to be the
only agreements between the parties hereto and their representatives and
agents. None of the terms, covenants, conditions or provisions of this
Sublease can be modified, deleted or added to except in writing signed
by the parties hereto. All negotiations and oral agreements acceptable
to both parties have been merged into and are included herein. There are
no other representations or warranties between the parties, with respect
to the subject matter hereof except as contained in this Sublease.
IN WITNESS WHEREOF, the parties have entered into this Sublease as of
the date first written above.
SUBLANDLORD:
Alexander & Alexander Consulting Group, Inc.,
a New Jersey corporation
By: /s/ Jerome S. Hanner
-------------------------------------
Jerome S. Hanner
Its: Vice President
SUBTENANT:
The Movado Group, Inc.
a New York Corporation
By: /s/ E. Grinberg
-------------------------------------
E. Grinberg
Its: President
<PAGE> 18
EXHIBIT A
SECOND AMENDMENT OF LEASE
SECOND AMENDMENT OF LEASE dated as of December 28, 1993 between
MEADOWLANDS ASSOCIATES, a New Jersey limited partnership, having an address c/o
Bellemead Management Co., Inc., 4 Becker Farm Road, Roseland, New Jersey 07068
(hereinafter called "Landlord") and ALEXANDER & ALEXANDER CONSULTING GROUP,
INC., a New Jersey corporation having an address at 125 Chubb Avenue,
Lyndhurst, New Jersey 07071 (hereinafter called "Tenant").
W I T N E S S E T H:
WHEREAS:
A. Landlord and Tenant heretofore entered into a certain lease dated
October 7, 1986, as modified pursuant to a certain First Amendment of Lease
dated October 27, 1986 (said lease, as the same may be amended from time to
time, is hereinafter called the "Lease") with respect to premises on the second
(2nd) and fifth (5th) floors (the "Original Premises") of that certain office
building ("Building") known as and located at 125 Chubb Avenue, Lyndhurst, New
Jersey;
B. Tenant is desirous of increasing the size of the Demised Premises by
the addition of some 17,862 rentable square feet ("Additional Space") on the
fifth (5th) floor of the Building; and
C. The parties hereto desire to further modify the Lease in certain
respects.
NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto modify said Lease as follows:
1. All terms contained in this Second Amendment of Lease that are
defined in the Lease, shall, for the purposes hereof, have the same meaning
ascribed to them in the Lease.
2. Notwithstanding anything to the contrary contained in the Lease,
the term for the Additional Space only shall commence on the Additional Space
Commencement Date (as hereinafter defined) and shall terminate on a date which
is five (5) years after the Additional space Commencement Date (the "Additional
Space
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Termination Date"). Landlord shall deliver to Tenant a notice ("Additional
Space Commencement Notice") confirming, among other things, the Additional
Space Termination Date. Tenant shall acknowledge receipt of the Additional
Space Commencement Notice by signing a copy of same and returning it to
Landlord within five (5) days after Tenant's receipt thereof. For the purposes
hereof, the period commencing on the Additional Space Commencement Date and
ending on the Additional Space Termination Date shall be referred to as the
"Additional Space Term".
3. The Demised Premises shall be expanded to incorporate the Additional
Space on or about May 1, 1994 (the "Estimated Additional Space Commencement
Date"). Notwithstanding the above, the Additional Space commencement date (the
"Additional Space Commencement Date") shall be the date upon which the work
required to be performed by the Landlord pursuant to the Work Letter attached
hereto as Schedule A (the "Additional Space Work") shall be substantially
completed. The Additional Space Work shall be deemed to be substantially
completed for all proposes hereunder, on the date upon which:
(i) Landlord has procured a temporary or permanent Certificate
of Occupancy, permitting occupancy of the Additional Space by
the Tenant; and (ii) The Landlord's architects shall have
certified that Landlord has substantially performed the
Additional Space Work. Substantial completion shall be deemed to
have occurred even though minor details of work remain to be
done, provided such details do not materially interfere with the
Tenant's use of the Additional Space, subject to Tenants
punch-list items which Landlord agrees to complete within a
reasonable time period and if possible, within thirty (30) days
from the date of request.
Notwithstanding anything to the contrary contained herein, Tenant's
obligation to pay Minimum Rent for the Additional Space shall commence on May
1, 1994 (the "Additional Space Rent Commencement Date", subject only to
Landlord Delays and Force Majeure Events (as such terms are hereinafter defined
in Paragraph 8 hereof).
As of the Additional Space Commencement Date, Exhibit A (Rental Plan)
to the Lease shall be modified by incorporating the attached Schedule B so
that the Rental Plan to the Lease shall consist of the original Exhibit A and
the attached Schedule B.
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4. A] The Lease is hereby amended to provide that Tenant shall pay an
annual Minimum Rent for the Additional Space only as follows:
THREE HUNDRED THIRTY THOUSAND FOUR HUNDRED FORTY SEVEN AND 00/100
DOLLARS ($330,447.00) for the period commencing on the Additional
Space Commencement Date and ending on the Additional Space
Termination Date, payable in advance on the first day of each
calendar month in equal monthly installments of TWENTY SEVEN
THOUSAND FIVE HUNDRED THIRTY SEVEN AND 25/100 DOLLARS ($27,537.25).
B] In addition to the Minimum Rent for the Additional Space
described above, Tenant shall pay to Landlord during each month of the
Additional Space Term the sum of FIVE THOUSAND FIVE HUNDRED SIXTY ONE AND
79/100 DOLLARS ($5,561.79) (the "Construction Reimbursement"), payable in
advance on the first day of each calendar month commencing on the Additional
Space Commencement Date and ending on the Additional Space Termination Date.
The Construction Reimbursement described in this paragraph 4 B]
represents the repayment of the Additional Construction Credit (as hereinafter
defined) over the Additional Space Term at an interest rate of nine percent
(9%). Failure to pay all or any portion of the Construction Reimbursement shall
entitle Landlord to the same rights and remedies as may be imposed for failure
to pay Minimum Rent hereunder.
C] Tenant shall continue to pay the Adjusted Minimum Rent for the
Original Premises in accordance with the terms of the Lease.
5. At all times during the Additional Space Term, Section 36.2 of the
Lease shall be modified to provide that the Demised Premises shall contain
74,273 square feet and that the Occupance Percentage shall be 26.67%.
6. Section 36.1 (3) and (4)of the Lease shall be modified so that the
First Operating Year and the First Tax Year for the Additional Space only shall
mean the calendar year ending December 31, 1994.
7. At all times during the Additional Space Term, Section 43.1 of the
Lease shall be modified so that Tenant's License for Allotted Parking shall be
for two hundred three (203) cars.
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8. Tenant agrees that it shall either approve Landlord's drawings for
the Additional Space or provide to Landlord on or before January 31, 1994, such
drawings and specifications required by Landlord for Tenant's layout,
partitioning, electrical, reflecting ceiling and other installations for the
approval and acceptance of Landlord. Landlord shall furnish and install in
accordance with such drawings, so much of the work required by Tenant by the
above drawings as allowed by a construction credit to Tenant of $357,240.00
(the "Construction Credit"). In addition to the Construction Credit, Landlord
shall provide to Tenant an additional construction credit of $267,930.00 (the
"Additional Construction Credit") to be applied towards any additional work
that Tenant requires in the Additional Space. To the extent Tenant's drawings
require work, the cost of which exceeds the Construction Credit and the
Additional Construction Credit, such work shall be reduced to an "Extra" or
"Change Order" to be executed by both Landlord and Tenant, which shall indicate
the work required, the cost thereof to be paid by Tenant, and the additional
time required, if any, for completion. The portion, if any, of the Construction
Credit that remains not designated for expenditure as of the Additional Space
Commencement Date shall be forever forfeited. If any portion of the Additional
Construction Credit is not utilized, the Construction Reimbursement described
in Paragraph 4 (B) hereof shall be modified to reflect the actual sums
expended. Tenant shall be responsible for any delays in completing the
Additional Space by reason of Tenant's failure to cooperate with Landlord,
Tenant's delays in submitting any drawings or specifications, or in supplying
information, or in approving drawings, specifications or estimates, or in
giving authorizations, or by reason of any changes by Tenant in any
designations previously made by Tenant, or by reason of any similar acts or
omissions of Tenant ("Tenant Delays"). Landlord shall be responsible for any
delays in completing the Additional Space by reason of Landlord's failure to
cooperate with Tenant, Landlord's failure to construct the Additional Space
within a reasonable time
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frame or by reason of any similar acts or omissions of Landlord ("Landlord
Delays"). Any other cause or factor beyond the reasonable control of Landlord
or tenant, including but not limited to strikes or other labor disputes,
accidents, orders or regulations of any federal, state, county or municipal
authority, delays due to adjustment of insurance claims, lack of availability
of materials, parts or services, acts of God, fire, earthquake, floods,
explosion, action of the elements, war, hostilities, invasion, insurrection,
riot, mob violence, sabotage or any other similar cause that is beyond the
reasonable control of Landlord or Tenant shall be deemed to be force majeure
("Force Majeure Events").
9. Landlord agrees that for each trade to be subcontracted out in
connection with Landlord's construction of the Additional Space (except for
demolition, general drywall construction, carpeting and ceiling repair),
Landlord shall request bids from no fewer than three (3) subcontractors. In
addition, Landlord's profit derived from the construction of the Additional
Space shall be limited to the compounded sum of general conditions equal to 6%
of the total cost to prepare the Additional Space for Tenant's occupancy,
overhead equal to 5% of the total cost to prepare the Additional Space for
Tenant's occupancy and profit equal to 5% of the total cost to prepare the
Additional Space for Tenant's occupancy. Tenant may, upon request review any of
the subcontractor's bids in connection with the construction of the Additional
Space.
10. Tenant covenants, represents and warrants that no real estate
broker other than La Salle Partners (the "Broker") is responsible for bringing
about or negotiating this Second Amendment of Lease and Tenant has not dealt
with any broker other than the Broker in connection with the consummation of
this Second Amendment of Lease. Landlord represents and warrants that Landlord
has not dealt with any broker (other than the Broker) in connection with the
consummation of this Second Amendment of Lease. In accordance with the
foregoing representation, Tenant and Landlord each
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covenants and agrees to pay, defend, hold harmless and indemnify the other and
its directors, officers, partners, and their affiliates and/or subsidiaries
from and against any and all cost, expenses, including attorney's fees (in
settlement, at trial or on appeal), court costs and disbursements or liability
for any commission or other compensation claimed by any broker or agent acting
through or on behalf of Tenant or Landlord other than the Broker with
respect to this Second Amendment of Lease.
11. As of the date hereof, the following provision shall be applicable
to the Additional Space:
RENEWAL OPTION FOR ADDITIONAL SPACE
"11.1 Subject to the provisions of Section 11.2 below, Tenant shall
have the option to renew this Lease with respect to the Additional Space only
for an additional term commencing as of the date immediately following the
Additional Space Term and continuing through April 30, 2002 (the "Additional
Space Renewal Term"). The terms, covenants and conditions during the Additional
Space Term, including but not limited to the definitions of the First Tax Year
and First Operating Year as set forth in Paragraph 6 hereof, shall be projected
and carried over into the Additional Space Renewal Term, except as specifically
set forth hereinafter.
(a) The Minimum Rent during the Additional Space Renewal Term shall be
the greater of (i) Market Rent (as defined in clause (b) below) or (ii) the
Adjusted Minimum Rent for the Additional Space as of the last day of the
Additional Space Term.
(b) "Market Rent" shall mean the fair market rent for the Additional
Space, as of the commencement date of the Additional Space Renewal Term (the
"Determination Date"), based upon the rents generally in effect for comparable
office space in the area in which the Real Estate is located. Market Rent (for
the purposes of determining the Minimum Rent only during the Renewal Term)
shall be determined on what is commonly known as "gross" basis; that is, in
computing Market Rent, it shall be assumed that all real estate taxes and
expenses for customary services are included in such Market Rent and are not
passed through to the Tenant as separate additional charges. Notwithstanding
the foregoing, the Minimum Rent for the Renewal Term shall be thereafter
increased from time to time as provided in this Lease and the First Tax Year
and First Operating Year for the Additional Space Renewal Term shall be defined
as provided in Paragraph 6 hereof.
(c) Landlord shall notify Tenant ("Landlord's Determination Notice")
of Landlord's determination of the Market Rent within sixty (60) days of the
Determination Date. If Tenant disagrees with Landlord's determination, Tenant
shall notify Landlord ("Tenant's Notice of Disagreement") within fifteen (15)
days of receipt of Landlord's Determination Notice. Time shall be of the
essence with respect to Tenant's Notice of Disagreement, and the failure of
Tenant to give such notice within the time period set forth above shall
conclusively be deemed an acceptance by Tenant of the Market Rent as determined
by Landlord and a waiver by Tenant of any right to dispute such Market Rent. If
Tenant timely gives its Tenant's Notice of Disagreement, then the Market Rent
shall be determined as follows: Landlord and Tenant shall, within thirty (30)
days of the date on which Tenant's Notice of Disagreement was given, each
appoint an Appraiser (hereinafter
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defined) for the purpose of determining the Market Rent. An Appraiser shall mean
a duly qualified impartial real estate appraiser having at least ten (10) years'
experience in the area in which the Additional Space is located. In the event
that the two (2) Appraisers so appointed fail to agree as to the Market Rent
within a period of thirty (30) days after the appointment of the second
Appraiser, such two (2) Appraisers shall forthwith appoint a third Appraiser who
shall make a determination within thirty (30) days thereafter. If such two
Appraisers fail to agree upon such third Appraiser within ten (10) days
following the last thirty (30) day period, such third Appraiser shall be
appointed by a presiding Judge of the Superior Court of the State of New Jersey
for the County in which the Real Estate is located. Such two (2) Appraisers or
three (3) Appraisers, as the case may be, shall proceed with all reasonable
dispatch to determine the Market Rent for the Additional Space. The decision of
such Appraisers shall be final; such decision shall be in writing and a copy
shall be delivered simultaneously to Landlord and to Tenant. If such Appraisers
fail to deliver their decision as set forth above prior to the commencement of
the Additional Space Renewal Term, Tenant shall pay Landlord the Adjusted
Minimum Rent with respect to the Additional Space at the rate as of the last day
of the Additional Space Term, until such decision is so delivered. If the Market
Rent as determined above is in excess of the actual rent paid, then Tenant, upon
demand, shall pay to Landlord the difference between the actual rent paid and
the Market Rent from the commencement of the Additional Space Renewal Term.
Landlord and Tenant shall each be responsible for and shall pay the fee of the
Appraiser appointed by them respectively, and Landlord and Tenant shall share
equally the fee of the third Appraiser. Promptly upon determination of the
Market Rent, Tenant shall execute and deliver a Lease amendment prepared by
Landlord setting forth the terms of the Additional Space Renewal Term.
11.2 Tenant's option to renew for the Additional Space Renewal Term, as
provided in Section 11.1 above, shall be strictly conditioned upon and subject
to each of the following:
(a) Tenant shall notify Landlord in writing of Tenant's exercise of
its option to renew at least nine (9) months, but not more than twelve (12)
months, prior to the expiration of the Additional Space Term;
(b) At the time Landlord receives Tenant's notice as provided in (a)
above, and at the expiration of the Additional Space Term, Tenant shall not
have been in default under the terms or provisions of this Lease and the Tenant
shall not have subleased any portion of the Additional Space;
(c) It is the intention of the parties hereto that the Additional Space
Renewal Term shall be co-terminous with the expiration date of the Lease with
respect to the balance of the Demised Premises. Accordingly, so long as the
renewal option for the Additional Space Term is exercised by Tenant, the
Additional Space shall be deemed part of the Demised Premises for the purposes
of Tenant's right to renew the Lease for the Removal Term described in Section
60.1 of the Lease. Except as provided herein and in Section 60.1 of the Lease,
Tenant shall have no further renewal options with respect to the Additional
Space or the Demised Premises;
(d) This option to renew shall be deemed personal to the Tenant named
on the first and last page of this Lease and may not be assigned;
(e) Landlord shall have no obligation to do any work or perform any
services for the Additional Space Renewal Term with respect to the Additional
Space, the Demised Premises or the Building which Tenant agrees to accept in
their then "as is" condition; and
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(f) No later than ten (10) days prior to the commencement of
the Additional Space Renewal Term, Tenant shall deposit with Landlord such
additional sums as may be required to increase any security deposit then held
by Landlord proportionate to the increase in the Minimum Rent.
12. Except as modified by this Second Amendment of Lease, the Lease
and all covenants, agreements, terms and conditions thereof shall remain in
full force and effect and are hereby in all respects ratified and confirmed. The
terms and provisions of the Lease, as modified hereby, shall govern the
Tenant's occupancy and use of the Demised Premises as increased by the
Additional Space.
13. Tenant represents that the undersigned officer representative
of Tenant has been duly authorized on behalf of Tenant to enter into this
Second Amendment of Lease in accordance with the terms, covenants and
conditions set forth herein, and, upon Landlord's request, Tenant shall deliver
appropriate evidence of the accuracy of the foregoing representation.
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<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment of Lease as of the day and year first above written.
Signed, sealed and delivered LANDLORD:
IN THE PRESENCE OF OR MEADOWLANDS ASSOCIATES
ATTESTED BY: By: ARC Meadowlands Associates,
General Partner
By: ARC Meadowlands, Inc.,
General Partner
By: /s/ Michael Futterman
- ---------------------------- ------------------------------
Michael Futterman
President
TENANT:
ALEXANDER & ALEXANDER
CONSULTING GROUP, INC.
By: /s/ D.L. Sedes
- ---------------------------- ------------------------------
Name: Name: /s/ D.L. Sedes
---------------------- ------------------------
(Please Print) (Please Print)
Title: Corporate (Assistant) Title: /s/ President & CEO
Secretary -----------------------
(Please Print)
9
<PAGE> 27
The undersigned hereby reaffirms and reacknowledges that the certain
Guaranty dated October 7, 1986 from Alexander & Alexander Services, Inc. to
Meadowlands Associates applies with equal force and effect to the Additional
Space described herein.
ALEXANDER & ALEXANDER SERVICES, INC.
By: /s/ R.A. Kershaw
--------------------------------
The undersigned hereby reaffirms and reacknowledges that the certain
Guaranty dated October 7, 1986 from Alexander & Alexander, Inc. to Meadowlands
Associates applies with equal force and effect to the Additional Space
described herein.
ALEXANDER & ALEXANDER INC.
By: /s/ R.A. Kershaw
--------------------------------
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SCHEDULE A
(Additional Space Work)
To be mutually agreed upon at a later date, based upon plans and
specifications prepared by Tenant pursuant to Paragraph 8 hereof.
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<PAGE> 29
SHORT TERM LEASE
The Landlord and Tenant agree that Tenant shall lease the Rental Space for the
Term and at the Rent stated, as follows: (The words Landlord and Tenant include
all landlords and all tenants under this Lease.)
Landlord: MEADOWLANDS ASSOCIATES, a New Jersey limited partnership, having
an office c/o Bellemead Management Co., Inc., Four Becker Farm
Road, Roseland, New Jersey 07068
Tenant: ALEXANDER & ALEXANDER CONSULTING GROUP, INC., a New Jersey
corporation, having an address at 125 Chubb Avenue, Lyndhurst,
New Jersey 07071
Rental Space: A portion of the fifth (5th) floor consisting of 8,500 rentable
square feet, and more particularly shown on the Rental Plan
annexed hereto as Exhibit A.
Building: 125 Chubb Avenue, Lyndhurst, New Jersey
Date of Lease: As of January 1, 1994
Rent: The per annum base rent ("Rent" or "rent") for the Rental Space
shall be ONE HUNDRED FIFTY SEVEN THOUSAND TWO HUNDRED FIFTY AND
00/100 DOLLARS ($157,250.00) payable in advance on the first
(1st) day of each calendar month in equal monthly installments
of THIRTEEN THOUSAND ONE HUNDRED FOUR AND 17/100 DOLLARS
($13,104.17).
Term: January 1, 1994 ("Beginning of the Term") - Termination Date
(hereinafter defined in Section 30)
Security: None
Broker: Tenant represents that no real estate broker is responsible for
bringing about, or negotiating this Lease and that Tenant has
not dealt with any other broker in connection with the Rental
Space. In accordance with the foregoing representation, Tenant
agrees to defend, indemnify and hold harmless Landlord, its
affiliates and/or subsidiaries, partners and officers from any
expense or liability (including attorney's fees) arising out of
any claim for commission by any broker claiming or alleging to
have acted on behalf of or to have dealt with Tenant.
Insurance: Minimum amount:
$1,000,000.00 for each person injured; $1,000,000.00 for any
one accident; and $1,000,000.00 for property damage
Municipal Real
Estate Tax
Base Year: N/A
Base Year: N/A
Percent of
Increase: N/A
Use of
Rental Space: general, executive and administrative offices and for no other
purpose.
<PAGE> 30
1. POSSESSION AND USE
The Landlord shall give possession of the Rental Space to the Tenant
for the Term. The Tenant shall take possession of and use the Rental Space for
the purpose stated above. The Tenant may not use the Rental Space for any other
purpose without the written consent of the Landlord.
The Tenant shall not allow the Rental Space to be used for any unlawful
or hazardous purpose. The Tenant is satisfied that the Rental Space is zoned
for the Use stated. Landlord shall obtain any necessary certificate of
occupancy or other certificate permitting the Tenant to use the Rental Space
for that Use.
The Tenant shall not use the Rental Space in any manner that results in
(1) an increase in the rate of fire or liability insurance or (2) cancellation
of any fire or liability insurance policy on the Rental Space. The Tenant shall
comply with all requirements of the insurance companies insuring the Rental
Space. The Tenant shall not abandon the Rental Space during the Term of this
Lease or permit it to become vacant.
2. NO ASSIGNMENT OR SUBLETTING
The Tenant may not do any of the following without the Landlord's
written consent: (a) assign this lease (if the Tenant is a corporation, the
sale of the majority of its common shares shall be treated as an assignment),
(b) sublet all or any part of the Rental Space or (c) permit any other person
or business to use the Rental Space. Landlord may withhold consent at its sole
discretion.
3. RENT AND ADDITIONAL RENT
Tenant shall pay the rent to the Landlord at the Landlord's address. If
the Tenant fails to comply with any agreement in this Lease, the Landlord may
do so on behalf of the Tenant. The Landlord may charge the cost to comply,
including attorney's fees, to the Tenant as "additional rent". The additional
rent shall be due and payable upon Landlord's demand. Non-payment of additional
rent shall give Landlord the same rights against the Tenant as if the Tenant
failed to pay Rent.
4. SECURITY
N/A
5. LIABILITY INSURANCE
The Tenant shall obtain, pay for, and keep in effect for the benefit of
the Landlord and the Tenant public liability insurance on the Rental Space in
an amount no less than $1,000,000.00. The insurance company must be financially
reputable in the sole judgment of Landlord. This coverage must be in the
minimum amounts stated above.
All policies shall state that the insurance company cannot cancel or
refuse to renew without at least 30 days written notice to the Landlord.
The Tenant shall deliver the original insurance policy or a
certificate thereof to the Landlord with proof of payment of the first year's
premium. This shall be done not less than 5 days before the Beginning of the
Term. The Tenant shall deliver a renewal policy or a certificate thereof to the
Landlord with proof of payment not less than 5 days before the expiration date
each policy.
6. UNAVAILABILITY OF FIRE INSURANCE, RATE INCREASES
If due to the Tenant's use of the Rental Space the Landlord cannot
obtain fire insurance on the Building in an amount and form acceptable to the
Landlord, the Landlord may cancel this Lease on 10 days notice to the Tenant.
If due to the Tenant's use of the Rental Space the fire insurance rate is
increased, the Tenant shall pay the increase in the premium to the Landlord on
demand.
7. WATER DAMAGE
The Landlord shall not be liable for any damage or injury to any person
property caused by the leak or flow of water from or into any part of the
Building.
8. LIABILITY OF LANDLORD AND TENANT
The Landlord shall not be liable for injury or damage to any person or
property unless it is due to the Landlord's willful misconduct or gross
negligence. The Tenant shall defend the Landlord from and reimburse the
Landlord for all liability and cost resulting from any injury or damage due to
the act or neglect of the Tenant or the guests, including attorneys fees and
expenses.
9. REAL ESTATE TAXES
N/A
10. ACCEPTANCE OF RENTAL SPACE
The Tenant has inspected the Rental Space and agrees that the Rental
Space is in satisfactory condition. The Tenant accepts the Rental Space "as
is". Tenant acknowledges that neither Landlord nor any of its employees or
agents has made any representation concerning the condition of the Rental
Space.
11. QUIET ENJOYMENT
The Landlord has the right to enter into this Lease. If the Tenant
complies with this Lease, the Landlord must provide the Tenant with undisturbed
possession of the Rental Space, subject to any mortgage or ground leases.
12. UTILITIES AND SERVICES
There shall be no separate charge to Tenant for any utilities and
service required for the Rental Space.
The Landlord is not liable for any stoppage or reduction of utilities
and services beyond the reasonable control of the Landlord. This does not
excuse the Tenant from paying rent and additional rent.
13. TENANT'S REPAIRS, MAINTENANCE AND COMPLIANCE
The Tenant shall:
(a) Promptly comply with all laws, orders, rules and requirements of
governmental authorities, insurance carriers, board of fire underwriters, or
similar groups.
(b) Maintain the Rental Space and all equipment and fixtures in it in
good repair
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<PAGE> 31
and appearance.
(c) Make all necessary repairs to the Rental Space and all equipment
and fixtures in it.
(d) Maintain the Rental Space in neat, clean, safe and sanitary
condition free of all garbage.
(e) Keep the walks, driveway, parking area, yard, entrances, hallways
and stairs clean and free from trash and debris, snow and ice.
(f) Use all electric, plumbing and other facilities in the Rental
Space safely.
(g) Use no more electricity than the wiring or feeders to the Rental
Space can safely carry.
(h) Replace all broken glass in the Rental Space.
(i) Do nothing to destroy, deface, damage or remove any part of the
Rental Space.
(j) Keep no inflammable or dangerous things in the Rental Space.
(k) Promptly notify the Landlord when there are conditions which need
repair.
(l) Do nothing to destroy the peace and quiet of the Landlord, other
tenants, or persons in the neighborhood.
The Tenant shall pay any expenses involved in complying with the above.
14 LANDLORD'S REPAIRS AND MAINTENANCE
The Landlord shall:
(a) Maintain the public areas, roof and exterior walls in good
condition.
(b) Make all structural repairs unless these repairs are made necessary
by the act or neglect of the Tenant or the Tenant's employees, or their
invitees.
(c) Make necessary replacements of the plumbing, cooling, heating and
electrical systems, except when made necessary by the act or neglect of the
Tenant or the Tenant's employees, or their invitees.
(d) Maintain the elevators in the Building, if any.
15. NO ALTERATIONS
The Tenant may not make any changes or additions to the Rental Space
without the Landlord's written consent. Any changes or additions made without
the Landlord's written consent shall be removed by the Tenant on demand.
Landlord may withhold consent at its sole discretion.
All changes or additions made with the Landlord's written consent shall
become the property of the Landlord when completed and paid for by the Tenant.
They shall remain as part of the Rental Space at the end of the Term. The
Landlord may demand that the Tenant remove any changes or additions at the end
of the Term. The Tenant shall promptly pay for all costs of any changes or
additions. The Tenant shall not allow any mechanic's lien or other claim to be
filed against the Building. If any lien or claim is filed against the Building,
the Tenant shall have it promptly removed.
16. SIGNS
The Tenant shall obtain the Landlord's written consent before placing
any sign on or about the Rental Space. Signs must conform with all applicable
municipal ordinances and regulations. Landlord may withhold consent in its sole
discretion.
17. ACCESS TO RENTAL SPACE
The Landlord shall have access to the Rental Space on reasonable oral
or written notification to the Tenant to (a) inspect the Rental Space, (b) make
necessary repairs, alterations or improvements, (c) supply services, and (d)
show it to prospective buyers, mortgage lenders, contractors or insurers.
The Landlord may show the Rental Space to rental applicants at
reasonable hours on reasonable oral or written notification to the Tenant.
The Landlord may enter the Rental Space at any time without notice to
the Tenant in case of emergency.
18. FIRE AND OTHER CASUALTY
The Tenant is liable for the acts and neglect of the Tenant's
employees, or their invitees.
The Tenant shall notify the Landlord at once of any fire or other
casualty in the Rental Space. The Tenant is not required to pay rent when the
Rental Space is unusable. If part of the Rental Space can be used, the Tenant
must pay rent prorata for the usable part. If the fire or other casualty is
caused by the act or neglect of the Tenant, the Tenant shall pay for all
repairs and all other damage.
If the Rental Space is partially damaged by fire or other casualty
without the act or neglect of the Tenant, the Landlord shall repair it as soon
as possible. This includes the damage to the Rental Space and fixtures
installed by the Landlord. The Landlord need not repair or replace anything
installed by the Tenant.
Either party may cancel this Lease if the Rental Space is so damaged by
fire or other casualty that it cannot be repaired within 180 days. If the
parties cannot agree, the opinion of a contractor chosen by the Landlord and
the Tenant will be binding on both parties. The Tenant may not cancel this
Lease if the fire or other casualty is caused by the act or neglect of the
Tenant.
This Lease shall end if the Rental Space is totally destroyed by fire
or other casualty without the act or neglect of the Tenant. The Rent shall be
paid to the date of destruction.
19. EMINENT DOMAIN
Eminent domain is the right of a government to lawfully condemn and
take private property for public use. Fair value must be paid for the property.
The taking occurs either by court order or by deed to the condemning party. If
any part of the Rental Space is taken by eminent domain, either party may
cancel this Lease on 30 days notice to the other. The entire payment for the
taking shall belong to the Landlord. The Tenant shall make no claim for the
value of the remaining part of the
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<PAGE> 32
Term.
20. SUBORDINATION TO MORTGAGE
In a foreclosure sale all mortgages or ground leases which now or in the
future affect the Building have priority over this Lease. This means that the
holder of a mortgage or ground lease may end this Lease on a foreclosure sale.
The Tenant shall sign all papers needed to give any mortgage or ground lease
priority over this Lease. If the Tenant refuses, the Landlord may sign the
papers on behalf of the Tenant.
21. TENANT'S CERTIFICATE
At the request of the Landlord, the Tenant shall sign a certificate
stating that (a) this Lease has not been amended and is in effect, (b) the
Landlord has fully performed all of the Landlord's agreements in this Lease, (c)
the Tenant has no rights to the Rental Space except as stated in this Lease and
(d) the Tenant has paid all Rent to date. The Certificate shall also list all
the property attached to the Rental Space owned by the Tenant.
22. VIOLATION, EVICTION, RE-ENTRY AND DAMAGES
If the Tenant violates any agreement in this Lease, the Landlord has the
right to end this Lease and re-enter the Rental Space. If the Rental Space
becomes vacant, empty or abandoned or if Tenant shall have removed all or
substantially all of Tenant's property therefrom, the Landlord has the right to
end this Lease and re-enter the Rental Space. This is done by eviction. The
Landlord may also evict the Tenant for all other causes provided by law.
Eviction is a court procedure to remove a tenant. It is started by the filing of
a complaint in court and the service of a summons on a tenant to appear in
court. After a court order of eviction and compliance with the warrant of
removal, the Landlord may re-enter and take back possession of the Rental Space.
If the cause for eviction is non-payment of additional rent, notice does not
have to be given to the Tenant before the Landlord files a complaint. If there
is any other cause to evict, the Landlord must give to the Tenant the notice
required by law before the Landlord files a complaint.
The Tenant is liable for all damages caused by the Tenant's violation of
any agreement in this Lease. This includes lost future rents, attorney's fees
and costs.
After eviction the Tenant shall pay all rent due for the balance of the
Term. If the Landlord re-rents the Rental Space for less than the Tenant's Rent,
the Tenant shall pay the difference until the end of the Term. The Tenant shall
not be entitled to any excess resulting from the re-renting. The Tenant shall
also pay (a) all expenses incurred by the Landlord in preparing the Rental Space
for re-renting and (b) commissions paid to a broker for obtaining a new tenant.
23. NOTICES
All notices given under this Lease must be in writing. Unless otherwise
provided by law, they may be given by (a) personal delivery, or (b) certified
mail, return receipt requested. Each party must accept the certified mail sent
by the other. Notices shall be addressed to the Landlord at the address written
at the beginning of this Lease and to the Tenant at the Rental Space.
24. NO WAIVER
The Landlord's failure to enforce an agreement in this Lease does not
prevent the Landlord from enforcing the agreement as to any later violations.
25. SURVIVAL
If any agreement in this Lease is contrary to law, the rest of the Lease
shall remain in effect.
26. END OF TERM
At the end of the Term the Tenant shall (a) leave the Rental Space
clean, (b) remove all of the Tenant's property, (c) remove all signs and restore
that portion of the Rental Space on which they were placed, (d) repair all
damage caused by moving, and (e) return the Rental Space to the Landlord in the
same condition as it was at the Beginning of the Term.
If the Tenant leaves any property in the Rental Space, the Landlord may
(a) dispose of it and charge the Tenant for the cost of disposal, or (b) keep it
as abandoned property.
27. BINDING
This Lease binds the Landlord and the Tenant and all parties who
lawfully succeed to their rights or take their places.
28. FULL AGREEMENT
The parties have read this Lease. It contains their full agreement. It
may not be changed except in writing signed by the Landlord and the Tenant.
29. LIMITATION OF LANDLORD'S LIABILITY
Notwithstanding anything to the contrary herein provided, each and every
term, covenant, condition and provision of this Lease is hereby made
specifically subject to the provisions of this Section 29. The term "Landlord"
as used in this Lease means only the owner or lessor for the time being of the
Building, so that in the event of any conveyance of such interest and the
transfer to the transferee of any funds then being held under this Lease by such
owner, Landlord shall be and hereby is entirely freed and relieved of any and
all obligations of Landlord hereunder thereafter accruing, and it shall be
deemed without further agreement between the parties and such grantee(s) that
the grantee has assumed and agreed to observe and perform all obligations of
Landlord hereunder. It is specifically understood and agreed that
notwithstanding anything to the contrary herein provided or otherwise provided
at law or in equity, there shall be absolutely no personal liability in excess
of its interest in the Building to the Landlord or any successor in interest
thereto (whether the same be an individual, firm or partnership, general,
limited joint venture, tenancy in common, or otherwise) or on the part of the
members of any firm, partnership or joint venture or any other unincorporated
Landlord with respect to any of the terms, covenants and/or conditions of this
Lease. In the event of a breach or default by Landlord, or any successor in
interest, thereof, of any of its obligations under this Lease, Tenant shall look
solely to the then landlord for
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<PAGE> 33
the satisfaction of each and every remedy of Tenant, such exculpation of
personal and additional liability which is in excess of such interest in the
Building to be absolute and without any exception whatsoever.
30. TERMINATION
Tenant acknowledges and agrees that Landlord has entered into this Lease
as an accommodation to Tenant in connection with Tenant's execution of a second
amendment of lease for 17,862 rentable square feet of space on the fifth (5th)
floor of the Building (the "Additional Space Lease Amendment"). The term of this
Lease shall end ("Termination Date") on the earlier of (i) July 1, 1994 or (ii)
the date designated as the Additional Space Commencement Date (as such term is
defined in the Additional Space Lease Amendment). Tenant shall vacate and
surrender the Rental Space on or before the Termination Date in accordance with
Section 26 of this Lease.
31. SURRENDER
Tenant acknowledges that time is of the essence with respect to Tenant's
surrender, vacating, and removal from the Rental Space on or before the
Termination Date. Tenant shall be liable for all damages, costs and expenses,
including but not limited to attorney's fees, court costs and disbursements in
settlement, at trial and on appeal, incurred or suffered by Landlord as a result
of Tenant's failure to surrender, vacate and remove from the Rental Space on or
before the Termination Date. Nothing contained in this Section 31 should in any
way be deemed or construed to limit Landlord's rights pursuant to Section 22 of
the Lease.
32. FAILURE TO GIVE POSSESSION
If Landlord is unable to gain possession of the Rental Space at
Beginning of the Term because of holding-over or retention of possession any
tenant, undertenant or occupants because of the fact that a certificate
occupancy has not been procured or for other reason, Landlord shall not be
subject to any liability for failure to gain possession on the Beginning of the
Term the validity of the Lease shall not be impaired under such circumstances,
nor should the same be construed in any wise to extend the Term of this Lease,
but the rent payable hereunder shall be abated (provided Tenant is not
responsible for Landlord's inability to obtain possession) until after Landlord
shall have given Tenant written notice that the Rental Space is substantially
ready for Tenant's occupancy. If permission is given to Tenant to enter into the
possession of the Rental Space or to occupy premises other than the Rental Space
prior to the Beginning of the Term, Tenant covenants and agrees that such
occupancy shall be deemed to under all the terms, covenants, conditions and
provisions of this Lease.
IN WITNESS WHEREOF, Landlord has signed this Lease and Tenant by its
proper corporate officers, has signed this Lease as of the 28th day of December,
1993.
ATTESTED BY: Landlord:
MEADOWLANDS ASSOCIATES
By: ARC Meadowlands Associates,
General Partner
By: ARC Meadowlands, Inc.,
General Partner
By: /s/ Michael Futterman
- ---------------------------- ----------------------------
Michael Futterman, President
ATTESTED BY: Tenant:
ALEXANDER & ALEXANDER CONSULTING
GROUP, INC.
By: /s/ D.L. Secles
- ---------------------------- ----------------------------
Name: Name: D.L. Secles
----------------------- ----------------------
(Please Print) (Please Print)
Title: Corporate (Assistant) Title: President & CEO
Secretary ---------------------
(Please Print)
5
<PAGE> 34
Exhibit "A"
Rental Plan
<PAGE> 35
EXHIBIT A
STANDARD FORM OF OFFICE LEASE
AGREEMENTS OF LEASE, made as of this 7th day of October , 1986, between
MEADOWLANDS ASSOCIATES, a New Jersey limited partnership, having an office c/o
Bellemead Management Co., Inc., 4 Becker Farm Road, Roseland, New Jersey 07068
(the "Landlord"), and ALEXANDER & ALEXANDER CONSULTING GROUP INC., a New Jersey
corporation, having an address at 22-08 Route 208, Fairlawn, New Jersey 07410
(the "Tenant").
WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the entire north wing of the second floor and the entire north wing
of the fifth floor of a certain office building located at 125 Chubb Avenue,
Lyndhurst, New Jersey (the second floor space and the fifth floor space,
collectively, the "Premises" or "Demised Premises"), more particularly shown
upon the scaled Rental Plan annexed hereto and made a part thereof as Exhibit
"A", for a term commencing and terminating as set forth in Article 37 of the
Rider to Lease.
The minimum rent (the "Minimum Rent") for the Premises shall be payable
on the first day of each calendar month during the term of this lease as
follows:
A. During the period commencing on the Commencement Date (as defined in
Article 37 below) and ending on the date immediately preceding the fifth
anniversary of the Commencement Date, Minimum Rent shall be One Million Two
Hundred Forty-one Thousand Seven Hundred Two Dollars ($1,241,702.00) per annum,
payable in equal monthly installments of One Hundreds Three Thousand Four
Hundred Seventy-five Dollars and Seventeen Cents ($103,475.17) in advance on the
first day of each calendar month.
<PAGE> 36
2
B. During the period commencing on the fifth anniversary of the
Commencement Date and ending on the date immediately preceding the tenth
anniversary of the Commencement Date, Minimum Rent shall be One Million Five
Hundred Fifty-two Thousand One Hundred Twenty-seven Dollars and Fifty Cents
($1,552,127.50) per annum, payable in equal monthly installments of One Hundred
Twenty-nine Thousand Three Hundred Forty-three Dollars and Ninety-six Cents
($129,343.96) in advance on the first day of each calendar month.
C. During the period commencing on the tenth anniversary of the
Commencement Date and ending on the Termination Date (as defined in Article 37
below), Minimum Rent shall be the greater of (i) Market Rent, to be determined
as set forth in Section 60.1(b), below (except that, for purposes of this rent
period, the Determination Date for the Market Rent shall be 180 days prior to
the tenth anniversary of the Commencement Date, rather than 180 days prior to
the expiration of the Initial Term) or (ii) the Adjusted Minimum Rent as of the
date immediately preceding the tenth anniversary of the Commencement Date
including any increase in Taxes or Building Operating Costs for the calendar
year in which this rent period commences which have not yet been factored into
Adjusted Minimum Rent.
Rent for any partial month at the commencement or termination of the
term of this Lease shall be appropriately prorated.
Installments of Minimum Rent payable hereunder shall be paid at the
office of Landlord or at such other place as Landlord may designate from time to
time by written notice to Tenant hereunder.
<PAGE> 37
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
hereby covenant as follows:
REAL OCCUPANCY
1. Tenant shall pay the rent as above and as hereinafter provided.
2. Tenant shall use and occupy demised premises for executive, sales
and administrative offices, including accessory computer space and for no other
purpose.
ALTERATIONS:
1. Tenant shall make no changes in or to the demised premises of any
nature without Landlord's prior written consent. Subject to the prior written
consent of Landlord, and to the provisions of this article, Tenant at Tenant's
expenses, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or machanics first approved by Landlord. All fixtures and all
panalling, partitions, ceilling and like installations, installed in the
premises at any time, either by Tenant or by Landlord in Tenant's behalf,
shall, upon installation, become the property of Landlord and shall remain upon
and be surrendered with the demised premises unless Landlord, by notice to
Tenant no later than twenty days prior to the date fixed as the termination of
this lease, elects to relinquish Landlord's right thereto and to have them
removed by Tenant, in which event, the same shall be removed from the premises
by Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in
this article shall be construed to give Landlord title to or to prevent
Tenant's removal of trade fixtures, moveable office furniture and equipment,
but upon removal of any such from the premises or upon removal of other
installations as may be required by Landlord, Tenant shall immediately and at
its expense, repair and restore the premises to the condition existing prior to
installation and repair any damage to the demised premises or the building due
to such removal. All property permitted or required to be removed by Tenant at
the end of the term remaining in the premises after Tenant's removal shall be
deemed abondoned and may, at the election of Landlord, either be retained as
Landlord's property or may be removed from the premises by Landlord at Tenant's
expense. Tenant shall, before making any alterations, additions, installations
or improvements, at its expense, obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies and
(upon completion) certificates of final approval thereof and shall deliver
promptly duplicates of all such permits, approvals and certificates to Landlord
and Tenant agrees to carry and will cause Tenant's contractors and
sub-contractors to carry such workman's compensation, general liability,
personal and property damage insurance as Landlord may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within ten days thereafter, at Tenant's expense,
by filing the bond required by law.
<PAGE> 38
REPAIRS
4. Landlord shall maintain and repair the public portions of the
building, both exterior and interior. Tenant shall, throughout the term of this
lease, take good care of the demised premises and the fixtures and
appurtenances therein and at Tenant's sole cost and expense, make all
non-structural repairs thereto as and when needed to preserve them in good
working order and condition, reasonable wear and tear, obsolescence and damages
from the elements, fire or other casualty, excepted. Notwithstanding the
foregoing, all damage or injury to the demised premises or to any other part of
the building, or to its fixtures, equipment and appurtenances, whether
requiring structural or non-structural repairs, caused by or resulting from
carelessness, omission, neglect or improper conduct of Tenant. Tenant's
servants, employees, invitees or licensees, shall be repaired promptly by
Tenant at its sole cost and expenses, to the satisfaction of Landlord
reasonably exercised. Tenant shall also repair all damage to the building and
the demised premises caused by the moving of Tenant's fixtures, furniture or
equipment. All the aforesaid repairs shall be of quality or class equal to the
original work or construction. If Tenant fails after ten days notice to proceed
with due diligence to make repairs required to be made by Tenant, the same may
be made by the Landlord at the expense of Tenant and the expenses thereof
incurred by Landlord shall be collectible as additional rent after rendition of
a bill or statement therefor. Tenant shall give Landlord prompt notice of any
defective condition in any plumbing, heating system or electrical lines located
in, servicing or passing through the demised premises and following such
notice, Landlord shall remedy the condition with due diligence but at the
expense of Tenant if repairs are necessitated by damage or injury attributable
to Tenant. Tenant's servants, agents, employers, invitees or licensees as
aforesaid. Except as specifically provided by Article 9 or elsewhere in this
lease, there shall be no allowance to Tenant for a diminution of rental value
and no liability on the part of Landlord by reason of inconvenience, annoyance
or injury to business arising from Landlord. Tenant or others making or failing
to make any repairs, alterations, additions or improvements in or to any
portion of the building or the demised premises or in and to the fixtures,
appurtenances or equipment thereof. The provisions of this Article 4 with
respect to the making of repairs shall not apply in the case of fire or other
casualty which are dealt with in Article 9 hereof.
<PAGE> 39
Window Cleanings
5. Tenant will not clean, nor require, permit, suffer or allow any window in
the demised premises to be cleaned from the outside in violation of any law or
of the rules of the Board of Standards and Appeals, or of any other board or
body having or asserting jurisdiction.
Requirements of Law, Fire Insurance, Floor Loades
6. Prior to the commencement of the lease term. If Tenant is then in
possession, and at all times thereafter. Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments,
departments, commissions and boards and any direction of any public officer
pursuant to law, and all orders, rules and regulations of the Board of
Fire Underwriters or any similar body which shall impose any violation, order
or duty upon Landlord or Tenant with respect to the demised premises whether or
not arising out of Tenant's use or manner of use thereof, or with respect to the
building if arising out of Tenant's use or manner of use of the premises or the
building (including the use permitted under the law). Nothing herein shall
require Tenant to make structural repairs or alterations until Tenant has by
its manner of use of the demised premises or method of operation therein,
violated any such laws, ordinances, orders, rules, regulations or requirements
with respect thereto. Tenant may, after securing Landlord to Landlord's
satisfaction against all damages, interest, penalties and expenses, including,
but not limited to, reasonable attorneys' fees, by cash deposit or by surety
bond in an amount and in a company satisfactory to Landlord, contest and appeal
any such laws, ordinances, orders, rules, regulations or requirements provided
same is done with all reasonable promptness and provided such appeal shall
not subject Landlord to prosecution for a criminal offense or constitute a
default under any lease or mortgage under which Landlord may be obligated, or
cause the demised premises or any part thereof to be condemned or vacated.
Tenant shall not do or permit any act or thing to be done in or to the demised
premises which is contrary to law, or which will invalidate or be in conflict
with public liability, fire or other policies or insurance at any time carried
by or for the benefit of Landlord with respect to the demised premises or the
building of which the demised premises form a part, or which shall or might
subject Landlord to any liability or responsibility to any person or for
property damage, nor shall Tenant keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization or other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. Tenant shall pay all costs, expenses, fees, penalties, or
damages, which may be imposed upon Landlord by reason of such failure to comply
with the provisions of this article and if by reason of such failure the fire
insurance rate shall, at the beginning of this lease or at any time thereafter,
be higher than it otherwise would be, the Tenant shall reimburse Landlord, as
additional rent hereunder, for that portion of all fire insurance premises
thereafter paid by Landlord which shall have been charged because of such
failure by Tenant, and shall make such reimbursement upon the first day of the
month following such outlay by Landlord. In any action or proceeding wherein
Landlord and Tenant are parties a schedule or "make-up" of rate for the
building or demised premises issued by any body making fire insurance rates
applicable to said premises shall be conclusive evidence of the facts therein
stated and of the several items and charges in the fire insurance rate then
applicable to said premises. Tenant shall not place a load upon any floor of the
demised premises exceeding the floor load per square foot area which it was
designed to carry and which is allowed by law. Landlord reserves the right to
prescribe the weight and position of all safes, business machines and
mechanical equipment. Such installations shall be placed and maintained by
Tenant at Tenant's expense, its settings sufficient, in Landlord's judgment, to
absorb and prevent vibration, noise and annoyance.
<PAGE> 40
[This portion illegible]
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying leases or by any mortgages, affecting any leases or the real
property of which the demised premises are a part. In confirmation of such
subordination. Tenant shall execute promptly any certificate that Landlord
may request.
See Paragraph 63 "Rider to Lease"
LOSS, DAMAGES, REIMBURSEMENT, INDEMNITY
8. Landlord or its agents shall not be liable for any damages to property of
Tenant or of others entrusted to employers of the building, nor for loss of or
damages to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Landlord, its agents, servants or
employers; nor shall Landlord or its agents be liable for any such damage caused
by other tenants or persons in, upon or about said building or caused by
operations in construction of any private, public or quasi public work. If at
any time any windows of the demised premises are temporarily closed, darkened
or bricked up (or permanently closed, darkened or bricked up, if required by
law) for any reason whatsoever including, but not limited to Landlord's own
acts. Landlord shall not be liable for any damage Tenant may sustain thereby
and Tenant shall not be entitled to any compensation therefor nor abatement or
diminution of rent nor shall the same release Tenant from its obligations
hereunder nor constitute an eviction. Tenant shall not move any safe, heavy
machinery, heavy equipment, bulky matter, or fixtures into or out of the
building without Landlord's prior written consent. If such safe, machinery,
equipment, bulky matter or fixtures requires special handling, all work in
connection therewith shall comply with all laws and regulations applicable
thereto and shall be done during such hours as Landlord may designate. Tenant
shall indemnify and save harmless Landlord against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Landlord
shall not be reimbursed by insurance, including reasonable attorneys fees,
paid, suffered or incurred as a result of any breach by Tenant. Tenant's
agents, contractors, employees, invitees, or licensees, of any covenant or
condition of this lease, or the carelessness, negligence or improper conduct of
the Tenant. Tenant's agents, contractors, employees, invitees or licensees.
Tenant's liability under this lease extends to the acts and omissions of any
subtenant, and any agent, contractor, employee, invitee or licensee of any
sub-tenant. In case any action or proceeding is brought against Landlord by
reason of any such claim. Tenant, upon written notice from Landlord, will, at
Tenant's expense, resist or defend such action or proceeding by counsel
approved by Landlord in writing, such approval not to be unreasonably withheld
[Rider to be added if necessary]
<PAGE> 41
DESTRUCTION, FIRE AND OTHER CASUALTY:
9. (a) If the demised premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give immediate notice thereof to Landlord and
this lease shall continue in full force and effect except as hereinafter set
forth. (b) If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by and
at the expense of Landlord and the rent, until such repair shall be
substantially completed, shall be apportioned from the day following the
casualty according to the part of the premises which is usable. (c) If the
demised premises are totally damaged or rendered wholly unusable by fire or
other casualty, then the rent shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Landlord, subject to Landlord's right to
elect not to restore the same as hereinafter provided. (d) If the demised
premises are rendered wholly unusable or (whether or not the demised premises
are damaged in whole or in part) if the building shall be so damaged that
Landlord shall decide to demolish it or to rebuild it, then, in any of such
events, Landlord may elect to terminate this lease by written notice to Tenant
given within 90 days after such fire or casualty specifying a date for the
expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the date specified in such notice the term of
this lease shall expire as fully and completely as if such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the premises without prejudice however, to Landlord's
rights and remedies against Tenant under the lease provisions in effect prior to
such termination, and any rent owing shall be paid up to such date and any
payments of rent made by Tenant which were on account of any period subsequent
to such date shall be returned to Tenant. Unless Landlord shall serve a
termination notice as provided for herein, Landlord shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Landlord's control. After any such casualty, Tenant
shall cooperate with Landlord's restorations by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Landlord that the premises
are substantially ready for Tenant's occupancy. (c) Nothing contained
hereinabove shall relieve Tenant from liability that may exist as a result of
damage from fire or other casualty. Notwithstanding the foregoing, each party
shall look first to any insurance in its favor before making any claim against
the other party for recovery for loss or damage resulting from fire or other
casualty, and to the extent that such insurance is in force and collectible and
to the extent permitted by law, Landlord and Tenant each hereby releases and
waives all right of recovery against the other or any one claiming through or
under each of them by way of subrogation or otherwise. The foregoing release and
waiver shall be in force only if both releasers insurance policies contain a
clause providing that such a release or waiver shall not invalidate the
insurance and also, provided that such a policy can be obtained without
additional premiums. Tenant acknowledges that Landlord will not carry insurance
on Tenant's furniture and/or furnishings or any fixtures or equipment,
improvements, or appurtenances removable by Tenant and agrees that Landlord will
not be obligated to repair any damage thereto or replace the same.
2
<PAGE> 42
SEE PARAGRAPH 51 "RIDER TO LEASE"
EMINENT DOMAIN
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting is such proceeding and Tenant shall have no claim for the
value of any unexpected term of said leases.
ASSIGNMENT MORTGAGE ETC.
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it
shall not assign, mortgage or encumber this agreement, nor under???, or suffer
or permit the demised properties or any part thereof to be used by others,
without the prior written consent of Landlord in each instance. If this lease
be assigned, or if the demised premises or any part thereof be under??? or
occupied by anybody other than Tenant, Landlord may, after default by
Tenant, collect rent from the assignee, under-tenant or occupant, and apply the
net amount collected to the rent herein reserved, but no such assignment,
underwriting, occupancy or collection shall be deemed a waiver of this covenant,
or the acceptance of the assignee, under-tenant or occupant as tenant, or a
release of Tenant from the further performance by Tenant of covenants on the
part of Tenant herein contained. The consent by Landlord to as assignment or
underletting shall not in any ways be construed to relieve Tenant from
obtaining the express consent in writing of Landlord to any further assignment
or underletting
SEE PARAGRAPH 48 "RIDER TO LEASE"
ELECTRIC CURRENT
12. Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and
Tenant may not use any electrical equipment which, in Landlord's opinion,
reasonable exercised, will overload such installations or interfere with the use
thereof by other tenants of the building. The change at any time of the
character of electric service shall in no wise make Landlord or responsible to
Tenant, for any loss, damages or expenses which Tenant may sustain
SEE PARAGRAPH 40 "RIDER TO LEASE"
ACCESS TO PREMISES
13. Landlord or Landlord's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Landlord may deem necessary and reasonably
desirable to the demised premises or to any other portion of the building or
which Landlord may elect to perform following Tenant's failure to make repairs
or perform any work which Tenant is obligated to perform under this license, or
for the purpose of complying with laws, regulations and other directions of
governmental authorities. Tenant shall permit Landlord to use and maintain and
replace pipes and conduits in and through the demised premises and to erect new
pipes and conduits therein. Landlord may, during the progress of any work in
the demised premises, take all necessary materials and equipment into said
premises without the same constituting an eviction nor shall the Tenant be
entitled to any abatement or rent while such work is in progress not to any
damages by reason of loss or interruption of business or otherwise. Throughout
the terms hereof Landlord shall have the right to enter the demised premises at
reasonable hours for the purposes of showing the same to prospective purchasers
or mortgagees of the building, and during the last six months of the term for
the purpose of showing the same to prospective tenants and may, during said six
months period place upon the premises the usual notices "To Let" and "For Sale"
which notices Tenant shall permit so remain thereon without molestation. If
Tenant is not present to open and permit as entry into the premises, Landlord
or Landlord's agents may enter the same whenever such entry may be necessary or
permissible by master key or forcibly and provided reasonable care is
exercised to safeguard Tenants's property and such entry shall not render
Landlord or its agents liable therefor, nor in any event shall the obligations
of Tenant hereunder be affected. If during the last month of the term Tenant
shall have removed all or substantially all of Tenant's property therefrom.
Landlord may immediately enter, alter, renovate or redecorate the demised
premises without) limitations or abatement of rent, or incurring liability to
Tenant for any compensation and such act shall have no effect on this lease or
Tenant's obligations hereunder. Landlord shall have the right at any time,
without the same consisting an eviction and without incurring liability to
Tenant therefor to changes the arrangement and/or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets, or other
public parts of the building and to change the name, member or demag??? by
which the building may be known.
<PAGE> 43
CERTIFICATE OF OCCUPANCY
15. Tenant will not at any time live or occupy the detached premises
in violation of the certificates of occupancy issued for the building of which
the damaged premises are a part. Tenant has inspected the premises and accepts
them as is, subject to the riders announced hereto with respect to Landlord's
work. If any in any event, Landlord makes no representation as to the condition
of the premises and Tenant agrees to accept the same subject as violations
whether or not of record.
BANKRUPTCY
16. (a) If at the date fixed as the commencement of the term of this
lease or if at any time during the term hereby demised there shall be filed by
or against Tenant in any court pursuant to any statute either of the United
States or of any sextets, an petition in bankruptcy or insolvency or for
reorganization or for the apportionment of a receiver or trustee of all or a
portion of Tenant's property and within 60 days thereof. Tenant fails to secure
a dismissal thereof, or if Tenant make an assignment for the benefit of
creditors or petition for or enter into an arrangement, this lease, at the
option of Landlord exercised within a reasonable time after notice of the
happening of any one or more of such events, may be cancelled and terminated by
written notice to the Tenant (but if any of such xxxxx occur prior to the
commencement xxxx, this lease shall be ipso facto cancelled and incriminated)
and whether such cancellation and termination occur prior to or during the
term, neither Tenant nor any person claiming through or under Tenant by virtue
of any statute or of any order of any court, shall be entitled to possession or
to remain in possession of the premises determined but shall forthwith quit and
surrender the premises, and Landlord, in addition to the other rights and
xxxxxxx Landlord has by virtue of any other provision herein or elsewhere in
this lease contained or by virtue of any xxxxxx or rule of law, may xxxxx as
liquidated damages, any rent, security deposit or xxxxxx received by him from
Tenant or others on behalf of Tenant. If this lease shall be assigned in
accordance with its terms, the provisions of this Article 16 shall be
applicable only to the party then owning Tenant's interest in that lease.
(b) It is stipulated and agreed that in the event of the termination
of this lease pertinent to (a) hereof, Landlord shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the unexpired portion of
the term demised and the fair and reasonable retail values of the demised
premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the day of
termination and the fair and reasonable rental value of the demised premises
for the period for which such instalment was payable shall be discontinued to
the date of termination at the rate of four per cent (4%) per annum. If such
premises or any part thereof be re-let by the Landlord for the unexpired term
of said lease, or any part thereof, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the amount of rent
reserved upon such re-letting shall be deemed to be the fair and reasonable
rental value for the part or the whole of the premises to re-let during the
term of the reletting. Nothing herein contained shall limit or prejudice the
right of the Landlord to prove for and obtain as liquidated damages by reason
of such termination, an amount equal to the maximum allowed by any statute or
rule of law in effect at the time where, and governing the proceedings in
which, such damages are to be proved, whether or not such amount be greater,
equal to, or less than the amount of the difference referred to above.
DEFAULT
17. (l) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent or if
the demised premises become vacant or deserted: or if the demised premises are
damaged by reason of negligence or carelessness of Tenant, its agents employees
or invitees: or if any execution or attachment shall be issued against Tenant
or any of Tenant's property whereupon the demised premises shall be taken or
occupied by someone other than Tenant: or if Tenant shall make default with
respect to any other lease between Landlord and Tenant: or if Tenant shall fail
to move into or take possession of the premises within fifteeen (15) days after
the commencement of the term of this lease, of which fact Landlord shall be the
sole judge; then, in any one or more of such events upon Landlord serving a
written 4 days notice upon Tenant specifying the nature of said default and
upon the expiration of said 4 days, if Tenant shall have failed to comply with
or remedy such default, or if the said default or omission complained of shall
be of a nature that the same cannot be completely cured or remedied within said
4 day period, and if Tenant shall not have diligently commenced during such
default within such 4 day period and shall not thereafter with reasonable
diligence and in good faith proceed to remedy or cure such default then
Landlord may serve a written three (3) days' notice of cancellation of this
lease upon Tenant and upon the expiration of said three (3) days this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such three (3) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Landlord but Tenant shall remain
liable as hereinafter provided.
(2) If the notice provided for in (l) hereof shall have been given and
the term shall expire as aforesaid: or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required
5 then and in any of such events Landlord may without notice, re-enter the
demised premises either by force or otherwise and dispossess Tenant by summary
proceedings or otherwise and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease. Landlord may cancel and terminate
such renewal or extension agreement by written notice.
<PAGE> 44
REMEDIES OF LANDLORD AND WAIVER OF REDEMPTIONS:
18. In case of any such default, re-entry, expiration and/or dispossess
by summary proceedings or otherwise. (a) the rent shall become due thereupon and
be paid up to the time of such re-entry, dispossess and/or expiration, together
with such expenses as Landlord may incur for legal expenses, attorneys' fees,
brokerage, and/or pricing the demand premises in good order, or for preparing
the same for re-rental; (b) Landlord may re-let the premises or any part or
parts thereof, either in the name of Landlord or otherwise, for a term or terms,
which may at Landlord's option be less than or exceed the period which would
otherwise have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in the lease,
and/or (c) Tenant or the legal representatives of Tenant shall also pay Landlord
as liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained pay deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the lease or leases of the desired premises for each
month of the period which would otherwise have constituted the balance of the
term of this lease. The failure of Landlord to re-let the premises or any part
or parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Landlord may face in connection with re-letting, such as legal
expenses, attorneys' fees, brokerages, advertising and for keeping the demised
premises in good order or for preparing the sums for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the first
day specified in this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Landlord
to collect the deficiency for any subsequent month by a similar proceeding.
Landlord, in pricing the demised premises in good order or preparing the same
for renewal may, at Landlord's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Landlord, in
Landlord's sole judgment, commences advisable and summary for the purpose of
re-letting the demised premises, and the making of such alterations, repairs,
replacements, and/or decorations shall not operate or be construed to release
Tenant from liability hereunder as aforesaid. Landlord shall in no event be
liable in any way whatsoever for failure to re-let the demised premises, or in
the event that the demised premises are re-let, for failure to conflict the rent
thereof under such re-letting, and in no event shall Tenant be entitled to
receive any excess, if any, of such net rent collected over the sums payable by
Tenant to Landlord hereunder. In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions hereof, Landlord shall have the
right of liquidation and the right to invoke any remedy allowed by law or in
equity as if re-entry, summary proceedings and other remedies were not being
provided for, mention in this lease of any particular remedy, shall not practice
Landlord from any other remedy, in law or in equity. Tenant hereby expressively
waives any and all rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or dispossessed for any causes,
or in the event of Landlord obtaining possession of demised premises, by reason
of the violation by Tenant of any of the covenants and additions of this lease,
or otherwise.
FEES AND EXPENSES:
19. If tenant shall default in the observance or performance of any
term or covenant on tenant's part to be observed or performed under or by virtue
of any of the terms or provisions in any article of this lease, them, unless
otherwise provided elsewhere in this lease, landlord may immediately or at any
time thereafter and without notice perform the obligation of tenant thereunder,
and if landlord, in connection therewith or in connection with any default by
tenant in the covenant to pay rent hereunder, makes any expenditures or incurs
any obligations for the payment of money, including but not limited to
attorney's fees, in instituting, protesting or defending any action or
proceeding, such sums so paid or obligations incurred with interest and costs
shall be deemed to be additional rent hereunder and shall be paid by tenant to
landlord within 6 days of recondition of any bill statement to tenant therefore,
and is tenant's lease term shall have expired at the time of making of such
expenditures or incurring of such obligations, such sums shall be recoverable by
landlord as damages.
<PAGE> 45
NO REPRESENTATION BY LANDLORD:
20. Neither Landlord nor Landlord's agents have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses except as herein expressly set forth and no rights, easement
of licenses are acquired by Tenant by implication or otherwise except as
expressly set forth in the provisions of this leases. Tenant has inspected the
building and the demised premises and is thoroughly acquainted with their
condition, and agrees to take the same "as is" and acknowledges that the taking
of possession of the demised premises by Tenant shall be conclusive evidence
that the said premises and the building ow which the same form a part were in
good and satisfactory condition at the time such possession was so taken,
except as to latent defects. All understandings and agreements heretofore made
between the parties herein are merged in this contract, which alone fully and
completely expresses the agreement between Landlord and Tenant and any
executory agreement hereafter made shall be ineffective to changes, modify,
discharge or effect an abandonment of it in whole or in part, unless such
executory agreement is in writing and signed by the party against whom
enforcement of the changes, modification, discharge or abandonment is sought.
END OF TERM:
21. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Landlord the semised premises, broom
clean, in good order and condition, ordinary wear excepted, and Tenant shall
remove all its property. Tenant's obligation to observe or perform this
covenant shall survive the expiration or other termination of this lease. If
the last day of the term of this lease or any removal thereof, falls on Sunday,
this lease shall expire at noon on the preceding Saturday unless it be a legal
holiday in which case it shall expire at noon on the preceding business day.
QUIET ENJOYMENT:
22. Landlord covenants and agrees with Tenant that upon Tenant that
upon Tenant paying the rent and additional rent and observing and performing
all the terms, covenants and conditions, on Tenant's part to be observed and
performed, Tenant may peaceably and quietly enjoy the premises hereby demised,
subject, nevertheless, to the terms and conditions of this leases xxxxxding,
but not limited to, Article 30 hereof and to the ground leases, underlying
leases and mortgages herein before mentioned.
FAILURE TO GIVE POSSESSION:
23. If Landlord is unable to give possession of the demised premises
on the date of the commencement of the term hereof, because of the holding-over
or retention of possession of any tenant, undertenant or occupants, or if the
premises are located in a building being constructed, because such building has
not been sufficiently completed to make the premises ready for occupancy or
because of the fact that a certificate of occupancy has not been procured or
for any other reason. Landlord shall not be subject to any liability for
failure to give possession on said date and the validity of the leases shall
not be impaired under such circumstances, nor shall the same be construed in
any way to extend the term of this lease, but the rent payable hereunder shall
be abated (provided Tenant is not responsible for the inability to obtain
possession) until after Landlord shall have given Tenant written notice that
the premises are substantially ready for Tenant's occupancy. If permission is
given to Tenant to enter into the possession of the demised premises or to
occupy premises other than the demised premises prior to the date specified as
the commencement of the term of this lease, Tenant covenants and agrees that
such occupancy shall be deemed to be under all the terms, covenants, conditions
and provisions of this lease, except as to the covenant to pay rent.
<PAGE> 46
NO WAIVERS:
24. The failure of Landlord to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease
or of any of the Rules or Regulations set forth or hereafter adopted by
Landlord, shall not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect of an original
violation. The receipt by Landlord of rent with knowledge of the breach of any
covenant of this lease shall not be deemed to have been waived by Landlord
unless such waiver be in writing signed by Landlord. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly rent herein stipulated
shall be deemed to be other than on account of the earliest stipulated rent,
nor shall any endorsement or statement of any check or any letter accompanying
any check or payment as rent be deemed an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord's right to
recover the balance of such rent or pursue any other remedy in this lease
provided. No act or thing done by Landlord or Landlord's agents during the term
hereby described shall be deemed as acceptance of a surrender of said premises
and no agreement to accept such surrender shall be valid unless in writing
signed by Landlord. No employee of Landlord or Landlord's agent shall have any
power to accept the keys of said premises prior to the termination of the lease
and the delivery of keys to any such agent or employee shall not operate as a
termination of the lease or a surrender of the premises.
WAIVER OF TRIAL BY JURY:
25. It is mutually agreed by and between landlord and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personnel injury or property damage) on any
matters whatsoever arising out of or is any way connected with this lease, the
relationship of Landlord and Tenant. Tenant's use of or occupancy of said
premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Landlord commences any summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding.
LIABILITY TO PERFORM:
26. This lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall is no wise be affected, impaired or excused because Landlord
is unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or implied to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment or
fixtures if Landlord is prevented or delayed from so doing by reason of strike
or labor troubles of any cause, including, but not limited to, government
preemption in connection with a National Emergency or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions of supply and demand which have been or
are affected by war or other emergency.
<PAGE> 47
BILLING AND NOTICES
27. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Landlord may desire or the required to give to Tenant,
shall be deemed sufficiently given or rendered if in writing.
as sent by registered or certified mail addressed to Tenant at the building of
which the demised premises form a part or at the last know residence address or
business address of Tenant or left at any of the aforesaid premises addressed
to Tenant, and the time of the rendition of such bill or statement and of the
giving of such notice or communication shall be deemed to be the time when the
same is delivered to Tenant, mailed, or left at the premises as herein
provided. Any notice by Tenant to Landlord must be served by registered or
certified mail addressed to Landlord at the address first hereinabove given or
at such other address as Landlord shall designate by written notice.
SERVICES PROVIDED BY LANDLORD--WATER, ELEVATORS, HEAT,
CLEANING, AIR CONDITIONING
28. As long as Tenant is not in default under any of the covenants of this
lease. Landlord shall provide: (a) necessary elevator facilities on business
days from 8 a.m. to 6 p.m. and have one elevator subject to call at all other
times: (b) heat to the demised premises when and as required by law, on
business days from 8. a.m. to 6 p.m.*
(c) water for ordinary lavatory purposes, but if Tenant uses or consumes water
for any other purposes or in unusual quantities (of which fact Landlord shall
be the sole judges). Landlord may install a water meter at Tenant's expense
which Tenant shall thereafter maintain at Tenant's expense in good working
order and repair to register such water consumption and Tenant shall pay for
water consumed as shown on said meter as additional rent as and when bill are
rendered, and on Tenant's default in making such payment. Landlord may pay such
charges and collect the same from Tenant. Such a matter shall also be installed
and maintained at Tenant's expenses if required by Law or Governmental Order.
Tenant, if a water meter is so installed, convenants and agrees to pay its
proportionate share of the sewer rent and all other rents and charges which are
now or hereafter assessed, imposed or may become a lien on the demised premises
or the reality of which they are a part: (d) cleaning service for the demised
premises on business days at Landlord's expense provided that the same are kept
in order by Tenant. If, however, said premises are to be kept clean by Tenant,
it shall be done at Tenant's sole expense, in a manner satisfactory to Landlord
and no one other than persons approved by Landlord shall be permitted to enter
said premises or the building of which they are a part (or such purposes.
Tenant shall pay Landlord the cost of removal of any of Tenant's refuse and
rubbish from the building. (e) RIDER to be added in respect to rates and
conditions for air condition's cooling and ventilation if the entire building
in which the demised premises is located is serviced by a central air
conditioning/cooling and ventilating system. If applicable air
condition/cooling will be furnished from March 15th through September 30th on
business days (Mondays through Fridays, holidays excepted) from 8:00 a.m. to
6:00 p.m., and ventilation will be furnished on business days during the
aforesaid hours except when air conditioning/cooling is being furnished as
aforesaid. If Tenant requires air conditioning/cooling or ventilation for more
extended hours or on Saturdays, Sunday's or on holidays.
Landlord will furnish the name at Tenant's expense (f) Landlord shall have no
responsibility or liability for failure to supply the services agreed to
herein. Landlord reserves the right to stop services of the heating, elevators,
plumbing, air-conditioning, power systems or cleaning or other services,if any,
when necessary by reason of accident or for repairs, alterations, replacements
or improvements necessary or demurable?? in the judgement of Landlord for as
long as may be reasonably required by reason thereof or by reasons of strikes,
accidents, laws, order or regulations or any other reason beyond the control of
Landlord. If the building of which the demised premises are a part supplies
manually-operated elevator services, Landlord at any time may sub???/?
automatic-control elevator services and upon ten days' written notice to
Tenant, proposed with alterations necessary therefor without in any ways
affecting this leasee or the obligations of Tenant hereunder. The name shall
be done with a minimum of inconvenience to Tenant and Landlord shall ????? the
alteration which due diligence.
SEE PARAGRAPH 39 "RIDER TO LEASE"
<PAGE> 48
33. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEDUCTIONS:
34. The term "office", or "offices", wherever used in this lease,
shall not be construed to mean premises used as a store or stores, for the sale
or display, at any time, of goods, wares of merchandise, of any kind or as a
restaurant, shop, booth, bootblack or other stand, barber shop, or for other
similar puporses or for manufacturing. The term "Landlord" as used in this
lease means only the owner of the mortgage in possession, for the time being of
the land and building (or the owner of a lease of the building or of the land
and building) of which the demised premises form a part, so that in the event
of any sale or sales of said land and building or of said lease, or in the
event of a lease of said building, or of the land and building, the said
Landlord shall be and hereby is entirely freed and relieved of all covenants
and obligations of Landlord hereunder, and it shall be deemed and construed
without further agreement between the partners of their successors in interest,
or between the partners and the purchaser, at any such sale, or the said leasee
of the building, or of the land and building, that the purchaser or the leasee
of the building has assumed and agreed to carry out any and all covenants and
obligations of Landlord, hereunder. The words "reenter" and "re-entry" as used
in this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude Saturdays (except such
portion thereof as is covered by specific hours in Article 28 hereof). Sundays
and all days set forth on Exhibit "E".
ADJACENT EXCAVATED SHXXXINGS:
31. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made. Tenant shall afford to the person
causing or authorized to cause such excavation, licensee to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form
a part from injury or damage and to support the same by proper foundations
without any claim for damages or internality against Landlord, or diminution or
abatement of rent.
RULES AND REGULATIONS:
32. Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faithfully, and comply strictly with, the Rules and
Regulations and such other and further reasonable Rules and Regulations as
Landlord or Landlord's agents may from time to time adopt. Notice of any
additional rules or regulations shall be given in such manner as Landlord may
elect. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the name shall be
assured by service of a notice thereof. Nothing in this lease contained shall
be construed to impose upon Landlord any duty or obligation to enforce the
Rules and Regulations or terms, covenants or conditions in any other lease, as
against any other tenant and Landlord shall not be liable to Tenant for
violation of the xxxxx by any other tenant, its servants, employees, agents,
visitors or licensees.
<PAGE> 49
SECURITY:
33. Tenant has deposited with Landlord the sum of $ as security
for the faithful performance and observance by Tenant of the terms, provisions
and conditions of this lease: it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent. Landlord may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Landlord may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to any damages
or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Landlord. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Landlord. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Landlord shall have the right to transfer the
security to the vendor or lessee and Landlord shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Landlord solely for the return of said security; and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new Landlord. Tenant further covenants that it will
not assign or encumber or attempt to assign or encumber the monies deposited
herein as security and that neither Landlord not its successors or assigns shall
be bound by any such assignment, encumbrances, attempted assignment or attempted
encumbrances.
SUCCESSORS AND ASSIGNEES
34. The covenants, conditions and agreements contained in this lease
shall bind and insure to the benefit of Landlord and Tenant and their respective
heirs, distributes, executors, administrators, successors, and except as
otherwise provided in this lease, their assigns.
35. This Lease consists of this Printed Portion containing Articles
1-35 and each of the following attached hereto and made a part hereof: (a)
Addendum to Printed Portion of Lease; (b) Rider to Lease; and (c) the following
exhibits: Exhibit A (Rental Plan), Exhibit B (Work Letter), Exhibit C (Legal
Description - Site Plan), Exhibit D (Cleaning Service rider) and Exhibit E
(Legal Holidays).
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed this
Lease on the day year first above written.
LANDLORD: MEADOWLANDS ASSOCIATES
By: ARC Meadowlands Associates,
General Partner
By: ARC Meadowlands, Inc.,
General Partner
----------------------------------------
Michael A. Futterman, President
TENANT: ALEXANDER & ALEXANDER CONSULTING
GROUP INC.
By:
------------------------------------
Title: Vice President
<PAGE> 50
IMPORTANT -- PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 32
(REST OF COPY IS ILLEGIBLE)
*Notwithstanding the above, Tenant shall be permitted to bring on to the
demised premises bottled drinking water.
**Or the Tenant.
<PAGE> 51
ADDENDUM TO PRINTED PORTION OF LEASES
Dated: October 7, 1986
LANDLORD: MEADOWLANDS ASSOCIATES
TENANT: ALEXANDER & ALEXANDER CONSULTING GROUP INC.
PREMISES: 125 Chubb Avenue
Lyndhurst, New Jersey 07071
The entire north wing of the second
(2nd) and fifth (5th) floors
The paragraphs of the Printed Portion of the Lease listed below are
amended as follows where indicated by the corresponding footnotes set forth in
the body of the Printed Portion:
Paragraph 6., Requirements of Law, etc.:
1. to correct any violations which have been caused by tenants previously
occupying the Demised Premises, or
Paragraph 8., Property - Loss, Damage, etc.:
2. In the event Tenant shall notify Landlord and the appropriate governmental
authority of an illegal and dangerous condition existing in the Building
and Landlord shall not correct or cause to be corrected such condition
within thirty (30) days following such notice, Tenant shall not be liable
for damages resulting from claims brought for any injuries arising from
such condition, provided such condition shall not have resulted, in whole
or in part, from the acts or omissions of Tenant.
Paragraph 9., Destruction, etc.:
3. Tenant shall have the option of terminating this Lease upon thirty (30)
days written notice to Landlord in the event Landlord shall not have
substantially completed
<PAGE> 52
restoration of the Demised Premises as of a date which is 90 days after
such fire or casualty destroys 25% or less of the Demised Premises,
provided Tenant submits such notice to Landlord on or prior to a date
which is 120 days after such fire or casualty, but if such fire or
casualty destroys more than 25% of the Demised Premises, Landlord shall
have 180 days to restore the Demised Premises. Tenant's right to
terminate the Lease upon Landlord's failure to repair in the event of a
destruction in excess of 25% shall require Tenant's notice to Landlord
within 210 days after such fire or casualty.
Paragraph 17., Default:
4. thirty (30)
5. except that in the event of default in the payment of rent or additional
rent, Landlord shall, not more than one (1) time in any Operating Year,
give Tenant a ten (10) day notice of such default and Tenant shall have
five (5) days to cure such default.
Paragraph 19., Fees and Expenses:
6. fifteen (15)
Paragraph 26., Inability to Perform:
7. beyond Landlord's reasonable control.
Paragraph 27., Bills and Notices:
8. or by overnight courier or United States Postal Service Express Mail.
2
<PAGE> 53
IN WITNESS WHEREOF, Landlord and Tenant have executed this Addendum to
the Printed Portion of the Lease as of the day and year above written.
LANDLORD:
MEADOWLANDS ASSOCIATES
By: ARC Meadowlands Associates,
General Partner
By: ARC Meadowlands, Inc.
General Partner
By: /s/ Michael A. Fitterman
----------------------------------
Michael A. Fitterman, President
TENANT:
ALEXANDER & ALEXANDER
CONSULTING GROUP INC.
By: /s/ [ILLEGIBLE SIGNATURE]
---------------------------------
Vice President Title.
Alexander & Alexander Inc.
3
<PAGE> 54
TABLE OF CONTENTS
FOR RIDER TO LEASE
ARTICLE Page
- ------- ----
36. DEFINITIONS; DEMISED PREMISES;
ADJUSTED MINIMUM RENT.............................................. 1
37. COMMENCEMENT OF TERM; ESTIMATED
COMMENCEMENT DATE; COMMENCEMENT DATE AND
TERMINATION DATE; RENT COMMENCEMENT DATE........................... 5
38. LANDLORD'S WORK; LANDLORD'S WORK LETTER............................ 6
39. HEATING, AIR-CONDITIONING AND VENTIL-
ATION; LEGAL HOLIDAYS; "AFTER HOURS"............................... 6
40. ELECTRIC CURRENT................................................... 7
41. LIABILITY INSURANCE................................................ 7
42. FIRE INSURANCE - WAIVER OF SUBROGATION............................. 7
43. PARKING FACILITIES................................................. 8
44. ACCESS AND COMMON AREAS............................................ 8
45. INTENTIONALLY DELETED.............................................. 8
46. BROKER............................................................. 8
47. CLEANING SERVICES.................................................. 9
48. ASSIGNMENT AND SUBLETTING.......................................... 9
49. TENANT'S COOPERATION; REASONABLE
MODIFICATIONS; ESTOPPEL CERTIFICATE................................ 14
50. LIMITATION OF LIABILITY
DEFINITION OF LANDLORD............................................. 14
51. STATUTORY WAIVER................................................... 15
52. CORPORATE AUTHORITY................................................ 15
53. PERSONAL PROPERTY TAXES............................................ 15
54. BUILDING CHANGES................................................... 15
55. HOLDING OVER....................................................... 16
56. RESTRICTIVE COVENANT - FOOD SERVICE................................ 16
57. NOTICES............................................................ 16
58. SEVERABILITY OF PROVISIONS......................................... 17
59. NO OFFER OR AGREEMENT.............................................. 17
60. RENEWAL OPTION..................................................... 18
61. TENANT'S SPECIAL SECURITY.......................................... 20
62. CROSS DEFAULT...................................................... 20
63. SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT..................................................... 20
64. RATIFICATION....................................................... 22
SIGNATURE PAGE..................................................... 22
<PAGE> 55
RIDER TO LEASE
In the event of any inconsistency between the provisions of this typed
Rider and those contained in the printed portion of the lease to which this
Rider is annexed, the provisions of this typed Rider shall govern and be
binding.
Dated: October 7, 1986
LANDLORD: MEADOWLANDS ASSOCIATES
TENANT: ALEXANDER & ALEXANDER CONSULTING GROUP INC.
PREMISES: The entire north wing of the second (2nd) and fifth (5th) floors
1251 Chubb Avenue
Lyndhurst, New Jersey
36. DEFINITIONS; DEMISED PREMISES;
ADJUSTED MINIMUM RENT
36.1 Definitions. For purposes of this Article, the following terms
shall have the meanings set forth below:
(1) Assessed Valuation shall mean the assessed valuation of the Real
Estate for the First Tax Year, as such assessed valuation is or may
be ultimately determined by final administrative or judicial proceedings, or by
abatement by an appropriate taxing authority;
(2) Base Tax Rate shall mean the real estate tax rate in effect on the
date of this Lease;
(3) First Operating Year shall mean the calendar year ending December
31, 1987. Operating Year shall mean any calendar year thereafter;
(4) First Tax Year shall mean the calendar year ending December 31,
1987. Tax Year shall mean any calendar year thereafter;
(5) Land shall mean the land described in Exhibit C to this Lease;
(6) Occupancy Percentage shall mean the percentage of Tenant's
occupancy of the entire Building;
(7) Real Estate Tax Base shall mean the amount determined by
multiplying the Assessed Valuation by the Base Tax Rate;
(8) Taxes shall mean all real estate taxes, charges and assessments
imposed upon the Land, Building and other improvements thereon (collectively,
the "Real Estate"). If and to the extent that due to change in the method of
taxation or assessment, any franchise, capital stock, capital gains, rent,
income, profit or any other tax or charge shall be substituted in whole or in
part for the current ad valorem Taxes now or hereafter imposed upon the Real
Estate, such franchise, capital stock, capital gains, rent, income, profit or
other tax or charge shall be deemed included in the term "Taxes" for the
purposes of this Article;
<PAGE> 56
36.2 The Demised Premises shall be deemed to contain a total floor
area of 56,441 square feet and the building of which the Demised Premises form
a part ("Building") shall be deemed to contain a total floor area of 278,456
square feet. Tenant's Occupancy Percentage shall be 20.27 percent.
36.3 Adjusted Minimum Rent shall mean the Minimum Rent as increased in
accordance with this Article to reflect any increase in Taxes and Building
Operating Costs. Tenant shall pay such increases as additional rent as
hereinafter provided.
36.4 Taxes. (1) If the Taxes for any Tax Year during the term of this
Lease shall be greater than the Real Estate Tax Base, then Tenant shall pay to
Landlord, as additional rent, an amount equal to the Occupancy Percentage of
such excess.
(2) Upon the issuance by the respective taxing authorities having
jurisdiction over the Real Estate of a bill or bills for the Taxes imposed upon
the Real Estate for the First Tax Year, Landlord shall submit a copy of such
bill or bills to Tenant. Thereafter, on or about each anniversary of said date,
Landlord shall submit to Tenant a copy of the latest tax bill or bills for the
Taxes for each subsequent Tax Year indicating each change in the Taxes and the
effective date of such change together with a statement (the "Tax Statement")
which shall indicate the amount, if any, required to be paid by Tenant as
additional rent. Within 30 days after the issuance of the Tax Statement, Tenant
shall pay the additional rent as set forth therein. Any payments due pursuant
to this Article for a period of less than a full Tax Year, either at the
commencement or at the end of the term of this Lease, shall be ratably
apportioned.
(3) If, at any time after the execution of this Lease, the taxing
jurisdiction in which the Real Estate is located should change its method of
valuating the Real Estate for the First Tax Year as part of a general
revaluation program ("Revaluation"), then, the provisions of Sections 36.1(2)
and 36.1(1) above notwithstanding, for purposes of computing the Real Estate
Tax Base pursuant to Section 36.1(7) Landlord may, at its option, use one of
the following methods:
(a) The Assessed Valuation shall be the amount for which the
Real Estate would have been assessed for the First Tax Year if there had
been no Revaluation, and the Base Tax Rate shall be as defined in
Section 36.1(2) above, or
(b) The Assessed Valuation shall be the actual amount assessed,
and the Base Tax Rate shall be the real estate tax rate as subsequently
reduced by the taxing jurisdiction in connection with the Revaluation.
Landlord shall inform the Tenant as to which of the above two methods
Landlord has elected at such time as Landlord submits the Tax Statement to
Tenant.
36.5 Building Operating Costs. (1) Tenant hereby agrees that for each
Operating Year during the Term of this Lease for which the total Building
Operating Costs (as hereinafter defined) shall exceed the Building Operating
Costs for the First Operating Year, Tenant shall pay to Landlord, as additional
rent, an amount equal to the Occupancy Percentage of such excess within 30 days
after presentation of Landlord's statement (the "Operating
-2-
<PAGE> 57
Statement") therefor. Landlord shall present its Operating Statement within 90
days after the commencement of each such Operating Year ("Billing Date").
Tenant shall thereafter, for the balance of that Operating Year and for that
portion of the next Operating Year until the Billing Date during such year,
make monthly payments of 1/12th of such increase to reflect the change as at
the Billing Date, which amounts shall be credited for the account of Tenant
against the annual payment due on the succeeding Billing Date. The Operating
Statement shall indicate (i) the initial additional amount required to be paid
by Tenant as additional rent as in this Article provided; (ii) the Tenant's new
Adjusted Minimum Rent; and (iii) the manner in which such adjustment is
computed.
(2) The "Building Operating Costs" shall include each and every expense
incurred in connection with the ownership, administration, management,
operation and maintenance of the Real Estate, including but not limited to,
wages, salaries and fees paid to persons either employed by Landlord or engaged
as independent contractors in the operation of the Real Estate, and such other
typical items of expense as indicated below. All such costs shall be reflected
on a comparative statement (the "Statement") which shall be exhibited to the
Tenant upon request. Building Operating Costs shall exclude capital
expenditures except those which are required by law or which directly reduce or
eliminate other Building Operating Costs.
(3) The expenses referred to in this Article shall be determined in
accordance with sound accounting principles and each Statement furnished shall
be certified by Landlord as true and correct. Tenant or its representatives
shall have the right, at its own expense, upon reasonable notice and during
reasonable hours, to inspect the books of Landlord for the purpose of verifying
the information contained in any Statement, provided prior written request for
such inspection shall be made by Tenant within ten days after receipt of such
Statement.
(4) Some of the typical items of expense which comprise or may
comprise the Building Operating Costs and to be included in the Statement are
or may be: (a) General repairs and maintenance; (b) utility costs, including
but not limited to, cost of electricity to power HVAC units serving the entire
Building (both tenant and common areas), cost of oil or other fuel required to
heat the entire Building, cost of electricity to light the common areas; (c)
cleaning costs, including but not limited to, window cleaning, general interior
office cleaning, cleaning of common areas; (d) service contracts, including but
not limited to, contracts for elevator service, HVAC service, rubbish removal,
carting, janitorial and watchman services and snow removal; (e) costs of
landscaping; (f) cost of insurance; (g) fees and/or salaries of
superintendents, engineers, custodians; and (h) towel service for common
lavatories.
(5) Anything to the contrary contained in this Article 36
notwithstanding, if the average occupancy of the Building is less than
ninety-five (95%) percent during the First Operating Year, then Landlord shall
make a determination ("Landlord's Determination") of what the Building
Operating Costs for such year would have been if during the entire year the
average tenant occupancy of the Building were ninety-five (95%) percent and
shall notify Tenant of Landlord's Determination within ninety (90) days
following the last day of the First Operating Year. Landlord's Determination,
unless otherwise objected to by Tenant in writing
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within 30 days after receipt of Landlord's Determination, shall be binding and
conclusive upon Tenant and shall for all purposes of this Lease be deemed to be
the Building Operating Costs for the First Operating Year. In the event Tenant
timely objects to Landlord's determination, representatives appointed by
Landlord and Tenant shall mutually agree upon the determination. If such
representatives are unable to agree within fifteen (15) days following the date
upon which Tenant objects to Landlord's Determination, the matter shall be
submitted to arbitration before the Newark office of the American Arbitration
Association, the cost of such arbitration to be shared equally by the parties.
Thereafter, if for any subsequent Lease year the average tenant occupancy of
the Building is below ninety-five (95%), the Building Operating Costs for any
such year shall be adjusted by Landlord to the amount that such Building
Operating Costs would have been if the average tenant occupancy during that
year had been ninety-five (95%) percent.
36.6 If, pursuant to any Tax Statement or Operating Statement showing
Taxes or Building Operating Costs for any year subsequent to the First Tax Year
or First Operating Year, respectively, there shall be an additional amount
payable or a refund due with respect to Taxes and/or Building Operating Costs
for the periods covered by such statement(s), the amount payable by the Tenant
to the Landlord as additional rent or the amount due to the Tenant as a refund,
shall be calculated and paid accordingly. If such calculation takes place
and/or any payment in connection therewith becomes payable after the expiration
of the term of this Lease, this provision shall be deemed to have survived such
expiration. However, it is agreed by the parties that any refund shall not in
any way operate to reduce the Minimum Rent.
36.7 Any increase in additional rent under this Article shall be
prorated for the final Operating Year if such Operating Year covers a period of
less than twelve (12) full months. Tenant's obligation to pay prorated
additional rent under this Article for the final Operating Year shall survive
the expiration of the term of this Lease.
36.8 In the event that the payment of any sum required to be paid by
Tenant to Landlord under this Lease (including, without limiting the generality
of the foregoing, Minimum Rent, Adjusted Minimum Rent, or payment made by
Landlord under any provision of this Lease for which Landlord is entitled to
reimbursement by Tenant) shall become overdue for 15 days beyond the date on
which they are due and payable as provided in this Lease, then a delinquency
service charge equal to four percent of the amount overdue shall become
immediately due and payable to Landlord as liquidated damages for Tenants'
failure to make prompt payment. Further, such delinquency service charge shall
be payable on the first day of the month next succeeding the month during which
such late charges become payable as additional rent. In the event of nonpayment
of any delinquency service charges and interest provided for above, Landlord
shall have, in addition to all other rights and remedies, all the rights and
remedies provided for herein and by law in the case of nonpayment of rent. No
failure by Landlord to insist upon the strict performance by Tenant of Tenant's
obligations to pay late charges shall constitute a waiver by Landlord of its
rights to enforce the provisions of this Section 36.8 in any instance
thereafter occurring. The provisions of this Section 36.8 shall not be
construed in any way to extend any notice period provided for in this Lease.
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37. COMMENCEMENT OF TERM; ESTIMATED
COMMENCEMENT DATE; COMMENCEMENT
DATE AND TERMINATION DATE; RENT
COMMENCING DATE
--------------------------------------
37.1 The parties intend that the Lease shall commence on December 1,
1986 (the "Estimated Commencement Date"). Notwithstanding the above, the
commencement date ("Commencement Date") as defined, fixed and ascertained in
this Article shall be the date upon which the work required to be performed by
the Landlord pursuant to the Work Letter attached hereto as Exhibit "B" (the
"Work"), shall be substantially completed. The Work shall be deemed to be
substantially completed ("Substantial Completion") for all purposes hereunder,
on the earlier of the date upon which:
A. (i) Landlord has procured a permanent Certificate of Occupancy,
permitting occupancy of the Demised Premises by the Tenant; and (ii) the
Landlord's architects or Tenant's consulting professional shall have certified
that Landlord has substantially performed the Work. Substantial Completion shall
be deemed to have occurred even though minor details of work remain to be done,
provided such details do not materially interfere with the Tenant's use of the
Demised Premises,
or
B. Tenant shall have taken possession of all or any part of the demised
Premises. (Tenant shall not be deemed to have taken possession for purposes of
this subsection of Tenant, with Landlord's prior consent, has relocated minor
supply items to the Demised Premises prior to substantial completion as defined
in "A", above),
or
C. May 1, 1987.
37.2 On or after determination of the Commencement Date as above
provided, Landlord shall deliver to Tenant a notice ("Commencement Date Notice")
fixing the Commencement Date and termination date which shall be a date fifteen
(15) years after the Commencement Date ("Termination Date").
37.3 The date upon which Tenant's obligation for the payment of the
Minimum Rent hereunder shall commence ("Rent Commencement Date") shall be deemed
to be the Commencement Date.
37.4 If, prior to the Commencement Date, Tenant shall enter the Demised
Premises to make any installations of its equipment, fixtures and furnishings,
Landlord shall have no liability or obligation for the care or preservation of
Tenant's property.
37.5 Landlord agrees to provide access to the telephone company during
the course of construction, to permit Tenant's installations of the telephones.
However, the parties agree that the failure of the telephone company to complete
the telephone installation and to provide service shall not delay or defer the
determination of the Commencement Date or the Rent Commencement Date and the
obligation of tenant to pay rent therefrom. Landlord represents that the
Building is properly constructed to accommodate the installation of standard
telephone equipment.
37.6 Anything contained in this Article 37 to the contrary
notwithstanding, if for any reason the Premises are not
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ready for occupancy on the Estimated Commencement Date, this Lease shall
nevertheless continue in full force and effect; the Commencement Date shall be
postponed until substantial completion has occurred and the Rent Commencement
Date shall be postponed for a like number of days. The Termination Date shall be
adjusted to provide the full term set forth in Section 37.2 hereinabove.
38. LANDLORD'S WORK; LANDLORD'S WORK LETTER
38.1 Annexed hereto as Exhibit "B" and made a part hereof is Landlord's
work letter (the "Work Letter"). Tenant agrees that it shall either approve
Landlord's drawings or provide to Landlord for the approval and acceptance of
Landlord on or before the 8th day of October, 1986, such information as required
by Landlord for Landlord to prepare drawings for Tenant's layout, partitioning,
electrical, reflecting ceiling and other installations. Landlord shall furnish
and install in accordance with such drawings, so much of the work required by
Tenant by the above drawings as allowed by Landlord's Work Letter at no
additional cost to Tenant. To the extent Tenant's drawings require work, the
cost of which is not contemplated by the Work Letter, such work ("Extras") shall
be reduced to an "Extra or Change Order" to be executed by both Landlord and
Tenant, which shall indicate the work required, the cost thereof, and the
additional time required, if any, for completion. Tenant shall be responsible
for any delays in completing the Demised Premises by reason of Tenant's failure
to furnish Landlord with the requisite approvals and drawings.
39. HEATING, AIR-CONDITIONING AND VENTILATION;
LEGAL HOLIDAYS; "AFTER HOURS"
39.1 Notwithstanding the provisions of subsections (b) and (e) of Article
28 of this Lease, but subject to all of the other terms, covenants and
conditions of said Article 28, Landlord shall provide and furnish appropriate
heat, air-conditioning or ventilation to the Demised Premises between the hours
of 8:00 A.M. and 6:00 P.M., Monday through Friday, other than Legal Holidays
(which are listed on Exhibit "E"), attached to this Lease.
39.2 At all other times not otherwise provided for in Section 39.1 above,
Landlord agrees that it shall, upon prior written request from Tenant, provide
after-hours air-conditioning, ventilation or heating, as the case may be, for
which Tenant shall pay to Landlord as additional rent hereunder, a sum equal to
$100.00 per hour for providing heat, and $100.00 per hour for providing
air-conditioning, that being intended to cover Landlord's cost for the power or
fuel required to provide the same. In the event that during the term of this
Lease, or any renewal hereof, the Landlord's cost for providing after-hours
heating or air-conditioning shall increase by virtue of utility rate increases
or unit fuel cost increases, the above-specified hourly charges shall be
adjusted from time to time to reflect said increases. In addition to the
foregoing, should there by any charges incurred by Landlord for additional
attendant engineers or similar additional requirements as may be imposed from
time to time by the State Labor Department, local authorities, union
requirements, or the like, Tenant agrees to reimburse Landlord for its
out-of-pocket expenses incurred in connection therewith, related to the
after-hours use by Tenant.
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40. ELECTRIC CURRENT
40.1 Landlord's obligation to supply current shall be limited to the
current required to power the Building standard heating, ventilation and
air-conditioning systems and the power for and lighting of common areas.
40.2 Tenant shall arrange to purchase and pay for all of the electric
current requirements for light and power used in connection with Tenant's
operations within the Demised Premises. Landlord, at Landlord's cost, shall
furnish and install an electric meter for the measurement of the consumption of
Tenant's electric current as herein provided.
40.3 At the request of Landlord, prior to occupancy of the Demised
Premises, Tenant shall execute any and all applications for service, or forms
required by the local utility company supplying electric current to the
Building for the metering of all electric current and power required for the
operation of the electrical equipment of any nature whatsoever and lights
within or serving the Demised Premises.
40.4 As an alternative to the obligations of Landlord and Tenant as
set forth in Sections 40.1 and 40.2 above, Landlord may elect, at its option,
to meter and furnish the electric current to the entire floor of which the
Premises forms a part, in which case Tenant shall pay as additional rent
Tenant's share of Landlord's costs therefor. Tenant's share of costs under this
Section 40.4 shall be based upon a percentage which the area of the Premises
bears to the total floor area on which the Premises are located. Tenant, at its
option, may in the alternative, install a separate electric meter and, in such
event, Tenant shall pay its own electric costs directly to the utility company
serving the Premises and the provisions of Sections 40.1 and 40.2 shall
thereupon apply hereunder.
41. LIABILITY INSURANCE
41.1 Tenant agrees to provide on or before the Commencement Date a
Certificate of Insurance confirming to Landlord insurance coverage under a
comprehensive general liability policy to confirm, among other things, (i)
personal injury coverage, and (ii) coverage for Tenant's contractual duty of
indemnification under this Lease in an amount not less than $1,000,000.00
combined single limit per occurrence and containing a provision that such
insurance shall not be cancelled except upon 90 days' prior written notice to
Landlord.
42. FIRE INSURANCE - WAIVER OF SUBROGATION
42.1 Landlord and Tenant each hereby releases the other, its
respective officers, directors, employees and agents from any and all liability
or responsibility to the other or anyone claiming through or under either of
them by way of subrogation or otherwise, for any loss or damage to property
caused by fire or any of the extended coverage casualties, even if such fire or
other casualty shall have been caused by the fault or negligence of the other
party or anyone for whom such party may be responsible. Landlord agrees that it
shall carry and maintain in force and effect at all times during the term of
this Lease a Standard Fire Insurance policy with Standard Extended or
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Additional Extended Coverage and vandalism and malicious mischief endorsements.
Tenant shall maintain a Standard Fire Insurance policy with the aforesaid
Extended Coverage and vandalism endorsements covering the replacement value of
all Tenant's personal property, equipment and improvements located in the
Demised Premises.
43. PARKING FACILITIES
43.1 So long as Tenant is not in default under this Lease, Landlord
hereby grants to Tenant the license (the "License") to park 158 cars ("Allotted
Parking"), for use solely by Tenant and Tenant's employees, guests and invitees
in the parking area or areas serving the Building (the "Designated Parking
Area").
43.2 In the event Tenant, its employees, licensees or invitees shall
use any more than the Allotted Parking on three or more occasions during the
term of this Lease after notice from Landlord, Landlord may immediately suspend
or revoke the License. Landlord shall not be responsible to Tenant for
enforcing the License or for violation of the License by other tenants of the
Building, by third parties, or guests or visitors to the Building.
43.3 In the event the number of parking spaces in the Designated
Parking Area is reduced by circumstances beyond the control of Landlord, the
Allotted Parking shall be reduced proportionately.
44. ACCESS AND COMMON AREAS
44.1 Anything to the contrary contained in this Lease notwithstanding,
Landlord and all tenants, including Tenant hereunder, of this Building, shall
have a mutual right of access for purposes of emergencies relating to the
Building and its occupants through such areas where the same may be required
including the Demised Premises and the demised premises of any other tenant in
the Building.
44.2 Tenant shall have the right of nonexclusive use, in common with
others, of (a) automobile parking areas and driveways (subject to Article 43
hereof); (b) footways, and (c) such elevator and other facilities as may be
constructed and designated from time to time by Landlord in the Building, all
to be subject to the terms and conditions of the Lease and to reasonable rules
and regulations for the use thereof as prescribed from time to time by
Landlord.
45. INTENTIONALLY DELETED
46. BROKER
46.1 Tenant represents that Peregrine White Company, Inc. is the only
real estate broker responsible for bringing about, or negotiating, this Lease
and said broker is the only broker with whom it has dealt in connection with
the Demised Premises.
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46.2 In reliance upon the foregoing representation, Landlord agrees to
pay a commission to said broker in accordance with a separate agreement between
them, and Tenant agrees to defend, indemnify and hold harmless the Landlord,
its affiliates and/or subsidiaries from any expense or liability (including
attorney's fees) arising out of any claim for commission by any other broker
claiming or alleging to have acted on behalf of or to have dealt with Tenant.
47. CLEANING SERVICES
47.1 Landlord shall provide services for maintenance of the grounds,
common areas and parking areas and such other cleaning services within the
Demised Premises as are set forth on the "Cleaning Service Rider" annexed
hereto and made a part hereof as Exhibit "D".
48. ASSIGNMENT AND SUBLETTING
48.1 Supplementing the provisions of Article 11, and except as
provided in Section 48.8 if the Tenant shall desire to assign this Lease,
sublet or underlet all or any portion of the Demised Premises, it shall first
submit in writing to the Landlord a notice setting forth in reasonable detail:
(a) the identity and address of the proposed assignee or sublessee;
(b) in the case of a subletting, the terms and conditions thereof;
(c) the nature and character of the business of the proposed assignee
or sublessee and its proposed use for the Demised Premises;
(d) evidence that the proposed assignee or sublessee is a United
States citizen or citizens or a corporation qualified to do business in the
State of New Jersey and organized and existing under the laws of one of the
States of the United States;
(e) banking, financial and other credit information relating to the
proposed assignee or sublessee reasonably sufficient to enable Landlord to
determine the proposed assignee's or sublessee's financial responsibility; and
(f) in the case of a subletting of only a portion of the Demised
Premises, plans and specifications for Tenant's layout, partitioning, and
electrical installations for the portion of the Demised Premises to be sublet.
48.2 If the nature and character of the business of the proposed
assignee or sublessee, and the proposed use and occupancy of the Demised
Premises, or any portion thereof, by the proposed assignee or sublessee, is in
keeping and compatible with the dignity and character of the Building, then,
subject to compliance with the requirements of Article 11 and this Article 48,
anything to the contrary in Article 11 notwithstanding, Landlord agrees not
unreasonably to withhold or delay its consent to any such proposed
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assignment or subletting, provided that Tenant shall, by notice in writing as
described in Section 48.1, advise Landlord of its intention to assign this
lease or to sublease all or any part of the Demised Premises, from, on and
after a stated date (which shall not be less than 60 days after date of
Tenant's notice), in which event Landlord shall have the right, to be exercised
by giving written notice to Tenant within 30 days after receipt of Tenant's
notice, to recapture the space described in Tenant's notice. Such recapture
notice shall, if given, cancel and terminate this Lease with respect to the
space therein described as of a date which shall be the later of 30 days
following the date set forth in Tenant's notice, or 30 days after Tenant shall
have surrendered possession of the Demised Premises. In the event less than all
of the Demised Premises are recaptured, Landlord shall construct and erect such
partitioning as may be required to separate the space retained by Tenant from
the space recaptured. The cost of any such partitioning shall be borne fully
and exclusively by Tenant, shall constitute additional rent hereunder and shall
be payable to Landlord within 20 days following a statement from Landlord for
the amount thereof.
48.3 If this Lease is cancelled pursuant to the foregoing with respect
to less than the entire Demised Premises, the Minimum Rent and/or the Adjusted
Minimum Rent and Tenant's Occupancy Percentage shall be adjusted on the basis
of the number of square feet retained by Tenant in proportion to the number of
square feet originally demised under this Lease, and this Lease, as so amended,
shall continue thereafter in full force and effect.
48.4 In addition to the foregoing requirements: (a) no sublease shall
result in an occupancy of the Demised Premises by more than two tenants,
including the Tenant hereunder, provided that subleases to affiliates of Tenant
shall be permitted to result in an occupancy of the Demised Premises of up to
six tenants including Tenant hereunder, (b) no sublease, other than subleases to
affiliates of Tenant, shall be for a term of less than two years, unless the
unexpired term of this Lease shall be less than two years at the commencement of
the sublease, (c) no assignee or sublessee shall be an existing tenant of or any
party then negotiating for space in the Building, or any other building in the
office park of which the Building is a part (i) owned by Landlord, Bellemead
Development Corporation ("Bellemead") or any partnership in which Bellemead or
an affiliate of Bellemead is a partner or (ii) managed by Bellemead or an
affiliate of Bellemead ("Affiliated Building"), (d) no sublease shall result in
the occupancy of less than 5000 square feet of space, provided that subleases to
affiliates of Tenant shall be permitted to result in an occupancy of not less
than 2000 square feet of space, (e) Tenant shall not be in material default
under any of the terms and conditions of this Lease at the time of any notice or
request for consent under the terms of this Article or at the effective date of
such assignment or subletting and (f) no subletting or assignment other than
subleases to affiliates of Tenant shall be for a rental rate less than that
currently being charged by Landlord for comparable space in the Building or any
Affiliated Building (the "Going Rate"); in the event Landlord shall notify
Tenant of its Going Rate upon request from Tenant, Tenant shall be permitted to
rely on such rate solely for purposes of this subsection (pound sterling) for a
time period not to exceed sixty (60) days following such notice. Furthermore,
anything to the contrary in Section 48.2 notwithstanding, Landlord shall not
consent to any sublease unless Tenant agrees at the time of the proposed
sublease and in the Tenant's notice required in Section 48.2 to pay over to
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Landlord fifty (50%) percent of all rents (of whatever nature) payable by the
prospective sublessee to Tenant pursuant to such sublease which exceeds the pro
rata share of the then Adjusted Minimum Rent allocable to the sublease premises
payable by Tenant hereunder.
48.5 Any sublease must provide (a) it shall be subject and subordinate
to all of the terms and conditions of this Lease, (b) that notwithstanding
Article 2 hereof, the use of the Demised Premises thereunder shall be restricted
exclusively to executive and administrative office use, (c) that the term
thereof shall not extend beyond a date which is one day prior to the expiration
date of the then current Initial Term or Renewal Term hereof, (d) no sublessee
shall be permitted to further sublet all or any part of the Demised Premises
without first complying with each and every requirement of this Article 48 and
without obtaining Landlord's prior written consent which shall not otherwise be
unreasonably withheld or delayed, and (e) in the event of cancellation or
termination of this Lease for any reason whatsoever or of the surrender of this
Lease whether voluntary, involuntary or by operation of law, prior to the
expiration date of such sublease, including extensions and renewals granted
thereunder, that, at Landlord's option, the subtenant shall make full and
complete attornment to Landlord for the balance of the term of the sublease,
which attornment shall be evidenced by an agreement in form and substance
satisfactory to Landlord which the subtenant shall execute and deliver at any
time within five days after request by Landlord, its successors and assigns.
The subtenant shall waive the provisions of any law now or hereafter in effect
which may give the subtenant any right of election to terminate the sublease or
to surrender possession of the Premises in the event any proceeding is brought
by Landlord to terminate this Lease.
48.6 Each of the following events shall be deemed to constitute an
assignment of this Lease and shall require the prior written consent of
Landlord in each instance:
(a) Any assignment or transfer of this Lease by operation of
law;
(b) Any hypothecation, pledge or collateral assignment of this
Lease;
(c) Any involuntary assignment or transfer of this Lease in
connection with bankruptcy, insolvency, receivership or otherwise;
(d) Any assignment, transfer, disposition, sale or acquiring of
a controlling interest in Tenant to or by any person, entity or group of
related persons or affiliated entities, whether in a single transaction
or in a series of related or unrelated transactions; and
(e) Any issuance of an interest or interests in Tenant (whether
stock, partnership interests or otherwise) to any person, entity or
group of related persons or affiliated entities, whether in a single
transaction or in a series of related or unrelated transactions, such
that following such issuance, such person, entity or group shall hold a
controlling interest in Tenant.
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For purposes of the immediately preceding sentence, a "controlling interest" of
Tenant shall mean fifty (50%) percent or more of the aggregate issued and
outstanding equitable interests (whether stock, partnership interests or
otherwise) thereof.
48.7 Any provision of Article 11 and sections 48.1, 48.2 and 48.6 to
the contrary notwithstanding, but subject to Sections 48.3, 48.4, 48.5 and 48.8:
(a) Any corporate Tenant shall have the right, without the consent of
Landlord, to assign this Lease or sublet all or any part of the Demised
Premises to any corporation controlling, controlled by or under common
control with Tenant, provided that no such assignee shall further assign
this Lease and no such sublessee shall assign or encumber its sublease or
further sublet all or any part of the Demised Premises to any person other
than a corporation controlling, controlled by or under common control with
Tenant, except in accordance with the provisions of Article 11 and this
Article 48, and provided, further, that any event resulting in such
assignee or sublessee ceasing to be a corporation controlling, controlled
by or under common control with Tenant shall be deemed to be an assignment
of this Lease requiring the prior consent of Landlord, and Tenant shall
thereupon be required to comply with all provisions of Article 11 and
this Article 48 applicable thereto. For purposes of the immediately
foregoing, "control", means ownership of at least eighty (80%) percent of
the issued and outstanding voting stock of such corporation.
(b) Any corporate Tenant shall also have the right, without the
consent of Landlord, to assign this Lease to any corporation succeeding to
Tenant by merger or consolidation in accordance with applicable statutory
provisions for merger or consolidation of corporations or by purchase of
all or substantially all of Tenant's assets, provided that immediately
after such merger, consolidation or purchase, the shareholders' equity
(capital stock, additional paid-in capital and retained earnings) of the
successor corporation or the purchasing corporation, as the case may be,
shall at least equal the shareholders' equity of Tenant immediately prior
to such merger, consolidation or purchase and shall be so certified by
the chief financial officer of the assignee. Effective upon the making of
an assignment permitted under the immediately preceding sentence, the
assignor shall be released from further liability under this Lease.
It is Landlord's intent to permit assignment of this Lease and subletting
pursuant to this Section 48.7 exclusively as an accommodation to the bona fide
and legitimate business needs of Tenant, and notwithstanding the provisions
hereof, no assignment of this Lease or sublease of the Demised Premises without
Landlord's consent hereunder shall be permitted where the sole or primary
purpose of such assignment or subletting is to permit occupancy of the Demised
Premises by a third party in avoidance of Landlord's consent, or in the case of
a corporation's purchasing all or substantially all of Tenant's assets where
this Lease constitutes all or a substantial portion of such assets.
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Tenant shall promptly give Landlord prior notice of any assignment of
this Lease or subletting permitted under this Section 48.7, accompanied by all
documentation required to establish compliance with the requirements of
subsections (a) and (b) above and shall also promptly provide Landlord with a
copy of any executed instrument of merger, consolidation or assignment or the
executed sublease, as the case may be.
48.8 It is a condition to the effectiveness of any assignment
otherwise complying with Article 11 and this Article 48 that the assignee
execute, acknowledge and deliver to Landlord an agreement in form and substance
satisfactory to Landlord whereby the assignee assumes all obligations of Tenant
under this Lease, and agrees that the provisions of Article 11 and this Article
48 shall continue to be binding upon it in respect of all future assignments
and deemed assignments of this Lease. No assignment of this Lease shall release
the assignor from its continuing obligations to Landlord under this Lease,
except as expressly herein provided, and Tenant and any subsequent assignor
shall continue to remain jointly and severally liable (as primary obligor) for
all Tenant's obligations hereunder.
48.9 Tenant shall be responsible for obtaining all permits and
approvals required by any governmental or quasi-governmental agency for any
work or otherwise required in connection with any assignment of this Lease or
any sublease, and Tenant shall deliver copies of the same to Landlord prior to
the commencement of work if work is to be done. Tenant is furthermore
responsible for and is required to reimburse Landlord for all costs including
legal fees which Landlord incurs in reviewing any proposed assignment of this
Lease or any sublease and any permits, approvals and applications for the
construction within the Demised Premises. Tenant's failure to obtain any of the
above-mentioned permits and approvals or to submit same and a duplicate
original counterpart of the assignment or sublease to Landlord within five days
of the date of issuance or execution of such item(s) shall constitute a default
under this Lease.
48.10 If Landlord reasonably withholds its consent of any proposed
assignment or sublease, or if Landlord exercises its recapture option under
Section 48.2, Tenant shall indemnify, defend and hold harmless Landlord against
and from all loss, liability, damage, cost and expense (including reasonable
attorneys' fees and disbursements) resulting from any claims that may be made
against Landlord by the proposed assignee or sublessee or by any brokers or
other persons claiming a commission or similar compensation in connection with
the proposed assignment or sublease.
48.11 If Landlord consents to any proposed assignment or sublease and
Tenant fails to consummate the assignment or sublease to which Landlord
consented within 45 days after the giving of such consent, Tenant shall be
required again to comply with all of the provisions and conditions of this
Article 48 before assigning this Lease or subletting all or part of the Demised
Premises.
48.12 Tenant, its sublessees, and their respective successors and
assigns acknowledge and agree that the restriction that Landlord's consent to a
proposed assignment of this Lease or to a subletting under certain
circumstances shall not be unreasonably withheld and shall not be intended or
construed as an agreement or covenant on the part of the Landlord, but rather
as a qualification on Tenant's covenant not to assign this Lease or
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<PAGE> 68
sublet, and they further agree that under no circumstances shall Landlord be
liable in damages or subject to liability of any other kind or nature whatever
by reason of Landlord's failure or refusal to grant its consent to any proposed
assignment of this Lease or subletting of the Demised Premises, the sole and
exclusive recourse being a declaratory judgment on the question of Landlord's
reasonableness.
48.13 The joint and several liability of the named Tenant and any
immediate or remote successor in interest of the named Tenant for the due
performance and observance of all covenants and conditions to be performed and
observed by Tenant shall not be impaired by any agreement of Landlord extending
the time for such performance or observance or by Landlord's waiving or failing
to enforce any provision of this Lease.
49. TENANT'S COOPERATION; REASONABLE MODIFICATION; ESTOPPEL CERTIFICATE
49.1 If, in connection with obtaining financing for the Building and/or
the Real Estate, or otherwise upon the interest of the Landlord, as lessee,
under any ground or underlying lease, any lending institution shall request
reasonable modifications of this Lease as a condition of such financing, Tenant
covenants not unreasonably to withhold or delay its agreement to such
modification, upon Landlord's request, provided that such modification does not
materially or adversely affect the rights of Tenant under this Lease.
49.2 Tenant agrees at any time and from time to time, upon not less
than ten days' prior written request, that Tenant shall execute, acknowledge
and deliver to Landlord, or its designee, a statement in writing certifying:
that this Lease is unmodified and is in full force and effect (or if there have
been modifications, the specifics thereof and that the Lease is in full force
and effect as modified); the dates to which the Minimum Rent (or Adjusted
Minimum Rent) and additional rent have been paid; and the amount of all rents
paid in advance, if any. It is intended hereby that any such statement
delivered pursuant to this Article may be relied upon by a prospective
purchaser of the Landlord's interest or a mortgagee of Landlord's interest, or
any assignee of any mortgage upon Landlord's interests in the Real Estate. The
foregoing obligation shall be deemed a substantial obligation of the tenancy,
the breach of which shall give Landlord those remedies herein provided for an
event of default.
50. LIMITATION OF LIABILITY; DEFINITION OF "LANDLORD"
50.1 Notwithstanding anything to the contrary herein provided, each and
every term, covenant, condition and provision of this Lease is hereby made
specifically subject to the provisions of this Article 50. The term "Landlord"
as used in this Lease means only the owner or lessor for the time being of the
Building, so that in the event of any conveyance of such interest and the
transfer to the transferee of any funds then being held under this Lease by
such owner, Landlord shall be and hereby is entirely freed and relieved of any
and all obligations of Landlord hereunder thereafter accruing, and it shall be
deemed without further agreement between the parties and such grantee(s) that
the grantee has assumed and agreed to observe and perform all
14
<PAGE> 69
obligations of Landlord hereunder. It is specifically understood and agreed that
notwithstanding anything to the contrary herein provided or otherwise provided
at law or in equity, there shall be absolutely no personal liability in excess
of its interest in the Real Estate to the Landlord or any successor in interest
thereto (whether the same be an individual, joint venture, tenancy in common,
firm or partnership, general, limited or otherwise) or on the part of the
members of any firm, partnership or joint venture or other unincorporated
Landlord with respect to any of the terms, convenants and/or conditions of this
Lease; in the event of a breach or default by Landlord, or any successor in
interest thereof, of any of its obligations under this Lease, Tenant shall look
solely to the then Landlord for the satisfaction of each and every remedy of
Tenant, such exculpation of personal and additional liability which is in excess
of such interest in the Real Estate to be absolute and without any exception
whatsoever.
51. STATUTORY WAIVER; NOTICE BY TENANT
51.1 Tenant waives the benefit of New Jersey Revised Statures, Title
46, Chapter 8, Sections 6 and 7. Tenant agrees that it will not be relieved of
the obligations to pay the Minimum Rent, Adjusted Minimum Rent or any additional
rent in case of damage to or destruction of the Building, except as provided in
Article 9 of the printed portion of this Lease.
51.2 Tenant shall give Landlord immediate notice in case of fire or
accident within the Demised Premises, or, within the Building if involving
Tenant, its servants, agents, employees, invitees or licensees.
52. CORPORATE AUTHORITY
52.1 Tenant represents that the officer(s) executing and delivering
this Lease has (have) been duly authorized to enter into this Lease and that the
execution and delivery of this Lease by Tenant do not and shall not violate any
provision of any by-law, agreement, order, judgment, governmental regulation or
any other obligation to which Tenant is a party or is subject.
52.2 Upon execution hereof, Tenant shall deliver an appropriate
certification by its secretary and assistant secretary to the above effect.
53. PERSONAL PROPERTY TAXES
53.1 Tenant agrees to pay all taxes imposed on the personal property of
Tenant in connection with its use and occupancy of the Demised Premises, and to
hold Landlord harmless therefrom.
54. BUILDING CHANGES
54.1 This Lease shall not be affected or impaired by any change to any
lawns, sidewalk or streets adjacent to or around the Building, except as
provided in the provisions of this lease Dealing with condemnation.
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<PAGE> 70
55. HOLDING OVER
55.1 If Tenant holds over in the Demised Premises beyond the
Termination Date or prior expiration of the term hereof. Tenant shall become a
tenant from month-to-month at one and one-half times the Adjusted Minimum Rent
then payable hereunder and otherwise upon all the other terms and conditions of
this Lease, and shall continue to be such month-to-month tenant until such
tenancy shall be terminated by Landlord or such possession shall cease. Nothing
contained in this Lease shall be construed as a consent by Landlord to the
occupancy or possession by Tenant of the Premises beyond the Termination Date or
prior expiration of the term hereof shall be entitled to the benefit of all
legal remedies that now may be in force or may be hereafter enacted for summary
possession of the Demised Premises.
56. RESTRICTIVE COVENANT - FOOD SERVICE
56.1 Tenant hereby covenants and agrees (anything to the contrary
contained in this lease, notwithstanding) that it shall not use the Demised
Premises or any portion thereof, for the service of food to the public, nor
shall it maintain any facilities for the sale or consumption of food to and by
the public without, in each case, obtaining the prior written consent of the
Landlord. The consent of the Landlord required hereunder shall be given solely
in the discretion of the Landlord. Notwithstanding the above, Tenant shall be
permitted to maintain lunchrooms for its executives and employees on the
premises.
56.2 Landlord represents to Tenant, and Tenant acknowledges, that
pursuant to agreements made or to be made by and between the Landlord and third
parties for the operation of a restaurant, cafeteria, coffee-cart and similar
food services for this Building and/or other buildings in the office park in
which this Building is located, no tenant of this Building, including Tenant, or
of any other buildings in the office park in which this Building is located
shall prepare, contract for, serve or otherwise make available a food service
facility in competition with such third parties. Any breach of this restriction
by the Tenant shall be deemed a material event of default under the terms of
this Lease, and Landlord may, in its discretion, exercise such remedies as it
may deem appropriate to terminate this Lease, prevent a violation of this
covenant, and recover any damages to which it may be exposed by virtue of a
breach by the Tenant.
57. NOTICES
57.1 All notices, demands and requests which may or are required to be
given by either party hereunder to the other, shall be in writing. All notices,
demands and requests by Landlord to Tenant shall be deemed to have been properly
given if sent by registered or certified mail, return receipt requested,
postage prepaid, addressed to Tenant at:
TENANT: Alexander & Alexander Consulting Group Inc.
Prior to the Commencement Date:
22-08 Route 208
Fairlawn, New Jersey 07410
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<PAGE> 71
On or after the Commencement Date:
125 Chubb Avenue
Lyndhurst, New Jersey 07071
with a copy to:
Benjamin B. Gill, Jr., Esq.
Vice President and General Counsel
Alexander & Alexander Inc.
300 East Joppa Road
Hampton Plaza
Towson, Maryland 20124
or to such other address as Tenant may from time to time designate by notice to
Landlord.
All notices, demands and requests by Tenant to Landlord shall be deemed
to have been properly given if sent by registered or certified mail, return
receipt requested, postage prepaid, addressed to Landlord at:
LANDLORD: Meadowland Associates
c/o Bellemead Management Co,. Inc.
4 Becker Farm Road
Roseland, New Jersey 07068
with copies to:
Sanford Grossman, Esq.
Simpson Thacher & Bartlett
One Battery Park Plaza
New York, New York 10004
or to such other address as Landlord may from time to time designate by notice
to Tenant.
All notices referred to hereunder shall be deemed given and received
two days after the date said notice is mailed by United States registered or
certified mail as aforesaid, in any post office or branch post office regularly
maintained by the United States Government, unless said notice was personally
served upon an officer of Landlord or Tenant, in which cash such notice shall
be deemed given when delivered.
58. SEVERABILITY OF PROVISIONS
58.1 If any term or provision of this Lease or the application thereof
to any party or circumstance shall to any extent be invalid or unenforceable,
the remainder of this Lease or the application of such term or provision to
parties or circumstances other than those with respect to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and enforced to the fullest extent
permitted by law.
59. NO OFFER OR AGREEMENT
59.1 No employee or agent of Landlord, no broker, and no agent of any
broker, or any agent or employee of Tenant, other than Tenant's Chief Executive
Officer or Chief Operating Officer, has authority to make or agree to make a
lease or any other
-17-
<PAGE> 72
agreement or undertaking in connection herewith, including, but not limited to
the modification, amendment or cancellation of a lease. The mailing or delivery
of this document by the Landlord or its agent to Tenant, its agent or attorney
shall not be deemed an offer by the Landlord to lease the Demised Premises on
the terms herein. This Lease shall not be effective, nor shall Tenant have any
rights with respect thereto unless and until Landlord shall accept this Lease
and execute and deliver the same to Tenant.
60. RENEWAL OPTION
60.1 Subject to the provisions of Section 60.2 below, Tenant
shall have the option to renew this Lease for an additional term of five (5)
years (the "Renewal Term"), which Renewal Term shall commence upon the
expiration of the term described in Article 37 of this Lease (the "Initial
Term"). The terms, covenants and conditions during the Initial Term, including
but not limited to the definitions of First Tax Year and First Operating Year
as set forth in Article 36 hereof, shall be projected and carried over into the
Renewal Term, except as specifically set forth hereinafter.
(a) The Minimum Rent shall be the greater of (i) Market Rent
(as defined in clause (b) below) or (ii) the Adjusted Minimum Rent as
of the last day of the Initial Term.
(b) "Market Rent" shall mean the fair market rent for the
Demised Premises, as of the date 180 days prior to the expiration of
the Initial Term (the "Determination Date"), based upon the rents
generally in effect for comparable office space in the area in which
the Real Estate is located (as such space is then being offered with a
standard work letter). Market Rent (for the purposes of determining the
Minimum Rent only during the Renewal Term) shall be determined on what
is commonly known as a "gross" basis; that is, in computing Market
Rent it shall be assumed that all real estate taxes and customary
services are included in such additional charges. Notwithstanding the
foregoing, the Minimum Rent for the Renewal Term shall be thereafter
increased from time to time as provided in this Lease, and the First
Tax Year and First Operating Lease Year for the Renewal Term shall be
defined as provided in Article 36 hereof.
(c) Landlord shall notify Tenant ("Landlord's Determination
Notice") of Landlord's determination of the Market Rent within 60 days
of the Determination Date. If Tenant disagrees with Landlord's
determination, Tenant shall notify Landlord ("Tenant's Notice of
Disagreement") within fifteen (15) days of receipt of Landlord's
Determination Notice. Time shall be of the essence with respect to
Tenant's Notice of Disagreement, and the failure of Tenant to give
such notice within the time period set forth above shall conclusively
be deemed an acceptance by Tenant of the Market Rent as determined by
landlord and a waiver by Tenant of any right to dispute such Market
Rent. If Tenant timely gives its Tenant's Notice of Disagreement, then
the Market Rent shall be determined as follows:
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<PAGE> 73
Landlord and Tenant shall, within thirty (30) days of the date on which
Tenant's Notice of Disagreement was given, each appoint an Appraiser
for the purpose of determining the Market Rent. An Appraiser shall mean
a duly qualified impartial real estate appraiser having at least 10
years' experience in the area in which the Demised Premises are
located. In the event that the two Appraisers so appointed fail to agree
as to the Market Rent within a period of 30 days after the appointment
of the second Appraiser, such two Appraisers shall forthwith appoint a
third Appraiser who shall make a determination within 30 days
thereafter. If such two Appraisers fail to agree upon such third
Appraiser within 10 days following the last 30 day period, such third
Appraiser shall be appointed by a Judge of the Superior Court of the
State of New Jersey. Such two Appraisers or three Appraisers, as the
case may be, shall proceed with all reasonable dispatch to determine
the Market Rent. The decision of such Appraisers shall be final; such
decision shall be in writing and a copy shall be delivered
simultaneously to Landlord and to Tenant. If such Appraisers fail to
deliver their decision as set forth above prior to the commencement of
the Renewal Term, Tenant shall pay Landlord the Adjusted Minimum Rent
at the rate as of the last day of the Initial Term, until such decision
is so delivered. If the Market Rent as determined above is in excess of
the actual rent paid, then Tenant, upon demand, shall pay to Landlord
the difference between the actual rent paid and the Market Rent from
the commencement of the Renewal Term. Landlord and Tenant shall each be
responsible for and shall pay the fee of the Appraiser appointed by
them respectively, and Landlord and Tenant shall share equally the fee
of the third Appraiser.
60.2 Tenant's option to renew, as provided in Section 60.1
above, shall be conditioned upon and subject to each of the following:
(a) Tenant shall notify Landlord in writing of its exercise of
its option to renew at least 9 months, but not more than 12 months,
prior to the expiration of the Initial Term;
(b) At the time Landlord receives Tenant's notice as provided
in (a) above, and at the expiration of the Initial Term, Tenant shall
not be in default under the terms or provisions of this Lease and
Tenant shall not have subleased any portion of the Demised Premises;
(c) Tenant shall have no further renewal option other than
the option to extend for the one Renewal Term as set forth in Section
60.1 above;
(d) This option to renew shall be deemed personal to the
Tenant and may not be assigned without the express consent of Landlord;
(e) Landlord shall have no obligation to do any work or
perform any services for the Renewal Term with respect to the Demised
Premises which Tenant agrees to accept in its then "as is" condition;
and
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<PAGE> 74
(f) Ten days prior to the commencement of the Renewal Term, Tenant
shall deposit with Landlord such additional sums as may be required to increase
any Security Deposit than held by Landlord proportionate to the increase in the
Minimum Rent.
61. TENANT'S SPECIAL SECURITY
61.1 Supplementing the requirement, if any, of paragraph 33 of the
Printed Portion of this Lease, an amount ("Tenant's Special Security") equal to
one monthly installment of Minimum Rent shall be deposited by Tenant with
Landlord upon the execution of this Lease as security for the faithful
performance and observance by Tenant of the term, conditions and provisions of
this Lease. landlord agrees to hold Tenant's Special Security in a money market
account at a commercial bank, savings bank or savings and loan institution
authorized to do business in the State of New Jersey. Provided Tenant is not
then in default in any of its obligations hereunder, Landlord agrees to return
Tenant's Special Security, together with all interest earned thereon, upon
receipt of the first monthly installment of Minimum Rent due on the Rent
Commencement Date.
62. CROSS DEFAULT
62.1 It is acknowledged by the parties hereto that Alexander &
Alexander of New York Inc. ("A&A") and 1280 Associates have entered into a
lease of even date herewith covering the entire fourth and fifth floors of the
office building located at 1280 Wall Street West, Lyndhurst, New Jersey (as
such lease may be amended or modified, the "Other Lease"). It is specifically
understood and agreed that a default by Tenant under this Lease shall also be
deemed a default by A&A under the Other Lease, and that a default by A&A under
the Other Lease shall also be deemed a default by Tenant under this Lease.
62.2 It is acknowledged by the parties hereto that A&A and Bellemead
Development Corporation, a Delaware corporation ("BDC"), have entered into that
certain Agreement of Sublease (the "Sublease") of even date herewith. It is
specifically understood and agreed that a default by Tenant under this Lease
shall also be deemed a default by A&A under the Sublease, and that a default by
A&A under the Sublease shall also be deemed a default by Tenant under this
Lease.
63. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
63.1 This Lease, including any options for renewal or purchase
contained herein or executed in connection herewith, shall be subject and
subordinate to any ground lease, underlying lease and/or all mortgages made or
given by Landlord, which now or hereafter affect the real property of which the
Demised Premises forms a part, and to all renewals, modifications,
consolidations, replacements and extensions thereof.
63.2 Landlord shall request from the lessor under any ground or
underlying lease and/or mortgagees holding any mortgage affecting the Building
or the Demised Premises, an agreement, providing in substance that,
notwithstanding any default by the
<PAGE> 75
Landlord under such leases or mortgages, and so long as this Lease is in
effect, that:
a) in the event of a default under any lease or mortgage, or
should it become necessary to foreclose a mortgage or terminate a lease,
the mortgagee or lessor thereunder shall not join the Tenant in any
summary or foreclosure proceedings, nor shall Tenant be evicted or its
leasehold estate hereunder be disturbed or terminated, so long as
Tenant is not in default under any of the terms, covenants and
conditions of this Lease;
b) in the event that the holder of such lease or mortgage or any
of its successors or assigns, shall hereafter succeed to the interest of
the Landlord under this Lease, the lessor or mortgagee shall agree to be
bound to the Tenant under all of the terms, covenants and conditions of
this Lease, and the Tenant agrees that from and after such event it
shall attorn to and recognize such successor as Tenant's landlord under
this Lease. Tenant shall execute promptly and deliver any instrument
that may be necessary to evidence such attornment within ten days after
any such landlord or mortgagee shall give notice and demand to Tenant
requesting the execution and delivery of such instrument, accompanied by
a draft of the proposed instrument. Should Tenant fail or refuse to do
so, Tenant hereby irrevocably appoints Landlord its attorney-in-fact to
execute such instrument on behalf of Tenant.
c) upon the attornment provided for above, this Lease shall
continue in full force and effect as a lease directly between such
successor landlord and the Tenant hereunder, upon and subject to all of
the terms, covenants and conditions hereunder. All rights and
obligations under this Lease shall continue as though the interest of
Landlord had not been terminated. Tenant shall have all of the remedies
provided hereunder against any such lessor or mortgagee for the breach
of any agreement contained in this Lease that Tenant might have had
under this Lease against the Landlord hereunder, as if such lessor or
mortgagee had not succeeded to the interest of the Landlord; provided
however, that no lessor or mortgagee shall be:
(i) liable for any act or omission of any prior landlord
(including the Landlord); or
(ii) subject to any offsets or defenses which the Tenant
might have against any prior landlord (including the Landlord);
or
(iii) bound by any rent or additional rent which the
Tenant might have paid for more than or in advance of the
current month to any prior landlord (including the Landlord); or
(iv) liable to Tenant for the return of any security
deposit made hereunder, unless such Lessor or Mortgagee shall
have actually received the same and shall be entitled to retain
and apply the same pursuant to the terms of this Lease; or
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<PAGE> 76
(v) bound by any amendment or modification of this Lease made
without its consent.
63.3 Tenant hereby agrees that within ten days following request by
any such Landlord or by the holder of any mortgage, described in this Article,
it shall execute, acknowledge and deliver an agreement in form substantially
similar to that described in Section 63.2 of this Article.
63.4 Tenant agrees to provide Landlord upon request, a consolidated
balance sheet and profit and loss statement of operations for the most current
past year, compiled for the confidential use of Landlord, when required in good
faith by Landlord, in connection with a sale of the Building or Demised
Premises, mortgage applications, renewals thereof or inquiries by the present
mortgagee or future mortgagee.
63.5 Tenant further agrees, within ten days following a request by
Landlord, to certify by written instrument duly executed and acknowledged to
the Landlord under any ground or underlying lease or the holder of any mortgage,
affecting the Building or the Demised Premises or to any prospective purchaser,
that this Lease is in full force and effect, or if not, in what respect it is
not; that this Lease has not been modified, or, if so, the extent to which it
has been modified; that there are no existing defaults hereunder to the best of
the knowledge of the party so certifying, or specifying the defaults, if any.
64.0 Notwithstanding any other provision to the contrary herein*
IN WITNESS WHEREOF, Landlord has signed this Lease and this Rider, and
Tenant, by its proper corporate officers, has signed this Lease and this Rider
this 7th day of October, 1986.
LANDLORD: MEADOWLANDS ASSOCIATES
By: ARC Meadowlands Associates,
General Partner
By: ARC Meadowlands, Inc.
General Partner
WITNESS:
/s/ [Illegible Signature] /s/ Michael A. Futterman
- -------------------------------- --------------------------------
Michael A. Futterman, President
TENANT: ALEXANDER & ALEXANDER
WITNESS: CONSULTING GROUP INC.
/s/ Deborah L. Guiness BY: /s/ [Illegible Signature]
- -------------------------------- ----------------------------
Title
Vice President
Alexander & Alexander Inc.
*Tenant's execution of this Lease shall be conditional only and subject to
ratification by the Board of Directors of its parent corporation, Alexander &
Alexander Services Inc. Tenant shall advise Landlord of its parent company's
ratification in writing on or before November 30, 1986.
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<PAGE> 77
EXHIBIT A
[BELLEMEAD MANAGEMENT CO., INC. LETTERHEAD]
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
P. 271 732 791
April 10, 1987
Alexander & Alexander Consulting Group, Inc.
22-08 Route 208
Fairlawn, New Jersey 07410
RE: Commencement Notice
Leased Premises - 125 Chubb Avenue
Lyndhurst, New Jersey/56,441 square feet
----------------------------------------
Gentlemen:
In accordance with the terms of the Lease, the First Amendment of Lease
and by mutual consent, the Lease will commence May 1, 1987 and terminate
fifteen (15) years thereafter on April 30, 2002.
Commencing May 1, 1987 and continuing through April 30, 1992, the
Minimum Annual Rent will be $1,241,702.00, payable in equal monthly
installments of $103,475.17. Effective May 1, 1992 and continuing through April
30, 1997, the Minimum Annual Rent shall be $1,552,127.50, payable in equal
monthly installments of $129,343.96. Beginning on May 1, 1997 and ending on the
Termination Date, the Minimum Annual Rent for the premises shall be the greater
of A) Market Rent, as determined pursuant to Article 60, Section 60.1(b),
provided that, the determination date for the Market Rent shall be 180 days
prior to May 1, 1997 (on or about October 31, 1996), or B) the Adjusted Minimum
Rent as of April 30, 1997.
Since we do not invoice the monthly rent, please advise your Accounts
Payable department to forward the rent, due the first of each month directly to
"Bellemead, As Agent Meadowlands Associates", c/o Bellemead, 4 Becker Farm
Road, Roseland, New Jersey 07068.
We acknowledge receipt of Tenant's Special Security in the amount of
$103,475.17, the terms of which may be found in Article 61 of the Lease.
<PAGE> 78
Alexander & Alexander -2- April 10, 1987
If you are in agreement with the above, please sign and return to my
attention, the enclosed copy of this letter. The original should be attached to
and made part of the Lease.
Very truly yours,
BELLEMEAD MANAGEMENT CO., INC.
Managing Agent for
Meadowlands & Associates
/s/ Cheryl Hardt
-------------------------------
Cheryl Hardt
Assistant Vice President
CH:nvr
Enclosure
AGREED TO AND ACCEPTED: Alexander & Alexander Consulting Group, Inc.
--------------------------------------------
BY: /s/ Donald Cleveland DATE: 4/15/87
------------------------------ -------
cc: S. Grossman, Esq.
B. Gill, Jr., Esq.
S. Ketive
B. Brodbeck
K. Defina
B. Donaleski
C. Walsh
<PAGE> 79
EXHIBIT A
FIRST AMENDMENT TO LEASE
THIS AMENDMENT, is made this 27th day of October, 1986 between
MEADOWLANDS ASSOCIATES, a New Jersey limited partnership having an office c/o
Bellemead Management Co., Inc., 4 Becker Farm Road, Roseland, New Jersey 07068
(the "Landlord"), and ALEXANDER & ALEXANDER CONSULTING GROUP INC., a New JERSEY
corporation, having an address at 22-08 Route 208, Fairlawn, New Jersey 07410
(the "Tenant").
W I T N E S S E T H
WHEREAS, the Landlord and the Tenant have heretofore entered into a
Lease dated October 7, 1986 (the "Lease") for the entire second (2nd) and fifth
(5th) floors of the office building located at 125 Chubb Avenue, Lyndhurst, New
Jersey 07071; and
WHEREAS, the parties desire to amend the Lease to reflect changes
agreed to by the parties subsequent to the date of execution thereof;
NOW THEREFORE, for good and reasonable consideration, receipt of which
is hereby acknowledged, the parties hereby agree as follows:
1. Footnote 3 of the Addendum to Printed Portion of Lease is hereby
deleted in its entirety and the following Footnote 3 is added in its place:
3. Tenant shall have the option of terminating this Lease upon
thirty (30) days' written notice to Landlord in the event Landlord
shall not have substantially completed restoration of the Demised
Premises as of a date which is 120 days after such fire or casualty
provided such fire or casualty destroys 25% or less of the Demised
Premises and further provided Tenant submits such notice to Landlord
within 150 days after such fire or casualty. If such fire or
casualty destroys more than 25% of the Demised Premises, Tenant
shall have the option of terminating this Lease only in the event
Landlord shall not have substantially completed restoration of the
Demised Premises as of a date which is 180 days after such fire or
casualty and only in the event Tenant submits such notice to
Landlord within 210 days after such fire or casualty.
2. Article 64 of the Rider to Lease is hereby deleted in its entirety.
3. Except as amended hereby, the Lease should remain in full force and
effect.
<PAGE> 80
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment to Lease the day and year first above written.
LANDLORD:
MEADOWLANDS ASSOCIATES
By: ARC Meadowlands
Associates, General
Partner
WITNESS:
/s/ [Illegible Signature] By: /s/ Michael Futterman
- ------------------------- ---------------------
Title: President
TENANT:
ALEXANDER & ALEXANDER
CONSULTING GROUP INC.
WITNESS:
- ------------------------- By: /s/ [Illegible Signature]
------------------------
Title:
<PAGE> 1
EXHIBIT 11
MOVADO GROUP, INC.
COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JULY 31, 1997(*) JULY 31, 1997(*)
---------------- ------------------
<S> <C> <C>
PRIMARY
Net income................................................ $ 2,095 $ 2,355
======= =======
Weighted average number of common shares outstanding...... 11,302 11,302
Add common equivalent shares (determined using the
"Treasury Stock" Method) representing shares issuable
upon exercise of employee stock options................. 386 458
------- -------
Weighted average number of shares used in primary net
income per share........................................ 11,688 11,760
======= =======
Primary net income per share.............................. $ 0.18 $ 0.20
======= =======
FULLY DILUTED
Net income................................................ $ 2,095 $ 2,355
======= =======
Weighted average number of common shares outstanding...... 11,302 11,302
Add common equivalent shares (determined using the
"Treasury Stock" Method) representing shares issuable
upon exercise of employee stock options................. 583 583
------- -------
Weighted average number of shares used in fully diluted
net income per share.................................... 11,885 11,885
======= =======
Fully diluted net income.................................. $ 0.18 $ 0.20
======= =======
</TABLE>
- ---------------
(*) Share information reflects a three-for-two stock split effective September
20, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JULY 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 1,493
<SECURITIES> 0
<RECEIVABLES> 89,549
<ALLOWANCES> 0
<INVENTORY> 105,819
<CURRENT-ASSETS> 219,559
<PP&E> 16,738
<DEPRECIATION> 0
<TOTAL-ASSETS> 246,302
<CURRENT-LIABILITIES> 99,585
<BONDS> 40,000
0
0
<COMMON> 113
<OTHER-SE> 100,292
<TOTAL-LIABILITY-AND-EQUITY> 246,302
<SALES> 56,994
<TOTAL-REVENUES> 56,994
<CGS> 24,768
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,368
<INCOME-PRETAX> 3,141
<INCOME-TAX> 786
<INCOME-CONTINUING> 2,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,355
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
